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, 2004

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

       For the transition period from _______________ to ________________

                        Commission File Number 000-28363

                              SBS INTERACTIVE, CO.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its charter)

            Florida                                              65-0705830
---------------------------------                            -------------------
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

                          4211 Yonge Street, Suite 235
                            Toronto, Ontario M2P 2A9
                                     Canada
                    ----------------------------------------
                    (Address of principal executive offices)

Issuer's telephone number, including area code:  (416) 223-9293

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

Title of each class            Name of each exchange on which each is registered
-------------------            -------------------------------------------------
          None                                       None

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

                         Common Stock, $0.001 par value
                         ------------------------------
                                (Title of class)

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

     Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and will not 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. [X]

     The issuer's revenues for the fiscal year ended December 31, 2004
totaled $0.

     The number of shares of the issuer's common stock, $0.001 par value per
share, outstanding as of March 23, 2005 was 30,027,576. The aggregate market
value of the voting and non-voting common equity held by non-affiliates of the
registrant on March 23, 2005, based on the average bid and ask price on the OTC
Bulletin Board as of such date, was approximately $13,512,409.

                       DOCUMENTS INCORPORATED BY REFERENCE

         None

Transitional Small Business Disclosure Format:   Yes    X       No
                                                      ------        -----
<PAGE>

                                TABLE OF CONTENTS

                                                                        Page No.

PART I

Forward Looking Statements                                                    1

Risk Factors                                                                  2

Item 1.  Description of Business                                              4

Item 2.  Description of Property                                             12

Item 3.  Directors, Executive Officers and Significant Employees             12

Item 4.  Remuneration of Directors and Officers                              13

Item 5.  Security Ownership of Management and Certain Shareholders           15

Item 6.  Interest of Management and Others in Certain Transactions           16

Item 7.  Description of Securities                                           17

PART II

Item 1.  Market Price of and Dividends on the Registrant's
          Common Equity and Other Shareholder Matters                        17

Item 2.  Legal Proceedings                                                   18

Item 3.  Changes in and Disagreements with Accountants                       18

Item 4.  Submission of Matters to a Vote of Security Holders                 19

Item 5.  Compliance with Section 16(a) of the Exchange Act/                  19
          Adoption of Code of Ethics

PART F/S

Report of Independent Registered Accounting Firm                            F-1

Consolidated Balance Sheet as of December 31, 2004                          F-2

Consolidated Statements of Operations for the Years Ended
     December 31, 2004 and December 31, 2003 and from Inception             F-3

Consolidated Statements of Comprehensive Loss for the Years
     Ended December 31, 2004 and December 31, 2003 and
     from Inception                                                         F-4

Consolidated Statements of Stockholders' Deficit for the
     Period from September 20, 1996 (Inception) to
     December 31, 2004                                               F-5 - F-10

Consolidated Statements of Cash Flows for the Years Ended
     December 31, 2004 and December 31, 2003
     and from Inception                                             F-11 - F-12

Notes                                                               F-13 - F-31

PART III

Index to Exhibits                                                            20

Signatures                                                                   22


<PAGE>

                                     PART I

     SBS Interactive, Co., referred to in this report as "we", "us" and "our",
elects to furnish the information required by Items 6-11 of Model B of Form 1-A
under Alternative 2 of Form 10-KSB.

                           FORWARD LOOKING STATEMENTS

     This Annual Report on Form 10-KSB contains "forward-looking statements".
These forward-looking statements are based on our current expectations,
assumptions, estimates and projections about our business and our industry.
Words such as "believe," "anticipate," "expect," "intend," "plan," "may," and
other similar expressions identify forward-looking statements. In addition, any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in the sections of this report titled
"Risk Factors" and "Description of Business", as well as the following:

     o    our lack of capital and whether or not we will be able to raise
          capital when we need it,

     o    whether or not we are able to successfully market our product,

     o    our overall ability to successfully compete in our market and our
          industry,

     o    whether or not we will continue to receive the services of our
          executive officer and director, Mr. Todd Gotlieb,

and other factors, some of which will be outside our control. You are cautioned
not to place undue reliance on these forward-looking statements, which relate
only to events as of the date on which the statements are made. We undertake no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof. You should refer to and
carefully review the information in future documents we file with the Securities
and Exchange Commission.



                                       1
<PAGE>


                                  RISK FACTORS

AN INVESTMENT IN OUR SECURITIES IS VERY SPECULATIVE AND INVOLVES A HIGH DEGREE
OF RISK.

WE ARE A DEVELOPMENT STAGE COMPANY AND HAVE HAD NO OPERATIONS TO DATE.

     We are a development stage company and, to date, we have had no operations.
As of the year ended December 31, 2004 we had a net loss (from inception) of
$19,509,390 and a working capital deficiency of approximately $910,000. Our
auditor, Stonefield Josephson, Inc., has issued a "going concern" report for our
consolidated financial statements at December 31 2004. In that report and in the
notes to the consolidated financial statements, the auditor noted that we have
generated no revenues and that our continued existence will be dependent on our
ability to resolve our lack of liquidity and obtain adequate financing to
fulfill our development activities. These factors raise substantial doubt about
our ability to continue as a going concern. Because we have no operating
history, you will have no basis upon which to accurately forecast our future
operations, including sales, or to judge our ability to develop our business.

THE SUCCESS OF OUR BUSINESS REQUIRES CONTINUED FUNDING.

     Since we have not yet generated revenues, our ability to continue in
existence and to develop our business depends upon our ability to obtain funding
for our operations. Since 2002, we have sustained our operations primarily with
loans from a single individual, Mr. Arthur Cohn. Neither Mr. Cohn, nor any other
person, is required or bound by any agreement with us to loan us money or to
invest in our securities. If Mr. Cohn refuses to loan us more money or to invest
in our securities when we need additional funds, and if we do not receive
adequate funding from other sources, it is unlikely that we could continue our
business.

WE ARE DEVELOPING AND MANUFACTURING ONLY ONE PRODUCT, THEREFORE, WE WILL NOT
HAVE THE ABILITY TO RELY UPON OTHER PRODUCT LINES IN THE EVENT OF OUR INABILITY
TO SUCCESSFULLY COMPETE IN THE MARKET.

     The only product we are presently developing is our interactive video
technology for use with television sets. We do not presently intend to engage in
developing other products. Accordingly, our success will depend entirely upon
the success of this single product. We will not have the benefit of reducing
risk through the diversification of products.

THE SUCCESS OF OUR BUSINESS REQUIRES ACCEPTANCE OF OUR PRODUCT IN THE
MARKETPLACE. IF A DEMAND FOR OUR PRODUCT DOES NOT DEVELOP, OUR BUSINESS WILL BE
UNSUCCESSFUL.

     Our interactive video technology for televisions is novel and unproven. Our
ability to grow and sustain our business depends upon the acceptance of our
product primarily by businesses. Without significant acceptance by businesses,
we will probably not be able to achieve and sustain profitable operations. At
this time it is impossible for us to predict the degree to which demand for our
product will evolve or whether any potential market will be large enough to
provide any meaningful revenue or profit for us.



                                       2
<PAGE>



WE ARE SUBJECT TO THE RISKS AND UNCERTAINTIES INHERENT IN DEVELOPING BUSINESSES.
OUR FAILURE TO PLAN OR FORECAST ACCURATELY COULD HAVE A MATERIAL ADVERSE IMPACT
ON OUR DEVELOPMENT.

     We are subject to the risks and uncertainties inherent in developing
businesses, including the following:

     o    Our projected capital needs may be inaccurate, and we may not have
          enough money to develop our product and bring it to market;

     o    We may experience unanticipated development or marketing expenses,
          which may make it more difficult to develop our product and bring it
          to market;

     o    Even if we are able to develop our product and bring it to market, we
          may not earn enough revenue from sales of our product to cover the
          costs of operating our business.

     If, because of our failure to plan or project accurately, we are
unsuccessful in our efforts to develop our product or if the product we develop
does not produce revenues as we project, we are not likely to ever become
profitable and we may be required to curtail some or all of our operations.

WE ARE DEPENDENT FOR OUR SUCCESS ON OUR PRESIDENT, MR. TODD GOTLIEB. THE LOSS OF
MR. GOTLIEB'S SERVICES WOULD HAVE AN ADVERSE EFFECT ON OUR OPERATIONS, AND ON
THE VALUE OF YOUR SECURITIES.

     Our future success will depend, to a significant degree, on the continued
services of our President, Mr. Todd Gotlieb. We do not have, and currently we do
not intend to acquire, key-man insurance on the life of Mr. Gotlieb. The loss of
Mr. Gotlieb's services would have a material adverse effect on our business and
operations.

WE ARE DEPENDENT ON PROPRIETARY TECHNOLOGY, WHICH WE MAY NOT BE ABLE TO
ADEQUATELY PROTECT. ADDITIONALLY, THIRD PARTIES MAY ALLEGE THAT WE INFRINGE ON
THEIR INTELLECTUAL PROPERTY. IF WE WERE TO BECOME INVOLVED IN LITIGATION, IT
WOULD BE COSTLY AND WOULD DIVERT MANAGEMENT'S ATTENTION FROM OUR BUSINESS
OPERATIONS.

     We hold U.S. Patent Number 6,072,933 which covers a system for producing
personalized video recordings. We rely on patent laws, nondisclosure agreements
and other contractual and technical measures to protect our proprietary rights
in this patent and other technology. However, we cannot assure you that these
measures will be adequate to protect our proprietary rights. In addition, the
laws of certain foreign countries do not protect intellectual property rights to
the same extent as the laws of the United States. Although we believe that our
intellectual property rights do not infringe upon the proprietary rights of
third parties, a competitor may claim that we have infringed on its products.
Any litigation relating to our intellectual property could result in substantial
expense to us and result in significantly diverting our technical and management
personnel from their routine activities.




                                       3
<PAGE>


PART I

ITEM 1.  DESCRIPTION OF THE BUSINESS
(Item 6 of Model B of Form 1A)

General

     SBS Interactive, Co. was formed on September 20, 1996 in Florida as
"Cosmetics Consultation Corporation". Our name was changed to "Lomillo
Consulting Corp." on November 25, 1996 and then to "Inet Commerce Conduit Corp."
on July 17, 1997. On July 30, 2002, we changed our name to "SBS Interactive,
Co." in anticipation of the completion of the business combination described
below. From September 1999 to July 2002, we conducted operations as a consultant
to Internet-related enterprises seeking capital.

     On July 16, 2002, we, SBS Interactive, Inc., a Nevada corporation (referred
to as "Interactive" in this discussion) and SBS Acquisition, Inc., our wholly
owned subsidiary, executed a Merger Agreement. On October 29, 2002 we completed
the merger by issuing 3,180,984 shares of our common stock to the stockholders
of Interactive in exchange for all of the Interactive issued and outstanding
stock. Interactive is a consumer electronics company focused on developing,
marketing and licensing products that enable consumers or businesses to use a
television as an interactive medium. When we talk about "we", "us" or "our" in
this report, we are speaking about SBS Interactive, Co. together with it's
wholly-owned subsidiary, Interactive.

     On May 30, 2002, prior to executing the Merger Agreement, Interactive
acquired U.S. Patent Number 6,072,933 covering our Side by Side(TM) interactive
video technology product by acquiring all of the issued and outstanding stock of
High Plateau Holdings, Inc. The patent was issued in June 2000. Side by Side(TM)
technology is based upon "blue screen" technology. Used primarily in the making
of movies and television programming, blue screen technology allows actors to
perform in front of a blue background screen, upon which background images are
superimposed at a later time by a chromakey processor. Side by Side(TM) uses its
patented reverse blue screen technology to playback, on the user's television
screen, pre-recorded programming into which the user's environment, as
photographed by the digital camera in the Side by Side(TM) set-top box, is
combined. In other words, the user and his surroundings will appear with the
pre-recorded programming along with the actors. The Side by Side(TM) set-top box
is easily connected between the user's DVD player and the TV monitor. For
optimal versatility, the set top unit - which can be modified to fit a number of
footprints - is also designed to facilitate easy recording of the combined
images (viewer and content) by simply connecting it to most VCR or DVD
recorders.

     Our Side by Side(TM) set top box incorporates the use of patented software
with a digital camera and a keyer unit developed under an exclusive agreement
with Ultimatte Corporation, a leader in "blue screen" technology. The prototype
unit was delivered to us in May 2004 and testing of the unit was completed on
June 11, 2004. During the 2004 fiscal year, Ultimatte Corporation submitted the
unit to the FCC and Underwriters' Laboratories, Inc. ("UL"). We have been
informed by Ultimatte Corporation that the unit received preliminary approval



                                       4
<PAGE>


from UL on August 10, 2004 and Class B approval from the FCC on July 19, 2004.
Once these approvals are obtained the set-top box can be marketed in the United
States and Canada.

     We believe that our Side by Side(TM) technology can be used not only for
entertainment purposes, but also as a teaching and training tool. For exercising
or athletics for example, the user can watch himself or herself stand next to
the instructor and follow the instructor's lead. This allows the user to compare
his or her activity to the instructor's and to immediately correct or modify the
activity, if necessary. Other potential uses by consumers for the Side by
Side(TM) interactive video technology includes children's programs, video
karaoke, performance training and enhancement (including musical instrument
training, acting workshops, singing and dancing training), theme parties and
adult entertainment. In the business and institutional markets the potential
uses for the product include product and procedural training and testing,
military and security training, language education, training and educating the
learning disabled, and public speaking training.

     The pre-recorded programming content is inexpensive to develop because
there is no need for costly sets or location shoots. For example, if a business
wants to create a program to instruct employees on how to correctly lift heavy
objects without sustaining injuries, we film an instructor doing the
demonstration in front of a blue screen. When the programming is played back at
the business location, the camera in the set-top box will capture the employee
and his surroundings, which will be projected onto the television screen along
with the instructor.

     We plan to license our technology to others in the electronic entertainment
and telecommunications industries such as the film and music industries, the
fitness, exercise and martial arts industries and the adult entertainment
industries. Once we establish a business market, we will consider marketing the
set-top boxes to consumers through existing retail outlets. In July 2004 we
entered into an agreement with ViBE Dance and Fitness Studios Inc. ("ViBE").
Pursuant to this agreement, we will produce videos for ViBE, which it will sell
to its customers along with our duo hardware. Under the agreement, ViBE will
receive 50% of the profit generated from its sales of our duo hardware and the
entire profit from the sale of the videos it produces, until it recovers the
video production costs. After recovery of these costs, we will receive $5 for
each video sold by ViBE. Alternatively, ViBE will receive $5 for each video
produced by SBS and sold by ViBE. We have also entered into agreements with Kick
Communications and Kontrolled Khaos pursuant to which they have agreed to engage
us to produce videos for them that they will sell, along with our duo hardware.
However, the definitive terms of these agreements have not yet been fully
negotiated. To date, these are the only distribution arrangements we have
entered into.

     During the 2004 fiscal year, we received an order for 1,000 set-top boxes
from Digital Broadcast Corporation. Digital Broadcast Corporation has also
ordered eight "duo specific" videos on DVD. Four of these videos have been
produced by us and the remaining four were produced by ViBE especially for use
with our product, pursuant to the agreement we signed in July 2004. The videos
include subjects such as dance instruction, golf instruction, pilates exercise
and children's entertainment. We are currently obtaining quotes for the
replication of these videos.




                                       5
<PAGE>


         In March 2005, tooling by our manufacturer in Shanghai, China for the
production of our product was completed. We expect to receive 25 pre-production
samples by April 31, 2005. If those units are acceptable, we will place our
first order for 2,000 set top boxes. We will ship 1,000 of these boxes to
Digital Broadcast Corporation to fulfill its order and the remaining 1,000 boxes
will make up our inventory for sale.

     During the past two fiscal years, we spent no money on research and
development or on customer-sponsored research activities relating to the
development of our technology.

     We have three full-time employees. We plan to add the services of a
production manufacturing coordinator who will be responsible for coordinating
the manufacture of our product overseas.

     In August 2002 we retained the services of Mr. Sam Ash who, in 2003 became
our Secretary and a director, to begin building our brand and planning our
marketing program. Mr. Ash receives $5,000 per month for these services. We have
also been working with consultants who are helping to generate interest in our
product. These individuals have backgrounds in the entertainment industry and in
education. Depending on the agreement we reach, we pay these consultants solely
with our securities or with our securities and cash.

     We do not manufacture or otherwise engage in activities that are hazardous
to the environment, therefore, federal, state and local provisions enacted or
adopted which regulate the discharge of materials into the environment are not
applicable to our business. We do not anticipate that we will be required to
spend any money on compliance with environmental laws during our current fiscal
year or in the future.

     Other than the requirement that the set-top box be approved by the FCC and
UL (or another organization responsible for setting business standards, such as
the Canadian Standards Association or CSA), we do not believe that we will be
subject to significant government regulation.

     Because we have not yet begun to market our product and earn revenues,
there are no characteristics that are special or distinctive to our operations
that might impact our financial performance with the exception of our
relationship with Ultimatte Corporation. This relationship is governed by the
Amended and Restated Design and Development Agreement that we entered into with
Ultimatte Corporation on June 15, 2003. Pursuant to this agreement, we agreed to
pay Ultimatte Corporation a development fee of $300,000 for the development and
fabrication of five keyer units. We also agreed to pay certain royalties to
Ultimatte Corporation upon UL (or CSA) approval and CE marking. The royalty
equals 7% of the gross revenue we recognize from the rental, lease, license or
sale of the units manufactured for us by Ultimatte Corporation and the content
used with the units plus 40% of the gross revenue we recognize related to
licensing to a third party the right to manufacture and to sell or use or rent
the units. We must pay a minimum royalty of $100,000 during the first quarter
following the UL (or CSA) approval and CE marking, $150,000 during the second
quarter, $250,000 during the third quarter, $250,000 during the fourth quarter
and the greater of $312,500 or 50% of the projected amount of royalties due
during the fifth quarter and each quarter thereafter. Royalties must be paid



                                       6
<PAGE>


within 30 days following the end of each quarter. If we fail to pay the
royalties as required, Ultimatte Corporation will have the right to use the
Side-by-Side(TM) technology for any purpose.

     Pursuant to our acquisition of High Plateau Holdings, Inc., we acquired
U.S. Patent Number 6,072,933 covering our Side by Side(TM) interactive video
technology product. While we have not registered our trade name or our logo with
either the United States Patent and Trademark Office or the Canadian
Intellectual Property Office, we believe that eventually our name recognition
will be important. Accordingly, we intend to aggressively defend our trade name
and logo. We hold no licenses, franchises, concessions or royalty agreements,
other than those discussed above.

Plan of Operation

     As a development stage company our capital requirements, particularly as
they relate to product development, have been and will continue to be
significant. Our future cash requirements and the adequacy of available funds
will depend on many factors, including the pace at which we are able to launch
our product, whether or not a market develops, and the pace at which the
technology involved in making our product changes.

     Since our inception, we have relied on loans, sales of our securities and
stock and options issued for services to sustain our operations. We will
continue to do this until we are able to support our operations through sales of
our product however, we cannot assure you that this will ever occur. We cannot
guarantee that financing will be available to support our operations and if we
fail to obtain other financing, either through an offering of our securities or
by obtaining additional loans, we may be unable to continue our operations.

     In February 2004 we reached an agreement with three of our creditors,
including Mr. Todd Gotlieb, our President, Challure Holdings, an entity
controlled by Mr. Barry Alter, a former director, and Mr. Arthur Cohn, our
largest stockholder, to pay approximately $974,435 of our debt with our common
stock. In conjunction with these agreements, we also agreed to issue to each
creditor a warrant to purchase our common stock at exercise prices of $0.85 and
$1.00 per share. These agreements were subsequently prepared and executed in
March 2004. When we are able to do so, we also pay consultants with our common
stock, to conserve our cash.

     Our largest stockholder, Mr. Arthur Cohn, has continued to loan us money,
as we need it.

     In July 2004, we executed the following agreements with, or in favor of,
Mr. Cohn. Pursuant to the First Amendment to Assignment and Agreement to Convert
Debt, we agreed to issue to Mr. Cohn an additional 7,313,333 shares of our
common stock to settle alleged claims Mr. Cohn asserted relating to his
agreement, in March 2004, to convert loans made by him to our securities. The
Master Loan Agreement governs the loans made to us by Mr. Cohn and the Pledge
and Security Agreement secures the repayment of those loans with our assets and
those of our subsidiaries. All of the promissory notes issued to Mr. Cohn are
convertible and include both demand and piggy back registration rights



                                       7
<PAGE>


as to the securities Mr. Cohn will receive upon conversion. The Master Loan
Agreement prevents us from issuing more than 350,000 shares of common stock
without first obtaining Mr. Cohn's consent. The Secured Convertible Promissory
Note in the amount of $100,000 that was issued in July 22, 2004 originally
allowed Mr. Cohn to covert the principal and interest of the loan into shares of
our common stock at the price of $0.50 per share. This promissory note was
amended on November 8 and November 9, 2004, however, to reset the conversion
price and to increase the number of shares of common stock that will be issued
upon the conversion. As amended, the promissory note is convertible into common
stock at a conversion price of $0.40 per share. Upon conversion, Mr. Cohn will
also receive a warrant to purchase 250,000 shares of our common stock at an
exercise price of $1.00 per share and a warrant to purchase 250,000 shares of
our common stock at an exercise price of $1.25 per share. The exercise prices of
the warrants are subject to adjustment under certain circumstances. The loan
bears interest at 6% per annum and is payable on demand. The conversion price of
this loan was reset again to $0.20. This reset will increase the number of
shares of common stock covered by the warrants from 250,000 shares to 500,000
shares.

     On July 26, 2004, we borrowed an additional $27,500 from Mr. Cohn. This
loan was paid from the proceeds of the private offering of units we undertook in
August 2004.

     On November 5, 2004, we issued a promissory note to Mr. Cohn in the amount
of $150,000. The loan bears interest at the rate of 6% and is due upon demand.
In the event of a default, the interest rate will increase to 15%. At his
election, Mr. Cohn may convert the principal amount of the loan, as well as all
accrued interest, into our common stock at the rate of $0.20 per share. Upon
conversion, Mr. Cohn will also receive a warrant to purchase 750,000 shares of
common stock at an exercise price of $1.00 per share and a warrant to purchase
750,000 shares of common stock at an exercise price of $1.25 per share. The
exercise prices of the warrants are subject to adjustment under certain
circumstances.

     In December 2004 Mr. Cohn made an additional loan to us in the amount of
$87,150. The loan bears interest at the rate of 6% and is due upon demand. In
the event of a default, the interest rate will increase to 15%. At his election,
Mr. Cohn may convert the principal amount of the loan, as well as all accrued
interest, into shares of our common stock at a conversion price of $0.20 per
share. Upon conversion, Mr. Cohn will receive a warrant to purchase 435,750
shares of our common stock at an exercise price of $1.00 per share, subject to
adjustment under certain circumstances.

     Mr. Cohn loaned us an additional $166,000 on March 31, 2005. This
promissory note is also convertible into shares of our common stock at a
conversion price of $0.20 per share. Upon conversion, Mr. Cohn will receive a
warrant to purchase 830,000 shares of common stock at an exercise price of $1.00
per share and a warrant to purchase 830,000 shares of common stock at an
exercise price of $1.25 per share. The exercise prices of the warrants are
subject to adjustment under certain circumstances.

     In August 2004 we completed an offering of units to accredited investors,
including an investor who was outside the United States. The units were
comprised of one share of our common stock and warrants to purchase two shares
of our common stock for each unit purchased. The unit price was originally $0.50



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<PAGE>


per unit. However, in accordance with the requirements of the unit purchase
agreement, the number of shares of common stock to be issued in exchange for the
unit purchase price was reset at the closing based upon a price of $0.40 per
share, and subsequently it was further reset based upon a price of $0.35 per
share. The warrant exercise prices are $1.00 and $1.25, respectively. We sold
1,000,000 units and raised $500,000 in the offering. The proceeds of the
offering were used primarily for operating expenses relating to the launch of
our product. As a result of the reset provision, we were obligated to issue an
additional 250,000 shares of common stock at the close of the offering, and we
are now required to issue an additional 178,571 shares of common stock to these
investors.

     On January 7, 2005 we sold 666,667 shares of our common stock to a single
accredited investor. We raised a total of $200,000 through this offering. In
March 2005, we sold 50,000 units to a single accredited investor. Each unit
consisted of one share of our common stock and a warrant to purchase two shares
of our common stock at a price of $1.00 and $1.25 per share. The per unit price
was $0.40.

     Even with the proceeds from these offerings, we will need to raise
additional funds soon to continue our operations. Pursuant to the terms of an
agreement we have with our largest security holder, Arthur Cohn, we may not
issue more than 350,000 shares of common stock without his consent. Mr. Cohn is
not required to give us his consent, nor is he required to loan us additional
funds. If we are unable to borrow money or to raise funds through the sale of
our securities, we will be required to severely curtail, or even cease, our
operations.

     On July 16, 2002, we, SBS Interactive, Inc., a Nevada corporation (referred
to as "Interactive" in this discussion) and SBS Acquisition, Inc., our wholly
owned subsidiary, executed a Merger Agreement. On October 29, 2002 we completed
the merger by issuing 3,180,984 shares of our common stock to the stockholders
of Interactive in exchange for all of the Interactive issued and outstanding
stock.

Change of Auditors and Subsequent Restatement of Financial Information

     On February 10, 2004, Barry I. Hechtman, P.A., our former auditor, resigned
from that position and on April 6, 2004, we engaged the firm of Stonefield
Josephson, Inc. as our new auditors. In conducting its review of our financial
statements, Stonefield Josephson, Inc. determined that our acquisition of
Interactive should have been accounted for in accordance with SEC Topic 5-G
rather than under FASB 141, since neither we nor Interactive constituted a
business in accordance with EITF 98-3. This resulted in a change to the
valuation of the shares issued for the acquisition of Interactive. The value of
the shares was reduced to reflect the value of Interactive's assets and
liabilities on the date of the transaction, which was a net liability assumed of
$310,757.

     We restated our 2003 financial statements to change the accounting for the
acquisition of Interactive, which required us to change the valuation of the
3,180,984 shares issued for the acquisition to the historical cost basis of
Interactive's assets and liabilities under GAAP. A change to the recognition of
a beneficial conversion feature was also recorded in accordance with EITF 98-5
and 00-27, and is being amortized over the lives of the notes rather than being
recognized in full at inception




                                       9
<PAGE>


     The effects of the restatements for the twelve months ended December 31,
2003 are as follows:

                                           As previously filed       As restated

Total Assets                                   $2,529,733             $   5,598
Stockholders Equity/(Deficit)                  $1,982,429             $(559,688)
Net income (loss)                              $  786,201             $ 530,390


Results of Operations

     Our development stage expenses for the year ended December 31, 2004 were
$12,747,528 as compared to $1,172,497 in development stage expenses for the year
ended December 31, 2003. During the year ended December 31, 2004, we granted
common stock and warrants to induce conversion of debt and settle claims valued
at $6,186,373 as compared to no such transactions during the year ended December
31, 2003. During the year ended December 31, 2004, we issued common stock and
warrants to employees and consultants in exchange for services rendered to us,
which accounted for $5,160,151 in expense as compared to a total of $810,000 in
non-cash compensation expenses for the year ended December 31, 2003. Other
operating expenses for the year ended December 31, 2004 included selling,
general and administrative expenses of $1,401,004. In comparison, for the year
ended December 31, 2003 we had $362,497 in selling, general and administrative
expenses. The increase in selling, general and administrative expenses for the
year ended December 31, 2004 resulted from the ramp-up of our business while the
increase in non-cash compensation resulted not only from ramping-up our
business, which meant retaining the services of individuals who could assist us
with the marketing of our product, but also from an increase in professional
fees that were incurred as a result of the securities offerings we engaged in as
well as the preparation or review of general business documents. We have adopted
two employee benefit plans that will permit us to pay employees, officers,
directors, consultants and agents with our common stock or options to purchase
common stock, so long as the services these individuals render to us do not
relate to capital raising transactions. With the consent of Mr. Arthur Cohn, we
will continue to pay compensation and debt with our securities whenever
possible, in order to conserve our cash for operations.

     Our loss from operations for the year ended December 31, 2004 was
$12,747,528 as compared to loss from operations of $1,172,497 for the year ended
December 31, 2003. As a result of the payment of debt with securities, we
incurred non-cash interest expense for the year ended December 31, 2004 of
$876,771 from the amortization of debt discount, as compared to non-cash
interest expense in the amount of $353,621 for the year ended December 31, 2003.
Interest expense for the year ended December 31, 2004 was $22,129 as compared to
interest expense of $26,339 for the year ended December 31, 2003. Interest
expense relates to a loan of $100,000 made to us by Maple Leaf Holdings that
accrues interest at the rate of 5% per annum and loans from Mr. Cohn that accrue
interest at the rate of 6% per annum.





                                       10
<PAGE>


     Because of the increase in expenses related to implementation of our
business plan, including the expenses we incurred by paying compensation and
loans with our securities, our net loss for the fiscal year ended December 31,
2004 was $13,646,428 as compared to a net loss of $1,552,457 for the fiscal year
ended December 31, 2003.

     In May 2004 we received the completed prototype of the Side-by-Side(TM)
set-top box and we began our marketing efforts. We have not yet earned any
revenues from the sales of our product. Even though we have received our first
purchase order for our product, we do not anticipate that sales of our product
will immediately provide us with the revenue we need to maintain our operations.
In order to maintain our operations, we will be required to either continue
borrowing money or to raise money through the sale of our securities. Pursuant
to the terms of an agreement we have with our largest security holder, Mr.
Arthur Cohn, we may not issue more than 350,000 shares of common stock without
his consent. Mr. Cohn is not required to give us his consent, nor is he required
to loan us additional funds. If we are unable to borrow money or to raise funds
through the sale of our securities, we will have to severely curtail, or even
cease, our operations.

     Net cash used in operating activities for the year ended December 31, 2004
was $1,118,055 as compared to $380,830 in net cash used in operating activities
for the year ended December 31, 2003.

     We used $76,418 to purchase property and equipment during the year ended
December 31, 2004, as compared to $1,183 used to purchase property and equipment
during the year ended December 31, 2003. This increase in investment in property
and equipment related to the ramp-up of our business.

     During the year ended December 31, 2004, $500,000 was provided to us from
net proceeds raised through the sale of units composed of common stock and
warrants and $743,012 was provided to us from security holder loans. During the
year ended December 31, 2003, we received $402,536 from security holder loans.

     As of the year ended December 31, 2004 we had a net loss of $13,646,428 and
a working capital deficiency of approximately $910,000. Our auditor, Stonefield
Josephson, Inc., has issued a "going concern" report on our consolidated
financial statements for the year ended December 31 2004. In that report and in
the notes to the consolidated financial statements, the auditor noted that we
have generated no revenues and that our continued existence will be dependent on
our ability to resolve our liquidity problems and to obtain adequate financing
to fulfill our development activities. These factors raise substantial doubt
about our ability to continue as a going concern.

Subsequent Events (Unaudited)

     During January 2005, we sold 666,667 shares of our common stock at $0.30
for a total of $200,000 in cash.




                                       11
<PAGE>


     During January, February and March 2005, we issued a total of 30,000 shares
of our common stock, with an aggregate value of $12,000, to an unrelated
consultant for services rendered.

     During February 2005, we issued 200,000 shares of our common stock, with an
aggregate fair value of $80,000, to our legal counsel in payment of accrued
legal fees.

     During March 2005, our Board of Directors approved the sale of 50,000
shares of common stock at a price per share of $0.40 per share to an accredited
investor.


ITEM 2.  DESCRIPTION OF PROPERTY
(Item 7 of Model B of Form 1A)

     We presently occupy approximately 1,500 square feet of office space located
at 4211 Yonge Street, Suite 235, Toronto, Ontario, Canada M2P 2A9. We moved into
these premises on March 5, 2004. The premises are occupied on a month-to-month
tenancy at a rental rate of approximately $2,500 per month. Prior to March 5,
2004 our offices were located at 200 Viceroy Road, Unit 5, Concord, Ontario,
Canada. We also occupied these premises on a month-to-month tenancy at a rental
rate of approximately $2,000 per month.


ITEM 3.  DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.
(Item 8 of Model B of Form 1A)

         The following table sets forth information regarding our directors and
executive officers.

    Name               Age           Position                Beginning of Term
    ----               ---           --------                -----------------

Todd E. Gotlieb        39       President, Principal         October 29, 2002
                                Accounting Officer and
                                Director

Sam Ash                43       Secretary and Director       September 30, 2003


     Todd E. Gotlieb graduated from the Osgoode Hall School of Law in 1989. He
was engaged in the private practice of law in Toronto, Ontario from 1992 through
early 1999. From early 1999 through July of 2002, he was employed as a Vice
President of Exclusive Auto Marketing in Toronto, Ontario. He has served as the
founder, President and a director of SBS Interactive, Inc. since its formation
in August 2000.

     Sam Ash was appointed to the Board of Directors and as Secretary of the
Company on September 30, 2003. Mr. Ash presently serves as a Vice President and
Creative Director for MSA, a New York City advertising and public relations
firm, where he has been employed since November 1987. He has developed
advertising, promotional and marketing strategies for numerous technology,
lifestyle and entertainment clients including Brother(TM), Verizon(TM), Viacom,
Croton Time, Best Buy, Home Box Office (HBO) (TM), CineMax, and Columbia
Broadcasting System (CBS) (TM). He has also developed point of sale promotional
programs for numerous liquor brands including J&B(TM) and Goldschlager(TM).
Additionally, he twice chaired symposiums at the COMDEX computer show regarding
"User Friendly" technology marketing. From June 1985 until November 1987 he was



                                       12
<PAGE>


employed as a Senior Writer at Griffin Bacal, Inc, an advertising and public
relations firm in New York City. The clients for which he worked in this
position included Hasbro(TM), Commodore Computer(TM), and Sharp Electronics.
From March 1984 to June 1985, he worked as a Senior Creative Group Writer for
Ziff Davis Publishing in New York City. Mr. Ash holds a Bachelor of Arts degree
in psychology that he received from Brooklyn College in 1981. He also attended
Emek Rabbinical College in New York. Mr. Ash resides in Wesley Hills, New York
with his wife and five sons.

     Neither of our directors or executive officers has

          o    filed, or has had filed against him, a petition under the
               Bankruptcy Act or any state insolvency law or has had a receiver,
               fiscal agent or similar officer appointed by a court for his
               business or property, or any partnership in which he was a
               general partner at or within two years before the time of such
               filing, or any corporation or business association of which he
               was an executive officer at or within two years before the time
               of such filing, or

          o    been convicted in a criminal proceeding.

     We have decided to increase the number of directors on our Board of
Directors from two members to three members. Furthermore, Sam Ash has indicated
that he intends to resign this position in the near future. We have extended
offers to two individuals to join our Board of Directors.


ITEM 4.   REMUNERATION OF DIRECTORS AND OFFICERS
(Item 9 of Model B to Form 1A)

     Information with respect to the only remuneration paid to any of our
officers and directors during the fiscal year ended December 31, 2004 is as
follows:

                            Capacity in Which
Name of Individual      Remuneration was Received         Aggregate Remuneration
------------------      -------------------------         ----------------------

Todd Gotlieb            President, Principal                    $120,000
                        Accounting Officer,
                        Director

Sam Ash(2)              Secretary, Director                     $60,000

-----------------
(1)  On February 9, 2004, our Board of Directors granted to Mr. Gotlieb
     3,000,000 shares of our common stock valued at $0.10 per share for past and
     future services as our President, Principal Accounting Officer and a
     director.
(2)  Mr. Ash was appointed to our Board of Directors in September 30, 2003. On
     February 9, 2004, our Board of Directors granted to Mr. Ash an option to
     purchase 500,000 shares of our common stock at $0.50 per share as
     compensation for his services as a director and officer.


     On January 26, 2004 our Board of Directors adopted the SBS Interactive, Co.
2004 Equity Incentive Plan and set aside 7,000,000 shares of our common stock
for awards to be made under the plan. The purpose of the plan is to attract,
compensate and motivate selected employees, officers, directors, consultants,



                                       13
<PAGE>


independent contractors and advisors by allowing them to share in our growth
through ownership of our securities. The plan will terminate ten years from the
date it was adopted. Section 21 of the plan allows our Board of Directors to
amend or modify the plan or to suspend or discontinue it at any time. However,
unless we receive the consent of the participant of an award, no such action may
adversely alter or impair any award granted prior to the amendment or
modification. The plan is currently administered by our Board of Directors,
although the Board may appoint a committee to administer the plan, in its
discretion. In administering the plan, the Board of Directors may construe and
interpret the plan, define terms, prescribe, amend and rescind rules related to
the plan, determine who receives awards, and decide the timing of grants, the
number of shares included in any grant, the exercise price, the duration of an
option and any vesting conditions. The Board of Directors, acting as the
administrator of the plan, may grant awards of options, award stock, or stock
bonuses.

     The exercise price of an option grant is determined by the plan
administrator, but in no circumstances may the exercise price be less than 85%
of the fair market value of the common stock on the date the option is granted.
However, if the option is an incentive option, that is, if it is intended to
meet the requirements of sections 421 through 424 of the Internal Revenue Code,
the purchase price that will be paid when the option is exercised and the stock
purchased will be the fair market value of the common stock as of the date of
the grant. Furthermore, in the case of an incentive option, if the participant
owns at least 10% of our common stock, then the purchase price that will be paid
when the option is exercised and the stock purchased must equal 110% of the fair
market value of the common stock as of the date of the grant.

     If a participant does not receive an incentive option, he or she will
receive a non-qualified option.

     Options may be subject to conditions, such as vesting and forfeiture.

     Award stock is an offer to sell to the participant shares of our common
stock that may be subject to restrictions. These restrictions may include
vesting conditions or conditions relating to the attainment of certain
performance goals.

     The price of the common stock is determined by the plan administrator,
however, the price can never be less than 85% of the fair market value of the
award stock on the grant date. If the participant owns at least 10% of our
common stock, then the purchase price that must be paid for the stock is 100% of
the fair market value of the common stock on the grant date.

     The plan administrator may also award shares of our common stock as a bonus
or reward for extraordinary services rendered by the participant or as
compensation for services rendered by the participant. These shares would be
issued to the participant without the payment of cash consideration to us by the
participant. A stock bonus may be subject to the fulfillment of vesting or other
conditions.

     In general, no participant of an award under the plan may assign or
transfer the award, except by Will or under the laws of descent and
distribution. During the lifetime of a participant, an award can be exercised
only by the participant.



                                       14
<PAGE>


     On March 23, 2005, we had remaining in the plan a total of 5,590,000
shares. On that date, the value of the shares was $0.45 per share for an
aggregate value of $2,515,500.


ITEM 5.  SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
(Item 10 to Model B of Form 1A)

     The following table sets forth information as of March 23, 2005 with
respect to the ownership of our common stock by our officers and directors, our
officers and directors as a group and any person owning 10% or more of our
common stock: We do not have authorized, nor have we issued, non-voting
securities.

                                                  Number of           Percentage
Name, Address(1) and Capacity                  Shares Owned(2)         of Class
-----------------------------                  ---------------        ----------

Todd Gotlieb, President, Principal                3,621,967             12.45%
Financial Officer and director

Sam Ash, director                                     0                     0

Arthur Cohn, 10% shareholder                     11,054,444             38.01%
Gellertstrasse 18, Basel V8,
Switzerland 4052

All Officers and Directors as a group             3,621,967             12.45%

-----------------

(1)  The address for Todd Gotlieb and Sam Ash is 4211 Yonge Street, Suite 235,
     Toronto, Ontario M2P 2A9, Canada.
(2)  Unless otherwise indicated, we believe that all persons named in the table
     have sole voting and investment power with respect to all shares of common
     stock beneficially owned by them. The table is based on 30,027,576 shares
     of common stock outstanding as of March 23, 2005.



                                       15
<PAGE>



     The following table provides information, as of March 23, 2005, regarding
options, warrants or rights to purchase securities held by each officer and
director and each shareholder who owns more than 10% of our securities.
<TABLE>
<CAPTION>

                    Title and Amount of
                   Securities Called for
                   by Options, Warrants                                            Date
Name of Holder         or Rights(1)               Exercise Price                of Exercise
--------------     ----------------------         --------------                ----------
<S>                     <C>                   <C>                               <C>
Todd Gotlieb              590,423             53,111/$0.85 per share;           Unexercised
                                              264,923/$1.00 per share

Sam Ash                   500,000             $0.50 per share                   Unexercised

Arthur Cohn             8,602,611             3,741,111/$1.00 per share;        Unexercised
                                              1,000,000/$0.85 per share;
                                              250,000/$0.40 per share;
                                              250,000/$1.00 per share;
                                              250,00/$1.25 per share;
                                              750,000/$0.20 per
                                              share/750,000/$1.00 per share;
                                              750,000/$1.25 per share;
                                              430,750/$0.20 per share;
                                              430,750/$1.00 per share

</TABLE>
(1)  All securities are convertible to common stock.


ITEM 6.  INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
(Item 11 to Model B of Form 1A)

     In the merger that was completed on October 29, 2002 in which we acquired
Interactive, Mr. Todd Gotlieb, our President, Principal Accounting Officer and
director, and Mr. Barry Alter, our former Vice President and director, received
shares of our common stock in exchange for the shares of Interactive held by
them on the same basis as other Interactive shareholders, namely one share of
our common stock for each 6.5 shares of Interactive common stock. As a result,
Mr. Gotlieb received 465,233 shares of our common stock and Mr. Alter received
465,847 shares of our common stock.

     Beginning in August 2001 and ending in May 2003, Mr. Gotlieb advanced funds
to us from time-to-time totaling $57,711. In February 2004, Mr. Gotlieb agreed
to accept 264,923 shares of our common stock and a warrant to purchase an
additional 318,034 shares of our common stock as full payment of the principle
of the loans. Mr. Gotlieb agreed to forego the payment of any interest accrued
on the loans.

     Beginning in August 2001 and ending in April 2003, Barry Alter, our former
Vice President and director, and Challure Holdings, Inc., an entity owned and
controlled by Mr. Alter, advanced funds to us from time-to-time totaling
$67,692. In February 2004, Mr. Alter and Challure Holdings, Inc. agreed to
accept 324,786 shares of our common stock and warrants to purchase an additional
389,898 shares of our common stock as full payment of the principle of the
loans. Mr. Alter and Challure Holdings, Inc. agreed to forego the payment of any
interest accrued on the loans.

     We pay our director, Mr. Sam Ash, $5,000 per month as a consultant in
marketing and brand communications.

     On January 1, 2004 we relocated our corporate headquarters to 4211 Yonge
Street, Toronto, Ontario. The space in which our corporate offices are currently
located was leased by PPSI, a corporation owned equally by our President, Todd
Gotlieb, and Mr. Michael Bronstine. On February 3, 2005 the lease was assigned
to us.


                                       16
<PAGE>


ITEM 7.  DESCRIPTION OF SECURITIES
(Item 12 of Model B of Form 1A)

     Our authorized capitalization consists of 50,000,000 shares of $.001 par
value common stock. As of March 23, 2005, there were 30,027,576 shares of common
stock outstanding. Under Florida law and our Articles of Incorporation, our
Board of Directors may issue additional shares of our common stock without
approval of our shareholders. Each holder of our common stock is entitled to one
vote for each share of stock held.

     The holders of our common stock do not have any preemptive rights to
acquire shares of our capital stock. In the event of a liquidation, assets then
legally available for distribution to the holders of common stock will be
distributed on a pro rata basis among the holders of our common stock in
proportion to their stock holdings.

     There is no right to cumulate votes for the election of directors. This
means that holders of more than 50% of the shares voting for the election of
directors can elect 100% of the directors if they choose to do so and the
holders of the remaining shares voting for the election of directors will not be
able to elect any person to the Board of Directors.

     Holders of common stock are entitled to dividends when, and if, declared by
the Board of Directors out of funds legally available therefore. We have not had
any earnings and we do not presently contemplate the payment of any cash
dividends in the foreseeable future.

     Our common stock does not have any mandatory redemptive provisions, sinking
fund provisions or conversion rights.


                                     PART II

ITEM 1.  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
         OTHER RELATED SHAREHOLDER MATTERS

     Our common stock is quoted on the OTCBB under the symbol "SBSS". Our common
stock trades sporadically.

     The table below sets forth the range of high and low prices of our common
stock for each quarter for the last two fiscal years as reported by Yahoo
Finance. The prices represent inter-dealer quotations, without adjustments for
retail mark-ups, markdowns or commissions and may not necessarily represent
actual transactions.

                             PERIOD                       HIGH          LOW
                             ------                       ----          ---

Fiscal Year Ended
December 31, 2004         First Quarter                   $1.55         $0.08
                          Second Quarter                  $1.23         $0.45
                          Third Quarter                   $0.70         $0.23
                          Fourth Quarter                  $0.65         $0.27

Fiscal Year Ended
December 31, 2003         First Quarter                   $4.60         $3.60
                          Second Quarter                  $5.00         $4.30
                          Third Quarter                   $4.75         $0.11
                          Fourth Quarter                  $0.15         $0.08


                                       17
<PAGE>


     As of March 23, 2005, we had 697 shareholders of record. This number does
not include holders of our common stock whose shares are registered in street
name with various brokerage and depository firms.

     We have never declared or paid cash dividends on our common stock, and our
present policy is not to pay cash dividends on our common stock. Any payment of
cash dividends in the future will be wholly dependent upon our earnings,
financial condition, capital requirements and other factors deemed relevant by
our board of directors. It is not likely that cash dividends will be paid in the
foreseeable future.

     The following table illustrates, as of December 31, 2004, information
relating to our equity compensation plans.
<TABLE>
<CAPTION>

                      EQUITY COMPENSATION PLAN INFORMATION

                                                                                        Number of securities
                                                                                       remaining available for
                                 Number of securities                                   future issuance under
                                  to be issued upon           Weighted average         the equity compensation
                                exercise of outstanding        exercise price             compensation plan
                                   options, warrants       of outstanding options,      (excluding securities
                                      and rights             warrants and rights       reflected in column (a))
Plan Category                             (a)                      (b)                         (c)
-------------                   -----------------------    -----------------------     ------------------------
<S>                                    <C>                      <C>                          <C>
Shareholder Approved                      N/A                      N/A                         N/A

Not Approved by
Shareholders/SBS Interactive
Co. 2004 Equity Incentive
Plan(1)                                 925,000                  $0.53                      4,665,000

Not Approved by
Shareholders/Non-Exclusive
Consulting Agreement with
Clearsite, Ltd.(2)
                                          N/A                      N/A                         N/A
</TABLE>
--------------
(1)  The SBS Interactive Co. 2004 Equity Incentive Plan allows us to grant
     awards of common stock or options to purchase common stock. During the 2004
     fiscal year, we made awards of 1,410,000 shares of common stock.

(2)  Clearsite, Ltd., a personal services corporation, received a grant of
     1,000,000 shares of common stock. The Consulting Agreement with Clearsite,
     Ltd. does not contemplate a grant of options to purchase common stock.


ITEM 2. LEGAL PROCEEDINGS

     Not applicable.


ITEM 3.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

     Barry I. Hechtman, P.A., the independent accountants who had been engaged
by us as the principal accountants to audit our consolidated financial
statements, resigned effective February 10, 2004. The report of Barry I.
Hechtman, P.A. on our financial statements as of and for the years ended
December 31, 2002 and December 31, 2001 did not contain an adverse opinion, or a
disclaimer of opinion, however, the report was modified as to our ability to
continue as a going concern. The report was not qualified or modified as to
audit scope or accounting principles. During our two most recent fiscal years
and the interim period from January 1, 2004 through the date of resignation, we
did not have any disagreements with Barry I. Hechtman, P.A. on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Barry I. Hechtman, P.A., would have caused it to make a reference to the subject
matter of the disagreements in connection with its reports.




                                       18
<PAGE>


     On March 15, 2004, we filed a Form 8-K indicating that as of March 11, 2004
we had engaged the firm of Ahearn, Jasco + Company, P.A. as our new auditors.
However, on March 16, 2004 Ahearn, Jasco + Company, P.A. indicated that it would
not be able to accept the appointment as our new auditors. During the period
from March 11, 2004 through March 16, 2004, Ahearn, Jasco + Company, P.A. did
not accept us as a client, rendered no services to us and did not issue a report
on our financial statements. During the period from March 11, 2004 through March
16, 2004, we did not have any disagreements with Ahearn, Jasco + Company, P.A.
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Ahearn, Jasco + Company, P.A., would have caused it to
make a reference to the subject matter of the disagreements in connection with
its reports.

     On April 6, 2004, we engaged the firm of Stonefield Josephson, Inc. as our
new auditors. The decision to retain the services of Stonefield Josephson, Inc.
was approved by our Board of Directors. Prior to engaging Stonefield Josephson,
Inc., we had not consulted Stonefield Josephson, Inc. regarding the application
of accounting principles to a specified transaction, completed or proposed, the
type of audit opinion that might be rendered on our financial statements or a
reportable event, nor did we consult with Stonefield Josephson, Inc. regarding
any disagreements with its prior auditor on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of the prior auditor,
would have caused it to make a reference to the subject matter of the
disagreements in connection with its reports.


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

     During the calendar quarter ending December 31, 2004 no matters were
submitted to a vote of securities holders through the solicitation of proxies or
otherwise.


ITEM 5.  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT/ADOPTION OF CODE OF
         ETHICS

     Section 16(a) of the Securities Exchange Act requires our directors,
executive officers and persons who own more than 10% of our common stock to file
reports of ownership and changes in ownership of our common stock with the
Securities and Exchange Commission. Directors, executive officers and persons
who own more than 10% of our common stock are required by Securities and
Exchange Commission regulations to furnish to us copies of all Section 16(a)
forms they file.

     To our knowledge, based solely upon review of the copies of such reports
received or written representations from the reporting persons, we believe that
during our 2004 fiscal year our directors, executive officers and persons who
owned more than 10% of our common stock complied with all Section 16(a) filing
requirements.

     On June 11, 2004 our Board of Directors adopted a Code of Ethics that is
applicable to all of our officers, directors and employees.












                                       19
<PAGE>


                                    PART F/S



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
SBS Interactive, Co.

We have audited the accompanying consolidated balance sheet of SBS Interactive,
Co. (the "Company"), as of December 31, 2004, and the related consolidated
statements of operations, comprehensive loss, stockholders' deficit and cash
flows for the two years then ended and for the period from September 20, 1996
(inception) to December 31, 2004. 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 auditing standards of the Public
Company Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of SBS
Interactive, Co. as of December 31, 2004, and the consolidated results of their
operations and their cash flows for the two years then ended, and for the period
from September 20, 1996 (inception) to December 31, 2004 in conformity with
accounting principles generally accepted in the United States of America.

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
from operations and has a working capital deficiency, deficit in stockholders'
equity, and has no source of revenue, which raise substantial doubt about the
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.


/s/ STONEFIELD JOSEPHSON, INC.

Santa Monica, California
April 13, 2005


                                      F-1
<PAGE>


                                 SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2004


                                     ASSETS



CURRENT ASSET
   Cash and cash equivalents                                       $     12,103

PROPERTY AND EQUIPMENT,
   NET OF ACCUMULATED DEPRECIATION                                       72,099
                                                                   ------------

           TOTAL ASSETS                                            $     84,202
                                                                   ============


                      LIABILITIES AND STOCKHOLDERS' DEFICIT


CURRENT LIABILITIES:
   Accounts payable and accrued expenses, including to
     related party of $27,000                                           485,529
   Notes payable, related party (Note 3)                                437,140
                                                                   ------------

                TOTAL CURRENT LIABILITIES                               922,669
                                                                   ------------


   STOCKHOLDERS' DEFICIT:
      Common stock, $0.001 par value;
          50,000,000 shares authorized;
          29,080,909 issued and outstanding                              29,082
      Additional paid-in capital                                     18,688,058
      Other comprehensive loss -
          Foreign currency translation adjustment                       (46,217)
      Deficit accumulated during the
         Development stage                                          (19,509,390)
                                                                   ------------

                TOTAL STOCKHOLDERS' DEFICIT                            (838,467)
                                                                   ------------


                TOTAL LIABILITIES AND
                    STOCKHOLDERS' DEFICIT                          $     84,202
                                                                   ============





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


                                       F-2
<PAGE>
<TABLE>
<CAPTION>


                                                    SBS INTERACTIVE, CO.
                                              (A DEVELOPMENT STAGE ENTERPRISE)
                                           CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                                         From
                                                                              For The               For The          September 20,
                                                                            Year Ended            Year Ended        1996 (Inception)
                                                                           December 31,          December 31,       to December 31,
                                                                               2004                   2003                2004
                                                                           -------------         -------------      ----------------
<S>                                                                        <C>                   <C>                   <C>
DEVELOPMENT STAGE EXPENSES
   Selling, general and administrative, including
     related party                                                         $  1,401,004          $    362,497        $  2,083,516
   Non-cash compensation                                                      5,160,151               810,000           9,945,151
   Debt restructing expense                                                   6,186,373                     0           6,186,373
                                                                           ------------          ------------        ------------

     TOTAL DEVELOPMENT
          STAGE EXPENSES                                                    (12,747,528)            1,172,497         (18,215,040)
                                                                           ------------          ------------        ------------

LOSS FROM OPERATIONS                                                        (12,747,528)           (1,172,497)        (18,215,040)

INTEREST INCOME                                                                       0                     0               2,239

INTEREST EXPENSE                                                                (22,129)              (26,339)            (50,689)

NON-CASH INTEREST EXPENSE
   FROM AMORTIZATION OF
   DEBT DISCOUNT                                                               (876,771)             (353,621)         (1,245,900)
                                                                           ------------          ------------        ------------

NET LOSS                                                                   $(13,646,428)         $ (1,552,457)       $(19,509,390)
                                                                           ============          ============        ============

NET LOSS PER COMMON SHARE
    Basic and diluted                                                      $       (.59)         $       (.15)
                                                                           ============          ============
WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING
    Basic and diluted                                                        23,047,111            10,481,975
                                                                           ============          ============


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

</TABLE>


                                                          F-3
<PAGE>
<TABLE>
<CAPTION>

                                               SBS INTERACTIVE, CO.
                                        (A DEVELOPMENT STAGE ENTERPRISE)
                                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)

                                                                                                From
                                             For The                   For The             September 20,
                                            Year Ended                Year Ended          1996 (Inception)
                                           December 31,              December 31,         to December 31,
                                               2004                      2003                   2004
                                          --------------            -------------         ---------------
<S>                                       <C>                       <C>                     <C>
NET LOSS                                  $(13,646,428)             $ (1,552,457)           $(19,509,390)

   FOREIGN CURRENCY
     TRANSLATION ADJUSTMENT                    (36,878)                   (9,339)                (46,217)
                                          ------------              ------------            ------------

   NET COMPREHENSIVE (LOSS)               $(13,683,306)             $ (1,561,796)           $(19,555,607)
                                          ============              ============            ============
































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

</TABLE>
                                                   F-4
<PAGE>
<TABLE>
<CAPTION>
                                          SBS INTERACTIVE CO.
                                     (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
                      FOR THE PERIOD FROM SEPTEMBER 20, 1996 (DATE OF INCEPTION)
                                         TO DECEMBER 31, 2004


                                              Common Stock                     Additional
                                      ------------------------------             Paid-In             Deferred
                                         Shares             Amount               Capital          Compensation
                                      ------------        ----------           -----------        ------------
<S>                                   <C>                  <C>                 <C>                 <C>
September 20, 1996 -
  common stock issued
  for cash                              500,000           $     500            $   9,500           $      0

October 1, 1996 to
  December 31, 1996 -
  common stock issued
  for cash                               17,200                  17                5,143                  0

Net (loss) for the period
  from September 20, 1996
  to December 31, 1996                         0                   0                   0                   0
                                      ----------           ---------           ---------           ---------
Balance, December 31, 1996               517,200                 517              14,643                   0

Net (loss) for the year
  ended December 31, 1997                      0                   0                   0                   0
                                      ----------           ---------           ---------           ---------

Balance, December 31, 1997               517,200                 517              14,643                   0
                                      ----------           ---------           ---------           ---------
Net (loss) for year ended
  December 31, 1998                            0                   0                   0                   0
                                      ----------           ---------           ---------           ---------
Balance, December 31, 1998               517,200                 517              14,643                   0

1998 - Common stock
  issued for cash                      6,000,000               6,000             294,000                   0

Net (loss) for the year
  ended December 31, 1999                      0                   0                   0                   0
                                      ----------           ---------           ---------           ---------
Balance, December 31, 1999             6,517,200               6,517             308,643                   0

Net (loss) for the year
  ended December 31, 2000                      0                   0                   0                   0
                                      ----------           ---------           ---------           ---------
Balance, December 31, 2000             6,517,200               6,517             308,643                   0

November 30, 2001, common
  stock issued for services              500,000                 500           3,874,500                  0

Net (loss) for the year
  ended December 31, 2001                      0                   0                   0                  0
                                      ----------           ---------           ---------           --------
Balance, December 31, 2001             7,017,200               7,017           4,183,143                  0

October 29, 2002 - common
  stock issued for business
  acquisition                          3,180,984               3,181            (313,938)                 0

Debt discount arising from
  beneficial conversion feature                0                   0              33,000                  0

Net (loss) for the year ended
  December 31, 2002                            0                   0                   0                  0
                                      ----------           ---------          ----------          ---------
Balance, December 31, 2002            10,198,184              10,198           3,902,205                  0


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

</TABLE>


                                                  F-5
<PAGE>

                               SBS INTERACTIVE CO.
                          (A DEVELOPMENT STAGE COMPANY)
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
           FOR THE PERIOD FROM SEPTEMBER 20, 1996 (DATE OF INCEPTION)
                         TO DECEMBER 31, 2004 (CONTINUED)



                                                      Deficit
                                   Accumulated      Accumulated
                                      Other         During The         Total
                                  Comprehensive     Development    Stockholders'
                                     (Loss)            Stage           Deficit
                                  --------------    -----------    -------------

September 20, 1996 -
  common stock issued for cash     $      0        $               $    10,000

October 1, 1996 to
  December 31, 1996 -
  common stock issued for cash            0                  0           5,160

Net (loss) for the period
  from September 20, 1996
  to December 31, 1996                    0                  0               0
                                   --------        -----------     -----------
Balance, December 31, 1996                0                  0          15,160


Net (loss) for the year
  ended December 31, 1997                 0            (15,160)        (15,160)
                                   --------        -----------     -----------
Balance, December 31, 1997                0            (15,160)              0

Net (loss) for year ended
  December 31, 1998                       0            (17,087)        (17,087)
                                   --------        -----------     -----------
Balance, December 31, 1998                0            (32,247)        (17,087)

1998 - Common stock
  issued for cash                         0                  0         300,000

Net (loss) for the year
  ended December 31, 1999                 0            (54,829)        (54,829)
                                   --------        -----------     -----------
Balance, December 31, 1999                0            (87,076)        228,084

Net (loss) for the year
  ended December 31, 2000                 0            (55,545)        (55,545)
                                   --------        -----------     -----------
Balance, December 31, 2000                0           (142,621)        172,539

November 30, 2001, common
  stock issued for services               0                  0       3,875,000

Net (loss) for the year
  ended December 31, 2001                 0         (3,941,567)     (3,941,567)
                                   --------        -----------     -----------
Balance, December 31, 2001                0         (4,084,188)        105,972

October 29, 2002 - common
  stock issued business
  acquisition                             0                  0        (310,757)
nt arising from
  beneficial conversion feature           0                  0          33,000

Net (loss) for the year ended
  December 31, 2002                       0           (226,317)       (226,317)
                                   --------        -----------     -----------
Balance, December 31, 2002                0         (4,310,505)       (398,102)


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


                                       F-6
<PAGE>
<TABLE>
<CAPTION>


                                         SBS INTERACTIVE CO.
                                    (A DEVELOPMENT STAGE COMPANY)
                          CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
                     FOR THE PERIOD FROM SEPTEMBER 20, 1996 (DATE OF INCEPTION)
                                  TO DECEMBER 31, 2004 (CONTINUED)


                                              Common Stock                     Additional
                                      ------------------------------             Paid-In             Deferred
                                         Shares             Amount               Capital          Compensation
                                      ------------        ----------           -----------        ------------
<S>                                   <C>                 <C>                 <C>                 <C>
July 1, 2003 - common
  stock issued for services              100,000          $      101          $  346,399          $        0

Debt discount arising from
  beneficial conversion feature                0                   0             465,750                   0

November 20, 2003 - common
  stock issued for services            1,000,000               1,000             109,000                   0

Stock discount expense                         0                   0             103,500                   0

Deferred compensation                          0                   0                   0            (100,000)

Foreign currency
  translation adjustment                       0                   0                   0                   0

Net (loss) for the year ended
  December 31, 2003                            0                   0                   0                   0
                                      ----------          ----------          ----------          ----------
Balance, December 31, 2003            11,298,184              11,299           4,926,854            (100,000)

February 9, 2004 - common
  stock issued conversion of
  accrued compensation                 3,000,000               3,000             297,000                   0

February 9, 2004 - warrants
  issued for services                          0                   0              72,000                   0

February 2004 - warrants
  issued to retire outstanding
  debt, net of fees                            0                   0           6,186,373                   0

February 2004 - common
  stock issued to retire debt          4,330,820               4,331             980,983                   0

February 12, 2004 -
  common stock issued for
  services                               500,000                 500             109,500                   0

February 9, 2004 - common
  stock issued for services              250,000                 250              24,750                   0

February 19, 2004 - common
  stock issued for services               50,000                  50              49,950                   0

March 19, 2004 - common
  stock issued for services              450,000                 450              49,550                   0

March 29, 2004 - common
  stock issued for services              230,000                 230             252,770                   0

April 1, 2004 - warrants
  issued for services                          0                   0              20,134                   0

May 1, 2004 - warrants
  issued for services                          0                   0              14,914                   0

 June 1, 2004 - warrants
  issued for services                          0                   0              11,142                   0

June 29, 2004 - warrants
  issued for services                          0                   0              11,706                   0


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

</TABLE>

                                                 F-7


<PAGE>


                               SBS INTERACTIVE CO.
                          (A DEVELOPMENT STAGE COMPANY)
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
           FOR THE PERIOD FROM SEPTEMBER 20, 1996 (DATE OF INCEPTION)
                         TO DECEMBER 31, 2004 (CONTINUED)



                                                      Deficit
                                   Accumulated      Accumulated
                                      Other         During The         Total
                                  Comprehensive     Development    Stockholders'
                                     (Loss)            Stage          Deficit
                                  --------------    -----------    -------------


July 1, 2003 - common
  stock issued for services        $         0      $         0    $   346,500

Debt discount arising from
  beneficial conversion feature              0                0        465,750

November 20, 2003 - common
  stock issued for services                  0                0        110,000

Stock discount expense                       0                0        103,500

Deferred compensation                        0                0       (100,000)

Foreign currency
  translation adjustment                (9,339)               0         (9,339)

Net (loss) for the year ended
  December 31, 2003                          0       (1,552,457)    (1,552,457)
                                   -----------      -----------    -----------
Balance, December 31, 2003              (9,339)      (5,862,962)    (1,034,148)

February 9, 2004 - common
  stock issued conversion for
  accreud compensation                       0                0        300,000

February 9, 2004 - warrants
  issued for services                        0                0         72,000

February 2004 - warrants
  issued to retire outstanding
  debt, net of fees                          0                0      6,186,373

February 2004 - common
  stock issued to retire debt                0                0        985,314

February 2004 - common
  stock issued to retire debt                0                0        125,403

February 12, 2004 -
  common stock issued for
  services                                   0                0        110,000

February 9, 2004 - common
  stock issued for services                  0                0         25,000

February 19, 2004 - common
  stock issued for services                  0                0         50,000

March 19, 2004 - common
  stock issued for services                  0                0         50,000

March 29, 2004 - common
  stock issued for services                  0                0        253,000

April 1, 2004 - warrants
  issued for services                        0                0         20,134

May 1, 2004 - warrants
  issued for services                        0                0         14,914

June 1, 2004 - warrants
  issued for services                        0                0         11,142

June 29, 2004 - warrants
  issued for services                        0                0         11,706

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


                                       F-8
<PAGE>
<TABLE>
<CAPTION>


                                         SBS INTERACTIVE CO.
                                    (A DEVELOPMENT STAGE COMPANY)
                          CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
                     FOR THE PERIOD FROM SEPTEMBER 20, 1996 (DATE OF INCEPTION)
                                  TO DECEMBER 31, 2004 (CONTINUED)


                                              Common Stock                     Additional
                                      ------------------------------             Paid-In             Deferred
                                         Shares             Amount               Capital          Compensation
                                      ------------        ----------           -----------        ------------
<S>                                   <C>                 <C>                 <C>                 <C>
July 1, 2004 and
  August 1, 2004 - warrants
  issued for services                           0          $         0         $     7,426        $         0

July 22, 2004 - common
  stock issued for settlement           7,313,333                7,313           4,384,345                  0

June 25, 2004 - common
  stock issued for services               200,000                  200             111,800                  0

August 6, 2004 - common
  stock issued for cash, net
  of registration right penalty         1,250,000                1,250             336,250                  0

August 19, 2004 - common
  stock issued as a reset to the
  August 6, 2004 common stock
  issued for cash                         178,572                  179              62,321                  0

October 7, 2004 - common
  stock issued for services                30,000                   30              11,970                  0

October 29, 2004 - options
  issued for services                           0                    0              19,170                  0

Debt discount arising from
  beneficial conversion
  feature                                       0                    0             747,150                  0

Deferred compensation                           0                    0                   0            100,000

Foreign currency translation
  adjustment                                    0                    0                   0                  0

Net (loss) for the year ended
   December 31, 2004                            0                    0                   0                  0
                                      -----------          -----------         -----------        -----------

Balance, December 31, 2004             29,080,909          $    29,082         $18,688,058        $         0
                                      ===========          ===========         ===========        ===========










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

</TABLE>

                                                 F-9
<PAGE>



                               SBS INTERACTIVE CO.
                          (A DEVELOPMENT STAGE COMPANY)
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
           FOR THE PERIOD FROM SEPTEMBER 20, 1996 (DATE OF INCEPTION)
                         TO DECEMBER 31, 2004 (CONTINUED)



                                                      Deficit
                                   Accumulated      Accumulated
                                      Other         During The         Total
                                  Comprehensive     Development    Stockholders'
                                     (Loss)            Stage           Deficit
                                  --------------    -----------    -------------

July 1, 2004 and
  August 1, 2004 - warrants
  issued for services             $          0     $          0    $      7,426

July 22, 2004 - common
  stock issued for services                  0                0       4,391,658

June 25, 2004 - common
  stock issued for services                  0                0         112,000

August 6, 2004 - common
  stock issued for cash, net
  of fees                                    0                0         337,500

ugust 19, 2004 - common
  stock issued as a reset to the
  August 6, 2004 common stock
  issued for cash                            0                0          62,500

October 7, 2004 - common
  stock issued for services                  0                0          12,000

October 29, 2004 - options
  issued for services                        0                0          19,170

Debt discount arising from
  beneficial conversion
  feature                                    0                0         747,150


Deferred compensation                        0                0         100,000

Foreign currency translation
  adjustment                           (36,878)               0         (36,878)

Net (loss) for the year ended
   December 31, 2004                         0      (13,646,428)    (13,646,428)
                                  ------------     ------------    ------------
Balance, December 31, 2004        $    (46,217)    $(19,509,390)   $   (838,467)
                                  ============     ============    ============









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


                                       F-10
<PAGE>
<TABLE>
<CAPTION>

                                             SBS INTERACTIVE, CO.
                                       (A DEVELOPMENT STAGE ENTERPRISE)
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                  For The              For The              September 20,
                                                                Year Ended           Year Ended           1996 (Inception)
                                                                December 31,         December 31,          to December 31,
                                                                   2004                 2003                     2004
                                                               ------------         --------------        -----------------
<S>                                                            <C>                   <C>                    <C>
OPERATING ACTIVITIES:
   Net loss                                                    $(13,646,428)         $ (1,552,457)          $(19,509,390)

   Adjustments to reconcile net loss
     to net cash (used) in operating
     activities:
       Depreciation and amortization                                  5,684                 8,816                 15,538
       Non-cash interest, beneficial
         conversion feature                                         876,771               353,621              1,245,900
       Issuance of equity instruments for
          debt extinguishment cost                                6,186,373                     0              6,186,373
       Issuance of equity instruments
           for services                                           5,160,151               810,000              9,804,517
   Changes in assets and liabilities:
       Deposits                                                       1,411                  (324)                     0

       Prepaid expenses                                                   0                     0                      0

       Accrued interest                                              21,571                26,017                 21,051

       Accounts payable                                             276,412               (35,842)               464,078
                                                               ------------          ------------           ------------
         NET CASH USED IN
          OPERATING ACTIVITIES                                   (1,118,055)             (380,830)            (1,771,933)
                                                               ------------          ------------           ------------
INVESTING ACTIVITIES:
   Cash from acquired subsidiaries                                        0                     0                  1,980
   Purchase of property and equipment                               (76,418)               (1,183)               (77,989)
                                                               ------------          ------------           ------------
         NET CASH (USED) BY
             INVESTING ACTIVITIES                                   (76,418)               (1,183)               (76,009)
                                                               ------------          ------------           ------------
FINANCING ACTIVITIES:
   Proceeds from issuance of common stock                           500,000                     0                715,160
   Proceeds from issuance of debt to related parties                      0                38,786                 39,840
   Proceeds from issuance of debt,
     shareholders, net of fees                                      743,012               363,750              1,178,762
   Payment on debt,
     shareholders, net of fees                                      (27,500)                    0                (27,500)
                                                               ------------          ------------           ------------
       NET CASH PROVIDED BY
          FINANCING ACTIVITIES                                    1,215,512               402,536              1,906,262
                                                               ------------          ------------           ------------

EFFECT OF EXCHANGE RATE CHANGES
  ON CASH AND CASH EQUIVALENTS                                      (36,878)                9,339                (46,217)
                                                               ------------          ------------           ------------

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

</TABLE>

                                                F-11
<PAGE>
<TABLE>
<CAPTION>


                                               SBS INTERACTIVE, CO.
                                   (A DEVELOPMENT STAGE ENTERPRISE) (CONTINUED)
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                  For The              For The              September 20,
                                                                Year Ended           Year Ended           1996 (Inception)
                                                                December 31,         December 31,          to December 31,
                                                                   2004                 2003                     2004
                                                               ------------         --------------        -----------------
<S>                                                            <C>                     <C>                   <C>
       NET INCREASE (DECREASE) IN
          CASH AND CASH EQUIVALENTS                             $(15,839)              $ 20,523              $ 12,103

CASH AND CASH EQUILAVENTS,
   Beginning of year                                              27,942                  7,419                     0
                                                                --------               --------              --------
CASH AND CASH EQUIVALENTS,
   End of year                                                  $ 12,103               $ 27,942              $ 12,103
                                                                 ========               ========              ========



                                                                   December 31,       December 31,
                                                                       2004               2003
                                                                   ------------       ------------

 SUPPLEMENTAL DISCLOSURE OF:
     Cash paid for interest                                         $    5,866            $ 322
     Cash paid for taxes                                            $        0            $   0

NON-CASH INVESTING AND FINANCING
   ACTIVITIES:
     Issuance of stock for accrued compensation                     $  300,000            $   0
     Conversion of debt to equity                                   $1,033,475            $   0













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

</TABLE>

                                                    F-12
<PAGE>

                              SBS INNTERACTIVE CO.
                        (A DEVELOPMENT STAGE ENTERPRISE0
                         NOTES TO FINANCIAL STATEMENTS

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Nature of Operations
         --------------------

          SBS Interactive, Co. (the "Company") was incorporated on September 20,
          1996 under the laws of the State of Florida as Cosmetics Consultants
          Corp. for the purpose of marketing sales and support services to
          retailers of cosmetic companies. In November of 1999, the Company
          changed its activities to acting as a consultant to internet related
          enterprises that were seeking capital. In July, 2002, the Company
          changed its activities to operating as a consumer electronics company
          focused on developing, marketing and licensing products that enabled
          the consumers to use their televisions as an interactive medium. The
          Company has been operating as a development stage enterprise since its
          inception and is devoting substantially all its efforts to the ongoing
          development of the Company.

          On November 25, 1996, Cosmetics Consultants Corp. changed its name to
          Lomillo Consultants Corp. On July 17, 1997, the Company amended and
          restated its articles of incorporation and changed its name to Inet
          Commerce Conduit Corp. On July 30, 2002, the Company amended and
          restated its articles of incorporation and changed its name to SBS
          Interactive, Co.

          SBS Interactive, Inc. ("SBS, Inc."), the Company's wholly owned
          subsidiary, was incorporated on August 3, 2000 under the laws of the
          State of Nevada. SBS, Inc.'s line of business is to design, develop
          and manufacture technology which captures a user's image and local
          background environment and composites that image side-by-side with a
          pre-recorded image. SBS, Inc. has been operating as a development
          stage enterprise since its inception and is devoting substantially all
          its efforts to the ongoing development of the SBS, Inc.

          In May 2002, SBS, Inc. acquired High Plateau Holdings, Inc. ("High
          Plateau"), as a wholly owned subsidiary. High Plateau was incorporated
          on April 3, 1974 under the laws of Canada and had been operating as a
          development stage enterprise since its inception, devoting
          substantially all its efforts to its ongoing development. High Plateau
          has had no significant transactions since inception other than the
          acquisition and development of its technology (United States Patent
          Number 6,072,933).

          Principles of Consolidation
          ---------------------------

          The consolidated financial statements include the accounts of the
          Company and its wholly owned subsidiaries, SBS Interactive, Inc. and
          High Plateau Holdings, Inc. All material intercompany accounts and
          transactions have been eliminated.



                                       F-13
<PAGE>


                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 1    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          Cash and Cash Equivalents
          -------------------------

          The Company considers all highly liquid investments with a maturity of
          three equivalent months or less when purchased to be cash equivalents.

          Fair Value of Financial Instruments
          -----------------------------------

          For certain of the Company's financial instruments, including cash and
          cash equivalents and accounts payable, the carrying amounts
          approximate fair value due to their short maturities. The amounts
          shown for notes payable also approximate fair value because current
          interest rates and terms offered to the Company for similar debt are
          substantially the same.

          Use of Estimates
          ----------------

          The preparation of consolidated 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 consolidated
          financial statements and the reported amounts of revenues and expenses
          during the reporting period. Current estimates include but are not
          limited to the value of warrants and options issued for services and
          depreciation expense. Actual results could differ from those
          estimates.

          Property and Equipment
          ----------------------

          Property and equipment is stated at cost and maintenance and repairs,
          as incurred, are charged to operations. Property and equipment
          consists principally of office equipment. Depreciation and
          amortization is computed using the straight-line method based on the
          estimated useful lives of the related assets of 3 years.


          Foreign Currency Translation
          ----------------------------

          The financial statements of SBS, Inc. are measured using the Canadian
          dollar as the functional currency. Assets, liabilities and equity
          accounts of SBS, Inc. are translated at exchange rates as of the
          balance sheet date. Revenues and expenses are translated at average
          rates of exchange in effect during the year. The resulting cumulative
          translation adjustments have been recorded as a separate component of
          stockholders' deficit. The financial statements are presented in
          United States of America dollars.




                                       F-14
<PAGE>


                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 1    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          Advertising
          -----------

          The Company conducts advertising for the promotion of its products.
          Advertising costs are charged to operations when incurred; such
          amounts aggregated $37,874 in 2004 and $118 in 2003.

          Income Taxes
          ------------

          Provisions for income taxes are based on taxes payable or refundable
          for the current year and deferred taxes on temporary differences
          between the amount of taxable income and pretax financial income and
          between the tax bases of assets and liabilities and their reported
          amounts in the financial statements. Deferred tax assets and
          liabilities are included in the financial statements at currently
          enacted income tax rates applicable to the period in which the
          deferred tax assets and liabilities are expected to be realized or
          settled as prescribed in FASB Statement No. 109, "Accounting for
          Income Taxes". As changes in tax laws or rates are enacted, deferred
          tax assets and liabilities are adjusted through the provision for
          income taxes.

          Loss Per Share
          --------------

          Basic and diluted net loss per share has been computed by dividing net
          loss by the weighted average number of common shares outstanding
          during the fiscal year. At December 31, 2004, the Company had stock
          warrants outstanding that could potentially be exercised into
          8,306,185 additional common shares and stock options outstanding that
          could potentially be exercised into 925,000 additional shares. The
          Company additionally had debentures outstanding at December 31, 2004
          that could potentially be converted into 2,930,750 additional shares.
          Such potentially issuable shares are excluded from the computation of
          net loss per share since the effect would be anti-dilutive. Should the
          Company report net income in a future period, diluted net income per
          share will be separately disclosed giving effect to the potential
          dilution that could occur if the then outstanding stock warrants,
          options and debentures were exercised and converted into common
          shares.

          Stock Based Compensation
          ------------------------

          The Company accounts for its stock option plans using the fair value
          based method of accounting, under which, compensation expense has been
          recognized for stock option awards granted. For purposes of pro forma
          disclosures under FAS 123, Accounting for Stock-Based Compensation, as
          amended by FAS 148, Accounting for Stock-Based Compensation -
          Transition and Disclosure, the estimated fair value of the stock
          options is amortized to compensation expense over the options' vesting
          period. No pro forma disclosures have been made since the fair value
          based method has been applied to all outstanding and unvested awards
          in each period.


                                       F-15
<PAGE>


                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 1    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          Stock Based Compensation
          ------------------------

          The Company estimates the aggregate fair value of all stock option
          issued to employee's at the grant date to be $72,000, for 750,000
          options at $0.50 for five years, (the Company expensed the full fair
          value on date of grant) by using the Black-Scholes option pricing
          model based on the following assumptions:

                                               December 31,    December 31,
                                                   2004            2003
                                               ------------    ------------

               Risk free interest rate            4.1 %             0%
               Expected life                      5 years           0
               Expected volatility                235 %             0%
               Dividend yield                     0.0               0


          The Black-Scholes option-pricing model was developed for use in
          estimating the fair value of traded options which have no vesting
          restrictions and are fully transferable. In addition, option valuation
          models require the input of highly subjective assumptions including
          the expected stock price volatility. Because the Company's stock
          options and warrants have characteristics different from those of
          traded options, and because changes in the subjective input
          assumptions can materially affect the fair value estimate, in
          management's opinion, the existing models do not necessarily provide a
          reliable single measure of the fair value of such stock options.

          Recent Accounting Pronouncements
          --------------------------------

          In January 2003, the Financial Accounting Standards Board ("FASB")
          issued Interpretation No. 46, "Consolidation of Variable Interest
          Entities, an Interpretation of Accounting Research Bulletin No. 51"
          (the "Interpretation"). The Interpretation requires the consolidation
          of variable interest entities in which an enterprise absorbs a
          majority of the entity's expected losses, receives a majority of the
          entity's expected residual returns, or both, as a result of ownership,
          contractual or other financial interests in the entity. Currently,
          entities are generally consolidated by an enterprise that has a
          controlling financial interest through ownership of a majority voting
          interest in the entity. The Interpretation is generally effective for
          any variable interest entities created after January 31, 2003, with
          transition rules for those created prior to February 1, 2003. The
          Interpretation's adoption did not have any impact on the Company's
          consolidated financial position or results of operations.

          In April 2003, the FASB issued Statement No. 149, "Amendment of
          Statement 133 on Derivative Instruments and Hedging Activities." SFAS
          No. 149 amends SFAS No. 133 to provide clarification on the financial
          accounting and reporting of derivative instruments and hedging
          activities and requires that contracts with similar characteristics be
          accounted for on a comparable basis. The standard is effective for
          contracts entered into or modified after June 30, 2004. The Company's
          adoption of SFAS No. 149 did not have any impact on its consolidated
          financial position or results of operations.




                                       F-16
<PAGE>

                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 1    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          Recent Accounting Pronouncements (Continued)
          --------------------------------------------

          In May 2003, the FASB issued Statement No. 150, "Accounting for
          Certain Instruments with Characteristics of Both Liabilities and
          Equity." SFAS No. 150 establishes how an issuer classifies and
          measures certain freestanding financial instruments with
          characteristics of liabilities and equity and requires that such
          instruments be classified as liabilities. The standard is effective
          for financial instruments entered into or modified after May 31, 2003.
          The Company's adoption of SFAS No. 150 did not have any impact on its
          consolidated financial position or results of operations.

          In December 2003, the FASB issued Summary of Statement No. 132
          (revised 2003), "Employer's Disclosures about Pensions and Other Post
          Retirement Benefits - an amendment to FASB Statements No. 87, 88, and
          106." This statement revises employers' disclosures about pension
          plans and other postretirement benefit plans. However, it does not
          change the measurement or recognition of those plans as required by
          FASB Statements No. 87, "Employers' Accounting for Pensions", No. 88,
          "Employers' Accounting for Settlements and Curtailments of Defined
          Benefit Pension Plans and for Termination Benefits", and No. 106,
          "Employers' Accounting for Postretirement Benefits Other Than
          Pensions." This statement requires additional disclosures to those in
          the original Statement 132 about the assets, obligations, cash flows,
          and net periodic benefit cost. This statement also calls for certain
          information to be disclosed in financial statements for interim
          period. The disclosures required by this statement are effective for
          year ending after December 15, 2003. The Company does not expect the
          adoption of this pronouncement to have a material impact on its
          consolidated financial position or results of operations.

          In December 2003, the Securities and Exchange Commission (the "SEC")
          issued Staff Accounting Bulletin ("SAB") No. 104, "Revenue
          Recognition." SAB 104 supersedes SAB 101, "Revenue Recognition in
          Financial Statements." SAB No. 104, which was effective upon issuance,
          rescinded certain guidance contained in SAB No. 101 related to
          multiple element revenue arrangements, and replaced such guidance with
          that contained in EITF 00-21, "Accounting for Revenue Arrangements
          with Multiple Deliverables." Additionally, SAB No. 104 rescinded the
          SEC's Revenue Recognition in Financial Statements Frequently Asked
          Questions and Answers issued with SAB No. 101. The revenue recognition
          principles of SAB No. 101 remain largely unchanged by the issuance of
          SAB No. 104, and therefore the adoption of SAB No. 104 did not have a
          material effect on the Company's consolidated results of operations or
          financial condition.



                                       F-17
<PAGE>

                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          Recent Accounting Pronouncements (Continued)
          --------------------------------------------

          In January 2004, the FASB issued FASB Staff Position No. FAS 106-1
          ("FSP 106-1"), "Accounting and Disclosure Requirements Related to the
          Medicare Prescription Drug, Improvement and Modernation Act of 2003,"
          (the "Act"). FSP 106-1 addresses the accounting impact of the Act,
          which was signed into law on December 8, 2003. Among other features,
          the Act introduces a prescription drug benefit under Medicare Part D
          and a federal subsidy to sponsors of retiree health care plans that
          provide a benefit that is at least actuarially equivalent to Medicare
          Part D. Companies sponsoring affected postretirement benefit plans may
          elect to defer recognition of the impact of the Act until (1) final
          FASB guidance on accounting for the federal subsidy provision of the
          Act is issued, or (2) a significant event calling for remeasurement of
          a plan's assets and obligations occurs. FSP 106-1 is effective for
          interim or annual financial statements of years ending after December
          7, 2003. The adoption of this accounting interpretation is not
          expected to have a material impact on the Company's consolidated
          financial position or results of operations.

          In March 2004, the Financial Accounting Standards Board (FASB)
          approved the consensus reached on the Emerging Issues Task Force
          (EITF) Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment
          and Its Application to Certain Investments." The objective of this
          Issue is to provide guidance for identifying impaired investments.
          EITF 03-1 also provides new disclosure requirements for investments
          that are deemed to be temporarily impaired. The accounting provisions
          of EITF 03-1 are effective for all reporting periods beginning after
          June 15, 2004, while the disclosure requirements for certain
          investments are effective for annual periods ending after December 15,
          2003, and for other investments such disclosure requirements are
          effective for annual periods ending after June 15, 2004. The adoption
          of this accounting interpretation is not expected to have a material
          impact on the Company's consolidated fiancial position or results of
          operations.

          In November 2004, the FASB issued SFAS No. 151, "Inventory Costs-An
          Amendment of ARB. No. 43, Chapter 4". This Statement amends the
          guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the
          accounting for abnormal amounts of idle facility expense, freight,
          handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43,
          Chapter 4, previously stated that"... under some circumstances, items
          such as idle facility expense, excessive spoilage, double freight, and
          rehandling costs may be so abnormal as to require treatment as current
          period charges..." This Statement requires that those items be
          recognized as current-period charges regardless of whether they meet
          the criterion of "so normal." In addition, this Statement requires
          that allocation of fixed production overheads to the costs of
          conversion be based on the normal capacity of the production
          facilities. The adoption of this accounting interpretation is not
          expected to have a material impact on the Company's consolidated
          fiancial position or results of operations.

          In December 2004, the FASB issued SFAS No. 152, "Accounting for Real
          Estate Time-Sharing Transactions - an amendment of FASB statements No.
          66 and 67". This Statement amends FASB Statement No. 66, Accounting
          for Sales of Real Estate, to reference the financial accounting and
          reporting guidance for real estate time-sharing transactions that is
          provided in AICPA Statement of Position (SOP) 04-2, Accounting for
          Real Estate Time-Sharing Transactions. This Statement also amends FASB
          Statement No. 67, Accounting for Costs and Initial Rental Operations
          of Real Estate Projects, to state that the guidance for (a) incidental
          operations and (b) costs incurred to sell real estate projects does
          not apply to real estate time-sharing transactions. The accounting for
          those operations and costs is subject to the guidance in SOP 04-2. The
          adoption of this accounting interpretation is not expected to have a
          material impact on the Company's consolidated fiancial position or
          results of operations.



                                       F-18
<PAGE>

                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


 NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          Recent Accounting Pronouncements (Continued)
          --------------------------------------------

          In December 2004, the FASB issued SFAS No. 153, "Exchanges of
          Nonmonetary assets - an amendment of APB Opinion No. 29". This
          Statement amends APB Opinion 29 to eliminate the exception for
          nonmonetary exchanges of similar productive assets and replaces it
          with a general exception for exchanges of nonmonetary assets that do
          not have commercial substance. A nonmonetary exchange has commercial
          substance if the future cash flows of the entity are expected to
          change significantly as a result of the exchange. The adoption of this
          accounting interpretation is not expected to have a material impact on
          the Company's consolidated fiancial position or results of operations.


          In December 2004, the FASB issued SFAS No. 123R, "Share Based
          Payment". This Statement is a revision of FASB Statement No. 123,
          Accounting for Stock-Based Compensation. This Statement supersedes APB
          Opinion No. 25, Accounting For Stock Issued to Employees, and its
          related implementation guidance. This Statement 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. This Statement focuses primarily on accounting for
          transactions in which an entity obtains employee services in
          share-based payment transactions. This Statement does not change the
          accounting guidance for share-based payment transactions with parties
          other than employees provided in Statement 123 as originally issued
          and EITF Issue No. 96-18, "Accounting for Equity Instruments That Are
          Issued to Other Than Employees for Acquiring, or in Conjunction with
          Selling, Goods or Services." This Statement does not address the
          accounting for employee share ownership plans, which are subject to
          AICPA Statement of Position 93-6, Employers' Accounting for Employee
          Stock Ownership Plans. The Company is still assessing the impact of
          this new standard and will implement it, as required, on January 1,
          2006.

          In December 2004 the Financial Accounting Standards Board issued two
          FASB Staff Positions--FSP FAS 109-1, Application of FASB Statement 109
          "Accounting for Income Taxes" to the Tax Deduction of Qualified
          Production Activities Provided by the American Jobs Creation Act of
          2004, and FSP FAS 109-2 Accounting and Disclosure Guidance for the
          Foreign Earnings Repatriation Provision within the American Jobs
          Creation Act of 2004. Neither of these affected the Company as it does
          not participate in the related activities.




                                      F-19
<PAGE>




                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 1    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          Going Concern
          -------------

          The accompanying consolidated financial statements were prepared
          assuming that the Company will continue as a going concern. This basis
          of accounting contemplates the realization of its assets and the
          satisfaction of its liabilities in the normal course of operations.
          Since inception, the Company has incurred losses of approximately $20
          million and, at December 31, 2004, has a working capital deficit of
          approximately $910,000. The Company presently has no established
          source of revenue. All of these factors raise substantial doubt about
          the Company's ability to continue as a going concern.

          The Company's continued existence is dependent upon its ability to
          resolve its liquidity problems, principally by obtaining additional
          debt financing and equity capital. Management plans to raise
          additional capital through private equity financing by selling shares
          of the Company's common stock or through debt financing. Management
          believes that the Company will need approximately $1 million to
          provide it with the ability to continue in existence for the next
          twelve months.

          There are no assurances that the Company will be successful in
          achieving the above plans, or that such plans, if consummated, will
          enable the Company to obtain profitable operations or continue as a
          going concern. The consolidated financial statements do not include
          any adjustments to reflect the possible future effects on the
          recoverability and classification of assets or the amounts and
          classification of liabilities that may result from the possible
          inability of the Company to continue as a going concern.

NOTE 2    PROPERTY AND EQUIPMENT

          Property and equipment consist of the following:

                                                         Estimated
                                                           Useful   December 31,
                                                            Life        2004
                                                         ---------  -----------

          Office equipment                                3 years     $ 24,236
          Tooling and molds -
            not placed in service yet                                   63,401
                                                                      --------
                                                                        87,637
          Less accumulated depreciation                                 15,538
                                                                      --------

                                                                      $ 72,099
                                                                      ========





                                      F-20
<PAGE>


                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 3    NOTES PAYABLE, RELATED PARTIES

          The notes payable consist of the following:

          Note payable to stockholder, due on
          demand, bearing interest at 5% per
          annum, unsecured.                                      $100,000

          Notes payable to stockholder, due on
          demand, bearing interest at 6% per
          annum, unsecured.                                       337,140
                                                                 --------
                                                                 $437,140
                                                                 ========


          In January 2004, the notes payable to Arthur Cohn were consolidated
          and extended with a stated interest rate of 6% per annum and a due
          date of April 30, 2004. This note allowed the Company to borrow up to
          $841,750, of which, $431,750 was already borrowed at December 31, 2003
          (an additional $410,000 was borrowed during 2004), was secured by the
          Company's assets and was convertible immediately at the holder's
          discretion into shares of the Company's common stock equal to the
          lesser of $.04 per share or 60% of the average closing prices for the
          5 trading days immediately prior to the applicable conversion date. In
          accordance with EITF 98-5 and 00-27, the note contained a beneficial
          conversion feature (BCF). The original borrowing in 2003 of $431,750
          had a BCF calculated at $201,113, of which, $71,492 had been amortized
          prior to December 31, 2003 and recognized as non-cash interest expense
          from amortization of debt discount. The residual of the original BCF
          of $129,621 was amortized in 2004. The new debt had an additional BCF
          calculated at an estimated fair value of $410,000 (limited to the face
          amount of the new debt acquired) and was fully amortized upon
          conversion in the year ended December 31, 2004.

          In connection with these financings, the Company recorded an aggregate
          charge to non-cash interest, including amortization of debt discount,
          in the amount of $539,621 and $71,492 (restated) during the years
          ended December 31, 2004 and 2003, respectively.

          On March 17, 2004, Arthur Cohn exercised his conversion rights under
          the promissory note to convert $908,072 of principal and interest at
          $0.24 per share. As an inducement to Mr. Cohn to increase the
          conversion rate from $0.04 to $0.24, the Company issued two warrants
          to purchase 1) 3,741,111 shares of the Company's common stock at $1.00




                                      F-21
<PAGE>

                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 3    NOTES PAYABLE, RELATED PARTIES (CONTINUED)


          per share and 2) 1,000,000 shares of the Company's common stock at
          $0.85 share. Both warrants expire on March 18, 2007 and are fully
          vested at date of grant. The Company recorded the issuance of these
          warrants valued at $5,382,648, which was included in Debt
          Restructuring Costs, using the Black-Scholes Option pricing model with
          the following assumptions: life of 3 years, volatility of 216% and a
          risk free interest rate of 4.0%. As part of the debt restructuring,
          the Company incurred Legal fees of $48,161, which were offset in
          equity against the value of the shares issued. On July 11, 2004, Mr.
          Cohn became aware of other parties who converted their debt on the
          same day as him, which was not disclosed to him. As a settlement for
          the nondisclosure, the Company issued another 7,313,333 shares to
          settle this claim made by Mr. Cohn.

          An expense of $4,391,658, which was the fair market value of the
          shares given the closing stock price of the Company's common stock as
          noted on the OTCBB, was recorded as non-cash compensation expense for
          the year ended December 31, 2004. The issuance of these shares gave
          the shareholder a controlling interest (49.8%) in the Company.

          In July 2004, the Company issued a $100,000 convertible note to Arthur
          Cohn for cash, convertible at $0.50 into one share of the Company's
          common stock and two warrants to purchase the Company's common stock
          1) at a $1.00 per share at any time and 2) at $1.25 per share for
          following three years. As a provision to the note, the conversion
          price resets upon 1) issuance of the Company's common stock at terms
          more favorable to this note and 2) other anti-dilution events. The
          note has a stated interest rate of 6% per annum and is due upon
          demand. In accordance with EITF 98-5 and 00-27, the note contained a
          beneficial conversion feature which was initially calculated at an
          estimated fair value of $84,226 and the warrants upon conversion would
          have a value of $15,774, which would be recognized upon conversion.
          Under the reset provision, there were multiple occurrences of equity
          and debt instruments issued at more favorable terms. As of December
          31, 2004, the conversion price was $0.20 per unit. Upon this reset,
          the beneficial conversion feature was capped at the face value of the
          note. Given that the note is due upon demand, the Company has recorded
          during the year ended December 31, 2004 a $100,000 debt discount
          arising from the beneficial conversion feature on this note.

          In November 2004, the Company issued a $150,000 convertible note to
          Arthur Cohn for cash, convertible at $0.20 into one share of the
          Company's common stock and two warrants to purchase the Company's
          common stock 1) at a $1.00 per share and 2) at $1.25 per share for
          three years. As a provision to the note the conversion price resets
          upon 1) issuance of the Company's common stock at terms more favorable
          to this note and 2) other anti-dilution events. The note has a stated
          interest rate of 6% per annum and due upon demand. In accordance with
          EITF 98-5 and 00-27, the note contained a beneficial conversion
          feature which was initially calculated at an estimated fair value of
          $150,000 and the warrants upon conversion would have no allocated
          value to be recognized upon conversion. Given that the note is due
          upon demand, the Company has recorded a the $150,000 debt discount
          arising from the beneficial conversion feature on this note during the
          year ended December 31, 2004.





                                       F-22
<PAGE>

                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE 3    NOTES PAYABLE, RELATED PARTIES (CONTINUED)

          In December 2004, the Company issued a $87,150 convertible note to
          Arthur Cohn for cash, convertible at $0.20 into one share of the
          Company's common stock and a warrant to purchase the Company's common
          stock at a $1.00 per share for three years. As a provision to the note
          the conversion price resets upon 1) issuance of the Company's common
          stock at terms more favorable to this note and 2) other anti-dilution
          events. The note has a stated interest rate of 6% per annum and due
          upon demand. In accordance with EITF 98-5 and 00-27, the note
          contained a beneficial conversion feature which was initially
          calculated at an estimated fair value of $87,150 and the warrants upon
          conversion would have no allocated value to be recognized upon
          conversion. Given that the note is due upon demand, the Company has
          recorded the $87,150 debt discount arising from the beneficial
          conversion feature on this note during the year ended December 31,
          2004.

          For these series of three notes, the Company has outstanding at
          December 31, 2004 principal of approximately $337,000 and has
          recognized beneficial conversion feature expense totaling
          approximately $337,000 included in non-cash interest expense from
          amortization of debt discounts.

          On July 21, 2004, the Company received a loan of $27,500, net of fees,
          from Arthur Cohn with an interest rate of 6% per annum and a maturity
          date of September 30, 2004. The loan was repaid on September 30, 2004.

          The Company renegotiated the note payable with Maple Leaf Holdings in
          the amount of $100,000, extending the due date from August 31, 2003 to
          due on demand. It continues to accrue interest at a rate of 5% per
          annum.

NOTE 4    COMMON STOCK

          Shares Issued for Debt

          On March 19, 2004, the Company issued 264,923 shares of its common
          stock to Todd Gotlieb (a shareholder) as payment for principal and
          accrued interest totaling $57,711 previously loaned to the Company at
          approximately $0.22 per common share. Also, the Company issued
          warrants to acquire up to 318,034 shares of common stock at the
          following exercise prices: the first 264,923 shares at $1.00 per share
          and an additional 53,111 shares at $0.85 per share. The warrants
          expire March 18, 2007 and are fully vested at grant. The Company
          recorded the issuance of these warrants valued at $361,068 using the
          Black-Scholes Option pricing model with the following assumptions:
          life of 3 years, volatility of 216% and a risk free interest rate of
          4.0%. During the year ended December 31, 2004, $361,068 was charged to
          expense as a debt restructuring charge.



                                       F-23
<PAGE>

                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 4    COMMON STOCK (CONTINUED)

          Shares Issued for Debt (continued)

          On March 17, 2004, the Company issued 324,786 shares of its common
          stock to Challure Holdings (a shareholder) as payment for principal
          and accrued interest totaling $67,692 previously loaned to the Company
          at approximately $0.21 per share. Also, the Company issued warrants
          to acquire up to 389,898 shares of its common stock at the following
          exercise prices: the first 324,786 shares at $1.00 per share and an
          additional 65,112 shares at $0.85 per share. The warrants expire March
          18, 2007 and are fully vested at grant. The Company recorded the
          issuance of these warrants valued at $442,657 using the Black-Scholes
          Option pricing model with the following assumptions: life of 3 years,
          volatility of 216% and a risk free interest rate of 4.0%. During the
          year ended December 31, 2004, $442,657 was charged to expense as a
          debt restructuring charge.

          Shares Issued for Services

          On February 9, 2004, the Company approved the issuance of 3,000,000
          common shares having a fair market value of $0.10 per share, which was
          the closing value of the Company's common stock as indicated on the
          OTCBB on the date of grant, to an employee for accrued compensation.
          An expense of $300,000 was recognized during the year ended December
          31, 2004 on the statement of operations.

          On February 12, 2004, the Company approved the issuance of 500,000
          common shares having a fair market value of $0.10 per share, which was
          the closing value of the Company's common stock as indicated on the
          OTCBB on date of grant, to an employee for services performed during
          the current fiscal year. An expense of $110,000 was recognized during
          the year ended December 31, 2004 on the statement of operations.

          On February 4, 2004, the Company approved the issuance of 450,000
          common shares having a fair market value of $0.11 per share, which was
          the closing value of the Company's common stock as indicated on the
          OTCBB on date of grant, to its legal counsel for services performed
          during the current fiscal year. An expense of $50,000 was recognized
          during the year ended December 31, 2004 on the statement of
          operations.

          On February 9, 2004, the Company approved the issuance of 250,000
          common shares having a fair market value of $0.10 per share, which was
          the closing value of the Company's common stock as indicated on the
          OTCBB on date of grant, to an employee for services performed during
          the current fiscal year. An expense of $25,000 was recognized during
          the year ended December 31, 2004 on the statement of operations.




                                      F-24
<PAGE>


                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


 NOTE 4   COMMON STOCK (CONTINUED)

          Shares Issued for Services (continued)
          --------------------------------------

          On February 19, 2004, the Company approved the issuance of 50,000
          common shares having a fair market value of $1.00 per share, which was
          the closing value of the Company's common stock as indicated on the
          OTCBB on date of grant, to its legal counsel for services performed
          during the current fiscal year. An expense of $50,000 was recognized
          during the year ended December 31, 2004 on the statement of
          operations.

          On March 29, 2004, the Company approved the issuance of 230,000 common
          shares having a fair market value of $1.10 per share , which was the
          closing value of the Company's common stock as indicated on the OTCBB
          on date of grant, to a consultant for services performed during the
          current fiscal year. An expense of $253,000 was recognized during the
          year ended December 31, 2004 on the statement of operations.

          On June 25, 2004, the Company approved the issuance of 200,000 common
          shares having a fair market value of $0.56 per share , which was the
          closing value of the Company's common stock as indicated on the OTCBB
          on date of grant, to a consultant for services performed. An expense
          of $112,000 was recognized during the year ended December 31, 2004 on
          the statement of operations.

          On October 7, 2004, the Company approved the issuance of 30,000 common
          shares having a fair value of $0.40 per share, which was the closing
          value of the Company's common stock as indicated on the OTCBB on date
          of grant, to a consultant for services performed. An expense of
          $12,000 was recognized during the year ended December 31, 2004 on the
          statement of operations.

          Options
          -------

          On February 9, 2004, the Company issued options to acquire up to
          750,000 shares of common stock at the exercise price of $0.50 per
          share from consulting services performed. The options expire February
          8, 2009 and are fully vested at grant. During the year ended December
          31, 2004, $72,000 was charged to expense as non-cash compensation. The
          Company recorded the issuance of these options valued at $72,000 using
          the Black-Scholes Option pricing model with the following assumptions:
          life of 5 years, volatility of 207% and a risk free interest rate of
          4.1%.

          On June 25, 2004, the Company issued options to acquire up to 100,000
          shares of common stock at the exercise price of $0.75 per share for
          consulting fees. The options expire June 24, 2007 and are vested as
          follows: 20,000 shares vested on April 1, 2004, 20,000 shares vested
          on May 1, 2004, 20,000 shares vested on June 1, 2004, 20,000 shares
          vested on July 1, 2004, and 20,000 vested on August 1, 2004. During
          the year ended December 31, 2004, $65,322 was charged to expense as
          non-cash compensation. The Company recorded the issuance of these
          options valued at $65,322 using the Black-Scholes Option pricing model
          with the following assumptions: life of 3 years, volatility of 140.4%
          to 212% and a risk free interest rate of 4.1%.





                                       F-25
<PAGE>




                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 4    COMMON STOCK (CONTINUED)

          Options (continued)
          -------------------

          On October 29, 2004, the Company issued options to acquire up to
          75,000 shares of common stock at the exercise price of $0.50 per share
          from consulting services performed. The options expire October 28,
          2007 and are fully vested at grant. During the year ended December 31,
          2004, $19,170 was charged to expense as non-cash compensation. The
          Company recorded the issuance of these options valued at $19,170 using
          the Black-Scholes Option pricing model with the following assumptions:
          life of 3 years, volatility of 208% and a risk free interest rate of
          4.0%.

          Private Placement Common Stock Offering
          ---------------------------------------

          On August 6, 2004, the Company completed a private placement common
          stock offering to qualified investors. The offering was for the sale
          of units. Each unit consisted of one share of common stock and a
          warrant. The price per unit was $0.50. The warrant grants the holder
          the right to purchase two shares of the Company's common stock for
          every one unit purchased at exercise prices of $1.00 per share for the
          first share and $1.25 per share for second share.

          The stock offering contained provisions for a "reset price" which was
          to be the lowest average closing price for the five consecutive
          trading days prior to the closing. The Company reset the price per
          unit to $0.40 prior to closing and issued an aggregate of 1,250,000
          shares of common stock for a total of $500,000.

          A further reset to a price per unit of $0.35 after closing took place
          August 19, 2004. The Company is required to issue an additional
          178,572 shares as of December 31, 2004. As of March 31, 2005, the
          additional shares were not issued.

          The private placement common stock option required the Company to
          complete the filing of Form SB-2 to register the shares by October 19,
          2004. The Company has not completed the filing and is therefore
          subject to the cash penalty as called for in the agreement.
          Accordingly, the Company has recorded the potential penalty of
          $100,000, in full, at December 31, 2004. Should the Company fulfill
          its registration requirements before August 2005, only a portion of
          the penalty will be paid to the holders.






                                      F-26
<PAGE>




                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 4    COMMON STOCK (CONTINUED)

          The following table summarizes information about fixed stock warrants
          outstanding at December 31, 2004:

          Warrants Outstanding                            Warrants Exercisable
----------------------------------------------------    ------------------------

                              Weighted
                              Average       Weighted                    Weighted
 Range of                    Remaining      Average                     Average
 Exercise       Number      Contractual     Exercise      Number        Exercise
  Prices     Outstanding       Life           Price     Exercisable      Price
----------   -----------    -----------     --------    -----------     --------

 $  1.25      1,000,000          2.4           1.25      1,000,000       $ 1.25
    1.00      5,330,820          2.3           1.00      5,330,820         1.00
    0.85      1,118,223          2.2           0.85      1,118,223
                                                                           0.85

          As of December 31, 2004 and 2003, the Company had 925,000 and 0 stock
          options outstanding and excercisable, respectively, with a weighted
          average life of 46 months, weighted average exercise price of $0.53
          and weighted average fair value of $0.17.


NOTE 5    INCOME TAXES

          Deferred income taxes reflect the net tax effects of temporary
          differences between the carrying amounts of assets and liabilities for
          financial reporting purposes and the amounts used for income tax
          purposes. At December 31, 2004, the Company had a deferred tax asset
          from their United States net operating losses (NOL) of approximately
          $2,339,500. The United States NOL expires starting in the the year
          2018. In the event that a change in ownership of the Company of
          greater than 50 percent occurs/occurred as a result of the Company's
          issuance of common and preferred stock, the utilization of the United
          States NOL carryforward will be subject to limitation under certain
          provisions of the United States Internal Revenue Code.










                                       F-27
<PAGE>




                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 5    INCOME TAXES (CONTINUED)

          The reconciliation of income tax benefit computed at the United States
          federal tax rate of 34% is as follows:

          Year Ended December 31,                     2004            2003
          -----------------------                 ------------    ------------

          Tax benefit at the United
              States statutory rate               $   485,000     $   550,000
          Valuation allowance adjustment             (485,000)       (550,000)
                                                  -----------     ------------

          Income tax benefit                      $         0     $         0
                                                  ===========     ===========

          Significant components of the Company's deferred tax assets and
          liabilities are as follows:

          Year Ended December 31,                     2004          2003
          -----------------------                  -----------    -----------

          Deferred tax assets:
          Net operating loss carryforwards         $ 2,339,500    $   366,000
          Compensation related to equity
            instruments issued for services          3,380,200      1,558,000
          Compensation related to equity
            instruments issued for debt                      0        170,000
          Valuation allowance for deferred
            tax assets                              (5,719,700)    (2,094,000)
                                                   -----------    -----------

          Net deferred tax assets                  $         0    $         0
                                                   ===========    ===========


          Subsidiaries of the Company have net operating loss carryovers that
          are subject to limitation under certain provisions of the United
          States Internal Revenue Code. The NOLs total approximately $6,881,000
          start to expire in the year 2018. The Company also has an NOL
          carryover in Canada that totals approximately $300,000 (Canadian
          Dollars) and expires during the years 2003 to 2010 at December 31,
          2004.





                                       F-28
<PAGE>


                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 6    RELATED PARTY TRANSACTIONS

          Consulting Services
          -------------------

          Fees totaling $24,000 have been paid to officers and related parties
          for both the years ended December 31, 2004 and 2003 for administrative
          fees, consulting services rendered and expenses paid on behalf of the
          Company. The officers and directors of the Company are involved in
          other business activities and may, in the future, become involved in
          other business opportunities.

          Lease Commitments
          -----------------

          Lease expense for the years ended December 31, 2004 and 2003 amounted
          to $25,416 and $14,336, respectively. At December 31, 2004, the
          Company was subleasing an office space under a month-to-month lease
          from a related company for monthly payments of $2,500 Canadian.


NOTE 7    COMMITMENTS AND CONTINGENCIES

          Royalty Agreement
          -----------------

          On September 9, 1999, High Plateau entered into a Royalty and
          Development Agreement with Ultimatte Corporation ("Ultimatte") to
          develop a "keyer unit" based on patented technology held by Ultimatte.
          The keyer unit enables the patented technology of the Company to
          interact with the consumer and is crucial to the Company's existing
          plans for development and production of its intended product. In
          accordance with the agreement, the Company was obligated to pay
          $130,000 to Ultimatte in development fees, of which, the entire amount
          has been paid through December 31, 2004.

          This relationship is now governed by the Amended and Restated Design
          and Development Agreement that the Company entered into with Ultimatte
          Corporation on June 15, 2003. Pursuant to this agreement, the Company
          agreed to pay Ultimatte Corporation a development fee of $300,000 for
          the development and fabrication of five keyer units. The contract
          calls for the Company to manufacture the keyer units after the Company
          has received test units and FCC approval is received for which the
          Company has not received approval yet. The Company also agreed to pay
          certain royalties to Ultimatte Corporation upon UL or CSA approval and
          CE marking. The royalties equal 7% of the gross revenue the Company
          recognizes from the rental, lease, license or sale of the units
          manufactured for the Company by Ultimatte Corporation and the content
          used with the units plus 40% of the gross revenue the Company
          recognizes related to licensing to a third party the right to
          manufacture and sell or use or rent the units. The Company must pay a
          minimum royalty of $100,000 during the first quarter immediately
          following the UL or CSA approval and CE marking, $150,000 during the





                                       F-29
<PAGE>




                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


 NOTE 7   COMMITMENTS AND CONTINGENCIES (CONTINUED)

          Royalty Agreement (Continued)
          -----------------------------

          second quarter, $250,000 during the third quarter, $250,000 during the
          fourth quarter and the greater of $312,500 or 50% of the projected
          amount of royalties due during the fifth quarter and each quarter
          thereafter. Royalties must be paid within 30 days following the end of
          each quarter. If the Company fails to pay the royalties as required,
          Ultimatte Corporation will have the right to use the Side-By-Side (TM)
          technology for any purpose.

          Real Estate Lease
          -----------------

          The Company currently maintains an office in Canada. The Company does
          not currently own or operate any manufacturing, operating or repair
          facilities. Substantially all of the Company's operations are devoted
          to the development of its patented technology. The Company believes
          that it is in substantial compliance with all environmental laws and
          regulations applicable to its business as currently conducted.

          Rent expense for the years ended December 31, 2004 and 2003 amounted
          to $25,416 and $14,336, respectively. At December 31, 2003, the
          Company was subleasing an office space under a month-to-month lease
          from a related company for monthly payments of approximately $2,500
          Canadian.


NOTE 8    EQUITY INCENTIVE PLAN

          On January 26, 2004, the Company adopted the SBS Interactive Co. 2004
          Equity Incentive Plan. The purpose of this plan is to provide
          incentives to attract, retain and motivate eligible persons whose
          present and potential contributions are important to the success of
          the Company by offering them an opportunity to participate in the
          Company's future performance through awards of options, the right to
          purchase common stock and stock bonuses. The Company has reserved a
          total of 7,000,000 shares of its common stock for grant to employees,
          officers, directors, consultants, independent contractors and advisors
          of the Company, provided such persons render bona-fide services not in
          connection with the offer and sale of securities in a capital-raising
          transaction or promotion of the Company's securities. Unless earlier
          terminated, this plan will terminate in ten years from the date of the
          plan. The Board may at any time terminate or amend this plan.





                                       F-30
<PAGE>




                              SBS INTERACTIVE, CO.
                        (A DEVELOPMENT STAGE ENTERPRISE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 9    SUBSEQUENT EVENTS (UNAUDITED)

          During January 2005, the Company sold 666,667 shares of its common
          stock for cash at $0.30 per share for a total of $200,000.

          During January, February and March 2005, the Company issued a total of
          30,000 shares of its common stock, with an aggregate value of $12,000
          to an unrelated consultant for services rendered.

          During February 2005, the Company issued 200,000 shares of its common
          stock to its attorney with an aggregate fair value of $80,000 in
          payment of accrued legal fees.

          During March 2005, the Company's Board of Directors approved the sale
          of 50,000 shares of common stock at a price per share of $0.40 per
          share to RP Capital LLC, an entity that is owned by the outside legal
          counsel for the Company.

          In March 2005 the Company's largest shareholder loaned the Company
          $166,000. The promissory note is convertible to common stock at a
          conversion price of $0.20 per share. Upon conversion, the shareholder
          will receive a warrant to purchase 830,000 shares of the Company's
          common stock at an exercise price of $1.00 per share and a warrant to
          purchase 830,000 shares of the Company's common stock at an exercise
          price of $1.25 per share.


































                                       F-31
<PAGE>


                                    PART III

Index to Exhibits

Exhibit
  No.                Description of Exhibit

2         Articles and Plan of Merger of SBS Acquisition, Inc. with and into SBS
          Interactive, Inc. (1)
3.1       Articles of Incorporation, as amended. (2)
3.2       Bylaws of SBS Interactive, Co. (2)
10.1      SBS Interactive, Co. 2004 Equity Incentive Plan (3)
10.2      Amended and Restated Design and Development Agreement dated June 16,
          2003 between Ultimatte Corporation and SBS Interactive, Co. (4)
10.3      Mutual Confidentiality and Non-Disclosure Agreement dated June 19,
          2003 between Ultimatte Corporation and SBS Interactive, Co. (4)
10.4      Convertible Secured Debenture dated October 30, 2002 issued to Karlgar
          Limited (4)
10.5      Convertible Secured Debenture dated March 14, 2003 issued to Karlgar
          Limited (4)
10.6      Secured Promissory Note dated July 23, 2003 in favor of Karlgar
          Limited (4)
10.7      6% Convertible Secured Debenture issued September 10, 2003 to Karlgar
          Limited (4)
10.8      Amendment No. 1 to 6% Convertible Secured Debenture issued September
          10, 2003 to Karlgar Limited (4)
10.9      First Amended and Restated 6% Convertible Secured Debenture dated
          January 6, 2004 issued to Karlgar Limited (4)
10.10     Assignment and Agreement to Convert Debt dated March 17, 2004 between
          Karlgar Limited, Arthur Cohn and SBS Interactive, Co. (4)
10.11     Agreement to Convert Debt dated March 17, 2004 between SBS
          Interactive, Co. and Todd Gotlieb (4)
10.12     Agreement to Convert Debt dated March 17, 2004 between SBS
          Interactive, Co. and Challure Holdings (4)
10.13     Agreement to Convert Debt dated March 17, 2004 between SBS
          Interactive, Co. and Barry Alter (4)
10.14     Warrant issued March 19, 2004 issued to Arthur Cohn (4)
10.15     Warrant issued March 19, 2004 issued to Todd Gotlieb (4)
10.16     Warrant issued March 19, 2004 issued to Challure Holdings (4)
10.17     Warrant issued March 19, 2004 issued to Barry Alter (4)
10.18     Non-Exclusive Consulting Agreement dated November 20, 2003 between
          Clearsite Ltd. and SBS Interactive, Co. (5)
10.19     Master Loan Agreement among Arthur Cohn, SBS Interactive, Co. and SBS
          Interactive, Inc. dated July 22, 2004*
10.20     First Amendment to Assignment and Agreement to Convert Debt dated as
          of July 22, 2004 among Arthur Cohn, SBS Interactive, Co. and SBS
          Interactive, Inc.*
10.21     Pledge and Security Agreement dated July 22, 2004 among Arthur Cohn,
          SBS Interactive, Co. and SBS Interactive, Inc.*
10.22     Secured Convertible Promissory Note dated July 22, 2004 in favor of
          Arthur Cohn*



                                       20
<PAGE>


10.23     Secured Promissory Note dated as of November 5, 2004 in favor of
          Arthur Cohn*
10.24     Allonge to $100,000 Secured Promissory Note dated as of November 9,
          2004*
10.25     Secured Convertible Promissory Noted dated January 13, 2005 in favor
          of Arthur Cohn*
10.26     Agreement between ViBE Dance and Fitness Studio and SBS Interactive,
          Co. dated May 15, 2004*
10.27     Agreement between Kontrolled Khaos and SBS Interactive, Co. dated
          April 10, 2004*
10.28     Agreement between Kick Communications, Inc. and SBS Interactive, Co.
          dated May 10, 2004*
10.29     $166,000 Secured Convertible Promissory Note dated as of
          March 31, 2005
14        Code of Ethics (3)
16.1      Letter on Change in Certifying Accountant (Barry I Hechtman, P.A.) (6)
16.2      Letter on Change in Certifying Accountant (Ahern, Jasco + Company,
          P.A.) (7)
23.       Consent of Stonefield, Josephson Inc.*
31.       Certification pursuant to Rule 13a-14(a) and 15d-14(a)*
32.       Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002*
----------------
*Filed herewith.

(1)  Incorporated by reference from the Registrant's Form 10-QSB for the quarter
     ended September 30, 2002, filed with the Securities and Exchange Commission
     on November 12, 2002.
(2)  Incorporated by reference from the Registrant's Form 10-SB filed with the
     Securities and Exchange Commission on December 3, 1999, as amended.
(3)  Incorporated by reference from the Registrant's S-8 Registration Statement
     filed with the Securities and Exchange Commission on February 13, 2004.
(4)  Incorporated by reference from the Registrant's Form 10-KSB for the fiscal
     year ended December 31, 2003 filed with the Securities and Exchange
     Commission on June 17, 2004.
(5)  Incorporated by reference from the Registrant's S-8 Registration Statement
     filed with the Securities and Exchange Commission on February 18, 2004.
(6)  Incorporated by reference from the Form 8-K filed by the Registrant with
     the Securities and Exchange Commission on February 17, 2004.
(7)  Incorporated by reference from the Form 8-K filed by the Registrant with
     the Securities and Exchange Commission on March 19, 2004.



















                                       21
<PAGE>


                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on this 15th day of April 2005.

                                       SBS INTERACTIVE, CO.



                                       By: /s/Todd Gotlieb
                                          ---------------------------------
                                          Todd Gotlieb,
                                          President and Principal Financial
                                          Officer


     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.

    Signature                               Title                     Date
    ---------                               -----                     ----


/s/Todd Gotlieb                     President,                    April 15, 2005
---------------------------         Principal Financial Officer
Todd Gotlieb                        and Director


/s/Sam Ash                          Secretary and Director        April 15, 2005
---------------------------
Sam Ash

































                                       22