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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION** Washington, D.C. 20549

FORM 10-KSB

Annual Report Pursuant to Section 13 or 15(d) of 
  The Securities Exchange Act of 1934

For the fiscal year ended December 31, 2004

Commission File Number0-26065

BANYAN CORPORATION 
  (Exact name of registrant as specified in its charter)

|Oregon                                                   | 84-1346327         
|-------------------------------------------------------- | -------------------
|(State or other jurisdiction of                          | (IRS Employer      
|Incorporation or organization)                           | Identification No.)
|                                                         |                    
|                                                         |                    
|Suite 500, 1925 Century Park East, Los Angeles,
      CA | 90067              
|(Address of Principal Executive offices)                 | (Zip Code)         

Registrant's telephone number, with area code:(800)
  808-0899

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

Securities registered pursuant to Section 12(g) of the Act:Common Stock, no par value

Check whether the registrant
  (1) filed all reports required to be filed by Section 13 or 15(d) of the 
  Securities Exchange Act of 1934 during the past 12 months (or for such shorter
  period that the registrant was 
  required to file such reports), and (2) has been subject to such filing requirements
  for the past 90 days. 
  Yes   x  
  No   ̈

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

Issuer’s revenues for its most recent fiscal year. $1,847,595

Aggregate market value of the
  voting and non-voting common equity held by non-affiliates: $7,610,462 as
  
  of March 31, 2005.

Number of shares outstanding
  of issuer’s Common Stock, no par value outstanding as of March 31, 2005:
  78,539,410.

Transitional Small Business Disclosure Format (Check one):
  Yes   ̈  No   x

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We
  want to provide you with more meaningful and useful information. This Annual
  Report on Form 10-KSB contains certain "forward-looking statements" (as such
  term is defined in Section 21E of the Securities Exchange Act of 1934, as amended).
  These statements reflect our current expectations regarding our possible future
  results of operations, performance and achievements. These forward-looking statements
  are made pursuant to the safe harbor provisions of the Private Securities Litigation
  Reform Act of 1995.

Wherever
  possible, we have tried to identify these forward-looking statements by words
  such as “anticipate,” “believe,” “estimate,”
  “expect,” “plan,” “intend” and similar expressions.
  These statements reflect our current beliefs and are based on information currently
  available to us. Accordingly, these statements are subject to certain risks,
  uncertainties, and contingencies, which could cause our actual results, performance,
  or achievements to differ materially from those expressed in, or implied by,
  such statements. These risks, uncertainties and contingencies include, without
  limitation, the factors set forth under Item 6. Management’s Discussion
  and Analysis of Financial Condition and Results of Operations or Plan of Operation.
  We disclaim any obligation to update or revise any such forward-looking statements
  that may be made to reflect events or circumstances after the date of this Form
  10-KSB.

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PART I

Item 1. Description of Business.

We
  are a holding company focused on investing in and building a network of subsidiaries
  engaged in the franchising of Chiropractic USA branded chiropractic clinics,
  providing practice development training and assistance to chiropractors, acquiring
  a diagnostic imaging business, and offering franchise support and related services
  to franchisees. As used herein, the terms “Our,” “Us,”
  “We” and the “Company” all refer to Banyan and its one
  majority-owned subsidiary, Chiropractic USA, Inc., a Colorado corporation (“Chiropractic
  USA”), and four wholly-owned subsidiaries, Diagnostic USA, Inc., a Colorado
  corporation (“Diagnostic USA”), Franchise Support Network, Inc.
  (“Franchise Support Network”), incorporated pursuant to the laws
  of the province of Alberta, Canada, Banyan Financial Services, Inc, a Colorado
  corporation, and Southern Health Care, Inc., a Colorado corporation. We currently
  have twelve employees including two in management, six in franchise sales and
  support operations, and four in accounting (including three part-time) and administration.

Chiropractic
  USA. There are approximately 80,000 chiropractors in the United States and
  Canada. Approximately 2,000 new graduates enter the field each year. This year,
  an estimated 20,000,000 Americans are expected to visit a chiropractor and expenses
  for the treatment of lower back pain are expected to exceed approximately $50
  billion. The aging of the population, continued population growth, advanced
  chiropractic treatments, increased health care, and greater health consciousness
  are trends that assure the chiropractic industry a future of expanding services.
  Despite the size and potential of the chiropractic market, there had been no
  national brand.

Management
  believes these factors have created a unique and significant business opportunity:
  to establish the first nationally franchised brand in the burgeoning chiropractic
  market and to provide ancillary services to chiropractors.

Chiropractic
  USA was formed to develop and franchise Chiropractic USA brand chiropractic
  clinics throughout North America under the Chiropractic USA trademark and uniform
  operating systems and practices.

We
  have embarked on two main development strategies: direct marketing of franchises;
  and, recruiting area developers to increase the number of franchises in exclusive
  territories. In the middle of 2003, we completed development of our uniform
  franchise offering materials and began the rollout of our franchising program
  through direct marketing to existing practitioners and chiropractic students.

We
  are developing our network of franchised clinics through conversion of established
  practices to franchised Chiropractic USA brand clinic locations and franchising
  new practitioners. Established practices that convert receive a corporate identity
  -- logos, banners, name recognition, marketing capability, a uniform operating
  and business format, practice development services, and other services available
  through us. These conversions will establish a strong basis for our operations
  and enable us to build up our brand rapidly. We have also been

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marketing to new practitioners and recently graduated chiropractic students. As additional services to new practitioners, we offer site selection consultation, lease negotiation, practice design and other services.

We
  have entered into approximately 80 franchise agreements. Our franchise agreements
  provide for payment of percentage royalties, contribution to a national advertising
  fund, and charges for additional services selected by the franchisee. New practitioners
  pay a franchise fee in addition to these charges. Some franchise agreements
  cover more than one location.

We
  recruit area developers from all regions of the country. An area developer is
  responsible for increasing the number of Chiropractic USA locations within an
  exclusive territory. An area developer receives a portion of the percentage
  royalty we collect from the territory. We have entered into thirteen area representative
  agreements in twenty states. Typically, an area developer enters into one or
  more franchise agreements.

During
  the latter half of 2002, we acquired a chain of three clinics in Louisiana,
  which were re-branded under Chiropractic USA. This allowed us to implement our
  practice methods in our own clinics and commence the chain/brand building segment
  of our business plan. These clinics served as a flagship or role model for the
  Chiropractic USA chain. See Item 12. Certain Relationships and Related Transactions—Acquisition
  of Corporate Clinics.

On
  April 8, 2005, we signed an agreement effective December 31, 2004 to sell the
  three clinics for $1,000,000 to LSI Group, LLC, a Louisiana limited liability
  company. As payment, LSI assumed $175,493 of the liabilities associated
  with the business and issued us a promissory note for $824,507 payable in
  equal monthly installments of principal and interest at 5% for ten years beginning
  September 1, 2005. The note is secured by substantially all of the assets of
  the business.

In
  December 2002, we entered into an agreement in principle with recognized Chiropractic
  Coach Dr. CJ Mertz to assist us with the development of our franchising. Dr.
  Mertz has operated The Waiting List Practice Chiropractic Training Organization
  (www.teamwlp.com) and its predecessors for approximately 20 years. According
  to Team WLP, Dr. Mertz has trained with thousands of chiropractors and has visited
  over one thousand private practices worldwide, Team WLP has successfully built
  more practices profitably than any other coaching program and Dr. Mertz has
  received numerous awards from the chiropractic profession. We utilize Team WLP
  in our franchise system to encourage maximum potential for our franchisees.
  Additionally, Dr. Mertz will have a significant role in the growth of our network
  as well as strategic planning and execution. Under the agreement Dr. Mertz owns
  a minority interest in our subsidiary Chiropractic USA and up to one-quarter
  of our royalties on franchises he introduces to us.

On
  May 7, 2001, Banyan Corporation entered into three contracts with our Chief
  Executive Officer and our Chief Financial Officer in connection with the repositioning
  of our business into the chiropractic market: an Offer to Purchase (Intellectual
  Property), an Offer to Purchase Franchise Support Network, Inc. and, Management
  Agreements with each of these officers (the “Management Agreements”).
  See Item 9. Directors and Executive Officers; Corporate Governance; Promoters
  and Control Persons; Compliance with Section 16(a) of the

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Exchange Act; Item 10. Executive Compensation; and, Item 12. Certain Relationships and Related Transactions – Chiropractic USA and Franchise Support Network Acquisitions.

Diagnostic
  USA and the Nationwide Purchase Agreement. Diagnostic USA is intended to
  be a vehicle for us to enter the diagnostic imaging business. Initially, we
  intend to offer ultra sound imaging and Nerve Conduction Velocity Testing (“NCVT”)
  through our franchisees and others to their patients. NCVT measures the transmission
  of nerve impulses through the body, identifies problems in the nervous system,
  and helps to substantiate the benefit and cost of treatment to patients and
  their insurers. We believe these are logical services to offer in chiropractic
  clinics and through other health care professionals.

We
  intend to acquire all the equity securities of Nationwide Diagnostic Solutions,
  Inc., an Arizona corporation based in Tempe, Arizona (“Nationwide”),
  from Dr. Jeff and Constance Rebarcak (the “Rebarcaks”), the founders,
  sole shareholders and operators of Nationwide.

On
  March 18, 2005, we entered into an agreement with Nationwide and the Rebarcaks
  to acquire all their shares for $10,000,000. The $10,000,000 is payable
  at closing: $700,000 in cash and the balance of $9,300,000 in the form
  of a promissory note from Diagnostic USA to the Rebarcaks due May 30, 2015 and
  bearing interest at 2.5% per annum. The note is payable from 50% of the dividends
  or other distributions received by Diagnostic USA from Nationwide (70% during
  the first year), with a minimum monthly payment of $10,000. The agreement
  provides for a minimum dividend or other distribution of 75% of the net cash
  flow, if any, of Nationwide. We will guarantee payment of up to $1,500,000
  of the balance due on the note. The Rebarcak’s would be permitted to convert
  up to $1,000,000 of the balance due on the note into shares of our common
  stock at the prevailing market price and in no event less than a conversion
  price of $.22 per share, or a maximum of approximately 4,545,454 shares.
  The deadline for closing is May 31, 2005. At closing, it is expected that Diagnostic
  USA would employ Jeff Rebarcak under a five-year employment agreement for compensation
  of $240,000 per year.

These
  agreements supercede the purchase agreement with Nationwide and the Rebarcaks
  dated January 7, 2005 reported in our Form 8-K on or about February 23, 2005.

Franchise
  Support Network. Franchise Support Network (“FSN”) is intended
  to be a dedicated support unit to assist the needs of practitioners who would
  like to be Chiropractic USA franchisees. It will offer such support services
  as business plan formulation, franchise agreement review and negotiation, assistance
  in site selection, lease review and negotiation, local marketing assistance,
  accounting services, and other ongoing services. We intend that Franchise Support
  Network will establish relationships with business consultants and accountants
  across North America in order to establish itself as a network of one-stop franchise
  consultants. Franchise Support Network has its principal place of business in
  Calgary, Alberta. As of the date hereof, significant operations have not commenced.

Banyan
  Financial Services. Banyan Financial Services is intended to be a specialty
  finance firm providing financing assistance, including start up capital, construction
  financing, equipment leasing, unsecured lines of credit, and refinancing for
  Chiropractic USA franchisees and others in the health care industry. The president
  of Banyan Financial Services is Mark Eric

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Bailey. Banyan Financial Services has its principal place of business in Cape May, New Jersey. As of the date hereof, significant operations have not commenced.

Item 2. Description of Property

We
  have a trademark registered with the United States Patent and Trademark Office
  for the Chiropractic USA logo.

We
  sublease our executive offices in Los Angeles for a monthly rental. We lease
  1,500 square feet of office space in Calgary, Alberta for $3,300 per month
  under a lease expiring May 2006.

Item 3. Legal Proceedings

As
  of December 31, 2004 we owe $167,747 including accrued interest at the rate
  of 9% per annum with respect to a stipulated money judgment in favor of a broker-dealer,
  Paine Webber, Inc. The judgment was entered in Multnomah County, Oregon pursuant
  to a settlement agreement entered into in January 2001. This legal proceeding
  arose from the alleged failure to deliver a stock certificate to the broker-dealer.

On
  January 8, 2004, a former employee of a former subsidiary, Bruce Leithead, filed
  suit against us in Mobile County, Alabama seeking money damages for breach of
  an alleged employment contract. The suit was dismissed without prejudice against
  us on January 5, 2005. We have no indication that Mr. Leithead will pursue the
  suit further.

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

We
  held a special meeting of shareholders on March 7, 2005. The shareholders elected
  Michael J. Gelmon, Cory H. Gelmon and Richard J. Doran, Jr. to our board of
  directors, approved Restated Articles of Incorporation with Amendments, approved
  the 2004 Human Resources Incentive Plan (the “Incentive Plan”) and
  the options issued thereunder, and ratified the appointment of Schwartz Levitsky
  Feldman llp to audit our financial statements for 2004.

Our
  Restated Articles of Incorporation with Amendments were filed and became effective
  on March 10, 2005. Under the Restated Articles of Incorporation with Amendments,
  our authorized capital stock is 500,000,000 shares of common stock and 100,000,000
  shares of preferred stock, all no par value. Previously, our authorized capital
  was 60,000,000 shares of common stock and 10,000,000 shares of preferred stock.

Of
  the 58,701,744 shares eligible to vote at the meeting, 34,799,874 (59.3%) of
  the shares voted, a quorum. The following table summarizes the voting.

|Matter                                                  | For        | Withheld/Against | Abstain | % For
|------------------------------------------------------- | ---------- | ---------------- | ------- | -----
|Election of Directors  
              Michael J. Gelmon | 34,746,197 | 54,677           | N/A     | 99   

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|Cory H. Gelmon 
               Richard J. Doran | 34,746,197   34,746,897 | 54,677   52,977 | N/A   N/A | 99   99
|----------------------------------------------- | ----------------------- | --------------- | --------- | -------
|Restated Articles                               | 34,778,402              | 19,877          | 1,595     | 99     
|Incentive Plan                                  | 34,712,039              | 86,735          | 1,100     | 99     
|Auditors                                        | 34,784,474              | 14,400          | 1,000     | 99     

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

Our
  Common Stock is traded on the National Association of Securities Dealers, Inc.
  (the “NASD”) OTC Bulletin Board under the symbol "BANY”. The
  following are the high and low bid prices for each quarter within the last two
  fiscal years and the current fiscal year to date:

|Year | Quarter | Bid Price
|---- | ------- | ---------
|     |         | High     

|2003 | First                      | $.19 | $.09
|---- | -------------------------- | ---- | ----
|     | Second                     | $.19 | $.11
|     | Third                      | $.69 | $.11
|     | Fourth                     | $.52 | $.26
|2004 | First                      | $.33 | $.23
|     | Second                     | $.27 | $.15
|     | Third                      | $.20 | $.09
|     | Fourth                     | $.19 | $.10
|2005 | First   (through March 31) | $.24 | $.11

As
  of March 31, 2005, there were approximately 500 record holders of our Common
  Stock. This does not reflect an estimated 1,400 shareholders that hold their
  shares in street name.

No
  dividends were declared since December 31, 2002. We presently intend to retain
  our earnings to fund development of our business. Decisions concerning dividend
  payments in the future will depend on income and cash requirements. Holders
  of common stock are entitled to receive such dividends as may be declared our
  board of directors. We are restricted from paying dividends under the terms
  of our convertible notes described in Item 12. Certain Relationships and Related
  Transactions – Securities Purchase Agreement.

Securities authorized for issuance under equity compensation plans.

The
  following is provided with respect to compensation plans (including individual
  compensation arrangements) under which equity securities are authorized for
  issuance as of the fiscal year ending December 31, 2004. The disclosure refers
  to options or warrants under the Incentive Plan unless otherwise specifically
  stated.

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Equity Compensation Plan Information

|Plan category                                                        | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights(b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|-------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation   plans approved by  
      security holders     | 22,120,000                                                                                      | $.13                                                                           | 27,880,000                                                                                                                                     
|Equity compensation   plans not approved by 
       security holders | -0-                                                                                             | N/A                                                                            | N/A                                                                                                                                            
|Total                                                                | 22,120,000                                                                                      | $.13                                                                           | 27,880,000                                                                                                                                     

Please refer to Item 10. Executive Compensation, for additional information
  regarding securities authorized for issuance under the Incentive Plan.

Recent Sales of Unregistered Securities.

During
  2003, we sold 9,989,071 shares of common stock that were not registered under
  the Securities Act of 1933. Of these shares, we sold 7,940,500 to 30 investors
  for $890,115 in cash, an average of $.11 per share. The sales to eleven
  of these investors involved an aggregate of 4,910,000 units consisting of one
  share plus one warrant expiring on or before March 31, 2005 to purchase one
  share of common stock at purchases prices from $.10 to $.25. Sales to
  four investors were the result of the investors exercising warrants they held
  prior to 2003 to purchase an aggregate of 350,000 shares for $35,000, or
  $.10 per share. Of the remaining 2,048,571 shares, we sold 1,850,571 shares
  to six consultants and employees in consideration for services rendered to us
  valued at $265,500, or an average of $.14 per share, and issued 198,000
  shares to pay part of the balance due on a promissory note.

In
  2004, we sold 12,520,827 shares of common stock that were not registered under
  the Securities Act of 1933 to 47 investors. Of these shares, we sold 9,116,827
  shares for $877,470 in cash, an average of $.10 per share. The sales
  to two of these investors involved units consisting of one share plus one option
  to purchase one share of common stock. One of our investors purchased 3,125,000
  shares and an option to purchase 3,125,000 shares exercisable at $.08 per
  share until September 15, 2007 for $250,000. Another investor purchased
  1,000,000 shares and an option to purchase 1,000,000 shares exercisable at $.10
  per share until May 31, 2005 for $100,000. The sales to three investors
  were the result of the investors exercising options they held granted prior
  to 2004 to purchase an aggregate of 300,000 shares for $30,000, or $.10
  per share. Shares sold for consideration other than cash totaled 3,404,000.
  We sold 2,680,428 shares to fifteen consultants and employees in consideration
  for services rendered to us valued at $.12 to $.25 per share. We issued
  an aggregate of 720,000 shares to pay outstanding indebtedness to two creditors,
  including 650,000 shares to pay in full the balance due on a promissory note,
  and

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70,000 shares to pay an account payable. We issued 3,572 shares to correct
  a pricing error in connection with a prior sale to an investor. Finally, we
  sold the convertible notes and warrants to certain purchasers in the transactions
  described in Item 12. Certain Relationships and Related Transactions –
  Securities Purchase Agreement.

During
  the first quarter of 2005, we issued an aggregate of 2,300,000 shares to three
  management and marketing consultants for services rendered valued at $.22
  per share, and we sold additional convertible notes and warrants to certain
  purchasers in the transactions described in Item 12. Certain Relationships and
  Related Transactions – Securities Purchase Agreement.

The
  sales of securities discussed above do not include shares issued to the Chief
  Executive Officer and the President and Chief Financial Officer in connection
  with certain acquisitions. Please refer to Item 12. Certain Relationships and
  Related Transactions -- Chiropractic USA and Franchise Support Network Acquisitions.

Basis of exemption from registration

We
  relied on the exemptions from registration afforded by Section 4(2) of the Securities
  Act of 1933 and Rule 506 of Regulation D of the General Rules and Regulations
  thereunder for the sales of shares to investors, the sale of the convertible
  notes and warrants and the issues to pay debt and for services. We complied
  with the manner of sale, access to information and investor accreditation requirements
  of such exemptions.

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

*Plan of Operation for 2005*

*Liquidity
  and Capital Resources*. We expect to be in a positive cash flow position
  by the end of the 2005 as a result of the rapid rise in our franchise revenue,
  coupled with the acquisition of a diagnostic imaging business that we believe
  will generate positive cash flow, and the disposition of the Company-owned clinics
  that had a negative cash flow. We expect that the additional revenue and cash
  flow will generate sufficient liquidity to defray our ongoing expenses and additional
  expenses resulting from expansion.

We entered into an agreement that provides $3,000,000 from the sale of convertible
  notes to an investment group. We received $1,200,000 in the fourth quarter of
  2004 and $800,000 in the first quarter of 2005 from the sale of convertible
  notes. We anticipate receiving another $1,000,000 from the sale of convertible
  notes during the second quarter of 2005. Most of the latter amount will be used
  towards the purchase of the diagnostic imaging business. We believe without
  assurance that the investment group will convert the notes to stock. In the
  event the investment group does not convert the notes to stock and our stock
  does not trade at or above $0.22 during any given month (in which case no interest
  is due for that month), we intend to have sufficient cash flow to pay the principal
  and interest on the notes when due in the fourth quarter of 2006. See Item 12.
  Certain Relationships and Related Transactions -- Securities Purchase Agreement.

We do not expect to need additional financing to continue in operation after
  the proceeds from the sale of convertible notes are expended. If revenue does
  not materialize as expected or as we continue to expand, however, it may be
  necessary to take steps to increase our liquidity and capital resources, mainly
  by selling shares. The exercise of outstanding stock options (22,120,000 at
  a weighted average exercise price of $.13 per share at the end of 2004) is one
  possible source of such financing. We do not expect to obtain financing though
  additional borrowing.

During
  the first quarter of 2005, our shareholders voted to increase our authorized
  capital to make shares available upon conversion of the convertible notes and
  for sales to investors and pursuant to the exercise of options. The shareholders
  also approved our Incentive Plan and the underlying options.

Our
  independent registered public accounting firm issued a report to the effect
  that certain conditions raise substantial doubt about our ability to continue
  as a going concern because we incurred a net loss during 2004 and had a stockholders’
  deficit and working capital deficiency at year end.

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*Operations.*
  Our plan of operation for fiscal 2005 is as follows:

To
  increase the number of franchises by direct marketing of franchises and recruiting
  area developers;

To
  increase fees and royalty income from existing and new franchises;

To
  discontinue and dispose of the former Company-owned chiropractic clinics; and,

To
  acquire a diagnostic imaging business that we believe will generate positive
  cash flow.

During the first quarter of 2005, we were able to increase the number of franchises
  primarily by breaking into the Phoenix, Arizona market. This is significant
  as it will give us our first concentrated market in the country in which a large
  number of clinics will be operated and marketed under the Chiropractic USA brand.
  This will serve as an example and a catalyst for practitioners in other markets
  that are considering becoming Chiropractic USA franchisees.

Effective December 31, 2004 we disposed of the former Company-owned chiropractic
  clinics by selling their assets and discontinuing their operations that had
  a loss of $414,833 in 2004. The assets disposed of, mainly accounts receivable,
  were valued at approximately $926,000. As a result of the disposition, there
  was a significant decrease in the number of employees. A consultant, six chiropractors
  and ten support staff from these clinics are no longer on our payroll. We gained
  $242,187 on the sale. The disposition of the clinics eliminates an operation
  that was being supported by franchise operations. Under deferred payment terms
  of a ten-year note issued by the purchaser, we expect to receive $24,481 in
  2005, increasing to more than $100,000 in principal and interest for 2006 and
  the remaining term of the note. These clinics also signed franchise agreements
  that are expected to generate significant royalties beginning in the last quarter
  of 2005. See Item 1. Description of Business -- Chiropractic USA.

We
  intend to acquire all the equity securities of a diagnostic imaging business
  from its shareholders. We are advised that the business has been profitable
  and have entered an agreement for the acquisition to be completed on or before
  May 31, 2005. The assets of the business to be acquired are primarily accounts
  receivable and customer accounts. The financial information we rely on has not
  been verified either by audit or the receipt of complete financial information
  for the business. We are committed to a down payment of $700,000 at closing.
  The source of funds for the down payment will be substantially all the proceeds
  remaining from the sale of convertible notes. The balance of $9,300,000 of the
  purchase price is to be paid from the profits of the business over ten years.
  See Item 1. Description of Business -- Diagnostic USA. After the acquisition
  there will be a significant increase in the number of employees: we will add
  one senior manager and approximately ten staff to our payroll.

To
  date our operations have not been self-sustaining.

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*Financial condition at December 31, 2004 and 2003*

*December
  31, 2004.*At year-end stockholders’ deficit was $1,397,205 and we
  had a working capital deficiency of $1,964,581. Principal internal sources of
  liquidity in 2004 included the sale of $1,200,000 in convertible notes, $877,470
  from selling shares to investors and $465,729 in revenue from franchising operations.

*December
  31, 2003.* Stockholders deficit was $1,133,802 and working capital deficiency
  was $888,305. Principal sources of liquidity in 2003 included $890,115 from
  selling shares to investors and $54,138 in revenue from franchising operations.

*Results of operation in 2004 and 2003*

Revenue
  from franchised operations increased to $465,729 in 2004 from $54,138 in 2003.
  This was caused by the large increase in the number of Chiropractic USA franchises
  as we rollout our franchise program and rapidly build up our brand. We expect
  this trend to continue.

Selling,
  general and administrative expenses decreased from $3,335,478 in 2003 to $2,566,783
  in 2004. In 2004, $1,134,395 of these expenses consisted of non-cash compensation
  expenses: $339,075 recorded as a result of the sale of shares to franchisees
  and area representatives at less than fair market value, $382,370 representing
  the value of shares issued for services, and $412,950 recorded in connection
  with stock options granted to franchisees, area developers, consultants and
  investors. These figures were significantly greater in 2003: $2,238,529, $1,397,590,
  $71,500 and $769,439, respectively. General and administrative expenses, particularly
  management salaries, are expected to increase in 2005 as a result of additions
  to management and increases in compensation to our chief executive officer and
  our president and chief financial officer.

As
  a result of the increase in revenue and decrease in selling, general and administrative
  expenses, net loss from continuing operations decreased from $3,440,785 in 2003
  to $2,287,282, in 2004.

We
  had losses from the discontinued operations of the Company-owned clinics of
  $414,833 and $478,588 in 2004 and 2003, respectively. In 2004, we realized a
  $242,187 gain on the sale of the assets of this business. Giving effect to the
  discontinued operations, overall net loss decreased from $3,919,373 in 2003
  to $2,459,928 in 2004.

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Item 7. Financial Statements.

BANYAN CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004 AND 2003

TOGETHER WITH REPORT OF INDEPENDENT
  REGISTERED PUBLIC ACCOUNTING FIRM(Amounts expressed in US Dollars)

TABLE OF CONTENTS

|Report of Independent Registered Public Accounting Firm | 1                                                                                                          
|------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------
|                                                        |                                                                                                            
|Report of Independent Registered Public Accounting Firm | 2                                                                                                          
|                                                        |                                                                                                            
|Consolidated financial statements:                      |                                                                                                            
|                                                        |                                                                                                            
|                                                        | Consolidated
      balance sheet as of December 31, 2004                                                   
|                                                        |                                                                                                            
|                                                        | Consolidated
      statements of operations for the years ended December 31, 2004 and 2003                 
|                                                        |                                                                                                            
|                                                        | Consolidated
      statements of stockholders’ deficit for the years ended December 31,
      2004 and 2003
|                                                        |                                                                                                            
|                                                        | Consolidated
      statements of cash flows for the years ended December 31, 2004 and 2003                 
|                                                        |                                                                                                            
|                                                        | Notes to
      consolidated financial statements                                                           

---

REPORT OF INDEPENDENT REGISTERED
  PUBLIC ACCOUNTING FIRM

To the Board of Directors and
  Stockholders of
  Banyan Corporation

We have audited the accompanying consolidated balance sheet
  of Banyan Corporation as at December 31, 2004 and the related consolidated statement
  of operations, cash flows and stockholders’ deficiency for the year ended
  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 audit.

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

In our opinion, the consolidated
  financial statements referred to above present fairly, in all material respects,
  the financial position of Banyan Corporation as at December 31, 2004 and the
  results of its operations and its cash flows for the year ended December 31,
  2004 in accordance with generally accepted accounting principles in the United
  States of America.

The accompanying consolidated
  financial statements have been prepared assuming the Company will continue as
  a going concern. As discussed in note 1 to the consolidated financial statements,
  the Company has incurred significant losses, has a working capital deficiency
  and lacks long-term financing. These conditions raise substantial doubt about
  its ability to continue as a going concern. The consolidated financial statements
  do not include any adjustments that might result from the outcome of this uncertainty.

The consolidated financial statements of Banyan Corporation
  as at December 31, 2003 and for the year ended December 31, 2003 were audited
  by other auditors whose report dated April 15, 2004 included an explanatory
  paragraph that there was substantial doubt about the Company’s ability
  to continue as a going concern and that those financial statements did not include
  any adjustments that might result from that uncertainty.

|                         | “SCHWARTZ
      LEVITSKY FELDMAN LLP”
|------------------------ | -------------------------------------
|                         |                                      
|Toronto, Ontario, Canada |                                      
|April 15, 2005           | Chartered Accountants                

F- 1

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
  FIRM**

Board of Directors 
  Banyan Corporation

We have audited the accompanying consolidated statements of
  operations, stockholders' deficit and cash flows of Banyan Corporation and subsidiaries
  for the year ended December 31, 2003. These financial statements are the responsibility
  of the Company's management. Our responsibility is to express an opinion on
  these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the results of operations
  and cash flows of Banyan Corporation and subsidiaries for the year ended December
  31, 2003, 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 incurred
  significant operating losses for several years. This raises substantial doubt
  about the Company’s ability to continue as a going concern. Management’s
  plans with regard to this matter are also described in Note 1. The financial
  statements do not include any adjustments that might result from the outcome
  of this uncertainty.

**GHP HORWATH, P.C.**

Denver, Colorado
  April 15, 2004

F- 2

---

BANYAN
  CORPORATION 
  CONSOLIDATED BALANCE SHEETDECEMBER 31, 2004
  (Expressed in US Dollars)

|ASSETS                                                            |  
|----------------------------------------------------------------- | -
|                                                                  |  
|Current assets:                                                   |  
|Cash and cash equivalents                                         | $
|Accounts receivable                                               |  
|Prepaid expenses                                                  |  
|Current portion of note receivable (Note 3)                       |  
|                                                                  |  
|Total current assets                                              |  
|                                                                  |  
|Note receivable (Note 3)                                          |  
|Other assets, net (Note 7)                                        |  
|                                                                  |  
|                                                                  | $
|                                                                  |  
|                                                                  |  
|LIABILITIES AND
      STOCKHOLDERS' DEFICIT                       |  
|                                                                  |  
|Current liabilities:                                              |  
|Accounts payable (Note 10)                                        | $
|Accrued interest                                                  |  
|Other liabilities (Note 11)                                       |  
|Notes payable (Note 8)                                            |  
|Related
      parties                                             |  
|Others                                                            |  
|                                                                  |  
|Total current liabilities                                         |  
|                                                                  |  
|Convertible note (Note 7)                                         |  
|                                                                  |  
|                                                                  |  
|                                                                  |  
|Commitments and contingencies
      (Notes 3, 4, 5, 7, 9 and 11)  |  
|                                                                  |  
|Stockholders' deficit (Notes
      2, 3, 7, 9, 10 and 16)         |  
|Preferred stock; no par value;
      10,000,000 shares authorized |  
|Class A convertible preferred stock; 500,000 shares authorized    |  
|187,190
      shares issued and outstanding;                      |  
|liquidation
      preference $514,773                             |  
|Common stock; no par value;
      60,000,000 Class A shares       |  
|authorized; 58,661,744 shares issued and outstanding              |  
|Deferred compensation costs                                       |  
|Common stock to be issued                                         |  
|Accumulated deficit                                               |  
|                                                                  |  
|Total stockholders' deficit                                       |  
|                                                                  |  
|                                                                  | $

The accompanying notes are an
  integral part of these consolidated financial statements 
  F- 3

---

BANYAN CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS 
  YEARS ENDED DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|                                                        |   | 2004       |   |   | 2003       |  
|------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                        |   |            |   |   |            |  
|Revenue from franchised clinics                         | $ | 465,729    |   | $ | 54,138     |  
|                                                        |   |            |   |   |            |  
|Franchise cost                                          |   | 106,552    |   |   | 33,830     |  
|Impairment loss (Note 2)                                |   | -          |   |   | 52,000     |  
|Selling, general and administrative
      expenses      |   | 2,566,783  |   |   | 3,335,478  |  
|                                                        |   |            |   |   |            |  
|                                                        |   | 2,673,335  |   |   | 3,421,308  |  
|                                                        |   |            |   |   |            |  
|Loss from operations                                    |   | (2,207,606 | ) |   | (3,367,170 | )
|                                                        |   |            |   |   |            |  
|Other expense                                           |   |            |   |   |            |  
|                                                        |   |            |   |   |            |  
|Interest expense:                                       |   |            |   |   |            |  
|Related
      parties                                   |   | (8,619     | ) |   | (3,250     | )
|Other                                                   |   | (71,057    | ) |   | (70,365    | )
|                                                        |   |            |   |   |            |  
|Loss from continuing operations                         |   | (2,287,282 | ) |   | (3,440,785 | )
|                                                        |   |            |   |   |            |  
|Discontinued operations (Note
      3)                  |   |            |   |   |            |  
|Loss from operations of discontinued subsidiary         |   | (414,833   | ) |   | (478,588   | )
|Gain on disposal of net assets of subsidiary            |   | 242,187    |   |   | -          |  
|                                                        |   |            |   |   |            |  
|                                                        |   | (172,646   | ) |   | (478,588   | )
|                                                        |   |            |   |   |            |  
|Net loss                                                | $ | (2,459,928 | ) | $ | (3,919,373 | )
|                                                        |   |            |   |   |            |  
|Loss from continuing operations
      per common share: |   |            |   |   |            |  
|                                                        |   |            |   |   |            |  
|Basic and diluted                                       | $ | (0.04      | ) | $ | (0.07      | )
|                                                        |   |            |   |   |            |  
|Net loss per common share:                              |   |            |   |   |            |  
|                                                        |   |            |   |   |            |  
|Basic and diluted                                       | $ | (0.04      | ) | $ | (0.08      | )
|                                                        |   |            |   |   |            |  
|Weighted average number of
      common                 |   |            |   |   |            |  
|shares- outstanding - basic and diluted                 |   | 57,155,110 |   |   | 48,715,457 |  

The accompanying notes are an
  integral part of these consolidated financial statements 
  F- 4

---

BANYAN CORPORATIONCONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT 
  YEARS ENDED DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   | Common   |  |   |             |   |   |            |  
|------------------------------------------------------- | --------------- |  | ------------ | ------- |  | ---------- | - | - | ---------- | - | - | ------------ | - | - | -------- |  | - | ----------- | - | - | ---------- | -
|                                                        | Preferred stock |  | Common stock |         |  |            |   |   | stock      |   |   |              |   |   | Stock-   | 
|                                                        | Class A         |  | Class A      |         |  | Deferred   |   |   | to be      |   |   | Accumulated  |   |   | holders' | 
|                                                        | Shares          |  |              | Amount  |  | Shares     |   |   | Amount     |   |   | compensation |   |   | issued   |  |   | deficit     |   |   | deficit    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Balances at January 1, 2003                             | 187,190         |  | $            | 334,906 |  | 43,451,846 |   | $ | 4,496,796  |   | $ | (39,669      | ) | $ | 3,500    |  | $ | (5,368,516  | ) | $ | (572,983   | )
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Issuance of common stock for services (Note 9)          |                 |  |              |         |  | 422,000    |   |   | 65,500     |   |   |              |   |   |          |  |   |             |   |   | 65,500     |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Issuance of common stock for services (Note 9)          |                 |  |              |         |  | 1,428,571  |   |   | 200,000    |   |   | (200,000     | ) |   |          |  |   |             |   |   | -          |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Stock compensation plans (Note 9)                       |                 |  |              |         |  |            |   |   | 906,850    |   |   |              |   |   |          |  |   |             |   |   | 906,850    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Transfer of 100,000 shares of subsidiary common         |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|stock for services                                      |                 |  |              |         |  |            |   |   | 6,000      |   |   |              |   |   |          |  |   |             |   |   | 6,000      |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Conversion of notes payable to equity (Note 9)          |                 |  |              |         |  | 198,000    |   |   | 35,500     |   |   |              |   |   |          |  |   |             |   |   | 35,500     |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Common stock issued for cash (Note 9)                   |                 |  |              |         |  | 1,930,500  |   |   | 259,115    |   |   |              |   |   |          |  |   |             |   |   | 259,115    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Common stock and warrants issued for cash               |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|of $596,000
      and services of $1,397,590 (Note 9)   |                 |  |              |         |  | 5,660,000  |   |   | 1,993,590  |   |   |              |   |   |          |  |   |             |   |   | 1,993,590  |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Exercise of warrants for cash                           |                 |  |              |         |  | 350,000    |   |   | 35,000     |   |   |              |   |   |          |  |   |             |   |   | 35,000     |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Amortization of deferred compensation                   |                 |  |              |         |  |            |   |   |            |   |   | 56,999       |   |   |          |  |   |             |   |   | 56,999     |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Net loss                                                |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   | (3,919,373  | ) |   | (3,919,373 | )
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Balances at December 31, 2003                           | 187,190         |  |              | 334,906 |  | 53,440,917 |   |   | 7,998,351  |   |   | (182,670     | ) |   | 3,500    |  |   | (9,287,889  | ) |   | (1,133,802 | )
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Issuance of common stock for services (Note 9)          |                 |  |              |         |  | 2,254,000  |   |   | 382,370    |   |   |              |   |   |          |  |   |             |   |   | 382,370    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Issuance of common stock for services (Note 9)          |                 |  |              |         |  | 500,000    |   |   | 123,250    |   |   | (123,250     | ) |   |          |  |   |             |   |   | -          |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Stock compensation plans (Note 9)                       |                 |  |              |         |  |            |   |   | 412,950    |   |   |              |   |   |          |  |   |             |   |   | 412,950    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Conversion of notes payable to equity (Note 9)          |                 |  |              |         |  | 650,000    |   |   | 89,282     |   |   |              |   |   |          |  |   |             |   |   | 89,282     |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Common stock issued for cash (Note 9)                   |                 |  |              |         |  | 3,881,827  |   |   | 425,220    |   |   |              |   |   |          |  |   |             |   |   | 425,220    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Common stock issued for cash and services               |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|of $422,250
      and services of $339,075 (Note 9)     |                 |  |              |         |  | 4,935,000  |   |   | 761,325    |   |   |              |   |   |          |  |   |             |   |   | 761,325    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Issuance of common stock for options exercised (Note 9) |                 |  |              |         |  | 300,000    |   |   | 30,000     |   |   |              |   |   |          |  |   |             |   |   | 30,000     |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Stock redeemed (Note 9)                                 |                 |  |              |         |  | (9,600,000 | ) |   | (1,440,000 | ) |   |              |   |   |          |  |   |             |   |   | (1,440,000 | )
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Stock reissued (Note 9)                                 |                 |  |              |         |  | 3,000,000  |   |   | 450,000    |   |   |              |   |   |          |  |   |             |   |   | 450,000    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Stock to be issued                                      |                 |  |              |         |  | (700,000   | ) |   | (70,412    | ) |   |              |   |   | 70,412   |  |   |             |   |   | -          |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Amortization of deferred compensation                   |                 |  |              |         |  |            |   |   |            |   |   | 285,378      |   |   |          |  |   |             |   |   | 285,378    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Beneficial conversion (Note 7)                          |                 |  |              |         |  |            |   |   | 800,000    |   |   |              |   |   |          |  |   |             |   |   | 800,000    |  
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Net loss                                                |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   | (2,459,928  | ) |   | (2,459,928 | )
|                                                        |                 |  |              |         |  |            |   |   |            |   |   |              |   |   |          |  |   |             |   |   |            |  
|Balances at December 31, 2004                           | 187,190         |  | $            | 334,906 |  | 58,661,744 |   | $ | 9,962,336  |   | $ | (20,542      | ) | $ | 73,912   |  | $ | (11,747,817 | ) | $ | (1,397,205 | )

The accompanying notes are an
  integral part of these consolidated financial statements
  F- 5

---

BANYAN CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS 
  YEARS ENDED DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|                                                                         |   | 2004        |   |   | 2003        |  
|------------------------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|                                                                         |   |             |   |   |             |  
|Cash flows from operating activities
      of continuing operations      |   |             |   |   |             |  
|Net loss from continuing operations                                      | $ | (2,287,282) | ) | $ | (3,440,785) | )
|Adjustments to reconcile net loss to net cash                            |   |             |   |   |             |  
|used in operating activities:                                            |   |             |   |   |             |  
|Impairment
      loss                                                    |   | -           |   |   | 52,000      |  
|Stock,
      options and warrents issued for services                    |   | 1,134,395   |   |   | 2,238,529   |  
|Amortization
      of deferred compensation                              |   | 285,378     |   |   | 56,999      |  
|Amortization
      of other assets                                       |   | 15,246      |   |   | -           |  
|Expenses
      paid by convertible note                                  |   | 37,436      |   |   | -           |  
|Note
      payable written-off                                           |   | (45,000     | ) |   | -           |  
|Foreign
      exchange on note payable                                   |   | 17,500      |   |   | -           |  
|Changes in assets and liabilities from continuing operations:            |   |             |   |   |             |  
|Accounts
      receivable                                                |   | (22,754     | ) |   | (7,246      | )
|Accounts
      payable and accrued expenses                              |   | 53,914      |   |   | 82,088      |  
|                                                                         |   |             |   |   |             |  
|Net cash used in operating
      activities of continuing operations     |   | (811,167    | ) |   | (1,018,415) | )
|                                                                         |   |             |   |   |             |  
|Cash flows from investing activities:                                    |   | -           |   |   | -           |  
|                                                                         |   |             |   |   |             |  
|Cash flows from financing activities                                     |   |             |   |   |             |  
|Net proceeds from notes payable, related parties                         |   | (4,530      | ) |   | 73,591      |  
|Proceeds from long term debt                                             |   | 377,103     |   |   | -           |  
|Deferred finance fees                                                    |   | (5,000      | ) |   | -           |  
|Payments on long term debt and notes payable                             |   | (8,000      | ) |   | (55,000     | )
|Proceeds from issuance of common stock and exercise                      |   |             |   |   |             |  
|of
      options and warrents                                            |   | 877,470     |   |   | 890,115     |  
|                                                                         |   |             |   |   |             |  
|Net cash provided by financing
      activities of continuing operations |   | 1,237,043   |   |   | 908,706     |  
|                                                                         |   |             |   |   |             |  
|Cash (used in) provided by discontinued operations                       |   | (435,140    | ) |   | 70,741      |  
|                                                                         |   |             |   |   |             |  
|Net decrease in cash                                                     |   | (9,264      | ) |   | (38,968     | )
|                                                                         |   |             |   |   |             |  
|Cash and cash equivalents,
      beginning of year                       |   | 10,209      |   |   | 49,177      |  
|                                                                         |   |             |   |   |             |  
|Cash and cash equivalents,
      end of year                             | $ | 945         |   | $ | 10,209      |  

(continued)

The accompanying notes are an
  integral part of these consolidated financial statements
  F- 6

---

BANYAN CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS (continued) 
  YEARS ENDED DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|Supplemental disclosures of
      cash flow information: |   |           |   |   |        | 
|-------------------------------------------------------- | - | --------- | - | - | ------ | 
|                                                         |   |           |   |   |        | 
|Cash paid for interest                                   | $ | 703       |   | $ | 22,958 | 
|                                                         |   |           |   |   |        | 
|Supplemental disclosure of non-cash investing and        |   |           |   |   |        | 
|financing
      activities:                              |   |           |   |   |        | 
|                                                         |   |           |   |   |        | 
|Convertible note                                         |   |           |   |   |        | 
|Convertible note, issued                                 | $ | 1,200,000 |   |   |        | 
|Finance fees capitalized                                 |   | (177,956  | ) |   |        | 
|Expenses                                                 |   | (37,436   | ) |   |        | 
|Prepaid interest                                         |   | (22,575   | ) |   |        | 
|Southern Health Care Inc. loan repaid                    |   | (584,930  | ) |   |        | 
|                                                         |   |           |   |   |        | 
|                                                         | $ | 377,103   |   | $ |        | 
|                                                         |   |           |   |   |        | 
|Sale of assets of Southern Health Care Inc.              |   |           |   |   |        | 
|Carrying value of net assets                             | $ | 471,278   |   |   |        | 
|Liabilities not assumed by purchaser                     |   | 111,042   |   |   |        | 
|Note receivable issued                                   |   | (824,507  | ) |   |        | 
|                                                         |   |           |   |   |        | 
|Gain on sale of subsidiary                               | $ | (242,187  | ) | $ |        | 
|                                                         |   |           |   |   |        | 
|Class A common stock issued in satisfaction of           |   |           |   |   |        | 
|notes
      payable (Note 9)                             | $ | 89,282    |   | $ | 35,500 | 

The accompanying notes are an
  integral part of these consolidated financial statements 
  F- 7

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|1. | Organization, principles of consolidation,
          going concern, results of operations and management’s plans:
        Organization and principles of consolidation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Banyan Corporation (the “Company”),
        an Oregon corporation, was incorporated on June 13, 1978. The Company
        primarily franchises Chiropractic USA chiropractic clinics in the health
        care industry. All clinics are operated by independent entrepreneurs under
        the terms of franchise arrangements (franchisees).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | The consolidated
        financial statements include the accounts of Banyan Corporation, its wholly-owned
        subsidiaries, Banyan Financial Services, Inc. (a Colorado corporation),
        Franchise Support Network Inc. (a Canadian corporation) and its majority-owned
        subsidiary, Chiropractic USA, Inc. (a Colorado corporation) and the accounts
        of Southern Health Care, Inc. (a Colorado corporation) in accordance with
        guidelines established under Emerging Issue Task Force 97-2 Application
        of FASB Statement No. 94 and APB Opinion 16 to Physician Practice Management
        Entities and Certain Other Entities with Contractual Management Arrangements.The Company meets all six of the requirements for a controlling financial
        interest that results in the consolidation of Southern Health Care, Inc.
        All significant intercompany accounts and transactions have been eliminated
        in consolidation. Banyan Financial Services Inc. and Franchise Support
        Network Inc. have not commenced operations.
|  
|   | Going concern,
        results of operations and management’s plans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | The Company has incurred operating losses for several
        years. These losses have caused the Company to operate with limited liquidity
        and have created stockholders’ deficit and working capital deficiencies
        of $1,397,205 and $1,964,581, respectively, as of December 31, 2004. These
        conditions raise substantial doubt about the Company’s ability to
        continue as a going concern. Management’s plans to address these
        concerns include the conversion of outstanding debt to equity, additional
        equity financing, sales of franchises, increasing collections of receivables
        from franchisees and acquisition of a diagnostic imaging business, which
        management believes to have a positive cash flow and in addition selling
        the company-owned clinics that had a negative cash flow.                                                                                                                                                                                                                         
|  
|   | The accompanying
        financial statements do not include any adjustments relating to the recoverability
        and classification of assets or the amounts of liabilities that might
        be necessary should the Company be unsuccessful in implementing these
        plans, or otherwise be unable to continue as a going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|2. | Summary of significant
        accounting policies: Use of estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | The preparation of
        financial statements in conformity with accounting principles generally
        accepted in the United States of America requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and disclosure of contingent assets and liabilities at the date of the
        financial statements and the reported amounts of revenue and expenses
        during the reporting period. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | Cash and cash
        equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | The Company considers
        all highly liquid investments with an original maturity of three months
        or less to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | Accounts receivable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | Accounts receivable
        are uncollateralized and consist primarily of receivables from franchisees.
        Management reviews accounts receivable periodically for collectibility
        and establishes an allowance for doubtful accounts and records bad debt
        expense when deemed necessary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F- 8

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|2. | Summary of significant
        accounting policies (continued):
      Goodwill:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Goodwill, arising
        from the acquisition of the Chiropractic USA development plan, represents
        the purchase price in excess of the fair value of assets acquired. In
        June 2001, the Financial Accounting Standards Board (“FASB”)
        issued Statement of Financial and Accounting Standards (“SFAS”)
        No. 142, Goodwill and Other Intangible Assets. Effective January
        1, 2002, SFAS No. 142 no longer allows the amortization of goodwill and
        intangible assets with indefinite useful lives. SFAS No. 142 requires
        that these assets be reviewed for impairment at least annually, or whenever
        there is an indication of impairment. Intangible assets with finite lives
        will continue to be amortized over their estimated useful lives and reviewed
        for impairment in accordance with SFAS No. 144, Accounting for the
        Impairment or Disposal of Long-Lived Assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | SFAS No. 142 requires
        companies to allocate goodwill to identifiable reporting units, which
        are then tested for impairment using a two-step process detailed in the
        statement. The first step requires comparing the fair value of each reporting
        unit with its carrying amount, including goodwill. If the fair value exceeds
        the carrying amount, goodwill of the reporting unit is considered not
        impaired, and the second step of the impairment test is not necessary.
        If the fair value of the reporting unit does not exceed the carrying amount,
        the second step of the goodwill impairment test must be performed to measure
        the amount of impairment loss, if any. This step requires the allocation
        of the fair value of the reporting unit to the reporting unit’s
        assets and liabilities (including any unrecognized intangible assets)
        as if the reporting unit had been acquired in a business combination and
        the fair value of the reporting unit was the price paid to acquire the
        reporting unit. The excess of the fair value of the reporting unit over
        its re- evaluated net assets would be the new basis for the reporting
        unit’s goodwill, and any necessary goodwill write down to this new
        value would be recognized as an impairment expense. The Company performed
        its annual goodwill impairment test in the fourth quarter of 2003 and
        determined that goodwill was impaired as of that testing date. As a result,
        the Company recorded an impairment loss of $52,000 for the year ended
        December 31, 2003.
|  
|   | Revenue recognition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | Fees from franchised
        clinics include initial franchise fees and continuing royalty fees and
        marketing fees. Initial fees are recognized upon opening of a clinic,
        which is when the Company has performed substantially all initial services
        required by the franchise arrangement. Continuing fees are recognized
        in the period earned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | Comprehensive
        income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | SFAS No. 130, Reporting
        Comprehensive Income,establishes accounting and reporting requirements
        for comprehensive income. During the years ended December 31, 2004 and
        2003, the Company had no components of comprehensive income to report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | Foreign currency
        translation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   | Operating revenue
        and expenses arising from foreign currency transactions are translated
        into US dollars at exchange rates in effect on the date of the transactions.
        Monetary assets and liabilities are translated into US dollars at the
        exchange rate in effect at the balance sheet date. Gains or losses arising
        from the translations are included in earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

F- 9

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|2. | Summary of significant accounting
          policies (continued):
        Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | SFAS No. 123, Accounting
        for Stock-Based Compensationallows companies to choose whether to
        account for employee stock-based compensation on a fair value method,
        or to continue accounting for such compensation under the intrinsic value
        method prescribed in Accounting Principles Board Opinion No. 25, Accounting
        for Stock Issued to Employees(“APB 25”). The Company
        has chosen to continue to account for employee stock based compensation
        using APB 25. Accordingly, no compensation expense has been recognized
        for options granted at fair value. Had compensation cost for the Company’s
        stock options plan been determined based on the fair value at the grant
        dates for awards under the plans consistent with the fair-value based
        method of accounting prescribed by SFSA No. 123, the Company’s results
        would have been changed to the pro forma amounts indicated below:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                                                  |   | 2004       |   |   | 2003       |  
|------------------------------------------------- | - | ---------- | - | - | ---------- | -
|Net loss, as reported                             | $ | (2,459,928 | ) | $ | (3,919,373 | )
|Deduct: Total stock-based employee                |   |            |   |   |            |  
|compensation expense determined under             |   |            |   |   |            |  
|fair value based method for all awards            |   | (120,000   | ) |   | (375,500   | )
|Net loss, pro forma                               | $ | (2,579,928 | ) | $ | (4,294,873 | )
|Basic and diluted loss                            |   |            |   |   |            |  
|per share, as reported                            | $ | (0.04      | ) | $ | (0.08      | )
|Basic and diluted loss per
      share, pro forma |   |            |   |   |            |  
|per share, pro forma                              | $ | (0.05      | ) | $ | (0.09      | )

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fair value of each
        option and grant is estimated on the date of the grant using the Black-Scholes
        option-pricing model with the following weighted-average assumptions used
        for grants in the years ended December 31, 2004 and 2003: dividend yield
        of zero; expected volatility of 16% (ranging from 197% to 181% for 2003);
        risk-free interest rates of 3% (ranging from 1.36% to 1.68% for 2003);
        and an expected term of 5 years (18-36 months for 2003).
      Income taxes:
      The Company provides
        for income taxes under the provisions of SFAS No. 109, Accounting for
        Income Taxes. SFAS No. 109 requires an asset and liability based approach
        in accounting for income taxes. Deferred income tax assets and liabilities
        are recorded to reflect the tax consequences on future years of temporary
        differences of revenue and expense items for financial statement and income
        tax purposes. Valuation allowances are established against assets, which
        are not likely to be realized.
      Impairment of long-lived
        assets:
      Management reviews long-lived
        assets for impairment whenever events or changes in circumstances indicate
        that the carrying amount of an asset may not be recoverable. Recoverability
        of assets to be held and used is measured by a comparison of the carrying
        amount of an asset to future net cash flows expected to be generated by
        that asset. If such assets are considered impaired, the impairment to
        be recognized is measured by the amount by which the carrying amount of
        the assets exceeds the fair value of the assets. Based on its review,
        management does not believe that any impairment of long-lived assets exists
        at December 31, 2004.

F-10

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|2. | Summary of significant accounting
          policies (continued):
        Net loss per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Basic net loss per
        share is computed by dividing the net loss applicable to common stockholders
        by the weighted-average number of shares of common stock outstanding for
        the year. Diluted net loss per share reflects the potential dilution that
        could occur if dilutive securities were exercised or converted into common
        stock or resulted in the issuance of common stock that then shared in
        the earnings of the Company, unless the effect of such inclusion would
        reduce a loss or increase earnings per share. For the years ended December
        31, 2004 and 2003, the effect of the inclusion of dilutive shares would
        have resulted in a decrease in loss per share. Accordingly, the weighted
        average shares outstanding have not been adjusted for dilutive shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | Advertising:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | Advertising costs
        are expensed as incurred. For the years ended December 31, 2004 and 2003,
        advertising costs were approximately $114,000 and $90,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | Business segments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | The Company has adopted SFAS No. 131, Disclosures
        *About Segments of an Enterprise and Related Information*, which
        establishes reporting and disclosure standards for an enterprise’s
        operating segments. Operating segments are defined as components of an
        enterprise for which separate financial information is available and regularly
        reviewed by the Company’s senior management. During 2004 and 2003,
        the Company operated in two business segments, franchising chiropractic
        clinics and chiropractic services, the later of which was disposed of
        in 2004 and is recorded under discontinued operations. (See Note 13)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | Recently issued
        accounting pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | In January 2003, the FASB issued SFAS
          Interpretation No. 46, Consolidation of Variable Interest Entities(“FIN 46”), which changes the criteria by which one
          company includes another entity in its consolidated financial statements.
          FIN 46 requires a variable interest entity (“VIE”) to be
          consolidated by a company if that company is subject to a majority of
          the risk of loss from the variable interest entity’s activities
          or entitles to receive a majority of the entity’s residual returns
          or both. In December 2003, the FASB approved a partial deferral of FIN
          46 along with various other amendments. The effective date for this
          interpretation has been extended until the first fiscal period ending
          after December 15, 2004. However, prior to the required application
          of this interpretation, a public entity that is a small business issuer
          shall apply this interpretation to those entities that are considered
          to be special purpose entities no later than as of the end of the first
          reporting period after December 15, 2003. As the Company does not currently
          have an interest in a VIE or special purpose entity, management does
          not expect that the adoption of FIN 46 will have a material effect on
          the financial condition or results of operations of the Company.
        In May 2003, the FASB issued SFAS No.
          150, Accounting for Certain Financial Instruments with Characteristics
          of both Liabilities and Equity. SFAS No. 150 establishes new standards
          on how an issuer classifies and measures certain financial instruments
          with characteristics of both liabilities and equity. The provisions
          of SFAS No. 150 are generally effective for all financial instruments
          entered into or modified after May 31, 2003, except for those provisions
          relating to mandatory redeemable non- controlling interests, which have
          been deferred. The adoption of SFAS No. 150 did not have a material
          impact on the financial position or results of the Company. If the deferred
          provisions of SFAS No. 150 are finalized in their current form, management
          does not expect adoption to have a material effect on the financial
          position or results of operations of the Company.

F-11

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|2. | Summary of significant
        accounting policies (continued):
      Recently issued accounting
        pronouncements (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | 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 waste material (spoilage). SFAS No. 151 requires that those items
        be recognized as current-period charges. In addition, this statement requires
        that all allocation of fixed production overheads to costs of conversion
        be based upon the normal capacity of the production facilities. The provisions
        of SFAS No. 151 are effective for fiscal years beginning after June 15,
        2005. As such, the Company is required to adopt these provisions at the
        beginning of the fiscal year ended December 31, 2006. Management does
        not expect the adoption of SFAS No. 151 to have a significant impact on
        the financial position or results of operations of the Company.                                                                                                                                                                                                                                                                         
|  
|   | 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 SOP
        04-2, Accounting for Real Estate Time-Sharing Transactions. SFAS
        No. 152 also amends FASB Statement No. 67, Accounting for Costs and
        Initial Rental Operations of Real Estate Projects, to state that the
        guidance for incidental operations and costs incurred to sell real estate
        projects does not apply to real estate time-sharing transactions, with
        the accounting for those operations and costs being subject to the guidance
        in SOP 04-2. The provisions of SFAS No. 152 are effective in fiscal years
        beginning after June 15, 2005. As Such the Company is required to adopt
        these provisions at the beginning of the fiscal year ended December 31,
        2006. Management does not expect the adoption of SFAS No. 152 to have
        a significant impact on the financial position or results of operations
        of the Company.
|  
|   | In December 2004,
        the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets –
        an amendment of APB Opinion No. 29. SFAS No. 153 replaces the exception
        from fair value measurement in APB Opinion No. 29 for non-monetary exchanges
        of similar productive assets with a general exception from fair value
        measurement for exchanges of non-monetary assets that do not have commercial
        substance. A non-monetary exchange has commercial substance if the future
        cash flows of the entity are expected to change significantly as a result
        of the exchange. SFAS No. 153 is effective for all interim periods beginning
        after June 15, 2005. As such, the Company is required to adopt these provisions
        at the beginning of the fiscal quarter ended September 30, 2005. The Company
        is currently evaluating the impact of SFAS No. 153 on its consolidated
        financial statements.                                                                                                                                                                                                                                                                                                                                                              
|  
|   | In December 2004,
        the FASB issued SFAS No. 123R, Share-Based Payment. SFAS No. 123R
        revises FASB Statement No. 123, Accounting for Stock-Based Compensation,
        and supersedes APB Opinion No. 25, Accounting for Stock issued to Employees.
        SFAS No. 123R requires all public and non-public companies to measure
        and recognize compensation expense for all stock-based payments for services
        received at the grant-date fair value, with the cost recognized over the
        vesting period (or the requisite service period). SFAS No. 123R is effective
        for non-small business issuers for all interim periods beginning after
        June 15, 2005. SFAS No. 123R is effective for small business issuers for
        all interim periods beginning after December 15, 2005. As such, the Company
        is required to adopt these provisions at the beginning of the fiscal quarter
        ended March 31, 2006. Retroactive application of the provisions of SFAS
        No. 123R to the beginning of the fiscal year that includes the effective
        date is permitted, but not required. The Company is currently evaluating
        the impact of SFAS No. 123R on its consolidated financial statements.                                                                

F-12


---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|3. | Business acquisitions
        and dispositions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | In September 2001, the Company, entered into an
        agreement with Advanced Health Center, Inc. (“Advanced”) of
        Lake Charles, Louisiana to purchase three chiropractic clinics and their
        operating assets for $1,150,000. On June 26, 2002, the Company’s
        wholly-owned subsidiary, Chiropractic USA, Inc. assigned its right to
        acquire the clinics to Southern Health Care, Inc., (”Southern”)
        a newly formed Colorado holding company with no other assets, in exchange
        for a management agreement and franchise agreements. Southern is wholly
        owned by the Company’s chief executive and chief financial officer.
        This assignment was undertaken at the request of the financial institution
        funding the acquisition to accommodate their desired organizational structure
        for the transaction. On July 29, 2002, Southern completed the acquisition
        of Advanced. As part of the agreement to purchase Advanced, the Company
        agreed to issue an aggregate of 2,300,000 shares of its Class A common
        stock, valued at $345,000 as guarantee and loan fees on the financial
        institution debt of Southern. The guarantee and loan fees were being amortized
        over the three-year term of the loan. However, in November 2004, the Company
        repaid in full the guaranteed loan and wrote-off the unamortized balance
        of the guarantee. In December 2004, the net assets of Southern were transferred
        to Chiropractic USA, who in turn sold the net assets to a third party.
        The disposal included accounts receivable with a book value of approximately
        $650,000, furniture, fixtures and equipment with a book value of approximately
        $102,000 and accounts payable with a book value of approximately $224,000.
        The sale agreement is for $1,000,000 minus $175,493 of accounts payable
        and the company assuming $50,000 of accounts payable, in exchange for
        a promissory note of $824,507, bearing interest at 5% starting, principal
        and interest, in September 2005. Principal and interest amounts will be
        paid in 120 monthly instalments. The promissory note is secured by all
        current and future acquired assets of the purchaser.
|  
|   | On May 7, 2001, the
        Company made an offer to purchase all of the issued and outstanding shares
        of Franchise Support Network, Inc. (“FSN”) in exchange for
        34,047,666 shares of the Company’s Class A common stock. The Company
        issued an aggregate of 24,000,000 shares of its Class A common stock to
        the shareholders of FSN, Michael and Cory Gelmon, on November 30, 2002.
        The transaction has been accounted for by the Company under guidance provided
        by SAB No. 48 (Topic 5-G), Transfers of Nonmonetary Assets by Promoters
        or Shareholders. Accordingly, the assets of FSN have been recorded
        at the transferors’ historical cost basis, which is zero, as FSN
        had no assets as of the acquisition date, had not commenced operations
        and expenses since inception are not material. At December 31, 2004, the
        Company’s chief executive and chief financial officer hold 15,100,000
        shares of the Company’s Class A common stock, or approximately 26%
        of the issued and outstanding Class A common stock. At December 31, 2004,
        there were 10,047,666 shares to be issued to the Company’s chief
        executive and chief financial officer for the acquisition of FSN, when
        they become available for issue (see Note 16).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|4. | Franchise Operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   | As of December 31,
        2004, the Company’s subsidiary, Chiropractic USA Inc., is entered
        into more than fifty franchise agreements. Franchise agreements are for
        ten-year terms. The franchise agreements provide for payment of percentage
        royalties, contribution to a national advertising fund, and charges for
        additional services selected by the franchisee. New practitioners pay
        a franchise fee in addition to these charges. Some franchise agreements
        cover more than one location.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | As of December 31,
        2004, the Company’s subsidiary Chiropractic USA Inc., is entered
        into thirteen area developer agreements. Area developer agreements are
        for five-year terms. An area developer is responsible for developing a
        number of additional Chiropractic USA franchised locations within an exclusive
        territory. Area developers are paid a percentage of the royalties collected
        in the territory. An area developer typically enters into one or more
        franchise agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-13


---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|5. | Lease commitments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The Company leases
        office space in Los Angeles, California under a month-to-month lease for
        $250 per month.                                                                                                                                                                                                                                                                                                                                                                                                
|  
|6. | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | The Company did not
        incur income tax expense for the years ended December 31, 2004 and 2003.
        The difference between the expected tax benefit computed at the federal
        statutory income tax rate of 34% and the effective tax rate for the years
        ended December 31, 2004 and 2003 was due primarily to the tax effect of
        the change in the valuation allowance.                                                                                                                      
|  
|   | The Company recognizes
        deferred tax liabilities and assets for the expected future tax consequences
        of events that have been recognized in the financial statements or tax
        returns. Under this method, deferred tax liabilities and assets are determined
        based on the difference between the financial statement carrying amounts
        and tax bases of assets and liabilities using enacted tax rates in effect
        in the years in which the differences are expected to reverse.
|  
|   | The following is
        a summary of the Company’s deferred tax assets and liabilities arising
        from differences in financial statement and income tax bases for the following
        assets at December 31, 2004:                                                                                                                                                                                                                                                                                                

| | Net operating
      loss carry forward       | $ | 3,702,600  |   | 
| | -------------------------------------------- | - | ---------- | - | 
| | Deferred tax asset valuation
      allowance |   | (3,702,600 | ) | 
| |                                              |   |            |   | 
| |                                              | $ | -          |   | 

|   | At December 31, 2004
        the Company has approximately $10,890,000 of unused federal net operating
        loss carry forwards, which expire from 2005 through 2024. A valuation
        allowance has been provided to reduce the deferred tax assets to zero,
        as realization is not assured. In addition, due to the change in control
        of the Company in 2002, the net operating loss carry forwards may be limited.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|7. | Convertible note:                                                                                                                                                                                                                                                                                                                                                                                                                         

| | Face value
      of note   | $ | 1,200,000 |  
| | -------------------------- | - | --------- | -
| | Less: unamortized discount |   | (800,000  | )
| |                            |   |           |  
| |                            | $ | 400,000   |  

| | The Company has entered
        into an agreement to sell $3,000,000 in convertible notes. The proceeds
        are to be advanced in stages.
      The convertible notes
        have a term of two years after issuance and bear interest at 10%. Four
        months of interest is payable upon issuance. Any interest that has not
        been paid in advance is payable monthly. In any month in which the stock
        price is greater than $0.22, the interest for that month shall be
        zero. The notes are immediately convertible into shares of the Company’s
        common stock at the holder’s option. The conversion price will be
        equal to the lesser of $0.22 and the average of the lowest 3 intra-day
        trading prices during the 20 trading days prior to the conversion date
        discounted by 40%.
      Lenders shall receive
        for each $1.00 of note, warrants to purchase one share of the Company’s
        common stock. Warrants have a five-year term from the date of issuance
        with an exercise price equal to $0.40 a share. Warrants are issued
        at the same time the proceeds are received.
      As of December 31, 2004,
        the first advance of the $1,200,000 was received, and 1,200,000 warrants
        were issued. Financing fees related to the first advance amounted to $182,956.
        The fees were capitalized and are being amortized over the two-year term
        of the note. The note is due in November 2006. The second advance of $800,000
        was received after the year-end upon filing of a registration statement
        for the shares underlying the convertible notes and warrants. The final
        $1,000,000 advance is due within five days after the effective date
        of the registration statement
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-14

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|7. | Convertible note
        (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | As a result of the advance of the amount $1,200,000
        on account of the convertible note, a beneficial conversion in the amount
        of $800,000 resulted this amount has been deducted from the face value
        of the note and will be charged to earnings upon the registration statement
        becoming effective. The receipt of the second advance of $800,000 will
        result in an estimated beneficial conversion in the amount of $533,000,
        which will be added to the unamortized discount and charged to earnings
        upon the registration statement becoming effective.
|  
|8. | Notes payable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | At December 31, 2004
        notes payable consist of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | Related Parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| | Note payable,
      family member of a principal stockholder/officer; unsecured;          |   |         | 
| | ----------------------------------------------------------------------------------------- | - | ------- | 
| | interest at 10%; due January
      2006                                                   | $ | 50,000  | 
| | Note payable,
      entity controlled by chief executive and chief financial officers;    |   |         | 
| | unsecured; interest at 10%;
      due January 2006                                        |   | 69,050  | 
| |                                                                                           |   |         | 
| |                                                                                           | $ | 119,050 | 
| |                                                                                           |   |         | 
| | Other                                                                                     |   |         | 
| |                                                                                           |   |         | 
| | Note payable;
      unrelated entity, unsecured; interest at 10%, due June 2002, past due | $ | 5,000   | 
| | Note payable; unrelated party,
      unsecured; interest at 8%, due April 2005            |   | 15,000  | 
| | Note payable;
      unrelated party, unsecured; interest at 10%, due April 2005           |   | 33,840  | 
| | Note payable; unrelated party,
      unsecured; interest at 9%, due April 2005            |   | 16,300  | 
| | Note payable;
      unrelated party, unsecured; interest at 9%, due April 2005            |   | 12,200  | 
| | Note payable; unrelated party,
      unsecured; interest at 10%, due April 2005           |   | 130,640 | 
| | Note payable;
      unrelated party, unsecured; interest at 10%, due April 2005           |   | 50,000  | 
| |                                                                                           |   |         | 
| |                                                                                           | $ | 262,980 | 

|9. | Stockholders’
        deficit: Preferred stock:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The Company has 10,000,000
        shares of no par value preferred stock authorized, and has designated
        500,000 shares of Class A convertible preferred stock and 500,000 shares
        of Class B preferred stock. No Class B preferred stock is issued or outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | At December 31, 2004
        and 2003, there were 187,190 shares of no par value, Class A convertible
        preferred stock issued and outstanding. The Company may call the shares
        at $2.75 per share at any time. Each share of Class A convertible
        preferred stock is convertible at any time into one share of the Company’s
        Class A common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | Common stock:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | In September 2003,
        the Board of Directors re-designated 10,000,000 shares of no par value,
        Class B common stock as no par value, Class A common stock thereby increasing
        the number of authorized shares of Class A common stock from 50,000,000
        to 60,000,000. There are no longer any shares of Class B common stock
        authorized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | At December 31, 2004,
        the Company has 60,000,000 shares of no par value, common stock authorized.
        At the end of the year, there were 58,661,744 shares of Class A common
        stock issued and outstanding. In addition, the Company has outstanding
        options of 22,120,000, outstanding warrants of 1,200,000, a commitment
        to issue 1,800,000 additional warrants, outstanding preferred stock of
        187,190, 10,047,666 shares to be issued to its officers and directors
        in connection with the acquisition of intellectual property and the stock
        of a now-inactive subsidiary, a commitment to issue 6,600,000 shares to
        the Chief Executive Officer and 700,000 shares to be issued for subscriptions
        before December 31, 2004. The Company does not have sufficient authorized
        shares to issue and deliver all those shares. The Company had a special
        shareholders’ meeting to increase its authorized shares in an amount
        sufficient to meet its obligations to issue shares and future requirements
        in March 2005 (see Note 16).

F-15

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|9. | Stockholders’
        deficit (continued):
      Stock transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | During the year ended
        December 31, 2004, the Company sold an aggregate of 4,935,000 shares of
        its Class A common stock, at less than the market value on the date of
        sale, for cash of $422,250 to franchisees and area developers. As
        the cash consideration for the stock sales was less than the market value
        on the sales dates, the Company recorded an expense of $339,075 for
        the effect of these discounts. During the year ended December 31, 2004,
        the Company issued an aggregate of 3,881,827 shares of Class A common
        stock to investors at an average price of approximately $0.11 per
        share for total cash consideration of $425,220.                                                                                                                                                                                                                                                            
|  
|   | In February 2004,
        the Company issued 500,000 shares of Class A common stock, valued at $0.25
        per share, which was equal to the market price on the agreement date,
        to consultants under twelve month service agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | In February 2004,
        the Company issued 950,000 shares of Class A common stock for services
        rendered. The shares were valued at $212,544 and expensed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | In February 2004,
        the Company issued 300,000 shares of Class A common stock to related parties
        who exercised options. The company received $30,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | In August 2004, the
        Company issued 904,000 shares of Class A common stock for services rendered.
        The shares were valued at $114,376 and expensed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | In August 2004, the
        Company redeemed 9,600,000 shares of Class A common stock from the chief
        executive officer of the Company. The shares were valued at $1,440,000
        and recorded as payable. In September 2004, the Company issued 650,000
        shares of Class A common stock, valued at $89,282 for cancellation
        of debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | In October 2004,
        the Company issued 250,000 shares of Class A common stock for services
        rendered. The shares were valued at $32,500 and expensed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | In November 2004,
        the Company issued 150,000 shares of Class A common stock for services
        rendered. The shares were valued at $22,950 and expensed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   | In December 2004,
        the Company reissued 3,000,000 shares of Class A common stock to the chief
        executive officer. The shares were valued at $450,000 and recorded
        against the payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   | During the year ended December 31, 2003 the Company
        sold an aggregate of 750,000 shares of its Class A common stock, at less
        than the market value on the sale date, and 4,910,000 units consisting
        of one share of its Class A common stock and a warrant to purchase one
        share of its Class A common stock, at less than market value of the common
        stock and fair value of the warrant on the sale date, for cash of $596,000
        to franchisees and area developers. As the cash consideration for the
        stock sales was less than the market value on the sale dates, the Company
        recorded an expense of $407,350 for the effect of these discounts. The
        warrants are immediately exercisable and may be exercised for a period
        of 18 months from the sale date. The Company valued the warrants based
        on the Black-Scholes pricing model, resulting in compensation expense
        of $990,240.
|  
|   | In February 2003,
        the Company issued 202,000 shares of Class A common stock, valued at $0.10
        per share, the market price on the agreement date, to consultants for
        accounting and Internet services. In May 2003, the Company issued 20,000
        shares of Class A common stock, valued at $0.14 per share, the market
        price on the agreement date, to a consultant for marketing services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | In August 2003, the
        Company issued 1,428,571 shares of Class A common stock, valued at $0.14
        per share, the market price on the agreement date, to a consultant for
        marketing services under a twelve month marketing service agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | In July 2003, the
        Company issued 150,000 shares of Class A common stock at $0.12 per
        share, the market price on the agreement date, to an employee for services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-16

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|9. | Stockholders’
        deficit (continued):
      Stock transactions
        (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | In October 2003,
        the Company issued 50,000 shares of Class A common stock, valued at $0.49
        per share, the market price on the agreement date, to a consultant for
        marketing services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | In December 2003,
        the Company issued 198,000 shares of its Class A common stock, valued
        at $35,500, to a former president of the Company in exchange for $35,500
        reduction in debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | During the year ended
        December 31, 2003, the Company issued an aggregate of 1,930,500 shares
        of its Class A common stock to investors at an average price of approximately
        $0.13 per share, for total cash consideration of $259,115.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | Stock Option:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | On October 28, 2004
        the Board of Directors adopted the 2004 Human Resources Incentive Plan
        (the "Incentive Plan") to provide incentive compensation to employees,
        directors, officers and others. The Incentive Plan provides for the granting
        of up to 50,000,000 options and shares to our personnel. Generally, stock
        options granted under the Incentive Plan are for a maximum term of ten
        years and unless otherwise provided in the specific award document vest
        and are exercisable immediately. Unless otherwise provided, the options
        expire within one year after termination of service or three months if
        termination is for cause. The Board of Directors administers the Incentive
        Plan. The Incentive Plan may be amended by the directors except where
        required by the Internal Revenue Code as to any increase in the total
        number of underlying shares and the class of persons eligible to receive
        options or as otherwise required by any applicable law or regulation.
|  
|   | The Incentive Plan
        supercedes all previous stock option plans and any ad hoc issuance of
        options. In connection with the adoption of the Incentive Plan, the Company
        converted the options issued to our management, area developers, franchisees,
        employees, consultants and one investor, into options subject to the Incentive
        Plan. The Company cancelled any other outstanding options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | During the year ended
        December 31, 2004, the Company granted options to purchase 4,565,000 shares
        of the Company’s Class A common stock at an average price of $0.10
        per share to franchisees and area developers. The Company valued these
        options based on the Black-Scholes pricing model, resulting in recognition
        of compensation expense of approximately $268,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   | In May 2004, the
        Company granted options to purchase 1,000,000 shares of the Company’s
        Class A common stock at $0.10 per share to an investor, as incentive
        to the purchase of 1,000,000 shares. The Company valued the options based
        on the Black-Scholes pricing model, resulting in recognition of compensation
        expense of $130,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | In November 2004,
        the Company granted options to purchase 150,000 shares of the Company’s
        Class A common stock at $0.10 per share to a consultant for services
        provided to the Company. The Company valued the options based on the Black-Scholes
        pricing model, resulting in recognition of compensation expense of $15,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | During the year ended
        December 31, 2003, the Company granted options to purchase 3,270,000 shares
        of the Company’s Class A common stock at an average price of $0.24
        per option to franchisees and area developers. The Company valued the
        options based upon the Black-Scholes pricing model resulting in compensation
        expense of approximately $765,600.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | In July 2002, the Company committed to grant options to purchase 685,000
          shares of the Company’s stock in July 2004, to an employee and
          to consultants for services at the weighted average closing price of
          the Company’s Class A common stock for the preceding 30 days,
          if the employees remains in the service of the company through that
          date. The Company accounts for these options as variable awards. At
          2003, the total estimated value of these options was approximately $195,000.
          For the year ended December 31, 2003, the Company recorded an expense
          of approximately $137,400 under discontinued operations.
        See also Note 10 for stock options granted to related parties for which
          no expense has been recorded.                                                                                                                                                                                                                                                              

F-17

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|9. | Stockholders’ deficit (continued):
        Stock Option (continued):                                 
|-- | -----------------------------------------------------------------------------------------------------
|  
|   | A summary of options
        activity for the periods ended December 31, 2004 and 2003 is as follows:

| |                         |                 |   |   | Weighted average | 
| | ----------------------- | --------------- | - | - | ---------------- | 
| |                         | Weighted shares |   |   | exercise price   | 
|
| | January 1,
      2003   | 7,480,000       |   | $ | 0.11             | 
| | Granted                 | 5,970,000       |   | $ | 0.20             | 
| | Expired                 | (335,000        | ) | $ | 0.08             | 
|
| | December
      31, 2003 | 13,115,000      |   | $ | 0.15             | 
|
| | Granted                 | 9,715,000       |   | $ | 0.12             | 
| | Exercised               | (300,000        | ) | $ | 0.10             | 
| | Expired                 | (410,000        | ) | $ | 0.55             | 
|
| | December
      31, 2004 | 22,120,000      |   | $ | 0.13             | 

| | The following table summarizes information
      about stock options outstanding at December 31, 2004.
| | ------------------------------------------------------------------------------------------------------

| |                |             | Weighted         | Weighted       |             | Weighted      
| | -------------- | ----------- | ---------------- | -------------- | ----------- | --------------
| | Range of       | Number      | average          | average        | Number      | average       
| | exercise price | outstanding | contractual life | exercise price | exercisable | exercise price
| |                |             |                  |                |             |               
| | $0.05-0.10     | 8,425,000   | 2.5 years        | $0.09          | 8,425,000   | $0.09         
| | $0.11-0.20     | 13,435,000  | 3.5 years        | $0.15          | 13,435,000  | $0.15         
| | $0.21-0.30     | 260,000     | 0.25 year        | $0.25          | 260,000     | $0.25         
| |                |             |                  |                |             |               
| |                | 22,120,000  |                  |                | 22,120,000  |               

|10. | Related party
        transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | As of December 31,
        2004, $1,054,644 (2003 - $166,439) included in accounts payable
        is due to the chief executive officer and the chief financial officer
        of the Company. The payable does not bear interest and has no specific
        term of repayment. Of which $990,000 was to be repaid by the issuance
        of 6,600,000 shares of Class A common stock.                                                                                               
|   
|    | In August 2004, the
        chief executive officer of the Company returned to the Company for cancellation
        9,600,000 shares of Class A common stock. These shares have been treated
        as treasury stock available for future issuance. In December 2004, The
        Company reissued 3,000,000 of those shares to the chief executive officer.
        The Company intends to repay the remaining 6,600,000 shares when enough
        shares are available (see Note 9).
|   
|    | In November 2004,
        the Company granted options to purchase an aggregate of 4,000,000 shares
        of the Company’s Class A common stock at $0.14 per share, which
        was equal to the market price on the agreement date to the chief executive
        officer and the chief financial officer of the Company. The options are
        exercisable through November 2009 and vest immediately.                                                                            
|   
|    | In January 2003,
        the company entered into an agreement with Britannia Law Office located
        in Calgary, Canada for Britannia to represent the Company in legal matters.
        The Company pays Britannia a monthly retainer of $12,000. During 2004
        and 2003, the Company paid approximately $144,000 and $158,100
        respectively to Britannia for these services. Britannia is owned by the
        president and chief executive officer of the Company.  

F-18

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|10. | Related
        party transactions (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In
        August 2003, the chief executive officer of the Company returned for cancellation
        1,000,000 shares of Class A common stock held in his name to the Company.
        In September 2003, the Company issued 1,000,000 shares of Class A common
        stock to the chief executive officer as repayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In August 2003, the Company
        granted options to purchase an aggregate of 2,000,000 shares of the Company’s
        Class A common stock at $0.18 per share, which was equal to the market
        price on the agreement date to the chief executive officer and the chief
        financial officer of the Company. The options were exercisable through
        August 2006 and vested immediately. During 2004, the Company extended
        the exercisable date through August 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | During
        the year ended December 31, 2003, the Company received $73,591 in
        exchange for notes payable issued to an entity in which the Company’s
        chief executive officer and chief financial officer are shareholders.
        The notes are non-interest bearing and due on demand. During the same
        period, $35,000 was repaid on these related party notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In
        June 2003, the Company granted options to purchase 500,000 shares of the
        Company’s Class A common stock at $0.12 per share, which was
        equal to the market price on the agreement date, and options to purchase
        200,000 shares of the Company’s Class A common stock at $0.16
        per share, which was greater than the market price on the agreement date,
        to an employee for services. The options vest over three years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In
        April 2003, the Company’s chief executive officer and chief financial
        officer transferred an aggregate of 4,800,000 shares of the Company’s
        Class A common stock held in their names to a shareholder and former director
        of the Company and another shareholder (the “Parties”) of
        the Company. In May 2001, the Company’s chief executive officer
        and chief financial officer entered into an agreement to each transfer
        10% of the shares they received upon the closing of the Franchise Support
        Network, Inc. acquisition to allay the concerns of the Parties about dilution
        upon closing. Since no services were provided by the former director or
        the shareholder, the Company has not recorded expense for the transfer
        of the Class A common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|11. | Commitments
        and contingencies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | A
        former officer and director of the Company was convicted in 1999 in U.S.
        District Court, Southern District of New York of securities violations
        occurring in 1996. No claims were made and no proceedings were instituted
        against the Company relating to these violations. The former officer and
        director claims that the Company must indemnify him for court-ordered
        restitution and his expenses, including attorney’s fees, in the
        criminal proceedings. The Company, based on an opinion of independent
        legal counsel, has taken the position that indemnification would be improper
        under the circumstances because the former officer and director had reasonable
        cause to believe his conduct was unlawful and that indemnification is
        null and void and unenforceable under the federal securities laws. Given
        that the likelihood of an unfavorable outcome of any proceeding that may
        be brought by the former president to enforce his indemnification claim
        is remote, no amount of potential loss has been accrued. During the years
        ended December 31, 2004 and 2003, the Company did not pay or incur any
        expenses, including attorney’s fees, on behalf of the former officer
        and director. $55,125 of note payable and accrued interest to his
        attorney, previously recorded, has been written-off in 2004.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | As
        of December 31, 2004 we owe $167,747 including accrued interest at
        the rate of 9% per annum with respect to a stipulated money judgment in
        favor of a broker-dealer. The judgment was entered in Multnomah County,
        Oregon pursuant to a settlement agreement entered into in January 2001.
        This legal proceeding arose from the alleged failure to deliver a stock
        certificate to the broker-dealer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | On
        January 8, 2004, a former employee filed suit against the Company seeking
        unspecified money damages for breach of an alleged employment contract.
        The case was dismissed in 2005 without prejudice against the Company.
        There has been no indication that the former employee intends to reassert
        this claim.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F-19

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|12. | Fair value of
        financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The fair value of
        a financial instrument is the current amount that would be exchanged between
        willing parties, other than in a forced liquidation. Fair value is best
        determined based upon quoted market prices. However, in many instances,
        there are no quoted market prices for the Company’s various financial
        instruments. In cases where quoted market prices are not available, fair
        values are based on estimates using present value or other valuation techniques.
        Those techniques are significantly affected by the assumptions used, including
        the discount rate and estimates of future cash flows. Accordingly, the
        fair value estimates may not be realized in an immediate settlement of
        the instrument. Accordingly, the aggregate fair value amounts presented
        may not necessarily represent the underlying fair value of the Company.
|   
|    | The fair value of
        cash and cash equivalents, accounts receivable, accounts payable and notes
        payable to related parties approximate their carrying amounts because
        of the short maturities of these instruments. The fair value of the long-term
        note payable approximates its fair value because of the adjustable interest
        rate on the note. Notes payable to non-related parties are impractical
        to approximate because of their past due status. The fair value of other
        liabilities is impractical to estimate based because of the Company’s
        default on the agreement.                                                                                                                                                                                                                                                                                                       
|   
|13. | Segment Information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    | During 2003, the Company had two business segments:
        Company owned operation of Chiropractic clinics and franchised chiropractic
        clinics. The accounting policies of the segments are the same as those
        described in the summary of significant accounting policies. The Company
        owned operation of Chiropractic clinics was disposed of during the 2004
        year and are disclosed as discontinued operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-20

---

BANYAN CORPORATION 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  DECEMBER 31, 2004 AND 2003
  (Expressed in US Dollars)

|14. | Fourth Quarter Adjustments:
      Non-cash stock compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | During the fourth quarter 2004, the Company recognized
        expense for non-cash compensation in the amount of $339,075. These shares
        were issued to franchisees and area developers below the market value.
        $50,000, $143,875 and $145,200 of this expense was from shares issued
        during the first, second and third quarters of 2004, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    | During the fourth
        quarter of 2004, the Company recognized expense for stock options issued
        in the amount of $412,950. These stock options were issued to franchisees,
        area developers, investors and consultants. $71,200, $156,000,
        $163,950 and $21,800 of this expense was from stock options issued
        during the first, second, third and fourth quarters of 2004, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|15. | Subsidiary Stock
        Transaction:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | In January 2003, the Company agreed to transfer
        100,000 shares of common stock it owns in the Company’s subsidiary,
        Chiropractic USA, Inc. to a consultant for services. The 100,000 shares
        represent a 10% minority interest in the subsidiary and were valued at
        $6,000, which the Company believes was the fair value of the common stock
        on the agreement date, as Chiropractic USA, Inc. had not yet generated
        any revenues as of the date of transfer. The Company entered into an agreement
        with the consultant, whereby he acquired an additional 39% interest in
        Chiropractic USA, Inc. in exchange for his services to promote Chiropractic
        USA and assist the Company with franchisee development and training for
        which he receives up to one quarter of the Company’s royalties on
        franchisees he introduces. The consultant was appointed to the board of
        directors of Chiropractic USA, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|16. | Subsequent events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    | In March 2005, the
        Company filed Restated Articles of Incorporation with Amendments. Under
        the Restated Articles of Incorporation with Amendments, the Company’s
        authorized capital stock is 500,000,000 shares of common stock and 100,000,000
        shares of preferred stock, all no par value. Previously, the Company’s
        authorized capital was 60,000,000 shares of common stock and 10,000,000
        shares of preferred stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | In March 2005, the
        Company issued to the Company’s chief executive officer and the
        chief financial officer the balance of 10,047,666 shares as the final
        payment on the Franchise Support Network acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    | In March 2005, the
        Company reissued 6,600,000 of the 9,600,000 cancelled shares to the chief
        executive officer as final repayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    | In 2005, the Company incorporated a wholly owned
        subsidiary, Diagnostic USA, Inc (“the subsidiary”). The subsidiary
        is intended to be a vehicle for the Company to enter the diagnostic imaging
        business. The subsidiary intends to acquire all the equity securities
        of Nationwide Diagnostic Solutions, Inc., an Arizona corporation based
        in Tempe, Arizona (“Nationwide”), from Dr. Jeff and Constance
        Rebarcak (the “Rebarcaks”), the founders, sole shareholders
        and operators of Nationwide. In March 2005, the subsidiary entered into
        an agreement with Nationwide and the Rebarcaks to acquire all their shares
        for $10,000,000. The $10,000,000 is payable at closing: $700,000 in cash
        and the balance of $9,300,000 in the form of a promissory note from the
        subsidiary to the Rebarcaks due May 30, 2015 and bearing interest at 2.5%
        per annum. The note is payable from 50% of the dividends or other distributions
        received by the subsidiary from Nationwide (70% during the first year),
        with a minimum monthly payment of $10,000. The agreement provides for
        a minimum dividend or other distribution of 75% of the net cash flow,
        if any, of Nationwide. The Company will guarantee payment of up to $1,500,000
        of the balance due on the note. The Rebarcaks would be permitted to convert
        up to $1,000,000 of the balance due on the note into shares of our common
        stock at the prevailing market price and in no event less than a conversion
        price of $.22 per share, or a maximum of approximately 4,545,454 shares.
        The deadline for closing is May 31, 2005. At closing, it is expected that
        the subsidiary would employ Jeff Rebarcak under a five-year employment
        agreement for compensation of $240,000 per year.

F-21

---

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

GHP
  Horwath, P.C., the independent registered public accounting firm that reported
  on our balance sheet as of December 31, 2003 and the related consolidated statements
  of operations, stockholders’ deficit and cash flows for each of the years
  in the two-year period ended December 31, 2003 was dismissed effective as of
  September 1, 2004. Their report was qualified in that the financial statements
  were prepared assuming that we would continue as a going concern. The report
  stated that our net loss, stockholders deficit and working capital deficiency
  as of December 31, 2003 raised substantial doubt about our ability to continue
  as a going concern. We have no audit committee; accordingly, the decision to
  dismiss accountants was approved by the board of directors. During our two most
  recent fiscal years and any subsequent interim period there were no disagreements
  with GHP Horwath, P.C., on any matter of accounting principles or practices,
  financial statement disclosure, or auditing scope or procedure which, if not
  resolved to their satisfaction, would have caused them to make reference to
  the subject matter of the disagreement(s) in connection with their report.

The
  independent registered public accounting firm of Hurley & Company, P.C.,
  the independent auditors who reviewed our balance sheet as of June 30, 2004
  and the related consolidated statements of operations, stockholders' deficit
  and cash flows for the period ended June 30, 2004 were dismissed effective as
  of September 1, 2004. Hurley & Company, P.C. did not issue any report on
  any of our financial statements. We have no audit committee; accordingly, the
  decision to dismiss accountants was approved by the board of directors. During
  our two most recent fiscal years and any subsequent interim period there were
  no disagreements with Hurley & Company on any matter of accounting principles
  or practices, financial statement disclosure, or auditing scope or procedure
  which, if not resolved to their satisfaction, would have caused them to make
  reference to the subject matter of the disagreement(s) in connection with their
  report.

On
  September 1, 2004, we appointed Schwartz Levitsky Feldman llp to audit our financial
  statements for the fiscal year ended December 31, 2004.

Item 8A. Controls and Procedures.

Disclosure
  controls and procedures are designed to ensure that information required to
  be disclosed in the reports filed or submitted under the Exchange Act is recorded,
  processed, summarized and reported within the time periods specified in the
  SEC's rules and forms. Disclosure controls and procedures include, without limitation,
  controls and procedures designed to ensure that information required to be disclosed
  in the reports filed under the Exchange Act is accumulated and communicated
  to management, including the Chief Executive Officer and the President and Chief
  Financial Officer, as appropriate, to allow timely decisions regarding required
  disclosure. Within the 90 days prior to the filing of this report, we carried
  out an evaluation, under the supervision and with the participation of the management,
  including the Chief Executive Officer and the President and Chief Financial
  Officer, of the effectiveness of the design and operation of our disclosure
  controls and procedures. Based upon and as of the date of that evaluation, the
  Chief Executive Officer and the President and Chief Financial Officer

13

---

concluded that our disclosure controls and procedures were not effective to
  ensure that information required to be disclosed in the reports the Company
  files and submits under the Exchange Act is recorded, processed, summarized
  and reported as and when required. None of our periodic reports for 2004 including
  the financial statements were filed on time. Since year end, we added three
  part time accounting employees and converted to more appropriate accounting
  software to speed up the preparation of financial reports and statements. During
  2004, expenses for options and warrants issued were not reported on a timely
  basis. The omissions occurred during every quarter of 2004 and were adjusted
  in the fourth quarter. A reporting structure with required notification of equity
  changes has been established to correct the issue.

There
  were no other changes in our internal controls or in other factors that could
  have significantly affected those controls subsequent to the date of our most
  recent evaluation.

Item 8B. Other Information.

None.

PART III

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

Directors and Executive Officers; Corporate Governance

|Name                  | Age | Positions                                   
|--------------------- | --- | --------------------------------------------
|Michael J. Gelmon     | 40  | Chief Executive Officer and Director        
|Cory H. Gelmon        | 45  | President, Chief Financial Officer, Director
|Richard J. Doran, Jr. | 50  | Director                                    

Our
  Board of Directors is comprised of three directors of one class. Each director
  is elected to hold office until the next annual meeting of shareholders and
  until his successor has been elected and qualified. Officers are elected annually
  by the Board of Directors and hold office until successors are duly elected
  and qualified.

Michael
  J. Gelmon and Cory H. Gelmon are brothers.

The
  following is a brief account of the business experience of each director and
  executive officer.

Michael
  J. Gelmon.Mr. Gelmon is an experienced franchising entrepreneur and executive
  as well as a real estate lawyer. He has been our Chief Executive Officer and
  a director since 2001. From 1993 through 1997, Mr. Gelmon was a founding shareholder,
  director, as well as head of acquisitions and real estate for Domino's Pizza
  of Canada Ltd., the Domino's Pizza master franchisor in Canada. He was an integral
  part of the team that was responsible for growing the Domino's Pizza chain to
  200 stores throughout Canada. Since 1999 Mr. Gelmon has

14

---

also practiced law with his brother in a law partnership, Britannia Law Firm. Mr. Gelmon received his Bachelor of Laws with honors from the University of London in 1988 and a Bachelor of Arts from the University of Calgary in 1988.

Cory
  H. Gelmon. During Cory H. Gelmon’s sixteen-year career in franchising,
  he has been an owner, promoter, executive and a franchise lawyer. Mr. Gelmon
  has been our president and chief financial officer since 2001. Since 1999 Mr.
  Gelmon has also practiced law with his brother in a law partnership, Britannia
  Law Firm. From 1993 until 1997, he was chief operating officer and general counsel
  of Domino’s Pizza of Canada Ltd. Mr. Gelmon was largely responsible for
  growing the Domino's Pizza chain to 200 stores throughout Canada. He received
  his Bachelor of Laws with honors from the University of London in 1987 and a
  Bachelor of Arts from the University of Calgary in 1984.

Richard
  J. Doran, Jr.Mr. Doran has more than twenty-years of experience in mortgage
  banking, including extensive experience in management, marketing and sales in
  both the United States and England. Since May 2002, Mr. Doran has been chief
  executive officer of Kensington Financial Services, LLC, a New Jersey-based
  mortgage broker with more than 50 employees and operations in several states.
  From 1997 through 2001, he was a top marketing executive of the Alliance Funding
  Division of Superior State Bank, New York, with responsibility for its wholesale
  mortgage marketing and sales and business planning. Mr. Doran received his college
  education at Fairleigh Dickinson University and Rutgers University.

Committees of the Board of Directors

Audit
  Committee.We have no audit committee of the Board of Directors. We believe
  that the better practice is to form an Audit Committee. During 2004, we adopted
  an Audit Committee Charter that provides for an audit committee consisting of
  three or more directors, each of whom shall satisfy the independence, financial
  literacy and experience requirements of Section 10A of the Exchange Act and
  any other regulatory requirements. We need to expand our Board of Directors
  and make appropriate compensation arrangements with them. As of the date hereof
  we have not identified potential candidates. We intend to form the Audit Committee
  on or before July 31. 2005. Accordingly, there is no audit committee financial
  expert. We are exempt from the Securities and Exchange Commission requirements
  for a separate audit committee.

No
  Compensation Committee.We have no compensation committee of the Board of
  Directors. The entire board acts as our compensation committee. Transactions
  between the Gelmons, members of their immediate families and the entities they
  own and control and us are not conducted at arm's-length. These include their
  compensation arrangements set forth in Item 10. Executive Compensation and the
  transactions set forth in Item 12. Certain Relationships and Related Transactions
  below. The Gelmons without any independent authorization, review or oversight
  set the terms of these arrangements and transactions. There can be no assurance
  that the terms thereof are comparable to those that would be negotiated at arm's-length
  or otherwise fair and reasonable, despite the good faith belief of the Gelmons
  that they are.

15

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Codes of Ethics

During
  2004, we adopted a Code of Business Conduct and Ethics that addresses, among
  other things, conflicts of interest, corporate opportunities, confidentiality,
  fair dealing, protection and use of company assets, compliance with laws (including
  insider trading laws), and reporting of unethical behavior. The Code of Business
  Conduct and Ethics is applicable to our directors, officers and all employees.

In
  addition, we have adopted a Finance Code of Ethics that requires honest and
  ethical business conduct; full, accurate and timely financial disclosures; compliance
  with all laws, rules and regulations governing our business; and, prompt internal
  reporting of any violations of the code. The Finance Code of Ethics is applicable
  to our Chief Executive Officer, Chief Financial Officer and all finance employees.
  We intend to satisfy the disclosure requirements under Item 10 of Form 8-K regarding
  any amendment to or waiver of the Code of Ethics with respect to our Chief Executive
  Officer, Chief Financial Officer, and persons performing similar functions,
  by posting such information on our web site.

Compliance with Section 16(a) of the Exchange Act

Our
  directors and executive officers failed to file on a timely basis reports required
  by Section 16(a), including Forms 3, 4 and 5 during the three most recent fiscal
  years and the year to date. With respect to Michael J. Gelmon there were ten
  late reports covering thirteen transactions that were not reported on a timely
  basis. With respect to Cory H. Gelmon, there were eleven late reports covering
  thirteen transactions that were not reported on a timely basis. Richard J. Doran,
  Jr. is tardy this year in the filing his initial statement of beneficial ownership
  and one statement of changes in beneficial ownership. As of the date hereof,
  all reports required by Section 16(a) have been filed and are available on our
  web site, except for Mr. Doran’s two statements.

Item 10. Executive Compensation.

Summary Compensation Table

The
  following table sets forth-certain information about the compensation paid to
  management during the 2003 through 2004 fiscal years:

16

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|                                                                                                       | Annual Compensation | Long Term Compensation   
|------------------------------------------------------------------------------------------------------ | ------------------- | -------------------------
|Name and principalposition                                                                             | Year                | Salary ($)               
|                                                                                                       |                     |                          
|Michael Gelmon
      Chief Executive  
      Officer and  
      Director                              | 2004 
      2003    | $150,300* 
      $120,000
|Cory Gelmon  
      President, Chief  
      Financial Officer,  
      Secretary and  
      Director | 2004  
      2003   | $140,893* 
      $120,000

*
  Includes payments for accrued and unpaid salaries in prior years.

No
  bonuses were awarded in 2003 or 2004.

Employment and Other Compensation-Related Agreements with Management

Our
  Management Agreements with the Gelmons, as amended, provide for payment of compensation
  of $210,000 per year, a bonus of five percent of the net income of Diagnostic
  USA payable annually, and a grant of stock options. The Management Agreements
  expire on March 31, 2008. As of the date hereof, we owe Michael J. Gelmon and
  Cory H. Gelmon $64,644 for accrued and unpaid salaries.

We
  retained the Gelmons’ law partnership, the Britannia Law Firm, to serve
  as our general counsel and special Canadian counsel particularly in the areas
  of franchising, mergers and acquisitions, Canadian corporate law, real estate
  law, and other matters. For 2004, we paid the Britannia Law Firm $144,000
  at the rate of $12,000 per month. We paid the Britannia Law Firm $158,100
  in 2003.

Equity Compensation Plan Information

On
  October 28, 2004 the Board of Directors adopted the 2004 Human Resources Incentive
  Plan (the "Incentive Plan") to provide incentive compensation to employees,
  directors,

17

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officers and others who serve us. The Incentive Plan provides for the granting of up to 50,000,000 options and shares to our personnel. Generally, stock options granted under the Incentive Plan are for a maximum term of ten years and unless
otherwise provided in the specific award document vest and are exercisable immediately. Unless otherwise provided, the options expire within one year after termination of service or three months if termination is for cause. The Board of Directors
administers the Incentive Plan. The Incentive Plan may be amended by the directors except where required by the Internal Revenue Code as to any increase in the total number of underlying shares and the class of persons eligible to receive options or
as otherwise required by any applicable law or regulation.

The
  Incentive Plan supercedes all of our previous stock option plans and any ad
  hoc issuance of options. In connection with the adoption of the Incentive Plan,
  we converted the options issued to our management (including 9,000,000 options
  issued to the Gelmons) area developers, franchisees, employees, consultants
  and one investor, into options subject to the Incentive Plan. We cancelled any
  other outstanding options. There were 22,120,000 options outstanding as of December
  31, 2004.

Federal
  Income Tax Consequences. The United States federal income tax consequences
  of the issuance and exercise of options is generally as follows. The holder
  reports as ordinary income the discount, if any, between the fair market value
  and the exercise price on the exercise date. When the holder sells the underlying
  shares the holder recognizes as a capital gain the difference between their
  sales price and the total ordinary income previously reported. If the options
  are treated as incentive stock options under Section 422A under the Internal
  Revenue Code, the holder only reports the difference between the sale price
  of the underlying shares and the exercise price of the options as a capital
  gain in the year of sale. Incentive stock option treatment requires, among other
  limitations, that the exercise price be equal to the fair market value on the
  date of grant (110% of such fair market value in the case of directors, officers
  and 10% shareholders).

Option Grants to Management in 2004

Option grants to management during 2004 were as follows:

|Name                                                                                  | Securities Underlying Options/SARs Granted (#) | Percent of Total Granted to Employees In Options/SARs Fiscal Year (*) | Exercise or Base Price (S/Sh) | Expiration Date
|------------------------------------------------------------------------------------- | ---------------------------------------------- | --------------------------------------------------------------------- | ----------------------------- | ---------------
|Michael Gelmon,  Chief Executive  
      Officer   and Director                       | 2,500,000                                      | 50%                                                                   | $0.14                         | 11/1/2009      
|Cory Gelmon,   President, Chief 
       Financial Officer,   Secretary and   Director | 2,500,000                                      | 50%                                                                   | $0.14                         | 11/1/2009      

18

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*
  Represents all options granted to individuals during 2004 as a percentage of
  all options granted to employees during 2004.

Option Exercises and Year-End Values

The
  following table sets forth-certain values with respect to stock options held
  by management at the end of 2004:

|Name                                                                                | Share Acquired on Exercise (#) | Value Realized | Number of Securities Underlying Unexercised Options/SAR’s at FY-end (#) Exercisable/ Unexercisable | Value of Unexercised In-the-Money Options/SAR’s at FY-end (S) Exercisable/ Unexercisable
|----------------------------------------------------------------------------------- | ------------------------------ | -------------- | -------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|Michael Gelmon,   Chief Executive Officer
      and   Director                      |                                |                | 4,500,000 / 0(1)                                                                                   | 45,315 / 0                                                                              
|Cory Gelmon,   President, Chief Financial 
       Officer,   Secretary and Director |                                |                | 4,500,000 / 0(2)                                                                                   | 45,315 / 0                                                                              
|Richard J. Doran, Jr.   Director                                                    |                                |                | 0(3)                                                                                               | 0 / 0                                                                                   

| | (1) | Does not include 2,000,000 options exercisable at $.18 per shares
      that expire April 1, 2010 granted on April 1, 2005.
| | --- | ---------------------------------------------------------------------------------------------------------------------------
| | (2) | Does not include 2,000,000 options exercisable at $.18 per shares
      that expire April 1, 2010 granted on April 1, 2005.
| | (3) | Does not include 1,000,000 options exercisable at $.18 per shares
      that expire April 1, 2010 granted on April 1, 2005.

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

The
  following table sets forth information, as of the date hereof, with respect
  to the beneficial ownership of our common stock by each person known to be the
  beneficial owner of more than five percent of the outstanding common stock,
  and by our three directors and executive officers, individually and as a group.

19

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|Name and Address                                                                       | Numbers of SharesBeneficially Owned | %    
|-------------------------------------------------------------------------------------- | ----------------------------------- | -----
|Cory H. Gelmon   3019 Roxboro Glen Road
      S.W.   Calgary, Alberta Canada T2S 1T9   | 22,687,730(1)                       | 26.7%
|Michael J. Gelmon   7008 Kootenay Street
      S.W.   Calgary, Alberta, Canada T2V 2M3 | 22,123,833(2)                       | 26.0%
|Patrick Anderson   6502 Normandy Lane 
       Madison, Wisconsin 53719                 | 7,422,500(3)                        | 9.0% 
|Richard J. Doran, Jr.   112 Cheshire
      Lane   Ringwood, NJ 07456                   | 1,150,000(4)                        | 1.5% 
|Directors and Executive   Officers as
      a group (3 persons)                        | 45,961,563(5)                       | 49.6%

|(1) | Includes 6,500,000 immediately exercisable options, 11,100,000 shares
      pledged as security for a loan, and 63,897 shares owned by members of his
      immediate family (see Item 10. Executive Compensation and Item 12. Certain
      Relationships and Related Transactions – Securities Purchase Agreement).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Includes 6,500,000 immediately exercisable options and 10,600,000 shares
      pledged as security for a loan (see Item 10. Executive Compensation and
      Item 12. Certain Relationships and Related Transactions – Securities
      Purchase Agreement).                                                         
|   
|(3) | Includes 3,125,000 immediately exercisable options.                                                                                                                                                                                                                                                                  
|   
|(4) | Includes 1,000,000 immediately exercisable options.                                                                                                                                                                                                                                                                  
|   
|(5) | Includes the shares and options referred to in footnotes (1), (2) and
      (4).                                                                                                                                                                                                                                     

Item 12. Certain Relationships and Related Transactions.

Chiropractic USA and Franchise Support Network Acquisitions

On
  May 7, 2001, we acquired certain intellectual property, goodwill and other nonmonetary
  assets from the Gelmons.

We
  purchased the Chiropractic USA development plan for our present business, the
  franchising of chiropractic clinics under the name Chiropractic USA from the
  Gelmons for 2,000,000 shares of common stock, 1,000,000 shares each. The shares
  were valued at the market price of $.03 per share on that date, an aggregate
  of $60,000. The $60,000 purchase price was allocated to goodwill.

20

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We
  also purchased all of the issued and outstanding shares of Franchise Support
  Network, Inc. (“FSN”) from the Gelmons, its shareholders, in exchange
  for 34,047,666 shares. The assets of FSN were recorded on our balance sheet
  at $-0-, the Gelmons’ historical cost basis, in accordance with accounting
  rules that apply to transfers of nonmonetary assets from promoters and controlling
  shareholders. FSN had no assets as of the acquisition date, had not commenced
  operations and expenses since inception were not material. FSN is intended as
  a vehicle for acquiring, operating and selling franchises in various businesses.
  On November 1, 2002, we issued to the Gelmons 24,000,000 shares for the purchase,
  12,000,000 shares each. On March 18, 2005, we issued to the Gelmons the balance
  of 10,047,666 shares, 5,023,333 each.

In
  addition, we entered into management agreements with the Gelmons. Prior to these
  acquisitions, we engaged unsuccessfully, under different management, in various
  Internet commerce businesses and the manufacture and sale of computer cases.
  The purpose of these acquisitions and the benefit to our shareholders was to
  enable us to enter into our present business using the Gelmons’ proprietary
  concepts and know-how, to acquire the brand name Chiropractic USA, to acquire
  a vehicle for other franchising business, and to engage the Gelmons as management.
  Another purpose was that the Gelmons acquired control of the Company through
  their management positions and the stock ownership they attained. The number
  of shares we paid the Gelmons in the acquisitions and the allocation thereof
  to the development plan and for the shares of FSN were arbitrarily determined
  to facilitate the acquisition and do not reflect the actual cost of the assets
  acquired from the Gelmons or the value of the assets to us for financial reporting
  purposes.

Acquisition of Corporate Clinics

In
  September 2001, the Company entered into an agreement with Advanced Health Center,
  Inc. (“Advanced”) to purchase three chiropractic clinics and their
  operating assets for $1,150,000. The purpose of this transaction and the
  benefit to our shareholders was to enable us to own and operate clinics where
  we developed and demonstrated our franchise operating system and practices and
  showcased the Chiropractic USA brand.

In
  June 2002, the agreement was restructured at the request of the Merrill Lynch
  Business Financial Services, Inc. (“MLBFS”), the lender for the
  acquisition. MLBFS based approval of the loan on the business experience and
  personal credit of the Gelmons and strength of the business and assets to be
  acquired. There would have been substantial complications, delays and other
  problems involved in approving a loan to us, a small-cap public corporation
  with a negative operating history. To accommodate the restructuring, the Gelmons
  formed a new corporation, Southern Health Care, Inc (“Southern”),
  wholly owned by them to act as a holding company for the business acquired from
  Advanced. We assigned our right to acquire the clinics to Southern in exchange
  for a management agreement and franchise agreements. The effects of these agreements
  was that Southern is treated as our consolidated subsidiary in which we have
  all of the financial interest and that the Gelmons have no direct pecuniary
  interest in Southern. In connection with the sale of the clinics to LSI, the
  agreements with Southern were terminated. We intend to dissolve Southern. See
  Item 1. Description of Business – Chiropractic USA.

21

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On
  July 29, 2002, Southern completed the acquisition of Advanced. Southern acquired
  accounts receivable of $973,469 and furniture, fixtures and equipment of
  $176,531. In exchange, Southern paid the owner of Advanced, Dr. Dennis Gregory,
  $900,000 cash, and we issued Dr. Gregory $200,000 in promissory notes
  due April 30, 2005 with interest at 10% (of which $150,000 has been paid)
  and 277,778 shares of common stock valued at $50,000 ($.18 per share),
  the market price on the agreement date. Dr. Gregory is not affiliated with the
  Company other than through ownership of the shares issued in the acquisition.

MLBFS
  provided Southern with the cash used in the acquisition under a term loan and
  related installment note due July 31, 2005 in the original principal amount
  $1,000,000 with interest at 1.4% above the prime rate. On November 16, 2004,
  we prepaid the entire balance of $584,930 on the installment note.

In
  connection with the agreement to purchase Advanced, we issued an aggregate of
  2,300,000 shares of common stock, valued at $345,000 ($.15 per share)
  to eight individuals for giving their personal guarantees of the term loan and
  installment note and as loan fees. The purpose and benefit to our shareholders
  of the personal guarantees was to provide MLBFS with additional recourse as
  an inducement to make the loan to Southern. The purpose and benefit to our shareholders
  from the issuance of the shares was to compensate the individuals for guaranteeing
  the loan as required by MLBFS. Included in the eight individuals were the Gelmons,
  who each received 600,000 shares as guarantors and for their agreement to indemnify
  the other guarantors of the loan. Richard J. Doran Jr., a director, received
  150,000 shares for his guarantee of the loan.

Loans

Management
  and members of their immediate families have loaned us funds to pay our debts
  from time to time.

Lloyd
  Parrish was a director who resigned in July 2002. As recently as April 9, 2003
  he was also the beneficial owner of more than 5% of our common stock. In 2001
  and prior fiscal years, Mr. Parish loaned us more than $28,200 and we issued
  several promissory notes to him that are due April 30, 2005. The notes are not
  secured and bear simple interest at 10% per annum. As of December 31, 2004,
  we owed Mr. Parrish $40,608 pursuant to these notes.

During
  2001, Eva Gelmon, the mother of the Gelmons, loaned us $37,500. We issued
  a promissory note to her due April 30, 2005. The note is not secured and bears
  simple interest at 10% per annum. As of December 31, 2004, we owed Eva Gelmon
  $65,390 pursuant to this note.

From
  and after 2002, 860532 Alberta Ltd., which is owned and controlled by the Gelmons,
  loaned us funds. On November 16, 2004, we paid $52,451 against this debt
  to 860532 Alberta Ltd. As of December 31, 2004, the principal and interest due
  was $69,050 which was repaid on February 22, 2005. On December 1, 2004,
  we issued a new promissory note due January 1, 2006 with interest at 7% per
  annum to evidence our indebtedness to 860532 Alberta Ltd. for our obligations
  for prior and possible additional advances up to a maximum aggregate of $100,000.
  Previously the interest rate on the loan from 860532 Alberta Ltd. was 10%.

22

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Contribution of Shares

On
  August 25, 2004, Michael J. Gelmon returned 9,600,000 shares to us for cancellation.
  He made the contribution to reduce the number of shares issued and outstanding.
  The benefit to the shareholders was to make 9,600,000 shares available to us
  to meet our obligations to issue shares we sold to certain investors for cash
  and agreed to pay for services provided to us. As repayment, we issued to Mr.
  Gelmon 3,000,000 shares on December 3, 2004 and 6,600,000 shares on March 18,
  2005.

Securities Purchase Agreement

Effective
  November 8, 2004 (the "Closing Date"), we entered into a Securities Purchase
  Agreement with AJW Partners, Inc., AJW Offshore, Ltd., AJW Qualified Partners,
  LLC and New Millennium Capital Partners II, LLC (hereinafter collectively referred
  to as the "Purchasers") and ancillary agreements as hereinafter described (collectively
  the "Transaction Agreements"). Under the Securities Purchase Agreement, we agreed
  to sell the Purchasers a total of $3,000,000 in Callable Secured Convertible
  Notes (the "Convertible Notes") due November 8, 2006 with 10% annual interest
  payable quarterly, the first four months interest to be prepaid from proceeds
  of the Convertible Notes. The Purchasers may convert the Convertible Notes into
  shares at the lower of $.22 per share or 60% of the three lowest intraday
  trading prices during the twenty trading days prior to conversion. Based on
  the conversion price of $.076 on February 9, 2005 the Convertible Notes
  can be converted into a minimum of 39,473,685 shares. Management believes that
  the actual conversion price may be lower and more than the minimum number of
  shares that may be issued when the Convertible Notes are converted.

We
  agreed to issue to the Purchasers for no additional cash consideration Stock
  Purchase Warrants (the "Warrants") to purchase one share at $.40 per share
  for each one dollar of Convertible Notes purchased by the Purchasers. The Warrants
  expire November 8, 2009. The Purchasers will be entitled to exercise the Warrants
  on a cashless basis if the shares of common stock underlying the Warrants are
  not then registered pursuant to an effective registration statement. In the
  event that a Purchaser exercises the Warrants on a cashless basis, then we will
  not receive any proceeds. In addition, the exercise price of the Warrants will
  be adjusted in the event we issue common stock at a price below market, with
  the exception of any securities issued as of the date of the warrant or issued
  in connection with the Convertible Notes issued pursuant to the Securities Purchase
  Agreement. Upon the issuance of shares of common stock below the market price,
  the exercise price of the Warrants will be reduced accordingly. The market price
  is determined by averaging the last reported sale prices for our shares of common
  stock for the five trading days immediately preceding such issuance as set forth
  on our principal trading market. The exercise price shall be determined by multiplying
  the exercise price in effect immediately prior to the dilutive issuance by a
  fraction. The numerator of the fraction is equal to the sum of the number of
  shares outstanding immediately prior to the offering plus the quotient of the
  amount of consideration received by us in connection with the issuance divided
  by the market price in effect immediately prior to the issuance. The denominator
  of such issuance shall be equal to the number of shares outstanding after the
  dilutive issuance.

23

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In
  addition, the conversion price of the Convertible Notes and the exercise price
  of the Warrants will be adjusted in the event that we issue common stock at
  a price below the fixed conversion price, below market price, with the exception
  of any securities issued in connection with the Securities Purchase Agreement.
  The conversion price of the Convertible Notes and the exercise price of the
  Warrants may be adjusted in certain circumstances such as if we pay a stock
  dividend, subdivide or combine outstanding shares of common stock into a greater
  or lesser number of shares, or take such other actions as would otherwise result
  in dilution of the selling stockholder’s position.

Payment
  of the Convertible Notes is secured by all of our assets pursuant to a Security
  Agreement and an Intellectual Property Security Agreement.

Pursuant
  to a Registration Rights Agreement we agreed to file a registration statement
  to register on request by the Purchasers the shares underlying the Notes and
  Warrants.

Michael
  Gelmon and Cory Gelmon each entered into a Guaranty and Pledge Agreement to
  provide additional security for our performance of the Transaction Agreements.
  Michael Gelmon pledged to the Purchasers 15,623,666 shares he now owns of record.
  Cory Gelmon pledged to the Purchasers 16,123,333 shares he owns of record.

We
  will be subject to the payment of certain penalties and damages in the event
  we do not satisfy our obligations under the Transaction Agreements including
  those with respect to registration of the shares underlying the Convertible
  Notes and Warrants.

None
  of the Purchasers are affiliates of the company. If all of the Convertible Notes
  are converted and/or if certain conversion limitations are disregarded, the
  Purchasers are the beneficial owners of 5% or more of our outstanding shares.
  In the event we default under the Transaction Agreements, the Purchasers may
  become the record and beneficial owners of the shares pledged by the Gelmons.
  The Purchasers have contractually agreed to restrict their ability to convert
  or exercise their Warrants and receive shares of our common stock such that
  the number of shares of common stock held by them and their affiliates after
  such conversion or exercise does not exceed 4.99% of the then issued and outstanding
  shares of common stock.

On
  November 16, 2004, we received $1,200,000 from the shareholders from the
  sale of Convertibles Notes. On February 22, 2005 we received $800,000 upon
  filing of a registration statement on Form SB-2. Provided that all of the conditions
  in the Securities Purchase Agreement have been met, the Purchasers will purchase
  an additional $1,000,000 in Convertible Notes within five days after the
  effective date of the registration statement.

A
  portion of the proceeds from the Convertible Notes was used to prepay the balance
  of $584,930 on a term loan and related installment note due July 31, 2005
  in the original principal amount of $1,000,000 that were personally guaranteed
  by the Gelmons and others and a loan from 860532 Alberta Corp. that is owned
  by the Gelmons. See Item 12. Certain Relationships and Related Transactions
  – Acquisition of Corporate Clinics, and Item 12. Certain Relationships
  and Related Transactions – Loans. We also used the proceeds to repay principal
  and interest on other outstanding notes and accounts payable, fees, and business
  development purposes. The

24

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proceeds from the sale of additional Convertible Notes may be used for debt repayment, fees, the acquisition of Nationwide (see Item 1. Description of Business – Diagnostic USA), and business development.

Item 13. Exhibits.

|No.   | Description                                                                                                                                                       
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                   
|3.1   | Articles of Incorporation (1)                                                                                                                                     
|      |                                                                                                                                                                   
|3.2   | Bylaws (1)                                                                                                                                                        
|      |                                                                                                                                                                   
|4.2   | Securities Purchase Agreement
      dated as of November 8, 2004 by and between the Registrant and the investors
      named therein (3)                          
|      |                                                                                                                                                                   
|4.3   | Form of Convertible Notes due
      November 2006 (3)                                                                                                             
|      |                                                                                                                                                                   
|4.4   | Form of Common Stock Purchase
      Warrant dated as of November 8, 2004 (3)                                                                                      
|      |                                                                                                                                                                   
|4.5   | Registration Rights Agreement
      dated as of November 8, 1004 by and between the Registrant and the investors
      named therein (3)                          
|      |                                                                                                                                                                   
|4.6   | Security Agreement dated as
      of November 8, 2004 between the Registrant and the secured parties named
      therein (3)                                      
|      |                                                                                                                                                                   
|4.7   | Intellectual Property Security
      Agreement dated as of April 19, 2004 between the Registrant and the secured
      parties named therein (3)                  
|      |                                                                                                                                                                   
|10.1  | Offer to Purchase Intellectual
      Property (4)                                                                                                                 
|      |                                                                                                                                                                   
|10.2  | Offer to Purchase Franchise
      Support Network Inc. (4)                                                                                                        
|      |                                                                                                                                                                   
|10.3  | Amending Agreement
      re: Management Agreement between the Registrant and Cory Gelmon made effective
      April 1, 2005 (2)                                   
|      |                                                                                                                                                                   
|10.4  | Amending Agreement
      re: Management Agreement between the Registrant and Michael Gelmon effective
      April 1, 2005 (2)                                     
|      |                                                                                                                                                                   
|10.5  | Advance Promissory Note from
      the Registrant to 860532 Alberta Ltd. (1)                                                                                      
|      |                                                                                                                                                                   
|10.6  | Promissory Note from the Registrant
      to Eva Gelmon (1)                                                                                                       
|      |                                                                                                                                                                   
|10.7  | 2004 Human Resources Incentive
      Plan (1)                                                                                                                     
|      |                                                                                                                                                                   
|10.8  | Limited Liability Company Purchase
      Agreement with exhibits (1)                                                                                              
|      |                                                                                                                                                                   
|10.9  | Agreement re: Sale and
      Purchase of Assets, between the Registrant and LSI Group, LLC. effective
      December 31, 2004 with exhibits (2)                   
|      |                                                                                                                                                                   
|10.10 | Purchase Agreement
      among the Registrant, Nationwide Diagnostic Solutions, Inc., and Jeff and
      Constance Rebarcak dated March 18, 2005 with exhibits (2)

25

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|31.1 | Certification of Periodic Report
      – Michael Gelmon (2)                  
|---- | -----------------------------------------------------------------------------
|     |                                                                              
|31.2 | Certification of Periodic Report
      -- Cory Gelmon (2)                    
|     |                                                                              
|32.1 | Certifications Pursuant to 18 U.S.C.
      Section  1350 – Michael Gelmon (2)
|     |                                                                              
|32.2 | Certifications Pursuant to 18 U.S.C.
      Section  1350 – Cory Gelmon (2)   

|(1) | Incorporated by reference to the Registrant’s Form SB-2 filed with
      the Securities and Exchange Commission on February 14, 2005.   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Filed herewith.                                                                                                                         
|   
|(3) | Incorporated by reference to the Registrant’s Form 10-Q SB filed
      with the Securities and Exchange Commission on November 22, 2004.
|   
|(4) | Incorporated by reference to the Registrant’s Current Report on
      Form 8-K filed June 7, 2001.                                      
|   
|(5) | Incorporated by reference to the Registrant’s Form 10K-SB filed
      with the Securities and Exchange Commission on May 17, 2004.      

26

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Item 14. Principal Accountant Fees and Services.

The
  following table presents fees for professional services rendered by the independent
  registered public accountants for Banyan Corporation for 2004 and 2003:

|Name of Firm                        | Type of Fees | Year Ended December 31, 2004 | Year Ended December 31, 2003
|----------------------------------- | ------------ | ---------------------------- | ----------------------------
|Schwartz Levitsky
      Feldman llp | Audit fees   | $42,193                      | $0                          
|Audit-related fees                  | $0           | $0                          
|Tax fees                            | $0           | $0                          
|All other fees                      | $0           | $0                          
|GHP Horwath, P.C.                   | Audit fees   | $0                           | $83,010                     
|Audit-related fees                  | $0           | $0                          
|Tax fees                            | $0           | $0                          
|All other fees                      | $0           | $0                          

To
  safeguard the continued independence of the independent auditors, the Board
  has adopted a policy that expands our existing policy preventing our independent
  auditors from providing services to us that are prohibited under Section 10A(g)
  of the Securities Exchange Act of 1934, as amended. This policy also provides
  that independent auditors are only permitted to provide services to the Company
  that have been pre-approved by the Board of Directors. Pursuant to the policy,
  all audit services require advance approval by the directors. All other services
  by the independent auditors that fall within certain designated dollar thresholds,
  both per engagement as well as annual aggregate, have been pre-approved under
  the policy. Different dollar thresholds apply to the three categories of pre-approved
  services specified in the policy (audit related services, tax services and other
  services). All services that exceed the dollar thresholds must be approved in
  advance by the directors.

27

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SIGNATURES

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

|April 15, 2005 |                                   
|-------------- | ----------------------------------
|               | BANYAN CORPORATION                
|               |                                   
|               | By: /s/ Michael J. Gelmon         
|               | Michael J. Gelmon, Chief Executive
|               | Officer and Director              

Pursuant
  to the requirements of the Securities Exchange Act of 1934, this report has
  been signed below by the following persons on behalf of the registrant and in
  the capacities and dates indicated.

|April 15, 2005 |                                                 
|-------------- | ------------------------------------------------
|               |                                                 
|               | By: /s/ Michael J. Gelmon                       
|               | Michael Gelmon, Chief Executive Officer and     
|               | Director                                        
|               |                                                 
|               |                                                 
|April 15, 2005 |                                                 
|               |                                                 
|               | By: /s/ Cory S. Gelmon                          
|               | Cory Gelmon, President, Chief Financial Officer,
|               | Secretary and Director (Principal               
|               | Accounting and Financial Officer)               

28

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