**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**AMENDMENT
      NO. 2 TO**


**FORM
      10-KSB**




[X]    
      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934




For
      the
      year ended December 31, 2005




[ 
      ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
      THE SECURITIES


EXCHANGE
      ACT OF 1934 for the transition period from


__________________
      to ____________________.


Commission
      File Number 000-27001




**Apex
      Capital Group, Inc.**


(Exact
      name of registrant as specified in its charter)





000-27001


(Commission
      File Number)


Nevada
            91-1939535(State
                or other jurisdiction of incorporation)
            (I.R.S.
                Employer Identification No.)





69930
      Highway 111, Suite 100, Rancho Mirage, CA 92270


(Address
      of principal executive offices, with zip code)





(760)
      219-2776


(Registrant’s
      telephone number, including area code)




Check
      whether the Issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
      (or
      for such shorter period that the Registrant was required to file such reports)
      and (2) has been subject to such filing requirements for the past 90 days.


**YES** **þ** **NO** ** ̈**




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





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). **YES** **þ** **NO** ** ̈**




Registrant’s
      revenues for its fiscal year ended December 31, 2005 were: $0.




State
      the
      aggregate market value of the voting stock held by non-affiliates computed
      by
      reference to the price at which the common equity was sold, or the average
      bid
      and asked prices of such common equity, as of a specified date within the past
      60 days: **Not
      Applicable**




The
      number of shares of registrant’s common stock ($.001 par value) outstanding as
      of October 18, 2006 was 1,004,520.





Transitional
      Small Business Disclosure Format: **YES** ** ̈** **NO** **þ**











**Explanatory
      Note**


This
        Amendment No. 2 on Form 10-KSB/A to the Annual Report on Form 10-KSB of
        Ape x
        Capital
        Group, Inc. (the “Company”) for the fiscal year ended December 30, 2005 (this
“Amendment”) is being filed for the purposes of (i) correcting an error
        appearing on the front cover page, (ii) amending and restating in its entirety
        “Item 1. Description of Business,” (iii) amending and restating the Financial
        Statements and the Notes thereto of the Company’s Annual Report on Form 10-KSB
        filed on April 3, 2006 (the “Original Filing”), as amended by Amendment No. 1 on
        Form 10-KSB/A filed on September 11, 2006, and (iv) amending and restating
“Item
        13. Exhibits” in its entirety in accordance with the above corrections.
 
 This
        Amendment corrects an error regarding the identification of the state of
        incorporation of the Company appearing on the front cover page of the Original
        Filing, as amended. The cover page incorrectly identified the Company’s state of
        incorporation as Wyoming. The correct state of incorporation of the Company
        is
        Nevada.
 
 This
        Amendment also amends and restates in its entirety “Item 1. Description of
        Business” of the Original Filing, as amended, by deleting the following sentence
        contained in the first paragraph therein: “On July 27, 2005, the Company merged
        with Apex Capital Group, Inc. (a Wyoming entity) for the purpose of changing
        its
        domicile from Nevada to Wyoming.” Unaffected items in the Original Filing, as
        amended, have not been restated in this Amendment.
 
 Additionally,
        this Amendment corrects errors contained in the Financial Statements of the
        Original Filing, as amended, which were inadvertently made in the process
        of
        converting and formatting the Financial Statements to an electronic format
        for
        filing. The corrections are summarized as follows:
 
 (i)  Statements
        of Changes in Stockholders’ Deficit incorrectly stated January 25 as the date of
        the yearly ending balance for each year period from 1996 through 2005. The
        correct date is December 31 and is reflected in this Amendment;
 
 (ii)  Statements
        of Changes in Stockholders’ Deficit incorrectly stated the yearly ending balance
        for 2004 as that of 2005, and did not include the activity or yearly ending
        balance for 2005. The correct 2005 activity and yearly ending balances for
        2004
        and 2005 are included in this Amendment;
 
 (iii)  Statements
        of Changes in Stockholders’ Deficit incorrectly stated (a) the net loss amount
        for 1997 and (b) the ‘Deficit Accumulated During Development Stage’ and ‘Total’
yearly ending balances for 1997. The correct net loss amount and yearly ending
        balances for 1997 are included in this Amendment;
 
 (iv)  Statements
        of Cash Flows contained no information relating to cash at end of the period,
        supplemental cash flow or non-cash investing and financing activities. The
        missing items are included this Amendment; and
 
 (v)  Statements
        of Cash Flows incorrectly stated the ‘Issuance of notes payable to related
        parties for services’ for the year ended December 31, 2004. The correct amount
        is included in this Amendment.
 
 This
        Amendment also amends and restates Note 1 of the Notes to the Financial
        Statements furnished in the Original Filing, as amended, by deleting the
        following sentence therein: “On July 27, 2005, the Company merged with Apex
        Capital Group, Inc. (a Wyoming entity) for the purpose of changing its domicile
        from Nevada to Wyoming.” Except for Note 1 as amended and restated, the Notes to
        the Financial Statements are reproduced in this Amendment in their entirety
        as
        they appear in the Original Filing, as amended, without modification.
 
 Accordingly,
        the Financial Statements and the Notes thereto of the Original Filing, as
        amended, are amended and restated in this Amendment in their entirety. Other
        than the corrections described above, no changes have been made to the Financial
        Statements of the Original Filing, as amended, or to the Notes relating thereto.
 
 The
        Report of Independent Registered Public Accounting Firm has been filed as
        of the
        date of the Original Filing except for the restatement of Note 1 of the Notes
        to
        the Financial Statements, as to which the date is as of October 18,
        2006.
 
 As
        a
        result of this Amendment, the certifications pursuant to Section 302 and
        Section
        906 of the Sarbanes-Oxley Act of 2002, filed and furnished, respectively,
        as
        exhibits to the Original Filing, as amended, have been re-executed, re-filed
        and
        re-furnished as of the date of this Amendment. Accordingly, “Item 13. Exhibits”
has been amended and restated herewith.
 
 Concurrent
        with the filing of this Amendment, the Company is filing a Current Report
        on
        Form 8-K setting forth the changes described above in substantially the same
        manner with respect to each of its Annual Reports on Form 10-KSB and Quarterly
        Reports on Form 10-QSB filed with the Securities and Exchange Commission
        since
        July 27, 2005.




**Item
      1.** **Description
      of Business.**




Business
      Development.




Apex
      Capital Group, Inc. (the Company) was incorporated under the laws of the State
      of Nevada on January 25, 1996, under the name of Pinnacle Management Group,
      Inc.  The Company was incorporated to engage in any lawful activity. 
The Company has not commenced operations and has not generated any revenues
      since inception.  There are no employees other than officers or
      directors.




The
      Company's articles initially authorized the Company to issue a total of 60,000
      shares of stock, consisting of 50,000 shares of common stock and 10,000 shares
      of preferred stock, both at a par value of $0.001 per share.




An
      amendment to the Articles of Incorporation was filed on February 6, 1996
      changing the name of the corporation to Apex Capital Group, Inc.




An
      amendment to the Articles of Incorporation was filed on October 6, 1998,
      increasing the Company's authorized shares to 100,000,000, consisting of
      99,990,000 shares of common stock and 10,000 shares of preferred stock, both
      at
      a par value of $0.001 per share.







Common
      Stock.




On
      March 16, 1996, 16,001 shares were issued to individuals for services rendered
      at the stated par value of $.001 per share, for a total value of
      $16.01.




On
      October 15, 1998, the Board of Directors issued a 20 to 1 forward split of
      the
      16,001 common stock shares issued and outstanding.  Total shares issued and
      outstanding after the split were 320,020, for a total value of $16.




On
      December 15, 1998, the Board of Directors agreed to sell up to 700,000 shares
      of
      its common stock at the stated par value of $0.001 per share. Total shares
      issued were 684,500 at the stated par value $0.001 per share, for total cash
      received of $685.




As
      of December 31, 2005, there were 1,004,520 common shares issued and
      outstanding.




Preferred
      Stock.




As
      of December 31, 2005, there have been no shares issued and none are
      outstanding.





**Item
      13. Exhibits**





(a)
      The Exhibits listed below are filed or furnished as part of this Amendment.





Exhibit
      No.


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





*
      Articles of Incorporation (Incorporated by reference from the Company's
      Registration Statement on Form 10-SB filed with the Securities and Exchange
      Commission on August 11, 1999).





*
      Bylaws (Incorporated by reference from the Company's Registration Statement
      on
      Form 10-SB filed with the Securities and Exchange Commission on August 11,
      1999).





*
      Code of Ethics (Incorporated by reference from the Company's Annual Report
      on
      Form 10-KSB for the fiscal year ended 2004 filed with the Securities and
      Exchange Commission on September 14, 2005).





31.1 Certification
      of
      Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
      Securities Exchange Act of 1934.





31.2 Certification
      of
      Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
      Securities Exchange Act of 1934.





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





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





*
      Previously filed.







**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 on October 26 ,
      2006.




**APEX
              CAPITAL GROUP, INC.**By:
            /s/ Dempsey
              K. MorkDempsey
                K. Mork
              President,
                Chief Executive Officer and Director
              (Principal
                Executive Officer)





Pursuant
      to the requirements of the Securities Act of 1934, this report has been signed
      below by the following persons on behalf of the registrant and in the capacities
      indicated on October 26 ,
      2006.





/s/
                Dempsey K. Mork
              Dempsey
                K. Mork
              President,
                Chief Executive Officer and Director
              (Principal
                Executive Officer)
            October 26,
              2006/s/
                Norbert LeBoeuf
              Norbert
                LeBoeuf
              Chief
                Financial Officer and Director
              (Principal
                Financial Officer)
            October 26,
              2006







APEX
      CAPITAL GROUP, INC.


(A
      Development Stage Company)





Financial
      Statements




For
      the
      Years Ended December 31, 2005 and 2004, and


the
      Period of January 25, 1996 (inception) to December 31, 2005





Report
                of Independent Registered Public Accounting Firm
            F-1Financial
                Statements:Balance
                Sheet
            F-2Statements
                of Operations
            F-3Statements
                of Changes in Stockholders' Deficit
            F-4Statements
                of Cash Flows
            F-5Notes
                to the Financial Statements
            F-6
                - F-9









Report
      of
      Independent Registered Public Accounting Firm






To
      the
      Board of Directors


Apex
      Capital Group, Inc.




We
      have
      audited the balance sheet of Apex Capital Group, Inc. (a development stage
      company) (the Company) as of December 31, 2005, and the related statements
      of
      operations, changes in stockholders' deficit and cash flows for the years ending
      December 31, 2005, 2004, and 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 audits. The
      financial statements for the year ended December 31, 2002 and for the period
      of
      January 25, 1996 (inception) through December 31, 2002 were audited by another
      auditor, who expressed an unqualified opinion in his audit report dated May
      13,
      2003.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States).  Those standards require that
      we plan and perform the audits to obtain reasonable assurance about whether
      the
      financial statements are free of material misstatement.  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 audits provide a reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of the Company as of December 31,
      2005, and the results of its operations and its cash flows for the years ending
      December 31, 2005, 2004, and 2003, in conformity with accounting principles
      generally accepted in the United States of America.




The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern.  As discussed in Note 5 to the financial
      statements, the Company has suffered net losses since inception and is still
      considered a development stage company, as it has not yet obtained revenues
      from
      its planned principle operations.  These factors raise substantial doubt
      about the Company's ability to meet its obligations and to continue as a going
      concern. Management's plans in regard to these matters are also described in
      Note 5.  The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.






Child,
      Van Wagoner & Bradshaw, PLLC


Kaysville,
      Utah


March
      29,
      2006 (except the first paragraph of Note 1, which is dated October 18,
      2006)





F-1








APEX
                CAPITAL GROUP, INC.
              (A
                Development Stage Company)
              BALANCE
                SHEET
              December
                31, 2005ASSETSTotal
                assets
            
            $
            -LIABILITIES
                AND STOCKHOLDERS' DEFICITLIABILITIESCurrent
                liabilities
            
            $
            5,900Notes
                payable - related parties (note 4)
            
            
            70,000Total
                liabilities
            
            
            75,900STOCKHOLDERS’
                DEFICIT (NOTE 3)Preferred
                stock; $.001 par value; 10,000 shares authorized; no shares issued
                and
                outstanding
            
            
            -Common
                stock; $.001 par value; 99,990,000 shares authorized; 1,004,520 shares
                issued and outstanding
            
            
            1,005Additional
                paid-in capital
            
            
            (304
            )Deficit
                accumulated during development stage
            
            
            (76,601
            )Total
                stockholders’ deficit
            
            
            (75,900
            )Total
                liabilities and stockholders’ deficit
            
            $
            -




See
      accompanying notes to financial statements.


F-2





APEX
                CAPITAL GROUP, INC.
              (A
                Development Stage Company)
              STATEMENTS
                OF OPERATIONSFor
                the Year Ended Decemeber 31, 2005
            
            For
                the Year Ended Decemeber 31, 2004
            
            Cumulative
                from Inception (Jan. 25, 1996) to Dec. 31, 2005Revenues
            
            $
            -
            
            $
            -
            
            $
            -Operating
                Expenses
            
            
            5,900
            
            
            10,000
            
            
            76,601Net
                loss from operations
            
            
            (5,900
            )
            
            (10,000
            )
            
            (76,601
            )Other
                Income (expense)
            
            
            -
            
            
            -
            
            
            -Net
                loss
            
            $
            (5,900
            )
            $
            (10,000
            )
            $
            (76,601
            )Net
                income (loss) per share
            
            $
            (0.01
            )
            $
            (0.01
            )Weighed
                  average numbercommon shares outstanding
            
            
            1,004,520
            
            
            1,004,520




See
      accompanying notes to financial statements.




F-3





APEX
                CAPITAL GROUP, INC.
              (A
                Development Stage Company)
              STATEMENTS
                OF CHANGES IN STOCKHOLDERS' DEFICIT
              For
                the Period of January 25, 1996 (Inception) through December 31,
                2005Shares
            
            Common
                Stock
            
            Additional
              Paid-In
              Capital
            
            Deficit
                Accumulated
              During
              Development
                Stage
            
            TotalBalance,
                January 25, 1996 (inception)Shared
                issued for services
            320,020
            
            320
            
            (304)
            
            -
            
            16Net
                Loss
            -
            
            -
            
            -
            
            (10,016)
            
            (10,016)Balance,
                December 31, 1996
            320,020
            
            320
            
            (304)
            
            (10,016)
            
            (10,000)Net
                Loss
            -
            
            -
            
            -
            
            (10,000)
            
            (10,000)Balance,
                December 31, 1997
            320,020
            
            320
            
            (304)
            
            (20,016)
            
            (20,000)Shares
                issued for cash
            684,500
            
            685
            
            -
            
            -
            
            685Net
                Loss
            -
            
            -
            
            -
            
            (10,000)
            
            (10,000)Balance,
                December 31, 1998
            1,004,520
            
            1,005
            
            (304)
            
            (30,016)
            
            (29,315)Net
                Loss
            -
            
            -
            
            -
            
            (10,000)
            
            (10,000)Balance,
                December 31, 1999
            1,004,520
            
            1,005
            
            (304)
            
            (40,016)
            
            (39,315)Net
                  Loss
            -
            
            -
            
            -
            
            (10,130)
            
            (10,130)Balance,
                December 31, 2000
            1,004,520
            
            1,005
            
            (304)
            
            (50,146)
            
            (49,445)Balance,
                December 31, 2001
            1,004,520
            
            1,005
            
            (304)
            
            (50,146)
            
            (49,445)Net
                Loss
            -
            
            -
            
            -
            
            (555)
            
            (555)Balance,
                December 31, 2002
            1,004,520
            
            1,005
            
            (304)
            
            (50,701)
            
            (50,000)Net
                Loss
            -
            
            -
            
            -
            
            (10,000)
            
            (10,000)Balance,
                December 31, 2003
            1,004,520
            
            1,005
            
            (304)
            
            (60,701)
            
            (60,000)Net
                Loss
            -
            
            -
            
            -
            
            (10,000)
            
            (10,000)Balance,
                December 31, 2004
            1,004,520
            
            1,005
            
            (304)
            
            (70,701)
            
            (70,000)Net
                  Loss
            -
            
            -
            
            -
            
            (5,900)
            
            (5,900)Balance,
                December 31, 2005
            1,004,520
            
            1,005
            
            (304)
            
            (76,601)
            
            (75,900)




See
        accompanying notes to financial statements.




F-4


APEX
                CAPITAL GROUP, INC.
              (A
                Development Stage Company)
              STATEMENTS
                OF CASH FLOWSFor
                the Year Ended Decemeber 31, 2005
            
            For
                the Year Ended Decemeber 31, 2004
            
            Cumulative
                from Inception (Jan. 25, 1996) to Dec. 31, 2005Operating
                ActivitiesNet
                income (loss)
            
            $
            (5,900
            )
            $
            (10,000
            )
            $
            (76,601
            )Adjustments
                to reconcile netloss
                to net cash used in operations:Issuance
                of shares for services
            
            
            -
            
            
            -
            
            
            16Issuance
                of notes payable to
              related
                parties for services
            
            
            -
            
            
            10,000
            
            
            70,000Changes
                in operating assets and liabilites:Increase
                in accounts payables
            
            
            5,900
            
            
            -
            
            
            5,900Cash
                used in operating activities
            
            
            -
            
            
            -
            
            
            (685
            )Investing
                Activities
            
            
            -
            
            
            -
            
            
            -Financing
                ActivitiesIssuance
                of shares for cash
            
            
            
            
            
            
            
            
            685Cash
                provided by financing activities
            
            
            -
            
            
            -
            
            
            685Net
                change in cash
            
            
            -
            
            
            -
            
            
            -Cash
                at beginning of the period
            
            
            -
            
            
            -
            
            
            -Cash
                at end of the period
            
            $
            -
            
            $
            -
            
            $
            -Supplemental
                information:Cash
                paid for interest and income taxes
            
            $
            -
            
            $
            -
            
            $
            -Non-cash
                investing and financing activities:Issuance
                of notes payable to related party for services rendered
            
            $
            -
            
            $
            10,000
            
            $
            70,000




F-5


APEX
      CAPITAL GROUP, INC.


(A
      Development Stage Company)


NOTES
      TO
      THE FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2005 and 2004, and for the


Period
      of
      January 25, 1996 (Inception) through December 31, 2005





NOTE
      1 -
      ORGANIZATION AND BUSINESS PLAN





The
      Company was incorporated under the laws of the State of Nevada on January 25,
      1996 under the name of Pinnacle Management Group, Inc. On February 6, 1996,
      the
      articles were amended to change its name to Apex Capital Group, Inc. The Company
      was incorporated primarily to engage in any lawful activity.


The
      Company's articles initially authorized 10,000 shares of preferred stock and
      50,000 shares of common stock, both at a par value of $0.001 per
      share.





An
      amendment to the Articles of Incorporation was filed on October 6, 1998,
      increasing the Company's authorized shares to 100,000,000, consisting of
      99,990,000 shares of common stock and 10,000 shares of preferred stock, both
      at
      a par value of $0.001 per share.





NOTE
      2 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Development
      Stage Company


The
      Company is considered a Development Stage Company as defined in SFAS 7,
      "Accounting and Reporting by Development Stage Enterprises." Therefore,
      cumulative amounts are reported on the statements of operations, stockholders
      deficit, and cash flows.





Cash
      and
      Equivalents


The
      Company considers all highly liquid debt instruments purchased with a maturity
      of three months or less to be cash equivalents. No cash was paid for interest
      or
      income taxes during the years ending December 31, 2005 or 2004.





Loss
      Per
      Common Share


Loss
      per
      common share is computed by dividing the net loss for the period by the weighted
      average number of shares outstanding for the years ended December 31, 2005
      and
      2004. The Company's convertible debt (Note 4) is a potentially dilutive
      security, but does not impact the computation of fully diluted EPS because
      its
      effect would be antidilutive. Accordingly, basic earnings per share and fully
      diluted earnings per share are the same.





Use
      of
      Estimates


The
      preparation of the accompanying 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
      expenses during the reporting periods. Actual results could differ from those
      estimates.


F-6


APEX
      CAPITAL GROUP, INC.


(A
      Development Stage Company)


NOTES
      TO
      THE FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2005 and 2004, and for the


Period
      of
      January 25, 1996 (Inception) through December 31, 2005





NOTE
      2 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Income
      Taxes


Deferred
      tax assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities and their respective tax bases. Deferred tax
      assets and liabilities are measured using enacted tax rates expected to apply
      to
      taxable income in the years in which those temporary differences are expected
      to
      reverse. The effect on deferred tax assets and liabilities from a change in
      tax
      rates is recognized in the statement of operations in the period that includes
      the enactment date. The Company has not yet commenced an active trade or
      business, therefore, the Company did not provide any current or deferred federal
      or state income tax expense or benefit for any of the periods presented because
      to date, it has experienced operating losses. The Company has a federal net
      operating loss carryforward of $76,601 expiring in the years 2016 through 2026.
      The tax benefit of this net operating loss, based on an effective tax rate
      of
      35%, is approximately $26,810 and has been offset by a full valuation allowance,
      which increased by $2,065 and $3,500 during the years ended December 31, 2005
      and 2004, respectively.





Recently
      Issued Accounting Pronouncements


In
      December of 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
      Compensation - Transition and Disclosure - An Amendment of FASB Statement No.
      123." SFAS 148 provides alternative methods of transition for a voluntary change
      to the fair value based method of accounting for stock- based employee
      compensation. In addition, the statement amends the disclosure requirement
      of
      Statement No. 123 to require prominent disclosures in both annual and interim
      financial statements about the method of accounting for stock-based employee
      compensation and the effect of the method used on reported results.





In
      April
      2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative
      Instruments and Hedging Activities." SFAS No. 149 amends and clarifies financial
      accounting and reporting for derivative instruments, including certain
      derivative instruments embedded in other contracts and for hedging activities
      under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging
      Activities." SFAS No. 149 is generally effective for contracts entered into
      or
      modified after June 30, 2003 and for hedging relationships designated after
      June
      30, 2003.





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 standards for how an issuer measures certain financial instruments
      with characteristics of both liabilities and equity and requires that an issuer
      classify a financial instrument within its scope as a liability (or asset in
      some circumstances). SFAS No. 150 was effective for financial statements entered
      into or modified after May 31, 2003 and otherwise was effective and adopted
      by
      the Company in 2003.








F-7




APEX
      CAPITAL GROUP, INC.


(A
      Development Stage Company)


NOTES
      TO
      THE FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2005 and 2004, and for the


Period
      of
      January 25, 1996 (Inception) through December 31, 2005





NOTE
      2 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Recently
      Issued Pronouncements (continued)


In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections,
      a
      replacement of APB Opinion No. 20 and FASB Statement No. 3." This statement
      changes the requirements for the accounting for and reporting of a change in
      accounting principle. Previously, Opinion 20 required that most voluntary
      changes in accounting principle be recognized by including in net income of
      the
      period of change the cumulative effect of changing to a new principle. This
      statement requires retrospective application to prior periods' financial
      statements of changes in accounting principle, when practicable.





None
      of
      the above new pronouncements has current application to the Company, but may
      be
      applicable to the Company's future financial reporting.





NOTE
      3 -
      STOCKHOLDERS DEFICIT





As
      of
      December 31, 1997, there were 16,001 Common Stock shares issued and outstanding.
      On October 15, 1998, a 20 for 1 forward split was made, resulting in common
      stock issued and outstanding of 320,020. The split has been retroactively
      reflected since inception in the statements of changes in stockholders deficit.





On
      December 15, 1998, the Board of Directors agreed to sell up to 700,000 shares
      of
      its common stock at the stated par value of $.001 per share. Total shares issued
      were 684,500 at the stated par value $.001 per share, for $685 in
      cash.





Common
      stock shares issued and outstanding as of December 31, 2005 were 1,004,520.
      No
      preferred stock has been issued and none are outstanding as of December 31,
      2005.





NOTE
      4 -
      RELATED PARTY TRANSACTIONS





The
      Company has accrued $10,000 per year for management services rendered by the
      Company's majority shareholder/President pursuant to a five-year convertible
      promissory note covering years 1995 through 1999 for a total balance of $50,000
      at December 31, 2005. This note is non-interest bearing and convertible at
      a
      rate of $0.05 per share for 1,000,000 common shares at the option of the holder.
      If not sooner converted into common stock, the principal amount is due December
      31, 2008.





The
      Company accrued $20,000 during 2003 and 2004 for management services rendered
      by
      an affiliate of the Company's majority shareholder/President pursuant to the
      terms of a convertible promissory note. This note is non- interest bearing
      and
      convertible at a rate of $0.02 per share for 1,000,000 common shares at the
      option of the holder. If not sooner converted into common stock, the principal
      amount is due December 31, 2008.








F-8




APEX
      CAPITAL GROUP, INC.


(A
      Development Stage Company)


NOTES
      TO
      THE FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2005 and 2004, and for the


Period
      of
      January 25, 1996 (Inception) through December 31, 2005








NOTE
      4 -
      RELATED PARTY TRANSACTIONS (continued)





The
      Company's officers and directors have resolved to provide for various minimal
      expenses incurred by the Company without repayment until such time that a merger
      candidate is found. These expenses consist of, but are not limited to, office
      space, accounting, filing requirements, and management services.





NOTE
      5 -
      GOING CONCERN AND INCIDENTAL COSTS





The
      accompanying financial statements have been prepared in conformity with
      accounting principles generally accepted in the United States of America, which
      contemplate continuation of the Company as a going concern. However, the Company
      has incurred losses since its inception and has not yet been successful in
      establishing profitable operations. These factors raise substantial doubt about
      the ability of the Company to continue as a going concern. Unanticipated costs
      and expenses or the inability to generate revenues could require additional
      financing, which would be sought through bank borrowings, or equity or debt
      financing. To the extent financing is not available, the Company may not be
      able
      to, or may be delayed in, developing its business purpose. The accompanying
      financial statements do not reflect any adjustments that might result from
      the
      outcome of these uncertainties.





Incidental
      costs to maintain legal registrations of the Company in its state of
      incorporation and with the Securities and Exchange Commission have been paid
      or
      assumed by the current shareholders of the Company. This will continue for
      the
      foreseeable future.





The
      Company intends to actively pursue a business relationship with a qualified
      merger or acquisition candidate. Costs incurred on these efforts will continue
      to be borne/paid by the Officers/Directors of the Company in the form of
      loans/advances or the issuance of stock.




F-9