UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

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

                        COMMISSION FILE NUMBER 333-34308
                                  NEWAVE, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


         UTAH                                         87-0520575
(State  or  Other  Jurisdiction  of               (I.R.S.  Employer
Incorporation  or  Organization)                     Identification
                                                         Number)



                           404 EAST 1ST STREET, #1345
                              LONG BEACH, CA 90802
          (Address and telephone number of principal executive offices)

                                 (562) 983-5331
                                 --------------
                           (Issuer's telephone number)

          Securities registered under Section 12(b) of the Exchange Act

                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT

                    Common Stock, $0.001 par value per share

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 issuer was required to file such
reports),  and  (2) has been subject to such filing requirements for the past 90
days.  Yes  [X]  No  [_]

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

The Issuer had $6,812,686 in net revenues for the fiscal year ended December 31,
2004.

As  of  March  31,  2005,  the  Issuer  had  34,885,117  shares  of common stock
outstanding.

As  of  March  31,  2005 the aggregate market value of the Issuer's common stock
held  by  non-affiliates  was  approximately  $4,951,263  (calculated  based  on
3,414,664  non-affiliate  shares  outstanding  at  the  closing price of $1.45).

Transitional  Small  Business  Disclosure  Format  (Check  one):  Yes [ ] No [X]

                                  NEWAVE, INC.
                                     10-KSB

                                TABLE  OF  CONTENTS



PART  I                                                                 PAGE
NO.
ITEM  1.     DESCRIPTION OF BUSINESS.                                          2
ITEM  2.     DESCRIPTION OF PROPERTY.                                          6
ITEM  3.     LEGAL PROCEEDINGS.                                                6
ITEM  4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.              7

PART  II
ITEM  5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.         7
ITEM  6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.        9
ITEM  7.     FINANCIAL  STATEMENTS.                                           13
ITEM  8.     CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING
             AND  FINANCIAL  DISCLOSURE.                                      24
ITEM  8A.    CONTROLS  AND  PROCEDURES.                                       24
ITEM  8B.    OTHER  INFORMATION.                                              24

PART  III
ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
             COMPLIANCE  WITH  SECTION  16(a)  OF  THE  EXCHANGE  ACT.        24
ITEM  10.    EXECUTIVE  COMPENSATION.                                         26
ITEM  11.    SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND
             MANAGEMENT  AND  RELATED  STOCKHOLDER  MATTERS.                  26
ITEM  12.    CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.              27
ITEM  13.    EXHIBITS.                                                        30
ITEM  14.    PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES.                      31





                                     PART I

ITEM  1.  DESCRIPTION  OF  BUSINESS.

OVERVIEW


Through  our  wholly-owned  subsidiary,  Onlinesupplier.com,  we  offer  a
comprehensive  line  of  products  and  services at wholesale prices through our
online  club  membership. Additionally, our technology allows both large complex
organizations  and  small stand-alone businesses to create, manage, and maintain
effective  website  solutions for eCommerce. Onlinesupplier.com's web address is
www.onlinesupplier.com.

Our  integrated  suite  of  electronic commerce products enables individuals and
businesses  to conduct electronic commerce over the Internet at affordable price
levels.  Our products integrate transaction processing, accounting and financial
systems,  customer relationship management, advertising, merchant processing and
a  wide  array  of  wholesale products. Our suite of products is accessed by our
customers through our online club membership. Through our membership program, we
charge  our  members  a  monthly  fee  for  unlimited access to our products and
services.

Our  website  offers  wholesale  merchandise  in  categories  such  as:

-  Consumer  Electronics
-  Home,  garden  and  outdoor  living  products
-  Kitchenware  and  housewares
-  Sports  and  Outdoor  Equipment
-  Automobile  Accessories
-  Tools  and  hardware
-  Jewelry
-  Travel  Accessories

Furthermore,  our  online membership program provides the following services and
capabilities:

-  Automated  Webstore  Generation  and  Customization
-  Merchant  Processing  Capabilities
-  Domain  Name  Registration
-  Online  Training  Modules

We  are a publicly traded company, which trades on the Over-the-Counter Bulletin
Board  of  the  National  Quotation  Service  under  the  ticker  symbol "NWWV."

The  address  of  our  principal executive office is 404 East 1st Street, #1345,
Long  Beach,  California  90802.  Our  telephone  number  is (562) 983-5331. Our
website address is www.newave-inc.com. Information contained on our website does
not  constitute  part  of  this  report  and our address should not be used as a
hyperlink  to  our  website.

HISTORY
We  incorporated  in the State of Utah on March 1, 1994 as Utah Clay Technology,
Inc.  From  our  formation  until  January 15, 2004, our business plan included:
(1)  locating  kaolin  deposits  in  Utah;
(2)  obtaining  the  legal  rights  to  these  deposits;
(3)  conducting  exploratory  operations;
(4)  testing  the  extracted  minerals  in  the  laboratory;  and
(5)  selling samples of the processed form of our kaolin to a commercial company
for  market  evaluation.

Although  we  did  obtain certain legal rights to properties possibly containing
kaolin,  due  to  a  lack of capital, we never commenced mining operations. As a
result,  we  had  no  revenues  since  our  inception.  On  January 15, 2004, we
abandoned  the  business  plan  for  Utah  Clay  Technologies. On the same date,
pursuant  to  an  Agreement and Plan of Reorganization with NeWave, Inc., a Utah
corporation,  Utah  Clay Technologies, Inc. changed its name to NeWave, Inc. and
OnlineSupplier.com  became  our  wholly-owned  subsidiary. We own and operate an
online membership club that offers a comprehensive line of products and services
at  wholesale  prices through our membership program. As a result of this change
in  our  focus  and  direction,  the  entire former management team and board of
directors  resigned  and  we  employed a new management team and appointed a new
board  of  directors.

On  January  30,  2004,  the State of Utah recognized our name change to NeWave,
Inc.  We  acquired  our operating subsidiary, Onlinesupplier.com, on January 15,
2004  and its operations are therefore not reflected on our financial statements
for  the  fiscal  year  ending  December  31, 2003. We organized our subsidiary,
Auction  Liquidator, Inc., in September 2004 and it began to generate immaterial
revenues  in  October  2004.

Through  our  wholly-owned  subsidiary,  Onlinesupplier.com,  we  offer  a
comprehensive  line  of  products  and  services at wholesale prices through our
online  club  membership. Additionally, our technology allows both large complex
organizations  and  small stand-alone businesses to create, manage, and maintain
effective  website  solutions for eCommerce. Onlinesupplier.com's web address is
www.onlinesupplier.com.  Auction  Liquidator  was  organized  to  leverage  the
"Onlinesupplier"  customer  base  to  market  the eBay drop-off concept. Auction
Liquidator's  web  address  is  www.auctionliquidator.com

Our  integrated  suite  of  electronic commerce products enables individuals and
businesses  to conduct electronic commerce over the Internet at affordable price
levels.  Our products integrate transaction processing, accounting and financial
systems,  customer relationship management, advertising, merchant processing and
a  wide  array  of  wholesale products. Our suite of products is accessed by our
customers through our online club membership. Through our membership program, we
charge  our  members  a  monthly  fee  for  unlimited access to our products and
services.

We are a publicly traded company, which trades on the Over-the-Counter Bulletin
Board  of  the  National  Quotation  Service  under  the ticker symbol "NWWV.OB"
The  address  of  our  principal executive office is 404 East 1st Street, #1345,
Long  Beach,  California  90802.  Our  telephone  number  is (562) 983-5331. Our
website address is www.newave-inc.com. Information contained on our website does
not  constitute  part  of  this  report  and our address should not be used as a
hyperlink  to  our  website.

INDUSTRY  BACKGROUND

eCommerce  Industry

Online  shopping  has  established itself as a large and rapidly growing channel
for  consumers  and  merchants  to buy and sell goods and services. According to
Forrester  Research, U.S. online retail sales will grow at a steady 19% Compound
Annual  Growth  Rate  over  the  next  five years, from $95.7 billion in 2003 to
$229.9 billion in 2008. Additionally, roughly 5 million new U.S. households will
shop  online  each  of  the next five years, creating a total of 63 million U.S.
online  shopping  households  in  2008.

We  believe  that  the  key  forces  driving  the  growth of online shopping are
convenience,  selection and savings. The Internet offers around-the-clock access
to  millions  of  products and thousands of stores, unlike in-store shopping. It
contains shopping information from a wide variety of sources, including merchant
websites,  manufacturer  websites  and other online content providers. Consumers
utilize  this  convenience,  selection  and  information to save time and money.
We  believe that individuals and businesses desire an integrated package that is
inexpensive,  comprehensive  and easily navigable. We believe current electronic
commerce  applications  in the market do not include complete functionality such
as  webstore  generation, merchant processing capabilities, customer management,
online  training  modules,  domain  name  registration and an array of wholesale
products.  Accordingly,  we  believe  there  is  a  large  demand for a complete
electronic  commerce  product  for individuals and businesses and that demand is
not  being  currently  met  by  any  provider  of  electronic commerce products.

OUR  WEBSITE,  PRODUCTS  AND  SERVICES

We  are  a  progressive  internet-based direct marketing company and provider of
product fulfillment solutions headquartered in Long Beach, CA. We bring value to
consumers  by  designing  and  implementing  membership  programs that offer the
services and discounts needed to stay competitive in today's online marketplace.
As  a consumer-driven organization, we offer a program that can fit the needs of
today's  multi-faceted customer. From payment solutions to product distribution,
we  give  our  customers  access to every major area of e-commerce and provide a
one-stop  portal  into  the  world  of  internet  driven  business  solutions.
Our  wholly-owned subsidiary Online Supplier is in the business of providing its
members  the  necessary  tools  to  create and run a successful Internet auction
business.  We not only provide future business owners guidance in starting their
own  online  business  but  also  give  them  access  to  an  array of wholesale
merchandise  and  value-added  services  via  our  online membership program for
resale  online.

Our membership-based website Onlinesupplier.com provides our customers access to
an  array  of  various products and services designed to create or enhance their
shopping  experience  and  to  promote  our customers own ecommerce solution. We
store  approximately 450 products in our warehouse for distribution. Our members
pay  a  monthly  subscription  fee,  which  allows  them unlimited access to our
product  and  service  offerings.

Our  website  wholesales  approximately  1,100  products  in such categories as:
-  Consumer  Electronics;
-  Home,  Garden  and  Outdoor  Living  Products;
-  Kitchenware  and  Housewares;
-  Sports  and  Outdoor  Equipment;
-  Automobile  Accessories;
-  Tools  and  Hardware;
-  Jewelry;  and
-  Travel  Accessories.

For  an  additional  monthly  fee,  our  customers  are  also  offered access to
discounted  value-added  services  such  as:  prescription  drug plans, roadside
assistance, tax and legal services, and discounted entertainment packages. These
services are currently offered to our customers through third party arrangements
with  suppliers  such  as  MemberWorks  Incorporated  and GE Financial Services.

Furthermore,  our  online membership program provides the following services and
capabilities:
-  Automated  Webstore  Generation  and  Customization;
-  Merchant  Processing  Capabilities;
-  Domain  Name  Registration;  and
-  Online  Training  Modules  (that  includes  online  auction  training).
-  Web  hosting

We  generate  revenues  from  monthly  membership fees and product sales via our
website.

In  September  2004,  we  organized  Auction  Liquidator, Inc. as a wholly-owned
subsidiary  to  pursue  opportunities  related to eBay "drop off" or consignment
stores.  As  of  June  30,  2004,  through their wholly-owned and majority-owned
subsidiaries  and  affiliates,  eBay  had  websites  directed  toward the United
States,  Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong,
Ireland,  Italy,  The  Netherlands,  New Zealand, Singapore, South Korea, Spain,
Sweden,  Switzerland,  Taiwan  and  the  United  Kingdom.  eBay pioneered online
trading  by  developing  an  Internet-based  marketplace in which a community of
buyers  and  sellers  are  brought together to buy and sell almost anything. The
eBay  online  service  permits  sellers to list items for sale, buyers to bid on
items  of  interest,  and  all  eBay  users  to browse through listed items in a
fully-automated,  topically-arranged service that is available online seven days
a  week.

We  organized  Auction Liquidator to leverage the "Onlinesupplier" customer base
to  market the eBay drop-off concept. Customers desiring to sell an item on eBay
but  lacking  technical knowledge or wishing to outsource the sale, can drop off
the  item at any Fed Ex location nationwide. The item is then shipped to Auction
Liquidator's  warehouse  located  in  Long  Beach,  California  where it will be
photographed,  detailed  and eventually auctioned on eBay with a starting bid of
$1.00.  Once  the  item  has  sold,  Auction  Liquidator  would receive the sale
proceeds  and  deliver  final payment to the customers less Auction Liquidator's
commission  of 22% - 35% and eBay's commission of 1.5% - 5.25%, depending on the
sale  price,  and an eBay transaction cost of 2.9%. The customer incurs no other
charges  including  shipping which is paid by Auction Liquidator. If the item is
not  successfully  sold,  it  is  returned  to  the  customer  at  no  cost.
Auction  Liquidators  began  to generate immaterial revenues in October 2004 and
was fully operational on January 1, 2005. We are aware of several competitors in
the  eBay  "drop-off"  store  arena including Auction Drop, Quikdrop and Door to
Door  auctions.

In  April,  2004,  we  organized  Discount  Online  Warehouse  as a wholly-owned
subsidiary  to offer heavily discounted products purchased in bulk to consumers,
for  a  $19.95  monthly  membership  fee.  We  intend  to launch Discount Online
Warehouse  in  mid  to  late  2005.

STRATEGIC  RELATIONSHIPS  AND  ALLIANCES

We  have  entered  into  strategic  relationships  or  alliances:

In  June  2004, we entered into a Lead Marketing Agreement with Vandalay Venture
Group, Inc. d/b/a Applied Merchant for an initial term of 60 days, automatically
renewable  for  successive  periods  of  one year. In exchange for our providing
Applied  Merchant  with  a  number  of brokered leads on a weekly basis, Applied
Merchant  will pay us fifty percent of the net monthly residual amount collected
from  leads  marketed  pursuant  to  the  Agreement.

On  August  11,  2004,  we  entered  into a Software Subscription Agreement with
NetChemistry,  Inc.  for  a  term  of  two  years,  automatically  renewable.
NetChemistry  agreed  to  create a private label, branded solution for licensing
our product and allowing the ability to provide self-serve managed eCommerce and
non-eCommerce  Web  sites  to  our  customers.  In  exchange,  we  agreed to pay
NetChemistry  a  minimum  monthly  fee of $5,000, which includes the first 1,666
sites  hosted  at  $3  each  for the Newave Sales Web Sites, and $3 per site per
month  on  sites  1  - 16,666 and $1 per site per month on sites over 16,667 for
NeWave  Sales Web Sites built using NetChemistry software. We also agreed to pay
NetChemistry  $7,000  for  setup  and  $3,000  to  purchase  a  server.

CUSTOMERS

As  of  December  31,  2004,  we  had  approximately 20,000 current paid members
although  we  have  serviced  over 100,000 paid members since our inception. Our
customers  consist  primarily of individuals desiring assistance with organizing
their  own  internet-based  business.

Memberworks,  Inc.  makes  up  approximately  19%  of  our  revenue.  This  is a
significant  customer  and  the  loss of this relationship could cause result in
decreasing  revenues.  However,  we  intend to expand and diversify our customer
base  to  reduce  our  dependency  on  Memberworks  over the next twelve months.

SALES  AND  MARKETING

December  31,  2004, we employed 150 telephone sales representatives that assist
customers  with  making  and  processing  orders.  In  addition,  we employed 40
customer  service representatives that address any issues that may arise while a
customer  is  utilizing  a  product  or  service.

We  primarily market our products throughout the United States. We advertise and
market our products in industry magazines, local and regional news publications,
online search engines, opt-in email marketing, and network marketing. By working
with  independent  sales  agents,  we  have  been  able  to  expand our reach to
customers  nationwide that are looking for our products. In addition, our online
marketing  campaign  has  significantly  expanded  our marketing effort that has
decreased  our  marketing  cost  per  acquisition.

We  have  signed  TV  game  show host and celebrity personality Bob Eubanks to a
personal  services  contract. Through his company Luminary Ventures, Mr. Eubanks
will  perform  promotional  and  business  development  services  for us and our
wholly-owned  subsidiary  Onlinesupplier.com.  We  intend  to  launch  our first
infomercial  in  July  2005  featuring  Mr.  Eubanks.

SUPPLIERS

Although  we  continue  to increase our direct purchasing from manufacturers, we
source  a  significant amount of inventory from relatively few vendors. However,
no  vendor  accounts  for 10% or more of our inventory purchases. We do not have
long-term  contracts  or  arrangements with most of our vendors to guarantee the
availability  of  merchandise,  particular  payment  terms,  or the extension of
credit  limits. If our current vendors were to stop selling merchandise to us on
acceptable terms, we may not be able to acquire merchandise from other suppliers
in  a  timely  and  efficient  manner  and  on  acceptable  terms.

COMPETITION

The  environment  for  our  products  and services is intensely competitive. Our
current  and  potential  competitors  include:

(1)  physical-world  retailers,  catalog retailers, publishers, distributors and
manufacturers  of  our  products,  many  of  which  possess  significant  brand
awareness,  sales  volume, and customer bases, and some of which currently sell,
or  may  sell,  products or services through the Internet, mail order, or direct
marketing,  such  as,  Wal-Mart  Stores,  Target Corporation, Kmart Corporation,
Costco  Wholesale  Corporation,  Sam's Club, BJ's Wholesale Club, Inc., and Best
Buy,Inc.;
(2)  other  online  eCommerce  sites  such  as,  Amazon,  Sam's  Club  Online,
Wal-Mart.com  USA,  LLC;
(3)  a  number  of indirect competitors, including media companies, Web portals,
and  Web search engines that are involved in online commerce, either directly or
in  collaboration  with  other  retailers,  such  as  Yahoo, AOL and Google; and
(4)  companies that provide eCommerce services, including website developers and
third-party fulfillment and customer-service providers, such as Yahoo, Go-Daddy,
MSN,  Network  Solutions,  Register.com,  and  Buydomains.

Additionally,  we  are aware of several competitors in the eBay "drop-off" store
arena  including  Auction  Drop,  Quikdrop  and  Door  to  Door  auctions.

We believe that the principal competitive factors in our market segments include
selection,  price,  availability,  convenience,  information,  discovery,  brand
recognition,  personalized  services,  accessibility,  customer  service,
reliability, speed of fulfillment, ease of use, and ability to adapt to changing
conditions,  as well as our customers' overall trust in the entire experience in
transactions  with us or facilitated by us on behalf of third-party sellers. For
services  we  offer  to  business and individual sellers, additional competitive
factors  include  the  quality  of  our  services  and  tools  and  the speed of
performance  for  our  services.  As  the  market  segments  in which we operate
continue  to  grow, other companies may also enter into business combinations or
alliances  that  strengthen  their  competitive  positions.

INTELLECTUAL  PROPERTY

We  have  filed for a trademark for Online Supplier, onlinesupplier.com (date of
use:  August 18, 2003), NeWave, Inc.-tomorrow's innovations, today (date of use:
August 18, 2003), and Auction Liquidator, auctionliquidator.com, and Stop, Drop,
n'  Cash  (date  of use: September 1, 2004). We regard copyrights, domain names,
trade  dress,  trade secrets, proprietary technologies, and similar intellectual
property  as  important  to our success, and we rely on trademark, and copyright
law, trade-secret protection, and confidentiality and/or license agreements with
our  employees,  customers,  partners,  and  others  to  protect our proprietary
rights.  We  have  licensed  in  the past, and expect that we may license in the
future,  certain  of  proprietary rights, technologies or copyrighted materials,
from  third  parties  and  we  rely  on  those  third  parties  to  defend their
proprietary  rights,  copyrights  and  technologies.

We  also  may not be able to acquire or maintain appropriate domain names in all
countries  in which we intend to do business. Furthermore, regulations governing
domain  names  may not protect our trademarks and similar proprietary rights. We
may  be  unable  to  prevent  third parties from acquiring domain names that are
similar  to,  infringe  upon,  or diminish the value of our trademarks and other
proprietary  rights.

Policing unauthorized use of our proprietary rights is inherently difficult, and
we may not be able to determine the existence or extent of any unauthorized use.
The  protection  of  our  intellectual  property  may require the expenditure of
significant  financial  and managerial resources. Moreover, we cannot be certain
that  the  steps  we  take  to protect our intellectual property will adequately
protect  our  rights  or that others will not independently develop or otherwise
acquire equivalent or superior technology or other intellectual property rights.


TECHNOLOGY

Using a combination of our own technologies and commercially available, licensed
technologies,  we  have  implemented numerous features that simplify and improve
the  customer  shopping  experience, enable third parties to generate customized
eCommerce solutions on our platform, and facilitate our fulfillment and customer
service  operations. Our current strategy is to focus our development efforts on
creating  and  enhancing the specialized, proprietary software that is unique to
our  business,  and  to license or acquire commercially-developed technology for
other  applications  where  available  and  appropriate.

OPERATIONS

Customer  Service Center. We sublease approximately 16,000 square feet of office
space  in  Goleta,  California,  which  houses  our  customer service center and
administration  offices.  This  space  accommodates our sales force as well. The
lease  is  month  to month and the base rent is $15,642 per month plus expenses,
estimated  at  $0.22 per square foot, plus a pro rata share of utilities payable
monthly  in  advance on the first day of each calendar month of the term of this
sublease.  The  sublease  expires  on  in  April  of  2009.

Auction  Liquidator  leases  approximately  10,500  square feet of warehouse and
office  space  in  Signal  Hill,  California. The monthly rent is $7,612.50. The
lease  expires  on  September  2007  and  we  have  an  option  to  renew.

Warehousing and Shipping: Additionally, we lease approximately 2,200 square feet
which  serves  as our product warehouse and shipping center. The lease was month
to month and the rent is $2,340/month. The lease has expired and the Company has
consolidated  operations to the Long Beach facility. When sales are processed in
our inbound call center the orders are processed, fulfilled and shipped from our
warehouse.  Shipments  are  made  via  UPS  signature  guarantee.

Third  Party  Suppliers:  Some of the products we have listed on our website are
fulfilled  and  shipped  by  third  party  suppliers.  In  addition, some of the
products  we sell may expose us to product liability claims relating to personal
injury,  death,  or property damage caused by these products, and may require us
to take actions such as product recalls. Certain businesses and individuals also
sell  products  using  our  eCommerce platform that may increase our exposure to
product  liability  claims,  such  as  if  these  sellers do not have sufficient
resources  to  protect  themselves  from  these  claims.  Although  we  maintain
liability insurance, we cannot be certain that our coverage will be adequate for
liabilities actually incurred or that insurance will continue to be available to
us  on economically reasonable terms, or at all. In addition, some of our vendor
agreements  with  our suppliers and third party sellers do not indemnify us from
product  liability.

EMPLOYEES

As  of  December 31, 2004, we employed 225 employees, including customer service
representatives,  telephone  sales  representatives,  and  administrative  and
management personnel. We have never experienced work stoppages, and we are not a
party  to  any  collective bargaining agreement. We anticipate that our business
will  continue to grow and that we will be required to hire additional employees
to  service  our  customer  demand.

REGULATORY  RESTRICTIONS  ON  OUR  BUSINESS

We  are subject to general business regulations and laws, as well as regulations
and  laws  specifically  governing  the  Internet,  telecommunication  sales and
eCommerce.  These existing and future laws and regulations may impede the growth
of  the  Internet or other online services. These regulations and laws may cover
taxation,  user  privacy,  data  protection,  pricing,  content,  copyrights,
distribution,  electronic  contracts  and  other  communications,  consumer
protection,  the  provision  of  online  payment services, broadband residential
Internet  access,  and the characteristics and quality of products and services.

It  is  not clear how existing laws governing issues such as property ownership,
sales  and  other  taxes,  libel,  and  personal  privacy apply to the Internet,
eCommerce  and  our Company. Unfavorable resolution of these issues may harm our
business. Specifically, our inbound telephone center is regulated by the Federal
Trade  Commission  and Federal Communication Commission. Under the Federal Trade
Commission's Telemarketing Sales Rule and the Federal Communication Commission's
Telephone  Consumer  Protection Act, we are subject to the Do Not Call Registry,
limited  in the use of pre-acquired account information, required to get certain
authorizations  and  consents  with  regard to billing, required to make certain
disclosure  statements,  prohibited  from  making misrepresentations, limited to
when  we  may  call  consumers,  required  to  transmit  Called  ID information,
restricted  in  the  trafficking  of  data,  required  to  keep certain records,
prohibited  from abandoning certain outbound calls, and are subject to fines for
unlawful  activity. Furthermore, some of our merchant, advertising and marketing
efforts  are  regulated  by  the  same  organizations  and statutes, such as the
CAN-SPAM Act limiting the transmission of unsolicited commercial electronic mail
via  the  Internet,  California  Online Privacy Protection Act of 2003 requiring
owners  of commercial Web sites or online services to post a privacy policy, the
Fair  and  Accurate  Credit  Transaction  Act  of 2003 ensuring that everyone is
treated  fairly  when  applying  for  credit  and  protecting  consumers against
identity  theft,  California  Financial  Information Privacy Act prohibiting the
sharing of nonpublic personal information of a consumer with nonaffiliated third
parties  without  the  explicit  prior consent of the consumer, California Civil
Code Section 1798.82 requiring businesses to notify customers if an unauthorized
person  may  have  obtained  access to their personal information and California
Civil  Code  Section  1798.83  requiring  disclosure  of  sharing  for marketing
purposes.

While  we believe that we maintain all requisite licenses and permits and are in
compliance with all applicable federal, state, local and foreign regulations, we
may  not  be able to maintain all requisite licenses and permits. The failure to
satisfy  those  and  other regulatory requirements could have a material adverse
effect  on  our  business'  financial  condition  and  results  of  operations

ITEM  2.  DESCRIPTION  OF  PROPERTY.

The  address  of our principal executive office is 404 East 1st ST., #1345, Long
Beach,  CA  90802.

We  sublease  approximately  16,000  square  feet  of  office  space  in Goleta,
California, which houses our customer service center and administration offices.
This space accommodates our sales force as well. The lease is month to month and
the  base  rent is $15,642 permonth plus expenses, estimated at $0.22 per square
foot, plus a pro rata share of utilities payable monthly in advance on the first
day of each calendar month of the term of this sublease. The sublease expires on
in  April  of  2009.

We  also  lease  approximately  2,200  square  feet  which serves as our product
warehouse  and  shipping  center.  The  lease  is month to month and the rent is
$2,340  per  month.  The  lease  has  expired  expires  on  long  beach

Auction  Liquidator  leases  approximately  10,500  square feet of warehouse and
office  space  in  Signal  Hill,  California. The monthly rent is $7,612.50. The
lease  expires  on  September 2007 and we have an option to renew. We believe we
will  have  to find additional space to lease to support our anticipated growth.


ITEM  3.  LEGAL  PROCEDINGS.

On  February  20, 2004, we initiated legal proceedings in Superior Court, County
of  Santa  Barbara,  Anacapa  Division  against  Paydirt,  L.P.,  a Utah limited
partnership,  alleging causes of action for usury, unfair business practices and
unfair  competition in connection with loan agreements entered into with Paydirt
in  September  and November 2003. This action is entitled NeWave, Inc. et al. v.
Paydirt,  Case  No.  01156046  (S.B.S.C.).  The  parties  to the lawsuit dispute
whether  we  currently  owe  Paydirt  the  sum  of  $225,829.  Paydirt  retained
California  counsel,  who removed our superior court action to the United States
District  Court, Central District of California. On April 5, 2004, Paydirt filed
a motion to dismiss our action. While this motion was pending, Paydirt initiated
an  action  in  the  State  of  Utah,  Washington County entitled Paydirt, LP v.
NeWave,  Inc.  et al., Civil No. 040500597 (Wash. County, Utah). On May 3, 2004,
the  District  Court dismissed our complaint without prejudice to our filing the
action  in Utah. Subsequently, we have settled the lawsuit by agreeing to make a
payment  to  Paydirt  of  $180,000.  We  agreed  to pay $30,000 up front and the
remaining  amount  in  equal monthly installments of $12,500 for the next twelve
months.

We  believe that there are no other claims or litigation pending, the outcome of
which  could  have  a  material  adverse  effect  on  our financial condition or
operating  results.

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

None.
ITEM  5.  MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS.

Bid  and  ask  quotations  for  our  common  shares  are  routinely submitted by
registered  broker  dealers  who  are  members  of  the  National Association of
Securities Dealers on the NASD Over-the-Counter Electronic Bulletin Board. These
quotations  reflect  inner-dealer  prices,  without retail mark-up, mark-down or
commission  and  may  not  represent  actual  transactions. The high and low bid
information  for  our  shares for each quarter for the last two years, so far as
information  is  reported,  through  the  quarter  ended  December  31, 2004, as
reported  by  the  Bloomberg  Financial  Network,  are  as  follows:

<TABLE>
<CAPTION>
<S>                         <C>             <C>
2003 FISCAL YEAR*           HIGH BID        LOW BID
First Quarter                $1.14            $ 0.57
Second Quarter               $1.14            $ 0.34
Third Quarter                $6.31            $ .57
Fourth Quarter               $1.49            $ 0.45
*Price adjusted for 343.33:1 split

2004 FISCAL YEAR *
First Quarter                $1.43            $ .68
Second Quarter               $1.50            $ 1.00
Third Quarter                $1.33            $ 0.93
Fourth Quarter               $1.46            $ 1.08
*Price adjusted for 1:3 split
</TABLE>


SHAREHOLDERS

As  of  March  28,  2005,  there were approximately 209 holders of record of our
common  stock.

DIVIDEND  POLICY

We  have  never  declared  a  cash dividend on our common stock and our Board of
Directors does not anticipate that we will pay cash dividends in the foreseeable
future. Any future determination to pay cash dividends will be at the discretion
of  our  board  of  directors  and  will  depend  upon  our financial condition,
operating  results,  capital  requirements,  restrictions  contained  in  our
agreements  and  other  factors  which  our  board  of directors deems relevant.

RECENT  SALES  OF  UNREGISTERED  SECURITIES

On  October  25,  2004,  we issued convertible debentures of $60,000 to Dutchess
Private  Equities  Fund, II, LP. The debentures convert on October 25, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 8% cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $10,000.  On  October  25,  2004,  we issued a warrant to Dutchess
Private  Equities  Fund,  II,  to  purchase  50,000  of  our common shares at an
exercise  price  at  $4.60  per  share.

On  November  11, 2004, we issued convertible debentures of $162,000 to Dutchess
Private  Equities Fund, II, LP. The debentures convert on November 11, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 8% cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $27,000.  On  November  11,  2004, we issued a warrant to Dutchess
Private  Equities  Fund,  II,  to  purchase  162,000  of our common shares at an
exercise  price  at  $3.00  per  share.

On  December  28, 2004, we issued convertible debentures of $240,000 to Dutchess
Private  Equities Fund, II, LP. The debentures convert on December 28, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 8% cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $40,000.  On  December  28,  2004, we issued a warrant to Dutchess
Private  Equities  Fund,  II,  to  purchase  240,000  of our common shares at an
exercise  price  at  $3.75  per  share.

The  securities  issued in the foregoing transactions were made in reliance upon
an  exemption from registration under Rule 701 promulgated under Section 3(b) of
the Securities Act. Alternatively, these issuances of securities were undertaken
under  Rule 506 of Regulation D under the Securities Act of 1933, as amended, by
the  fact  that:

-  the  sale  was  made to a sophisticated or accredited investor, as defined in
Rule  502;

-  we  gave  the  purchaser the opportunity to ask questions and receive answers
concerning the terms and conditions of the offering and to obtain any additional
information  which  we possessed or could acquire without unreasonable effort or
expense  that  is  necessary  to  verify  the accuracy of information furnished;

- at a reasonable time prior to the sale of securities, we advised the purchaser
of  the  limitations  on  resale  in  the  manner  contained  in  Rule  502(d)2;

- neither we nor any person acting on our behalf sold the securities by any form
of  general  solicitation  or  general  advertising;  and

- we exercised reasonable care to assure that the purchaser of the securities is
not  an underwriter within the meaning of Section 2(11) of the Securities Act of
1933  in  compliance  with  Rule  502(d).

ITEM  6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION.

You should read this section together with our consolidated financial statements
and  related  notes  thereto  included  elsewhere  in  this  report.

CAUTIONARY  STATEMENT  CONCERNING  FORWARD-LOOKING  STATEMENTS

This  report  contains  forward-looking  statements  that  involve  risks  and
uncertainties. We generally use words such as "believe," "may," "could," "will,"
"intend,"  "expect,"  "anticipate,"  "plan," and similar expressions to identify
forward-looking  statements, including statements regarding our expansion plans.
You  should  not  place  undue reliance on these forward-looking statements. Our
actual  results  could  differ  materially  from  those  anticipated  in  the
forward-looking  statements  for  many reasons, including the risks described in
our  "Risk Factor" section and elsewhere in this report. Although we believe the
expectations  reflected  in  the forward-looking statements are reasonable, they
relate  only  to events as of the date on which the statements are made, and our
future  results,  levels  of  activity, performance or achievements may not meet
these  expectations.  We  do  not  intend  to  update any of the forward-looking
statements after the date of this document to conform these statements to actual
results  or  to  changes  in  our  expectations,  except  as  required  by  law.

OVERVIEW

We  have  a  limited  operating  history  and,  as  of January 15, 2004, conduct
business  through our wholly-owned subsidiary, Onlinesupplier.com which offers a
comprehensive  line  of  products  and  services at wholesale prices through its
online  club  membership. Additionally, our technology allows individuals, large
complex  organizations and small stand-alone businesses alike to create, manage,
and  maintain  effective  website  solutions  for  eCommerce.


CRITICAL  ACCOUNTING  POLICIES

We have identified the policies below as critical to our business operations and
the  understanding  of  our results of operations. The impact and any associated
risks  related  to  these  policies  on  our  business  operations are discussed
throughout  this  section  where  such policies affect our reported and expected
financial  results.  Our  preparation  of  our Consolidated Financial Statements
requires  us  to make estimates and assumptions that affect the reported amounts
of  assets  and  liabilities, disclosure of contingent assets and liabilities at
the  date  of  our financial statements, and the reported amounts of revenue and
expenses  during  the  reporting  period.  There can be no assurance that actual
results  will  not  differ  from  those  estimates.

Our  accounting  policies  that  are  the most important to the portrayal of our
financial  condition  and  results,  and  which  require  the  highest degree of
management  judgment  relate  to  revenue  recognition,  the  provision  for
uncollectible  accounts  receivable,  property  and  equipment,  advertising and
issuance  of  shares  for  service.

We estimate the likelihood of customer payment based principally on a customer's
credit  history  and  our general credit experience. To the extent our estimates
differ  materially  from  actual  results,  the  timing  and  amount of revenues
recognized  or  bad  debt  expense recorded may be materially misstated during a
reporting  period.

Property  and  equipment  are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets, e.g.
computers  (5  years),  software  (3 years), office equipment and furniture (3-7
years).

Leasehold  improvements  are amortized over the remaining lease term at the date
of installation. Expenditures for maintenance and repairs are charged to expense
as  incurred.

We  expense  advertising  costs  as  incurred.

We  account for the issuance of equity instruments to acquire goods and services
based  on  the  fair  value  of  the goods and services or the fair value of the
equity  instrument  at  the  time  of  issuance,  whichever  is  more  reliably
measurable.

We  recognize  income  when  the  products  are shipped, and when the service is
provided.  We apply the provisions of the SEC Staff Accounting Bulletin No. 104,
"Revenue  Recognition  in  Financial  Statements" which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements. Our
revenues earned from membership setup fees and monthly charges are recorded when
the  credit  card  transaction  is  processed.  Current  terms  of  the
onlinesupplier.com  membership  agreement  stipulate  that  the  customer pays a
nonrefundable  $6.95  fee  to setup an account. The customer then has a fourteen
day  period to review our offerings. If the customer does not cancel the service
within  the  fourteen day window, a charge of $29.95 is billed to the customer's
credit  card  on  a  monthly basis. Bulletin No. 104 outlines the basic criteria
that  must  be met to recognize revenue and provides guidance for the disclosure
of  revenue  recognition  policies.  Our  revenue recognition policy for sale of
products  is  in  compliance  with  Bulletin  No.  104. Revenue from the sale of
products  is recognized when a formal arrangement exists, the price is fixed, or
determinable,  the  delivery  is  completed  and  collectibility  is  reasonably
assured.  Generally,  we  extend  credit  to  our  customers  and do not require
collateral.  We perform ongoing credit evaluations of our customers and historic
credit  losses  have  been  within  management's  expectations.

Our  audited financial statements for the twelve months ended December 31, 2004,
reflect  a  net  loss of ($3,884,862) and negative cash flows from operations of
($815,393).  These  conditions  indicate a need to acquire sufficient additional
funding  or alternative sources of capital to meet our working capital needs. We
have  raised  capital  by  issuing convertible debentures and anticipate that we
will  continue  to  be able to do so in the foreseeable future. Additionally, we
are  currently  raising  capital  by  issuing convertible debentures and plan to
raise money through our Equity Line of Credit. We believe this will generate the
additional  cash  required  to  fund  our  operations  and  allow us to meet our
obligations.



GOING  CONCERN  OPINION

Our  audited  financial  statements for the fiscal year ended December 31, 2003,
reflect  a  net loss of $3,884,862. Although these conditions raised substantial
doubt  about  our  ability  to  continue as a going concern if we do not acquire
sufficient  additional  funding  or  alternative  sources of capital to meet our
working  capital  needs,  we  believe  we  could continue operating for the next
twelve  months  without additional capital based on the cash flow generated from
our  acquisition  of  NeWave,  Inc.

FIVE  MONTH  PERIOD  ENDED DECEMBER 31, 2003 AS COMPARED TO TWELVE MONTH PERIODS
ENDED  DECEMBER  31,  2004

NET  REVENUES
-------------
Net  revenues  for  the year ended December 31, 2004 were $6,548,633 compared to
$1,126,087  for  the five months ended December 31, 2003. The increase is due to
increased  memberships  and  revenue  for lead referrals. We also experienced an
increase in upsell revenues, which are revenues resulting from our clients using
our referral programs. We also increased our advertising and marketing campaigns
which  contributed  to  the  increase  in Net Revenue for the fiscal year ending
2004.  Our  new  subsidiary  and  the  segments  in  which  it operates has also
contributed  to  an  increase  in  Net  Revenue.

OPERATING  EXPENSES

Operating  Expenses  for  the  year  ended  December  31,  2004 were $10,432,695
compared to $1,731,473 for the five months ended December 31, 2003. The increase
was partially due to an increase in advertising expenses of $2,619,831. Salaries
for  the  year ended 2004 increased to $2,619,831 due to hiring of new employees
to  handle the demand of the increased members. We issued shares of common stock
recorded  at  $1,548,000  for  director  compensation in 2004. We had additional
expenses  for  consulting  totaling  $531,578 and for rent in new facilities and
offices  totaling  $256,935.

NET  LOSS

Net  Loss  for  the  year  ended  December 31, 2004 was ($3,884,862) compared to
($605,386)  for  the  five  months  ended  December  31,  2003  due to increased
Operating  Expenses  discussed  above,  for  the  year  ended  December 31, 2004
compared  to  the  year  ended  December  31,  2003.

BASIC  AND  DILUTED  LOSS  PER  SHARE

Our  basic  and  diluted loss per share for the year ended December 31, 2004 was
($.34)  compared  to  ($25.77)  for the five months ended December 31, 2003. The
decrease  in our loss per share is due to the increase in the issuances of stock
for  consulting  services  and  director compensation and for the reverse merger
completed  in  2004.

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of December 31, 2004, our Total Current Assets were $1,474,128 and our Total
Current  Liabilities  were  $1,212,110. Our Stockholder's Equity at December 31,
2004  was  $224,074.

As  of  December  31,  2004,  we  had  debt  of  $961,003. We make annual or
semi-annual interest payments on the debt under our convertible notes, which are
due  in  2008  and  2009.  Our debt could limit our ability to obtain additional
financing  for working capital, capital expenditures, debt service requirements,
or other purposes in the future, as needed; to plan for, or react to, changes in
technology  and in our business and competition; and to react in the event of an
economic  downturn.

We  may  not  be  able to meet our debt service obligations. If we are unable to
generate  sufficient  cash  flow or obtain funds for required payments, or if we
fail  to  comply  with  covenants  in  our  debt,  we  will  be  in  default.

On  March  3, 2004, we entered into an Investment Agreement with Preston Capital
Partners,  also referred to as an Equity Line of Credit. This agreement provides
that,  following  notice to Preston, we may put to Preston up to $4.5 million in
shares  of  our  common  stock  for  a purchase price equal to 98% of the lowest
closing  bid  price  on  the Over-the-Counter Bulletin Board of our common stock
during the five day period following that notice. For each put, Preston shall be
required  to  purchase  the  number of shares having an aggregate purchase price
equal  to the lesser of (i) the put amount set forth in the put notice, and (ii)
20%  of  the  aggregate trading volume of the common stock during the applicable
during the five days after we deliver the put notice to Preston Capital Partners
the  average of the lowest closing bid price of our common stock during the five
days after we deliver the put notice to Preston Capital Partners . We cannot use
the Equity Line of Credit until we have an effective registration statement that
registers  the  resale of the shares of common stock that we will issue pursuant
to  the Equity Line of Credit.

We  believe  our  Investment  Agreement  with Preston will be sufficient to fund
operations  and  capital  requirements as presently planned over the next twelve
months.

SEASONALITY

We  generally  have payment terms with our vendors that extend beyond the amount
of time necessary to collect proceeds from our customers. As a result of holiday
sales,  at  December 31 of each year, our cash, cash equivalents, and marketable
securities  balances  reach  their highest level (other than as a result of cash
flows provided by or used in investing and financing activities). This operating
cycle  results  in  a  corresponding  increase in accounts payable. Our accounts
payable  balance  will decline during the first three months following year-end,
which  will  result  in  a  decline in the amount of cash, cash equivalents, and
marketable  securities  on  hand.

FINANCINGS

On  July  9,  2004,  we  issued  convertible  debentures of $180,000 to Dutchess
Private Equities Fund, II. The debentures convert on July 9, 2009. The holder of
the debentures can convert the face value of the debenture plus accrued interest
into  shares  of our common stock at the lesser of (i) 75% of the lowest closing
bid  price  during the 15 full trading days prior to the conversion date or (ii)
100%  of  the  average  of the five lowest closing bid prices for the 30 trading
days  immediately  following  the  first  reverse  split  in  stock  price.  The
convertible  debentures  shall  pay  8%  cumulative interest, payable in cash or
stock  at  our  option, at the time of conversion. The debenture was issued at a
discount  of  $30,000.  On July 9, 2004, we issued a warrant to Dutchess Private
Equities Fund, II, to purchase 150,000 of our common shares at an exercise price
at  $3.50  per  share.

On  August  15,  2004,  we issued convertible debentures of $144,000 to Dutchess
Private Equities Fund, II. The debentures convert on August 15, 2009. The holder
of  the  debentures  can  convert  the  face value of the debenture plus accrued
interest  into shares of our common stock at the lesser of (i) 75% of the lowest
closing  bid  price during the 15 full trading days prior to the conversion date
or  (ii)  100%  of  the average of the five lowest closing bid prices for the 30
trading  days  immediately following the first reverse split in stock price. The
convertible  debentures  shall  pay  8%  cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount of $24,000. On August 18, 2004, we issued a warrant to Dutchess Private
Equities Fund, II, to purchase 120,000 of our common shares at an exercise price
at  $3.10  per  share.

On  August  15, 2004, we issued convertible debentures of $60,000 to eFund Small
Cap  Fund,  LP.  The  debentures  convert  on August 15, 2009. The holder of the
debentures  can  convert  the  face value of the debenture plus accrued interest
into  shares  of our common stock at the lesser of (i) 75% of the lowest closing
bid  price  during the 15 full trading days prior to the conversion date or (ii)
100%  of  the  average  of the five lowest closing bid prices for the 30 trading
days  immediately  following  the  first  reverse  split  in  stock  price.  The
convertible  debentures  shall  pay  8%  cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $10,000.  On August 18, 2004, we issued a warrant to eFund Capital
Partners,  to purchase 50,000 of our common shares at an exercise price at $3.10
per  share.

On  September 25, 2004, we issued convertible debentures of $222,000 to Dutchess
Private  Equities Fund. The debentures convert on September 25, 2009. The holder
of  the  debentures  can  convert  the  face value of the debenture plus accrued
interest  into shares of our common stock at the lesser of (i) 75% of the lowest
closing  bid  price during the 15 full trading days prior to the conversion date
or  (ii)  100%  of  the average of the five lowest closing bid prices for the 30
trading  days  immediately following the first reverse split in stock price. The
convertible  debentures  shall  pay  8%  cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $37,000.  On  September  25, 2004, we issued a warrant to Dutchess
Private  Equities  Fund, to purchase 185,000 of our common shares at an exercise
price  at  $3.75  per  share.

On  September  25,  2004,  we  issued convertible debentures of $60,000 to eFund
Small  Cap Fund, LP. The debentures convert on September 24, 2009. The holder of
the debentures can convert the face value of the debenture plus accrued interest
into  shares  of our common stock at the lesser of (i) 75% of the lowest closing
bid  price  during the 15 full trading days prior to the conversion date or (ii)
100%  of  the  average  of the five lowest closing bid prices for the 30 trading
days  immediately  following  the  first  reverse  split  in  stock  price.  The
convertible  debentures  shall  pay  8%  cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount of $10,000. On September 25, 2004, we issued a warrant to eFund Capital
Partners,  to purchase 50,000 of our common shares at an exercise price at $3.75
per  share.

On  October  25,  2004,  we issued convertible debentures of $60,000 to Dutchess
Private  Equities  Fund, II, LP. The debentures convert on October 25, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 8% cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $10,000.  On  October  25,  2004,  we issued a warrant to Dutchess
Private  Equities  Fund,  II,  to  purchase  50,000  of  our common shares at an
exercise  price  at  $4.60  per  share.

On  November  11, 2004, we issued convertible debentures of $162,000 to Dutchess
Private  Equities Fund, II, LP. The debentures convert on November 11, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 8% cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $27,000.  On  November  11,  2004, we issued a warrant to Dutchess
Private  Equities  Fund,  II,  to  purchase  162,000  of our common shares at an
exercise  price  at  $3.00  per  share.

On  December  28, 2004, we issued convertible debentures of $240,000 to Dutchess
Private  Equities Fund, II, LP. The debentures convert on December 28, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 8% cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $40,000.  On  December  28,  2004, we issued a warrant to Dutchess
Private  Equities  Fund,  II,  to  purchase  240,000  of our common shares at an
exercise  price  at  $3.75  per  share.


COMMITMENTS

Minimum  future  rental  payments  under  non-cancelable  operating leases as of
December  31,  2004  for each of the next five years and in the aggregate are as
follows:

<TABLE>
<CAPTION>



<S>    <C>
2005.  $187,704
2006.  $187,704
2007.  $187,704
2008.  $187,704
2009.  $ 62,568
       --------
TOTAL  $813,384
       ========
</TABLE>


We  issued  a  note payable to an unrelated party in 2003. This note was settled
for  $180,000 in August of 2004, payable $30,000 in August 2004, and $12,500 per
month  thereafter.  As  of  December 31,  2004,  the  balance of this note was
$125,000.

We entered into a consulting agreement with Barrett Evans, a member of the Board
of  Directors,  on  August  18,  2003.  The term of the agreement was for twelve
months  at  $10,000  per month. We paid $6,230 on the agreement during the three
months  ended  September  30,  2004  and  owe  $96,136  at  December 31, 2004.

We  entered  into  a consulting agreement with Michael Hill, our Chief Executive
Officer,  on August 18, 2003. The term of the agreement was for twelve months at
$12,000  per  month.  We  paid  $51,000 on the agreement during the three months
ended  September  30,  2004  and  owe  $38,591  at  December 31, 2004.

On March 2, 2004, we entered into a Consulting Agreement with Luminary Ventures,
Inc.  where in exchange for services, we agreed to pay the consultant the sum of
$10,000  per month for non-accountable expenses. Payment may be made either: (i)
in cash or (ii) shares of our common stock. The term of this agreement is twelve
months.

We  owe  Paydirt,  LP, $180,000 pursuant to a lawsuit settlement entered into on
May  3, 2004. We agreed to pay $30,000 upfront and the remaining amount in equal
monthly  installments of $12,500 for the next twelve months. As of December 31,
2004,  the  balance  of  this  was  $87,500.



ADDITIONAL  FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS

The  following risk factors and other information included in this Annual Report
should  be carefully considered. The risks and uncertainties described below are
not  the  only  ones  we  face. Additional risks and uncertainties not presently
known  to  us  or that we currently deem immaterial also may impair our business
operations.  If  any  of  the  following  risks  occur,  our business, financial
condition,  operating  results,  and  cash  flows  could be materially adversely
affected.

                            RISKS ABOUT OUR BUSINESS

IF WE CANNOT OBTAIN ADDITIONAL FINANCING, WE MAY HAVE TO CURTAIL OPERATIONS
AND  MAY  ULTIMATELY  CEASE  TO  EXIST.

Our audited financial statements for the year ended December 31, 2004, reflect a
net loss of ($3,884,862)) and negative cash flows from operations of ($815,393).
These conditions require sufficient additional funding or alternative sources of
capital  to  meet  our  working capital needs. We have raised capital by issuing
convertible  debentures and anticipate that we will continue to be able to do so
in the foreseeable future. However, financing may not be available in amounts or
on  terms  acceptable  to  us, if at all. If we cannot raise funds on acceptable
terms,  or achieve positive cash flow, we may be forced to curtail operations or
may  ultimately  cease  to  exist.

WE HAVE AN ACCUMULATED DEFICIT AND MAY INCUR ADDITIONAL LOSSES, THEREFORE WE MAY
NOT  BE  ABLE  TO  MEET  OUR  DEBT  SERVICE  OBLIGATIONS.

As  of December 31, 2004, we had total liabilities of $1,738,913. We make annual
or  semi-annual interest payments on the debt under our convertible notes, which
are  due in 2008 and 2009. Our debt could limit our ability to obtain additional
financing  for working capital, capital expenditures, debt service requirements,
or other purposes in the future, as needed, to plan for, or react to, changes in
technology  and in our business and competition, and to react in the event of an
economic  downturn.

We  may  not  be  able to meet our debt service obligations. If we are unable to
generate  sufficient  cash  flow or obtain funds for required payments, or if we
fail  to  comply  with  covenants  in  our  debt,  we  will  be  in  default.

WE  FACE  INTENSE COMPETITION, WHICH MAY REDUCE OUR SALES, OPERATING PROFITS, OR
BOTH.

The  market  segments  in  which  we  compete are rapidly evolving and intensely
competitive.  We  have  many competitors in different industries, including both
the  retail  and  eCommerce  services  industries.

Many  of  our current and potential competitors such as SMC and Bargain.com have
longer  operating  histories,  larger customer bases, greater brand recognition,
and  significantly  greater  financial,  marketing,  and other resources than we
have.  They  may  be  able  to secure merchandise from vendors on more favorable
terms  and may be able to adopt more aggressive pricing policies. Competitors in
both the retail and eCommerce service industries also may be able to devote more
resources  to  technology  development  and  marketing  than  we  do.

Competition  in  the  eCommerce  channel  may  intensify. Other companies in the
retail  and eCommerce service industries may enter into business combinations or
alliances  that  strengthen  their  competitive  positions.  As various Internet
market  segments  obtain  large,  loyal  customer  bases,  participants in those
segments  may  expand into the market segments in which we operate. In addition,
new  and  expanded Web technologies may further intensify the competitive nature
of  online  retail.  The  nature  of  the  Internet as an electronic marketplace
facilitates  competitive entry and comparison shopping and renders it inherently
more competitive than conventional retailing formats. This increased competition
may  reduce  our  sales,  operating  profits,  or  both.

WE  DEPEND ON OUR RELATIONSHIPS WITH THIRD PARTIES, THE LOSS OF WHICH MAY RESULT
IN  LOSS  OF  CUSTOMERS.

We  depend  on  our  merchant  and  banking  relationships, as well as strategic
relationships  with  third  parties,  who  provide payment processing to all our
customers. Failure of these financial institutions and third parties to continue
to  provide  services in a satisfactory way to our customers could result in our
loss  of the business of the merchants to whom we sell products and services. If
these  financial  institutions  and  third  parties  do  not continue to provide
services  to our customers, we may not be able to find other third party service
providers.  In  that instance, our customers may terminate their agreements with
us  and  move their business to our competitors, which could adversely affect on
our  revenues  and  earnings.

IF  WE  CANNOT  PASS  ALONG  INCREASED  FEES  FROM  VISA  AND  MASTERCARD TO OUR
CUSTOMERS,  WE  WILL  HAVE  TO  ABSORB  THE  INCREASES  WHICH WOULD INCREASE OUR
OPERATING  COSTS  AND  REDUCE  OUR  PROFIT  MARGIN.

From  time  to  time  VISA  and  MasterCard  increase  the fees that they charge
processors.  We  may  attempt  to  pass  these  increases  along to our merchant
customers,  but  this  might  result  in  the  loss  of  those  customers to our
competitors  who  do  not  pass  along the increases. Our revenues from merchant
account processing are dependant upon our continued merchant relationships which
are  highly  sensitive and can be canceled if customer charge-backs escalate and
generate  concern  that  the  company  has held back sufficient funds in reserve
accounts  to  cover  these  charge-backs. Cancellation by our merchant providers
would most likely result in the loss of new customers and lead to a reduction in
our  revenues.

WE  DEPEND ON CERTAIN CUSTOMERS AND IF WE LOSE ONE OF OUR SIGNIFICANT CUSTOMERS,
OUR  REVENUES  MAY  SUBSTANTIALLY  DECREASE  AND  OUR  BUSINESS  MAY  FAIL.

We sell a substantial portion of our product to one customer, Memberworks, Inc.,
which  makes  up  approximately  19%  of  our  revenue.  During the period ended
December  31,  2004,  sales to that customer totaled $1,420,005. At December 31,
2004,  amounts due from that customer included in trade accounts receivable were
$26,753.  If this customer stops generating orders for us altogether, and we are
unable  to  obtain  comparable  orders  from other customers, our revenues would
decrease.

WE  RELY  ON  CO-MARKETING  ALLIANCES  TO  GENERATE  ADDITIONAL REVENUE FROM OUR
EXISTING  CUSTOMERS.

We  have  co-marketing arrangements with strategic partners in which we agree to
market their services to our existing customers. These "upsell" services account
for  approximately  47%  of  our total current revenue. If these partners either
fail  provide  to  adequate  services  to  our customers or decline to renew our
agreements,  our  gross  revenue  could  decline  which would effect our overall
financial  stability.

WE  MAY EXPERIENCE BREAKDOWNS IN OUR HOSTING SERVICES, INFRASTRUCTURE OR PAYMENT
PROCESSING  SYSTEMS,  WHICH  MAY EXPOSE US TO LIABILITIES AND CAUSE CUSTOMERS TO
ABANDON  OUR  PRODUCTS  AND  SERVICES.

We  may  experience  interruption  in  hosting  service  due  to  upgrades being
implemented  into  hosting  software.  In  addition  interruption  in  service,
transmission  downtime,  and  or  outages  may  be  cause  at  the  wholesale
communication  distribution  level  (i.e.  Verizon).  This  may  expose  us  to
liability,  which  may  cause  customers  to  abandon  our  service.

We  would  be  unable  to  deliver  our  payment  processing services or hosting
services  if our system infrastructures break down or are otherwise interrupted.
Events  that  could  cause  system  interruptions  are:

-Acts  of  God  such  as  fire  or  earthquakes,
-power  loss,
-terrorist  attacks,
-telecommunications  failure,
-unauthorized  entry  by  hackers,  or
-other  events.

Although  we  regularly  back up data from operations and take other measures to
protect  against  loss  of  data, there is still some risk that our services may
breakdown  or  we will lose data. Despite the security measures we maintain, our
infrastructure  may  be vulnerable to computer viruses, hackers, rouge employees
or  other  sources  of  disruption.  Any  problem of this nature could result in
significant  liability to customers or financial institutions and also may deter
potential  customers  from  using our services. We attempt to limit this sort of
liability  through back-up systems, contractual provisions, insurance, and other
security  measures.  However, these contractual limitations on liability may not
be  enforceable,  and  our  insurance  coverage may not be adequate to cover all
liabilities we might sustain. Also, a breach of our e-commerce security measures
could  reduce  demand  for  our  services.  The e-commerce industry is intensely
focused  on  the  need  for  Internet security, particularly with respect to the
transmission  and  storage  of  confidential  personal  and  financial data. Any
compromise or elimination of our security could erode customer confidence in our
systems  and  could  result  in  lower  demand  for  our  services  or  possible
litigation.

IF  WE  ARE  UNSUCCESSFUL  IN  MAKING,  INTEGRATING,  AND MAINTAINING COMMERCIAL
AGREEMENTS,  STRATEGIC  ALLIANCES,  AND  OTHER  BUSINESS RELATIONSHIPS, THEN OUR
BUSINESS  COULD  SUFFER.

Our  business  plan  contemplates that we will enter into commercial agreements,
strategic  alliances,  and  other  business relationships with third parties. We
have  entered  into agreements to provide eCommerce services to other businesses
and  we  plan  to  enter  into  similar  agreements  in  the future. Under these
agreements,  we  may perform services such as: providing our technology services
such  as  search,  browse,  and personalization; permitting other businesses and
individuals  to  offer  products  or services through our websites; and powering
third-party  websites, either with or without providing accompanying fulfillment
services.  These  arrangements are complex and require substantial personnel and
resource  commitments by us, which may constrain the number of agreements we are
able  to enter into and may affect our ability to integrate and deliver services
under  the  relevant  agreements.  If  we  fail  to  implement,  maintain,  and
successfully  develop  the various components of these commercial relationships,
which  may  include  fulfillment,  customer  service,  inventory management, tax
collection, payment processing, licensing of third party software, hardware, and
content, and engaging third parties to perform hosting and other services, these
initiatives  may  not  be  viable  and  cause  the  company  to be in default of
agreement  or planned compensation.  The amount of compensation we receive under
certain  of  these agreements is dependent on the volume of sales that the other
company makes. Therefore, if the other business's website or product or services
offering  is  not  successful, we may not receive all of the compensation we are
otherwise  due under the agreement, which may cause substantial loss of revenue,
or  may  not  be able to maintain the agreement. Moreover, we may not be able to
succeed  in  our  plans  to  enter  into additional commercial relationships and
strategic  alliances  on  favorable  terms,  which  will  not  enable us to stay
competitive  with  in  the  industry.

As  our commercial agreements expire or otherwise terminate, we may be unable to
renew  or  replace these agreements on comparable terms, or at all. In the past,
we  amended  several of our commercial agreements to reduce future cash proceeds
to  be  received  by us, shorten the term of our commercial agreements, or both.
Some  of  our  agreements  involve  high  margin services, such as marketing and
promotional  agreements, and as these agreements expire they may be replaced, if
at all, by agreements involving lower margin services. In addition, several past
commercial agreements were with companies that experienced business failures and
were  unable  to  meet  their obligations to us. We may in the future enter into
further  amendments  of  these  agreements  or encounter other parties that have
difficulty  meeting  their  contractual obligations to us, which could adversely
affect  our  operating  results.

IF  WE  LOSE  KEY  SENIOR  MANAGEMENT PERSONNEL OUR BUSINESS COULD BE NEGATIVELY
AFFECTED.

We depend on the continued services and performance of our senior management and
other  key personnel, particularly Michael Hill, our Chief Executive Officer and
Director.  Mr. Hill has been the primary employee involved in the integration of
our  subsidiaries  Online  Supplier  and Auction Liquidator. We do not have "key
person"  life  insurance  policies. The loss of any of our executive officers or
other  key  employees  could  harm  our  business.

IF OUR WEBSITES ARE NOT CONTINUALLY AVAILABLE TO OUR CUSTOMERS AND THE PUBLIC OR
THERE  IS  LACK  OF  INTEGRATION  AND  REDUNDANCY  IN OUR SYSTEMS, OUR SALES MAY
DECREASE.

Customer access to our websites directly affects the volume of goods we sell and
the  services  we offer and thus affects our net sales. We experience occasional
system  interruptions  that  make  our  websites  unavailable or prevent us from
efficiently  fulfilling orders or providing services to third parties, which may
reduce  our net sales and the attractiveness of our products and services. If we
are unable to continually add additional software and hardware and upgrade in an
effective  manner  our systems and network infrastructure, it could cause system
interruptions  that  adversely  affect  our  operating  results.

Our  websites  could  be  damaged  or  interrupted  by  fire, flood, power loss,
telecommunications  failure,  acts  of  war  or terrorism, acts of God, computer
viruses,  physical  or  electronic break-ins, and similar events or disruptions.
Any  of  these events could result in website interruption and delays that could
prevent  us  from  accepting  and  fulfilling  customer  orders.

If our websites are not continually available to our customers and the public or
there  is  a  lack  of  integration  and redundancy in our system, our sales may
decrease.  We  may  experience  interruption in hosting service due to upgrades,
communication  downtime,  and  or  outages  at  the  wholesale  communication
distribution  level  (i.e.  Verizon). This may expose us to liability, which may
cause  customers  to abandon our service. Some of our customers are acquired via
Internet  advertising and interruption in service may extend a decrease in gross
sales.

Should these problems occur, it would make our product offerings less attractive
to  our  customers  and  our service offerings less attractive to third parties.
While  we  do  have  backup  systems  for certain aspects of our operations, our
systems  are  not  fully redundant and our disaster recovery planning may not be
sufficient  for all eventualities. In addition, we may have inadequate insurance
coverage  or  insurance  limits  to  compensate  us  for  losses  from  a  major
interruption.  If  any of this were to occur, it could damage our reputation and
be  expensive  to  remedy.

WE  COULD  BE  LIABLE IF WE FAIL TO MITIGATE BREACHES OF SECURITY ON OUR WEBSITE
AND FRAUDULENT ACTIVITIES OF USERS OF OUR PAYMENTS PROGRAM, WHICH COULD INCREASE
OUR  EXPENSES  AND  LOWER  OUR  OPERATING  RESULTS.

A  fundamental  requirement  for  eCommerce  is  the  secure  transmission  of
confidential  information  over  public  networks.  Although  we  have developed
systems  and  processes  that  are  designed to protect consumer information and
prevent fraudulent credit card transactions and other security breaches, failure
to  mitigate  fraud  or breaches may adversely affect our operating results. The
law  relating  to  the  liability  of  providers  of  online payment services is
currently  unsettled.  We  guarantee  payments made through our payments program
available  to  sellers  on  Marketplace and certain other programs up to certain
limits  for  buyers,  and  we  may  be unable to prevent users from fraudulently
collecting  payments  when  goods may not be shipped to a buyer. As our payments
program  grows, our liability risk will increase. Any costs we incur as a result
of liability because of our payments program's guarantee or otherwise could harm
our  business. In addition, the functionality of our payments program depends on
certain  third-party vendors delivering services. If these vendors are unable or
unwilling  to provide services, our payments program and our businesses that use
it  may  not  be  viable.

We  could  be  liable if we fail to mitigate breaches of security on our website
and fraudulent activities of users of our payments program, which could increase
our  expenses and lower our operating results. If an individual or group were to
take unauthorized control of our hosting servers to generate "spam" or any other
example  of  fraudulent  activity,  this could cause situation-specific Internet
service  providers  "ISP(s)"  to  block communications with our Internet service
provider  not  allowing  for communications with customers being serviced by the
above  referenced  "ISP(s)".

IF  GOVERNMENT  REGULATION  OF THE INTERNET AND ECOMMERCE RESULTS IN UNFAVORABLE
CHANGES,  OUR  BUSINESS  COULD  BE  HARMED.

We  are subject to general business regulations and laws, as well as regulations
and  laws specifically governing the Internet and eCommerce. Existing and future
laws  and  regulations  may  impede  the  growth of the Internet or other online
services.  These  regulations  and  laws  may cover taxation, user privacy, data
protection, pricing, content, copyrights, distribution, electronic contracts and
other  communications,  consumer  protection,  the  provision  of online payment
services,  broadband  residential  Internet  access, and the characteristics and
quality  of  products  and services. It is not clear how existing laws governing
issues  such  as  property ownership, sales and other taxes, libel, and personal
privacy  apply  to  the  Internet and eCommerce. Unfavorable resolution of these
issues  may  harm  our business. On November 11, 2004 the Federal Communications
Commission ruled that providers of Internet-based phone call services fall under
jurisdiction  of  the  federal  government and cannot be regulated by states. We
executed  an  agreement  with  an  Internet-based  phone  call services provider
VoiceGlo  to  resell their Internet-based telephony service to our customers. It
is  currently  unclear  how  the  Federal  Communications Commission ruling will
affect  our  business.

WE  MAY  BE SUBJECT TO LIABILITY FOR PAST SALES, THEREFORE DECREASING OUR FUTURE
SALES

In  accordance  with current industry practice, we do not collect sales taxes or
other  taxes  with  respect  to shipments of most of our goods into states other
than  California.  Our  fulfillment center and customer service center networks,
and  any  future  expansion  of  those networks, along with other aspects of our
evolving business, may result in additional sales and other tax obligations. One
or  more  states  or  foreign  countries  may  seek to impose sales or other tax
collection  obligations  on  out-of-jurisdiction  companies  that  engage  in
eCommerce.  A  successful  assertion  by one or more states or foreign countries
that  we  should  collect  sales  or  other  taxes on the sale of merchandise or
services  could  result  in substantial tax liabilities for past sales, decrease
our  ability  to  compete  with  traditional  retailers,  and otherwise harm our
business.

Currently,  decisions  of  the  U.S.  Supreme  Court  restrict the imposition of
obligations to collect state and local sales and use taxes with respect to sales
made  over  the  Internet.  However,  a  number  of  states, as well as the U.S.
Congress,  have  been  considering  various  initiatives  that  could  limit  or
supersede the Supreme Court's position regarding sales and use taxes on Internet
sales.  If any of these initiatives addressed the Supreme Court's constitutional
concerns  and  resulted  in  a  reversal  of  its  current position, we could be
required  to  collect  sales  and use taxes in states other than California. The
imposition  by  state  and  local  governments  of  various  taxes upon Internet
commerce could create administrative burdens for us and could increase our costs
and  decrease  our  future  sales.

IF WE DO NOT ADAPT QUICKLY ENOUGH TO CHANGING CUSTOMER REQUIREMENTS AND INDUSTRY
STANDARDS,  OUR  EXISTING  WEBSITES  MAY  BECOME  OBSOLETE.

Technology  in  the  eCommerce  industry  changes rapidly. We may not be able to
adapt  quickly  enough  to  changing  customer  requirements and preferences and
industry  standards.  Competitors often introduce new products and services with
new  technologies. These changes and the emergence of new industry standards and
practices  could  render  our  existing  websites  and  proprietary  technology
obsolete.

ITEM  7.  FINANCIAL  STATEMENTS.


NEWAVE,  INC.


TABLE  OF  CONTENTS                              PAGE

INDEPENDENT  AUDITORS'  REPORT                    1


BALANCE  SHEETS                                   2


STATEMENTS  OF  OPERATIONS                        3


STATEMENTS  OF  STOCKHOLDERS'  EQUITY  (DEFICIT)  4


STATEMENTS  OF  CASH  FLOWS                       5


NOTES  TO  FINANCIAL  STATEMENTS                 6-13








                          INDEPENDENT AUDITOR'S REPORT


Board  of  Directors
NeWave,  Inc.
Long  Beach,  CA


We have audited the accompanying consolidated balance sheets of NeWave, Inc., as
of  December  31,  2004  and  2003,  and  the  related statements of operations,
stockholders' equity, and cash flows for the years then ended.   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  audits  "in  accordance with standards of the Public Company
Accounting  Oversight  Board  (United  States)"  as  outlined  in PCAOB Auditing
Standard  No. 1.  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 NeWave, Inc., as of December
31,  2004 and 2003, and the results of their operations and their cash flows for
the  years  then  ended,  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  described  in Note 3 to the
financial  statements,  conditions exist which raise substantial doubt about the
Company's  ability  to continue as a going concern unless it is able to generate
sufficient  cash  flows  to meet its obligations and sustain its operation.  The
Company lost $7,189256 from operations through December 31, 2004.  The financial
statements  do not include any adjustments that might result from the outcome of
this  uncertainty.

Jaspers Hall & Johnson
Denver,  Colorado
April  11,  2005






<TABLE>
<CAPTION>


                                  NEWAVE, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
    FROM INCEPTION, AUGUST 18, 2003 THROUGH DECEMBER 31, 2003 as compared to
                   the twelve months ended December 31, 2004:

<S>                                                            <C>           <C>


                                                                      2004        2003
                                                               ------------  ----------
ASSETS:
CURRENT ASSETS:
   Cash . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   210,361   $       -
   Accounts Receivable. . . . . . . . . . . . . . . . . . . .      514,956     334,744
   Allowance for Doubtful Accounts. . . . . . . . . . . . . .     (215,000)   (125,000)
   Other Receivables. . . . . . . . . . . . . . . . . . . . .      724,865      19,820
   Inventory. . . . . . . . . . . . . . . . . . . . . . . . .       39,796      37,101
   Prepaid Expenses . . . . . . . . . . . . . . . . . . . . .      199,150      13,130
                                                               ------------  ----------
      Total Current Assets. . . . . . . . . . . . . . . . . .    1,474,128     279,795
                                                               ------------  ----------

FIXED ASSETS:
   Equipment. . . . . . . . . . . . . . . . . . . . . . . . .      213,664     213,664
   Furniture  & Fixtures. . . . . . . . . . . . . . . . . . .       74,798      74,798
   Computers & Software . . . . . . . . . . . . . . . . . . .      163,138           -
   Leasehold Improvements . . . . . . . . . . . . . . . . . .       89,922           -
                                                               ------------  ----------
       Total Fixed Assets . . . . . . . . . . . . . . . . . .      541,522     288,462
       Less: Accumulated Depreciation . . . . . . . . . . . .     (119,053)    (82,521)
                                                               ------------  ----------
           Net Fixed Assets . . . . . . . . . . . . . . . . .      422,469     205,941
                                                               ------------  ----------

OTHER ASSETS:
   Deposits . . . . . . . . . . . . . . . . . . . . . . . . .       66,390           -
                                                               ------------  ----------
      Total Other Assets. . . . . . . . . . . . . . . . . . .       66,390           -
                                                               ------------  ----------

TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . .  $ 1,962,987   $ 485,736
                                                               ============  ==========


LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Accounts Payable. . . . . . . . . . . . . . . . . . . . .  $   391,918   $ 184,620
    Notes Payable . . . . . . . . . . . . . . . . . . . . . .      165,429           -
    Notes Payable - related party . . . . . . . . . . . . . .      150,000     581,502
    Deferred Revenue. . . . . . . . . . . . . . . . . . . . .       70,563           -
    Convertible Debentures - current. . . . . . . . . . . . .      434,200      80,000
                                                               ------------  ----------
        Total current liabilities . . . . . . . . . . . . . .    1,212,110     846,122
                                                               ------------  ----------

LONG-TERM DEBT
    Convertible Debentures - Long Term. . . . . . . . . . . .      526,803     100,000
                                                               ------------  ----------
        Total long-term debt. . . . . . . . . . . . . . . . .      526,803     100,000
                                                               ------------  ----------

SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, 100,000,000 shares authorized
  shares at $.001 par value, 11,295,039 shares issued
  and outstanding at December 31, 2004 . . . . . . . . . . . .      11,297          28
Additional paid-in capital . . . . . . . . . . . . . . . . . .   4,868,061     144,972
Shares to be issued. . . . . . . . . . . . . . . . . . . . .          541           -
Subscriptions receivable . . . . . . . . . . . . . . . . . .      (59,880)          -
Accumulated deficit. . . . . . . . . . . . . . . . . . . . .   (4,595,945)   (605,386)
                                                              ------------  ----------

      TOTAL SHAREHOLDERS' EQUITY (DEFICIT) . . . . . . . . .      224,074    (460,386)
                                                              ------------  ----------

TOTAL LIABILITIES AND SHAREHOLDERS'
  EQUITY (DEFICIT) . . . . . . . . . . . . . . . . . . . . .   $ 1,962,987   $ 485,736
                                                               ============  ==========
See accompanying notes to financial statements
</TABLE>



<TABLE>
<CAPTION>

                                  NEWAVE, INC.
                          CONSOLIDATED Income statement
    FROM INCEPTION, AUGUST 18, 2003 THROUGH DECEMBER 31, 2003 as compared to
                   the twelve months ended December 31, 2004:

<S>                                      <C>             <C>


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

REVENUE:
   Membership Revenue . . . . . . . . .  $   3,172,524   $1,151,517
   Upsell Revenue . . . . . . . . . . .      2,247,040            -
   Lead Revenue . . . . . . . . . . . .      1,149,934            -
   Other Revenue. . . . . . . . . . . .        243,188            -
                                         --------------  -----------

      Total Revenue . . . . . . . . . .      6,812,686    1,151,517
                                         --------------  -----------

   Cost of Goods Sold . . . . . . . . .        264,053       25,430
                                         --------------  -----------

NET REVENUE . . . . . . . . . . . . . .      6,548,633    1,126,087
                                         --------------  -----------

EXPENSES:
    Salaries. . . . . . . . . . . . . .      2,665,935      544,331
    Advertising . . . . . . . . . . . .      2,619,831      425,473
    Directors Fees. . . . . . . . . . .      1,548,000            -
    Consulting Fees . . . . . . . . . .        531,578      134,326
    Rent. . . . . . . . . . . . . . . .        256,935       54,804
    Professional Fees . . . . . . . . .        249,866            -
    Financing Inducment Fees. . . . . .        221,125            -
    Internet Expense. . . . . . . . . .        869,431       62,414
    Investor Relations. . . . . . . . .        219,905            -
    Telephone . . . . . . . . . . . . .        211,742       52,692
    Payroll Taxes . . . . . . . . . . .        203,870       71,801
    Webhosting Fees . . . . . . . . . .        157,180            -
    Insurance . . . . . . . . . . . . .        105,601       11,865
    Bad Debt Expense. . . . . . . . . .         91,011      125,000
    Depreciation and Amortization . . .         85,688       33,365
    Other operating expenses. . . . . .        394,997      215,402
                                         --------------  -----------

        Total Expenses. . . . . . . . .     10,432,695    1,731,473
                                         --------------  -----------

LOSS BEFORE INCOME TAXES. . . . . . . .     (3,884,062)    (605,386)
                                         --------------  -----------

    Provision for income taxes. . . . .            800            -
                                         --------------  -----------

NET LOSS. . . . . . . . . . . . . . . .     (3,884,862)    (605,386)
                                         ==============  -----------


BASIC AND DILUTED LOSS PER COMMON SHARE  $       (0.34)  $   (25.77)
                                         ==============  ===========

BASIC AND DILUTED WEIGHTED AVERAGE
   NUMBER OF COMMON SHARES OUTSTANDING.     11,295,039       27,590
                                         ==============  ===========
</TABLE>




<TABLE>
<CAPTION>

                                  NEWAVE, INC.
                        CONSOLIDATED Cash flow statement
    FROM INCEPTION, AUGUST 18, 2003 THROUGH DECEMBER 31, 2003 as compared to
                   the twelve months ended December 31, 2004:

<S>                                                   <C>             <C>


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

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss . . . . . . . . . . . . . . . . . . . . . .  $  (3,884,862)  $ (605,386)
  Stock issued for services. . . . . . . . . . . . .      2,693,975            -
  Depreciation . . . . . . . . . . . . . . . . . . .      1,030,888       33,365
  Bad Debt Expense . . . . . . . . . . . . . . . . .         91,011      125,000
Adjustments to reconcile net loss to net cash used
   by operating activities
 Changes in operating assets and liabilities:
   (Increase) in accounts receivable . . . . . . . .       (181,223)    (334,744)
   (Increase) in other receivables . . . . . . . . .       (721,059)           -
   (Increase) in other assets. . . . . . . . . . . .         29,144      (32,950)
   (Increase) in deposits. . . . . . . . . . . . . .        (66,392)           -
   Increase Deferred Revenue . . . . . . . . . . . .         70,563            -
   Increase (Decrease) accounts payable and accruals        125,257      159,706
                                                      --------------  -----------
NET CASH FLOWS USED BY OPERATING ACTIVITIES. . . . .       (812,698)    (655,009)
                                                      --------------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of Fixed Assets. . . . . . . . . . . . .       (302,214)     (94,306)
   Increase in Inventory . . . . . . . . . . . . . .         (2,695)     (37,101)
                                                      --------------  -----------
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES. . .       (304,909)    (131,407)
                                                      --------------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payment for acquisition of Utah Clay Technology .       (150,000)           -
   Proceeds from line of credit. . . . . . . . . . .              -       24,914
   Payment on line of credit . . . . . . . . . . . .        (24,914)
   Proceeds from notes payable - related . . . . . .        116,585    1,247,230
   Payment on notes payable - related. . . . . . . .       (272,424)    (665,728)
   Proceeds from notes payable & debentures. . . . .      1,773,000      188,000
   Payment on long-term debt . . . . . . . . . . . .        (95,279)      (8,000)
   Payment to reacquire stock. . . . . . . . . . . .        (20,000)           -
   Issuance of Common Stock. . . . . . . . . . . . .          1,000            -
                                                      --------------  -----------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES. . .      1,327,968      786,416
                                                      --------------  -----------

NET INCREASE (DECREASE) IN CASH. . . . . . . . . . .        210,361            -
                                                      --------------  -----------

CASH AT BEGINNING OF PERIOD. . . . . . . . . . . . .              -            -
                                                      --------------  -----------

CASH AT END OF PERIOD. . . . . . . . . . . . . . . .  $     210,361   $        -
                                                      ==============  ===========


SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

    Cash paid for interest . . . . . . . . . . . . .  $      65,042   $   25,000
                                                      ==============  ===========
    Cash paid for taxes. . . . . . . . . . . . . . .  $         800   $        -
                                                      ==============  ===========

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS

    Stock issued for services. . . . . . . . . . . .      2,268,394       20,417
</TABLE>




<TABLE>
<CAPTION>



<S>                         <C>      <C>      <C>         <C>       <C>          <C>       <C>         <C>           <C>
                               Common Stock       Preferred Stock
                            ----------------  -------------------    Addit-                 Stock                    Total
                                                                     ional       Shares     Sub         Accum-       Stock-
                                       Par                   Par     Paid In      To be     Recei-      ulated       holders'
                             Shares   0.001     Shares      0.001    Capital     Issued     vable       Deficit      Equity
                            -------  -------  ----------  --------  -----------  -------  ----------  ------------  ------------
BALANCE,
December 31, 2003. . . . .       -         -      27,590        28     144,972         -          -      (605,386)     (460,386)
                            -------  -------  ----------  --------  -----------  -------  ----------  ------------  ------------
Recapitalization
upon reverse merger
acquisition. . . . . . . .      94         -     572,159       574    (153,997)        -    (59,880)     (105,697)     (319,000)

Issuance of
common stock
for preferred stock. . . .     (94)        -   9,418,000     9,418      (9,418)        -          -             -             -

Issuance of
common stock
for consulting
services . . . . . . . . .       -         -     430,000       430   1,128,670       250          -             -     1,129,350

Issuance of
common stock
for director's
compensation . . . . . . .       -         -     750,000       750   1,547,250         -          -             -     1,548,000

Beneficial
conversion feature
on convertible
debentures . . . . . . . .       -         -           -         -     655,616        50          -             -       655,666

Conversion
of debentures. . . . . . .       -         -      77,290        77     252,835        88          -             -       253,000

Issuance of
stock warrants
for debt
inducement . . . . . . . .       -         -      20,000        20   1,302,133       153          -             -     1,302,306

Net loss . . . . . . . . .       -         -           -         -           -         -          -    (3,884,862)   (3,884,862)
                            -------  -------  ----------  --------  -----------  -------  ----------  ------------  ------------

BALANCE, December 31, 2004       -   $     -  11,295,039  $ 11,297  $4,868,061   $   541  $ (59,880)  $(4,595,945)  $   224,074
                            =======  =======  ==========  ========  ===========  =======  ==========  ============  ============
</TABLE>


                                  NEWAVE, INC.
                      (Formerly Utah Clay Technology, Inc.
                          Notes to Financial Statements
                                December 31, 2004


Note  1  -  Organization  and  Summary  of  Significant  Accounting  Policies:
            ------------------------------------------------------------------

Organization:
-------------

Utah Clay Technology, Inc. (the "Company"), a Utah corporation, was incorporated
on March 1, 1994. On December 24, 2003 the Company entered into an Agreement and
Plan  of  Reorganization  with  Ne.Wave,  Inc. a Nevada corporation, pursuant to
which  the  Company  agreed  that  NeWave,  Inc.  would  become the wholly-owned
subsidiary  subject  to the parties to the Agreement meeting certain conditions.
The  parties  to  the  Agreement  satisfied  the required conditions to close on
January  15,  2004,  including transfer of all funds.   On January 15, 2004, all
outstanding  shares  of Utah Clay Technology, Inc. common stock were acquired by
NeWave,  Inc.  The  purchase  price  consisted of $150,000 and the assumption of
$165,000  in  convertible  debt  for  576,968  shares  of  NeWave,  Inc.  dba
Onlinesupplier.com's  common stock.   Although from a legal perspective, NeWave,
Inc.  acquired  NeWave  dba  Onlinesupplier.com,  the transaction is viewed as a
recapitaliztion  of  NeWave dba Onlinesupplier.com accompanied by an issuance of
stock  by NeWave dba Onlinesupplier.com for the net assets of NeWave, Inc.  This
is  because  NeWave,  Inc.  did  not  have  operations  immediately prior to the
transaction, and following the reorganization, NeWave dba Onlinesupplier.com was
the operating company.  Effective February 11, 2004 the Company changed its name
from  Utah  Clay  Technology,  Inc.  to  Newave,  Inc.  The  company  offers  a
comprehensive  line  of  products  and  services  at wholesale prices through an
online  club  membership.   Additionally,  the  Company  creates,  manages  and
maintains  effective  website  solutions  for  eCommerce.

Basis  of  Accounting:
----------------------

The accompanying financial statements have been prepared on the accrual basis of
accounting  in  accordance  with  generally  accepted  accounting  principles.

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

The  Company  considers  all  highly  liquid debt instruments, purchased with an
original  maturity  of  three  months  or  less,  to  be  cash  equivalents.

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

The  preparation  of financial statements, in conformity with generally accepted
accounting  principles,  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.

Property  &  Equipment:
-----------------------

Property  and  equipment are stated at cost.  Depreciation is provided using the
straight-line  method  over  the  estimated  useful lives of the related assets,
generally  three  to  seven  years.


Income  Taxes:
--------------

Deferred income tax assets and liabilities are computed annually for differences
between  the  financial  statements and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted laws
and  rates  applicable  to  the periods in which the differences are expected to
affect  taxable  income  (loss).

Basic  and  Diluted  Net  Loss  per  Share:
-------------------------------------------

Net  loss  per share is calculated in accordance with the Statement of financial
accounting  standards  No.  128  (SFAS  128),  Earnings per share.  SFAS No. 128
superseded  Accounting  Principles  Board Opinion No. 15 (APB 15).  Net loss per
share  for  all  periods  presented has been restated to reflect the adoption of
SFAS  No.  128.  Basic  net  loss  per  share is based upon the weighted average
number of common shares outstanding.  Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or  exercised.  Dilution  is  computed  by  applying  the treasury stock method.
Under  this  method,  options  and  warrants  are assumed to be exercised at the
beginning  of the period (or at the time of issuance, if later), and as if funds
obtained  thereby were used to purchase common stock at the average market price
during  the  period.

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

The  Company  has  adopted  the  disclosure  provisions only of SFAS No. 123 and
continues  to  account  for  stock  based compensation using the intrinsic value
method  prescribed in accordance with the provisions of APB  No. 25, "Accounting
for  Stock  Issued  to  Employees",  and  related interpretations.  Common stock
issued  to employees for compensation is accounted for based on the market price
of  the  underlying  stock,  generally  the  average  low  bid  price.

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

Statement  of  financial  accounting  standards No. 107, "Disclosures about Fair
Value  of  Financial  Instruments", requires that the Company disclose estimated
fair  values  of  financial  instruments.  The  carrying amounts reported in the
statements  of  financial  position  for  current assets and current liabilities
qualifying  as  financial  instruments are a reasonable estimated of fair value.

Comprehensive  Income:
---------------------

Statement  of  financial  accounting standards No. 130, "Reporting Comprehensive
Income",  (SFAS  No.  130),  establishes  standards for reporting and display of
comprehensive  income,  its  components and accumulated balances.  Comprehensive
income  is defined to include all changes in equity, except those resulting from
investments  by  owners  and  distributions to owners.  Among other disclosures,
SFAS  No.  130  requires that all items that are required to be recognized under
current  accounting  standards as components of comprehensive income be reported
in  a  financial  statements that is displayed with the same prominence as other
financial  statements.  The  Company  adopted  this  standard  in  1998  and the
implementation  of this standard did not have a material impact on its financial
statements.


Accounts  Receivable:
---------------------

The  Company  maintains  an allowance for doubtful accounts for estimated losses
that  may  arise  if  any of its customers are unable to make required payments.
Management  specifically  analyzes  the age of customer balances, historical bad
debt  experience,  customer  credit-worthiness, and changes in customer payments
terms  when  making  estimates  of  the  uncollectibility of the Company's trade
accounts  receivable  balances.  If  the  Company  determines that the financial
conditions  of  any  of  its  customers  deteriorated,  whether  due to customer
specific  or general economic issues, an increase in the allowance will be made.
Accounts  receivable  are  written off when all collection attempts have failed.

Inventory:
----------

Inventories  consist  of  a  variety of wholesale goods purchased for individual
resale  and  are  stated  at  the  lower  of  cost,  determined by the first-in,
first-out  ("FIFO")  method,  or  market.

Revenue  Recognition:
---------------------

The Company recognizes income when the products are shipped and when the service
is  provided.  The  Company  applies  the  provisions  of  SEC  Staff Accounting
Bulletin  ("SAB")  No.  101, "Revenue Recognition in Financial Statements" which
provides  guidance on the recognition, presentation and disclosure of revenue in
financial  statements.  SAB No. 101 outlines the basic criteria that must be met
to  recognize  revenue  and  provides  guidance  for  the  disclosure of revenue
recognition  policies.  The  Company's  revenue  recognition  policy for sale of
products is in compliance with SAB No. 101.  Revenue for the sale of products is
recognized when a formal arrangement exists, the price is fixed or determinable,
the  delivery is completed and collectibility is reasonably assured.  Generally,
the  Company  extends  credit  to its customers and does not require collateral.
The  Company  performs  ongoing credit evaluations of its customers and historic
credit  losses  have  been  within  management's  expectations.

Note  2  -  Federal  Income  Taxes:
            -----------------------

The  Financial  Accounting  Standards  Board  (FASB)  has  issued  Statement  of
Financial  Accounting Standards Number 109 ("SFAS 109").  "Accounting for Income
Taxes",  which  requires  a  change  from  the  deferred method to the asset and
liability  method of accounting for income taxes.  Under the asset and liability
method,  deferred  income  taxes  are  recognized  for  the  tax consequences of
"temporary  differences"  by  applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the  tax  basis  of  existing  assets  and  liabilities.

<TABLE>
<CAPTION>
<S>                                               <C>          <C>
                                                   2004              2003
                                                  -------          --------
Deferred  tax  assets
     Net  operating  loss  carryforwards         $7,189,256        $4,928,377
     Valuation allowance                         (7,189,256)       (4,928,377)
                                               -------------    -------------
     Net  deferred  tax  assets               $             0   $         0
                                              ===============  =============
</TABLE>


At  December  31,  2004,  the  Company  had  net operating loss carryforwards of
approximately  $7,189,256  for federal income tax purposes.  These carryforwards
if  not  utilized  to  offset  taxable  income  will  begin  to  expire in 2010.

Note  3  -  Going  Concern:
            ---------------

The  Company's financial statements have been prepared on the basis that it is a
going concern, which contemplated the realization of assets and the satisfaction
of  liabilities  in  the  normal  course  of  business.

The  Company incurred a net loss of $7,189,256 for the period ended December 31,
2004.  The  financial  statements  do  not include any adjustments that might be
necessary  should  the  Company  be  unable to continue as a going concern.  The
Company  plans  to  finance  the  continued operations for the next year through
private  funding  and  funding  from  officers  of  the  Company.


Note  4  -  Accounts  Payable  &  Accrued  Expenses:
            ----------------------------------------

     Accounts  Payable                              $  92,496
     Accrued  Advertising                              57,671
     Accrued  P/R  Taxes                               47,667
     Accrued  Consulting  Fees                        106,955
     Miscellaneous  Accruals                           87,129
                                                     ----------
                                                     $391,918
                                                     ========

Note  5  -  Notes  Payable  -  Related  Parties  and  Others:
            -------------------------------------------------

Notes  Payable  -  Others:
--------------------------
Note  Payable - Line of Credit, none interest bearing,
                     due  on  demand.                    $  50,073

Notes  Payable to others, bearing an interest rate of
     10%  per  annum,  unsecured  and  due  on  demand.    115,356
                                                          --------
                                                          $165,429
                                                          ========

Notes  Payable  -  Related  Parties:
------------------------------------

     Note  Payable  to  an  affiliated  company,  unsecured,
     none  interest  bearing  and  due  on  demand.               $150,000
                                                                  ========


Note  7  -  Convertible  Debenture:
            -----------------------

On  January  15,  2004  the  Company  issued  $250,000 worth of 6%, 5-year Term,
Convertible  Debentures,  (the  "Debentures),  on  January  25,  2004;
the Company issued $355,000 worth of 6%, 5-year Term, Convertible Debentures, on
January  26,  2004;
the  Company  issued $50,000 worth of 6%, 5-year Term Convertible Debentures, on
March  3,  2004  ;
the Company issued $28,000 worth of 6%, 5-year Term,  Convertible Debentures, on
April  1,  2004;
the Company issued $180,000 worth of 8%, 5-year Term, Convertible Debentures, on
May  5,  2004
the  Company  issued $180,000 worth of 8%, 5-year Term, ;Convertible Debentures,
on  July  7,  2004  ;
the Company issued $180,000 worth of 8%, 5-year Term, Convertible Debentures, on
August  18,  2004;
the  Company  issued $204,000 worth of 8%, 5-year Term, Convertible Debentures,
on  September  25,  2004
the  Company issued $282,000 worth of 8%, 5-year Term, Convertible  Debentures,
on  October  25,  2004
the  Company issued $60,000 worth of 8%, 5-year Term, Convertible Debentures, on
November  11,  2004
the Company issued $162,000 worth of 8%, 5-year Term, Convertible Debentures, on
December  28,  2004
the  Company  issued  $240,000 worth of 8%, 5-year Term, Convertible Debentures.


The  Debentures  shall  pay  six  percent  (6%) or eight percent (8%) cumulative
interest,  in  cash  or in shares of common stock, par value $.001 per share, of
the  Company,  at  the  Company's  option,  at the time of each conversion.  The
Company  shall  pay interest on the unpaid principal amount of this Debenture at
the time of each conversion until the principal amount hereof is paid in full or
has  been  converted.  If  the interest is to be paid in cash, the Company shall
make  such  payment within five (5) business days of the date of conversion.  If
the interest is to be paid in Common Stock, said Common Stock shall be delivered
to  the  Holder,  or per Holder's instructions, within five (5) business days of
the  date  of conversion.  The Debentures are subject to automatic conversion at
the end of five (5) years from the date of issuance at which time all Debentures
outstanding  will be automatically converted based upon the formula set forth in
the  agreement

The  principal  amount  of  this  Debenture  is  secured  by  shares  pledged as
collateral  pursuant  to the terms of a Security Agreement.  This Debenture is a
full  recourse  loan  being made by the Holder and the Company is liable for any
deficiency.

Note  8  -  Capital  Stock
            --------------

Common  Stock
-------------

In  January 2004, the Company increased the authorized shares of common stock to
300,000,000.

During  the  year  ended December 31, 2004, the following shares of common stock
were  issued  by  the  Company:

The  Company issued 9,417,259 shares of the Company's common stock in compliance
with  the  Merger  agreement  with  Utah  Clay  Technology,  Inc.

The  Company  issued 1,150,000 shares of the Company's common stock for services
amounting  to  $2,268,394.


Note  8  -  Capital  Stock  (cont):
            -----------------------

The  Company  issued 127,290 shares of the Company's common stock for conversion
of  Debentures  at  a  conversion  price  of  $635,401.

The Company issued 100,473 shares of the Company's common stock for the Founders
amounting  to  $998.

The  Company  accounts for the issuance of equity instruments for services based
on  the fair value of the services or the fair value of the equity instrument at
the  time  of  issuance,  whichever  is  more  reliably  measurable.

The Company effectuated the 344.33 to 1 reverse stock split on February 9, 2004.
All  shares  have  been stated to retroactively affect this reverse stock split.

Preferred  Stock
----------------

Effective  September30,  1996,  the  Company  authorized  10,000,000  share  of
preferred stock at par value of $.001.  There are no preferred stock outstanding
at  the  end  of  December  2004.

Note  9  -  Financial  Accounting  Developments:
            ------------------------------------

Recently  issued  Accounting  Pronouncements

In  February 2003, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  150,  "Accounting for Certain Financial Instruments with Characteristics of
Both  Liabilities  and Equity".  SFAS 150 is effective for financial instruments
entered  into  or modified after May 31, 2003, and otherwise is effective at the
beginning  of  the  first  interim  period  beginning after June 15, 2003.  This
statement  establishes  new  standards  of how an issuer classifies and measures
certain  financial  instruments  with  characteristics  of  both liabilities and
equity.  SFAS  150  requires that an issuer classify a financial instrument that
is  within  the  scope  of  this  statement as a liability because the financial
instrument  embodies  an  obligation  of  the issuer.  This statement applies to
certain  forms of mandatorily redeemable financial instruments including certain
types  of  preferred stock, written put options and forward contracts.  SFAS 150
did  not  materially  effect  the  financial  statements.

In  December  2003,  the  FASB  issued  FASB  Interpretation  No. 146,  (revised
December  2003)  "Consolidation  of  Variable Interest Entities" (FIN 146) which
addresses how a business enterprise should evaluate whether it has a controlling
financial  interest  in  an  entity  through  means other than voting rights and
accordingly  should  consolidate  the  entity.  FIN  No.  146R  replaces  FASB
Interpretation No. 146, "Consolidation of Variable Interest Entities", which was
issued  in  January  2003.  Companies  are  required  to  apply  FIN No. 146R to
variable interests in variable interest entities ("VIEs") created after December
31,  2003.  For  variable  interest  in VIEs created before January 1, 2004, the
Interpretation  is applied beginning January 1, 2005.  For any VIEs that must be
consolidated  under  FIN  No.  146R that were created before January 1, 2004,the
assets,  liabilities  and  non-controlling  interests  of  the VIE initially are
measured  at  their  carrying amounts with any difference between the net amount
added  to  the  balance  sheet  and  any  previously  recognized  interest being
recognized  as  the  cumulative  effect  of  an  accounting  change.


If  determining  the carrying amounts is not practicable, fair value at the date
FIN  No.  146R  first applies may be used to measure the assets, liabilities and
non-controlling  interest  of the VIE.  The Company doe not have any interest in
any  VIE.

In  March  2003,  the  FAS  issued  SFAS No. 149, "Amendment of Statement 133 on
Derivative  Instruments  and  Hedging  Activities".  SFAS  149  is effective for
contracts  entered  into or modified after June 30, 2003.  This statement amends
and  clarifies  financial  accounting  and reporting for derivative instruments,
including  certain  derivative  instruments  embedded  in  other  contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
133,  "Accounting  for  Derivative  Instruments  and  Hedging Activities".  SFAS
149did  not  materially  effect  the  financial  statements.

In  December  2004,  the FASB issued SFAS No. 123(R)(revised 2004), "Share Based
Payment"  which  amends  FASB Statement No. 123 and will be effective for public
companies  for  interim  or  annual  periods  after  January  15, 2005.  The new
standard  will  require  entities  to  expense  employee stock options and other
share-based  payments.  The  new  standard may be adopted in one of three ways -
the  modified  prospective  transition  method,  a  variation  of  the  modified
prospective  transition  method or the modified retrospective transition method.
The  Company  is  to  evaluate  how  it will adopt the standard and evaluate the
effect  that the adoption of SFAS 123(R) will have on our financial position and
results  of  operations.

In  November  2004, the FASB issued SFAS NO. 151, "Inventory Costs, an amendment
of  ARB  No  43,  Chapter 4".  This statement amends the guidance in ARB No. 43,
Chapter  4  Inventory Pricing, to clarify the accounting for abnormal amounts of
idle  facility  expense, freight, handling cost, and wasted material (spoilage).
Paragraph  5  of  ARB  No.  43,  Chapter  4, previously stated that, "under some
circumstances,  items  such as idle facility expense, excessive spoilage, double
freight  and  rehandling  costs  may  be  so abnormal as to require treatment as
current  period  charges."  SFAS No. 151 requires that those items be recognized
as  current-period  charges regardless of whether they meet the criterion of "so
abnormal".  In  addition,  this  statement  requires  that  allocation  of fixed
production  overheads  to  the costs of conversion be based on the prospectively
and  are  effective  for  inventory costs incurred during fiscal years beginning
after  June  5,  2005,  with  earlier  application permitted for inventory costs
incurred during fiscal years beginning after the date this Statement was issued.
The  adoption  of  SFAS No. 151 is not expected to have a material impact on the
Company's  financial  position  and  results  of  operations.

In  December  2004,  the  FASB  issued  SFAS  No. 153, Exchanges of Non-monetary
Assets,  an  amendment  of  APB Opinion No. 29.  The guidance in APB Opinion 29,
Accounting  for  Non-monetary  Transactions,  is  based  on  the  principle that
exchange  of  non-monetary  assets should be measured based on the fair value of
assets  exchanged.  The  guidance  in  that  Opinion,  however, included certain
exceptions to that principle.  This Statement amends Opinion 29 to eliminate the
exception  for  non-monetary  exchanges of similar productive 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 non-monetary exchanges
occurring in fiscal periods beginning after June 15, 2005.  The adoption of SFAS
No.  153  is  not  expected to have a material impact on the Company's financial
position  and  results  of  operations.




Note  10  -  Accounts  Receivables:
             ----------------------

As  of  December  31,  2004,  the Company had other receivables in the amount of
$721,059  and  Accounts  Receivable  of  $514,956  made  up  of  the  following:
<TABLE>
<CAPTION>
<S>                                     <C>
     Accounts  Receivable
          Impact  Legal                 $316,963
          Venture  Inc.                   12,545
          Encore  International           90,558
          Platinum  Values                72,256
          Misc.  Receivables              22,634
                                      ----------
                                        $514,956
                                        ========
</TABLE>


<TABLE>
<CAPTION>
<S>                                       <C>
     Other  Receivables
          Premium  Holdings,  LTD          $405,245
          Misc.  Receivables                  3,806
          Concorde  Payment  Systems        315,814
                                          ---------
                                            724,865
          Less:  Allowance                 (215,000)
                                           ---------
                                           $509,865
                                           ========
</TABLE>



ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL  DISCLOSURE.

None.

ITEM  8A.  CONTROLS  AND  PROCEDURES.

As  of  the  end  of the period covered by this Annual Report on Form 10-KSB, an
evaluation was performed under the supervision and with the participation of our
management,  including  the Chief Executive Officer and Chief Financial Officer,
of  the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act
of  1934).  Based  on  that  evaluation,  our  Chief Executive Officer and Chief
Financial  Officer  concluded  that  our disclosure controls and procedures were
effective  in  ensuring that material information relating to us with respect to
the  period  covered  by  this  report was made known to them. Since the date of
their  evaluation,  there  have  been  no  significant  changes  in our internal
controls  or  in  other  factors that could significantly affect these controls,
including  any  corrective  actions  with regard to significant deficiencies and
material  weaknesses.

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.

The  following  table  sets  forth  the  name,  age,  positions,  and offices or
employments  for  the  past  five  years  as of March 28, 2004, of our executive
officers  and directors. Members of the board are elected and serve for one year
terms  or  until  their  successors are elected and qualify. All of the officers
serve  at  the  pleasure  of  the  Board  of  Directors  of  the  Company.


<TABLE>
<CAPTION>
<S>                               <C>          <C>
NAME                              AGE          POSITION

Michael  Hill                      28          Chief  Executive  Officer,
Director
Michael  A.  Novielli              40          Chairman  of  the  Board of
Directors
Barrett  Evans                     33          Director
Douglas  H.  Leighton              36          Director
Theodore  Smith                    28          Director
</TABLE>


MICHAEL HILL has been our Chief and Executive Officer and Director since January
15, 2004.  From 1999 until 2003, Mr. Hill acted as President and Chief Executive
Officer  of Intravantage Marketing, another Santa Barbara based marketing firm,.
while  simultaneously serving as a consultant for several smaller organizations.
From January 1998 until starting Intavantage Marketing he was the Vice President
of  International  Specialties,  Inc.

BARRETT EVANS has been our director since January 15, 2004 and our Interim Chief
Financial  Officer  since  January 7, 2003. Mr. Evans is eFund Capital Partner's
Managing  Partner. In 1990, Mr. Evans started his career with Cruttenden Roth, a
regional  emerging  growth  focused  investment  bank.  At Cruttenden, Mr. Evans
developed  significant relationships with institutional investors. Additionally,
Mr.  Evans was engaged in all facets of investment banking from private debt and
equity financing to Initial Public Offerings, retail brokerage and institutional
trading,  Mezzanine  financing  and  bridge  capital.   Mr.  Evans  founded  BRE
Investments  &  Consulting,  LLC.  in 1996. BRE Investments & Consulting evolved
into  what is now eFund Capital Partners in 1999. At eFund Capital Partners, Mr.
Evans  has  utilized  his  institutional contacts to help fund numerous start-up
companies  and  has  advised these companies on a wide range of issues including
raising  capital,  securing  management and overall business strategy. Mr. Evans
received his Bachelor's degree from the University of California, Santa Barbara.

MICHAEL  A.  NOVIELLI  has  served  as  our director since January 15, 2003. Mr.
Novielli  is a Managing Partner of Dutchess Capital Management, LLC and Dutchess
Advisors, LLC. A co-founder of Dutchess in 1996, Mr. Novielli advises the senior
management  of  issuers  in which Dutchess Private Equities Fund LP and Dutchess
Private  Equities  II  LPhas  invested, in areas of business development, legal,
accounting  and  regulatory  compliance.  Prior  to  co-founding  Dutchess,  Mr.
Novielli  was  a  partner  at  Scharff,  Witchel  & Company, a 40 year-old, full
service  investor  relations  firm,  where  he  consulted  with  publicly-traded
companies  on  areas  of  finance  and  business  development.  Prior to joining
Scharff,  Mr.  Novielli  was  Vice-President  of  Institutional  Sales-Private
Placements  at  Merit  Capital  Associates,  an  independent  NASD  registered
broker-dealer. Before joining Merit, Mr. Novielli began his investment career at
PaineWebber,  where  he  served  for  approximately  three years as a registered
representative servicing high net worth individuals and institutional clientele.
Mr.  Novielli  has  held  series  7, 63 and 65 licenses and received his B.S. in
Business  from  the  University  of  South  Florida  in  1987.

DOUGLAS LEIGHTON has served as our director since January 15, 2004. Mr. Leighton
is a Managing Partner of Dutchess Capital Management, LLC and Dutchess Advisors,
LLC.  A  co-founder  of  Dutchess  in  1996,  Mr.  Leighton oversees trading and
portfolio  risk  management  of  investments  made on behalf of Dutchess Private
Equities  Fund LP and Dutchess Private Equities Fund II LP. Prior to co-founding
Dutchess,  Mr. Leighton was founder and president of Boston-based Beacon Capital
from  1990-1996, which engaged in money management. Mr. Leighton has held series
7,  63 and 65 licenses as well as registered investment advisor status and holds
a  BS/BA  in  Economics  &  Finance  from  the  University  of  Hartford.

THEODORE  SMITH  has  served  as  our director since January 15, 2004. Mr. Smith
serves  as  Executive Vice President of Dutchess Advisors LLC, whom he joined in
1998  and  is  a  liaison  between Dutchess Capital Management, LLC on behalf of
Dutchess  Private  Equities  Fund,  LP and senior management of companies in the
Fund's  portfolio.  Prior to joining Dutchess in 1998, Mr. Smith was a principal
at  Geneva Atlantic Capital, LLC where he focused on assisting corporate clients
with  SEC  compliance  matters,  business  plan preparation and presentation and
capital  markets  financing.  Mr. Smith received his BS in Finance and Marketing
from  Boston  College. Mr. Smith has also served as a director of several public
as  well  as  private  companies.


BOARD  OF  DIRECTORS

We  currently  have  five  members of our Board of Directors, who are elected to
annual  terms  and  until  their successors are elected and qualified. Executive
officers  are  appointed  by the Board of Directors on an annual basis and serve
until their successors have been duly elected and qualified. There are no family
relationships  among  any  of  our  directors,  officers  or  key  employees.

AUDIT  COMMITTEE

We  do not have a separate Audit Committee. Our full Board of Directors performs
the  functions  usually  designated to an Audit Committee. Mr. Evans, a Director
and  our  Interim  Chief  Financial  Officer,  qualifies  as an "audit committee
financial  expert"  under  the  rules of the Securities and Exchange Commission.

CODE  OF  ETHICS

We  have  adopted  a  code  of  ethics  that  applies to our principal executive
officer,  principal  financial  officer,  principal  accounting  officer  or
controller,  or  persons  performing  similar  functions.  We  filed our Code of
Ethics  to  our  Report  on  Form 10-KSB for the year ended December 31, 2003 as
Exhibit  14.1.


ITEM  10.  EXECUTIVE  COMPENSATION.

The  following  table  presents  a summary of the compensation paid to our Chief
Executive Officer. No other executive officer received compensation in excess of
$100,000  during  2004.  Except as listed below, there  are  no  bonuses,  other
annual  compensation,  restricted  stock  awards or stock  options/SARs  or  any
other  compensation  paid  to  the  executive  officers.

<TABLE>
<CAPTION>
<S>                           <C>       <C>         <C>      <C>       <C>             <C>                 <C>          <C>
                                      Annual Compensation                               Long Term Compensation
                              ---------------------------------------  ----------------------------------------------------------
                                                                                 Awards                           Payouts
                                                                       ------------------------------     -----------------------
                                                                       Restricted
                                                              Other       Stock           Securities
                                                     Bonus    Annual     Awards           Underlying           LTIP     All Other
Name and Principal Position   Year (1)  Salary ($)    ($)    Comp ($)      ($)           Options/SARs       Payout ($)  Comp. ($)
----------------------------  --------  ----------   -----   --------   ----------      -------------      ----------  ----------
Michael Hill, Chief
Executive
Officer and Director (1)(2)     2004       $0.00       0      156,000       0                 0                 0
                                2003       $0.00       0        0           0                 0                 0
<FN>

(1)     Mr. Dennis Engh served as our President until his resignation on January
15,  2004.  Prior  to  January  15,  2004,  we did not have a CEO and only had a
President.  Mr.  Engh's  successor,  Michael  Hill, has orally agreed to be paid
$156,000  per  annum  through the fiscal year ending December 31, 2004. However,
Mr.  Hill has deferred compensation until such time we are capitalized enough to
pay  for  his  services.
</TABLE>


EMPLOYMENT  AGREEMENTS

Currently  we  do  not  have any of our executives or officers under employments
contracts.  However, Mr. Hill, our Chief Executive Officer, has orally agreed to
accept  $156,000  per annum as compensation for his services. We anticipate that
in  2005  we  will  have  employment agreements in place with several of our key
executives  and  officers.


DIRECTOR  COMPENSATION

On February 13, 2004, we issued 150,000 registered shares of our common stock to
each  director  for  services.  We  do  not have a formal plan to compensate our
directors.  During  the  three  months  ended  March 31, 2004, we issued 750,000
shares  of  our  common  stock  for  board compensation amounting to $1,548,000.

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED  STOCKHOLDER  MATTERS.

The  following  table  sets  forth certain information concerning the beneficial
ownership  of  our outstanding classes of stock as of December 31, 2004, by each
person  known  by us to (i) own beneficially more than 5% of each class, (ii) by
each  of  our  Directors  and  Executive Officers and (iii) by all Directors and
Executive  Officers  as  a  group.  Unless  otherwise  indicated  below,  to our
knowledge,  all  persons listed below have sole voting and investment power with
respect  to  their shares of common stock except to the extent that authority is
shared  by  spouses  under  applicable  law.

The number of shares of common stock issued and outstanding on December 31, 2004
was  11,295,039  shares. The calculation of percentage ownership for each listed
beneficial  owner  is based upon the number of shares of common stock issued and
outstanding on December 31, 2004, plus shares of common stock subject to options
held  by  such  person  on  December  31,  2004  and  exercisable within 60 days
thereafter.



<TABLE>
<CAPTION>



<S>                                                                                     <C>        <C>

Michael Hill(a)  404 East 1st Street, #1345, Long Beach, CA 90802. . . . . . . . . . .  2,659,275  23.65%
Barrett Evans(b)  301 East Ocean Blvd., Long Beach, CA 90802 . . . . . . . . . . . . .  3,674,585  32.68%
Michael A. Novielli(c) 100   Mill  Plain  Rd., 3rd Floor, Danbury, CT 06811. . . . . .  3,254,389  28.94%
Douglas Leighton(d) 312 Stuart St, Third Floor, Boston, MA 02116 . . . . . . . . . . .  3,254,389  28.94%
Theodore J. Smith(e) 312 Stuart St, Third Floor, Boston, MA 02116. . . . . . . . . . .    110,000   0.98%
Dutchess Private Equities, LP (f), 312 Stuart Street, 3rd Floor, Boston, MA 02116. . .    830,155   7.38%
Dutchess Private Equities, II, LP (g), 312 Stuart Street, 3rd Floor, Boston, MA 02116.    914,934   8.14%
Dutchess Advisors, LLC (h), 312 Stuart Street, 3rd Floor, Boston, MA 02116 . . . . . .  1,400,000  12.45%
eFund Capital Partners, LLC (i) 301 East Ocean Blvd. Suite 640,
Long Beach, CA 90802 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2,536,200  22.55%
eFund Small-Cap Fund, LP (j) 301 East Ocean, Suite 640, Long Beach, CA 90802 . . . . .  1,068,385   9.50%
All directors and current executive officers as a group (5 Persons). . . . . . . . . .  9,698,249  86.24%
<FN>

(a) Mr. Hill has sole voting and dispositive power of 2,659,275 shares of common
stock  issued  to  him  as  of  May  31,  2004.

(b)  Mr. Evans has sole voting and dispositive power 70,000 shares issued to him
February  2,  2004.  Mr.  Evans  is  also  the  managing member of eFund Capital
Partners  and  eFund  Small-Cap  fund and the shares issued to those entities as
listed  below  (please  see  (i)  and  (j)  below).

(c)  Mr.  Novielli  has sole voting and dispositive power of 109,300 shares. Mr.
Novielli  is  a  managing  member  of  Dutchess Capital Management which acts as
general  partner  to  Dutchess  Private Equities Fund, Dutchess Private Equities
Fund,  II  and  Dutchess  Advisors.(please  see  (f)  and  (g)  below).

(d)  Mr.  Leighton  has  sole voting and dispositive power of 109,300 shares. In
addition, Mr. Leighton is a managing member of Dutchess Capital Management which
acts  as  general  partner  to  Dutchess Private Equities Fund, Dutchess Private
Equities  Fund,  II  and  Dutchess  Advisors.(please  see  (f)  and  (g) below).

(e)  Mr.  Smith  has sole voting and dispositive power of 110,000. Our director,
Theodore  Smith,  is  the  Executive  Vice  President  of  Dutchess  Advisors.

(f) Dutchess Private Equities Fund owns 125,000 shares of common stock. Dutchess
acquired  100,000  shares  pursuant  to  conversion  of  a Preferred C Share. In
addition,  we  entered into investment agreements with Dutchess Private Equities
Fund  for  $762,000, respectively, whereby we issued convertible debentures. The
debentures  are  convertible  into  our common stock at the lesser of 75% of the
lowest  closing  bid  price  of the common stock during the fifteen full trading
days  prior  to  the  Conversion  Date or 100% of the average of the five lowest
closing  bid  prices of the common stock for the thirty trading days immediately
following  the  first reverse split in the stock price. As of December 31, 2004,
the debentures were convertible into 280,147 shares of common stock based on the
debenture  conversion  formula.  Dutchess  Private  Equities  Fund purchased the
debenture.  Mr.  Leighton  and  Mr.  Novielli  are  managing members of Dutchess
Capital Management which acts as general partner Dutchess Private Equities Fund,
LP.  Dutchess  also  owns  a  warrant to purchase up to 425,000 shares of common
stock  at $3.75 per share. Mr. Leighton and Mr. Novielli are managing members of
Dutchess  Capital  Management  which  acts  as  general partner Dutchess Private
Equities  Fund,  LP  and  have sole voting and dispositive power over the shares
owned  by  Dutchess.

(g)  Dutchess  Private  Equities  Fund  II  owns  10,000 shares of common stock.
Dutchess  received  10,000  shares as an incentive for an investment. We entered
into  investment  agreements with Dutchess Private Equities Fund II for $726,000
whereby  we  issued  convertible debentures. The debentures are convertible into
our  common  stock  at  the lesser of 75% of the lowest closing bid price of the
common stock during the previous fifteen trading days or 100% of the average bid
prices  of  the common stock for the twenty trading days prior to closing. As of
December 31, 2004, the debentures were convertible into 266,912 shares of common
stock  based on the debenture conversion formula. Dutchess Private Equities Fund
II  purchased  the  debenture.  Dutchess also owns a warrant to purchase 632,000
shares of common stock at between $3.00 and $4.75, and a warrant to purchase Mr.
Leighton  and  Mr.  Novielli are managing members of Dutchess Capital Management
which  acts  as  general partner Dutchess Private Equities Fund, II, LP and have
sole  voting  and  dispositive  power  over  the  shares  owned  by  Dutchess.

(h)  Dutchess  Advisors  is  controlled  by  Mr.  Novielli  and  Mr.  Leighton.

(i)  eFund Capital Partners owns 2,162,500 shares of common stock. Barrett Evans
is  eFund  Capital  Partners'  Managing  Member.  We  entered into an investment
agreement with eFund Small-Cap Fund for $535,000 whereby we issued a convertible
debenture.  The  Debenture is convertible into our common stock at the lesser of
75%  of  the  lowest  closing  bid price of the common stock during the previous
fifteen  trading  days or 100% of the average bid prices of the common stock for
the twenty trading days prior to closing. As of Cecember 31, 2004, the debenture
was  convertible  into 196,691 shares of our common stock based on the debenture
conversion  formula.  eFund also owns a warrant to purchase up to 150,000 shares
of  common  stock  at  $4.25 per share. Barrett Evans is eFund Capital Partners'
Managing  Member and has sole voting and dispositive power over the shares owned
by  eFund.

(j) eFund Small-Cap Fund owns 1,000,000 shares of common stock. Barrett Evans is
the  Managing  Partner  of  eFund  Small-Cap Fund. We entered into an investment
agreement  with eFund Small-Cap Fund for $50,000 whereby we issued a convertible
debenture.  The  Debenture is convertible into our common stock at the lesser of
75%  of  the  lowest  closing  bid price of the common stock during the previous
fifteen  trading  days or 100% of the average bid prices of the common stock for
the twenty trading days prior to closing. As of December 31, 2004, the debenture
was  convertible  into  18,382 shares of our common stock based on the debenture
conversion  formula.  eFund also owns a warrant to purchase up to 100,000 shares
of  common stock at $3.10 per share. Barrett Evans is eFund Small Cap's Managing
Member and has sole voting and dispositive power over the shares owned by eFund.
</TABLE>



ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.

During  the  period  ended  December  31,  2003,  a board member, Barrett Evans,
provided  a  short term line of credit and provided debt financing to us on a 30
day revolving rate of 0% provided the amount was paid in full at the end of each
30  day  period.  Repayments  during the period ended December 31, 2003, totaled
$630,333.  All  advances  from  this  finance company were short term borrowings
which  were  repaid  within  a month of the actual advance, in most cases. In no
instance  did  the  advances  remain outstanding for a prolonged period of time,
over  three months. This transaction is no less favorable than if we had entered
into  it  on  an  arms  length  basis  with an unrelated third party because the
Company  was  not  aware of any other creditors willing to provide a loan for 0%
interest.

During  the period ended December 31, 2003, Shirley Oaks, Sharon Paugh, Jennifer
Strohl,  all  of  whom  are  family  members  of  an  officer  of  ours provided
short-term,  non-interest  bearing  debt  financing  to  us,  totaling  $92,464.
Repayments during the period ended December 31, 2003 totaled $8,773 and the rest
was  converted to common stock in the first quarter of 2004. This transaction is
no less favorable than if we had entered into it on an arms length basis with an
unrelated  third  party because we were not aware of any other creditors willing
to  provide  debt  with  0%  interest.

During  the period ended December 31, 2003, we received certain office equipment
as  a  contribution  of  capital  from eFund Capital Partners which is a finance
company  controlled  by  one  of  our board members and Chief Financial Officer,
Barrett  Evans.  Accordingly, the office equipment has been recorded at its fair
market value of $145,000, and additional paid in capital has been increased by a
corresponding  amount.

As  of  December  31,  2003,  we  had  an unsecured note due to Dutchess Private
Equities  Fund,  which  is  controlled  by  two  board  members of ours, Douglas
Leighton  and Michael Novielli, of $150,000, bearing an interest rate of 6%. The
note  commenced on December 13, 2003, and was due on demand. In January 2004, we
issued  convertible  debt,  bearing an interest rate of 6%, in exchange for this
unsecured  note.

As  of  December  31,  2003, we had consulting fees payable our board member and
Chief  Financial  Officer, Barrett Evans, totaling $25,943; an owner who is also
an  employee  of ours, Aaron Gravitz, totaling $14,500; and an owner who is also
our  chief  executive  officer,  Michael  Hill,  totaling,  $65,000.  Our  chief
executive officer, Michael Hill earned $39,000 and $117,000 during the three and
nine  months  ended  September  30,  2004,  in  accordance  with  the consulting
agreement.  Formal  payment  terms  have  yet  to  be  established.

On  January  5,  2004,  we issued convertible debentures of $250,000 to Dutchess
Private  Equities Fund. The debentures convert on January 5, 2009. The holder of
the debentures can convert the face value of the debenture plus accrued interest
into  shares  of our common stock at the lesser of (i) 75% of the lowest closing
bid  price  during the 15 full trading days prior to the conversion date or (ii)
100%  of  the  average  of the five lowest closing bid prices for the 30 trading
days  immediately  following  the  first  reverse  split in the stock price. The
convertible  debentures  shall  pay  6%  cumulative interest, payable in cash or
stock  at  our  option,  at  the  time  of  conversion.

On January 25, 2004, we issued convertible debentures of $50,000 to a beneficial
owner,  Dutchess  Private  Equities  Fund. The debentures convert on January 25,
2009.  The  holder of the debentures can convert the face value of the debenture
plus  accrued  interest into shares of our common stock at the lesser of (i) 75%
of  the  lowest  closing  bid price during the 15 full trading days prior to the
Conversion  Date  or  (ii)  100%  of  the average of the five lowest closing bid
prices  for the 30 trading days immediately following the first reverse split in
stock  price.  The  convertible  debentures  shall  pay  6% cumulative interest,
payable  in  cash  or  stock  at  our  option,  at  the  time  of  conversion.

On January 25, 2004, we contracted to issue 25,000 shares of our common stock to
a  beneficial  owner,  Dutchess  Private  Equities  Fund  as an incentive for an
investment.  These  shares  were  valued  at  $38,625.

On January 26, 2004, we issued convertible debentures of $50,000 to a beneficial
owner,  eFund  Capital Partners. The debentures convert on January 26, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 6% cumulative interest, payable in cash or
stock  at  our  option,  at  the  time  of  conversion.

On January 26, 2004, we contracted to issue 25,000 shares of our common stock to
a  beneficial  owner,  eFund Capital Partners as an incentive for an investment.
These  shares  were  valued  at  $43,041.

On  February  4,  2004,  we  issued  a debenture to a beneficial owner, Dutchess
Private  Equities  Fund  totaling  $155,000.  The  debenture  does  not earn any
interest. The term of the debenture was 14 calendar days. The debenture was paid
in  full  and  there  is  no  balance  outstanding.
On  February 17, 2004, we issued a beneficial owner, Dutchess Advisors 1,400,000
shares  of  our common stock for conversion of 14 shares of Series C Convertible
Preferred  stock,  which were originally valued at $0, since at that time we had
no  equity and a shareholder deficit of ($901,936). Pursuant to the terms of the
Series  C  Convertible  Preferred  Stock  each  share  of  Series  C Convertible
Preferred  Stock  converts  into  100,000  shares  of  common  stock.

On  February  17,  2004,  we  issued  100,000  shares  of  our common stock to a
beneficial  owner,  Dutchess  Private Equities Fund for conversion of 1 share of
Series  C Convertible Preferred stock, which were originally valued at $0, since
at  that time we had no equity and a shareholder deficit of ($901,936). Pursuant
to  the terms of the Series C Convertible Preferred Stock each share of Series C
Convertible  Preferred  Stock  converts  into  100,000  shares  of common stock.
On  February  17,  2004,  we  issued  2,000,000  shares of our common stock to a
beneficial owner, eFund Capital Partners for conversion of 20 shares of Series C
Convertible  Preferred  stock, which were originally valued at $0, since at that
time  we  had no equity and a shareholder deficit of ($901,936). Pursuant to the
terms  of  the  Series  C  Convertible  Preferred  Stock  each share of Series C
Convertible  Preferred  Stock  converts  into  100,000  shares  of common stock.

On  February  17,  2004,  we  issued 2,555,000 shares of our common stock to our
Chief Executive Officer, Michael Hill for conversion of 25.55 shares of Series C
Convertible  Preferred stock, which where originally valued at $0, since at that
time  we  had no equity and a shareholder deficit of ($901,936). Pursuant to the
terms  of  the  Series  C  Convertible  Preferred  Stock  each share of Series C
Convertible  Preferred  Stock  converts  into  100,000  shares  of common stock.
On  February  19,  2004,  we  issued  convertible  debentures  of  $305,000 to a
beneficial  owner,  eFund  Capital  Partners  for $155,000 advanced in 2003, and
$155,000  advanced  in  2004.  The  debentures convert on February 19, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the Conversion
Date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 6% cumulative interest, payable in cash or
stock  at  our  option,  at  the  time  of  conversion

On  February 19, 2004, we contracted to issue 152,500 shares of our common stock
to a beneficial owner, eFund Capital Partners as an incentive for an investment.
These  shares  were  valued  at  $221,125.

On  March  9,  2004,  we  were  issued a revolving credit facility by beneficial
owners,  Dutchess Private Equities Fund and eFund totaling $50,000. The Revolver
carries  an  interest  rate  or  1% per month, and a minimum payment is due each
month  of  $500.  We  also  had another $100,000 of notes payable outstanding to
another  shareholder  of  ours.  These notes bear interest at 15% and matured on
March  4,  2004.

On  March  10,  2004,  we  issued  10,000  shares  of  our  common stock to each
beneficial  owner  Dutchess  Private Equities Fund II and eFund Capital Partners
amounting  to $25,000 each as an incentive for a loan. The shares were valued at
$34,500.

On  April  1,  2004, we issued convertible debentures of $90,000 to a beneficial
owner,  Dutchess  Private  Equities Fund, II. The debentures convert on April 1,
2009.  The  holder of the debentures can convert the face value of the debenture
plus  accrued  interest into shares of our common stock at the lesser of (i) 75%
of  the  lowest  closing  bid price during the 15 full trading days prior to the
conversion  date  or  (ii)  100%  of  the average of the five lowest closing bid
prices  for the 30 trading days immediately following the first reverse split in
stock  price.  The  convertible  debentures shall pay 8% cumulative interest. We
must make minimum payments of $1,000 per month to Dutchess Private Equities Fund
II. On April 1, 2004, we issued a warrant to Dutchess Private Equities Fund, II,
to purchase 90,000 of our common shares at an exercise price at $4.25 per share.
On  April  2,  2004, we issued convertible debentures of $90,000 to a beneficial
owner,  eFund  Capital  Partners.  The  debentures convert on April 2, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately  following  the  first reverse split in the stock
price. The convertible debentures shall pay 8% cumulative interest. We must make
minimum  payments of $1,000 per month to the eFund Capital Partners. On April 2,
2004,  we  issued a warrant to eFund Capital Partners, to purchase 90,000 of our
common  shares  at  an  exercise  price  at  $4.25  per  share

On  May  5,  2004,  we  issued convertible debentures of $90,000 to a beneficial
owner,  Dutchess  Private  Equities  Fund,  II. The debentures convert on May 5,
2009.  The  holder of the debentures can convert the face value of the debenture
plus  accrued  interest into shares of our common stock at the lesser of (i) 75%
of  the  lowest  closing  bid price during the 15 full trading days prior to the
conversion  date  or  (ii)  100%  of  the average of the five lowest closing bid
prices  for the 30 trading days immediately following the first reverse split in
stock price after the date in the preamble. The convertible debentures shall pay
8%  cumulative  interest.  We  must make minimum payments of $1,000 per month to
Dutchess  Private  Equities  Fund,  II.  On  May 5, 2004, we issued a warrant to
Dutchess  Private  Equities Fund, II, to purchase 90,000 of our common shares at
an  exercise  price  at  $4.25  per  share.

On  May  5,  2004,  we  issued convertible debentures of $90,000 to a beneficial
owner, eFund Capital Partners. The debentures convert on May 5, 2009. The holder
of  the  debentures  can  convert  the  face value of the debenture plus accrued
interest  into shares of our common stock at the lesser of (i) 75% of the lowest
closing  bid  price during the 15 full trading days prior to the conversion date
or  (ii)  100%  of  the average of the five lowest closing bid prices for the 30
trading  days  immediately following the first reverse split in the stock price.
The  convertible  debentures  shall  pay  8%  cumulative  interest. We must make
minimum  payments  of  $1,000 per month to the eFund Capital Partners. On May 5,
2004,  we  issued a warrant to eFund Capital Partners, to purchase 90,000 of our
common  shares  at  an  exercise  price  at  $4.25  per  share.

On  July  9,  2004, we issued convertible debentures of $180,000 to a beneficial
owner,  Dutchess  Private  Equities  Fund, II. The debentures convert on July 9,
2009.  The  holder of the debentures can convert the face value of the debenture
plus  accrued  interest into shares of our common stock at the lesser of (i) 75%
of  the  lowest  closing  bid price during the 15 full trading days prior to the
conversion  date  or  (ii)  100%  of  the average of the five lowest closing bid
prices  for the 30 trading days immediately following the first reverse split in
stock  price.  The  convertible  debentures  shall  pay  8% cumulative interest,
payable in cash or stock at our option, at the time of conversion. The debenture
was  issued  at  a  discount of $30,000. On July 9, 2004, we issued a warrant to
Dutchess  Private Equities Fund, II, to purchase 150,000 of our common shares at
an  exercise  price  at  $3.50  per  share.

On August 15, 2004, we issued convertible debentures of $144,000 to a beneficial
owner,  Dutchess Private Equities Fund, II. The debentures convert on August 15,
2009.  The  holder of the debentures can convert the face value of the debenture
plus  accrued  interest into shares of our common stock at the lesser of (i) 75%
of  the  lowest  closing  bid price during the 15 full trading days prior to the
conversion  date  or  (ii)  100%  of  the average of the five lowest closing bid
prices  for the 30 trading days immediately following the first reverse split in
stock  price.  The  convertible  debentures  shall  pay  8% cumulative interest,
payable  in  cash  or  stock  at  our  option,  at  the time of conversion. This
debenture  was  issued at a discount of $24,000. On August 18, 2004, we issued a
warrant to Dutchess Private Equities Fund, II, to purchase 120,000 of our common
shares  at  an  exercise  price  at  $3.10  per  share.

On  August 15, 2004, we issued convertible debentures of $60,000 to a beneficial
owner,  eFund Small Cap Fund, LP. The debentures convert on August 15, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 8% cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $10,000.  On August 18, 2004, we issued a warrant to eFund Capital
Partners,  to purchase 50,000 of our common shares at an exercise price at $3.10
per  share.

On  September  25,  2004,  we  issued  convertible  debentures  of $222,000 to a
beneficial  owner,  Dutchess  Private  Equities  Fund. The debentures convert on
September  25,  2009. The holder of the debentures can convert the face value of
the  debenture  plus  accrued  interest  into  shares of our common stock at the
lesser  of  (i)  75%  of the lowest closing bid price during the 15 full trading
days prior to the conversion date or (ii) 100% of the average of the five lowest
closing  bid  prices  for  the  30  trading days immediately following the first
reverse split in stock price. The convertible debentures shall pay 8% cumulative
interest,  payable  in  cash  or stock at our option, at the time of conversion.
This  debenture  was  issued  at a discount of $37,000.On September 25, 2004, we
issued  a  warrant to Dutchess Private Equities Fund, to purchase 185,000 of our
common  shares  at  an  exercise  price  at  $3.75  per  share.

On  September  25,  2004,  we  issued  convertible  debentures  of  $60,000 to a
beneficial  owner, eFund Small Cap Fund, LP. The debentures convert on September
25,  2009.  The  holder  of  the  debentures  can  convert the face value of the
debenture plus accrued interest into shares of our common stock at the lesser of
(i) 75% of the lowest closing bid price during the 15 full trading days prior to
the  conversion  date or (ii) 100% of the average of the five lowest closing bid
prices  for the 30 trading days immediately following the first reverse split in
stock  price.  The  convertible  debentures  shall  pay  8% cumulative interest,
payable  in  cash  or  stock  at  our  option,  at  the time of conversion. This
debenture  was issued at a discount of $10,000. On September 25, 2004, we issued
a  warrant to eFund Capital Partners, to purchase 50,000 of our common shares at
an  exercise  price  at  $3.75  per  share.

On  October  25,  2004,  we  issued  convertible  debentures  of $60,000 to
Dutchess  Private  Equities  Fund, II, LP. The debentures convert on October 25,
2009.  The  holder of the debentures can convert the face value of the debenture
plus  accrued  interest into shares of our common stock at the lesser of (i) 75%
of  the  lowest  closing  bid price during the 15 full trading days prior to the
conversion  date  or  (ii)  100%  of  the average of the five lowest closing bid
prices  for the 30 trading days immediately following the first reverse split in
stock  price.  The  convertible  debentures  shall  pay  8% cumulative interest,
payable  in  cash  or  stock  at  our  option,  at  the time of conversion. This
debenture  was issued at a discount of $10,000. On October 25, 2004, we issued a
warrant  to Dutchess Private Equities Fund, II, to purchase 50,000 of our common
shares  at  an  exercise  price  at  $4.60  per  share.

On  November  11, 2004, we issued convertible debentures of $162,000 to Dutchess
Private  Equities Fund, II, LP. The debentures convert on November 11, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 8% cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $27,000.  On  November  11,  2004, we issued a warrant to Dutchess
Private  Equities  Fund,  II,  to  purchase  162,000  of our common shares at an
exercise  price  at  $3.00  per  share.

On  December  28, 2004, we issued convertible debentures of $240,000 to Dutchess
Private  Equities Fund, II, LP. The debentures convert on December 28, 2009. The
holder  of  the  debentures  can  convert  the  face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date  or  (ii) 100% of the average of the five lowest closing bid prices for the
30  trading  days  immediately following the first reverse split in stock price.
The  convertible debentures shall pay 8% cumulative interest, payable in cash or
stock  at  our option, at the time of conversion. This debenture was issued at a
discount  of  $40,000.  On  December  28,  2004, we issued a warrant to Dutchess
Private  Equities  Fund,  II,  to  purchase  240,000  of our common shares at an
exercise  price  at  $3.75  per  share.


ITEM  13.  EXHIBITS.

EXHIBIT
NUMBER              DESCRIPTION
---------------------------------------------

2.1  Agreement and Plan of Reorganization between Utah Clay Technology, Inc. and
NeWave, Inc., D.B.A. Online  Supplier NeWave Shareholders and Dutchess Advisors,
Ltd.,  dated  December  24, 2003 (included as Exhibit 2.1 to the Form  8-K filed
February  12,  2004,  and  incorporated  herein  by  reference).

3.1  Articles  of  Incorporation (included as Exhibit  3.(i) to the Form  SB-2/A
filed  April  11,  2000,  and  incorporated  herein  by  reference).

3.2  Amended  Articles  of  Incorporation (included as Exhibit 3.(i) to the Form
10-QSB  filed  November  14,  2001,  and  incorporated  herein  by  reference).

3.3  Articles  of Amendment to Articles of Incorporation, dated January 30, 2004
(included  as  Exhibit  3.2  to  the 10-QSB filed May 24, 2004, and incorporated
herein  by  reference).

3.4 By-laws (included as Exhibit 3.(ii) to the Form SB-2/A filed April 11, 2000,
and  incorporated  herein  by  reference).

4.1  Debenture Agreement between the Company and Dutchess Private Equities Fund,
dated  January 5, 2004 (included as Exhibit 4.1 to the Form 10-QSB filed May 24,
2004,  and  incorporated  herein  by  reference).

4.2  Debenture Agreement between the Company and Dutchess Private Equities Fund,
dated January 25, 2004 (included as Exhibit 4.2 to the Form 10-QSB filed May 24,
2004,  and  incorporated  herein  by  reference).

4.3  Debenture  Agreement  between  the Company and eFund Capital Partners, LLC,
dated  January  26,  2004  (included as Exhibit 4.3 to the Form 10-QSB filed May
24,  2004,  and  incorporated  herein  by  reference).

4.4  Debenture  Agreement  between  the Company and eFund Capital Partners, LLC,
dated  February  19,  2004 (included as Exhibit 4.4 to the Form 10-QSB filed May
24,  2004,  and  incorporated  herein  by  reference).

4.5  Debenture  Agreement between the Company and Preston Capital Partners, LLC,
dated  March  3,  2004 (included as Exhibit 4.5 to the Form 10-QSB filed May 24,
2004,  and  incorporated  herein  by  reference).

4.6  Debenture Agreement between the Company and Dutchess Private Equities Fund,
II, dated April 1, 2004 (included as Exhibit 4.6 to the Form 10-QSB filed August
23,  2004,  and  incorporated  herein  by  reference).

4.7  Debenture  Agreement  between the Company and eFund Capital Partners, dated
April 2, 2004 (included as Exhibit 4.7 to the Form 10-QSB filed August 23, 2004,
and  incorporated  herein  by  reference).

4.8  Debenture Agreement between the Company and Dutchess Private Equities Fund,
II,  dated  May 5, 2004 (included as Exhibit 4.8 to the Form 10-QSB filed August
23,  2004,  and  incorporated  herein  by  reference).

4.9  Debenture  Agreement  between the Company and eFund Capital Partners, dated
May  5,  2004 (included as Exhibit 4.9 to the Form 10-QSB filed August 23, 2004,
and  incorporated  herein  by  reference).

4.10  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
II,  LP,  dated  April  1, 2004 (included as Exhibit 4.10 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

4.11  Warrant  Agreement  between  the Company and eFund Capital Partners, dated
April  2, 2004 (included as Exhibit 4.11 to the Form SB-2 filed October 8, 2004,
and  incorporated  herein  by  reference).

4.12  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
II,  LP,  dated  May  5,  2004  (included as Exhibit 4.12 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

4.13  Warrant  Agreement  between  the Company and eFund Capital Partners, dated
May  5,  2004  (included as Exhibit 4.13 to the Form SB-2 filed October 8, 2004,
and  incorporated  herein  by  reference).

4.14  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
II,  LP,  dated  July  9,  2004 (included as Exhibit 4.14 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

4.15  Debenture Agreement between the Company and Dutchess Private Equities Fund
II,  LP,  dated  July  9,  2004 (included as Exhibit 4.15 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

4.16  Debenture Agreement between the Company and Dutchess Private Equities Fund
II,  LP,  dated August 15, 2004 (included as Exhibit 4.16 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

4.17  Debenture  Agreement  between  the  Company  and eFund Small Cap Fund, LP,
dated  August  15, 2004 (included as Exhibit 4.17 to the Form SB-2 filed October
8,  2004,  and  incorporated  herein  by  reference).

4.18  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
II,  LP,  dated August 18, 2004 (included as Exhibit 4.18 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

4.19  Warrant  Agreement between the Company and eFund Small Cap Fund, LP, dated
August  18,  2004  (included  as  Exhibit 4.19 to the Form SB-2 filed October 8,
2004,  and  incorporated  herein  by  reference).

4.20  Debenture  Agreement  between  the  Company  and Dutchess Private Equities
Fund,  LP,  dated  September 25, 2004 (included as Exhibit 4.20 to the Form SB-2
filed  October  8,  2004,  and  incorporated  herein  by  reference).

4.21  Debenture  Agreement  between  the  Company  and eFund Small Cap Fund, LP,
dated  September  25,  2004  (included  as  Exhibit 4.21 to the Form  SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

4.22  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
LP,  dated  September  25, 2004 (included as Exhibit 4.22 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

4.23  Warrant  Agreement between the Company and eFund Small Cap Fund, LP, dated
September  25,  2004 (included as Exhibit 4.23 to the Form SB-2 filed October 8,
2004,  and  incorporated  herein  by  reference).

4.24 Debenture Agreement between the Company and Dutchess Private Equities Fund,
dated February 4, 2004 (included as Exhibit 4.24 to the Form SB-2 filed December
9,  2004,  and  incorporated  herein  by  reference).

4.25  Debenture  Agreement  between  the  Company  and Dutchess Private Equities
Fund,  II,  LP,  dated  October  25,  2004  (filed  herewith).

4.26  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
II,  LP,  dated  October  25,  2004  (filed  herewith).

4.27  Debenture  Agreement  between  the  Company  and Dutchess Private Equities
Fund,  II,  LP,  dated  November  11,  2004  (filed  herewith).

4.28  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
LP,  dated  November  11,  2004  (filed  herewith).

4.29  Debenture  Agreement  between  the  Company  and Dutchess Private Equities
Fund,  II,  LP,  dated  December  28,  2004  (filed  herewith).

4.30  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
LP,  dated  December  28,  2004  (filed  herewith).

10.1  2000  Stock  Option  Plan  (included as Exhibit 9 to the Form SB-2/A filed
April  11,  2000,  and  incorporated  herein  by  reference).

10.2  Sublease  between  the Company and Pinnacle Sales Group, LLC, dated August
18,  2003 (included as Exhibit 10.1 to the Form 10-KSB filed April 14, 2004, and
incorporated  herein  by  reference).

10.3  Sublease Agreement between the Company and Mammoth Moving Inc., dated July
14,  2003 (included as Exhibit 10.2 to the Form 10-KSB filed April 14, 2004, and
incorporated  herein  by  reference).

10.4 Investment Agreement between the Company and Preston Capital Partners, LLC,
dated  September  13,  2004  (included  as  Exhibit  10.3 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

10.5  Registration  Rights  Agreement  between  the  Company and Preston Capital
Partners,  LLC,  dated  September 13, 2004 (included as Exhibit 10.4 to the Form
SB-2  filed  October  8,  2004,  and  incorporated  herein  by  reference).

10.6  Placement  Agent  Agreement between the Company, Preston Capital Partners,
and Legacy Trading Co., LLC, Inc., dated September 13, 2004 (included as Exhibit
10.5  to  the  Form  SB-2  filed  October  8,  2004,  and incorporated herein by
reference).

10.7  Registration  Rights  Agreement  between  the Company and Dutchess Private
Equities  Fund, LP, dated January 14, 2004 (included as Exhibit 10.1 to the Form
10-QSB  filed  May  24,  2004,  and  incorporated  herein  by  reference).

10.8  Registration  Rights  Agreement  between  the Company and Dutchess Private
Equities  Fund, LP, dated January 26, 2004 (included as Exhibit 10.2 to the Form
10-QSB  filed  May  24,  2004,  and  incorporated  herein  by  reference).

10.9  Registration  Rights  Agreement  between  the  Company  and  eFund Capital
Partners,  LLC,  dated  January  26,  2004 (included as Exhibit 10.3 to the Form
10-QSB  filed  May  24,  2004,  and  incorporated  herein  by  reference).

10.10  Registration  Rights  Agreement  between  the  Company  and eFund Capital
Partners,  LLC,  dated  February  19, 2004 (included as Exhibit 10.4 to the Form
10-QSB  filed  May  24,  2004,  and  incorporated  herein  by  reference).

10.11  Registration  Rights  Agreement  between  the Company and Preston Capital
Partners,  LLC, dated March 3, 2004 (included as Exhibit 10.5 to the Form 10-QSB
filed  May  24,  2004,  and  incorporated  herein  by  reference).

10.12  Consulting  Agreement  between  the  Company and Luminary Ventures, Inc.,
dated  March  2,  2004 (included as Exhibit 99.1 to the Form S-8 filed March 11,
2004,  and  incorporated  herein  by  reference).

10.13 Consulting Agreement between the Company and Jeffrey Conrad, dated January
30,  2004 (included as Exhibit 99.2 to the Form S-8 filed February 13, 2004, and
incorporated  herein  by  reference).

10.14  Consulting  Agreement  between  the Company and Catherine Basinger, dated
January  30,  2004  (included as Exhibit 99.3 to the Form S-8 filed February 13,
2004,  and  incorporated  herein  by  reference).

10.15  Consulting  Agreement between the Company and Barrett Evans, dated August
18,  2003  (included  as Exhibit 10.11 to the Form 10-QSB filed August 23, 2004,
and  incorporated  herein  by  reference).

10.16  Consulting  Agreement  between the Company and Michael Hill, dated August
18,  2003  (included  as Exhibit 10.12 to the Form 10-QSB filed August 23, 2004,
and  incorporated  herein  by  reference).

10.17  Lead Marketing Agreement between the Company and Vandalay Venture, Group,
Inc.  d/b/a  Applied Merchant, dated June 2004 (included as Exhibit 10.13 to the
Form  10-QSB  filed  August  23,  2004,  and  incorporated herein by reference).

10.18  Standard  Multi-Tenant  Office  Lease  between  the Company and La Patera
Investors, dated April 9, 2004 (included as Exhibit 10.17 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

10.19 ASP Software Subscription Agreement between the Company and Net Chemistry,
dated  August 11, 2004 (included as Exhibit 10.18 to the Form SB-2 filed October
8,  2004,  and  incorporated  herein  by  reference).

10.20  Consulting  Agreement  between the Company and Pacific Shore Investments,
LLC,  dated  August  15,  2004 (included as Exhibit 10.19 to the Form SB-2 filed
October  8,  2004,  and  incorporated  herein  by  reference).

10.21  Membership Agreement between the Company and Memberworks, dated September
30,  2003 (included as Exhibit 10.20 to the Form SB-2 filed October 8, 2004, and
incorporated  herein  by  reference).

10.22  Amendment  to  Membership  Agreement between the Company and Memberworks,
dated  August 17, 2004 (included as Exhibit 10.21 to the Form SB-2 filed October
8,  2004,  and  incorporated  herein  by  reference).

10.23  Revolving  Credit  Facility  between  the  Company  and  Dutchess Private
Equities  Fund  and eFund, dated March 9, 2004 (included as Exhibit 10.23 to the
Form  10-QSB  filed  November  22,  2004, and incorporated herein by reference).

10.24  Line  of  Credit  Agreement  between the Company and Barrett Evans, dated
August  18,  2003  (included as Exhibit 10.23 to the Form SB-2 filed December 9,
2004,  and  incorporated  herein  by  reference).

10.25  Debt  Financing  Agreement  between  the  Company and Shirley Oaks, dated
January  26,  2004 (included as Exhibit 10.24 to the Form SB-2 filed December 9,
2004,  and  incorporated  herein  by  reference).

10.26  Consulting  Agreement between the Company and Aaron Gravitz, dated August
18, 2003 (included as Exhibit 10.25 to the Form SB-2 filed December 9, 2004, and
incorporated  herein  by  reference).

10.27  Debt  Financing  Agreement  between  the  Company and Sharon Paugh, dated
January  26,  2004 (included as Exhibit 10.26 to the Form SB-2 filed December 9,
2004,  and  incorporated  herein  by  reference).

10.28  Debt  Financing  Agreement between the Company and Jennifer Strohl, dated
March  22,  2004  (included  as Exhibit 10.27 to the Form SB-2 filed December 9,
2004,  and  incorporated  herein  by  reference).

14.1 Code of Ethics (included as Exhibit 14.1 to the Form 10-KSB filed April 14,
2004,  and  incorporated  herein  by  reference).

21.1  List  of  Subsidiaries  (included as Exhibit 21.1 to the Form 10-KSB filed
April  14,  2004,  and  incorporated  herein  by  reference).

23.1  Consent  of  Jaspers,  Hall  and Johnson, LP. Independent Auditors. (filed
herewith).

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley  Act  of  2002.

31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley  Act  of  2002.

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

ITEM  14.  PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES.

AUDIT  FEES

Rose Snyder and Jacobs, were our auditors for the three quarters ended September
30,  2004  and  Jaspers  Hall  and Johnson were our auditors for the fiscal year
ended  December  31,  2004.

For  their  audit of our annual financial statements and for their review of our
Quarterly Reports on Form 10-Q $7,972.00 per Form 10-Q and Rose Snyder & Jacobs.
billed us a total of $23,917 for the 2003 audit. We have contracted Jaspers Hall
&  Johnson  to  complete  the  2004  year  end  audit  for  $11,000.

AUDIT  RELATED  FEES

None.

TAX  FEES

None.

ALL  OTHER  FEES

None.

THE  BOARD  OF  DIRECTORS  PRE-APPROVAL  POLICY  AND  PROCEDURES

We  do not have a separate Audit Committee. Our full Board of Directors performs
the  functions  of  an  Audit  Committee.  During fiscal year 2004, the Board of
Directors  adopted  policies  and  procedures  for the pre-approval of audit and
non-audit  services  for  the  purpose  of  maintaining  the independence of our
independent  auditors.  We may not engage our independent auditors to render any
audit  or  non-audit service unless either the service is approved in advance by
the  Board  of Directors or the engagement to render the service is entered into
pursuant  to the Board of Director's pre-approval policies and procedures. On an
annual  basis, the Board of Directors may pre-approve services that are expected
to be provided to us by the independent auditors during the following 12 months.
At  the  time  such  pre-approval  is  granted,  the Board of Directors must (1)
identify the particular pre-approved services in a sufficient level of detail so
that  management  will  not  be  called  upon  to  make judgment as to whether a
proposed  service  fits  within  the  pre-approved  services and (2) establish a
monetary limit with respect to each particular pre-approved service, which limit
may  not  be  exceeded  without obtaining further pre-approval under the policy.

The  Board  has considered whether the provision of the services described above
under  the caption "All Other Fees" is compatible with maintaining the auditor's
independence.

                                   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, in the City of Long Beach,
State  of  California  on  the  15th  day  of  April  2005.

NEWAVE,  INC.
------------------
   Registrant



          /s/  Michael  Hill
          By:       Michael  Hill
          Director  and  Chief  Executive  Officer





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  on  the  date  indicated.



Signature                   Title                                    Date

/s/  Michael  Hill
Michael  Hill                Director  and
                            Chief  Executive Officer              April 15, 2005


/s/  Barrett  Evans
Barrett  Evans               Director  and
                            Chief  Financial Officer              April 15, 2005


/s/  Michael  A.  Novielli
Michael  A. Novielli         Chairman of the Board of Directors   April 15, 2005


/s/  Douglas  Leighton
Douglas  Leighton            Director                             April 15, 2005


/s/  Theodore  J.  Smith,  Jr.
Theodore  J. Smith, Jr.      Director                             April 15, 2005