UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB
(Mark  One)

[X]  ANNUAL  REPORT  UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934  FOR  THE  FISCAL  YEAR  ENDED  DECEMBER  31,  2005.

[ ]  TRANSITION  REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
     OF  1934  FOR  THE  TRANSITION  PERIOD  FROM  ______  TO  ________

                          COMMISSION FILE NO. 333-30914

                                  NEWAVE, INC.
               (Exact name of issuer as specified in its charter)

               UTAH                                               87-0520575
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

             30 S. LaPatera Lane, Suite 7 Goleta, CA        90802
             (Address of principal executive offices)     (Zip Code)

       Registrant's telephone number, including area code: (805) 964-9126


Securities  registered  under  Section  12(b)  of  the  Exchange  Act:     NONE.

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

COMMON STOCK, PAR  VALUE  $0.001  PER  SHARE.
             (Title of class)

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

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

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



Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).
[ ] Yes [X] No

State  issuer's  revenues  for  its  most  recent  fiscal  year:  $7,340,399
State the aggregate market value of the voting and non-voting common equity held
by  non-affiliates computed by reference to the price at which the common equity
was  last  sold, or the average bid and asked price of such common equity, as of
February  3,  2006:  $3,783,508

State  the  number  of shares outstanding of each of the registrant's classes of
common  stock  as  of  February  3,  2006:  39,227,063

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


                                       1
<PAGE>

<TABLE>

                                  NEWAVE, INC.
                                     10-KSB

                                TABLE  OF  CONTENTS
<CAPTION>

<S>          <C>                                                             <C>
PART  I                                                                      PAGE
ITEM  1.     DESCRIPTION OF BUSINESS.                                          3
ITEM  2.     DESCRIPTION OF PROPERTY.                                          8
ITEM  3.     LEGAL PROCEEDINGS.                                                8
ITEM  4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.              8

PART  II
ITEM  5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.         9
ITEM  6.     MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS.  11
ITEM  7.     FINANCIAL  STATEMENTS.                                           21
ITEM  8.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING
             AND  FINANCIAL  DISCLOSURE.                                      38
ITEM  8A.    CONTROLS  AND  PROCEDURES.                                       38
ITEM  8B.    OTHER  INFORMATION.                                              38

PART  III
ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS AND CONTROL PERSONS;
             COMPLIANCE  WITH  SECTION  16(a)  OF  THE  EXCHANGE  ACT.        39
ITEM  10.    EXECUTIVE  COMPENSATION.                                         40
ITEM  11.    SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND
             MANAGEMENT  AND  RELATED  STOCKHOLDER  MATTERS.                  40
ITEM  12.    CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.              42
ITEM  13.    EXHIBITS.                                                        47
ITEM  14.    PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES.                      48
</TABLE>

                                       2
<PAGE>

                                     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.


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 30 S. LaPatera Lane, Suite 7,
Goleta, CA 93117. Our telephone number is (805) 964-9126. 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.

                                       3
<PAGE>

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,  we  changed  our  name  to NeWave, Inc. We acquired our
operating  subsidiary, Onlinesupplier.com. In April, 2004, we organized Discount
Online  Warehouse  as  a  wholly-owned  subsidiary  to  offer heavily discounted
products  purchased  in  bulk to consumers. We organized our subsidiary, Auction
Liquidator, Inc., in September 2004 and it began to generate immaterial revenues
in  October  2004.  During  2005,  we  decided  to  cease  operations at Auction
Liquidator, Inc. and Discount Online Warehouse in order to focus our efforts and
resources on Onlinesupplier.com. Discontinued operations did not have a material
effect  on  the  financial  statements.

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. 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.


ECOMMERCE INDUSTRY  BACKGROUND


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 14% compound
annual  growth  rate  over the next five years from $172 billion in 2005 to $328
billion  in  2010. Additionally, roughly 2 million new U.S. households will shop
online  each  of the next five years, creating a total of 55 million U.S. online
shopping  households  in  2010.


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 Goleta, 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.

                                       4
<PAGE>

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.  Our
services  and  capabilities  include:

-  Automated  Webstore  Generation  and  Customization;
-  Merchant  Processing  Capabilities;
-  Domain  Name  Registration;
-  Online  Training  Modules  (that  includes  online  auction  training; and
-  Web  hosting

As  of  December  31,  2005,  we stored approximately 450 unique products in our
warehouse  for  distribution  to  our  customers.  As  of  February 28, 2006, we
curtailed  operations  at  our  warehouse  and  decided  to focus exclusively on
providing products to our members by drop shipping the products from third party
suppliers when they are ordered.  We provide access to over 30,000 products from
our third party suppliers.   Our website wholesales products in many categories,
including:

-  Consumer  Electronics;
-  Audio/Video  Equipment
-  Software
-  Home/Small  Office  Electronic  Equipment
-  Automobile  Accessories;
-  Travel  Accessories  and
-  Networking  Equipment

We  generate  revenues  by:

1.     Charging  our  members a monthly fee for the tools and services needed to
create  and  run  a  successful  Internet  auction  business.

2.     Offering  our  customers  access  to coaching services provided through a
third  party  arrangement  with  20-20  Advisors for a monthly fee.  We began to
offer  this  service  in  February  2005.

3.     Offering our customers access to discounted value-added services such as:
prescription  drug  plans,  roadside  assistance,  tax  and  legal services, and
discounted  entertainment  packages  for  a  monthly  fee.  These  services  are
currently  offered  to  our  customers  through  third  party  arrangements with
suppliers  such  as  My Computer Club,  Inc.,  West,  Inc. and  InQ.

4.     Product  sales  via  our  website.

5.     Providing  our  customer  information  to third parties who compensate us
with  a  fee  for  each customer contact information acquired, or by sharing the
revenues generated from contacting our customer.  Revenues generated by the sale
of  our  customer information have been related to offers made to customers in a
wide  variety  of industries.  Revenues generated from sharing arrangements have
primarily  been  related  to the sale of extended business coaching products and
services.

STRATEGIC  RELATIONSHIPS  AND  ALLIANCES

In  February  2005, we entered into a marketing agreement with 2020 Advisors for
an  initial  term  of  60  days  that  is automatically renewable for successive
periods of one year.  For a monthly fee per customer, 2020 Advisors will provide
its  coaching  services  to  our  members.

In  February 2005, we entered into a software agreement with Discount Solutions,
Inc.  to  purchase  certain  software license rights to software that is used to
provide  web  based  stores to our customers.  We agreed to purchase a perpetual
license for use of the software of $52,500, and to compensate Discount Solutions
$24,000  monthly  for the full service hosting and maintenance of our customers'
web  stores.  Our  Chief  Executive  Officer  is  a  majority  owner of Discount
Solutions.  This  agreement  automatically  renews  monthly  unless  notice  is
provided by either party.  We intend to renegotiate and extend the terms of this
agreement.

In  March  2005,  we  entered  into a Program Sales Agreement with Provell, Inc.
Provell  engaged  us  to  market  its  continuity  service  programs via inbound
telemarketing.  Provell  provided  us  with  detailed  information regarding the
benefits  of  each Program and we were responsible for marketing the Programs at
our  cost  and  expense. On November 23, 2005, we were notified by Provell, Inc.
that  we  would  no longer be eligible to sell their programs as of December 23,
2005.  We  expect  to enter into agreements with other companies to resell other
programs and products in order to mitigate the impact of the termination of this
contract  on  our  net  revenues.

In  August  2005,  we  entered  into  a  Lead  Marketing  Agreement  with Summit
Consulting,  Inc  for  an  initial  term of 90 days, automatically renewable for
successive  periods  of  one  year.  In  exchange  for our providing a number of
brokered  leads  on  a  weekly basis, Summit Ventures will pay us 25% of the net
monthly residual amount collected from leads marketed pursuant to the agreement.
In  December  2005,  the  agreement  was modified so that in addition to the 25%
monthly  residual  amount,  Summit  Ventures  would  also  pay us 40% of the net
monthly residual amount collected from leads pursuant to the agreement, provided
that  we  assist  in  the  sales process related to their products and services.

                                       5
<PAGE>

CUSTOMERS

As  of  December  31,  2005,  we  had  approximately 32,000 current paid members
although  we  have  serviced  over 300,000 paid members since our inception. Our
customers  consist  primarily of individuals desiring assistance with organizing
their  own  internet-based  business.

No  single  customer  comprised  more  than  10%  of  revenues  during  2005.

SALES  AND  MARKETING

At December 31, 2005, we employed 10 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. During 2005, we began to offer our
customers  the  opportunity to become a member by signing up on our web site. By
the  end of 2005, on-line activations had become a significant proportion of our
total  new  activations.

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.


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  the  same  products  that we sell, many of which possess
     significant  brand awareness, sales volume, and customer bases, and some of
     which 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.

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.

Our  overall  market  is  intensely  competitive,  and  there  a number of other
competitors  that  are  much  larger  than  us  and  have  significantly greater
resources  at  their  disposal.  We  believe  that  our  product  offerings  are
competitive  with  others in the marketplace however, we do not have a dominant
market  share.

                                      6
<PAGE>

INTELLECTUAL  PROPERTY

We  have  received  trademarks  for  Onlinesupplier.com (date of use: August 18,
2003), Tomorrow's Innovations, Today (date of use: August 18, 2003), and Auction
Liquidator  (date  of  use: September 1, 2004), and Stop, Drop, n' Cash (date of
use: September 1, 2004). We have also filed a trade mark for NeWave, Inc., (date
of  use:  August 18, 2003) which is still pending registration; however, we have
received  an  opposition to the application from a company called Neway, Inc. We
plan to defend the registration of the mark; however, there is no guarantee that
we will be successful. We regard our trademarks, 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

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.

As  of  December  31,  2005,  we stored approximately 450 unique products in our
warehouse  for  distribution to our customers. During 2005, and through February
28,  2006, when we received an order and confirmation of payment, we shipped the
products  ordered  via  common  carrier to the shipping address requested by our
customer.  As of February 28, 2006, we curtailed operations at our warehouse and
decided  to  focus  exclusively  on  providing  products  to our members by drop
shipping  the  products  from  third party suppliers when they are ordered. This
change enables us to provide a wider selection of products while eliminating the
need  to invest in inventory. We provide access to over 30,000 products from our
third  party  suppliers.  When we receive an order from our customer, we place a
purchase  order  on  our  supplier  to drop ship the products ordered to the end
customer.

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, 2005, we employed 67 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.

                                       7
<PAGE>

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 30 S. LaPatera Lane, Suite 7,
Goleta,  CA  93117.

We  sublease  approximately  16,000  square  feet  of  office  space  in Goleta,
California,  which houses our customer service center, sales, and administration
Offices.  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  in  April  of  2009.

Effective February 28, 2006, we entered into an agreement to terminate our lease
for 10,500 square feet of warehouse and office space in Signal Hill, California.
This  space  was  no  longer  required  to  support our growth because we ceased
operations  of  our  subsidiaries,  Auction Liquidator, Inc. and Discount Online
Warehouse.

We  believe  our  existing  leased  facilities  are  adequate  to  support  our
anticipated  growth  in  2006.

ITEM  3.  LEGAL  PROCEDINGS.

We believe that there are no claims or litigation pending against the company or
our  officers  and  directors in their roles as such, 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.

                                       8

<PAGE>

                                     PART II

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, 2005, as
reported  by  the  Bloomberg  Financial  Network,  are  as  follows:

<TABLE>
<CAPTION>
<S>                          <C>              <C>
2004 FISCAL YEAR *
First Quarter                $1.43            $ 0.68
Second Quarter               $1.50            $ 1.00
Third Quarter                $1.33            $ 0.93
Fourth Quarter               $1.46            $ 1.08
*Price adjusted for 1:3 split on February 18, 2005

2005 FISCAL YEAR *
First Quarter                $1.93            $1.29
Second Quarter               $1.78            $1.35
Third Quarter                $1.27            $ .75
Fourth Quarter               $ .90            $ .16
<FN>
*Price adjusted for 1:3 split on February 18, 2005
</TABLE>

                                       9
<PAGE>

SHAREHOLDERS

As  of  February  3, 2006, there were approximately 176 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.

SECURITIES  AUTHORIZED  FOR  ISSUANCE  UNDER  EQUITY  COMPENSATION  PLANS

The  following  table summarizes securities authorized for issuance under equity
compensation  plans:

<TABLE>
<CAPTION>
<S>             <C>                            <C>                            <C>
                Number of Securities to be
                  issued upon exercise of       Weighted Average exercise           Number of securities
               outstanding options, warrants   price of outstanding options,  remaining available for future
Plan Category          and rights                 warrants, and rights                   issuance


Equity compensation
plans approved by
security holders             0                               n/a                              0

Equity compensation
plans not approved
by security holders    878,750                             $0.67                              0

Total                  878,750                             $0.67                              0
</TABLE>

We  awarded seven hundred fifty thousand warrants to our Chief Financial Officer
upon his hiring during July 2005. Five hundred thousand of the warrants vest one
year after his date of hire, and two hundred fifty thousand vest two years after
his  date of hire. Five hundred thousand of the warrants are priced at $1.12 per
share,  and  two  hundred  fifty  thousand  are  priced  at  $.10  per  share.

We awarded 128,750 warrants to a consultant during 2005.  These warrants are
fully  vested  and  are  excercisable at 33% of our closing price on the date of
exercise.  In  order  to  complete the above chart, we used the closing price of
our  stock  as  of  December  31, 2005 to calculate the exercise price for these
warrants.  However, the actual exercise price will depend on
the  date  the  warrants  are  exercised.

RECENT  SALES  OF  UNREGISTERED  SECURITIES

CONVERTIBLE  NOTES:
-------------------

On February 11, 2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $360,000,  at a discount of $60,000. The Note has a 0% interest
rate.  During  the  year  ended December 31, 2005, this Note was repaid, and the
balance  at December 31, 2005 was zero. We issued 37,500 shares to the Holder as
an  inducement  to  provide  financing.   The shares were valued at $40,219.

On  April  18,  2005,  we  issued  $132,000  of non-interest bearing Convertible
Promissory Notes, due August 18, 2005 at a discount of $44,000, to eFund Capital
Partners,  LLC  and  Dutchess Private Equities Fund, II, LP. The Notes have a 0%
interest  rate.  During  the year ended December 31, 2005, this Note was repaid,
and  the balance at December 31, 2005 was zero. We issued 13,750 shares to eFund
Capital  Partners and Dutchess Private Equities Fund, II, LP as an inducement to
provide  financing.  The  shares  were  valued  at  $31,968.

On  May  20,  2005,  we  issued  a  $402,750  non-interest  bearing  Convertible
Promissory  Note,  due  December  20, 2005 at a discount of $52,750, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31, 2005, $112,500 of this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 40,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $46,500.

On  June  2,  2005,  we  issued  a  $540,000  non-interest  bearing  Convertible
Promissory  Note,  due  December  20, 2005 at a discount of $80,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 54,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $50,700.

On  July  22,  2005,  we  issued  a  $258,000  non-interest  bearing Convertible
Promissory  Note,  due  December  22, 2005 at a discount of $33,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 10,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $8,925.

On  August  4,  2005,  we  issued  a  $162,000  non-interest bearing Convertible
Promissory  Note,  due  January  4,  2006  at a discount of $17,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 25,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $15,937.

On  August  17,  2005,  we  issued  a  $247,200 non-interest bearing Convertible
Promissory  Note,  due  January  17,  2006 at a discount of $40,200, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 37,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $24,975.

On  August  18  2005,  we  issued  $221,000  of non-interest bearing Convertible
Promissory  Notes,  due  December  18,  2005  at a discount of $37,000, to eFund
Capital  Partners.  The  Note  has  a  0%  interest  rate. During the year ended
December  31,  2005,  $18,211  of  this  Note  was  repaid,  and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at December 31, 2005 was zero. We issued 30,000 shares to eFund Capital Partners
as  an  inducement  to  provide  financing.  The  shares were valued at $19,125.

On  August  18  2005,  we  issued  $84,000  of  non-interest bearing Convertible
Promissory  Notes,  due  December  18, 2005 at a discount of $14,000, to Barrett
Evans. The Note has a 0% interest rate. During the year ended December 31, 2005,
none  of  this Note was repaid, and the balance was exchanged into a Convertible
Debenture  effective  December  18,  2005.  The balance at December 31, 2005 was
zero.  We  issued  10,000  shares  to  Barrett Evans as an inducement to provide
financing.  The  shares  were  valued  at  $6,375.

On  September  16,  2005,  we issued a $192,000 non-interest bearing Convertible
Promissory  Note,  due  March  15,  2006  at  a discount of $32,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005, $162,752 of this Note was repaid, and the balance at
December  31,  2005  was  $29,248.  We  issued 50,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $31,500.  This  note  was  repaid  in  full  on  March  1,  2006.

On  September  30,  2005,  we issued a $276,000 non-interest bearing Convertible
Promissory  Note,  due  March  30,  2006  at  a discount of $46,000, to Dutchess
Private  Equities  Fund,  LP.  The  Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this  Note was repaid, and the balance at
December  31,  2005  was  $276,000.  We issued 70,000 shares to Dutchess Private
Equities  Fund, LP as an inducement to provide financing. The shares were valued
at  $42,000.  We  repaid  $210,000  of  this  note  on  March  1,  2006.

On  October  11,  2005,  we  issued  a  $30,000 non-interest bearing Convertible
Promissory Note, due April 11, 2006 at a discount of $5,000, to Dutchess Private
Equities  Fund,  LP.  The  Note  has  a  0% interest rate. During the year ended
December  31,  2005,  none of this Note was repaid, and the balance December 31,
2005  was  $30,000. We issued 8,000 shares to Dutchess Private Equities Fund, LP
as  an  inducement  to  provide  financing.  The  shares  were valued at $5,000.

Effective  November  1,  we  agreed  to  issue  a convertible debenture to eFund
Capital  Partners,  in  the  amount  of $180,000, at a discount of $176,200. The
debenture  has  a 10% interest rate and is due and payable November 1, 2009. The
debentures  are  convertible into shares of our common stock at a price equal to
the  lesser of; (i) seventy-five percent of the average of the closing bid price
of  the  stock  for the five days prior to conversion or (ii) the average of the
closing  bid  price of the stock on the five days immediately preceding the date
of  the  of  debenture  agreement.

Effective  December  15,  2005, we entered into a Convertible Debenture Exchange
Agreement with Dutchess Private Equities Fund, II, LP and eFund Capital Partners
to  exchange  the  unpaid  balance  of  promissory  notes  issued  in 2005 worth
$1,784,239  into  10%,  4-year  term, Convertible Debentures. The debentures are
convertible  at  the  lesser  of  (i) seventy-five percent of the average of the
lowest  closing  bid  price  during  the  fifteen days immediately preceding the
conversion  date  or  (ii)  100%  of the average of the closing bid price of the
stock  for  the  twenty  days  immediately  preceding  the  closing  date of the
debenture  agreement.

                                       10
<PAGE>

PRIVATE  PLACEMENTS:

During  February 2005, we issued 1,000,000 shares of common stock for $1,213,233
in  connection  with  the  Equity  Line  Agreement dated September 13, 2004 with
Preston  Capital  Partners.

During  October  2005.  we issued 550,000 shares of common stock for $135,463 in
connection  with the Equity Line Agreement dated September 13, 2004 with Preston
Capital  Partners.  As  of  December  31, 2005, we had not received proceeds for
390,629 shares. On January 9, 2006, 384,871 of these shares were returned to us.

During  December  2005,  we  entered  into  stock  subscription  agreements with
accredited investors  to purchase 1,726,364 shares of our  common stock for an
aggregate  price  of  $189,900.  We  received  the  funds  in  January  2006.

WARRANTS:

We  awarded  seven  hundred  and  fifty thousand warrants to our Chief Financial
Officer  upon his hiring during July 2005. Five hundred thousand of the warrants
vest  one  year  after his date of hire, and two hundred fifty thousand vest two
years  after  his date of hire. Five hundred thousand of the warrants are priced
at $1.12 per share, and two hundred fifty thousand are priced at $.10 per share.

We  awarded  128,750  warrants  to Olive Tree LLC in the fourth quarter of 2005.
Olive  Tree  LLC  provides  consulting  services in matters regarding Ecommerce,
direct  marketing,  and  general business operating procedures. The warrants are
immediately  exercisable,  at  a  price equal to 33% of the closing price of our
common  stock  on  the  date  of  exercise.

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  AND  RESULTS  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.

                                       11
<PAGE>

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  the  media  costs  of  advertising  the  first  time the
advertising  takes  place,  except  for  direct-response  advertising  that  is
contracted  with our advertising partners on a cost per customer acquired basis,
which  is capitalized and amortized over its expected period of future benefits.
Direct-response  advertising  consists  primarily  of  on  line advertising that
include unique reference codes and URL tracking that are used for purchasing our
products  and  services.  The capitalized costs of the advertising are amortized
over  the  three-month  period  following  the  receipt of a trial order for our
products  and services.

At December 31, 2005, and December 31, 2004, capitalized
direct-response  advertising  costs  of  $159,182  and  zero, respectively, were
included  in  "Prepaid Expenses" in the accompanying Balance Sheets. Advertising
expense  was  $3,098,204  in  2005.  Advertising expense was $2,619,831 in 2004.

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  fee ranging from $1.95 to $9.95 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 to $59.95
is billed to the customer's credit card on a monthly basis. The membership terms
are  agreed to under a negative option and we will continue to bill the customer
on  a  monthly  basis until they cancel their account. 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.

GOING  CONCERN  OPINION

Our  audited  financial  statements for the fiscal year ended December 31, 2005,
reflect  a  net  loss  of  $6,265,924  and  net cash flows used by operations of
$2,477,774.  Although these conditions raise substantial doubt about our ability
to  continue  as  a  going  concern, we have not needed additional funding since
October  11,  2005.   We  believe  we will be able to continue operating for the
next  twelve  months  based  on  cash  flows  expected  to be generated from our
subsidiary, OnlineSupplier.com.  If we need additional funding for our business,
we  believe  we  would be able to secure funding from our current investors, but
there  is  no  assurance  we  will  be  able  to  do  so.

YEAR  ENDED  DECEMBER  31,  2005  AS  COMPARED  TO  YEAR ENDED DECEMBER 31, 2004

REVENUES
--------

We generated net revenues of $7,340,399 for the twelve months ended December 31,
2005,  as  compared  to  $6,812,686 for the year ended December 31, 2004. During
2005,  there  were  two  major  changes  in  our business that impacted revenue.

-    We focused more of our marketing efforts on increasing our membership based
     products,  and  less  on  revenues  generated  from  the  upsells  of  non-
     membership  based  products  and from the sale of our customer information.
     The  percentage  of  revenue  attributable to membership revenues increased
     from  47%  in  2004  to  75%  in  2005.

-    During  the  last  quarter  of  2005,  we changed our advertising to direct
     the  majority  of  our  potential customers to our web site to purchase our
     products and services. Prior to the fourth quarter of 2005, we had directed
     the  majority  of our customers to contact us via phone at our call center.
     As a result of this change in advertising focus, our new member activations
     in  the fourth quarter were greater than any of the three other quarters in
     2005.

                                       12
<PAGE>

COSTS  OF GOODS  SOLD
--------------------

We  incurred  costs  of sales of $1,744,866 for the twelve months ended December
31,  2005,  as  compared  to $1,033,351 for the twelve months ended December 31,
2004 .  On a percentage basis, cost of goods sold increased from 15.2% to 23.8%
of  revenues.  A  number  of  factors  led  to  the  increase:

-    Beginning  in  April  2005,  we  began  to  distribute a welcome kit to all
     new  customers  at  a  unit cost, including shipment, ranging from $2.00 to
     $4.50.  We believe that shipment of the welcome kit increases the retention
     of our customer.

-    We  have  incurred  higher  merchant  fees  associated  with the processing
     of  credit  card  transactions because a higher percentage of sales in 2005
     have  been  paid  via  credit  cards  versus automated clearing of checking
     account information. We terminated the use of the automated clearing method
     of  payment  for  new  customers in the third quarter of 2005 because of an
     unacceptable collection rate related to this type of payment method.

-    We have  incurred  costs  paid  to a third party vendor to provide coaching
     services  to  our members for a new product that we introduced in the first
     quarter  of  2005.

OPERATING  EXPENSES
-------------------

We incurred costs of $10,230,994 for the twelve months ended December 31, 2005
as compared  to  $8,793,966  for the twelve months ended December 31, 2004. The
increase in  Operating  Expenses was partially offset by a decrease in director
fees  which  totaled  $1,548,000  in  the  first  quarter  of  2004.

Expenses  for salaries increased 19% during the twelve months ended December 31,
2005 as compared to the prior year.   During 2005, we increased the depth of our
management  team,  our  administrative  staff and  our  customer  service
organization.

Advertising  expense  increased  by  18%  from  the  year  earlier period due to
increased  marketing  efforts,  and  also  due  to  a contract executed with our
national  spokesperson  to  promote  our  products  and  services

Other expenses grew 101% as compared to the prior year period, primarily because
of  increased  investor  relations  expenses,  finance  inducement expenses, and
issuance  of warrants to our Chief Financial Officer. We also incurred increased
costs  related  to  the  operation  and closure of Discount Online Warehouse and
Auction  Liquidator.

INTEREST  EXPENSE
-----------------

Interest  expense  increased  from  $869,431  to  $1,630,464 from the prior year
period, reflecting the costs of borrowing funds with short term promissory notes
as  opposed  to  long  term  debentures in the prior year. Each of our notes are
issued  at  a  discount, which is amortized and charged to interest expense over
the  life  of  the promissory note. Also, our promissory notes are issued with a
conversion  preference  to the Holder in the event of default.  During the years
ended  December 31, 2005 and 2004, we incurred beneficial conversion expenses of
$754,238  and  $655,516,  which  are  included  in  interest  expense  in  the
consolidated  financial  statements.

NET  LOSS
---------

We had a net loss of $6,265,924 for the twelve months ended December 31, 2005 as
compared  to $3,884,862 for the twelve months ended December 31, 2004.  Non cash
charges  to  income  comprised  $2,836,132  and  $3,815,874  for the years ended
December  31,  2005  and  2004  are  summarized  as  follows:

<TABLE>
<CAPTION>

<S>                                            <C>             <C>
                                                        Year Ended
                                                  12/31/2005   12/31/2004
                                               --------------  --------------
Stock issued for services . . .                $     563,647   $   2,693,975
Depreciation and amortization .                      804,474       1,030,888
Bad Debt Expense. . . . . . . .                       50,000          91,011
Issuance of warrants. . . . . .                      341,238
Debt conversion feature expense                      754,238
Debt inducement expense . . . .                      322,535
                                               --------------  --------------
                                               $  2,836,132   $   3,815,874
                                               ==============  ==============
</TABLE>

BASIC  AND  DILUTED  LOSS  PER  SHARE
-------------------------------------

Our  basic  and  diluted loss per share for the twelve months ended December 31,
2005 was ($0.17) as compared to ($0.11) for the twelve months ended December 31,
2004.  Basic  net  earnings  (loss) per common share is computed by dividing net
earnings (loss) applicable to common shareholders by the weighted-average number
of  common shares outstanding during the period. Diluted net earnings (loss) per
common  share  is  determined using the weighted-average number of common shares
outstanding  during the period, adjusted for the dilutive effect of common stock
equivalents,  consisting  of shares that might be issued upon exercise of common
stock  warrants  and conversion of convertible debt. In periods where losses are
reported,  the  weighted-average  number  of  common shares outstanding excludes
common  stock  equivalents,  because  their inclusion would be anti-dilutive. At
December  31,  2005,  the total amount of outstanding convertible debentures was
$4,203,698, which might be converted into 35,030,817 shares of our common stock,
based  on  the  closing  price  of  our  common  shares on December 31, 2005. At
December  31, 2005, there were 4,148,750 warrants outstanding that were eligible
for  conversion  into  shares  of  our  common  stock.

                                       13
<PAGE>

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  December  31, 2005, our Total Current Assets were $900,114 and our Total
Current  Liabilities  were  $1,392,362. Our Stockholders' Equity at December 31,
2004  was  a  deficit  of  $2,854,264.

During  2005,  we  issued  promissory  notes to related parties in the amount of
$3,036,950  as more fully described in the financing section below.  At December
31,  2005,  $917,465 of these notes were repaid, $1,784,239 were exchanged for a
long  term  debenture  maturing  in  2009, and $335,246 was outstanding.  Of the
outstanding amount, $305,248 matures in March 2006, and $30,000 matures in April
2006.

As  of  December  31,  2005,  we  had  debt of $4,588,946, including convertible
debentures which total $4,203,698. We make monthly interest payments on the debt
under  our  convertible  debentures, which are due in 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  have  not  required additional funding since October 11, 2005, and we repaid
$301,000  of  debt  on  March  1,  2006.  We  anticipate that we will be able to
continue  to  make  payments  to  reduce  our  debt  from  cash  generated  from
operations,  but  there is no assurance we will be able to do so.  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.  If we need additional
funding for our business, we believe we would be able to secure funding from our
current  investors,  but  there  is  no  assurance  we  will  be  able to do so.

We  believe  that  cash  generated  from  operations  will be sufficient to fund
operations  and  capital  requirements as presently planned over the next twelve
months.

SEASONALITY

Our  business  is  not  susceptible  to  significant  seasonal  factors.

FINANCINGS

On  January  15,  2004, we issued convertible debentures of $250,000 to Dutchess
Private Equities Fund LP. The debentures convert on January 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  6%  cumulative interest, payable in cash or
stock at our option, at the time of conversion.   At December 31, 2005, $250,000
was  outstanding  for  this  debenture.

On  January  19,  2004,  we  issued  convertible debentures of $305,000 to eFund
Capital Partners, LLC. The debentures convert on January 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. At December 31, 2005, $305,000
was  outstanding  for  this  debenture.

On  January  25,  2004,  we issued convertible debentures of $50,000 to Dutchess
Private Equities Fund LP. 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.  At December 31, 2005, $44,500
was  outstanding  for  this  debenture.

On  January  25,  2004,  we  issued  convertible debentures of $50,000 to eFund
Capital Partners, LLC. 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.   At December 31, 2005, $50,000
was  outstanding  for  this  debenture.

On March 3, 2004, we issued convertible debentures of $28,000 to Preston Capital
Partners,  LLC.  The  debentures  convert  on  March  3, 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. . At December 31, 2005, $28,000
was  outstanding  for  this  debenture.

On  April  1,  2004,  we  issued  convertible  debentures of $90,000 to 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, payable in cash or
stock  at  our  option, at the time of conversion. The debenture was issued at a
discount  of  $15,000.  On July 9, 2004, we issued a warrant to Dutchess Private
Equities Fund, II, to purchase 225,000 of our common shares at an exercise price
at  $1.42  per  share.   At  December 31, 2005, $38,959 was outstanding for this
debenture.

                                       14
<PAGE>

On  April  1, 2004, we issued convertible debentures of $90,000 to eFund Capital
Partners,  LLC.  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, payable in cash or
stock  at  our  option, at the time of conversion. The debenture was issued at a
discount  of  $15,000.  On  July  9,  2004, we issued a warrant to eFund Capital
Partners,  LLC, to purchase 225,000 of our common shares at an exercise price at
$1.42  per  share.   At  December  31,  2005,  $90,000  was outstanding for this
debenture.

On  May 5, 2004, we issued convertible debentures of $90,000 to 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.  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  $15,000.  On July 9, 2004, we issued a warrant to Dutchess Private
Equities Fund, II, to purchase 225,000 of our common shares at an exercise price
at  $1.42  per  share.  At  December  31, 2005, $90,000 was outstanding for this
debenture.

On  May  5,  2004,  we issued convertible debentures of $90,000 to eFund Capital
Partners,  LLC.  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.  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  $15,000.  On  July  9,  2004, we issued a warrant to eFund Capital
Partners,  LLC, to purchase 225,000 of our common shares at an exercise price at
$1.42  per  share.  At  December  31,  2005,  $90,000  was  outstanding for this
debenture.

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 450,000 of our common shares at an exercise price
at  $1.17  per  share.  At  December 31, 2005, $180,000 was outstanding for this
debenture.

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 360,000 of our common shares at an exercise price
at  $1.03  per  share.  At  December 31, 2005, $144,000 was outstanding for this
debenture.

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 150,000 of our common shares at an exercise price at $1.03
per  share.  At  December  31, 2005, $60,000 was outstanding for this debenture.

                                       15
<PAGE>

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 540,000 of our common shares at an exercise
price  at  $1.25  per  share. At December 31, 2005, $222,000 was outstanding for
this  debenture.

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 150,000 of our common shares at an exercise price at $1.25
per  share.   At  December 31, 2005, $60,000 was outstanding for this debenture.

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  150,000  of our common shares at an
exercise  price  at  $1.53  per  share.  At  December  31,  2005,  $60,000  was
outstanding  for  this  debenture.

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  480,000  of our common shares at an
exercise  price  at  $1.25  per  share.  At  December  31,  2005,  $162,000  was
outstanding  for  this  debenture.

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  720,000  of our common shares at an
exercise  price  at  $1.25  per  share.   At  December  31,  2005,  $240,000 was
outstanding  for  this  debenture.

On February 11, 2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $360,000,  at a discount of $60,000. The Note had a 0% interest
rate  and  was  repaid  on  May  20,  2005.

On  April  18,  2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $132,000,  at a discount of $22.000. The Note had a 0% interest
rate  and  was  repaid  on  August  5,  2005.

On  April 18, 2005, we issued a Note to eFund Capital Partners, in the amount of
$132,000,  at  a  discount  of  $22,000. The Note had a 0% interest rate and was
repaid  on  August  18,  2005.


On  May 20, 2005, we issued a Note to Dutchess Private Equities Fund, II, in the
amount  of  $402,750,  at a discount of $52,750. The Note had a 0% interest rate
and  $112,500  was  repaid prior to December 18, 2005.  The remaining amount was
exchanged  into  a  four  year,  convertible  debenture  bearing interest of 10%
effective  December  18,  2005.

On  June 2, 2005, we issued a Note to Dutchess Private Equities Fund, II, in the
amount  of  $540,000,  at a discount of $80,000. The Note had a 0% interest rate
and  was  exchanged  into a four year, convertible debenture bearing interest of
10%  effective  December  18,  2005.

On July 22, 2005, we issued a Note to Dutchess Private Equities Fund, II, in the
amount  of  $258,000,  at a discount of $33,000. The Note had a 0% interest rate
and  was  exchanged  into a four year, convertible debenture bearing interest of
10%  effective  December  18,  2005.

On  August  4,  2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $162,000,  at a discount of $17,000. The Note had a 0% interest
rate  and  was  exchanged  into  a  four  year,  convertible  debenture  bearing
interest  of  10%  effective  December  18,  2005.

                                       16
<PAGE>

On  August  17, 2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $247,200,  at a discount of $41,200. The Note had a 0% interest
rate and  was exchanged into a four year, convertible debenture bearing interest
of  10%  effective  December  18,  2005.

On  August  18,  2005, we issued notes to eFund, in the amount of $221,000, at a
total  discount  of  $37,000.  The  notes had a 0% interest rate and $18,211 was
repaid  prior  to  December  18,  2005.  The  remaining  outstanding  amount was
exchanged  into  a  four  year,  convertible  debenture  bearing interest of 10%
effective  December  18,  2005.

On  August  18, 2005, we issued a Note to a Barrett Evans, a member of our Board
of  Directors,  in  the  amount  of $84,000, at a total discount of $14,000. The
notes  had  a  0% interest rate and were exchanged into a four year, convertible
debenture  bearing  interest  of  10%  effective  December  18,  2005.

On September 16, 2005, we issued a Note to Dutchess Private Equities Fund, L.P.,
in  the amount of $192,000, at a discount of $32,000. The Note has a 0% interest
rate  and  $162,752  was  repaid  during  2005,  and  the  remaining $29,248 was
outstanding  at December 31, 2005.  This amount was due and payable on March 15,
2006,  and  was  repaid  on  March  1,  2006.

On  September  30, 2005, we issued a Note to Dutchess Private Equities Fund, LP,
in  the amount of $276,000, at a discount of $46,000. The Note has a 0% interest
rate  and  is  due  and  payable on March 30, 2006.  On March 1, 2006, we repaid
$210,000  of  this  note.

On  October 11, 2005, we issued a Note to Dutchess Private Equities Fund, LP, in
the  amount of $30,000, at a discount of $5,000. The Note has a 0% interest rate
and  is  due  and  payable  on  April  11,  2006.

Effective  November  1,  we  agreed  to  issue  a convertible debenture to eFund
Capital  Partners,  in  the  amount of $180,000, at a discount of $176,200.  The
debenture  has  a 10% interest rate and is due and payable November 1, 2009. The
debentures  are convertible into shares of the Company's common stock at a price
equal  to  the  lesser  of; (i) seventy-five percent of the average of the
closing bid price of the stock for the five days prior to conversion or (ii) the
average  of  the closing bid price of the stock on the five days immediately
preceding  the  date  of  the  of  debenture  agreement.  At  December 31, 2005,
$180,000  was  outstanding  for  this  debenture.

Effective  December  18,  2005, we entered into a Convertible Debenture
Exchange  Agreement with majority shareholders to exchange the unpaid balance of
promissory  notes  issued  in  2005  worth  $1,784,239  into  10%,  4-year term,
Convertible  Debentures.  The  debentures  are  convertible at the lesser of (i)
seventy-five percent (75%) of the average of the lowest closing bid price during
fifteen immediately  preceding  the  conversion date or  (ii) 100% of the
average  of  the  closing  bid  price  of  the  stock  for  the twenty days
immediately  preceding the closing date of the debenture agreement.  At December
31,  2005,  $1,784,239  was  outstanding  for  this  debenture.

COMMITMENTS

Minimum  future  rental  payments  under  non-cancelable  operating leases as of
December  31,  2005  for each of the next five years and in the aggregate are as
follows:

<TABLE>
<CAPTION>
<S>    <C>
2006.  $187,704
2007.  $187,704
2008.  $187,704
2009.  $ 62,568
       --------
TOTAL  $625,680
       ========
</TABLE>

In  February 2005, we entered into a software agreement with Discount Solutions,
Inc.  to  purchase  certain  software license rights to software that is used to
provide  web  based  stores to our customers.  We agreed to purchase a perpetual
license for use of the software of $52,500, and to compensate Discount Solutions
$24,000  monthly  for the full service hosting and maintenance of our customers'
web  stores.  Our  Chief  Executive  Officer  is  a  majority  owner of Discount
Solutions.  This  agreement  automatically  renews  monthly  unless  notice  is
provided be either party.  We intend to renegotiate and extend the terms of this
agreement.

                                       17
<PAGE>

We entered into a consulting agreement with Barrett Evans, a member of the Board
of  Directors,  effective  November  1,  2005. The term of the agreement was for
twelve  months  at $5,000 per month. We made no payments on the agreement during
the  year  ended  December  31,  2005  and  owe  $10,000  at  December 31, 2005.

We  entered  into  a  consulting  agreement  with Olive Tree Holdings, effective
January  1,  2006.  The  term  of the agreement is for 12 months at $23,667 per
month.

In  March  2005,  we entered into a Consulting Agreement with Luminary Ventures,
Inc.  where in exchange for services, we agreed to pay the consultant the sum of
$15,000  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,  and  our  final  payment  was  made  in  February  2006.

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, 2005, reflect a
net  loss  of  ($6,265,924))  and  negative  cash  flows  from  operations  of
($2,477,774).  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, 2005, we had total liabilities of $4,476,379. 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.

                                       18
<PAGE>

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  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.  For the year ended December
31,  2005  these  "upsell" services accounted for approximately 14% 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.

                                       19
<PAGE>

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  subsidiary  Online  Supplier.  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.

                                       20
<PAGE>

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.

                                       21
<PAGE>

ITEM  7.  FINANCIAL  STATEMENTS.

<TABLE>
                  NEWAVE, INC.
<CAPTION>
<S>                                              <C>
TABLE  OF  CONTENTS                              PAGE

INDEPENDENT  AUDITORS'  REPORT                    F-1


BALANCE  SHEETS                                   F-2


STATEMENTS  OF  OPERATIONS                        F-3


STATEMENTS  OF  CASH  FLOWS                       F-4


STATEMENTS  OF  STOCKHOLDERS'  EQUITY  (DEFICIT)  F-5-F-7


NOTES  TO  FINANCIAL  STATEMENTS                 F-8-F-18
</TABLE>


JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
9175 Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099

Report of Independent Registered Public Accounting Firm

To the Board of Directors
Newave, Inc.

We  have  audited the accompanying consolidated balance sheet of Newave, Inc. as
of December 31, 2005 and the related consolidated statements of operations, cash
flows,  and  changes  in stockholders' equity (deficit) for the year 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  audit  in  accordance  with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we  plan and perform the audits to obtain reasonable assurance about whether the
financial  statements  are  free  of  material  misstatement.  An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  financial  statements.  An  audit  also  includes  assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating  the  overall  financial  statement presentation. We believe that our
audit  provides  a  reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Newave,
Inc.  at December 31, 2005, and the results of its operations and its cash flows
for  the  year  then  ended  in  conformity with accounting principles generally
accepted  in  the  United  States.

The  financial  statements for the year ended December 31, 2004, were audited by
other  accountants,  whose  report  dated  April  11,  2005  on those statements
included  an explanatory paragraph describing conditions that raised substantial
doubt  about  the  Company's  ability  to  continue  as  a  going  concern.

The  accompanying  consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As described in Note 1 to the
financial  statements,  conditions exist which raise substantial doubt about the
Company's  ability  to continue as a going concern. Management's plans in regard
to  these  matters are also discussed in Note 1. The financial statements do not
include  any adjustments that might result from the outcome of this uncertainty.




Jaspers + Hall, PC
February 24, 2006



                                      F-1
<PAGE>

<TABLE>
<CAPTION>

                                  NEWAVE,  INC.
                          CONSOLIDATED BALANCE  SHEETS
              AS  OF  DECEMBER  31,  2005  AND  DECEMBER  31,  2004

<S>                                                   <C>              <C>
                                                             2005             2004
                                                       --------------   --------------
ASSETS:
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . . . .  $       253,856  $       210,361
Accounts Receivable. . . . . . . . . . . . . . . . .          520,081          514,956
Allowance for Doubtful Accounts. . . . . . . . . . .         (265,000)        (215,000)
Other Receivables                                                              724,865
Inventory. . . . . . . . . . . . . . . . . . . . . .            2,590           39,796
Prepaid Expenses . . . . . . . . . . . . . . . . . .          388,587
                                                       --------------   --------------
Total Current Assets . . . . . . . . . . . . . . . .          900,114        1,274,978
                                                       --------------   --------------

FIXED ASSETS:
Equipment. . . . . . . . . . . . . . . . . . . . . .          578,493          213,664
Furniture  & Fixtures. . . . . . . . . . . . . . . .           75,627           74,798
Computers & Software . . . . . . . . . . . . . . . .          240,677          163,138
Leasehold Improvements . . . . . . . . . . . . . . .          103,124           89,922
                                                       --------------   --------------
Total Fixed Assets . . . . . . . . . . . . . . . . .          997,921          541,522
Less: Accumulated Depreciation . . . . . . . . . . .         (292,311)        (119,053)
                                                       --------------   --------------
Net Fixed Assets . . . . . . . . . . . . . . . . . .          705,610          422,469
                                                       --------------   --------------

OTHER ASSETS:
Deposits . . . . . . . . . . . . . . . . . . . . . .           16,392           66,240
                                                       --------------   --------------
Total Other Assets . . . . . . . . . . . . . . . . .           16,392           66,240
                                                       --------------   --------------

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . .  $     1,622,116  $     1,763,687
                                                       ==============   ==============

LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities . . . . . .  $       710,364  $       441,991
Notes Payable                                                                  115,356
Notes Payable - related party .. . . . . . . . . . .          345,998          150,000
Deferred Revenue . . . . . . . . . . . . . . . . . .          336,001           70,563
Convertible Debentures - current                                               434,200
                                                       --------------   --------------
Total current liabilities. . . . . . . . . . . . . .        1,392,363        1,212,110
                                                       --------------   --------------

LONG-TERM DEBT
Convertible Debentures - Long Term . . . . . . . . .        3,084,017          526,803
                                                       --------------   --------------
Total long-term debt . . . . . . . . . . . . . . . .        3,084,017          526,803

SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, 300,000,000 shares authorized
shares at $.001 par value, 39,094,633 shares issued
and outstanding at December 31, 2005 . . . . . . . .           39,096           33,891
Additional paid-in capital . . . . . . . . . . . . .        8,230,224        4,844,385
Shares to be issued. . . . . . . . . . . . . . . . .            1,843            1,473
Shares to be returned. . . . . . . . . . . . . . . .           (1,805)               0
Deferred Compensation. . . . . . . . . . . . . . . .          (71,853)        (199,150)
Subscriptions receivable . . . . . . . . . . . . . .         (189,900)         (59,880)
Accumulated deficit. . . . . . . . . . . . . . . . .      (10,861,869)      (4,595,945)
                                                       --------------   --------------

TOTAL SHAREHOLDERS' EQUITY (DEFICIT) . . . . . . . .       (2,854,264)           24,774
                                                       --------------   --------------

TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT) . . . . . . . . . . . . . . . . . .  $     1,622,116  $     1,763,687
<FN>
                                                       ==============   ==============
See  accompanying  notes  to  financial  statements
</TABLE>

                                      F-2
<PAGE>

<TABLE>
<CAPTION>

                                  NEWAVE,  INC.
                          CONSOLIDATED  Income  statement
             FOR  THE  YEARS  ENDED  DECEMBER  31,  2005  AND  2004




                                                         Years Ended  December, 31
                                                       -------------------------------
<S>                                                    <C>              <C>
                                                             2005            2004
                                                       --------------   --------------
REVENUE:
Membership Revenue . . . . . . . . . . .               $    5,493,609   $    3,172,524
Upsell Revenue . . . . . . . . . . . . .                      991,058        2,247,040
Lead Revenue . . . . . . . . . . . . . .                      415,592        1,149,934
Other Revenue. . . . . . . . . . . . . .                      440,140          243,188
                                                       --------------   --------------

Total Revenue. . . . . . . . . . . . . .                    7,340,399        6,812,686
                                                       --------------   --------------

Cost of Goods Sold . . . . . . . . . . .                    1,744,865        1,033,351
                                                       --------------   --------------

GROSS MARGIN . . . . . . . . . . . . . .                    5,595,534        5,779,335
                                                       --------------   --------------

EXPENSES:
Salaries . . . . . . . . . . . . . . . .                    3,179,427        2,665,935
Advertising. . . . . . . . . . . . . . .                    3,098,204        2,619,831
Directors Fees . . . . . . . . . . . . .                            -        1,548,000
Other Expenses . . . . . . . . . . . . .                    3,953,363        1,960,200

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

Total Operating Expenses . . . . . . . .                   10,230,994        8,793,966

Other Income (Expense)
Interest . . . . . . . . . . . . . . . .                    1,630,464          869,431
                                                       --------------   --------------
Total Other Income (Expense) . . . . . .                    1,630,464          869,431

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

LOSS BEFORE INCOME TAXES . . . . . . . .                   (6,265,924)      (3,884,062)
                                                       --------------   --------------

Provision for income taxes . . . . . . .                            0              800
                                                       --------------   --------------

NET LOSS . . . . . . . . . . . . . . . .                  ($6,265,924)     ($3,884,862)
                                                       ==============   ==============


BASIC AND DILUTED LOSS PER COMMON SHARE.                       ($0.17)          ($0.11)
                                                       ==============   ==============

BASIC AND DILUTED WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING. . .                   36,644,281       33,885,117
                                                       ==============   ==============
<FN>
See  accompanying  notes  to  financial  statements
</TABLE>

                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                                  NEWAVE,  INC.
                        CONSOLIDATED  STATEMENT OF CASH FLOWS
                  For  the  years  ended  December  31,  2005  and  2004:


                                                                                           Years Ended December 31
                                                                                         -------------------------------
                                                                                              2005              2004
<S>                                                                                      <C>              <C>
                                                                                         --------------   --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   ($6,265,924)     ($3,884,862)

Adjustment to reconcile net loss to net cash
(used in) operating activities:
Stock issued for services . . . . . . . . . . . . . . . . . . . . . . . .                       563,647        2,693,975
Depreciation and amortization.. . . . . . . . . . . . . . . . . . . . . .                       804,474        1,030,888
Bad Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        50,000           91,011
Issuance of warrants. . . . . . . . . . . . . . . . . . . . . . . . . . .                       341,238
Debt conversion feature expense . . . . . . . . . . . . . . . . . . . . .                       754,238
Debt inducement expense . . . . . . . . . . . . . . . . . . . . . . . . .                       322,535

Changes in Operating Assets/Liabilities
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .                        (5,125)        (181,223)
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       724,865         (721,059)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        37,206           (2,695)
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      (388,587)          29,144
Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        49,848          (66,392)
Deferred Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       265,438           70,563
Accounts payable and accruals . . . . . . . . . . . . . . . . . . . . . .                       268,373          125,257
                                                                                         --------------   --------------
NET CASH FLOWS USED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . .                    (2,477,774)        (815,393)
                                                                                         --------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets. . . . . . . . . . . . . . . . . . . . . . . . .                      (456,399)        (302,214)

                                                                                         --------------   --------------
NET CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES. . . . . . . . . .                      (456,399)        (302,214)
                                                                                         --------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for acquisition of Utah Clay Technology . . . . . . . . . . . . .                             0         (150,000)
Proceeds from line of credit. . . . . . . . . . . . . . . . . . . . . . .                             0
Payments on Notes payable . . . . . . . . . . . . . . . . . . . . . . . .                      (115,356)
Payment on line of credit . . . . . . . . . . . . . . . . . . . . . . . .                             0          (24,914)
Proceeds from notes payable - related parties . . . . . . . . . . . . . .                     2,786,800          116,585
Conversions and refinancings on notes payable - related parties . . . . .                    (1,099,004)        (272,424)
Proceeds from notes payable & debentures . . . . . . . . . . . . . . . .                                       1,773,000
Payment on long-term debt  . . . . .. . . . . . . . . . . . . . . . . . .                                        (95,279)
Payment to reacquire stock  . . . . . . . . . . . . . . . . . . . . . . .                                        (20,000)
Payments on bank borrowings . . . . . . . . . . . . . . . . . . . . . . .
Issuance of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . .                     1,405,228            1,000
                                                                                         --------------   --------------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES . . . . . . . . . . . . .                     2,977,668        1,327,968
                                                                                         --------------   --------------

NET INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . . . . .                        43,495          210,361
                                                                                         --------------   --------------

CASH AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . .                       210,361                0
                                                                                         --------------   --------------

CASH AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . .                $      253,856   $      210,361
                                                                                         ==============   ==============


SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

Cash paid for interest. . . . . . . . . . . . . . . . . . . . . . . . . .                $       92,636   $       65,042
                                                                                         ==============   ==============
Cash paid for taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .                $          800   $          800
                                                                                         ==============   ==============

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS

Stock issued for services . . . . . . . . . . . . . . . . . . . . . . . .                $      563,647   $    2,693,975
                                                                                         ==============   ==============
<FN>
See  accompanying  notes  to  financial  statements
</TABLE>

                                      F-4
<PAGE>


<TABLE>
<CAPTION>

                                  Newave, Inc.
    Consolidated Condensed Statement of Stockholders' Equity (Deficit) - Common Stock
                 For the years ended December 31, 2005 and 2004

<S>                          <C>        <C>      <C>         <C>     <C>        <C>          <C>          <C>            <C>
                                Common  Stock
                            -------------------                                                                          Total
                                                 Additional  Shares     Shares               Stock Sub                   Stock-
                                          Par     Paid In    To be      To be    Deferred    Receivable   Accumulated    holders'
                              Shares     0.001    Capital    Issued   Returned  Compensation           Deficit      Equity
                            ----------  -------  ----------  -------  ---------  ----------  ----------  ------------  -----------
BALANCE,
December 31, 2003               82,770  $    84  $  144,916        -          -          -           -    $ (605,386)  $ (460,386)
                            ----------  -------  ----------  -------  ---------  ----------  ----------  ------------  -----------
Recapitalization
upon reverse merger
acquisition                  1,716,477    1,722    (155,145)       -                           (59,880)     (105,697)    (319,000)

Issuance of
common stock
for preferred stock         28,254,000   28,254     (28,254)       -                                 -             -

Issuance of
common stock
for consulting
services                     1,290,000    1,290   1,127,310      750              (199,150)          -             -      930,200

Issuance of
common stock
for director's
compensation                 2,250,000    2,250   1,545,750        -                                 -             -    1,548,000

Beneficial
conversion feature
on convertible
debentures                           -        -     655,516                                          -             -      655,516

Conversion
of debentures                  231,870      231     252,505      264                                 -             -      253,000

Issuance of
stock warrants
for debt
inducement                      60,000       60   1,301,787      459                                 -             -    1,302,306

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

BALANCE, December 31, 2004  33,885,117  $33,891  $4,844,385  $ 1,473  $       -  $(199,150)  $ (59,880)  $(4,595,945)  $   24,774
                            ==========  =======  ==========  =======  =========  ==========  ==========  ============  ===========


</TABLE>

                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                                  Newave, Inc.
    Consolidated Condensed Statement of Stockholders' Equity (Deficit) - Common Stock
                 For the years ended December 31, 2005 and 2004

<S>                          <C>        <C>      <C>         <C>     <C>        <C>          <C>          <C>            <C>
                                Common  Stock
                            -------------------                                                                          Total
                                                 Additional  Shares     Shares               Stock Sub                   Stock-
                                          Par     Paid In    To be      To be    Deferred    Receivable   Accumulated    holders'
                              Shares     0.001    Capital    Issued   Returned  Compensation                Deficit      Equity
                            ----------  -------  ----------  -------  ---------  ----------  ----------  ------------  -----------
Issuance of stock
for equity line              1,550,000     1,544     (1,165)              (385)                                    -           (6)

Issuance of stock
for inducement                 808,500       810    322,135     (410)                                                     322,535

Issuance of stock
for cash                       264,000       264          -     (264)                                -             -            0

Beneficial Conversion                -         -    754,238        -                                 -             -      754,238

Exercise of Puts                                  1,348,696                                                        -    1,348,696

Conversion on
convertible debentures          66,516        67     56,472        -                                 -             -       56,539

Stock Issued for Services    1,100,000     1,100    436,000     (750)              127,297           -             -      563,647

Re-issuance of stock as
registered.                  1,420,500     1,420          -        -    (1,420)                                    -            0

Issuance of stock warrants           -         -    341,238        -                                 -             -      341,238

Reduction in stock
subscription receivable,
pre merger                                          (59,880)                                    59,880                          0

Issuance of Stock
Subscription Agreements                             188,105    1,794                          (189,900)                        (1)

Other                                                                                                                           0

Net Loss for Period .                -        -           -        -                                 -    (6,265,924)  (6,265,924)
                            ----------  -------  ----------  -------  ---------  ----------  ----------  ------------  -----------

BALANCE, December 31, 2005
                            39,094,633  $39,096  $8,230,224  $ 1,843  $ (1,805)  $ (71,853)  $(189,900) $(10,861,869) $(2,854,264)
                            ==========  =======  ==========  =======  =========  ==========  ==========  ============  ===========

<FN>

See accompanying notes to financial statements
</TABLE>

                                      F-6
<PAGE>

<TABLE>
<CAPTION>

                                  Newave, Inc.
   Consolidated Condensed Statement of Stockholders' Equity - Preferred Stock
                 For the years ended December 31, 2005 and 2004

<S>                                                                             <C>            <C>

                                                                                       Preferred Stock
                                                                                ---------------------------
                                                                                                    Par
                                                                                   Shares          0.001
                                                                                ------------   ------------
BALANCE,
December 31, 2003                                                                          -              -
                                                                                ------------   ------------
Recapitalization
upon reverse merger
acquisition                                                                              282              -

Issuance of
common stock
for preferred stock                                                                     -282              -

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

BALANCE, December 31, 2004                                                                 0              0
                                                                                ============   ============

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

BALANCE, December 31, 2005
                                                                                $          -   $          -
                                                                                ============   ============
<FN>

See accompanying notes to financial statements
</TABLE>

                                      F-7

<PAGE>

                                  NEWAVE, INC.
                      (Formerly Utah Clay Technology, Inc.
                          Notes to Financial Statements
                                December 31, 2005


NOTE  1  -  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 NeWave, 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
recapitalization  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.

RECLASSIFICATION  OF  COST  OF  SALES  AND  OPERATING  EXPENSES:
----------------------------------------------------------------
In  the  accompanying  condensed  statement  of operations, all of the Company's
operating  expenses  have been classified as cost of sales, advertising expense,
salary  expense,  director  fees,  and  other  operating  expense. This basis of
presentation  is  different  than in prior reports, and all prior period amounts
have  been  changed  to  comply  with  the  current  period  classification.

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.

                                      F-8
<PAGE>

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.

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 $6,265,924 for the year ended December 31,
2005.  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 cash
generated  from operations, and, if necessary and available, private funding and
funding  from  officers  of  the  Company.

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:
-------------------------------------------
Basic  loss per share is computed on the basis on the weighted average of common
shares  outstanding.  For  the  periods  ended  December  31,2005  and  2004 the
Company's common stock equivalents were excluded from the calculation of diluted
loss  per common share because they were anti-dilutive to the Company's net loss
in  the  current  period. At December 31, 2005, there were convertible debts and
warrants  to  purchase common stock which were outstanding and may dilute future
earnings  per  share.  At
December  31,  2005,  the total amount of outstanding convertible debentures was
$4,203,698, which might be converted into 35,030,817 shares of our common stock,
based  on  the  closing  price  of  our  common shares on December 31, 2005.  At
December  31, 2005, there were 4,148,750 warrants outstanding that were eligible
for  conversion  into  shares  of  our  common  stock.


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.

                                      F-9
<PAGE>

REVENUE  RECOGNITION:
---------------------
The Company has six revenue streams: membership fees earned from web hosting and
other web-based services provided to the Company's customers, upsale of services
provided  by  affiliated  service  providers, sales of customer lead information
generated from potential customers who decide not to use the Company's services,
advertising  income, commissions earned from referrals to affiliated credit card
processing service providers and lastly, product sales from the Company's online
store.  The  Company  does not provide multiple deliverables to its customers as
described  in EITF 00-21. Instead, the Company generally uses one revenue stream
to  develop potential revenues from another source, not from the same source. As
such,  the  Company  does  not  anticipate that the adoption of EITF 00-21 has a
material  effect  on  the  financial  statements.

The Company's revenues earned from membership setup fees and monthly charges are
recorded  when  the  credit  card  transaction  is processed and the Company has
received  confirmation  that the credit card processing has been successful. The
Company  does  not  recognize  the  revenues  earned  related to membership fees
charged  to credit cards until the collection of the revenue is assured. This is
due  to  the uncertainty surrounding the credit card transactions. Current terms
of  the onlinesupplier.com membership agreement stipulate that the customer pays
a  nonrefundable  fee  between  $1.85  and  $9.95  fee to set up an account. The
customer  then  has  a fourteen day period to review the Company's 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. The
membership  terms  are agreed to under a negative option and we will continue to
bill  the  customer  on  a  monthly  basis  until they cancel their account. The
Company  initiates the sale of products for its affiliates during the process of
selling  the  Company's  own  products, normally when an individual accesses our
internet  home page or calls the Company's sales or customer service department.
The  Company's  internal system maintains records of each sale of an affiliate's
product.  The affiliate completes the sales process by fulfilling the particular
product.  Payments  are  forwarded  to the Company, plus or minus two percent of
actual  billings,  when  the  affiliate  has  completed the fulfillment of their
product  and  has  approved  the  cross  selling revenue due to the Company. The
Company notes that on a historical basis, its affiliates have generally approved
all  sales  initiated  by  the  Company.  The  Company  recognizes cross selling
revenues once it has reconciled its internal records of cross selling sales with
the  affiliate's records. The Company has several contracts with affiliates. The
terms  of  each  contract are varied but in most cases, a minimum/flat amount of
revenue  is  earned  per  sale  based  on  a  certain  volume  being  reached.

The  Company  generates leads for Applied Merchant as potential customers of the
Company  contact  the Company's customer service department. The Company can not
reasonably  determine  the  actual  incremental  cost incurred in the process of
generating  each  telephone  call from a potential customer. Therefore costs are
expensed  as  incurred.

The  Company  recognizes  income when the products are received by the customer.
The  Company applies the provisions of SEC Staff Accounting Bulletin ("SAB") No.
104,  "Revenue  Recognition  in Financial Statements" which provides guidance on
the recognition, presentation and disclosure of revenue in financial statements.
SAB  No.  104  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.  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, 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.  The  Company accounts for sales
returns  related  to  product sales on an individual basis, as they occur. Sales
returns  related  to  product  sales  have  not  been  significant  in the past.

ADVERTISING  COSTS
------------------

     The  Company  expenses  the  media  costs of advertising the first time the
advertising  takes  place,  except  for  direct-response  advertising  that  is
contracted  with our advertising partners on a cost per customer acquired basis,
which  is capitalized and amortized over its expected period of future benefits.
Direct-response  advertising  consists  primarily  of  on  line advertising that
include  reference codes that are used for purchasing our products and services.
The  capitalized  costs  of  the  advertising are amortized over the three-month
period  following  the  receipt  of a trial order for our products and services.
At  December  31,  2005,  and  December  31,  2004,  capitalized direct-response
advertising  costs of $159,000 and zero, respectively, were included in "Prepaid
Expenses" in the accompanying Balance Sheets. Advertising expense was $3,098,204
in  2005.  Advertising  expense  was  $2,619,831  in  2004.

DISCONTINUED OPERATIONS
In April, 2004, we organized Discount Online Warehouse
as  a  wholly-owned subsidiary to offer heavily discounted products purchased in
bulk  to  consumers.  We  organized our subsidiary, Auction Liquidator, Inc., in
September  2004  and  it  began to generate immaterial revenues in October 2004.
During  2005,  we  decided  to  cease operations at Auction Liquidator, Inc. and
Discount  Online  Warehouse  in  order  to  focus  our  efforts and resources on
Onlinesupplier.com.  Discontinued operations did not have a material effect
on the financial statements.


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>
                                                   2005              2004
                                                   ----              ----
Deferred  tax  assets
     Net  operating  loss carryforwards      $ 13,455,180      $  7,189,256
     Valuation allowance                      (13,455,180)       (7,189,256)
                                             -------------     -------------
     Net  deferred  tax  assets              $         0       $          0
                                             =============     =============
</TABLE>

At  December  31,  2005,  the  Company  had  net operating loss carryforwards of
approximately 13,455,180 for federal income tax purposes. These carryforwards if
not  utilized  to  offset  taxable  income  will  begin  to  expire  in  2025.

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 $6,265,924 for the year ended December 31,
2005.  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 cash
generated  from  operations,  and if necessary, private funding and funding from
the  officers  of  the  Company.

NOTE  4  -  ACCOUNTS  RECEIVABLE

As  of  December  31,  2005,  accounts  receivable,  consists  of the following:

<TABLE>
<CAPTION>

<S>                                 <C>
Accounts  Receivable
     Impact  Legal                  $284,482
     Platinum  Values                 72,256
     Misc.  Receivables              163,343
                                    --------
                                    $520,081
                                    ========
</TABLE>

NOTE  5  -  ACCOUNTS  PAYABLE  &  ACCRUED  EXPENSES

As  of December 31, 2005, accounts payable and accrued expenses, consists of the
following:

<TABLE>
<CAPTION>
<S>                                                     <C>
Accounts  Payable  and  Accrued  Expenses               $616,029
Accrued  Payroll  and  Payroll  Taxes                     14,439
Accrued Interest                                          79,896
                                                       ---------
                                                        $710,364
                                                        ========
</TABLE>

NOTE  6  -  NOTES  PAYABLE  -  RELATED  PARTIES  AND  OTHERS

NOTES  PAYABLE  -  RELATED  PARTIES:
At December 31, 2005, the Company had Notes Payable to two majority shareholders
for  $25,000 each for a total of $50,000. Each note is unsecured, due on demand,
and bears interest at a rate of 6%. See Note 7 for further information regarding
convertible  notes  payable  to  related  parties.

                                      F-10
<PAGE>

NOTE  7  -  CONVERTIBLE  DEBT

CONVERTIBLE  DEBENTURES:
------------------------

On  January  5,  2004,  the  Company  issued  $125,000 worth of 6%, 5-year Term,
Convertible  Debentures  to  a  minority  shareholder.

On  January  15,  2004, we issued convertible debentures of $250,000 to Dutchess
Private Equities Fund LP. The debentures convert on January 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  6%  cumulative interest, payable in cash or
stock at our option, at the time of conversion.   At December 31, 2005, $250,000
was  outstanding  for  this  debenture.

On  January  19,  2004,  we  issued  convertible debentures of $305,000 to eFund
Capital Partners, LLC. The debentures convert on January 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. At December 31, 2005, $305,000
was  outstanding  for  this  debenture.

On  January  25,  2004,  we issued convertible debentures of $50,000 to Dutchess
Private Equities Fund LP. 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.  At December 31, 2005, $44,500
was  outstanding  for  this  debenture.

On  January  25,  2004,  we  issued  convertible debentures of $50,000 to eFund
Capital Partners, LLC. 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.   At December 31, 2005, $50,000
was  outstanding  for  this  debenture.

On March 3, 2004, we issued convertible debentures of $28,000 to Preston Capital
Partners,  LLC.  The  debentures  convert  on  March  3, 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. . At December 31, 2005, $28,000
was  outstanding  for  this  debenture.

On  April  1,  2004,  we  issued  convertible  debentures of $90,000 to 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, payable in cash or
stock  at  our  option, at the time of conversion. The debenture was issued at a
discount  of  $15,000.  On July 9, 2004, we issued a warrant to Dutchess Private
Equities Fund, II, to purchase 225,000 of our common shares at an exercise price
at  $1.42  per  share.   These  warrants were valued at $49,612. At December 31,
2005,  $38,959  was  outstanding  for  this  debenture.

On  April  1, 2004, we issued convertible debentures of $90,000 to eFund Capital
Partners,  LLC.  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, payable in cash or
stock  at  our  option, at the time of conversion. The debenture was issued at a
discount  of  $15,000.  On  July  9,  2004, we issued a warrant to eFund Capital
Partners,  LLC, to purchase 225,000 of our common shares at an exercise price at
$1.42 per share.   These warrants were valued at $49,612.  At December 31, 2005,
$90,000  was  outstanding  for  this  debenture.

                                      F-11
<PAGE>

On  May 5, 2004, we issued convertible debentures of $90,000 to 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.  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  $15,000.  On July 9, 2004, we issued a warrant to Dutchess Private
Equities Fund, II, to purchase 225,000 of our common shares at an exercise price
at  $1.42  per  share.  These  warrants were valued at $65,098.  At December 31,
2005,  $90,000  was  outstanding  for  this  debenture.

On  May  5,  2004,  we issued convertible debentures of $90,000 to eFund Capital
Partners,  LLC.  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.  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  $15,000.  On  July  9,  2004, we issued a warrant to eFund Capital
Partners,  LLC, to purchase 225,000 of our common shares at an exercise price at
$1.42  per share.  These warrants were valued at $65,098.  At December 31, 2005,
$90,000  was  outstanding  for  this  debenture.

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 450,000 of our common shares at an exercise price
at  $1.17  per  share.  These warrants were valued at $127,126.  At December 31,
2005,  $180,000  was  outstanding  for  this  debenture.

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 360,000 of our common shares at an exercise price
at  $1.03  per  share.  These  warrants were valued at $74,843.  At December 31,
2005,  $144,000  was  outstanding  for  this  debenture.

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 150,000 of our common shares at an exercise price at $1.03
per  share.  These  warrants  were  valued  at  $31,185.  At  December 31, 2005,
$60,000  was  outstanding  for  this  debenture.

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 540,000 of our common shares at an exercise
price  at $1.25 per share.  These warrants were valued at $140,130.  At December
31,  2005,  $222,000  was  outstanding  for  this  debenture.

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 150,000 of our common shares at an exercise price at $1.25
per  share.   These  warrants  were  valued  at  $37,873.  At December 31, 2005,
$60,000  was  outstanding  for  this  debenture.

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  150,000  of our common shares at an
exercise  price  at $1.53 per share.  These warrants were valued at $37,840.  At
December  31,  2005,  $60,000  was  outstanding  for  this  debenture.

                                      F-12
<PAGE>

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  480,000  of our common shares at an
exercise  price at $1.25 per share.  These warrants were valued at $168,254.  At
December  31,  2005,  $162,000  was  outstanding  for  this  debenture.

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  720,000  of our common shares at an
exercise price at $1.25 per share.   These warrants were valued at $200,010.  At
December  31,  2005,  $240,000  was  outstanding  for  this  debenture.

The  Debentures  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  the  Debentures  are  secured  by  shares pledged as
collateral  pursuant  to the terms of a Security Agreement. These Debentures are
full  recourse  loans being made by the Holder and the Company is liable for any
deficiency.

A  conversion  into  common stock of $5,500 against the principle balance of the
convertible  debenture  dated  January  15,  2004 was made during the year ended
December  31,  2005.

A  conversion  into common stock of $51,041 against the principle balance of the
convertible  debenture  dated  April  1,  2004  was  made  during the year ended
December  31,  2005.

Effective  November  1,  2005,  the Company entered into a Convertible Debenture
agreement  with  a  majority shareholder to issue $180,000 worth of non-interest
bearing,  5-year  Term,  Convertible  Debentures  at a discount of $178,200. The
debentures  are convertible into shares of the Company's common stock at a price
equal  to  the  lesser  of; (i) seventy-five percent (75%) of the average of the
closing bid price of the stock for the five days prior to conversion or (ii) the
average  of  the closing bid price of the stock on the five (5) days immediately
preceding the date of the of debenture agreement. At December 31, 2005, $180,000
was  outstanding  for  this  debenture.

Effective  December  18,  2005, the Company entered into a Convertible Debenture
Exchange  Agreement with majority shareholders to exchange the unpaid balance of
promissory  notes  issued  in  2005  worth  $1,784,239  into  10%,  4-year term,
Convertible  Debentures.  The  debentures  are  convertible at the lesser of (i)
seventy-five percent (75%) of the average of the lowest closing bid price during
fifteen  (15)  immediately  preceding  the  conversion date or  (ii) 100% of the
average  of  the  closing  bid  price  of  the  stock  for  the twenty (20) days
immediately  preceding the closing date of the debenture agreement.  At December
31,  2005,  $1,784,239  was  outstanding  for  this  debenture.

Amortization  of  the debt discount on all convertible debentures outstanding as
of  December  31,  2005  amounted  to  $268,516  and $84,684 for the years ended
December  31,  2005  and  2004,  and  is  included  in  interest  expense on the
consolidated  condensed statement of operations.   Beneficial conversion feature
expense  relating  to  the  convertible debentures issued during the years ended
December  31,  2005 and December 31, 2004 amounted to $0 and $574,000 during the
years  ended  December  31, 2005 and 2004 and is included in interest expense on
the  consolidated  condensed  statement  of  operations.

                                      F-13
<PAGE>

As  of  December  31,  2005,  Convertible  Debentures  of  remained
-------------------------------------------------------------------
outstanding  and  are  comprised  of  the  following  components:
-----------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                       <C>
Convertible  Debentures
     Convertible  debentures  issued  at  face  value     $4,203,698
     Unamortized  debt  discounts                           (349,612)
     Unamortized  warrants  to  purchase  common  stock     (770,069)
                                                          -----------
                                                          $3,084,017
                                                          ===========
</TABLE>

CONVERTIBLE  PROMISSORY  NOTES:
-------------------------------
On February 11, 2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $360,000,  at a discount of $60,000. The Note had a 0% interest
rate  and  was  repaid  on  May  20,  2005.

On  April  18,  2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $132,000,  at a discount of $22.000. The Note had a 0% interest
rate  and  was  repaid  on  August  5,  2005.

On  April 18, 2005, we issued a Note to eFund Capital Partners, in the amount of
$132,000,  at  a  discount  of  $22,000. The Note had a 0% interest rate and was
repaid  on  August  18,  2005.


On  May 20, 2005, we issued a Note to Dutchess Private Equities Fund, II, in the
amount  of  $402,750,  at a discount of $52,750. The Note had a 0% interest rate
and  $112,500  was  repaid prior to December 18, 2005.  The remaining amount was
exchanged  into  a  four  year,  convertible  debenture  bearing interest of 10%
effective  December  18,  2005.

On  June 2, 2005, we issued a Note to Dutchess Private Equities Fund, II, in the
amount  of  $540,000,  at a discount of $80,000. The Note had a 0% interest rate
and  was  exchanged  into a four year, convertible debenture bearing interest of
10%  effective  December  18,  2005.

On July 22, 2005, we issued a Note to Dutchess Private Equities Fund, II, in the
amount  of  $258,000,  at a discount of $33,000. The Note had a 0% interest rate
and  was  exchanged  into a four year, convertible debenture bearing interest of
10%  effective  December  18,  2005.

On  August  4,  2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $162,000,  at a discount of $17,000. The Note had a 0% interest
rate  and  was  exchanged  into  a  four  year,  convertible  debenture  bearing
interest  of  10%  effective  December  18,  2005.

On  August  17, 2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $247,200,  at a discount of $41,200. The Note had a 0% interest
rate and  was exchanged into a four year, convertible debenture bearing interest
of  10%  effective  December  18,  2005.

On  August  18,  2005, we issued notes to eFund, in the amount of $221,000, at a
total  discount  of  $37,000.  The  notes had a 0% interest rate and $18,211 was
repaid  prior  to  December  18,  2005.  The  remaining  outstanding  amount was
exchanged  into  a  four  year,  convertible  debenture  bearing interest of 10%
effective  December  18,  2005.

On August 18, 2005, we issued a Note to a majority shareholder, in the amount of
$84,000,  at  a total discount of $14,000.  The notes had a 0% interest rate and
were  exchanged  into a four year, convertible debenture bearing interest of 10%
effective  December  18,  2005.

On September 16, 2005, we issued a Note to Dutchess Private Equities Fund, L.P.,
in  the amount of $192,000, at a discount of $32,000. The Note has a 0% interest
rate  and  $162,752  was  repaid  during  2005,  and  the  remaining $29,248 was
outstanding  at December 31, 2005.  This amount was due and payable on March 15,
2006,  and  was  repaid  on  March  1,  2006.

On  September  30, 2005, we issued a Note to Dutchess Private Equities Fund, LP,
in  the amount of $276,000, at a discount of $46,000. The Note has a 0% interest
rate  and  is  due  and  payable on March 30, 2006.  On March 1, 2006, we repaid
$210,000  of  this  note.

On  October 11, 2005, we issued a Note to Dutchess Private Equities Fund, LP, in
the  amount of $30,000, at a discount of $5,000. The Note has a 0% interest rate
and  is  due  and  payable  on  April  11,  2006.

During  the  year  ended  December  31,  2005, payments were applied against the
following  promissory  notes:

-     $360,000  against  the convertible promissory note dated February 11, 2005
-     $264,000  against  the  convertible  promissory  note dated April 19, 2005
-     $112,500  against  the  convertible  promissory  note  dated  May 20, 2005
-     $162,752  against the convertible promissory note dated September 16, 2005
-     $18,211  against  the  convertible  promissory  note dated August 18, 2005

Effective  December  18,  2005, the Company entered into a Convertible Debenture
Exchange  Agreement with majority shareholders to exchange the unpaid balance of
promissory  notes  issued  in  2005  worth  $1,784,239  into  10%,  4-year term,
Convertible  Debentures.

                                      F-14
<PAGE>

Each  of  the Convertible Promissory Notes shall be paid 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 Promissory Note 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 Promissory Notes are subject to automatic conversion at the maturity date at
which  time  all  Promissory  Notes  outstanding will be automatically converted
based  upon  the  formula  set  forth  in  the  agreement.

Amortization  of  the  debt  discount  on all convertible promissory notes as of
December  31, 2005 amounted to $362,700 for the year ended December 31, 2005 and
is  included  in  interest  expense  on  the consolidated condensed statement of
operations.  Beneficial  conversion  feature expense relating to the convertible
promissory notes issued during year ended December 31, 2005 amounted to $754,238
during  the  year ended December 31, 2005 and is included in interest expense on
the  consolidated  condensed  statement  of  operations.

The principal amounts of these Promissory Notes are secured by shares pledged as
collateral  pursuant  to the terms of a Security Agreement. The Promissory Notes
are  full recourse loans being made by the Holder. The Company is liable for any
deficiency.

As  of  December  31, 2005, Notes Payable - Related Parties of $345,998 remained
outstanding  and  are  comprised  of  the  following  components:

<TABLE>
<CAPTION>
<S>                                                   <C>
Notes Payable - Related Parties
     Promissory notes issued at face value            $  335,248
     Notes payable to majority shareholders               50,000
     Unamortized debt discounts                         ( 39,250)
                                                     -----------
                                                      $  345,998
                                                     ===========
</TABLE>

NOTE  8  -  CAPITAL  STOCK


Preferred  Stock
Effective  September  30,  1996,  the  Company  authorized  10,000,000 shares of
preferred  stock  at par value of $.001. There is no preferred stock outstanding
as  of  December 31,  2005.

COMMON  STOCK

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

The  Company effectuated a 3 for 1 forward stock split on February 18, 2005. All
shares  have  been  stated  to  retroactively  affect  this reverse stock split.


During  the  year  ended December 31, 2005, the following shares of common stock
were  issued  by  the  Company:

-    The Company  issued  1,550,000  shares  of  the  Company's common stock for
     $1,348,696 in connection with the Equity Line Agreement dated September 13,
     2004  with  Preston Capital Partners. As of December 31, 2005, proceeds for
     390,629  shares  not  yet been received by the Company. On January 9, 2006,
     384,871  of  these  shares  were  returned  to the Company. The shares were
     valued  at 75% of the lowest closing bid price in the fifteen days prior to
     execution  of  each  put.

-  The Company issued a total of 808,500 shares of common stock as an inducement
     to  provide  financing,  as  follows:

-    The Company  agreed  to  issue  48,000 shares of the Company's common stock
     valued  at  $29,952  to  majority  shareholders as an inducement to provide
     financing  to  the  Company. The shares were valued at the closing price of
     the  stock  on  the  date  the  inducement was provided, less 25% liquidity
     discount.

-    The Company  issued  351,000  shares  valued  at  $292,583  to  a  majority
     shareholder  as  an  inducement  to  provide  financing to the Company. The
     shares  were  valued  at  the  closing  price  of the stock on the date the
     inducement  was  provided,  less  25%  liquidity  discount.


-    The Company issued 457,500 shares of common stock which were contracted and
     accounted  for  as  a  financing  inducement expense of $221,125 during the
     three  months  ended  March  31,  2004.

-    The  Company  issued  264,000  shares  for  cash  which were contracted and
     accounted for as shares to be issued in 2004.

-    The Company  issued  66,516 shares of common stock to majority shareholders
     upon  the conversion of $56,539 in convertible debentures dated January 25,
     2004 and April 1, 2004. The shares were valued at 75% of the lowest closing
     bid  price  in  the  fifteen  days  prior  to  execution of the conversion.


-    The Company  issued  a  total  of  1,100,000  shares  of  common  stock for
     services, as follows:

-    In June  2005,  The Company issued 750,000 shares of common stock valued at
     $381,250  which  were  contracted and accounted for as advertising expenses
     during  the twelve month period ended March 2, 2005. The shares were valued
     at the closing price of the stock on the date the services were contracted,
     less  25%  liquidity  discount.


-    In June  2005,  The Company issued 350,000 shares of Common Stock valued at
     $436,350  for marketing service to be provided over the twelve month period
     beginning March 3, 2005. The shares were valued at the closing price of the
     stock  on  the  date  the  services  were  contracted,  less  25% liquidity
     discount.

-    The  Company  issued  1,420,500  shares  to  replace  shares issued in 2004
     which  are  expected to be returned to the Company in 2006. Of this amount,
     shares totaling 340,500 were returned to the Company on January 9, 2006.

                                      F-15
<PAGE>

During  the  year  ended  December  31, 2005, the Company issued warrants to its
Chief  Financial Officer to purchase up to 750,000 shares of its common stock at
prices  ranging  from  $.10 per share to $1.12 per share.  During the year ended
December  31,  2005,  the  Company  agreed  to issue warrants to a consultant to
purchase up to 128,750 common shares at a price equal to 33% of the market price
of  the  Company's  common  stock  on  the  date  of  exercise.

During  December  2005,  the  Company entered into stock subscription agreements
with  minority shareholders to purchase 1,726,364 shares of the Company's common
stock  for  an  aggregate  price  of  $189,900.  The  funds were received by the
Company  in  January  2006.

Basic  net earnings (loss) per common share is computed by dividing net earnings
(loss)  applicable  to  common  shareholders  by  the weighted-average number of
common  shares  outstanding  during  the period. Diluted net earnings (loss) per
common  share  is  determined using the weighted-average number of common shares
outstanding  during the period, adjusted for the dilutive effect of common stock
equivalents,  consisting  of shares that might be issued upon exercise of common
stock  warrants  and conversion of convertible debt. In periods where losses are
reported,  the  weighted-average  number  of  common shares outstanding excludes
common  stock  equivalents,  because their inclusion would be anti-dilutive.  At
December  31,  2005,  the total amount of outstanding convertible debentures was
$4,203,698, which might be converted into 35,030,817 shares of our common stock,
based  on  the  closing  price  of  our  common  stock on December 31, 2005.  At
December  31, 2005, there were 4,148,750 warrants outstanding that were eligible
for  conversion  into  shares  of  our  common  stock.

Warrants  Activity  for  the  Period  and  Summary  of  Outstanding  Warrants

During  the  years  ended December 31, 2005, and December 31, 2004, the board of
directors  approved  the  issuance  of  warrants  to  purchase  an  aggregate of
4,898,750 shares of the Company's common stock. Such warrants are exercisable at
prices  ranging from $.10 to $1.53 per share, vest over periods up to 24 months,
and  expire  at  various  times  through  December  2009.

     During  the  years  ended  December  31,  2005,  and  December 31, 2004, no
     warrants  were  exercised.

Included  in  the issuance of warrants to purchase 4,898,750 aggregate shares of
the  Company's  common  stock  is  a warrant to purchase 878,750 shares that was
issued  to  our  Chief  Financial  Officer  and  an independent consultant. Such
issuances  were  accounted  for  under  Financial  Accounting  Standards  Board
Statement  No.  123  using the Black-Scholes option-pricing model (with the same
assumptions  as  those  used for the option), which resulted in the recording of
$341,238 and zero in compensation cost during the years ended December 31, 2005,
and  December  31,  2004,  respectively.

A  summary  of  warrant  activity  for  2005  and  2004  is  as  follows:

<TABLE>
<CAPTION>

<S>                             <C>        <C>         <C>          <C>
                                            Weighted-                 Weighted-
                                Number of    Average                   Average
                                Warrants    Exercise     Warrants     Exercise
                                              Price    Exercisable     Price
Outstanding, December 31, 2003
                                        0           0            0           0
    Granted. . . . . . . . . .  4,020,000  $     1.23    4,020,000  $     1.23
    Exercised. . . . . . . . .          0  $        -
                                ---------  ----------  -----------  ----------
Outstanding, December 31, 2004
                                4,020,000  $     1.23    4,020,000  $     1.23
    Granted. . . . . . . . . .    878,750  $     0.67      128,750  $     0.06
    Exercised. . . . . . . . .          0  $        -            0
                                ---------  ----------  -----------  ----------
Outstanding, December 31, 2005
                                4,898,750  $     1.13    4,148,750  $     1.19
                                =========  ==========  ===========  ==========
</TABLE>

                                      F-16
<PAGE>

At  December 31, 2005, the range of warrant prices for shares under warrants and
the  weighted-average  remaining  contractual  life  is  as  follows:

<TABLE>
<CAPTION>

<S>              <C>                <C>             <C>                <C>                 <C>
                                  Warrants Outstanding                            Warrants Exercisable
                -----------------------------------------------------  ------------------------------------------
                                       Weighted
Range of Warrant                        Average     Average Remaining                              Weighted
Exercise Price  Number of Warrants  Exercise Price  Contractual Life   Number of Warrants  Average Exercise Price
--------------  ------------------  --------------  -----------------  ------------------  ----------------------
..06-1.53             4,898,750          $1.13             3.6               4,148,750             $ 1.19
==============  ==================  ==============  =================  ==================  ======================
</TABLE>

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 mandatory 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.

                                      F-17
<PAGE>

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.

In  March  2005,  the  FASB  issued  FASB Interpretation No. 47, "Accounting for
Conditional  Asset  Retirement Obligations" ("FIN 47"). FIN 47 provides guidance
relating  to the identification of and financial reporting for legal obligations
to perform an asset retirement activity. The Interpretation requires recognition
of  a  liability for the fair value of a conditional asset retirement obligation
when  incurred if the liability's fair value can be reasonably estimated. FIN 47
also  defines  when  an  entity  would have sufficient information to reasonably
estimate  the  fair  value  of  an asset retirement obligation. The provision is
effective  no later than the end of fiscal years ending after December 15, 2005.
The  Company  will  adopt FIN 47 beginning the first quarter of fiscal year 2006
and  does  not  believe  the  adoption  will  have  a  material  impact  on  its
consolidated  financial  position  or  results  of  operations  or  cash  flows.

In  May  2005,  the  FASB  issued  SFAS  No.  154, "Accounting Changes and Error
Corrections"  ("SFAS  154")  which replaces Accounting Principles Board Opinions
No.  20  "Accounting  Changes"  and SFAS No. 3, "Reporting Accounting Changes in
Interim  Financial  Statements-An  Amendment  of  APB  Opinion No. 28." SFAS 154
provides  guidance on the accounting for and reporting of accounting changes and
error  corrections.  It  establishes  retrospective  application,  or the latest
practicable  date,  as  the required method for reporting a change in accounting
principle  and  the reporting of a correction of an error. SFAS 154 is effective
for accounting changes and a correction of errors made in fiscal years beginning
after  December  15,  2005  and  is required to be adopted by the Company in the
first  quarter  of 2006. The Company is currently evaluating the effect that the
adoption  of  SFAS  154  will  have  on  its results of operations and financial
condition  but  does  not  expect  it  to  have  a  material  impact.

In  June  2005,  the Emerging Issues Task Force, or EITF, reached a consensus on
Issue  05-6,  Determining  the  Amortization  Period for Leasehold Improvements,
which requires that leasehold improvements acquired in a business combination or
purchased subsequent to the inception of a lease be amortized over the lesser of
the  useful  life  of  the  assets  or  a  term  that includes renewals that are
reasonably  assured  at  the  date of the business combination or purchase. EITF
05-6 is effective for periods beginning after July 1, 2005. We do not expect the
provisions  of  this  consensus  to  have  a  material  impact  on the financial
position,  results  of  operations  or  cash  flows.

NOTE 10 - COMMITMENTS

COMMITMENTS

Minimum  future  rental  payments  under  non-cancelable  operating leases as of
December  31,  2005  for each of the next five years and in the aggregate are as
follows:

<TABLE>
<CAPTION>
<S>    <C>
2006.  $187,704
2007.  $187,704
2008.  $187,704
2009.  $ 62,568
       --------
TOTAL  $625,680
       ========
</TABLE>

In  February 2005, we entered into a software agreement with Discount Solutions,
Inc.  to  purchase  certain  software license rights to software that is used to
provide  web  based  stores to our customers.  We agreed to purchase a perpetual
license for use of the software of $52,500, and to compensate Discount Solutions
$24,000  monthly  for the full service hosting and maintenance of our customers'
web  stores.  Our  Chief  Executive  Officer  is  a  majority  owner of Discount
Solutions.  This  agreement  automatically  renews  monthly  unless  notice  is
provided be either party.  We intend to renegotiate and extend the terms of this
agreement.

                                       F-18
<PAGE>

We entered into a consulting agreement with Barrett Evans, a member of the Board
of  Directors,  effective  November  1,  2005. The term of the agreement was for
twelve  months  at $5,000 per month. We made no payments on the agreement during
the  year  ended  December  31,  2005  and  owe  $10,000  at  December 31, 2005.

We  entered  into  a  consulting  agreement  for  ecommerce  business consulting
services  with  Olive  Tree Holdings, effective January 1, 2006. The term of the
agreement  was  for  12  months  at  $23,667  per  month.

In  March  2005,  we entered into a Consulting Agreement with Luminary Ventures,
Inc.  where in exchange for services, we agreed to pay the consultant the sum of
$15,000  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,  and  our  final  payment  was  made  in  February  2006.

NOTE 11 - RELATED PARTY TRANSACTIONS

On  January  15,  2004, we issued convertible debentures of $250,000 to Dutchess
Private Equities Fund. The debentures convert on January 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 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 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 75,000 shares of our common stock to
Dutchess  Private  Equities  Fund  as an incentive for an
investment.  These  shares  were  valued  at  $38,625.

On  January  25,  2004,  we  issued  convertible  debentures of $50,000 to eFund
Capital  Partners. 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 26, 2004, we contracted to issue 75,000 shares of our common stock to
  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 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 to Dutchess Advisors 4,200,000
shares  of  our common stock for conversion of 42 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.

                                      F-19
<PAGE>

On  February  17, 2004, we issued 300,000 shares of our common stock to Dutchess
Private  Equities  Fund  for  conversion  of  3  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  6,000,000  shares  of our common stock to a beneficial owner,
eFund  Capital  Partners  for  conversion  of  60 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 7,665,000 shares of our common stock to our
Chief Executive Officer, Michael Hill for conversion of 76.65 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  January  19,  2004,  we  issued  convertible  debentures  of  $305,000  to
eFund  Capital  Partners  for $155,000 advanced in 2003, and
$155,000  advanced  in  2004.  The  debentures  convert on January 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 457,500 shares of our common stock
to 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 , 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  30,000  shares  of  our  common stock to each
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 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  225,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.42  per  share.

On  April  1, 2004, we issued convertible debentures of $90,000 to 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  1,  2004,  we issued a warrant to eFund Capital Partners, to purchase
225,000  of our common shares as an incentive for an investment. The warrant has
an  exercise  price  of  $1.42  per  share

On  May  5,  2004,  we issued convertible debentures of $90,000 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  225,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.42  per  share.

                                     F-20
<PAGE>

On  May  5,  2004,  we  issued  convertible  debentures of $90,000 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
225,000  of our common shares as an incentive for an investment. The warrant has
an  exercise  price  of  $1.42  per  share.

On  July 9, 2004, we issued convertible debentures of $180,000, 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  450,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.17  per  share.

On  August  15,  2004,  we  issued  convertible  debentures of $144,000 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 360,000 of our common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.03  per  share.

On  August 15, 2004, we issued convertible debentures of $60,000 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
150,000  of our common shares as an incentive for an investment. The warrant has
an  exercise  price  of  $1.03  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  540,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.25  per  share.

On  September  25,  2004,  we  issued convertible debentures of $60,000 to 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  150,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.25  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 150,000 of our common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.53  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 480,000 of our common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.25  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 720,000 of our common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.25  per  share.

                                       F-21
<PAGE>

On February 11, 2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $360,000,  at a discount of $60,000. The Note has a 0% interest
rate.  During  the  year  ended December 31, 2005, this Note was repaid, and the
balance  at December 31, 2005 was zero. We issued 37,500 shares to the Holder as
an  inducement  to  provide  financing.   The shares were valued at $40,219.

In  February 2005, we entered into a software agreement with Discount Solutions,
Inc.  to  purchase  certain  software license rights to software that is used to
provide  web  based  stores to our customers.  We agreed to purchase a perpetual
license for use of the software of $52,500, and to compensate Discount Solutions
$24,000  monthly  for the full service hosting and maintenance of our customers'
web  stores.  Our  Chief  Executive  Officer  is  a  majority  owner of Discount
Solutions. This agreement automatically renews monthly unless notice is provided
be  either  party.  We  intend  to  renegotiate  and  extend  the  terms of this
agreement.

On  April  18,  2005,  the  Company  issued  $132,000  of  non-interest  bearing
Convertible  Promissory  Notes, due August 18, 2005 at a discount of $44,000, to
eFund  Capital  Partners,  LLC  and  Dutchess Private Equities Fund, II, LP. The
Notes  have  a  0%  interest rate. During the year ended December 31, 2005, this
Note was repaid, and the balance at December 31, 2005 was zero. We issued 13,750
shares  to  eFund Capital Partners and Dutchess Private Equities Fund, II, LP as
an  inducement  to  provide  financing.  The  shares  were  valued  at  $31,968.

On  May 20, 2005, the Company issued a $402,750 non-interest bearing Convertible
Promissory  Note,  due  December  20, 2005 at a discount of $52,750, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31, 2005, $112,500 of this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 40,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $46,500.

On  June 2, 2005, the Company issued a $540,000 non-interest bearing Convertible
Promissory  Note,  due  December  20, 2005 at a discount of $80,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 54,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $50,700.

On July 22, 2005, the Company issued a $258,000 non-interest bearing Convertible
Promissory  Note,  due  December  22, 2005 at a discount of $33,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 10,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $8,925.

We  awarded  seven  hundred  and  fifty thousand warrants to our Chief Financial
Officer  upon his hiring during July 2005. Five hundred thousand of the warrants
vest  one  year  after his date of hire, and two hundred fifty thousand vest two
years  after  his date of hire. Five hundred thousand of the warrants are priced
at $1.12 per share, and two hundred fifty thousand are priced at $.10 per share.

On  August  4,  2005,  the  Company  issued  a  $162,000  non-interest  bearing
Convertible  Promissory  Note,  due January 4, 2006 at a discount of $17,000, to
Dutchess  Private Equities Fund, II, LP. The Note has a 0% interest rate. During
the  year ended December 31, 2005, none of this Note was repaid, and the balance
was  exchanged  into  a  Convertible  Debenture effective December 18, 2005. The
balance  at  December  31,  2005  was  zero. We issued 25,000 shares to Dutchess
Private  Equities Fund, II, LP as an inducement to provide financing. The shares
were  valued  at  $15,937.

On  August  17,  2005,  the  Company  issued  a  $247,200  non-interest  bearing
Convertible  Promissory  Note, due January 17, 2006 at a discount of $40,200, to
Dutchess  Private Equities Fund, II, LP. The Note has a 0% interest rate. During
the  year ended December 31, 2005, none of this Note was repaid, and the balance
was  exchanged  into  a  Convertible  Debenture effective December 18, 2005. The
balance  at  December  31,  2005  was  zero. We issued 37,000 shares to Dutchess
Private  Equities Fund, II, LP as an inducement to provide financing. The shares
were  valued  at  $24,975.

On  August  18  2005,  the  Company  issued  $221,000  of  non-interest  bearing
Convertible Promissory Notes, due December 18, 2005 at a discount of $37,000, to
eFund  Capital  Partners. The Note has a 0% interest rate. During the year ended
December  31,  2005,  $18,211  of  this  Note  was  repaid,  and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at December 31, 2005 was zero. We issued 30,000 shares to eFund Capital Partners
as  an  inducement  to  provide  financing.  The  shares were valued at $19,125.

On  August  18  2005,  the  Company  issued  $84,000  of  non-interest  bearing
Convertible Promissory Notes, due December 18, 2005 at a discount of $14,000, to
Barrett  Evans.  The Note has a 0% interest rate. During the year ended December
31,  2005,  none  of  this Note was repaid, and the balance was exchanged into a
Convertible  Debenture  effective December 18, 2005. The balance at December 31,
2005  was  zero.  We  issued  10,000 shares to Barrett Evans as an inducement to
provide  financing.  The  shares  were  valued  at  $6,375.

On  September  16,  2005,  the  Company  issued  a $192,000 non-interest bearing
Convertible  Promissory  Note,  due  March 15, 2006 at a discount of $32,000, to
Dutchess  Private Equities Fund, II, LP. The Note has a 0% interest rate. During
the  year  ended  December  31,  2005, $162,752 of this Note was repaid, and the
balance  at  December  31, 2005 was $29,248. We issued 50,000 shares to Dutchess
Private  Equities Fund, II, LP as an inducement to provide financing. The shares
were  valued  at  $31,500.  This  note  was  repaid  in  full  on March 1, 2006.

                                     F-22
<PAGE>

On  September  30,  2005,  the  Company  issued  a $276,000 non-interest bearing
Convertible  Promissory  Note,  due  March 30, 2006 at a discount of $46,000, to
Dutchess  Private Equities Fund, LP. The Note has a 0% interest rate. During the
year  ended  December 31, 2005, none of this Note was repaid, and the balance at
December  31,  2005  was  $276,000.  We issued 70,000 shares to Dutchess Private
Equities  Fund, LP as an inducement to provide financing. The shares were valued
at  $42,000.  We  repaid  $210,000  of  this  note  on  March  1,  2006.

On  October  11,  2005,  the  Company  issued  a  $30,000  non-interest  bearing
Convertible  Promissory  Note,  due  April  11, 2006 at a discount of $5,000, to
Dutchess  Private Equities Fund, LP. The Note has a 0% interest rate. During the
year  ended  December  31,  2005,  none of this Note was repaid, and the balance
December  31,  2005  was  $30,000.  We  issued  8,000 shares to Dutchess Private
Equities  Fund, LP as an inducement to provide financing. The shares were valued
at  $5,000.

We entered into a consulting agreement with Barrett Evans, a member of the Board
of  Directors,  effective  November  1,  2005. The term of the agreement was for
twelve  months  at $5,000 per month. We made no payments on the agreement during
the  year  ended  December  31,  2005  and  owe  $10,000  at  December 31, 2005.

Effective  November  1,  we  agreed  to  issue  a convertible debenture to eFund
Capital  Partners,  in  the  amount  of $180,000, at a discount of $176,200. The
debenture  has  a 10% interest rate and is due and payable November 1, 2009. The
debentures  are  convertible into shares of our common stock at a price equal to
the  lesser of; (i) seventy-five percent of the average of the closing bid price
of  the  stock  for the five days prior to conversion or (ii) the average of the
closing  bid  price of the stock on the five days immediately preceding the date
of  the  of  debenture  agreement.


Effective  December  15,  2005, the Company entered into a Convertible Debenture
Exchange Agreement with Dutchess Private Equities Fund, II, LP_and eFund Capital
Partners to exchange the unpaid balance of promissory notes issued in 2005 worth
$1,784,239  into  10%,  4-year  term, Convertible Debentures. The debentures are
convertible  at  the  lesser  of  (i) seventy-five percent of the average of the
lowest  closing  bid  price  during fifteen immediately preceding the conversion
date  or  (ii) 100% of the average of the closing bid price of the stock for the
twenty  days  immediately preceding the closing date of the debenture agreement.

The  Convertible  Promissory  Notes shall be paid 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 Promissory Note 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 Promissory Notes are subject to automatic conversion at the maturity date at
which  time  all  Promissory  Notes  outstanding will be automatically converted
based  upon  the  formula  set  forth  in  the  agreement.


NOTE  12  -  SUBSEQUENT  EVENTS

In  January  2006,  the Company received funds totaling $189,900 as payment for
stock  subscription  agreements  entered into during December 2005.  The Company
also  received  725,371  common shares from two shareholders.  See footnote 8 to
these  financial  statements  for  further  information.

In  January  2006,  the  Company  issued  convertible  promissory notes totaling
$68,000  to unrelated parties. The promissory notes are due and payable one year
from  date  of  issuance.  The  notes  bear  interest  at  20%  per annum or are
convertible into shares of our common stock at an amount equal to a 30% discount
to the market value of the stock on the day of conversion, or at $.10 per share,
whichever  results  in  the greatest value to the Holder. We are also obliged to
issue  a  warrant  to  purchase  common  stock to the Holders at a rate of 1,000
shares  per  $1,000  loaned  to the Company, at a price no less than $.50 and no
more  than  $0.75.

                                      F-23

<PAGE>


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 are
effective to ensure that information we are required to disclose in reports that
we  file  or  submit  under the Securities Exchange Act of 1934 (i) is recorded,
processed,  summarized  and  reported  within  the  time  periods  specified  in
Securities  and Exchange Commission rules and forms, and (ii) is accumulated and
communicated  to our management, including our Chief Executive Officer and Chief
Financial  Officer, as appropriate, to allow timely decisions regarding required
disclosure.  Our  disclosure  controls  and  procedures  are designed to provide
reasonable  assurance  that  such information is accumulated and communicated to
our management. Our disclosure controls and procedures include components of our
internal  control  over  financial  reporting.  Management's  assessment  of the
effectiveness  of our internal control over financial reporting is expressed at
the  level  of  reasonable assurance that the control system, no matter how well
designed  and operated, can provide only reasonable, but not absolute, assurance
that  the  control  system's  objectives  will  be  met.

CHANGES  IN  INTERNAL  CONTROLS

There  was  no  change  in  our  internal  control over financial reporting that
occurred  during  the  fourth  quarter  covered  by  this Annual  Report on Form
10-KSB  that  materially  affected,  or  is  reasonably  likely  to  materially
affect,  our  internal  control  over  financial  reporting.

ITEM  8B.  OTHER  INFORMATION.

None.

                                       38
<PAGE>

                                    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 15, 2006, 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                      29          Chief  Executive  Officer,
                                               Director
Michael  A.  Novielli              41          Chairman  of  the  Board of
                                               Directors
Barrett  Evans                     34          Director
Douglas  H.  Leighton              37          Director
Theodore  Smith                    29          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 was our  Interim
Chief Financial Officer between  January 7, 2003 and July 27, 2005. 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  LP has 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.

                                       39
<PAGE>

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 ,
qualifies  as an "audit committee financial expert" as defined in Item 401(e)(2)
of  Regulation  S-B.

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.  Our  Code  of  Ethics  is  available  upon  request  at  no charge to any
shareholder.

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 2005. 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
                                                                       ------------------------------     -----------------------
                                                                       Un-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) (3) 2005       $211,323    0       $73,000       0                 0                0
                                2004       $156,000    0       $20,000     $309,450            0                0
                                2003       $ 10,000    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.

(2)  Mr. Hill  orally  agreed  to be paid $156,000 per annum beginning in August
     2003.  Effective  April  1, 2005, Mr. Hill's annual salary was increased to
     $260,000.

(3)  Mr. Hill  has elected to defer $19,677 of his 2005 salary to 2006. Mr. Hill
     deferred  payments until 2004 and 2005 until we were adequately capitalized
     to  pay  for  his  services.  The  amounts  included  in  the "Other Annual
     Compensation"  column  represent payments made for salary deferred in prior
     years.
</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  agreed to accept
$260,000  per  annum  as  compensation  for  his  services.

DIRECTOR  COMPENSATION

We  do not have a formal plan to compensate our Directors. On February 13, 2004,
we  issued  450,000  registered  shares of our common stock to each director for
services  for  a  total  of  2,250,000 shares. Our Directors did not receive any
compensation  for  their  services  in  2005.

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, 2005, 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, 2005
was  39,094,633  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, 2005, plus shares of common stock subject to options
held  by  such  person  on  December  31,  2005  and  exercisable within 60 days
thereafter.

                                       40
<PAGE>

<TABLE>
<CAPTION>

<S>                                                                <C>        <C>          <C>       <C>       <C>        <C>
                                                                             COMMON SHARES
                                                                              BENEFICIALLY CONVERSION
NAME AND TITLE OF BENEFICIAL OWNER. . . . . . . . . . . . . . . .    OWNED       OWNED      RIGHTS    WARRANTS   TOTAL    PERCENTAGE
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
Michael Hill(a)  30 S. Lapatera Lane, Suite 7, Goleta, CA 93117    8,040,000            0          0        0   8,040,000     20.57%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
Barrett Evans(b)  301 East Ocean Blvd., Long Beach, CA 90802. . .       6777    9,501,250  9,302,408  750,000  19,560,435     33.35%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
Michael A. Novielli(c) 1110 Rt. 55, Suite 206, LaGrangeville,   .    300,000    3,937,250 24,453,408 3,150,000 31,840,658     45.08%
NY 12540
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
Douglas Leighton(d) 50 Commonwealth Ave, Suite 2, Boston, MA 02116.  300,000    3,937,250 24,453,408 3,150,000 31,840,658     45.08%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
Theodore J. Smith(e) 50 Commonwealth Ave, Suite 2, Boston, MA 02116  303,990            0          0         0    303,990      0.78%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
Dutchess Private Equities, LP (f), 50 Commonwealth Ave,
Suite 2, Boston, MA 02116 . . . . . . . . . . . . . . . . . . . .    157,500            0  6,350,000 1,260,000  7,767,500     16.63%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
Dutchess Private Equities, II, LP (g), 50 Commonwealth Ave,
Suite 2, Boston, MA 02116 . . . . . . . . . . . . . . . . . . . .    179,750            0 18,103,408 1,890,000 20,173,158     34.14%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
Dutchess Advisors, LLC (h), 50 Commonwealth Ave,
Suite 2, Boston, MA 02116. . . . . . . . . . . . . . . . . . . . . 3,600,000            0          0         0  3,600,000      9.21%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
eFund Capital Partners, LLC (i) 301 East Ocean Blvd. Suite 640,
Long Beach, CA 90802. . . . . . . . . . . . . . . . . . . . . . .  6,501,250            0  8,302,408   450,000 15,253,658     31.88%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
eFund Small-Cap Fund, LP (j) 301 East Ocean, Suite 640, Long
Beach, CA 90802 . . . . . . . . . . . . . . . . . . . . . . . . .  3,000,000            0  1,000,000   300,000  4,300,000     10.64%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
Aaron Gravitz (k), 327 Woodley Court, Santa Barbara, CA 93105 . .                                    2,753,571  2,753,571      7.04%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
All directors and current executive officers as a
group (5 Persons) . . . . . . . . . . . . . . . . . . . . . . . .  8,040,000   13,438,500 33,755,817 3,900,000 59,134,317     77.45%
-----------------------------------------------------------------  --------- ------------ ---------- --------- ---------- ----------
<FN>
a)  Mr.  Hill  owns  8,040,000  shares  of  common  stock.

(b) Mr. Evans has sole voting and dipostive power to 6,777 shares issued to him.
Mr.  Evans may acquire 750,000 shares of common stock within 60 days through the
exercise  of  warrants.  He  may  also  acquire 9,302,408 shares of common stock
within  60  days through the conversion of debentures. In addition, Mr. Evans is
the managing member of eFund Capital Partners, LLC and eFund Small-Cap Fund, LP.
The  securities  owned  by those entities are attributable to Mr. Evans, and are
listed  below  in  note  (i)  and  note  (j).

(c)  Mr.  Novielli has sole voting and dipositive power to 300,000 shares issued
to him. Mr. Novielli may acquire 3,150,000 shares of common stock within 60 days
through  the  exercise  of  warrants.  He  may also acquire 24,453,408 shares of
common  stock  within 60 days through the conversion of debentures. In addition,
Mr. Novielli is a managing member of Dutchess Capital Management, LLC which acts
as  general  partner  to  Dutchess  Private  Equities Fund, LP, Dutchess Private
Equities  Fund II, LP, and Dutchess Advisors, LLC. The securities owned by those
entities  are  attributable  to  Mr. Novielli, and are listed below in note (f),
note  (g)  and  note  (h).

(d)  Mr.  Leighton has sole voting and dipositive power to 300,000 shares issued
to  him  .  Mr.  Leighton may acquire 3,150,000 shares of common stock within 60
days  through the exercise of warrants. He may also acquire 24,453,408 shares of
common  stock  within 60 days through the conversion of debentures. In addition,
Mr.  Leighton  is a managing member of Dutchess Capital Management which acts as
general  partner to Dutchess Private Equities Fund LP, Dutchess Private Equities
Fund  II, LP, and Dutchess Advisors, LLC. The securities owned by those entities
are attributable to Mr. Novielli, and are listed below in note (f), note (g) and
note  (h).


(e)  Our  director,  Theodore Smith, is the Executive Vice President of Dutchess
Advisors, LLC. Mr. Smith has sole voting and dispositive power to 303,990 shares
issued  to  him.

(f)  Dutchess  Private  Equities  Fund,  LP owns 157,500 shares of common stock.
Dutchess  Private  Equities  Fund, LP also may acquire up to 1,260,000 shares of
common  stock  within  60  days  through  the exercise of warrants. In addition,
Dutchess  Private Equities Fund, LP may acquire 6,350,000 shares of common stock
within  60  days  through  the  conversion  of  debentures. Mr. Leighton and Mr.
Novielli  are managing members of Dutchess Capital Management, LLC which acts as
general  partner  to Dutchess Private Equities Fund, LP and have sole voting and
dispositive  power  over the shares owned by Dutchess Private Equities Fund, LP.

(g)  Dutchess  Private Equities Fund II, LP owns 179,750 shares of common stock.
Dutchess Private Equities Fund II, LP also may acquire up to 1,890,000 shares of
common  stock  within  60  days  through  the exercise of warrants. In addition,
Dutchess  Private  Equities  Fund II, LP may acquire 18,103,408 shares of common
stock  within 60 days through the conversion of debentures. Mr. Leighton and Mr.
Novielli  are managing members of Dutchess Capital Management, LLC which acts as
general  partner  to  Dutchess Private Equities Fund II, LP and have sole voting
and  dispositive  power  over the shares owned by Dutchess Private Equities Fund
II,  LP.


(h)  Dutchess  Advisors  LLC  owns  3,600,000  shares  of common stock. Dutchess
Advisors  LLC  is  controlled  by  Mr.  Novielli  and  Mr.  Leighton.

(i)  eFund Capital Partners owns 6,501,250 shares of common stock. eFund Capital
Partners may acquire up to 450,000 shares of common stock within 60 days through
the  exercise  of  warrants.  In  addition,  eFund  Capital Partners may acquire
8,302,408  shares  of  common  stock  within  60  days through the conversion of
debentures.  Barrett Evans is the managing member of eFund Capital Partners, LLC
and has sole voting and dispositive power over the shares owned by eFund Capital
Partners  LLC.

(j)  eFund  Small-Cap  Fund,  LP  owns  3,000,000  shares of common stock. eFund
Small-Cap  Fund  LP  may  acquire up to 300,000 shares of common stock within 60
days  through  the  exercise  of warrants. In addition, eFund Small-Cap Fund may
acquire  1,000,000  shares of common stock within 60 days through the conversion
of  debentures. Barrett Evans is the managing member of eFund Small Cap Fund and
has  sole  voting  and  dispositive  power  over  the  shares  owned  by  eFund.

(k)  Mr.  Gravitz  owns  2,753,521  shares of the company and is our Director of
Media.

The number of shares of common stock issued and outstanding on December 31, 2005
was  39,094,633  shares.

</TABLE>

                                       41
<PAGE>

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.


On  January  15,  2004, we issued convertible debentures of $250,000 to Dutchess
Private Equities Fund. The debentures convert on January 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 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 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 75,000 shares of our common stock to
Dutchess  Private  Equities Fund as an incentive for an investment. These shares
were  valued  at  $38,625.

On  January  25,  2004,  we  issued  convertible  debentures of $50,000 to eFund
Capital  Partners. 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 26, 2004, we contracted to issue 75,000 shares of our common stock to
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 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 to Dutchess Advisors 4,200,000 shares of our
common  stock  for  conversion  of  42  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.

                                       42
<PAGE>

On  February  17, 2004, we issued 300,000 shares of our common stock to Dutchess
Private  Equities  Fund  for  conversion  of  3  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  6,000,000  shares  of our common stock to a beneficial owner,
eFund  Capital  Partners  for  conversion  of  60 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 7,665,000 shares of our common stock to our
Chief Executive Officer, Michael Hill for conversion of 76.65 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  January  19,  2004,  we  issued  convertible debentures of $305,000 to eFund
Capital  Partners  for $155,000 advanced in 2003, and $155,000 advanced in 2004.
The  debentures  convert  on  January 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 457,500 shares of our common stock
to 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 , 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 30,000 shares of our common stock to each 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 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  225,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.42  per  share.

On  April  1, 2004, we issued convertible debentures of $90,000 to 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  1,  2004,  we issued a warrant to eFund Capital Partners, to purchase
225,000  of our common shares as an incentive for an investment. The warrant has
an  exercise  price  of  $1.42  per  share

On  May  5,  2004,  we issued convertible debentures of $90,000 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  225,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.42  per  share.

                                       43
<PAGE>

On  May  5,  2004,  we  issued  convertible  debentures of $90,000 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
225,000  of our common shares as an incentive for an investment. The warrant has
an  exercise  price  of  $1.42  per  share.

On  July 9, 2004, we issued convertible debentures of $180,000, 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  450,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.17  per  share.

On  August  15,  2004,  we  issued  convertible  debentures of $144,000 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 360,000 of our common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.03  per  share.

On  August 15, 2004, we issued convertible debentures of $60,000 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
150,000  of our common shares as an incentive for an investment. The warrant has
an  exercise  price  of  $1.03  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  540,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.25  per  share.

On  September  25,  2004,  we  issued convertible debentures of $60,000 to 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  150,000  of  our  common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.25  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 150,000 of our common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.53  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 480,000 of our common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.25  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 720,000 of our common shares as an incentive for an investment. The
warrant  has  an  exercise  price  of  $1.25  per  share.

                                       44
<PAGE>

On February 11, 2005, we issued a Note to Dutchess Private Equities Fund, II, in
the  amount  of  $360,000,  at a discount of $60,000. The Note has a 0% interest
rate.  During  the  year  ended December 31, 2005, this Note was repaid, and the
balance  at December 31, 2005 was zero. We issued 37,500 shares to the Holder as
an  inducement  to  provide  financing.   The shares were valued at $40,219.

In  February 2005, we entered into a software agreement with Discount Solutions,
Inc.  to  purchase  certain  software license rights to software that is used to
provide  web  based  stores to our customers.  We agreed to purchase a perpetual
license for use of the software of $52,500, and to compensate Discount Solutions
$24,000  monthly  for the full service hosting and maintenance of our customers'
web  stores.  Our  Chief  Executive  Officer  is  a  majority  owner of Discount
Solutions. This agreement automatically renews monthly unless notice is provided
be  either  party.  We  intend  to  renegotiate  and  extend  the  terms of this
agreement.

On  April  18,  2005,  we  issued  $132,000  of non-interest bearing Convertible
Promissory Notes, due August 18, 2005 at a discount of $44,000, to eFund Capital
Partners,  LLC  and  Dutchess Private Equities Fund, II, LP. The Notes have a 0%
interest  rate.  During  the year ended December 31, 2005, this Note was repaid,
and  the balance at December 31, 2005 was zero. We issued 13,750 shares to eFund
Capital  Partners and Dutchess Private Equities Fund, II, LP as an inducement to
provide  financing.  The  shares  were  valued  at  $31,968.

On  May  20,  2005,  we  issued  a  $402,750  non-interest  bearing  Convertible
Promissory  Note,  due  December  20, 2005 at a discount of $52,750, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31, 2005, $112,500 of this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 40,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $46,500.

On  June  2,  2005,  we  issued  a  $540,000  non-interest  bearing  Convertible
Promissory  Note,  due  December  20, 2005 at a discount of $80,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 54,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $50,700.

On  July  22,  2005,  we  issued  a  $258,000  non-interest  bearing Convertible
Promissory  Note,  due  December  22, 2005 at a discount of $33,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 10,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $8,925.

We  awarded seven hundred and fifty warrants to our Chief Financial Officer upon
his hiring during July 2005. Five hundred thousand of the warrants vest one year
after  his date of hire, and two hundred fifty thousand vest two years after his
date  of  hire.  Five  hundred  thousand of the warrants are priced at $1.12 per
share,  and  two  hundred  fifty  thousand  are  priced  at  $.10  per  share.

On  August  4,  2005,  we  issued  a  $162,000  non-interest bearing Convertible
Promissory  Note,  due  January  4,  2006  at a discount of $17,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 25,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $15,937.

On  August  17,  2005,  we  issued  a  $247,200 non-interest bearing Convertible
Promissory  Note,  due  January  17,  2006 at a discount of $40,200, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this Note was repaid, and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at  December  31,  2005  was  zero.  We issued 37,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $24,975.

On  August  18  2005,  we  issued  $221,000  of non-interest bearing Convertible
Promissory  Notes,  due  December  18,  2005  at a discount of $37,000, to eFund
Capital  Partners.  The  Note  has  a  0%  interest  rate. During the year ended
December  31,  2005,  $18,211  of  this  Note  was  repaid,  and the balance was
exchanged  into a Convertible Debenture effective December 18, 2005. The balance
at December 31, 2005 was zero. We issued 30,000 shares to eFund Capital Partners
as  an  inducement  to  provide  financing.  The  shares were valued at $19,125.

On  August  18  2005,  we  issued  $84,000  of  non-interest bearing Convertible
Promissory  Notes,  due  December  18, 2005 at a discount of $14,000, to Barrett
Evans. The Note has a 0% interest rate. During the year ended December 31, 2005,
none  of  this Note was repaid, and the balance was exchanged into a Convertible
Debenture  effective  December  18,  2005.  The balance at December 31, 2005 was
zero.  We  issued  10,000  shares  to  Barrett Evans as an inducement to provide
financing.  The  shares  were  valued  at  $6,375.

On  September  16,  2005,  we issued a $192,000 non-interest bearing Convertible
Promissory  Note,  due  March  15,  2006  at  a discount of $32,000, to Dutchess
Private  Equities Fund, II, LP. The Note has a 0% interest rate. During the year
ended  December  31,  2005, $162,752 of this Note was repaid, and the balance at
December  31,  2005  was  $29,248.  We  issued 50,000 shares to Dutchess Private
Equities  Fund,  II,  LP  as an inducement to provide financing. The shares were
valued  at  $31,500.  This  note  was  repaid  in  full  on  March  1,  2006.

                                       45
<PAGE>

On  September  30,  2005,  we issued a $276,000 non-interest bearing Convertible
Promissory  Note,  due  March  30,  2006  at  a discount of $46,000, to Dutchess
Private  Equities  Fund,  LP.  The  Note has a 0% interest rate. During the year
ended  December  31,  2005,  none  of  this  Note was repaid, and the balance at
December  31,  2005  was  $276,000.  We issued 70,000 shares to Dutchess Private
Equities  Fund, LP as an inducement to provide financing. The shares were valued
at  $42,000.  We  repaid  $210,000  of  this  note  on  March  1,  2006.

On  October  11,  2005,  we  issued  a  $30,000 non-interest bearing Convertible
Promissory Note, due April 11, 2006 at a discount of $5,000, to Dutchess Private
Equities  Fund,  LP.  The  Note  has  a  0% interest rate. During the year ended
December  31,  2005,  none of this Note was repaid, and the balance December 31,
2005  was  $30,000. We issued 8,000 shares to Dutchess Private Equities Fund, LP
as  an  inducement  to  provide  financing.  The  shares  were valued at $5,000.

We entered into a consulting agreement with Barrett Evans, a member of the Board
of  Directors,  effective  November  1,  2005. The term of the agreement was for
twelve  months  at $5,000 per month. We made no payments on the agreement during
the  year  ended  December  31,  2005  and  owe  $10,000  at  December 31, 2005.

Effective  November  1,  we  agreed  to  issue  a convertible debenture to eFund
Capital  Partners,  in  the  amount  of $180,000, at a discount of $176,200. The
debenture  has  a 10% interest rate and is due and payable November 1, 2009. The
debentures  are  convertible into shares of our common stock at a price equal to
the  lesser of; (i) seventy-five percent of the average of the closing bid price
of  the  stock  for the five days prior to conversion or (ii) the average of the
closing  bid  price of the stock on the five days immediately preceding the date
of  the  of  debenture  agreement.


Effective  December  15,  2005, we entered into a Convertible Debenture Exchange
Agreement with Dutchess Private Equities Fund, II, LP and eFund Capital Partners
to  exchange  the  unpaid  balance  of  promissory  notes  issued  in 2005 worth
$1,784,239  into  10%,  4-year  term, Convertible Debentures. The debentures are
convertible  at  the  lesser  of  (i) seventy-five percent of the average of the
lowest  closing  bid  price  during fifteen immediately preceding the conversion
date  or  (ii) 100% of the average of the closing bid price of the stock for the
twenty  days  immediately preceding the closing date of the debenture agreement.




                                       46
<PAGE>

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 (included as Exhibit 4.25 to the  Form 10-K filed
April  15,  2005,  and  incorporated  by  reference).

4.26  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
II,  LP, dated October 25, 2004 (included as Exhibit 4.26 to the Form 10-K filed
April  15,  2005,  and  incorporated  by  reference).

4.27 Debenture Agreement between the Company and Dutchess Private Equities Fund,
II, LP, dated November 11, 2004 (included as Exhibit 4.27 to the Form 10-K filed
April  15,  2005,  and  incorporated  by  reference).

4.28  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
LP,  dated  November  11,  2004 (included as Exhibit 4.28 to the Form 10-K filed
April  15,  2005,  and  incorporated  by  reference).

4.29 Debenture Agreement between the Company and Dutchess Private Equities Fund,
II, LP, dated December 28, 2004 (included as Exhibit 4.29 to the Form 10-K filed
April  15,  2005,  and  incorporated  by  reference).

4.30  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
LP,  dated  December  28,  2004 (included as Exhibit 4.30 to the Form 10-K filed
April  15,  2005,  and  incorporated  by  reference).

4.31 Debenture Agreement between the Company and Dutchess Private Equities Fund,
II,  LP,  dated  December  28, 2004 (included as Exhibit 4.29 to the Form 10-KSB
filed  April  15,  2005,  and  incorporated  herein  by  reference).

4.32  Warrant  Agreement between the Company and Dutchess Private Equities Fund,
LP,  dated  December 28, 2004 (included as Exhibit 4.30 to the Form 10-KSB filed
April  15,  2005,  and  incorporated  herein  by  reference).

4.33 Promissory Note between the Company and Dutchess Private Equities Fund, II,
LP,  dated  February 11, 2005 (included as Exhibit 4.31 to the Form 10-QSB filed
May  23,  2005,  and  incorporated  herein  by  reference).

4.34  Promissory  Note between the Company and eFund Small Cap Fund, L.P., dated
April  8,  2005  (included  as  Exhibit 4.34 to the Form 10-QSB filed August 19,
2005,  and  incorporated  herein  by  reference).

4.35 Promissory Note between the Company and Dutchess Private Equities Fund, II,
LP,  dated  April  12,  2005  (included as Exhibit 4.35 to the Form 10-QSB filed
August  19,  2005,  and  incorporated  herein  by  reference).

4.36 Promissory Note between the Company and Dutchess Private Equities Fund, II,
LP, dated May 20, 2005 (included as Exhibit 4.36 to the Form 10-QSB filed August
19,  2005,  and  incorporated  herein  by  reference).

4.37 Promissory Note between the Company and Dutchess Private Equities Fund, II,
LP, dated June 2, 2005 (included as Exhibit 4.37 to the Form 10-QSB filed August
19,  2005,  and  incorporated  herein  by  reference).

4.38  Receivable  Factoring  Agreement  between the Company and Dutchess Private
Equities  Fund, II, LP, dated June 8, 2005 (included as Exhibit 4.38 to the Form
10-QSB  filed  August  19,  2005,  and  incorporated  herein  by  reference).

4.39 Promissory Note between the Company and Dutchess Private Equities Fund, II,
LP,  dated  July  22,  2005  (included  as Exhibit 4.39 to the Form 10-QSB filed
November  14,  2005,  and  incorporated  herein  by  reference).

4.40 Promissory Note between the Company and Dutchess Private Equities Fund, II,
LP,  dated  August  4,  2005  (included as Exhibit 4.40 to the Form 10-QSB filed
November  14,  2005,  and  incorporated  herein  by  reference)

4.41 Promissory Note between the Company and Dutchess Private Equities Fund, II,
LP,  dated  August  17,  2005 (included as Exhibit 4.41 to the Form 10-QSB filed
November  14,  2005,  and  incorporated  herein  by  reference)

4.42  Promissory Note between the Company and eFund Capital Partners, LLC, dated
August  18, 2005 (included as Exhibit 4.42 to the Form 10-QSB filed November 14,
2005,  and  incorporated  herein  by  reference)

4.43  Promissory  Note  between  the Company and Barrett Evans, dated August 18,
2005  (included  as Exhibit 4.43 to the Form 10-QSB filed November 14, 2005, and
incorporated  herein  by  reference)

4.44  Promissory Note between the Company and eFund Capital Partners, LLC, dated
August  18, 2005 (included as Exhibit 4.44 to the Form 10-QSB filed November 14,
2005,  and  incorporated  herein  by  reference)

4.45  Promissory Note between the Company and eFund Capital Partners, LLC, dated
August  18, 2005 (included as Exhibit 4.45 to the Form 10-QSB filed November 14,
2005,  and  incorporated  herein  by  reference)

4.46  Promissory  Note  between the Company and Dutchess Private Equities Fund,,
LP,  dated September 16, 2005 (included as Exhibit 4.46 to the Form 10-QSB filed
November  14,  2005,  and  incorporated  herein  by  reference)

4.47  Promissory  Note  between  the Company and Dutchess Private Equities Fund,
L.P.,  dated  September  30,  2005  (included as Exhibit 4.47 to the Form 10-QSB
filed  November  14,  2005,  and  incorporated  herein  by  reference)

4.48  Convertible  Debenture Exchange Agreement between the Company and Dutchess
Private  Equities  Fund, II, LP dated December 18, 2005 (included as Exhibit 4.2
to  the Form 8-K filed February 17, 2006, and incorporated herein by reference).

4.49  Convertible  Debenture  Exchange  Agreement  between the Company and eFund
Capital  Partners,  LLC  dated December 18, 2005 (included as Exhibit 4.1 to the
Form  8-K  filed  February  17,  2006,  and  incorporated  herein by reference).

4.50     Promissory Note between the Company and Dutchess Private Equities Fund,
L.P.,  dated  October  11,  2005,  and  filed herewith.

4.51  Stock  Subscription  Agreement  between  the Company and Gary D. Elliston,
dated  December  22,  2005,  and  filed  herewith.

4.52  Stock  Subscription  Agreement  between the Company and Cliff M. Holloway,
dated  December  22,  2005,  and  filed  herewith.

4.53  Stock Subscription Agreement between the Company and John C. Boutwell, Jr,
dated  December  22,  2005,  and  filed  herewith.

4.54  Stock  Subscription Agreement between the Company and Mr. and Mrs. Jack B.
Manning,  dated  December  22,  2005,  and  filed  herewith.

4.55  Stock  Subscription Agreement between the Company and Stephen Moore, dated
December  22,  2005,  and  filed  herewith.

4.56  Stock Subscription Agreement between the Company and Monte L. Roach, dated
December  22,  2005,  and  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).

10.29  Business  Services  Agreement  between the Company and Luminary Ventures,
Inc.,  dated March 3, 2005 (included as Exhibit 10.1 to the Form S-8 filed April
29,  2005,  and  incorporated  herein  by  reference).

10.30  Employment  Offer  Letter between the Company and Paul Daniel, dated June
24,  2005  (included  as Exhibit 10.1 to the Form 8-K filed August 25, 2005, and
incorporated  herein  by  reference).

10.31  Corporate  Consulting  Agreement  between  the  Company and eFund Capital
Partners  LLC  dated  November 1, 2005 (included as Exhibit 10.1 to the Form 8-K
filed  February  17,  2006,  and  incorporated  by  reference  herein).

10.32  Corporate  Consulting  Agreement  between  the Company and Olive Tree LLC
dated  June  28,  2005,  as  amended  on October 25, 2005, October 31, 2005, and
January  4,  2006,  and  filed  herewith.


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  herewith

23.1  Consent of Michael Johnson and Company, LLC Independent Auditors (included
as  Exhibit  23.1  to  the Form 10-KSB filed April 15, 2005, and filed herewith.

23.2 Report of Independent Registered Public Accounting Firm regarding the audit
of  Newave,  Inc.  for  the  year  ended  December 31, 2004, and filed herewith.

23.3 Consent of Jaspers + Hall, PC - Independent Auditors to the Form 10-K filed
March  21,  2006,  and  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.

                                       47
<PAGE>

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 Michael Johnson and Co. were our auditors for the fiscal year ended
December  31, 2004.  Jaspers + Hall, PC were our auditors for the fiscal year
ended  December  31,  2005.

For  their  review of our Quarterly Reports on Form 10-Q, Rose Snyder and Jacobs
billed  us  $7,972.  For  their  2004 year end audit and review of our Quarterly
Reports  on  Form  10-Q  for 2005, Michael Johnson and Co. billed us $20,000. We
have  contracted  Jaspers  +  Hall,  PC  to complete the 2005 year end audit for
$15,000.

The  independent  auditors'  report  included  in  the 10-KSB for the year ended
December  31,  2004  was  incorrectly  attributed to Jaspers Hall & Johnson.  It
should  have  been  attributed  to  Michael  Johnson  &  Co.

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.

                                       48
<PAGE>

                                   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 Goleta,
State  of  California  on  the  21st  day  of  March  2006.

                                  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             March 21, 2006


/s/  Barrett  Evans
Barrett  Evans               Director                             March 21, 2006


/s/  Michael  A.  Novielli
Michael  A. Novielli         Chairman of the Board of Directors   March 21, 2006


/s/  Douglas  Leighton
Douglas  Leighton            Director                             March 21, 2006


/s/  Theodore J. Smith, Jr.
Theodore  J. Smith, Jr.      Director                             March 21, 2006

                                       50
<PAGE>