UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


____________________________________________________





FORM
10-K





(Mark
One)


x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
The Fiscal Year Ended December 31, 2009





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





Commission
File No.  _____________-___________





Muscato
      Group, Inc.(Exact
      name of issuer as specified in its
charter)






Nevada
            
            __-________(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.  Employer
      Identification No.)




2301
      Maitland Center Parkway, Suite 240
                Maitland,
      Florida 32751
              
              32751(Address
      of principal executive offices)
              
              (Zip
      Code)
  Registrant’s
      telephone number, including area code: (407)
      551-1300





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 $0.0001 per share.(Title
      of class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.       
Yes o    No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.    Yes o     No x





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





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference Part III of this Form 10-K or
any amendment to this Form 10-K.   x





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).


Yes o No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer
            o
            
            Accelerated
      filer
            oNon-accelerated
      filer
              (Do
      not check if a smaller reporting company)
            o
            
            Smaller
      reporting company
            x





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





As of the
last business day of the registrant’s most recently completed second fiscal
quarter, there was no public trading market for our common stock.





As of
March 29, 2010, the registrant had 8,127,500 shares issued and outstanding,
respectively.





Documents Incorporated by
Reference:





None.











TABLE
OF CONTENTS





PART
      IITEM
      1.
            BUSINESS
            
            
            1ITEM
      2.
            PROPERTIES
            
            
            4ITEM
      3.
            LEGAL PROCEEDINGS
            
            
            5ITEM
      4.
            SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
            
            
            5PART
      IIITEM
      5.
            MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED
      STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES
            
            
            5ITEM
      6.
            SELECTED FINANCIAL DATA
            
            
            5ITEM
      7.
            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
            
            
            5ITEM
      7A.
            QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET RISK
            
            
            7ITEM
      8.
            FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA
            
            
            7ITEM
      9.
            CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE
            
            
            8ITEM
      9A.
            CONTROLS AND PROCEDURES
            
            
            8PART
      IIIITEM
      10.
            DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
      GOVERNANCE
            
            
            10ITEM
      11.
            EXECUTIVE COMPENSATION
            
            
            12ITEM
      12.
            SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
      AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
            
            
            12ITEM
      13.
            CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
      AND DIRECTOR INDEPENDENCE
            
            
            13ITEM
      14.
            PRINCIPAL ACCOUNTANT FEES AND
      SERVICES
            
            
            13PART
      IVITEM
      15.
            EXHIBITS, FINANCIAL STATEMENT
      SCHEDULES
            
            
            14SIGNATURES
            
            
            
            15


PART
I





ITEM
1.         BUSINESS





On
September 30, 2009, we entered into a share exchange agreement (the “Share
Exchange Agreement”) and consummated a share exchange (the “Share Exchange”)
with M2 Systems Corporation, a Florida corporation, (hereinafter, “M2 Systems”),
and each of the shareholders of M2 Systems (the “M2 Systems
Shareholders”).





Upon the
closing of the Share Exchange on September 30, 2009 (the “Closing”), the M2
Systems Shareholders transferred all of their shares of common stock in M2
Systems to us.  In exchange, we issued to the M2 Systems Shareholders
an aggregate of 6,600,000 shares of our common stock (the “Common Stock”),
$0.0001 par value per share, representing 81.21% of the shares issued and
outstanding immediately after the Closing.  As a result of the Share
Exchange, M2 Systems became our wholly-owned subsidiary.





M2
Systems was formed on April 27, 2002 under the laws of the State of Florida, as
M2 Systems Corporation.  Immediately prior to the Closing, Michael
Muscato and Joseph Adams were the two directors and officers of M2
Systems.





At
Closing, our officers and directors resigned from their
positions.  Michael Muscato was appointed as our Chief Technology
Officer and Director, Joseph Adams was appointed as our Chief Executive Officer
and Director, Randy Oveson was appointed as our Chief Financial Officer, and
Malcolm Kirschenbaum was appointed as a Director.





The Share
Exchange Agreement contained customary terms and conditions for a transaction of
this type, including representations, warranties and covenants, as well as
provisions describing the process of exchanging the consideration and the effect
of the Share Exchange.  In addition, as a condition to Closing,
5,000,000 shares of our Common Stock held by Diane Pyun were placed in escrow to
be canceled within 120 days from Closing.  As of the Closing date, the
Company had 8,127,100 shares of Common Stock outstanding, not including the
5,000,000 shares held in escrow and pending cancellation.





Closing
of the Share Exchange Agreement





As
described in Item 1.01 above, on September 30, 2009, we entered into a Share
Exchange Agreement with M2 Systems and M2 Systems
Shareholders.





At
Closing, pursuant to the terms of the Share Exchange Agreement, the M2 Systems
Shareholders transferred all of their shares of common stock in M2 Systems to us
in exchange for an issuance to them of an aggregate of 6,600,000 newly-issued
shares of our Common Stock (or 81.21% of our Common Stock), resulting in M2
Systems becoming our wholly-owned subsidiary.





Prior to
the Share Exchange, Joseph Adams, our newly appointed CEO and director, and
Michael Muscato, our newly appointed Chief Technology Officer and director,
owned an aggregate of 100 shares or 100% of the issued and outstanding capital
stock of M2 Systems.  Following the Share Exchange, Michael Muscato
and Joseph Adams own an aggregate of 6,600,000 shares or 81.21% of our issued
and outstanding Common Stock.





At this
time, we intend to carry on M2 Systems’ business as our sole line of business
which is a developer and operator of technology for financial and healthcare
companies.





At
Closing, our current officers and directors resigned from their positions and
Michael Muscato was appointed and elected as Chief Technology Officer and
Director, Joseph Adams was appointed and elected as Chief Executive Officer and
Director, Randy Oveson was appointed as Chief Financial Officer and Malcolm
Kirschenbaum was appointed as a Director.  All directors hold office
for one-year terms until the election and qualification of their
successors.  Officers are elected by the board of directors and serve
at the discretion of the board of directors.





The Share
Exchange is being accounted for as a “reverse merger” because the M2 Systems’
Shareholders now own a majority of the outstanding shares of our Common Stock
immediately following the Share Exchange.  M2 Systems is deemed the
acquirer in the reverse merger.  Consequently, the assets and liabilities
and the historical operations that are reflected in the financial statements
prior to the Share Exchange are those of M2 Systems and are recorded at the
historical cost basis of M2 Systems, and the consolidated financial statements
after completion of the Share Exchange include our assets and liabilities and
those of M2 Systems, historical operations of M2 Systems, and our operations
from the Closing of the Share Exchange.





Except as
described in the previous paragraphs, no arrangements or understandings exist
among present or former controlling stockholders with respect to the election of
members of our board of directors and, to our knowledge, no other arrangements
exist that might result in a change of control of the Company. Further, because
of the issuance of the shares of our Common Stock pursuant to the Share
Exchange, a change in control of the Company occurred on the date of
consummation of the Share Exchange. We will continue to be a “smaller reporting
company,” as defined under the Securities Exchange Act of 1934, as amended (the
“Exchange Act” ), following the Share Exchange.





1





The
Registrant was a “shell company” (as such term is defined in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
immediately before the completion of the Share Exchange
Agreement.  Accordingly, pursuant to the requirements of Item
2.01(a)(f) of Form 8-K, set forth below is the information that would be
required if the Company were filing a general form for registration of
securities on Form 10-SB under the Exchange Act, reflecting the Company’s common
stock, which is the only class of its securities subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act upon
consummation of the Share Exchange, with such information reflecting the Company
and its securities upon consummation of the Share Exchange.





Overview
of M2’s Business





General





M2
Systems is a financial and healthcare services technology company. We develop,
operate and license proprietary technology used to enable platform
interoperability and in the initiation and settlement of electronic
payments/transactions. We own all our intellectual property.  M2
Systems is a preferred software vendor to two government backed healthcare
companies and our platform is being used today as a core system in the
processing of millions of Medicare claims.





Our
products are difficult to replicate and compete in fast growing markets and our
IP is patent protected. Given that our fixed costs are largely covered by
established recurring revenue, increases in revenue are expected to generate
high margin incremental operating income.





Products





Software
Licensing





M2
System’s portfolio of software products is focused on delivering real-time
transaction processing capability to targeted vertical applications. Our
products operate on next generation technology and on methods that we have
developed over the course of fifteen years of licensing software to clients in
markets like finance, healthcare and transportation with high-availability,
high-capacity infrastructures.  M2 Systems currently owns, maintains
and develops two software products:




-
            ENGIN  -
      interoperability middleware with healthcare vertical plug-in;
      and




-
            authENGIN
      -  transaction authentication and settlement
      software.





ENGIN -ENGIN is an
interoperability middleware software product that enables communications between
disparate platforms without the engineering burden of various communications
architecture. ENGIN substantially automates interaction between legacy systems
and other hardware and software installations. It is an enterprise class product
that is deployed in numerous large corporations worldwide and in a number of
market verticals including Healthcare (Payor Specific Applications), Financial
(Electronic Benefits Transfer, Credit and Debit card processing, Prepaid Cards,
Automated Settlement), Transportation, Insurance and
Telecommunications.  More than 100 million messages per day pass
through ENGIN installations.





In 2000,
we developed, in close collaboration with a consortium of seven Blue Cross Blue
Shield plans, a HIPAA compliant healthcare plug in for ENGIN. The suite of
healthcare specific tools that came out of this initiative remains the leading
Business Process Automation technology in the global healthcare industry. ENGIN
is the first, and still only, HIPAA certified application to combine trading
partner interoperability, platform integration, date store/data translation and
routing capabilities in one, completely integrated, product suite. As a result
it can be deployed quickly and safely in any hardware/software environment –
qualities ideally suited to the “need-to-change-now” environment that exists in
the US healthcare market today.





M2
Systems offers a 3-tiered messaging broker solution that addresses today’s most
pressing application and data integration challenges without disrupting existing
assets. The solution provides reliable transformation and exchange of real-time
information, delivers industry-leading performance advantages, and allows
business decision makers to easily modify and configure rules with an intuitive
Graphical User Interface (GUI). ENGIN performs message routing, translation and
compounding at the back end – between OLTP systems and the applications that
rely on them. The solution enables rapid data exchange based on user-defined
business rules for inbound and outbound messages. The platform processes 90% of
business rules immediately, so records like payments, claims updates, and order
information are routed accurately and rapidly.





The ENGIN
solution is unique because M2 Systems offers all three middleware components –
message broker, trading partner services and data mart processing. Other vendors
offer one or two of the three, and then partner with other providers to complete
their offerings. No other company has a fully integrated solution with this kind
of end-to-end information integration, however. This is especially important for
the healthcare vertical where comprehensive support from one vendor and tight
system coupling is so important.  ENGIN is also very flexible when
compared to competitive solutions. Other vendors typically recommend rigid,
proprietary solutions that require extensive professional services support. The
result is a solution that is walled off to some degree. With ENGIN, there is no
barrier. The broker resides peacefully between existing systems, databases and
applications. All configurations are GUI-driven, with drag and drop
manipulation, point and click simplicity, and drop-down menus. There is no
coding necessary and no development language to learn.





2





With
ENGIN, enterprises realize a much more cost-effective solution. The integrated
GUI interface puts business analysts and users in charge of linking up rules,
mapping data transformation and establishing business processes. There’s no need
for developers. Non-technical people who understand the data they need to
manipulate can configure the system. The solution offers a very user-friendly
experience, especially when compared to training a business analyst on Java, for
example. Back-end technical support is straight forward, as well. IT staff
familiar with TCP/IP, queue set-up and similar functions require very little
time and effort for implementation and maintenance.





authENGINauthENGINTM
was designed specifically for financial institutions that issue domestic and
international cards and acquire card transactions through merchants at retail
locations, on the web or from ATM's. It is a software product used to acquire,
authenticate, route, switch and authorize electronic transactions across
multiple delivery channels. Our target clients are international banks and
payment processors that prefer to license software instead of investing to
develop their own. Every time a consumer uses a credit or debit card, a number
of systems are involved, including the merchant processor; Visa, MasterCard, or
the ATM; and the card issuer systems. authENGIN essentially provides the
"electronic handshake" that connects these systems to complete the
transaction.





authENGIN
is a secure, flexible and scalable processing system that is easy to implement
with very robust management tools and real time transaction authorization and
settlement functionality.





In
addition to processing millions of Visa, MasterCard, JCB, Discover, STAR and
other network transactions, authENGIN provides:





·
            Credit
      and debit card issuing capability;·
            PIN
      and signature based debit card
processing;





·
            Card
      management and authorization;·
            Card
      production and issuance;





·
            Gateway
      services;·
            Loyalty
      programs;





·
            Bill
      payment; and·
            Loan
      programs.





Features
of authENGIN that differentiate it from competitive alternatives
include:





·
            Ability
      to define transaction processing rules without modifying source
      code·
            Uses
      industry-standard technologies such as C++, Java, and
  XML





·
            Supports
      multiple platforms, allowing institutions to make hardware decisions
      independent of application software·
            Transaction
      storage layer





·
            Comprehensive
      reporting tool·
            BIN
      configuration and cardholder fee
management





·
            Card
      management API·
            Manage
      Cardholders and Cards





·
            Deposit
      and withdraw funds·
            Change
      and set PINs





·
            Obtain
      cardholder statements·
            OFAC
      and the latest in Know Your Customer data
  validation





·
            Secure
      – meets or exceeds Visa and Master Card security
    requirements·
            Uses
      industry standard technologies wherever
possible





Intellectual Property, Patent
Licensing and Operations





M2
Systems owns, maintains and develops patented technologies.


-
            Dynamic
      CVV – patent pending secure card authorization system for card not present
      transactions.


o
            Title:
      Card Verification Value


o
            Applicant:
      Michael Muscato


o
            Registration
      Number: 60,315


o
            Patent
      Pending





DYNAMIC CVV (SAFE)  Our dynamic CVV technology is the security equivalent of
issuing a new credit or debit card to a cardholder for each transaction they
make. Actually issuing new cards constantly is not practical of course. With our
new patent pending Dynamic CVV technology, however, we have made it possible for
cardholders to easily generate and confirm a unique CVV for every card
transaction they undertake. A thief who has stolen a card number will not know
or be able to guess these dynamic codes because they are always changing and are
transaction specific.





3





Competition





SOFTWARE LICENSINGThe
electronic payments market is highly competitive and subject to rapid change.
Generally, our most significant competition comes from in-house information
technology departments of potential customers, as well from ACIWorldwide. Other third party
software transaction engine competitors include eFunds Corporation and S1
Corporation, as well as small, more regionally-focused companies such as
OpenWay, Distra Pty Ltd. and CTL, Ltd.





In the
Healthcare payer market M2 competes with companies like Virtia and to a lesser
extent Trizetto and in the general interoperability / BPM market with Microsoft,
EDS, TIBCO and Mercator. The general interoperability market can be very
competitive which is why M2 tends to focus its development and licensing sales
efforts on vertical plug-in opportunities such as healthcare and financial
services.





Revenue
and Cost Model





We
generate revenue from licensing our products to our customers.  Our
licensing revenue is largely comprised of paid-up fees supported by annual
maintenance fees. We also charge our licensees for support, any and all custom
development and, in some cases, per transaction fees. Our business is comprised
almost entirely of fixed costs (developers). We are like most software
businesses in that once our cost of developing a product is covered incremental
sales revenue for this product drops almost entirely down to the bottom line.
ENGIN and healthENGIN are mature, and consequently, high margin products.
authENGIN is a relatively young application and we are still working to pay back
its development costs.





All of
our licensed products are based on a “right” to use basis and all maintenance
costs are part of the licensed products. They are typically 5 year licenses with
a perpetual renewal unless terminated by mutual consent. Our new license model
for authENGIN will be based on the same strategy, along with a cost per
transaction fee that will based on projected volumes and consumer use. This is
standard practice in the financial community as we target a specific vendor in
this marketplace.





Competitive
Strengths





We are
competitively differentiated on several fronts.





In-house
Programming.  We have a full in-house development team. In
today’s e-commerce environment, many scenarios are constantly encountered that
require immediate resolution. Our staff, including Michael Muscato, has decades
of programming experience, especially relating to processing technology and
systems. We have the ability to both problem solve (fast) and to develop new
products in-house.





We are
currently the named inventor on two new payment technologies and intend to
continue to expand our portfolio of intellectual property.





Highly Scalable
Platform.  Our scalable, efficient operating structure allows
us to expand our operations easily and without significantly increasing our
fixed costs.





Stable and Recurring Revenue
Base.  Our business is characterized by sources of revenue that
are fee orientated. We also have little incremental cost to add transactions to
our network.





Employees





As of
September 25, 2009, we had a total of 42 employees. We believe that our employee
relations are good. Our employees are not subject to any collective bargaining
agreements, and we are not aware of any current efforts to implement such
agreements.





ITEM
1A.      RISK FACTORS





Not
applicable for smaller reporting companies.





ITEM
1B.        UNRESOLVED STAFF
COMMENTS





Not
applicable for smaller reporting companies.





ITEM
2.         DESCRIPTION OF
PROPERTY.





We do not
own any property.  We lease our corporate headquarters located at 2301
Maitland Center Parkway, Maitland, Florida 32751.  We pay a total rent
of $12,722 per month for this location.  We also lease two data
centers.  One data center is located at 348 East Winchester Road,
Murray, Utah and we pay $5,600 per month for rent.  The other data
center is located at 850 Trafalgar Drive, Maitland, Florida 3275 and we pay
$5,331 per month for rent.





4





ITEM
3.         LEGAL
PROCEEDINGS.





To the
best of our knowledge, there are no known or pending litigation proceedings
against us.





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





Pursuant
to the approval of the board of directors (the “Board”) of Color Accents
Holdings, Inc., a Nevada corporation (the “Company”), and the written consent of
at least a majority of the outstanding shares of common stock of the Company,
the Company filed a Certificate of Amendment to the Company’s Articles of
Incorporation (the “Certificate of Amendment”) with the Secretary of State of
the State of Nevada to change the name of the Company from “Color Accents
Holdings, Inc.” to “Muscato Group, Inc.” The Certificate of Amendment became
effective on October 5, 2009.





PART
II





ITEM
5.         MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.





Market
Information





Our
common stock has traded on the OTC Bulletin Board system under the symbol “MGRP”
since December 3, 2009.  To date there has been a very limited trading
market for our Common Stock.





The
market price of our common stock will be subject to significant
fluctuations in response to variations in our quarterly operating results,
general trends in the market, and other factors, over many of which we have
little or no control. In addition, broad market fluctuations, as well as general
economic, business and political conditions, may adversely affect the market for
our common stock, regardless of our actual or projected
performance.





Holders





As of
March 29, 2010, in accordance with our transfer agent records, we had 87 record
holders of our Common Stock.





Dividends





To date,
we have not declared or paid any dividends on our common stock. We currently do
not anticipate paying any cash dividends in the foreseeable future on our common
stock, when issued pursuant to this offering. Although we intend to retain our
earnings, if any, to finance the exploration and growth of our business, our
Board of Directors will have the discretion to declare and pay dividends in the
future.





Payment
of dividends in the future will depend upon our earnings, capital requirements,
and other factors, which our Board of Directors may deem relevant.





Stock
Option Grants





To date,
we have not granted any stock options.





ITEM
6.         SELECTED FINANCIAL
DATA.





Not
applicable.





ITEM
7.         MANAGEMENT’S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATIONS





The
following plan of operation provides information which management believes is
relevant to an assessment and understanding of our results of operations and
financial condition. The discussion should be read along with our financial
statements and notes thereto. This section includes a number of forward-looking
statements that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified by words
like believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events. You should
not place undue certainty on these forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from our
predictions.





Overview





Results
of Operations





For the
period from inception through December 31, 2009, we had 5,311,967 revenue.
Expenses for the period from inception to December 31, 2009 totaled $5,487,343
resulting in a Net gain (loss) of ($238,244).





5





Capital
Resources and Liquidity





As of
December 31, 2009, we had $48,109 in cash.





Recent
Accounting Pronouncements





In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
160, “Non-controlling
Interests in Consolidated Financial Statements – an amendment of ARB No.
51”.  This statement improves the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require; the ownership interests in subsidiaries held by parties
other than the parent and the amount of consolidated net income attributable to
the parent and to the non-controlling interest be clearly identified and
presented on the face of the consolidated statement of income, changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently, when a subsidiary is
deconsolidated, any retained non-controlling equity investment in the former
subsidiary be initially measured at fair value, entities provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners.  SFAS No. 160
affects those entities that have an outstanding non-controlling interest in one
or more subsidiaries or that deconsolidate a subsidiary.  SFAS No. 160
is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Early adoption is prohibited. The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133”
(SFAS 161). This statement is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance, and cash flows. SFAS 161 applies to all
derivative instruments within the scope of SFAS 133, “Accounting for Derivative
Instruments and Hedging Activities” (SFAS 133) as well as related hedged items,
bifurcated derivatives, and non-derivative instruments that are designated and
qualify as hedging instruments. Entities with instruments subject to SFAS 161
must provide more robust qualitative disclosures and expanded quantitative
disclosures. SFAS 161 is effective prospectively for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008,
with early application permitted. We are currently evaluating the disclosure
implications of this statement.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (SFAS 162”).  SFAS 162 identifies the sources
of accounting principles and the framework for selecting principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States.  This statement shall be effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board’s amendments to
AU section 411, The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles.  The Company is currently evaluating
the impact of SFAS 162, but does not expect the adoption of this pronouncement
will have a material impact on its financial position, results of operations or
cash flows.





In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under FASB Statement No. 60, Accounting and Reporting by
Insurance Enterprises. This results in inconsistencies in the recognition and
measurement of claim liabilities. This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. The adoption of FASB 163 is not expected to
have a material impact on the Company’s financial position.





Critical
Accounting Policies and Estimates





Our
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
(“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenues and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use of estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.





Use of Estimates:In preparing financial
statements in conformity with generally accepted accounting principles,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reported period.  Actual results could differ from
those estimates.





6





Revenue
Recognition:Revenue is recognized when persuasive evidence of
an arrangement exists, delivery has occurred, the fee is fixed or determinable
and collectability is assured.  We had no revenue for the twelve
months ended June 30, 2009 and 2007, respectively.





Stock-Based
Compensation:





The
Company accounts for its stock-based compensation under the provisions of SFAS
No.123(R) Accounting for Stock Based Compensation. Under SFAS No. 123(R), the
Company is permitted to record expenses for stock options and other employee
compensation plans based on their fair value at the date of grant. Any such
compensation cost is charged to expense on a straight-line basis over the
periods the options vest. If the options had cashless exercise provisions, the
Company utilizes variable accounting.





Common
stock, stock options and common stock warrants issued to other than employees or
directors are recorded on the basis of their fair value, as required by SFAS No.
123(R), which is measured as of the date required by EITF Issue 96-18, Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services. In accordance with EITF 96-18, the stock
options or common stock warrants are valued using the Black-Scholes model on the
basis of the market price of the underlying common stock on the valuation date,
which for options and warrants related to contracts that have substantial
disincentives to non­performance is the date of the contract, and for all
other contracts is the vesting date. Expense related to the options and warrants
is recognized on a straight-line basis over the shorter of the period over which
services are to be received or the vesting period. Where expense must be
recognized prior to a valuation date, the expense is computed under the
Black-Scholes model on the basis of the market price of the underlying common
stock at the end of the period, and any subsequent changes in the market price
of the underlying common stock up through the valuation date is reflected in the
expense recorded in the subsequent period in which that change
occurs.





In
December 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
148, Accounting for
Stock-Based Compensation-Transition and Disclosure. SFAS No. 148 also
amends the disclosure requirements of SFAS No. 123(R), requiring prominent
disclosure in annual and interim financial statements regarding a company's
method for accounting for stock-based employee compensation and the effect of
the method on reported results.





Off-Balance Sheet
Arrangements





We do not
have any off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).





ITEM
7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.





We are
subject to certain market risks, including changes in interest rates and
currency exchange rates.  We have not undertaken any specific actions to
limit those exposures.





ITEM
8.         FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.




7


REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 
 To the
Board of Directors and Shareholders of
 Muscato
Group, Inc. & Subsidiary
 
 We have
audited the accompanying consolidated balance sheets of Muscato Group Inc. &
Subsidiary as of December 31, 2009 and 2008 and the related consolidated
statements of operations, changes in stockholders' deficit and cash flows for
the years ended December 31, 2009 and 2008.  These consolidated
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements.  An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Muscato Group, Inc. &
Subsidiary  as of December 31, 2009 and 2008 and the results of its
operations and its cash flows for the years ended December 31, 2009 and 2008 in
conformity with accounting principles generally accepted in the United States of
America.
   /s/
JEWETT, SCHWARTZ, WOLFE AND ASSOCIATES
 Hollywood,
Florida
 March 31,
2010
 200 South Park Road, Suite
150  •  Hollywood, Florida
33021  •  Main 954.922.5885  •  Fax
954.922.5957  •www.jsw-cpa.com
 Member - American Institute of Certified Public Accountants •
Florida Institute of Certified Public Accountants
 Private Companies Practice Section of the AICPA • Registered
with the Public Company Accounting Oversight Board of the SEC
 F-1
 MUSCATO
GROUP, INC. & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 CONSOLIDATED
BALANCE SHEETS
  December
      31,
              
              
              December
      31,2009
              
              
              2008(Audited)
              
              
              (Audited)ASSETSCURRENT
      ASSETSCash
              
              $
              48,109
              
              
              $
              101,362Accounts
      receivable, net
              
              
              507,506
              
              
              
              793,467Prepaid
      expenses
              
              
              13,348
              
              
              
              60,681TOTAL
      CURRENT ASSETS
              
              
              568,962
              
              
              
              955,510PROPERTY
      and EQUIPMENT, net
              
              
              116,794
              
              
              
              140,619DEPOSITS
              
              
              21,080
              
              
              
              94,782INTANGIBLE
      ASSETS, net
              
              
              24,999
              
              
              
              50,000TOTAL
      ASSETS
              
              $
              731,835
              
              
              $
              1,240,911LIABILITIES AND SHAREHOLDERS'
      DEFICITCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
              
              $
              377,727
              
              
              $
              168,869Deferred
      revenue
              
              
              771,159
              
              
              
              747,996Loans
      from related parties
              
              
              287,360
              
              
              
              1,247,619Current
      portion of note payable
              
              
              14,967
              
              
              
              13,235Funding
      liability
              
              
              470,641
              
              
              
              -TOTAL
      CURRENT LIABILITIES
              
              
              1,921,854
              
              
              
              2,177,719LONG
      TERM NOTE PAYABLE
              
              
              55,812
              
              
              
              70,779TOTAL
      LIABILITIES
              
              
              1,977,666
              
              
              
              2,248,498COMMITMENTS
      AND CONTINGENCIESSHAREHOLDERS'
      DEFICITCommon
      stock, $.0001 par value, 100,000,000 sharesauthorized,
      8,127,000   and 13,127,000 shares issued
andoutstanding
      as of December 31, 2009 and 2008
              
              
              813
              
              
              
              1,313Additional
      paid in capital
              
              
              86,243
              
              
              
              85,743Retained
      earnings (accumulated deficit)
              
              
              (1,332,887
              )
              
              
              (1,094,643
              )TOTAL
      SHAREHOLDERS' DEFICIT
              
              
              (1,245,831
              )
              
              
              (1,007,587
              )TOTAL
      LIABILITIES AND SHAREHOLDERS' DEFICIT
              
              $
              731,835
              
              
              $
              1,240,911
 
  F-2
 
 MUSCATO
GROUP, INC. & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY) CONSOLIDATED
STATEMENTS  OF OPERATIONS
  Year
      Ended December 31,2009
              
              
              2008CONTRACT
      REVENUES EARNED
              
              $
              5,311,967
              
              
              $
              2,463,339COST
      OF REVENUES EARNED
              
              
              80,765
              
              
              
              -GROSS
      PROFIT
              
              
              5,231,202
              
              
              
              2,463,339OPERATING
      EXPENSESSalaries
      and related expenses
              
              
              3,113,720
              
              
              
              2,233,444Professional
      services
              
              
              119,343
              
              
              
              807,019General
      and administrative expenses
              
              
              1,930,276
              
              
              
              637,014Rent
              
              
              235,714
              
              
              
              175,983Depreciation
      and amortization
              
              
              88,291
              
              
              
              62,292Total
      operating expenses
              
              
              5,487,343
              
              
              
              3,915,752ILOSS
      FROM CONTINUING OPERATIONSBEFORE
      INTEREST INCOME, EXPENSE AND INCOME TAXES
              
              
              (256,141
              )
              
              
              (1,452,413
              )Other
      income
              
              
              -
              
              
              
              2,320,258Interest
      income
              
              
              5,652
              
              
              
              -Interest
      expense
              
              
              (9,656
              )
              
              
              -Income
      Tax expense
              
              
              21,900
              
              
              
              -INCOME
      (LOSS) FROM OPERATIONS
              
              $
              (238,244
              )
              
              $
              867,845BASIC
      AND FULLY DILUTED NET LOSS PER SHARE
              
              $
              (0.02
              )
              
              $
              8,678.45WEIGHTED
      AVERAGE SHARES OUTSTANDING
              
              
              13,127,000
              
              
              
              100
  F-3
 MUSCATO GROUP, INC. & SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' DEFICIT FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
  Common
      Stock, no par valuePar
              
              
              Paid
      in
              
              
              Accumulated
              
              
              Shareholders'Shares
              
              
              Value
              
              
              Capital
              
              
              Deficit
              
              
              DeficitBALANCE
      AT DECEMBER 31, 2007
              
              
              13,127,500
              
              
              $
              1,313
              
              
              $
              85,743
              
              
              $
              (1,746,285
              )
              
              $
              (1,659,229
              )Reclassification
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (216,203
              )
              
              
              (216,203
              )Net
      income
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              867,845
              
              
              
              867,845BALANCE
      AT DECEMBER 31, 2008
              
              
              13,127,500
              
              
              
              1,313
              
              
              $
              85,743
              
              
              $
              (1,094,643
              )
              
              $
              (1,007,587
              )Cancellation
      of shares
              
              
              (5,000,000
              )
              
              
              (500
              )
              
              
              500
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              (219,324
              )
              
              
              (219,324
              )BALANCE
      AT DECEMBER 31, 2009
              
              
              8,127,500
              
              
              $
              813
              
              
              $
              86,243
              
              
              $
              (1,313,967
              )
              
              $
              (1,226,911
              )
 F-4
 MUSCATO GROUP, INC. & SUBSIDIARY
 (f/k/a COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY) CONSOLIDATED STATEMENTS OF CASH FLOWS For
the year ended December 31,
 2009
                
                
                2008Cash
      flows from operating activities:Net
      income (loss)
                
                $
                (238,244
                )
                
                $
                867,845Adjustments
      to reconcile net income (loss) to net cashprovided
      by (used in) operating activities:Depreciation
      and amortization
                
                
                88,289
                
                
                
                62,292Allowance
      for doubtful accounts
                
                
                -
                
                
                
                69,000Net
      adjustment debt forgiveness
                
                
                -
                
                
                
                (2,368,432
                )Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                285,961
                
                
                
                5,838Prepaid
      assets
                
                
                47,333
                
                
                
                (23,030
                )Deposits
                
                
                73,702
                
                
                
                1,681Accounts
      payable and accrued expenses
                
                
                190,363
                
                
                
                (262,711
                )Deferred
      revenue
                
                
                23,163
                
                
                
                178,619Other
      current liabilities
                
                
                470,641
                
                
                
                -Net
      cash provided by (used in) operating activities
                
                
                941,208
                
                
                
                (1,468,898
                )Cash
      flows from investing activities:Acquisition
      of property and equipment
                
                
                (39,464
                )
                
                
                (105,891
                )Net
      cash used in investing activities
                
                
                (39,464
                )
                
                
                (105,891
                )Cash
      flows from financing activities:Proceeds
      from related party loan
                
                
                -
                
                
                
                1,247,619Repayments
      of related party loans
                
                
                (960,259
                )
                
                
                -Proceeds
      from loans payable
                
                
                5,262
                
                
                
                84,014Net
      cash provided by financing activities
                
                
                (954,997
                )
                
                
                1,331,633NET
      DECREASE IN CASH
                
                
                (53,253
                )
                
                
                (243,156
                )CASH
      AT BEGINNING OF YEAR
                
                
                101,362
                
                
                
                344,518CASH
      AT END OF PERIOD
                
                $
                48,109
                
                
                $
                101,362Supplemental
      disclosure of cash flow information:Cash
      paid during the year for interest
                
                $
                -
                
                
                $
                -Cash
      paid for taxes
                
                $
                -
                
                
                $
                -
 
  F-5
 
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
  NOTE 1 –
ORGANIZATION
 
 Overview
 
 Color
Accents Holdings, Inc. (the "Company") was incorporated under the laws of the
State of Nevada on April 28, 2008.  Color Accents Holdings, Inc. is
planning to provide total interior design, color analysis and home staging to
the entire housing market network including home builders, home renovators and
real estate firms and agents.
 
 M2
Systems and its wholly owned subsidiary, Muscato Corporation, (collectively
referred to as M2 Systems) are incorporated under the laws of the state of
Florida. M2 Systems is engaged primarily in the development and sale of software
which serves the online transaction processing systems marketplace. M2 Systems
primarily serves organizations which are located throughout the United States
and operate in the banking, healthcare, insurance and transportation
industries.
 
 On
September 30, 2009, the Company  entered into a share exchange
agreement (the “Share Exchange Agreement”) and consummated a share exchange (the
“Share Exchange”) with M2 Systems and each of the shareholders of M2 Systems
(the “M2 Systems Shareholders”).
 
 Upon the
closing of the Share Exchange on September 30, 2009 (the “Closing”), the M2
Systems Shareholders transferred all of their shares of common stock in M2
Systems to Color.  In exchange, Color issued to the M2 Systems
Shareholders an aggregate of 6,600,000 shares of our common stock (the “Common
Stock”), $0.0001 par value per share, representing 81.21% of the shares issued
and outstanding immediately after the Closing.  As a result of the
Share Exchange, M2 Systems became a wholly-owned subsidiary.
 
 The Share
Exchange is being accounted for as a “reverse merger” because the M2 Systems’
Shareholders now own a majority of the outstanding shares of our Common Stock
immediately following the Share Exchange.  M2 Systems is deemed the
acquirer in the reverse merger.  Consequently, the assets and liabilities
and the historical operations that are reflected in the financial statements
prior to the Share Exchange are those of M2 Systems and are recorded at the
historical cost basis of M2 Systems, and the consolidated financial statements
after completion of the Share Exchange include our assets and liabilities and
those of M2 Systems, historical operations of M2 Systems, and our operations
from the Closing of the Share Exchange.  Except as described in the
previous paragraphs, no arrangements or understandings exist among present or
former controlling stockholders with respect to the election of members of our
board of directors and, to our knowledge, no other arrangements exist that might
result in a change of control of the Company.  Further, because of the
issuance of the shares of our Common Stock pursuant to the Share Exchange, a
change in control of the Company occurred on the date of consummation of the
Share Exchange.
 
 F-6
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 On
October 5, 2009, the Company changed its name to Muscato Group,
Inc.
 
 NOTE 2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 In June
2009, the Financial Accounting Standards Board (FASB) issued its final Statement
of Financial Accounting Standards (SFAS) No. 168,“The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles a Replacement of FASB StatementNo. 162”.
SFAS No. 168 made the FASB Accounting Standards Codification (ASC )
the single source of U.S. GAAP used by nongovernmental entities in the
preparation of financial statements, except for rules and interpretive releases
of the Securities and Exchange Commission (SEC) under authority of federal
securities laws, which are sources of authoritative accounting guidance for SEC
registrants. The Codification is meant to simplify user access to all
authoritative accounting guidance by reorganizing U.S. GAAP pronouncements
into roughly 90 accounting topics within a consistent structure; its purpose is
not to create new accounting and reporting guidance. The Codification supersedes
all existing non-SEC accounting and reporting standards and was effective for
the Company beginning July 1, 2009. Following SFAS No. 168, the
Board will not issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts; instead, it will issue
Accounting Standards Updates (ASU). The FASB will not consider ASUs as
authoritative in their own right; these updates will serve only to update the
Codification, provide background information about the guidance, and provide the
bases for conclusions on the change(s) in the Codification.
 
 Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of Muscato Group, Inc.
(f/k/a Color Accents, Inc.), M2 Systems Corporation and and Muscato Corporation.
All significant intercompany balances and transactions have been eliminated in
consolidation.
 
 Revenue
Recognition
 The
Company recognizes revenue in accordance with the provisions of ASC 600 Revenue
Recognition, which states that revenue is realized and earned when all of the
following criteria are met:
  (a)
persuasive evidence of the arrangement exists,
 (b)
delivery has occurred or services have been rendered,
 (c) the
seller’s price to the buyer is fixed and determinable and
 (d)
collectibility is reasonably assured.
 
 F-7
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 The
Company recognizes revenue for the software development upon execution of a
non-cancelable contract and the acceptable delivery of the software to the
end-user. Software support, consulting, processing fees and other services are
recognized as the services are performed. Software maintenance fees are
recognized over the term of the underlying maintenance contracts.
 
 Use of
Estimates
 The
preparation of consolidated financial statements in conformity with U.S.
generally accepted accounting principles requires management to make a number of
estimates and assumptions relating to the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the period. Significant items subject to such estimates and
assumptions include the carrying amount of property and equipment, intangible
assets and goodwill; valuation allowances for receivables and deferred income
tax assets.
 
 Cash and Cash
Equivalents
 For
purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of one year or less to be cash
equivalents. From time to time, cash accounts held in United States based
checking accounts may exceed the Federal Deposit Insurance Corporation (FDIC)
$250,000 insured limit. Management believes that no significant concentration of
credit risk exists with respect to these cash balances because of its assessment
of the credit worthiness and financial viability of their banks.
 
 Accounts
Receivable
 Accounts
receivable are recorded at amounts due and do not bear interest. The Company
reviews these receivables on a monthly basis for collectibility. An allowance is
established to provide for estimated uncollectable accounts receivable. In
estimating the collectability of accounts receivable, management considered the
most recent financial information available for the applicable party as well as
the most recent payment history. Account balances are charged off against the
allowance after all means of collection have been exhausted and potential for
recovery is considered remote.  The Company has recorded as allowance
of approximately $69,000 as of December 31, 2009 and December 31,
2008.
 
 Property and
Equipment
 Property
and equipment are stated at cost at the date of acquisition. Major additions and
betterments are capitalized, while replacements, maintenance, and the repairs
that do not improve or extend the life of the respective assets are expensed in
current operations. Depreciation of property and equipment is calculated using
straight-line methods over the estimated useful lives the asset. Estimated
useful lives are as follows:
  F-8
 
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 
 Furniture
and
Fixtures                                                                             3-5
years
 Computer
and office
equipment                                                            3-7
years
 Leasehold
improvements                                                                       10
years
 
 Income
Taxes
 
 The
Company accounts for income taxes as follows:
 
 The
Company makes no provision for Federal or State income taxes for entities that
have elected to be taxed as an S Corporation under Subchapter S of the Internal
Revenue Code.   Entities that have not made this election are
accounted for under provisions for “Accounting for Income Taxes” which requires
an asset and liability approach to financial accounting for income taxes.
Deferred income tax assets and liabilities are computed annually for the
difference between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future,
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period, plus or minus the change during the period in deferred tax assets and
liabilities.
 
 The
Corporation adopted the provisions of "Accounting for Uncertainty in Income
Taxes. This provision prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. Benefits from tax
positions should be recognized in the financial statements only when it is more
likely than not that the tax position will be sustained upon examination by the
appropriate taxing authority that would have full knowledge of all relevant
information. A tax position that meets the more-likely-than-not recognition
threshold is measured at the largest amount of benefit that is greater than
fifty percent likely of being realized upon ultimate settlement. Tax positions
that previously failed to meet the more-likely-than-not recognition threshold
should be recognized in the first subsequent financial reporting period in which
that threshold is met. Previously recognized tax positions that no longer meet
the more-likely-than-not recognition threshold should be derecognized in the
first subsequent financial reporting period in which that threshold is no longer
met. This provision also provides guidance on the accounting for and disclosure
of unrecognized tax benefits, interest and penalties. Adoption of this provision
did not have a significant impact on the Company's financial
statements.
 
 F-9
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 Long-Lived
Assets
 
 The
Company reviews long-lived assets and certain identifiable assets related to
those assets for impairment whenever circumstances and situations change, such
that there is an indication that the carrying amounts may not be recoverable. If
the undiscounted cash flows of the long-lived assets are less than the carrying
amount, their carrying amounts are reduced to fair value, and an impairment loss
is recognized.
 
 Goodwill and
Indefinite-Lived Intangible Assets
 
 In
accordance with ASC 359 Intangibles – Goodwill and Other goodwill, represents
the excess of the purchase price over the fair value of net assets, including
the amount assigned to identifiable intangible assets. The Company accounts for
business combinations using the purchase method of accounting and accordingly,
the assets and liabilities of the acquired entities are recorded at their
estimated fair values at the acquisition date. The primary driver that generates
goodwill is the value of synergies between the acquired entities and the
Company, which does not qualify as an identifiable intangible
asset.  The Company does not amortize the goodwill
balance.
 
 The
Company assesses goodwill and indefinite-lived intangible assets for impairment
annually during the fourth quarter, or more frequently if events and
circumstances indicate impairment may have occurred. If the carrying value of
goodwill exceeds its implied fair value, the Company records an impairment loss
equal to the difference. The fair value of indefinite-lived purchased intangible
assets should be estimated and compared to the carrying value. The Company
recognizes an impairment loss when the estimated fair value of the
indefinite-lived purchased intangible assets is less than the carrying
value.
 
 Funding
Liability
 
 The
funding liability account represents amounts that the Company is holding in
connection with an ACH remittance program.  These amounts are
classified as a liability as they are expected to be remitted at a future
time.  The balance in the funding liability account is $488,641 and $0
as of December 31, 2009 and 2008, respectively.
 
 Fair Value of Financial
Instruments
 
 Fair
value of certain of the Company’s financial instruments including cash and cash
equivalents, accounts receivable, accrued compensation, and other accrued
liabilities approximate cost because of their short maturities.
 
 The
Company has adopted the provisions of ASC 820 Fair Value Measurements and
Disclosure which, ASC 820 establishes a framework for measuring fair value in
accordance with generally accepted accounting principles and expands disclosures
about fair value investments.  The provision was effective for
financial assets and liabilities on January 1, 2008.
 
 F-10
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 Fair
value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. The fair value of an asset should reflect its highest and best
use by market participants, whether using an in-use or an in-exchange valuation
premise. The fair value of a liability should reflect the risk of
nonperformance, which includes, among other things, the company’s credit
risk.
 
 Valuation
techniques are generally classified into three categories: the market approach;
the income approach; and the cost approach. The selection and application of one
or more of the techniques requires significant judgment and are primarily
dependent upon the characteristics of the asset or liability, the principal (or
most advantageous) market in which participants and the quality and availability
of inputs. Inputs to valuation techniques are classified as either observable or
unobservable within the following hierarchy:
   -
              Level
      1 Inputs:  These inputs come from quoted prices (unadjusted) in
      active markets for identical assets or
  liabilities.
 
 -
              Level
      2 Inputs:  These inputs are other than quoted prices that are
      observable, for an asset or liability. This includes: quoted prices for
      similar assets or liabilities in active markets; quoted prices for
      identical or similar assets or liabilities in markets that are not active;
      inputs other than quoted prices that are observable for the asset or
      liability; and inputs that are derived principally from or corroborated by
      observable market data by correlation or other
  means.
 
 -
              Level
      3 Inputs:  These are unobservable inputs for the asset or liability
      which require the company’s own
assumptions.
 
 Advertising
Costs
 
 The
Company expenses all advertising costs as incurred.
 
 Software Development
Costs
 
 Software
development costs are expensed as incurred.
 
 F-11
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 Earnings Per
Share
 
 Basic
earnings (loss) per share is computed using the weighted-average number of
common shares outstanding during the period. Diluted net income per share is
computed using the weighted-average number of common shares and dilutive
potential common shares outstanding during the period. Diluted net loss per
share is computed using the weighted-average number of common shares and
excludes dilutive potential common shares outstanding, as their effect is
anti-dilutive. Dilutive potential common shares would primarily consist of
employee stock options and restricted common stock.  The Company had
no such dilutive common shares as of September 30, 2009 and 2008,
respectively.
 
 Recent Accounting
Pronouncements
 
 In August
2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10,
“Fair Value Measurements and Disclosures—Overall”. The update provides
clarification that in circumstances, in which a quoted price in an active market
for the identical liability is not available, a reporting entity is required to
measure fair value using one or more of the techniques provided for in this
update. The amendments in this ASU clarify that a reporting entity is not
required to include a separate input or adjustment to other inputs relating to
the existence of a restriction that prevents the transfer of the liability and
also clarifies  that both a quoted price in an active market for the
identical liability at the measurement date and the quoted price for the
identical liability when traded as an asset in an active market when no
adjustments to the quoted price of the asset are required are Level 1 fair value
measurements. The guidance provided in this ASU is effective for the first
reporting period, including interim periods, beginning after
issuance.  The adoption of this standard did not have a material
impact on the Company’s consolidated financial position and results of
operations.
 
 In
September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements
and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net
Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10,
“Fair Value Measurements and Disclosures – Overall”, to permit a reporting
entity to measure the fair value of certain investments on the basis of the net
asset value per share of the investment (or its equivalent). This ASU also
requires new disclosures, by major category of investments including the
attributes of investments within the scope of this amendment to the
Codification. The guidance in this Update is effective for interim and annual
periods ending after December 15, 2009. Early application is
permitted.   The adoption of this standard is not expected to
have a material impact on the Company’s consolidated financial position and
results of operations.
 
 F-12
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 In
October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic
605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products
or services (deliverables) separately rather than as a combined unit.
Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue
Recognition-Multiple-Element Arrangements”, for separating consideration in
multiple-deliverable arrangements. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on:
(a) vendor-specific objective evidence; (b) third-party evidence; or (c)
estimates. This guidance also eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and also
requires expanded disclosures. The guidance in this update is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
The adoption of this standard is not expected to have a material impact any
impact on the Company’s consolidated financial position and results of
operations.
 
 In
October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain
Revenue Arrangements that Include Software Elements” and changes the accounting
model for revenue arrangements that include both tangible products and software
elements. Under this guidance, tangible products containing software components
and nonsoftware components that function together to deliver the tangible
product's essential functionality are excluded from the software revenue
guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition,
hardware components of a tangible product containing software components are
always excluded from the software revenue guidance.  The guidance in
this ASU is effective prospectively for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010. Early
adoption is permitted.  The adoption of this standard is not expected
to have a material impact on the Company’s consolidated financial position and
results of operations.
  
 Other
ASUs not effective until after December 31, 2009, are not expected to have a
significant effect on the Company’s consolidated financial position or results
of operations.
 
 NOTE 3 –
PROPERTY AND EQUIPMENT
 
 Property
and equipment at December 31, 2009 and 2008 consisted of the
following:
 
 2009
              
              
              2008Computer
      hardware and software
              
              $
              552,131
              
              
              $
              513,261Furniture
      and fixtures
              
              
              14,294
              
              
              
              14,294Office
      equipment
              
              
              60,442
              
              
              
              59,847Leasehold
      improvements
              
              
              96,847
              
              
              
              96,847723,714
              
              
              
              684,249Less:  accumulated
      depreciation
              
              
              (606,920
              )
              
              
              (543,629
              )$
              116,794
              
              
              $
              140,620
   F-13
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 For the
year ended December 31, 2009 and 2008, the Company recorded $63,291 and $37,000
respectively in depreciation and amortization expense.
 
 NOTE 4 –
CAPITAL LEASE OBLIGATIONS
 
 The
Company entered into a lease agreement with De Lage Landen Financial Services
for purposes of leasing HP Fiserv Rack/Servers.  The Company entered
into this lease agreement on November 6, 2008.  The present value of
the minimum lease payments on this date was $85,045.  The Company is
making sixty equal monthly payments of $1,907.55 on the 6th of
each month.
 
 Principal
lease payment obligations over the next four years are due as
follows:
 
 Year
      Ending2010
              
              $
              14,9682011
              
              
              16,9272012
              
              
              19,1432013
              
              
              19,742$
              70,779
 
 NOTE 5 -
ACQUISITION
 
 On
September 30, 2009, Color Accents Holdings, Inc. (Color) entered into a share
exchange agreement (the “Share Exchange Agreement”) and consummated a share
exchange (the “Share Exchange”) with M2 Systems Corporation, a Florida
corporation, (hereinafter, “M2 Systems”), and each of the shareholders of M2
Systems (the “M2 Systems Shareholders”).
 
 Upon the
closing of the Share Exchange on September 30, 2009 (the “Closing”), the M2
Systems Shareholders transferred all of their shares of common stock in M2
Systems to Color.  In exchange, Color issued to the M2 Systems
Shareholders an aggregate of 6,600,000 shares of our common stock (the “Common
Stock”), $0.0001 par value per share, representing 81.21% of the shares issued
and outstanding immediately after the Closing.  As a result of the
Share Exchange, M2 Systems became our wholly-owned subsidiary.
 
 F-14
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 NOTE 6 –
COMMON STOCK
 
 In
connection with the Acquisition (see Note 4), the previous owner of Color
Accents placed 5,000,000 shares of common stock into an escrow account in
connection with the Share Exchange Agreement.  These shares were
cancelled as of December 31, 2009.
 
 NOTE 7 –
COMMITMENTS AND CONTINGENCIES
 
 Operating
Leases
 
 The
Company leases office space, and office machines under non-cancelable operating
leases, which expire at various dates through 2012. Rental expense under these
leases amounted to approximately $215,000 and $200,000 for the years ended
December 31, 2009 and 2008, respectively
 
 Future
minimum lease payments under the Company’s non-cancelable operating leases as of
December 31, 2009, are as follows:
  2009
              
              $
              211,6062010
              
              
              215,0752011
              
              
              210,0262012
              
              
              41,475Total
              
              $
              678,182
 
 NOTE 8 –
CONCENTRATION OF CREDIT RISK
 
 Accounts
receivable - Revenues generated from three customers, comprised approximately
80% of revenues for the year ended December 31, 2009. At December 31, 2009
approximately 80% of accounts receivables were from these three
customers.
 
 NOTE 9 –
SUBSEQUENT EVENTS
 
 In
accordance with the guidance offered in ASC Topic 855, formerly SFAS 165 – “Subsequent Events”, the
Company has evaluated its activities from December 31, 2009 through March 31,
2010, the date the financial statements were issued, and determined that there
were no reportable subsequent events.
  F-15
 MUSCATO
GROUP, INC & SUBSIDIARY
 (f/k/a
COLOR ACCENTS HOLDINGS, INC. & SUBSIDIARY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
  NOTE 10 –
INCOME TAXES
 
 The
provision (benefit) for income taxes from continued operations for the year
ended December 31, 2009 includes only expected tax benefit from entities subject
to taxation. The provision (benefit) consists of the following:
 2009
              
              
              2008Current:
                Federal
                State
              
              $
              
              
              
              $
              -
      -Deferred:Federal
              
              $
              (81,000
              )
              
              
              (451,000
              )State
              
              
              (14,000
              )
              
              
              (79,000
              )(95,000
              )
              
              
              (530,000
              )Benefit
      from the operating loss
                carryforward
              
              
              95,000
              
              
              
              530,000Provision
      (benefit) for income taxes, net
              
              
              
              
              
              $
              -
 
 The
difference between income tax expense computed by applying the federal statutory
corporate tax rate and actual income tax expense is as follows:
  2009
              
              
              
              2008Statutory
      federal income tax rate
              
              
              34.0
              %
              
              
              34.0
              %Decrease
      in valuation allowance
              
              
              (40.0
              )%
              
              
              (40.0
              )%State
      income taxes
              
              
              6.0
              %
              
              
              6.0
              %Effective
      tax rate
              
              
              (0
              )%
              
              
              (0
              )%
 
 Deferred
income taxes result from temporary differences in the recognition of income and
expenses for the financial reporting purposes and for tax
purposes.   The net deferred tax assets and liabilities are
comprised of the
following:
  2009
              
              
              2008Deferred
      income tax asset:Net
      operating loss carry-forwards
              
              $
              453,000
              
              
              $
              356,000Allowance
      for Doubtful Accounts
              
              
              69,000
              
              
              
              69,000Research
      and Development Tax and
                Credit
      carryover
              
              
              624,000
              
              
              
              624,000Valuation
      allowance
              
              
              (1,146,000
              )
              
              
              (1,049,000
              )Deferred
      income tax asset
              
              $
              -
 
 The
Company has a net operating loss carry-forward of approximately $453,000
available to offset future taxable income through 2023.  In accordance
with Internal Revenue Code Section 382, the Company may be limited in its
ability to recognize the benefit of future net operating loss
carry-forwards.  Consequently, the Company did not include a benefit
from operating loss carry-forwards.
 The
Company has recorded a valuation allowance at December 31, 2009, as it is not
expected that the deferred tax assets and liabilities will be
realized.  The net change in valuation allowance during the year ended
December 31, 2009 resulted in a increase of $97,000.  The net change
in valuation allowance stems from the acquisition of Muscato Corporation, a
wholly owned subsidiary of M2 Systems Corporation, and its valuation allowance
at year end December 31, 2007.
 F-16
  ITEM
9.         CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE




Our accountant isJewett Schwartz Wolfe & Associates,
certified public accountants.We do not presently intend
to change accountants. At no time have there been any disagreements with such
accountants regarding any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or
procedure.





ITEM
9A.      CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure.





8





Management's
Annual Report on Internal Control Over Financial Reporting





The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the
Company.  Our internal control system was designed to, in general,
provide reasonable assurance to the Company’s management and board regarding the
preparation and fair presentation of published financial statements, but because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





Our
management assessed the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2009.  The framework used by
management in making that assessment was the criteria set forth in the document
entitled “ Internal Control – Integrated Framework” issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on that assessment,
our CEO and CFO have determined and concluded that, as of December 31, 2009, the
Company’s internal control over financial reporting was effective.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.





Changes
in Internal Control over Financial Reporting





No change
in our system of internal control over financial reporting occurred during the
period covered by this report, fourth quarter of the fiscal year ended December
31, 2009 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.





9





PART
III





ITEM
10.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT





Our
executive officers and directors and their respective age as of December 31,
2009 is as follows:





NAME
            
            AGE
            
            POSITIONMichael
      Muscato
            
            51
            
            Chief
      Technology Officer, Chairman of the Board of DirectorsJoseph
      W. Adams
            
            53
            
            Chief
      Executive Officer and DirectorRandy
      Oveson
            
            47
            
            Chief
      Financial OfficerMalcolm
      Kirschenbaum
            
            68
            
            Director





Set forth
below is a brief description of the background and business experience of our
executive officers and directors for the past five years.





Michael A. Muscato: Chief Technology
Officer and Chairman, Mr. Muscato is an entrepreneur with 30 years
experience in the software industry. He started with Martin Marietta Information
Systems building a Public Health Information System (PHAMIS) utilizing
fault-tolerant computers. He has held numerous technology leadership positions
where he was responsible for architecting business enterprise solutions. He was
the lead architect responsible for building an Electronic Funds Transfer Network
(HONOR/STAR) supporting debit cards in a shared environment. It was one of the
first of its kind. His responsibilities included engineering, database
management, network engineering and planning data centre operations and customer
service for the HONOR Network to primarily support Debit cards in a shared
environment.





In 1986
Mr. Muscato formed Muscato Corporation as a consulting firm specializing in
application interoperability for banks and financial institutions that
eventually expanded into several vertical markets. He served as Chairman and
Chief Executive Officer for 14 years. Muscato Corporation developed middleware
architecture and leading edge applications infrastructure centered around its
technologies. Muscato Corporation developed its proprietary platform known as
"ENGIN" (Enterprise Generic Integrator). Its customer base included companies
such as Citicorp, Delta Airlines and many large healthcare providers. In the
ensuing years, under his guidance Muscato Corporation became a multi-million
dollar global organisation which was later sold to a public company in March
2000.





In
February 2001, Mr. Muscato founded M2 Systems, which repurchased Muscato
Corporation.  The same year he formed Symmetrex Corporation, a transaction
application service provider, established to provide a turn-key service company
geared for electronic payments (prepaid, remittance, payroll and stored value
cards) and the automation of health-care claims processing utilising the
payments infrastructure. Symmetrex was sold to a private company in September
2006.





Joseph W. Adams: Chief Executive
Officer and Director, Joe Adams has over 25 years experience in the
information technology and healthcare industries. Mr. Adams has successfully
held senior level positions ranging from vice president to President and chief
executive officer in companies specializing in healthcare insurance, EDI,
electronic commerce, and enterprise application integration markets. He has
extensive business and technical experience in providing leadership, direction,
and management of a successful organization.





Mr. Adams
has prior senior executive experience working at companies such as Muscato
Corporation, a multi-million dollar global organization specializing in
financial interoperability for banks and financial institutions along with
administrative and financial interoperability for the health care market; a Blue
Cross and Blue Shield Plan doing over $500M in annual revenues; an Application
Services Provider company that offered electronic commerce solutions for the
health insurance payer market; and a company that offered electronic claims
processing solutions.





He was
one of the principals responsible for the strategic vision, design, and
implementation of a national company that offered a transaction network/system
for the use of e-commerce, electronic data interchange and financial
transactions in the health care industry. He was also an officer on the board of
directors.





Randy Oveson: Chief Financial
Officer, Mr. Oveson started his career in 1987 as a Financial Analyst
with Suite Thinking, Inc., a boutique hospitality consulting firm in Newport
Beach, CA. There Mr. Oveson developed systems and processes used to analyze
dozens of hotels in various operational categories. Mr. Oveson also acted as
liaison between hotel owners and management companies, meeting with each monthly
and utilizing the proprietary systems developed he was able to increase the
profitability of all hotels placed in the Suite Thinking portfolio.





10





Upon
completion of his MBA at Pepperdine University in 1989 Mr. Oveson was offered
the position of VP of Finance and Technology of Osar, Ltd., a hotel management
company, where Mr. Oveson oversaw the acquisition, asset and financial
management, and human resources of 5 hotels through 1994. From 1994 to 1998 he
pursued various start-up opportunities in the aerospace, manufacturing,
brokerage, and action sports industries where he acted as CFO and in some cases
CFO and CIO of these start-up ventures. In 1998 he joined In Touch
Communications, Inc. a leader in prepaid home phone service, located in Lake
Forest, CA. There Mr. Oveson helped the company grow to become the largest
alternative home dial-tone company in the State.





He has
now spent ten years in the rapidly growing prepaid industry. He has been
instrumental in the business development of prepaid telecommunications,
stored-value, and electronic bill payment companies. Mr. Oveson has worked with
TransFirst, a multi-billion dollar merchant processing group, as AVP of Business
Development leading the product development and sales of prepaid debit cards,
prepaid telecommunication products, prepaid open-loop gift cards, money
remittance, and electronic bill-pay products. During this time Mr. Oveson has
also directed the start-up company, Debit Resources, which provides IVR and
telecommunication services in support of Prepaid Stored Value cards issued
through numerous prepaid processors. In 2005 Mr. Oveson joined M2
Systems/Symmetrex as CFO where his skills and knowledge of the prepaid industry
helped the Symmetrex processing company through a significant growth phase and
sale. He holds joint responsibility today as CFO of M2 Systems Corporation and
COO of FirstPay Limited where he is responsible for payment services development
and the processing center management for payment products.





Malcolm Kirschenbaum:
Director, After Mr. Kirschenbaum graduated from University of Florida Law
School in 1964, he began his career as a business lawyer at the firm of Gray,
Harris & Robinson, Attorneys at Law in Melbourne , Florida where he
continues Of Counsel. Over the years he has obtained extensive experience in
banking and real estate law, as well as transportation issues, which led to
various directorships and chairman positions almost from the beginning of his
career.





From 1972
to 1978 Mr. Kirschenbaum served as Director of United National Bank, Cocoa
Beach, Florida. He also served as Director of Merritt Square Bank of Merritt
Island, and subsequently he served until 1999 as Director of Merritt Island Bank
of Merritt Island, Florida. He is currently a Director and substantial
shareholder of Prime Bank.





He was
appointed by the Governor of Florida, the Speaker of the House and the President
of the Senate of The State of Florida as Chairman of the Florida High Speed Rail
Transportation Commission from 1988 to 1990, which focuses on the advancement of
the development of a Statewide High Speed Rail System in Florida. This
distinguished position led to his appointment as Chairman of Florida
Transportation Commission from 1994 to 1998.





In 1979
he became President and Owner of EKS, Inc., a real estate development firm
located in Cocoa, Florida. He remains President and Co -Owner of EKS, which
focuses on new construction and single family homes.


Beginning
in February of 1994 he became part owner of TGO Realty, Inc. located in
Titusville, Florida. In February of 1996, he became part owner of Mowbray Land
Trust of Melbourne, Florida. And in April of 1998 he became part owner of High
Point Property Trust of Cocoa, Florida. Mr. Kirschenbaum remains part owner of
all three.





Currently,
Mr. Kirshenbaum is Of Counsel at Gray, Harris & Robinson, Vice Chairman of
Ron Jon Surf Shop, Inc. and most notably a member of The Freedom Forum and
Newseum Board of Trustees where he is Chairman of the Finance/ Investment
Committee. The Freedom Forum and Newseum Board of Trustees is a nonpartisan
foundation dedicated to free press, free speech and free spirit for all people
founded in 1991 and is made up of various high profile media and civic leaders,
such as Tom Daschle, U.S. Senate Majority Leader and Kenneth A. Paulson, editor
of USA TODAY.





Mr.
Kirshenbaum considers his civic duty essential and notably has served on a
comprehensive list of various groups and organizations. These include: former
Member of Brevard Community College Board of Trustees, Member and former
Chairman of Cape Canaveral Hospital Foundation, former Member and Chairman of
Cape Canaveral Hospital Board of Trustees, Member Board of Trustees, Florida
Institute of Technology, Chairman, Leadership Giving of UNITED WAY, former
Member and Chairman of WMFE (Public Television & Radio) Board of Trustees
and Member, Board of Directors, Florida 2012, Effort to bring Olympic Games to
Florida.





Term
of Office





Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors and hold
office until removed by the board





Current
Issues and Future Management Expectations





No board
audit committee has been formed as of the filing of this Annual
Report.





Compliance
With Section 16(A) Of The Exchange Act.





Section
16(a) of the Exchange Act requires the Company’s officers and directors, and
persons who beneficially own more than 10% of a registered class of the
Company’s equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and are required to
furnish copies to the Company. To the best of the Company’s knowledge, any
reports required to be filed were timely filed in fiscal year ended June 30,
2009.





11





Code
of Ethics





The
Company has not adopted a Code of Ethics. This officers and directors expect to
adopt a code of ethics at the next annual meeting.





ITEM
11.       EXECUTIVE COMPENSATION





The
following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officer during the years ended
December 31, 2009 and 2008 in all capacities for the accounts of our executive,
including the Chief Executive Officer (CEO) and Chief Financial Officer
(CFO):





SUMMARY
COMPENSATION TABLE





Name
      and Principal Position
            
            Year
            
            Salary
                ($)
            
            Bonus
                ($)
            
            Stock
                Awards
                ($)
            
            Option
      Awards
                ($)
            
            Non-Equity
      Incentive Plan Compensation ($)
            
            Non-Qualified
      Deferred Compensation Earnings
                ($)
            All
      Other Compensation
                ($) (1)
            
            Totals
                ($)Michael
      Muscato
            
            2009
            
            $
            240,000
            
            -
            
            $
            -
            
            -
            
            
            -
            
            -
            $4,749.44
            
            $
            244,750CTO
      and Chairman
            
            2008
            
            $
            150,000
            
            -
            
            $
            -
            
            -
            
            
            -
            
            -
            $4,506.64
            
            $
            154,507Joseph
      Adams
            
            2009
            
            $
            240,000
            
            -
            
            $
            -
            
            -
            
            
            -
            
            -
            $4,749.44
            
            $
            244,750CEO
      and Director
            
            2008
            
            $
            240,000
            
            -
            
            $
            -
            
            -
            
            
            -
            
            -
            $4,506.64
            
            $
            244,507Randy
      Oveson
            
            2009
            
            $
            135,000
            
            -
            
            $
            -
            
            -
            
            
            -
            
            -
            $4,749.44
            
            $
            139,750Chief
      Financial Officer
            
            2008
            
            $
            135,000
            
            -
            
            $
            -
            
            -
            
            
            -
            
            -
            $4,506.64
            
            $
            139,507Malcolm
      Kirschenbaum
            
            2009
            
            $
            -
            
            -
            
            $
            -
            
            -
            
            
            -
            
            -
            -
            
            $
            -Director
            
            2008
            
            $
            -
            
            -
            
            $
            -
            
            -
            
            
            -
            
            -
            -
            
            $




(1)
            This
      amount is the Company paid portion of the health benefit
    plan.





Option Grants
Table.There were
no individual grants of stock options to purchase our common stock made to the
executive officer named in the Summary Compensation Table through December 31,
2009.





Aggregated
Option Exercises and Fiscal Year-End Option Value Table.There were no stock options
exercised during period ending December 31, 2009 by the executive officer named
in the Summary Compensation Table.





Long-Term Incentive Plan
(“LTIP”) Awards Table.There were no awards made to a named executive officer in the last
completed fiscal year under any LTIP





Compensation of
Directors





Directors
are permitted to receive fixed fees and other compensation for their services as
directors. The Board of Directors has the authority to fix the compensation of
directors. No amounts have been paid to, or accrued to, directors in such
capacity.





Employment
Agreements





We do not
have any employment agreements in place with our sole officer and
director.





ITEM
12.       SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT





The
following table provides the names and addresses of each person known to us to
own more than 5% of our outstanding shares of common stock as of December
31, 2009 and by the officers and directors, individually and as a group. Except
as otherwise indicated, all shares are owned directly.




12





Title
      of Class
            
            Name
      and Address
                of
      Beneficial Owner
            
            Amount
      and Nature
                of
      Beneficial Owner
            
            Percent
                ofClass
      (1)Common
      Stock
            
            Michael
      A. Muscato
              2301
      Maitland Center Parkway
              Suite
      240
              Maitland,
      Florida 32751
            
            4,400,000
            
            54.14%Common
      Stock
            
            Joseph
      W. Adams
              2301
      Maitland Center Parkway
              Suite
      240
              Maitland,
      Florida 32751
            
            2,200,000
            
            27.07%Common
      Stock
            
            Malcolm
      Kirshenbaum
              516
      Delannoy Ave
              Cocoa,
      Florida 32922
            
            0
            
            0%Common
      Stock
            
            Randy
      Oveson
              4044
      W. Lake Mary Blvd Unit#104-120
              Lake
      Mary, Florida 32746
            
            0
            
            0%Common
      Stock
            
            All
      executive officers and directors as a group
            
            6,600,000
            
            81.21%





Stock Option
Grants





We have
not granted any stock options to our executive officer since our
incorporation.





ITEM 13.       CERTAIN
RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR
INDEPENDENCE





None.





ITEM
14.       PRINCIPAL ACCOUNTANT FEES AND
SERVICES





Audit
Fees





For the
Company’s fiscal years ended December 31, 2009 and 2008, we were billed
approximately $25,000 and $0 for professional services rendered for
the audit and review of our financial statements.





Audit Related
Fees





There
were no fees for audit related services for the years ended December 31, 2009
and 2008.





Tax Fees





For the
Company’s fiscal years ended December 31, 2009 and 2008, we were not billed for
professional services rendered for tax compliance, tax advice, and tax
planning.





All Other
Fees





The
Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal years ended December 31, 2009 and
2008.





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.





Effective
May 6, 2003, the Securities and Exchange Commission adopted rules that require
that before our auditor is engaged by us to render any auditing or permitted
non-audit related service, the engagement be:





-approved
by our audit committee; or





-entered
into pursuant to pre-approval policies and procedures established by the audit
committee, provided the policies and procedures are detailed as to the
particular  service,  the  audit committee is
informed of each service, and such policies and procedures do not include
delegation of the audit committee's responsibilities to management.





We do not
have an audit committee.  Our entire board of directors pre-approves
all services provided by our independent auditors.





13





The
pre-approval process has just been implemented in response to the new rules.
Therefore, our board of directors does  not have  records
of  what percentage of the above fees were
pre-approved.  However, all of the above services and fees were
reviewed and approved by the entire board of directors either before or after
the respective services were rendered.








PART
IV





ITEM
15.       EXHIBITS, FINANCIAL STATEMENT
SCHEDULES.





a)
Documents filed as part of this Annual Report





1.
Consolidated Financial Statements





2.
Financial Statement Schedules





3.
Exhibits





31.1          Rule
13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer


31.2          Rule
13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer


32.1          Section
1350 Certification of Chief Executive Officer


32.2          Section
1350 Certification of Chief Financial Officer








14





SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized.





Dated:
March 31, 2010





By/s/Joseph
A.
Adams


Joseph A.
Adams,


Chief
Executive Officer





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





Signature
            
            Title
            
            Date/s/
      Michael A. Muscato
            
            Chairman
      of the Board of Directors
            
            March
      31, 2010Michael
      A. Muscator/s/ Joseph W. Adams
            
            Director
            
            March
      31, 2010Joseph
      W. Adams/s/ Malcolm
    Kirschenbaum
            
            Director
            
            March
      31, 2010Malcolm
      Kirschenbaum








15