SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________________

FORM 10-KSB



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



For the fiscal year ended October 31, 2005



OR



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|- | ----------------------------------------------------------------------------------------------------------
| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)



For the transition period from  to



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|Commission File No. 333-74928

MONEYFLOW SYSTEMS INTERNATIONAL INC.

(Name of Small Business Issuer in Its Charter)

______________________________________

|                                               |                                  
|---------------------------------------------- | ---------------------------------
|Nevada                                         | 52-2325923                       
|(State or other jurisdiction of incorporation) | (IRS Employer Identification No.)



|                                                 |           
|------------------------------------------------ | ----------
|Suite N, 7003 - Fifth Street SE
Calgary, Alberta | T2H 2G2   
|(Address of Principal Executive Offices)         | (Zip Code)

Issuer's telephone number, including area code:  (403) 319-0236

_______________________________

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

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

(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   ̈    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   ̈    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   ̈









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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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 in Part III of this Form 10-K or any amendment to this Form 10-K.  x



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):



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|-------------------------- |  | ------------------- |  | ------------------------
|                           |  |                     |  |                         
|Large accelerated filer   ̈ |  | Accelerated file   ̈ |  | Non-accelerated filer  x



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





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The issuer's total net sales for the fiscal year ended October 31, 2005 were $888,662.

As of February 10, 2006, there were 7,216,203 outstanding shares of the issuer's common stock, par value $0.001 per share ("Common Stock"), which is the only class of common stock of the issuer.  As of February 10, 2006, the aggregate market value of the shares of Common Stock held by non-affiliates of the issuer, computed based on the closing bid price of the Common Stock as quoted on the OTC Bulletin Board, was approximately $210,500.

Documents Incorporated by Reference

None.

Transitional Small Business Disclosure Format:       Yes     X   No











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TABLE OF CONTENTS

|                                                         |                                                                                        |    |      | 
|-------------------------------------------------------- | -------------------------------------------------------------------------------------- | -- | ---- | 
|                                                         |                                                                                        |    | Page | 
|                                                         |                                                                                        |    |      | 
|PART I                                                   |                                                                                        |    | 1    | 
|                                                         |                                                                                        |    |      | 
|Item 1.                                                  | Business                                                                               |    | 1    | 
|Item 2.                                                  | Properties                                                                             |    | 7    | 
|Item 3.                                                  | Legal Proceedings                                                                      |    | 7    | 
|Item 4.                                                  | Submission of Matters to a Vote of Security Holders                                    | 7  |     
|                                                         |                                                                                        |    |      | 
|PART II                                                  |                                                                                        |    | 7    | 
|Item 5.                                                  | Market for Common Equity and Related Stockholder Matters                               | 7  |     
|Item 6.                                                  | Management's Discussion and Analysis of Financial Condition and Results of Operations  | 9  |     
|Item 7.                                                  | Financial Statements                                                                   |    | 24   | 
|Item 8.                                                  | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure   | 24 |     
|Item 8A.                                                 | Controls and Procedures                                                                |    | 24   | 
|Item 8B.                                                 | Other Information                                                                      |    | 25   | 
|                                                         |                                                                                        |    |      | 
|PART III                                                 |                                                                                        |    | 25   | 
|Item 9.                                                  | Directors and Executive Officers; Compliance with Section 16(a) of the Exchange Act    | 25 |     
|Item 10.                                                 | Executive Compensation                                                                 |    | 27   | 
|Item 11.                                                 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder |   
|                                                         | Matters                                                                                |    | 28   | 
|Item 12.                                                 | Certain Relationships and Related Transactions                                         | 29 |     
|Item 13.                                                 | Exhibits, Financial Statements and Reports on Form 8-K                                 | 29 |     
|Item 14.                                                 | Principal Accountant Fees And Services                                                 | 30 |     
|                                                         |                                                                                        |    |     
|CONSOLIDATED FINANCIAL STATEMENTS AND NOTES F-1          |                                                                                        |   
|                                                         |                                                                                        |    |     
|Report of Independent Registered Public Accounting Firms | 31                                                                                     |   





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PART I

ITEM 1.        BUSINESS



Unless the context otherwise requires, "MoneyFlow", "Company", "we", "us" and "our" refer to MoneyFlow Systems International Inc., and its subsidiaries combined.

Overview

MoneyFlow Systems International Inc. ("MoneyFlow") was incorporated on April 25, 2001 under the laws of the State of Nevada.  Security Bancorp Inc. ("Security Bancorp"), our wholly owned subsidiary, was organized on August 3, 1992 in Alberta, Canada and was inactive until January 5, 1999 when it changed its name to Security Bancorp Inc. and began operations under the name CA$H STATION(R).  In July, 2001, Security Bancorp and MoneyFlow approved a share exchange agreement whereby MoneyFlow issued 14,000,000 shares of its common stock in exchange for 100% of the issued and outstanding shares of Security Bancorp.  In connection with this agreement, Security Bancorp became a wholly owned subsidiary of MoneyFlow.  On April 1, 2002, MoneyFlow formed a wholly owned Canadian subsidiary, Intercash POS Systems Ltd., ("Intercash") through which MoneyFlow conducted its Point-of-Sale business.  Point-of-Sale terminals allow customers to use their debit and credit cards to make purchases and obtain cash on the premises of businesses.  On August 31, 2004, MoneyFlow sold the majority of its Point-of-Sale business to BP Financial Corp. for approximately $258,000 in cash pursuant to a purchase and sale agreement, and Intercash is no longer an operating subsidiary of MoneyFlow.  The Point-of-Sale terminals that were not part of the sale are being managed by Security Bancorp, and the Company does not plan to sell any new terminals.

Since May, 1999, Security Bancorp has been successful in supplying, installing, maintaining and managing ATM machines which it places on the premises of property owners and businesses for the purpose and convenience of dispensing cash and other services.  As of February 10, 2006, Security Bancorp operates over 200 ATMs in five Canadian Provinces.  Security Bancorp is a member of the Automated Teller Machine Industry Association (ATMIA) which serves the industry in Canada and the United States.  Security Bancorp has placed ATMs in convenience stores, grocery stores, service stations, hotels, motels, hospitals, night clubs, casinos, restaurants, truck stores, airports and many other locations.  Security Bancorp's ATMs accept VISA, Mastercard, Interac, Maestro, Cirrus, Circuit and American Express (Canada).  Security Bancorp has a website located at http://www.cashstation.net.  Security Bancorp operates its ATMs under the trademark "CA$H STATION(R)."

In October 2004, MoneyFlow acquired Interglobe Investigation Services Inc. ("Interglobe"), organized on August 3, 1992 in British Columbia, pursuant to a share exchange agreement whereby MoneyFlow issued 500,000 shares of its common stock in exchange for 100% of the issued and outstanding shares of Interglobe, and Interglobe became a subsidiary of MoneyFlow.  Interglobe provides security consulting services and related products and services to companies and individuals, and also supplies and installs custom remote access digital surveillance systems.  Subsequent to the acquisition, during the second quarter of the fiscal year, MoneyFlow elected to divest itself of the physical surveillance part of the business.  MoneyFlow continues to operate its digital surveillance business under the name Interglobe Security.

Our ATM Business

While we intend to expand the focus of our business to include our new security products and services business, as provided by Interglobe and described in "New Focus on Security Products and Services" below, during fiscal year 2005 substantially all of our revenue was generated by our ATM business, which is described below.

The ATM Market

In 1996 and 1997, deregulation of the banking system in Canada and the United States provided an opportunity for private investors and businesses to own, place, operate and collect transaction fees from customers for providing the convenience of a bank machine on their premises.  Prior to this deregulation, only financial institutions could access the Interac network, which allows consumers to withdraw cash at an ATM that is not owned by their financial institution.

In Canada, technology became available in 1997 to enable the private ownership of ATMs and investors and businesses have purchased a significant number of ATMs since 1997.  Private ATMs have become common in various types of locations, including convenience stores, bars, hotels, grocery stores, nightclubs, service stations and other locations.  These systems are generally placed where there is deemed to be sufficient traffic to support the economics of the investment of purchasing and operating the ATM.  Competition among ATM manufacturers has steadily reduced the cost



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of privately owned ATMs over the last couple of years.  The current cost is approximately CDN$5,000.  New security technology advances and greater volume of sales helps to make prices lower.

Charges for use of an ATM vary.  Generally, fees range from $1 to $2 and in some cases a 10% charge is levied, based upon the amount of money withdrawn.  The average amount of money withdrawn per transaction ranges from $50 to $74.

The Financial Transaction Industry

Security Bancorp has connection services and software licensing agreements with DataWest Ltd., a direct subscriber to Interac Association, operator of a proprietary electronic financial transaction exchange.  Security Bancorp's agreements with DataWest give it access to Interac.  Through access to Interac, Security Bancorp's customers can (for a fee) use their ATM cards, debit cards and credit cards at ATMs and Point-of-Sale machines not owned by their bank or credit card company.

Security Bancorp's customers pay a fee, or surcharge, for the use of its ATMs machines.  Part of the fee generated by these transactions is paid to Security Bancorp and part of the fee is paid to the owner of the machine.  DataWest charges a per transaction fee to Security Bancorp for each ATM transaction.  DataWest also charges Security Bancorp a one-time fee for each ATM terminal connected to DataWest's switch network.  Interac Association also collects a nominal fee per transaction from DataWest and its other members.

In addition, the issuer of the ATM card pays an "interchange" fee to Security Bancorp through DataWest for each transaction processed.  Interac Association sets a default level for the interchange fee.  DataWest forwards the interchange fee for Security Bancorp's transactions, net of fees owed to DataWest, to Security Bancorp.  Therefore, Security Bancorp's transaction fee revenues are actually generated from two sources - surcharges paid by the ATM users and interchange fees generated by issuers.

Our Approach to Sales, Service and Operations

Security Bancorp sells, services and operates ATMs in Canada.  Prior to the discontinuation of its operations in 2004, Intercash sold and operated Point-of-Sale machines.  Each time an ATM card, debit card or credit card is used in one of our machines, a fee is charged.  That fee is split between the owner of the machine, the owner of the location where the machine is located, and us.  Transaction fees accounted for approximately 74% of MoneyFlow's revenue during fiscal year 2005.  Sales of ATMs terminals generated most of the remainder of MoneyFlow's revenue during fiscal year 2005.

Security Bancorp enters into a transaction processing agreement with each client who acquires an ATM and each business owner who allows Security Bancorp to place an ATM at its business that is owned by Security Bancorp.  The processing agreement typically has an initial term of 5 years and grants to the client a non-exclusive, non-transferable, revocable license to use the software needed to operate the ATM.  The currency used to supply the machine is provided by the machine owner who is responsible for maintenance and supplies in the machine.  Machines owned by Security Bancorp are supplied by the owner of the business where the ATM is located.  Security Bancorp credits the client's bank account for the amount of the funds withdrawn by users of the ATM.

Typically, retail, food, hospitality and other businesses are interested in having an ATM on their premises for the convenience of their customers and to encourage spending on the premises.

As of February 10, 2006, Security Bancorp has placed and holds under management ATMs at over 200 locations across Canada, primarily in the provinces of Ontario, Alberta, Saskatchewan, British Columbia and Manitoba.  We are also building a presence in certain other targeted Canadian provinces.

During 2005, MoneyFlow used two suppliers for the ATMs it sold -Tranax Technologies and Greenlink Technologies.One supplier, Tranax Technologies, accounted for most of MoneyFlow's product purchases in fiscal year 2005.  Management believes that MoneyFlow will be able to continue its relationship with these suppliers.  However, if MoneyFlow is not able to continue its relationship with one or more of these suppliers, management believes that financial transaction hardware and software is readily available from alternate suppliers.

All of MoneyFlow's ATM transactions are currently processed by DataWest.  However, Interac Association continues to add new members and management believes enough competition exists among Interac members to allow MoneyFlow to find an alternative provider to process its transactions if its contracts with DataWest are terminated or not renewed.



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Security Bancorp owns some of the ATMs that it manages.  However, Security Bancorp holds these ATMs as inventory and intends to sell them to appropriate buyers in the ordinary course of business.  The business reason for placing an ATM that has not yet been sold is to secure a location MoneyFlow thinks is desirable before it gets taken by a competitor.  In addition, when the Company places (owns) the ATM it receives a larger portion of the transaction revenue than if the ATM were sold to (owned by) the location.

In January 2002, MoneyFlow entered into a new Connection Services Agreement with Open Solutions Inc. to facilitate ATM transactions.  This agreement's current term expires in 2007 and is renewable for successive two year terms.  Security Bancorp pays Open Solutions Inc;a fee for each transaction processed and also pays a one-time fee for each ATM terminal connected to Open Solutions transaction processing network.

These agreements enable Security Bancorp to acquire, sell, service and manage ATM and related financial transactions.

Competition in the ATM Business

Banks and other financial institutions typically maintain ATMs at their own branch locations but can service any location.  Security Bancorp and its primary competitors described below place ATMs solely in private businesses such as grocery stores, convenience stores, service stations, bars, nightclubs and hotels.  Although Security Bancorp competes directly with banks and other financial institutions in placing its ATMs, its management does not view banks and other financial institutions as its primary competition as historically they have not selected prime private business locations.  Security Bancorp and its primary competitors compete by locating the most attractive locations for their machines based on expected transaction volume and making arrangements with the owners of those properties to place ATMs there before a competitor can take that location.  Location is the most important factor in the success of an ATM because ATMs depend on consumer traffic to generate large volumes of ATM transactions.  If Security Bancorp cannot secure prime locations for its ATMs, it will likely lose those locations to its competitors, which negatively impacts Security Bancorp's growth.  Management believes that only a finite number of prime locations exist for the placement of its machines and once they are gone, Security Bancorp must settle for less profitable locations.  Security Bancorp's competitors offer very similar services to those of Security Bancorp.  Security Bancorp does not offer discounted fees in comparison to its competitors and does not offer a distinctive product or service.

The ATM industry remains fragmented with an estimated 150 ATM operators in Canada. Consolidation is taking place in the industry, resulting in fewer small operators and a couple of operations having grown to a significant size.

The following list represents the competitors of whom the management of MoneyFlow is aware:

Direct Cash Income Trust is currently the largest Canadian company in the private ATM business, with approximately 3500 machines in operation.  Its distribution covers major centers in Canada.

Laser Cash is an Ontario-based organization with in excess of 650 ATMs distributed, primarily in Eastern Canada.

Frisco Bay is a well established security system and ATM supply and maintenance company.  We estimate that their installed base of ATM systems exceeds 1000 units.

Cash-n-Go, based in Edmonton Alberta, has over 1000 ATMs in operation, primarily from the manufacturer Triton.  It recently acquired a micro-switch to facilitate partial processing of its transactions.

EZE ATM operating from the Toronto area has an estimated 2,000 plus ATMs in operation.

Cash-line, headquartered in Victoria, B.C., has in excess of 500 systems in service.

New Focus on Security Products and Services

In early 2003, MoneyFlow introduced a new product, the Remote Access Digital Surveillance System, a remote access digital recording system (the "Digital Surveillance System").  Images recorded by a digital video recorder, or DVR, may be viewed remotely over the Internet, and MoneyFlow offers a variety of cameras that can operate both indoors and outdoors and offer pan, tilt and zoom functions suitable for a variety of surveillance needs.  DVRs, CCTV cameras and related software can be combined in a variety of pre-packaged or custom configurations in a variety of price ranges.  MoneyFlow began marketing this product to retail and commercial businesses, homes, industrial facilities, government facilities and educational facilities as a method of deterring criminal activity, reducing losses, and providing passive monitoring of both indoor and outdoor areas.  MoneyFlow assembles, tests and sells the Digital Surveillance System to its customers.  The Digital Surveillance System is also leased to customers through third parties.



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Competition in the Security Industry

We face competition for our security product, the Digital Surveillance System.  In Canada, our competitors include ADT, Honeywell, GE and smaller companies which distribute surveillance products.  The products offered by these competitors are similar to the Digital Surveillance System, although management believes that the Digital Surveillance System offers a level of quality and available features equivalent to the other products on the market as of the date of this filing.   Management also believes that MoneyFlow's history of controlling the cost of the Digital Surveillance System and providing a range of systems at various price points is a key factor in the product being competitive with similar products offered by our competitors.

Growth Strategy and Market Niche

MoneyFlow's plan is to capture immediate growth in the electronic financial transactions and security markets as follows:

Short Term Strategy

·

Continuing to research and develop new and better surveillance products.

·

Further improvement of security features on ATMs.

·

The immediate implementation of marketing efforts, and an increased focus on promotion, sale and installation of its Digital Surveillance Systems.

·

The pursuit of additional security consulting contracts through Interglobe.

·

The purchase, sale and placement of additional ATMs over the next 12 months.

·

To generate adequate working capital from operations and/or financing for growth.

Long Term Strategy

·

Acquisition of existing ATM networks owned by others.

·

To source potential merger/amalgamation candidates, identify and participate in joint ventures and strategic alliances with industry partners in both the financial transactions and security markets.

·

To engage in new product development through technology acquisition, strategic alliances and joint venture opportunities.

·

To identify and locate potential opportunities to expand our operations.

Trademarks and Licenses

Our registered Canadian trademarks are:  "CA$H STATION" and "CASH FOR YOUR CUSTOMERS WHEN AND WHERE THEY NEED IT", both of which are owned by our subsidiary, Security Bancorp.  We believe that these trademarks are known and recognized within our market and are valuable to our business.  We intend to vigorously enforce all violations of our trademarks as we believe the goodwill associated with them is important to the development of our business.  All trademarks and trade names used in this Form 10-KSB are the property of their respective owners.

Employees

We currently have nine employees.

Government Regulations and Legal Considerations

As of the date of this filing, there are no pervasive regulations of our ATM and Point-of-Sale business.  Due to the nature of Interglobe's business, its operations are subject to a variety of laws, regulations and licensing requirements, including laws requiring registration of security officers and requiring certain levels of insurance and bonding.We believe Interglobe's operations are in substantial compliance with applicable laws, regulations and other requirements.  The nature of the services provided by Interglobe exposes it to potentially greater risks of liability for employee acts, injuries or omissions than may be posed by other service businesses, and, although Interglobe attempts to manage these risks through employee screening, training and supervision, there can be no assurance that a successful claim would not exceed any insurance coverage and thus have an adverse effect on our business.

ITEM 2.     PROPERTIES



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MoneyFlow's principal offices are located at Suite N, 7003 - Fifth Street SE, Calgary, Alberta T2H 2G2, telephone number (403) 319-0236.  These offices consist of 3,746 square feet on a lease that runs through May 1, 2007.  The monthly rental fee is CDN $1,968 (approximately US $1,614) plus taxes and operating costs, with rent increasing yearly by CDN $0.48 (approximately US $0.40) per square foot of gross leasable area.  Interglobe leases a virtual office facility on a month-to-month basis for approximately $156 (CDN $190) plus additional usage fees.



The Company's management believes that all facilities occupied by the Company are adequate for present requirements, and that the Company's current equipment is in good condition and is suitable for the operations involved.



ITEM
3.    
LEGAL PROCEEDINGS



We are not currently involved in any legal proceedings.



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



No matters were submitted to a vote of our security holders during the fourth quarter of fiscal year 2004.



PART II



ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





MoneyFlow had 7,216,203 shares of common stock outstanding as of February 10, 2005.

Number of Shareholders

The number of beneficial shareholders of record of the Common Stock of the Company as of the close of business on February 10, 2006 was approximately 81.

Dividend Policy

To date, the Company has no cash dividends on its Common Stock, and does not expect to pay cash dividends in the near term.  The Company intends to retain future earnings, if any, to provide funds for operation and growth of its business.

Market Information

Our common stock is currently traded on the National Association of Securities Dealers Automated Quotation System Over the Counter Bulletin Board ("OTCBB") under the symbol "MFLW.OB."  There is limited trading activity in our securities, and there can be no assurance a regular trading market for our common stock will be sustained. We began trading on the OTCBB on October 11, 2002. The following table sets forth, for the periods indicated, the bid price range of our common stock, giving retroactive effect to our ten to one reverse stock split, which occurred in July 2004.  Prior to the reverse stock split, our common stock was traded under the symbol "MNYF.OB."

|                    |             |             
|------------------- | ----------- | ------------
|Fiscal Period       | Average Low | Average High
|Fourth Quarter 2005 | $.05        | $.05        
|Third Quarter 2005  | $.06        | $.10        
|Second Quarter 2005 | $.19        | $29         
|First Quarter 2005  | $.51        | $.72        
|Fourth Quarter 2004 | $0.33       | $1.01       
|Third Quarter 2004  | $0.50       | $1.40       
|Second Quarter 2004 | $1.10       | $1.90       
|First Quarter 2004  | $0.80       | $1.60       
|Fourth Quarter 2003 | $0.60       | $2.50       
|Third Quarter 2003  | $1.00       | $3.60       



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|                    |       |       
|------------------- | ----- | ------
|Second Quarter 2003 | $1.60 | $10.10
|First Quarter 2003  | $1.00 | $13.30

Such market quotations reflect the high bid and low prices as reflected by the OTCBB or by prices, without retail mark-up, markdown or commissions and may not necessarily represent actual transactions.

Disclosure of Equity Compensation Plans

The Company maintains the 2004 Benefit Plan (the "Benefit Plan"), pursuant to which it may grant equity awards to eligible persons.  The Benefit Plan allows the Board of Directors to issue shares of MoneyFlow common stock or grant options to purchase shares of MoneyFlow common stock to employees, consultants and advisors of the Company or its subsidiaries.  As of February 10, 2006, no options had been granted or shares issued under the Benefit Plan.  Pursuant to the Company's previous plan, the 2002 Stock Option Plan, 537,500 shares of common stock were issued to the Company's directors and employees of Security Bancorp on December 10, 2004.  Subsequent to that date, the 2002 Stock Option Plan was discontinued and the Company maintains only the Benefit Plan as of the date of this filing.  The table below lists information on our equity compensation plans as of October 31, 2005.

|                                                       |  |                                                                                                 |  |                                                                                 |  |                                                                                             
|------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------
|Plan Category                                          |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights (#) |  | Weighted-average exercise price of outstanding options, warrants and rights ($) |  | Number of securities remaining available for future issuance under equity compensation plans
|Equity compensation plans approved by shareholders     |  | N/A                                                                                             |  | N/A                                                                             |  | 1,800,000                                                                                   
|Equity compensation plans not approved by shareholders |  | N/A                                                                                             |  | N/A                                                                             |  | N/A                                                                                         
|Total                                                  |  | N/A                                                                                             |  | N/A                                                                             |  | 1,800,000                                                                                   

Recent Sales of Unregistered Securities

During the fiscal years ended October 31, 2004 and October 31, 2005, the Company issued shares of common stock as follows:

·

40,000 shares of common stock were issued in exchange for $14,875 to Dianne Manzo, on July 13, 2004, as a private placement in reliance on the exemption from registration provided by § 4.2 of the Securities Act of 1933, as amended (the "Securities Act").

·

5,000 shares of common stock were issued to Carman Parente as payment of a finder's fee on July 13, 2004 in reliance on the exemption from registration provided by § 4.2 of the Securities Act.

·

500,000 shares of common stock were issued to the two shareholders of Interglobe and 150,000 shares of common stock were issued to Advanced Canadian Enterprises and Global Business Exchange Corp. as finders' fees on October 13, 2004 as part of the Company's acquisition of Interglobe, in reliance on the exemption from registration provided by § 4.2 of the Securities Act.

·

300,000 shares of common stock were issued to the directors of the Company on September 29, 2004 as payment of director fees, in reliance on the exemption from registration provided by § 4.2 of the Securities Act.

237,500 shares of common stock were issued to employees of Security Bancorp as a year-end bonus on December 2, 2004, in reliance on the exemption from registration provided by § 4.2 of the Securities Act.

·

240,000 shares of common stock were issued to members of the Board as compensation for service on the Board on November 12, 2004 and 60,000 shares of Class A preferred stock on November 19, 2004, in reliance on the exemption from registration provided by § 4.2 of the Securities Act.



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·

1,000 shares of class B preferred stock were issued to Hal Schultz, the Company's President, on November 15, 2004, as compensation, in reliance on the exemption from registration provided by § 4.2 of the Securities Act.

·

10,000 shares of Class A preferred stock were issued to Ryan Henning on November 19, 2004 for legal services, in reliance on the exemption from registration provided by § 4.2 of the Securities Act.



ITEM 6.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS



Results of Operations



Through its operating subsidiaries, Security Bancorp, Inc. ("SBI") and Interglobe Ltd. (ITL), MoneyFlow Systems International Inc. ("Moneyflow" or the "Company") supplies, installs, maintains and manages Automated Teller Machines ("ATMs") and provides transaction processing services for card holders using these devices.  The machines are placed on the premises of businesses for the purpose and convenience of dispensing cash and other services to the public and the merchant.  To date, Moneyflow has provided these services to approximately 470 locations in five Canadian provinces; however the number of locations being serviced has been reduced to approximately 200 as a result of the sale of Intercash POS Systems in 2004.  Our sales expenses to outside independent distributors have been virtually eliminated as a result of sales now being handled by corporate staff. Our terminals accept Visa, MasterCard, Interac, Maestro, Cirrus, Circuit and American Express (Canada).

In October of 2004 the Company acquired Interglobe Investigation Services, Inc. to expand the Companys investigation services and video surveillance product line.  On March 15, 2005, Interglobe Investigation Services, Inc. was sold and the Company organized Interglobe Ltd., the successor for the Companys surveillance operations.  The Company originally developed its own Remote Access Digital Video Recorder, which is the central feature of this surveillance system.  More recently additional Digital Video Recorders and new CCTV cameras have been added to round out the product line to provide surveillance systems capable of serving the smallest to the most sophisticated requirements.  Our capability now ranges from a simple one camera observation system to multiples of hundreds of cameras, together with the supporting viewing and recording capabilities.  The systems are being installed in retail, hospitality and other businesses, and in industrial and government facilities to provide remote access video surveillance to detect events, including cash and inventory shrinkage, security intrusions, theft, vandalism, and for general surveillance.  Users of the system may access digital camera images remotely from anywhere in the world via the Internet.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.  In consultation with our Board of Directors, we have identified several accounting principles that we believe are key to an understanding of our financial statements.  These important accounting policies require management's most difficult, subjective judgments.

Principles of Consolidation

The consolidated financial statements include the accounts of Moneyflow Systems International, Inc. and its wholly-owned subsidiaries, Security Bancorp, Inc., Interglobe Investigation Services, Inc. through March 15, 2005, and Interglobe, Ltd. from March 16, 2005.

The comparative financial statements presented for the year ended October 31, 2004 have been restated to segregate the results of discontinued operations as the Company sold its wholly-owned subsidiaries Intercash POS Systems, Ltd. on September 1, 2004 and Interglobe Investigation Services, Inc. on March 15, 2005.

All material inter-company accounts and transactions have been eliminated.

Revenue Recognition Policy



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The Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collectibility is probable. Sales are recorded net of sales discounts.  The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition," (SAB 104).  Our revenues are recorded under the following categories:

Revenue from the sale of Automated Teller Machines and Surveillance Systems is recognized when the earning process is complete and the risk and rewards of ownership have transferred to the customer, which is generally considered to have occurred upon the delivery, activation and acceptance of the units by our customers.

Revenue from transaction and service fees are earned daily and are electronically transferred to the Company from the processors.

Revenue from investigation services provided is recognized when the earning process is complete which is generally considered to have occurred when the services are provided to the customer.

Stock Issued for Non-Cash Transactions

It is the Companys policy to value stock issued for non-cash transactions, such as services, at the fair market value of the goods or services received or the consideration granted, whichever is more readily determinable, at the date the transaction is negotiated.



Preferred A stock that is issued for non-cash transactions, such as services, at the fair market value of the goods or services received or the consideration granted, whichever is more readily determinable, at the date the transaction is negotiated and by applying the conversion feature of one share of preferred A stock into 100 shares of common stock.



Stock Based Compensation



The Company accounts for its stock option plan using the fair value based method of accounting, under which compensation expense has been recognized for stock option awards granted.  For purposes of pro forma disclosures under FAS 123, Accounting for Stock-Based Compensation, as amended by FAS 148, Accounting for Stock-Based Compensation  Transition and Disclosure, the estimated fair value of the stock options is amortized to compensation expense over the options vesting period.



The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model based on the following assumptions:



Risk free interest rate
	4.5 %Expected life
	1 yearExpected volatility
	214 %Dividend yield
	0.0




Accounts Receivable

Accounts receivable are reported at the customers' outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.

Allowance for Doubtful Accounts

The allowance for doubtful accounts on accounts receivable is charged against income in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers.  Accounts receivable are charged off against the allowance when collectibility is determined to be potentially impaired (bankruptcy, lack of contact, age of account balance, etc.).

Inventories

Inventories are valued at the lower of cost or market.  Cost is determined as follows:



12



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Automated Teller Machines held for resale  actual cost for the machine purchased.

Automated Teller Machines former placements  actual cost for the machine purchased less accumulated depreciation.  Depreciation is computed on the straight line basis over 10 years.

Surveillance equipment, parts, supplies and counterfeit detectors  lower of cost or market, first-in, first-out method.

Property and Equipment

Property and equipment are stated at cost.  Major renewals and improvements are charged to the asset accounts while replacements, maintenance, and repairs, which do not improve or extend the lives of the respective assets, are expensed.  At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts.  Gains or losses from retirements or sales are credited or charged to income.

The Company depreciates property and equipment as follows:

Financial statement reporting  straight line method as follows:

Furniture and fixtures
	10
	yearsComputer equipment
	5
	yearsTelephone equipment
	5
	yearsAutomobile
	5
	years




Income Taxes

Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements.  Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB Statement No. 109, Accounting for Income Taxes.  As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

Foreign Currency Translation

The financial statements of our Canadian subsidiaries are measured using the Canadian dollar as the functional currency. Assets, liabilities and equity accounts of the companies are translated at exchange rates as of the balance sheet date.  Revenues and expenses are translated at the average rate in effect during the year.  The resulting cumulative translation adjustment has been recorded as a separate component of stockholders' equity.  The financial statements are presented in United States of America dollars.

Shipping and Handling Costs

The Company's policy is to classify shipping and handling costs as part of cost of sales in the statement of operations.



Reclassifications

Certain 2004 amounts have been reclassified to conform to 2005 presentations.



SELECTED FINANCIAL INFORMATION -2004 amounts have been reclassified to segregate the results of discontinued operations.

Year Ended10/31/200510/31/2004Statement of Operations Data:Total revenue$      888,662$     851,918(Loss) from operations(1,315,656)(251,099)




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(Loss) from continuing operations before corporation income taxes(1,319,640)(254,940)Income (loss) from discontinued operations (including loss on disposal)(148,444)119,234Net (loss)$ (1,468,084)$  (135,706)Net (loss) per share continuing operations$          (0.25)$        (0.13)Net (loss) per share discontinued operations$          (0.03)$          0.06Balance Sheet Data:Total assets$      294,403$    707,197Total liabilities$        92,371$    179,654Stockholders' equity$      202,032$    527,543




Results of Operations

Year ended October 31, 2005 compared to year ended October 31, 2004.

Year Ended10/31/200510/31/2004Increase(Decrease)Revenues:Machines and terminals$     82,653$     130,334$  (47,681)Surveillance equipment136,86260,81376,049Fees651,046649,1111,935Other revenue18,10111,6606,441Total Revenues$   888,662$   851,918$    36,744


Revenues.Revenues from operations for the year ended October 31, 2005 were $888,662 as compared to revenues of $851,918 for the year ended October 31, 2004, an increase of $36,744 or approximately 4%.  The changes in revenues are summarized as follows:

Sales of Machines and Terminals.Sales of machines and terminals decreased by $47,681 to $82,653 for the year ended October 31, 2005, as compared to $130,334 for the year ended October 31, 2004, approximately a 37% decrease.  During the year ended October 31, 2005, we continued to sell terminals from stock at reduced prices in an effort to meet increasing competition, and to place machines in active locations with long-term contracts and therefore generate recurring fee income.  In addition, a portion of our efforts is being used to continue participation in the burgeoning surveillance business opportunity.  Our overall focus is still to strategically market our ATM terminals and surveillance systems in order to capture additional locations and to identify and negotiate ATM asset acquisitions with potential acquisition candidates.

CS Surveillance Systems.Sales of surveillance equipment were $136,862 in the year ended October 31, 2005, an increase of 125% or $76,049 from the $60,813 sold during the year ended October 31, 2004.  During the year ended October 31, 2005, we continued to develop and expand the line of products we offer to clients in order to fulfill their surveillance system needs.

Fee Income.Fee income increased by $1,935 to $651,046 for the year ended October 31, 2005, as compared to $649,111.  Improvements in our integrated ATM services that offer a suite of ATM management services from ATM deployment to transaction processing resulted in an increase in the revenue flow from those machines and



14



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terminals.  Our continuing long-term marketing strategy is to generate recurring fee income by placing machines in active locations with long-term contracts and to pursue acquisitions of competitive ATM assets.

Year Ended10/31/200510/31/2004Increase(Decrease)Cost of sales:Machines and terminals$    118,847$  183,700$ (64,853)Surveillance equipment81,03748,48732,550Total Cost of Sales$  199,884$  232,187$ (32,303)Gross Profit (Loss):Machines and terminals  amount$ (36,194)$ (53,366)$      17,172Machines and terminals - percentage(44%)(41%)(3%)Surveillance equipment  amount55,82512,32643,499Surveillance equipment - percentage41%20%21%


Cost of Sales and Gross Profit.The cost of sales decreased by $64,853 to $118,847 for the year ended October 31, 2005, as compared to $183,700 for the year ended October 31, 2004.  This decrease in cost of sales is due primarily to our reduction of ATM terminals during the year ended October 31, 2005 as compared to the year ended October 31, 2005.  The gross profit for the year ended October 31, 2005 increased by $69,047 to $688,778 as compared to $619,731 for the year ended October 31, 2004.  This increase is attributable to the expansion of our surveillance equipment the Company is offering as well as the continued growth in our recurring ATM fee revenue.

Write Off of Obsolete Inventory.The need to write off inventory arose in the year ended October 31, 2005 and amounted to $3,489 as a result of improved technologies and changing equipment which made certain parts obsolete.  In particular, we wrote off the remaining POS inventory that we are holding for repairs and replacements.  For similar reasons we wrote-off obsolete inventory during the year ended October 31, 2004 in the amount of $7,669.  As technologies continue to improve and customers demand equipment changes, we may need to write off additional inventory in the future.

Consulting and legal fees, paid with common stock and options to purchase common stock.During the year ended October 31, 2005, we issued 2,020,000 shares of common stock and options to purchase   150,000 shares of common stock to various consultants in consideration for service agreements. The amortized portion of these issuances was $556,688 for the year ended October 31, 2005.

Employee bonuses paid with common stock.During the year ended October 31, 2005, we issued 237,500 shares of common stock valued at $80,750 to employees for their 2004 Christmas bonuses.

Directors fees paid with common stock and preferred stock.During the year ended October 31, 2005, we issued 240,000 shares of common stock valued at $60,000, 21,500 shares of preferred A stock valued at $430,000 and 1,000 shares of preferred B stock valued at $1,000 to our Board of Directors in payment of directors fees, for an aggregate total of $491,000 in expense.



Year Ended10/31/200510/31/2004Increase(Decrease)Selling, general and administrative expenses:Accounting, legal and professional services$    186,623$     120,553$    66,070Advertising34,10622,87211,234




15



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Agent, distributor and investor sales and residual fees27,65046,081(18,431)Bad debt73,2754,12569,150Depreciation20,42819,4231,005Office expense25,53722,5802,957Office rent22,30718,1004,207Salaries and wages300,061233,09366,968Sales contract fees82125,394(24,573)Sales management55,85282,177(26,325)Sales tax input expense15,19719,777(4,580)Travel26,39433,746(7,352)Vault cash usage fees15,00911,1853,824Other selling, general and administrative expenses69,247204,055(134,808)Total selling, general and administrative expenses$  872,507$   863,161$   9,346




Selling, General and Administration Expenses.Selling, general and administrative expenses increased by $9,346 to $872,507 for the year ended October 31, 2005, as compared to $863,161 for the year ended October 31, 2004, approximately a 1% increase. Several factors contributed to this increase.  Our accounting, legal and professional fees increased $66,070 or 55% due to our disposal of business segments and increased reporting requirements.  Our advertising increased $11,234, or 49%, due to our efforts to expand into the surveillance and security markets.  Our bad debts increased $69,150 as we expanded into new markets and began relations with new customers, specifically the customers related to the surveillance services and equipment and also due to our write down of the loan receivable with SMSMobility in the amount of $54,000. Our office expense, rent and salaries and wages increased $2,957, $4,207 and $66,968 due to our surveillance operations. Offsetting these increases was a decrease in our agent, distributor and investor sales and residual fees of $18,431 as our sales of ATM machines decreased.  Our sales contract fees and sales management fees decreased $24,573 and $26,325 as we work to rely more on our internal sales force.   Our other selling, general and administrative expenses decreased $134,808 to $69,247 mainly due to our attempt to reduce miscellaneous administrative costs.

Interest Expense.Interest expense increased by a nominal $52 in the year ended October 31, 2005, to $1,273, as compared to $1,221 in the year ended October 31, 2004.

Loss From Continuing Operations Before Corporation Income Taxes.We had a net loss before corporation income taxes of $1,319,640 for the year ended October 31, 2005 compared to $254,940 for the year ended October 31, 2004.  The increase in net loss was primarily the result of non-cash stock compensation payments to consultants, employees and directors made during the year ended October 31, 2005.

Corporation Income Taxes.Corporation income tax for the year ended October 31, 2005 and 2004 was $-0-.  No income tax expense was due for the year ended October 31, 2005 due to the current period loss.

Income (Loss) From Discontinued Operations.During the year ended October 31, 2005 we experienced a loss from discontinued operations in the amount of $148,444 as compared to net income of $119,234 during the year ended October 31, 2004.  Interglobe Investigation Services, Inc., our wholly-owned subsidiary and our investigations service segment, was sold and operations were discontinued on March 15, 2005.

Foreign Currencies.The key foreign currencies in which we effect transactions are the Canadian dollar and the United States dollar.  For the year ended October 31, 2005, the average exchange rate was 1.21751 United States dollars to Canadian dollars.  This is an 8% decrease from the year ended October 31, 2004 in which the average exchange rate was 1.31923 United States dollars to Canadian dollars.



16



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Capital and Sources of Liquidity.We currently have no material commitments for capital expenditures and have nominal fixed expenses such as an annual lease payment of approximately $20,000 (Canadian) per year.

Working capital is summarized and compared as follows:

|                    | October 31,
|------------------- | -----------
|                    |            
|Current assets      | $          
|Current liabilities |            
|Working capital     | $          

We expect that available cash and the cash flow from future operations will be sufficient to allow us to meet the expected growth in demand for our products and services.  However, we cannot be assured that our sales will meet our growth expectations.  Should this fail to occur, we may elect to (1) reduce the planned expansion of operations or (2) pursue other financing alternatives such as an equity offering or borrowings. Our planned growth and profitability could be delayed or diminished if the two options listed above are not implemented or financing is unavailable.

Our net cash used by operations was $284,810 for the year ended October 31, 2005 as compared to net cash provided of $144,501 for the year ended October 31, 2004.  The $429,311increase in cash used was primarily the result of a $1,064,700 increase in our net loss from continuing operations offset by the $1,128,438 non-cash stock compensation paid for directors fees, consulting and legal fees and employee bonuses for the year ended October 31, 2005.  We also used cash to fund the increase in our prepaid expenses and deposits and customer deposits in the amounts of $11,444 during the year ended October 31, 2005 along with the decrease in accounts payable and accrued expenses in the amount of $68,615 and G.S.T. and P.S.T. payable in the amount of $4,996.  Our uses of cash were offset by the reduction of inventories and accounts receivable in the amount of $27,726 and $25,428, respectively.

Our net provided by investing activities was $114,366 for the year ended October 31, 2005 as compared to $12,710 used by investing activities for the year ended October 31, 2004.  We used $54,000 to fund a loan receivable from SMS Mobility with whom we entered into a Technology Joint Venture Agreement on January 21, 2005.  The loan bears interest at 12% per annum and was due in six months. The loan has not yet been collected, and the amount fully reserved.  During the year ended October 31, 2005, we disposed of $183,355 of goodwill in connection with the sale of Interglobe.  We also used $14,989 and $17,175 to purchase property and equipment during the year ended October 31, 2005 and 2004, respectively.  During the year ended October 31, 2004 we purchased $4,465 cash during the acquisition of Interglobe Investigation Services.

Our net cash used from financing activities was $14,359 during the year ended October 31, 2005 as compared to $3,647 for the year ended October 31, 2004.  We used $9,000 to fund the acquisition of treasury stock.  We used the cash to repay notes payable in the amounts of $3,369 and $4,780, and repay capital leases in the amounts of $1,990 and $1,519 during the years ended October 31, 2005 and 2004, respectively. During the year ended October 31, 2004 we also received $14,875 from the sale of common stock and repaid $12,223 of a note payable to stockholder.

Our only term debt consists of a vehicle loan and a capital lease totaling approximately $12,781, of which $6,776 is long-term.  Our term debt matures at various periods through 2008 and bears interest of approximately eight percent.  We believe, but can provide no assurance, that we have available resources, both commercial and private, should we need additional capital to fund our cash flows from operations or investing activities.

Other than as disclosed herein the Company is not party to any financial arrangements or obligations.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS

The Company's Form 10-KSB, any Form 10-QSB or any Form 8-K of the Company or any other written or oral statements made by or on behalf of the Company may contain forward-looking statements which reflect the Company's current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," and similar expressions identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for



17



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future operations; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.  Such "forward-looking statements" are subject to risks and uncertainties set forth from time to time in the Company's SEC reports and are generally set forth below and particularly discussed in the Company's Form 10-KSB for the year ended October 31, 2004.

Readers are cautioned not to place undue reliance on such forward-looking statements as they speak only of the Company's views as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Risk Factors

You should consider the following discussion of risks as well as other information regarding our operations.  The risks and uncertainties described below are not the only ones.  Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

·

Our ongoing reporting obligations as a public company have resulted and may continue to result in ongoing operating losses.

·

We have increased our reliance on sales of our new surveillance products to reach profitability, and to date this product has not been accepted by the market and there is no assurance that it will be accepted by the market.

·

We are selling fewer ATM terminals, which are resulting in a decline in revenues from these sources, and are instead focusing on enhancing fee revenue and sales of our new surveillance products.

·

If we have to comply with any new government regulations, or if old government regulations are reenacted, we may not be able to comply with them or we may have to spend large amounts of resources to meet these new regulations, which we may not have the resources to do, and which may result in a loss of revenue and reduced profitability.

·

Our need for additional financing is uncertain, as is our ability to acquire further financing if required.

·

Because several of our competitors are much larger than we are, we may not be able to compete effectively and gain additional market share, and we face additional competition as banks have recently been re-entering the market to place ATMs at non-banking locations.

·

We depend on key management personnel and the loss of any of them would seriously disrupt our operations.

·

Our operations are not diversified and we will not have the benefit of reducing our financial risks by relying on other revenues.

·

We depend on the revenues generated by our wholly-owned subsidiaries, Security Bancorp Inc. and Interglobe Investigation Services Inc. Should they fail to continue producing revenues to fund our operations; we would have to seek alternative methods of financing such as selling our stock or borrowing money.

·

There is a limited market for our common stock.

·

Our common stock is subject to penny stock regulation.

·

Our auditors have expressed substantial doubt about our ability to continue as a going concern.





ITEM 7.FINANCIAL STATEMENTS



The information required by this Item is submitted as a separate section of this Form 10-KSB.  See Item 13.



ITEM 8.CHANGES IN AND
DISAGREEMENTSWITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





18



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None.

ITEM


8A.

CONTROLS AND PROCEDURES

(a)

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the design and operation of our disclosure controls and procedures, as such term is defined under Rules 13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), within 90 days of the filing date of this report.  Based on that evaluation, our principal executive officer and our principal financial officer concluded that the design and operation of our disclosure controls and procedures were effective to ensure that information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

(b)

In addition, there have been no changes in our internal control over financial reporting identified in connection with the elevation that occurred during the last fiscal quarter that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

ITEM

8B.

OTHER INFORMATION

MoneyFlow previously reported on its Form 8-K filed October 26, 2004 that most of its Point-of-Sale business had been sold to BP Financial Corp., and also previously reported on its Form 8-K filed November 1, 2004 that it acquired Interglobe through a share exchange.  As of the dates of these filings it was impractical for MoneyFlow to provide the financial statements and pro forma financial information required by Item 9.01 of Form 8-K for these transactions.  This required financial information is filed herewith as Exhibits 99.1 and 99.2.

On September 30, 2004, Richard J. Scott resigned from his positions as a director and a vice president of MoneyFlow.

PART III

ITEM

9.

DIRECTORS




ANDEXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The names of our directors and executive officers, their ages, and certain other information about them are set forth below:

|                     |     |                                            |            
|-------------------- | --- | ------------------------------------------ | -----------
|Name                 | Age | Position                                   | Term Began 
|Harold F. Schultz    | 74  | Chairman of the Board, President, CEO, CFO | April, 2001
|Douglas A. McDougall | 57  | Director                                   | July, 2003 
|Darwyn Ross          | 43  | Director                                   | July, 2004 



Harold F. Schultz, Chairman of the Board, President, CEO and CFO.  Mr. Schultz is a founding shareholder of MoneyFlow as well as serving as its President and Chief Executive Officer since MoneyFlow was formed in 2001.  Mr. Schultz is also President, CEO and a Director of Security Bancorp Inc., MoneyFlow's wholly owned subsidiary.  Mr. Schultz has been President of Security Bancorp Inc. since 1999.  Mr. Schultz has over 40 years experience in the areas of construction, real estate and the oil and gas industry.  Prior to joining Security Bancorp Inc., Mr. Schultz was Chairman of Enviro FX, Inc., a publicly traded Canadian company, from 1996 until 1998.  Mr. Schultz has been President of Advance Contracting Services Ltd., a private holding company, since 1972.  Mr. Schultz is a member of the 400 Club, a founder of the Lakeview Community Association and many other community organizations.

Alec McDougall, Director.  Mr. McDougall's career has spanned several senior engineering posts with CP Rail, the City of Calgary, the City of Lethbridge, Alberta and positions in private engineering firms.  In 1997 he joined Canadian Crude Separators (CCS) as President and COO.  Mr. McDougall is also President of ECCO Waste Systems, a company



19



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involved in the disposal of construction and demolition debris and non hazardous waste.  He is currently Project Director for the TPO Project with the City of Calgary and five private sector partners.  He is responsible for design and construction of major transportation and land development projects. His diverse professional and business experience continues to be a valuable asset to the Company.  Mr. McDougall received his BSc in Civil Engineering in 1972.

Darwyn Ross, Director.  Mr. Ross became a director of MoneyFlow in July of 2004.  Mr. Ross has been practicing law since 1986.  He began his legal career at Paterson Ross in 1986, and moved to Sisson Warren Sinclair in 2002.  Since 2004, Mr. Ross has practiced from his own firm.  From 2000 to 2002, Mr. Ross served as a director of Delta Capital Technologies Corp., a publicly traded corporation.

Conflicts of Interest Policy

MoneyFlow has adopted a policy that any transactions with directors, officers or entities of which they are also officers or directors or in which they have a financial interest, will only be on terms consistent with industry standards.  These transactions must also be approved by a majority of the disinterested directors of MoneyFlow's Board of Directors.

Board Committees, Meetings and Compensation

The Company's business affairs are managed by the Board.  During the fiscal year ending October 31, 2004, the Board of Directors held __ meetings at which time no director then in office attended fewer than 100% of the aggregate number of meetings of the Board of Directors.  None of the Directors currently receive any cash compensation for their service on the Board, although they may receive, at the Company's discretion, restricted stock as compensation for their service on the Board.  The Company does not currently have any standing committees.  As of the date of this filing, the entire Board fulfills the functions of the Audit Committee.  The Board has determined that none of the directors are "audit committee financial experts" as such term is defined in Item 401(e) of Regulation S-B.  Due to the small size of the Company, the Board believes an audit committee financial expert is not necessary, but the Board may seek an audit committee financial expert for the Board in the future if the Company's needs change.  The Company does not have a nominating committee, and the Board believes such a committee is not necessary due to the small size of the Board and the absence to date of any director candidates recommended by shareholders.  Currently, the entire Board participates in the consideration of director nominees.  The Board of Directors does not have a formal policy with regard to the consideration of any director candidates recommended by stockholders, the minimum qualification of director candidates or the process for identifying and evaluating director nominees.  To date, the Company has not received any director candidates recommended by its stockholders and consequently the Board of Directors has believed that it could appropriately address any such recommendations received without a formal policy.  Although the Company does not have a formal policy regarding attendance by members of the Board of Directors at annual meetings of stockholders, directors are encouraged to attend annual meetings.

Stockholder Communications with the Board of Directors

Stockholders may communicate with the full Board, or any individual directors, by sending such written communication to the following address:

Corporate Secretary

MoneyFlow Systems International Inc.

Suite N  -  7003  5th Street S.E.

Calgary, Alberta, Canada  T2H 2G2



Any written communications received by the Corporate Secretary will be forwarded to the appropriate directors.

Code of Ethics

The Company has not yet established a code of ethics comprising written standards that are reasonably designed to deter wrongdoing and to promote the behavior described in Item 406 of Regulation S-B promulgated by the Securities and Exchange Commission.  The Board does not believe such a code is necessary at this stage in the Company's development.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's directors, executive officers and persons who own more than 10% of the Company's stock (collectively, "Reporting Persons") to file with the SEC initial reports of ownership



20



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and changes in ownership of the Company's common stock.  Reporting Persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) reports they file.  To the Company's knowledge, based solely on its review of the copies of such reports received or written representations from certain Reporting Persons that no other reports were required, the Company believes that during its fiscal year ended October 31, 2004, all Reporting Persons timely complied with all applicable filing requirements except as follows:  Hal Schultz - one Form 4; Douglas McDougall - one Form 4; Darwyn Ross - one Form 3 and one Form 4.  These individuals have not filed their delinquent Forms, but intend to do so in the near future.

ITEM
10.

EXECUTIVECOMPENSATION

SUMMARY COMPENSATION TABLE



|                                      |                     |                        |              |                                  |                                |                                   |             
|------------------------------------- | ------------------- | ---------------------- | ------------ | -------------------------------- | ------------------------------ | --------------------------------- | ------------
|                                      | Annual Compensation | Long Term Compensation
|Awards                                | Payouts            
|Name and Principal Position           | Year                | Salary
(US $)          | Bonus
(US $) | Other Annual Compensation
(US $) | Restricted Stock Awards
(US $) | Securities Underlying Options
(#) | LTIP Payouts
|Harold Schultz (President, CEO & CFO) | 2002                | 38,800                 | 0            | 0                                | 0                              | 0                                 | 0           
|                                      | 2003                | 41,577                 | 0            | 0                                | 0                              | 0                                 | 0           
|                                      | 2004                | 0                      | 0            | 0                                | 15,000                         | 0                                 | 0           
|                                      | 2005                | 49,800                 | 0            | 0                                | 10,000                         | 0                                 | 0           



Members of the Board of Directors do not receive any cash compensation for their service as Directors but the Company may determine to pay Directors a per meeting fee in the future if these Directors are not separately compensated by MoneyFlow for other services and the Company may award restricted stock to Directors from time to time.  All expenses for meeting attendance or out of pocket expenses connected directly with their Board representation will be reimbursed by MoneyFlow.

Director liability insurance may be provided to all members of the Board of Directors. MoneyFlow has not yet obtained such insurance and does not have any specifics for available cost and coverage.  MoneyFlow does not have a specific time frame to obtain the insurance.  No differentiation is made in the compensation of "outside directors" and those officers of MoneyFlow serving in that capacity

During fiscal 2004, Mr. Schultz was issued 50,000 restricted shares, valued at $15,000, and the other Directors were issued 250,000 restricted shares, valued at $75,000, as compensation for service on the Board.

ITEM11.

SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

There were 7,216,203 common shares outstanding as of February 10, 2006.  The following tabulates holdings of shares of MoneyFlow by each person who, subject to the above, as of February 10, 2006, holds of record or is known by Management to own beneficially more than 5.0% of the common shares and, in addition, by all directors and officers of MoneyFlow individually and as a group.



|                                          |                                |                                
|----------------------------------------- | ------------------------------ | -------------------------------
|SHARE OWNERSHIP AS OF FEBRUARY 8, 2006   
|Name and Address of 
Beneficial Owner (1) | Amount of 
Common Shares Owned | Percent of 
Common Shares Owned
|                                          |                                |                                
|Harold F. Schultz (2) (3)                 | 2,052,670                      | 28.4%                          
|Suite N - 7003 5th Street SE              |                                |                                
|Calgary, Alberta T2H 2G2                  |                                |                                



21



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|                                                  |           |       
|------------------------------------------------- | --------- | ------
|                                                  |           |       
|Douglas A. McDougall (2) (4)                      | 219,900   | 4.2%  
|916 Rideau Road, SW                               |           |       
|Calgary, Alberta T2S 0R6                          |           |       
|                                                  |           |       
|Darwyn Ross (2)                                   | 110,000   | 2.1%  
|Suite N - 7003 5th Street SE                      |           |       
|Calgary, Alberta T2H 2G2                          |           |       
|                                                  |           |       
|Dale Tingley                                      | 497,200   | 9.4%  
|Suite N - 7003 5th Street SE                      |           |       
|Calgary, Alberta T2H 2G2                          |           |       
|                                                  |           |       
|All Officers and Directors
as a group (3 persons) | 2,382,570 | 34.74%



(1)

Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended, beneficial ownership of a security consists of sole or shared voting power (including the power to vote or direct the voting) and/or sole or shared investment power (including the power to dispose or direct the disposition) with respect to a security whether through a contract, arrangement, understanding, relationship or otherwise. Unless otherwise indicated, each person indicated above has sole power to vote, or dispose or direct the disposition of all shares beneficially owned, subject to applicable community property laws.

(2)

Denotes officer or director of MoneyFlow.

(3)

All shares beneficially owned by Mr. Schultz are held of record by Advance Contracting Services Ltd., an entity owned and controlled by Mr. Schultz, President of MoneyFlow.

(4)

All shares beneficially owned by Mr. McDougall are held of record by Altess Investments, an entity owned and controlled by Mr. McDougall, a director of MoneyFlow.

ITEM


12.

CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

Since inception, MoneyFlow through its wholly owned subsidiary, Security Bancorp Inc., has had an arrangement with Advance Contracting Services Ltd., whose sole shareholder, officer and director is Harold F. Schultz, President of MoneyFlow.  As part of this arrangement, Security Bancorp pays a monthly management fee to Advance in the amount of CDN$5,000 (approximately US$4,450) for Mr. Schultz's services to Security Bancorp.  No written agreement has been entered into and this arrangement is terminable at will.

ITEM

13.

EXHIBITS,
FINANCIAL
STATEMENTS AND REPORTS ON FORM 8-K

(a)

The following documents are filed as part of this report:

|   |                                                                           |    |             | 
|-- | ------------------------------------------------------------------------- | -- | ----------- | 
|   |                                                                           |    | Page Number | 
|1. | Financial Statements:                                                     |    |             | 
|   | Reports of Registered Public Accounting Firms                             |    | 27          | 
|   | Consolidated Balance Sheets at October 31, 2004 and October 31, 2005      | 28 |            
|   | Consolidated Statements of Operations for each of the two years           |    |            
|   | ended October 31, 2004 and October 31, 2005                               |    | 30          | 
|   | Consolidated Statements of Comprehensive (Loss) for each of the two years |    |            
|   | ended October 31, 2004 and October 31, 2005                               |    | 32          | 



22



---



| |                                                                          |    |    | 
| | ------------------------------------------------------------------------ | -- | -- | 
| | Consolidated Statements of Stockholders Equity for each of the two years |    |   
| | ended October 31, 2004 and October 31, 2005                              |    | 33 | 
| | Consolidated Statements of Cash Flows for each of the two years          |    |   
| | ended October 31, 2004 and October 31, 2005                              |    | 34 | 
| | Notes to Consolidated Financial Statements                               | 36 |   
| | Exhibits included or incorporated herein:See Exhibit Index.              |    |   





(b)

Reports on Form 8-K:

On August 9, 2004, the Company filed a Current Report on Form 8-K announcing the planned acquisition of Interglobe.

On August 17, 2004, the Company filed a Current Report on Form 8-K announcing the consolidation of the Company's common stock.

On October 26, 2004, the Company filed a Current Report on Form 8-K announcing the sale of most of the Point-of-Sale business to BP Financial Corp.

On November 1, 2004, the Company filed a Current Report on Form 8-K announcing the acquisition of Interglobe.

On December 23, 2004, the Company filed a Current Report on Form 8-K disclosing the unregistered issuance of 777,500 shares of common stock.

On March 1, 2005, the Company filed a Current Report on Form 8-K disclosing the change of independent auditor.

On March 24, 2005, the Company filed a Current Report on Form 8-K disclosing the sale of Interglobe Investigative Services Inc.

On September 13, 2005, the company filed a Current Report on Form 8-K disclosing the cancellation of 45,500 Preferred A shares previously issued and the conversion of 15,000 Preferred A shares resulting in the unregistered issuance of 1,500,000 common shares.

On September 22, 2005, the Company filed a Current Report on Form 8-K announcing the rescheduling of the Annual and Special Shareholders meeting.

ITEM

14.

PRINCIPAL

ACCOUNTANT

FEES AND SERVICES

The following table presents fees for professional services rendered by Hein & Associates, LLP and Farber and Hass, L.L.P. for the audit of the Company's annual consolidated financial statements for fiscal 2005 and 2004, and fees billed for other services rendered byHein & Associates, LLP and Farber and Hass, L.L.P.

|                   |   |        |  |   |        | 
|------------------ | - | ------ |  | - | ------ | 
|                   |   | 2005   |  |   | 2004   | 
|                   |   |        |  |   |        | 
|Audit Fees         | $ | 36,500 |  | $ | 38,000 | 
|Audit related fees | $ | 0      |  | $ | 0      | 
|Tax fees           | $ | 0      |  | $ | 0      | 
|All other fees     | $ | 0      |  | $ | 0      | 
|                   |   |        |  |   |        | 
|Total fees         | $ | 36,500 |  | $ | 38,000 | 





23



---

The Board pre-approves all auditing and permitted non-audit services to be performed for the Company by its independent auditor, including the fees and terms of those services.







24



---

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MONEYFLOW SYSTEMS INTERNATIONAL, INC.,

a Nevada 

corporation



Date:  February 10, 2006

By:  _/s/ Harold F. Schultz________________________



Harold F. Schultz

Chairman of the Board, President, Chief Financial

Officer and Chief Executive Officer



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

|                                                   |                                                                                       |                  
|-------------------------------------------------- | ------------------------------------------------------------------------------------- | -----------------
|Signature                                          | Title                                                                                 | Date             
|/s/ Harold F. Schultz

Harold F. Schultz           | Chairman of the Board, President, Chief Financial Officer and Chief Executive Officer | February 10, 2006
|/s/ Darwyn Ross

Darwyn Ross                       | Director                                                                              | February 10, 2006
|/s/ Douglas Alec McDougall

Douglas Alec McDougall | Director                                                                              | February 10, 2006





25



---

EXHIBIT INDEX



|            |                                                                                                                                                                                                  
|----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                      
|2.11        | Acquisition Agreement dated as of July 15, 2001 between MoneyFlow Systems International Inc. and Security Bancorp Inc.                                                                           
|3.11        | Articles of Incorporation                                                                                                                                                                        
|3.21        | Bylaws                                                                                                                                                                                           
|3.35        | Certificate of Amendment, dated July 15, 2004                                                                                                                                                    
|4.34        | 2002 Stock Option Plan, dated July 31, 2002                                                                                                                                                      
|4.48
10.12  | 2004 Benefit Plan, dated July 24, 2004
Connection Services Agreement dated December 20, 2001 with TCS Canada, Ltd.                                                                               
|10.22       | Agreement for Credit Card Processing Services dated November 15, 2001 with TCS Canada, Ltd.                                                                                                      
|10.52       | Letter Agreement dated July 26, 2001 with Hypercom Canada, Ltd., as amended and assumed by Letter Agreement dated February 7, 2003 with Rycom, Inc.                                              
|10.93       | Letter Agreement dated January 17, 2003 with 1st SB Partners Ltd.                                                                                                                                
|10.104      | Director's Loan dated February 24, 2003                                                                                                                                                          
|10.116      | Agreement for the Purchase and Sale of Assets dated August 31, 2004 between Intercash POS Systems Inc. and BP Financial Corp.                                                                    
|10.127      | Share Exchange Agreement dated October 28, 2004 among MoneyFlow Systems International Inc., Interglobe Investigation Services Inc. and the shareholders of Interglobe Investigation Services Inc.
|21.19       | Subsidiaries of the Company.                                                                                                                                                                     
|24.17       | Power of Attorney (see signature page of the Annual Report on Form 10-KSB).                                                                                                                      
|319         | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and Principal Financial Officer                                                                                            
|329         | Section 1350 Certification                                                                                                                                                                       
|99.19       | Consent of Independent Registered Public Accounting Firm                                                                                                                                         
|            |                                                                                                                                                                                                  

_______________

1.  Incorporated by reference from the Company's Form SB-2, filed with the SEC on December 11, 2001.

2.  Incorporated by reference from the Company's Form SB-2/A, filed with the SEC on June 11, 2002.

3.  Incorporated by reference from the Company's Form 10-KSB, filed with the SEC on February 14, 2003.

4.  Incorporated by reference from the Company's Form 10-QSB, filed with the SEC on September 15, 2003.

5.  Incorporated by reference from the Company's Form 10-QSB, filed with the SEC on September 14, 2004.

6.   Incorporated by reference from the Company's Form 8-K, filed with the SEC on October 26, 2004.

7.  Incorporated by reference from the Company's Form 8-K, filed with the SEC on November 1, 2004.

8.   Incorporated by reference from the Company's Form S-8, filed with the SEC on November 23, 2004.

9.   Filed herewith.









26



---









Report of Independent Registered Public Accounting Firm



To the Board of Directors

MoneyFlow Systems International Inc.

Calgary, Alberta





We have audited the accompanying balance sheet of MoneyFlow Systems International Inc. (the Company) as of October 31, 2005, and the related statements of operations, comprehensive income (loss), changes in stockholders equity and cash flows for the year then ended.  These financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audit.



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



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



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has incurred substantial losses from operations and has a Stockholders equity of $202,032.  These factors raise substantial doubt about the Companys ability to continue as a going concern.  Managements plans with regard to these matters are described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.







Hein & Associates LLP

Phoenix, Arizona

January 17, 2006







27



---



Report of Independent Registered Public Accounting Firm







To the Board of Directors and Stockholders

of Moneyflow Systems International, Inc.:



We have audited the accompanying consolidated statements of operations and comprehensive income of Moneyflow Systems International, Inc. (the Company) for the year ended October 31, 2004 and the related consolidated statements stockholders deficit and cash flows for the year then ended.  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 audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended October 31, 2004 in conformity with accounting principles generally accepted in the United States.











/s/ Farber Hass Hurley McEwen LLP

(Formerly Farber & Hass, LLP)

January 28, 2005

Camarillo, California



28



---







MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

OCTOBER 31, 2005





|ASSETS                                    |   |        
|----------------------------------------- | - | -------
|CURRENT ASSETS:                           |   |        
|Cash and cash equivalents                 | $ | 59,845 
|Accounts receivable, net of allowance for |   |        
|doubtful accounts of $17,699              |   | 18,996 
|Inventories                               |   | 149,251
|Prepaid expenses and other current assets |   | 16,088 
|Total current assets                      |   | 244,180
|PROPERTY AND EQUIPMENT, Net               |   |        
|of accumulated depreciation               |   | 47,565 
|OTHER ASSETS:                             |   |        
|Rent security deposit                     |   | 2,658  
|TOTAL ASSETS                              | $ | 294,403











(Continued)



29



---





MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

OCTOBER 31, 2005



|LIABILITIES AND STOCKHOLDERS' EQUITY                 |   |            
|---------------------------------------------------- | - | -----------
|CURRENT LIABILITIES:                                 |   |            
|Accounts payable and accrued expenses                | $ | 76,567     
|G.S.T. and P.S.T. payable                            |   | 3,023      
|Note payable, automobile, current portion            |   | 3,793      
|Capital lease payable, current portion               |   | 2,212      
|Total current liabilities                            |   | 85,595     
|LONG-TERM LIABILITIES:                               |   |            
|Note payable, automobile, long-term portion          |   | 4,742      
|Capital lease payable, long-term portion             |   | 2,034      
|Total long-term liabilities                          |   | 6,776      
|COMMITMENT (NOTES 8, 9 and 13)                       |   |            
|STOCKHOLDERS' EQUITY:                                |   |            
|Preferred A stock, par value $.001 per share;      |   |            
|Authorized, 5,000,000 shares;                        |   |            
|Issued and outstanding, 9,500 shares                 |   | 10         
|Preferred B stock, par value $.001 per share;      |   |            
|Authorized, 5,000,000 shares;                        |   |            
|Issued and outstanding, 1,000 shares                 |   | 1          
|Common stock, par value $.001 per share;             |   |            
|Authorized, 100,000,000 shares;                      |   |            
|Issued and outstanding, 7,216,203 shares             |   | 7,276      
|Paid in capital in excess of par value of stock      |   | 2,664,389  
|Accumulated deficit                                  |   | (2,468,239)
|Deferred compensation                                |   | ( 54,467)  
|Accumulated other comprehensive income               |   |            
|(primarily cumulative translation adjustment)        |   | 62,062     
|                                                     |   | 211,032    
|Less cost of common stock in Treasury, 60,000 shares |   | ( 9,000)   
|TOTAL STOCKHOLDERS EQUITY                           |   | 202,032    
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           | $ | 294,403    



See accompanying notes.



30



---

MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED OCTOBER 31, 2005 AND 2004





|                                             |   | 2005         |   | 2004      
|-------------------------------------------- | - | ------------ | - | ----------
|REVENUES:                                    |   |              |   |           
|Sales of machines and terminals              | $ | 82,653       | $ | 130,334   
|Sales of surveillance equipment              |   | 136,862      |   | 60,813    
|Fees                                         |   | 651,046      |   | 649,111   
|Other revenue                                |   | 18,101       |   | 11,660    
|Total revenues                               |   | 888,662      |   | 851,918   
|COST AND EXPENSES:                           |   |              |   |           
|Cost of sales                                |   | 199,884      |   | 232,187   
|Write-off of obsolete inventory              |   | 3,489        |   | 7,669     
|Amortization of consulting and legal fees,   |   |              |   |           
|paid with common stock                       |   |              |   |           
|and options to purchase                      |   |              |   |           
|common stock                                 |   | 556,688      |   | 0         
|Employee bonuses,                            |   |              |   |           
|paid with common stock                       |   | 80,750       |   | 0         
|Directors fees, paid with common and        |   |              |   |           
|preferred stock                              |   | 491,000      |   | 0         
|Selling, general and administrative expenses |   | 872,507      |   | 863,161   
|Total cost and expenses                      |   | 2,204,318    |   | 1,103,017 
|(LOSS) FROM OPERATIONS                       |   | ( 1,315,656) |   | ( 251,099)
|OTHER INCOME (EXPENSE):                      |   |              |   |           
|Interest expense                             |   | ( 1,273)     |   | ( 1,221)  
|Interest income                              |   | 436          |   | 9         
|(Loss) on disposition of assets              |   | ( 3,147)     |   | ( 2,629)  
|Total other income (expense), net            |   | ( 3,984)     |   | ( 3,841)  
|(LOSS) FROM CONTINUING                       |   |              |   |           
|OPERATING OPERATIONS                         |   | ( 1,319,640) |   | ( 254,940)
|INCOME (LOSS) FROM                           |   |              |   |           
|DISCONTINUED OPERATIONS                      |   |              |   |           
|(INCLUDING LOSS ON DISPOSAL                  |   |              |   |           
|OF $170,657)                                 |   | ( 148,444)   |   | 119,234   
|NET (LOSS)                                   | $ | ( 1,468,084) | $ | (135,706) 
|NET (LOSS) PER COMMON SHARE                 |   |              |   |           
|BASIC AND DILUTED:                           |   |              |   |           
|CONTINUING OPERATIONS                        | $ | ( 0.25)      | $ | ( 0.13)   
|DISCONTINUED OPERATIONS                      | $ | ( 0.03)      | $ | 0.06      
|NET (LOSS)                                   | $ | ( 0.28)      | $ | (0.07)    
|                                             |   |              |   |           
|WEIGHTED AVERAGE                             |   |              |   |           
|NUMBER OF COMMON                             |   |              |   |           
|SHARES OUTSTANDING -                         |   |              |   |           
|Basic and diluted                            |   | 5,287,662    |   | 1,894,117 













See accompanying notes.



31



---











MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)

FOR THE YEARS ENDED OCTOBER 31, 2005 AND 2004



|                           | 2005 | 2004        
|-------------------------- | ---- | ------------
|NET (LOSS)                 | $    | ( 1,468,084)
|OTHER COMPREHENSIVE INCOME |      |             
|FOREIGN CURRENCY           |      |             
|TRANSLATION ADJUSTMENT     |      | 23,135      
|NET COMPREHENSIVE (LOSS)   | $    | ( 1,444,949)









See accompanying notes.



32



---

MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

FOR THE YEARS ENDED OCTOBER 31, 2005 AND 2004





|                              | Preferred A Stock | Preferred B Stock | Common Stock
|----------------------------- | ------------------- | ------------------- | ------------
|                              | Shares              |                     | Amount      
|Balance, October 31, 2003     | 0                   | $                   | 0           
|Common stock issued for       |                     |                     |             
|cash from private placement   | 0                   |                     | 0           
|Fees for private placement    | 0                   |                     | 0           
|Purchase of Interglobe        |                     |                     |             
|Investigation Services, Inc.  | 0                   |                     | 0           
|Directors fees               | 0                   |                     | 0           
|Foreign currency translation  |                     |                     |             
|adjustment                    | 0                   |                     | 0           
|Net (loss) for the year ended |                     |                     |             
|October 31, 2004              | 0                   |                     | 0           
|Balance, October 31, 2004     | 0                   |                     | 0           
|Preferred A Stock           |                     |                     |             
|Issued For:                   |                     |                     |             
|Directors fees               | 21,500              |                     | 22          
|Legal and consulting          | 3,000               |                     | 3           
|Conversion of preferred       |                     |                     |             
|A stock to                  |                     |                     |             
|common stock                  | ( 15,000)           |                     | ( 15)       
|Preferred B stock           |                     |                     |             
|Issued For Directors fees    | 0                   |                     | 0           
|Common Stock Issued For:      |                     |                     |             
|Directors fees               | 0                   |                     | 0           
|Compensation                  | 0                   |                     | 0           
|Legal and consulting          | 0                   |                     | 0           







33



---





MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (CONTINUED)

FOR THE YEARS ENDED OCTOBER 31, 2005 AND 2004





|                              | Preferred A Stock | Preferred B Stock |        | Common Stock
|----------------------------- | ------------------- | ------------------- | ------ | ------------
|                              | Shares              |                     | Amount | Shares      
|Acquisition of treasury stock | 0                   | $                   | 0      | 0           
|Options issued for            |                     |                     |        |             
|consulting fees               | 0                   |                     | 0      | 0           
|Allocation of deferred        |                     |                     |        |             
|compensation                  | 0                   |                     | 0      | 0           
|Net (loss) for the year       |                     |                     |        |             
|ended                         |                     |                     |        |             
|October 31, 2005              | 0                   |                     | 0      | 0           
|Foreign currency              |                     |                     |        |             
|translation adjustment        | 0                   |                     | 0      | 0           
|Balance, October 31, 2005     | 9,500               | $                   | 10     | 1,000       





34



---



|  | Paid-In      |   |              |              |               |                |        |       |   |   |   |           
|- | ------------ | - | ------------ | ------------ | ------------- | -------------- | ------ | ----- | - | - | - | ----------
|  | Capital      |   |              |              |               | Accumulated    |        |       |   |   |  
|  | In Excess of |   |              |              |               | Other          |        |       |   |   |  
|  | Par Value of |   | Accumulated  | Deferred     | Comprehensive | Treasury Stock |        |      
|  | Stock        |   | Deficit      | Compensation | Income (Loss) | Shares         | Amount | Total
|$ | 1,219,592    | $ | ( 864,449)   | $            | 0             | $              | 10,038 | 0     | $ | 0 | $ | 366,985   
|  | 14,835       |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 14,875    
|  | ( 5)         |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 0         
|  | 161,850      |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 162,500   
|  | 89,700       |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 90,000    
|  | 0            |   | 0            |              | 0             |                | 28,889 | 0     |   | 0 |   | 28,889    
|  | 0            |   | ( 135,706)   |              | 0             |                | 0      | 0     |   | 0 |   | ( 135,706)
|  | 1,485,972    |   | ( 1,000,155) |              | 0             |                | 38,927 | 0     |   | 0 |   | 527,543   
|  | 429,978      |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 430,000   
|  | 59,997       |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 60,000    
|  | ( 1,485)     |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 0         
|  | 999          |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 1,000     
|  | 59,760       |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 60,000    
|  | 80,513       |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 80,750    
|  | 524,100      |   | 0            |              | 0             |                | 0      | 0     |   | 0 |   | 526,600   









35



---





|  | Paid-In      |   |              |              |               |                |        |        |           |             
|- | ------------ | - | ------------ | ------------ | ------------- | -------------- | ------ | ------ | --------- | ------------
|  | Capital      |   |              |              |               | Accumulated    |        |        |          
|  | In Excess of |   |              |              |               | Other          |        |        |          
|  | Par Value of |   | Accumulated  | Deferred     | Comprehensive | Treasury Stock |       
|  | Stock        |   | Deficit      | Compensation | Income (Loss) | Shares         | Amount | Total 
|$ | 0            | $ | 0            | $            | 0             | $              | 0      | 60,000 | $( 9,000) | $ ( 9,000)  
|  | 24,555       |   | 0            |              | 0             |                | 0      | 0      | 0         | 24,555      
|  | 0            |   | 0            |              | ( 54,467)     |                | 0      | 0      | 0         | ( 54,467)   
|  | 0            |   | ( 1,468,084) |              | 0             |                | 0      | 0      | 0         | ( 1,468,084)
|  | 0            |   | 0            |              | 0             |                | 23,135 | 0      | 0         | 23,135      
|$ | 2,664,389    | $ | ( 2,468,239) | $            | ( 54,467)     | $              | 62,062 | 60,000 | $( 9,000) | $ 202,032   









36



---

MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED OCTOBER 31, 2005 AND 2004



|                                                              |   | 2005         |   | 2004      
|------------------------------------------------------------- | - | ------------ | - | ----------
|CASH FLOWS FROM OPERATING ACTIVITIES:                         |   |              |   |           
|Net (loss)                                                    | $ | ( 1,468,084) | $ | ( 135,706)
|Adjustments to reconcile net (loss) to net                    |   |              |   |           
|cash provided (used) by operating activities of               |   |              |   |           
|operations:                                                   |   |              |   |           
|Depreciation and inventory impairment                         |   | 20,428       |   | 19,423    
|Provision for doubtful accounts                               |   | 63,162       |   | 0         
|Loss on disposal of fixed asset                               |   | 3,147        |   | 2,629     
|Common and preferred stock issued for directors fees         |   | 491,000      |   | 90,000    
|Common stock and options issued for consulting and legal fees |   | 556,688      |   | 0         
|Common stock issued for employee bonuses                      |   | 80,750       |   | 0         
|Changes in operating assets and liabilities:                  |   |              |   |           
|Accounts and other receivables                                |   | 25,428       |   | 56,211    
|G.S.T. refund                                                 |   | 0            |   | 5,994     
|Inventories                                                   |   | 27,726       |   | 53,651    
|Prepaid expenses and deposits                                 |   | ( 3,132)     |   | 10,099    
|Accounts payable and accrued expenses                         |   | ( 68,615)    |   | 53,251    
|Customer deposits                                             |   | (8,312)      |   | 8,312     
|Deferred income                                               |   | 0            |   | ( 2,745)  
|Corporate income taxes                                        |   | 0            |   | (15,567)  
|G.S.T. and P.S.T. payable                                     |   | ( 4,996)     |   | ( 1,051)  
|Net cash provided by (used in) operating activities           |   | ( 284,810)   |   | 144,501   
|CASH FLOWS FROM INVESTING ACTIVITIES:                         |   |              |   |           
|Loan receivable                                               |   | (54,000)     |   | 0         
|Disposal of goodwill                                          |   | 183,355      |   | 0         
|Purchase of cash through acquisition of subsidiary            |   | 0            |   | 4,465     
|Purchases of property and equipment                           |   | ( 14,989)    |   | ( 17,175) 
|Net cash provided by (used in) investing activities           |   | 114,366      |   | ( 12,710) 
|CASH FLOWS FROM FINANCING ACTIVITIES:                         |   |              |   |           
|Common stock issued for cash                                  |   | 0            |   | 14,875    
|Acquisition of treasury stock                                 |   | (9,000)      |   | 0         
|Repayment of note payable to stockholder                      |   | 0            |   | ( 12,223) 
|Repayment of note payable                                     |   | ( 3,369)     |   | ( 4,780)  
|Repayment on capital leases                                   |   | ( 1,990)     |   | ( 1,519)  
|Net cash (used by) financing activities                       |   | (14,359)     |   | ( 3,647)  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                       |   |              |   |           
|AND CASH EQUIVALENTS                                          |   | 23,135       |   | 16,013    



(Continued)



37



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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED OCTOBER 31, 2005 AND 2004





|                                                        |   | 2005      |   | 2004   
|------------------------------------------------------- | - | --------- | - | -------
|NET INCREASE (DECREASE) IN CASH                         |   |           |   |        
|AND CASH EQUIVALENTS                                    | $ | (161,668) | $ | 144,157
|CASH AND CASH EQUIVALENTS,                              |   |           |   |        
|BEGINNING OF YEAR                                       |   | 221,513   |   | 77,356 
|CASH AND CASH EQUIVALENTS,                              |   |           |   |        
|END OF YEAR                                             | $ | 59,845    | $ | 221,513
|SUPPLEMENTAL DISCLOSURE OF CASH                         |   |           |   |        
|FLOW INFORMATION                                        |   |           |   |        
|CASH PAID DURING THE PERIOD FOR:                        |   |           |   |        
|Interest                                                | $ | 1,273     | $ | 1,221  
|Taxes                                                   | $ | 0         | $ | 15,567 
|SCHEDULE OF NON-CASH INVESTING AND                      |   |           |   |        
|FINANCING ACTIVITES:                                    |   |           |   |        
|Acquisition of Interglobe Investigation Services Inc.   |   |           |   |        
|with the issuance of common stock                       | $ | 0         | $ | 162,500
|Directors fees paid with the issuance of common        |   |           |   |        
|and preferred stock                                     | $ | 491,000   | $ | 90,000 
|Fees for private placement paid with issuance           |   |           |   |        
|of common stock                                         | $ | 0         | $ | 1,860  
|Consulting and legal fees paid with the issuance of     |   |           |   |        
|common stock and options                                | $ | 556,688   | $ | 0      
|Employee bonuses paid with the issuance of common stock | $ | 80,750    | $ | 0      





See accompanying notes.





38



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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Nature of Business and History of Company-Moneyflow Systems International Inc. (hereinafter referred to as the Company) was organized on April 25, 2001, under the laws of the State of Nevada.  The Company operates as a holding company for acquisitions of subsidiaries.



Security Bancorp Inc. (hereinafter referred to as SBI) was organized on August 3, 1992, in Alberta, Canada and was inactive until January 5, 1999 when it changed its name to Security Bancorp Inc. and began operations under the trademark name of CA$H STATION.  SBI is headquartered in Calgary, Canada and is in the business to supply, install, maintain and manage Automated Teller Machines (ATM'S) and other Electronic Funds Transfer Devices and to provide transaction processing services for these devices.  The machines are placed on the premises of property owners and businesses for the purpose and convenience of dispensing cash and other services to the public.



Interglobe, Ltd. (hereinafter referred to as ITL) began operating on March 16, 2005 and was  incorporated in Alberta, Canada on April 13, 2005. ITL is in the business to supply, install and maintain surveillance equipment and is the successor to the surveillance operations.



Interglobe Investigation Services, Inc. (hereinafter referred to as IIS) was formed in 1994 in Vancouver, British Columbia, Canada.  The company is in the business to provide security consulting services, loss prevention and forensic computing services. Interglobe Investigation Services, Inc. was sold on March 15, 2005.



Intercash POS Systems, LTD. (hereinafter referred to as POS) was organized on April 1, 2002 in Alberta, Canada and sells point of sale terminals and other electronic funds transfer devices.  Intercash POS Systems, LTD. was sold on September 1, 2004.



Principles of Consolidation -The consolidated financial statements include the accounts of Moneyflow Systems International Inc. and its wholly-owned subsidiaries, Security Bancorp Inc.  and Interglobe LTD.  Interglobe Investigation Services, Inc. results of operations are included for the period from November 1, 2004 to March 15, 2005.



All material inter-company accounts and transactions have been eliminated.



Liquidity  The Company has had losses from operations its past two years, and has Stockholders Equity of $202,032. The Company is pursuing opportunities to improve its financial condition by seeking to increase the placement of ATM machines, and it may also consider other alternatives such as mergers or acquisitions. The Company may need to raise additional equity or debt financing to execute its business plan, and ultimately will need to re-achieve profitable operations.



Reverse Stock Split and Restatement of Common Stock On May 27, 2004 the Company approved a one-for-ten reverse stock split of the Companys common stock, effective July 19, 2004.  The stock split has been recorded in the financial statements as if it occurred at the date of inception.



Cash and Cash Equivalents- For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.



Accounts  Receivable -Accounts  receivable are reported at the customers' outstanding balances less any allowance for doubtful accounts.  Interest is not accrued on overdue accounts receivable.



Allowance for Doubtful Accounts - The allowance for doubtful accounts on accounts receivable is charged to income in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses.  Management determines the adequacy of the allowance based on historical

write-off percentages and information collected from individual customers.  Accounts  receivable are charged off against the allowance when collectibility is determined to be permanently impaired (bankruptcy, lack of contact, age of account balance, etc.).



39



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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Inventories - Inventories are valued at the lower of cost or market. Cost is determined as follows:

Automated Teller Machines and Point of Sale Terminals held for resale - actual cost for the machine purchased.

Automated Teller Machines and Point of Sale Terminals  placements - actual cost for the machine purchased less accumulated depreciation.  Depreciation is computed on the straight line basis over 10 years.

Surveillance equipment, parts, supplies, and counterfeit detectors  lower of cost or market, first-in, first-out method.



Property and Equipment - Property and equipment are stated at cost.  Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed.  At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts.  Gains or losses from retirements or sales are credited or charged to income.



The Companies depreciate the property and equipment as follows:



Financial statement reporting  straight-line method as follows:



Furniture and fixtures

10 years

Computer equipment

5 years

Telephone equipment

5 years

Automobile

5 years



Warranty Reserve The Company provides a warranty provision on sales of its computer surveillance systems to cover anticipated repairs and/or replacement.  The warranty for the computer surveillance systems are for twelve months from date of acceptance.



Long-Lived Assets The Company recognizes  impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amount. In such circumstances, those assets are written down to estimated fair value. Long-lived assets consist primarily of goodwill and fixed assets.



Revenue Recognition Policy - The Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collectibility is probable.  Sales are recorded net of sales discounts.  The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, (SAB 104).  The revenues are recorded under two categories:



Revenue from the sale of Automated Teller Machines and Surveillance Systems is recognized when the earning process is complete and the risk and rewards of ownership have transferred to the customer, which is generally

considered to have occurred upon the delivery of the units to our customer and the acceptance and activation of the units by the customer.



Revenue from transaction and service fees are earned daily and are electronically transferred to the Company from the processors.



40



---





MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005



1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Revenue from investigation services provided is recognized when the earning process is complete which is generally considered to have occurred when the services are provided to the customer.

Common Stock Issued for Non-Cash Transactions -It is the Companys policy to value stock issued for non-cash transactions, such as services, at the fair market value of the goods or services received or the consideration granted, whichever is more readily determinable, at the date the transaction is negotiated.



Stock Based Compensation As permitted by FAS 123, as amended, the Company accounts for stock options issued to employees using the intrinsic value method as prescribed by APB 25. Under this method no expense is recognized for options issued with an exercise price equal to or greater than the market price of the stock on the date of grant. Expense for options or warrants issued to non-employees is recorded in the financial statements at estimated fair value. For options issued to employees, the Company is subject to proforma disclosures based on the estimated fair value of options issued.



The Black-Scholes option-pricing model was developed for use in estimating the fair value of options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Companys stock options and warrants have characteristics different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options.



The Company estimated the fair value of each stock option at the grant date using the Black-Scholes option pricing model based on the following assumptions:



2005
	2004Risk free interest rate
	4.5 %
	N/AExpected life
	1 Year
	N/AExpected volatility
	214
%
	N/ADividend yield
	0%
	N/A




Had the compensation costs for our options been determined based on the fair value at the grant date, rather than the intrinsic-value-method, our proforma amounts would be as follows:



Net (loss)
	
	2005
	
	2004As reported
	$
	( 1,468,084)
	$
	135,706Proforma
	
	( 1,488,547)
	
	N/ANet (loss) per common shareAs reported  basic and diluted
	$
	( .28)
	$
	(0.07)Proforma  basic and diluted
	
	( .29)
	
	N/A




41



---



Proforma disclosures for stock option accounting may not be representative of the effects on reported net income (loss) in future years.



Treasury Stock The Company intends to hold repurchased shares in Treasury for general corporate purposes, including issuances under various employee stock option plans. The Company accounts for the Treasury stock using the cost method.



42



---



MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Shipping and Handling Costs - The Company's policy is to classify shipping and handling costs as part of cost of goods sold in the statement of operations.



Advertising  The Company expenses all advertising as incurred.  Advertising expenses for the years ended October 31, 2005 and 2004 were $15,270 and $8,983, respectively.



Income Taxes - Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements.  Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB Statement No. 109, "Accounting for Income Taxes".  As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.



Net Income (Loss) Per Share - The Company adopted Statement of Financial Accounting Standards No. 128 that requires the reporting of both basic and diluted earnings (loss) per share.  Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period.  Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  In accordance with FASB 128, any anti-dilutive effects on net earnings (loss) per share are excluded. As of October 31, 2005, there were 150,000 potentially dilutive common shares outstanding, all of which have been excluded from the diluted shares outstanding because they were anti-dilutive.



Accounting Estimates - Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities, and the reported revenues and expenses.  Actual results could vary from the estimates that were used.











43



---





MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Concentration of Credit Risk



Financial Instruments



Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable.  The Company places its temporary cash investments in reputable financial institutions.



Concentrations of credit risk with respect to accounts  receivable are limited due to the number of customers comprising the Company's customer base and their dispersion across different geographic areas.  The Company routinely assesses the financial strength of its customers and normally does not require collateral to support its receivables.



Purchases



The Company relies primarily on five suppliers for its products and services.  The Company has selected its suppliers from a lengthy and varied list of manufacturers to which it has access.  Competitive suppliers are available in the event any suppliers products should no longer be available.  The loss of any one supplier would not preclude the Company from continuing its business with other products capable of performing the same services.



Foreign Currency Translation- The financial statements of SBI, ITL and IIS are measured using the Canadian dollar as the functional currency.  Assets, liabilities and equity accounts of SBI, ITL and IIS are translated at exchange rates as of the balance sheet date.  Revenues and expenses are translated at average rates of exchange in effect during the year.  The resulting cumulative translation adjustments have been recorded as a separate component of stockholders' equity.  The financial statements are presented in United States of America dollars.



Recent Accounting Pronouncements 



In December 2003, the FASB issued FIN No. 46R, Consolidation of Variable Interest Entities. This requires that the assets, liabilities and results of the activity of variable interest entities be consolidated into the financial statements of the company that has a controlling financial interest. It also provides the framework for determining whether an entity should be consolidated based on voting interest or significant financial support provided to it. The adoption of FIN No. 46R did not have any impact on the Companys financial condition or results of operations.







44



---







MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



In December 2004, the FASB issued SFAS No. 123R, Share Based Payment. This Statement is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting For Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This Statement does not change the accounting guidance for share-based payment transactions with parties other than employees provided in Statement 123 as originally issued and EITF Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. This Statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, Employers Accounting for Employee Stock Ownership Plans.  The Company has no transactions that would be subject to SFAS 152.



In December 2004, the Financial Accounting Standards Board issued two FASB Staff Positions  FSP FAS 109-1, Application of FASB Statement 109 Accounting for Income Taxes to the Tax Deduction of Qualified Production Activities Provided by The American Job Creation Act of 2004, and FSP FAS 109-2 Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. Neither of these affected the Company as it does not participate in the related activities.



In May 2005, the FASB issued SFAS No. 154 Accounting Changes and Error Corrections  a replacement of APB Opinion No. 20 and FASB Statement No. 3. This Statement replace APB Opinion No. 20, Accounting Changes and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements and changes  the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provision. When a pronouncement includes specific transition provisions, those provisions should be followed. The Company has no transactions that would be subject to SFAS 154.



Reclassifications Certain 2004 amounts have been reclassified to conform to 2005 presentations.





45



---



MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





2.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS



Accounts comprised of the following :Trade accounts receivable
	$
	36,695Allowance for doubtful accounts
	
	(17,699)$
	18,996




3.

INVENTORIES



Inventories are comprised of the following:Automated Teller Machines
	$
	67,342Point of Sale Terminals
	
	6,863Surveillance Equipment
	
	68,966Counterfeit detectors
	
	202Parts and supplies
	
	5,878Total inventories
	$
	149,251




4.

PROPERTY AND EQUIPMENT



Property and equipment consists of the following:Furniture and fixtures
	$
	25,447Computer equipment
	
	38,581Telephone equipment (Capital lease)
	
	8,116Automobile
	
	18,545Total property and equipment
	
	90,689Less accumulated depreciation
	
	(43,124)Property and equipment, net
	$
	47,565




5.

GOODWILL



The changes in the carrying amount of goodwill for the year ended October 31, 2005, are as follows:



Balance
as of November 1, 2004
	$
	183,355To write-off goodwillon dissolution of subsidiary (included in discontinued operations)
	
	( 183,355)Balance
as of October 31, 2005
	$
	0








46



---



MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





6.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES



Accounts payable and accrued expense consists of the following:Accounts payable
	$
	64,656Accrued equipment contract
	
	6,658Other payable
	
	5,253Total
	$
	76,567




7.

INCOME TAXES

2005
	
	2004Pretax Income (Loss)
	$
	( 1,263,399)
	$
	( 29,204)United States of America
	
	( 204,685)
	
	( 106,502)Canadian
	$
	( 1,468,084)
	$
	( 135,706)






Provision (Benefit)

The Company had  no current or deferred provision (benefit) for/or refund of income taxes for the years ended October 31, 2005 and 2004 due to full valuation allowances on the Companys net deferred tax assets.

2005

2004





Deferred Tax Components



Significant components of the Companys deferred tax assets are as follows at October 31, 2005:

Net operating loss carryforwards
	$
	981,000Fixed Assets
	
	(16,000)Less valuation allowance
	
	(965,000)Net deferred tax assets
	$
	0




The valuation allowance increased approximately $490,000 in the year ended October 31, 2005. In assessing the realizability of deferred assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.







47



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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





7.

INCOME TAXES (CONTINUED)



Net Operating Loss Carryforwards



The Company has approximately $2,000,000 of U.S. Net Operating Loss Carryforwards which expire in the years 2021 through 2025, and approximately CND$900,000 Canadian Net Operating Loss carryforwards that expire from 2008 through 2015.





The use of the net operating loss carryforwards may be limited based on changes in control of the Company.



8.

NOTE PAYABLE, AUTOMOBILE



Note payable, automobile, is due in monthly payments of principal and interest of approximately $305, including interest at 8%. The note matures on January 31, 2008 and is collateralized by an automobile which costs $17,907 and has a book value of $11,429.





Total
	$
	8,535Less current portion
	
	3,793Long-term portion
	$
	4,742Maturities of long-term debt are as follows:October 31, 2006
	$
	3,793October 31, 2007
	
	3,793October 31,
 2008
	
	949$
	8,535












9.

CAPITAL LEASE PAYABLE



Capital lease payable is due in monthly payments of principal and interest of approximately $178, including interest at 14.76%. The lease matures on September 30, 2007 and is secured by a telephone system which costs $7,837 and has a book value of $3,183.



Total
	$
	4,246Less current portion
	
	2,212Long-term portion
	$
	2,034






MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





9.

CAPITAL LEASE PAYABLE (CONTINUED)



Maturities of long-term debt are as follows:



October 31, 2006
$
	2,212October 31, 2007
	
	2,034$
	4,246






48



---

10.

ACQUISITION OF INTERGLOBE INVESTIGATION SERVICES, INC.



On October 1, 2004, the Company acquired all of the issued and outstanding shares of Interglobe Investigation Services, Inc.  The results of Interglobes operations have been included in the consolidated financial statements since that date. Intergobe Investigation Services is in the business to provide security consulting services, loss prevention and forensic computing services.



The aggregate purchase price was $162,500, including 500,000 shares of common stock valued at $125,000 and an additional 150,000 shares of common stock valued at $37,500 that were issued for acquisition costs. The value of the 650,000 shares issued was determined based on the market price of the shares on the date the terms of the acquisition were agreed to and announced.



The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition. At October 1, 2004:



Current assets
	$
	18,766Property, plant and
equipment
	
	305Goodwill
	
	183,355Total
assets acquired
	
	202,426Current liabilities
	
	( 39,926)Total
liabilities assumed
	
	( 39,926)Net
assets acquired
	$
	162,500




See Footnote 12 for discontinued operations.



11.

BUSINESS SEGMENTS

FASB Statement No. 131 "Disclosures about Segments of an Enterprise and Related Information," requires companies to provide certain information about their operating segments.  The Company has three reportable segments:  Automated Teller Machines, Surveillance Service and Equipment and General Corporation Administration.  Management evaluates performance based upon the operating earnings after income taxes.





49



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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





11.

BUSINESS SEGMENTS (CONTINUED)

Summarized financial information concerning the Company's reportable segments is shown on the following table:

|                                   | Automated  | Surveillance | General        |         |             
|---------------------------------- | ---------- | ------------ | -------------- | ------- | ------------
|                                   | Teller     | Service and  | Corporation    |         |             
|                                   | Machines   | Equipment    | Administration |         | Total       
|2005                               |            |              |                |         |             
|Net revenues to external customers | $ 751,800  | $ 136,862    | $              | 0       | $           
|Operating (loss)                   | ( 13,390)  | ( 163,812)   | ( 1,138,453)   |         | ( 1,315,656)
|Total assets                       | 209,032    | 83,466       |                | 1,905   |             
|Depreciation and amortization      | 19,841     | 587          |                | 0       |             
|Capital expenditures               | 14,989     | 0            |                | 0       |             
|                                   |            |              |                |         |             
|                                   | Automated  | Surveillance | General        |         |             
|                                   | Teller     | Service and  | Corporation    |         |             
|                                   | Machines   | Equipment    | Administration |         | Total       
|2004                               |            |              |                |         |             
|Net revenues to external customers | $ 791,105  | $ 60,813     | $              | 0       | $           
|Operating income                   | ( 125,081) | 12,326       | ( 138,344)     |         | ( 251,099)  
|Goodwill                           | 0          | 0            |                | 183,355 |             
|Total assets                       | 417,442    | 100,863      |                | 188,892 |             
|Depreciation and amortization      | 19,380     | 43           |                | 0       |             
|Capital expenditures               | 16,888     | 287          |                | 0       |             



2004 amounts have been restated to segregate the results of discontinued operations.



12.

DISCONTINUED OPERATIONS



APB 30 requires that an entity reclassify prior year financial statements to disclose the results of subsequent discontinued operations. Intercash POS Systems LTD., a wholly owned subsidiary of the Company that sold point of sale terminals and other electronic funds transfer devices, was sold and discontinued on September 1, 2004. The October 31, 2004, statements of operations and cash flows were reclassified to segregate the income from discontinued operations from continuing operations.





50



---



MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





12.

DISCONTINUED OPERATIONS (CONTINUED)



The following information is presented for the discontinued operations:



Segments discontinued  Intercash POS Systems LTD., a wholly owned subsidiary of the Company that sold point of sale terminals and other electronic funds transfer devices.

Discontinued date  September 1, 2004

Manner of disposal  sale of assets to unrelated entity

Remaining assets  none

Income in October 31, 2004 - $26,400

Partial proceeds from sale of segment - $203,639



Interglobe Investigation Services, Inc., a wholly owned subsidiary of the Company that provided security consulting services, loss prevention and forensic computing services, was sold and discontinued on March 15, 2005. The October 31, 2004 statements of operations and cash flows were reclassified to segregate the income from discontinued operations from continuing operations.



The following information is presented for the discontinued operations:



A.

Segments discontinued  The investigative service portion of Interglobe Investigation Services, Inc., a wholly owned subsidiary of the Company that provided Security Consulting services, loss prevention and forensic computing services.

B.

Discontinued date  March 15, 2005.

C.

Manner of disposal  sale of assets to an officer and stockholder of the Company.

D.

Remaining assets  The surveillance equipment division was transferred to Interglobe, Ltd.

E.

Loss on October 31, 2005 - $21,554.

F.

Partial proceeds from sale of segment  9,000,000 shares of common stock of Already Checked, Inc. - the shares have no market value and therefore the Company recorded no value for the consideration; 60,000 shares of the Companys common stock with a fair market value of $9,000 returned as consideration for the sale by a departing employee of the Company.





2005
	
	2004Net (loss) from continuing operations
	$
	( 1,319,640)
	$
	( 254,940)Weighted average number of commonshares outstanding
	
	5,317,662
	
	1,894,117Net (loss) per share
	$
	(0.25)
	$
	( 0.13)Net income (loss) from discontinued operations
	$
	( 148,044)
	$
	119,234Weighted average number of commonshares outstanding
	
	5,317,662
	
	1,894,117Net income (loss) per share
	$
	( 0.03)
	$
	0.06








51



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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





13.

COMMITMENTS AND CONTINGENCIES



Lease



On March 15, 2002, SBI leased its office facilities for a five-year period that began on May 1, 2002. The lease requires monthly rentals of approximately $1,614 ($1,900) Canadian dollars) plus taxes and operating costs, with rent increasing yearly by $.40 ($.48 Canadian dollars) per square footage of gross leaseable area.



Future minimum lease payments excluding taxes and expenses are as follows:



October 31, 2006
	$
	22,062October 31, 2007
	
	11,388$
	33,450




IIS leases a virtual office facility on a month-to-month basis for approximately $156 ($184 Canadian dollars) plus additional usage fees per month.



IIS also leases facilities from its former sole shareholder, who is now an employee of the Company, on a month-to-month basis for approximately $1,066 ($1,255 Canadian dollars) per month.



Rent expense including rental costs and taxes is as follows:



2005
	
	2004Related party
	$
	6,396
	$
	1,066Unrelated parties
	
	15,911
	
	17,034Total
	$
	22,307
	$
	18,100




14.

EMPLOYEE STOCK OPTIONS



On July 24, 2004, the Company adopted the 2004 Benefit Plan of Moneyflow Systems International Inc. (the Plan). Under the Plan, the Company may issue stock, or grant options to acquire the Companys common stock, par value $0.001, from time to time to employees of the Company or its subsidiaries. In addition, at the discretion of the Board or Directors, benefits may from time to time be granted under this Plan to other individuals, including consultants or advisors, who contribute to the success of the Company or its subsidiaries, but are not employees of the Company or its subsidiaries, provided that bona fide services shall be rendered by consultants and advisors and such services must not be in connection with the offer or sale of securities in a capital raising-transaction.



The Plan is administered by the Companys Board of Directors and the Company has reserved a total of 2,500,000 shares of common stock under the Plan. Options granted under this Plan will have terms, vesting and expiration dates as determined by the Plans Administrator at the time of grant.





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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





14.

EMPLOYEE STOCK OPTIONS (CONTINUED)



The Company has elected to account for stock-based compensation under APB Opinion No. 25, under which no compensation expense has been recognized for stock options granted to employees at fair market value.

The Company has issued 150,000 shares of the Companys common stock as compensation. The exercise price is $0.40 per share and all options were immediately vested.



The Company has elected to account for stock-based compensation under the Intrinsic Value method of APB Opinion No. 25, under which no compensation expenses has been recognized for options granted to employees.



A summary of the option activity for the year ended October 31, 2005 is as follows:



WeightedShares
	
	AverageUnder
	
	ExerciseOption
	
	PriceOptions outstanding atNovember 1, 2004
0
	$
0.00Granted
	
	150,000
	
	0.40Exercised
	
	0
	
	0.00Cancelled and expired
	
	0
	
	0.00Options outstanding atOctober 31, 2005
150,000
	$
	0.40




150,000 shares are exercisable at October 31, 2005.



Information regarding stock options outstanding at October 31, 2005 is as follows:



Price range
	$
	0.40Weighted average exercise price
	
	0.40Weighted average remainingcontractual life
	
	2 MonthsOptions exercised
	
	0






The Company also maintains the Moneyflow Systems International Inc. 2002 Equity Incentive Plan. No options have been granted since inception of this Plan and the Company intends to dissolve this Plan and replace it with the 2004 Benefit Plan of Moneyflow Systems International Inc. as adopted on July 24, 2004.







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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





15.

COMMON STOCK AND CHANGE IN AUTHORIZED SHARES



On May 27, 2004, the Board of Directors approved a one-for-ten reverse stock split of the Companys common stock, effective July 19, 2004, thereby reducing the authorized share from 50,000,000 to 5,000,000 and the issued and outstanding from 18,037,000 to 1,803,700. The stock split has been retroactively recorded in the financialstatements as if it occurred at the date of inception. On the same date, the Board of Directors authorized an increase in number of common shares authorized from 5,000 to 100,000,000.



During the year ended October 31, 2005, the Company issued the following shares of common stock:



240,000 restricted shares valued at $60,000 were issued to the Company Board of Director Members in payment of directors fees. Included in this issuance are 60,000 restricted shares valued at $15,000 that were issued to the Companys President, Hal Schultz.



237,500 restricted shares valued at $80,750 were issued to the Companys employees for their 2004 Christmas bonuses.



2,500,000 free trading shares valued at 526,600 were issued to the Companys consultants and attorneys in consideration of service agreements. 1,500,000 free trading shares valued at $300,000 were converted from preferred A stock, (See Note 16) 60,000 restricted shares valued at $15,000 were acquired as treasury stock. (See Note 17).



16.

PREFERRED STOCK



On May 27, 2004, the Board of Directors authorized creation of 5,000,000 Preferred A stock with a par value of $0.001 per share and 5,000,000 Preferred B stock with a par value of $0.001 per share.



Preferred A stock carries the following preferences:



(a) Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Company, the holders of Preferred A Series I shares will be entitled to receive, prior and in preference to any distribution of any assets or surplus funds to the holders of Common Stock, liquidation amounts equal to the sum of (i) the Original issue Price ($.25 per share), plus (ii) all declared but unpaid dividends (the Senior Preferential Amount). After payment of the Senior Preferential Amount).   After payment of  the  Senior  Preferential Amount, liquidation  proceeds will be shared prorate by the holders of the Common Stock and the Preferred A Series I shares on an as converted basis.



(b) Voluntary Conversion. The holders of the Preferred A Series I shares will have, at the option of the holder, the right to convert one share of Preferred A Series I shares stock, at any time, into one hundred shares of Common Stock.



(c) Automatic Conversion. The Preferred A Series I shares will be converted automatically into Common Stock, at the applicable Conversion ratio, (i) upon the closing of an underwritten public offering of shares of the Common Stock of the Company in an offering of not less than $20,000,000 (prior to underwriting commissions and expenses), (ii) upon the closing of a Sale of the Company that is not deemed a dissolution under the liquidation preference provisions above, or (iii) in the event that the holders of a majority of the Preferred A Series I shares consent to the conversion into Common Stock.



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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005





16.

PREFERRED STOCK (CONTINUED)



(d) Anti-dilution Protection. The Conversion Price will be subject to proportional adjustment for stock splits, stock dividends, recapitalizations and the like. The Preferred A Series I shares also will be subject to adjustment to prevent dilution in the event that the Company issues additional equity securities (or warrants or rights to purchase
Common Stock or securities convertible into Common Stock) at purchase price less that the applicable Conversion Price. Such adjustment will be on a standard, broad based weighted average basis. The Conversion Price will not be adjusted for issuances of equity securities upon the exercise or conversion of presently outstanding securities, or on the future issuance of stock options to employees, as approved by the Companys Board of Directors and certain other strategic issuances.



(e) Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the Common Shares are exchanged for or changed into other shares or securities, cash and/or any other property, then in any such case the Preferred A Series I Shares shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of shares, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Shares is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on Common Shares payable in Common Shares, or effect a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of Series A Preferred Shares shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event.



(f) Dividends. No cash dividends may be declared on the Common Stock unless or until a like dividend in an amount equal to or greater than the dividend has been declared on the Preferred A Series I shares  (dividends shall be compared on a Common Stock equivalent basis).



(g) Reacquired Shares. Any Preferred A Series I Shares purchased or otherwise acquired by the Corporation  in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation, and upon the taking of any action required by applicable law,  become authorized but unissued preferred shares and may be reissued as part of a new series of preferred shares to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.



(h) Amendment. The Articles of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Preferred A Series I Shares so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding Series A Preferred Shares voting together as a single class.



(i) Board Rights. So long as the Preferred A Series I shares Investors collectively hold at least 10,000 shares of Preferred A Series I shares, a representative of such group, selected by the Preferred A Series I shares Investors, shall be entitle to be elected to the Companys Board of Directors.





55



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MONEYFLOW SYSTEMS INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2005



16.

PREFERRED STOCK (CONTINUED)



Preferred B stock carries the following preferences:

(a) Voting Rights.The holders of Preferred B Series I shares shall not be entitled to vote on any matters on which shareholders of common shares of the corporation shall be entitled to vote, with the express exception of the right of the holders of Preferred B Series I shares to have a representative of the holders elected to the Board of Directors as set out in paragraph (d) of this section.



(b) Reacquired Shares. Any Preferred Series I Shares purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation, and upon the taking of any action required by applicable law, become authorized but unissued preferred shares and may be reissued as part of a new series of preferred shares to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.



(c) Amendment.The Articles of Incorporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Preferred B Series I Shares so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding Series B Preferred Shares voting together as a single class.



(d) Board Rights. So long as the holders of Preferred B Series I shares collectively hold at least 1,000 shares of Preferred B Series I shares, a representative of such group, selected by the Preferred B Series I shares shall be entitled to be elected to the Companys Board of Directors.



During the year ended October 31, 2005, the Company issued the following shares of Preferred A stock:



24,500 restricted shares valued at $490,000 were issued to the Company Board of Director Members in payment of directors fees. Included in this issuance are 15,000 restricted shares valued at $300,000 that were issued to the Companys President, Hal Schultz. The 15,000 shares were later converted into 1,500,000 shares of common stock.



During the year ended October 31, 2005, the Company issued to the following shares of Preferred B stock:



1,000 restricted shares valued at $1,000 were issued to the Companys President, Hal Schultz, in payment of directors fees.



17.

TREASURY STOCK



On March 15, 2005, the Company acquired 60,000 shares of its common stock as partial consideration for the sale of its wholly-owned subsidiary Interglobe Investigation Services, Inc.  The shares had a fair market value of $9,000 on the date of the agreement.











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