**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        D.C. 20549
 
 **FORM
        10-KSB/A**
 
 **Amendment
        No. 1**
 
 (Mark
        One)
 
 **[X]**
              **ANNUAL
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT****OF
                  1934**
 
 **For
        the fiscal year ended September 30, 2005**
 
 **[  
                ]**
              **TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934**
 
 For
        the
        transition period from __________ to__________
  Commission
        File No. 0-51107
  
 
 
 **Benacquista
        Galleries, Inc.**
 (Name
        of
        small business issuer as specified in its charter)
 
 Nevada
              71-0928242(State
                  or other Jurisdiction of
              (I.R.S.
                  EmployerIncorporation
                  or Organization)
              Identification
                  No.)6870
                  La Valle Plateada Rancho Santa Fe, California
              92067(Address
                  of Principal Executive Offices)
              (Zip
                  Code)
  (858)
        525-5695
 (Issuer’s
        Telephone Number, Including Area Code)
 
 **Securities
        registered under Section 12(b) of the Act:**
 
 None
 
 **Securities
        registered under Section 12(g) of the Act:**
 
 Common
        Stock, $0.001 par value
 (Title
        of
        Class)
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such period that
        the
        small business issuer was required to file such reports), and (2) has been
        subject to such filing requirements for the past 90 days. [X] Yes [ ]
        No
 
  
  Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of registrant’s knowledge, in definitive proxy or information
        statements incorporated by reference in Part III of this Form 10-KSB or any
        amendment to this Form 10-KSB. [  ]
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 Yes
        [   ]  No [X]
 For
        the
        fiscal year ended December 31, 2005, the issuer’s revenues were
        $106,000.
 
 As
        of
        January 13, 2006, the aggregate market value of the issuer’s voting and
        non-voting common stock held by non-affiliates was $515,450 based on the
        average
        bid and asked price of such stock on that date as reported on the OTC Bulletin
        Board.
 
 On
        January 13, 2006 there were 1,100,113 shares of the issuer’s common stock,
        $0.001 par value per share, issued and outstanding.
  **DOCUMENTS
        INCORPORATED BY REFERENCE**
 
 None
 
 Transitional
        Small Business Disclosure Format Yes [  ]; No [X]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  TABLE
        OF
        CONTENTS
 
 **PART
                  I**ITEM
                  1.
              DESCRIPTION
                  OF BUSINESS.
              1ITEM
                  2.
              DESCRIPTION
                  OF PROPERTY.
              5ITEM
                  3.
              LEGAL
                  PROCEEDINGS.
              5ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS.
              5**PART
                  II**ITEM
                  5.
              MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
              6ITEM
                  6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
              7ITEM
                  7.
              FINANCIAL
                  STATEMENTS.
              F-1ITEM
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE.
              19ITEM
                  8A.
              CONTROLS
                  AND PROCEDURES.
              19ITEM 8B.
              OTHER INFORMATION
              19**PART
                  III**ITEM
                  9.
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND CORPORATE
                  GOVERNANCE; COMPLIANCE WITH SECTION 16(a)OF THE EXCHANGE
                  ACT.
              20ITEM
                  10.
              EXECUTIVE
                  COMPENSATION.
              21ITEM
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS.
              23ITEM
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                  INDEPENDENCE.
              23ITEM
                  13.
              EXHIBITS.
              25ITEM
                  14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES.
              26
 
 
 
 
  
 
 **PART
        I**
 
 **SPECIAL
        NOTE REGARDING FORWARD-LOOKING STATEMENTS**
 
 In
        addition to historical information, this Form 10-KSB, press releases and
        certain
        information provided periodically in writing or verbally by our officers
        or our
        agents contain statements which constitute forward-looking statements. Such
        forward-looking statements are generally identified by words such as “may”,
“would”, “could”, “will”, “expect”, “estimate”, “goal”, “intend”, “project”,
“believe”, “anticipate”, “plan”, and similar expressions and variations thereof
        that are intended to specifically convey the uncertainty of future events
        or
        outcomes. These statements appear in a number of places in this Form 10-KSB
        and
        include all statements that are not statements of historical fact regarding
        the
        intent, belief or current expectations of us, our directors or our officers,
        with respect to, among other things: (i) our liquidity and capital resources;
        (ii) our financing opportunities and plans; (iii) our ability to generate
        revenues; (iv) competition in our business segments; (v) market and other
        trends
        affecting our future financial condition or results of operations; (vi) our
        growth strategy and operating strategy; and (vii) the declaration and/or
        payment
        of dividends.
 
 Investors
        and prospective investors are cautioned that the forward-looking statements
        contained herein are not guarantees of future performance and are subject
        to
        certain risks and uncertainties that may cause actual results to differ
        materially from those projected in the forward-looking statements. Factors
        that
        may cause such differences include, among others, those set forth in Part
        II,
        Item 6 of this annual report on Form 10-KSB, entitled “Management’s Discussion
        and Analysis or Plan of Operation”, including without limitation the risk
        factors contained therein. Except as required by law, we undertake no obligation
        to update any of the forward-looking statements in this Form 10-KSB after
        the
        date of this report.
  **ITEM
        1. DESCRIPTION OF BUSINESS.**
 
 **CORPORATE
        HISTORY AND DEVELOPMENT**
 
 We
        were
        originally incorporated on January 17, 2003, in accordance with the laws
        of the
        State of Nevada, as Benacquista Galleries, Inc. On July 28, 2005 our common
        shares commenced trading on the OTC Bulletin Board (owned and operated by
        the
        Nasdaq Stock Market, Inc.) and are currently quoted under the symbol
“BAQG”.
 
 On
        September 29, 2005 we entered into an agreement with YNOT Education, Inc.
        a
        Nevada corporation, to acquire the website www.ynoteduk8.com in exchange
        for a
        $150,000 unsecured promissory note bearing interest at a rate of five percent
        (5%) per annum.
 
 On
        September 29, 2005 we also entered into an exclusive publishing and royalty
        agreement with our director, Don Tolman, to publish certain of his health
        and
        educational related books and materials, including the *Farmacist
        Desk Reference* (the
“FDR TM ”).
 
 On
        January 8, 2007, we consolidated our authorized common shares on a one-for-ten
        basis, with a corresponding reduction in our common shares issued and
        outstanding as of that date. Unless otherwise noted, all references to the
        number of common shares included in this annual report on Form 10-KSB for
        the
        fiscal year ended September 30, 2005 are stated on a post-consolidated basis.
        Per share amounts have also been restated for the share
        consolidation.
 
 **BUSINESS**
 
 **Overview**
 
 We
        are a
        development stage company formed for the purpose of offering collectable
        artwork
        and accessories through a chain of retail galleries and a fully interactive
        e-commerce and auction-enabled website. In September, 2005, we added to our
        available products through the acquisition of an interactive website,
        www.ynoteduk8.com. This website provides information and materials for purchase
        related to art and visual education as well as other aspects of education
        and
        cognitive science. We also acquired the publication rights to the *Farmacist’s
        Desk Reference* ,
        a
        full-color guide to health and wellness written by our director, Don Tolman.
        To
        date, we do not have any retail galleries and all of our art and educational
        products are available for sale through our websites:
        www.benacquistagalleries.com and www.ynoteduk8.com.
 
  1
  We
        currently have very limited operations, only two part-time employees (our
        sole
        officer and director James Price and our director Don Tolman) and no retail
        gallery space. We have recently launched our website and an eBay ® store
        which features our current, limited art inventory. We have developed a plan
        of
        operations that could allow us to sell art through at least one retail gallery
        location and over the internet.
 
 The
        primary areas of our business which we intend to develop over the next six
        to
        twelve months include:
 
 ·
              our
                  relationships with several artists for exclusive artwork offerings
                  through
                  Benacquista Galleries;
 
 ·
              the
                  publication and sale of the FDR;
 
 ·
              at
                  least one gallery opening in a strategic
                  location;
 
 ·
              sales
                  of additional educational products created by Don Tolman and related
                  to
                  various educational topics including art education;
                  and
 
 ·
              sales
                  and marketing capability sufficient to handle all website inquiries
                  and
                  gallery traffic.
 
 **Principal
        Products and Services**
 
 We
        have
        developed and launched a website which displays some of our current art
        inventory for sale. You can visit our website at www.benacquistagalleries.com.
        Our website contains basic company information as well as displays several
        art
        pieces for sale and information on the artists. In addition, our website
        provides links to our newly acquired educational website www.ynoteduk8.com,
        which offers a variety of educational products for sale, including products
        related to art education and cognitive sciences.
 
 Our
        website contains a functional shopping cart which allows customers to enter
        credit card information and purchase a specific piece of artwork or educational
        product. These products are then shipped by us directly to the customer.
        Our art
        products are currently shipped from Monkton, Maryland and our educational
        products are currently shipped from Rogersville, Tennessee, from a facility
        owned by our director Don Tolman.
 
 We
        also
        maintain an eBay store which allows eBay customers to view and purchase our
        products using their eBay accounts and PayPal ® or
        credit card payment methods.
 
 **Distribution
        and Marketing Methods**
 
 A
        present
        we have very limited internal distribution and sales capabilities and rely
        heavily on our internet presence, the personal efforts of our Chief Executive
        Officer, James Price, our director, Don Tolman, and on the efforts of our
        strategic partners, ArtTrader.org, Inc. and Monarch Consulting LLC. These
        strategic partners assist us with the acquisition of new products and new
        artists, and with marketing, sales and distribution. We also anticipate that
        our
        Chief Executive Officer, James Price, will continue to use his network of
        professional and business contacts in the art industry to sign on additional
        artists and reach our proposed customer base through traditional forms of
        advertising and through our existing website, www.benacquistagalleries.com,
        as
        well as contacts made through our planned e-commerce website. Mr. Price
        established his network of professional and business contacts in the art
        industry as an amateur collector of art over the past 15 years, attending
        auctions and visiting international and domestic galleries. During these
        visits
        and in the course of his purchasing for his own private collection, Mr. Price
        has made acquaintances in the industry, including artists, gallery owners,
        auction personnel and suppliers and service providers to the art trade. We
        intend to market our artwork via industry trade shows, in trade publications
        and
        through online search engines. We also intend to market our products through
        the
        efforts of our partners ArtTrader.org, Inc. and Monarch Consulting LLC, as
        well
        as through the personal efforts of our director, Don Tolman, who will be
        making
        a number of international appearances over the next twelve months to promote
        our
        products.
 
  2
  **Status
        of Products and Services**
 
 Both
        of
        our websites, www.benacquistagalleries.com and www.ynoteduk8.com, are
        operational and allow customers to purchase our products using a credit card.
        Our eBay store is fully operational and allows customers to purchase our
        products using a credit card or Pay Pal. We intend to add significantly to
        our
        current inventory of art over the next 6 to 12 months, including additional
        agreements to represent artists on an exclusive basis. We also intend to
        add to
        our product lines in education, both art-related and non-art related. Currently,
        our most significant educational product, the *Farmacist’s
        Desk Reference* ,
        should
        be available for sale to our customers by March 31, 2006, the end of the
        second
        quarter of our fiscal year. We expect that our director Don Tolman will continue
        to develop additional educational products for release throughout the year.
        We
        also anticipate having at least one retail gallery opening during the next
        six
        months, though we have not yet entered into any negotiations or made any
        contractual arrangements to do so and may have difficulty in obtaining the
        location and space we desire under favorable terms.
 
 **Competitive
        Conditions, Competitive Position and Methods of Competition**
 
 The
        artwork industry in which we compete contains an old and established network
        of
        galleries and promoters. Intense competition exists for our galleries and
        artwork offerings. The number of companies with which we compete is estimated
        in
        the hundreds and expanding. We expect competition with any galleries or internet
        sales presence that we develop to increase over time as the market for our
        collectable and investment grade art grows. Competition may also increase
        as a
        result of industry consolidation.
 
 Our
        chief
        competition comes from large established galleries and websites, such
        as:
 
 ·
              P
                  and C Art;
 
 ·
              Herndon
                  Fine Art;
 
 ·
              Galleria
                  De Sorrento;
 
 ·
              Art.com;
                  and
 
 ·
              Artvest.com.
 
 These
        companies tend to compete for clients by sales of services to existing clients,
        via word of mouth referrals, advertising, trade show presence and artist
        shows.
        Our main method of competition is through product differentiation based on
        style, philosophical orientation, and gallery locations. We intend to
        distinguish our service and artwork offerings by appealing to the collectors
        and
        investors at our specific gallery locations and via the Internet. We believe
        that the philosophical orientation of our services will attract aspiring
        new
        artists to sign exclusive contracts with Benacquista to show their art. This
        orientation will be reflected in the on-line artwork that we offer on the
        site
        and in the focus and direction of the variety of artwork and the customer
        service that we offer in our galleries.
 
 We
        believe that our competitive position is that of vulnerable, new entrant
        and
        that the success of our artwork offering will be largely dependent on our
        ability to find new artists who are not currently affiliated with any other
        gallery or on-line artwork website.
 
 Competition
        for our educational products comes from a variety of companies, but most
        significantly from established websites such as amazon.com that offer a wide
        variety of educational works on a variety of subjects. Because the work of
        Don
        Tolman is unique and not available anywhere except through Benacquista and
        its
        distributors, we believe that we have very limited competition for selling
        educational products to those individuals who have purchased Don’s products in
        the past and continue to be interested in Don’s intellectual
        output.
 
  3
  **Dependence
        on One Customer**
 
 For
        the
        fiscal year ended September 30, 2005 all our sales were to a single customer.
        In
        the future, we do not contemplate a dependence on one customer or one referral
        source for clients.
 
 **Research
        and Development**
 
 We
        have
        not spent any money on research and development to date, however, the $150,000
        that we spent on advertising during the fiscal year ended September 30, 2005,
        for the acquisition of www.ynoteduk8.com, means that we acquired a substantially
        developed website. We anticipate that we will spend up to $100,000 on the
        development of additional educational materials and additional features on
        our
        websites. Much of the development of the artwork offering and the selection
        and
        securing of retail gallery sites will be undertaken by James Price, our Chief
        Executive Officer. Mr. Price is available to spend as much time as necessary
        to
        continue our operations through the next three months. At the end of those
        three
        months, Benacquista intends to have at least two additional full-time employees
        to assist Mr. Price in his development and other responsibilities.
 
 **Intellectual
        Property**
 
 We
        rely
        primarily on a combination of copyrights, licenses, trade secret laws and
        restrictions on disclosure to protect our artist’s intellectual property and
        proprietary rights. We intend to enter into confidentiality agreements with
        our
        future employees, consultants and artists and to generally control access
        to and
        distribution of our internal documentation and other proprietary
        information.
  **Regulatory
        Environment**
 
 There
        are
        two aspects of our business which face significant governmental regulation
        or
        are likely to face such regulation; our planned sales offering via the internet
        and regulations which affect sales of retail art and collectibles in general.
        There are no significant regulations regarding our educational materials,
        except
        as relates to the regulations regarding the dispensation of medical
        advice.
 
 Within
        the United States, the legal landscape for internet privacy is new and rapidly
        evolving. Collectors and users of consumer information over the internet
        face
        potential tort liability for public disclosure of private information; and
        liability under federal and state fair trade acts when information sharing
        practices do not mirror stated privacy policies. Due to the increasing
        popularity and use of the internet, it is likely that a growing number of
        laws
        and regulations will be adopted at the international, federal, state and
        local
        levels relating to the internet covering issues such as user privacy, pricing,
        content, copyrights, distribution, antitrust and characteristics and quality
        of
        services. Further, the growth and development of the market for activity
        on the
        internet may prompt calls for more stringent consumer protection laws that
        may
        impose additional burdens on those companies conducting business online.
        The
        adoption of any additional laws or regulations may impair the growth of the
        internet, which could, in turn, decrease the demand for our services and
        increase our cost of doing business. Moreover, the applicability to the internet
        of existing laws in various jurisdictions governing issues such as property
        ownership, sales and other taxes, libel and personal privacy is uncertain
        and
        may take years to resolve. Any such new legislation or regulation, the
        application of laws and regulations from jurisdictions whose laws do not
        currently apply to our business or the application of existing laws and
        regulations to the internet could harm our business.
 
 Sellers
        of retail art and collectibles are particularly susceptible to unscrupulous
        individuals selling forged or stolen goods. There are significant local,
        state
        and federal penalties for merchants who sell forged or stolen goods, or goods
        that violate existing copyright interests. Although we intend to make every
        effort to insure that our supply of goods comes from reputable artists and
        sources, we may nevertheless be liable under these regulations for sales
        of such
        articles. Liability can include civil and criminal penalties, as well as
        forfeiture of the artwork without compensation. We may be able to insure
        against
        the costs of some, but not all of these regulations, but do not currently
        maintain such insurance. Liability under existing criminal or civil regulations
        for such sales could have a material, adverse impact on our
        business.
 
  4
  Books
        and
        materials regarding health and fitness, such as our FDR, are not regulated
        as
        such by any federal, state or local authority. However, there is a risk that
        our
        products, which are not intended to give medical advice or to diagnose any
        condition, might be misperceived as offering such advice or misused by
        customers. If our products were misconstrued as giving medical advice, we
        would
        be subject to an incredibly complex network of federal, state and local
        regulations and prohibitions that involve substantial civil and criminal
        penalties. The FDR contains a clear disclaimer indicating it is not meant
        for
        medical or diagnostic advice and we believe that this disclaimer is adequate,
        but we have no assurance that this is the case. If we were to be found to
        violate any regulations regarding the provision of medical device, applicable
        civil and criminal penalties would be very likely to result in the complete
        cessation of a our business and could lead to huge fines and other costs
        which
        could completely destroy any financial or intellectual property assets in
        the
        Company.
 
 **EMPLOYEES**
 
 For
        the
        fiscal year ended September 30, 2005, we had two full-time and no part-time
        employees, and we intend to add at least two additional full-time employees
        by
        March 31, 2006.
 
 As
        of the
        date of this annual report on Form 10-KSB for the fiscal year ended September
        30, 2005, we have no written employment agreements with any of our employees,
        and rely heavily on our current officers and directors in operating our
        business. We are not subject to any collective bargaining agreements and
        believe
        that our relationships with our employees are good.
 
 **ITEM
        2. DESCRIPTION OF PROPERTY.**
 
 Our
        principal executive offices are currently hosted out of the residence of
        our
        chief executive officer, James Price, in Monkton, Maryland. We began leasing
        these premises on a month-to-month basis at a rate of $500 per month on April
        1,
        2004. We are currently in the process of searching for office space in San
        Diego, California, but, as of the date of this annual report on Form 10-KSB
        for
        the fiscal year ended September 30, 2005, we have not yet identified, nor
        have
        we entered into any agreements or negotiations, regarding any specific
        locations. We believe that our relocation will be complete by March 31, 2006,
        however, there can be no assurance of this.
 **ITEM
        3. LEGAL PROCEEDINGS.**
 
 As
        of the
        date of this annual report on Form 10-KSB for the fiscal year ended September
        30, 2005, there were no pending material legal proceedings to which we were
        a
        party and we are not aware that any were contemplated. There can be no
        assurance, however, that we will not be made a party to litigation in the
        future. Any finding of liability imposed against us is likely to have an
        adverse
        effect on our business, our financial condition, including liquidity and
        profitability, and our results of operations
 
 **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
        HOLDERS.**
 
 No
        matters were submitted to a vote of our security holders, through the
        solicitation of proxies or otherwise, during the fourth quarter of the fiscal
        year ended September 30, 2005.
 
 
 
 
 
  5
  **PART
        II.**
  **ITEM
        5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS.**
 
 Our
        common stock is quoted on the OTC Bulletin Board, a service provided by the
        Nasdaq Stock Market Inc., under the symbol “BAQG”.
 
 The
        following table sets forth the high and low bid prices for our common stock
        as
        reported each quarterly period within the last two fiscal years on the OTC
        Bulletin Board, and as obtained from BigCharts.com. The high and low prices
        reflect inter-dealer prices, without mark-up, mark-down or commission and
        may
        not represent actual transactions.
 **Period****High***
              
              **Low*****Fiscal
                  year ended 2004****Quarter
                  ended**December
                  31, 2003**
              
              $
              --
              
              $
              --March
                  31, 2004**
              
              $
              --
              
              $
              --June
                  30, 2004**
              
              $
              --
              
              $
              --September
                  30, 2004
              
              $
              --
              
              $
              --**Fiscal
                  year ended 2005****Quarter
                  ended**December
                  31, 2004**
              
              $
              --
              
              $
              --March
                  31, 2005**
              
              $
              --
              
              $
              --June
                  30, 2005**
              
              $
              --
              
              $
              --September
                  30, 2005
              
              $
              25.00
              
              $
              1.00
 
 *
              On
                  January 8, 2007, we consolidated our authorized common shares on
                  a
                  one-for-ten basis, with a corresponding reduction in our common
                  shares
                  issued and outstanding as of that date.**
              Our
                  common shares began trading on the OTC Bulletin Board on July,
                  28, 2005;
                  thus, prior historical price information regarding shares of our
                  common
                  stock is unavailable.
 
 **STOCKHOLDERS**
 
 As
        of the
        fiscal year ended September 30, 2005, there were approximately 313 holders
        of
        record of our common stock.
 
 **DIVIDENDS**
 
 From
        our
        inception we have never declared or paid any cash dividends on shares of
        our
        common stock and we do not anticipate declaring or paying any cash dividends
        in
        the foreseeable future. The decision to declare any future cash dividends
        will
        depend upon our results of operations, financial condition, current and
        anticipated cash needs, contractual restrictions, restrictions imposed by
        applicable law and other factors that our board of directors deem relevant.
        Although it is our intention to utilize all available funds for the development
        of our business, no restrictions are in place that would limit our ability
        to
        pay dividends. The payment of any future cash dividends will be at the sole
        discretion of our board of directors.
 
  6
  **SECURITIES
        AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS**
 
 We
        do not
        presently have in place any equity compensation plan or plans under which
        shares
        of our common stock may be issued.
 
 **RECENT
        SALES OF UNREGISTERED SECURITIES**
 
 There
        were no previously unreported sales of unregistered securities during the
        fiscal
        year ended September 30, 2005.
 
 **ITEM
        6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION.**
 
 The
        following discussion and analysis of our financial condition, results of
        our
        operations and liquidity should be read in conjunction with our audited
        financial statements for the years ended September 30, 2005 and 2004 and
        related
        notes appearing elsewhere in this annual report. This discussion and analysis
        contains forward-looking statements that involve risks, uncertainties and
        assumptions. Our audited financial statements have been prepared in accordance
        with generally accepted accounting principles, contemplate that we will continue
        as a going concern, and do not contain any adjustments that might result
        if we
        were unable to continue as a going concern, however, our independent registered
        public accounting firm, Hansen, Barnett and Maxwell, P.C., has added an
        explanatory paragraph in Note 4 of our audited financial statements for the
        fiscal years ended September 30, 2005 and 2004 raising substantial doubt
        as to
        our ability to continue as a going concern.
 
 **CRITICAL
        ACCOUNTING POLICIES**
 
 Our
        critical accounting policies, including the assumptions and judgments underlying
        those policies, are more fully described in the notes to our financial
        statements. We have consistently applied these policies in all material
        respects. Investors and potential investors are cautioned, however, that
        these
        policies are not guarantees of future performance and involve risks and
        uncertainties, and that actual results may differ materially. Set forth below
        are the accounting policies that we believe most critical to an understanding
        of
        our financial condition, results of operations and liquidity.
 
 **Use
        of Estimates**
 
 The
        preparation of our financial statements in conformity with generally accepted
        accounting principles requires management to make certain estimates and
        assumptions that affect the amounts of assets, liabilities, revenues and
        expenses reported in our financial statements and the accompanying notes.
        We
        evaluate our estimates on an ongoing basis, and make our estimates and
        assumptions based on actual historical experience which we believe to be
        reasonable under the circumstances at that time. Actual results may differ
        materially from our current estimates.
 
 **Inventory**
 
 Inventory
        is recorded at the lower of cost or market value.
 
 **Revenue
        Recognition**
 
 We
        derive
        revenues from direct and consignment sales of collectible, investment grade
        works of art, and from individual and corporate-oriented publishing
        services.
 
 We
        recognize revenues based on the various types of transactions generating
        the
        revenue. We recognize art revenue when persuasive evidence of an arrangement
        exists, services have been rendered or products have been delivered, the
        price
        to the buyer is fixed and determinable, and collectibility is reasonably
        assured.
 
 We
        recognize revenues for published products distributed through wholesale and
        retail channels and through resellers upon verification of final sell-through
        to
        end users, after consideration of rights of return and price protection.
  7
  Typically,
        the right of return on such products has expired when the end user purchases
        the
        product from the retail outlet. Once the end user opens the package, it is
        not
        returnable unless the medium is defective.
 
 **OVERVIEW**
 
 Benacquista
        Galleries, Inc. is a development stage Nevada corporation formed on January
        17,
        2003 for the purpose of offering collectable artwork and accessories through
        a
        chain of retail galleries and a fully interactive e-commerce and auction-enabled
        website. In September, 2005, we added to our available products through the
        acquisition of an interactive website, www.ynoteduk8.com. This website provides
        information and materials for purchase related to art and visual education
        as
        well as other aspects of education and cognitive science. We also acquired
        the
        publication rights to the *Farmacist’s
        Desk Reference* ,
        a
        full-color guide to health and wellness written by our director, Don Tolman.
        As
        of the date of this annual report on Form 10-KSB for the fiscal year ended
        September 30, 2005, we do not have any retail galleries, but our art and
        educational products are available for sale on our websites:
        www.benacquistagalleries.com and www.ynoteduk8.com.
 
 **PLAN
        OF OPERATION**
 
 We
        currently have very limited operations, only two employees (our sole officer
        and
        director James Price and our director Don Tolman) and no retail gallery space.
        We have recently launched our website and an eBay store which features our
        current, limited art inventory. We have developed a plan of operations that
        could allow us to sell art through at least one retail gallery location and
        over
        the internet.
 
 The
        primary areas of our business which we intend to develop over the next six
        to
        twelve months include:
 
 ·
              our
                  relationships with several artists for exclusive artwork offerings
                  through
                  Benacquista Galleries;
 
 ·
              the
                  publication and sale of the FDR;
 
 ·
              at
                  least one gallery opening in a strategic
                  location;
 
 ·
              sales
                  of additional educational products created by Don Tolman and related
                  to
                  various educational topics including art education;
                  and
 
 ·
              A
                  sales and marketing capability sufficient to handle all website
                  inquiries
                  and gallery traffic.
 
 We
        have
        identified target locations for potential gallery openings during the next
        12
        months. These locations are in Maine, Pennsylvania, Virginia, Nevada and
        Maryland. Initially, we selected locations in shopping malls based on the
        number
        of complementary luxury goods stores they contain, however, having found
        cost
        and credit terms of such spaces prohibitively expensive, we have now
        concentrated our efforts on locating stand alone retail spaces in prime tourist
        or shopping areas, ideally spaces that were formerly or are currently being
        used
        as galleries. Although we will seek out space that requires as little
        improvement as possible, there can be no assurance that such a space will
        be
        available to us on terms which we qualify for and would be willing to accept.
        Our Chief Executive Officer, James Price, has agreed to execute lease guarantees
        on up to four of the retail spaces which we select, if necessary, for a maximum
        lease liability of $500,000 per lease.
 
 We
        have
        developed and launched a website which displays some of our current art
        inventory for sale. You can visit our website at www.benacquistagalleries.com.
        The website contains basic company information as well as displays several
        art
        pieces and information on the artists. Our website, as well as the
        www.ynoteduk8.com website and our eBay store, allow customers to view and
        purchase our art and education products.
 
 Our
        acquisition of the www.ynoteduk8.com website and our September 2005 publishing
        agreement with Don Tolman will allow us to offer a variety of unique educational
        products over the next 12 months that we believe will significantly enhance
        our
        product offerings.
 
  8
  We
        intend
        to commence sales of the FDR by March 31, 2006. We anticipate that U.S. domestic
        sales of the FDR will provide sufficient revenues and profits to allow us
        to
        significantly expand our business during the fiscal year 2006.
 
 In
        February of 2006, we also intend to begin an aggressive expansion plan which
        will include:
 
 ·
              an
                  international speaking tour of Don Tolman with multiple public
                  appearances
                  at which the FDR and our other educational products will be available
                  for
                  purchase;
 
 ·
              television
                  and radio commercials promoting our
                  products;
 
 ·
              the
                  opening of at least one retail gallery
                  site;
 
 ·
              the
                  addition of at least 10 educational products to the YNOT EduK8
                  line;
 
 ·
              significant
                  expansion of our art inventory and substantial new
                  acquisitions;
 
 ·
              expansion
                  of the network of distributors for our educational products;
                  and
 
 ·
              the
                  signing of at least 3 new artists to artist representation
                  agreements.
 
 We
        believe that the events indicated in this plan should be substantially complete
        by June 30, 2006. We believe that the total cost for these expansions should
        be
        less than approximately $250,000, most of which will be spent on the opening
        of
        the retail gallery, which we estimate to cost approximately $100,000, and
        the
        television and radio commercials, which we estimate to cost approximately
        $80,000. We believe that there will be little cost associated with the
        significant expansion of our inventory because most of such inventory will
        be
        held on a consignment basis. We believe that our distribution network and
        artist
        representation agreements will not involve any initial costs. We estimate
        Don
        Tolman’s international tour to cost approximately $40,000. The 10 additional
        educational products, which will be written by Don Tolman, should not cost
        us
        financially except with respect to initial layout expenses of approximately
        $2,500 per product or approximately $25,000 in the aggregate, as we intend
        to
        print these on demand through a third party vendor based on pre-paid
        orders.
 
 **RESULTS
        OF OPERATIONS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2005 AND
        2004**
 
 **Revenues**
 
 Our
        revenues increased $76,000, from $30,000 for the fiscal year ended September
        30,
        2004, to $106,000 for the fiscal year ended September 30, 2005. This increase
        is
        attributable to an increase in the number of pieces of art sold in the fiscal
        year ended September 30, 2005 as compared to the fiscal year ended September
        30,
        2004.
 
 **Advertising
        and Marketing Expense**
 
 Advertising
        and Marketing expenses were $150,000 for the year ended September 30, 2005,
        as
        compared to $0 for the fiscal year ended September 30, 2004. This increase
        pertains entirely to the acquisition of the www.ynoteduk8.com website content
        in
        September 2005.
 
 Advertising
        and marketing will be critical to the success of our business, as our business
        model relies heavily on our ability to cause collectors and investors to
        visit
        our retail galleries, once established, and our websites
        www.benacquistagalleries.com and www.ynoteduk8.com. We intend to accomplish
        this
        goal through a combination of methods. We intend to hire a full-time sales
        and
        marketing director as soon as funding permits, which we estimate to be by
        March
        31, 2006. We believe it will take approximately three months for us to identify
        and hire such an individual and that we can obtain a suitable candidate for
        an
        annual salary of approximately $65,000, without having to offer insurance
        or
        other benefits. We anticipate that we will need to support this individual
        with
        a marketing budget of approximately $35,000. This budget would be used for
        travel to and attendance at industry trade shows and for advertisements in
        trade
        publications and websites. We believe that this combination of efforts together
        with the efforts of our Chief Executive Officer, James Price, in approaching
        colleagues and leaders in the art field will be sufficient to cause collectors
        and investors to visit our future retail galleries and existing websites.,
        however, investors are cautioned that there can be no assurance that either
        of
        the above strategies will achieve our intended goals.
 
  9
  We
        presently have a limited inventory of 36 pieces of artwork purchased from
        our
        Chief Executive Officer, James Price. Although we plan to sell this artwork
        along with other artwork that we plan to acquire, we have not yet negotiated
        with any suppliers or artists regarding such other artwork. We plan to acquire
        new artwork from individual artists and wholesalers and to sell through our
        internet website and in the retail galleries we intend to open.
 
 We
        expect
        sales and marketing expenses to increase sharply to between approximately
        $25,000 and $50,000 by March of 2006 and up to approximately $350,000 in
        the
        next fiscal year, assuming that we receive sufficient funding to commence
        our
        marketing plan. We expect that due, in part to an advertising expense of
        $150,000 for the www.ynoteduk8.com website acquisition, sales and marketing
        expenses excluding advertising for the fiscal year 2006, will be substantially
        higher than in the fiscal year ended September 30, 2005, but that advertising
        expenses should be lower or comparable.
 
 **General
        and Administrative**
 
 General
        and administrative expenses principally include salary expenses, professional
        fees, investor relations fees, rent and general corporate overhead. General
        and
        administrative expenses increased $106,609, from $48,458 for the fiscal year
        ended September 30, 2004 to $155,067 for the fiscal year ended September
        30,
        2005. The increase is primarily attributable to a $75,000 increase in salary
        expenses and $6,000 increase in rent during the fiscal year ended September
        30,
        2005, and for which there were no comparable expenses in the fiscal year
        ended
        September 30, 2004. In addition, the fiscal year ended September 30, 2005
        includes increased legal and accounting fees mainly attributable to expenses
        related to the filing of our registration statement on Form SB-2 and increased
        fees associated with SEC periodic reporting requirements as compared to the
        fiscal year ended September 30, 2004.
 
 Going
        forward, we intend to hire additional personnel to staff our physical galleries,
        once open, and to assist us in the marketing of our online gallery at
        www.beneacquistagalleries.com. We anticipate hiring such personnel in
        approximately nine months and would hire no more than a total of nine
        individuals.
 
 **Other
        Income and Expense**
 
 In
        January 2003, we issued a warrant to purchase up to 100,000 shares of our
        common
        stock at a price of $10.00 per share. During the period of August 17, 2005
        through September 7, 2005 the warrant was exercised and we received
        consideration in the form of certain promissory notes bearing interest at
        a rate
        of five percent (5%) per annum and payable in full on or before January 31,
        2008
        (the “Notes”). Our interest income from the Notes was $4,246 for the fiscal year
        ended September 30, 2005, as compared to $0 for the fiscal year ended September
        30, 2004.
 
 Interest
        expenses increased $3,020, from $40,106 for the fiscal year ended September
        30,
        2004 to $43,126 for the fiscal year ended September 30, 2005. This increase
        is
        attributable to an increase in the average outstanding balance owed to our
        Chief
        Executive Officer and majority shareholder, James Price, for the fiscal year
        ended September 30, 2005 as compared to the fiscal year ended September 30,
        2004.
 
 **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 As
        of the
        fiscal year ended September 30, 2005 we had $507 of cash on hand.
 
 Our
        net
        loss increased $234,113, from $94,564 for the fiscal year ended September
        30,
        2004 to $328,697 for the fiscal year ended September 30, 2005, and our working
        capital deficit increased $310,099, from $78,254 for the fiscal year ended
        September 30, 2004 to $388,353 for the fiscal year ended September 30,
        2005.
 
 Net
        cash
        used in operating activities increased $111,106, from $18,287 for the fiscal
        year ended September 30, 2004 to $129,393 for the fiscal year ended September
        30, 2005. This increase was primarily the result of a net loss, offset partially
        by a non-cash charge for the purchase of the web content of YNOT Education,
        Inc.
        and changes in working capital. Net cash used in operating activities for
        the
        fiscal year ended September 30, 2004 was primarily the result of a net loss
        and
        changes in working capital.
 
  10
  Net
        cash
        provided by financing activities increased $51,488, from $48,110 for the
        fiscal
        year ended September 30, 2004 to $99,598 for the fiscal year ended September
        30,
        2005. Net cash provided by financing activities for the fiscal year ended
        September 30, 2005 was primarily attributable to capital contributions and
        advances in the form of a loan from our Chief Executive Officer and majority
        shareholder, James Price. Net cash provided by financing activities for the
        fiscal year ended September 30, 2004 was attributable to a capital contribution
        by our Chief Executive Officer and majority shareholder, James
        Price.
 
 As
        of the
        fiscal year ended September 30, 2005 our principal commitments consisted
        of our
        obligations outstanding for accrued interest and our long term obligations
        related to a note owed to our Chief Executive Officer and majority shareholder,
        James Price. We expect no significant capital expenditures or lease commitments
        during the next fiscal quarter except with respect to the potential lease
        of
        office space in San Diego.
 
 We
        do not
        believe that our current financial resources are sufficient to meet our working
        capital needs over the next twelve months and, accordingly, we will need
        to
        secure additional external financing to continue our operations. We may seek
        to
        raise additional capital though private equity or debt financings and further
        shareholder loans. As
        of the
        date of this quarterly report on Form 10-QSB for the three months ended December
        31, 2005, we have
        obtained verbal commitments from our Chief Executive Officer and majority
        shareholder to make further capital advances to fund our operations; however,
        there can be no assurance that those further capital advances, if and when
        made,
        will be sufficient to sustain our required level of operations. Moreover,
        there
        can be no assurance that we will be able to secure additional external
        financing, or, if we are able to secure such external financing, that it
        will be
        on terms favorable, or even acceptable, to us. If necessary, we may explore
        strategic alternatives, including a merger, asset sale, joint venture or
        other
        comparable transactions. Any inability to achieve or sustain profitability
        or
        otherwise secure external financing or locate a strategic partner would have
        a
        material adverse effect on our business, financial condition, and results
        of
        operations, raising substantial doubts as to our ability to continue as a
        going
        concern, and we may ultimately be forced to seek protection from creditors
        under
        the bankruptcy laws or cease operations.
 
 Our
        short-term prospects are challenging considering our lack of financial
        resources. In the absence of additional financing, sales of works of art,
        educational products or publishing services, or locating a strategic partner
        willing to finance further product development, our short-term and long-term
        prospects for growth are minimal over and above incremental sales of our
        existing inventory.
 
 **RECENTLY
        ISSUED ACCOUNTING PRONOUNCEMENTS**
 
 In
        December 2004, the Financial Accounting Standards Board (“FASB”) issued
        Statements of Financial Accounting Standard (“SFAS”) No. 123 (revised 2004), *Share-Based
        Payment* ,
        which
        is an amendment to SFAS No. 123, *Accounting
        for Stock-Based Compensation* and
        supersedes Accounting Principles Board (“APB”) Opinion No. 25, *Accounting
        for Stock Issued to Employees* .
        This
        new standard eliminates the ability to account for share-based compensation
        transactions using APB No. 25 and requires such transactions to be accounted
        for
        using a fair-valued-based method, with the resulting cost recognized in our
        financial statements. This new standard is effective for annual periods
        beginning after June 15, 2005. We have not awarded or granted any share-based
        compensation to date and, therefore, the adoption of this standard is not
        expected to have a material impact on our financial statements until such
        time
        as share-based compensation is granted.
 
 In
        December 2004, the FASB issued SFAS No. 153 *,
        Exchange of Non-monetary Assets* .
        SFAS
        No. 153 amends APB Opinion No. 29, *Accounting
        for Non-monetary Transactions* ,
        to
        eliminate the exception for non-monetary exchanges of similar productive
        assets.
        We will be required to apply this statement to non-monetary exchanges after
        December 31, 2005. The adoption of this standard is not expected to have
        a
        material impact on our financial statements.
 
 In
        May
        2005, the FASB issued SFAS No. 154, *Accounting
        Changes and Error Corrections* which
        replaces APB Opinions No. 20 *Accounting
        Changes* and SFAS
        No. 3 *Reporting
        Accounting Changes in Interim Financial Statements - An Amendment of APB
        Opinion
        No. 28* .
        SFAS
        No. 154 provides guidance on the accounting for and reporting of accounting
        changes and error corrections. It establishes retrospective application,
        or the
        earliest practicable date, as the required method for reporting a change
        in
        accounting principle and restatement with respect to the reporting of a
        correction of an error. SFAS No. 154 is effective for accounting changes
        and
        corrections of errors made in fiscal years beginning after December 15,
        2005.
 
  11
  In
        June
        2005, the FASB’s Emerging Issues Task Force (“EITF”) reached a consensus on
        Issue No. 05-6, *Determining
        the Amortization Period for Leasehold Improvements* .
        The
        guidance requires that leasehold improvements acquired in a business combination
        or purchased subsequent to the inception of a lease be amortized over the
        lesser
        of the useful life of the assets or a term that includes renewals that are
        reasonably assured at the date of the business combination or purchase. The
        guidance is effective for periods beginning after June 29, 2005. The adoption
        of
        EITF No. 05-6 is not expected to have a material impact on our financial
        statements.
 
 **RISK
        FACTORS**
 
 Our
        business entails a significant degree of risk and uncertainty, and an investment
        in our securities should be considered highly speculative. What follows is
        a
        general description of the material risks and uncertainties, which may adversely
        affect our business, our financial condition, including liquidity and
        profitability, and our results of operations, ultimately affecting the value
        of
        an investment in shares of our common stock. In addition to other information
        contained in this annual report on Form 10-KSB, you should carefully consider
        the following cautionary statements and risk factors.
 
 **GENERAL
        BUSINESS RISKS**
 
 ***We
        are a development stage company and based on our historical operating losses
        and
        negative cash flows from operating activities there is uncertainty as to
        our
        ability to continue as a going concern.***
 
 We
        have a
        history of operating losses and negative cash flows from operating activities.
        In the event that we are unable to achieve or sustain profitability or are
        otherwise unable to secure external financing, we may not be able to meet
        our
        obligations as they come due, raising substantial doubts as to our ability
        to
        continue as a going concern. Any such inability to continue as a going concern
        may result in our security holders losing their entire investment. Our
        consolidated financial statements, which have been prepared in accordance
        with
        generally accepted accounting principles, contemplate that we will continue
        as a
        going concern and do not contain any adjustments that might result if we
        were
        unable to continue as a going concern. Changes in our operating plans, our
        existing and anticipated working capital needs, the acceleration or modification
        of our expansion plans, lower than anticipated revenues, increased expenses,
        potential acquisitions or other events will all affect our ability to continue
        as a going concern.
 
 ***Our
        liquidity and capital resources are very limited.***
 
 Our
        ability to fund working capital and anticipated capital expenditures will
        depend
        on our future performance, which is subject to general economic conditions,
        our
        customers, actions of our competitors and other factors that are beyond our
        control. Our ability to fund operating activities is also dependent upon
        (i) the
        extent and availability of bank and other credit facilities, (ii) our ability
        to
        access external sources of financing, and (iii) our ability to effectively
        manage our expenses in relation to revenues. There can be no assurance that
        our
        operations and access to external sources of financing will continue to provide
        resources sufficient to satisfy our liabilities arising in the ordinary course
        of business.
 
 ***Our
        deficit accumulated during the development stage makes it more difficult
        to
        borrow funds.***
 
 As
        of the
        fiscal year ended September 30, 2005, and as a result of historical operating
        losses from in prior years, our deficit accumulated during the development
        stage
        was $491,411. Lenders generally regard an deficit accumulated during the
        development stage as a negative factor in assessing creditworthiness, and
        for
        this reason, the extent of our deficit accumulated during the development
        stage
        coupled with our historical operating losses will negatively impact our ability
        to borrow funds if and when required. Any inability to borrow funds, or a
        reduction in favorability of terms upon which we are able to borrow funds,
        including the amount available to us, the applicable interest rate and the
        collateralization required, may affect our ability to meet our obligations
        as
        they come due, and adversely affect on our business, financial condition,
        and
        results of operations, raising substantial doubts as to our ability to continue
        as a going concern.
 
  12
  ***From
        inception, we have historically generated minimal revenues while sustaining
        considerable operating losses and we anticipate incurring continued operating
        losses and negative cash flows in the foreseeable future resulting in
        uncertainty of future profitability and limitation on our
        operations.***
 
 From
        inception, we have generated minimal revenues and experienced negative cash
        flows from operating losses. We anticipate continuing to incur such operating
        losses and negative cash flows in the foreseeable future, and to accumulate
        increasing deficits as we increase our expenditures for (i) infrastructure,
        (ii)
        sales and marketing, and (iii) general business enhancements. Any increases
        in
        our operating expenses will require us to achieve significant revenue before
        we
        can attain profitability. In the event that we are unable to achieve
        profitability or raise sufficient funding to cover our losses we may not
        be able
        to meet our obligations as they come due, raising substantial doubts as to
        our
        ability to continue as a going concern.
 
 **RISKS
        ASSOCIATED WITH OUR BUSINESSES AND INDUSTRIES**
 
 ***We
        face serious competition in our business segments from new market entrants
        as
        well as a number of established companies with greater resources and existing
        customer bases.*** ****
 
 The
        markets for our collectible, investment grade works of art and for our
        publishing services are intensely competitive and include both new market
        entrants and established companies, all of whom generally offer products
        and
        services through the same combination of channels as we do, including retail,
        wholesale and online marketing sales.
 
 Competition
        in the collectible, investment grade art industry is based primarily upon:
 
 ·
              availability
                  of financial resources;
 
 ·
              quality
                  of works of art offered;
 
 ·
              reviews
                  received for art work from independent reviewers who publish in
                  magazines,
                  websites, newspapers and other industry
                  publications;
 
 ·
              availability
                  of access to gallery space; and
 
 ·
              the
                  price of a work of art.
 
 Competition
        in the publishing services industry is based primarily upon:
 
 ·
              brand
                  name recognition;
 
 ·
              availability
                  of financial resources;
 
 ·
              quality
                  of products or services offered;
 
 ·
              reviews
                  received for products or services from independent reviewers who
                  publish
                  in magazines, websites, newspapers and other industry
                  publications;
 
 ·
              the
                  price of products and services; and
 
 ·
              the
                  number of comparable products or services then
                  available.
 
  13
  To
        remain
        competitive in each of our industries and market segments we rely heavily
        upon
        what we believe to be our superior marketing and sales abilities and our
        management’s experience. However, we may not be able to effectively compete in
        these intensely competitive markets, as some of our competitors have longer
        operating histories, larger customer bases and greater financial, marketing,
        service, support, technical and other resources, affording them the ability
        to
        undertake more extensive marketing campaigns and adopt more aggressive pricing
        policies, than we can. Moreover, we believe that competition from new entrants
        may increase should the markets in our industries expand with time. If we
        are
        unable to remain competitive in our industries and market segments, our
        business, financial condition and results of operations will be negatively
        affected. See “Business—Competitive Conditions, Competitive Position and Methods
        of Competition”.
 
 ***Changes
        in consumer preferences or*** ***discretionary********* ***spending******may negatively affect Benacquista Fine Art’s future operating results.***
 
 Within
        the collectible, investment grade art industry revenues are largely generated
        by
        consumer preferences and discretionary spending. Our success as a retailer
        of
        collectible, investment grade works of art will depend, in part, on the
        popularity of our collection. Any shift in consumer sentiment away from the
        styles and works of art in our collection could have a negative affect on
        our
        ability to generate future revenues. Our success also depends on a number
        of
        factors affecting levels of consumer discretionary income and spending,
        including, the following, among other, social and economic conditions:
 
 ·
              general
                  business conditions;
 
 ·
              interest
                  rates;
 
 ·
              inflation;
 
 ·
              consumer
                  debt levels;
 
 ·
              the
                  availability of consumer credit;
 
 ·
              taxation;
 
 ·
              fuel
                  prices and electrical power rates;
 
 ·
              unemployment
                  trends;
 
 ·
              natural
                  disasters;
 
 ·
              terrorist
                  attacks and acts of war; and
 
 ·
              other
                  matters that influences consumer confidence and
                  spending.
 
 Consumer
        purchases of discretionary items, including collectible, investment grade
        works
        of art, could decline during periods in which discretionary income is lower
        or
        actual or perceived unfavorable economic conditions exist. Should this occurs,
        and if we are unable to offer styles and works of art that consumers find
        appealing, our business, financial condition and results of operations will
        be
        negatively affected.
 
 ***Our
        Chief Executive Officer has only limited experience in the retail sale of
        collectible, investment grade works of art.***
 
 Our
        Chief
        Executive Officer, James Price, has only limited experience in the retail
        sale
        of collectible, investment grade works of art, and we must rely substantially
        on
        our Chief Executive Officer to make all decisions regarding our management
        and
        operations. Mr.
        Price
        does have some experience with private acquisitions of works
        of
        art , though
        this may n ot
        actually prove useful in acquiring collectible, investment grade works for
        resale. Although
        we do not believe that Mr. Price’s limited experience will prove detrimental,
        there can be no assurance that it will not directly or indirectly result
        in
        mistakes or failures that, had Mr. Price had more extensive experience, might
        have been avoided or been less costly. Any such mistakes or failures, should
        they occur, would
        likely have a material adverse effect on our business, financial condition,
        including liquidity and profitability, and our results of
        operations.
 
  14
  ***We
        are susceptible to individuals selling forged or stolen works as original,
        investment grade works of art.***
 
 Retailers
        of collectible, investment grade works of art are particularly susceptible
        to
        unscrupulous individuals selling forged or stolen works as originals. There
        are
        significant federal, state and local penalties associated with selling forged
        or
        stolen works of art or works that violate existing copyright laws. Although
        we
        make every effort to ensure that our collectible, investment grade works
        of art
        are acquired from reputable sources, there can be no assurance that we may
        not
        acquire one or more forged or stolen works and, consequently, become liable
        for
        the subsequent resale of such works. Should this occur, our business, financial
        condition and results of operations will be negatively affected.
 
 ***If
        our published works infringe upon proprietary rights of others, lawsuits
        may be
        brought requiring us to pay large legal expenses and judgments, and redesign,
        revise or discontinue selling one or more of our published
        works.***
 
 We
        are
        not aware of any circumstances under which our published works infringe upon
        any
        valid existing proprietary rights of third parties. However, as has happened
        in
        the past, infringement claims can arise at any time, whether or not meritorious,
        and could result in costly litigation or require us to enter into royalty
        or
        licensing agreements. If we are found to have infringed the proprietary rights
        of others, we could be required to pay damages, revise or redesign our published
        works or discontinue their sale. Any of these outcomes, individually or
        collectively, would negatively affect on our business, financial condition
        and
        results of operations. See “Business—Intellectual Property”.
 
 ***We
        may be subject to adverse publicity or claims by consumers arising out of
        information contained in the FDR or other future health and fitness related
        books and materials.***
 
 We
        may be
        subject to complaints from or litigation by consumers, whether or not
        meritorious, relating to information contained in our FDR or other future
        health
        and fitness related books and materials. The FDR contains a clear disclaimer
        indicating that is not intended to give medical advice or to treat or diagnose
        any medical condition, however, due to the nature of the material in the
        FDR
        there remains the risk that it may be misperceived as offering such advice
        or
        misused by ours consumers. Consumer claims could arise at any time and, should
        they, we may not be successful in defending against them. Any litigation,
        regardless of the outcome, would entail significant costs and use of management
        time, which could impair our ability to generate revenue and profit. Moreover,
        were the FDR, or any of our future health and fitness related books and
        materials, construed as giving medical advice, we would become subject to
        an
        incredibly complex network of federal, state and local regulations and
        prohibitions that involve substantial civil and criminal penalties. For these
        reasons or, should we be found liable with regard to a claim arising out
        of the
        FDR or any future health and fitness related books and materials, our business,
        financial condition, and results of operations would be negatively affected.
        See
“Business—Regulatory Environment”.
 
 ***Our
        intellectual property may not be adequately protected from unauthorized use
        by
        others, which could increase our litigation costs and adversely affect our
        business.***
 
 Our
        intellectual properties, including our brands, are some of the most important
        assets that we possess in our ability to generate revenues and profits and
        we
        rely significantly on these intellectual property assets in being able to
        effectively compete in our markets. However, our intellectual property rights
        may not provide meaningful protection from unauthorized use by others, which
        could result in an increase in competing products and services and a reduction
        in our own sales. Moreover, if we must pursue litigation in the future to
        enforce or otherwise protect our intellectual property rights, or to determine
        the validity and scope of the proprietary rights of others, we may not prevail
        and will likely have to make substantial expenditures and divert valuable
        resources in any case. See “Business—Intellectual Property”.
 
  15
  ***We
        face substantial competition in attracting and retaining qualified senior
        management and key personnel and may be unable to develop and grow our business
        if we cannot attract and retain as necessary, or if we were to lose our
        existing, senior management and key personnel.***
 
 As
        a
        development stage company, our success, to a large extent, depends upon our
        ability to attract, hire and retain highly qualified and knowledgeable senior
        management and key personnel who possess the skills and experience necessary
        to
        satisfy our business and client service needs. Our ability to attract and
        retain
        such senior management and key personnel will depend on numerous factors,
        including our ability to offer salaries, benefits and professional growth
        opportunities that are comparable with and competitive to those offered by
        more
        established companies operating in our industries and market segments. We
        may be
        required to invest significant time and resources in attracting and retaining,
        as necessary, additional senior management and key personnel, and many of
        the
        companies with which we will compete for any such individuals have greater
        financial and other resources, affording them the ability to undertake more
        extensive and aggressive hiring campaigns, than we can. Furthermore, an
        important component to overall compensation offered to senior management
        and key
        personnel may be equity. If our stock prices do not appreciate over time,
        it may
        be difficult for us to attract and retain senior management and key personnel.
        Moreover, should we lose our key personnel, we may be unable to prevent the
        unauthorized disclosure or use of our trade secrets, including our practices,
        procedures or client lists. The normal running of our operations may be
        interrupted, and our financial condition and results of operations negatively
        affected, as a result of any inability on our part to attract or retain the
        services of qualified and experienced senior management and key personnel,
        our
        existing key personnel leaving and a suitable replacement not being found,
        or
        should any former senior key personnel disclose our trade secrets.
 
 ***The
        loss of our Chief Executive Officer could have a material adverse effect
        on our
        business.***
 
 Our
        success depends to a large degree upon the skills, network and professional
        business contacts of our Chief Executive Officer, James Price. We presently
        do
        not maintain key person life insurance on, and have no employment agreement
        with, Mr. Price, and there can be no assurance that we will be able to retain
        him or, should he choose to leave us for any reason, to attract and retain
        a
        replacement or additional key executives. The loss of our Chief Executive
        Officer would have a material adverse effect on our business, our financial
        condition, including liquidity and profitability, and our results of operations, raising
        substantial doubts as to our ability to continue as a going concern .
 
 ***Certain
        conflicts of interest exist between us and our Chief Executive Officer, James
        Price.***
 
 Our
        Chief
        Executive Officer, James Price, has other outside business interests to which
        he
        currently devotes time and attention, and it is expected that he will continue
        to do so in the future. As a result, conflicts of interest may arise between
        us and Mr. Price with respect to our operating affairs as well as the amount
        of
        time which Mr. Price devotes to our business as opposed to his other business
        interests. Furthermore,
        Mr. Price may, in the future, participate in outside business ventures which
        compete directly with our own. We do not presently have in place any procedures
        which would provide a means for resolving potential conflicts of interest
        that
        might occur in these regards, and there
        can
        be no assurance that Mr. Price will resolve any such conflicts in a manner
        that
        is satisfactory to our shareholders. Should Mr. Price’s outside business
        interests conflict with our own, our
        business, financial condition and results of operations will be negatively
        affected.
 
 **RISKS
        ASSOCIATED WITH AN INVESTMENT IN OUR COMMON STOCK**
 
 ***Unless
        an active trading market develops for our securities, you may not be able
        to
        sell your shares.***
 
 Although,
        we are a reporting company and our common shares are quoted on the OTC Bulletin
        Board (owned and operated by the Nasdaq Stock Market, Inc.) under they symbol
        “BAQG”, there is not currently an active trading market for our common stock and
        an active trading market may never develop or, if it does develop, may not
        be
        maintained. Failure to develop or maintain an active trading market will
        have a
        generally negative affect on the price of our common stock, and you may be
        unable to sell your common stock or any attempted sale of such common stock
        may
        have the affect of lowering the market price and therefore your investment
        could
        be a partial or complete loss.
 
  16
  ***Since
        our common stock is thinly traded it is more susceptible to extreme rises
        or
        declines in price, and you may not be able to sell your shares at or above
        the
        price paid.***
 
 Since
        our
        common stock is thinly traded its trading price is likely to be highly volatile
        and could be subject to extreme fluctuations in response to various factors,
        many of which are beyond our control, including:
 
 ·
              the
                  trading volume of our shares;
 
 ·
              the
                  number of securities analysts, market-makers and brokers following
                  our
                  common stock;
 
 ·
              changes
                  in, or failure to achieve, financial estimates by securities
                  analysts;
 
 ·
              new
                  products or services introduced or announced by us or our
                  competitors;
 
 ·
              actual
                  or anticipated variations in quarterly operating
                  results;
 
 ·
              conditions
                  or trends in our business
                  industries;
 
 ·
              announcements
                  by us of significant acquisitions, strategic partnerships, joint
                  ventures
                  or capital commitments;
 
 ·
              additions
                  or departures of key personnel;
 
 ·
              sales
                  of our common stock; and
 
 ·
              general
                  stock market price and volume fluctuations of publicly-traded,
                  and
                  particularly microcap, companies.
 
 You
        may
        have difficulty reselling shares of our common stock, either at or above
        the
        price you paid, or even at fair market value. The stock markets often experience
        significant price and volume changes that are not related to the operating
        performance of individual companies, and because our common stock is thinly
        traded it is particularly susceptible to such changes. These broad market
        changes may cause the market price of our common stock to decline regardless
        of
        how well we perform as a company. In addition, securities class action
        litigation has often been initiated following periods of volatility in the
        market price of a company’s securities. A securities class action suit against
        us could result in substantial legal fees, potential liabilities and the
        diversion of management’s attention and resources from our business. Moreover,
        and as noted below, our shares are currently traded on the OTC Bulletin Board
        and, further, are subject to the penny stock regulations. Price fluctuations
        in
        such shares are particularly volatile and subject to manipulation by
        market-makers, short-sellers and option traders.
 
 ***Trading
        in our common stock on the OTC Bulletin Board may be limited thereby making
        it
        more difficult for you to resell any shares you may
        own.***
 
 Our
        common stock is quoted on the OTC Bulletin Board (owned and operated by the
        Nasdaq Stock Market, Inc.). The OTC Bulletin Board is not an exchange and,
        because trading of securities on the OTC Bulletin Board is often more sporadic
        than the trading of securities listed on a national exchange or on the Nasdaq
        National Market, you may have difficulty reselling any of the shares of our
        common stock that you may own.
 
 ***Our
        common stock is subject to the “penny stock” regulations, which are likely to
        make it more difficult to sell.***
 
 Our
        common stock is considered a “penny stock,” which generally is a stock trading
        under $5.00 and not registered on a national securities exchange or quoted
        on
        the Nasdaq National Market. The SEC has adopted rules that regulate
        broker-dealer practices in connection with transactions in penny stocks.
        These
        rules generally have the result of reducing trading in such stocks, restricting
        the pool of potential investors for such stocks, and making it more difficult
        for investors to sell their shares once acquired. Prior to a transaction
        in a
        penny stock, a broker-dealer is required to:
   17
  ·
              deliver
                  to a prospective investor a standardized risk disclosure document
                  that
                  provides information about penny stocks and the nature and level
                  of risks
                  in the penny stock market;
 
 ·
              provide
                  the prospective investor with current bid and ask quotations for
                  the penny
                  stock;
 
 ·
              explain
                  to the prospective investor the compensation of the broker-dealer
                  and its
                  salesperson in the transaction;
 
 ·
              provide
                  investors monthly account statements showing the market value of
                  each
                  penny stock held in the their account;
                  and
 
 ·
              make
                  a special written determination that the penny stock is a suitable
                  investment for the purchaser and receive the purchaser’s written agreement
                  to the transaction.
 
 These
        requirements may have the effect of reducing the level of trading activity
        in
        the secondary market for a stock that is subject to the penny stock rules.
        Since
        our common stock is subject to the penny stock rules, investors in our common
        stock may find it more difficult to sell their shares.
 
 ***Future
        issuances by us or sales of our common stock by our officers or directors
        may
        dilute your interest or depress our stock price.***
 
 We
        may
        issue additional shares of our common stock in future financings or may
        institute and grant stock options to our employees, officers, directors and
        consultants under a future stock incentive plan. Any such issuances could
        have
        the effect of depressing the market price of our common stock and, in any
        case,
        would dilute the interests of our common stockholders. Such a depression
        in the
        value of our common stock could reduce or eliminate amounts that would otherwise
        have been available to pay dividends on our common stock (which are unlikely
        in
        any case) or to make distributions on liquidation. Furthermore, shares owned
        by
        our officers or directors which are registered in a registration statement,
        or
        which otherwise may be transferred without registration under the Securities
        Act
        to the extent permitted by Rule 144 or other exemptions under the Securities
        Act, may be sold. Because of the perception by the investing public that
        a sale
        by such insiders may be reflective of their own lack of confidence in our
        prospects, the market price of our common stock could decline as a result
        of a
        sell-off following sales of substantial amounts of common stock by our officers
        and directors into the public market, or the mere perception that these sales
        could occur.
 
 ***We
        do not intend to pay any common stock dividends in the foreseeable
        future.***
 
 We
        have
        never declared or paid a dividend on our common stock and, because we have
        very
        limited resources and a substantial accumulated deficit, we do not anticipate
        declaring or paying any dividends on our common stock in the foreseeable
        future.
        Rather, we intend to retain earnings, if any, for the continued operation
        and
        expansion of our business. It is unlikely, therefore, that the holders of
        our
        common stock will have an opportunity to profit from anything other than
        potential appreciation in the value of our common shares held by them. If
        you
        require dividend income, you should not rely on an investment in our common
        stock.
 
 
 
 
 
  18
  
 **ITEM
        7. FINANCIAL STATEMENTS.**
 
 **BENACQUISTA
        GALLERIES, INC.**
 ***(A
        Development Stage Company)***
 
 
 
 **TABLE
        OF CONTENTS**
 
 **Page**Report
                  of Independent Registered Public Accounting Firm
              
              F-2Balance
                  Sheets as of September 30, 2005 and 2004
              
              F-3Statements
                  of Operations for the Year Ended September 30, 2005 and 2004 and
                  for the
                  Period from January 17, 2003 (Inception) through September 30,
                  2005
              
              F-4Statements
                  of Stockholders Deficit for the Period from January 17, 2003 (Inception)
                  through September 30, 2003, and for the Years Ended September 30,
                  2004 and
                  2005
              
              F-5Statements
                  of Cash Flows for the Years Ended September 30, 2005 and 2004 and
                  for the
                  Period from January 17, 2003 (Inception) through September 30,
                  2005
              
              F-6Notes
                  to the Financial Statements
              
              F-7
 
        
  F-1
  
 **H****ANSEN****,
                  B****ARNETT****&** **M****AXWELL**A
                  Professional CorporationCERTIFIED
                  PUBLIC ACCOUNTANTS
              
              **Registered
                    with the Public Company**5
                  Triad Center, Suite 750
              
              **Accounting
                  Oversight Board**Salt
                  Lake City, UT 84180-1128Phone:
                  (801) 532-2200
                  Fax:
                    (801) 532-7944www.hbmcpas.com
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
        the
        Board of Directors and Shareholders
 Benacquista
        Galleries, Inc.
 
 We
        have
        audited the accompanying balance sheets of Benacquista Galleries, Inc. (a
        development stage company) as of September 30, 2005 and 2004, and the related
        statements of operations, stockholders’ deficit, and cash flows for the years
        ended September 30, 2005 and 2004, and for the period from January 17, 2003
        (inception) through September 30, 2005. These financial statements are the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these financial statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        financial statements are free of material misstatement. An audit includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements. An audit also includes assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall financial statement presentation. We believe that
        our
        audits and the reports of the other auditors provide a reasonable basis for
        our
        opinion.
 
 In
        our
        opinion, based on our audits, the financial statements referred to above
        present
        fairly, in all material respects, the financial position of Benacquista
        Galleries, Inc. as of September 30, 2005 and 2004, and the results of its
        operations and its cash flows for the years ended September 30, 2005 and
        2004,
        and for the period from January 17, 2003 (inception) through September 30,
        2005,
        in conformity with U.S. generally accepted accounting principles.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 4 to the financial
        statements, the Company’s lack of operating history raises substantial doubt
        about its ability to continue as a going concern. Management’s plans regarding
        those matters are also described in Note 4. The financial statements do not
        include any adjustments that might result from the outcome of this
        uncertainty.
 
 HANSEN,
        BARNETT & MAXWELL P.C.
 Salt
        Lake
        City, Utah
 January
        10, 2007
 
  F-2
  **BENACQUISTA
        GALLERIES, INC.**
 **(A
        Development Stage Enterprise)**
 **BALANCE
        SHEETS**
 **September
                    30,**
                
                **September
                    30,****2005**
                
                **2004****ASSETS****Current
                    Assets**Cash
                
                $
                507
                
                $
                30,302Inventory
                
                
                841,377
                
                
                826,127Accrued
                    interest receivable
                
                
                4,247**Total
                    Current Assets**
                
                
                846,131
                
                
                856,429**Total
                    Assets**
                
                **$**
                **846,131**
                
                **$**
                **856,429****LIABILITIES
                    AND STOCKHOLDERS' DEFICIT****Current
                    Liabilities**Accounts
                    payable
                
                $
                26,386
                
                $
                713Accrued
                    interest payable
                
                
                114,971
                
                
                71,843Due
                    to majority shareholder
                
                
                81,000
                
                
                -Note
                    payable to majority shareholder
                
                
                1,012,127
                
                
                862,127**Total
                    Current Liabilities**
                
                
                1,234,484
                
                
                934,683**Long-Term
                    Liabilities**
                
                
                -
                
                
                -**Total
                    Liabilities**
                
                
                1,234,484
                
                
                934,683**Stockholders'
                    Deficit**Common
                    Stock- $0.001 par value; 5,000,000 shares authorized; 1,100,113
                    and
                    1,000,113 shares issued and outstanding respectively
                
                
                1,100
                
                
                1,000Additional
                    paid-in-capital
                
                
                1,101,958
                
                
                83,460Stock
                    subscription receivable
                
                
                (1,000,000
                )
                
                -Deficit
                    accumulated during the development stage
                
                
                (491,411
                )
                
                (162,714
                )**Total
                    Stockholders' Deficit**
                
                
                (388,353
                )
                
                (78,254
                )**Total
                    Liabilities and Stockholders' Deficit**
                
                **$**
                **846,131**
                
                **$**
                **856,429**
 
 
 The
        accompanying notes are an integral part of these financial
        statements.
  F-3
  **Benacquista
        Galleries, Inc.**
 **(A
        Development Stage Enterprise)**
 **STATEMENTS
        OF OPERATIONS)**
  **For
                    the Year Ended**
                  **September
                    30,**
                
                **January
                    17,**
                  **2003**
                  **(Inception)**
                  **through**
                  **September
                    30,****2005**
                
                **2004**
                
                **2005**Revenues
                
                $
                106,000
                
                $
                30,000
                
                $
                136,000Cost
                    of revenues
                
                
                90,750
                
                
                36,000
                
                
                126,750Gross
                    profit
                
                
                15,250
                
                
                (6,000
                )
                
                9,250Operating
                    ExpensesAdvertising
                    and marketing expense
                
                
                150,000
                
                
                
                
                
                150,000General
                    and administrative expense
                
                
                155,067
                
                
                48,458
                
                
                239,937Total
                    Operating Expenses
                
                
                305,067
                
                
                48,458
                
                
                389,937Loss
                    from Operations
                
                
                (289,817
                )
                
                (54,458
                )
                
                (380,687
                )Other
                    Income (Expense):Interest
                    income
                
                
                4,246
                
                
                -
                
                
                4,246Interest
                    expense
                
                
                (43,126
                )
                
                (40,106
                )
                
                (114,970
                )Total
                    Other Income and Expenses:
                
                
                (38,880
                )
                
                (40,106
                )
                
                (110,724
                )Net
                    Loss
                
                $
                (328,697
                )
                $
                (94,564
                )
                $
                (491,411
                )Basic
                    and Diluted Loss per Share
                
                $
                (0.33
                )
                $
                (0.09
                )Weighted
                    average number of shares outstanding
                
                
                1,008,633
                
                
                1,000,113
 
 
 The
        accompanying notes are an integral part of these financial
        statements.
  F-4
  **BENACQUISTA
        GALLERIES INC.**
 **(A
        Development Stage Enterprise)**
 **STATEMENTS
        OF STOCKHOLDERS’ DEFICIT**
 **Deficit****Accumulated****Additional**
                
                **Stock**
                
                **During
                    the****Common
                    Stock**
                
                **Paid-in**
                
                **Subscription**
                
                **Development****Shares**
                
                **Amount**
                
                **Capital**
                
                **Receivable**
                
                **Stage**
                
                **Total****Balance
                    January 17, 2003**(inception)
                
                
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -Shares
                    issued for cash,January
                    2003, $0.001 per share
                
                
                1,000,113
                
                
                1,000
                
                
                9,000
                
                
                -
                
                
                -
                
                
                10,000Capital
                    contributions
                
                
                -
                
                
                -
                
                
                26,350
                
                
                -
                
                
                -
                
                
                26,350Net
                    loss for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (68,150
                )
                
                (68,150
                )**Balance
                    - September 30, 2003**
                
                
                1,000,113
                
                
                1,000
                
                
                35,350
                
                
                -
                
                
                (68,150
                )
                
                (31,800
                )Capital
                    contributions
                
                
                -
                
                
                -
                
                
                48,110
                
                
                -
                
                
                -
                
                
                48,110Net
                    loss for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (94,564
                )
                
                (94,564
                )**Balance
                    - September 30, 2004**
                
                
                1,000,113
                
                
                1,000
                
                
                83,460
                
                
                -
                
                
                (162,714
                )
                
                (78,254
                )Shares
                    issued and underlying warrants issued forNotes
                    Receivable
                
                
                100,000
                
                
                100
                
                
                999,900
                
                
                (1,000,000
                )
                
                -
                
                
                -Capital
                    contributions
                
                
                -
                
                
                -
                
                
                18,598
                
                
                -
                
                
                -
                
                
                18,598Net
                    loss for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (328,697
                )
                
                (328,697
                )**Balance
                    - September 30, 2005**
                
                
                1,100,113
                
                $
                1,100
                
                $
                1,101,958
                
                $
                (1,000,000
                )
                $
                (491,411
                )
                $
                (388,353
                )
      
 
 The
        accompanying notes are an integral part of these financial
        statements.
  F-5
  **BENACQUISTA
        GALLERIES, INC.**
 **(A
        Development Stage Enterprise)**
 **STATEMENTS
        OF CASHFLOWS**
  **For
                    the Year Ended**
                
                **January
                    17,**
                  **2003
                    (Inception) through****September
                    30,**
                
                **September
                    30,****2005**
                
                **2004**
                
                **2005****Cash
                    Flows From Operating Activities**Net
                    Loss
                
                $
                (328,697
                )
                $
                (94,564
                )
                $
                (491,411
                )Adjustments
                    to reconcile net loss toNet
                    Cash From Operating Activities:Advertising
                    expense - web content purchase
                
                
                150,000
                
                
                -
                
                
                150,000Changes
                    in operating assets and liabilitiesInventory
                
                
                (15,250
                )
                
                36,000
                
                
                20,750Accrued
                    interest receivable
                
                
                (4,247
                )
                
                -
                
                
                (4,247
                )Accounts
                    payable
                
                
                25,673
                
                
                172
                
                
                26,386Accrued
                    interest
                
                
                43,128
                
                
                40,105
                
                
                114,971**Net
                    Cash From Operating Activities**
                
                
                (129,393
                )
                
                (18,287
                )
                
                (183,551
                )**Cash
                    Flows From Investing Activities**
                
                
                -
                
                
                -
                
                
                -**Cash
                    Flows From Financing Activities**Capital
                    contribution from majority shareholders
                
                
                18,598
                
                
                48,110
                
                
                93,058Advances
                    from majority shareholder
                
                
                81,000
                
                
                -
                
                
                81,000Sale
                    of common stock
                
                
                -
                
                
                -
                
                
                10,000**Net
                    Cash From Financing Activities**
                
                
                99,598
                
                
                48,110
                
                
                184,058**Net
                    Change in Cash**
                
                
                (29,795
                )
                
                29,823
                
                
                507**Cash
                    at Beginning of Period**
                
                
                30,302
                
                
                479
                
                
                -**Cash
                    at End of Period**
                
                $
                507
                
                $
                30,302
                
                $
                507**Non-Cash
                    Financing Activities**Acquisition
                    of inventory by issuance of note payable to majority
                    shareholder
                
                $
                -
                
                $
                -
                
                $
                862,127Shares
                    underlying warrants issued for notes receivable
                
                $
                1,000,000
                
                
                
                
                $
                1,000,000Acquistion
                    of web content by issuance of note payable to majority
                    shareholder
                
                $
                150,000
                
                $
                -
                
                $
                150,000
 The
        accompanying notes are an integral part of these financial
        statements.
  F-6
  **BENACQUISTA
        GALLERIES, INC.**
 **(A
        Development Stage Enterprise)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 
 **NOTE
        1 - NATURE OF BUSINESS**
 
 ***Organization
        and Nature of Operations —*** On
        January 17, 2003, Benacquista Galleries, Inc. (“the Company”) was organized
        under the laws of the State of Nevada. The Company is considered a development
        stage enterprise and is in the process of raising capital to fund operations.
        As
        such, the Company has since inception spent most of its efforts in developing
        its business plan, acquiring inventory, and in raising capital to fund its
        operations. The Company has relied upon cash flows from equity issuances
        and
        capital contributions from its major shareholder to sustain operations. The
        planned operations of the Company consist of selling art work through the
        internet and in September 2005 obtained the exclusive publishing rights to
        the
“Farmacist Desk Reference”. The Company has limited revenues to date. The
        Company’s fiscal year end is September 30. The controlling shareholder of the
        Company is Mr. James Price, our Chief Executive Officer and Chairman of the
        Board, who owns approximately 81.5% of the outstanding common stock of the
        Company as of September 30, 2005.
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 ***Revenue
        Recognition*** —
        Revenues are recognized by the Company based on the various types of
        transactions generating the revenue. The Company recognizes art revenue when
        persuasive evidence of an arrangement exists; services have been rendered
        or
        products have been delivered; the price to the buyer is fixed and determinable;
        and collectibility is reasonably assured.
 
 Revenue
        for published products distributed through wholesale and retail channels
        and
        through resellers is recognized upon verification of final sell-through to
        end
        users, after consideration of rights of return and price protection. Typically,
        the right of return on such products has expired when the end user purchases
        the
        product from the retail outlet. Once the end user opens the package, it is
        not
        returnable unless the medium is defective.
 
 ***Use
        of Estimates —*** The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect certain reported amounts of assets
        and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenues and expenses
        during the reporting period. Actual results could differ from those
        estimates.
 
 ***Fair
        Value of Financial Instruments*** —
The
        carrying amounts reported in the accompanying financial statements for current
        assets approximate fair values because of the immediate or short-term maturities
        of these financial instruments.
 
 ***Income
        Taxes*** —
The
        Company recognizes an asset or liability for the deferred tax consequences
        of
        all temporary differences between the tax basis of assets or liabilities
        and
        their reported amounts in the financial statements that will result in taxable
        or deductible amounts in future years when the reported amounts of the asset
        or
        liabilities are recovered or settled. Deferred tax assets or liabilities
        are
        measured using the enacted tax rates that will be in effect when the differences
        are expected to reverse. Deferred tax assets are reviewed periodically for
        recoverability and valuation allowances are provided as necessary.
 
 ***Cash*** —
Cash
        consists of a deposit with a bank.
  ***Inventory*** —
        Inventory is stated at the lower of cost or market.
 
 ***Advertising
        expense*** —
        Advertising costs are expensed as incurred. Advertising expense for the year
        ended September 30, 2005 was $150,000.
   F-7
  ***Net
        Income Per Share-Basic and Diluted*** —
Basic
        income (loss) per common share is computed on the basis of the weighted-average
        number of common shares outstanding during the period. Diluted income per
        share
        is computed on the basis of the weighted-average number of common shares
        and all
        potentially issuable common shares outstanding during the year. As of December
        31, 2005, there are no potentially dilutive securities outstanding. As of
        December 31, 2004, there was an outstanding warrant to purchase up to 100,000
        shares of common stock that is not included in the computation of diluted
        net
        loss per share as the effect would be anti-dilutive.
 
 **RECENTLY
        ISSUED ACCOUNTING PRONOUNCEMENTS**
 
 In
        December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based
        Payment,” which is an amendment to SFAS No. 123, “Accounting for Stock-Based
        Compensation” and supersedes Accounting Principles Board (“APB”) Opinion No. 25,
“Accounting for Stock Issued to Employees.” This new standard eliminates the
        ability to account for share-based compensation transactions using APB No.
        25
        and requires such transactions to be accounted for using a fair-valued-based
        method, with the resulting cost recognized in the Company’s financial
        statements. This new standard is effective for annual periods beginning after
        June 15, 2005. The Company has not awarded or granted any share-based
        compensation to date and, therefore, the adoption of this standard is not
        expected to have a material impact on the Company’s financial statements until
        such time as share-based compensation is granted.
 
 In
        December 2004, the FASB issued SFAS No. 153, “Exchange of Non-monetary Assets.”
SFAS No. 153 amends APB Opinion No. 29, “Accounting for Non-monetary
        Transactions,” to eliminate the exception for non-monetary exchanges of similar
        productive assets. The Company will be required to apply this statement to
        non-monetary exchanges after December 31, 2005. The adoption of this standard
        is
        not expected to have a material impact on the Company’s financial
        statements.
  In
        May
        2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”
which replaces APB Opinions No. 20 “Accounting Changes” and SFAS No. 3
“Reporting Accounting Changes in Interim Financial Statements - An Amendment
        of
        APB Opinion No. 28.” SFAS No. 154 provides guidance on the accounting for and
        reporting of accounting changes and error corrections. It establishes
        retrospective application, or the earliest practicable date, as the required
        method for reporting a change in accounting principle and restatement with
        respect to the reporting of a correction of an error. SFAS No. 154 is effective
        for accounting changes and corrections of errors made in fiscal years beginning
        after December 15, 2005.
  In
        June
        2005, the FASB’s Emerging Issues Task Force reached a consensus on Issue No.
        05-6, “Determining the Amortization Period for Leasehold Improvements.” The
        guidance requires that leasehold improvements acquired in a business combination
        or purchased subsequent to the inception of a lease be amortized over the
        lesser
        of the useful life of the assets or a term that includes renewals that are
        reasonably assured at the date of the business combination or purchase. The
        guidance is effective for periods beginning after June 29, 2005. The adoption
        of
        EITF No. 05-6 is not expected to have a material impact on the Company’s
        financial statements.
 
 **NOTE
        3 - RESTATEMENT**
 
 Certain
        adjustments were made at and for the year ended September 30, 2005 and as
        such,
        the financial statements have been restated to reflect said adjustments as
        described in the following paragraphs.
 
 Salary
        expense for the services provided by our sole Officer James Price has been
        recorded in the amount of $75,000 for the year ended September 30, 2005.
        In
        addition, Mr. Price leases office facilities at his home under a month to
        month
        agreement for rent of $500 per month totaling $6,000 for the year ended
        September 30, 2005. The restatement was included in “General and administrative
        expenses” in the accompanying Statement of Operations for the year ended
        September 30, 2005. The liability in the amount of $81,000 was recorded as
“Due
        to majority shareholder” in the accompanying balance sheet as of September 30,
        2005.
 
 In
        addition, the Company recorded the correction of the issuance of 100,000
        shares
        of common stock related to the exercise of warrants at a price of $10.00
        per
        share in exchange for certain notes in the aggregate principal amount of
        $1,000,000 which bear interest at 5% and are due January 2008 with no interim
        principal or interest payments required. The Company recorded the issuance
        of
        the stock, the receipt of the notes and the related interest income which
        took
        place in the fourth quarter of 2005. The transaction had previously been
        recorded in the March 31, 2006 10-QSB.
   F-8
 
 The
        effects of the restatement items described above for September 30, 2005 and for
        the year then ended are shown on the following table:
  **As
                    Originally**
                
                **Effect
                    of****Reported**
                
                **Restatement**
                
                **As
                    Restated****Balance
                    Sheet**Accrued
                    interest receivable
                
                $
                -
                
                $
                4,247
                
                $
                4,247Total
                    Assets
                
                
                841,884
                
                
                4,247
                
                
                846,131Due
                    to shareholder
                
                
                -
                
                
                81,000
                
                
                81,000Total
                    Current Liabilities
                
                
                1,153,484
                
                
                81,000
                
                
                1,234,484Total
                    Liabilities
                
                
                1,153,484
                
                
                81,000
                
                
                1,234,484Common
                    Stock
                
                
                1,000
                
                
                100
                
                
                1,100Additional
                    Paid in Capital
                
                
                102,058
                
                
                999,900
                
                
                1,101,958Stock
                    subscription receivable
                
                
                -
                
                
                (1,000,000
                )
                
                (1,000,000
                )Deficit
                    accumulated during the development stage
                
                
                (414,657
                )
                
                (76,754
                )
                
                (491,411
                )Total
                    Shareholder's Deficit
                
                
                (311,599
                )
                
                (76,754
                )
                
                (388,353
                )Total
                    Liabilities and Shareholder's Deficit
                
                $
                841,884
                
                $
                4,247
                
                $
                846,131**Statement
                    of Operations**General
                    and administrative expenses
                
                $
                74,067
                
                $
                81,000
                
                $
                155,067Total
                    operating expenses
                
                
                224,067
                
                
                81,000
                
                
                305,067Loss
                    from operations
                
                
                (208,817
                )
                
                (81,000
                )
                
                (289,817
                )Interest
                    income
                
                
                -
                
                
                4,246
                
                
                4,246Net
                    Loss
                
                $
                (251,943
                )
                $
                (76,754
                )
                $
                (328,697
                )Basic
                    and diluted loss per share
                
                $
                (0.25
                )
                $
                -
                
                $
                (0.33
                )Weighted
                    average shares outstanding -Basic
                    and diluted
                
                
                1,000,000
                
                
                8,633
                
                
                1,008,633
  **NOTE
          4 - GOING CONCERN**
 
 ***Business
        Condition*** —
The
        Company has a limited operating history. The accompanying financial statements
        have been prepared in conformity with generally accepted accounting principles
        which contemplate continuation of the Company as a going concern. During
        the
        year ended September 30, 2005, the Company incurred a net loss of $328,697
        and
        it had negative cash flows from operations of $129,393. In addition, the
        Company
        had a deficit accumulated in the development stage of $491,411 as of September
        30, 2005. These factors raise substantial doubt about the Company’s ability to
        continue as a going concern. The financial statements do not include any
        adjustments relating to the recoverability and classification of asset carrying
        amounts or the amount and classification of liabilities that might result
        should
        the Company be unable to continue as a going concern.
 
 The
        Company plans to fund its operations with revenues from the sale of art
        inventory on its interim website and publication and wholesale sales of the
        “Farmacist Desk Reference”. The Company’s president has indicated that he will
        loan sufficient funds to cover operating needs for the next twelve months.
        However, there is no guarantee that these loans will be made.
  F-9
  Recovery
        of the Company’s assets is dependent upon future events, the outcome of which is
        indeterminable. The Company’s attainment of profitable operations is dependent
        upon the Company obtaining adequate debt or equity financing and achieving
        a
        level of sales adequate to support the Company’s cost structure.
 
 **NOTE
        5** - **INVENTORY**
 
 ***Value*** —
        Inventories are stated at the lower of cost or market. When there is evidence
        that the inventory value is less than the original cost, the inventory is
        reduced to market value. The Company determines market value from periodic
        professional appraisals. Appraisals are performed annually or more often
        as
        deemed appropriate. On September 30, 2005, Ted Robertson, appraiser, appraised
        the works of art and provided a current market value of $1,227,500.
 
 ***Composition*** —
        Inventory is composed of 36 pieces of art consisting of oil-on-canvas,
        lithograph and pastel paintings, bronze and ceramic sculptures and other
        miscellaneous items.
 
 **NOTE
        6** - **STOCKHOLDERS’
        EQUITY AND WARRANTS**
 
 On
        November 21, 2006, the Board of Directors approved a reverse stock split
        of
        Benacquista Galleries, Inc. common shares, par value $0.001, at a ratio of
        one
        post-reverse split share for every 10 pre-split shares to be effective as
        of
        January 8, 2007. All share and per share amounts have been retroactively
        restated to reflect this reverse stock split. In addition, in accordance
        with
        the laws of the state of Nevada, the authorized number of common shares was
        reduced at the same ratio and accordingly, the authorized shares were reduced
        from 50,000,000 to 5,000,000.
 
 ***Common
        Stock*** —
In
        January 2003, the Company issued 1,000,000 shares of common stock to various
        individuals, including officers of the Company, for cash proceeds of $10,000
        or
        $0.01 per share.
 
 ***Additional
        Paid-in Capital*** —
The
        majority shareholder made $18,598 cash contributions for the twelve months
        ended
        September 30, 2005 and a total of $93,058 for the period January 17, 2003
        (date
        of inception) through September 30, 2005.
 
 ***Warrant*** —
In
        January 2003, the Company issued a warrant to purchase up to 100,000 shares
        of
        common stock at an exercise price of $10 per share expiring January 31, 2006
        to
        XCL Partners, an unaffiliated company. XCL Partners subsequently transferred
        their interest in the warrant to three other unaffiliated parties in accordance
        with the terms of the warrant. A warrant to purchase 20,000 shares was
        transferred to OTC Services. Warrants to purchase 40,000 shares each were
        granted to Monarch Consulting and Emerald Resource Group, respectively. During
        the fourth quarter of 2005, the three warrant holders exercised their rights
        under the warrant and purchased 100,000 shares of common stock at $10 per
        share
        by entering into three separate note receivable agreements to pay the Company
        an
        aggregate of $1,000,000.
  
  
 F-10
 
 The
        following summarizes the outstanding warrant at September 30, 2003, September
        30, 2004 and September 30, 2005:
 
 **Weighted****Weighted**
              
              **Average****Average**
              
              **Remaining****Exercise**
              
              **Contractual****Fixed
                  Warrants**
              
              **Warrants**
              
              **Price**
              
              **Life**Outstanding
                  at January 17, 2003
              
              
              -
              
              $
              -Issuances
                  January 31, 2003
              
              
              100,000
              
              
              10.00Outstanding
                  at September 30, 2003
              
              
              100,000
              
              $
              10.00
              
              2.43
                  yearsIssuances
              
              
              -
              
              
              -Outstanding
                  at September 30, 2004
              
              
              100,000
              
              $
              10.00
              
              1.34
                  yearsIssuances
              
              
              -
              
              
              -Exercise
              
              
              (100,000
              )
              $
              10.00Outstanding
                  at September 30, 2005
              
              
              -
              
              $
              -
 
 
 ***Stock
        Subscription Receivable*** —
The
        Company received notes in exchange for the shares issued pursuant to the
        exercise of outstanding warrants as discussed above. The notes bear interest
        at
        5% and are due January 2008 with no interim principal or interest payments
        required. As the notes are the result of issuing common stock, the $1,000,000,
        less amounts received, is recorded as an offset to equity as stock subscription
        receivable in the accompanying balance sheet as of September 30,
        2005.
 
 Stock
        subscription receivable as of September 30, 2005 and 2004 is comprised of
        the
        following notes receivable:
 
 **September
                  30,**
              
              **September
                  30,****2005**
              
              **2004**OTC
                  Services
              
              $
              200,000
              
              $
              -Monarch
                  Consulting
              
              
              400,000
              
              
              -Emerald
                  Resources
              
              
              400,000
              
              
              -$
              1,000,000
              
              $
              -
 
 
 **NOTE
        7 - RELATED PARTY TRANSACTIONS**
 
 In
        January 2003, the major shareholder sold certain of his works of art to the
        Company for $862,127 represented by an unsecured note payable. The note bears
        interest at 5% per annum and was due in full June 30, 2005 with no periodic
        payments required. The purchase price represents the shareholder’s original cost
        in the art which was originally acquired for cash. The balance of the note
        plus
        accrued interest is currently unpaid and will remain on the books as a demand
        note continuing to bear the 5% per annum interest.
 
 In
        September 2005, the Company issued an unsecured, demand note payable to YNOT
        Education, Inc. (“YNOT”) in the amount of $150,000 (See Note 8). The note bears
        interest at 5% per annum and is payable on demand with no periodic payments
        required. The Company’s major shareholder is a director of YNOT. Upon YNOT’s
        receipt of the note, YNOT immediately assigned the Note to the Company’s
        majority shareholder.
 
 
 F-11
 
 The
        Company also entered into a royalty agreement in September, 2005 with Don
        Tolman, a director of the Company as more fully described in Note
        8.
 
 The
        major
        shareholder rents certain office space to the Company at a rate of $500 per
        month on a month to month basis. Total rent under this agreement was $6,000
        for
        the year ended September 30, 2005.
 
 **NOTE
        8 - WEB SITE CONTENT PURCHASE AND LICENSE AGREEEMENT**
 
 In
        September 2005, the company acquired the website content for www.ynoteduk8.com
        from YNOT Education, Inc. (“YNOT”) in exchange for the issuance to YNOT of an
        unsecured demand note payable in the amount of $150,000 bearing interest
        at the
        rate of 5.0% per annum. The note was immediately assigned by YNOT to the
        Company’s major shareholder, who is also a director of YNOT. The website content
        has been accounted for under the caption of Sales and Marketing expense in
        the
        accompanying statement of operations as of September 30, 2005 as the purpose
        of
        the purchase of the website content was for advertising of licensed products
        from Don Tolman, the president and sole shareholder of YNOT.
 
 Concurrently
        with the purchase of the website content, the Company entered into a Royalty
        Agreement with Don Tolman, a director of the Company and the shareholder
        and
        president of YNOT for the exclusive publishing rights to the “Farmacist Desk
        Reference” (“FDR”) and other works created or controlled by YNOT. The license
        agreement calls for the payment of royalties of $1 per book sold and 5% of
        all
        proceeds collected. The license is for a two year term which expires September
        28, 2007 which will automatically extend for an additional two year term
        if
        royalties of $250,000 are achieved during the initial term. There are no
        guaranteed minimum royalties, but Mr. Tolman will have the right to cancel
        the
        Royalty Agreement after the initial two year term if sales are not sufficient
        to
        generate $250,000 in royalties.
 
 **NOTE
        9 - INCOME TAXES**
 
 The
        Company has paid no federal or state income taxes since its incorporation.
        As of
        September 30, 2005 and September 30, 2004, the Company had net operating
        loss
        carry forwards for federal income tax reporting purposes of $491,411 and
        $162,714, respectively, which, if unused, will begin to expire in 2023.
 
 The
        net
        deferred tax asset consists of the following at September 30, 2005 and September
        30, 2004:
 
 **For
                  the Year Ended****September
                  30,****2005**
              
              **2004**Deferred
                  tax asset - operating loss carryforwards
              
              $
              167,080
              
              $
              55,323Valuation
                  allowance
              
              
              (167,080
              )
              
              (55,323
              )**Total
                  Deferred Income Tax Asset**
              
              $
              -
              
              $
              -
 
 
 The
        following is a reconciliation of the income tax computed using the federal
        statutory rate to the provision for income taxes:
 
 **For
                  the Year Ended****September
                  30,****2005**
              
              **2004**Tax
                  at federal statutory rate (34%)
              
              $
              (111,757
              )
              $
              (32,152
              )Change
                  in valuation allowance
              
              
              111,757
              
              
              32,152**Provision
                  for Income Taxes**
              
              $
              -
              
              $
              -
 
 
 F-12
 
 **NOTE
        10 - BUSINESS SEGMENTS**
 
 Information
        related to Benacquista Galleries, Inc.’s reportable operating business segments
        is shown below. The Company’s reportable segments are reported in a manner
        consistent with the way management evaluates the businesses. The Company
        identifies it reportable business segments based on differences in products
        and
        services. The accounting policies of the business segments are the same as
        those
        described in the summary of significant accounting policies. The products
        and
        services of each business segment are further described in Note 1. The Company
        has identified the following business segments:
 
 ***Publishing*** —
        Consists of published products to be sold under a royalty agreement with
        YNOT
        Education, Inc. This segment began in September, 2005.
 
 ***Fine
        Art*** —
Fine
        art sales are made from the Company’s inventory.
 
 The
        following presents certain segment information as of and for the year ended
        September 30, 2005 and 2004:
 
 **Year
                  ended September 30, 2005**
              
              **Year
                  ended September 30, 2004****Art
                  Sales**
              
              **Publishing**
              
              **Total**
              
              **Art
                  Sales**
              
              **Publishing**
              
              **Total**Revenues
              
              $
              106,000
              
              $
              -
              
              $
              106,000
              
              $
              30,000
              
              $
              -
              
              $
              30,000Cost
                  of sales
              
              
              90,750
              
              
              -
              
              
              90,750
              
              
              36,000
              
              
              -
              
              
              36,000Gross
                  profit
              
              
              15,250
              
              
              -
              
              
              15,250
              
              
              (6,000
              )
              
              -
              
              
              (6,000
              )Operating
                  expenses
              
              
              155,067
              
              
              150,000
              
              
              305,067
              
              
              48,458
              
              
              -
              
              
              48,458Operating
                  loss
              
              
              (139,817
              )
              
              (150,000
              )
              
              (289,817
              )
              
              (54,458
              )
              
              -
              
              
              (54,458
              )Other
                  income (expense)
              
              
              (40,983
              )
              
              2,103
              
              
              (38,880
              )
              
              (40,106
              )
              
              -
              
              
              (40,106
              )Segment
                  loss
              
              $
              (180,800
              )
              $
              (147,897
              )
              $
              (328,697
              )
              $
              (94,564
              )
              $
              -
              
              $
              (94,564
              )Segment
                  assets
              
              $
              844,008
              
              $
              2,123
              
              $
              846,131
              
              $
              856,429
              
              $
              -
              
              $
              856,429
 
 **NOTE
        11 - CONCENTRATIONS**
 
 In
        fiscal
        2005, all the company’s sales were to a single customer in the United States. In
        fiscal 2004, all the company’s sales were to a different, single customer in the
        United States. The country is determined by the address the product is shipped
        to.






F-13
  **ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL
        DISCLOSURE.**
 
 There
        were no reportable events under this Item 8 during the fiscal year ended
        September 30, 2005.
  **ITEM
        8A. CONTROLS AND PROCEDURES.**
 
 We
        maintain disclosure controls and procedures designed to ensure that the
        information required to be disclosed in our reports filed or submitted under
        the
        Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
        and reported in a timely manner as specified in the rules and forms set forth
        by
        the United States Securities and Exchange Commission. These controls and
        procedures are designed to ensure that the information required to be disclosed
        in our reports is accumulated and communicated to our management, including
        our
        Chief Executive Officer and Principal Financial Officer, or other persons
        performing similar functions, as appropriate, so as to allow timely decisions
        regarding required disclosure.
 
 An
        evaluation of the effectiveness of the design and operation of our disclosure
        controls and procedures was carried out by our Chief Executive Officer and
        Principal Financial Officer, James Price, as of the end of the period covered
        by
        this annual report on Form 10-KSB. Based on this evaluation, our Chief Executive
        Officer and Principal Financial Officer has concluded that our disclosure
        controls and procedures are effective and designed to ensure that the
        information required to be disclosed in our reports filed or submitted under
        the
        Exchange Act, is recorded, processed, summarized and reported within the
        requisite time periods.
 
 During
        the course of his evaluation our Chief Executive Officer and Principal Financial
        Officer did not discover any fraud involving management or any other personnel
        who play a significant role in our disclosure controls and procedures.
        Furthermore, because there were no significant deficiencies and/or material
        weaknesses discovered no remedial measures were necessary or taken during
        the
        period covered by this report to correct any such deficiencies.
 
 **CHANGES
        IN INTERNAL CONTROL OVER FINANCIAL REPORTING**
 
 No
        changes in our disclosure controls and procedures, internal controls over
        financial reporting or other factors have occurred during the fiscal quarter
        covered by this report that would materially affect or be reasonably likely
        to
        materially affect our disclosure controls and procedures or internal controls
        over financial reporting.
 
 **ITEM
        8B. OTHER INFORMATION****.**
 
 There
        were no reportable events under this Item 8B during the fiscal quarter ended
        September 30, 2005.
 
 
 19
  **PART
        III**
  **ITEM
        9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH
        SECTION 16(A) OF THE EXCHANGE ACT.**
 
 The
        following table sets forth our directors and executive officers and their
        ages
        as of the fiscal year ended September 30, 2005:
 
 **Name**
              
              **Age**
              
              **Position**
              
              **Since**James
                  Price
              
              41
              
              Chief
                  Executive Officer, Principal Financial Officer, President,
                  Director
              
              2003Don
                  Tolman
              
              55
              
              Director
              
              2005
 
 **James
        Price -** ***Chief
        Executive Officer, Principal Financial Officer, President,
        Director***
 
 James
        Price has served as our Chief Executive Officer, Principal Financial Officer,
        President and a director since our inception in January 2003. In addition,
        Mr.
        Price currently serves as the president of Aero Financial, Inc., a boutique
        corporate advisory firm, providing a full range of strategic operational
        and
        management services in addition to access to capital resources. Mr. Price
        has
        served in this capacity since February 2002. Mr. Price also currently serves
        as
        the sole director and Chief Executive Officer of Wine Purveyors International,
        Inc., a development stage retailer of wines, ports, champagne and related
        accessories, and has served in that capacity since January, 2003. From December
        1997 through February 2002, Mr. Price served as the Chief Executive Officer
        of
        Columbia Financial Group, Inc., an investor relations firm. From February
        1995
        through December 1997, Mr. Price was a stockbroker employed by Global Financial.
        Mr. Price attended Eastern Washington University, where he took general studies
        courses with an interest in art history. Mr. Price is a veteran of the United
        States Army, serving from September 1982 through September 1985.
 
 **Don
        Tolman -** ***Director***
 
 Don
        Tolman has served as one of our directors since September 2005. Mr. Tolman
        is
        currently, and has been for more than twenty years, a self-employed consultant
        and developer of educational materials, a public speaker and an author. Mr.
        Tolman has previously been involved with founding two nutritional and health
        companies: The Whole Food Farmacy, Inc. and The Brain Garden, Inc. Mr. Tolman
        is
        also the author of *Think
        Fast: History, Mystery and Wealth* ,
        and *The
        Quest* ,
        as well
        as *Farmacist’s
        Desk Reference* ,
        which
        we are currently publishing. From October 2005 Mr. Tolman has served on the
        board of directors of our wholly owned subsidiary, YNOT Eduk8, Inc. Throughout
        his career, Mr. Tolman has appeared on more than 200 radio and television
        programs and has spoken to more than 1,000 live audiences worldwide.
 
 **FAMILY
        RELATIONSHIPS**
 
 There
        are
        no family relationships, by blood or marriage, between any of our directors
        or
        executive officers.
 
 **INVOLVEMENT
        IN CERTAIN LEGAL PROCEEDINGS**
 
 During
        the past five years, none of our directors, executive officers and control
        persons have been involved in any of the following events:
 
 ·
              any
                  bankruptcy petition filed by or against any business of which such
                  person
                  was an executive officer either at the time of the bankruptcy or
                  within
                  two years prior to that time;
 
 
 20
 
 ·
              any
                  conviction in a criminal proceeding or being subject to a pending
                  criminal
                  proceeding (excluding traffic violations and other minor offenses);
 
 ·
              being
                  subject to any order, judgment, or decree, not subsequently reversed,
                  suspended or vacated, of any court of competent jurisdiction, permanently
                  or temporarily enjoining, barring, suspending or otherwise limiting
                  his
                  involvement in any type of business, securities or banking activities;
                  and
 
 ·
              being
                  found by a court of competent jurisdiction (in a civil action),
                  the
                  Securities and Exchange Commission or the Commodity Futures Trading
                  Commission to have violated a federal or state securities or commodities
                  law, and the judgment has not been reversed, suspended, or
                  vacated.
 
 **CODE
        OF ETHICS**
 
 As
        of the
        date of this annual report on Form 10-KSB for the fiscal year ended September
        30, 2005, we have not yet adopted a written code of ethics for our principal
        executive officer, principal financial officer or principal accounting officer.
        We are, however, currently in the process of drafting such a code of ethics
        and,
        upon adoption, it will be made available on our website at
        www.benacquistagalleries.com. We will also provide a copy of our code of
        ethics,
        without charge, to any person who so requests a copy, in writing, at:
        Benacquista Galleries Inc., 6870 La Valle Plateada Rancho Santa Fe, California
        92067.
 
 **SECTION
        16(** **a** **)
        BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**
 
 Section
        16(a) of the Securities Exchange Act of 1934 and the rules promulgated
        thereunder require our officers and directors, and persons who beneficially
        own
        more than ten percent of a registered class of our equity securities, to
        file
        with the Securities and Exchange Commission initial reports of ownership
        and
        reports of changes in ownership of our equity securities and to furnish us
        with
        copies of all Section 16(a) forms they filed.
 
 Based
        on
        a review of copies of the Section 16(a) forms which we have received, and
        on
        written representations from certain reporting persons, we believe that all
        outstanding obligations by reporting persons have been met with the exception
        of
        James Price, who intends to meet such requirements by January 31,
        2006.
 
 **ITEM
        10. EXECUTIVE COMPENSATION.**
  **EXECUTIVE
        COMPENSATION**
 
 The
        following table sets forth the total compensation awarded to, earned by,
        or paid
        to our Chief Executive Officer during each of the last three completed fiscal
        years. No other individuals are employed by us or have earned a total annual
        salary and bonus in excess of $100,000 during any of the last three completed
        fiscal years
 **Long
                    Term Compensation Awards****Annual
                    Compensation**
                
                **Awards**
                
                **Payouts****Name
                    and Principal Position**
                
                
                **Year**
                
                **Salary**
                
                **Bonus**
                
                **Other
                    Annual Compensation**
                
                **Restricted
                    Stock Awards**
                
                **Securities
                    Underlying Options/SARs**
                
                **LTIP
                    Payouts**
                
                **All
                    Other Compensation**James
                    Price
                
                
                2005
                
                $
                75,000
                (1)
                $
                -
                
                $
                -
                
                $
                -
                
                
                -
                
                $
                -
                
                $
                -*President
                    and Chief Executive Officer*
                
                
                2004
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                
                -
                
                $
                -
                
                $
                -2003
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                
                -
                
                $
                -
                
                $
                -
   21
 
 (1)
              A
                  salary expense for services provided by our Chief Executive Officer,
                  James
                  Price, has been recorded in our General and Administrative expenses
                  for
                  the fiscal year ended September 30, 2005, however, since our inception,
                  Mr. Price has not drawn any salary or
                  benefits.
 
 **INFORMATION
        CONCERNING STOCK OPTIONS**
 
 As
        of the
        date of this annual report on Form 10-KSB for the fiscal year ended September
        30, 2005, we have not adopted a stock option incentive plan and, since inception
        have not granted stock options/SARs to our executive officer.
 
 
 **Option/SAR
                  Grants in Last Fiscal Year****Name**
              
              **Number
                  of Securities**
                **Underlying
                  Options/SARs**
                **Granted**
              
              **Percent
                  of Total**
                **Options/SARs
                  Granted to**
                **Employees
                  in Fiscal Year**
              
              **Exercise**
                **or
                  Base**
                **Price
                  ($/Sh)**
              
              **Expiration**
                **Date**James
                  Price
              
              
              -
              
              
              -
              
              
              -
              
              
              -
 
 The
        following table sets forth the number of stock options/SARs held by the
        executive officer named in the Summary Compensation Table for the fiscal
        year
        ended September 30, 2005 and the value of unexercised “in-the-money” stock
        options/SARs held which represents the positive difference between the exercise
        price and the market price at fiscal year end. No such executive exercised
        any
        stock options/SARs during the fiscal year 2006.
 
 **Aggregated
                  Option/SAR Exercises in Last Fiscal Year and**
                **FY-End
                  Option/SAR Values****Name**
              
              **Shares**
                **Acquired
                  on**
                **Exercise**
              
              **Value
                  Realized**
              
              **Number
                  of Unexercised**
                **Options/SARs
                  at**
                **Fiscal
                  Year End**
              
              **Value
                  of Unexercised**
                **“In-the-Money”
                  Options/**
                **SARs
                  at Fiscal Year End**James
                  Price
              
              
              -
              
              
              -
              
              
              -
              
              
              -
 
 **LONG
        TERM INCENTIVE PLAN AWARDS**
 
 As
        of the
        date of this annual report on Form 10-KSB for the fiscal year ended September
        30, 2005, we have no long-term incentive plans in place and therefor no awards
        were made to the executive officer named in the Summary Compensation Table during the most
        recently completed fiscal year under any long-term
        incentive plan.
 
 **DIRECTOR
        COMPENSATION**
 
 Pursuant
        to authority granted under our Article III, Section 10 of our bylaws,
        non-officer directors are entitled to such compensation as our board of
        directors shall from time to time determine. For the fiscal year ended September
        30, 2005 our directors James Price and Don Tolman were not
        compensated.
 
 
 22
 
 **EMPLOYMENT
        AGREEMENTS**
 
 As
        of the
        date of this annual report on Form 10-KSB for the fiscal year ended September
        30, 2006, we have no employment agreements in place with any of our executive
        officers, directors or other employees.
 
 **ITEM
        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
        MANAGEMENT.**
 
 The
        following table sets forth certain information regarding the beneficial
        ownership of our common stock as of September 30, 2005. The information in
        these
        tables provides ownership information for:
 
 ·
              each
                  person known by us to be the beneficial owner of more than a 5%
                  of our
                  common stock
 ·
              each
                  of our directors and executive officers; and
 ·
              all
                  of our directors and executive officers as a group.
 
 Beneficial
        ownership has been determined in accordance with the rules and regulations
        of
        the SEC and includes voting or investment power with respect to our common
        stock
        and those rights to acquire additional shares within sixty days. Unless
        otherwise indicated, the persons named in the table below have sole voting
        and
        investment power with respect to the number of shares of common stock indicated
        as beneficially owned by them, except to the extent such power may be shared
        with a spouse. Common stock beneficially owned and percentage ownership are
        based on 1,100,113 shares
        of
        common stock currently outstanding (reflects a one-for-ten reverse stock-split
        of our common stock that occurred on January 8, 2007) and no additional shares
        potentially acquired within sixty days. The address of each person listed
        is
        care of Benacquista
        Galleries Inc., 6870 La Valle Plateada Rancho Santa Fe, California
        92067.
 **Name**
              
              **Amount
                  and**
                **Nature
                  of Ownership**
              
              **Percent
                  of Class***James
                  Price (1)
              
              896,910
              
              81.53%Don
                  Tolman (2)
              
              -
              
              -%All
                  officers and directorsas
                  a group (2 persons)
              
              896,910
              
              83.55%
 
 **ITEM
        12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.**
 
 **OFFICE
        LEASE RENT**
 
 During
        the fiscal year ended September 30, 2005, we leased certain office space
        from
        our Chief Executive Officer, James Price, on a month-to-month basis at a
        rate of
        $500 per month, with no formal lease agreement in place. The aggregate of
        accrued rent for the fiscal year ended September 30, 2005 was $6,000. Although
        we believe that the monthly rate of rent accrued is as fair as that which
        could
        have been obtained in an arms length transaction with unaffiliated third
        parties, the fact that this office space has been leased from one of our
        executive officers gives rise to the potential that the terms of the lease
        may
        have been less favorable to us than would otherwise have been the
        case
 
 **LOANS**
 
 From
        our
        inception we have obtained aggregate loan advances in an amount totaling
        $93,058
        from our Chief Executive Officer, James Price, including $18,598 in cash
        contributions for the year ended September 30, 2005.
 
 
 23
 
 **OTHER
        AGREEMENTS**
 
 On
        September 29, 2005 we entered into an exclusive publishing and royalty agreement
        with Don Tolman, a member of our board of directors. Under the terms of the
        Publishing Agreement we received the exclusive right to publish, distribute
        and
        sell certain of Tolman’s health and educational related books and materials,
        including the *Farmacist’s
        Desk Reference* ,
        as well
        as a license to use Tolman’s name and likeness in connection with the FDR and,
        subject to pre-approval, certain of his other unspecified works. In
        consideration for the Publishing Agreement Tolman is to receive royalty payments
        of $1.00 per copy of the FDR sold and five percent (5%) of all proceeds of
        the
        sale or license of the FDR or any other works covered by the Publishing
        Agreement. The Publishing Agreement is effective for a period of two years,
        during which time Tolman must receive Minimum Royalty payments of $250,000
        otherwise he may, in his sole discretion, terminate the Publishing Agreement
        at
        the end of the Initial Period. Following the Initial Period, the Publishing
        Agreement will automatically renew for two successive two-year terms unless
        earlier terminated by Tolman for our failure to have made the Minimum Royalty
        payments.
 
 Also
        on
        September 29, 2005 we entered into an asset acquisition agreement with YNOT
        Education, Inc. whereby we acquired all rights, title and interest in the
        website www.ynoteduk8.com in exchange for a $150,000 unsecured promissory
        note
        bearing interest at a rate of five percent (5%) per annum and payable upon
        demand, with no prior periodic payments due. At the time the Asset Acquisition
        Agreement was executed, Don Tolman, a member of our board of directors, was
        the
        President, Secretary and a director of YNOT Education Inc., and James Price,
        our
        Chief Executive Officer, was the Treasurer and a director. Immediately upon
        executing the Asset Acquisition Agreement, YNOT Education, Inc. assigned
        all of
        its rights, title and interest in the YNOT Note to James Price.
 
 Although
        we believe that the terms and conditions of the Publishing
        Agreement ,
        A sset
        Acquisition Agreement and the assignment of the YNOT Note were as fair as
        any which could have been negotiated in an arms length transactions with
        unaffiliated third parties, the fact that these transactions were executed
        with
        our officers and directors, and a company of which our officers and directors
        are officers and directors, gives rise to the potential that the Publishing
        Agreement, A sset
        Acquisition Agreement and assignment of the YNOT Note may have
        been less favorable to us than would otherwise have been the case
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 24
 
 **ITEM
        13. EXHIBITS.**
 **No.**
                **Description
                    of Exhibit**
  3(i)(1)
                Articles
                    of Incorporation of Benacquista Galleries Inc., dated January
                    17, 2003,
                    incorporated by reference to Exhibit 3.1 on Form SB-2 filed March
                    31,
                    2003.
  3(ii)
                By-laws
                    of Benacquista Galleries Inc., dated January 17, 2003, incorporated
                    by
                    reference to Exhibit 3.2 on Form SB-2 filed March 31,
                    2003.
  10.1
                Asset
                    Acquisition Agreement betweenBenacquista
                    Galleries Inc. and YNOT Education, Inc., datedSeptember
                    29, 2005, incorporated by reference to Exhibit 10.1 on Form 8-K
                    filed
                    September 30, 2005.
  10.2
                Royalty
                    Agreement betweenBenacquista
                    Galleries Inc. and Don Tolman, dated September 29, 2005,incorporated
                    by reference to Exhibit 10.2 on Form 8-K filed September 30,
                    2005.
  31.1
                Certification
                    ofBenacquista
                    Galleries Inc. Chief Executive Officer, James Price, required
                    by Rule
                    13a-14(a) or Rule 15d-14(a), dated May 18,2007.
                    FILED HEREWITH
  31.2
                Certification
                    ofBenacquista
                    Galleries Inc. Chief Financial Officer, James Price, required
                    by Rule
                    13a-14(a) or Rule 15d-14(a), dated May 18,2007.
                    FILED HEREWITH
  32.1
                Certification
                    ofBenacquista
                    Galleries Inc. Chief Executive Officer, James Price,required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350
                    of Chapter
                    63 of Title 18 of the United States Code (18 U.S.C. 1350),dated
                    May 18,2007.
                    FILED HEREWITH.
  32.2
                Certification
                    ofBenacquista
                    Galleries Inc. Chief Financial Officer, James Price,required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350
                    of Chapter
                    63 of Title 18 of the United States Code (18 U.S.C. 1350),dated
                    May 18,2007.
                    FILED HEREWITH.
   
 
 
 
 
 
 25
 
 **ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.**
 
 The
        following table sets forth the aggregate amount of various professional fees
        billed by our principal accountants with respect to our last two fiscal
        years:
 **2005**
              
              **2004**Audit
                  fees
              
              $
              10,826
              
              $
              6,304Audit-related
                  fees
              
              
              12,051
              
              
              11,443Tax
                  fees
              
              
              147
              
              
              158All
                  other fees
              
              
              -
              
              
              -**Total**
              
              $
              23,024
              
              $
              17,905
 
 All
        audit
        fees are approved by our board of directors. Hansen, Barnett & Maxwell, P.C.
        (“HB&M”) does not provide any non-audit services to us.
 
 **Audit
        Fees**
 
 Audit
        fees billed for professional services rendered by HB&M during the fiscal
        years ended September 30, 2005 and 2004, for the audit of our annual financial
        statements and the review of the financial statements included in our quarterly
        reports on Form 10-QSB, or services that are normally provided by HB&M in
        connection with statutory and regulatory filings or engagements for those
        years
        ended, totaled approximately $10,826 and $ 6,304, respectively.
 
 **Audit-Related
        Fees**
 
 Audit-related
        fees billed by HB&M during the fiscal years ended September 30, 2005 and
        2004, were primarily for assurance and related services rendered in relation
        to
        our registration statements and totaled approximately $12,051 and $11,443,
        respectively.
 
 **Tax
        Fees**
 
 Tax
        fees
        billed by HB&M during the fiscal years ended September 30, 2005 and 2004,
        for tax compliance, tax advice, and tax planning services, specifically
        including the preparation of our tax returns and guidance on tax accruals
        totaled approximately $147 and $158, respectively.
 
 **All
        Other Fees**
 
 There
        were no fees billed by HB&M during the years ended September 30, 2005 and
        2004 for any other services rendered other than the amounts set forth
        above.
 
 
 26
 
 **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.
 
 Date:
        May
        18, 2007
 **BENACQUISTA
                  GALLERIES, INC.**By:
              */s/
                  James Price*James
                  PriceChief
                  Executive Officer & Chief Financial
                  Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 27