SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

                           Commission File #000-50672

                                  NANNACO, INC.
        (Exact name of small business issuer as specified in its charter)

                                      Texas
         (State or other jurisdiction of incorporation or organization)

                                   74-2891747
                      (IRS Employer Identification Number)

             4906 Point Fosdick Dr., Suite 102, Gig Harbor, WA 98335
               (Address of principal executive offices)(Zip Code)

                                 (253) 853-3632
               (Registrant's telephone no., including area code)

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

The number of shares outstanding of the Company's common stock outstanding on
April 29, 2005: 97,033,561


                                       1
<PAGE>

                                  NANNACO, INC.
                                   FORM 10-QSB

Part I. Financial Information.

Item 1. Consolidated Financial Statements

Filed herewith are our following unaudited financial statements:

                                                                       Page No.

Balance Sheet at March 31, 2005.............................................3

Statements of Operations for the six and three months

ended March 31, 2005 and 2004...............................................5

Statements of Cash Flows for the six and three months

ended March 31, 2005 and 2004...............................................6

Notes to Financial Statements...............................................8


                                       2
<PAGE>

                                  NANNACO, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                                   (Unaudited)
                                 MARCH 31, 2005

                                     ASSETS

CURRENT ASSETS
Cash and cash equivalents                      $     --
                                               --------

Total current assets                           $     --
                                               ========

                                   LIABILITIES

CURRENT LIABILITIES
Convertible debentures                         $ 77,500
Bank loans                                       59,336
Accounts payable - trade                        117,093
Accrued compensation, related party              25,092
Accrued interest                                 51,790
Due to consultants                               36,196
Other current liabilities                        84,378
Payroll taxes payable                           270,789
Sales tax payable                                40,801
Judgment payable                                 55,226
Loan payable - related party                     42,700
                                               --------

Total current liabilities                      $860,900
                                               ========


The accompanying notes are an integral part of the financial statements.


                                       3
<PAGE>

                                  NANNACO, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            BALANCE SHEET (Continued)
                                   (Unaudited)
                                 MARCH 31, 2005

                            STOCKHOLDERS' DEFICIENCY

CONTINGENT RETURNABLE COMMON STOCK
Common stock, $0.001 par value, 750,000 shares
issued and outstanding                                             $        750
Additional paid in capital                                              899,250
Less: Deferred compensation                                            (900,000)
                                                                   ------------

TOTAL CONTINGENT RETURNABLE COMMON STOCK                                     --

COMMITMENTS AND CONTINGENCIES
                                                                   ------------

STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value, 100,000,000 shares authorized
Issued - 10,000,000 issued and outstanding                               10,000

Common stock, $0.001 par value, 500,000,000 shares authorized:
Issued - 97,033,561 issued and outstanding                               97,034

Additional paid in capital                                           14,412,061

Accumulated deficit through September 30, 2003                       (5,048,764)

Deficit accumulated during development stage                         (9,831,879)
                                                                   ------------
                                                                       (361,548)

Less: Subscription receivable                                          (101,205)
Less: Deferred consulting                                              (398,146)
                                                                   ------------

TOTAL STOCKHOLDERS' DEFICIENCY                                         (860,900)
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICENCY                      $         --
                                                                   ============





The accompanying notes are an integral part of the financial statements.


                                       4
<PAGE>

                                  NANNACO, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                        Period From
                                                                                                      October 1, 2003
                                                                                                       (Inception of
                                              Six Months Ended             Three Months Ended       Development Stage)
                                                 March   31,                    March   31,             To March 31,
                                            2005            2004            2005            2004            2005
                                        ------------    ------------    ------------    ------------    ------------
<S>                                     <C>             <C>             <C>             <C>             <C>
REVENUES FROM DISCONTINUED OPERATIONS   $         --    $     15,577    $         --    $         --    $     15,577

COST OF REVENUES                                  --          16,848              --           3,715          16,848
                                        ------------    ------------    ------------    ------------    ------------

GROSS LOSS                                        --          (1,271)             --          (3,715)         (1,271)

OPERATING EXPENSES:

Selling, general and administrative               --          15,220              --          (1,991)         16,186

Compensation and payroll taxes                57,097       1,983,397          21,507       1,637,032       2,097,675

Consulting                                 1,912,255       1,946,042       1,312,883       1,857,543       4,870,251

Legal and professional                     1,405,000         984,894       1,100,000         769,594       2,733,986

Rent                                              --           1,495              --              --           1,495

Travel and entertainment                          --           3,726              --           2,445           3,726

Debenture liquidated damages                  48,603          24,500          10,400           3,500          75,343

Bad debt expense                                  --           1,171              --           1,171           1,171
                                        ------------    ------------    ------------    ------------    ------------

TOTAL OPERATING EXPENSES                   3,422,955       4,960,445       2,444,790       4,269,295       9,799,833
                                        ------------    ------------    ------------    ------------    ------------


LOSS FROM OPERATIONS                      (3,422,955)     (4,961,716)     (2,444,790)     (4,273,009)     (9,801,104)

OTHER INCOME (EXPENSE):

Interest expense, net                         (8,817)        (12,467)         (4,100)         (6,234)        (30,775)
                                        ------------    ------------    ------------    ------------    ------------

TOTAL OTHER INCOME (EXPENSE)                  (8,817)        (12,467)         (4,100)         (6,234)        (30,775)
                                        ------------    ------------    ------------    ------------    ------------

NET LOSS                                $ (3,431,772)   $ (4,974,183)   $ (2,448,890)   $ (4,279,244)   $ (9,831,879)
                                        ============    ============    ============    ============    ============

NET LOSS PER SHARE -
BASIC AND DILUTED                       $      (0.16)   $     (99.17)   $      (0.06)   $     (67.60)   $      (1.39)
                                        ============    ============    ============    ============    ============


WEIGHTED AVERAGE SHARES                   21,170,239          50,158      42,232,230          63,303       7,098,802
                                        ============    ============    ============    ============    ============
</TABLE>


The accompanying notes are an integral part of the financial statements


                                       5
<PAGE>

                                  NANNACO, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 MARCH 31, 2005

<TABLE>
<CAPTION>
                                                                                                  Period From
                                                                                                  October 1, 2003
                                                                                                  (Inception of
                                                                               Six Months Ended  Development Stage)
                                                                             March   31,            To March 31,
                                                                       2005            2004           2005
                                                                   ---------------------------------------------
<S>                                                                <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                                                           $ (3,431,772)   $ (4,974,183)   $ (9,831,879)
Adjustments to reconcile net loss to net cash used in
operating activities:
   Bad debt expense                                                                       1,171           1,171
   Accrued interest on subscription promissory note                        (997)             --          (1,205)
   Stock issued for legal services                                    1,400,000         952,800       2,602,800
   Stock issued for consulting services                               1,360,000       1,504,000       3,129,001
   Stock issued for debenture liquidated damages                             --
                                                                   ---------------------------------------------
   Stock issued for termination fee                                          --
                                                                   ---------------------------------------------
   Debenture liquidated damages                                          48,603          24,500           75,343
   Amortization of deferred compensation                                 44,917       1,918,387        2,008,303
   Amortization of deferred consulting                                  552,255         435,241        1,734,449
                                                                   ---------------------------------------------
   Changes in operating assets and liabilities:
      Increase in accounts receivable - trade                                              (548)           (548)
                                                                                             --
      Increase in other assets                                               --
                                                                   ---------------------------------------------
      Decrease in bank overdrafts
                                                                                         (1,976)         (1,976)
      Increase in accounts payable                                        5,000          20,845          93,873

      Increase in accrued interest payable                                7,699          10,353          25,219

      Increase in due to consultants                                                      8,750          36,196

      Increase in other current liabilities                                              33,535          33,535

      Increase in payroll taxes payable                                  12,181          65,010          89,371

      Increase in judgment payable                                        2,115           2,115           6,346

                                                                   ---------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES                              $          0    $          0    $          0
                                                                   =============================================
</TABLE>

     The accompanying notes are an integral part of the financial statements


                                       6
<PAGE>

                                  NANNACO, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      STATEMENTS OF CASH FLOWS (Continued)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                       Period From
                                                                                      October 1, 2003
                                                                                      (Inception of
                                                             Three Months  Ended      Development Stage)
                                                                  March  31,           To March 31,
                                                             2005           2004           2005
                                                         ------------   ------------   ------------
<S>                                                      <C>            <C>            <C>
CASH FLOW FROM INVESTING ACTIVITIES                                --             --             --
                                                         ------------   ------------   ------------
NET CASH USED IN INVESTING ACTIVITIES                              --             --             --
                                                         ------------   ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES                               --             --             --
                                                         ------------   ------------   ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                          --             --             --
                                                         ------------   ------------   ------------

NET INCREASE IN CASH                                               --             --             --
                                                         ------------   ------------   ------------
CASH AT BEGINNING OF PERIOD                                        --             --             --
                                                         ------------   ------------   ------------
CASH AT END OF PERIOD                                    $         --   $         --   $         --
                                                         ============   ============   ============
CASH INTEREST PAID                                       $         --   $         --   $         --
                                                         ============   ============   ============

Supplemental disclosure of non-cash transactions:
Stock issued for debenture liquidated damages            $         --   $         --   $     35,000
Stock issued for conversion of debentures and interest         30,900             --        109,267
Stock issued for conversion of accounts payable                25,404             --         80,403
</TABLE>




     The accompanying notes are an integral part of the financial statements


                                       7
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


1.    HISTORY AND NATURE OF BUSINESS

      Nannaco, Inc. ("Nannaco", "the Company", "we", "us") is a publicly traded
company that previously provided surface cleaning, surface protection, surface
restoration, and other services to commercial and industrial businesses, as well
as to owners of historical buildings. The Company had operated under the trade
name Surface Pro on order to relate to its previous principal business activity,
since the Nannaco name did not indicate the type of business. The Company was
incorporated under the laws of the State of Texas on October 20, 1998, and
immediately began operations.

      Until September 30, 2003, Nannaco focused on surface cleaning, surface
protection and restoration. However, sales from these products were not
sufficient to enable the company to continue operations and the Company changed
its strategy due to poor operating conditions and their operating results
coupled with difficulties in raising capital through debt and equity sources.
The Company adopted a new strategy that committed to the disposal of its current
business and to seek a merger/acquisition transaction with a company having
better financial resources and/or act as a holding company for newly developed
businesses. As of September 30, 2003, the Company ceased all operating
activities under the surface cleaning, surface protection and restoration
business and disposed of most of its assets while formulating a plan to improve
it financial position.

      In December 2003 and January 2004, the Company issued several
announcements related to the change in business. The Company had moved to a new
line of business as a consultant and advisor to customers, however, they ceased
this activity in March 2004. The Company continues to seek a merger/acquisition
candidate. The Company will be treated as a development stage company, effective
October 1, 2003. Activities during the new development stage include
restructuring the Company and entering into contracts to provide consulting
services to customers. Additionally, in March 2004, the Company's CEO resigned
and was replaced by a new CEO.

      In March 2004, the Company announced they had signed a letter of intent to
acquire Red Alert Group, Inc. ("Red Alert"), a company specializing in homeland
and global security. The Company anticipated that upon the successful completion
of the announced acquisition, the name of the Company would be changed to Red
Alert Group, Inc. and would apply to obtain a new stock ticker symbol. In July
2004, the Company filed a Schedule 14A with the Securities and Exchange
Commission ("SEC") giving notice that the Company and Red Alert had adopted an
Agreement and Plan of Merger ("Merger Agreement") that would result in Red Alert
becoming a wholly owned subsidiary of Nannaco. The Schedule 14 A was
subsequently withdrawn prior to any action being taken thereunder. In November
2004, the Company announced that the merger previously announced with Red Alert
was terminated. The Board of Directors of both Nannaco and Red Alert approved
the termination, without cause, of the Agreement and Plan of Merger. As a result
of the termination of the agreement, both companies will bear their own expenses
in connection with the merger and neither company will owe to the other either
break-up fees or other costs and expenses.

      In October 2004, a 1 for 100 reverse-split discussed above was completed
and the number of issued and outstanding shares was reduced from 474,253,389 to
4,742,534 as a result thereof. Additionally, in December 2004 the Board


                                       8
<PAGE>


                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


approved and completed a 1 for 40 reverse-stock split. As a result of this
reverse-stock split, the number of issued and outstanding shares was reduced
from 4,742,534 to 118,563.

      On October 28, 2004 the Company and NAZZ Productions, Inc. entered into an
agreement to merge a subsidiary of Nannaco into NAZZ Productions, Inc. ("NAZZ")
and to rename the Company NAZZ Productions, Inc. (the "reverse merger"). The
agreement provides that all of the shares of common stock of NAZZ issued and
outstanding at the time the merger becomes effective under applicable state law
(the "Effective Time"), will be converted into common stock of Nannaco such that
the current holder of NAZZ common stock will hold 95% of all shares of
Registrant's common stock outstanding immediately after the closing of this
merger transaction, on a fully diluted basis. The NAZZ merger agreement was
extended by mutual consent to close not later than March 31, 2005. As of the
date of these Financial Statements, the merger has not closed and the Company
has renegotiated the merger agreement substituting instead an agreement to
acquire NAZZ Productions, Inc. through an acquisition subsidiary with the
Company retaining 5% of the stock of acquisition subsidiary. Upon the
effectiveness of a registration statement covering the distribution of
shares,the Company will distribute the 5% shareholdings to its shareholders.
NAZZ will not be entitled to a $200,000 "break-up fee" as provided under certain
circumstances in the prior merger agreement.

2. GOING CONCERN

      We have incurred net losses in prior years and this has resulted in a
significant accumulated deficit and stockholders' deficiency at March 31, 2005.
In addition, we are in default under our convertible debenture agreements and we
have no assets. We had net losses of $3,431,772 for the six months ended March
31, 2005 and $4,974,183 for the six months ended March 31, 2004. At March 31,
2005, our current liabilities exceeded our current assets by $860,900, our
stockholders' deficiency was $860,900, we had an accumulated deficit from prior
business operations of $5,048,764 and we had a deficit accumulated during the
development stage of $9,831,879 as of March 31, 2005.

      The time required for us to become profitable is highly uncertain, and we
cannot assure you that we will achieve or sustain profitability or generate
sufficient cash flow from operations to meet our planned capital expenditures,
working capital and debt service requirements. If required, our ability to
obtain additional financing from other sources also depends on many factors
beyond our control, including the state of the capital markets and the prospects
for our business. The necessary additional financing may not be available to us
or may be available only on terms that would result in further dilution to the
current owners of our common stock.

      We have substantial current obligations and no assets to satisfy these
obligations. As of March 31, 2005, we had $860,900 of liabilities as compared to
$840,706 as of September 30, 2004. Of the $860,900 outstanding at March 31,
2005, $270,789 is for unpaid federal payroll taxes, interest and penalties. The
Company has received correspondence from the Internal Revenue Service ("IRS")
detailing the obligation and remedies that the IRS may pursue if not paid and is
in discussions with the IRS concerning resolution of the matter. The remaining
current obligations (which are all past due) include sales tax payable of
$40,801, accounts payable of $117,093, judgment payable of $55,336, bank loans
of $59,335, loan payable-related party of $42,700, accrued compensation-related


                                       9
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005

party of $25,092, due to consultants of $36,196, convertible debentures of
$77,500 and accrued debenture liquidated damages of $50,843. The Company does
not have any cash resources or other assets to pay these obligations.

Our substantial debt obligations pose risks to our business and stockholders by:

      o     making it more difficult for us to satisfy our obligations;

      o     requiring us to dedicate a substantial portion of our cash flow to
            principal and interest payments on our debt obligations, thereby
            reducing the availability of our cash flow to fund working capital,
            capital expenditures and other corporate requirements;

      o     impeding us from obtaining additional financing in the future for
            working capital, capital expenditures and general corporate
            purposes; and

      o     making us more vulnerable to a downturn in our business and limit
            our flexibility to plan for, or react to, changes in our business.
            We cannot assure you that we will generate sufficient cash flow from
            operations or obtain additional financing to meet scheduled debt
            payments and financial covenants. If we fail to make any required
            payment under the agreements and related documents governing our
            indebtedness or fail to comply with the financial and operating
            covenants contained in them, we would be in default. The financial
            statements do not include any adjustments to reflect the possible
            effects on recoverability and classification of assets or the
            amounts and classification of liabilities, which may result from the
            inability of the Company to continue as a going concern.

      The Company has taken steps to curtail the operating losses for future
periods. These steps include the reduction of employees and all categories of
operating expenses, where possible. Additionally, as mentioned previously, the
Company adopted a new strategy during the fourth quarter of 2003 that committed
to the disposal of its current business and to seek a merger/acquisition
transaction with a Company having better financial resources (See History and
Nature of Business above). As of September of 2003, the Company ceased all
operating activities and has disposed of most of its assets while formulating a
plan to improve its financial position.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

      The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America ("U.S. GAAP") and the rules and regulations of the U.S. Securities and
Exchange Commission for interim financial information. Accordingly, they do not
include all of the information and footnotes required for a comprehensive
presentation of financial position and results of operations. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. The results of operations for the six and three months ended
March 31, 2005 are not necessarily indicative of the results to be expected for
the year ending September 30, 2005. These Financial Statements should be read

                                       10
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


in conjunction with the audited Financial Statements of Nannaco, Inc., for the
years ended September 30, 2004 and 2003 included in Form 10-KSB Accounting
Estimates

      When preparing financial statements in conformity with U.S. GAAP, our
management must make estimates based on future events which affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities as of the date of the financial statements, and revenues and
expenses during the reporting period. Actual results could differ from these
estimates. Significant estimates in the accompanying financial statements
includes the realizability of a subscription note receivable, provision for
uncollectible investor loans, impairment of property and equipment, evaluation
of a beneficial conversion feature in convertible debentures and convertible
preferred stock, valuation of the fair value of financial instruments, valuation
of non-cash issuances of common stock and the valuation allowance for deferred
tax assets.

Cash and Cash Equivalents

      Cash and cash equivalents include all highly liquid investments with a
maturity date of three months or less when purchased.

Fair Value of Financial Instruments

      We define the fair value of a financial instrument as the amount at which
the instrument could be exchanged in a current transaction between willing
parties. The carrying value of accounts receivable, accounts payable and accrued
liabilities approximates fair value because of the short maturity of those
instruments. The estimated fair value of our other obligations is estimated
based on the current rates offered to us for similar maturities. Based on
prevailing interest rates and the short-term maturity of all of our
indebtedness, management believes that the fair value of our obligations
approximates book value at March 31, 2005.

Stock-Based Compensation

      The Company accounts for stock options issued to employees in accordance
with the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of the
current market price of the underlying stock over the exercise price. Such
compensation amounts are amortized over the respective vesting periods of the
option grant. The Company adopted the disclosure provisions of SFAS No. 123
"Accounting for Stock-Based Compensation," and SFAS No. 148 "Accounting for
Stock Based Compensation - Transition and Disclosure," which permits entities to
provide pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 had been applied.

      The Company accounts for stock options or warrants issued to non-employees
for goods or services in accordance with the fair value method of SFAS 123.
Under this method, the Company records an expense equal to the fair value of the
options or warrants issued. The fair value is computed using an options pricing
model.


                                       11
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005



Income Taxes

      Income taxes are accounted for under the asset and liability method of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes ("SFAS 109")." Under SFAS 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
SFAS 109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

Loss per Common Share

      Basic earnings per share are computed only on the weighted average number
of common shares outstanding during the respective periods. There were no
additional items to adjust the numerator or denominator in the EPS computations.

      In September 2004, we completed a 1 for 100 reverse-split of the issued
and outstanding shares of the common stock of the Company. As a result of the 1
for 100 reverse-split, the number of issued and outstanding shares was reduced
from 474,253,389 to 4,742,534 after the reverse-split. In December 2004, we
completed a 1 for 40 reverse-split of the issued and outstanding shares of the
common stock of the Company. As a result of the 1 for 40 reverse-split, the
number of issued and outstanding shares was reduced from 4,742,534 to 118,563
after the reverse-split. In accordance with SFAS 128, the Company applied the
effect of both the 1 for 100 and the 1 for 40 reverse-splits from October 1,
2003 and the weighted average number of common shares outstanding was adjusted
retroactively to reflect the reverse splits.

Accumulated Other Comprehensive Income

      As of the date of these Financial Statements, we had no components of
other comprehensive income as defined by Statement of Financial Accounting
Standards No. 130.

New Accounting Standards

On December 16, 2004, the Financial Accounting Standards Board issued SFAS 123
(revised 2004), Share-Based Payment ("SFAS 123(R)"), which is a revision of SFAS
123, Accounting for Stock-Based Compensation. SFAS 123(R) supersedes APB Opinion
25, Accounting for Stock Issued to Employees, and amends SFAS 95, Statement of
Cash Flows. Generally, the approach in SFAS 123(R) is similar to the approach
described in SFAS No. 123. However, SFAS 123(R) requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the income statement based on their fair values. Pro-forma
disclosure is no longer an alternative.


SFAS No. 123(R) permits public companies to adopt its requirements using one of
two methods:


                                       12
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


1). A "modified prospective" method in which compensation cost is recognized
beginning with the effective date (a) based on the requirements of SFAS No.
123(R) for all share-based payments granted after the effective date and (b)
based on the requirements of SFAS No. 123 for all awards granted to employees
prior to the effective date of SFAS No. 123(R) that remain unvested on the
effective date.


(2) A "modified retrospective" method which includes the requirements of the
modified prospective method described above, but also permits entities to
restate based on the amounts previously recognized under SFAS No. 123 for
purposes of pro-forma disclosures either (a) all prior periods presented or (b)
prior interim periods of the year of adoption.


The Company is required to adopt SFAS No. 123(R) on January 1, 2006, and is
currently evaluating the adoption alternatives.


As permitted by SFAS 123, the Company currently accounts for share-based
payments to employees, vendors, or outside consultants/contractors, using APB
Opinion No.25`s intrinsic value method and, as such, generally recognizes
expense to the extent of the fair market value of the shares exchanged, after
taking into account various factors, such as but not limited to, number of
shares, market, and other stock restrictions. Accordingly, the adoption of SFAS
123(R) `s fair value method may or may not have a significant impact on the
consolidated results of operations, although it will have no impact on the
Company's overall consolidated financial position. The impact of adopting SFAS
123(R) in future periods will depend on levels of share-based payments granted
in the future. This requirement is expected to reduce net operating cash flows
and increase net financing cash flows in periods after adoption.


4. SHORT-TERM DEBT

Our short-term debt at March 31, 2005 consisted of the following:

<TABLE>
<CAPTION>
<S>                                                                                   <C>
Bank Loans
$35,000 bank installment loan, dated Feb. 19, 2000, bearing interest at 10% per
  annum, 60 monthly payments of principal and interest..............................  $  25,350
$35,000 bank line of credit, bearing interest at prime plus 1.25% per annum,
  interest payable monthly and line of credit due July 15, 2002......................    33,986
                                                                                        -------
                                                                                      $  59,336
                                                                                      =========
</TABLE>

      On February 19, 2000, we obtained a bank installment loan in the amount of
$35,000, of which $25,350 is outstanding at September 30, 2003. The interest
rate is 10% per annum and sixty monthly payments of principal and interest in
the amount of $745 are required. This note is secured by the personal guaranty
of the Company's former President.

      At March 31, 2005, we had a bank line of credit, which provides for
borrowings of up to $35,000, of which $33,986 was outstanding. The interest rate
is Prime plus 1.25% per annum and monthly interest payments were required.


                                       13
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                   (unaudited)
                                 March 31, 2005


The line of credit matured on July 15, 2002 but the bank has not exercised its
rights of default and the facility was on a month-to-month basis. The line of
credit is secured by a personal guaranty of the Company's former President.

<TABLE>
<CAPTION>
<S>                                                                                         <C>
Loan Payable - Related Party
Loan payable, dated January through July of 2001, bearing interest at 10% per
  annum and due in July of 2002.......................................................      $  42,700
                                                                                            =========

         Beginning in January of 2001 and through July of 2001, Mark Triesch, a
director Of the Company, loaned $43,700 to the Company in the form of a
promissory note. The note bears interest at ten percent (10%) per annum and the
principal and accrued interest was due one year from each of the investments. As
of July 2002, the entire amount was due and payable. In April 2003, the Company
repaid $1,000 of principal resulting in the current balance due of $42,700.

Convertible Debentures
$175,000 Convertible Debentures, dated March and April of 2003, bearing
  interest at 6% per annum and due in March and April of 2006.........................      $  77,500
                                                                                            =========
</TABLE>

      Pursuant to Securities Purchase Agreements, Convertible Debentures and
related contracts, in March of 2003, the Company issued $155,000 of six percent
(6%) convertible debentures due in March of 2006 and in April issued another
$20,000 of the debentures due in April 2006. The Company received $122,100 of
cash proceeds, net of $52,900 of cash offering costs. The debenture holder has
the option of converting the principal and accrued interest into the Company's
common stock at a conversion price equal to seventy-five percent (75%) of the
lowest closing bid price per share for the twenty (20) trading days immediately
preceding the conversion. The Company has the option to redeem all or part of
the debentures prior to the maturity date at a price equal to one hundred thirty
percent (130%) of the principal amount plus accrued interest.

      The Company recognized an immediate $58,333 interest expense and paid-in
capital relating to a beneficial conversion feature inherent in the debentures
since the debentures were immediately convertible. In connection with the
offering, in addition to cash offering costs of $52,900, the Company issued
500,000 of its common shares to the investment bankers. The shares were valued
on the grant date at the trading price of $0.03 per share or $12,500. The total
offering costs of $65,400 were initially deferred to be amortized over the term
of the debentures, however due to a default provision which changed the
debentures maturity to due on demand (see below); the $65,400 was fully expensed
as of September 30, 2003.

      Under a related Registration Rights Agreement, the Company is subject to a
2% monthly liquidated damages penalty for not filing a registration statement
with the Securities and Exchange Commission, within a stipulated timeframe, to
register the common shares underlying the convertible debentures and another 2%
monthly liquidated damages penalty relating to that registration statement not
becoming effective within a stipulated timeframe. The liquidated damages penalty
started accruing at 2% or $3,500 per month at June 1, 2003 and at another 2% or
$3,500 per month starting September 1, 2003. The penalties for June and July
2003 were satisfied with the issuance of 350,000 of the Company's


                                       14
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005

common shares to the debenture investors and remaining accrued liquidated
damages were $10,500 at September 30, 2003. The Company recognized a $1,750 gain
on the settlement of $7,000 of accrued liquidated damages in June and July 2003
based on the $0.015 trading price of the common stock on the settlement date.
For the three-month period ended December 31, 2003, the Company recorded an
additional $24,500 of liquidated damages expense resulting in an accrued balance
of $35,000. Effective March 31, 2004, the Company reached an agreement with the
debenture investors and all outstanding penalties in the amount of $35,000 were
satisfied with the issuance of 438 of the Company's common shares based on a
$0.02 trading price of the common stock on the settlement date. For the period
from April 1, 2004 through March 31, 2005, the Company has recorded an
additional $50,843 of liquidated damages resulting in an accrued balance of
$50,843 as of March 31, 2005.

      Due to the default under the Registration Rights Agreement, the debentures
went into default as of June 1, 2003. Accordingly, the debentures became due on
demand at that date and are presented as current liabilities at March 31, 2005.

      In April and May of 2004, $67,500 principal amount of the debentures was
converted into 3,167 shares of our common stock. $60,000 of the debentures was
converted in April 2004 into 2,736 shares at $0.0054825 per share and $7,500 of
the debentures was converted in May 2004 into 431 shares at $0.00435 per share.

      In March 2005, $30,000 principal amount of the debentures was converted
into 8,239,998 shares of our common stock at $0.0375 per share. For this
conversion, one party with a debenture in the principal amount of $5,000,
converted accrued interest and accrued liquidated damages totaling $900 into
240,000 shares of our common stock, which are included in the 8,239,998 shares
discussed above. None of the other conversions included accrued interest or
accrued debenture liquidated damages and the Company has retained these accruals
in the accompanying Financial Statements.

      As a result of the above conversions, $77,500 principal amount of the
convertible debentures is outstanding as of March 31, 2005 (See Subsequent
Events Note 9).

5. CONTINGENT RETURNABLE COMMON STOCK

      In October 2004, the Company issued 750,000 shares of common stock as
compensation to the Chief Executive Officer in his capacity as Chief Financial
Officer and director. The shares were issued as consideration of services past
and continuing and subject to substantial conditions constituting events of
forfeiture. Under conditions of the issuance, the officer was required to raise
capital in excess of $5,000,000 within 90 days following this issuance or
forfeit the shares. As of the date of these Financial Statements, the
requirement had not been met and the Company is commencing the process top have
the shares cancelled and returned. The shares were valued at $1.20 per share,
the fair market value on the grant date or $900,000. The Company anticipates
that these shares will be canceled and that the $900,000 of deferred
compensation recorded will be reversed at that time. Accordingly, the Company
has recorded the common stock and related deferred compensation as Contingent
Returnable Common Stock in the accompanying Balance Sheet as of March 31, 2005.
Additionally, the Company is in the process of canceling these shares, but as of
the date of these Financial Statements, the cancellation was not finalized. See
subsequent events note 9.


                                       15
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


6. STOCKHOLDERS' EQUITY

Capital Structure

      We are authorized to issue up to 500,000,000 shares of our common stock,
$0.001 par value per share, of which 97,033,561 shares were issued and
outstanding as of March 31, 2005. In September 2004, we completed a 1 for 100
reverse-split of the issued and outstanding shares of the common stock of the
Company while maintaining the amount of common stock shares we are authorized to
issue at 500,000,000. As a result of the 1 for 100 reverse-split, the number of
issued and outstanding shares was reduced from 474,253,389 to 4,742,534 after
the reverse-split In December 2004, we completed a 1 for 40 reverse-split of the
issued and outstanding shares of the common stock of the Company. In accordance
with SFAS 128, the Company applied the effect of the 1 for 40 reverse split from
the beginning of the year and as a result of the 1 for 40 reverse split, the
number of issued and outstanding shares was reduced from 4,742,534 to 118,563
after the reverse-split as of September 30, 2004.

      We are authorized to issue up to 100,000,000 shares of Preferred Stock,
$0.001 par value per share, of which 10,000,000 shares were issued and
outstanding as of March 31, 2005 (See Issuances of Preferred Stock below).


Issuances of Common Stock

      In November 2003, the Company issued 16,325 shares of common stock. 3,750
of the shares were issued as an annual bonus for the President of the Company
and were valued at $40.00 per share, the closing price on the grant date of
November 9, 2003 and are being amortized over the remaining life of the
employment agreement from October 1, 2003 through June 1, 2005 - see Deferred
Compensation below. 10,125 of the shares were issued for consulting services
provided to the Company and were valued at $40.00 per share, the closing share
price on the grant date of November 9, 2003 and are being amortized over the one
year term of the agreements - see Deferred Consulting below. The remaining 2,500
shares were issued for legal services provided to the Company and were valued at
$40.00 per share, the closing price on the grant date of November 9, 2003. The
agreement for services did not specify a term and can be terminated by either
party on a monthly basis. Accordingly, the Company has expensed the entire
amount and recorded $100,000 of legal expense in the accompanying Statements of
Operations for the period October 1, 2003 (inception of development stage) to
March 31, 2005.

      In connection with 750 of the 10,125 common shares issued for consulting
services as discussed above, the Company on November 17, 2003 committed to issue
two year warrants to purchase 750 of the Company's common shares at an exercise
price of $0.02 per share and two year warrants to purchase 750 of the Company's
common shares at an exercise price of $0.03 per share. As of September 30, 2004,
the warrants have not been issued to the consultant. The agreement contains a
provision however that the holders of such warrants shall not individually own
more than 4.9% of the total shares of the Company's outstanding shares.


                                       16
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


      In December 2003, the Company issued 2,850 shares of common stock. 2,350
of the shares were issued for legal services provided to the Company and were
valued at $48.00 per share, the closing share price on the grant date of
December 10, 2003. The resulting $112,800 was expensed as legal and professional
in the accompanying Statement of Operations. The remaining 500 shares were
issued for consulting services provided to the Company and were valued at $48.00
per share, the closing price on the grant date of December 10, 2003. The
resulting $24,000 was expensed as consulting in the accompanying Statements of
Operations.

      In January 2004, the Company issued 11,250 shares of common stock. 7,500
of the shares were issued for consulting services provided to the Company and
were valued at $0.026 per share, the closing share price on the grant date of
January 12, 2004. These shares were issued as a modification of the terms
related to the November 9, 2003 issuance of 10,125 shares (see Deferred
Consulting below) and this issuance of shares was subsequently modified as
discussed below. Accordingly, the Company has expensed the entire amount of the
7,500 shares issued and recorded $780,000 of consulting expense in the
accompanying Statement of Operations for the period October 1, 2003 (inception
of development stage) to December 31, 2004. The remaining 3,750 shares of the
11,250 shares issued were for legal services provided to the Company and were
valued at $0.026 per share, the closing price on the grant date of January 12,
2004. The agreement for services did not specify a term and can be terminated by
either party on a monthly basis. Accordingly, the Company has expensed the
entire amount and recorded $390,000 of legal expense in the accompanying
Statements of Operations for the period October 1, 2003 (inception of
development stage) to March 31, 2005.

      In February 2004, the Company issued 12,500 shares of common stock. 8,750
of the shares were issued for consulting services provided to the Company and
were valued at $104.00 per share, the closing share price on the grant date of
February 25, 2004. These shares were issued as a modification of the terms
related to the November 9, 2003 issuance of 10,125 shares (see Deferred
Consulting below) and the January 2004 issuance of 7,500 shares discussed above.
Accordingly, the Company has expensed the entire amount of the 8,750 shares
issued and recorded $700,000 of consulting expense in the accompanying Statement
of Operations for the period October 1, 2003 (inception of development stage) to
March 31, 2005. 2,500 shares of the 8,750 shares issued were for legal services
provided to the Company and were valued at $104.00 per share, the closing price
on the grant date of February 25, 2004. The agreement for services did not
specify a term and can be terminated by either party on a monthly basis.
Accordingly, the Company has expensed the entire amount and recorded $200,000 of
legal expense in the accompanying Statement of Operations for the period October
1, 2003 (inception of development stage) to March 31, 2005. The remaining 1,250
shares of the 8,750 shares issued were for new consulting services and were
valued at $104.00 per share, the closing share price on the grant date of
February 25, 2004 and are being amortized over the one year term of the
agreement - see Deferred Consulting below.

      In March 2004, the Company issued 16,250 shares of common stock (See
Common Stock Issuable below). 1,250 of the shares were issued as compensation
for the new CEO of the Company and were valued at $40.00 per share, the closing


                                       17
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


price on the grant date of March 15, 2004 and are being amortized over the term
of the employment agreement from March 15, 2004 through March 15, 2005 - see
Deferred Compensation below. 11,250 of the 16,250 shares issued were for
consulting services provided to the Company and were valued at $40.00 per share,
the closing share price on the grant date of March 15, 2004. These shares were
issued as the last modification of the terms related to the November 9, 2003
issuance of 10,125 shares (see Deferred Consulting below) and additional shares
issued as discussed above. Accordingly, the Company will amortize these shares
over the term of the agreements based upon the grant date of March 15, 2004
through March 15, 2005 - see Deferred Consulting below. 3,750 shares of the
16,250 shares issued were for legal services provided to the Company and were
valued at $40.00 per share, the closing price on the grant date of March 15,
2004. The agreement for services did not specify a term and can be terminated by
either party on a monthly basis. Accordingly, the Company has expensed the
entire amount and recorded $150,000 of legal expense in the accompanying
Statement of Operations for the period October 1, 2003 (inception of development
stage) to March 31, 2005.

      In April and May 2004, the Company issued 3,167 shares of Common Stock.
The shares were issued for the conversion of $67,500 of convertible debentures
at $24.7449 per share

      In April 2004, the Company issued 2,750 shares of Common Stock. The shares
were valued at $40.00 per share, the closing price on the grant date of April
12, 2004, and were issued to a consultant for the conversion of $54,999 of
accounts payable and $55,001 of additional consulting services provide to the
Company. The agreement for the additional consulting services was for a term of
three months and the Company has expensed the entire $55,001 as consulting
expense in the accompanying Statement of Operations for the period October 1,
2003 (inception of development stage) to March 31, 2005.

      In April 2004, the Company issued 10,625 shares of common stock. 3,750
shares of the 10,625 shares issued were for legal services provided to the
Company and were valued at $40.00 per share, the closing price on the grant date
of April 12, 2004. The agreement for services did not specify a term and can be
terminated by either party on a monthly basis. Accordingly, the Company has
expensed the entire amount and recorded $150,000 of legal expense in the
accompanying Statements of Operations. 5,250 of the 10,625 shares issued were
for consulting services provided to the Company and were valued at $40.00 per
share, the closing share price on the grant date of April 12, 2004.
Subsequently, additional shares were issued to the same consultants as a
modification of the agreements (see 14,000 shares issuance below). Accordingly,
the Company has expensed the entire amount of the 5,250 shares issued and
recorded $210,000 of consulting expense in the accompanying Statement of
Operations. 1,625 of the shares were issued as the last modification for two
consultants that were issued shares previously. Accordingly, the Company will
amortize these shares over the six month term of the agreements based upon the
grant date of April 19, 2004 through October 19, 2004 - see Deferred Consulting
below.


                                       18
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


      In April 2004, the Company issued 1,250 shares of Common Stock. In March
2004, the Company issued 16,250 shares of common stock as discussed above.
Subsequently, the Company determined that an error was made and 17,500 shares of
common stock should have been issued. The 1,250 shares were recorded as common
stock issuable at March 31, 2004 and were valued at $40.00 per share, the
closing price on the date of grant of the 16,250 shares discussed above and was
being amortized over the term of the agreement from March 15, 2004 through March
15, 2005. The Company recorded $50,000 of Deferred Consulting at March 31, 2004
and subsequently, additional shares were granted to this consultant as a
modification of the agreement for the 1,250 share issuance (see 14,000 share
issuance below) and the Company has expensed the remaining unamortized deferred
consulting balance - see Deferred Consulting below.

      In May 2004, the Company issued 14,000 shares of common stock. 1,050 of
the shares were issued as compensation for the new CEO of the Company and were
valued at $40.00 per share, the closing price on the grant date of March 7, 2004
and are being amortized over the term of the employment agreement from March 15,
2004 through March 15, 2005 - see Deferred Compensation below. 10,450 of the
14,000 shares issued were for consulting services provided to the Company and
were valued at $40.00 per share, the closing share price on the grant date of
May 7, 2004. These shares were issued as the last modification of the terms
related to previously issued shares to the consultants. Accordingly, the Company
will amortize these shares over the term of the agreements based upon the grant
date of May 7, 2004 through May 7, 2005 - see Deferred Consulting below. 2,500
of the 14,000 shares issued were for legal services provided to the Company and
were valued at $40.00 per share, the closing price on the grant date of May 7,
2004. The agreement for services did not specify a term and can be terminated by
either party on a monthly basis. Accordingly, the Company has expensed the
entire amount and recorded $150,000 of legal expense in the accompanying
Statement of Operations for the period October 1, 2003 (inception of development
stage) to March 31, 2005.


      In November 2004, the Company issued 25,000 shares of common stock as
compensation to the Chief Executive Officer and were issued as consideration of
services as Chief Executive Officer The shares were valued at $1.20 per share,
the fair market value on the grant date and $30,000 was recorded as deferred
compensation. The Company will amortize these shares over the term of the
agreement based upon the grant date of November 1, 2004 through October 31, 2005
- see Deferred Consulting below.

      In November 2004, the Company issued 650,000 shares of common stock.
250,000 shares of the 650,000 shares issued were for legal services provided to
the Company and were valued at $1.20 per share, the closing price on the grant
date of November 1, 2004. The agreement for services did not specify a term and
can be terminated by either party on a monthly basis. Accordingly, the Company
has expensed the entire amount and recorded $300,000 of legal expense in the
accompanying Statements of Operations. 250,000 of the 650,000 shares issued were
for consulting services provided to the Company and were valued at $1.20 per
share, the closing share price on the grant date of November 1, 2004. The


                                       19
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


250,000 shares were issued as a modification of an existing agreement and the
term of the existing agreement has expired without modification. Accordingly,
the Company has expensed the entire amount of the 250,000 shares and recorded
$300,000 of consulting expense in the accompanying Statement of Operations.
25,000 of the 650,000 shares issued were for consulting services provided to the
Company and were valued at $1.20 per share, the closing price on the grant date
of November 1, 2004. Subsequently, additional shares were issued to the same
consultants as a modification of the agreement (see 75,000 shares issuance
below). Accordingly, the Company has expensed the entire amount of the 25,000
shares issued and recorded $30,000 of consulting expense in the accompanying
Statement of Operations. 75,000 of the 650,000 shares were issued as a
modification for the consultant who received the 25,000 shares discussed above
and were valued at $1.20 per share, the closing price on the grant date of
November 1, 2004. The Company will amortize the 75,000 shares or $90,000 over
the term of the agreement based upon the grant date of November 1, 2004 through
October 1, 2005 - see Deferred Consulting below. The final 50,000 of the 650,000
shares were issued to a consultant for prior and new consulting services and
were valued at $1.20 per share, the closing price on the grant date of November
1, 2004. The prior services were valued at $25,404 and had been recorded
previously and included in Accounts Payable as of September 30, 2004. The
Company will amortize the 50,000 shares or $34,596 ($60,000 less $25,404 of
Accounts payable converted) over the term of the agreement based upon the grant
date of November 1, 2004 through May 15, 2005 - see Deferred Consulting below.


      In February 2005, the Company issued 43,000,000 shares of common stock.
17,500,000 shares of the 43,000,000 shares issued were for legal services
provided to the Company and were valued at $0.04 per share, the closing price on
the grant date of February 4, 2005. The agreement for services did not specify a
term and can be terminated by either party on a monthly basis. Accordingly, the
Company has expensed the entire amount and recorded $700,000 of legal expense in
the accompanying Statements of Operations. 12,500,000 of the 43,000,000 shares
issued were for consulting services provided to the Company and were valued at
$0.04 per share, the closing share price on the grant date of February 4, 2005.
The 12,500,000 shares were issued as a modification of an existing agreement and
the term of the existing agreement has expired without modification.
Accordingly, the Company has expensed the entire amount of the 12,500,000 shares
and recorded $500,000 of consulting expense in the accompanying Statement of
Operations. 7,000,000 of the 43,000,000 shares issued were for consulting
services provided to the Company and were valued at $0.04 per share, the closing
price on the grant date of February 4, 2005. Subsequently, additional shares
were issued to the same consultants as a modification of the agreement (see
45,000,000 shares issuance below). Accordingly, the Company has expensed the
entire amount of the 7,000,000 shares issued and recorded $280,000 of consulting
expense in the accompanying Statement of Operations. 6,000,000 of the 43,000,000
shares were issued as a modification for consultants who received shares
previously and were valued at $0.04 per share, the closing price on the grant
date of February 4, 2005. The Company will amortize the 6,000,000 shares or
$240,000 over the terms of the agreement based upon the grant date of February
4, 2005 through October 1, 2005 and


                                       20
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005



October 29, 2005, the original termination date for the shares issued previously
- see Deferred Consulting below.


      In March 2005, the Company issued 45,000,000 shares of common stock.
20,000,000 shares of the 45,000,000 shares issued were for legal services
provided to the Company and were valued at $0.02 per share, the closing price on
the grant date of March 3, 2005. The agreement for services did not specify a
term and can be terminated by either party on a monthly basis. Accordingly, the
Company has expensed the entire amount and recorded $400,000 of legal expense in
the accompanying Statements of Operations. 12,500,000 of the 45,000,000 shares
issued were for consulting services provided to the Company and were valued at
$0.02 per share, the closing share price on the grant date of March 3, 2005. The
12,500,000 shares were issued as a modification of an existing agreement and the
term of the existing agreement has expired without modification. Accordingly,
the Company has expensed the entire amount of the 12,500,000 shares and recorded
$250,000 of consulting expense in the accompanying Statement of Operations.
12,500,000 of the 45,000,000 shares were issued as a modification for
consultants who received shares previously and were valued at $0.02 per share,
the closing price on the grant date of March 3, 2005. The Company will amortize
the 12,500,000 shares or $250,000 over the terms of the agreement based upon the
grant date of March 3, 2005 through May 15, 2005 and February 3, 2006, the
original termination date for the shares issued previously - see Deferred
Consulting below.


      In March 2005, the Company issued 8,239,998 shares of Common Stock. The
shares were issued for the conversion of $30,000 of convertible debentures and
$900 of accrued interest and accrued liquidated debenture damages at $0.00375
per share.


      See Subsequent Events Note 9.

Issuances of Preferred Stock:

      On August 23, 2004, the Company sold 10,000,000 shares of newly designated
Series A Convertible Preferred Stock. The obligation to buy the Series A
Convertible Preferred Stock created by the Subscription Agreement was, on the
same date, exchanged for a promissory note executed by the buyer as maker and
the Company as holder. The promissory note is in the principal amount of
$100,000, bears interest at the rate of 2% per annum and will be paid in
installments. The first installment was due on October 15, 2004 in the amount of
$10,000 and thereafter installments of $7,500 plus accrued interest are due each
month with all principal and interest due to be paid on or before October 15,
2005.


      The first installment under a promissory note receivable held by the
Company was due on October 15, 2004 in the amount of $10,000. The Company did
not receive this payment. Additionally, installments of $7,500 plus accrued
interest are due each month with all principal and interest due to be paid on or
before October 15, 2005. The second through fifth installments due on the 15th


                                       21
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


day of November 2004, December 2004, January 2005, February 2005 and March 2005
in the amount of $7,500 each plus accrued interest were not received by the
Company either. See Subsequent Events Note 9.

      The Company has recorded $1,205 of accrued interest on the promissory note
through March 31, 2005 in the accompanying Financial Statements.


      Pursuant to the Designation Certificate, The Series A Convertible
Preferred Stock will have no preferences in the event of liquidation and has no
stated dividend rate or dividend preference. The newly designated Series A
Convertible Preferred Stock has voting rights equal to the equivalent of 100
shares of common stock for each 1 share of Series A Convertible Preferred held.
These voting rights are limited to the specific purpose of voting on a 100 to 1
reverse stock split of Registrant's issued and outstanding common stock, but not
the total authorized common capital stock, of the Registrant. Otherwise, the
Series A Preferred Convertible Stock has no voting rights on any matter. The
Series A Convertible Preferred Stock is convertible into the common stock of
Registrant at the option of Registrant at a rate calculated to grant all holders
of the Series A Convertible Preferred Stock 5% of Registrant's common stock then
outstanding.


      In accordance with EITF Issue 98-5, as amended by EITF Issue 00-27, the
Company has evaluated that the convertible preferred stock discussed above does
not have a beneficial conversion feature as the preferred stock is not
convertible at the option of the holder and is therefore not deemed convertible
preferred stock for evaluation of the beneficial conversion.

Deferred Compensation

      On September 30, 2003, the Company authorized the issuance of 18,750
shares of common stock as compensation for the former President in accordance
with an amendment to the employment agreement. However, the transfer agent did
not issue the shares until October 15, 2003 and accordingly; such shares were
classified as common stock issuable in the balance sheet at September 30, 2003.
On October 15, 2003, the transfer agent issued these shares and they have been
properly reclassified as common stock in 2004. Of the 18,750 shares, 1,087 were
issued to settle $50,000 of accrued and unpaid salary for the former President
through September 30, 2003. In accordance with the amended employment agreement,
these shares were valued based upon a thirty percent (30%) discount to the
average stock price for the month of September or $48.00 per share. There was no
loss on settlement recorded since this was a related party transaction. The
remaining 17,663 shares were valued based upon the closing price on September
30, 2003, or $100.00 per share and the resulting $1,766,304 balance was recorded
as Deferred Compensation in the balance sheet at September 30, 2003. The
deferred compensation balance was being amortized over the remaining life of the
employment agreement from October 1, 2003 through June 1, 2005. For the three
months ended December 31, 2003, $264,946 was amortized and recorded as
compensation in the accompanying Statements of Operations (See below for
subsequent write-off).


                                       22
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


      On November 9, 2003, the Company authorized the issuance of 3,750 shares
of common stock as compensation for the former President in accordance with an
amendment to the employment agreement. The shares were valued based upon the
closing price on the grant date of November 9, 2003, or $40.00 per share and the
resulting $150,000 was recorded as Deferred Compensation. The deferred
compensation balance was being amortized over the remaining life of the
employment agreement from November 9, 2003 through June 1, 2005. For the three
months ended December 31, 2003, $22,500 was amortized and recorded as
compensation in the accompanying Statements of Operations (See below for
subsequent write-off).

      On March 15, 2004, the President of the Company resigned from his
position. Accordingly, the Company has expensed the remaining balance of the
deferred compensation for the two issuances discussed above and recorded
$1,628,858 of compensation in the accompanying Statement of Operations.

      On March 15, 2004, the Company authorized the issuance of 1,250 shares as
compensation for the new CEO of the Company. The shares were valued at $40.00
per share, the closing price on the grant date of March 15, 2004 and are being
amortized over the term of the employment agreement from March 15, 2004 through
March 15, 2005. Accordingly, the Company has recorded Deferred Compensation in
the amount of $50,000 on the grant date of March 15, 2004 and all of the balance
has been amortized and recorded as compensation in the accompanying Statement of
Operations.

      On May 7, 2004, the Company authorized the issuance of 1,050 shares as
compensation for the new CEO of the Company. The shares were valued at $40.00
per share, the closing price on the grant date of May 7, 2004 and are being
amortized over the term of the employment agreement from March 15, 2004 through
March 15, 2005. Accordingly, the Company has recorded Deferred Compensation in
the amount of $42,000 on the grant date of May 7, 2004 and all of the balance
has been amortized and recorded as compensation in the accompanying Statement of
Operations.

Deferred Consulting

      On November 9, 2003, the Company authorized the issuance of 10,125 shares
of common stock for consulting services provided to the Company and was valued
at $40.00 per share, the closing share price on the grant date of November 9,
2003 and the resulting $405,000 was recorded as Deferred Compensation. The
deferred compensation balance is being amortized over the one-year term of the
agreements through November 9, 2004 and for the three months ended December 31,
2003, $57,699 was amortized and recorded as consulting expense in the
accompanying Statements of Operations. As a result of the issuance of additional
shares to the consultants as discussed below, in May 2004, the entire remaining
Deferred Consulting balance in the amount of $347,301 was expensed by the
Company and recorded as consulting expense in the accompanying Statement of
Operations.

      In February 2004, the Company issued 1,250 shares of common stock for new
consulting services. The shares were valued at $80.00 per share, the closing
share price on the grant date of February 25, 2004 and are being amortized over


                                       23
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


the one-year term of the agreement. Accordingly, the Company recorded $100,000
of Deferred Consulting on the grant date of February 25, 2004 and has been
amortized and recorded as consulting expense in the accompanying Statement of
Operations.

      In April 2004, the Company issued 11,250 shares of common stock for
consulting services as a modification of the November 9, 2003 and subsequent
issuances as discussed previously under Issuances of Common Stock. The shares
were valued at $40.00 per share, the closing share price on the grant date of
March 15, 2004 and are being amortized over the one-year term of the agreement
from the grant date of March 15, 2004. Accordingly, the Company recorded
$450,000 of Deferred Consulting on the grant date of March 15, 2004 and the
balance has been amortized and recorded as consulting expense in the
accompanying Statement of Operations.

      In March 2004, the Company issued 16,250 shares of common stock as
discussed above. Subsequently, the Company determined that an error was made and
17,500 shares of common stock should have been issued. The 1,250 shares are for
new consulting services and the Company recorded the 1,250 shares as common
stock issuable at March 31, 2004. In April 2004, the 1,250 shares were issued by
the transfer agent and reclassed from Common Stock Issuable to Common Stock. The
shares were valued at $40.00 per share, the closing price on the date of grant
of the 16,250 shares discussed above and was being amortized over the term of
the agreement from March 15, 2004 through March 15, 2005. Accordingly, the
Company recorded $500,000 of Deferred Consulting on the grant date of March 15,
2004 and the balance has been amortized and recorded as consulting expense in
the accompanying Statement of Operations.

      In April 2004, the Company issued 1,625 shares of common stock as the last
modification for two consultants that were issued shares previously. The Company
is amortizing these shares over the six month term of the agreements based upon
the grant date of April 19, 2004 through October 19, 2004. Accordingly, the
Company recorded $65,000 of Deferred Consulting on the grant date of April 12,
2004 and the balance has been amortized and recorded as consulting expense in
the accompanying Statement of Operations.

      In April 2004, the Company issued 10,450 shares of common stock as the
last modification for several consultants that were issued shares previously.
The Company will amortize these shares over the one year term of the agreements
based upon the grant date of May 7, 2004 through May 7, 2005. Accordingly, the
Company recorded $418,000 of Deferred Consulting on the grant date of May 7,
2004 and the balance has been amortized and recorded as consulting expense in
the accompanying Statement of Operations.


      In November 2004, the Company issued 75,000 shares as a modification for a
consultant and valued at $1.20 per share, the closing price on the grant date of
November 1, 2004. The Company will amortize the 75,000 shares or $90,000 over
the term of the agreement based upon the grant date of November 1, 2004 through


                                       24
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


      October 1, 2005. Accordingly, the Company recorded $90,000 of Deferred
Consulting on the grant date of November 1, 2004. Subsequently, additional
shares of common stock were issued to the consultant and the entire balance has
been amortized and recorded as consulting expense in the accompanying Statement
of Operations.


      In November 2004, the Company issued 50,000 shares to a consultant for
prior and new consulting services and valued at $1.20 per share, the closing
price on the grant date of November 1, 2004. The prior services were valued at
$25,404 and had been recorded previously and included in Accounts Payable as of
September 30, 2004. The Company will amortize the 50,000 shares or $34,596
(60,000 less $25,404 of Accounts payable converted) over the term of the
agreement based upon the grant date of November 1, 2004 through May 15, 2005.
Subsequently, additional shares of common stock were issued to the consultant
and the entire balance has been amortized and recorded as consulting expense in
the accompanying Statement of Operations.


      In February 2005, the Company issued 6,000,000 shares to two consultants
as a modification of their agreements and valued at $0.04 per share, the closing
price on the grant date of February 4, 2005. The Company will amortize the
6,000,000 shares or $240,000 over the terms of the agreement based upon the
grant date of February 4, 2005 through October 1, 2005 and October 29, 2005, the
original termination date for the shares issued previously. Accordingly, the
Company recorded $240,000 of Deferred Consulting on the grant date of February
4, 2005 and $54,265 of the balance has been amortized and recorded as consulting
expense in the accompanying Statement of Operations.


      In March 2005, the Company issued 12,500,000 shares to three consultants
as a modification of their agreements and valued at $0.02 per share, the closing
price on the grant date of March 3, 2005. The Company will amortize the
12,500,000 shares or $250,000 over the terms of the agreement based upon the
grant date of March 3, 2005 through May 15, 2005 and February 3, 2006, the
original termination date for the shares issued previously - see Deferred
Consulting below. Accordingly, the Company recorded $250,000 of Deferred
Consulting on the grant date of March 3, 2005 and $37,589 of the balance has
been amortized and recorded as consulting expense in the accompanying Statement
of Operations.


      In March 2005, the Company issued 8,239,998 shares of Common Stock. The
shares were issued for the conversion of $30,000 of convertible debentures and
$900 of accrued interest and accrued liquidated debenture damages at $0.0375 per
share.

Stock Based Compensation Plans

      On September 29, 2003, the Company adopted a stock based compensation plan
for 5,000,000 shares of common stock for which stock options, restricted stock
and common stock may be granted from time to time to employees and consultants
of the Company in lieu of cash. Under this plan, the Company issued 2,000,000


                                       25
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005

shares of common stock into escrow for a pending merger. The merger was
terminated and the shares were subsequently cancelled. On October 3, 2003, the
Company adopted a stock based compensation plan for 10,000,000 shares of common
stock for which stock options, restricted stock and common stock may be granted
from time to time to employees and consultants of the Company in lieu of cash.
Under this plan, the Company issued 2,350 shares of common stock into escrow for
a pending merger. The merger was terminated and the shares were subsequently
cancelled.

Options

      In April 2000, the Company adopted the Nannaco 2000 Stock Option Plan (the
"2000 Plan"). The purpose of the 2000 Plan is to advance the business and
development of the Company and its shareholders by affording to the employees,
directors and officers of the Company the opportunity to acquire a proprietary
interest in the Company by the grant of Options to such persons under the 2000
Plan's terms. The 2000 Plan reserved 5,000,000 shares for grant or issuance upon
the exercise of options granted under the plan. Stock Options under the Plan may
be granted by the Board of Directors or a Compensation Committee of the Board of
Directors. The exercise prices for Options granted will be at the fair market
value of the common stock at the time of the grant if a public market develops
for the common stock or not less than the most recent price at which the Company
had sold its common stock.


                                       26
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005


The following table summarizes activity related to options:

                              Number of Shares Weighted Average

Balance at September 30, 2003           40,000   $         1.00
  Granted ...................                0                0
  Exercised .................                0                0
  Forfeited .................          (40,000)            1.00
                                --------------   --------------
Balance at March 31, 2005 ...                0   $         1.00
                                ==============   ==============

      All options to purchase our common stock have been issued with exercise
prices equal to or greater than fair market value on the date of issuance. All
options previously granted, if any, have expired by their terms, unexercised.

The terms of options to purchase our common stock are summarized below:

<TABLE>
<CAPTION>
----------------------------Options Outstanding---------------------------------    ------Options Exercisable------

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


                                                  Weighted                                             Weighted
                                Number            Average           Weighted           Number          Average
                            Outstanding at       Remaining          Average        Exercisable at      Exercise
Range of Exercise Prices     Mar. 31, 2005    Contractual Life   Exercise Price     Mar. 31, 2005       Price
------------------------- ------------------- ----------------- ----------------- ------------------ -------------
<S>                        <C>                <C>                <C>              <C>                <C>
          $1.00                   0              .58 Years            1.00                0             $1.00
          =====                   =              =========            ====                =             =====
</TABLE>
Compensation Expense for Options Granted to Employees, Officers and Directors

      Had compensation cost for our stock options not been determined consistent
with SFAS 123, the Company's net loss per share would not have changed.


7. COMMITMENTS AND CONTINGENCIES

      From time to time we may become subject to proceedings, lawsuits and other
claims in the ordinary course of business including proceedings related to
environmental and other matters. Such matters are subject to many uncertainties,
and outcomes are not predictable with assurance.

      On June 14, 2002, Wyndham Hotel Corporation obtained a summary judgment
against Nannaco in the amount of $42,308, representing $32,045 of unpaid charges
plus $10,263 of legal fees. The Company does not have sufficient resources to
pay the judgment and interest accrued at a rate of ten percent (10%) until paid


                                       27
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005

in full. At March 31, 2005, the total amount due is $55,226 (including $12,918
of accrued interest) and is included under the caption Judgment Payable in the
accompanying Financial Statements.

      The Company has not made timely payments of Federal payroll taxes and has
not remitted payments under an executed installment agreement with the IRS. At
March 31, 2005, the Company has recorded $270,789 in the accompanying Balance
Sheet for the estimated amount due (including accrued interest and penalties).
As a result, the IRS could attach a lien against the Company's assets and bank
accounts to protect their claim.


      On July 1, 2002, the Company relocated its facility and had a single
month-to-month operating lease agreement for the business office located in San
Antonio, Texas. There was no restriction on our activities concerning dividends,
additional debt or further leasing. In 2004, the Company closed this facility
and moved the business office from San Antonio, Texas to Gig Harbor, Washington.
We currently do not have a lease and we are not paying rent for our office
space. It is being provided to the Company by an officer/director free of charge
(See Note 8 - Related Party Transactions). Usage of this office space and the
related value is de minimis. Therefore, no expense has been recorded in the
accompanying Financial Statements. We expect we will have to lease more
substantial office in the near future and that the cost of the space may be
material to our operations.


8. RELATED PARTY TRANSACTIONS

      Beginning in January of 2001 and through July of 2001, a director of the
Company, loaned $43,700 to the Company in the form of a promissory note. The
note bears interest at ten percent (10%) per annum and the principal and accrued
interest was due one year from each of the investments. In April 2003, the
Company repaid $1,000 of principal resulting in the current balance due of
$42,700 at March 31, 2005.

      At September 30, 2004, the same director discussed above was owed $25,092
in accrued compensation related to legal services provided to the Company and
has been classified as accrued compensation - related party in the accompanying
Balance Sheet at March 31, 2005.

      From October through December of 2003, the father of the Company's
President advanced $26,500 of funds to the Company and this has been classified
as other current liabilities in the accompanying Balance Sheet at March 31,
2005.


      We currently do not have a lease and we are not paying rent for our office
space. It is being provided to the Company by an officer/director free of charge
(See Note 7 - Commitments and Contingencies). Usage of this office space and the
related value is de minimis. Therefore, no expense has been recorded in the
accompanying Financial Statements. We expect we will have to lease more
substantial office in the near future and that the cost of the space may be
material to our operations.


                                       28
<PAGE>

                                  Nannaco, Inc.
                          (a development stage company)
                          Notes to Financial Statements
                                  (unaudited)
                                 March 31, 2005

9. SUBSEQUENT EVENTS

      In April 2005, $15,000 principal amount of the debentures was converted
into 3,999,999 shares of our common stock at $0.00375 per share. As a result of
the above conversions, $62,500 principal amount of the convertible debentures is
outstanding after the conversion.

      In April 2005, the Company issued 65,000,000 shares of its 0.001 par value
common stock for legal and consulting services. The shares were valued at $0.007
per share, the market price of the common stock on the date of grant. The
Company will record legal and consulting expense in the amount of $455,000.

      In April 2005, the Company cancelled 750,000 shares of common stock that
was issued as compensation to the Chief Executive Officer in his capacity as
Chief Financial Officer and director. The shares had been issued as
consideration of services past and continuing and subject to substantial
conditions constituting events of forfeiture. Under conditions of the issuance,
the officer was required to raise capital in excess of $5,000,000 within 90 days
following issuance or forfeit the shares and the requirement was not met. The
shares had been valued at $1.20 per share, the fair market value on the grant
date or $900,000, and recorded as Contingent Returnable Common Stock, which will
be reversed by the Company.

      In April 2005, the Company determined that a promissory note from the sale
of 10,000,000 shares of Series A Convertible Preferred Stock in August 2004 was
deemed to be unenforceable and uncollectible. The promissory note was in the
principal amount of $100,000, bears interest at the rate of 2% per annum and was
to be paid in monthly installments, for which none were ever paid.

      The Company will reverse the previously recorded $100,000 principal amount
of the promissory note and the offset will be the cancellation of the 10,000,000
shares of Series A Convertible Preferred Stock. Additionally, the Company will
reverse $1,205 of accrued interest recorded on the promissory note.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The following is a discussion of our financial condition, results of operations,
liquidity and capital resources. This discussion should be read in conjunction
with our audited financial statements and the notes thereto included elsewhere
in our Form 10-KSB for the year ended September 30, 2004 and 2003.

Some of the statements under "Description of Business," "Risk Factors,"
"Management's Discussion and Analysis or Plan of Operation," and elsewhere in
this Report and in the Company's periodic filings with the Securities and
Exchange Commission constitute forward-looking statements. These statements
involve known and unknown risks, significant uncertainties and other factors
what may cause actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by such forward- looking
statements. Such factors include, among other things, those listed under "Risk
Factors" and elsewhere in this Report.

In some cases, you can identify forward-looking statements by terminology such
as "may," "will," "should," "could," "intends," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of such terms or other comparable terminology.

The forward-looking statements herein are based on current expectations that
involve a number of risks and uncertainties. Such forward-looking statements are
based on assumptions that the Company will obtain or have access to adequate
financing for each successive phase of its growth, that there will be no
material adverse competitive or technological change in condition of the
Company's business, that the Company's President and other significant employees
will remain employed as such by the Company, and that there will be no material
adverse change in the Company's operations, business or governmental regulation
affecting the Company. The foregoing assumptions are based on judgments with
respect to, among other things, further economic, competitive and market
conditions, and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the Company's
control.

Although management believes that the expectations reflected in the
forward-looking statements are reasonable, management cannot guarantee future


                                       29
<PAGE>

results, levels of activity, performance or achievements. Moreover, neither
management nor any other persons assumes responsibility for the accuracy and
completeness of such statements.


GENERAL

Nannaco, Inc. ("Nannaco", "the Company", "we", "us") was incorporated under the
laws of the State of Texas on October 20, 1998, and immediately thereafter began
operations. The Company's shares began trading on September 5, 2002 on the
OTCBB. The Company previously provided surface cleaning, surface protection,
surface restoration, and other services to commercial businesses, as well to the
owners of historical buildings. The Company previously operated under the trade
name of Surface Pro.

Until September 2003, Nannaco focused on surface cleaning, surface protection
and restoration. However, sales from these products were not sufficient to
enable the company to continue operations. In September 2003, the Company
changed its strategy due to poor operating conditions and financial results
coupled with difficulties in raising capital through debt and equity sources.
The Company adopted a new strategy during the fourth quarter of 2003 that
committed to the disposal of its current business and to seek a
merger/acquisition transaction with a Company having better financial resources.
As of September of 2003, the Company ceased all operating activities and has
disposed of most of its assets. The Company has entered a new development phase,
while formulating a plan to improve its financial position.

OVERVIEW OF COMPANY.

Since its inception, the Company has suffered recurring losses from operations
and has been dependent on existing stockholders and new investors to provide
cash resources to sustain its operations. During the six months ended March 31,
2005 and 2004, the Company reported net losses of $3,431,772 and $4,974,183
respectively.

The Company's long-term viability as a going concern is dependent on certain key
factors, as follows:

     -   The Company's ability to continue to obtain vital professional services
         in exchange for the issuance by the Company of registered and
         unregistered capital stock and cash payments for required services;

     -   The Company's ability to find a suitable merger or acquisition
         candidate that can increase profitability and sustain a cash flow level
         that will ensure support for continuing operations.

Our Twelve Month Operating Plan

Our business has evolved over the past several months to providing services,
either directly or through our advisers, consultants and other professionals, to
private companies interested in securing needed capital for their growth and
development and that perceive that becoming publicly traded companies in the
United States aids in securing capital.

We specialize in the acquisition and sale of small private companies and we may
maintain ownership interests in these companies for the benefit of our
shareholders. We give our client companies critical guidance and advice about


                                       30
<PAGE>

conducting due diligence, valuation analysis, and strategic positioning in
negotiations with providers of capital. Ultimately, we lend strategic support to
assist growing enterprises in setting and meeting strategic and financial
objectives.

In the next twelve months we will continue to seek out, receive, evaluate and
pursue to fruition opportunities to assist in securing financing through merger
or acquisition of private companies we believe have the potential to benefit
from being publicly traded companies. Companies we believe that have such
potential are companies with proprietary technology or information that
differentiates their products from those of their competitors and who have a
short path to cash flow or profitability.

We have not generated revenues from any source for several calendar quarters. We
expect to generate revenues from operations in the next twelve months through
our merger, acquisition and financing activities but cannot reasonably estimate
the level of revenues to be generated, if any are generated at all. We estimate
that our primary operating expense is the cost of remaining in compliance with
the Securities Exchange Act of 1934: an expense we estimate at $75,000 to
$125,000 per fiscal year. Our effort at capital raising is a transaction
intensive exercise. Additionally, the operations of the company are law
intensive and require legal services at higher levels. Finally, we rely heavily
on the services of outside advisers, consultants and other professionals to
supply us with business opportunities, the means to evaluate such opportunities,
and the skills to advance the acquisition process. The fees associated with such
processes are high and, since we have no revenues and no capital, we plan to
continue to pay certain of our advisers, consultants and other professionals by
issuing registered common stock in payment for their needed services. Over the
last twelve months we have been presented the opportunity to acquire several
companies that, after completion of our due diligence process, were rejected as
merger or acquisition candidates. We will continue to assess the merits of a
proposed merger or acquisition considering the best interests of our
shareholders.

Otherwise, we believe that there is no other immediate need for cash absent a
merger or acquisition transaction. To the extent cash is required to pay
expenses, including audit expenses which cannot be paid for by issuing common
stock to the independent registered public accounting firm, we will continue to
rely on short-term advances and loans from consultants, advisers and other
professional service providers which advances and loans are provided on an ad
hoc basis and may not be forthcoming in the next twelve months.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.


RECENT DEVELOPMENTS

In February 2005, the Company issued 43,000,000 shares of its 0.001 par value
common stock for legal and consulting services. The shares were valued at $0.04
per share, the market price of the common stock on the date of grant.

In March 2005, the Company issued 45,000,000 shares of its 0.001 par value
common stock for legal and consulting services. The shares were valued at $0.02
per share, the market price of the common stock on the date of grant.


                                       31
<PAGE>

In March 2005, the Company issued 8,239,998 shares of its 0.001 par value common
stock for the conversion of $30,000 of convertible debentures and $900 of
accrued interest and accrued debenture liquidated damages, at a conversion rate
of $0.00375 per share.

In April 2005, the Company issued 3,999,999 shares of its 0.001 par value common
stock for the conversion of $15,000 principal amount of convertible debentures
at a conversion rate of $0.00375 per share.

In April 2005, the Company issued 65,000,000 shares of its 0.001 par value
common stock for legal and consulting services. The shares were valued at $0.007
per share, the market price of the common stock on the date of grant.


GOING CONCERN

The independent registered public accounting firm's report to our financial
statements for the years ended September 30, 2004 and September 30, 2003,
include an emphasis paragraph in addition to their audit opinion stating that
the Company's recurring losses from operations including a net loss in 2004 of
$6,400,107, working capital deficit of $840,706 at September 30, 2004,
accumulated deficit from prior business operations and deficit accumulated
during the development stage at September 30, 2004 of $5,048,764 and $6,400,107,
respectively, and substantial obligations and default on convertible debentures
with no current resources to satisfy the obligations raise substantial doubt
about our ability to continue as a going concern. Our financial statements do
not include any adjustments to reflect the possible effects on recoverability
and classification of assets or the amounts and classification of liabilities
that may result from our inability to continue as a going concern.

VALUATION OF NON-CASH ISSUANCES OF COMMON STOCK

The Company issued common stock to several parties in non-cash transactions
during the six months ending March 31, 2005. For the majority of these
issuances, valuation was determined based upon the stock closing price on the
date of issuance.

VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS

In assessing the recoverability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will be realized. Net operating loss carry-forwards aggregate
approximately $2,819,000 and expire in the years through 2023.

As of October 1, 2003 the Company changed its strategy and moved into a new line
of business. As a result of this change, under IRS rules, approximately
$2,537,000 of the net operating loss carry-forward, through September 30, 2003
discussed above will not be allowable.

RESULTS OF OPERATIONS


Financial Analysis of the Six and Three Months Ended March 31, 2005 and 2004


<TABLE>
<CAPTION>
                                               Six Months Ended             Three Months Ended
                                                  March  31,                     March  31,
                                            2005            2004            2005            2004
                                        ------------    ------------    ------------    ------------
<S>                                     <C>             <C>             <C>             <C>
REVENUES FROM DISCONTINUED OPERATIONS   $         --    $     15,577    $         --    $         --

COST OF REVENUES                                  --          16,848              --           3,715
                                        ------------    ------------    ------------    ------------
GROSS LOSS                                        --          (1,271)             --          (3,715)

OPERATING EXPENSES:
Selling, general and administrative               --          15,220              --          (1,991)

Compensation and payroll taxes                57,097       1,983,397          21,507       1,637,032

Consulting                                 1,912,255       1,946,042       1,312,883       1,857,543

Legal and professional                     1,405,000         984,894       1,100,000         769,594

Rent                                              --           1,495              --              --

Travel and entertainment                          --           3,726              --           2,445

Debenture liquidated damages                  48,603          24,500          10,400           3,500

Bad debt expense                                  --           1,171              --           1,171
                                        ------------    ------------    ------------    ------------

TOTAL OPERATING EXPENSES                   3,422,955       4,960,445       2,444,790       4,269,295
                                        ------------    ------------    ------------    ------------


LOSS FROM OPERATIONS                      (3,422,955)     (4,961,716)     (2,444,790)     (4,273,009)

OTHER INCOME (EXPENSE):
Interest expense, net                         (8,817)        (12,467)         (4,100)         (6,234)
                                        ------------    ------------    ------------    ------------
TOTAL OTHER INCOME (EXPENSE)                  (8,817)        (12,467)         (4,100)         (6,234)
                                        ------------    ------------    ------------    ------------


NET LOSS                                $ (3,431,772)   $ (4,974,183)   $ (2,448,890)   $ (4,279,244)
                                        ============    ============    ============    ============
</TABLE>


Six Months Ended March 31, 2005

Revenues:

Operating revenue decreased $15,577, or 100%, to zero for 2005 from $15,577 for
2004. The Company adopting a new strategy during the fourth quarter of 2003 that
committed to the disposal of its current business and to seek a


                                       32
<PAGE>

merger/acquisition transaction with a Company having better financial resources.
As of September of 2003, the Company ceased all operating activities and has
disposed of most of its assets. The Company has entered a new development phase,
while formulating a plan to improve its financial position.

Cost of Sales:

Cost of sales decreased $16,848, or 100%, to zero for 2005 from $16,848 for
2004. The Company adopting a new strategy during the fourth quarter of 2003 that
committed to the disposal of its current business and to seek a
merger/acquisition transaction with a company having better financial resources.
As of September of 2003, the Company ceased all operating activities and has
disposed of most of its assets. The Company has entered a new development phase,
while formulating a plan to improve its financial position.

Operating Expenses:

Operating expenses decreased $1,537,490, or 31%, to $3,422,955 for 2005 from
$4,960,445 for 2004. The decrease was primarily the result of a $1,926,300
decrease in compensation, offset by a $420,106 increase in legal and
professional. The decrease in compensation was primarily the result of a
decrease in the issuance of stock for compensation in 2005 versus 2004. The
increase in legal and professional was primarily the result of an increase in
the issuance of stock for legal and professional in 2005 versus 2004.

Other Expense:

Other expense decreased $3,650, or 29% to $8,817 for 2005 from $12,467 for 2004.
The decrease was primarily from a decrease in interest expense as a result of
less convertible debentures outstanding in 2005 as compared to 2004.

Three Months Ended March 31, 2005

Revenues:

There was no operating revenue for either 2005 or 2004. The Company adopting a
new strategy during the fourth quarter of 2003 that committed to the disposal of
its current business and to seek a merger/acquisition transaction with a Company
having better financial resources. As of September of 2003, the Company ceased
all operating activities and has disposed of most of its assets. The Company has
entered a new development phase, while formulating a plan to improve its
financial position.

Cost of Sales:

There was no cost of sales for either 2005 or 2004. The Company adopting a new
strategy during the fourth quarter of 2003 that committed to the disposal of its
current business and to seek a merger/acquisition transaction with a company
having better financial resources. As of September of 2003, the Company ceased
all operating activities and has disposed of most of its assets. The Company has
entered a new development phase, while formulating a plan to improve its
financial position.

Operating Expenses:

Operating expenses decreased $1,824,505, or 31%, to $2,444,790 for 2005 from
$4,269,295 for 2004. The decrease was primarily the result of a $1,615,525
decrease in compensation and a $544,660 decrease in consulting, offset by a


                                       33
<PAGE>

$330,406 increase in legal and professional. The decrease in compensation and
consulting was primarily the result of a decrease in the issuance of stock for
compensation and consulting in 2005 versus 2004. The increase in legal and
professional was primarily the result of an increase in the issuance of stock
for legal and professional in 2005 versus 2004.

Other Expense:

Other expense decreased $2,134, or 34% to $4,100 for 2005 from $6,234 for 2004.
The decrease was primarily from a decrease in interest expense as a result of
less convertible debentures outstanding in 2005 as compared to 2004.

Liquidity and Capital Resources

Cash and cash equivalents were $0 at March 31, 2005 as compared to $0 at
September 30, 2004, and working capital deficit was $860,900 at March 31, 2005
as compared to $840,706 at September 30, 2004. The increase in the working
capital deficit was primarily due to a $48,603 increase in other current
liabilities as a result of accrued liquidated damages for convertible
debentures, offset by a $30,000 decrease in the principal amount of convertible
debentures.

Operating Activities:

Cash used in operating activities was $0 for both 2005 and 2004 as a result of
the Company having no cash balances outstanding for either period.

Investing Activities:

There were no investing activities for both 2005 and 2004 as a result of the
Company having no cash balances outstanding for either period.

Financing Activities:

There were no financing activities for both 2005 and 2004 as a result of the
Company having no cash balances outstanding for either period.

Short-Term Debt

Our short-term debt at March 31, 2005 consisted of the following:

Bank Loans

<TABLE>
<CAPTION>
<S>                                                                                                 <C>
$35,000 bank installment loan, dated Feb. 19, 2000, bearing interest at 10% per
  annum, 60 monthly payments of principal and interest..............................                $  25,350

$35,000 bank line of credit, bearing interest at prime plus 1.25% per annum,
  interest payable monthly and line of credit due July 15,
  2002..............................................................................                   33,986
                                                                                                    ---------
                                                                                                    $  59,336
                                                                                                    =========
</TABLE>

On February 19, 2000, we obtained a bank installment loan in the amount of
$35,000, of which $25,350 is outstanding at September 30, 2003. The interest
rate is 10% per annum and sixty monthly payments of principal and interest in
the amount of $745 are required. This note is secured by the personal guaranty
of the Company's former President.


                                       34
<PAGE>

At March 31, 2005, we had a bank line of credit, which provides for borrowings
of up to $35,000, of which $33,986 was outstanding. The interest rate is Prime
plus 1.25% per annum and monthly interest payments were required. The line of
credit matured on July 15, 2002 but the bank has not exercised its rights of
default and the facility was on a month-to-month basis. The line of credit is
secured by a personal guaranty of the Company's former President.

Loan Payable - Related Party

Loan payable, dated January through July of 2001, bearing interest at 10% per
  annum and due in July of
  2002.......................................................    $  42,700
                                                                 =========

Beginning in January of 2001 and through July of 2001, Mark Triesch, a director
Of the Company, loaned $43,700 to the Company in the form of a promissory note.
The note bears interest at ten percent (10%) per annum and the principal and
accrued interest was due one year from each of the investments. As of July 2002,
the entire amount was due and payable. In April 2003, the Company repaid $1,000
of principal resulting in the current balance due of $42,700.

Convertible Debentures

$175,000 Convertible Debentures, dated March and April of 2003, bearing interest
  at 6% per annum and due in March and April of 2006.........    $  77,500
                                                                 =========

Pursuant to Securities Purchase Agreements, Convertible Debentures and related
contracts, in March of 2003, the Company issued $155,000 of six percent (6%)
convertible debentures due in March of 2006 and in April issued another $20,000
of the debentures due in April 2006. The Company received $122,100 of cash
proceeds, net of $52,900 of cash offering costs. The debenture holder has the
option of converting the principal and accrued interest into the Company's
common stock at a conversion price equal to seventy-five percent (75%) of the
lowest closing bid price per share for the twenty (20) trading days immediately
preceding the conversion. The Company has the option to redeem all or part of
the debentures prior to the maturity date at a price equal to one hundred thirty
percent (130%) of the principal amount plus accrued interest.

The Company recognized an immediate $58,333 interest expense and paid-in capital
relating to a beneficial conversion feature inherent in the debentures since the
debentures were immediately convertible. In connection with the offering, in
addition to cash offering costs of $52,900, the Company issued 500,000 of its
common shares to the investment bankers. The shares were valued on the grant
date at the trading price of $0.03 per share or $12,500. The total offering
costs of $65,400 were initially deferred to be amortized over the term of the
debentures, however due to a default provision which changed the debentures
maturity to due on demand (see below); the $65,400 was fully expensed as of
September 30, 2003.

Under a related Registration Rights Agreement, the Company is subject to a 2%
monthly liquidated damages penalty for not filing a registration statement with
the Securities and Exchange Commission, within a stipulated timeframe, to
register the common shares underlying the convertible debentures and another 2%
monthly liquidated damages penalty relating to that registration statement not
becoming effective within a stipulated timeframe. The liquidated damages penalty
started accruing at 2% or $3,500 per month at June 1, 2003 and at another 2% or
$3,500 per month starting September 1, 2003. The penalties for June and July


                                       35
<PAGE>

2003 were satisfied with the issuance of 350,000 of the Company's common shares
to the debenture investors and remaining accrued liquidated damages were $10,500
at September 30, 2003. The Company recognized a $1,750 gain on the settlement of
$7,000 of accrued liquidated damages in June and July 2003 based on the $0.015
trading price of the common stock on the settlement date. For the three-month
period ended December 31, 2003, the Company recorded an additional $24,500 of
liquidated damages expense resulting in an accrued balance of $35,000. Effective
March 31, 2004, the Company reached an agreement with the debenture investors
and all outstanding penalties in the amount of $35,000 were satisfied with the
issuance of 438 of the Company's common shares based on a $0.02 trading price of
the common stock on the settlement date. For the period from April 1, 2004
through March 31, 2005, the Company has recorded an additional $50,843 of
liquidated damages resulting in an accrued balance of $50,843 as of March 31,
2005.

Due to the default under the Registration Rights Agreement, the debentures went
into default as of June 1, 2003. Accordingly, the debentures became due on
demand at that date and are presented as current liabilities at March 31, 2005.

In April and May of 2004, $67,500 principal amount of the debentures was
converted into 3,167 shares of our common stock. $60,000 of the debentures was
converted in April 2004 into 2,736 shares at $0.0054825 per share and $7,500 of
the debentures was converted in May 2004 into 431 shares at $0.00435 per share.

In March 2005, $30,000 principal amount of the debentures was converted into
8,239,998 shares of our common stock at $0.0375 per share. For this conversion,
one party with a debenture in the principal amount of $5,000, converted accrued
interest and accrued liquidated damages totaling $900 into 240,000 shares of our
common stock, which are included in the 8,239,998 shares discussed above. None
of the other conversions included accrued interest or accrued debenture
liquidated damages and the Company has retained these accruals in the
accompanying Financial Statements.

As a result of the above conversions, $77,500 principal amount of the
convertible debentures is outstanding as of March 31, 2005.

Equity Financing

None

Liquidity

To continue with our business plan, we will require additional short-term
working capital and we have not had generating sufficient cash from operations
to fund our operating activities through the end of fiscal 2005. Presently, we
have no source of revenues and have moved into a new business concept as a
consultant and advisor to customers. We cannot assure you that the new business
concept will provide sufficient proceeds, if any, and borrowings under any
interim financing we are able to secure will be sufficient to meet our projected
cash flow needs.

Our ability to obtain additional financing depends on many factors beyond our
control, including the state of the capital markets, the market price of our
common stock, the prospects for our business and the approval by our
stockholders of an amendment to our certificate of incorporation increasing the


                                       36
<PAGE>

number of shares of common stock we are authorized to issue. The necessary
additional financing may not be available to us or may be available only on
terms that would result in further dilution to the current owners of our common
stock. Failure to obtain commitments for interim financing and subsequent
project financing, would have a material adverse effect on our business, results
of operations and financial condition. If the financing we require to sustain
our working capital needs is unavailable or insufficient or we do not receive
the necessary financing, we may be unable to continue as a going concern.

Contractual Obligations and Commercial Commitments

The following table highlights, as of March 31, 2005, our contractual
obligations and commitments by type and period:

<TABLE>
<CAPTION>
                                            Payments Due by Period
                                            ----------------------
                                      Less than 1
Contractual Obligations       Total       year     1-3 years  4-5 years  After 5 years
-----------------------      --------   --------   --------   --------   --------

Short-Term Debt:
---------------
<S>                          <C>         <C>       <C>         <C>        <C>
Bank Loans                     59,336    59,3366                    --         --

Loan Payable-Related Party     42,700     42,700                    --         --

Convertible Debentures         77,500     77,500
                             --------   --------   --------   --------   --------
Total Short-Term Debt        $179,536   $179,536   $                --         --
                             ========   ========   ========   ========   ========
</TABLE>

2005 OUTLOOK

Our ability to continue in existence is heavily dependent on securing additional
capital from investors or debt. There is no assurance that additional equity or
debt financing will be available on terms acceptable to Management, or on any
terms at all.

Item 3A. Evaluation of Disclosure Controls and Procedures.

      Steve Careaga, our Chief Executive Officer and Chief Financial Officer,
has concluded that our disclosure controls and procedures are appropriate and
effective as of the date of the financial statements reported in this Form
10-QSB. He has evaluated these controls and procedures as of the end of the
period covered by this report on Form 10-QSB. There were no significant changes
in our internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

PART II

Item 1.  Legal Proceedings

      The company is not presently engaged in legal proceedings not previously
reported and there have been no material changes in previously reported legal
proceedings.


                                       37
<PAGE>

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

NONE.

Item 3. Defaults Upon Senior Securities

      During the months of March and April 2003, certain investors purchased
$175,000 worth of convertible debentures from the Company (the "Debentures").

      Pursuant to section 2(a)(i) of the Registration Rights Agreements (The
Registration Rights Agreement is Exhibit B to the Securities Purchase Agreement,
the definitive document outlining the terms and conditions of the parties in
connection with the purchase of a Convertible Debenture. The Debenture is
Exhibit A to the Securities Purchase Agreement.) executed by the Debenture
Holders and the Company, the Company is required to file a registration
statement no later than ten (10) days following the "Final Closing Date" (the
"Registration Statement"), for purposes of registering the shares of common
stock into which the Debentures convert (the "Debenture Shares"). Pursuant to
section 2(b)(iii) of the Registration Rights Agreements, in the event the
Company is in default of the provisions of section 2(b)(i) (requiring filing of
a registration statement by the "Required Filing Date" set forth in section
2(a)(i)) ("Default"), the Company must pay the Debenture Holders (a) a cash
amount equal to Two Percent (2%) per month of the outstanding principal amount
of the Debentures, and (b) that same Two Percent (2%) per month of the
outstanding principal amount of the Debentures for each subsequent month after a
Default until section 2(b)(i) is complied with.

      In March 2004, the Company reached an agreement with the Debenture Holders
and in lieu of making cash payments to the Debenture Holders as a result of the
Default, the Company issued 1,750,000 shares of its common stock to the
Debenture Holders (the "Penalty Shares").

Item 4. Submission of matters to a Vote of Securities Holders

NONE.


Item 5. Other Information

NONE.

Item 6. Exhibits

      The following exhibits are filed herewith:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Exhibit                                   Title                                   Location
-------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                                     <C>
2                                         Plan and Agreement of Merger with       Incorporated by Reference to Form 8-K
                                          NAZZ Productions Inc.                   dated August 23 2004
-------------------------------------------------------------------------------------------------------------------------
2.1                                       Amendment to Plan and Agreement of      Incorporated by Reference to Form
                                          Merger with NAZZ Productions Inc.       10-QSB filed February 22, 2005
-------------------------------------------------------------------------------------------------------------------------
3.1                                       Articles of Incorporation               Incorporated by Reference to the SB-2
                                                                                  Registration Statement filed August
                                                                                  21 2000
-------------------------------------------------------------------------------------------------------------------------


                                       38
<PAGE>

-------------------------------------------------------------------------------------------------------------------------
3.2                                       Bylaws                                  Incorporated by Reference to Form
                                                                                  SB-2 Registration Statement filed on
                                                                                  August 21 2000
-------------------------------------------------------------------------------------------------------------------------
3.2a                                      Certificate of Amendment to Articles    Incorporated by Reference to Form
                                          of Incorporation                        SB-2 Registration Statement filed on
                                                                                  August 21 2000
-------------------------------------------------------------------------------------------------------------------------
3.3                                       Certificate of Amendment to Articles    Incorporated by Reference to the
                                          of Incorporation                        Preliminary Schedule 14C filed
                                                                                  February 10 2004
-------------------------------------------------------------------------------------------------------------------------
3.4                                       Certificate of Designation of Series    Incorporated by Reference to Form 8-K
                                          A Convertible Preferred Stock           dated August 23 2004
-------------------------------------------------------------------------------------------------------------------------
4.01                                      2003 Stock Option And Grant Plan        Incorporated by Reference to Form S-8
                                                                                  Registration Statement filed
                                                                                  September 30 2003
-------------------------------------------------------------------------------------------------------------------------
4.1                                       Form of Common Stock Certificate        Incorporated by Reference to the SB-2
                                                                                  Registration Statement filed on
                                                                                  August 21 2000
-------------------------------------------------------------------------------------------------------------------------
4.1a                                      Engagement Agreement with The Otto      Incorporated by Reference to the Form
                                          Law Group PLLC                          S-8 Registration Statement filed
                                                                                  November 21 2003
-------------------------------------------------------------------------------------------------------------------------
4.1b                                      Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          James J. Taylor                         filed April 21 2004
-------------------------------------------------------------------------------------------------------------------------
4.1c                                      Amendment No. 5 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between              filed May 11 2004
                                          Bartholomew International Investments
                                          Limited Inc. and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
4.2                                       Consulting Services Agreement between   Incorporated by reference to the Form
                                          Aequitas Company and NANNACO Inc.       S-8 Registration Statement filed
                                                                                  November 21 2003
-------------------------------------------------------------------------------------------------------------------------
4.2a                                      Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement with Nicole Van      filed May 11 2004
                                          Coller
-------------------------------------------------------------------------------------------------------------------------
4.3                                       Consulting Services Agreement with      Incorporated by reference to the Form
                                          T.T. Byrne Capital Investments Inc.     S-8 Registration Statement filed
                                                                                  November 21 2003
-------------------------------------------------------------------------------------------------------------------------
4.3b                                      Consulting Services Agreement between   Incorporated by reference to the Form
                                          Michael Nerone and NANNACO Inc.         S-8 Registration Statement filed
                                                                                  January 13 2004
-------------------------------------------------------------------------------------------------------------------------


                                       39
<PAGE>

-------------------------------------------------------------------------------------------------------------------------
4.4                                       Consulting Services Agreement between   Incorporated  by  reference to the
                                          Bartholomew International Investments   Form S-8 filed November 21 2003
                                          Limited Inc. and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
4.4a                                      Consulting Services Agreement between   Incorporated by Reference to Form S-8
                                          Kenneth Davidson and NANNACO Inc.       Registration Statement filed January
                                                                                  13 2004
-------------------------------------------------------------------------------------------------------------------------
4.4b                                      Amendment No. 1 to Consulting           Incorporated by Reference to the Form
                                          Services Agreement with Michael Nerone  S-8 Registration Statement filed
                                                                                  March 2 2004
-------------------------------------------------------------------------------------------------------------------------
4.4c                                      Amendment No. 1 to Agreement with       Incorporated by Reference to Form S-8
                                          Vintage Filings LLC dated May 6 2004    filed May 11 2004
-------------------------------------------------------------------------------------------------------------------------
4.5                                       Consulting Services Agreement between   Incorporated by reference to Form S-8
                                          Mark Triesch and NANNACO Inc.           Registration Statement filed January
                                                                                  13 2004
-------------------------------------------------------------------------------------------------------------------------
4.5a                                      Amendment No.1 to Consulting Services   Incorporated by Reference to Form S-8
                                          Agreement between Kenneth Davidson      Registration Statement filed March 2
                                          and NANNACO Inc.                        2004
-------------------------------------------------------------------------------------------------------------------------
4.5b                                      Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          Chris Ebersole dated May 6 2004         filed May 11 2004
-------------------------------------------------------------------------------------------------------------------------
4.5c                                      Amendment No. 9 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between Terry        filed April 21, 2005
                                          Byrne at Bartholomew International
                                          Investments Limited Inc. and NANNACO
                                          Inc.
-------------------------------------------------------------------------------------------------------------------------
4.6                                       Consulting Services Agreement with      Incorporated by reference to the Form
                                          Vintage Filings LLC                     S-8 Registration Statement filed
                                                                                  November 21 2003
-------------------------------------------------------------------------------------------------------------------------
4.6a                                      Amendment No. 1 to Consulting           Incorporated by Reference to FormS-8
                                          Services Agreement between Mark         Registration Statement filed March 2
                                          Triesch and NANNACO Inc.                2004
-------------------------------------------------------------------------------------------------------------------------
4.6b                                      Amendment No. 4 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between              Registration Statement filed April 15
                                          Bartholomew International Investments   2004
                                          Limited Inc. and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
4.6c                                      Amendment No.3 Consulting Services      Incorporated by Reference to Form S-8
                                          Agreement between Lou Digiaimo Jr.      filed April 21, 2005
                                          and Nannaco Inc.
-------------------------------------------------------------------------------------------------------------------------
4.7                                       Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between Aequitas     Registration Statement filed January
                                          Company and NANNACO Inc.                13 2004
-------------------------------------------------------------------------------------------------------------------------


                                       40
<PAGE>

-------------------------------------------------------------------------------------------------------------------------
4.7a                                      Amendment No. 1 to Employment           Incorporated by reference to the Form
                                          Agreement with Andrew Devries III       S-8 Registration Statement filed
                                                                                  November 21 2003
-------------------------------------------------------------------------------------------------------------------------
4.7b                                      Amendment No. 2 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between Bradford     filed April 21, 2005
                                          van Siclen and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
4.8                                       Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between              Registration Statement filed January
                                          Bartholomew International Investments   13 2004
                                          Limited Inc. and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
4.8c                                      Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          Vintage Filings LLC dated April 6 2004  filed April 15 2004
-------------------------------------------------------------------------------------------------------------------------
4.3(e)                                    Amendment No. 6 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between              filed November 4 2004
                                          Bartholomew International Investments
                                          Limited Inc. and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
4.4e                                      Consulting Services Agreement between   Incorporated by Reference to Form S-8
                                          Bruce Arthur Hall and Nannaco Inc.      filed November 4 2004
-------------------------------------------------------------------------------------------------------------------------
4.5e                                      Consulting Services Agreement between   Incorporated by Reference to Form S-8
                                          Lou Digiaimo Jr. and Nannaco Inc.       filed November 4 2004
-------------------------------------------------------------------------------------------------------------------------
4.7b                                      Amendment No.2 to Consulting Services   Incorporated by Reference to Form S-8
                                          Agreement between Lou Digiaimo Jr.      filed February 10, 2005
                                          and Nannaco Inc.
-------------------------------------------------------------------------------------------------------------------------
4.6e                                      Amendment No.1 to Consulting Services   Incorporated by Reference to Form S-8
                                          Agreement between Lou Digiaimo Jr.      filed November 4 2004
                                          and Nannaco Inc.
-------------------------------------------------------------------------------------------------------------------------
4.6f                                      Amendment No. 7 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between              filed February 10, 2005
                                          Bartholomew International Investments
                                          Limited Inc. and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
4.7a                                      Consulting Services Agreement between   Incorporated by Reference to Form S-8
                                          Steve Careaga and Nannaco Inc.          filed November 4 2004
-------------------------------------------------------------------------------------------------------------------------
4.7b                                      Amendment No. 8 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between Terry        filed March 10, 2005
                                          Byrne at Bartholomew International
                                          Investments Limited Inc. and NANNACO
                                          Inc.
-------------------------------------------------------------------------------------------------------------------------


                                       41
<PAGE>

-------------------------------------------------------------------------------------------------------------------------
4.8                                       Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement with Michael Park    filed February 10, 2005
                                          dated April 14 2004
-------------------------------------------------------------------------------------------------------------------------
4.8a                                      Amendment No. 2 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement with Michael Park    filed March 10, 2005
                                          dated April 14 2004
-------------------------------------------------------------------------------------------------------------------------
4.9                                       Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement with Capital Group   filed April 15 2004
                                          International dated April 14 2004
-------------------------------------------------------------------------------------------------------------------------
                                          Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
4.9a                                      Agreement with Steve Careaga dated      filed February 10, 2005
                                          October 29 2004
-------------------------------------------------------------------------------------------------------------------------
4.9b                                      Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between Bruce        filed March 10, 2005
                                          Arthur Hall and Nannaco Inc.
-------------------------------------------------------------------------------------------------------------------------
4.10                                      Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          Michael Park dated April 14 2004        filed April 15 2004
-------------------------------------------------------------------------------------------------------------------------
4.10a                                     Consulting Services Agreement between   Incorporated by Reference to Form S-8
                                          Bradford van Siclen and NANNACO Inc.    filed February 10, 2005
-------------------------------------------------------------------------------------------------------------------------
4.10b                                     Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between Bradford     filed March 10, 2005
                                          van Siclen and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
4.11                                      Consulting Services Agreement between   Incorporated by Reference to Form S-8
                                          Kevin Evans and Nannaco Inc.            filed February 10, 2005
-------------------------------------------------------------------------------------------------------------------------
4.11a                                     Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between Kevin        filed March 10, 2005
                                          Evans and Nannaco Inc.
-------------------------------------------------------------------------------------------------------------------------
4.12                                      Amendment No. 2 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between              filed March 2 2004
                                          Bartholomew International Investments
                                          Limited Inc. and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
4.13                                      Amendment No. 2 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between Aequitas     filed March 2 2004
                                          Company and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------


                                       42
<PAGE>

-------------------------------------------------------------------------------------------------------------------------
4.14                                      Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          Bagswell Capital LLC dated February     filed March 2 2004
                                          23 2004
-------------------------------------------------------------------------------------------------------------------------
4.15                                      Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          Seth Elliott dated February 23 2004     filed March 2 2004
-------------------------------------------------------------------------------------------------------------------------
10.1                                      Settlement Agreement and Release with   Incorporated by Reference to Form 10
                                          and by  James J. Taylor                 QSB filed May 24 2004
-------------------------------------------------------------------------------------------------------------------------
10.1a                                     Employment Agreement with Andrew        Incorporated by Reference to Form 8-K
                                          Devries III dated June 1 2002           filed November 18 2004
-------------------------------------------------------------------------------------------------------------------------
10.1b                                     Amendment No. 1 to Employment           Incorporated by Reference to Form
                                          Agreement with Andrew Devries III       8-K/A filed February 102004
                                          dated June 1 2003
-------------------------------------------------------------------------------------------------------------------------
10.2                                      Employment Agreement with Steve         Incorporated by Reference to the Form
                                          Careaga                                 S-8 registration statement filed on
                                                                                  March 16 2004
-------------------------------------------------------------------------------------------------------------------------
10.3                                      $375000 Promissory Note executed by     Incorporated by Reference to Form
                                          Andre DeVries III payable to the        10-QSB/A filed June 21 2004
                                          Registrant
-------------------------------------------------------------------------------------------------------------------------
10.4                                      Agreement and Plan of Merger dated      Incorporated by Reference to Form
                                          July 8 2004 between Nannaco and Red     10-QSB filed August 25 2004
                                          Alert
-------------------------------------------------------------------------------------------------------------------------
10.5                                      Termination Agreement dated August 16   Incorporated by Reference to Form
                                          terminating Nannaco/Red Alert merger    10-QSB filed August 25 2004
-------------------------------------------------------------------------------------------------------------------------
10.6                                      Nelana Holdings Ltd. Subscription for   Incorporated by Reference to Form 8-K
                                          Series A Convertible Preferred Stock    dated August 23 2004
-------------------------------------------------------------------------------------------------------------------------
10.7                                      Promissory Note dated August 23 2004:   Incorporated by Reference to Form 8-K
                                          Nelana Holdings Ltd. Maker              dated August 23 2004
-------------------------------------------------------------------------------------------------------------------------
10.8                                      Consulting Agreement with Steve         Incorporated by Reference to Form 8-K
                                          Careaga dated October 29 2004           filed October 29 2004
-------------------------------------------------------------------------------------------------------------------------
41                                        Amendment No. 3 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement with Bartholomew     filed March 16 2004
                                          International Investments Limited
                                          dated February 23 2004
-------------------------------------------------------------------------------------------------------------------------
42                                        Amendment No.2 to Consulting Services   Incorporated by Reference to Form S-8
                                          Agreement between Kenneth Davidson      filed March 16 2004
                                          and NANNACO Inc. dated March 15 2004
-------------------------------------------------------------------------------------------------------------------------


                                       43
<PAGE>

-------------------------------------------------------------------------------------------------------------------------
43                                        Amendment No. 2 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement between Mark         filed March 16 2004
                                          Triesch and NANNACO Inc.
-------------------------------------------------------------------------------------------------------------------------
44                                        Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          Daedalus Ventures Inc. dated March 15   filed March 16 2004
                                          2004
-------------------------------------------------------------------------------------------------------------------------
45                                        Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          Nicole Leigh Van Coller dated March     filed March 16 2004
                                          15 2004
-------------------------------------------------------------------------------------------------------------------------
46                                        Amendment No. 1 to Consulting           Incorporated by Reference to Form S-8
                                          Services Agreement with Bagswell        filed March 16 2004
                                          Capital LLC
-------------------------------------------------------------------------------------------------------------------------
47                                        Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          Saratoga Capital Partner Inc. dated     filed March 16 2004
                                          February 23 2004
-------------------------------------------------------------------------------------------------------------------------
48                                        Employment Agreement with Steve         Incorporated by Reference to Form S-8
                                          Careaga dated March 15 2004             filed March 16 2004
-------------------------------------------------------------------------------------------------------------------------
418                                       Consulting Services Agreement with      Incorporated by Reference to Form S-8
                                          Capital Group International LLLP -      filed March 16 2004
                                          Western Series dated March 15 2004
-------------------------------------------------------------------------------------------------------------------------
31.1                                      Certificate of Principal Executive      Filed Herewith
                                          Officer
-------------------------------------------------------------------------------------------------------------------------
31.2                                      Certificate of Principal Financial      Filed Herewith
                                          Officer
-------------------------------------------------------------------------------------------------------------------------
32                                        Certificate                             Filed Herewith
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of NANNACO, Inc.,
in the capacities and on the dates indicated.


NAME AND SIGNATURE              TITLE                          DATE

                                Principal Executive Officer,   May 11, 2005
                                Principal Financial Officer,
/s/ Steve Careaga               Sole Director
---------------------------
Steve Careaga


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