# UNITED STATESSECURITIES
AND EXCHANGE COMMISSION Washington, D.C. 20549

# Form 10-KSB

ANNUAL REPORT UNDER
SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year
ended December 31, 2004

TALLY-HO VENTURES, INC.
a Delaware corporation518 Oak Street #2Glendale,
CA 91204

(818) 550-7886

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

Common Stock

Check whether the issuer (1) filed
all reports required to be filed by Section 13 of the Exchange Act during the past 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
_

Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B is not contained in this form,
and no disclosure will be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. X

Tally Ho has had no revenues for its
most recent fiscal year.

The aggregate market value of the
voting and non-voting common equity held by non-affiliates  computed by reference to
the price at which the common equity was sold as of a specified date within the past 60
days  is $433,771 as of February 15, 2005.

The number of shares outstanding of
the issuers Common Stock is 45,475,209 as of February 28, 2005.

# DOCUMENTS INCORPORATED
BY REFERENCE

| | Prospectus as appears in Form SB-2 filing (Amendment No. 6) filed on November 7,
2003.
|- | --------------------------------------------------------------------------------------

Transitional Small Business
Disclosure Format (Check One):    Yes __ No X

1

# PART I

# Description of Business.

Principal products or services and
their markets. We are a development-stage company in the business of producing
entertainment products, principally short films, web-exclusive videos vignettes and skits,
and pilot (one full-episode test) television programs. We also are currently
engaged in producing entertaining written material  such as comedic essays and
free-form prose  and posting these and our other products to our website
www.tallyhoventures.com.

The short film we have produced so
far and the short films we intend to produce in the future are produced as follows. First,
we start with an idea. This idea typically comes from one of our three founders, Tal
Kapelner, Cheney Shapiro or Ariella Kapelner, and it usually consists of no more than a
simple idea for a plot or storyline or interesting concept or even just a clever line of
dialogue that a story can be built around. To describe it most simply, an idea is the
completion of a what if scenario. Ideas are a byproduct of inspiration,
the occurrences of which are very difficult to predict.

Once an idea is hatched by one of our
three founders, either that founder or, more typically, Tal Kapelner alone, will begin to
write a short screenplay, which is a script written for the screen, encompassing that
idea. This process can take up to several months. During this time, a director and one or
more producers are decided upon for the production. Producers are those
individuals who manage and oversee the co-ordination of all of the elements to making a
film, including actors, writers, directors, propmen, wardrobe personnel, etc., as well as
co-ordinate with any legal and other professional personnel to handle any and all
regulatory, accounting or union paperwork and other issues regarding the making of the
film. Because of our short resources, typically Tal Kapelner is our producer for all of
our projects, and Tal Kapelner is our director.

Once the script is written, the
producers create a budget and a time line for production, based upon what the script calls
for. For example, a 10-page script that has all the action take place in one room of a
standard home would be cheaper and faster to produce than a 40-page script which calls for
car chases.

Once the budget and production
schedule are decided upon, financing is sought. Financing films, both short films and
features, is a difficult process, and it becomes more difficult the larger the budget.
This is for several reasons. First, there are simply not that many individuals and
entities worldwide who can put up the amount of money typically needed to finance an
average-budget feature film, currently about $30 million. Second, recouping money from a
film is a long process, as there is typically a gap of 1-3 years between the time the
money is paid to finance the film, and the theatrical release of the film. And if the
theatrical release did not recoup all of the financiers money, then the financiers
will have to wait to recoup their money until more money is brought in from overseas
markets; ancillary markets, which are non-theatrical markets such as military and airplane
exhibitions; sales of video and DVD copies of the film; and cable television and broadcast
network exhibitions. Finally, often times films dont recoup the money that is spent
on them ever, making financing films extremely risky. And financing short films is
typically more difficult than financing feature films, because although short films are
much cheaper to produce  they cost usually less than $100,000  there are much
fewer opportunities to exhibit them, and therefore fewer ways by which to recoup the
investment.

For these reasons, funding is
typically the most demanding, and oftentimes the longest, part of every project. Funding
for films is so elusive, in fact, that most organizations which seek to help the
independent filmmaker, such as Independent Film Project and Filmmakers Alliance of Los
Angeles, will not even address the key matter of funding and will focus instead on
providing inexpensive resources by which to make films, once funding has already been
achieved.

2

There are some sources of funding
available specifically for films, however. The two major types of funding are fundraising
and financing. Fundraising refers to grants and corporate gifts, while financing includes
both debt and equity financing. Sources for fundraising include the Film Arts Foundation
in San Francisco (www.filmarts.org), The Independent magazine
(www.aivf.org/independent) and The Foundation Center (www.fdncenter.org), all of
which have a list of foundations issuing grants, with information about each grant such as
deadlines, criteria, etc. We intend to pursue this line of funding whenever practicable.
Each project will have to be analyzed to see if it is a good fit for a funding entity.
Entertainment attorneys may also be contacted to provide guidance or consulting or
introduction to brokers, dealers or finders who may assist in locating financiers.

Both debt and equity financing shall
be used as needed whenever fundraising is not a viable option. The manner by which we will
generally seek to secure financing will depend upon the level of financing we will need.
For smaller budgeted short films, we shall rely on stock offerings such as this one, or
upon loans from management or another benefactor, or upon an equity investment from a
benefactor or venture capital group. For larger budgeted films, we will rely almost
exclusively on stock offerings similar to this or seek large-scale private financing.

With the money, budget, schedule and
script in place, the producers meet to more carefully plan out the pre-production process.
Pre-production refers to the time period when the film is being made but
nothing has been shot yet. During this time, we generally will be contacting SAG to
arrange for the signing of a contract that allows us to hire professional actors. We will
fill out the myriad paperwork and produce the $500-$1000 deposit required by SAG at this
time and hire a payroll company that will help us secure workers compensation
insurance for our actor employees as well as process payroll for the actors.

We have made a conscious decision to
not sign with other talent unions, including the directors guild, writers guild,
Teamsters, Basic Crafts, or the International Alliance of Theatrical Stage Employees
(IATSE), which is the union for most crewmember positions, as that would severely limit
the non-acting talent we would be able to hire, increase our costs by forcing us to hire
all non-actors as employees rather than independent contractors, and force us to adhere to
many rules regarding workplace environment which are geared towards larger productions and
would unnecessarily increase the costs of our modestly-budgeted projects.

Concurrently with working with the
actors union and ensuring that all legal and union regulatory compliance is made, casting
is completed. We generally will be hiring professional acting talent, in order to cheaply
enhance the quality and visibility of our work. In order to procure such talent, the
general procedure is to post breakdowns, which are descriptions of the
characters we are casting. Popular outlets to post breakdowns include
breakdownservices.com; nowcasting.com; the Backstage newspaper and backstage.com,
divisions of VNU Business Media; castnet.com; and, for background actors
(extras), Central Casting, a division of Entertainment Partners. These outlets
typically charge $0  $75 for an entire cast of character breakdowns.

After posting the breakdowns, a large
number of submissions will flow to our production offices, at which time the producers and
director will review the submissions and audition 2-6 actors for each role being cast,
eventually casting one actor for each role.

Concurrently with casting the film,
wardrobe and props are purchased by the producers, any film equipment necessary is rented
and crewmembers are hired to perform certain technical tasks in the shooting of the film.
Tally-Ho owns none of its own equipment and will have to rent equipment for each of its
shoots. Tally-Ho locates its crewmembers quite easily by simply typing into a Google
search the name of the technical position required, along with the word hire,
and then browsing the results. www.mandy.com and
www.mediaresourcecontacts.com are also two common sources of non-union non-actor
talent, as are the Independent Film Project (www.ifp.org) and the Filmmakers
Alliance (www.facommunity.org) organizations, which have non-union crewmember
directories.

Securing shoot locations is also
important. Tally-Ho neither owns nor leases any studio space for the purpose of shooting
films. Both IFP and Filmmakers Alliance have production studios available for very low
budget films, and oftentimes films can be filmed inside private homes or offices,
depending upon the script.

3

Once all of the above arrangements
have been made in pre-production, the shooting of the film begins. The scenes, as written
in the script, are shot. Expenses, such as food for the cast and crew and transportation
to and from the location sites, are incurred during this period.

After the shooting of the film, the
post-production process begins. An editor is chosen, the images recorded during the shoot
are catalogued and the director and editor, along with the producer occasionally, sit in
an editing bay and piece the footage together. It is during post-production that any
additional sound effects, narration, music or visual effects are added. Tally-Ho neither
owns nor leases any of its editing space or equipment, which is available either from the
editor him or herself, or from non-profit organizations that cater to the independent
filmmaker, such as IFP and Filmmakers Alliance, or from higher cost mainstream editing
rental facilities.

Also during the post-production
period, clean-up paperwork is done on the production, including bookkeeping, SAG
recordkeeping, tax and payroll recordkeeping, etc.

Finally, after the film is finished,
as determined typically by the director and producers, copies of the film are made in
whatever media is determined to be suitable and distributed as we describe below. A
producers rep, who acts essentially as an agent for the film, may be
hired on a contingency basis to represent the film at film festivals and markets and
attempt to secure a buyer or exhibitor for the film.

We anticipate most of our short films
to cost approximately $13,000, and most of our super-short films, those under 10 minutes
in length, to cost approximately $5,000. The timeframe for completing a short film from
script to final print is approximately 5-9 months, while the timeframe for completing a
super-short film is approximately 2-5 months.

One can consider the case of our
first short film, The G! True Tinseltown Tale: Dude, Wheres My Car? as
an illustration of the general process of making our products we describe above. In the
case of G! Dude? Tal Kapelner wrote the script in the fall of 2002 and, once
Tally-Ho was incorporated, both Mr. Kapelner and Cheney Shapiro got on board as producers.
Tal Kapelner was named director, and the two producers ironed out a budget based upon a
22-page script, which translates to approximately 22 minutes of running time. The budget
was fixed at $4,000 and a production schedule of 4 months was considered reasonable. In
our case, financing $4,000 for our first short film was not difficult because Tal Kapelner
financed it himself.

During pre-production for our
G! Dude? project, Tal Kapelner served as liaison with the Screen Actors Guild
and worked with them to sign the Experimental Film Agreement. He produced the $500 deposit
SAG requested and filled out all the paperwork. He also retained a payroll company to
properly process the payrolls of the actor employees hired for the shoot, and procured
workers compensation insurance from the State Insurance Compensation Fund, to cover
the actor employees on the set in case of injury.

Tal Kapelner and Cheney Shapiro cast
our G! Dude? film. They decided to cast Tal Kapelner to play the part of
Ashton Kutcher and Cheney Shapiro to play the part of Shera Friendly. They decided to cast
other professional actors to play the other four on-camera roles, and posted a breakdown
of each role being cast, on an online service mentioned above called
breakdownservices.com. This online service is a service where actors can log on and view
all of the roles available at that time in a wide variety of media, including television,
film, commercials and industrial or instructional media. Over the two weeks following the
posting of our breakdowns for our G! Dude? project, we received over 500
e-mailed and mailed submissions from actors all over the country, principally from Los
Angeles. Each submission carried with it a photo of the actor and a resume. Mr. Kapelner
and Ms. Shapiro pored over all of the submissions and selected approximately 3-5 actors to
audition for each of the four roles offered. After the auditions, one actor for each of
the four roles was chosen, and each of the respective actors agent or manager was
contacted and told that his or her client has been given the role. The total cost of the
actors services was approximately $1,200 total, which included mandatory
contributions to the SAG/Producers Pension and Health Fund and all employer taxes.

4

Also during pre-production, the
producers hired a cameraman who could serve as the director of photography (DP) and could
provide his own camera, sound and lighting equipment. Brian Solari was hired as the DP and
the cameraman for the shoot. He was recommended to the producers by Eric Sherman, an
acquaintance who is himself an accomplished director. Because Mr. Solari also had
expertise in the area, the producers were able to save money by using him as his own
lighting technician as well. Mr. Solari requested that a script supervisor be hired for
the shoot, and Krista Bean was hired as script supervisor through www.mandy.com,
responsible for keeping careful notes of how the shooting of the film progressed
vis-à-vis the script, and thereby providing valuable data for the editor during the
post-production process. Two production assistants, roughly equivalent to
gophers, were hired, and a friend of the producers volunteered her services as
make-up artist. The total cost of hiring crewmembers and renting equipment for the shoot
was approximately $1,000.

In the G! Dude?
production, the producers were able to secure the house and grounds of a business
associate in Los Angeles for the shooting of most of the scenes in our film, while the DP
allowed us to use the dance studio of one of his former clients, located in La Canada
Flintridge, just north of Los Angeles, as the location of the remainder of the scenes.

The film was shot on digital video,
which requires neither film nor analog videotape, and is, for this and other reasons,
cheaper than both film and analog video. G! Dude? took two days to shoot.

Brian Solari, our DP, who also has
his own editing bay and equipment, was chosen to also edit the film, and Tal Kapelner, as
director and producer, and Cheney Shapiro, as producer, joined with Mr. Solari in the
post-production process.

We completed the post-production
process in December of 2004 and have converted the film to DVD discs, available for free
to anyone who requests a copy through our website. We have also sent out a copy of the
film to a dozen or so industry professionals as part of our marketing plan, and have sent
out a copy of the trailer to our film to approximately 250 casting directors, agents and
managers in the entertainment industry.

Tal Kapelner, as executive producer,
handled the clean-up paperwork described above.

We are currently working on obtaining
clearance rights to use the song Ive Had the Time of My Life which is
featured in the film. We are also preparing to send out additional copies of our full film
to other entertainment industry professionals.

The cost of our G! Dude?
project was more than we anticipated. The final budget will be approximately $12,000 once
clearance rights for the song is obtained, whereas we had budgeted $4,000 initially. In
the future, other short films will likely be more expensive, as our first short film was
made especially cheap by the fact that our script called for mostly home interview scenes.

The process for making our
web-exclusive vignettes is the same as described above for making short films; however,
the method of distribution is much simpler: We only upload the finished products up to our
website for viewing exclusively on the web. This web-exclusive method of
distribution also allows us to sign a cheaper contract with SAG. The Internet-only
contract with SAG dramatically reduces our SAG-related paperwork and allows us to forego
paying any security deposit to SAG.

Given bandwidth considerations and
our opinion that attention spans are shorter among web surfers than among those watching
conventional video, we anticipate most of our web-exclusive products to fall in the
super-short films category of under 10 minutes and therefore cost approximately $5,000
each and be completed in 2 months time, from script to final print, which is on the low
end of the timeframe estimate for super-short films in general.

Our pilot television
programs are produced in the same manner as our short films above; however, we are obliged
to sign a more expensive contract with SAG, which requires minimum weekly salaries for
actors of over $3,000 per actor and enough paperwork to force us to hire a full-time
producer just to handle actors payroll and paperwork issues.

5

Additionally, our TV pilots will have
to use more than one camera to capture the simultaneous action; three is standard for a TV
show. A studio set will have to be rented, and more wardrobe will be required.

We have completed filmed rehearsals
for our first TV pilot entitled Boiler Twins  Pilot. We signed the
necessary SAG contracts, cast the film, hired the crew and filmed principal photography;
however, we felt that the results of principal photography were not satisfactory, and so
we are considering those filming sessions to be filmed rehearsals. We are currently in
further rehearsals and will resume filming in the next fiscal year, depending upon
financing.

So far Tal Kapelner has spent
approximately $5,000 on our Boiler Twins  Pilot project, and we
anticipate spending an additional $40,000  $100,000 on this project, depending upon
the extent to which we hire crew, rent studio space, etc.

We anticipate future TV pilots to be
budgeted similarly with an estimated time frame of 3-9 months for completion per project.

As with our film projects, described above,
the two major types of funding for our television pilots and web-exclusive vignettes will
be fundraising and financing, both of which we shall pursue as is practicable. Each
project will have to be analyzed first to see if it is a good fit for a funding entity.
Entertainment attorneys may also be contacted to provide guidance or consulting or
introduction to brokers, dealers or finders who may assist in locating financiers.

Both debt and equity financing shall
be used as needed whenever fundraising is not a viable option. The manner by which we will
generally seek to secure financing will depend upon the level of financing we will need.
For smaller budgeted short films, we shall rely on stock offerings such as this one, or
upon loans from management or another benefactor, or upon an equity investment from a
benefactor or venture capital group. For larger budgeted films, we will rely almost
exclusively on stock offerings similar to this or seek large-scale private financing.

Finally, our entertaining written
material, including free-form prose, etc., is written primarily by Tal Kapelner for no
fee. Mr. Kapelner is not under contract with Tally-Ho to produce a certain quantity or
quality of work, and makes contributions when inspiration strikes and his schedule allows.
Mr. Kapelners material is sent to our web designer, Steve Aguilera of
GraphicPark.net, and is uploaded onto our website at a rate of $50 per hour, which
translates to approximately $10 per written entertainment product we produce.

The market for our products is
principally members of the entertainment industry, particularly those in charge of
programming and finances. We ultimately are seeking professional production opportunities
in television and film, and in order for us to be retained for such producing services we
seek, we must make our work recognizable among members of the entertainment industry who
are in the position to offer us such professional producing opportunities.

A lesser market for our products
would be the public at large. We feel that if we got the attention of enough people,
regardless of whether they worked in the entertainment industry or not, there would be
enough positive word of mouth about our work to generate the kind of producing
opportunities described above.

The short- and long-term overall
financial plan. We have used no-interest loans from members of our management for our
initial administrative costs, including accountants fees, as well as the initial
development of our website and the production of our first major entertainment product, a
short film parody. We have since raised enough money to carry on our administrative
responsibilities, maintain and periodically update our website, and begin our marketing
efforts for our first major product, our short film parody G! Dude?". However,
we still lack the cash to further carry on our marketing plan, and to make new major
entertainment products. Our current project, the Boiler Twins pilot, is not moving forward
until further financing is arraged. In the next 12 months, we will need to arrange debt or
equity financing, or grant funding, in the amount of approximately $60,000 to properly
carry out our business and marketing plans in the next 12 months, of which approximately
$10,000 will be needed for administrative expenses alone. Please see Managements
Discussion and Analysis or Plan of Operation below.

6

Within three years, we hope to be
offered a budget from a film and/or television distribution company or television network
to produce a film or television program.

In the last quarter of 2004, we were
approved for an unpriced quotation on the Over The Counter Bulletin Board (OTC BB) stock
quotation service. In the first quarter of 2005, we received a priced quotation on the OTC
BB.

Distribution and marketing.
The first way we intend to market and distribute our entertainment products is to post
most of them on our website, www.tallyhoventures.com, and make them available for
viewing for free to the public. For example, we have already posted our short film
G! Dude? on our website. Initially, we will not have any resources 
except word of mouth  to actively advertise the website, and so we anticipate very
little traffic initially for our website. However, our website is up and operating
properly already, and GraphicPark.net, the website design and marketing firm we are using,
has already submitted our URL  http://www.tallyhoventures.com  to more
than ten popular search engines and web directories, including Google, HotBot, Lycos,
Netscape Search as well as DMOZ, which provides search results to many search engines such
as Alta Vista and AOL Search. This will allow the general public to become aware of our
site through web searches they conduct on their own into the areas with which our website
deals, and we anticipate that some growth in site traffic will occur through this means.

Although our website will have
available for viewing most of our products for free, and therefore not be
income-producing, our plan nevertheless calls for us to concentrate on increasing website
traffic. We view site traffic as a way to increase the positive word of mouth about our
products, thus hopefully getting the attention of executives of a film and/or television
distribution company or television network, who might offer us a professional production
opportunity, such as producing a television pilot or special, or short or feature-length
film, and it is the steady producing of television shows and films which is our ultimate
goal. For that reason, our business plan also calls for future funds  funds we
receive after this offering is completed  to be used to advertise on other websites
which might have a demographic that would appreciate our work, including off-beat
political me-zines, which are individualized web sites featuring a definite
personality such as andrewsullivan.com, or other off-beat humor websites such as
bobanddavid.com or atomfilms.com.

The second way we intend to market
and distribute our products is to distribute recordings of our films via DVD to members of
the entertainment community. For example, Managements first entertainment product is
a short film entitled: The G! True Tinseltown Tale: Dude, Wheres My Car?
This short film is a parody of both the television series The E! True Hollywood
Story as well as the 2000 film Dude, Wheres My Car? released by
Twentieth Century Fox. All photography of the short film was completed in January of 2003
and is now near completed. As mentioned above, we have begun marketing this product by
first, uploading it onto the tallyhoventures.com website. However, we have also sent DVD
copies of the film to the subjects that were parodied in the film as a way of enhancing
recognition of the film. This second marketing and distribution method also dovetails with
our first marketing and distribution method, the website, because at the end of the tape
containing the parody, the audience watching the parody will be directed to our website
for more free entertainment products. Future filmed parodies produced by Management will
likely be distributed in a similar fashion.

Although unusual, this marketing
maneuver of distributing DVD discs to members of the entertainment community as a way of
increasing exposure for ones work is not without precedent. The president of our
company, Tal Kapelner, recalls when he was a writers assistant and assistant to an
executive producer on a network television sitcom in 1997-1998. During that time, VHS
recordings containing bootleg copies, which are copies produced without the express
permission of its authors of a 10-minute video cartoon produced as a video Christmas
Card were circulating throughout the entertainment industry. Tal Kapelner himself
was shown a bootleg copy of this 10-minute video Christmas card in the offices of one of
the producers of the television sitcom he was working on at the time. He recalls that it
wasnt long after that time that the creators of this video Christmas card  who
had done no prior work in the entertainment industry  were offered their own show on
Comedy Central, a basic cable television channel jointly owned by AOL Time Warner and
Viacom. The show was entitled South Park.

7

According to Indiana University
Southeasts newspaper The Horizon and internet-based South Park
chronicler Scott Hemmings, the story of how the television show South Park
came about begins with the producers Matt Stone and Trey Parker, who met while attending
college in Colorado. They worked together in making film shorts for school, one of which
was a short film about 4 foul-mouthed boys trying to kill Frosty the Snowman. The video
was sent unsolicited to an executive at News Corps 20th Century Fox, who
enjoyed it and offered Parker and Stone $2000 to make a video Christmas card. Stone and
Parker took the idea from the Frosty skit they had done and improved the
animation a little. The finished product turned out to be the 10-minute video Christmas
card, entitled The Spirit of Christmas, wherein the 4 foul-mouthed boys were
involved in a fight between Santa Claus and Jesus. They gave it to the Fox executive, who
enjoyed it so much that he sent it out to his friends, who then sent it to others, and so
on until actor George Clooney got a hold of a copy. He watched it and liked it so much he
sent out between 300 and 700 copies  accounts vary as to the exact number  to
many people he knew, many of them in the entertainment industry. This distribution is
widely credited as responsible for Messrs. Parker and Stone having been offered a deal to
produce the sit-com cartoon South Park.

We envision our film and video
entertainment products, at least initially, to be distributed in a similar
underground fashion. We believe that sending our film and video parodies to
the subjects of the parodies themselves is a clever way to have our products seen, and we
hope that our products will be enjoyed by those to whom we send them, and distributed in
the same underground, guerilla fashion as the original video Christmas card
produced by Trey Parker and Matt Stone, with bootleg copies of our products being made by
those who view it, eventually gaining greater recognition in the entertainment industry
and perhaps eventually funding for future entertainment products, including television
series and specials, short and feature-length films and internet-based films.

The third way in which we anticipate
marketing and distributing our filmed entertainment products is to simply submit DVD
copies of our film and video products to those satellite, cable and broadcast entities who
air such products. For example, a DVD copy of our first short film parody, The G!
True Tinseltown Tale: Dude, Wheres My Car? may be submitted to HBO and/or
Cinemax, both owned by AOL Time Warner; Showtime and/or The Movie Channel, both owned by
Viacom; IFC, Independent Film Channel  owned jointly by Cablevision, General
Electric and MGM; and the Sundance channel, a joint venture between Viacom, PolyGram and
Robert Redford. All of these cable and satellite channels air short films regularly and
might be willing to at least look at unsolicited submissions to see if they would like to
air them, although we have no personal knowledge that it is that easy. Please see
Competition section, below. It is true, however, that Alexandra Pelosi, the producer and
director of the feature-length documentary Journeys With George  a
documentary featuring an intimate look at President George W. Bush as he campaigned for
President in the year 2000  did nothing more than submit her final edit of
Journeys With George to HBO with a handwritten note asking them to air it, and
HBO executives watched it, liked it and did, indeed, air it. We will try this plan and
hope that something similar to what transpired for Journeys With George occurs
for one of our film products, although it should be noted that Alexandra Pelosi is the
daughter of a high-ranking member of Congress, an advantage we do not share, and the
subject matter of Ms. Pelosis documentary is likely of more interest to a wider
audience than any of our products will be.

The fourth manner by which we intend
to market and distribute our film and video products is by submitting them as entries in
various film festivals and competitions across the continent. The largest and most famous
film festivals, which often include competitions of the films they exhibit, in North
America include Sundance and Slamdance, both in Park City, Utah, Telluride in Telluride,
Colorado and the Toronto International Film Festival in Toronto, Ontario. Given the
asymmetric amount of supply of films to the slots allowed in these festivals, we believe
it is not realistic that our films will be shown at any of these most famous film
festivals, although we will certainly try to submit our films as entrants into them,
beginning with our first film parody The G! True Hollywood Story: Dude, Wheres
My Car? which has recently been completed. More realistic, we feel, is successfully
entering our films in smaller film festivals, including Toronto Giggleshorts Comedy Film
Festival and World of Comedy International Film Festival, both held in Toronto, Ontario;
Firstglance Los Angeles Film Festival in Los Angeles; and the Anchorage Film Festival in
Anchorage, Alaska. Exhibiting any of our film products at film festivals increases the
exposure our work receives, increasing the chance that an executive of a film and/or
television distribution company or television network might see our work, and then might
help us achieve our goals by offering us a professional production opportunity, such as
producing a television pilot or special, or short or feature-length film.

8

One problem with our marketing plan
that we did not anticipate was the securing of rights to use the song Ive Had
the Time of My Life which we use in our G! Dude? film. The rights to use
this song in non-commercial settings is estimated by attorneys to cost approximately
$2,000 to $3,000, although rights are not guaranteed and are subject to the approval of
the owners of the copyrights to the song. Without an additional infusion of cash, we will
be unable to secure rights to this film and will therefore be severely hampered in our
ability to screen our film. For example, we will not be able to upload the film to
websites such as ifilm.com or atomfilms.com, nor will we be able to screen our film at
film festivals.

The plan for growth.
Ultimately, we plan for a network to approve of one of our TV pilots and pay us money to
produce more episodes of that concept. We also plan ultimately for a movie studio
executive to view one of our short films and finance a future feature film. Once we begin
to generate fees from the production of films and sees profits being derived from the
release of completed films, which we believe may occur within the next 1-3 years, we are
confident that we will be able to meet our minimum operating requirements. We then
anticipate having funds available for the needs of our development, making it possible to
expand in both quality and quantity. Please see Managements Discussion and Analysis
or Plan of Operation below.

Competition.    
First, as a general note, competition in this industry, particularly in the low-budget,
independent film production niche of the industry, is extremely intense. Major film
studios such as Warner Bros. and Sony Corps Columbia-Tri Star dominate the industry;
mini-major film studios such as Miramax and New Line Cinema compete fiercely
to produce and/or distribute low- and mid-budgeted films; smaller independent production
companies such as ThinkFilms, Shooting Gallery Films, Vivendi Universals October
Films, Lions Gate Films and Regent Entertainment are well-established and use their
recognition and track record as leverage to compete favorably for financing and other
resources used to make films; and there are literally hundreds of web-based producers of
films  with varied levels of quality  virtually all of which compete for
recognition, attention and, ultimately, financing for future productions, in this crowded
marketplace.

Initially, in order to make the
business, marketing and distribution plans we described above work, we need to have our
entertainment products competitive in three places: 1) at film festivals, 2) on the
Internet, and 3) within the actual offices of members of the entertainment community. And
business conditions in all three places are extremely competitive.

First, at film festivals, our work
will be submitted to the various film festivals across the continent, and then, prior to
each festival, judged against thousands of other short film submissions. If our work is
selected by the respective festivals judging panel, our work then is exhibited at
the festival along with one hundred or more other films, all presumably of similar
quality. These conditions combine to create a very poor business environment for our work,
in that the likelihood of being offered professional production opportunities as a result
solely of these exhibitions is small.

Second, on the Internet, there is an
overwhelming supply of entertainment products, including short- and feature-length films
and videos, and entertaining written material such as essays, screenplays, teleplays,
columns, short stories, etc., and most of the suppliers of these entertainment products
are actively trying to get their products seen by the broad public, and many want to be
offered paid jobs in the entertainment industry to write, direct, produce or act in
television, music videos and/or film projects, which is similar to our plan.

With the advent of the Internet, the
amateur entertainment suppliers have multiplied geometrically. There are literally
thousands upon thousands of websites such as ours which feature the creative and artistic
work of one or more people in the fields of film, video and creative writing. Websites
which make available entertainment products similar to ours include ifc.com,
atomfilms.com, kinemafilms.com, shockwave.com, pitch-prods.com, cyanpictures.com,
paperbarkfilms.com, and alldaybreakfast.ca. These websites containing entertainment
products similar to ours  and many thousands more  are virtually all more
established than we are, and carry more material than we do currently, and are more
well-known than our website is. Getting ones product noticed on the Internet in this
environment of overwhelming supply is extremely difficult. And with only a website which
so far contains little content, and only one short uploaded onto our site, and almost no
promotion of the site, our competitive position in this industry is very weak currently.

9

The third area in which we need our
products to be competitive initially is within the actual work offices of the members of
the entertainment community. As we described above, our plan calls for sending copies of
our products to the very people and/or entities we make fun of in our parodies. This is
because the number of submissions  both solicited and unsolicited  which
members of the entertainment community receive is huge. Often agents, producers, studio
heads and others involved in programming in the entertainment industry will receive
hundreds of submissions every month, including script submissions, video submissions and
so on. Even with our unusual marketing and distribution method, we face a daunting uphill
battle to get our work noticed. And with our relatively unknown status, our competitive
position in this arena is, again, very weak.

Our position is further weakened
because price is not a method of competition in this segment of the industry. Virtually no
low-budget web-based supplier of entertainment products charges for their products, making
it impossible to undercut the competition through price. And of course no
supplier charges members of the entertainment industry a fee when they send submissions
because suppliers are often desperate for members of the entertainment industry to view
their work. Quality of product is certainly a method of competition; however, there, too,
the sheer amount of entertainment products available make it close to impossible to
rise above the rest in terms of quality.

Another competitive method is
who you know, meaning that any personal and/or business relationships
cultivated with members of the entertainment community by each supplier are utilized to
get the respective suppliers work seen by those members of the entertainment
community. Here again, although our president and Chairman worked for one season as a
writers assistant and assistant to the executive producer on a sitcom which aired on
the WB Network, and our vice-president and secretary has worked as both a personal and
business assistant for several celebrities in the past, we nevertheless cannot say that we
are in a competitive advantage in this method of competition. Our contacts in
the entertainment industry do not go deep and wide, and while we certainly will try to
utilize whatever relationships with members of the entertainment community we have to our
advantage, we cannot say that we are in a necessarily more competitive position in this
method of competition than other suppliers, many of whom are more closely associated with
the entertainment industry.

Dependence On a Few Major
Customers. Although now with the Internet there are literally almost an infinite
number of ways one may show ones entertainment products to the public, there are
still, nevertheless, only a very few ways to show ones entertainment product to the
public in exchange for money. Theres broadcast network programming, which includes
NBC, CBS, ABC, FOX, WB and UPN, and several basic cable network channels which
have original entertainment programming, including USA Network, Comedy Central, Lifetime,
E! Entertainment Television, the PAX network, ABC Family, and MTV Networks. Theres
also a limited amount of original programming funded by premium pay cable outlets,
including HBO, Showtime, Cinemax and Encore! But there are not many other venues for
exhibiting ones work for money, and this huge amount of supply, combined with
relatively few customers for the supply, creates a bottleneck effect for
entertainment products, where there is a great deal of competition among suppliers of
entertainment content, such as Tally-Ho, and outlets which air them, such as broadcast,
basic cable and premium cable channels. Please see Competition section above.

Right now we have no customers, and
we anticipate no customers for the near future. If our business plan was quite successful,
then in the foreseeable future we would likely be reliant on the very few customers
delineated above for all of our work.

Intellectual Property and Labor
Agreements. Our success and ability to compete will be dependent in part upon our
ability to obtain and maintain protection for our current and future literary properties,
to defend our intellectual property rights and to operate without infringing on the
proprietary rights of others. While we will attempt to rely, as needed, on a combination
of copyrights and trademarks to establish and protect our intellectual property rights
 including use of the U.S. Patent and Trademark Offices Form PA and the
Writers Guild of Americas Intellectual Property Registry  we believe that
factors such as the technical and creative skills of our personnel are more essential to
our success and ability to compete. The Form PA, published by the U.S. Patent and
Trademark Office in Washington, D.C., allows the filer to register with the USPTO their
creative recorded work, such as a film and the underlying script for the film. Although
registration with the Copyright Office is not required to have a valid

10

copyright, registration does provide
several benefits, including the establishment of a public record and evidence of our claim
as the valid copyright owner of our films and their underlying scripts, the ability to
file a federal lawsuit against someone who uses our films or portions thereof without our
permission, and eligibility to receive statutory damages and attorneys fees in the
event we file and win a copyright infringement lawsuit. The Writers Guild of
Americas Intellectual Property Registry service assists writers in establishing the
completion dates of intellectual property, providing a dated record documenting a
writers claim of authorship. If necessary, a Registry employee may produce the
material as evidence if a legal or official Guild action is initiated.

Despite use of the federal Form PA
and the Writers Guilds Intellectual Property Registry, there can be no assurance
that any of our intellectual property rights will provide competitive advantages or will
not be challenged, invalidated or circumvented by competitors. There can be no assurance
that disputes will not arise concerning the ownership of intellectual property.
Furthermore, there can be no assurance that intellectual properties will not become known
or be independently developed by competitors or that we will be able to maintain the
confidentiality of information relating to our literary properties.

Conversely, content on our website
may bring us liability. Our website could possibly face potential liability for
negligence, copyright, patent, trademark, defamation, indecency and other claims based on
the nature and content of the materials we post. Such claims have been brought and
sometimes successfully pressed against Internet content distributors. We could also be
exposed to liability with respect to unauthorized duplication of content or unauthorized
use of other parties proprietary technology. Although we intend to obtain general
liability insurance, it may not cover potential claims of this type or may not be adequate
to protect us from all liability that may be imposed. Therefore any imposition of
liability could hurt our business.

Existing or Probable Governmental
Regulation There are the usual governmental regulations on workplace environment and
employee pay, benefits, taxes and relations that other businesses face, as well as
intellectual property considerations, discussed above; however, we do not anticipate any
other governmental regulations to substantially effect our business.

Employees.    
The total number of employees we have, including full- and part-time, is currently zero
(0). We rely on the services of our President and Chairman, Tal Kapelner, our
Vice-President, Secretary and Director, Cheney Shapiro, and our Treasurer, Ariella
Kapelner, to devote as much time as they can to Tally-Ho and its projects, and to spend
time overseeing our administrative responsibilities as well, but at this time we have no
employees, not even our three management personnel. Currently, Tal Kapelner devotes 20
hours per week to Tally-Ho, Cheney Shapiro devotes 15 hours per week to Tally-Ho and
Ariella Kapelner devotes 5 hours per week, on average, to Tally-Ho. We anticipate that our
officers will continue to devote the same number of hours, on average, per week to our
company in the foreseeable future, although there will naturally be a spike in the number
of hours per week devoted by our management team whenever we go into production on a short
film, web-exclusive video skit or vignette or television pilot. In the event we are
successful in generating revenue and making our company profitable, employment contracts
will be offered to members of our management personnel, and if in the mid-future 
1-3 years from now  we are successful enough to have the resources for and need to
hire additional management or administrative or other personnel, we will do so.

With respect to our filmed
entertainment products, those are worked on by independent contractors who work on each
shoot on a project basis. For example, a director of photography and a script supervisor
were retained for The G! True Tinseltown Tale: Dude, Wheres My Car? and
then paid by the shoot day as independent contractors. As this film went through
post-production, it was edited by an editor who was paid by the hour and was also not an
employee. The only exception to this are the actors. Pursuant to Screen Actors Guild
rules, we are required to consider the actors we hire on each film employees, even if they
are hired for only one day. However, the typical length of employment for actors on a
short film shoot is 1-2 days, such as it was with The G! True Tinseltown Tale: Dude,
Wheres My Car?". This is typical of our industry and we will likely continue to
produce film entertainment products without hiring employees, except for the actors on
very short-term bases.

11

# Description of Property.

We are provided free office and small
studio space at 518 Oak Street #2 in Glendale, California at no charge by our president
and Chairman, Tal Kapelner.

Currently, and for the foreseeable
future, which we consider to be over the next 12 months, it is our policy to not engage in
any investments in real estate or interests in real estate, or any investments in real
estate mortgages, or any securities of or interests in persons primarily engaged in real
estate activity; however, we do not have in place specific, written limitations on the
percentage of assets which may be invested in any one investment, or type of investment.
This policy we have described may be changed without a vote of our security holders.
Currently, it is not our policy to acquire assets either primarily for possible capital
gain or primarily for income.

# Legal Proceedings.

We are not a party to any pending
legal proceeding, nor are we aware of any proceeding contemplated by any governmental
authority.

# Submission of Matters to
a Vote of Security Holders.

There was an annual meeting of
shareholders held on November 21, 2004. At that meeting, Tal L. Kapelner and Cheney A.
Shapiro were nominated for re-election as directors, and then re-elected as directors. No
other persons were nominated to be directors. Mr. Kapelner and Ms. Shapiro are
Tally-Hos only two directors.

The only matter voted upon at this
annual meeting was the election of directors. Nominee Tal L. Kapelner received 40,137,500
votes for his re-election, representing approximately 88.3% of the shares of the company
and 100% of the shares represented at the meeting, and zero votes against. Nominee Cheney
A. Shapiro received 40,137,500 votes for her re-election, representing approximately 88.3%
of the shares of the company and 100% of the shares represented at the meeting, and zero
votes against.

# PART II

# Managements
Discussion and Analysis or Plan of Operation.

FORWARD-LOOKING STATEMENTS

This report contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements
relate to future events or the Companys future financial performance. The Company
intends the forward-looking statements throughout this quarterly report and the
information incorporated by reference to be covered by the safe harbor provisions for
forward-looking statements. All projections and statements regarding the Companys
expected financial position and operating results, its business strategy, its financing
plans and the outcome of any contingencies are forward-looking statements. These
statements can sometimes be identified by the use of forward-looking words such as
may, believe, plan, will,
anticipate, estimate, expect, intend, and
other words and phrases of similar meaning. Known and unknown risks, uncertainties and
other factors could cause the actual results to differ materially from those contemplated
by the statements. The forward-looking information is based on information available as of
the date of this report on Form 10-KSB and on numerous assumptions and developments that
are not within our control. Although the Company believes these forward-looking statements
are reasonable, the Company cannot assure you they will turn out to be correct.

12

The amount of cash we currently have
on hand, as of February 28, 2005, is $799, and the amount of working capital we have
 which is current assets minus current liabilities  is $799. As of the end of
our last quarter, on December 31, 2004, we had $9,229 cash on hand. The amount of cash we
will need to operate our business over the next 12 months is minimally approximately
$10,000 which will be needed just for administrative expenses, and ideally at least
$60,000 which will be used to further our business and marketing plans as delineated
below. The amount of cash we have on hand is insufficient to satisfy our cash requirements
beyond the first quarter of 2005. Without an infusion of cash from an additional private
offering, or other debt or equity financing, Tal Kapelner and Cheney Shapiro will have to
loan us money to pay our expenses as they have in the past. Our auditors have included a
note in our financial statements regarding Tally Ho and its ability to continue as a going
concern. Please see Notes to our Financial Statements, following below.

In the fourth quarter of 2003, we
began our second major project, a television pilot for a new original series entitled
The Boiler Twins. We look forward to completing and marketing the Boiler
Twins project as part of our future plans for this year (see our Marketing Plans,
below), dependant upon raising $40,000.

Over the next 12 months, we plan to
produce a minimum of one television pilot (the Boiler Twins pilot), and one
short film.

There are specific milestones 
and steps to achieving each milestone  to our business plan. Our first milestone was
to establish our business. The specific steps we took to accomplish this were

| | a) | incorporate
our corporation;
| | -- | ----------------------------

| | b) | establish
our web site;
| | -- | -----------------------

| | c) | establish
our offices;
| | -- | ----------------------

| | d) | open
a bank account;
| | -- | --------------------

| | e) | perfect
our business plan.
| | -- | --------------------------

This first milestone was reached in
approximately three months, from November 2002 to January 2003 and cost us approximately
$1,000. Tal Kapelner and Cheney Shapiro loaned Tally-Ho the money needed to complete this
milestone.

The second milestone was to produce
and market our first entertainment product: a short film shot on digital video entitled
The G! True Tinseltown Tale: Dude, Wheres My Car? The specific steps we
took to accomplish this were

| | a) | write a script;
| | -- | ---------------

| | b) | decide on a director and producers;
| | -- | -----------------------------------

| | c) | develop a budget and production schedule;
| | -- | -----------------------------------------

| | d) | finance the project;
| | -- | --------------------

| | e) | prepare paperwork for, and sign with, actors union;
| | -- | ---------------------------------------------------

| | f) | sign with payroll company and prepare employer tax and workers
          compensation obligations;
| | -- | ---------------------------------------------------------------------------------------------------

| | g) | cast all roles;
| | -- | ---------------

| | h) | find and secure locations for shooting;
| | -- | ---------------------------------------

| | i) | hire all needed crewmembers;
| | -- | ----------------------------

| | j) | purchase or otherwise secure props, wardrobe and filmmaking equipment;
| | -- | ----------------------------------------------------------------------

| | k) | rehearse the scenes with the actors;
| | -- | ------------------------------------

| | l) | prepare food and beverage service for locations and make other preparations
          before shooting;
| | -- | ------------------------------------------------------------------------------------------------------

| | m) | shoot the scenes of the film as per the script;
| | -- | -----------------------------------------------

| | n) | complete final tax and union paperwork;
| | -- | ---------------------------------------

| | o) | hire editor to catalogue all of the footage shot.
| | -- | -------------------------------------------------

| | p) | have director, producers and editor work together to cut the footage together
          into a final film, adding any visual or sound effects, additional dialogue
          recording, narration, additional footage, etc.;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | q) | produce copies of the finished film in whichever media is deemed suitable; and
| | -- | ------------------------------------------------------------------------------

| | r) | distribute and market the finished product through the various methods discussed
          above in the section 13
| | -- | ------------------------------------------------------------------------------------------------------------------

The first 15 steps (a  o) above
took approximately six months to complete, from November of 2002 to April of 2003 while
the last three steps (p  r) took approximately 19 months to complete, due to a lack
of funding. The cost of this project has been approximately $9,000 and Tal Kapelner has
paid for it out of his own pocket.

One step that we did not anticipate
was the securing of rights to use the song Ive Had the Time of My Life
which we use in our G! Dude? film. The rights to use this song in
non-commercial settings is estimated by attorneys to cost approximately $2,000 to $3,000,
although rights are not guaranteed and are subject to the approval of the owners of the
copyrights to the song. Without an additional infusion of cash, we will be unable to
secure rights to this film and will therefore be severely hampered in our ability to
screen our film. For example, we will not be able to upload the film to websites such as
ifilm.com or atomfilms.com, nor will we be able to screen our film at film festivals.

The third milestone was to produce
our second entertainment product: written material for the Tally-Ho Ventures, Inc.
website. The specific steps we took to accomplish this were

| | a) | Tal
Kapelner writing the material; and
| | -- | --------------------------------------

| | b) | our
web designer Steve Aguilera of GraphicPark.net uploading and formatting the
          material for our web site.
| | -- | --------------------------------------------------------------------------------------------------------------------

This third milestone was reached in
approximately 2 weeks, in March of 2003, and did not cost any additional money.

The fourth milestone was to raise
financial capital and prepare our share structure so as to allow for listing later on a
secondary market by issuing freely-tradable securities. The specific steps we took to
accomplish this were

| | a) | retain
counsel, auditor and EDGARizer professionals;
| | -- | ----------------------------------------------------

| | b) | prepare
Form SB-2 and file with SEC;
| | -- | ------------------------------------

| | c) | file
registration statement with state of California pursuant to qualification           by
coordination provision;
| | -- | -------------------------------------------------------------------------------------------------------------------

| | d) | have
SEC review and offer comments;
| | -- | -----------------------------------

| | e) | revise
SB-2 and re-file with SEC;
| | -- | ---------------------------------

| | f) | have
SEC re-review and offer further comments;
| | -- | ----------------------------------------------

| | g) | continue
to revise until cleared for offering by SEC; and
| | -- | ---------------------------------------------------------

| | h) | conduct
offering in the state of California, retain transfer agent, issue share
          certificates, etc.
| | -- | ------------------------------------------------------------------------------------------------------------

We began these steps in March of 2003
and completed this milestone on January 1, 2004, when our registered stock offering
closed. This milestone has cost us approximately $6,500 in EDGARizing and accounting fees;
printing, engraving and mailing costs; and states of California and Colorado registration
fees, and some of that money was loaned to us by Tal Kapelner and Cheney Shapiro and the
rest was taken from sales in the offering.

The fifth milestone in our business
plan was to apply for a priced quotation on the Over-The-Counter Bulletin Board stock
quotation service. The specific steps we took to complete this milestone were

| | a) | close
our stock offering pursuant to our earlier registration statement;
| | -- | ------------------------------------------------------------------------

| | b) | prepare
due diligence paperwork to supplement our 15c2-11 filing;
| | -- | -----------------------------------------------------------------

| | c) | submit
our due diligence materials to the NASD via a market maker;
| | -- | ------------------------------------------------------------------

| | d) | respond
to any deficiencies in our application as pointed out by the NASD;
| | -- | --------------------------------------------------------------------------

| | e) | upon
approval for an unpriced quotation by the NASD, have market maker revise
               Form 211 to apply for a priced quotation on the Over-The-Counter Bulletin
Board;                and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f) | work
with market maker on setting an opening price and discuss making market on
               the stock.
| | -- | ---------------------------------------------------------------------------------------------------------

The timeframe for completing this
milestone was one year, from December 2003 to December 2004. There was no cost for
applying for a priced quotation on the OTC Bulletin Board stock quotation service.

Our sixth milestone is to complete
our second major entertainment product: a pilot episode of our new television series
The Boiler Twins. The specific steps we have taken towards accomplishing this
are

14

| | a) | write
a script;
| | -- | ---------------

| | b) | decide
on a director and producers;
| | -- | -----------------------------------

| | c) | develop
a budget and production schedule;
| | -- | -----------------------------------------

| | d) | finance
the project;
| | -- | --------------------

| | e) | prepare
paperwork for, and sign with, actors union;
| | -- | ---------------------------------------------------

| | f) | sign
with payroll company and prepare employer tax and workers          compensation
obligations;
| | -- | --------------------------------------------------------------------------------------------------

| | g) | cast
all roles;
| | -- | ---------------

| | h) | find
and secure locations for shooting;
| | -- | ---------------------------------------

| | i) | hire
all needed crewmembers;
| | -- | ----------------------------

| | j) | purchase
or otherwise secure props, wardrobe and filmmaking equipment;
| | -- | ----------------------------------------------------------------------

| | k) | rehearse
the scenes with the actors;
| | -- | ------------------------------------

| | l) | prepare
food and beverage service for locations and make other preparations           before
shooting;
| | -- | ------------------------------------------------------------------------------------------------------

| | m) | shoot
the scenes of the film as per the script; and
| | -- | ---------------------------------------------------

| | n) | complete
final tax and union paperwork.
| | -- | ---------------------------------------

The above steps were accomplished
between July and December of 2003, and cost approximately $5,000, which was paid for by
Mr. Kapelner. The steps we need to take to finish this project are

| | o) | secure
funding for the completion of this project;
| | -- | --------------------------------------------------

| | p) | re-shoot
principal photography;
| | -- | -------------------------------

| | q) | hire
editor to catalogue all of the footage shot;
| | -- | -------------------------------------------------

| | r) | have
director, producers and editor work together to cut the footage together
               into a final vignette, adding any visual or sound effects, additional
dialogue                recording, narration, additional footage, etc.;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | s) | produce
copies of the finished film in whichever media is deemed suitable; and
| | -- | ------------------------------------------------------------------------------

| | t) | distribute
and market the finished product through the various methods discussed
               above in the section.
| | -- | ---------------------------------------------------------------------------------------------------------------------

We anticipate completing these steps
by the end of fiscal year 2005, with a cost of at least $40,000, or more, if funding is
available for a more extensive production.

Our seventh milestone is to prepare
our next entertainment product: a web-exclusive video vignette featuring two sets of
teams, each with their own car, attempting to garner the most number of parking tickets in
one day in the Greater Los Angeles Area. The specific steps we will need to take to
accomplish this milestone is

| | a) | complete
a treatment and detailed outline of the vignette;
| | -- | ----------------------------------------------------------

| | b) | decide
on a director and producers;
| | -- | -----------------------------------

| | c) | develop
a budget and production schedule;
| | -- | -----------------------------------------

| | d) | finance
the project;
| | -- | --------------------

| | e) | prepare
paperwork for, and sign with, actors union;
| | -- | ---------------------------------------------------

| | f) | sign
with payroll company and prepare employer tax and workers               compensation
obligations;
| | -- | -------------------------------------------------------------------------------------------------------

| | g) | decide
on who will participate in the vignette, cast any roles as needed;
| | -- | -------------------------------------------------------------------------

| | h) | hire
all needed crewmembers;
| | -- | ----------------------------

| | i) | purchase
or otherwise secure props, wardrobe and filmmaking equipment;
| | -- | ----------------------------------------------------------------------

| | j) | shoot
the action of each of the two teams as they wander around L.A. in search
               of parking enforcement officers to ticket their cars;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | k) | complete
final tax and union paperwork;
| | -- | ---------------------------------------

| | l) | hire
editor to catalogue all of the footage shot;
| | -- | -------------------------------------------------

| | m) | have
director, producers and editor work together to cut the footage together
               into a final vignette, adding any visual or sound effects, additional
dialogue                recording, narration, additional footage, etc.; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | n) | upload
finished vignette to website.
| | -- | ------------------------------------

The timeframe for completing this
milestone depends upon how quickly we can achieve financing; however, we anticipate
starting this project in August 2005 and uploading the finished product in September 2005.
We project a cost of $5,000 for this project from start to finish, and anticipate paying
for this project through future loans or future money raises.

15

The eighth milestone in our business
plan is to produce and market a television show pilot episode, which we have designed to
be a behind-the-scenes reality-based television show which will feature edited
footage of three writing partners coming together at a table to write a comedy sketch of
their choosing. The first two-thirds of the show will contain this footage showing the
writers attempting to put funny material down on paper in the form of a five-minute comedy
skit. The final 5-10 minutes of the program will feature professional actors actually
performing the skit the writers just completed writing, as well as bonus behind-the-scenes
footage showing the actors first reading their lines and rehearsing. The specific steps
for completing this milestone will be

| | a) | write
a detailed treatment and outline of the action in the episode;
| | -- | --------------------------------------------------------------------

| | b) | decide
on a director and producers;
| | -- | -----------------------------------

| | c) | develop
a budget and production schedule;
| | -- | -----------------------------------------

| | d) | finance
the project;
| | -- | --------------------

| | e) | prepare
paperwork for, and sign with, actors union;
| | -- | ---------------------------------------------------

| | f) | sign
with payroll company and prepare employer tax and workers               compensation
obligations;
| | -- | -------------------------------------------------------------------------------------------------------

| | g) | cast
all roles;
| | -- | ---------------

| | h) | find
and secure studio sets for shooting;
| | -- | -----------------------------------------

| | i) | hire
all needed crewmembers;
| | -- | ----------------------------

| | j) | purchase
or otherwise secure props, wardrobe and filmmaking equipment;
| | -- | ----------------------------------------------------------------------

| | k) | prepare
food and beverage service for the cast and crew on set and make other
               preparations before shooting;
| | -- | --------------------------------------------------------------------------------------------------------------------------

| | l) | shoot
the documentary footage of the three writers writing a skit together;
| | -- | ---------------------------------------------------------------------------

| | m) | shoot
documentary footage of actors receiving the material the writers just
               wrote, rehearsing and then performing the skit;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------

| | n) | complete
final tax and union paperwork;
| | -- | ---------------------------------------

| | o) | hire
editor to catalogue all of the footage shot;
| | -- | -------------------------------------------------

| | p) | have
director, producers and editor work together to cut the footage together
               into a final film, adding any visual or sound effects, additional dialogue
               recording, narration, additional footage, etc.;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | q) | produce
copies of the finished film in whichever media is deemed suitable; and
| | -- | ------------------------------------------------------------------------------

| | r) | distribute
and market the finished product through the various methods discussed
               above in the section.
| | -- | ---------------------------------------------------------------------------------------------------------------------

The timeframe for completing this
milestone, depending upon availability of funds following this offering, is expected to be
five months from writing the treatment to marketing and distributing the finished pilot.
We anticipate working on this project from December of 2005 to the end of May 2006, and
spending $40,000 to produce and market it, with the money coming from the proceeds of
future offerings or other debt or equity financing.

In addition to the above-mentioned
creative projects, we have many ideas in development for our short and super short films,
including a spoof of Viacoms basic cable channel MTV, tentatively titled 20
Things You Wont See on MTV (Like Dignity)"; a parody of the television series
Inside the Actors Studio; a parody of the Carls Jr. fast-food
restaurant commercials; and a dramatic short film about the field of psychiatrys
influence in the loss of individual liberty and freedom in the U.S.

We also plan to step up our marketing
efforts, subject to available financing, of both our company as a whole as well as our
indidividual projects. We look forward to more screenings of our first short film,
The G! True Tinseltown Tale: Dude, Wheres My Car?", as well as
distributing DVD discs of the film to key entertainment industry players, as we detail in
our prospectus. We also plan to distribute copies of our television pilot The Boiler
Twins in the hopes of gaining sufficient interest from television programmers. To
publicize our company as a whole, and drive viewers to our website, we may place some of
our written works  currently available through our website
www.tallyhoventures.com  in the form of an ad placed in entertainment
industry trade publications like Hollywood Reporter and Variety, and we may also advertise
on-line in certain websites we feel may garner the greatest amount of exposure to our
target demographic. Our marketing strategy in this area is to advertise
counter-intuitively on sites that are not particularly known for their entertainment
industry content, and are not widely advertised on at all, such as political weblogs like
andrewsullivan.com and instapundit.com, thereby reaching a powerful and affluent
demographic without much competition from other advertisers, in particular those from the
entertainment industry.

16

One problem with our marketing plan
that we did not anticipate was the securing of rights to use the song Ive Had
the Time of My Life which we use in our G! Dude? film. The rights to use
this song in non-commercial settings is estimated by attorneys to cost approximately
$2,000 to $3,000, although rights are not guaranteed and are subject to the approval of
the owners of the copyrights to the song. Without an additional infusion of cash, we will
be unable to secure rights to this film and will therefore be severely hampered in our
ability to screen our film. For example, we will not be able to upload the film to
websites such as ifilm.com or atomfilms.com, nor will we be able to screen our film at
film festivals.

We have no purchases or sales of
plant and/or significant equipment planned in the next 12 months.

We do not anticipate any significant
changes in the number of employees. We currently have zero and anticipate having zero
employees in the next 12 months.

# Financial Statements.

17

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of
Directors Tally-Ho Ventures, Inc.

(A Development Stage
Company)Glendale, CA

We have audited the accompanying
balance sheet of Tally-Ho Ventures, Inc. (an development stage company) as of December 31,
2004 and the related statements of operations, stockholders equity (deficit) and
cash flows for the years ended December 31, 2004 and 2003 and from inception of the
development stage on November 21, 2002 through December 31, 2004. These statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits. The financial statements from
inception of the development stage on November 21, 2002 through December 31, 2003 were
audited by other auditors; whose report dated April 14, 2004 expressed an unqualified
opinion. Our opinion from inception of the development stage on November 21, 2002 through
December 31, 2003 is based solely on the opinion of the prior auditors.

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

In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial
position of Tally-Ho Ventures, Inc. (an development stage company) as of December 31, 2004
and the results of its operations and its cash flows for the years ended December 31, 2004
and 2003, and from inception of the development stage on November 21, 2002 through
December 31, 2004 in conformity with United States generally accepted accounting
principles.

The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. As
discussed in the financial statements, the Company has sustained recent losses from
operations, has a deficit in working capital and a stockholders deficit. This raises
substantial doubt about the Companys ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the outcome of
this uncertainty.

HJ Associates & Consultants,
LLP Salt Lake City, Utah March 21, 2005

F-1

REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of DirectorsTally-Ho Ventures, Inc.(A Development Stage Company)Glendale,
California

We have audited the accompanying
statements of expenses, stockholders deficit, and cash flows for the year ended
December 31, 2003 and for the period from November 21, 2002 (Inception) through December
31, 2003. These financial statements are the responsibility of Tally-Hos management.
Our responsibility is to express an opinion on these financial statements based on our
audit.

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

In our opinion, the financial
statements referred to above present fairly, in all material respects, the results of
Tally-Ho Ventures operations and its cash flows for the period described in
conformity with accounting principles generally accepted in the United States of America.

MALONE & BAILEY, PC
www.malone-bailey.com Houston, Texas March 10, 2004

F-2

TALLY-HO VENTURES, INC.[a development stage
corporation] BALANCE SHEET as of December 31, 2004

|                                                 | 
|------------------------------------------------ | 
|ASSETS                                           | 
|Current Assets                                   | 
|Cash - General Account                           | 
|Cash - Distribution & Exhibition Account         | 
|                                                 | 
|Total Assets                                     | 
|                                                 | 
|LIABILITIES AND STOCKHOLDERS' EQUITY             | 
|LIABILITIES                                      | 
|Current Liabilities                              | 
|Notes Payable to Shareholders                    | 
|Accounts Payable                                 | 
|                                                 | 
|Total Liabilities                                | 
|                                                 | 
|STOCKHOLDERS' DEFICIT                            | 
|Common stock, $0.001 par, 75,000,000             | 
|shares authorized, 44,915,875 shares             | 
|issued and outstanding                           | 
|Additional paid-in capital                       | 
|Deficit accumulated during the development stage | 
|                                                 | 
|Total Stockholders' Deficit                      | 
|                                                 | 
|Total Liabilities and Stockholders' Deficit      | 
|                                                 | 

F-3

TALLY-HO VENTURES, INC. 
[a development stage corporation]STATEMENT OF EXPENSES Year ended December 31,
2004period from November 21, 2002 (Inception) through December 31, 2003 and period
from November 21, 2002 (Inception) through December 31, 2004

|                         | 1/1-
12/31,
2004 | 1/1 -
12/31,
2003 | Inception
Through
2004
|------------------------ | ---------------- | ----------------- | ----------------------
|Administrative expenses  |                  |                   |                       
|- paid in cash           |                  |                   | $                     
|- paid in stock          |                  |                   |                       
|- imputed interest       |                  |                   |                       
|- uncompensated services |                  |                   |                       
|                         |                  |                   |                       
|Net loss                 |                  |                   | $                     
|                         |                  |                   |                       
|Net loss per share       |                  |                   |                       
|                         |                  |                   |                       
|Weighted average common  |                  |                  
|shares outstanding       |                  |                   |                       

F-4

TALLY-HO VENTURES, INC. [a development stage
corporation] STATEMENT OF CASH FLOWSYear
ended December 31, 2004Period from November 21, 2002 (Inception) through December 31,and
period from November 21, 2002 (Inception) through December 31, 2004  Page 1 of a 2-page statement

|                               | 1/1 -
12/31,
2004 | 1/1 -
12/31,
2003 | Inception
Through
2004
|------------------------------ | ----------------- | ----------------- | ----------------------
|CASH FLOWS FROM OPERATING      |                   |                   |                       
|ACTIVITIES                     |                   |                  
|Net loss                       |                   |                   | $                     
|Adjustments to reconcile       |                   |                  
|net loss to cash used          |                   |                  
|in operating                   |                   |                  
|activities:                    |                   |                  
|Stock issued to founders       |                   |                   |                       
|Stock issued for services      |                   |                   |                       
|Imputed interest on notes      |                   |                  
|payable to shareholders        |                   |                   |                       
|Uncompensated services from    |                   |                  
|Management                     |                   |                   |                       
|Changes in Accounts Payable    |                   |                   |                       
|                               |                   |                   |                       
|NET CASH USED IN OPERATING     |                   |                  
|ACTIVITIES                     |                   |                   |                       
|                               |                   |                   |                       
|CASH FLOWS FROM INVESTING      |                   |                  
|ACTIVITIES                     |                   |                  
|Loans to related party         |                   |                   |                       
|Proceeds from repayment of     |                   |                  
|loan to related party          |                   |                   |                       
|                               |                   |                   |                       
|NET CASH USED IN INVESTING     |                   |                  
|ACTIVITIES                     |                   |                   |                       
|                               |                   |                   |                       
|CASH FLOWS FROM FINANCING      |                   |                  
|ACTIVITIES                     |                   |                  
|Proceeds from notes payable    |                   |                  
|to shareholders                |                   |                   |                       
|Payments on notes payable      |                   |                  
|to shareholders                |                   |                   |                       
|Stock issued for cash          |                   |                   |                       
|Stock returned and cancelled   |                   |                  
|cash returned                  |                   |                   |                       
|                               |                   |                   |                       
|NET CASH PROVIDED BY FINANCING |                   |                  
|ACTIVITIES                     |                   |                   |                       
|                               |                   |                   |                       
|NET CHANGE IN CASH             |                   |                   |                       
|Cash balance, beginning        |                   |                   |                       
|                               |                   |                   |                       
|Cash balance, ending           |                   |                   | $                     
|                               |                   |                   |                       

F-5

TALLY-HO VENTURES, INC. [a development stage
corporation] STATEMENT OF CASH FLOWSYear
ended December 31, 2004Period from November 21, 2002 (Inception) through December 31,and
period from November 21, 2002 (Inception) through December 31, 2004  Page 2 of a 2-page statement

|                        | 1/1 -
12/31,
2004 | 1/1 -
12/31,
2003 | Inception
Through
2004
|----------------------- | ----------------- | ----------------- | ----------------------
|CASH PAID FOR:          |                   |                  
|Interest                |                   |                   | $                     
|Income taxes            |                   |                   | $                     
|SCHEDULE OF NON-CASH    |                   |                  
|INVESTING AND FINANCING |                   |                  
|Common stock issued     |                   |                  
|for services            |                   |                   | $                     
|Contributed capital     |                   |                   | $                     

F-6

TALLY-HO VENTURES, INC.(A Development Stage
Company) STATEMENT OF CHANGES IN
STOCKHOLDERS DEFICIT Period from November
21, 2002 (Inception) through December 31,
2004 Page 1 of 2 page statement

|                           | Common Stock | Deficit
Accumulated
During
Development |   |           
|-------------------------- | ------------ | -------------------------------------- | - | ----------
|
|Shares issued to founder   |              |                                        |   |           
|in November 2002 at        |             
|par $.001                  |              | 41,050,000                             |   | $   41,050
|Shares issued for services |             
|in November 2002 at        |             
|par $.001                  |              | 2,100,000                              |   | 2,100     
|Shares cancelled           |              | (21,050,000                            | ) | --        
|Shares issued for services |             
|in November 2002 at        |             
|par $.001                  |              | 21,050,000                             |   | 21,050    
|Imputed interest on notes  |             
|payable to shareholders    |              | --                                     |   | 2         
|Net Loss                   |              | --                                     |   | --        
|                           |              |                                        |   |           
|Subtotals, 2002            |              | 43,150,000                             |   | 64,202    
|Shares issued for services |             
|in November 2003 at $.01   |              | 300,000                                |   | 3,000     
|Shares issued for cash     |             
|in 2003 at $.01            |              | 765,875                                |   | 7,659     
|Imputed interest on notes  |             
|payable to shareholders    |              | --                                     |   | 391       
|Net loss                   |              | --                                     |   | --        
|                           |              |                                        |   |           
|Subtotals, 2003            |              | 44,215,875                             |   | 75,252    

F-7

TALLY-HO VENTURES, INC.(A Development Stage
Company) STATEMENT OF CHANGES IN
STOCKHOLDERS DEFICIT Period from November
21, 2002 (Inception) through December 31,
2004 Page 2 of 2 page statement

|                            | Common Stock | Deficit
Accumulated
During
Development |   |        
|--------------------------- | ------------ | -------------------------------------- | - | -------
|
|Shares issued for cash      |             
|in 2004 at $.02             |              | 2,125,000                              |   | 42,500 
|Shares returned for refund  |              | (1,425,000                             | ) | (28,500
|Imputed interest on notes   |             
|payable to shareholders     |              | --                                     |   | 491    
|Uncompensated services from |             
|Management                  |              | --                                     |   | 10,470 
|Net loss                    |              | --                                     |   | --     
|                            |              |                                        |   |        
|Balances, 12/31/2004        |              | 44,915,875                             |   | 100,213
|                           
|Less:  par value            |              |                                        |   | 44,916 
|                            |              |                                        |  
|Paid in capital             |              |                                        | $ | 55,297 
|                            |              |                                        |  

F-8

TALLY-HO VENTURES, INC.[a
development stage corporation]

NOTES TO FINANCIAL
STATEMENTS

NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates. In preparing
financial statements, management makes estimates and assumptions that affect the reported
amounts of assets and liabilities in the balance sheet and revenue and expenses in the
income statement. Actual results could differ from those estimates.

Cash and Cash Equivalents. For
purposes of the statement of cash flows, Tally-Ho considers all highly liquid investments
purchased with an original maturity of three months or less to be cash equivalents. There
were no cash equivalents as of December 31, 2004.

Revenue Recognition. Tally-Ho
recognizes revenue in accordance with Statement of Accounting Position 00-2
Accounting by Producers or Distributors of Films. Revenue is recognized from a
sale or licensing arrangement of a film when persuasive evidence of a sale or licensing
arrangement with a customer exists; the film is complete and, in accordance with the terms
of the arrangement, has been delivered or is available for immediate and unconditional
delivery; the license period of the arrangement has begun and the customer begins its
exploitation, exhibition or sale; the arrangement fee is fixed or determinable; and
collection of the arrangement fee is reasonably assured. There were no revenues as of
December 31, 2004.

Income taxes. Tally-Ho recognizes
deferred tax assets and liabilities based on differences between the financial reporting
and tax bases of assets and liabilities using the enacted tax rates and laws that are
expected to be in effect when the differences are expected to be recovered. Tally-Ho
provides a valuation allowance for deferred tax assets for which it does not consider
realization of such assets to be more likely than not.

Recently issued accounting
pronouncements. Tally-Ho does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on their results of operations, financial
position or cash flow.

NOTE 2  SIGNIFICANT
EVENTS

On June 12, 2004, the Board of Directors
of Tally-Ho resolved to conduct a private placement offering of 3,000,000 of its common
shares of stock at a price of $0.02 per share. The offering was conducted from June 12,
2004  July 13, 2004 pursuant to an exemption from registration under Section 5 of
the Securities Act of 1933, as amended.

2,125,000 shares were issued to 12
investors in the state of California. A total of $42,500 was raised. The Company
subsequently returned $28,500 for the cancellation of 1,425,000 shares.

F-9

NOTE 3  GOING
CONCERN

The Companys financial
statements are prepared using generally accepted accounting principles in the United
States of America applicable to a going concern, which contemplates the realization of
assets and liquidation of liabilities in the normal course of business. The Company has
had no revenues, has generated losses from operations and has had a deficit in its working
capital through fiscal year-ending 2004.

In order to continue as a going
concern, and achieve a profitable level of operations, the Company will need, among other
things, additional capital resources. Managements plans include concentrating its
efforts on marketing its short film and website and raising additional capital
through future private placement offerings and through loans from shareholders. The
Company expects that it will need $10,000 to cover just its administrative expenses
through 2005, and at least $60,000 to further its business and marketing plans
as described in its annual report. However, management cannot provide any
assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to
continue as a going concern is dependent upon its ability to successfully accomplish the
plan described in the preceding paragraph and eventually attain profitable operations. The
accompanying financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.

NOTE 4  RELATED
PARTY TRANSACTIONS

Treasurer Ariella Kapelner loaned the
Company $900 in the year ended December 31, 2004. President and Chairman of the Board Tal
L. Kapelner loaned the Company $375 in the year ended December 31, 2004, and
Vice-President, Secretary and Director Cheney A. Shapiro loaned the Company $375 in the
year ended December 31, 2004.

Additionally, imputed interest of
$491 for the year ended December 31, 2004 was contributed to capital by holders of the
notes, and was recorded as paid-in capital.

Further, Tal L. Kapelner purchased
137,500 shares of stock of the Company in the private placement offering described in Note
2 for $2,750, and Cheney A. Shapiro purchased 425,000 shares of stock of the Company in
the private placement offering described in Note 2 for $8,500.

Further, on September 8, 2004, Cheney
A. Shapiro returned to the Company the 425,000 shares of stock she purchased in the
private placement offering described in Note 2 above. The Company cancelled the 425,000
shares and returned the purchase price of $8,500 to Ms. Shapiro.

Further, officers and directors of
the Company contributed services valued at $10,470 for the year-ended December 31, 2004.

F-10

NOTE 5  FUNDING
COMMITMENT

Tally-Ho has had no revenues and is
currently attempting to raise additional capital. However, current overhead and
administrative costs are minimal. The founder and majority shareholders have orally
committed to fund ongoing operations.

NOTE 6  NOTES
PAYABLE TO SHAREHOLDERS

In November and December 2002, the
majority shareholders loaned Tally-Ho $74. In 2003, the majority shareholders loaned
Tally-Ho $7,341. In 2004, the majority shareholders loaned Tally-Ho $1,650. The notes
mature 12 months from issuance, bear no interest and have no collateral. Interest expense
is being imputed at 8 percent and is recorded as paid in capital.

In 2004, Tally-Ho paid back $2,596 of
the money loaned to it by the majority shareholders. As of December 31, 2004, the Company
had $6,469 in outstanding loans still owing to the majority shareholders.

NOTE 7  COMMON STOCK

In November 2002, Tally-Hos
founder was issued 41,050,000 shares of common stock valued at par or $41,050.

In November 2002, Tally-Ho issued 2,100,000
shares of common stock valued at par or $2,100 for services rendered.

In November 2002, the founder
transferred 21,050,000 shares of his common stock to five individuals for services
performed for Tally-Ho. The shares were accounted for as canceled and reissued by Tally-Ho
for services. The shares were valued at $21,050 and have been expensed.

Tally-Ho sold 765,875 shares for
$7,659 to several individuals in November and December 2003 as part of a registered public
offering. Tally-Ho issued 300,000 shares valued at $3,000 to a consultant in November 2003
as part of the same offering.

Tally-Ho sold 2,125,000 shares for
$42,500 to several individuals in an unregistered private offering in June and July of
2004. Of those shares, 1,425,000 shares were returned later for full refunds, including
425,000 shares bought and then returned by Cheney A. Shapiro.

NOTE 8  COMMITMENTS

Tally-Hos principal office and
studio space is in the home of Tally-Hos president pursuant to an oral agreement on
a rent-free month-to-month basis.

NOTE 9  SUBSEQUENT
EVENTS

Since December 31, 2004, Tally-Ho
issued stock pursuant to a private stock offering, the Companys second private
offering. Tally-Ho sold and issued 299,334 shares of its Common Stock to ten investors at
a price of $0.03 per share on January 15, 2005. Total proceeds from the offering were
$8,980 in cash.

F-11

Also since December 31, 2004, the
Company filed a Form S-8 Registration Statement and issued 260,000 shares to parties which
the Company owed a total of $13,000 in Accounts Payable. This brought the Companys
Accounts Payable to $0.

Also since December 31, 2004, the
Company has repaid all loans owing. The Company paid a total amount of $6,859 to all
parties with outstanding loans with the Company, thereby bringing the Companys total
liabilities to $0.

NOTE 10  RECENT
ACCOUNTING PRONOUNCEMENTS

On December 16, 2004 the FASB issued
SFAS No. 123(R), Share-Based Payment, which is an amendment to SFAS No. 123,
Accounting for Stock-Based Compensation. This new standard eliminates the ability
to account for share-based compensation transactions using Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees,and
generally requires such transactions to be accounted for using a fair-value-based method
and the resulting cost recognized in our financial statements. This new standard is
effective for awards that are granted, modified or settled in cash in interim and annual
periods beginning after June 15, 2005. In addition, this new standard will apply to
unvested options granted prior to the effective date. We will adopt this new standard
effective for the fourth fiscal quarter of 2005, and have not yet determined what impact
this standard will have on our financial position or results of operations.

In November 2004, the
FASB issued SFAS No. 151, Inventory Costs  an amendment of ARB No. 43,
Chapter 4. This Statement amends the guidance in ARB No. 43, Chapter 4,
Inventory Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handling costs, and wasted material (spoilage).
Paragraph 5 of ARB 43, Chapter 4, previously stated that . . . under some
circumstances, items such as idle facility expense, excessive spoilage, double freight,
and rehandling costs may be so abnormal as to require treatment as current period charges.
.. . . This Statement requires that those items be recognized as current-period
charges regardless of whether they meet the criterion of so abnormal. In
addition, this Statement requires that allocation of fixed production overheads to the
costs of conversion be based on the normal capacity of the production facilities. This
statement is effective for inventory costs incurred during fiscal years beginning after
June 15, 2005. Management does not believe the adoption of this Statement will have
any immediate material impact on the Company.

In December 2004, the FASB issued
SFAS No. 152, Accounting for Real Estate Time-sharing Transactions, which amends
FASB statement No. 66, Accounting for Sales of Real Estate, to reference the financial
accounting and reporting guidance for real estate time-sharing transactions that is
provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate
Time-Sharing Transactions. This statement also amends FASB Statement No. 67, Accounting
for Costs and Initial Rental Operations of Real Estate Projects, to state that the
guidance for (a) incidental operations and (b) costs incurred to sell real estate projects
does not apply to real estate time-sharing transactions. The accounting for those
operations and costs is subject to the guidance in SOP 04-2. This Statement is effective
for financial statements for fiscal years beginning after June 15, 2005. Management
believes the adoption of this Statement will have no impact on the financial statements of
the Company.

F-12

In December 2004, the FASB issued
SFAS No.153, Exchange of Nonmonetary Assets. This Statement addresses the
measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29,
Accounting for Nonmonetary Transactions, is based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the assets exchanged. The
guidance in that Opinion, however, included certain exceptions to that principle. This
Statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of
similar productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetrary exchange has
commercial substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. This Statement is effective for financial
statements for fiscal years beginning after June 15, 2005. Earlier application is
permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the
date of this statement is issued. Management believes the adoption of this Statement will
have no impact on the financial statements of the Company.

The implementation of the provisions
of these pronouncements are not expected to have a significant effect on the
Companys consolidated financial statement presentation.

NOTE 11  TAXES

Deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carryforwards and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of
the following components as of December 31, 2004 and 2003:

|                         | 2004 |             | 2003
|------------------------ | ---- | ----------- | ----
|Deferred tax assets:     |      |             |     
|NOL Carryover            |      | $   8,325   |     
|Accrued Expenses         |      | 4,875       |     
|Deferred tax liabilities |      | --          |     
|Valuation allowance      |      | (13,200     | )   
|                         |      |             |     
|Net deferred tax asset   |      | $        -- |     
|                         |      |             |     

The income tax provision differs from
the amount of income tax determined by applying the U.S. federal and state income tax
rates of 39% to pretax income from continuing operations for the years ended December 31,
2004 and 2003 due to the following:

F-13

|                    | 2004 |          | 2003
|------------------- | ---- | -------- | ----
|Book income         |      | $(13,131 | )   
|State taxes         |      | (312     | )   
|Accrued expenses    |      | 4,085    |     
|Valuation allowance |      | 9,358    |     
|                    |      |          |     
|                    |      | $   --   |     

At December 31, 2004, the Company had
net operating loss carryforwards of approximately $10,000 that may be offset against
future taxable income from the year 2004 through 2024. No tax benefit has been reported in
the December 31, 2004 financial statements since the potential tax benefit is offset by a
valuation allowance of the same amount.

Due to the change in ownership
provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal
income tax reporting purposes are subject to annual limitations. Should a change in
ownership occur, net operating loss carryforwards may be limited as to use in future
years.

F-14

# Controls and Procedures.

It is Managements
responsibility for establishing and maintaining adequate internal control over financial
reporting for Tally Ho. It is the Presidents and Treasurers ultimate
responsibility to ensure the Company maintains disclosure controls and procedures designed
to provide reasonable assurance that material information, both financial and
non-financial, and other information required under the securities laws to be disclosed is
identified and communicated to senior management on a timely basis. The Companys
disclosure controls and procedures include mandatory communication of material events,
management review of monthly, quarterly and annual results and an established system of
internal controls.

As of December 31, 2004, management
of the Company, including the President and Treasurer, conducted an evaluation of the
effectiveness of the design and operation of the Companys disclosure controls and
procedures with respect to the information generated for use in this Quarterly Report.
Based upon and as of the date of that evaluation, the President and Treasurer have
concluded the Companys disclosure controls were effective to provide reasonable
assurance that information required to be disclosed in the reports that the Company files
or submits under the relevant securities laws is recorded, processed, summarized and
reported within the time periods specified in the Commissions rules and forms. There
have been no changes in the Companys internal control over financial reporting
during the fiscal year ended December 31, 2004, that have materially affected, or are
reasonably likely to materially affect, the Companys internal control over financial
reporting.

It should be noted that while the
Companys management, including the President and Treasurer, believes the
Companys disclosure controls and procedures provide a reasonable level of assurance,
they do not expect that the Companys disclosure controls and procedures or internal
control over financial reporting will prevent all errors and all fraud. A control system,
no matter how well conceived or operated, can provide only reasonable, not absolute,
assurance the objectives of the control system are met. Further, the design of a control
system must reflect the fact there are resource constraints, and the benefits of controls
must be considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance all control
issues and instances of fraud, if any, have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and breakdowns can
occur because of simple error or mistake. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people, or by management
override of the controls. The design of any system of controls is based in part upon
certain assumptions about the likelihood of future events, and there can be no assurance
any design will succeed in achieving its stated goals under all potential future
conditions; over time, controls may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost-effective control system, misstatements due to errors or
fraud may occur and not be detected.

The registered public accounting firm
that audited the financial statements included in this annual report has issued an
attestation report on Managements assessment of Tally Hos internal control
over financial reporting.

# PART III

# Directors, Executive
Officers, Promoters and Control Persons; Compliance With Section 16(a) of the ExchangeAct.

The following are the names and ages
of all directors and executive officers, their positions and offices, and brief
descriptions of their business experience during the past five years: Tal L. Kapelner
Age:   29 President and Chairman of the Board of Directors

18

From July 1997- March 1998, served as
a writers assistant and assistant to an Executive Producer on Unhappily Ever
After, a television sitcom produced by Touchstone Television, a division of Disney
Enterprises, and airing on the WB network. His duties included proof-reading scripts and
non-creative rewriting of scripts, recording various editing notes during the shows
tapings, and performing a variety of office assistant functions for an executive producer
of the show.

From March 1998- April 2000 was
self-employed as a technical writer and creative writer of screenplays and teleplays. Was
hired to write business plans for companies in various fields. Was never hired or paid for
any creative writing during this time.

From April 2000-present, President of
a California subchapter S corporation engaged in technical writing services named
Tally-Ho Ventures, Inc., which is not associated with our company. His duties
include preparing business plans for companies in various fields.

Cheney A. ShapiroAge:   22

Vice-President, Secretary
and a Director

From March 1998- June 2000, served as
a personal and business assistant to a celebrity  primarily film actress; name being
withheld  and her family. Her duties included being a household governess, which
entails being a nanny to three kids, running errands, house-sitting, and helping to run
the household; also provided administrative support for celebritys acting career.

From June 2000- January 2001, was a
personal and business assistant to a celebrity  primarily television actress; name
being withheld. Her duties included bookkeeping and various office assistant functions,
and household duties.

From January 2001- May 2002, employed
as executive assistant to the Chairman of David Morse and Associates, an insurance
adjustment firm based in Glendale, California. Duties included maintaining the external
and internal PR of the Chairman, event and meeting planning, scheduling of company
activities, some marketing for the company and various office assistant functions.

From July 2002-present, President of
Fly-By Enterprises, Inc., a California corporation offering administrative support
services, such as communication system and database overhauls, on a project basis. Her
duties include seeking and performing project-based administrative work to people in the
business community. Her administrative assistant projects include overseeing
organizational projects and database overhauls.

Ariella KapelnerAge:   58Treasurer

From August 1998-present, founded and
still serves as president of the nonprofit corporation Living & Education, Inc., a
provider of instructional videos covering such fields as parenting and drug and criminal
rehabilitation, under which she has produced educational materials and seminars currently
being sold world-wide.

From January  November 2001,
served as president of Investment Research, Inc., a for-profit corporation engaged in the
research of how venture capitalists and other investors choose which investments they wish
to make and upon which criteria to make such decisions. She has matched investors
interests with young companies looking for funding by calling persons holding themselves
out to be angel investors and surveying them as to which types of companies
they would be interested in investing and informing young companies looking for funding of
the results of her surveys.

19

From September 2001- January 2003,
served as executive director of the non-profit Federal Commission on Educational Rights,
Inc., a group which seeks to inform parents of their rights in the educational system. Ms.
Kapelner has educated many parents on these rights.

The following are all the directors
of Tally-Ho, their terms of office and periods in which they served, and identification of
any other directorships held in reporting companies, with names of those companies:

|Director's Name   | Term of Office as Director and
Period During Which Served | Other Directorships
Held in Reporting
Companies
|----------------- | --------------------------------------------------------- | -----------------------------------------------
|Tal L. Kapelner   |                                                           | 2 years, 4 months                              
|                  |                                                           | Served November 21, 2002 - present             
|                 
|Cheney A. Shapiro |                                                           | 2 years, 4 months                              
|                  |                                                           | Served November 21, 2002 - present             

Ariella Kapelner, treasurer, is the
mother of president and Chairman of the Board, Tal Kapelner.

Tally Hos board of directors
has determined that Tally Ho does not have an audit committee financial expert serving on
its audit committee. We do not have an audit committee financial expert at this time
because of our limited resources and lack of ongoing operations necessitating an audit
committee financial expert.

Tally Ho has adopted a Code of Ethics
that applies to our principle executive officer (Tal L. Kapelner), principal financial
officer (Ariella Kapelner), and principal controller (Tal L. Kapelner) and has posted it
on our website www.tallyhoventures.com.

We undertake to provide to any person
without charge, upon request, a copy of our Code of Ethics. To receive a copy of our Code
of Ethics, mail a request for such to: Tally-Ho Ventures, Inc., 518 Oak Street #2,
Glendale, CA 91204.

# Executive Compensation.

No compensation was awarded to,
earned by or paid to any officer or director of Tally-Ho.

# Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters.

Tally Ho has no equity compensation
plans at this time.

We have 45,475,209 shares of common stock
outstanding at $0.001 par value. 75,000,000 shares of common stock are authorized.

The following information is for any
person, including any group of two or more persons acting as a partnership, syndicate or
other similar group, who is known to us to be the beneficial owner of more than five
percent of any class of our voting securities:

20

|Title of Class | Name and Address
of Beneficial Owner | Amount and Nature
of Beneficial Owner | Percent
of Class
|-------------- | ------------------------------------ | ------------------------------------- | ----------------
|Common         | Tal L. Kapelner                      | 20,137,500 shares(1)                  | 44.3            
|Stock          | c/o Tally-Ho Ventures, Inc.          | President and                        
|               | 518 Oak Street #2                    | Chairman of the                      
|               |                                      | Board of Directors                   
|              
|Common         | Cheney A. Shapiro                    | 20,000,000 shares(2)                  | 44              
|Stock          | c/o Tally-Ho Ventures, Inc.          | Vice-President,                      
|               | 518 Oak Street #2                    | Secretary and a                      
|               |                                      | Director                             

(1)     Tal
Kapelner owns 20,137,500 shares of Tally-Ho, no part of which are options, warrants, or
via any other rights, and he has no rights to acquire beneficial ownership of any other
shares, whether through option, warrant, conversion privilege or any other right, within
sixty days.

(2)     Cheney
Shapiro owns 20,000,000 shares of Tally-Ho, no part of which are options, warrants, or via
any other rights, and she has no rights to acquire beneficial ownership of any other
shares, whether through option, warrant, conversion privilege or any other right, within
sixty days.

We only have one class of equity
securities, and that is our Common Stock, and we have no parents or subsidiaries. For our
Common Stock, we present the following information regarding the security ownership of our
management, as of December 31, 2004:

|Title of Class | Name and Address
of Beneficial Owner | Amount and Nature
of Beneficial Owner | Percent
of Class
|-------------- | ------------------------------------ | ------------------------------------- | ----------------
|Common         | Tal L. Kapelner                      | 20,137,500 shares(1)                  | 44.3            
|Stock          | c/o Tally-Ho Ventures, Inc.          | President and                        
|               | 518 Oak Street #2                    | Chairman of the                      
|               |                                      | Board of Directors                   
|              
|Common         | Cheney A. Shapiro                    | 20,000,000 shares(2)                  | 44              
|Stock          | c/o Tally-Ho Ventures, Inc.          | Vice-President,                      
|               | 518 Oak Street #2                    | Secretary and a                      
|               |                                      | Director                             
|              
|Common         | Ariella Kapelner                     | 1,000,000 shares(3)                   | 2.2             
|Stock          | c/o Tally-Ho Ventures, Inc.          | Treasurer                            
|               | 518 Oak Street #2                   
|              
|Common         | All Directors and Executive          | 41,137,500 shares(4)                  | 90.5            
|Stock          | Officers as a Group                 
|               | c/o Tally-Ho Ventures, Inc.         
|               | 518 Oak Street #2                   

21

(1)     Tal
Kapelner owns 20,137,500 shares of Tally Ho, no part of which are options, warrants, or
via any other rights, and he has no rights to acquire beneficial ownership of any other
shares, whether through option, warrant, conversion privilege or any other right, within
sixty days.

(2)     Cheney
Shapiro owns 20,000,000 shares of Tally Ho, no part of which are options, warrants, or via
any other rights, and she has no rights to acquire beneficial ownership of any other
shares, whether through option, warrant, conversion privilege or any other right, within
sixty days.

(3)     Ariella
Kapelner owns 1,000,000 shares of Tally Ho, no part of which are options, warrants, or via
any other rights, and she has no rights to acquire beneficial ownership of any other
shares, whether through option, warrant, conversion privilege or any other right, within
sixty days.

(4)     All
Directors and Executive Officers as a Group own 41,137,500 shares of Tally Ho, no part of
which are options, warrants, or via any other rights, and they have no rights to acquire
beneficial ownership of any other shares, whether through option, warrant, conversion
privilege or any other right, within sixty days.

# Certain Relationships
and Related Transactions.

We do not have any parent companies.
The names of our three promoters are Tal Kapelner, Cheney Shapiro and Ariella Kapelner,
who are the three founders of our company.

On November 21, 2002, Tal Kapelner
received 41,050,000 shares of common stock from Tally-Ho, valued at the par value of
$0.001 per share, which he received in exchange for our business plan, valued at $41,050.
Nothing else of any value was given to us by Mr. Kapelner or received by Mr. Kapelner from
us with respect to this transaction.

The business plan acquired by us from
Mr. Kapelner was acquired for 41,050,000 shares of our common stock, with the price per
share set at par value, $0.001, making the total amount paid by us for the business plan
$41,050. The principle followed in determining the amount of the business plan was an
approximation based on Tally-Hos and Tal Kapelners experience seeing similar
transactions occur for others. This determination regarding the amount of the business
plan was made by Tal Kapelner, President and Chairman of our company, and son of Ariella
Kapelner, the Treasurer of our company. The cost of the business plan to Tal Kapelner was
negligible, practically zero.

On November 21, 2002, 20,000,000 of
Mr. Kapelners initial 41,050,000 shares were assigned by Tal Kapelner to Cheney
Shapiro in connection with her services as a founder, a director, and our Vice-President
and Secretary. Nothing else of any value was given to us by Ms. Shapiro or received by Ms.
Shapiro from us with respect to this transaction.

Also on November 21, 2002, 1,000,000
shares of our common stock was assigned by Mr. Kapelner from his own personal share
holdings to Ariella Kapelner in connection with her services as a founder and our
Treasurer. Nothing else of value was given to us by Ms. Kapelner or received by Ms.
Kapelner from us with respect to this transaction.

22

|Index of Exhibits     |                    |                                                 
|--------------------- | ------------------ | ------------------------------------------------
|Exhibit 3.1           | Item 601(b)(3)(i)  | Articles of Incorporation*                      
|                     
|Exhibit 3.2           | Item 601(b)(3)(ii) | Bylaws*                                         
|                     
|Exhibit 4             | Item 601(b)(4)     | Instruments defining the rights of shareholders*
|                     
|Exhibit 14            | Item 601(b)(14)    | Code of ethics (attached)                       
|                     
|Exhibit 31.1 and 31.2 | Item 601(b)(31)    | Rule 13a-14(a)/15d-14(a) Certifications         
|                      |                    | (attached)                                      
|Exhibit 32.1 and 32.2 | Item 601(b)(32)    | Section 1350 (attached)                         

* These exhibits are hereby
incorporated by reference to our Registration Statement on Form SB-2 filed November 7,
2003. File No. 333-104631.

Audit Fees

Aggregate fees billed for fiscal year
2004 for professional services rendered by the principal accountant for the audit of our
annual financial statements, review of quarterly statements and other services provided in
connection with statutory or regulatory filings or engagements: $5,345.

Aggregate fees billed for fiscal year
2003 for professional services rendered by the principal accountant for the audit of our
annual financial statements, review of quarterly statements and other services provided in
connection with statutory or regulatory filings or engagements: $4,235, including $310
billed in 2003 but not paid until 2004.

Audit-Related Fees

Aggregate fees billed in fiscal year
2004 for assurance and related services by the principal accountant that are reasonably
related to the performance of the audit or review of our financial statements and are not
reported under the Audit Fees caption above: $0.

Aggregate fees billed in fiscal year
2003 for assurance and related services by the principal accountant that are reasonably
related to the performance of the audit or review of our financial statements and are not
reported under the Audit Fees caption above: $0.

Tax Fees

Aggregate fees billed in fiscal year
2004 for professional services rendered by the principal accountant for tax compliance,
tax advice and tax planning: $0.

Aggregate fees billed in fiscal year
2003 for professional services rendered by the principal accountant for tax compliance,
tax advice and tax planning: $0.

23

All Other Fees

Aggregate fees billed in fiscal year
2004 for products and services provided by the principal accountant, other than the
services reported above: $0.

Aggregate fees billed in fiscal year
2003 for products and services provided by the principal accountant, other than the
services reported above: $0.

Tally Hos audit
committees pre-approval policy is to retain the services of a professional
accountant only once the threshhold established by Rule 2-01 of Regulation S-X has been
met. The audit committees pre-approval procedure is to carefully establish that each
of the tests delineated in paragraphs (b) and (c)(1)-(3) of Rule 2-01 of Regulation S-X
are met.

# SIGNATURES

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

|Date: April 1, 2005 |  | TALLY-HO VENTURES, INC(Registrant)BY: /S/  Tal L. Kapelner
 Tal L. KapelnerPresident
|------------------- |  | --------------------------------------------------------------------------------------------------

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

|Date: April 1, 2005Date: April 1, 2005Date: April 1, 2005 |  | BY: /S/  Tal L. Kapelner
 Tal L. KapelnerPresident Principal Accounting Officer Chairman of the Board of DirectorsBY: /S/  Cheney A. Shapiro
Cheney A. ShapiroDirectorBY: /S/  Ariella Kapelner
Ariella KapelnerPrincipal Financial Officer
|--------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24