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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2004

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
              For the transition period from _________ to _________

                        Commission file number: 000-30583

                               PRACTICEXPERT, INC.
                 (Name of Small Business Issuer in Its Charter)


            NEVADA                                             87-0622329
------------------------------                           ----------------------
(State or Other Jurisdiction of                             (I.R.S. Employer
Incorporation or Organization)                           Identification Number)


                  10833 WASHINGTON BLVD., CULVER CITY, CA 90232
               (Address of Principal Executive Offices) (Zip Code)

                                 (310) 815-3500
                (Issuer's Telephone Number, Including Area Code)

       Securities registered under Section 12(b) of the Exchange Act: NONE

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


         Title of Each Class          Name of each Exchange on Which Registered
         -------------------          -----------------------------------------
  COMMON STOCK ($0.001 PAR VALUE)                       OTC BB


Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such 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 [ ] No [X].

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B 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 [ ].

The  registrant's  total  consolidated  revenues for the year ended December 31,
2004,  were  $11,096.512,  net of revenues  from the  discontinued  operation of
certain subsidiaries.

The aggregate market value of the registrant's Common Stock, par value $.001 per
share, held by non-affiliates was approximately $3,965,247, based on the closing
price for the Common  Stock on March 22,  2005.  Shares of Common Stock known by
the registrant to be beneficially  owned by the  registrant's  directors and the
registrant's executive officers subject to Section 16 of the Securities Exchange
Act of 1934 are not included in the computation.  The registrant,  however,  has
made no determination  that such persons are "affiliates"  within the meaning of
Rule 12b-2 under the  Securities  Exchange Act of 1934.  On March 22, 2005,  the
number of issued and outstanding  shares of the  registrant's  common stock, par
value $0.001 per share, was 129,938,872.


<PAGE>

                                TABLE OF CONTENTS


PART I.........................................................................3
     ITEM 1.      DESCRIPTION OF BUSINESS......................................3
     ITEM 2.      DESCRIPTION OF PROPERTY......................................7
     ITEM 3.      LEGAL PROCEEDINGS............................................7
     ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........7

PART II........................................................................8
     ITEM 5.      MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
                  SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.........8
     ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION....9
     ITEM 7.      FINANCIAL STATEMENTS........................................13
     ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE.........................31
     ITEM 8A.     CONTROLS AND PROCEDURES.....................................31

PART III......................................................................33
     ITEM 9.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..........33
     ITEM 10.     EXECUTIVE COMPENSATION......................................35
     ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT AND RELATED STOCKHOLDER MATTERS..................37
     ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............37
     ITEM 13.     EXHIBITS LIST AND REPORTS ON FORM 8-K.......................38
     ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES .....................38

INDEX TO EXHIBITS.............................................................40


                                        2
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

BACKGROUND

PracticeXpert,  Inc.,  a  Nevada  corporation,  is  a  healthcare  services  and
technology   company,   which  is  in  the  business  of  providing   "turn-key"
administrative  services to our clients,  as well as  developing  and  deploying
systems, technologies and services designed to improve operational efficiencies,
reduce billing errors and enhance cash flow for medical  practitioners.  We were
incorporated under the name Engineering Services,  Inc., on July 13, 1984. Since
then,  we have  undergone a series of  corporate  name  changes by amending  our
articles of  incorporation,  and  discontinued  a number of our  businesses.  On
November  27,  2000,  we changed our name to Thaon  Communications,  Inc.,  and,
subsequently,   acquired  and  commenced   certain   media  and   communications
businesses,  all of which were discontinued or sold. On July 9, 2003, we changed
our name to PracticeXpert, Inc.

Prior to our name change to  PracticeXpert,  Inc., on April 11, 2003, we entered
into a stock purchase agreement with Practice Xpert Services Corp., a California
corporation.  Pursuant to this  agreement,  we purchased 92% of the  outstanding
shares of capital stock of Practice Xpert Services  Corp.  The  shareholders  of
Practice Xpert Services Corp.  received 7,670,596 shares of our common stock and
1,845,000  shares of our Series C Preferred  Stock,  constituting  72.75% of our
voting securities.  As a condition  thereto,  our existing officers resigned and
our board of  directors  appointed  the  executive  officers of  Practice  Xpert
Services Corp. to serve as our executive management team.

On June 27, 2003, we entered into a stock purchase agreement for the sale of all
of  the  outstanding  shares  of  capital  stock  of  Clover,  Inc.,  one of our
wholly-owned  subsidiaries,  to one of our former directors, in exchange for the
repurchase  by us of  100,000  shares of our common  stock  from such  director.
Clover was an operating subsidiary of one of our predecessor businesses.

On September  30, 2003,  we purchased  the  remaining  eight percent (8%) of the
issued and outstanding  shares of capital stock of Practice Xpert Services Corp.
by issuing 472,860 shares of our common stock and 111,736 shares of our Series C
Preferred Stock to the shareholders of Practice Xpert Services Corp. As a result
thereof,  we own all of  issued  and  outstanding  shares  of  capital  stock of
Practice Xpert Services Corp.

On April 28, 2004, we raised $5.8 million from investors pursuant to the sale of
shares of our common stock and warrants to purchase shares of common stock in an
offering exempt from the registration  requirements  under the Securities Act of
1933, as amended.  This transaction was immediately  followed by the filing of a
Form SB-2 Registration  Statement with the Securities and Exchange Commission to
register such shares of common stock and common stock underlying the warrants in
a public offering,  which was declared  effective by the Securities and Exchange
Commission on August 13, 2004, and currently remains  effective.  Such investors
purchased  48,333,347  shares of our common stock at a price of $0.12 per share,
and  five-year  warrants to  purchase  48,333,347  shares of common  stock at an
exercise  price of $0.30 per share.  H.C.  Wainwright  & Co. Inc., a Wall Street
investment  banking firm,  acted as the placement  agent in connection  with the
foregoing.  H.C. Wainwright & Co. Inc., and its designees,  received warrants to
purchase  9,666,668 shares of our common stock, as an investment banking fee and
certain cash consideration for the services provided to us.

On April 29, 2004, we completed the  acquisition  of Cancer Care Network,  Inc.,
located in Oklahoma City,  Oklahoma,  which specializes in radiation and medical
oncology billing and management for a purchase price of $5,500,000. The purchase
price  consisted  of a lump sum cash  payment of  $4,100,000,  the  issuance  of
$500,000 in shares of common  stock,  subject to an increased  adjustment on the
first  and  second  anniversary  date  of the  closing,  and the  issuance  of a
promissory note for $900,000,  which bears interest of six and one-half  percent
(6.5%)  per annum and is payable in 10 monthly  installments  of  principal  and
interest.

On September 1, 2004,  we disposed of  Healthcare  Billing  Solutions,  Inc., by
agreeing  to  mutually  rescind  the  stock  purchase   agreement  entered  into
previously  with the seller.  The  operating  results  from  Healthcare  Billing
Solutions, Inc. are presented separately in our financial statements under "Loss
on disposal of subsidiary, net".

On January 3, 2005, we acquired Physicians Informatics,  Inc., doing business as
PracticeOne,   a  provider  of  practice   management  and  clinical  management
solutions,  including outsourced medical billing and administrative services, as
well as proprietary practice and clinical management  software.  Under the terms
of our agreement, we issued to the shareholders of PracticeOne 12,500,000 shares
of our common  stock,  and assumed a $4 million  promissory  note payable to its
majority shareholder.  Additional purchase price consideration is payable to the
shareholders  as an  earn-out  based upon  PracticeOne's  results of  operations
subsequent to the closing. Furthermore, such majority shareholder has guaranteed
a  revolving  credit  facility   between   PracticeOne  and  a  major  financial
institution that will provide us an additional  $2,000,000 in borrowing capacity
for any potential future corporate  acquisitions,  as determined by our Board of
Directors.


                                       3
<PAGE>

BUSINESS OVERVIEW

We are a healthcare services and technology company in the business of providing
"turn-key"  administrative  services to our clients,  as well as developing  and
deploying  systems,  technologies  and  related  services  designed  to  improve
operational  efficiencies,  reduce  billing  errors  and  enhance  cash flow for
medical  practitioners.  We bundle our technology  applications with our billing
and other practice  management services to provide an integrated solution to our
clients.

Because of our internal development efforts and the acquisition of complementary
businesses  in our  industry,  we have  developed a broad suite of services  and
products,  including an electronic  data capture  system  designed to reduce the
administrative burden that physicians face in operating their medical practices.
We believe that our electronic  data-capture system is a financially  attractive
solution to our existing and potential clients,  among other competing solutions
that are currently available in the marketplace.  We plan to continue to deliver
to our clients a wide range of products and services,  including custom tailored
solutions.

MARKETS AND COMPETITION

We believe  that our  strategy of bundling  technology  solutions  with our core
billing  and  practice  management  expertise  provides  us  with a  competitive
advantage. Our services are designed and marketed to appeal to physicians who do
not want to  invest  the time and  capital  in  purchasing  practice  management
systems and hiring staff to operate  those  systems,  which can be a substantial
on-going  business  expense.  We believe  that our  products  and  services  are
well-positioned  to maintain and further serve our existing client base, as well
as  attract  new  physician  clients  who desire a  practice  management  and/or
electronic health records system, consulting,  medical transcriptions,  business
management,  accounts receivable collection,  training or other related practice
management services.

We market our  products  and  services  to  physicians  and  physicians'  groups
throughout  the United States through  national  sales and marketing  campaigns,
seminars, conferences, one-on-one consultations, telemarketing, direct sales and
client and vendor  referrals.  We also market our products and services  through
strategic  relationships with other health care providers and organizations that
provide services to our existing and potential clients.

The  outsourced  medical  billing,  practice  management  and  medical  software
industries  are   multi-billion   dollar   industries,   which  currently  serve
approximately 700,000 licensed physicians in the United States. These industries
are highly  competitive  and include  many major  corporations,  as well as many
small "mom and pop"  operations.  We compete with many other medical billing and
practice management services companies,  both large and small, and with practice
management  and  electronic  health  record  software  providers.  Many  of  our
competitors are more established than us and have  substantially  greater market
share and resources than we do.

PRODUCTS AND SERVICES

We offer the following products and services under the brand name XPERT(TM):

XPERT  REVENUE  CYCLE  SERVICES - We provide a revenue  management  solution for
private practice  physicians from the point of service delivery,  where revenues
are  generated,  to,  ultimately,  collecting  those  revenues  from third party
payors. Xpert Revenue Cycle Services are designed to increase the potential cash
flow for physician clients,  which combine innovative  software with our medical
billing services,  including revenue  management.  Our staff has medical billing
expertise,  including  billing  expertise  for  specialists  in  the  fields  of
oncology, cardiology, therapeutic and diagnostic radiology and surgery.

XPERT  BUSINESS  MANAGEMENT  SERVICES  - We  provide  a wide  range of  practice
management  services.  These services include financial  administration,  office
operations  and billing  and  accounts  receivable  collections  management.  In
addition to billing and  collections,  we can handle the  day-to-day  accounting
requirements of the medical practice,  including purchasing,  payroll,  accounts
receivable, accounts payable, and financial statements.

XPERT TRANSCRIPTION  SERVICES - We offer medical transcription  services and our
staff is assigned to a particular  medical  specialty.  Information from clients
may  be  dictated  into  a  hand-held  personal  digital  recording  device  and
electronically  transmitted to us or dictated by telephone to a toll-free  "800"
telephone number for transcription processing.

XPERT CONSULTING - Our consulting  professionals work with physicians to improve
administrative  procedures  and  billing  processes,   reduce  redundancies  and
increase  reimbursements.  In  addition,  we provide  feedback on the  physician
service mix and recommend  changes or additions to increase  profitability.  Our
consulting  services  team may also provide  analysis  and  reporting on various
aspects of a physician's  practice,  including  advice to reduce overhead costs,
provide increases in productivity and improvements in cash flow.

XPERT SEMINARS - We provide billing and coding seminars for medical oncology and
radiation oncology medical practices. We also have developed a user's guide that
includes current CPT codes, an explanation of each code,  clinical  examples and
Medicare rulings.

XPERT  PRACTICE  MANAGER  - Our  Xpert  Practice  Manager  software  provides  a
physician's  practice  with tools to  increase  efficiency,  third  party  payor
reimbursement  and  patient  satisfaction,   including  appointment  scheduling,


                                       4
<PAGE>

patient  registration,  financial  management,  accounts receivable  management,
eligibility  processing,  claims  processing  and  custom  tailored  reports  to
management. Xpert Practice Manager also provides appointment and scheduling work
flow  tools,   rules-based   collection  decisions,   laser  printed  forms  and
HIPAA-compliant electronic transaction processing capabilities.

XPERT ELECTRONIC  HEALTH RECORD - Our Xpert Electronic Health Record software is
an electronic medical record, document management,  and retrieval software-based
system providing access to patient information in a physician's practice. It may
be integrated with lab and hospital  interfaces,  and our Xpert Practice Manager
software,  including retrieval of patient demographic data, appointment history,
billing  status and other  pertinent  information  entered into the system.  The
system is designed  for multiple  users to access the same  patient  record on a
simultaneous basis.

Certain of our products and  services  are provided to our  physician  customers
under service or license  agreements that may have a term of one to three years,
and may be renewable  unless either party terminates the  relationship.  We bill
our physician  clients for our Xpert Revenue Cycle  Services a percentage of the
physician's billings that we collect on their behalf.  Typical service rates may
range from seven  percent to eight  percent of  collections,  but may be more or
less depending upon circumstances, and we believe that our rates are competitive
with  market  rates,  but may be higher or lower  depending  upon the breadth of
services being provided and the complexity of the billing operations.  Our other
products  and  services,  such  as  medical  transcription  services,   practice
management  services,  consulting,  seminars and  software  sales are charged at
rates, which we believe are competitive with others in our industry.

HEALTHCARE INDUSTRY

Our business is affected by trends affecting the healthcare  industry generally.
As healthcare costs have risen over the years,  increasing focus has been placed
upon the costs associated with the delivery of healthcare products and services.
Consequently,  third party  payors,  such as insurance  companies,  Medicare and
similar state reimbursement  programs have embarked on programs to limit or even
reduce reimbursement to medical practitioners.  These changes have increased the
demand for healthcare  products and services,  such as ours, that assist medical
practitioners   in  dealing  with  the   complexity   of  medical   billing  and
reimbursement  issues,  while allowing them more time to focus on the quality of
care for their patients.

The federal  government,  various state  governments  and various  private third
party  payors have  developed  initiatives  to reduce  payments  for  healthcare
services,  all of which may affect our  revenues,  as our revenues are typically
based upon what we are able to collect for our physician  clients.  Further,  to
the degree  that  payors  increase  the  complexity  of the  billing and payment
process, we may experience increased costs related to providing of our services.

Government  regulations and standards for electronic  transactions,  privacy and
information   security  issued  under  the  Health  Insurance   Portability  and
Accountability  Act of  1996  ("HIPAA")  are  major  issues  in  the  healthcare
industry,  and are a major concern to us.  Although we do not expect the cost of
complying  with  HIPAA  to  have a  material  effect  on our  operations,  these
regulations  may require us to enhance or revise our products and services,  and
how we deliver them, from time to time, and at any time. The costs of compliance
may also  create  additional  demand for our  products  and  services as medical
practitioners struggle to deal with HIPAA and other regulations.

REGULATIONS

Healthcare and Privacy Related Legislation

PracticeXpert and our customers are subject to extensive and frequently changing
federal  and  state  healthcare  laws,  a broad  range of  complex  regulations,
programs to combat fraud and abuse, and increasing restrictions on reimbursement
for healthcare  services.  Each of the major federal healthcare payment programs
(Medicare,  Medicaid  and  TRICARE)  has its own set of  complex  and  sometimes
conflicting  regulations.  Additional  regulations  have  been  mandated  by the
Balanced  Budget  Act and  HIPAA,  and a number  of  states  have  also  imposed
significant regulatory programs applicable to billing and payment for healthcare
services.  Political,  economic and  regulatory  influences  are  subjecting the
healthcare  industry in the United States to ongoing changes,  many of which are
fundamental to our industry.  Potential reform  legislation may include,  but is
not limited to, the following:

      o     mandated basic healthcare benefits;

      o     controls on healthcare spending through limitations on the growth of
            private  health   insurance   premiums  and  Medicare  and  Medicaid
            reimbursement;

      o     the creation of large insurance purchasing groups;

      o     fundamental changes to the healthcare delivery system;

      o     FTC  enforcement  actions of existing  privacy laws  relating to the
            Internet;

      o     Medicare or Medicaid prescription benefit plans;

      o     state licensing requirements; and

      o     patient protection initiatives.


                                       5
<PAGE>

HIPAA

Several  state and federal laws govern the  collection,  dissemination,  use and
confidentiality of patient healthcare information.  HIPAA was signed into law on
August 21, 1996, and was designed to improve the efficiency and effectiveness of
the healthcare  system by  standardizing  the interchange of electronic data for
certain   administrative   and  financial   transactions   and  to  protect  the
confidentiality  of patient  information.  Multiple  regulations  have, and will
continue to, be promulgated from this revolutionary legislation.

Healthcare Fraud and Abuse

The federal  government has maintained a significant  emphasis on the prevention
of  healthcare  fraud and abuse.  Pursuant to the False Claims Act, the Medicare
and Medicaid Patient and Program  Protection Act of 1987, and HIPAA, the federal
government has statutory  authority to impose both civil and criminal  sanctions
and  penalties  for  submission of false claims to  governmental  payors.  Civil
monetary  penalties  of up to $50,000 per  offense  may be  imposed,  as well as
exclusion  from  participation  in Medicare  and other  governmental  healthcare
programs.  In addition,  the False Claims Act allows a private  party to bring a
"qui tam" or  "whistleblower"  suit  alleging the filing of false or  fraudulent
Medicare or Medicaid  claims or other  violations of the statute and to share in
any damages and civil  penalties paid to the  government.  The U.S.  Health Care
Financing Administration also offers rewards for information leading to recovery
of Medicare  funds,  and the Health Care Financing  Administration  has begun to
engage  private  contractors  to  detect  and  investigate   fraudulent  billing
practices.

Privacy Compliance

HIPAA's Privacy Rule imposes  extensive  requirements  on healthcare  providers,
healthcare  clearinghouses  and health  plans.  These  "Covered  Entities"  must
implement  standards  to protect and guard  against  the misuse of  individually
identifiable health information. Certain functions of PracticeXpert have been or
may be deemed to  constitute a  "clearinghouse"  as defined by the Privacy Rule.
However,  in many  instances,  we also  function as a "business  associate",  as
defined  thereunder.  Among other things,  the Privacy Rule requires us to adopt
written  privacy  procedures,  adopt  sufficient and  reasonable  safeguards and
provide  employee  training  with  respect  to  compliance.   The  deadline  for
compliance  with the privacy  aspects of HIPAA was April 14,  2003.  Although we
have  undertaken   several  measures  to  ensure  compliance  with  the  privacy
regulation by the deadline and believe that we are in material  compliance,  the
privacy regulations are less definitive than other HIPAA regulations,  are broad
in scope, and will require constant vigilance for ongoing compliance.

We also may be subject to state privacy laws,  which may be more  stringent than
HIPAA in some cases.

Transaction and Code Sets Compliance

HIPAA also mandates the use of standard  transactions for electronic  claims and
other   certain   healthcare   transactions.   HIPAA   specifically   designates
clearinghouses  (including  us and other  financial  network  operators)  as the
compliance facilitators for healthcare providers and payors. On August 17, 2000,
the U.S.  Department of Health and Human Services published final regulations to
govern  eight  of the  most  common  electronic  transactions  involving  health
information.  Under a revised bill passed by the U.S. Congress, the deadline for
the transaction and code sets aspects of HIPAA was extended to October 16, 2003,
provided  that a formal  request  for  extension  and plan  for  compliance  was
submitted   by  October  16,  2002.   However,   covered   entities,   including
PracticeXpert and our physician  customers and payors, are permitted to continue
to process  non-compliant  transactions  after  October 16, 2003 so long as that
covered entity is compliant with the "contingency  planning" guidelines provided
by the Center for Medicare and Medicaid  Services.  A substantial  number of our
transactions  involving our physician  customers and payors are currently  being
processed in a non-HIPAA  compliant  manner in accordance  with our  contingency
plan.

Security Compliance

HIPAA's Security Rule imposes standards for the security of electronic protected
health  information  and was finalized on February 20, 2003.  The effective date
for the  Security  Rule is  April  20,  2005.  We have  long-standing  physical,
technical and administrative  safeguards for the protection of electronic health
information. The Security Rule has also introduced the concept of an addressable
implementation  standard  which will  require  ongoing  vigilance to ensure that
employed  safeguards are sufficient  given current  technology  capabilities and
threats and reasonable industry expectations.

Identifiers and Future HIPAA Regulations

Because some HIPAA  regulations,  including some various  national  identifiers,
have yet to be issued or implemented,  and because even final HIPAA  regulations
may be subject to additional modification or amendment, our products may require
modification in the future. If we fail to offer solutions that permit compliance
with applicable laws and regulations, our business could suffer.


                                       6
<PAGE>

Patient/Consumer Protection Initiatives

State and federal  legislators and regulators continue to propose initiatives to
protect consumers covered by managed care plans and other health coverage plans.
These  initiatives  may result in the adoption of laws related to timely  claims
payment and review of claims determinations. These laws may impact the manner in
which we perform services for our clients.

Summary

We have a  well-established  compliance  program  modeled  after  the  Office of
Inspector General's  Compliance Program Guidance for Third-Party Medical Billing
Companies  that is designed  and  maintained  to detect and  prevent  regulatory
violations.  We  believe  our  compliance  program  is  effective.   However,  a
compliance   program  cannot  be  expected  to  provide  absolute  assurance  of
compliance  with the law.  The  existence of an  effective  compliance  program,
though,  may reduce the  severity of civil and  criminal  sanctions  for certain
healthcare related offenses.

While we believe our operations are in material  compliance with all federal and
state  healthcare   regulations   governing   medical   billing,   as  currently
interpreted,   the  regulatory  environment  in  which  we  operate  may  change
significantly  in the future,  which could  restrict  our  existing  operations,
expansion, financial condition, or opportunities for success. We anticipate that
the U.S.  Congress  and state  legislatures  will  continue to review and assess
alternative healthcare delivery systems and payment methods, as well as Internet
and healthcare privacy legislation,  and that public debate of these issues will
likely  continue  in the future.  Because of  uncertainties  as to these  reform
initiatives and their enactment and implementation,  we cannot predict which, if
any, of such reform proposals will be adopted,  when they may be adopted or what
impact they may have on us.

RESEARCH AND DEVELOPMENT

As with any software  products,  ongoing  product  maintenance  and upgrades are
required to ensure the Xpert software products function properly and continue to
deliver  value  to our  clients.  While  we  intend  to  continue  to fund  from
continuing  operations,  ongoing  maintenance  of, and enhancement to, our Xpert
software  products,  we do not project the need to raise  additional  capital to
fund research and development costs during the next 12 months.

EMPLOYEES

As of  March  25,  2005,  we had a  total  of  191  full-time  employees  and 46
independent contractors. In order for us to attract and retain quality employees
and contractors,  we anticipate we will have to offer  competitive  salaries and
payments to future employees and contractors.  As we continue to expand, we will
incur  additional  cost for personnel.  This projected  increase in personnel is
dependent  upon  the  level of  revenues  we may  generate  and our  results  of
operations.

ITEM 2. DESCRIPTION OF PROPERTY

The Company's principal executive office is located in Culver City,  California,
which has a term that  expires  in  September  2007,  and an option in favor our
favor to extend the term for an additional two year period until September 2009.
The Company conducts its operations from 10 other offices locations in Oklahoma,
California, Virginia, West Virginia, Washington, New Jersey, Kentucky, Idaho and
Texas. We believe that all of our facilities are leased at market rates pursuant
to arms-length  transactions  with expiration  dates that vary through  October,
2007,  and,  in some cases,  contain  option(s)  to extend the term(s)  thereof.
Although our office  facilities  vary in terms of age and condition,  management
believes that our facilities have generally been well maintained, are covered by
adequate insurance and are adequate for our current operations.

ITEM 3. LEGAL PROCEEDINGS

From  time  to  time,  we  become  involved  in  various  lawsuits,  claims  and
proceedings related to the conduct of our business.  While we cannot predict the
outcome of any lawsuit,  claim or proceeding,  our  management  does not believe
that the disposition of any pending matters is likely to have a material adverse
effect on our financial condition or liquidity.  The resolution in any reporting
period of one or more of these matters,  however,  could have a material adverse
effect on the results of operations for that period.

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

No matters were submitted to a vote of security holders during the quarter ended
December 31, 2004.


                                       7
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY SECURITIES

The Company's  common stock is quoted on the OTC Bulletin Board under the symbol
"PXPT".

The high and low  closing  bid prices for the fiscal  years 2003 and 2004 are as
follows:

         Year     Quarter   High*              Low*

         2003     First     $0.20             $0.02
                  Second    $0.51             $0.07
                  Third     $1.80             $0.06
                  Fourth    $1.00             $0.55

         2004     First     $0.65             $0.56
                  Second    $0.67             $0.20
                  Third     $0.46             $0.12
                  Fourth    $0.14             $0.08

*  On January 10, 2003, the Company  effectuated a 1 for 50 reverse stock split.
   On July 17,  2003,  the Company  effectuated  a 1for 20 reverse  stock split.
   These prices reflect post-split values. Furthermore, the prices of the Common
   Stock set forth above reflect  inter-dealer  prices,  without retail mark-up,
   mark-down or commissions, and may not represent actual transactions.

As of March 22, 2005, there were approximately  129,938,872 shares of our common
stock issued and outstanding held by approximately 2,400 shareholders of record.

DIVIDENDS ON THE COMMON STOCK

The Company has not declared a cash dividend on its Common Stock in the last two
fiscal  years  and the  Company  does  not  anticipate  the  payment  of  future
dividends.  The Company may not pay  dividends on its Common Stock without first
paying dividends on its Preferred Stock.  There are no other  restrictions  that
currently limit the Company's ability to pay dividends on its Common Stock other
than those generally imposed by applicable state law.

RECENT SALES OF UNREGISTERED SECURITIES

During the three month period ended  December 31, 2004,  the Company  issued the
following securities:

         (a) Warrants to one "accredited  investor",  as such term is defined in
Rule 501 of the Securities Act of 1933, as amended,  to purchase  500,000 shares
of common stock. The warrants are subject to immediate vesting, have an exercise
price of $.30 per share, and expire if not exercised by November 23, 2009.

         (b) 1,370,685  shares of common stock of the registrant  were issued to
an individual  pursuant to the terms of a stock purchase  agreement  between the
registrant and such person executed during the previous year.

         (c) 938,866 shares of common stock of the registrant were issued to six
consultants of the registrant.

The foregoing issuances were exempt from the registration  requirements,  as set
forth in  Section 5 of the  Securities  Act of 1933,  as  amended,  pursuant  to
Section  4(2)  thereof,   because  such  issuances   were   privately-negotiated
transactions, which did not involve any advertising or general solicitation, and
the recipient of the  registrant's  securities were accredited  investors within
the meaning of the Securities Act.


                                       8
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING INFORMATION

THE FOLLOWING  INFORMATION  SHOULD BE READ IN CONJUNCTION  WITH THE CONSOLIDATED
FINANCIAL  STATEMENTS OF PRACTICEXPERT AND THE NOTES THERETO APPEARING ELSEWHERE
IN THIS FILING.  STATEMENTS IN THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION AND ELSEWHERE IN THIS REPORT THAT ARE NOT  STATEMENTS OF HISTORICAL
OR CURRENT FACT CONSTITUTE "FORWARD-LOOKING STATEMENTS."

This report contains certain  forward-looking  statements regarding management's
plans and  objectives  for  future  operations  including  plans and  objectives
relating to our planned marketing efforts and future economic  performance.  The
forward-looking statements and associated risks set forth in this report include
or relate to, among other things, (a) our projected sales and profitability, (b)
our growth strategies,  (c) anticipated trends in our industry,  (d) our ability
to obtain and retain sufficient capital for future  operations,  (e) our ability
to achieve adequate intellectual property protection for our future products and
(f) our anticipated  needs for working  capital.  These  statements may be found
under  "Management's  Discussion  and  Analysis  and  Plan  of  Operations"  and
"Business,"  as well as in this report  generally.  Actual events or results may
differ materially from those discussed in forward-looking statements as a result
of various factors described in this report  generally.  In light of these risks
and uncertainties, there can be no assurance that the forward-looking statements
contained in this report will in fact occur.

The  forward-looking  statements  herein are based on current  expectations that
involve a number of risks and uncertainties. Such forward-looking statements are
based on  assumptions  that that  demand  for our  products  and  services  will
significantly  increase,  that our Chief Executive Officer and President,  Chief
Financial  Officer and Executive Vice  President  will remain  employed as such,
that our forecasts  accurately  anticipate market demand, and that there will be
no material  adverse  change in our  operations  or business or in  governmental
regulations   affecting  us,  our  clients  and/or   suppliers.   The  foregoing
assumptions  are based on judgments with respect to, among other things,  future
economic,  competitive and market conditions, and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond  our  control.  Accordingly,  although  we believe  that the  assumptions
underlying the  forward-looking  statements are reasonable,  any such assumption
could prove to be inaccurate  and therefore  there can be no assurance  that the
results  contemplated  in  forward-looking   statements  will  be  realized.  In
addition,  there  are a number  of other  risks  inherent  in our  business  and
operations,  which  could  cause our  operating  results to vary  markedly,  and
adversely from prior results or the results  contemplated by the forward-looking
statements.  Growth in absolute  and  relative  terms and  selling,  general and
administrative  expenses or the occurrence of  extraordinary  events could cause
actual  results  to  vary  materially  from  the  results  contemplated  by  the
forward-looking  statements.  Management  decisions,  including  budgeting,  are
subjective  in many  respects  and  periodic  revisions  must be made to reflect
actual conditions and business developments, the impact of which may cause us to
alter  marketing,  capital  investment  and other  expenditures,  which may also
materially  adversely affect our results of operations.  In light of significant
uncertainties  inherent  in the  forward-looking  information  included  in this
report,  the  inclusion  of  such  information  should  not  be  regarded  as  a
representation  by us or any other person that our  objectives  or plans will be
achieved.

Some of the information in this report contains forward-looking  statements that
involve substantial risks and uncertainties. Any statement in this report and in
the documents incorporated by reference into this report that is not a statement
of an historical fact constitutes a "forward-looking  statement".  Further, when
we use the words  "may",  "expect",  "anticipate",  "plan",  "believe",  "seek",
"estimate",  "internal", and similar words, we intend to identify statements and
expressions that may be forward-looking  statements.  We believe it is important
to communicate  certain of our  expectations  to our investors.  Forward-looking
statements  are not  guarantees  of  future  performance.  They  involve  risks,
uncertainties  and  assumptions  that could  cause our future  results to differ
materially from those expressed in any forward-looking  statements. Many factors
are beyond our ability to control or predict.  In such a case, the trading price
of our  common  stock  could  decline  and you  could  lose  all or part of your
investment.  You are  accordingly  cautioned not to place undue reliance on such
forward-looking  statements.  We have no obligation or intent to update publicly
any  forward-looking  statements whether in response to new information,  future
events or otherwise.

GENERAL

PracticeXpert,  Inc.,  a  Nevada  corporation,  is  a  healthcare  services  and
technology   company,   which  is  in  the  business  of  providing   "turn-key"
administrative  services to our clients,  as well as  developing  and  deploying
systems, technologies and services designed to improve operational efficiencies,
reduce billing errors and enhance cash flow for medical  practitioners.  We were
incorporated under the name Engineering Services,  Inc., on July 13, 1984. Since
then,  we have  undergone a series of  corporate  name  changes by amending  our
articles of  incorporation,  and  discontinued  a number of our  businesses.  On
November  27,  2000,  we changed our name to Thaon  Communications,  Inc.,  and,
subsequently,   acquired  and  commenced   certain   media  and   communications
businesses,  all of which were discontinued or sold. On July 9, 2003, we changed
our name to PracticeXpert, Inc.


                                       9
<PAGE>

Prior to our name change to  PracticeXpert,  Inc., on April 11, 2003, we entered
into a stock purchase agreement with Practice Xpert Services Corp., a California
corporation.  Pursuant to this  agreement,  we purchased 92% of the  outstanding
shares of capital stock of Practice Xpert Services  Corp.  The  shareholders  of
Practice Xpert Services Corp.  received 7,670,596 shares of our common stock and
1,845,000  shares of our Series C Preferred  Stock,  constituting  72.75% of our
voting securities.  As a condition  thereto,  our existing officers resigned and
our board of  directors  appointed  the  executive  officers of  Practice  Xpert
Services Corp. to serve as the executive management team.

On June 27, 2003, we entered into a stock purchase agreement for the sale of all
of  the  outstanding  shares  of  capital  stock  of  Clover,  Inc.,  one of our
wholly-owned  subsidiaries,  to one of our former directors, in exchange for the
repurchase  by us of  100,000  shares of our common  stock  from such  director.
Clover was an operating subsidiary of one of our predecessor businesses.

On September  30, 2003,  we purchased  the  remaining  eight percent (8%) of the
issued and outstanding  shares of capital stock of Practice Xpert Services Corp.
by issuing 472,860 shares of our common stock and 111,736 shares of our Series C
Preferred Stock to the shareholders of Practice Xpert Services Corp. As a result
thereof,  we own all of  issued  and  outstanding  shares  of  capital  stock of
Practice Xpert Services Corp.

On April 28, 2004, we raised $5.8 million from investors pursuant to the sale of
shares of our common stock and warrants to purchase shares of common stock in an
offering exempt from the registration  requirements  under the Securities Act of
1933, as amended.  This transaction was immediately  followed by the filing of a
Form SB-2 Registration  Statement with the Securities and Exchange Commission to
register such shares of common stock and common stock underlying the warrants in
a public offering,  which was declared  effective by the Securities and Exchange
Commission on August 13, 2004, and currently remains  effective.  Such investors
purchased  48,333,347  shares of our common stock at a price of $0.12 per share,
and  five-year  warrants to  purchase  48,333,347  shares of common  stock at an
exercise  price of $0.30 per share.  H.C.  Wainwright  & Co. Inc., a Wall Street
investment  banking firm,  acted as the exclusive  placement agent in connection
with the foregoing.  H.C.  Wainwright & Co. Inc.,  and its  designees,  received
warrants to purchase  9,666,668  shares of our common  stock,  as an  investment
banking fee and certain cash consideration for the services provided to us.

On April 29, 2004, we completed the  acquisition  of Cancer Care Network,  Inc.,
located in Oklahoma City,  Oklahoma,  which specializes in radiation and medical
oncology billing and management for a purchase price of $5,500,000. The purchase
price  consisted  of a lump sum cash  payment of  $4,100,000,  the  issuance  of
$500,000 in shares of common  stock,  subject to an increased  adjustment on the
first  and  second  anniversary  date  of the  closing,  and the  issuance  of a
promissory note for $900,000,  which bears interest of six and one-half  percent
(6.5%)  per annum and is payable in 10 monthly  installments  of  principal  and
interest.

On September 1, 2004,  we disposed of  Healthcare  Billing  Solutions,  Inc., by
agreeing  to  mutually  rescind  the  stock  purchase   agreement  entered  into
previously  with the seller.  The  operating  results  from  Healthcare  Billing
Solutions, Inc. are presented separately in our financial statements under "Loss
on disposal of subsidiary, net".

On January 3, 2005, we acquired Physicians Informatics,  Inc., doing business as
PracticeOne,   a  provider  of  practice   management  and  clinical  management
solutions,  including outsourced medical billing and administrative services, as
well as proprietary practice and clinical management  software.  Under the terms
of our agreement, we issued to the shareholders of PracticeOne 12,500,000 shares
of our common  stock,  and assumed a $4 million  promissory  note payable to its
majority shareholder.  Additional purchase price consideration is payable to the
shareholders  as an  earn-out  based upon  PracticeOne's  results of  operations
subsequent to the closing. Furthermore, such majority shareholder has guaranteed
a  revolving  credit  facility   between   PracticeOne  and  a  major  financial
institution that will provide us an additional  $2,000,000 in borrowing capacity
for any potential future corporate  acquisitions,  as determined by our Board of
Directors.

SIGNIFICANT ACCOUNTING POLICIES

REVENUE  RECOGNITION  - The  majority of our revenue is  generated  from medical
billing  and  accounts  receivable  management.  Fees  for  these  services  are
primarily  based on a percentage  of net  collections  on our clients'  accounts
receivable.  Revenue  is  recognized  and our  customers  are  billed  when  our
customers receive payment on those accounts.  Revenue from other services,  such
as practice  management,  medical  transcriptions and consulting  services,  are
recognized on a periodic basis, typically monthly, as services are performed for
our clients.  Revenue on software  sales is recognized as products are delivered
to customers.

CLIENT  LISTS AND CLIENT  ACCOUNT  AMORTIZATION  - The clients we have  acquired
through business acquisitions are valued based on a discounted cash flow formula
that considers projected client profitability,  growth rate and client retention
rate.  This valuation  methodology  forms a basis for the  determination  of the
overall purchase price paid for such accounts at the time of their  acquisition.
Thereafter,  the  value  of a  client  account  is  reviewed  by  management  in
accordance with our valuation  methodology to determine the potential impairment
in value, if any, of such client account(s). Client account amortization expense
is based upon the expected maximum  retention life of such client account at the
time of acquisition, and is generally between two and nine years.


                                       10
<PAGE>

RESULTS OF OPERATIONS

The  following  sections  discuss  the results of  operations.  See notes to the
Consolidated Financial Statements and Independent Auditors Report for additional
information.

YEAR 2004 COMPARED TO YEAR 2003

Consolidated  net revenue for the year ended December 31, 2004 was  $11,096,512,
as compared to consolidated  net revenue for the year ended December 31, 2003 of
$3,379,258,  an increase of $7,717,254,  or 228%. Revenues increased during 2004
primarily  as a  result  of the  recording  of  eights  months  of  revenue  for
PracticeXpert  of Oklahoma,  Inc., which was formerly named Cancer Care Network,
Inc., which was acquired in May 2004, and the recording of ten months of revenue
for  PracticeXpert of Texas,  Inc.,  which was formerly named Singer  MedScript,
acquired  in March 2004.  Revenue  also  increased  as a result of our sales and
marketing  activities,  which  generated  additional  business  from new clients
during 2004.

During 2004, we began to report  revenue and operating  expenses in two distinct
revenue  classifications  "Medical billing and related services" and "Management
services".  Medical  billing  and related  services  includes  medical  billing,
practice  management,  medical  transcription,  consulting  and  other  services
provided  directly to  physician  customers,  for specific and agreed upon fees.
Management services includes certain contracts under which PracticeXpert manages
specified  medical  facilities,  and  participates in the  profitability  of the
facility,  along with the owners of the  facility.  During  2004,  revenue  from
medical billing and related  services was $7,343,846 and revenue from management
services was $3,752,666.

Consolidated  operating  expenses  for the year  ended  December  31,  2004 were
$15,040,965,  as compared to consolidated  operating expenses for the year ended
December 31, 2003 of $5,812,756,  an increase of $9,228,209,  or 159%. Operating
expenses  increased,  in part,  as a result of the recording of eights months of
expenses for PracticeXpert of Oklahoma, Inc., and the recording of ten months of
expenses for PracticeXpert of Texas, Inc. Expenses also increased as a result of
the  expansion of corporate  support  services to our operating  units,  such as
sales and marketing, human resources, accounting and IT support.

During the year ended  December  31, 2004,  operating  expenses  included  costs
associated  with the  settlement of a legal action of $250,750 and  depreciation
and  amortization  consisting  primarily of the  amortization of client lists of
$1,775,524.  In addition,  during the year,  we reviewed the value of our client
lists and  determined  that the value was less than that reported on the balance
sheet,  and as a result  wrote  down the  value of  clients  lists by  $411,963.
Further, we have historically  carried the costs associated with the development
of software as an asset.  However,  even though we continue to use the  software
applications we have developed in our operations,  we determined that it was not
cost effective to try to accurately value that software for financial  statement
purposes,  and therefore made the decision to expense the unamortized balance of
software costs during 2004, taking a one time expense of $416,827.

Also  included in 2004 are $564,812 of expenses paid for through the issuance of
restricted stock. In accordance with prescribed accounting regulations, services
acquired  through the  issuance of  restricted  stock are valued  based upon the
market value of an  equivalent  quantity of free  trading  stock at the time the
stock is issued. We also to a $239,995 reserve for doubtful accounts,  primarily
related to Management  services.  Other expenses included in operating  expenses
are investor  relations of $261,614,  loan fees primarily relating to terminated
loan facilities of $149,139,  auditing costs of $107,806, legal fees of $175,692
primarily relating to the Wainwright financing, and dividends on preferred stock
of $63,740 paid in common stock.

We reported a net loss of $4,263,138,  or a basic and fully diluted net loss per
common  share of $0.05 for the year ended  December  31, 2004  compared to a net
income of $623,414,  or a basic net income per common share of $0.07 and a fully
diluted  net income per common  share of $0.01 for the year ended  December  31,
2003.  The net income for the year ended  December 31, 2003  included a one-time
gain  of  $3,433,069  on  the  disposal  of   subsidiaries   and  their  related
discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

As  of  December  31,  2004,   PracticeXpert  had  $381,403  in  cash  and  cash
equivalents.  Current assets at December 31, 2004 were  $2,159,462,  compared to
current  liabilities of $3,906,659,  resulting in a working  capital  deficit of
$1,747,197.  This  compares to working  capital of $2,008,291 as of December 31,
2003.  Of the current  liabilities  at December  31,  2004  $422,781  relates to
subscription  agreements  for stock not yet issued and $377,100 is related party
debt, primarily consisting of executives of the company.

Our  only  sources  of  liquidity  are our  bank  accounts,  our  unused  credit
facilities, which at December 31, 2004 were fully drawn and our revenues. During
the year we began a process of diligently  seeking capital to allow us to embark
on a program of expansion.  We raised  $6,265,247 during the year ended December
31, 2004 from the sale of stock to investors, and were able to acquire in excess
of $564,812  worth of business  services and interest in exchange for stock.  We
continue to seek capital,  primarily for  expansion  plans,  but there can be no
assurances that we will receive the needed  investment  capital to fully execute
on our  business  plans,  pay off  any of the  outstanding  liabilities,  and/or
maintain operations.

                                       11
<PAGE>

During the year ended  December  31, 2004,  we used  $333,130 in capital to fund
operations,  we used $1,482,574 to pay principal  payments on notes payable,  we
invested  $137,980  in  further  development  of our  proprietary  software,  we
invested  $202,677 in operating  assets, we used $150,000 for the acquisition of
Singer  MedScript  and we used  $4,100,000  for the  acquisition  of Cancer Care
Network.

On April 28,  2004,  we completed  the private  placement of $5.8 million of our
common  stock  and  warrants  to  certain  purchasers.  Of the  funds  received,
approximately  $600,000 was used to pay  commissions  relating to the financing,
$650,000 was used to pay off our  revolving  credit  facility,  $4.0 million was
used as the cash  component  of the  purchase  price  of  Cancer  Care  Network,
$100,000 was used for attorneys' and other fees associated with the transaction,
and the balance was used for working capital purposes.

Due to numerous  economic and competitive  risks, any or all of which may have a
material  adverse impact upon our operations,  there can be no assurance that we
will be able to successfully generate significant revenues or achieve a level of
profits  which will  permit us to stay in  business.  However,  we believe  cash
generated  from net revenues  will be  sufficient to fund all of our general and
administrative expenditures for the next twelve months.

FLUCTUATIONS IN OPERATING RESULTS; SEASONALITY

Annual and quarterly  fluctuations in our results of operations may be caused by
the timing and amount of payments received by our customers, upon which the bulk
of our revenues are based.  Our future  results also may be affected by a number
of factors,  including our ability to offer our services at  competitive  prices
and to anticipate customer demands. Our results may also be affected by economic
conditions in the geographical  areas in which we operate.  All of the foregoing
may result in substantial unanticipated quarterly earnings shortfalls or losses.
Due to all of the foregoing, we believe that period-to-period comparisons of our
results of operations  are not  necessarily  meaningful and should not be relied
upon as indicative of future performance.

INFLATION

We  believe  that  our  revenue  and  results  of   operations   have  not  been
significantly impacted by inflation since we began operations.

SUBSEQUENT EVENTS

On January 3, 2005, we acquired Physicians Informatics,  Inc., doing business as
PracticeOne,   a  provider  of  practice   management  and  clinical  management
solutions,  including outsourced medical billing and administrative services, as
well as proprietary practice and clinical management  software.  Under the terms
of the stock purchase  agreement,  we issued to the  shareholders of PracticeOne
12,500,000  shares of our common stock, and assumed a $4,00,000  promissory note
payable to its majority shareholder.  Additional purchase price consideration is
payable to the  shareholders  as an  earn-out  based upon the  business'  future
results of operations.  Furthermore,  such majority shareholder has guaranteed a
revolving credit facility between PracticeOne and a major financial  institution
that will  provide us an  additional  $2,00,000  in  borrowing  capacity for any
potential  future  corporate  acquisitions,   as  determined  by  our  Board  of
Directors.


                                       12
<PAGE>

ITEM 7. FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
PracticeXpert, Inc.

We have audited the accompanying  consolidated  balance sheet of  PracticeXpert,
Inc.  as of  December  31,  2004,  and the related  consolidated  statements  of
operations,  consolidated shareholders' deficit, and consolidated cash flows for
the years  ended  December  31,  2004 and  2003.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We conducted our audits of these consolidated  statements in accordance with the
standards of the Public  Company  Accounting  Oversight  Board (United  States).
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide 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  PracticeXpert,  Inc. as of
December 31, 2004,  and the results of their  operations  and cash flows for the
years ended December 31, 2004 and 2003 in conformity with accounting  principles
generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the  Company  will  continue  as a going  concern.  During  the year  ended
December  31,  2004,  the  Company  incurred  net losses of  $4,199,398  and has
accumulated  deficit of  $11,897,450  as of December 31, 2004. In addition,  the
Company had negative  cash flow from  operating  activities  amounting  $316,146
during the year ended  December  31,  2004.  These  factors,  among  others,  as
discussed in Note 15 to the consolidated financial statements, raise substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans in regard to these matters are also described in Note 15. The consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


/s/ KABANI & COMPANY, INC.


CERTIFIED PUBLIC ACCOUNTANTS
Huntington Beach, California

April 3, 2005

                                       13
<PAGE>

                               PRACTICEXPERT, INC.
                     (FORMERLY, THAON COMMUNICATIONS, INC.)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2004


                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                                      <C>
CURRENT ASSETS:
     Cash & cash equivalents                                             $    381,403
     Prepaid expense                                                           22,045
     Accounts receivable, net                                                 794,245
     Accounts receivable-management service, net                              872,537
     Other current assets                                                      89,232
                                                                         ------------
             Total current assets                                           2,159,462

PROPERTY AND EQUIPMENT, NET                                                   374,898

OTHER ASSETS
     Deposits                                                                  19,856

INTANGIBLES:
     Client list, net                                                       5,252,784
                                                                         ------------
                                                                         $  7,806,999
                                                                         ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable & accrued expenses                                 $  2,625,170
     Notes payable - related parties                                          194,116
     Notes payable                                                            323,153
     Advances                                                                 422,781
     Other current liability, including related party debt of $182,984        326,133
     Dividends payable                                                         15,306
                                                                         ------------
             Total current liabilities                                      3,906,659

Note Payable, related party - long term                                       140,740
Note Payable - long term                                                      320,000

COMMITMENTS

STOCKHOLDERS' EQUITY
     Preferred stock - unclassified, authorized shares 36,000,000, no
        par value none issued
     Preferred stock convertible - Series C, 6%, $.001 par value
        2,000,000 shares authorized; 41,170 issued and outstanding                 41
     Common stock, $.001 par value, 200,000,000 shares authorized;
        117,464,982 issued and outstanding                                    117,465
     Treasury Stock, 49,000 shares of common stock                           (285,000)
     Additional paid in capital                                            15,411,422
     Shares to be issued                                                       93,122
     Accumulated deficit                                                  (11,897,450)
                                                                         ------------
             Total stockholders' equity                                     3,439,600

                                                                         ------------
                                                                         $  7,806,999
                                                                         ============
</TABLE>

The accompanying notes are an integral part of these unaudited consolidated
                             financial statements.

                                       14
<PAGE>

                               PRACTICEXPERT, INC.
                     (Formerly, Thaon Communications, Inc.)
                      CONSOLIDATED STATEMENTS OF OPERATION
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                      2004             2003
                                                                  ------------    ------------
<S>                                                               <C>             <C>
NET REVENUES:
    Medical billings and related services                         $  7,343,846    $  3,379,258
    Management services                                              3,752,666              --
                                                                  ------------    ------------
          TOTAL NET REVENUE                                         11,096,512       3,379,258

OPERATING EXPENSES:
    Legal settlement                                                   250,750          30,630
    Impairment of goodwill/client lists                                411,963         175,678
    Impairment of intangible asset                                     416,827          25,727
    Medical billings and related services                           10,312,077       5,580,721
    Management services                                              3,649,348              --
                                                                  ------------    ------------
          TOTAL OPERATING EXPENSES                                  15,040,965       5,812,756
                                                                  ------------    ------------
LOSS FROM OPERATIONS                                                (3,944,453)     (2,433,498)

NON-OPERATING INCOME (EXPENSE):
    Gain  on settlement of debts                                        70,988              --
    Gain (loss) on disposal of asset                                    (4,705)         32,361
    Interest income                                                        382           2,842
    Interest expense                                                  (249,419)        (87,739)
                                                                  ------------    ------------
          Total non-operating income (expense)                        (182,755)        (52,536)
                                                                  ------------    ------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
  AND DISCONTINUED OPERATIONS                                       (4,127,208)     (2,486,034)

INCOME TAXES                                                             5,600           2,400
                                                                  ------------    ------------

LOSS FROM CONTINUING OPERATIONS                                     (4,132,808)     (2,488,434)

DISCONTINUED OPERATIONS
  Gain (loss) on disposal of subsidiary, net                           (66,590)      3,433,069
                                                                  ------------    ------------

NET INCOME (LOSS)                                                   (4,199,398)        944,635

Dividend requirement for preferred stock                               (63,740)       (321,221)
                                                                  ------------    ------------

NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS               $ (4,263,138)   $    623,414
                                                                  ============    ============
BASIC  WEIGHTED AVERAGE NUMBER OF
    COMMON STOCK OUTSTANDING*                                       80,670,149       9,545,365
                                                                  ============    ============

BASIC NET LOSS PER SHARE FROM CONTINUING OPERATION                $      (0.05)   $      (0.26)
                                                                  ============    ============

BASIC NET INCOME (LOSS) PER SHARE FROM DISCONTINUED OPERATION     $      (0.00)   $       0.36
                                                                  ============    ============

BASIC NET LOSS PER SHARE FOR DIVIDENDS FOR PREFERRED STOCK        $      (0.00)   $      (0.03)
                                                                  ============    ============

BASIC  NET INCOME ( LOSS) PER SHARE                               $      (0.05)   $       0.07
                                                                  ============    ============
DILUTED WEIGHTED AVERAGE NUMBER OF
    COMMON STOCK OUTSTANDING*                                       80,670,149      45,009,233
                                                                  ============    ============

DILUTED NET LOSS PER SHARE FROM CONTINUING OPERATION              $      (0.05)   $      (0.06)
                                                                  ============    ============

DILUTED NET INCOME (LOSS) PER SHARE FROM DISCONTINUED OPERATION   $      (0.00)   $       0.08
                                                                  ============    ============

DILUTED NET LOSS PER SHARE FOR DIVIDENDS FOR PREFERRED STOCK      $      (0.00)   $      (0.01)
                                                                  ============    ============

DILUTED  NET INCOME (LOSS) PER SHARE                              $      (0.05)   $       0.01
                                                                  ============    ============
</TABLE>

Weighted  average  number of shares used to compute  basic and diluted  loss per
share  for 2004  are the  same  since  the  effect  of  dilutive  securities  is
anti-dilutive.

  The accompanying notes are an integral part of these unaudited consolidated
                                  statements.

                                       15
<PAGE>

                          PRACTICEXPERT SERVICES CORP.
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                  PREFERRED STOCK              COMMON STOCK
                                                            -------------------------   -------------------------     ADDITIONAL
                                                            NUMBER OF                    NUMBER OF                     PAID IN
                                                              SHARES         AMOUNT        SHARES        AMOUNT        CAPITAL
                                                           -----------    -----------   -----------   -----------    -----------
<S>                                                        <C>            <C>            <C>               <C>       <C>
BALANCE AT DECEMBER 31, 2002                              $7,011,433     $4,884,826     $8,619,794    $    8,619     $      --
Issuance of shares for cash                                       --             --        555,161           555       248,518
Issuance of shares for directors' fee                             --             --        107,238           107       144,639
Issuance of shares for interest                                   --             --          8,625             9        13,434
Issuance of shares for services                               25,000             25      1,211,944         1,212     1,495,006
Issuance of shares for Bonus                                      --             --         27,499            27        30,607
Issuance of shares for goodwill                                   --             --            500             1           421
Issuance of shares for legal settlement                           --             --        104,216           104        82,852
Issuance of shares for collateral on note                         --             --        200,000           200          (200)
Issuance of shares for dividend payment                           --             --         25,405            25        17,872
Issuance of shares for subscription                               --             --        125,000           125        34,875
Issuance of shares committed from prior year                      --             --          5,000             5         4,995
Issuance of preferred stock committed from prior year        200,000        200,000             --            --            --
Issuance of shares for conversion of preferred stock      (2,234,914)    (2,234,914)     4,103,526         4,104     2,230,810
Cancellation of preferred stock                             (900,000)      (900,000)            --            --       900,000

Issuance of shares for debt settlement                            --             --         92,195            93       123,735
Issuance of shares for acquisition of subsidiaries                --             --        201,815           202       160,708
Shares to be issued for cash received                             --             --             --            --            --
Net loss for the year ended December 31, 2003                     --             --             --            --            --
                                                         -----------    -----------    -----------   -----------   -----------
BALANCE AT DECEMBER 31, 2003                               4,101,519      1,949,937     15,387,918        15,388     5,488,272
Issuance of shares for cash                                       --             --     59,328,662        59,329     6,101,600
Issuance of shares for directors' fee                             --             --        100,000           100        35,900
Issuance of shares for interest                                   --             --         68,093            68        18,139
Issuance of shares for services                                   --             --      2,111,123         2,111       467,771
Issuance of shares for salary                                     --             --         70,000            70        33,480
Issuance of shares for dividend payment                           --             --      1,386,083         1,386       690,341
Issuance of shares for conversion of preferred stock      (4,060,349)    (1,949,896)    36,615,740        36,616     1,913,280
Issuance of shares for debt settlement                            --             --         50,000            50        24,450
Issuance of shares for acquisition of subsidiaries                --             --      2,197,185         2,197       621,166
Issuance of shares for Preferred F shares to be issued            --             --        138,859           139         9,861
Warrants issued                                                   --             --             --            --         7,173
Additional shares issued to correct the transaction               --             --         11,319            11           (11)
Shares to be issued for cash received                             --             --             --            --            --
Net loss for the year ended December 31, 2004                     --             --             --            --            --
                                                         -----------    -----------    -----------   -----------   -----------
BALANCE AT DECEMBER 31, 2004                             $    41,170    $        41   $117,464,982   $   117,465   $15,411,422
                                                         ===========    ===========    ===========   ===========   ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                                         TOTAL
                                                                                                                      STOCKHOLDERS'
                                                            SHARES TO    SUBSCRIPTION     TREASURY      ACCUMULATED     EQUITY
                                                            BE ISSUED     RECEIVABLE        STOCK         DEFICIT      (DEFICIT)
                                                           -----------    -----------    -----------    -----------   ----------
<S>                                                        <C>            <C>            <C>          <C>            <C>
BALANCE AT DECEMBER 31, 2002                               $ 215,000      $      --      $(285,000)   $(8,257,726)   $(3,434,281)
Issuance of shares for cash                                       --             --             --             --        249,073
Issuance of shares for directors' fee                             --             --             --             --        144,746
Issuance of shares for interest                                   --             --             --             --         13,443
Issuance of shares for services                                   --             --             --             --      1,496,243
Issuance of shares for Bonus                                      --             --             --             --         30,634
Issuance of shares for goodwill                                   --             --             --             --            422
Issuance of shares for legal settlement                           --             --             --             --         82,956
Issuance of shares for collateral on note                         --             --             --             --             --
Issuance of shares for dividend payment                           --             --             --             --         17,897
Issuance of shares for subscription                               --        (35,000)            --             --             --
Issuance of shares committed from prior year                  (5,000)            --             --             --             --
Issuance of preferred stock committed from prior year       (200,000)            --             --             --             --
Issuance of shares for conversion of preferred stock              --             --             --             --             --
Cancellation of preferred stock                                   --             --             --             --             --
                                                         -----------    -----------    -----------    -----------    -----------
Issuance of shares for debt settlement                            --             --             --             --        123,828
Issuance of shares for acquisition of subsidiaries                --             --             --             --        160,910
Shares to be issued for cash received                         23,804             --             --             --         23,804
Net loss for the year ended December 31, 2003                     --             --             --        623,414        623,414
                                                         -----------    -----------    -----------    -----------    -----------
BALANCE AT DECEMBER 31, 2003                                  33,804        (35,000)      (285,000)    (7,634,312)      (466,911)
Issuance of shares for cash                                  (23,804)        35,000             --             --      6,172,125
Issuance of shares for directors' fee                             --             --             --             --         36,000
Issuance of shares for interest                                   --             --             --             --         18,207
Issuance of shares for services                                   --             --             --             --        469,882
Issuance of shares for salary                                     --             --             --             --         33,550
Issuance of shares for dividend payment                           --             --             --             --        691,727
Issuance of shares for conversion of preferred stock              --             --             --             --             --
Issuance of shares for debt settlement                            --             --             --             --         24,500
Issuance of shares for acquisition of subsidiaries                --             --             --             --        623,363
Issuance of shares for Preferred F shares to be issued       (10,000)            --             --             --             --
Warrants issued                                                   --             --             --             --          7,173
Additional shares issued to correct the transaction               --             --             --             --             --
Shares to be issued for cash received                         93,122             --             --             --         93,122
Net loss for the year ended December 31, 2004                     --             --             --     (4,263,138)    (4,263,138)
                                                         -----------    -----------    -----------    -----------    -----------
BALANCE AT DECEMBER 31, 2004                             $    93,122    $        --    $  (285,000)  $(11,897,450)   $ 3,439,600
                                                         ===========    ===========    ===========    ===========    ===========
</TABLE>

The accompanying notes are an integral part of these unaudited consolidated
                             financial statements.

                                       16
<PAGE>

                               PRACTICEXPERT, INC.
                     (FORMERLY, THAON COMMUNICATIONS, INC.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                 2004          2003
                                                              ----------    ----------
<S>                                                           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                       $(4,263,138)   $  623,414
     Adjustments to reconcile net income (loss) to net
       cash provided by (used in) operating activities:
         Depreciation and amortization                         1,775,524       359,263
         Loss (gain) on disposal of asset                          4,705       (32,361)
         Impairment of goodwill/client lists                     411,963       175,678
         Impairment of Intangible assets                         416,827        25,727
         Gain on settlement of debts                             (70,988)           --
         Loss on legal settlement                                     --        30,630
         Loss (gain) on disposal of subsidiaries                  66,590    (3,433,069)
         Shares issued for services and compensation             539,432     1,641,411
         Shares issued for interest                               18,207        31,340
         Shares issued for legal settlement                           --        82,956
         Shares issued for bonus                                      --        30,634
         Warrants issued                                           7,173            --
         (Increase) decrease in current assets
               Accounts receivable                              (232,581)       49,691
               Accounts receivable-management services          (872,537)           --
               Prepaid expenses                                   82,809      (104,854)
               Inventory                                              --        14,500
               Other current assets                              (88,614)       53,760
         Increase (decrease) in current liabilities:                  --        14,500
               Accounts payable and accrued expense            1,777,096       (87,457)
               Other current liabilities                         145,858       (28,144)
               Dividends payable                                 (21,851)      238,770
         Increase in other assets-deposit                        (12,621)           --
                                                              ----------    ----------
     Total Adjustments                                         3,946,992      (951,525)
                                                              ----------    ----------
                 Net cash used in operating activities          (316,146)     (328,111)
                                                              ----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES
         Increase in restricted cash                                  --       175,000
         Cash received in disposal of subsidiaries                    --        58,301
         Cash paid in acquisition of subsidiaries             (4,250,000)     (160,000)
         Development of software                                (154,964)     (292,351)
         Proceed from disposal of fixed asset                      1,500            --
         Purchase of property & equipment                       (202,677)      (94,454)
                                                              ----------    ----------
                 Net cash used in investing activities        (4,606,141)     (313,504)
                                                              ----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
         Payments on loans from related parties                  (81,684)     (121,239)
         Payments of notes payable                            (1,400,890)           --
         Proceed of notes payable                                450,000       527,022
         Cash received from shares to be issued                   93,122        23,804
         Cash received from issuance of shares                 6,172,125       249,073
                                                              ----------    ----------
                 Net cash provided by financing activities     5,232,673       678,660
                                                              ----------    ----------

NET INCREASE IN CASH & CASH EQUIVALENTS                          310,386        37,045

CASH & CASH EQUIVALENTS, BEGINNING BALANCE                        71,017        33,972
                                                              ----------    ----------

CASH & CASH EQUIVALENTS, ENDING BALANCE                       $  381,403    $   71,017
                                                              ==========    ==========
</TABLE>


The accompanying notes are an integral part of these unaudited consolidated
                             financial statements.

                                       17
<PAGE>

                               PRACTICEXPERT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Practice Xpert Services Corp.  ("Practice Xpert") was incorporated on August 11,
2001  in the  State  of  California,  under  the  name  Care  Delivery  Services
Corporation. On October 22, 2001, the Company filed an amendment to its articles
of incorporation to change the Company's name to PracticeXpert Services Corp.

Practice Xpert Services Corp., a healthcare  technology and services company, is
in the business of developing and deploying  systems,  technologies and services
designed to improve operational efficiencies,  reduce billing errors and enhance
cash flow for medical practitioners. Its services revolve around PracticeXpert's
flagship Revenue Management System,  PXpert(TM), and include medical billing and
accounts  receivable  management,   practice  management,   transcription,   and
consulting. Where applicable, Practice Xpert bundles its technology applications
with its billing and other  practice  management  services to provide a complete
and integrated solution to its physician customers.

On April 11, 2003,  Practice  Xpert  Services  Corp.  a California  corporation,
entered  into  a  stock  purchase  agreement  with  Thaon  Communications,  Inc.
(`Thaon")  Pursuant to the Purchase  Agreement,  which closed on April 11, 2003,
Thaon purchased 92% of Practice Xpert's outstanding common stock in exchange for
newly  issued  shares of Thaon's  common  stock and shares of Thaon's  Preferred
Series C stock to former owner of Practice  Xpert (the "Selling  Shareholders").
As a group, the Selling Shareholders  received 7,670,5965 (post split) shares of
common  stock and  1,845,000  shares of Preferred  Series C stock,  constituting
72.75% of Thaon's voting securities.  As a condition of the Purchase  Agreement,
on April 11,  2003,  the  officers of Thaon  resigned and the board of directors
appointed  officers of Practice Xpert as the combined  company's (the "Company")
officers.

On  September  30,  2003,  the Company  purchased  the  remaining 8% of Practice
Xpert's  outstanding  common stock by issuing  472,860  shares of the  Company's
common stock and 111,736 shares of Preferred Series C stock.

According to the terms of the share exchange agreement,  control of the combined
companies (the "Company")  passed to the former  shareholders of Practice Xpert.
This  type  of  share  exchange  has  been  treated  as  a  capital  transaction
accompanied by  recapitalization  of Practice Xpert in substance,  rather than a
business  combination,  and is deemed a  "reverse  acquisition"  for  accounting
purposes since the former owners of Practice Xpert  controlled a majority of the
total common shares outstanding  immediately  following the acquisition.  No pro
forma financial statements are being presented as Thaon had no significant asset
prior to the acquisition.

On July 21, 2003, the Company changed its name to PracticeXpert, Inc.

Thaon Communications,  Inc. (`Thaon") was originally incorporated under the name
Engineering  Services,  Inc. (a Nevada  Corporation),  on July 13,  1984.  Thaon
changed its name to Deep Earth,  Inc. in November of 1998. On November 29, 1999,
Thaon changed its name to CastPro.com, Inc

Practice  Xpert  owns 100% of the issued and  outstanding  shares of  Healthcare
Administrative  Management Corporation (HAMC), a California corporation and K.R.
Johnson  and  Associates  (KRJA),  an  Idaho  corporation.  On  July  31,  2003,
PracticeXpert  entered into a purchase  agreement to acquire 100% of  Healthcare
Billing Solutions, Inc., a Montana corporation.

On November 10, 2003,  Practice Xpert completed the 100% acquisition of National
Healthcare Management Services, Inc. ("NHMS"), West Virginia Corporation.

On March 1, 2004,  PracticeXpert of Texas (PX-TX),  which was formed on November
7, 2003, a 100% owned subsidiary of the Company,  completed its 100% acquisition
of Singer MedScript's assets, a Houston Texas sole proprietorship company, which
was formed in 1976.

On April 28, 2004, the Company completed its acquisition of Cancer Care Network,
Inc., an Oklahoma corporation,  located in Oklahoma City, Oklahoma.  Cancer Care
Network,  Inc.  specializes  in  radiation  and  medical  oncology  billing  and
management.

The management of the Company decided to dispose  Healthcare  Billing Solutions,
Inc. effective September 1, 2004. The loss from HBS for eight-month period ended
August 31, 2004 was included in loss from  discontinued  operation  along with a
loss on disposal in the financial statements.

Healthcare   Administrative   Management   Corporation   (HAMC),   a  California
corporation was formed on July 29, 1997.

K.R. Johnson and Associates  (KRJA), an Idaho corporation was formed on December
22, 1995.

Healthcare  Billing  Solutions,  Inc. (HBS),  Montana  corporation was formed on
March 8, 2001.

National Healthcare Management Services,  Inc. (NHMS), West Virginia corporation
was formed on June 23, 1999.

                                       18
<PAGE>

HAMC,  KTJA, HBS and NHMS all provide  medical  billing and accounts  receivable
management,  practice  management,  transcription  and  consulting  services  to
medical practitioners.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying  financial  statements  include the accounts of  PracticeXpert,
Inc., formerly Thaon Communications,  Inc. (legal acquirer,  the "Parent"),  and
its 100% owned  subsidiary,  Practice Xpert and Practice  Xpert's  subsidiaries,
Healthcare Administrative  Management Corporation,  K.R. Johnson and Associates,
Healthcare Billing Solutions,  Inc.,  National Healthcare  Management  Services,
Inc. and  PracticeXpert  of Taxes and Cancer Care Network,  Inc. All significant
inter-company accounts and transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all liquid  investments with a maturity of three months or
less from the date of purchase that are readily convertible into cash to be cash
equivalents.

Revenue Recognition

The  Company's  revenue  recognition  policies  are  in  compliance  with  Staff
Accounting  Bulletin (SAB) 104. Revenue is recognized when a formal  arrangement
exists,  the price is fixed or  determinable,  the  delivery  is  completed  and
collectibility is reasonably assured.  Generally,  the Company extends credit to
its  customers and does not require  collateral.  The Company  performs  ongoing
credit  evaluations of its customers and historic credit losses have been within
management's expectations.

INCOME TAXES

Deferred income tax assets and liabilities are computed annually for differences
between  the  consolidated  financial  statements  and tax basis of  assets  and
liabilities  that will  result in  taxable or  deductible  amounts in the future
based  on  enacted  laws and  rates  applicable  to the  periods  in  which  the
differences are expected to affect taxable income (loss). Valuation allowance is
established  when necessary to reduce deferred tax assets to the amount expected
to be realized.

ADVERTISING

The Company expenses advertising costs as incurred.


STOCK-BASED COMPENSATION

In October  1995,  the FASB  issued SFAS No. 123,  "Accounting  for  Stock-Based
Compensation".  SFAS No. 123 prescribes  accounting and reporting  standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting  Principles
Board Opinion No. 25,  "Accounting  for stock issued to employees"  (APB 25) and
related  interpretations  with  pro  forma  disclosure  of what net  income  and
earnings  per share would have been had the  Company  adopted the new fair value
method.  The company uses the intrinsic value method prescribed by APB25 and has
opted for the disclosure provisions of SFAS No.123.

ISSUANCE OF SHARES FOR SERVICE

The Company accounts for the issuance of equity  instruments to acquire services
based  on the fair  value  of the  services  or the  fair  value  of the  equity
instrument at the time of issuance, whichever is more reliably measurable.

                                       19
<PAGE>

COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE

As part of intangible assets, the Company  capitalizes certain computer software
development  costs in accordance with SFAS No. 86,  "Accounting for the Costs of
Computer  Software to be Sold,  Leased,  or Otherwise  Marketed." Costs incurred
internally to create a computer software product or to develop an enhancement to
an  existing  product  are charged to expense  when  incurred  as  research  and
development expense until  technological  feasibility for the respective product
is established.  Thereafter,  all software development costs are capitalized and
reported  at  the  lower  of   unamortized   cost  or  net   realizable   value.
Capitalization  ceases when the product or  enhancement is available for general
release to customers.

The Company makes on-going  evaluations of the recoverability of its capitalized
software  projects by comparing the amount  capitalized  for each product to the
estimated net realizable value of the product. If such evaluations indicate that
the unamortized  software development costs exceed the net realizable value, the
Company  writes off the  amount by which the  unamortized  software  development
costs exceed net realizable value.  Capitalized and purchased  computer software
development  costs  were  amortized  ratably  based  on  the  projected  revenue
associated  with the  related  software or on a  straight-line  basis over three
years, whichever method results in a higher level of amortization.

The Company had  capitalized  cost of computer  software once a working model is
developed through the year 2004. At December 31, 2004, the Company wrote off the
balance  of  the  capitalized   software  costs  amounting  $416,827  since  the
management  determined that this software would no longer generate the projected
revenue as a result of the subsequent  acquisition of a company with a different
software platform. (note 6)

PROPERTY & EQUIPMENT

Property and  equipment are stated at cost.  Expenditures  for  maintenance  and
repairs are charged to earnings as incurred; additions, renewals and betterments
are capitalized.  When property and equipment are retired or otherwise  disposed
of,  the  related  cost  and  accumulated  depreciation  are  removed  from  the
respective   accounts,   and  any  gain  or  loss  is  included  in  operations.
Depreciation  of property  and  equipment  is provided  using the  straight-line
method for substantially all assets with estimated lives of five to seven years.

LONG-LIVED ASSETS

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards  No. 144,  "Accounting  for the  Impairment  or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment  or  disposal  of  long-lived  assets and  supersedes  SFAS No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting  provisions of APB Opinion No.
30,  "Reporting  the  Results of  Operations  for a  Disposal  of a Segment of a
Business." The Company  periodically  evaluates the carrying value of long-lived
assets  to be held and used in  accordance  with  SFAS  144.  SFAS 144  requires
impairment  losses to be recorded on long-lived  assets used in operations  when
indicators of impairment are present and the  undiscounted  cash flows estimated
to be generated by those assets are less than the assets' carrying  amounts.  In
that  event,  a loss is  recognized  based on the  amount by which the  carrying
amount  exceeds  the  fair  market  value  of the  long-lived  assets.  Loss  on
long-lived  assets to be disposed of is determined in a similar  manner,  except
that fair  market  values are  reduced  for the cost of  disposal.  Based on its
review,  the Company has written  off $25,727 as  impairment  of its  long-lived
assets as of December 31, 2003.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial  instruments,  requires that the Company  disclose  estimated  fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current  liabilities  qualifying as
financial instruments are a reasonable estimate of fair value.

SEGMENT REPORTING

Statement of Financial  Accounting  Standards No. 131 ("SFAS 131"),  "Disclosure
About  Segments of an Enterprise  and Related  Information"  requires use of the
"management approach" model for segment reporting. The management approach model
is based on the way a company's management organizes segments within the company
for making operating  decisions and assessing  performance.  Reportable segments
are based on products  and  services,  geography,  legal  structure,  management
structure, or any other manner in which management disaggregates a company.

Following is a summary of segment  information  by geographic  unit for the year
ended December 31, 2004:

<TABLE>
<CAPTION>
                                     CA             ID           TX              OK            WV
                                -----------    -----------   -----------    -----------    ---------
<S>                             <C>            <C>           <C>            <C>            <C>
Sales                           $ 1,159,293    $ 2,356,046   $   637,454    $ 6,563,868    $ 378,117
Operating income (loss)          (2,662,326)       310,135      (146,878)       723,532     (127,837)
Total Assets                        729,263        356,101       102,620      1,523,772       56,125
Capital Expenditure                      --         18,524         3,000         54,558        2,225
Depreciation and amortization       122,612         53,798            --          1,647       26,088
</TABLE>

                                       20
<PAGE>

Following is a summary of segment information  by geographic  unit  for the year
ended December 31, 2003:

                                   CA            ID           MO          WV
                              -----------   -----------   ---------   ---------
Sales                         $ 1,058,334   $ 2,204,299   $  50,149   $  66,141
Operating income (loss)        (1,249,511)      268,187     (61,620)    (33,130)
Total Assets                      641,876       375,713       5,063      77,507
Capital Expenditure                    --        62,315          --       8,953
Depreciation and amortization      73,222        64,156         797       3,398


BASIC AND DILUTED NET LOSS PER SHARE

Net loss per share is calculated  in accordance  with the Statement of financial
accounting  standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128
superseded  Accounting  Principles  Board  Opinion  No.15 (APB 15). Net loss per
share for all periods  presented  has been  restated to reflect the  adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of  common  shares  outstanding.  Diluted  net  loss  per  share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised.  Dilution is computed by applying the treasury stock method. Under
this method,  options and warrants are assumed to be exercised at the  beginning
of the period (or at the time of issuance,  if later),  and as if funds obtained
thereby were used to purchase  common  stock at the average  market price during
the period.

STOCK-BASED COMPENSATION

The Company has adopted the disclosure provisions only of SFAS 123 and continues
to  account  for stock  based  compensation  using the  intrinsic  value  method
prescribed in accordance with the provisions of APB No. 25, Accounting for Stock
Issued to  Employees,  and  related  interpretations0.  Common  stock  issued to
employees  for  compensation  is accounted  for based on the market price of the
underlying stock, generally the average low bid price.

The Company accounts for stock-based  compensation  issued to non-employees  and
consultants  in  accordance  with the  provisions  of SFAS 123 and the  Emerging
Issues Task Force consensus in Issue No. 96-18 ("EITF  96-18"),  "Accounting for
Equity  Instruments  that are Issued to Other Than Employees for Acquiring or in
Conjunction   with  Selling,   Goods  or  Services".   Common  stock  issued  to
non-employees  in exchange for services is accounted for based on the fair value
of the services received.

In  December  2002,  the FASB issued  SFAS No. 148  "Accounting  for Stock Based
Compensation-Transition  and  Disclosure".  SFAS No.  148 amends  SFAS No.  123,
"Accounting for Stock Based  Compensation",  to provide  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee  compensation.  In addition,  this Statement amends the
disclosure  requirements  of Statement 123 to require  prominent  disclosures in
both annual and interim financial  statements about the method of accounting for
stock-based employee compensation and the effect of the method used, on reported
results.  The Statement is effective for the Companies' interim reporting period
ending January 31, 2003.

During the year 2004, the Company  granted a total of 6,000,000 stock options to
officers to purchase 1,500,000 shares at $0.12 and 4,500,000 shares at $0.30 per
share.  The stock options were issued in accordance  with the Company's 2003 and
2004 Equity  Incentive  plan.  The 2003 plan  options'  vesting is immediate and
expires  ten years  from  grant  date.  The 2004 plan  options'  vesting  is 1/3
immediately,  1/3 after 12 months and 1/3 after 24 months  and shall  expire ten
years from grant date. In  compliance  with FAS No. 148, the Company has elected
to follow the intrinsic value method in accounting for its stock-based  employee
compensation  plan  as  defined  by APB  No.  25 and  has  made  the  applicable
disclosures below.

Had the Company  determined  employee stock based  compensation  cost based on a
fair value  model at the grant date for its stock  options  under SFAS 123,  the
Company's  net  earnings  per share  would have been  adjusted  to the pro forma
amounts for the year ended December 31, 2004 and 2003, as follows:

                                       21
<PAGE>

                                                     Year ended December 31,
                                                      2004            2003
                                                  -----------    ------------

     Net loss - as reported                       $(4,199,398)   $    944,635
     Stock-Based employee compensation
       expense included in reported net
       income, net of tax                                  --              --

     Total stock-based employee
       compensation expense determined
       under fair-value-based method for all
       rewards, net of tax                           (287,820)             --
                                                  -----------    ------------
     Pro forma net income (loss)                  $(4,487,218)   $    944,635
                                                  ===========    ============
     (Loss) per share:

     Basic, as reported                           $     (0.05)   $       0.07
     Diluted, as reported                         $     (0.05)   $       0.01
     Basic, pro forma                             $     (0.06)   $       0.07
     Diluted, pro forma                           $     (0.06)   $       0.01


Following is a summary of the stock option activity:


                Outstanding at December 31, 2002              --
                Granted                                       --
                Forfeited                                     --
                Exercised                                     --
                                                      ----------
                Outstanding at December 31, 2003              --

                Granted                                6,000,000
                Forfeited                                     --
                Exercised                                     --
                                                      ----------
                Outstanding at December 31, 2004       6,000,000
                                                      ==========

Following  is a summary of the status of options  outstanding  at  December  31,
2004:

                                  Outstanding Options       Exercisable Options
                                  -------------------       -------------------
                                 Weighted
                                  Average      Weighted               Weighted
                                Remaining       Average               Average
                               Contractual     Exercise               Exercise
Exercise Price       Number        Life          Price      Number     Price
---------------      ------        ----        --------     ------    --------
$ 0.12 - $ 0.30    6,000,000      10 yrs        $ 0.26        --       $  --

For  options   granted   during  the  year  ended   December   31,   2004,   the
weighted-average  fair value of such options was $0.065 for 2003 plan and $0.042
for 2004 plan.

Stock-based  compensations  recognized  during the years ended December 31, 2004
and 2003 were $-0-.

The Black-Scholes option pricing model used the following assumptions:

                                                              2004
                                                            --------
  Risk-free interest rate                                     3.60%
  Expected life of the options                              10 years
  Expected volatility                                           70%
  Expected dividend yield                                        0

                                       22
<PAGE>

RECENT PRONOUNCEMENTS

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R").  FAS No. 123R requires
companies to recognize in the statement of operations the grant-date  fair value
of stock options and other equity-based  compensation  issued to employees.  FAS
No. 123R is effective  beginning in the Company's  first quarter of fiscal 2006.
The Company  believes  that the adoption of this  standard will have no material
impact on its financial statements.

In December  2004,  the FASB  issued  SFAS  Statement  No.  153,  "Exchanges  of
Nonmonetary  Assets."  The  Statement  is an  amendment of APB Opinion No. 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. The Company believes that the adoption of
this standard will have no material impact on its financial statements.

In March 2004, the Emerging  Issues Task Force  ("EITF")  reached a consensus on
Issue  No.  03-1,  "The  Meaning  of  Other-Than-Temporary  Impairment  and  its
Application  to Certain  Investments."  The EITF  reached a consensus  about the
criteria  that should be used to  determine  when an  investment  is  considered
impaired,  whether that impairment is other-than-temporary,  and the measurement
of an  impairment  loss and how that criteria  should be applied to  investments
accounted for under SFAS No. 115, "ACCOUNTING IN CERTAIN INVESTMENTS IN DEBT AND
EQUITY   SECURITIES."  EITF  03-01  also  included   accounting   considerations
subsequent to the recognition of an other-than-temporary impairment and requires
certain  disclosures  about  unrealized  losses that have not been recognized as
other-than-temporary   impairments.   Additionally,   EITF  03-01  includes  new
disclosure  requirements  for  investments  that are  deemed  to be  temporarily
impaired.  In September  2004, the Financial  Accounting  Standards Board (FASB)
delayed  the  accounting  provisions  of  EITF  03-01;  however  the  disclosure
requirements remain effective for annual reports ending after June 15, 2004. The
Company will evaluate the impact of EITF 03-01 once final guidance is issued.

NOTE 3 -  PREPAID EXPENSES

This amount  represents  the prepaid  insurance  cost of $7,474,  prepaid travel
expenses of $9,205 and other prepaid expenses of $5,366.

NOTE 4 - ACCOUNTS RECEIVABLE

Account Receivable;
The Company has a net accounts receivable balance of $794,245 as of December 31,
2004. In determining the allowance to be maintained,  management  evaluates many
factors including industry and historical loss experience. The Company considers
majority  accounts  receivable are collectible.  The Company reserved $56,470 as
allowance of bad debts.

Account Receivable-management services;
The Company has a net accounts receivable balance of $872,537 as of December 31,
2004. The Company reserved $183,500 as allowance for bad debts.


NOTE 5 -   PROPERTY AND EQUIPMENT

Property and equipment comprised of following on December 31, 2004:

                  Furniture & Fixtures                $   570,606
                  Office Equipment                        135,366
                  Computer Equipment                      346,619
                  Leasehold Improvement                     9,941
                                                      -----------
                                                        1,062,532
                  Less Accumulated Depreciation          (687,634)
                                                      -----------
                                                      $   374,898
                                                      ===========

NOTE 6 - INTANGIBLE ASSETS

Software:
During the years  ended  December  31, 2004 and 2003,  the  Company  capitalized
internal and external costs of $137,980 and $292,351, respectively,  incurred to
develop  internal-use  computer  software during the application and development
stage.  Capitalized  software has been  amortized over a period of 5 years using
the straight-line method. Amortization began when the software was available for
its intended use. The amortization  amounts for the year ended December 31, 2003
and  2002  were  $66,898  and  $18,417,   respectively.  The  Company  evaluates
capitalized  software cost for  recoverability and writes down such costs if the
unamortized  cost is lower than its net realizable  value. At December 31, 2004,
the Company wrote off the balance of the  capitalized  software costs  amounting
$416,827 as a result of the subsequent acquisition of a company with a different
software platform.

Client lists:

The Company has client lists acquired through purchase of subsidiaries valued at
$5,252,784 and $2,074,066 as of December 31, 2004 and 2003, respectively.  These
client  lists are  amortized  over one to nine years.  The Company  periodically
evaluates  the  carrying  value  of  long-lived  assets  to be held  and used in
accordance  with SFAS 144. At December 31, 2004 and 2003,  the Company  recorded

                                       23
<PAGE>

impairment  loss of  $288,600  and  $175,678,  respectively  since  the  Company
determined  that the  undiscounted  cash flows  estimated to be generated by the
client lists are less than the carrying amount.  The  amortization  expenses for
the period  ended  December  31,  2004 and 2003 were  $1,530,680  and  $217,674,
respectively.

The estimated aggregated amortization expenses for each of five succeeding years
are as follows:

                           2005     $ 2,161,000
                           2006       1,168,000
                           2007         671,000
                           2008         671,000
                           2009         375,000

Goodwill:

The Company  issued  additional  1,370,685  shares to the  previous  owners of a
subsidiary for backfill per purchase  agreement.  This amount valued at $123,363
was  recorded as goodwill  and the full  amount was  impaired as the  management
determined that there was no value at December 31, 2004.

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

                    Accounts payable                $ 1,515,453
                    Accrued expenses                    475,628
                    Accrued payroll                     590,716
                    Payroll tax payable                  43,372
                                                    -----------
                                                    $ 2,625,170
                                                    ===========

NOTE 8 - NOTES PAYABLE, RELATED PARTIES

Notes payable to related parties consist of the following:

    Notes payable--shareholder  bearing interest at 8%, due July
      1, 2005,  collateralized  by 267,926 shares of the Company's
      common stock                                                     $103,050
    Notes  payable--Shareholder  bearing  interest at 8%, due on
      Dec. 31, 2005                                                      91,066
    Notes  payable--shareholder  bearing  interest at 8%, due on
      October 30, 2007, unsecured                                        74,362
    Notes  payable--shareholder  bearing  interest at 8%, due on
      Feb. 17, 2007, unsecured                                           66,378
                                                                      ---------
    Total                                                               334,856
    Less: non-current portion                                           140,740
                                                                      ---------
    Current portion                                                   $ 194,116
                                                                      =========


The future maturity of the notes payable is as follows:

                                2006                 $ 91,514
                                2007                   49,226
                                                    ---------
                               Total                 $140,740
                                                    =========

NOTE 9 -NOTES PAYABLE

      Note payable--interest rate 18%,  Oct 12, 2004                 $  25,000
      Note payable--interest rate 6.5%, due on Feb. 25, 2005           183,910
      Notes payable--interest rate 10%, due in May 2005                 80,000
      Note payable--interest rate 0.625%, due on December 31, 2007     320,000
      Notes payable                                                     34,243
                                                                     ---------
      Total                                                            643,153
      Less: non-current portion                                        320,000
                                                                     ---------
      Current portion                                                $ 323,153
                                                                     =========


The long term note of $320,000 is due on December 31, 2007.

                                       24
<PAGE>

NOTE 10 -ADVANCES

The advances amounting $422,781 are due on demand, unsecured and interest free.

NOTE 11 -OTHE CURRNT LIABILITIES

Other current liabilities consist of the following:

              Advances from shareholders          $182,984
              Credit lines payable                 143,149
                                                  --------
                                                  $326,133
                                                  ========

The advances from shareholders are due on demand, unsecured and interest free.

NOTE  12   -STOCKHOLDERS' EQUITY

Issuance of shares for service

The Company accounts for the issuance of equity instruments to acquire goods and
services.  The stocks were valued at the average fair market value of the freely
trading shares of the Company as quoted on OTCBB on the date of issuance.

REGULATION S

On January 9, 2004, the Company and its management  (shareholder) entered into a
Regulation  S Stock  Purchase  Agreement  with  California  Securities  S.A. (CA
Securities)  a Panamanian  business  company.  The Company  agreed to sell to CA
Securities  in an  "offshore  transaction"  as  defined in  Regulation  S, which
transaction  had been  negotiated  outside the U.S. and  consummated  and closed
outside the U.S., and the Purchaser  agreed to purchase up to 8,000,000 Units. A
unit meant two shares of common stock of the Company.  One share was a new share
issued by the Company as part of this Reg. S Stock  Purchase  Agreement  and the
other share was sold by the  Shareholder  from their own stock.  For each unit ,
the  purchase  price  comprised of (1) $.001 per share for the share sold by the
shareholders  and (2) Per "purchase price" for the shares issued by the Company.
"Purchase  Price" for the Company  Share was the Share Price  multiplied by 30%.
"Share  Price"  was the  closing  bid price (on the  OTCBB)  multiplied  by 90%.
Proceeds paid to the Seller were  allocated  $.001 for each share to Shareholder
and the balance to the Company.  The Purchaser agreed to use its best efforts to
purchase up to 8 million  Units  between the date hereof and May 30, 2004 ("Best
Efforts  Period").  For the year ended  December  31, 2004,  the Company  issued
5,226,906 shares of common stock under Regulation S Offering amounting $795,161.

On April 28, 2004, the Company  completed the sale of $5.8 million of its common
stock and warrants to certain purchasers. The Company sold 48,333,347 restricted
shares  of its  common  stock  at a  purchase  price of $0.12  per  shares.  The
purchasers  received five-year warrants to purchase  48,333,347 shares of common
stock at an  exercise  price of $0.30 per share.  Pursuant  to the  Registration
Rights  Agreement the Company has agreed to prepare and file with the Securities
and Exchange  Commission  a  registration  statement  covering the resale of the
restricted  shares  of its  common  stock and  common  stock  issuable  upon any
exercise of the warrants.  As a result, during the year ended December 31, 2004,
the Company issued  52,171,169 shares of common stock and warrants of 48,333,347
for cash amounting to $5,183,027, net of commissions amounting $616,973. $20,000
of cash was received in the prior period.

During the year ended December 31, 2004, the Company issued  1,035,911 shares of
common stock for cash receipt of $237,418.

As of December  31,  2004,  the Company  has  received  $93,122 for shares to be
issued.

During the year ended  December 31,  2004,  the Company  issued  common stock in
exchange of various services to following parties:

The  Company  issued  2,111,123  shares of common  stock  for  various  services
amounting $469,882.  The Company issued 70,000 shares of common stock for salary
amounting  $33,550.  The Company  issued  68,093  shares for interest  amounting
$18,207.  The  Company  issued  100,000  shares for  directors'  fees  amounting
$36,000.  The Company  issued  820,376  shares for the  finder's  fees valued at
$418,440.

During the year ended  December 31, 2004,  the Company  issued  50,000 shares of
common  stock valued at $24,500 to settle note  payable  amount of $10,000.  The
difference amount of $14,500 was record as a loss on settlement of debt.

The subscription receivable which was outstanding as of December 31, 2003 for an
amount of $35,000 and was received in the year ended December 31, 2004.

                                       25
<PAGE>

During the year ended December 31, 2004, the Company issued the following common
stock to  convert  the  Preferred  stock at the  conversion  rate  specified  on
Preferred stock certificate;

      o     1,650,000  shares  of  Series A  convertible  Preferred  stock  plus
            dividend of $131,750  were  converted to 3,094,928  shares of common
            stock.

      o     197,783 shares of Series B convertible Preferred stock plus dividend
            of $22,709 were converted to 2,015,153 shares of common stock.

      o     1,942,566  shares  of  Series C  convertible  Preferred  stock  plus
            dividend of $153,110 were  converted to 29,392,826  shares of common
            stock.

      o     100,000 shares of Series D convertible Preferred stock plus dividend
            of $18,000 were  converted to 204,968  shares of common  stock.  The
            Company  issued  additional  1,719,646  shares of  common  stock for
            re-pricing adjustment of Preferred D stock.

      o     120,000 shares of Series E convertible Preferred stock plus dividend
            of $21,100 were converted to 275,050 shares of common stock.

      o     50,000 shares of Series F convertible  Preferred stock plus dividend
            of $13,000 were  converted  to 521,595  shares of common  stock.  In
            addition,  138,859  shares of common  stock  were  issued for 13,333
            shares of un-issued shares of Series F convertible Preferred stock.

In  addition,  the  Company  issued  591,152  shares for  dividends  on Series D
convertible  Preferred  stock  amounting  $310,000.  The Company  issued 187,598
shares  valued at $22,512  for  payment of  $108,000  dividends  on  convertible
Preferred  stock.  The  difference  amount of  $85,488  was  record as a gain on
settlement of debt.

During  the year  ended  December  31,  2004,  826,500  shares  were  issued for
acquisition of CCN valued at $500,000.

During the year ended December 31, 2004, 1,370,685 additional shares were issued
per purchase  agreement for NHMS  acquisition.  This issuance valued at $123,362
was  recorded as goodwill  and  included in  impairment  loss as of December 31,
2004.

PREFERRED STOCK

During the year ended December 31, 2004, all of outstanding  shares of Series A,
B, D, E and F  convertible  Preferred  stock plus  dividends  were  converted to
common stock.

During  the  year  ended  December  31,  2004,  1,942,566  shares  of  Series  C
convertible Preferred stock out of a total of 1,983,736 outstanding shares, plus
dividends amounting  $153,110,  were converted to common stock which resulted in
remaining balance of 41,170 outstanding shares.

The Series C  convertible  Preferred  stock is  entitled to receive 6% per annum
dividend, in preference to any other class. Class C convertible Preferred stock,
at the  option of the holder  thereof,  is  convertible  into 15 share of common
stock, The holders of Series C convertible stock shall be paid out of the assets
of the Company  prior and in preference  to any payment or  distribution  out of
assets  to the  holders  of the  common  stock or any  other  class of series of
capital  stock of the Company but  subordinate  to any  dividend  preference  of
Series A, D, E and F  Preferred  shares of the Company in amount per share equal
to $1.00 plus all declared but unpaid dividends on such shares to the date fixed
for distribution. The holders of Series C convertible Preferred stock shall have
the voting rights such holder's  shares of Series C Preferred are converted into
shares of common stock at which time the holder shall have the voting  rights of
the holders of common stock shares.

STOCK PURCHASE WARRANTS

During the year ended December 31, 2004, the Company issued 461,860  warrants to
purchase  461,860  shares of  common  stock for  services  to raise the  Company
capital  valued at $48,860.  The exercise  price of the warrants was $0.26.  The
Company recorded these warrants as the finder's fees against the equity based on
the fair market value of warrants.  The  warrants  include a 90-days  redemption
provision  such that if the stock  trades for a period of 30 days at price above
$1.00,  the  Company  can  redeem the  warrants  for $.001 per  warrant,  unless
exercised. The holder is subject to immediate vesting.

During the year ended December 31, 2004, the Company issued 48,333,347  warrants
in conjunction with the sale of 48,333,347 restricted shares of its common stock
at a purchase price of $0.12 per shares for $5.8 million to certain  purchasers.
Effective 180 days from the  registration of the warrant  shares,  the Issuer at
its option may call 50% of the  warrants  at $.65 per warrant if the stock price
trades at $.65 for the period of 10  consecutive  days. The holder is subject to
immediate vesting.

During the year ended December 31, 2004, the Company issued 500,000  warrants as
a loan  incentive.  The exercise price of the warrants was $0.30.  The holder is
subject to immediate  vesting.  The Company  recorded these warrants as interest
valued at $7,173 based on the fair market value of warrants.

                                       26
<PAGE>

The following table  summarizes  information  about the warrants  outstanding at
December 31, 2004:

                                                         Weighted-     Weighted-
                                          Weighted-      Average       Average
                                           Average       Exercise      Exercise
Range of                                  Remaining      Price of      Price of
Exercise       Warrants      Warrants    Contractual     Warrants      Warrants
Price        Outstanding   Exercisable       Life      Outstanding   Exercisable
--------------------------------------------------------------------------------
$ 0.26-0.30   49,295,207    49,295,207   4.29 years      $  0.30       $  0.30
================================================================================


NOTE   13   - SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company  prepares its statements of cash flows using the indirect  method as
defined under the Financial Accounting Standard No. 95.

The Company paid $0 for income tax and  $229,231  for  interest  during the year
ended December 31, 2004.

The  Company  paid $0 for income tax and $67,418  for  interest  during the year
ended December 31, 2003.

The cash  flow  statements  do not  include  following  non-cash  investing  and
financing activities:

The  Company  issued  2,111,123  shares of common  stock  for  various  services
amounting $469,882.  The Company issued 70,000 shares of common stock for salary
amounting  $33,550.  The Company  issued  68,093  shares for interest  amounting
$18,207.  The  Company  issued  100,000  shares for  directors'  fees  amounting
$36,000.  The Company  issued  820,376  shares for the  finder's  fees valued at
$418,440.

During the year ended  December 31, 2004,  the Company  issued  50,000 shares of
common stock valued at $24,500 to settle note payable amount of $10,000.

The  Company  issued  591,152  shares  for  dividends  on  Series D  convertible
Preferred stock amounting $310,000.  The Company issued 187,598 shares valued at
$22,512 for payment of $108,000 dividends on convertible Preferred stock.

During  the year  ended  December  31,  2004,  826,500  shares  were  issued for
acquisition of CCN valued at $500,000.

During the year ended December 31, 2004, 1,370,685 additional shares were issued
per purchase  agreement for NHMS  acquisition.  This issuance valued at $123,362
was  recorded as goodwill  and  included in  impairment  loss as of December 31,
2004.

NOTE   14   - BASIC AND DILUTED NET LOSS PER SHARE

Basic and diluted net loss per share for the years ended  December  31, 2004 and
2003 were  determined  by  dividing  net loss for the  periods  by the  weighted
average  number of both  basic and  diluted  shares of common  stock and all the
convertible  preferred  stock are regarded as common stock  equivalents  and are
considered in diluted net loss per share calculations.

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted earnings per share computation for the year ended December 31,
2003:

<TABLE>
<CAPTION>
                                               Net Inc.(loss)    Shares      Per Share
                                               --------------  -----------   ---------
<S>                                              <C>            <C>             <C>
Basic earnings per shares:
Loss from continuing operations                  (2,488,434)
Gain on disposal of subsidiary, net               3,433,069
Dividend requirement for preferred stock           (321,221)
                                                 ----------
  Net income available to common stockholders       623,414      9,928,866      $0.06
                                                 ==========    ===========   ========
Effect of dilutive securities:
     Convertible preferred stock                                35,080,367
                                                 ----------    -----------   --------
Diluted earnings per share:                         623,414     45,009,233      $0.01
                                                 ==========    ===========   ========
</TABLE>

Weighted  average  number of shares used to compute  basic and diluted  loss per
share is the same for the year  ended  December  31,  2004  since the  effect of
dilutive securities is anti-dilutive.

NOTE   15 - GOING CONCERN

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principle,  which contemplate  continuation of the
Company as a going  concern.  However,  the Company has  accumulated  deficit of

                                       27
<PAGE>

$11,897,450 as of December 31, 2004. The current net loss amounted to $4,199,398
on December  31,  2004.  The  continuing  losses  have  adversely  affected  the
liquidity of the Company.  The Company  faces  continuing  significant  business
risks including, but not limited to, its ability to maintain vendor and supplier
relationships by making timely payments when due.

In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded  asset amounts shown in the  accompanying  balance
sheet is dependent  upon continued  operations of the Company,  which in turn is
dependent  upon the  Company's  ability  to  raise  additional  capital,  obtain
financing and to succeed in its future operations.  The financial  statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and  classification  of liabilities that might
be necessary should the Company be unable to continue as a going concern.

Management  has taken the following  steps to revise its operating and financial
requirements,  which it believes are  sufficient to provide the Company with the
ability to continue as a going concern.  Management devoted  considerable effort
during the year ended December 31, 2004, towards (i) obtaining additional equity
financing (ii) controlling of salaries and general and administrative  expenses,
and (iii) management of accounts payable.

In that  regard,  on March 1, 2004,  the Company  purchased  all the assets from
Singer Medscript and on April 28, 2004, the Company  completed an acquisition of
Cancer Care Network, Inc. (note 19)

NOTE 16 - LEGAL SETTLEMENTS

On August 10, 2004, a consultant  of the Company filed a complaint in the action
contains  two counts,  alleging  breach of contract  and unjust  enrichment  for
unspecified  damages purportedly caused by the alleged non-payment of a finder's
fee  due in  connection  with  arranging  the  Company's  $5.8  million  private
placement  transaction  which closed on April 28, 2004,  and the  acquisition of
Cancer Care Network,  Inc. The complaint also seeks recovery of the  plaintiffs'
attorney's  fees and costs,  and  interest  on the  alleged  amounts  claimed by
plaintiffs  in the action.  This legal  action was settled in December  2004 for
$175,000,  all of which is payable in 2005. This  settlement  amount of $175,000
was accrued in the financial statements.

The  landlord of the building  where the  corporate  office was located  filed a
Complaint  against the Company for unpaid rental  payments and overvalued  stock
security  paid for prepaid rent.  This case was dismissed on July 10, 2003.  The
accrued  rent  amounting  to $52,326 has been  reversed  and recorded as gain on
legal  settlement in the financial  statements  for the year ended  December 31,
2003.

Two of the  shareholders  of the Company filed an action against the Company and
certain individuals connected therewith.  The complaint sought relief for breach
of  contract,  specific  performance,  breach  of  fiduciary  duty,  intentional
interference  with stock  transfer  rights,  negligent  interference  with stock
transfer rights and injunction.  Subsequently,  one of the shareholders released
the claim.  On August 19, 2002, this case was settled with free trading stock of
the Company  owned by the former  officer of the  Company.  The  Company  issued
104,216  shares of the  common  stock  valued at  $82,956  during the year ended
December 31, 2003 and recorded as a loss on legal  settlement  in the year ended
December 31, 2003.

NOTE 17 - DISCONTINUED OPERATIONS

The management of the Company decided to dispose  Healthcare  Billing Solutions,
Inc.  effective  September 1, 2004.  The Company  returned the subsidiary to the
former owners of the subsidiary with no consideration.  The loss from operations
of HBS for  eight-month  period  ended  August 31,  2004  totaling  $54,327  was
included  in loss from  discontinued  operation  along  with a loss on  disposal
amounting  $12,263 in the financial  statements  in the year ended  December 31,
2004.

On November 6, 2002, CastPro.com, LLC ("LLC"), a subsidiary of the Company filed
a Chapter 7 bankruptcy and on December 31, 2002, PTMS, subsidiary of the Company
filed a Chapter 7 bankruptcy.  On September 23, 2003,  the Company  finalized an
arrangement  under which it transferred legal ownership of three of its inactive
subsidiaries to an independent consulting firm for final disposition.  Under the
agreement,  the consulting firm took the ownership of PTS TV, INC., CASTPRO.COM,
LLC,  and Prime  Time  Distribution,  Inc.,  all  inactive  subsidiaries  of the
Company.  The  disposition  resulted in net gain of $3,433,069 to the company in
the year ended December 31, 2003.

NOTE 18 - RECLASSIFICATION

For comparative purposes,  prior period's consolidated financial statements have
been reclassified to conform with report classifications of the current period.

NOTE 19- ACQUISITION

On March 1, 2004, the Company  consummated its asset acquisition  agreement with
Singer MedScript, a medical transcription company located in Houston, Texas. The
agreement   was   consummated   by  the   Company's   wholly-owned   subsidiary,
PracticeXpert of Texas,  Inc., which agreed to acquire  substantially all of the

                                       28
<PAGE>

assets and assume certain  liabilities and obligations of Singer MedScript for a
purchase  price of $300,000 from the sole  proprietor of Singer  MedScript.  The
purchase  price  consisted  of a cash payment of $150,000 at the closing and the
issuance of a promissory note for $150,000 which bears interest of eight percent
(8%) per annum and payable in 36 monthly  installments of principal and interest
commencing on April 1, 2004.

A summary of the assets acquired and consideration for is as follows:

                                                     Allocated
            Assets Acquired                            Amount
            ---------------                          --------
            Client lists acquired                    $300,000
                                                     ========

Management  allocated  the  purchase  price to the basis of the assets  acquired
based on management's appraisals at the date of acquisition

            Consideration paid                        Amount
            ------------------                       --------
            Cash                                     $150,000
            Promissory note                           150,000
                                                     --------
                                                     $300,000
                                                     ========

On April 28, 2004, the Company consummated its asset acquisition  agreement with
Cancer Care Network,  Inc., an Oklahoma  corporation,  located in Oklahoma City,
Oklahoma.  Cancer  Care  Network,  Inc.  specializes  in  radiation  and medical
oncology billing and management. The acquisition was consummated by the Company,
Practice Xpert Services Corp., and PracticeXpert of Oklahoma, Inc., wholly-owned
subsidiaries of the Company,  which agreed to acquire  substantially  all of the
assets and assume certain  liabilities  and  obligations of Cancer Care Network,
Inc. for a purchase price of $5,500,000.  The purchase price consisted of a cash
payment of $4,100,000  and the issuance of $500,000 in shares of common stock at
the  closing and the  issuance of a  promissory  note for  $900,000  which bears
interest of six and one-half  percent (6.5%) per annum and payable in 12 monthly
installments of principal and interest commencing on April 25, 2004. As a result
of this  acquisition,  the  Company  expects  that CCN will  give the  Company a
platform and base of operations for the Oklahoma medical billing services.

A summary of CCN assets acquired,  liabilities  assumed and consideration for is
as follows:

                                                     Allocated
                                                       Amount
                                                    -----------
             Current assets                         $   232,727
                   Client lists                       5,107,334
                   Property & equipment                 233,667
             Accrued liabilities                        (73,728)
                                                    -----------
                                                    $ 5,500,000
                                                    ===========

            Consideration paid                         Amount
            ------------------                      -----------
            Cash                                    $ 4,100,000
            Promissory note                             900,000
             Common Stock                               500,000
                                                    -----------
                                                    $ 5,500,000
                                                    ===========

NOTE   20 -   COMMITMENTS

Leases;
The Company has office lease  agreements for 7 and 8 years  commenced on October
1, 1999 and various subsequent dates.  Future commitments under operating leases
are as follows for the twelve month ending December 31:

                             2005                         502,437
                             2006                         417,439
                             2007                         185,142
                             2008                          98,449
                             2009                          92,312
                                                       ----------
                       Total minimum lease payment     $1,295,779
                                                       ==========

The rent  expenses  were  $318,165 and $266,147 for the year ended  December 31,
2004 and 2003, respectively.

                                       29
<PAGE>

Related party transactions;
The Company  entered into  employment  and  compensation  agreements  with three
officers effective December 1, 2003. The base salaries increase in proportion to
the annual revenues of the Company as follows;

           Revenue Run Rate              Annual Salary Rate
           ----------------              ------------------
            $ 3.8 million                    $ 52,000
              5.0 million                      62,737
             10.0 million                     114,105
             15.0 million                     154,105
             20.0 million                     182,737
             25.0 million                     200,000

The total  compensation  of $402,317 was recorded in the year ended December 31,
2004 based on the agreements.

NOTE   21 -   INCOME TAXES

No provision was made for Federal  income tax since the Company has  significant
net  operating  loss.  Through  December  31,  2004,  the Company  incurred  net
operating  losses  for  tax  purposes  of  $4,550,668,  approximately.  The  net
operating  loss carry  forwards may be used to reduce taxable income through the
year 2024. The  availability  of the Company's net operating loss  carryforwards
are  subject  to  limitation  if there is a 50% or more  positive  change in the
ownership of the Company's stock. The provision for income taxes consists of the
state minimum tax imposed on corporations.

Temporary differences which give raise to deferred tax assets and liabilities at
December 31, 2004 comprised mainly of net operating loss carryforward. The gross
deferred tax asset balance as of December 31, 2004 was approximately $1,673,000.
A 100% valuation  allowance has been recorded for the deferred tax assets due to
the uncertainty of its realization.

The following is a reconciliation  of the provision for income taxes at the U.S.
federal  income  tax rate to the  income  taxes  reflected  in the  Consolidated
Statements of Operations:

                                                   December 31,    December 31,
                                                       2004           2003
                                                   ------------    ------------
Tax expense (credit) at statutory rate-federal         (34)%           34%
State tax expense net of federal tax                    (6)             6
Permanent differences                                    1              1
Changes in valuation allowance                          39            (41)
                                                    ---------        -------
Tax expense at actual rate                              --             --
                                                    =========        =======

NOTE 22 - SUBSEQUENT EVENT

Acquisition:

On  January  10,  2005,   PracticeXpert,   Inc.  completed  its  acquisition  of
Transcriptions  Plus,  inc. a  transcription  company  located in Palm  Springs,
California.  The purchase  price  consisted of a cash payment of $300,000 at the
closing and the issuance of a promissory  note for $100,000 which bears interest
of seven  percent  (7%) per  annum and  payable  in 3 years.  The note  wills be
payable in equal quarterly  installments with the first payment due 90 days from
the closing date.

As a result of this acquisition,  the Company expects that Transcriptions  Plus,
Inc.   will  add   additional   transcription   revenues  and  it  will  provide
opportunities to sell medical billing services.


A summary of the Transcriptions Plus, Inc. assets acquired,  liabilities assumed
and consideration for is as follows:

                                                    Allocated
                                                      Amount
                                                    ---------
            Current assets                          $   6,820
            Fixed assets                               11,029
            Current liabilities                      (107,822)
            Client lists                              489,973
                                                    ---------
                                                    $ 400,000
                                                    =========

            Consideration paid                        Amount
            ------------------                      ---------
            Cash                                    $ 300,000
            7% Note payable - payable in 2008         100,000
                                                    ---------
                                                    $ 400,000
                                                    =========

                                       30
<PAGE>

On January  3,  2005,  the  Company  completed  its  acquisition  of  Physicians
Informatics,  Inc., a Virginia  corporation,  t/a  PracticeOne  ("PracticeOne").
PracticeOne maintains offices in Calabasas,  California,  Somerset,  New Jersey,
and  Richland,  Washington.  PracticeOne  provides  HIPAA  compliant  integrated
software and service solutions that address core practice  management,  clinical
management and claims management for physicians. The acquisition was consummated
by the Company and Practice Xpert Services  Corp., a wholly-owned  subsidiary of
the Company, which entered into the Agreement of Purchase and Sale of Stock (the
"Purchase  Agreement")  dated as of December 20, 2004,  with  PracticeOne and PI
(Cayman)  Limited,  to acquire the capital stock of PracticeOne,  for a purchase
price of  12,500,000  shares of common  stock,  par value  $.001 per share  (the
"Common Stock"),  which has been allocated among the shareholders of PracticeOne
in accordance with their respective ownership interests.

As a result of this  acquisition,  the Company  expects  that  PracticeOne  will
enhance  the  Company's  ability  to better  serve the  medical  community  with
combined technology with service.


A  summary  of  the  PracticeOne  assets  acquired,   liabilities   assumed  and
consideration for is as follows:

                                                       Allocated
                                                        Amount
                                                     -----------
                Current assets                       $   323,633
                Fixed assets                             213,529
                Other assets                              58,544
                Current liabilities                   (3,206,784)
                LT liabilities                        (6,629,397)
                Client lists                           6,665,475
                Software                               4,200,000
                                                     $ 1,625,000
                                                     ===========

                Consideration paid                      Amount
                ------------------                   -----------
                Common stock - 12,500,000 shares       1,625,000
                                                     -----------
                                                       1,625,000
                                                     ===========

Unaudited  Pro-forma  revenue,  net income and  income  per share  assuming  the
transactions  had been  completed at the beginning of the periods  reported,  on
pro-forma financial results would be as follows:

                                                    For the year ended
                                            ------------------------------------
                                            December 31, 2004  December 31, 2003
                                            -----------------  -----------------
                                               (Unaudited)         (Unaudited)

        Revenue                               $ 15,718,130       $ 10,571,683
        Net Income (loss) for the period      $ 10,496,224)      $ (5,449,610)
        Net Income (loss) per share-Basic     $      (0.13)      $      (0.57)
        Net Income (loss) per share-Diluted   $      (0.13)      $      (0.12)


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None.

ITEM 8A. CONTROLS AND PROCEDURES

The Company's  disclosure  controls and  procedures  are designed to ensure that
information required to be disclosed in reports that it files or submits,  under
the  Securities  Exchange Act of 1934, was recorded,  processed,  summarized and
reported  within  the time  periods  specified  in the  rules  and  forms of the
Securities  and  Exchange  Commission.   The  Company's  management,   with  the
participation  of its President and Chief Executive  Officer and Chief Financial
Officer,  have  evaluated  the  effectiveness,  as of December 31, 2004,  of the
Company's  "disclosure controls and procedures," as that term is defined in Rule
13a-15(e)  under the  Securities  and  Exchange  Act of 1934,  as amended  ("the
Exchange Act"). Based upon that evaluation,  our Chief Executive Officer and our
Chief Financial Officer concluded that the disclosure controls and procedures as
of December 31, 2003,  were  effective  to provide a reasonable  assurance  that
information  required to be  disclosed  by the  Company in the reports  filed or
submitted by it under the Exchange Act is recorded,  processed,  summarized  and
reported within the time periods  specified in the SEC's rules and forms, and to
provide  reasonable  assurance that information  required to be disclosed by the

                                       31
<PAGE>

Company  in such  reports  is  accumulated  and  communicated  to the  Company's
management,  including its principal  executive officer and principal  financial
officer, as appropriate to allow timely decisions regarding required disclosure.

There was no change in the Company's "internal control over financial reporting"
(as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred
during the quarter ended December 31, 2003, that has materially affected,  or is
reasonably  likely to materially  effect,  the Company's  internal  control over
financial reporting.

The  methods and  processes  utilized  to  evaluate  and  certify the  Company's
financial and other information in this filing include,  but are not limited to,
the following:

1. Ongoing,  periodic  evaluation by our external  auditors (the senior  auditor
reports  directly and  separately  to the Chair of the Audit  Committee  and the
Chief Executive Officer);

2. A  process  which  requires  the key  business  general  managers  and  their
respective  controllers to confirm their  respective  business units'  quarterly
financial  statements and specific  internal  control  procedures prior to final
certification by our Chief Executive Officer and Chief Financial Officer; and

3. The audit and review activities of our independent auditors.


                                       32
<PAGE>

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names and ages of each of the current  directors and  executive  officers of
the Company are as follows:

Name                  Age       Position
----                  ---       --------
Jonathan Doctor       42        President, Chief Executive Officer and Director
Michael Manahan       49        Chief Financial Officer and Director
Zima Hartz            43        Executive Vice President, Secretary and Director
Monica Dedovich       69        Director
Joseph Simone         68        Director
Charles Smith         48        Director

JONATHAN  DOCTOR  serves  as  our  President,  Chief  Executive  Officer,  and a
Director.  Mr. Doctor also serves as chairman,  president,  and chief  executive
officer for Practice  Xpert  Services  Corp. , a company he co-founded in August
2001.  From December  2000 to July 2001,  Mr. Doctor was a director at Parkstone
Medical Information Systems. From August 1999 to November 2001, he was president
of Care  Delivery  Solutions  Corporation.  Prior to that,  Mr. Doctor served as
vice-president, Systems Development of Salick Health Care Inc. from July 1997 to
May 2000. He holds a B.A. from the  University of  Pennsylvania,  an M.Ph.  from
Yale University School of Medicine and an M.B.A. from the USC Graduate School of
Business.

MICHAEL  MANAHAN  serves as our Chief  Financial  Officer  and a  Director.  Mr.
Manahan has served as chief  financial  officer of Practice Xpert Services Corp.
since September 2001. Mr. Manahan is also president of Magnum  Financial  Group,
LLC, a non-active  company he co-founded in April 1998, that provided  financial
advisory and consulting services to emerging growth companies.  Prior to Magnum,
Mr.  Manahan  held  a  variety  of  financial  and  operational  positions  in a
diversified  group of  companies.  Mr.  Manahan  is a  graduate  of the  British
Columbia Institute of Technology and holds an M.B.A. from Pepperdine University.

In February 2002, the  Securities and Exchange  Commission  filed a civil action
for violations of federal securities laws against a public entity and certain of
its shareholders and officers,  and against Mr. Manahan and his company,  Magnum
Financial Group, LLC, which had been providing  investor  relations  services to
the public  company.  On or about  February  15,  2002,  Mr.  Manahan and Magnum
consented  to  entry of a  permanent  injunction,  enjoining  them  from  future
violations of the antifraud  provisions of the securities  laws, and a permanent
injunction was entered on February 27, 2002. Magnum  subsequently  established a
policy of  independently  verifying  all  information  provided  to it by client
companies for publication and/or general distribution.

ZIMA HARTZ serves as our Executive Vice-President, Secretary and a Director. Mr.
Hartz is executive  vice  president of product  development  for Practice  Xpert
Services  Corp.  Prior to  co-founding  Practice  Xpert Services Corp. in August
2001,  Mr.  Hartz  held  key  management   positions  and  was  responsible  for
development and operations of large software  products in the healthcare  field,
serving as a director  for  Parkstone,  Inc.  from  December  2000 to July 2001;
executive vice president of Care Delivery Solutions Corporation from August 1999
to November 2001; and served as senior director of software product  development
for Salick  Healthcare's  technology  unit from January  1998 to July 2000.  Ms.
Hartz holds an M.B.A. from Pepperdine University and a B.S. in Math and Computer
Science from UCLA.

MONICA  DEDOVICH serves as a Director.  Ms.  Dedovich is a frequent  speaker and
guest lecturer on physician  reimbursement in the New York  Metropolitan  Region
and New England.  Ms.  Dedovich is one of the original  founders of the New York
State  and  Massachusetts  State  Oncology  Societies.  Ms.  Dedovich  served as
President of Healthcare Administrative Management from 1997 to March 2001. Since
March 2001, she has served as a director of Practice Xpert Services Corp.

JOSEPH SIMONE serves as a director. Dr. Simone is the clinical director emeritus
of the Huntsman  Cancer  Institute  and  professor  emeritus of  pediatrics  and
medicine at the University of Utah School of Medicine. Dr. Simone also served as
assistant  vice-president  for cancer  programs at the University of Utah.  From
1992  to  1996,  Dr.  Simone  served  as   physician-in-chief  of  the  Memorial
Sloan-Kettering  Cancer  Center  in  New  York  City.  Before  joining  Memorial
Sloan-Kettering,  Dr. Simone he spent virtually his entire medical career at St.

                                       33
<PAGE>

Jude Children's  Research  Hospital in Memphis,  Tennessee,  where he joined the
staff in 1967. In his years there,  Dr. Simone was engaged in clinical  research
efforts to improve  therapy for children  with cancer and he played a leadership
role in the  development  of curative  treatments  for  childhood  leukemia  and
lymphoma.  Dr.  Simone also served as chief  executive  officer of St. Jude from
1983 to 1992. Previously,  Dr. Simone served as medical director and chairman of
the National  Comprehensive Cancer Network. Dr. Simone served for six years as a
member of the Board of  Scientific  Advisors of the  National  Cancer  Institute
(NCI) and is chairman of the National  Cancer  Policy Board of the  Institute of
Medicine.   Dr.   Simone  also  serves  on  the  external   committees  of  nine
NCI-designated  cancer centers.  Dr. Simone received his medical degree from the
Stritch  School of Medicine at Loyola  University in Chicago in 1960. Dr. Simone
completed  his  residency  in internal  medicine at  Presbyterian  - St.  Luke's
Hospital and was a fellow in pediatric  hematology at the University of Illinois
Research and Educational Hospitals, both also located in Chicago.

CHARLES SMITH serves as a director and chairman and chief  executive  officer of
PracticeOne.  Mr.  Smith was  formerly  senior  vice  president  of mergers  and
acquisitions  and a director at Election,  Inc., a global election  software and
services  company.  Previously,  Mr.  Smith  held  senior  managerial,  business
development and finance positions at Procter & Gamble and PepsiCo International.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section  16(a) of the Exchange Act  requires  our  officers and  directors,  and
persons  who own more  than ten  percent  of the  registrant's  shares of common
stock, to file reports of ownership and changes in ownership with the Securities
and  Exchange  Commission.  Officers,  directors  and  greater  than ten percent
shareholders  are required by  regulations  promulgated  by the  Securities  and
Exchange  Commission  to furnish us with copies of all Section  16(a) forms that
they file.

With reference to transactions during 2004, to the registrant's knowledge, based
solely on  review of the  copies of such  reports  furnished  to us and  written
representations,  all Section 16(a) forms required to be filed with the SEC were
filed except that the registrant's directors inadvertently did not timely report
on Form 4 the  issuance  of 10,000  shares  of common  stock to each of them for
their  services  as a director  on  October  13,  2004 and  December  29,  2004,
respectively.  Such  issuances  have  been  reported  by such  persons  on their
respective Form 5 filed with the Securities and Exchange Commission in February,
2005.  Furthermore,  the Board of Directors  issued to each of Jonathan  Doctor,
Michael  Manahan and Zima Hartz on October 4, 2004,  employee  stock  options to
purchase  1,500,000  shares of  common  stock at an  exercise  price of $.30 per
share,  which was higher than the  prevailing  market price of our common stock.
Such persons  inadvertently did not timely report on Form 4 the issuance of such
options.  Such issuances have been reported by such persons on their  respective
Form 5 filed with the Securities and Exchange Commission.

COMMITTEES OF THE BOARD OF DIRECTORS

The  Board  of  Directors  of the  Company  has an Audit  Committee,  Nominating
Committee and  Compensation  Committee.  The members of each committee have been
appointed by the Board of Directors to serve until their  respective  successors
are elected and qualified.  Such committees were formed on October 10, 2004, but
have not held any meetings since their formation.

Pursuant to resolutions  of the Board of Directors,  these  committees  have the
responsibilities and authority described below.

The Nominating Committee has the responsibility to propose nominees to the Board
of Directors.  The members of the Nominating Committee are Messrs. Doctor, Hartz
and Manahan.

The Audit Committee has the  responsibility of (i) recommending the selection of
our independent  public  accountants,  (ii) reviewing and approving the scope of
the  independent  public  accountants'  audit  activity  and extent of non-audit
services, (iii) reviewing with management and our independent public accountants
the  adequacy of our  accounting  system and the  effectiveness  of our internal
audit plan and  activities,  (iv) reviewing with  management and our independent
public accountants the financial  statements and exercising general oversight of
the financial  reporting  process and (v) reviewing with us litigation and other
legal matters that may affect our financial condition, and monitoring compliance
with our business ethics and other policies.  The members of the Audit Committee
are Messrs. Doctor, Simone and Manahan.

The Compensation Committee has the responsibility of (i) establishing the salary
rates of our officers and employees  and our  subsidiaries,  (ii)  approving the
issuance of stock options and other securities to management and its affiliates,
and (iii) examining  periodically  our  compensation  structure and compensation
plans.  Any  options  or  other  securities  to be  issued  to  members  of  the
Compensation  Committee  or their  respective  affiliates  must be approved by a
majority of the members of the  Company's  Board of Directors who do not have an
interest in such  transaction.  The members of the  Compensation  Committee  are
Messrs. Hartz and Simone and Ms. Dedovich.

                                       34
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

No  compensation  in excess of $100,000  per year was awarded to,  earned by, or
paid to any of our executive officers during the fiscal years 2003 and 2002. The
following table provides  summary  information for the years 2004, 2003 and 2002
concerning cash and non-cash  compensation  paid or accrued by us to our "named"
executive officers.

                           SUMMARY COMPENSATION TABLES

<TABLE>
<CAPTION>
                                                  -------------------------------------------------
                                                                Annual Compensation
---------------------------------------------------------------------------------------------------
Name and                                                                            Other Annual
Principal Position                      Year         Salary (US$)     Bonus ($)    Compensation ($)
---------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>               <C>          <C>
Jonathan Doctor, President and          2004         $114,003 (4)      - 0 -         $4,800 (5)
Chief Executive Officer

Michael Manahan, Chief Financial        2004         $114,003 (4)      - 0 -         $4,800 (5)
Officer

Zima Hartz, Executive Vice President    2004         $114,003 (4)      - 0 -         $4,800 (5)
And Secretary
---------------------------------------------------------------------------------------------------
Jonathan Doctor, President and
Chief Executive Officer                 2003         $30,500          - 0 -          $9,739 (3)
---------------------------------------------------------------------------------------------------
Adam Anthony, Chief Executive
Officer                                 2003          - 0 -           - 0 -            - 0 -
---------------------------------------------------------------------------------------------------
Adam Anthony, Chief Executive
Officer                                 2002         $72,000(2)       - 0 -         $19,600 (1)
---------------------------------------------------------------------------------------------------
</TABLE>

(1) On February 6, 2002, 600,000 shares of Common Stock were issued for services
    to the Board of Directors  for the period from January 3, 2001,  to June 30,
    2002,  at $.02 per share for a total  value of $12,000;  on March 16,  2002,
    288,462  shares of Common Stock were issued in lieu of automobile  allowance
    at $.02 per share for a total  value of  $6,000;  on July 8,  2002,  200,000
    shares of Common  Stock were issued for  services to the Board of  Directors
    for the period from July 1, 2002,  to December 31, 2002, at a price of $.008
    for a total value of $1,600.

(2) On October 1, 2002,  130,638 shares of Series B Preferred  Stock were issued
    in lieu of cash for  deferred  salary and housing  allowance  for the period
    from  January  3, 2001,  to  October 1, 2002,  at $.75 per share for a total
    value of $100,979.

(3) On July 31,  2003,  8,619 shares were issued for services as a member of the
    Board of Directors.

(4) Included  $20,000 in  salaries  accrued  but not paid.  All three  executive
    officers  agreed to defer a portion of their  salaries to assist  Company in
    meeting other financial obligations.

(5) Includes 10,000 shares of common stock issued for services as members of the
    Board of Directors and $3,600 for automobile allowance.

<TABLE>
<CAPTION>
                                        ----------------------------------------------------------
                                                         Long Term Compensation
                                        ----------------------------------------------------------
                                                         Awards                      Payouts
------------------------------------------------------------------------------------------------------------
                                          Restricted     Securities Underlying    LTIP
                                             Stock             Options/          Payouts       All Other
Name and Principal Position      Year     Award(s)($)           SARs(#)            ($)      Compensation ($)
------------------------------------------------------------------------------------------------------------
<S>                              <C>           <C>            <C>                  <C>           <C>
Jonathan Doctor, President
And Chief Executive Officer      2004        - 0 -            1,000,000            - 0 -         - 0 -

Michael Manahan, Chief           2004        - 0 -            1,000,000            - 0 -         - 0 -
Financial Officer

Zima Hartz, Executive Vice       2004        - 0 -            1,000,000            - 0 -         - 0 -
President and Secretary
------------------------------------------------------------------------------------------------------------
Jonathan Doctor, President       2003        - 0 -               - 0 - (1)         - 0 -         - 0 -
and Chief Executive Officer
------------------------------------------------------------------------------------------------------------
Adam Anthony, Chief Executive
Officer                          2003        - 0 -               - 0 -             - 0 -         - 0 -
------------------------------------------------------------------------------------------------------------
Adam Anthony, Chief Executive
Officer                          2002        - 0 -               - 0 -             - 0 -         - 0 -
------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                 ---------------------------------------------
                                                    Option/SAR Grants in Last Fiscal Year
                                                             (Individual Grants)
-------------------------------------------------------------------------------------------------------------------
                                  Number of
                                  Securities          Percent of Total
                                  Underlying      Options/SARs Granted to   Exercise of Base
Name                            Options/SARs(1)   Employees In Fiscal Year    Price ($/Sh)       Expiration Date
-------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                     <C>                   <C>            <C>
Jonathan Doctor, President            500,000               100%                  $0.12          December 31, 2009
and Chief Executive Officer         1,500,000                33%                  $0.30

Michael Manahan, Chief                500,000               100%                  $0.12
Financial Officer                   1,500,000                33%                  $0.30

Zima Hartz, Executive Vice            500,000               100%                  $0.12
President and Secretary             1,500,000                33%                  $0.30
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Form 10-KSB for the period ended  December 31, 2003  reported a grant of
125,000 options to Jonathan  Doctor.  However,  these options were never issued,
and in agreement  with Mr. Doctor,  other options were included in Mr.  Doctor's
revised employment agreement dated October 4, 2004. See "-Employment  Agreements
and Key Man Insurance".

                   EMPLOYMENT AGREEMENTS AND KEY MAN INSURANCE

All decisions  regarding  compensation for our executive  officers and executive
compensation  programs  are  reviewed,  discussed,  and approved by the Board of
Directors. All compensation decisions are determined following a detailed review
and assessment of external  competitive data, the individual's  contributions to
our success,  any significant  changes in role or  responsibility,  and internal
equity of pay relationships.

                              EMPLOYMENT AGREEMENTS

We have executive employment agreements with our chief executive officer,  chief
financial officer and executive vice president.  These employment agreements are
for a period of three years,  beginning  December 31, 2003. All three employment
agreements provide for a salary based on revenues of the Company, as follows:

                   REVENUE RUN RATE        ANNUAL SALARY RATE
                    $  3.8 million             $  52,000
                       5.0 million                62,737
                      10.0 million               114,105
                      15.0 million               154,105
                      20.0 million               182,737
                      25.0 million               200,000

                   For each $5 million in revenue run rate
                   above $25 million, an additional $15,000

As modified on October 4, 2004, all three employment  agreements provide for the
following:

A bonus  equal  to 5% of  pretax  profits,  to be paid in cash or  stock  at our
discretion.

                                       35
<PAGE>

500,000  options  at a  purchase  price of $0.12  per  share  issued  under  the
PracticeXpert 2003 Stock Option Plan, vesting immediately, and 1,500,000 options
at a  purchase  price of $0.30 per share  issued  under the  PracticeXpert  2004
Equity Incentive Plan, vesting equally over three years.

The employment  agreements  also provide that the  employment  agreements may be
terminated by the executive,  at the  evecutive's  discretion,  if there is more
than 50% change in ownership of PracticeXpert,  Inc., or a substantive change in
the control or the management of PracticeXpert, Inc. In such case, the executive
may  terminate  the  employment  agreement  and will be  entitled  to a lump sum
payment from us of $1,500,000.

We are  authorized  to purchase on behalf of each  executive up to $5,000 of our
shares  of  common  stock in the  open  market  each  month,  and may loan  each
executive  up to $500,000  for that  executive  to purchase our shares of common
stock.  We have not made any such stock purchases on behalf of any executive and
we have not made any loans to any of our  executives for the purchase of capital
stock.

As our  employees,  all executive  officers are eligible to  participate  in the
standard  employee benefit  programs made available to all employees,  including
without limitation medical insurance, dental insurance and our 401K plan.

KEY MAN INSURANCE

We hold "Key Man" life insurance on one of our executive  officers,  Zima Hartz,
in the amount of  $500,000.  We have no "Key Man" life  insurance  on any of its
other officers or directors.

2004 EQUITY INCENTIVE PLAN

We have adopted the PracticeXpert,  Inc. 2004 Equity Incentive Plan (the "Plan")
to provide an incentive to our employees, officers, directors and consultants to
achieve our  financial  goals and enhance  shareholder  value.  An  aggregate of
16,465,496  shares of our common stock are  authorized  for  issuance  under the
Plan. The purpose of the Plan is to attract and retain qualified  personnel,  to
provide  additional  incentives to our employees,  officers and directors and to
promote the success of our business.  In furtherance  of this purpose,  the Plan
authorizes  (i) the granting of incentive  and  non-statutory  stock  options to
purchase  shares of common stock to our employees,  officers and directors,  and
(ii) the granting of rights to purchase  shares of common stock on a "restricted
stock" basis (the "Awards") to our employees, officers and directors.  Incentive
stock  options  may only be granted to our  full-time  employees.  Non-statutory
stock  options  and Awards may be granted to  directors  of the  Company and any
person employed by us. The Plan is administered by the Compensation Committee of
the Board of Directors.  The Compensation  Committee has complete  discretion to
determine which eligible  individuals are to receive option or Award grants, the
number of shares subject to each such grant, the status of any granted option as
either an incentive stock option or a non-statutory option, the vesting schedule
to be in effect for the option or Award grant and the maximum term for which any
granted option or Award is to remain outstanding.

Each option  granted  under the Plan has a maximum term of ten years (five years
with respect to incentive  stock options  granted to holders of more than 10% of
the voting  power of our  outstanding  stock),  subject  to earlier  termination
following the optionee's cessation of service with us. Options granted under the
Plan may be  exercised  only for fully  vested  shares.  The  exercise  price of
incentive stock options and  non-statutory  stock options granted under the Plan
must be at least 100% and 85% of the fair market  value of the stock  subject to
the option on the date of grant, respectively (or 110% with respect to incentive
stock  options  granted to  holders of more than 10% of the voting  power of our
outstanding  stock). The purchase price is payable immediately upon the exercise
of the option. Such payment may be made in cash, in outstanding shares of Common
Stock held by the participant, through a promissory note payable in installments
over a period of years or any combination of the foregoing.

The Board of Directors  may amend or modify the Plan at any time,  provided that
no  such  amendment  or  modification   may  adversely  affect  the  rights  and
obligations  of the  participants  with  respect to their  outstanding  options,
Awards or vested shares without their consent. In addition,  no amendment of the
Plan may,  without  the  approval of our  shareholders:  (i) modify the class of
individuals  eligible  for  participation;  (ii)  increase  the number of shares
available  for issuance,  except in the event of certain  changes to our capital
structure; or (iii) extend the term of the Plan.

DIRECTOR COMPENSATION

All  directors  are entitled to receive up to 40,000  shares of our common stock
annually for serving on the Board of Directors. All directors are reimbursed for
out-of-pocket  expenses for business related  purposes.  No shares of our common
stock have been issued to the directors for their services during 2005.

                                       36
<PAGE>

ITEM 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The  following  table  sets  forth as of March  22,  2005,  certain  information
regarding the beneficial ownership of our common stock by:

      (1)   Each person who is known us to be the beneficial  owner of more than
            5% of the common stock,

      (2)   Each of our director and executive officers and

      (3)   All of our directors and executive officers as a group.

Except as otherwise  indicated,  the persons or entities  listed below have sole
voting  and  investment  power  with  respect  to all  shares  of  common  stock
beneficially owned by them, except to the extent such power may be shared with a
spouse.

       NAME AND ADDRESS OF            SHARES BENEFICIALLY   PERCENTAGE OF SHARES
        BENEFICIAL OWNER                    OWNED (1)            OUTSTANDING
--------------------------------------------------------------------------------
Jonathan Doctor (2)                        9,401,838 (3)            5.6%

Zima Hartz (2)                             9,395,182 (4)            5.6%

Monica Dedovich (2)                        9,638,412                5.7%

Michael Manahan (2)                        6,307,729 (5)            3.7%

Joseph Simone (2)                             99,328                  *

Charles Smith (2)                            500,000                  *

Total ownership by our officers and
directors as a group                      35,342,489               21.0%

Barron Partners LP                        36,566,666 (6)           21.8%
730 Fifth Avenue, 9th Floor
New York, NY  10019

Renn Capital Group, Inc.                  33,333,334 (7)           19.9%
8080 N. Central Expressway
Suite 210, LB-59
Dallas, TX  75206

PI (Cayman) Limited                       10,125,000                6.0%
Corporate Park III, 580 Howard Ave.
Somerset, N.J. 08873

--------------
*  Less than one percent (1%).

(1)   The number of shares and  percentage  of class  beneficially  owned by the
      entities  above is determined  under rules  promulgated by the SEC and the
      information is not necessarily  indicative of beneficial ownership for any
      other purpose. Under such rules,  beneficial ownership includes any shares
      as to which the  individual  has sole or shared voting power or investment
      power and also any  shares  that the  individual  has the right to acquire
      within 60 days  through  the  exercise  of stock  options or  warrants  to
      purchases our shares of common stock. The inclusion herein of such shares,
      however,  does not  constitute  an  admission  that the named  person is a
      direct or  indirect  beneficial  owner of such  shares.  Unless  otherwise
      indicated,  each person or entity named in the table has sole voting power
      and investment  power with respect to all shares of common stock listed as
      owned by such person or entity.

(2)   The address of the  reporting  person is c/o  PracticeXpert,  Inc.,  10833
      Washington Blvd., Culver City, California 90232.

(3)   Includes  1,000,000 shares subject to options that are exercisable  within
      60 days of the date hereof by Jonathan Doctor.

(4)   Includes  1,000,000 shares subject to options that are exercisable  within
      60 days of the date hereof by Zima Hartz.

(5)   Includes  1,000,000 shares subject to options that are exercisable  within
      60 days of the date hereof by Michael Manahan.

(6)   Includes  18,333,334 shares subject to options that are exercisable within
      60 days of the date hereof by Barron  Partners LP. The general  partner of
      Barron  Partners LP is Barron  Capital  Advisors  LLC, a Delaware  limited
      liability  company.  Andrew Barron  Worden is the managing  member of such
      general partner.

(7)   Includes  16,666,667 shares subject to options that are exercisable within
      60 days of the date hereof by RENN Capital Group, Inc. RENN Capital Group,
      Inc. is the investment adviser to Renaissance Capital Growth & Income Fund
      III, Inc. and Renaissance US Growth  Investment  Trust PLC, and has shared
      voting and  dispository  power with  respect to the shares.  RENN  Capital
      Group,  Inc. is registered as an investment  adviser under the  Investment
      Adviser Act of 1940.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

                                       37
<PAGE>

ITEM 13. EXHIBITS LISTS AND REPORTS ON FORM 8-K

(a)   Exhibits.

EXHIBIT                              DESCRIPTION

3.1         Articles of Incorporation of the registrant *

3.2         Bylaws of the registrant *

10.1        Amendment  No. 1 to  Compensation  and  Employment  Agreement  dated
            October 10, 2004 between the registrant and Jonathan Doctor

10.2        Amendment  No. 1 to  Compensation  and  Employment  Agreement  dated
            October 10, 2004 between the registrant and Zima Hartz

10.3        Amendment  No. 1 to  Compensation  and  Employment  Agreement  dated
            October 10, 2004 between the registrant and Michael Manahan

21.1        List of Subsidiaries of registrant**

23.1        Consent of Kabani & Company, Independent Auditors**

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

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

32.1        Section 1350-- Certification of Chief Executive Officer**

32.2        Section 1350-- Certification of Chief Financial Officer**


*  Previously filed as indicated and incorporated  herein by reference from the
   referenced filings previously made by the Registrant.

** Filed herewith.

(b)    Reports on Form 8-K.

       No reports on Form 8-K were filed by the registrant during the three
       month period ended December 31, 2004.


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table sets forth fees billed to us by Kabani and Company, Inc.,
our independent auditor, for professional services rendered for 2004 and 2003
(in thousands).

                                                    2004          2003
                                                 -----------   ------------

Audit Fees (1)                                    $      80    $        62
Audit-Related Fees                                       --             --
                                                 -----------   ------------

Total Audit Fees                                         80             62
                                                 -----------   ------------

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

Tax Fees                                                 --             --
Other Fees                                               --             --
Total Audit, Tax and Other Fees                  $       80    $        62
                                                 ===========   ============

----------
(1)   Aggregate fees billed for professional  services rendered for the audit of
      our  annual  financial   statements  and  for  the  reviews  of  financial
      statements included in our quarterly reports on Form 10-QSB and accounting
      consultations on matters reflected in the financial statements.

Since the  formation  of the Audit  Committee  on October  10,  2004,  the Audit
Committee has not adopted any pre-approval  policies or procedures for selecting
our independent auditor.


                                       38
<PAGE>

                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 15th day of April, 2005.

                                              PRACTICEXPERT, INC.


                                              By: /s/ Jonathan Doctor
                                                  -------------------
                                                  Jonathan Doctor
                                                  President and CEO


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act 1934,  this report has been duly signed  below by the  following  persons on
behalf of the Registrant and in the capacities and on the dates indicated.

      Signature                     Title                             Date
      ---------                     -----                             ----

/s/ Jonathan Doctor      President, CEO, and Director            April 15, 2005
-------------------
Jonathan Doctor


/s/ Michael Manahan      Chief Financial Officer and Director    April 15, 2005
-------------------
Michael Manahan


/s/ Zima Hartz           Executive VP, Secretary and Director    April 15, 2005
-------------------
Zima Hartz


/s/ Monica Dedovich      Director                                April 15, 2005
-------------------
Monica Dedovich


/s/ Joseph Simone        Director                                April 15, 2005
-------------------
Joseph Simone


/s/ Charles Smith        Director                                April 15, 2005
-------------------
Charles Smith


                                       39
<PAGE>

                                INDEX TO EXHIBITS


EXHIBIT                                DESCRIPTION

3.1           Articles of Incorporation of the registrant *

3.2           Bylaws of the registrant *

10.1          Amendment No. 1 to  Compensation  and Employment  Agreement  dated
              October 10, 2004 between the registrant and Jonathan Doctor

10.2          Amendment No. 1 to  Compensation  and Employment  Agreement  dated
              October 10, 2004 between the registrant and Zima Hartz

10.3          Amendment No. 1 to  Compensation  and Employment  Agreement  dated
              October 10, 2004 between the registrant and Michael Manahan

21.1          List of Subsidiaries of registrant**

23.1          Consent of Kabani & Company, Independent Auditors**

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

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

32.1          Section 1350--Certification of Chief Executive Officer**

32.2          Section 1350--Certification of Chief Financial Officer**


* Previously  filed as indicated and  incorporated  herein by reference
from the referenced filings previously made by the Company.

** Filed herewith.


                                       40