UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549  
 FORM 10-QSB
 
 (Mark One) x
Quarterly report pursuant
  to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31,
2005 o
Transition report pursuant
  to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number:
333-120428   NATIONWIDE FINANCIAL SOLUTIONS, INC.(Exact
name of registrant as specified in its charter) Nevada

33-1080880(State
  or other jurisdiction of
  incorporation or organization)

(I.R.S.
  Employer
  Identification Number) 3231 S. Country Club Way Suite 102 Tempe, AZ
85282(Address of Principal
Executive Offices) Issuers telephone number including area
code: (480)-820-9766   Securities registered pursuant to Section 12
(g) of the Act: None   Indicate whether the Issuer
(1) filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.  Yes  x  No  o Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).   Yes  o  No  x APPLICABLE ONLY TO CORPORATE
ISSUERS: Indicate the number of
shares outstanding of each of the Issuers classes of common stock, as of the
latest practicable date: There were 15,521,262 shares of the Issuers common
stock, $.0001 par value outstanding as of February 7, 2006. Transitional Small Business
Disclosure Format (Check One)   Yes  o  No  x    NATIONWIDE FINANCIAL SOLUTIONS, INC. 
FORM 10-QSB 
Quarter Ended December 31, 2005

Table of Contents

Page 
  NumberPART I  FINANCIAL
INFORMATIONItem 1  Financial StatementsCondensed
  Balance Sheet, December 31, 2005 (unaudited)

3Condensed
  Statements of Operations (unaudited) For the Six Months Ended December 31,
  2005 and 2004

4Condensed
  Statements of Cash Flows (unaudited) For the Six Months Ended December 31,
  2005 and 2004

5Notes to
  Condensed Financial Statements

6Item 2  Managements Discussion and Analysis of Financial
  Condition and Results of Operations

8Item 3  Controls and Procedures

20PART II  OTHER
INFORMATIONItem 1  Legal ProceedingsItem 2  Changes in Securities and Use of ProceedsItem 3  Default upon Senior SecuritiesItem 4  Submission of Matters to a Vote of Security
  HoldersItem 5  Other InformationItem 6  ExhibitsSignatures2

PART I  FINANCIAL INFORMATION
Item 1. Financial Statements


NATIONWIDE FINANCIAL SOLUTIONS, INC.
CONDENSED BALANCE SHEET
(Unaudited)

December
  31,
  2005ASSETSCash and cash equivalents



$
4,850,200Restricted cash




200,000Note receivable




500,000Interest receivable




6,440Prepaid expenses




129,257Income tax refund receivable




61,889Total current assets


5,747,786Deposits




9,351Other assets




251,410Property and equipment, net




231,543Total other assets


492,304TOTAL
  ASSETS

$
6,240,090LIABILITIES
  AND STOCKHOLDERS EQUITYAccounts payable



$
20,546Bank credit line




199,757Accrued liabilities




136,051Unearned income




13,742Notes payable-current




2,019,127Notes payable officer - current




12,056Total current liabilities


2,401,279NOTES PAYABLE OFFICER




250,000TOTAL
  LIABILITIES


2,651,279COMMITMENTS
  AND CONTINGENCIESSTOCKHOLDERS
  EQUITYPreferred stock, $.0001 par value; 10,000,000 shares authorized, none
  issued or outstanding



Common stock, $.0001 par value; 60,000,000 shares authorized,
  15,521,262 issued and outstanding



1,552Additional paid in capital




6,548,878Accumulated deficit




(2,961,619
)Total stockholders equity


3,588,811TOTAL
LIABILITIES AND STOCKHOLDERS EQUITY



$
6,240,090The accompanying notes are an integral part of
these financial
statements.

F - 1

NATIONWIDE FINANCIAL SOLUTIONS,
INC.CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

Three
  Months Ended
  
  Six Months
  EndedDecember
  31,
  
  December
  31,2005
  
  2004
  
  2005
  
  2004Revenues
  
  $
  107,449
  
  $
  83,494
  
  $
  218,778
  
  $
  153,219Cost of revenues
  
  
  39,997
  
  
  110,426
  
  
  90,723
  
  
  155,055Gross profit
  (loss)
  
  
  67,452
  
  
  (26,932
  )
  
  128,055
  
  
  (1,836
  )OPERATING EXPENSESSales and marketing
  
  
  101,854
  
  
  173,661
  
  
  312,521
  
  
  265,456General and administrative
  
  
  427,582
  
  
  272,381
  
  
  809,989
  
  
  510,230Total
  operating expenses
  
  
  529,436
  
  
  446,042
  
  
  1,122,510
  
  
  775,686Operating loss
  
  
  (461,984
  )
  
  (472,974
  )
  
  (994,455
  )
  
  (777,522
  )NONOPERATING INCOME (EXPENSE)Interest income
  
  
  9,242
  
  
  6,362
  
  
  11,808
  
  
  12,914Gain on forgiveness of accrued interest
  
  
  
  
  
  4,945
  
  
  
  
  
  4,945Interest expense
  
  
  (50,432
  )
  
  (3,758
  )
  
  (65,063
  )
  
  (7,108
  )Nonoperating
  income (expense), net
  
  
  (41,190
  )
  
  7,549
  
  
  (53,255
  )
  
  10,751Benefit from income taxesCurrent
  
  
  
  
  
  
  
  
  
  
  
  (61,889
  )Benefit from
  income taxes
  
  
  
  
  
  
  
  
  
  
  
  (61,889
  )Net loss
  
  $
  (503,174
  )
  $
  (465,425
  )
  $
  (1,047,710
  )
  $
  (704,882
  )Net loss per common share, basic and
  diluted
  
  
  (0.04
  )
  
  (0.04
  )
  
  (0.08
  )
  
  (0.07
  )Weighted average number of common shares
  outstanding- basic and diluted
  
  
  12,601,037
  
  
  10,645,982
  
  
  12,350,452
  
  
  9,480,260The accompanying notes are an
integral part of these financial
statements.
F - 2
NATIONWIDE FINANCIAL SOLUTIONS,
INC.CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Six Months
  EndedDecember
  31,2005
  
  2004CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
  
  $
  (1,047,710
  )
  $
  (704,882
  )Adjustments to reconcile net loss to net
  cash used by operating activities:Depreciation and amortization
  
  
  37,589
  
  
  36,566Issuance of common shares for employee
  compensation
  
  
  
  
  
  5,000Gain on forgiveness of accrued interest
  
  
  
  
  
  (4,945
  )Issuance of common shares for services
  
  
  171,250
  
  
  Changes in operating assets and
  liabilities:Prepaid expenses
  
  
  (366,591
  )
  
  (13,400
  )Accrued interest receivable- ISI (related
  party)
  
  
  
  
  
  (32,577
  )Accrued interest receivable
  
  
  (5,214
  )
  
  Income tax refund receivable
  
  
  
  
  
  (61,889
  )Accounts payable
  
  
  (42,669
  )
  
  (15,635
  )Income taxes payable
  
  
  
  
  
  (90,455
  )Accrued liabilities
  
  
  (121,402
  )
  
  (28,130
  )Accrued rent  Shalimar (related party)
  
  
  
  
  
  (14,516
  )Unearned income
  
  
  327
  
  
  1,615Net cash used by operating activities
  
  
  (1,374,420
  )
  
  (923,248
  )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
  
  
  (1,775
  )
  
  (21,758
  )Issuance of notes receivable
  
  
  (500,000
  )
  
  Repayments from ISI-related party
  
  
  
  
  
  115,452Net cash provided (used) by investing
  activities
  
  
  (501,775
  )
  
  93,694CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments of debt
  
  
  (29,862
  )
  
  Principal payments on notes
  payable-Shalimar (related party)
  
  
  
  
  
  (68,993
  )Proceeds from issuance of debt
  
  
  2,031,397
  
  
  18,599Proceeds from issuance of common stock
  
  
  4,711,292
  
  
  950,000Net cash provided by financing
  activities
  
  
  6,712,827
  
  
  899,606NET INCREASE IN CASH AND CASH EQUIVALENTS
  
  
  4,836,632
  
  
  70,052CASH AND CASH EQUIVALENTS, BEGINNING OF
  PERIOD
  
  
  13,568
  
  
  86,525CASH AND CASH EQUIVALENTS, END OF PERIOD
  
  $
  4,850,200
  
  $
  156,577SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATIONCash paid for interest
  
  $
  36,013
  
  $
  19,076Cash paid for taxes
  
  $
  
  
  $
  86,248SUMMARY OF NON-CASH INVESTING ACTIVITIES:Issuance of common shares for finders fee
  
  $
  461,208
  
  $
  140,000Issuance of common shares for notes
  conversion
  
  $
  
  
  $
  450,000The accompanying notes are an integral part of these financial
statements.
F - 3

NATIONWIDE FINANCIAL
SOLUTIONS, INC. 
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2005 AND 2004
(unaudited)

1.
ORGANIZATIONAL
  HISTORY AND NATURE OF BUSINESSIn March 2004, NB
  Acquisitions, Inc. (NBA), a privately-held, non-operating shell company
  with no assets or liabilities, previously organized and incorporated on
  September 21, 2001 under the laws of the State of Nevada, entered into a
  share exchange agreement (the Agreement) with National Interest Solutions,
  Inc. (NIS), a privately-held operating company previously organized and
  incorporated on October 24, 2001 under the laws of the State of Arizona. For
  legal purposes, the Agreement constituted an acquisition by NBA of NIS as NBA
  acquired all of the then outstanding shares of NIS common stock. Shortly
  thereafter, in April 2004, NBA changed its legal name to Nationwide Financial
  Solutions, Inc. (NFS). For accounting purposes, the preceding Agreement did
  not constitute a business combination given that NBA was merely a shell
  company with no economic substance. Instead, the Agreement constituted a
  recapitalization of NIS whereby NIS would merely grant NBA a minority
  ownership interest in exchange for it gaining access to NBAs assembled shareholder
  base, thereby potentially facilitating any prospective capital raising
  efforts. Accordingly, the accompanying financial statements solely reflect
  the historical operations and related financial results of NIS. Immediately
  after the related July 28, 2004 issuance by NBA of 8,253,400 shares of its
  common stock to the former shareholders of NIS as per the Agreement, the
  former shareholders of NIS and NBA owned 89.2% and 10.8%, respectively, of
  the then issued and outstanding common shares of the legally merged entity
  (hereinafter, the Company). The Company is, as was NIS, a debt resolution
  company, retained by individuals with significant unsecured debt that may be
  experiencing financial difficulties. Through its fee-based debt resolution
  program, the Company attempts to assist its clients in eliminating part or
  all of their unsecured debt. All of the Companys business operations are
  conducted from a single leased facility, from a related party, in Tempe,
  Arizona. The Company remains, as was NBA, a Nevada corporation.2.
SUBSTANTIAL
  DOUBT AS TO THE COMPANYS ABILITY TO CONTINUE AS A GOING CONCERNThe Company incurred
  substantial operating and net losses, as well as negative operating cash
  flow, during its fiscal year ended June 30, 2005. The Company additionally
  had working capital and stockholders deficits at June 30, 2005. In
  recognition of the preceding, the Companys independent certified public
  accountants included an explanatory paragraph in their audit report on the
  Companys financial statements for the fiscal year ended June 30, 2005 that
  expresses substantial doubt as to the Companys ability to continue as a
  going concern. Going concern contemplates the realization of assets and the
  satisfaction of liabilities in the normal course of business during the
  subsequent twelve month period. During the three and six month period ended
  December 31, 2005, the Company continued to incur substantial operating and
  net losses, as well as negative operating cash flows. As a result of the preceding,
  substantial doubt remains as to the Companys ability to continue as a going
  concern. The Companys accompanying interim condensed financial statements do
  not includeF - 4

NATIONWIDE FINANCIAL SOLUTIONS, INC.
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2005 AND 2004
(unaudited)

2.
SUBSTANTIAL
  DOUBT AS TO THE COMPANYS ABILITY TO CONTINUE AS A GOING CONCERN (continued)any adjustments that might
  result from the outcome of this financial uncertainty. Although there can be
  no assurance of such, management continues to believe that it will be able to
  timely procure, should such become necessary, debt and/or equity financing
  sufficient to meet the Companys cash needs over the next twelve months.3.
SUMMARY
  OF SIGNIFICANT ACCOUNTING POLICIESPreparation
  of Interim Condensed Financial StatementsThe accompanying interim
  condensed financial statements have been prepared by the Companys
  management, without audit, in accordance with accounting principles generally
  accepted in the United States of America and pursuant to the rules and
  regulations of the United States Securities and Exchange Commission (SEC).
  In the opinion of management, the accompanying interim condensed financial statements
  contain all adjustments (consisting solely of normal recurring adjustments,
  unless otherwise noted) necessary to present fairly, in all material
  respects, the Companys financial position, results of operations and cash
  flows for the interim periods presented. Certain information and note
  disclosures normally included in Quarterly financial statements prepared in
  accordance with accounting principles generally accepted in the United States
  of America have been condensed or omitted in these interim financial
  statements pursuant to the SECs rules and regulations, although the
  Companys management believes that the disclosures are adequate to make the
  information presented not misleading. The financial position, results of
  operations and cash flows for the interim periods disclosed herein are not
  necessarily indicative of future financial results. These interim condensed
  financial statements should be read in conjunction with the annual financial
  statements and accompanying notes included in the Companys Form 10-KSB filed
  on October 12, 2005.Use of
  EstimatesThe preparation of
  financial statements in conformity with accounting principles generally
  accepted in the United States of America requires management to make certain
  estimates, judgments and assumptions that affect the reported amounts and
  timing of revenue and expenses, the reported amounts and classification of
  assets and liabilities, and disclosure of contingent assets and liabilities.
  These estimates and assumptions are based on the Companys historical results
  as well as managements future expectations. The Companys actual results
  could vary materially from managements estimates, judgments and assumptions.Revenue
  RecognitionThe Companys clients
  consist of individuals with significant unsecured debt that may be
  experiencing financial difficulties, thereby making the collection of any
  receivable highly doubtful. The Company initially assesses each new client a
  non-refundable set-up fee for file creation, debt analysis, budget formulation,
  and initial creditor contacts. This set-up fee, which is based on a
  percentage of the clients total unsecured debt accepted into the Companys
  debt resolution program, is fully earned by the Company upon its completion
  of the above services and is typicallyF - 5

NATIONWIDE FINANCIAL SOLUTIONS, INC.
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2005 AND 2004
(unaudited)

3.
SUMMARY
  OF SIGNIFICANT ACCOUNTING POLICIES (continued)Revenue
  Recognition (continued)paid by the client in
  equal monthly installments over a subsequent six-month period. Upon
  completion of the above set-up services, the Company has no further
  obligations to the client.If and when, a client
  subsequently accumulates a previously agreed-upon cash balance in a
  designated savings account, access to which the Company is granted via a
  power-of-attorney, the Company commences formal negotiations with each of the
  clients creditors with the objective of convincing them to accept a lump
  partial payment in full and complete satisfaction of the entire unpaid
  balance. If and when, the Company is successful in obtaining a
  legally-binding settlement with a creditor on behalf of a client, the Company
  then assesses the client a settlement fee. This earned settlement fee, which
  is based on a previously agreed to percentage of any reduction obtained in
  the pay-off balance, is typically realized by the Company immediately in its
  entirety via an electronic debit made directly against the clients savings
  account. The Company conservatively recognizes each set-up and settlement fee
  earned on a cash basis upon receipt. Any payment received by the Company in
  advance of its complete performance of a related client service is reflected
  in the balance sheet as unearned income.Net Loss
  per Common ShareNet loss per common share
  - basic and diluted has been computed by dividing net loss by the weighted
  average number of common shares outstanding during the respective fiscal period.
  For the three and six month periods ended December 31, 2005 and 2004, the
  potentially dilutive effects of any then outstanding convertible notes and
  stock purchase warrants were excluded from the computation of net loss per
  common sharediluted as the effect of their inclusion would have been
  anti-dilutive.Stock-based
  CompensationIn December 2004, the FASB
  issued SFAS 123R (Revised 2004), Accounting for Stock Based Compensation.
  This statement supersedes APB Opinion 25, Accounting for Stock Issued to
  Employees. This revised statement establishes standards for the accounting
  of transactions in which an entity exchanges its equity instruments for goods
  and services, including the grant of stock options to employees and
  directors. The Statement is effective for periods beginning after December
  15, 2005, and will require the Company to recognize compensation costs based
  on the grant date fair value of the equity instruments it awards.4.
NOTE
  RECEIVABLEOn December 19, 2005 the
  Company issued a note receivable, to an unrelated entity, in the amount of
  $500,000. The note accrues interest, at a stated rate of 12% per annum, and
  requires eleven monthly interest only payments of $5,000 with the final
  payment consisting of all outstanding principal and interest. The note
  matures on December 19, 2006 and is personally guaranteed by the entitys
  president and sole shareholder.F - 6

NATIONWIDE FINANCIAL SOLUTIONS, INC.
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2005 AND 2004
(unaudited)

5.
NOTES
  PAYABLEThe Company is financing
  with an unrelated entity the premium of its directors and officers
  indemnification insurance policy. The note is unsecured, accrues interest at
  a stated rate of 9.25% per annum, and requires monthly payments of principal
  and interest aggregating $3,274 through June 23, 2006. As of December 31,
  2005, the remaining balance on the note was $19,127.On November 11, 2005, the
  Company secured $2,000,000 in debt financing from an unrelated party. The
  note calls for a fixed rate of interest at 12%, eleven monthly interest only
  payments of $20,000 and one principal and interest payment of $2,020,000. The
  note is due on November 8, 2006 and is secured by all the Companys assets.
  As of December 31, 2005 the remaining balance of the note was $2,000,000.6.
STOCKHOLDERS
  EQUITYPreferred
  StockThe Company has ten
  million shares of $.0001 par value preferred stock authorized for issuance.
  As of December 31, 2005, the Company had neither issued nor assigned any
  rights to these preferred shares.Common
  StockOn July 1, 2005 the
  Company retained an investment banking firm. Under the agreement, the Company
  issued 37,500 shares, valued at $74,250, of its common stock as a one-time
  fee and is committed to pay $75,000 upon the investment banking firm securing
  funding of $1,000,000.On July 18, 2005, the
  Company entered into to a stock purchase agreement and registration rights
  agreement with an unrelated party, issuing 1,250,000 shares of the Companys
  common stock for $675,000 in cash net of $75,000 paid and 50,000 shares
  issued to an unrelated individual as a finder fee.On October 13, 2005 the
  Company retained an investor relations firm that will provide the Company
  certain investor related services over the next twelve months. Under the
  agreement, the Company issued 17,000 shares, valued at $59,500, of its common
  stock as a one-time fee.On November 23, 2005, the
  Company retained an unrelated party to provide public relations services over
  the next twelve months. Under the agreement, the Company issued 10,000
  shares, valued at $37,500, of its common stock as a one-time fee.On December 22, 2005, the
  Company entered into a stock purchase agreement and registration rights
  agreement with an unrelated party, whereby the Company sold 2,998,334 shares
  of its common stock for proceeds of $4,036,292, in cash, net of 461,208 paid
  to an unrelated individual as a finder fee.F - 7

ITEM 2.
MANAGEMENTS
  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONSForward-Looking Statements

This Quarterly Report, Form
10-QSB contains certain forward-looking statements. Forward-looking statements
include all statements that do not relate solely to historical or current facts
and can be identified by the use of words such as may, believe, will,
expect, estimate, or anticipate. These forward-looking statements are
based on our current plans and expectations and are subject to a number of
risks and uncertainties that could cause our plans and expectations, including
actual results, to differ materially from the forward-looking statements. The
Private Securities Litigation Reform Act of 1995 (the Litigation Reform Act)
provides a safe harbor for forward-looking statements to encourage companies
to provide prospective information about their companies without fear of
litigation.

We would like to take
advantage of the safe harbor provisions of the Litigation Reform Act in connection
with the forward-looking statements included in this filing. The risks and
other factors that could cause our actual financial results to differ
materially from those projected, forecasted or estimated by us in
forward-looking statements may include, but are not limited to, we have
incurred losses in the past and cannot assure you that we will be profitable,
we have received a going concern opinion from our auditors, and our strategy
for growth will put a significant strain on our capital resources. We disclaim
any obligation to publicly update these statements, or disclose any difference
between our actual results and those reflected in these statements.

Risk Factors Affecting Future Results

Investing in our common
stock involves a high degree of risk. In addition to the other information
contained in this Quarterly Report, you should carefully read and consider the
following risk factors. The risks
described below are not exhaustive of the risks that might affect our business.
Other risks, including those we currently deem immaterial, may also impact our
business. If any of these risks actually occur, our business, financial
condition or operating results could be materially adversely affected and could
result in a complete loss of your investment or a severe reduction in the
trading price of our common stock.

We have incurred losses in the past and cannot assure you
that we will be profitable in the future.

For the year ended June 30,
2005 and the six months ended December 31, 2005, we incurred losses of
$1,839,628 and $1,047,710, respectively. We expect to increase considerably,
our operating expenses in the future by expanding our marketing programs to
solicit and attract new clients. We do not expect that our revenue will
initially cover our cash needs, and cannot assure you that it will cover our
cash needs for the foreseeable future. We continue to incur substantial
operating losses and we continue to have a working capital deficit. As a
result, we expect to incur further losses in the future.

8

We have received a going concern opinion from our auditors
indicating we may not be able to continue as a going concern.

In their audit report for
the fiscal year ended June 30, 2005, our auditors indicated that there was
substantial doubt as to our ability to continue as a going concern and that our
ability to continue as a going concern was dependent upon our obtaining
additional financing for our operations or reaching profitability. We cannot
assure that we will be able to do either.

Government regulation of bankruptcy protection and
debt-settlement operations may adversely impact our ability to attract new
clients, which could adversely affect our revenues.

We are subject to increasing
federal, state, and local laws and regulations regarding consumer bankruptcy
protection and the business of debt settlement-type operations. The most recent
and significant of these laws, the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005, or BAPCPA, was signed into law on April 20, 2005, with
most of the provisions taking effect on October 17, 2005. The BAPCPA provides
for relatively severe restrictions on who can qualify to file for bankruptcy,
the time frames used during the process, and further provides requirements for
consumer debt education and pre-qualification prior to a bankruptcy being
considered by the court. These conditions create significant procedural and
practical barriers to the completion of a bankruptcy petition.

In anticipation of the
October 17, 2005 deadline for filing a petition under the predecessor to the
BAPCA, approximately 307 of our clients exited our program to petition for
protection with their debts. While we can not accurately predict the overall
impact the BAPCPA or any other future federal, state or local regulation will
have on our debt resolution program, we anticipate that, to some degree, the
BAPCPA, and potentially other future laws, will adversely impact our ability to
attract new clients into our debt resolution program, which could adversely
affect our revenues.

Additional required capital may not be available at
attractive terms or at all, which could have a material negative effect on our
results and stock price.

To date, we have financed
much of our operations through cash from the private sale of our securities,
loans from our officers and directors, and by borrowing funds from third
parties. We cannot assure you that future financing, whether from unrelated
external sources or related parties, will be available at acceptable terms or
at all. If we are unable to obtain adequate financing, we may have to curtail
business operations and limit acquisitions of other businesses and assets which
would have a material negative effect on operating results and may result in a
lower stock price.

Our acquisition strategy may put a significant strain on our
resources, and we may not be able to successfully integrate acquired
businesses.

Our strategy to seek rapid
growth includes acquiring other businesses and assets. This strategy will place
a significant strain on our managerial, operating, financial and other
resources, including our ability to ensure client satisfaction. Our expansion
efforts will also require significant time commitments from our senior
management and will place a strain on their ability to manage our existing
business. Our future performance will depend, in part, upon our ability to
manage this growth effectively and to integrate the businesses we

9

acquire. To that end, we may
have to undertake the following improvements, among others:


Implement additional
  management information systems capabilities;
Further develop our
  operating, administrative and financial/accounting systems and controls; and
Hire and train additional
  management personnel and employees.If we are unable to
successfully integrate the businesses that we acquire, it could adversely
affect our ability to achieve anticipated levels of cash flows from the
acquired businesses or realize other anticipated benefits of those
acquisitions.

We depend on key personnel and could be adversely affected by
the loss of their services because of the limited number of qualified people in
our industry, which loss could reduce our operations and as a result our
revenue.

Competition for qualified
employees, especially certified client enrollment representatives, in the debt
resolution industry is intense and there are a limited number of people with
knowledge of, and experience in, the industry. Our success depends to a
significant degree upon our ability to attract and retain qualified enrollment
representatives and other personnel and upon the continued contributions of
such people. The process of locating personnel with the skills required to
carry out our strategies may be lengthy and costly. We do not have employment agreements
with any of our executive officers nor do we carry key man insurance on their
lives. Therefore, our employees may voluntarily terminate their employment with
us at any time. We have experienced significant attrition in the past, and
cannot assure you that we will be successful in attracting and retaining
qualified executives and personnel. The loss of the services of key personnel,
or the inability to attract additional qualified personnel, could reduce our
ability to operate our business and as a result our revenue from operations.

Many of our competitors are larger and have greater financial
and other resources than we do, and we may not be able to successfully compete
with them.

There are a significant
number of debt resolution companies, as well as other firms which offer debt
resolution services, operating throughout the United States. Many of these
competitors are larger than we are and have more personnel, greater financial,
development and marketing resources, longer track records and superior name
recognition. These factors could prevent us from successfully competing in and
capturing markets in which our competitors operate. If demand for our services
decreases due to these competitive forces, it could have a material adverse
effect on our operating results.

Risks Related to our Common Stock

Concentration of our ownership by our executive officers and
directors may dissuade new investors from purchasing our securities which could
result in a lower trading price for our securities than if our securities were
widely held.

Our officers and directors
currently own 38% of our outstanding common stock. As a result, they have the
ability to exert substantial influence or absolute control over all matters
requiring approval by our stockholders, including the election and removal of

10

directors, any proposed
merger, consolidation or sale of all or substantially all of our assets and
other corporate transactions. This concentration of control could be
disadvantageous to other stockholders with interests different from those of
our officers and directors. For example, subject to any fiduciary duties, our
officers and directors could delay or prevent an acquisition or merger even if
the transaction would benefit other stockholders. In addition, this concentration
of share ownership may adversely affect the trading price for our common stock
because investors often perceive disadvantages in owning stock in companies
with a significant concentration of ownership among a limited number of
stockholders.

Our common stock price has been volatile, and you may not be
able to sell your shares at or above the price that you pay for the shares.

Our common stock is
currently quoted on the OTC Bulletin Board. Securities quoted on the OTC
Bulletin Board tend to be highly illiquid, in part because there is no national
quotation system by which potential investors can track the market price of
shares except through information received or generated by a limited number of
broker-dealers that make markets in particular stocks. There is a greater
chance of market volatility for securities that trade on the OTC Bulletin Board
as opposed to a national exchange or quotation system. This volatility may be
caused by a variety of factors including:


the lack of readily available
  price quotations;
the absence of consistent
  administrative supervision of bid and ask quotations;
lower trading volume; and
market conditions.The price of our common
stock has historically been volatile and our investors have experienced wide
fluctuations in the market price of our securities. These fluctuations may have
an extremely negative effect on the market price of our securities and may
prevent you from obtaining a market price equal to your purchase price when you
attempt to sell our securities in the open market. In these situations, you may
be required to either sell our securities at a market price which is lower than
your purchase price, or to hold our securities for a longer period of time than
you planned.

Because our common stock will be classified as penny stock,
trading will be limited, and our stock price could decline.

Because our common stock
will fall under the definition of penny stock, trading in our common stock,
if any, is expected to be limited because broker-dealers are required to
provide their customers with disclosure documents prior to allowing them to
participate in transactions involving our common stock. These disclosure
requirements are burdensome to broker-dealers and may discourage them from
allowing their customers to participate in transactions involving our common
stock.

Penny stocks are equity securities with a market price below
$5.00 per share other than a security that is registered on a national
exchange; included for quotation on the NASDAQ system; or whose issuer has net
tangible assets of more than $2,000,000 and has been in continuous operation
for greater than three years. Issuers who have been in operation for less than
three years must have net tangible assets of at least $5,000,000.

11

Rules promulgated by the
Securities and Exchange Commission, or SEC, under Section 15(g) of the Exchange
Act require broker-dealers engaging in transactions in penny stocks, to first
provide to their customers a series of disclosures and documents, including:


a standardized risk
  disclosure document identifying the risks inherent in investment in penny
  stocks;
all compensation received
  by the broker-dealer in connection with the transaction;
current quotation prices
  and other relevant market data; and
monthly account statements
  reflecting the fair market value of the securities. In addition, these rules
  require that a broker-dealer obtain financial and other information from a
  customer, determine that transactions in penny stocks are suitable for such
  customer and deliver a written statement to such customer setting forth the
  basis for this determination.In addition, under the Exchange Act and its
regulations, any person engaged in a distribution of shares of our common stock
offered by this prospectus may not simultaneously engage in market making
activities with respect to the common stock during the applicable cooling off
periods prior to the commencement of this distribution.

Our preferred stock may make a third-party acquisition of our
company more difficult which in turn would make a purchase of our shares less
desirable, thereby potentially reducing our stock price or the liquidity of our
shares.

Our articles of
incorporation authorize our Board of Directors to issue up to 10,000,000 shares
of preferred stock having such rights as may be designated by our Board of
Directors, without stockholder approval. The issuance of preferred stock could
inhibit a change in our control by making it more difficult to acquire the
majority of our voting stock and thereby making the purchase of our shares by
new investors less likely. A lesser interest in the purchase of our shares
could reduce our market price or make it more difficult for stockholders to
sell their shares. No preferred shares are currently outstanding.

We do not anticipate paying dividends.

We have not declared or paid
cash dividends on our common stock and do not anticipate paying any cash
dividends on our common stock in the foreseeable future. We currently intend to
retain future earnings, if any, to finance the expansion of our business and
for general corporate purposes. We cannot assure you that we will pay dividends
in the future. Our future dividend policy is within the discretion of our board
of directors and will depend upon various factors, including our results of
operations, financial condition, capital requirements and investment
opportunities.

Introduction

This discussion of our
financial condition and results of operations should be read together with the
audited financial statements and accompanying notes for the fiscal years ended
June 30, 2005 and 2004 included at the end of our Form 10-KSB.

12

Organizational History and Nature of Business:

In March 2004, NB Acquisitions,
Inc. (NBA), a privately-held, non-operating shell company with no assets or
liabilities, previously organized and incorporated on September 21, 2001 under
the laws of the State of Nevada, entered into a share exchange agreement (the
Agreement) with National Interest Solutions, Inc. (NIS), a privately-held
operating company previously organized and incorporated on October 24, 2001
under the laws of the State of Arizona. For legal purposes, the Agreement
constituted an acquisition by NBA of NIS as NBA acquired all of the then
outstanding shares of NIS common stock. Shortly thereafter, in April 2004, NBA
changed its legal name to Nationwide Financial Solutions, Inc. (NWFS).

For accounting purposes, the
preceding Agreement did not constitute a business combination given that NBA
was merely a shell company with no economic substance. Instead, the Agreement
constituted a recapitalization of NIS whereby NIS would grant NBA a minority
ownership interest in exchange for it gaining access to NBAs assembled
shareholder base, thereby potentially facilitating any prospective capital
raising efforts. Accordingly, the financial statements solely reflect the
historical operations and related financial results of NIS. Immediately after
the related July 28, 2004 issuance by NBA of 8,253,400 shares of its common
stock to the former shareholders of NIS as per the Agreement, the former
shareholders of NIS and NBA owned 89.2% and 10.8%, respectively, of the then
issued and outstanding common shares of the legally merged entity (hereinafter,
we, us, and our).

We are, as was NIS, a debt
resolution company retained by individuals with significant unsecured debt that
may be experiencing financial difficulties. Through our fee-based debt
resolution program, we attempt to assist our clients in eliminating part or all
of their unsecured debt. All of our business operations are conducted from a
single leased facility in Tempe, Arizona. We remain, as was NBA, a Nevada
corporation.

Continuing Going Concern Uncertainty:

We incurred substantial
operating and net losses, as well as negative operating cash flow, during the
six months ended December 31, 2005 and our fiscal years ended June 30, 2005 and
2004, and, had working capital and stockholders deficits at June 30, 2005 and
2004. In recognition of the preceding, our independent registered public
accounting firm included an explanatory paragraph in their audit report on our
financial statements for the fiscal years ended June 30, 2005 and 2004 that
expresses substantial doubt as to our ability to continue as a going concern.
Going concern contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business during the subsequent fiscal year.
Our accompanying condensed financial statements do not include any adjustments
that might result from the outcome of this financial uncertainty. Although
there can be no assurance of such, we remain confident that we will be able to
timely procure, should such become necessary, any debt and/or equity financing
required to meet our cash needs over the next twelve months.

Our Current Efforts at Restoring Our Revenues and Financial
Condition

Our ability to continue as a
going concern remains contingent upon us:


Significantly growing our
  active client base,
Externally raising capital
  or securing debt financing13


Improving upon our current
  cash position and regaining a positive working capital position,
Pursuing other expansion
  or merger opportunities, and
Internally generating cash
  flows sufficient to support our on going operations and required growthIn an effort to expand the
financial products and services offered by our Company and to implement our
growth strategy, on December 9, 2005, we entered into a definitive agreement to
purchase all the outstanding shares of Bay Capital Corporation (Bay) for
approximately $8.1 million (consisting of cash and shares of the Companys
stock), subject to certain adjustments set forth in the definitive agreement. The
acquisition of the outstanding shares of Bay is expected to occur during the
third quarter of fiscal 2006. Bay markets mortgage loan products, provides
initial funding, gathers the loans into marketable pools, and then resells
those pools to the investment community. Bay offers a large spectrum of
mortgage products and is licensed to operate in 44 states and the District of
Columbia. We believe that Bays ability to directly fund loans, national
presence, and target-market, will be complimentary our current debt resolution
services.

We believe that additional
opportunities may exist for strategic acquisitions that would enhance growth,
bring additional complimentary opportunities, and achieve further gains in
operational efficiencies. We intend to aggressively search for these additional
opportunities going forward.

Our cash and working capital
positions have been strengthened by our receipt on July 18, 2005 of an
aggregate of $675,000, in the private placement sale of our securities to an
unrelated party and a debt financing of $2,000,000 on November 11, 2005. An
additional private placement sale of our securities occurred on December 22,
2005 which raised an additional $4,036,292 in cash. Despite the preceding cash
infusions, we remain in need of additional long-term debt and/or equity
financing in order to ensure that we will be able to continue as a going
concern through at least June 30, 2006. Our cash position is approximated at
$4.8 million at February 6, 2006, and our current operating budget for the
twelve months ending June 30, 2006 approximates $2.8 million. While our current
cash position represents our ability to cover our projected operating budget,
given the continuing uncertainty regarding our prospective revenues, we
currently are unable to reliably forecast our revenues for the corresponding
twelve months ending June 30, 2006.

In anticipation of some
degree of cash shortfall during the twelve months ending June 30, 2006, we
currently are exploring certain potential sources of funding. We can provide no
assurance that we will ultimately be successful in timely procuring at
acceptable terms external debt and/or equity financing sufficient to cover any
cash shortfall. To the extent that we were to be unsuccessful, our business
would likely be materially harmed, the effects from which we may not recover.

Our Industry

We are, and continue to
operate as a debt resolution Company. Our services remain a bankruptcy
alternative for clients that need assistance with eliminating part or all of
their unsecured debt. Our direct competition includes literally hundreds of
other debt resolution companies and indirectly credit counseling and debt
consolidation organizations.

14

On April 20,
2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,
(BAPCPA) was signed into law, with most of the provisions taking effect on
October 17, 2005. We believe the BAPCPA makes it more difficult for consumers
to file for Chapter 7 bankruptcy protection. Before any individual is eligible
to file for bankruptcy protection, they must first attend an individual or
group credit counseling session. In the session, the credit counselor will
perform a budget analysis and explain to the debtor what efforts could be taken
to resolve debt issues without a bankruptcy filing. Additionally, once a debtor
files for bankruptcy, they must attend a second educational class that will
explain budgeting and money management techniques. Under the BAPCPA, it will
now be considered an abuse of the bankruptcy code for an individual to file
for Chapter 7, unless the consumer first passes a means test intended to
demonstrate an inability to pay creditors over time. While we can not
accurately predict the overall impact the BAPCPA will have on our debt
resolution program, we remain an option to Bankruptcy for potential clients. In
anticipation of the October 17th deadline for filing a petition under the
predecessor act, approximately 307 of our clients exited our program to
petition for protection with their debts. We anticipate, to some degree, the
BAPCPA will adversely impact our ability to attract new clients into our debt
resolution program.

Critical Accounting Policy

A critical
accounting policy is distinguished from other significant accounting policies,
as set forth in Note 3 to our accompanying financial statements, by the fact
that it requires management to make certain underlying accounting estimates and
assumptions regarding matters that are inherently subject to a higher than
usual degree of uncertainty, and, as a result, are more susceptible to
prospective material changes. We have assessed each of our significant
accounting policies and have concluded that only our accounting policy for revenue
recognition would reasonably constitute a critical accounting policy.

Our Cash-Basis Revenue Recognition Policy

Our clients
consist of individuals with significant unsecured debt that may be experiencing
financial difficulties, thereby making the collection of any receivable by us
highly doubtful. We initially assess each new client a non-refundable set-up
fee for file creation, debt analysis, budget formulation, and initial creditor
contacts. This set-up fee, which is based on a percentage of the clients total
unsecured debt accepted by us into our debt resolution program, is fully earned
by us upon our completion of the above services and is typically paid by the
client in equal monthly installments over a subsequent six-month period. Upon
completion of the above set-up services, we have no further obligations to the
client.

If and when, a
client subsequently accumulates a previously agreed-upon cash balance in a
designated savings account, access to which we are granted via a
power-of-attorney, we commence formal negotiations with each of the clients
creditors with the objective of convincing them to accept a lump partial
payment in full and complete satisfaction of the entire unpaid balance. If and
when, we are successful in obtaining a legally-binding settlement with a
creditor on behalf of a client, we then assess the client a settlement fee.
This earned settlement fee, which is based on a previously agreed to percentage
of any reduction obtained in the pay-off balance, is typically realized by us
immediately in its entirety via an electronic debit made directly against the
clients savings account.

15

We
conservatively recognize each set-up and settlement fee earned on a cash basis
upon our subsequent receipt of related client payments. Any payment received by
us in advance of our complete performance of a related client service is
reflected in our balance sheet as unearned income.

Our Results of Operations

Revenues

Our revenues
were $107,449 and $83,494 for the three month period ended December 31, 2005
and 2004, respectively. For the six month periods ended December 31, 2005 and
2004 our revenues were $218,778 and $153,219 respectively. We principally
attribute the increase in our revenues, to the broad based radio advertising
conducted during the period and the ultimate enrollment of new clients into our
debt resolution program partially offsetting the number of clients that exited
our program to file for Bankruptcy protection prior, to the new filing
requirements becoming effective.

Cost of Revenues

Our cost of
revenues consists of the direct costs incurred by us in the servicing of client
accounts. Our costs of revenues were $39,997 and $110,426 for the three month
periods ended December 31, 2005 and 2004, respectively. For the six month
periods ended December 31, 2005 and 2004 our costs of revenues were $90,723 and
$155,055 respectively. Certain of these costs are substantially fixed in
nature, principally being the wages and benefits of our client engagement
personnel and allocated charges for basic telephone service, technology, rent,
utilities, and depreciation and amortization. Our other direct costs are more
variable in nature; principally being debt settlement commissions earned by our
client engagement personnel and allocated charges for long distance telephone
service, rent and postage.

As a matter of
background, we had four personnel directly engaged in the servicing of client
accounts at December 31, 2005, as compared to seven during the same time period
ended December 31, 2004.  We principally
attribute the decrease in our cost of revenues to the decrease in personnel,
that included two supervisors, and the associated wage and benefit costs.

Sales and Marketing Expenses

Our sales and
marketing expenses consist of the costs incurred by us in the solicitation and
acquisition of new clients. Our sales and marketing expenses were $101,854 and
$173,661 for the three month periods ended December 31, 2005 and 2004,
respectively. For the six month periods ended December 31, 2005 and 2004 our
sales and marketing expenses were $312,521 and $265,456, respectively. Certain
of these costs are substantially fixed in nature, principally being the wages
and benefits of our sales and marketing personnel and allocated charges for
basic telephone service, technology, rent, utilities, and depreciation and
amortization. Our other costs are more variable in nature, principally being
lead acquisition, media advertising costs and allocated charges for long
distance telephone service. The increase in our sales and marketing expenses
was a direct result of the increase in radio advertising, printed sales
materials and dues and subscriptions partially offset by reductions in lead
generation costs, labor and

16

telephone.  As a matter of background, we had five and
sixteen personnel engaged in sales and marketing activities at December 31,
2005 and 2004 respectively.

General and Administrative Expenses

Our general
and administrative expenses consist of the costs incurred by us in the general
administration of corporate matters. Our general and administrative expenses
were $427,582 and $272,381 for the three month periods ended December 31, 2005
and 2004, respectively. For the six month periods ended December 31, 2005 and
2004 our general and administrative expenses were $809,989 and $510,230
respectively. Certain of these costs are substantially fixed in nature,
principally being the wages and benefits of our executive, and administrative
support staff, insurance premiums, professional service fees, maintenance, and
allocated charges for rent, utilities, technology, basic telephone service, and
depreciation and amortization. Our other costs are more variable in nature,
principally being office supplies, repairs, transfer agent fees and allocated charges
for long distance telephone service.

We had eight
personnel directly engaged in general and administrative activities at December
31, 2005 and 2004. We primarily attribute the increases in our general and
administrative expenses for the respective 2005 period to our increased
investment banking and finder fees, legal fees associated with general
corporate matters, and public reporting fees associated with being a public
Company.

Interest Income

Our interest
income was $9,242 and $6,362 for the three month periods ended December 31,
2005 and 2004, respectively. For the six month periods ended December 31, 2005
and 2004 our interest income was $11,808 and $12,914, respectively. Our
interest income for the respective 2005 period principally resulted from the
interest earned on excess funds maintained in an interest bearing bank account
and our certificate of deposit that collateralizes our line of credit. In the
comparable 2004 period we earned interest on loans advanced to Infinity
Southwest, Inc. (ISI), a related company through common management control by
Stephen G. Luke, our Chief Executive Officer, President and Chairman of the
Board of Directors. During the fiscal year 2004, as well as prior thereto, we
made periodic loans to ISI. The loans were unsecured, accrued interest at a
stated five percent rate, and were repayable upon demand by us. Mr. Luke had
provided us with a written personal guarantee of repayment which was secured by
all of his personal assets. We and Mr. Luke agreed to discontinue the above
loan program as of December 2003. As of February 2, 2005, ISI had repaid these
loans in full. To a significantly lesser extent, we earned interest on excess
funds maintained in a money market account during the respective periods.

Interest Expense

Our interest
expense was $50,432 and $3,758 for the three month periods ended December 31,
2005 and 2004, respectively. For the six month periods ended December 31, 2005
and 2004 our interest expense was $65,063 and $7,108, respectively. Our interest
expense for the respective 2005 period principally resulted from borrowings our
officers, Mr. Luke and Mr. Dierich made to us and to a lesser extent, the
interest from our line of credit advances and interest of $34,466 on a $2
million loan from an unrelated party. In the comparable 2004 period, our
interest expense principally resulted from borrowings we obtained from Shalimar
Offices, LLC (Shalimar), a related company

17

through common
management control by Mr. Luke, from which we also lease our current facility.
During fiscal year 2004, Shalimar procured leasehold improvements and equipment
from unrelated vendors on our behalf in exchange for three notes payable. The
actual costs incurred by Shalimar were passed through to us and structured as
installment notes payable. These notes were unsecured, accrued interest at a
stated six percent rate, and required monthly payments of principal and
interest aggregating $4,421 through May 1, 2009. During January 2005, we repaid
these loans, as well as all accrued interest thereon, in full. To a
significantly lesser extent, we also incurred during the period interest
expense in connection with our financing of an insurance policy premium.

Benefit From Income Taxes

As we had
previously exhausted our federal net operating loss credits as of December 31,
2004, we were unable to realize any further federal income tax benefits in
connection with our pre-tax loss for the three months ended December 31,
2005.

Net Losses

Our net losses
were $503,174 and $465,425 for the three month periods ended December 31, 2005
and 2004, respectively. Our net losses for the six month periods ended December
31, 2005 and 2004 were $1,047,710 and $704,882 respectively.  In summary, we principally attribute our
continuing net losses to our efforts at marketing our services nationally and
the costs and expenses associated with being a public reporting company.

Our Liquidity and Capital Resources

Overview:

At December
31, 2005, we had positive working capital of $3,346,507, inclusive of the
current portion of outstanding notes payable of $2,031,183. At December 31,
2005, our only non-current debt obligation aggregated $250,000 representing an
amount due to Stephen G. Luke, our Chief Executive Officer.

On July 18,
2005 we completed a stock purchase agreement in which we sold 1,250,000 shares
of our common stock to an unrelated entity for $675,000 net a finders fee of
$75,000 paid to an unrelated individual in accordance with our amended finders
fee agreement dated July 31, 2005.

On November
11, 2005, we issued a promissory note for $2,000,000.  The promissory note bears interest of 12%.  Our working capital position
has been
strengthened by this $2 million debt issuance.
The promissory note bears a fixed interest charge of 12% and requires
interest only payments through October 8, 2006 with a final payment of
principal and accrued interest due on November 11, 2006.  Payments under the promissory note are
secured by all of our personal property.

On December
19, 2005, we loaned $500,000 to Allstate Home Loans, Inc. (Allstate) pursuant
to a promissory note.  The promissory
note accrues interest at an annual rate of 12% and is payable to us in 12
monthly payments, the first 11 of which will consist of accrued interest only,
with the final payment on December 19, 2006 consisting of the outstanding
principal and accrued interest.
Allstates president and sole shareholder

18

executed a
Personal Guaranty dated as of December 19, 2005 in favor of us, pursuant to
which he unconditionally guaranteed to us the payment and performance of all
obligations of Allstate under the promissory note.

On December
22, 2005 we entered into a Common Stock Purchase Agreement with an unrelated
party whereby we sold 2,998,334 shares of Common Stock resulting in net
proceeds of $4,036,292.

Off Balance Sheet Arrangements

At December
31, 2005, our facility operating lease with Shalimar constituted our sole
off-balance sheet obligation, which is required to be excluded from our balance
sheet by accounting principles in the United States. This lease, which we
entered into on April 1, 2004, is non-cancelable, has a five-year term, and
currently requires us to make monthly rent payments of $5,982, which payments
will increase annually by five percent. Our related minimum lease payment
obligations at December 31, 2005 were as follows: by fiscal years ending June
30: 2006 - $35,889; 2007 - $74,777; 2008 - $78,576; 2009 - $61,154; Thereafter
- none. Our lease additionally requires us to pay for certain related ancillary
costs, principally property taxes, parking and common area maintenance. These
ancillary costs, which are variable in nature, have approximated, and are
expected to continue to approximate $8,000 per fiscal year.

Cash Flows

Operating Activities

Net cash used
in operating activities was $1,374,420 and $923,248 for the six month periods
ended December 31, 2005 and 2004, respectively. Our operating activities during
the six month periods ended December 31, 2005 utilized net cash largely due to
the incremental cash outlays made by us to settle certain previously accrued
for liabilities associated with our marketing activities, professional fees,
accrued wages and to increase the overall levels in our prepaid professional
fees, insurance and to a lesser extent unearned income.

Investing Activities

Net cash used
by investing activities was $501,775 for the six month period
ended December 31, 2005 principally due to a loan of $500,000 to an unrelated
party and to a lesser extent our purchases of equipment.  In comparison, net cash provided by
investing activities was $93,694 for the six month period ended December 31,
2004 attributed to our receipt of payments on our outstanding note from ISI, a
related party, partially offset by our purchase of property and equipment.

Financing Activities

Net cash
provided by financing activities was $6,712,827 and $899,606 for the six month
periods ended December 31, 2005 and 2004, respectively. Our financing
activities provided us with a net cash inflow during the respective periods as
a result of our receipt of proceeds from the issuance of common shares to an
unrelated party, and the debt financing of an insurance policy, partially
offset by our debt repayments.

19

Planned Capital Expenditures

We currently
have the following planned capital expenditures for the next twelve months
ending June 30, 2006, which we currently anticipate funding with available
working capital or vendor financing:



Computer
  hardware and software
  
  $
  229,000Telephone equipment
  
  
  7,500Furniture
  
  
  15,000Leasehold
  improvements
  
  
  Total
  planned capital expenditures
  
  $
  251,500ITEM 3.
CONTROLS AND PROCEDURES

a) Evaluation of disclosure controls and procedures.

Our Chief
Executive Officer and Chief Financial Officer (collectively the Certifying
Officers), with the participation of management, performed an evaluation of
our disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act), which have been designed to permit us to ensure that information
required to be disclosed by us in our filings is recorded, processed,
summarized and reported in a timely manner. Based upon that evaluation, the
Certifying Officers concluded that our disclosure controls and procedures are
effective as of December 31, 2005 in ensuring that information required to be
disclosed by us in reports filed or submitted under the Exchange Act is
accumulated and communicated to management and the Certifying Officers to allow
timely decisions regarding required disclosure.

b) Changes
in internal controls over financial reporting.

During the
quarter ended December 31, 2005, we have made no change in our internal
controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange
Act) that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

20

PART II  OTHER INFORMATION

ITEM 1 
  LEGAL PROCEEDINGSNoneITEM 2 
  CHANGES IN SECURITIES AND USE OF PROCEEDSDuring the
  fiscal quarter ended December 31, 2005, the Company issued the following
  unregistered common shares as set forth below that were not otherwise
  reported on a Current Report on Form 8-K.
  Each such issuance of shares was exempt from registration under
  Section 4(2) of the Securities Act of 1933 because each was a transaction not
  involving a public offering.On October
  13, 2005, the Company retained an investor relations firm that will provide
  the Company certain investor related services over the next twelve months
  from the date of the agreement.  Under
  the agreement, the Company issued 17,000 shares, valued at $59,500, of its
  common stock as a one-time fee.On November
  23, 2005, the Company retained an unrelated party to provide public relations
  services over the next twelve months.
  Under the agreement, the Company issued 10,000 shares, valued at
  $37,500, of its common stock as a one-time fee.ITEM 3 
  DEFAULT UPON SENIOR SECURITIESNoneITEM 4 
  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSAt our
  Annual Meeting of Shareholders held on October 3, 2005, the following
  proposals were adopted by the margins indicated below:Proposal 1  Election of Directors.  The
nominees for election as directors
  were Stephen G. Luke, Darren R. Dierich, Ernest G. Alldredge and Michael A.
  Jenkins.  Each of these nominees was
  re-elected to serve for a one year team, by the following margins of votes:Nominees
  
  For
  
  WithheldStephen G.
  Luke
  
  9,411,743
  
  0Darren R.
  Dierich
  
  9,411,743
  
  0Ernest G.
  Alldredge
  
  9,411,743
  
  0Michael A.
  Jenkins
  
  9,411,743
  
  0Proposal 2 
Adoption of 2005 Long-Term Equity Incentive Plan



For
  
  Against
  
  Abstain
  
  Broker Non
  Vote9,411,743
  
  1
  
  0
  
  021

Proposal 3  Ratify Selection of
  Independent Registered Public Accounting Firm.  The ratification of the selection of
  Farber and Hass, LLP, as the Companys independent registered public
  accounting firmFor
  
  Against
  
  Abstain
  
  Broker Non
  Vote9,411,743
  
  1
  
  0
  
  0ITEM 5 
  OTHER INFORMATIONNoneITEM 6 
  EXHIBITS31.1
  Certification
  of Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to
  Section 302 of the Sarbanes-Oxley Act of 2002.31.2
  Certification
  of Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to
  Section 302 of the Sarbanes-Oxley Act of 2002.32.1
  Certification
  of Chief Executive Officer and Chief Financial Officer, Pursuant to 18,
  U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.22

SIGNATURES



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




Nationwide Financial Solutions, Inc.Dated February 9, 2006By:
        /s/Stephen G. LukeName: Stephen G. LukeChief Executive Officer and PresidentBy:
        /s/Darren R. DierichName: Darren R. DierichChief Financial Officer