----

----

| DELAWARE                                                                      | 23-2442288                                             |
|-------------------------------------------------------------------------------|--------------------------------------------------------|
| State                  or other jurisdiction of incorporation or organization | I.R.S.                  Employer Identification Number |
|                                                                          |                                                   |
| 6467                  Zuma View Place, Suite 160, Malibu CA                   | 90265                                                  |
| Address                  of principal executive offices                       | Zip                  Code                              |
|                                                                          |                                                   |
| (310)                  589-0227                                               |
| Issuer's                  Telephone Number                                    |

----

**PART          I**

*Z-Force*

----

*Nine        Dog Christmas*

*Big        Dogs*

*Little        Suzy’s Zoo*

*Corneil        & Bernie*

*The        Plonsters*

*The        Little Reindeer*

*64        Zoo Lane*

*Kiddo        the Super Truck*

----

| Television                    (pay, free, cable and satellite) | School                    Supplies                                        |
|----------------------------------------------------------------|---------------------------------------------------------------------------|
| Home                    Video                                  | Educational                    Licensing                                  |
| Merchandise                                                    | Music                    & Book Publishing                            |
| Toys                    and Video Games                        | Direct                    Marketing (to Retail chains through catalogues) |
| Apparel                                                        | Internet                    Applications                                  |
| Theme                    Park Licensing                        | Gifts                    & Novelties                                  |
| Fast                    Food Promotions                        |                                                                      |

**PART        II**

|                                                  |   | HIGH                  BID |   | LOW                  BID |   |
|-------------------------------------------------------|--------|---------------------------|--------|--------------------------|--------|
| FISCAL                  YEAR ENDED SEPTEMBER 30, 2004 |   |                      |   |                     |   |
| First                  Quarter                        |   | $                         | .31    |                     | $      | .14 |   |
| Second                  Quarter                       |   | $                         | .29    |                     | $      | .15 |   |
| Third                  Quarter                        |   | $                         | .27    |                     | $      | .15 |   |
| Fourth                  Quarter                       |   | $                         | .21    |                     | $      | .14 |   |
|                                                  |   |                      |   |                     |   |   |   |
| FISCAL                  YEAR ENDED SEPTEMBER 30, 2005 |   |                      |   |                     |   |   |   |
| First                  Quarter                        |   | $                         | .30    |                     | $      | .14 |   |
| Second                  Quarter                       |   | $                         | .20    |                     | $      | .11 |   |
| Third                  Quarter                        |   | $                         | .16    |                     | $      | .08 |   |
| Fourth                  Quarter                       |   | $                         | .17    |                     | $      | .09 |   |

----

** **

|   | A. | Earthworks                  lacks the capital necessary to expand its                  operations. |
|--------|----|----------------------------------------------------------------------------------------------------|

|   | B. | Earthworks                  has only one marketing relationship to date that assures it of                  revenue. |
|--------|----|----------------------------------------------------------------------------------------------------------------------|

|   | C. | We                  are dependent on the efforts of the current management team to                  develop                  revenue-generating business relationships for the Company. If the                  team is                  unsuccessful in its efforts, our business could                  fail. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | D. | The                  entertainment industry is highly competitive, and it is dominated                  by a                  small number of multinational corporations. We will be able to                  compete                  successfully only if we establish our brand in a niche of the                  market. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | (1) | satisfy                  Earthworks’ current obligations, |
|--------|-----|-----------------------------------------------------------------|

|   | (2) | continue                  our development of properties and projects,                  and |
|--------|-----|--------------------------------------------------------------------------------------------|

|   | (3) | implement                  our plans to market the properties and                  projects. |
|--------|-----|----------------------------------------------------------------------------------------------|

* *

----

----

| Consolidated                      Financial Statements Earthworks Entertainment, Inc. and                      Subsidiaries                                                                                                                                                                                                                                                                                                      | PAGES  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| Report                      of Rosenberg Rich Baker Berman and Company                                                                                                                                                                                                                                                                                                                                                      | F-1    |
|                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| Consolidated                      Balance Sheet of Earthworks Entertainment, Inc. and Subsidiaries                      as of                      September 30, 2005 (As Restated)                                                                                                                                                                                                                                              | F-2    |
|                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| Consolidated                      Statements of Operations of Earthworks Entertainment, Inc.                      and                      Subsidiaries for the years ended September 30, 2005  (As Restated)                      and September 30, 2004 (As Restated) and for the period from                      April 1, 1998                      (Inception) through September 30, 2005 (As Restated)                | F-3    |
|                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| Consolidated                      Statements of Changes in Stockholders' Equity (Net Capital                      Deficiency) of                      Earthworks Entertainment, Inc. and Subsidiaries for the period                      from                      October 1, 1997 (Inception) to September 30, 2005 (As                      Restated)                                                                         | F-4    |
|                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| Consolidated                      Statements of Cash Flows of Earthworks Entertainment, Inc.                      and                      Subsidiaries for the years ended September 30, 2005 (As Restated)                      and                      September 30, 2004 (As Restated) and for the period from April                      1, 1998                      (Inception) through September 30, 2005 (As Restated) | F-11   |
|                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| Notes                      to Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                  | F-13   |

----

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**Rosenberg        Rich Baker Berman & Company**

----

| ASSETS                                                                                                                                                         |   |   |        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|
| Current                  Assets:                                                                                                                               |   |   |        |
| Cash                                                                                                                                                           |   | $      | 133,459     |   |
| Prepaid                  financing costs                                                                                                                       |   |   | 166,180     |   |
| Other                  current assets                                                                                                                          |   |   | 11,331      |   |
|                                                                                                                                                           |   |   |        |   |
| Total                  Current Assets                                                                                                                          |   |   | 310,970     |   |
|                                                                                                                                                           |   |   |        |   |
| Production                  costs                                                                                                                              |   |   | 1,621,957   |   |
| Property                  and equipment                                                                                                                        |   |   | 671         |   |
|                                                                                                                                                           |   |   |        |   |
| Total                  Assets                                                                                                                                  |   | $      | 1,933,598   |   |
|                                                                                                                                                           |   |   |        |   |
|                                                                                                                                                           |   |   |        |   |
| LIABILITIES                  AND NET CAPITAL DEFICIENCY                                                                                                        |   |   |        |   |
| Current                  Liabilities:                                                                                                                          |   |   |        |   |
| Accounts                  payable and accrued expenses                                                                                                         |   | $      | 50,180      |   |
| Accrued                  salaries                                                                                                                              |   |   | 209,339     |   |
| Accrued                  interest                                                                                                                              |   |   | 14,241      |   |
| Accrued                  interest to officers                                                                                                                  |   |   | 24,387      |   |
| Promissory                  note                                                                                                                               |   |   | 15,773      |   |
| Convertible                  debentures, net of discount of $26,975                                                                                            |   |   | 1,123,025   |   |
| Convertible                  debentures, payable to officers                                                                                                   |   |   | 200,000     |   |
|                                                                                                                                                           |   |   |        |   |
| Total                  Current Liabilities                                                                                                                     |   |   | 1,636,945   |   |
|                                                                                                                                                           |   |   |        |   |
| Minority                  interest in consolidated subsidiary                                                                                                  |   |   | 583,400     |   |
|                                                                                                                                                           |   |   |        |   |
| Net                  Capital Deficiency:                                                                                                                       |   |   |        |   |
| Common                  stock, par value $.0015 per share; authorized 100,000,000 shares,                  66,705,894 shares issued and outstanding            |   |   | 100,059     |   |
| Convertible                  preferred stock, authorized 1,000,000 shares,par value $10.00;                  no shares                  issued and outstanding |   |   | --          |   |
| Additional                  paid in capital                                                                                                                    |   |   | 16,302,045  |   |
| Members’                  Capital                                                                                                                        |   |   | 1,189,500   |   |
| Stock                  subscription receivable                                                                                                                 |   |   | (216,633    | ) |
| Deferred                  compensation                                                                                                                         |   |   | (49,583     | ) |
| Prepaid                  consulting fees                                                                                                                       |   |   | (176,933    | ) |
| Deficit                  accumulated during development stage                                                                                                  |   |   | (17,435,202 | ) |
|                                                                                                                                                           |   |   |        |   |
| Total                  Net Capital Deficiency                                                                                                                  |   |   | (286,747    | ) |
|                                                                                                                                                           |   |   |        |   |
| Total                  Liabilities and Net Capital Deficiency                                                                                                  |   | $      | 1,933,598   |   |

----

|                                                                                                         |   | For                  The  Years EndedSeptember                  30, |       | FromApril                  1, 1998(Inception)                  To September 30, |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|--------|
|                                                                                                         |   | 2005                                                                     |       | 2004                                                                            |   | 2005 |   |
|                                                                                                         |   | (As                    Restated)                                         |       | (As                  Restated)                                                  |   | (As                  Restated) |   |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |
| Net                  Revenues                                                                                |   | $                                                                        | --         |                                                                            | $      | -- |   | $ | -- |   |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Direct                  Costs and Expenses:                                                                  |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Development,                  production and distribution                                                    |   |                                                                     | --         |                                                                            |   | 121,049 |   |   | 2,474,445 |   |
| General                  and administrative                                                                  |   |                                                                     | 1,491,549  |                                                                            |   | 1,280,126 |   |   | 12,813,236 |   |
| Depreciation                  and amortization                                                               |   |                                                                     | 383        |                                                                            |   | 96 |   |   | 133,402 |   |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Total                  Costs and Expenses                                                                    |   |                                                                     | 1,491,932  |                                                                            |   | 1,401,271 |   |   | 15,421,083 |   |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Loss                  from operations before other expenses and provisions for income                  taxes |   |                                                                     | (1,491,932 | )                                                                               |   | (1,401,271 | ) |   | (15,421,083 | ) |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Other                  Operating Income (Expense):                                                           |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Interest                  income                                                                             |   |                                                                     | 9,590      |                                                                            |   | 1,075 |   |   | 12,331 |   |
| Settlement                  income                                                                           |   |                                                                     | -          |                                                                            |   | - |   |   | 1,345,490 |   |
| Interest                  expense                                                                            |   |                                                                     | (911,152   | )                                                                               |   | (446,127 | ) |   | (1,467,915 | ) |
| Equity                  in earnings of unconsolidated                                                        |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Subsidiary                                                                                                   |   |                                                                     | -          |                                                                            |   | - |   |   | 96,774 |   |
| Loss                    from termination of interest in unconsolidated                    subsidiary         |   |                                                                     | -          |                                                                            |   | - |   |   | (1,985,901 | ) |
| Minority                  interest in consolidated loss                                                      |   |                                                                     | 30,724     |                                                                            |   | - |   |   | 30,724 |   |
| Loss                  on disposal of assets                                                                  |   |                                                                     | -          |                                                                            |   | - |   |   | (45,622 | ) |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Total                  Other Operating Income (Expense)                                                      |   |                                                                     | (870,838   | )                                                                               |   | (445,052 | ) |   | (2,014,119 | ) |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Operating                  (Loss) before income taxes                                                        |   |                                                                     | (2,362,770 | )                                                                               |   | (1,846,323 | ) |   | (17,435,202 | ) |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Provision                  for income taxes                                                                  |   |                                                                     | -          |                                                                            |   | - |   |   | - |   |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Net                  (Loss)                                                                                  |   | $                                                                        | (2,362,770 | )                                                                               | $      | (1,846,323 | ) | $ | (17,435,202 | ) |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Loss                  per common share, basic and diluted                                                    |   | $                                                                        | (0.04      | )                                                                               | $      | (0.03 | ) |   |   |   |
|                                                                                                         |   |                                                                     |       |                                                                            |   |   |   |   |   |   |
| Weighted                  average common shares outstanding, basic and diluted                               |   |                                                                     | 65,020,301 |                                                                            |   | 56,527,082 |   |   |   |   |

----

|                                                                                                                                                             |   | Common                  Stock |      | DeferredCompen- |   | Prepaid                  Consulting |   | Stock                  Sub-scription |    | Additional                  Paid In |   | Members’ |   | RetainedEarnings                  (Accum-ulated |   | Stock-holders’Equity(NetCapital |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-----------|-----------------|--------|-------------------------------------|--------|--------------------------------------|---------|-------------------------------------|--------|----------------|--------|-------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                                                                                             |   | Shares                        |      | Amount          |   | sation                              |   | Fees                                 |    | Receivable                          |   | Capital        |   | Capital                                         |   | Deficit)                              |   | Deficency) |   |
|                                                                                                                                                             |   |                          |      |            |   |                                |   |                                 |    |                                |   |           |   |                                            |   |                                  |   |   |   |
| Balance,                  October 1, 1997                                                                                                                        |   |                          | 398,045   |            | $      | 318,436                             |   | $                                    | --      |                                | $      | --             |   | $                                               | --     |                                  | $      | (318,436 | ) | $ | -- |   | $ | (86,099 | ) | $ | (86,099 | ) |
| Change                  of par value from $.80 to $.08                                                                                                           |   |                          | --        |            |   | (286,592                            | )      |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | 286,592 |   |   | -- |   |   | -- |   |   | -- |   |
| Retroactive                  effect of recapitalization on January 4, 1999 including the elimination                  of                  prior retained deficit |   |                          | 4,000,000 |            |   | 320,000                             |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | (320,000 | ) |   | -- |   |   | 86,099 |   |   | 86,099 |   |
|                                                                                                                                                             |   |                          |      |            |   |                                |   |                                 |    |                                |   |           |   |                                            |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  as restated for recapitalization effective April 1, 1998                                                                                |   |                          | 4,398,045 |            |   | 351,844                             |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  | $      | (351,844 | ) |   | -- |   |   | -- |   |   | -- |   |
| Issuance                  of common stock, in private placement, net of offering costs of                  $14,011                                               |   |                          | 255,000   |            |   | 20,400                              |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | 220,589 |   |   | -- |   |   | -- |   |   | 240,989 |   |
| Correction                  of predecessor shares canceled in reverse split and cancellation                  of                  indebtedness                   |   |                          | (2,836    | )               |   | (227                                | )      |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | 227 |   |   | -- |   |   | -- |   |   | -- |   |
| Net                  loss for the period from April 1, 1998 (date of inception) to September                  30, 1998                                           |   |                          | --        |            |   | --                                  |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | -- |   |   | -- |   |   | (141,759 | ) |   | (141,759 | ) |
|                                                                                                                                                             |   |                          |      |            |   |                                |   |                                 |    |                                |   |           |   |                                            |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  September 30, 1998, as restated                                                                                                        |   |                          | 4,650,209 |            |   | 372,017                             |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | (131,028 | ) |   | -- |   |   | (141,759 | ) |   | 99,230 |   |
| Issuance                  of common stock in connection with the extension of note                  payable                                                      |   |                          | 500,000   |            |   | 40,000                              |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | (15,000 | ) |   | -- |   |   | -- |   |   | 25,000 |   |
| Issuance                  of common stock in private placements, net of offering costs of                  $62,472                                               |   |                          | 912,500   |            |   | 73,000                              |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | 776,028 |   |   | -- |   |   | -- |   |   | 849,028 |   |
| Issuance                  of common stock in consideration for cancellation of note payable                  plus                  accrued interest              |   |                          | 500,000   |            |   | 40,000                              |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | 227,500 |   |   | -- |   |   | -- |   |   | 267,500 |   |
| Issuance                  of common stock to employees for services                                                                                              |   |                          | 3,400,000 |            |   | 272,000                             |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | 2,754,000 |   |   | -- |   |   | -- |   |   | 3,026,000 |   |
| Issuance                  of stock options to employees                                                                                                          |   |                          | --        |            |   | --                                  |   |                                 | (88,333 | )                                   |   | --             |   |                                            | --     |                                  |   | 106,000 |   |   | -- |   |   | -- |   |   | 17,667 |   |
| Net                  loss for the year ended September 30, 1999                                                                                                  |   |                          | --        |            |   | --                                  |   |                                 | --      |                                |   | --             |   |                                            | --     |                                  |   | -- |   |   | -- |   |   | (3,942,234 | ) |   | (3,942,234 | ) |
|                                                                                                                                                             |   |                          |      |            |   |                                |   |                                 |    |                                |   |           |   |                                            |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  at September 30, 1999                                                                                                                   |   |                          | 9,962,709 |            | $      | 797,017                             |   | $                                    | (88,333 | )                                   | $      | --             |   | $                                               | --     |                                  | $      | 3,717,500 |   | $ | -- |   | $ | (4,083,993 | ) | $ | 342,191 |   |

----

|                                                                                                                                  |   | Common                Stock |       | Deferred                Compen- |   | Prepaid                Consulting |   | StockSub-scription |    | AdditionalPaid                In |   | Members’ |   | RetainedEarnings                (Accum-ulated |   | Stock-holders’Equity(NetCapital |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|---------------------------------|--------|-----------------------------------|--------|--------------------|---------|----------------------------------|--------|----------------|--------|-----------------------------------------------|--------|---------------------------------------|--------|
|                                                                                                                                  |   | Shares                      |       | Amount                          |   | sation                            |   | Fees               |    | Receivable                       |   | Capital        |   | Capital                                       |   | Deficit)                              |   | Deficency) |   |
|                                                                                                                                  |   |                        |       |                            |   |                              |   |               |    |                             |   |           |   |                                          |   |                                  |   |   |   |
| Balance                at October 1, 1999                                                                                             |   |                        | 9,962,709  |                            | $      | 797,017                           |   | $                  | (88,333 | )                                | $      | --             |   | $                                             | --     |                                  | $      | 3,717,500 |   | $ | -- |   | $ | (4,083,993 | ) | $ | 342,191 |   |
| Shares                issued in consideration for cancellation of officer loans                                                       |   |                        | 805,424    |                            |   | 64,434                            |   |               | --      |                             |   | --             |   |                                          | --     |                                  |   | 740,990 |   |   | -- |   |   | -- |   |   | 805,424 |   |
| Issuance                of shares in connection with investment in MPI subsidiary                                                     |   |                        | 1,350,000  |                            |   | 108,000                           |   |               | --      |                             |   | --             |   |                                          | --     |                                  |   | 4,042,000 |   |   | -- |   |   | -- |   |   | 4,150,000 |   |
| Issuance                of stock options to employee of subsidiary                                                                    |   |                        | --         |                            |   | --                                |   |               | --      |                             |   | --             |   |                                          | --     |                                  |   | 368,750 |   |   | -- |   |   | -- |   |   | 368,750 |   |
| Exercise                of stock options                                                                                              |   |                        | 500,000    |                            |   | 40,000                            |   |               | --      |                             |   | --             |   |                                          | --     |                                  |   | 60,000 |   |   | -- |   |   | -- |   |   | 100,000 |   |
| Issuance                of common stock for services                                                                                  |   |                        | 1,135,000  |                            |   | 90,800                            |   |               | --      |                             |   | --             |   |                                          | --     |                                  |   | 1,801,952 |   |   |   |   |   | -- |   |   | 1,892,752 |   |
| Issuance                of shares in private placement, together with warrants, net of cash                offering costs of $184,975 |   |                        | 3,437,181  |                            |   | 274,974                           |   |               | --      |                             |   | --             |   |                                          | --     |                                  |   | 1,811,706 |   |   | -- |   |   | -- |   |   | 2,086,680 |   |
| Shared                issued for cash and guarantee of acquisition note                                                               |   |                        | 400,000    |                            |   | 32,000                            |   |               | --      |                             |   | --             |   |                                          | --     |                                  |   | 118,000 |   |   | -- |   |   | -- |   |   | 150,000 |   |
| Amortization                of deferred compensation                                                                                  |   |                        | --         |                            |   | --                                |   |               | 35,333  |                             |   | --             |   |                                          | --     |                                  |   | -- |   |   | -- |   |   | -- |   |   | 35,333 |   |
| Net                Loss for the year ended September 30, 2000                                                                         |   |                        | --         |                            |   | --                                |   |               | --      |                             |   | --             |   |                                          | --     |                                  |   | -- |   |   | -- |   |   | (3,595,192 | ) |   | (3,595,192 | ) |
|                                                                                                                                  |   |                        |       |                            |   |                              |   |               |    |                             |   |           |   |                                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                September 30, 2000                                                                                            |   |                        | 17,590,314 |                            | $      | 1,407,225                         |   | $                  | (53,000 | )                                | $      | --             |   | $                                             | --     |                                  | $      | 12,660,898 |   | $ | -- |   | $ | (7,679,185 | ) | $ | 6,335,938 |   |

----

|                                                                                                                                       |   | Common                Stock |       | Deferred                Compen- |   | Prepaid                Consulting |   | StockSub-scription |    | AdditionalPaid                In |   | Members’ |   | RetainedEarnings                (Accum-ulated |   | Stock-holders’Equity(Net                Capital |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|---------------------------------|--------|-----------------------------------|--------|--------------------|---------|----------------------------------|--------|----------------|--------|-----------------------------------------------|--------|-------------------------------------------------------|--------|
|                                                                                                                                       |   | Shares                      |       | Amount                          |   | sation                            |   | Fees               |    | Receivable                       |   | Capital        |   | Capital                                       |   | Deficit)                                              |   | Deficency) |   |
|                                                                                                                                       |   |                        |       |                            |   |                              |   |               |    |                             |   |           |   |                                          |   |                                                  |   |   |   |
| Balance,                September 30, 2000                                                                                                 |   |                        | 17,590,314 |                            | $      | 1,407,225                         |   | $                  | (53,000 | )                                | $      | --             |   | $                                             | --     |                                                  | $      | 12,660,898 |   | $ | -- |   | $ | (7,679,185 | ) | $ | 6,335,938 |   |
|                                                                                                                                       |   |                        |       |                            |   |                              |   |               |    |                             |   |           |   |                                          |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares in private placement, together with warrants, net of cash                offering costs of $130,018      |   |                        | 1,469,575  |                            |   | 117,566                           |   |               | --      |                             |   | --             |   |                                          |   |                                                  |   | 352,416 |   |   | -- |   |   | -- |   |   | 469,982 |   |
| Exercise                of warrants and issuance of reparative shares, net of cash offering                costs                of $99,718 |   |                        | 2,454,975  |                            |   | 196,398                           |   |               | --      |                             |   | --             |   |                                          | --     |                                                  |   | 834,964 |   |   | -- |   |   | -- |   |   | 1,031,362 |   |
| Issuance                of shares in private placement                                                                                     |   |                        | 100,000    |                            |   | 8,000                             |   |               | --      |                             |   | --             |   |                                          | --     |                                                  |   | 32,000 |   |   | -- |   |   | -- |   |   | 40,000 |   |
| Issuance                of common stock for production rights                                                                              |   |                        | 100,000    |                            |   | 8,000                             |   |               | --      |                             |   | --             |   |                                          | --     |                                                  |   | 104,500 |   |   | -- |   |   | -- |   |   | 112,500 |   |
| Amortization                of deferred compensation                                                                                       |   |                        | --         |                            |   | --                                |   |               | 25,999  |                             |   | --             |   |                                          | --     |                                                  |   | -- |   |   | -- |   |   | -- |   |   | 25,999 |   |
| Return                of shares pursuant to settlement agreement with certain                management                                    |   |                        | (1,675,688 | )                               |   | (134,055                          | )      |               | --      |                             |   | --             |   |                                          | --     |                                                  |   | (1,273,489 | ) |   | -- |   |   | -- |   |   | (1,407,544 | ) |
| Cancellation                of options pursuant to settlement agreement with certain                management                             |   |                        | --         |                            |   | --                                |   |               | 27,001  |                             |   | --             |   |                                          | --     |                                                  |   | (27,001 | ) |   | -- |   |   | -- |   |   | -- |   |
| Return                of shares in connection with termination of stock purchase agreement,                effective July 30, 2001         |   |                        | (1,350,000 | )                               |   | (108,000                          | )      |               | --      |                             |   | --             |   |                                          | --     |                                                  |   | (4,042,000 | ) |   | -- |   |   | -- |   |   | (4,150,000 | ) |
| Issuance                of shares in settlement                                                                                            |   |                        | 91,833     |                            |   | 7,347                             |   |               | --      |                             |   | --             |   |                                          | --     |                                                  |   | 6,428 |   |   | -- |   |   | -- |   |   | 13,775 |   |
| Issuance                of shares to directors to cancel debt and accrue                compensation                                       |   |                        | 1,442,563  |                            |   | 115,405                           |   |               | --      |                             |   | --             |   |                                          | --     |                                                  |   | -- |   |   | -- |   |   | -- |   |   | 115,405 |   |
| Issuance                of common stock for services                                                                                       |   |                        | 1,970,000  |                            |   | 157,600                           |   |               | --      |                             |   | --             |   |                                          | --     |                                                  |   | 336,030 |   |   | -- |   |   | -- |   |   | 493,630 |   |
| Net                loss for the year ended September 30, 2001                                                                              |   |                        | --         |                            |   | --                                |   |               | --      |                             |   | --             |   |                                          | --     |                                                  |   | -- |   |   | -- |   |   | (3,118,454 | ) |   | (3,118,454 | ) |
|                                                                                                                                       |   |                        |       |                            |   |                              |   |               |    |                             |   |           |   |                                          |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                September 30, 2001                                                                                                 |   |                        | 22,193,572 |                            | $      | 1,775,486                         |   | $                  | --      |                             | $      | --             |   | $                                             | --     |                                                  | $      | 8,984,746 |   | $ | -- |   | $ | (10,797,639 | ) | $ | (37,407 | ) |

----

|                                                          |   | Common                Stock |       | Deferred                Compen- |   | Prepaid                Consulting |   | StockSub-scription |   | AdditionalPaid                In |   | Members’ |   | RetainedEarnings(Accum-ulated |   | Stock-holders’Equity(Net                Capital |   |
|---------------------------------------------------------------|--------|-----------------------------|------------|---------------------------------|--------|-----------------------------------|--------|--------------------|--------|----------------------------------|--------|----------------|--------|-------------------------------|--------|-------------------------------------------------------|--------|
|                                                          |   | Shares                      |       | Amount                          |   | sation                            |   | Fees               |   | Receivable                       |   | Capital        |   | Capital                       |   | Deficit)                                              |   | Deficency) |   |
|                                                          |   |                        |       |                            |   |                              |   |               |   |                             |   |           |   |                          |   |                                                  |   |   |   |
| Balance,                September 30, 2001                    |   |                        | 22,193,572 |                            | $      | 1,775,486                         |   | $                  | --     |                             | $      | --             |   | $                             | --     |                                                  | $      | 8,984,746 |   | $ | -- |   | $ | (10,797,639 | ) | $ | (37,407 | ) |
|                                                          |   |                        |       |                            |   |                              |   |               |   |                             |   |           |   |                          |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of Warrants in Production Contract    |   |                        | --         |                            |   | --                                |   |               | --     |                             |   | --             |   |                          | --     |                                                  |   | 235,200 |   |   | -- |   |   | -- |   |   | 235,200 |   |
|                                                          |   |                        |       |                            |   |                              |   |               |   |                             |   |           |   |                          |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of Shares in settlement               |   |                        | 400,000    |                            |   | 32,000                            |   |               | --     |                             |   | --             |   |                          | --     |                                                  |   | 67,000 |   |   | -- |   |   | -- |   |   | 99,000 |   |
|                                                          |   |                        |       |                            |   |                              |   |               |   |                             |   |           |   |                          |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of Shares in settlement note          |   |                        | 100,000    |                            |   | 8,000                             |   |               | --     |                             |   | --             |   |                          | --     |                                                  |   | 12,000 |   |   | -- |   |   | -- |   |   | 20,000 |   |
|                                                          |   |                        |       |                            |   |                              |   |               |   |                             |   |           |   |                          |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of Shares for compensation            |   |                        | 2,050,000  |                            |   | 164,000                           |   |               | --     |                             |   | --             |   |                          | --     |                                                  |   | 122,000 |   |   | -- |   |   | -- |   |   | 286,000 |   |
|                                                          |   |                        |       |                            |   |                              |   |               |   |                             |   |           |   |                          |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of Shares for services                |   |                        | 1,245,000  |                            |   | 99,600                            |   |               | --     |                             |   | --             |   |                          | --     |                                                  |   | 374,250 |   |   | -- |   |   | -- |   |   | 473,850 |   |
|                                                          |   |                        |       |                            |   |                              |   |               |   |                             |   |           |   |                          |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for the year ended September 30, 2002 |   |                        | --         |                            |   | --                                |   |               | --     |                             |   | --             |   |                          | --     |                                                  |   | -- |   |   | -- |   |   | (1,578,316 | ) |   | (1,578,316 | ) |
|                                                          |   |                        |       |                            |   |                              |   |               |   |                             |   |           |   |                          |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                September 30, 2002                    |   |                        | 25,988,572 |                            | $      | 2,079,086                         |   | $                  | --     |                             | $      | --             |   | $                             | --     |                                                  | $      | 9,795,196 |   | $ | -- |   | $ | (12,375,955 | ) | $ | (501,673 | ) |

----

|                                                                                                                                 |   | Common                Stock |       | DeferredCompen- |   | Prepaid                Consulting |   | StockSub-scription |     | AdditionalPaid                In |   | Members’ |   | RetainedEarnings(Accum-ulated |   | Stock-holders’Equity(NetCapital |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|-----------------|--------|-----------------------------------|--------|--------------------|----------|----------------------------------|--------|----------------|--------|-------------------------------|--------|---------------------------------------|--------|
|                                                                                                                                 |   | Shares                      |       | Amount          |   | sation                            |   | Fees               |     | Receivable                       |   | Capital        |   | Capital                       |   | Deficit)                              |   | Deficency) |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |
| Balance,                September 30, 2002                                                                                           |   |                        | 25,988,572 |            | $      | 2,079,086                         |   | $                  | --       |                             | $      | --             |   | $                             | --     |                                  | $      | 9,795,196 |   | $ | -- |   | $ | (12,375,955 | ) | $ | (501,673 | ) |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| To                revise par value from $.08 to $.0015                                                                               |   |                        | --         |            |   | (2,040,103                        | )      |               | --       |                             |   | --             |   |                          | --     |                                  | $      | 2,040,103 |   |   | -- |   |   | -- |   |   | -- |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                October 1, 2002                                                                                              |   |                        | 25,988,572 |            | $      | 38,983                            |   | $                  | --       |                             | $      | --             |   | $                             | --     |                                  | $      | 11,835,299 |   | $ | -- |   | $ | (12,375,955 | ) | $ | (501,673 | ) |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to cancel production contract and retire                warrants                                   |   |                        | 125,000    |            |   | 188                               |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | 36,062 |   |   | -- |   |   | -- |   |   | 36,250 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to convert bridge notes                                                                            |   |                        | 458,333    |            |   | 687                               |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | 18,813 |   |   | -- |   |   | -- |   |   | 19,500 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to cancel unpaid compensation and professional                fees                                 |   |                        | 10,675,000 |            |   | 16,013                            |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | 215,887 |   |   | -- |   |   | -- |   |   | 231,900 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares for reparations                                                                                    |   |                        | 750,000    |            |   | 1,125                             |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | 13,875 |   |   | -- |   |   | -- |   |   | 15,000 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to settle license fees                                                                             |   |                        | 1,200,000  |            |   | 1,800                             |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | 22,200 |   |   | -- |   |   | -- |   |   | 24,000 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares @ $.03 per share in private placements                                                             |   |                        | 1,433,333  |            |   | 2,150                             |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | 42,850 |   |   | -- |   |   | -- |   |   | 45,000 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares @ $.08 per share in private placements                                                             |   |                        | 625,000    |            |   | 938                               |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | 49,062 |   |   | -- |   |   | -- |   |   | 50,000 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares @ $.10 per share in private placements, net of cash offering                costs of $46,006       |   |                        | 1,637,500  |            |   | 2,456                             |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | 115,289 |   |   | -- |   |   | -- |   |   | 117,745 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to settle $50,000 loan and collateral in connection with                cancelled merger agreement |   |                        | 2,400,000  |            |   | 3,600                             |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | 140,400 |   |   | -- |   |   | -- |   |   | 144,000 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares for employment agreement with President                                                            |   |                        | 3,000,000  |            |   | 4,500                             |   |               | (210,000 | )                                |   | --             |   |                          | --     |                                  |   | 205,500 |   |   | -- |   |   | -- |   |   | -- |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of deferred compensation                                                                                 |   |                        | --         |            |   | --                                |   |               | 20,417   |                             |   | --             |   |                          | --     |                                  |   | -- |   |   | -- |   |   | -- |   |   | 20,417 |   |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for the year ended September 30, 2003                                                                        |   |                        | --         |            |   | --                                |   |               | --       |                             |   | --             |   |                          | --     |                                  |   | -- |   |   | -- |   |   | (850,154 | ) |   | (850,154 | ) |
|                                                                                                                                 |   |                        |       |            |   |                              |   |               |     |                             |   |           |   |                          |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                September 30, 2003 (As Restated)                                                                        |   |                        | 48,292,738 |            | $      | 72,440                            |   | $                  | (189,583 | )                                | $      | --             |   | $                             | --     |                                  | $      | 12,695,237 |   | $ | -- |   | $ | (13,226,109 | ) | $ | (648,015 | ) |

----

|                                                                                                                                                       |   | Common                Stock |       | Deferred                Compen- |   | Prepaid                Consulting |   | StockSub-scription |     | Additional                Paid In |   | Members’ |   | RetainedEarnings(Accum-ulated |    | Stock-holders’Equity(NetCapital |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|---------------------------------|--------|-----------------------------------|--------|--------------------|----------|-----------------------------------|--------|----------------|--------|-------------------------------|---------|---------------------------------------|--------|
|                                                                                                                                                       |   | Shares                      |       | Amount                          |   | sation                            |   | Fees               |     | Receivable                        |   | Capital        |   | Capital                       |    | Deficit)                              |   | Deficency) |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |
| Balance,                September 30, 2003 (As Restated)                                                                                                   |   |                        | 48,292,738 |                            | $      | 72,440                            |   | $                  | (189,583 | )                                 | $      | --             |   | $                             | --      |                                  | $      | 12,695,237 |   | $ | -- |   | $ | (13,226,109 | ) | $ | (648,015 | ) |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares @ $.08 per share in private placements                                                                                   |   |                        | 2,100,000  |                            |   | 3,150                             |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | 166,850 |   |   | -- |   |   | -- |   |   | 170,000 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to Company President for license rights                                                                                  |   |                        | 10,000,000 |                            |   | 15,000                            |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | (15,000 | ) |   | -- |   |   | -- |   |   | -- |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares and warrants to settle bridge notes and accrued                interest                                                  |   |                        | 1,050,000  |                            |   | 1,575                             |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | 288,199 |   |   | -- |   |   | -- |   |   | 289,774 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to cancel unpaid compensation and professional                fees                                                       |   |                        | 900,000    |                            |   | 1,350                             |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | 198,650 |   |   | -- |   |   | -- |   |   | 200,000 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares for services                                                                                                             |   |                        | 600,000    |                            |   | 899                               |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | 101,101 |   |   | -- |   |   | -- |   |   | 102,000 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to settle advances                                                                                                       |   |                        | 200,000    |                            |   | 300                               |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | 39,700 |   |   | -- |   |   | -- |   |   | 40,000 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares pursuant to exercise of warrants                                                                                         |   |                        | 180,000    |                            |   | 270                               |   |               | --       |                              |   | --             |   |                          | (19,000 | )                                     |   | 21,730 |   |   | -- |   |   | -- |   |   | 3,000 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares and warrants for prepaid consulting                                                                                      |   |                        | 25,000     |                            |   | 38                                |   |               | --       |                              |   | (265,360       | )      |                          | --      |                                  |   | 265,322 |   |   | -- |   |   | -- |   |   | -- |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt                discount related to issuance of warrants and beneficial conversion                of                convertible debentures             |   |                        | --         |                            |   | --                                |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | 800,000 |   |   | -- |   |   | -- |   |   | 800,000 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt                discount related to issuance of warrants and beneficial conversion                of                convertible debentures to officers |   |                        | --         |                            |   | --                                |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | 200,000 |   |   | -- |   |   | -- |   |   | 200,000 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Offering                costs                                                                                                                              |   |                        | --         |                            |   | --                                |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | (80,000 | ) |   | -- |   |   | -- |   |   | (80,000 | ) |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of deferred compensation                                                                                                       |   |                        | --         |                            |   | --                                |   |               | 70,000   |                              |   | --             |   |                          | --      |                                  |   | -- |   |   | -- |   |   | -- |   |   | 70,000 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of prepaid consulting fees                                                                                                     |   |                        |       |                            |   |                              |   |               | --       |                              |   | 154,947        |   |                          | --      |                                  |   | -- |   |   | -- |   |   | -- |   |   | 154,947 |   |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for the year ended September 30, 2004                                                                                              |   |                        | --         |                            |   | --                                |   |               | --       |                              |   | --             |   |                          | --      |                                  |   | -- |   |   | -- |   |   | (1,846,323 | ) |   | (1,846,323 | ) |
|                                                                                                                                                       |   |                        |       |                            |   |                              |   |               |     |                              |   |           |   |                          |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                September 30, 2004 (As Restated)                                                                                                   |   |                        | 63,347,738 |                            | $      | 95,022                            |   | $                  | (119,583 | )                                 | $      | (110,413       | )      | $                             | (19,000 | )                                     | $      | 14,681,789 |   | $ | -- |   | $ | (15,072,432 | ) | $ | (544,617 | ) |

----

|                                                                                                                                           |   | Common                Stock |       | DeferredCompen- |   | Prepaid                Consulting |   | StockSub-scription |     | Additional                Paid In |   | Members’ |   | RetainedEarnings(Accum-ulated |     | Stock-holders’Equity(Net                Capital |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|-----------------|--------|-----------------------------------|--------|--------------------|----------|-----------------------------------|--------|----------------|--------|-------------------------------|----------|-------------------------------------------------------|--------|
|                                                                                                                                           |   | Shares                      |       | Amount          |   | sation                            |   | Fees               |     | Receivable                        |   | Capital        |   | Capital                       |     | Deficit)                                              |   | Deficency) |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |
| Balance,                September 30, 2004 (As Restated)                                                                                       |   |                        | 63,347,738 |            | $      | 95,022                            |   | $                  | (119,583 | )                                 | $      | (110,413       | )      | $                             | (19,000  | )                                                     | $      | 14,681,789 |   | $ | -- |   | $ | (15,072,432 | ) | $ | (544,617 | ) |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to settle bridge notes and accrued interest                                                                  |   |                        | 590,000    |            |   | 885                               |   |               | --       |                              |   | --             |   |                          | --       |                                                  |   | 70,890 |   |   | -- |   |   | -- |   |   | 71,775 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares for services                                                                                                 |   |                        | 850,000    |            |   | 1,275                             |   |               | --       |                              |   | --             |   |                          | --       |                                                  |   | 134,225 |   |   | -- |   |   | -- |   |   | 135,500 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares for cancellation of warrants                                                                                 |   |                        | 250,000    |            |   | 375                               |   |               | --       |                              |   | --             |   |                          | --       |                                                  |   | 27,125 |   |   | -- |   |   | -- |   |   | 27,500 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of shares pursuant to exercise of warrantsreceivable                                                                 |   |                        | 790,531    |            |   | 1,186                             |   |               | --       |                              |   | --             |   |                          | (197,633 | )                                                     |   | 196,447 |   |   | -- |   |   | -- |   |   | -- |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares in settlement                                                                                                |   |                        | 877,625    |            |   | 1,316                             |   |               | --       |                              |   | --             |   |                          | --       |                                                  |   | 88,684 |   |   | -- |   |   | -- |   |   | 90,000 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of warrants for prepaid consulting                                                                                     |   |                        | --         |            |   | --                                |   |               | --       |                              |   | (289,930       | )      |                          | --       |                                                  |   | 289,930 |   |   | -- |   |   | -- |   |   | -- |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepaid                financing costs related to issuance of warrants                                                                         |   |                        | --         |            |   | --                                |   |               | --       |                              |   | --             |   |                          | --       |                                                  |   | 272,000 |   |   | -- |   |   | -- |   |   | 272,000 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of warrants in connection with investment in Z-Force                                                                   |   |                        | --         |            |   | --                                |   |               | --       |                              |   | --             |   |                          | --       |                                                  |   | 475,284 |   |   | -- |   |   | -- |   |   | 475,284 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of prepaid consulting fees                                                                                         |   |                        | --         |            |   | --                                |   |               | --       |                              |   | 223,410        |   |                          | --       |                                                  |   | -- |   |   | -- |   |   | -- |   |   | 223,410 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of deferred compensation                                                                                           |   |                        | --         |            |   | --                                |   |               | 70,000   |                              |   | --             |   |                          | --       |                                                  |   | -- |   |   | -- |   |   | -- |   |   | 70,000 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt                discount related to issuance of warrants and beneficial conversion                of                convertible debentures |   |                        | --         |            |   | --                                |   |               | --       |                              |   | --             |   |                          | --       |                                                  |   | 65,671 |   |   | -- |   |   | -- |   |   | 65,671 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                of Z-Force Enterprises, LLC                                                                                              |   |                        | --         |            |   | --                                |   |               | --       |                              |   | --             |   |                          | --       |                                                  |   | -- |   |   | 1,189,500 |   |   | -- |   |   | 1,189,500 |   |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for the year ended September 30, 2005                                                                                  |   |                        | --         |            |   | --                                |   |               | --       |                              |   | --             |   |                          | --       |                                                  |   | -- |   |   | -- |   |   | (2,362,770 | ) |   | (2,362,770 | ) |
|                                                                                                                                           |   |                        |       |            |   |                              |   |               |     |                              |   |           |   |                          |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                September 30, 2005(As                  Restated)                                                                       |   |                        | 66,705,894 |            | $      | 100,059                           |   | $                  | (49,583  | )                                 | $      | (176,933       | )      | $                             | (216,633 | )                                                     | $      | 16,302,045 |   | $ | 1,189,500 |   | $ | (17,435,202 | ) | $ | (286,747 | ) |

----

|                                                                                                      |   | For                The Years EndedSeptember                30, |       | From                  April 1, 1998(Inception)                ToSeptember                30, |   |
|-----------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|--------|
|                                                                                                      |   | 2005                                                           |       | 2004                                                                                         |   | 2005 |   |
|                                                                                                      |   | (As                  Restated)                                 |       | (As                  Restated)                                                               |   | (As                Restated) |   |
| Cash                flows from operating activities:                                                      |   |                                                           |       |                                                                                         |   |   |   |
| Net                Loss                                                                                   |   | $                                                              | (2,362,770 | )                                                                                            | $      | (1,846,323 | ) | $ | (17,435,202 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities: |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Depreciation                and amortization                                                              |   |                                                           | 383        |                                                                                         |   | 96 |   |   | 133,401 |   |
| Amortization                of prepaid consulting fees paid with equity                                   |   |                                                           | 223,410    |                                                                                         |   | -- |   |   | 223,410 |   |
| Amortization                of deferred compensation paid with equity                                     |   |                                                           | 70,000     |                                                                                         |   | -- |   |   | 70,000 |   |
| Amortization                of loan discount                                                              |   |                                                           | 708,011    |                                                                                         |   | 330,685 |   |   | 1,056,196 |   |
| Amortization                of prepaid financing costs                                                    |   |                                                           | 105,820    |                                                                                         |   | -- |   |   | 105,820 |   |
| Loan                fees                                                                                  |   |                                                           | --         |                                                                                         |   | -- |   |   | 25,000 |   |
| Loss                on abandonment of equipment                                                           |   |                                                           | --         |                                                                                         |   | -- |   |   | 45,622 |   |
| Stock                based compensation and expenses paid with equity                                     |   |                                                           | 135,500    |                                                                                         |   | 399,221 |   |   | 8,633,122 |   |
| Minority                interest in loss of consolidated subsidiary                                       |   |                                                           | (30,724    | )                                                                                            |   | -- |   |   | (30,724 | ) |
| Equity                in earnings of unconsolidated subsidiary                                            |   |                                                           | --         |                                                                                         |   | -- |   |   | (96,774 | ) |
| Settlement                income relating to stock                                                        |   |                                                           | --         |                                                                                         |   | -- |   |   | (1,504,150 | ) |
| Loss                on termination of interest in unconsolidated subsidiary                               |   |                                                           | --         |                                                                                         |   | -- |   |   | 1,985,909 |   |
| Changes                in assets and liabilities:                                                         |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Deferred                charges and other current assets                                                  |   |                                                           | (9,464     | )                                                                                            |   | (24,051 | ) |   | 490,152 |   |
| Production                advances                                                                        |   |                                                           | (1,599,773 | )                                                                                            |   | -- |   |   | (1,599,773 | ) |
| Accounts                payable and accrued expenses                                                      |   |                                                           | 191,819    |                                                                                         |   | 137,268 |   |   | 746,100 |   |
| Other                liabilities                                                                          |   |                                                           | --         |                                                                                         |   | 178,239 |   |   | 872,548 |   |
|                                                                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Net                cash used in operating activities                                                      |   |                                                           | (2,567,788 | )                                                                                            |   | (824,865 | ) |   | (6,279,343 | ) |
|                                                                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Cash                flows from investing activities:                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Investment                in intangible assets                                                            |   |                                                           | --         |                                                                                         |   | -- |   |   | (90,481 | ) |
| Investment                in property and equipment                                                       |   |                                                           | --         |                                                                                         |   | (1,150 | ) |   | (68,528 | ) |
| Advance                on production rights                                                               |   |                                                           | --         |                                                                                         |   | -- |   |   | (337,500 | ) |
| Investment                in subsidiary                                                                   |   |                                                           | --         |                                                                                         |   | -- |   |   | (1,850,000 | ) |
|                                                                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Net                cash used in investing activities                                                      |   |                                                           | --         |                                                                                         |   | (1,150 | ) |   | (2,346,509 | ) |
|                                                                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Cash                flows from financing activities:                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Net                proceeds from issuance of equity                                                       |   |                                                           | --         |                                                                                         |   | 173,000 |   |   | 4,798,911 |   |
| Proceeds                from investment in subsidiary                                                     |   |                                                           | 2,278,908  |                                                                                         |   | -- |   |   | 2,278,908 |   |
| Proceeds                from loans, net of offering costs                                                 |   |                                                           | 350,000    |                                                                                         |   | 720,000 |   |   | 1,660,213 |   |
| Advances                from officers and stockholders                                                    |   |                                                           | --         |                                                                                         |   | -- |   |   | 400,954 |   |
| Repayment                of loans                                                                         |   |                                                           | (70,392    | )                                                                                            |   | (10,570 | ) |   | (379,675 | ) |
|                                                                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Net                cash provided by financing activities                                                  |   |                                                           | 2,558,516  |                                                                                         |   | 882,430 |   |   | 8,759,311 |   |
|                                                                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                       |   |                                                           | (9,272     | )                                                                                            |   | 56,415 |   |   | 133,459 |   |
|                                                                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Cash                and cash equivalents, Beginning of Period                                             |   |                                                           | 142,731    |                                                                                         |   | 86,316 |   |   | -- |   |
|                                                                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Cash                and cash equivalents, End of Period                                                   |   | $                                                              | 133,459    |                                                                                         | $      | 142,731 |   | $ | 133,459 |   |
|                                                                                                      |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| SUPPLEMENTAL                CASH FLOW INFORMATION:                                                        |   |                                                           |       |                                                                                         |   |   |   |   |   |   |
| Interest                paid                                                                              |   | $                                                              | 94,004     |                                                                                         | $      |  -- |   | $ | 94,004 |   |
| Income                taxes paid                                                                          |   | $                                                              |  --   |                                                                                              | $      | -- |   | $ |  -- |   |

----

| During                the fiscal year ended September 30, 2005, the Company had the following                non-cash investing and financing                activities: |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Issuance                of common stock in settlement                                                                                                   |   | $      | 71,775  |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                                                                                                    |   |   |    |   |
| Issuance                of common stock for cancellation of warrants                                                                                    |   | $      | 27,500  |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of common stock to settle bridge notes and accrued                interest                                                      |   | $      | 90,000  |   |
|                                                                                                                                                    |   |   |    |   |
| Prepaid                financing costs related to issuance of warrants                                                                                  |   | $      | 272,000 |   |
|                                                                                                                                                    |   |   |    |   |
| Debt                discount relating to issuance of warrants and beneficial conversion                of                convertible debentures payable |   | $      | 65,671  |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of common stock upon in exchange for stock subscription                receivable                                               |   | $      | 197,633 |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of convertible debentures in settlement Of accrued                interest                                                      |   | $      | 86,165  |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of warrant in connection with investment In Z-Force                                                                             |   | $      | 475,284 |   |

| During                the fiscal year ended September 30, 2004, the Company had the following                non-cash investing and financing                activities: |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Debt                discount relating to issuance of warrants                                                                       |   | $      | 800,000 |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                                                                                |   |   |    |   |
| Issuance                of 900,000 shares of common stock to two officers to settle unpaid                expenses and compensation |   | $      | 200,000 |   |
|                                                                                                                                |   |   |    |   |
| Issuance                of 1,050,000 shares of common stock to settle bridge notes and accrued                interest              |   | $      | 217,500 |   |
|                                                                                                                                |   |   |    |   |
| Issuance                of warrants in payment for offering costs                                                                   |   | $      | 115,265 |   |
|                                                                                                                                |   |   |    |   |
| Issuance                of 25,000 shares of common stock and 1,300,00 warrants for prepaid                consulting                |   | $      | 265,361 |   |
|                                                                                                                                |   |   |    |   |
| Issuance                of convertible debentures to two officers in settlement of accrued                compensation              |   | $      | 200,000 |   |
|                                                                                                                                |   |   |    |   |
| Debt                discount relating to beneficial conversion of convertible debentures                payable to officers         |   | $      | 200,000 |   |

|                                                                                                                                                                  |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Issuance                  of 200,000 shares of common stock in Settlement of advances and                  accrued                  interest                          |   | $      | 40,000 |   |
|                                                                                                                                                                  |   |   |   |   |
| Issuance                  of 180,000 shares of common stock upon exercise of warrants in                  exchange                  for stock subscription receivable |   | $      | 19,000 |   |

----

|   | (1) | satisfy                Earthworks’ current obligations, |
|--------|-----|---------------------------------------------------------------|

|   | (2) | continue                the development of properties and projects,                and |
|--------|-----|----------------------------------------------------------------------------------------|

|   | (3) | implement                its plans to market the properties and                projects. |
|--------|-----|------------------------------------------------------------------------------------------|

----

----

|                               |   | Year                Ended         |        |
|------------------------------------|--------|-----------------------------------|-------------|
|                               |   | September                30, 2004 |        |
|                               |   | As                Reported        |        | As                Restated |   |
|                               |   |                              |        |   |   |
| Net                Revenues        |   | $                                 | --          |   | $ | -- |   |
| Accumulated                Deficit |   | $                                 | (16,066,722 | ) | $ | (15,072,432 | ) |
| Net                Loss            |   | $                                 | (2,365,315  | ) | $ | (1,846,323 | ) |
| Loss                Per Share      |   | $                                 | (.04        | ) | $ | (.03 | ) |
| Total                Assets        |   | $                                 | 2,163,654   |   | $ | 167,836 |   |

----

|                                          |   | 2005   |       | 2004   |   |
|-----------------------------------------------|--------|--------|------------|--------|--------|
|                                          |   |   |       |   |   |
| Stock                Options                  |   |   | 950,000    |   |   | 750,000 |   |
| Stock                Warrants                 |   |   | 15,713,075 |   |   | 10,939,189 |   |
| Convertible                debt, if converted |   |   | 16,875,000 |   |   | 12,500,000 |   |
|                                          |   |   |       |   |   |   |   |
| Total                                         |   |   | 33,538,075 |   |   | 24,189,189 |   |

----

| Office                equipment              |   | $      | 1,150 |   |
|----------------------------------------------|--------|--------|-------|--------|
| Less                accumulated depreciation |   |   | (479  | )      |
|                                         |   | $      | 671   |   |

----

----

|                                             |   |                     |    | WEIGHTED |   |
|--------------------------------------------------|--------|--------------------------|---------|----------|--------|
|                                             |   |                     |    | AVERAGE  |   |
|                                             |   | NUMBER                OF |    | EXERCISE |   |
|                                             |   | OPTIONS                  |    | PRICE    |   |
|                                             |   |                     |    |     |   |
| Outstanding                at October 1, 2003    |   |                     | 950,000 |     |   | .250 |   |
| Granted                                          |   |                     | --      |     |   | -- |   |
| Exercised                                        |   |                     | --      |     |   | -- |   |
| Canceled                                         |   |                     | --      |     |   | -- |   |
|                                             |   |                     |    |     |   |   |   |
| Outstanding                at September 30, 2004 |   |                     | 950,000 |     | $      | .250 |   |
| Granted                                          |   |                     | --      |     |   | -- |   |
| Exercised                                        |   |                     | --      |     |   | -- |   |
| Canceled                                         |   |                     | --      |     |   | -- |   |
|                                             |   |                     |    |     |   |   |   |
| Outstanding                at September 30, 2005 |   |                     | 950,000 |     |   | .250 |   |
|                                             |   |                     |    |     |   |   |   |
| Exercisable                at September 30, 2005 |   |                     | 950,000 |     | $      | .250 |   |

----

|                               |   | September                30, |       | September                30, |   |
|------------------------------------|--------|------------------------------|------------|------------------------------|--------|
|                               |   | 2005                         |       | 2004                         |   |
|                               |   | (As                Restated) |       | (As                Restated) |   |
| Net                loss:           |   |                         |       |                         |   |
| As                reported         |   | $                            | (2,362,770 | )                            | $      | (1,846,323 | ) |
| Proforma                           |   | $                            | (2,371,588 | )                            | $      | (1,859,559 | ) |
|                               |   |                         |       |                         |   |   |   |
| Earnings                Per Share: |   |                         |       |                         |   |   |   |
| As                reported         |   | $                            | (.04       | )                            | $      | (.03 | ) |
| Proforma                           |   | $                            | (.04       | )                            | $      | (.03 | ) |

|                                             |   |                     |       | WEIGHTED |   |
|--------------------------------------------------|--------|--------------------------|------------|----------|--------|
|                                             |   |                     |       | AVERAGE  |   |
|                                             |   | NUMBER                OF |       | EXERCISE |   |
|                                             |   | WARRANTS                 |       | PRICE    |   |
|                                             |   |                     |       |     |   |
| Outstanding                at October 1, 2003    |   |                     | 4,153,772  |     | $      | 1.26 |   |
| Granted                                          |   |                     | 6,998,417  |     |   | .21 |   |
| Exercised                                        |   |                     | (180,000   | )        |   | .12 |   |
| Canceled                or Expired               |   |                     | (33,000    | )        |   | .12 |   |
|                                             |   |                     |       |     |   |   |   |
| Outstanding                at September 30, 2004 |   |                     | 10,939,189 |     |   | .61 |   |
| Granted                                          |   |                     | 9,214,658  |     |   | .16 |   |
| Exercised                                        |   |                     | (790,531   | )        |   | .25 |   |
| Canceled                or Expired               |   |                     | (3,650,241 | )        |   | 1.50 |   |
|                                             |   |                     |       |     |   |   |   |
| Outstanding                at September 30, 2005 |   |                     | 15,713,075 |     | $      | .18 |   |

----

----

----

----

|                             |   | September                30, |   |
|----------------------------------|--------|------------------------------|--------|
|                             |   | 2005                         |   | 2004 |   |
|                             |   |                         |   | (As                Restated) |   |
| Currently                payable |   |                         |   |   |   |
| Federal                          |   | $                            | --     |   | $ | -- |   |
| State                            |   |                         | --     |   |   | -- |   |
|                             |   | $                            | --     |   | $ | -- |   |

|  Federal              and State Net Operating |   |   |        |
|----------------------------------------------------|--------|--------|-------------|
|                                               |   |   |        |
| Losses                                             |   | $      | 16,500,000  |   |
|                                               |   |   |        |   |
| Less:                Valuation Allowance           |   |   | (16,500,000 | ) |
|                                               |   |   |        |   |
| Net                Deferred Tax Asset              |   | $      | --          |   |

----

|                                                  |   | September                30, |   |
|-------------------------------------------------------|--------|------------------------------|--------|
|                                                  |   | 2005                         |   | 2004 |   |
|                                                  |   |                         |   | (As                Restated) |   |
| Statutory                Benefit                      |   |                         | 40%    |   |   | 40% |   |
|                                                  |   |                         |   |   |   |   |   |
| Loss                for Which No Benefit Was Received |   |                         | (40%   | ) |   | (40% | ) |
|                                                  |   |                         |   |   |   |   |   |
| Effective                Rate                         |   |                         | --     |   |   | -- |   |

|                                 |   | Year                  Ended         |        |
|--------------------------------------|--------|-------------------------------------|-------------|
|                                 |   | September                  30, 2005 |        |
|                                 |   | As                  Reported        |        | As                  Restated |   |
| Net                  Revenues        |   | $                                   | --          |   | $ | -- |   |
| Accumulated                  Deficit |   | $                                   | (17,582,638 | ) | $ | (17,435,202 | ) |
| Net                  Loss            |   | $                                   | (2,510,206  | ) | $ | (2,362,770 | ) |
| Loss                  Per Share      |   | $                                   | (.04        | ) | $ | (.04 | ) |
| Total                  Assets        |   | $                                   | 1,933,598   |   | $ | 1,933,598 |   |

----

*Evaluation      of Disclosure Controls and Procedures*

*Changes      in Internal Controls*

----

**PART      III**

| NAME                                 | AGE    | POSITION                  HELD                                                                     |
|--------------------------------------|--------|----------------------------------------------------------------------------------------------------|
|                                 |   |                                                                                               |
| Peter                  Keefe         | 53     | President                    (Chief Executive Officer), Director                                   |
|                                 |   |                                                                                               |
| William                  H. Campbell | 60     | Executive                    Vice President (Chief Financial Officer),                    Director |
|                                 |   |                                                                                               |
| Catherine                  Malatesta | 46     | Director                                                                                           |

----

|                            |   | *Fiscal* |   |     |   |    |    |   |
|---------------------------------|--------|----------|--------|----------|--------|---------|---------|--------|
|                            |   | *Year*   |   | *Salary* |   |    | *Other* |   |
| Peter                Keefe      |   |     | 2005   |     | $      | 208,500 | (1)     |   |   | 70,000 | (4) |
|                            |   |     | 2004   |     | $      | 190,396 | (2)     |   |   | 70,000 | (4) |
|                            |   |     | 2003   |     | $      | 54,456  | (3)     |   | $ | 20,417 | (4) |
|                            |   |     |   |     |   |    |    |   |   |   |   |
| William                Campbell |   |     | 2005   |     | $      | 186,500 | (5)     |   |   | -- |   |
|                            |   |     | 2004   |     | $      | 169,125 | (6)     |   | $ | 60,000 | (8) |
|                            |   |     | 2003   |     | $      | 44,250  | (7)     |   | $ | 76,000 | (9) |

----

| (1) | Includes                $71,018 in accrued but unpaid                salary. |
|-----|------------------------------------------------------------------------------|

| (2) | Includes                $98,234 in accrued but unpaid                salary. |
|-----|------------------------------------------------------------------------------|

| (3) | Includes                  $36,956 in accrued but unpaid                  salary. |
|-----|----------------------------------------------------------------------------------|

| (4) | Represents                  amortization of the market value of 3,000,000 shares of common stock                  granted by the Company. In addition the Company granted to Mr.                  Keefe an                  option to purchase 400,000 shares of common stock at an exercise                  price of                  $.25 per share. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Includes $87,303 in accrued but unpaid                salary. |
|-----|---------------------------------------------------------------|

| (6) | Includes $105,246 in accrued but unpaid                salary. |
|-----|----------------------------------------------------------------|

| (7) | Includes $36,250 in accrued but unpaid                salary. |
|-----|---------------------------------------------------------------|

| (8) | Represents                the market value of 250,000 shares of common stock granted by the                Company. |
|-----|---------------------------------------------------------------------------------------------------------------------|

| (9) | Represents                the market value of 3,400,000 shares of common stock granted by the                Company. In addition the Company granted to Mr. Keefe an option to                purchase 300,000 shares of common stock at an exercise price of $.25                per                share. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *Option                Grants in the Last Fiscal Year* |
|--------------------------------------------------------|
|                                                   | Number                of securities underlying option | Percent                of total options granted to employees in fiscal | Exercise                Price | Expiration | Potential                realizable value at assumed annual rates of appreciationof                for option term |
| Name                                                   | granted | year | ($/share) | Date | 5% | 10% |
| Peter                Keefe                             | 0 | N.A. | N.A. | N.A. | 0 | 0 |
| W.                Campbell                             | 0 | N.A. | N.A. | N.A. | 0 | 0 |

----

| Aggregated                Fiscal Year-End Option Values |
|---------------------------------------------------------|
|                                                    |   |   |
| Name                                                    | Number                of securities underlyingunexercised                options at fiscalyear-end                (#) (All                exercisable) | Value                of unexercised in-the-moneyoptions                at fiscal year-end ($)(All                exercisable) |
| Peter                Keefe                              | 400,000 | NONE |
| W.                Campbell                              | 300,000 | NONE |

| NAME                AND ADDRESS                                    |   | AMOUNT                AND NATURE OFBENEFICIAL                OWNERSHIP |       | PERCENTAGE                OFCLASS                OWNED |   |
|--------------------------------------------------------------------|--------|------------------------------------------------------------------------|------------|--------------------------------------------------------|--------|
|                                                               |   |                                                                   |       |                                                   |   |   |
| Peter                Keefe (1)                                     |   |                                                                   | 13,100,000 |                                                   |   |   | 19.6% |   |
| William                Campbell (2)                                |   |                                                                   | 4,500,000  |                                                   |   |   |                  6.7% |   |
| Catherine                Malatesta                                 |   |                                                                   | 250,000    |                                                   |   |   |                    .4% |   |
|                                                               |   |                                                                   |       |                                                   |   |   |   |   |
| All                  officers and directors As a group (3 persons) |   |                                                                   |       |                                                   |   |   | 26.7% |   |

| (1) | Includes                400,000 options vested as of September 30, 2005. Also includes 1,000,000                shares owned by another shareholder, with respect to which Mr. Keefe                has                voting control. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes                300,000 options vested as of September 30,                2005. |
|-----|-----------------------------------------------------------------------------------------|

----

**PART      IV**

| EXHIBITNUMBERREFERENCE | DESCRIPTION                                                                                                                                                                 |
|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |                                                                                                                                                                        |
| 3a           | Articles                of Incorporation, as amended - included in previous filings by the                Company                and incorporated herein by reference.      |
|                   |                                                                                                                                                                        |
| 3b           | By-laws,                as amended - included in previous filings by the Company and incorporated                herein by reference.                                       |
|                   |                                                                                                                                                                        |
| 10a     | Employment                Agreement with Peter Keefe - included in previous filings by the                Company                and incorporated herein by reference.      |
|                   |                                                                                                                                                                        |
| 10b     | Employment                Agreement with William Campbell - included in previous filings by                the                Company and incorporated herein by reference. |
|                   |                                                                                                                                                                        |
| 31.1                   | Rule                13a-14(a) Certification - Chief Executive Officer                                                                                                       |
|                   |                                                                                                                                                                        |
| 31.2                   | Rule                13a-14(a) Certification - Chief Financial Officer                                                                                                       |
|                   |                                                                                                                                                                        |
| 32.1                   | Rule                13a-14(b) Certification - Chief Executive Officer                                                                                                       |
|                   |                                                                                                                                                                        |
| 32.2                   | Rule                13a-14(b) Certification - Chief Financial                Officer                                                                                        |

*Audit      Fees *

*Audit-Related      Fees*

*Tax      Fees*

*All      Other Fees*

** **

----

|                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                      |
|-------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                    | Earthworks                Entertainment, Inc.                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                      |
| Dated:                       July 21, 2006        |                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                    | By:                /s/ Peter                Keefe                                                     |
|                                                                                                                    | Peter                Keefe, CEO/President                                                                                                                                                                                                                                                                                                                                 |

| NAME                                                                                                                                                                                                                                                                  | TITLE                                    | DATE                         |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|------------------------------|
|                                                                                                                                                                                                                                                                  |                                     |                         |
| /s/                PETER                KEEFE                                     | Chief                Executive Officer,  | July                21, 2006 |
| Peter                Keefe                                                                                                                                                                                                                                            | Director                                 |                         |
|                                                                                                                                                                                                                                                                  |                                     |                         |
| /s/                WILLIAM H.                CAMPBELL                                                                                                                                 | Chief                Financial Officer,  | July                21, 2006 |
| William                H. Campbell                                                                                                                                                                                                                                    | Chief                Accounting Officer, |                         |
|                                                                                                                                                                                                                                                                  | Director                                 |                         |
|                                                                                                                                                                                                                                                                  |                                     |                         |
| /s/                CATHERINE                MALATESTA                                                                                                                                           | Director                                 | July                21, 2006 |
| Catherine                Malatesta                                                                                                                                                                                                                                    |                                     |                         |

----