SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB


(Mark One)

 /x/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934 For the fiscal year ended July 31, 2005

                                       or

 / / TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the transition period from N/A to N/A

                        Commission File Number 3319048NY

                         MURRAY UNITED DEVELOPMENT CORP.
                         (Name of Small Business Issuer)

             Delaware                                    222856171
(State of incorporation or organization)    (I.R.S. employer identification no.)


                P.O. Box 224, Landing, New Jersey         07850
             (Address of principal executive offices)   (Zip Code)

         Issuer's telephone number, including area code: (908) 979-3025


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


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


<PAGE>

Check whether the Issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes     X         No

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

The Issuer did not have any revenues during its fiscal year ended July 31, 2005.

As of October 24, 2005, the aggregate market value of the registrant's Common
Stock held by non affiliates of the Issuer as computed by reference to the
closing price of such stock on such date was approximately $ 867,683.

84,253,434 shares of the Issuer's Common Stock were outstanding as of October
24, 2005.

Transitional Small Business Disclosure Format:

Yes    No  X

Documents incorporated by Reference:  NONE

<PAGE>


                      INDEX TO FORM 10-KSB -- Parts I - III
<TABLE>
<S>     <C>                         <C>                                                         <C>

Part I-
                                                                                                   Page
         - Item 1.                  Description of Business                                          4
         - Item 2.                  Properties                                                      19
         - Item 3.                  Legal Proceedings                                               19
         - Item 4.                  Submission of Matters to a Vote of Security Holders             19

Part II
         -  Item 5.                 Market for Common Equity and Related Stockholder Matters        19
         -  Item 6.                 Management's Discussion and Analysis or Plan of Operation
         -  Item 7.                 Financial Statements                                            20
         -  Item 8.                 Changes in and Disagreements With Accountants on Accounting     26
                                    and Financial Disclosure
         -  Item 8A.                Controls and Procedures                                         26

Part III
         -  Item 9.                 Directors, Executive Officers, Promoters and Control Persons;
                                    Compliance with Section 16(a) of the Exchange Act               27
         -  Item 10.                Executive Compensation                                          29
         -  Item 11.                Security Ownership of Certain Beneficial Owners and
                                    Management                                                      31
         -  Item 12.                Certain Relationships and Related Transactions                  32
         -  Item 13.                Exhibits                                                        34
         -  Item 14                 Principal Accountant Fees and Services                          37

          Signatures
          Index to Financial Statements
          Exhibit 31(a) (Certification required under the Section 302 of the
          Sarbanes-Oxley Act of
          2002)
          Exhibit 31(b) (Certification required under the Section 302
          of the Sarbanes-Oxley Act of
          2002)
          Exhibit 32(a) (Certification required under the Section 906 of the
          Sarbanes-Oxley Act of 2002)
          Exhibit 32(b) (Certification required under the Section 906 of the
          Sarbanes-Oxley Act of 2002)
</TABLE>


<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

A. RISK FACTORS

         Safe Harbor Statement

         The statements contained in this Annual Report on Form 10-KSB that are
not historical facts are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements may be
identified by, among other things, the use of forward-looking terminology such
as "believes," "expects," "may," "will," "should," or "anticipates" or the
negative thereof or other variations thereon or comparable terminology. In
particular, our statements regarding the anticipated markets for our
technologies, the continued advancement of our research, the approval of our
patent applications, the successful implementation of our commercialization
strategy, and the timing of our projects are examples of such forward-looking
statements. The forward-looking statements include risks and uncertainties,
including, but not limited to variability in size, scope and duration of
research projects, research study results which may lead to cancellations of
research projects, and other factors, including general economic conditions and
regulatory developments, not within our control. The factors discussed herein
and expressed from time to time in our filings with the Securities and Exchange
Commission may cause results and developments to be materially different from
those expressed in or implied by such statements. The forward-looking statements
are made only as of the date of this filing, and we undertake no obligation to
publicly update such forward-looking statements to reflect subsequent events or
circumstances.

DEVELOPMENT STAGE COMPANY; LIMITED OPERATING HISTORY.

We are a development stage company with a limited operating history and limited
assets and capital. We have incurred losses each year since inception and have
an accumulated deficit of $4,827,999 at July 31, 2005. We have never generated
any operating revenues, and our technologies may not be ready for widespread
commercialization for several years. We expect to continue to incur losses over
the next two to three years because we anticipate that our expenditures on
research and development, commercialization and administrative activities will
significantly exceed any revenues during that period. We cannot predict when, if
ever, we will become profitable.

WE DEPEND ON THREE PRINCIPAL TECHNOLOGIES AND, IF OUR TECHNOLOGIES ARE NOT
COMMERCIALLY SUCCESSFUL, WE WILL HAVE NO ALTERNATIVE SOURCE OF REVENUE.

         Our primary business is the development and commercial exploitation of
technologies (1) to produce hydrogen using a photogalvanic process, (2) to
remove contaminants from coal burning flue gases and building air, and (3) to
develop an internal combustion engine that would run

                                       4
<PAGE>

on alternative fuels. Our future revenue and profitability critically depend on
our ability to develop these technologies and later to market and license such
technologies at a profit. We have conducted testing in connection with each of
these technologies. Such testing has provided us with data upon which we have
designed additional research. However, we cannot give any assurance that any of
our technologies will be commercially successful or economically viable. Our
failure to obtain market acceptance of our technologies or to successfully
commercialize such technologies would have a material adverse effect on our
future prospects and business.


WE HAVE SIGNIFICANT FUTURE CAPITAL NEEDS AND MAY BE UNABLE TO RAISE CAPITAL WHEN
NEEDED, WHICH COULD FORCE US TO DELAY OR REDUCE OUR RESEARCH AND DEVELOPMENT
EFFORTS.

         As of July 31, 2005, we had cash and liquid investments valued at only
$ 170 and a working capital deficit of $ 11,648. To date, we have generated
minimal revenues, and we anticipate that our operating costs will exceed any
revenues generated over the next several years. Therefore, we may be required to
raise additional capital in the future in order to operate according to our
current business plan, and this funding may not be available on favorable terms,
if at all. If adequate funds are not available, we may be required to curtail
our research efforts significantly or to obtain funds through arrangements with
collaborative partners or others that may require us to relinquish rights to
certain of our technologies, products or potential markets. Failure to obtain
financing on acceptable terms would have a material adverse effect on our
liquidity.

         Our future capital requirements depend on numerous factors, including:

         o the scope of our research and development;
         o our ability to attract business partners willing to share in our
           development costs;
         o our ability to successfully commercialize our technologies;
         o competing technological and market developments;
         o our ability to enter into collaborative arrangements for the
           development and commercialization of our technologies; and
         o the cost of filing, prosecuting, defending and enforcing patent
           claims and other intellectual property rights.

OUR BUSINESS WILL DEPEND UPON OUR ABILITY TO OBTAIN PATENTS AND UPON OUR OTHER
PROPRIETARY RIGHTS AND THE ENFORCEMENT OF THESE RIGHTS. OUR FAILURE TO OBTAIN
AND MAINTAIN PATENT PROTECTION MAY INCREASE COMPETITION AND REDUCE DEMAND FOR
OUR TECHNOLOGIES.

                                       5

<PAGE>

      As a result of the substantial length of time and expense associated with
developing products and bringing them to the marketplace obtaining and
maintaining patent and trade secret protection for technologies, products and
processes is of vital importance. Our success will depend in part on several
factors, including, without limitation:

     o our ability to obtain patent protection for our technologies and
       processes;
     o our ability to preserve our trade secrets; and
     o our ability to operate without infringing the proprietary rights of
       other parties.

      We have three (3) patents that have been issued by the U.S. Patent and
Trademark Office, (PTO) in connection with the Rotorcam Engine. We have also
filed patent applications for our hydrogen production and smoke stack and
building air decontamination technologies in the United States. Although we
believe that each of our technologies is unique and will not violate or infringe
upon the proprietary rights of any third party, we cannot assure you that such
claims will not be made, or if made, could be successfully defended against.

     Since patent applications in the United States are maintained in secrecy
until patents are issued, and since publication of discoveries in scientific and
patent literature tend to lag behind actual discoveries by several months, we
cannot be certain that we were the first creator of the technologies covered by
our pending patent applications or that we were the first to file patent
applications for these technologies.

In addition, among other things, we cannot assure you that:

     o our patent applications will result in the issuance of patents;
     o any patents issued or licensed to us will be free from challenge and, if
       challenged, would be held to be valid;
     o any patents issued or licensed to us will provide commercially
       significant protection for our technologies, products and processes;
     o other companies will not independently develop substantially equivalent
       technologies  that are not covered by our patent rights;
     o other companies will not obtain access to our know-how;
     o other companies will not be granted patents that may prevent the
       commercialization of our technologies; or
     o we will not require licensing and the payment of significant fees or
       royalties to third parties for the use of their intellectual property in
       order to enable us to conduct our business.


OUR SECURITY MEASURES MAY NOT ADEQUATELY PROTECT OUR UNPATENTED TECHNOLOGY AND,
IF WE ARE UNABLE TO PROTECT THE CONFIDENTIALITY OF OUR PROPRIETARY INFORMATION
AND KNOW-HOW, THE VALUE OF OUR TECHNOLOGIES MAY BE ADVERSELY AFFECTED.

                                       6

<PAGE>

         Our success also depends upon know-how, unpatentable trade secrets, and
the skills, knowledge and experience of our scientific and technical
consultants. We cannot assure you that adequate protection for our trade
secrets, know-how or other proprietary information against unauthorized use of
disclosure will be available. We occasionally provide information to research
collaborators in academic institutions and request them to conduct certain
tests. We cannot assure you that such academic institutions will not assert
intellectual property rights in the results of the tests they conduct or that
such academic institutions will grant licenses under such intellectual property
rights to us on acceptable terms, if at all. If the assertion of intellectual
property rights by an academic institution is substantiated, and such academic
institution does not grant intellectual property rights to us, these events
could limit our ability to commercialize our technologies.

AS WE EVOLVE FROM A COMPANY PRIMARILY INVOLVED IN THE RESEARCH AND DEVELOPMENT
OF OUR TECHNOLOGIES INTO ONE THAT IS ALSO INVOLVED IN THEIR COMMERCIALIZATION,
WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH AND EXPANDING OUR OPERATIONS.

         Should our business grow, we may need to add employees and enhance our
management, systems and procedures. We will need to successfully integrate our
operations with the operations of marketing partners, manufacturers,
distributors and suppliers to produce and market commercially viable products.
We may also need to manage additional relationships with various collaborative
partners, suppliers and other organizations. Expanding our business will place a
significant burden on our management and operations. Our failure to effectively
respond to changes may make it difficult for us to manage our growth and expand
our operations.

WE HAVE NO MARKETING OR SALES HISTORY AND WILL DEPEND ON THIRD-PARTY MARKETING
PARTNERS. ANY FAILURE OF THESE PARTIES TO PERFORM WOULD DELAY OR LIMIT OUR
COMMERCIALIZATION EFFORTS.

         We intend to rely on third parties to market, distribute and sell
commercially viable products. Our business plan also envisions creating
strategic alliances to access needed commercialization and marketing expertise.
We may not be able to attract qualified distributors or marketing partners, and
even if qualified, these marketing partners may not be able to successfully
market products developed with our technologies. If we fail to successfully
establish distribution channels, or if our marketing partners fail to provide
adequate levels of sales, our commercialization efforts will be delayed or
limited and we will not be able to generate revenue.

WE DEPEND ON OUR KEY PERSONNEL AND, IF WE ARE NOT ABLE TO ATTRACT AND RETAIN
QUALIFIED SCIENTIFIC AND BUSINESS PERSONNEL, WE MAY NOT
BE ABLE TO GROW OUR BUSINESS OR DEVELOP AND COMMERCIALIZE OUR TECHNOLOGIES.

         We are highly dependent on our scientific advisors, consultants and
third-party research partners. The loss of such advisors, consultants and
partners would severely hinder our technological development. Our future success
will also depend in part on our ability to identify, hire and retain qualified
personnel in an intensely competitive market. The failure to attract and retain
key personnel could limit our growth and hinder our research and development
efforts.


                                       7
<PAGE>

CERTAIN PROVISIONS OF DELAWARE LAW COULD MAKE A TAKEOVER DIFFICULT.

         We are subject to the Business Combination Act of the Delaware General
Corporation Law which, subject to certain exceptions, restricts certain
transactions and business combinations between a corporation an a stockholder
owning 15% or more of the corporation's outstanding voting stock for a period of
three years from the date such stockholder becomes a 15% owner. These provisions
may have the effect of delaying or preventing a change of control of us without
action by our stockholders and, therefore, could adversely affect the value of
our common stock.

INCREASING POLITICAL AND SOCIAL TURMOIL, SUCH AS TERRORIST AND MILITARY ACTIONS,
INCREASE THE DIFFICULTY FOR US AND OUR STRATEGIC PARTNERS TO FORECAST ACCURATELY
AND PLAN FUTURE BUSINESS ACTIVITIES.

         Recent political and social turmoil, including the terrorist attacks of
September 11, 2001, the conflict in Iraq and the current unrest in the Middle
East, can be expected to put further pressure on economic conditions in the
United States and worldwide. These political, social and economic conditions may
make it difficult for us to plan future business activities.

OUR MANAGEMENT HAS SIGNIFICANT CONTROL OF OUR COMMON STOCK AND COULD
SIGNIFICANTLY INFLUENCE OUR ACTIONS IN A MANNER THAT CONFLICTS WITH OUR
INTERESTS AND THE INTERESTS OF OTHER STOCKHOLDERS.

         As of July 31, 2005, our executive officers, directors and affiliated
entities together beneficially owned approximately 62.58 % of the outstanding
shares of our common stock, assuming the exercise of options, warrants and a
conversion right held by these stockholders. As a result, these stockholders,
acting together, are able to exercise significant influence over matters
requiring approval by our stockholders.

OUR COMMON STOCK HAS A LIMITED TRADING MARKET, WHICH COULD LIMIT YOUR ABILITY TO
RESELL YOUR SHARES OF COMMON STOCK AT OR ABOVE YOUR PURCHASE PRICE.

         Our common stock is quoted on the over-the-counter bulletin board and
currently has a limited trading market. We cannot assure you that an active
trading market will develop or, if developed, will be maintained. As a result,
our stockholders may find it difficult to dispose of shares of our common stock
and, as a result, may suffer a loss of all or a substantial portion of their
investments.

BECAUSE WE DO NOT INTEND TO PAY, AND HAVE NOT PAID, ANY CASH DIVIDENDS ON OUR
SHARES OF COMMON STOCK, OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON
THEIR SHARES UNLESS THE VALUE OF OUR COMMON STOCK APPRECIATES AND THEY SELL
THEIR SHARES.

         We have never paid or declared any cash dividends on our common stock,
and we intend to retain future earnings, if any, to finance the development of
our business. We do not anticipate paying any cash dividends on our common stock
in the foreseeable future. Therefore, our stockholders will not be able to
receive a return on their investment unless the value of our common stock
appreciates and they sell their shares.

                                       8
<PAGE>

OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" REGULATIONS WHICH MAY AFFECT
THE ABILITY OF OUR STOCKHOLDERS TO SELL THEIR SHARES.

         In general, regulations of the SEC define a "penny stock" to be an
equity security that is not listed on a national securities exchange or the
NASDAQ Stock Market and that has a market price of less than $5.00 per share or
an exercise price of less than $5.00 per share, subject to certain exceptions.
The regulations relating to penny stock impose additional sales practice
requirements on broker-dealers that sell such securities to persons other than
certain qualified investors. For transactions involving a penny stock, unless
exempt, a broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written consent to the transaction prior
to the sale. In addition, the rules on penny stocks require delivery, prior to
and after any penny stock transaction, of disclosures required by the SEC.
Accordingly, the ability of holders of our common stock to sell their shares in
the secondary market may also be adversely affected.

B. BACKGROUND

         Murray United Development Corporation (sometimes referred to in this
Report as the "Company") is a development stage company that was formed under
Delaware law on October 13, 1987 to exploit commercially an internal combustion
engine (referred to in this Report as the "Rotorcam Engine") that would run on
fuels other than gasoline, that would have significantly fewer parts, and that
would be lighter and operate more efficiently than conventional internal
combustion engines.

         In October 1987 we acquired from our predecessor, Rotorcam Technology
Corp., an assignment of license under which we obtained the exclusive right and
license to exploit all existing technology relating to the Rotorcam Engine,
which had previously been licensed to Rotorcam Technology Corp. by one of our
former officers. From our inception in 1988 through fiscal 2000, we were engaged
in research, design and development relating solely to the Rotorcam Engine
technology. During such period, we spent approximately $840,000 on such research
and development. However, due principally to the lack of any operating revenue
or other sources of funding, we did not incur any expenses for research and
development for the Rotorcam Engine during our last five fiscal years.

         During such period, we attempted to locate a funding source for the
$350,000 to $375,000 required in order to complete a second prototype of the
Rotorcam Engine, which is a necessary step in attempting to commercialize it.
Possible sources of such funding included borrowing from private sources and/or
exercise of our 15,398,000 outstanding Class B Warrants. In order to encourage
Warrant holders to exercise their Class B Warrants, we filed a Registration
Statement with the United States Securities and Exchange Commission ("SEC"),
which became effective on May 3, 2000.

                                       9
<PAGE>

         The Registration Statement, together with the qualification or
exemptions from qualification obtained in several states where holders of our
Class B Warrants reside, permit such holders to exercise their Class B Warrants
under the laws of the United States and those states where we have either
qualified or obtained an exemption from qualifying the shares of our Common
Stock for which the are exercisable. To date, however, none of such Class B
Warrant holders have exercised their Class B Warrants due principally to the
fact that, with limited exceptions, the market price of our Common Stock has
been lower than the exercise price of the Class B Warrants since the effective
date of the Registration Statement.

         Principally because of our inability to raise the funds necessary to
further develop the Rotorcam Engine, we have begun to research and develop other
technologies that may permit us to diversify into additional product areas.
These technologies consist of an environmentally safe cleaning solution and a
method of producing hydrogen from sunlight. Our investments in these
technologies have been guided by the Company's mission to commercialize
technologies that improve the environment. This has been our philosophy with the
Rotorcam Engine and continues with our efforts to produce hydrogen as a
substitute for fossil fuels and a cleaning solution that has the capability of
eliminating or reducing certain contaminants from the environment.

KLENZ-SAFE CLEANING SOLUTION

         In February 2002, we reached an agreement in principle with Mr. Anthony
Campo, the Chairman of the Company, and with Mr. Dwight Foster, Chief Executive
Officer of the Company, pursuant to which we would obtain a license to use and
sell a proprietary cleaning solution owned by Foster-Campo Corp.
("Foster-Campo"), a corporation owned by Mr. Foster and Mr. Campo. Under the
terms of the proposed license, Foster-Campo will manufacture the cleaning
solution and supply it to our customers. Foster-Campo will then invoice us for
their cost of doing so without any profit to Foster-Campo. Foster-Campo will
receive a royalty payment of 50% of our net profit on sales of the proprietary
solution to our customers. Calculation of our net profit will include, but not
be limited to, amounts Foster-Campo invoices us for supplying our customers with
the cleaning solution.

         In June 2000 Penn State Energy Institute, which is a facility of Penn
State University, agreed to conduct laboratory tests of the application of the
Klenz-Safe solution to the reduction of sulfur from coal burning flue gas. When
coal burning flue gas was introduced through Klenz-Safe using the Company's
proprietary methodology, the capture rate of sulfur exceeded 99.2% and
maintained a minimum 98% rate throughout the testing.

         Due to the success of the initial testing, Penn State Energy Institute
applied to the U.S. Department of Energy for a grant to conduct a pilot test of
Klenz-Safe's ability to capture sulfur in coal burning flue gas. Such grant
request was not funded during the Department of Energy's 2003 funding period.
During our 2004 fiscal year, Penn State informed us that the cost of further
testing, which would be conducted in a working smoke stack to simulate actual
conditions, would be approximately $100,000. We are currently attempting to form
a business relationship with one of more third parties that may assist us in
funding the cost of such testing; however, we are not able to provide any
assurances that we will be able to enter into such a business relationship. In
addition, even if we are able to enter into any such business relationship, it
is probable that we will be required to assign a partial interest in our
Klenz-Safe Technology, or the proceeds of such technology, to such third party
in consideration of such third party's agreement to assist in funding the
additional research.

                                       10
<PAGE>

         If funding for the pilot study is obtained, the pilot tests would be
conducted in a working smoke stack to simulate actual conditions. If such tests
are conducted and are successful, we intend to seek distribution partners to
assist us in marketing and selling the Klenz-Safe product to the coal burning
utility market. We cannot provide any assurances that such testing will occur
or, even if it does occur, that it will be successful.

         In 2001, we engaged a certified indoor air quality laboratory to
perform a series of laboratory tests on Klenz-Safe to determine Klenz-Safe's
ability to remove pollutants and contaminants from building air and to examine
other potential industrial uses. The tests simulated wet scrubber equipment,
which is commonly used device for removing pollutants from building air. Based
on generally known industry practices, management believes that the range of
pollutants captured by Klenz-Safe and the rate of such capture have not been
previously achieved in a single operation. The following were the material
findings of the laboratory tests:

         -    Klenz-Safe captured 90% of carbon monoxide in tested air streams;

         -    Klenz-Safe captured 70% of both nitrogen dioxide and of nitrous
              oxide in tested streams;

         -    Klenz-Safe added no detectable volatile organic compounds to the
              air stream at elevated temperatures, indicating that Klenz-Safe
              could be applied to indoor air cleaning systems without the need
              of additional filtering.

         Based on our tests of Klenz-Safe, management believes that Klenz-Safe
possesses the following environmentally beneficial attributes:

o Klenz-Safe is a non-toxic, non-hazardous composition that requires no special
  equipment to protect the personnel using it;

o Klenz-Safe achieves a higher starting alkalinity and has a longer operating
  life than can be obtained with commercial caustic materials or lime
  slurries;

o Klenz-Safe protects rather than corrodes metal compounds and surfaces.

         Management presently believes that Klenz-Safe may be useful in the
following applications:

o Air pollution control in we scrubber equipment, which are commonly used to
  remove pollutants from building air;

o Containment and neutralization of liquids and compounds;


                                       11
<PAGE>

o Decontamination of equipment in pharmaceutical production;

o Air filtration in indoor air quality control;

o Flue and combustion gas scrubbing.

         We are currently seeking to form a business relationship with one of
more third parties that may assist us in funding the cost of further testing of
Klenz-Safe's ability to remove contaminants from building air on a cost
effective basis; however, we are not able to provide any assurances that we will
be able to enter into such a business relationship. In addition, even if we are
able to enter into any such business relationship, it is probable that we will
be required to assign a partial interest in our Klenz-Safe Technology, or the
proceeds of such technology, to such third party in consideration of such third
party's agreement to assist in funding such additional testing.

         We are also presently continuing to demonstrate Klenz-Safe to potential
end-user customers. At such customers' requests, we are performing further tests
on Klenz-Safe to determine its ability to meet the particular intended
applications of such customers.

         To date, the cost of the research at Penn State was approximately
$9,000, and the cost of the research by the certified air quality laboratory was
approximately $5,000. We did not incur any expense for research and development
relating to our Klenz Safe technology during either fiscal 2005 or 2004.

         We have been granted trademark protection for the name "Klenz-Safe"
from the US Patent and Trademark Office (PTO). The method of application of the
Klenz-Safe formula for removal of sulfur from coal burning flue gas was
developed by a consultant to the Company, who assigned to us his rights to such
know-how and his rights under a provisional patent application filed with the
PTO covering such know-how. In October 2002 we filed an application for a
provisional patent, which extends the Klenz-Safe technology into additional
indoor air quality applications. In February 2003, we filed an amendment to the
October 2002 provisional patent application that revised certain data contained
in the October 2002 provisional patent with the PTO application. In February
2004 we filed a non-provisional patent application relating to Klenz-Safe.
However, we cannot provide any assurances that the PTO will grant a patent on
our Klenz-Safe technology.


HYDROGEN PRODUCTION TECHNOLOGY

         In light of the energy plan of current administration encouraging the
use of hydrogen fuel cells in place of fossil fuels such as oils and gas,
management has begun to investigate a technology that would produce hydrogen
from sunlight through the use of a proprietary device and solution. The hydrogen
gas produced would be used to supply on demand, low cost hydrogen fuel to
hydrogen-oxygen fuel cells in order to meet stationary and mobile electric power
requirements. Stationary uses would include residential and commercial heating
systems, and mobile uses would include electric and hybrid fuel cell powered
vehicles.

                                       12
<PAGE>

         In June 2002, we entered into an oral agreement with George Johnson and
William L. Johnson (the "Inventors") to develop a method and apparatus for
production of photo galvanic hydrogen (the "PGH Technology") and to prepare and
file a provisional patent application (the "Provisional Patent Application")
relating thereto in the PTO. The Inventors further agreed that, upon filing of
the Provisional Patent Application, they would negotiate with the Company for an
assignment of all of their interest in the PGH Technology and the Provisional
Patent Application to the Company. In consideration for the Inventors' services,
the Company agreed to issue to each of the Inventors 100,000 shares of the
Company's Common Stock and to register such shares with the Securities and
Exchange Commission. The Company subsequently formalized the oral agreement with
the Inventors by a written agreement dated as of June 1, 2002.

         In July 2003, the Inventors filed the Provisional Patent Application
with the PTO. By Agreement dated October 2, 2003, the Company entered into a
Technology Assignment Agreement with the Inventors pursuant to which the
Inventors agreed to assign to the Company all of their rights in the PGH
Technology, in the Provisional Patent Application, and in all letters patent,
both domestic and foreign, that may be granted for the PGH Technology. In
consideration for such assignment, we granted to the Inventors a right of first
refusal to perform all consulting services derived from contracts and/or grants
entered into between the Company and third parties relating to the development
of the PGH Technology. We further agreed to reimburse the Inventors up to $5,000
for their out-of pocket expenses incurred for materials and supplies to build
apparatus relating to the PGH Technology and for collecting, and testing for,
the production of hydrogen.

         Pursuant to the Technology Assignment Agreement, the Inventors executed
an Assignment of Invention & Patent Rights, dated October 2, 2003 (the
"Assignment"), under which the Inventors assigned to the Company their rights in
the PGH Technology, all applications for Letters Patent that may be filed for
the PGH Technology, and all Letters Patent for the PGH Technology in any
country. The Company intends to file such Assignment with the PTO as soon as
reasonably practicable.

         In October 2003, but effective as of July 18, 2003, we entered into
Consulting Agreements with each of the Inventors (the "Consulting Agreements")
pursuant to which the Inventors agreed to assist the Company in obtaining grants
from and/or contracts with third parties for research and development relating
to the PGH Technology and in obtaining a patent on the technology described in
the Provisional Patent Application. Mr. George Johnson's services under his
Consulting Agreement have terminated due to his death, and Mr. William Johnson's
services have been suspended indefinitely for personal reasons.

         In October 2004, we transferred the apparatus for our PGH Technology to
the University of Kansas for purposes of conducting further testing of the
ability of our PGH Technology to produce hydrogen. Our discussions with the
University have now been discontinued, and we are presently seeking other
parties to continue such testing.

         During fiscal 2004, we spent approximately $ 8055 on research relating
to the PGH Technology. Funding for such research was provided by loans from our
Chairman. We did not incur any expense for research and development of our PGH
Technology during fiscal 2005.

                                       13
<PAGE>

POTENTIAL MARKETS FOR COMPANY'S PRODUCTS

         We believe that potential markets for Klenz-Safe include the chemical
production, manufacturing, food processing, pharmaceutical production and indoor
air quality control industries. Potential markets for the Company's hydrogen
technology include residential and commercial heating systems and electric and
hybrid fuel cell powered vehicles.

         Markets that may be available for the Rotorcam Engine include off-road
terrain equipment, such as earth-moving farm equipment, tanks, pony engines,
marine engines, generators, and co-generation systems that are used to cool, as
well as to provide an electrical power source for, home and industry.

COMPETITION

         If we are able to commercialize Klenz-Safe, we expect to compete by
means of higher value in use through combining the advantages of differing
technologies in one product. Because the Company is still engaged in assessing
the viability of the Klenz-Safe product, we are unable to assess the competitive
environment for Klenz-Safe. We will be better able to determine the competitive
market after completion and analysis of further testing.

         We are not presently aware of any entities that may directly compete
with us in the production of photo galvanic hydrogen. Other companies are
engaged in the production and sale of hydrogen using electrolytic or other
electro-chemical processes. If we are able to develop and market our hydrogen
technology, we intend to compete on the basis that our technology is more
economical than electrolytic or other electro-chemical processes.

         If we are able to obtain sufficient funds to commercially exploit the
Rotorcam Engine, we expect to compete primarily on the basis of technological
advantage, which will permit favorable product cost and performance
differentials. Since engine technology is subject to rapid and dramatic changes,
however, competitors may develop better approaches to such technology, that
would seriously and adversely affect our ability to compete with them.

EMPLOYEES AND CONSULTANTS

         We currently have one employee,  Mr. Dwight Foster,  whom the Board
appointed as our President and Chief Executive Officer in December 1998. Mr.
Foster resigned his position as President in January 2000 upon the simultaneous
appointment of Mr. Robert Van Dine as President but remained as Chief Executive
Officer of the Company. Mr. Anthony Campo, who is our Chairman of the Board,
Executive Vice-President, Secretary and Treasurer, also provides us with general
administrative services. Mr. Robert Van Dine, our current President, has
rendered consulting services to us from January 2000 to the present.

         In October 2003, we engaged George Johnson and William L. Johnson as
consultants to the Company to engage in research and development of the
Company's hydrogen technology. George Johnson's services have been terminated
due to his death, and William L. Johnson's services have been suspended
indefinitely for personal reasons.

                                       14
<PAGE>

         In October 2003, we engaged John Byrne to assist us in identifying, and
coordinating and negotiating with, third parties that may form business
affiliations with the Company for purposes of developing and/or marketing the
Company's Klenz-Safe and PGH Technologies. In consideration of his services, we
agreed to issue to Mr. Byrne one million shares of our Common Stock. Such shares
were issued on November 30, 2004. We also agreed to issue an additional one
million shares of such Common Stock within 30 days after the Company derives at
least $250,000 of revenue resulting from business relationships between Company
and one or more of third parties introduced to us by Mr. Byrne.

         We have previously also retained the services of a consultant on an as
needed basis, who provides us with engineering services with payment being made
based on such consultants' hourly rate.

NEED FOR GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES

         Sales of our Klenz-Safe technology to power generating utilities, if
any, will require verification testing for pollutant capture. We expect that the
cost of compliance with such testing requirements will be minimal. We do not
believe that governmental approval will be required for other applications of
our Klenz-Safe product.

         We are not aware of any requirement for governmental approval of our
proposed hydrogen technology.

         If successfully developed, the Rotorcam Engine will be subject to a
series of governmental regulations with respect to safety, fuel efficiency and
pollution. We cannot provide you with any assurance that the Rotorcam Engine
will be able to meet these standards of pollution and safety. In addition, the
assembly and manufacture of products containing the Rotorcam Engine will be
subject to Federal and State regulations.

         We intend to comply with all regulations that may be applicable to our
business. However, the compliance with such regulations may cause delays and
additional expense that could adversely affect the commercial viability of our
potential products.

PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS, INCLUDING DURATION

         Under legal settlements signed in 1993 and 1996 with the Murrays, we
patents pending. Of these seven U.S. patents, three remain in effect and four
have expired due to lack of funds necessary to maintain such patents. Each of
the foreign patents and the rights to patents pending have also expired due to a
lack of funds necessary to acquire or maintain such patents.

                                       15

<PAGE>
         We have been granted trademark protection for the name "Klenz-Safe"
from the US Patent and Trademark Office (PTO). In February 2004, we filed a non
provisional patent application with the PTO for the use of Klenz-Safe to remove
contaminants from coal burning flue gas and to remove carbon monoxide and other
contaminants from indoor building air. In July 2004 we filed a non provisional
patent application covering a method and apparatus for production of photo
galvanic hydrogen ("PGH"). We are actively pursuing the grant of such
applications but cannot provide any assurances that we will be able to obtain a
patent on either the Klenz-Safe or PGH technologies.

STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE

         We have presently suspended further testing of Klenz-Safe's ability to
remove sulfur and other contaminating materials from coal-burning flue gas and
to remove contaminants from building air due to a lack of funds to conduct such
testing. However, we are continuing to attempt to form business relationships
with one or more third parties that may assist us in funding the cost of such
testing. We are not able to provide any assurances that we will be able to enter
into such a business relationship. Moreover, even if we are able to enter into
such a business relationship, it is probable that we will be required to assign
a partial interest in our Klenz-Safe technology, or the proceeds of such
technology, to such third party in consideration of such third party's agreement
to assist us in funding such additional testing. We are also seeking to form
alliances with power plants that may be willing to conduct on-site testing.

         Additionally, we are continuing to demonstrate Klenz-Safe to potential
end-user customers to demonstrate its ability to meet intended applications of
such customers.

         We had previously transferred the apparatus for our PGH Technology to
the University of Kansas for the purpose of conducting further testing on its
ability to produce hydrogen. Our discussions with the University have now been
discontinued and we are presently seeking other parties to continue such
testing.

EFFECTS OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS

Sarbanes-Oxley Act

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002
(the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide variety of new
regulatory requirements on publicly held companies and their insiders. Many of
these requirements will affect us. For example:

      -  Our Chief Executive Officer and Chief Financial Officer must now
         certify the accuracy of all of our periodic reports that contain
         financial statements;

      -  Our periodic reports must disclose our conclusions about the
         effectiveness of our disclosure controls and procedures; and

      -  We may not make any loan to any director or executive officer and we
         may not materially modify any existing loans.

The Sarbanes-Oxley Act has required us to review our current procedures and
policies to determine whether they comply with the Sarbanes-Oxley Act and the
new regulations promulgated thereunder. We will continue to monitor our
compliance with all future regulations that are adopted under the Sarbanes-Oxley
Act and will take whatever actions are necessary to ensure that we are in
compliance.

                                       16
<PAGE>

SEASONALITY

         As the company is a development stage company, its business is not
affected by seasonality.

PENNY STOCK

     Our common stock is "penny stock" as defined in Rule 3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks:

     -   with a price of less than five dollars per share;

     -   that are not traded on a "recognized" national exchange;
         whose prices are not quoted on the NASDAQ automated quotation system;

     -   whose issuer has net tangible assets in excess of $2,000,000 if the
         issuer has been in continuous operation for at least three years, or
         $5,000,000 if such issuer has been in continuous operation for less
         than three years, or has received average revenues of less than
         $6,000,000 for the last three years.

         Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities and
Exchange Commission require broker/dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny stocks and to
obtain a manually signed and dated written receipt of the document before making
any transaction in a penny stock for the investor's account. You are urged to
obtain and read this disclosure carefully before purchasing any of our shares.

         Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in these stocks before selling any penny stock to that investor.
This procedure requires the broker/dealer to:

     -   get information about the investor's financial situation, investment
         experience and investment goals;

     -   reasonably determine, based on that information, that transactions in
         penny stocks are suitable for the investor and that the investor can
         evaluate the risks of penny stock transactions;

                                       17
<PAGE>

     -   provide the investor with a written statement setting forth the basis
         on which the broker/dealer made his or her determination; and

     -   receive a signed and dated copy of the statement from the investor,
         confirming that it accurately reflects the investors' financial
         situation, investment experience and investment goals.

         Compliance with these requirements may make it harder for our
stockholders to resell their shares.


DISTRIBUTION METHODS OF PRODUCTS OR SERVICES

         If we successfully commercialize our Klenz-Safe technology, we plan to
distribute our Klenz-Safe products through third-party distribution channels
either on a commission or buy and resell basis.

         If we successfully produce hydrogen using the photo galvanic process,
we intend to develop a prototype apparatus to produce commercial quantities of
hydrogen and will seek distribution partners in order to market and distribute
our photo galvanic hydrogen product.


         If we are successful in our attempts to produce an engine that is
commercially viable, we intend to attempt to enter into licensing or contract
manufacturing arrangements with other companies for production and sale of the
Rotorcam Engine.

REPORTS TO SECURITY HOLDERS

         We have not in the past provided an annual report to our shareholders
and do not intend to do so until we are able to generate sufficient revenues to
fund the expense of such reports. We are subject to the disclosure rules of
Regulation S-B for a small business issuer under the Securities Act of 1933 and
the Securities Exchange Act of 1934 and are therefore required to file a Form
10-KSB annually and Forms 10-QSB quarterly. In addition, we are required to file
Forms 8-K and other information statements from time to time as required.

         The public may read and copy any materials we file with the Securities
and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an internet site (http://www.sec.gov). That contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with SEC.


                                       18
<PAGE>

ITEM 2.  PROPERTIES

We do not presently own or lease any properties.

ITEM 3.  LEGAL PROCEEDINGS

We are not presently a party to any pending legal proceedings.

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

Not applicable.

                                     PART II


ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

         Our Common Stock has been traded in on the over-the-counter market
since March 24, 1988 and is quoted on the OTC Bulletin Board under the symbol
MRAY. The range of high and low bid quotations as reported by the National
Quotation Bureau, Inc., without adjustment for retail markup, markdown or
commission, for the periods indicated below are:

                               Year Ended July 31,
                   ----------------------------------------
                         2005                      2004
                   ---------------           --------------
                     High     Low             High    Low
                   ------- -------           ------  ------
1st Quarter        $ 0.009 $ 0.003           $0.033  $0.017
2nd Quarter        $ 0.035 $ 0.015           $0.019  $0.011
3rd Quarter        $ 0.025 $ 0.01            $0.021  $0.012
4th Quarter        $ 0.015 $ 0.008           $0.012  $0.006

         Reporting by the National Quotation Bureau, Inc. of quotations for our
Common Stock does not evidence an established public trading market for such
stock, and holders of our Common Stock may not be able to liquidate their
investment at acceptable prices. Moreover, such quotations reflect inter-dealer
prices without retail mark-up, mark-down or commission and may not be indicative
of actual trading transactions.

         As of October 26, 2005 there were approximately 829 holders of record
of our Common Stock. We have not paid any dividends on our Common Stock during
either of the past two fiscal years and have no intention of paying dividends
during the forthcoming fiscal year.

         On November 5, 2004, we issued 2,000,000 shares of our Common Stock to
Mr. Dwight Foster. Such shares were issued as compensation for his services as
Chief Executive Officer and a Director of the Company. Such shares were issued
without registration pursuant to Section 4(2) of the Securities Act of 1933 and
are therefore "restricted" securities, which may not be resold or otherwise

                                       19
<PAGE>

transferred without registration under the securities laws or pursuant to an
exemption from such registration requirements. There were no transactions in the
Company's Common Stock on November 5, 2004. However, the average of the closing
bid and asked prices of such Common Stock on November 5, 2004 was $ 0.0050.
Based solely on such average price, the value of the grant to Mr. Foster was
therefore approximately $10,000.

         On November 30, 2004, we issued one million shares of our Common Stock
to Mr. John Byrne as consideration for consulting services rendered by Mr. Byrne
between October 2003 and September 2005. Such shares were issued without
registration pursuant to Section 4(2) of the Securities Act of 1933 and are
therefore "restricted" securities, which may not be resold or otherwise
transferred without registration under the securities laws or pursuant to an
exemption from such registration requirements. On November 30, 2004, the closing
price of our Common Stock as quoted on the Over the Counter Bulletin Board was $
0.0065 per share. Based solely on such price, the value of the issuance to Mr.
Byrne was therefore $6,500.

         On December 17, 2004, Mr. Anthony Campo, the Chairman of the Board and
Executive Vice President of the Company, exercised a right to convert $7,500 of
indebtedness owed by the Company to Mr. Campo under a Promissory Note dated
August 1, 2004 (the "2004 Note") into 1,000,000 shares of our Common Stock.
Under the terms of the 2004 Note, Mr. Campo was given the right to convert all
or any portion of the unpaid principal of and/or interest on the 2004 Note at a
rate of one share of Common Stock for each 3/4 of one cent of such principal and
interest converted, up to a maximum of 90,000,000 shares. The shares issued to
Mr. Campo upon such conversion were issued without registration pursuant to
Section 4(2) of the Securities Act of 1933 and are therefore "restricted"
securities, which may not be resold or otherwise transferred without
registration under the securities laws or pursuant to an exemption from such
registration requirements.

         On September 20, 2005 we issued 100,000 shares of our Common Stock to
Mr. Carmine Vano as consideration for his agreement to serve as a Director of
the Company. The shares issued to Mr. Vano were issued without registration
pursuant to Section 4(2) of the Securities act of 1933 and are therefore
"restricted" securities. The closing price of the Company's Common Stock on the
date the shares were issued to Mr. Vano was $.018 per share. Based solely on
such market price, the value of the shares issued to Mr. Vano was $1,800.

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

         The following discussion and analysis provides information which we
believe is relevant to an assessment and understanding of our results of
operations and financial condition. This discussion should be read in
conjunction with the financial statements and notes thereto appearing elsewhere
herein.

         Statements in this Form 10-KSB that are not statements of historical or
current fact constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other unknown
factors that could cause our actual results to be materially different from the
historical results or from any future results expressed or implied by such
forward-looking statements. In addition to statements that explicitly describe
such risks and uncertainties, readers are urged to consider statements labeled
with the terms "believes," "belief," "intends," "anticipates" or "plans" to be
uncertain and forward-looking. The forward-looking statements contained herein
are also subject generally to other risks and uncertainties that are described
from time to time in our reports filed with the Securities and Exchange
Commission.

                                       20
<PAGE>

RESULTS OF OPERATIONS

         We have not derived any revenues from the license or sale of our
technology and have incurred cumulative losses from our inception on October 13,
1987 through July 31, 2005 of $4,828,000. Our revenues from our inception on
October 13, 1987 through July 31, 2005 aggregating $66,465 were derived from
interest earned. Interest income was zero in the periods ended July 31, 2005 and
July 31, 2004 as a result of the unavailability of funds for investment.

         The cumulative loss from inception includes research and development
costs of $876,771. Research and development costs in the periods ended July 31,
2005 and July 31, 2004 were $0 and $ 8,055, respectively. We have had to
reduce substantially our research and development activities due to liquidity
problems.

         Our cumulative loss from inception includes general and administrative
expenses of $3,020,278. General and administrative expenses increased to $
123,858 in the period ended July 31, 2005 from $117,407 in the period ended July
31, 2004, or a 5.49% increase. Decreased general and administrative expenses can
be attributed to decreased legal and other professional expenses.

         Our cumulative loss from inception also includes past licensing fees,
of which there were none during the period ended July 31, 2005, and,
cumulatively, $57,260 since inception.

         The cumulative loss from inception also includes interest expense of
$940,156 on promissory notes payable to our principal stockholder and chairman.
Interest expense increased to $143,024 in the period ending July 31, 2005 from
$127,399 in the twelve (12) month period ended July 31, 2004, primarily as a
result of increased loans to us by our chairman and principal stockholder.

         Our net loss of $266,882 in the period ended July 31, 2005 increased by
$14,020, or 5.54%, over the net loss of $252,861 for the period ended July 31,
2004. Decreases in professional fees and research costs caused the overall
decrease.

LIQUIDITY AND CAPITAL RESOURCES

         At July 31, 2005, we had cash and short-term investments totaling $170
(compared to liquid assets of $1033 at July 31, 2004), a working capital
increase of $8,061 (compared with a working capital decrease of $7,219 at July
31, 2004), and a total stockholders' deficiency of $2,247,544 (compared to a
deficiency of $2,005,671 at July 31, 2004). The stockholders' deficiency
increased due to the net loss of $266,882 incurred in the twelve months ended
July 31, 2005.

                                       21
<PAGE>

         At July 31, 2005, we had current liabilities in excess of current
assets of $ 11,648. We have not been able to commercially utilize our Rotorcam
Engine, Klenz-Safe or hydrogen technologies to generate any revenue through that
date, and as a result, we have suffered recurring losses from operations from
inception that have generated the net capital deficiencies at July 31, 2005 as
well as July 31, 2004 and significant working capital deficiencies from time to
time. We do not expect to generate any significant revenues or positive
operating cash flows during the twelve-month period subsequent to July 31, 2005.
Cash flows used by operating activities were $73,612 and $107,219 in the periods
ended July 31, 2005 and July 31, 2004, respectively. The limited amount of
liquid resources available at July 31, 2005, and our inability to generate
operating revenues and cash flows, raise substantial doubts about our ability to
continue as a going concern.

OFF-BALANCE SHEET ARRANGEMENTS AND LONG-TERM CONTRACTUAL OBLIGATIONS

         We do not have any off-balance sheet arrangements or long-term
contractual obligations.



                                PLAN OF OPERATION


KLENZ-SAFE CLEANING SOLUTION

         In February 2002, we reached an agreement in principle with Mr. Anthony
Campo, the Chairman of the Company, and with Mr. Dwight Foster, Chief Executive
Officer of the Company, pursuant to which we would obtain a license to use and
sell a proprietary cleaning solution owned by Foster-Campo Corp.
("Foster-Campo"), a corporation owned by Mr. Foster and Mr. Campo. Under the
terms of the proposed license, Foster-Campo will manufacture the cleaning
solution and supply it to our customers. Foster-Campo will then invoice us for
their cost of doing so without any profit to Foster-Campo. Foster-Campo will
receive a royalty payment of 50% of our net profit on sales of the proprietary
solution to our customers. Calculation of our net profit will include, but not
be limited to, amounts Foster-Campo invoices us for supplying our customers with
the cleaning solution.

         In June 2000 Penn State Energy Institute, which is a facility of Penn
State University, agreed to conduct laboratory tests of the application of the
Klenz-Safe solution to the reduction of sulfur from coal burning flue gas. When
coal burning flue gas was introduced through Klenz-Safe using the Company's
proprietary methodology, the capture rate of sulfur exceeded 99.2% and
maintained a minimum 98% rate throughout the testing.

         Due to the success of the initial testing, Penn State Energy Institute
applied to the U.S. Department of Energy for a grant to conduct a pilot test of
Klenz-Safe's ability to capture sulfur in coal burning flue gas. Such grant
request was not funded during the Department of Energy's 2003 funding period.
During our 2004 fiscal year, Penn State informed us that the cost of further
testing, which would be conducted in a working smoke stack to simulate actual
conditions, would be approximately $100,000. We are currently attempting to form
a business relationship with one of more third parties that may assist us in
funding the cost of such testing; however, we are not able to provide any
assurances that we will be able to enter into such a business relationship. In
addition, even if we are able to enter into any such business relationship, it
is probable that we will be required to assign a partial interest in our
Klenz-Safe Technology, or the proceeds of such technology, to such third party
in consideration of such third party's agreement to assist in funding the
additional research.

                                       22
<PAGE>

         If funding for the pilot study is obtained, the pilot tests would be
conducted in a working smoke stack to simulate actual conditions. If such tests
are conducted and are successful, we intend to seek distribution partners to
assist us in marketing and selling the Klenz-Safe product to the coal burning
utility market. We cannot provide any assurances that such testing will occur
or, even if it does occur, that it will be successful.

         In 2001, we engaged a certified indoor air quality laboratory to
perform a series of laboratory tests on Klenz-Safe to determine Klenz-Safe's
ability to remove pollutants and contaminants from building air and to examine
other potential industrial uses. The tests simulated wet scrubber equipment,
which is commonly used device for removing pollutants from building air. Based
on generally known industry practices, management believes that the range of
pollutants captured by Klenz-Safe and the rate of such capture have not been
previously achieved in a single operation. The following were the material
findings of the laboratory tests:

         -    Klenz-Safe captured 90% of carbon monoxide in tested air streams;

         -    Klenz-Safe captured 70% of both nitrogen dioxide and of nitrous
              oxide in tested streams;

         -    Klenz-Safe added no detectable volatile organic compounds to the
              air stream at elevated temperatures, indicating that Klenz-Safe
              could be applied to indoor air cleaning systems without the need
              of additional filtering.

         Based on our tests of Klenz-Safe, management believes that Klenz-Safe
possesses the following environmentally beneficial attributes:

o  Klenz-Safe is a non-toxic, non-hazardous composition that requires no
   special equipment to protect the personnel using it;

o  Klenz-Safe achieves a higher starting alkalinity and has a longer operating
   life than can be obtained with commercial caustic materials or lime
   slurries;

o  Klenz-Safe protects rather than corrodes metal compounds and surfaces.
   Management presently believes that Klenz-Safe may be useful in the
   following applications:

o  Air pollution control in we scrubber equipment, which are commonly used to
   remove pollutants from building air;

o  Containment and neutralization of liquids and compounds;

o  Decontamination of equipment in pharmaceutical production;


                                       23
<PAGE>

o  Air filtration in indoor air quality control;

o  Flue and combustion gas scrubbing.

         To date, the cost of the research at Penn State was approximately
$9,000, and the cost of the research by the certified air quality laboratory was
approximately $5,000. In addition, during fiscal 2005 and 2004 we incurred $0
and approximately $4,700, respectively for research relating to Klenz Safe's
ability to remove sulfur from flue burning smoke stacks. Funding for all such
research was provided by loans to the Company from our Chairman, Mr. Anthony
Campo.

         We have presently suspended further testing of Klenz-Safe's ability to
remove sulfur and other contaminating materials from coal-burning flue gas and
to remove contaminants from building air due to a lack of funds to conduct such
testing. However, we are continuing to attempt to form business relationships
with one or more third parties that may assist us in funding the cost of such
testing. We are not able to provide any assurances that we will be able to enter
into such a business relationship. Moreover, even if we are able to enter into
such a business relationship, it is probable that we will be required to assign
a partial interest in our Klenz-Safe technology, or the proceeds of such
technology, to such third party in consideration of such third party's agreement
to assist us in funding such additional testing. We are also seeking power
plants that may be willing to conduct on-site testing.

         Additionally, we are continuing to demonstrate Klenz-Safe to potential
end-user customers to demonstrate its ability to meet intended applications of
such customers.

         We have been granted trademark protection for the name "Klenz-Safe"
from the US Patent and Trademark Office (PTO). The method of application of the
Klenz-Safe formula for removal of sulfur from coal burning flue gas was
developed by a consultant to the Company, who assigned to us his rights to such
know-how and his rights under a provisional patent application filed with the
PTO covering such know-how. In October 2002 we filed an application for a
provisional patent, which extends the Klenz-Safe technology into additional
indoor air quality applications. In February 2003, we filed an amendment to the
October 2002 provisional patent application that revised certain data contained
in the October 2002 provisional patent with the PTO application. In February
2004 we filed a non-provisional patent application relating to Klenz-Safe.
However, we cannot provide any assurances that the PTO will grant a patent on
our Klenz-Safe technology.

HYDROGEN PRODUCTION TECHNOLOGY

         In light of the energy plan of current administration encouraging the
use of hydrogen fuel cells in place of fossil fuels such as oils and gas,
management has begun to investigate a technology that would produce hydrogen
from sunlight through the use of a proprietary device and solution. The hydrogen
gas produced would be used to supply on demand, low cost hydrogen fuel to
hydrogen-oxygen fuel cells in order to meet stationary and mobile electric power
requirements. Stationary uses would include residential and commercial heating
systems, and mobile uses would include electric and hybrid fuel cell powered
vehicles.

                                       24
<PAGE>

         In June 2002, we entered into an oral agreement with George Johnson and
William L. Johnson (the "Inventors") to develop a method and apparatus for
production of photo galvanic hydrogen (the "PGH Technology") and to prepare and
file a provisional patent application (the "Provisional Patent Application")
relating thereto in the PTO. The Inventors further agreed that, upon filing of
the Provisional Patent Application, they would negotiate with the Company for an
assignment of all of their interest in the PGH Technology and the Provisional
Patent Application to the Company. In consideration for the Inventors' services,
the Company agreed to issue to each of the Inventors 100,000 shares of the
Company's Common Stock and to register such shares with the Securities and
Exchange Commission. The Company subsequently formalized the oral agreement with
the Inventors by a written agreement dated as of June 1, 2002.

         In July 2003, the Inventors filed the Provisional Patent Application
with the PTO. By Agreement dated October 2, 2003 , the Company entered into a
Technology Assignment Agreement with the Inventors pursuant to which the
Inventors agreed to assign to the Company all of their rights in the PGH
Technology, in the Provisional Patent Application, and in all letters patent,
both domestic and foreign, that may be granted for the PGH Technology. In
consideration for such assignment, we granted to the Inventors a right of first
refusal to perform all consulting services derived from contracts and/or grants
entered into between the Company and third parties relating to the development
of the PGH Technology. We further agreed to reimburse the Inventors up to $5,000
for their out-of pocket expenses incurred for materials and supplies to build
apparatus relating to the PGH Technology and for collecting, and testing for,
the production of hydrogen.

         Pursuant to the Technology Assignment Agreement, the Inventors executed
an Assignment of Invention & Patent Rights, dated October 2, 2003 (the
"Assignment"), under which the Inventors assigned to the Company their rights in
the PGH Technology, all applications for Letters Patent that may be filed for
the PGH Technology, and all Letters Patent for the PGH Technology in any
country. The Company intends to file such Assignment with the PTO as soon as
reasonably practicable.

         In October 2003, but effective as of July 18, 2003, we entered into
Consulting Agreements with each of the Inventors (the "Consulting Agreements")
pursuant to which the Inventors agreed to assist the Company in obtaining grants
from and/or contracts with third parties for research and development relating
to the PGH Technology and in obtaining a patent on the technology described in
the Provisional Patent Application. Mr. George Johnson's services under his
Consulting Agreement have terminated due to his death, and Mr. William Johnson's
services have been suspended indefinitely for personal reasons.

         In October 2004, we transferred the apparatus for our PGH Technology to
the University of Kansas for purposes of conducting further testing of the
ability of our PGH Technology to produce hydrogen. However, our discussions with
the University have been discontinued, and we are presently seeking other
parties to continue such testing.


                                       25
<PAGE>

         During fiscal 2005 and 2004, we spent $0 and approximately $8,055,
respectively, on research relating to the PGH Technology. Funding for such
research was provided by loans from our Chairman.

ROTORCAM ENGINE

         We do not expect to further develop the Rotorcam Engine during the next
12-month period. We have been advised by Southwest Research Institute that it
would take up to 4 years and $3 million in order to develop the Rotorcam Engine
for commercial sale. We therefore first intend to use any funds that may become
available to further develop our Klenz-Safe and PGH technologies, which we
believe have the potential to generate operating revenues much earlier than the
Rotorcam Engine. We will, however, continue to evaluate possible
commercialization of the Rotorcam Engine in light of future facts and
circumstances.

ITEM 7.   FINANCIAL STATEMENTS

         The financial statements are set forth where indicated in Item 13 (A) 1
of this Form 10-KSB.

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

         We did not have any disagreements on accounting and financial
disclosure with our accounting firm during the reporting period.

         On October 20, 2004 we filed a report on Form 8-K disclosing that the
firm of Albrecht, Viggiano, Zureck & Company, P.C. had resigned as our auditors
effective October 15, 2004 and that we had engaged the firm of Blanchfield,
Kober & Company, P.C. as independent public accountants for the Company's fiscal
year ended July 31, 2004. There were no disagreements with Albrecht, Viggiano,
Zureck & Company, P.C. during any period in which such firm had acted as the
Company's independent public accountants.

ITEM 8A.  CONTROLS AND PROCEDURES

             The Company is a development state company and currently has no
revenues, significant assets or independent operations. Its current Chief
Executive Officer, Dwight Foster, and its current Chief Financial Officer,
Anthony Campo, are the only individuals who accumulate financial information
required to be disclosed in the Company's financial reports. Since Mr. Foster
and Mr. Campo are the only individuals who accumulate such information, they
have concluded that the information they accumulate is obtained by them in such
a manner as to permit them to make timely decisions regarding disclosure. They
have also concluded that the Company's controls and procedures are effective to
ensure that information required to be disclosed in the reports that the Company
files under the Exchange Act is recorded, processed, summarized and reported
within the periods required by the Exchange Act.

             No significant changes in the Company's financial controls over
financial reporting have come to management's attention during the Company's
previous fiscal quarters that have materially affected or are likely to
materially affect the Company's internal control over financial reporting.

                                       26
<PAGE>

         As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and the with the participation of the
Company's management, including the Company's Chief Executive Officer and its
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's controls and procedures, as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e). Based upon that evaluation, the Company's Chief Executive Officer
and its Chief Financial Officer concluded that the Company's disclosure controls
and procedures are effective in enabling the Company to record, process,
summarize and report information required to be included in the Company's
periodic SEC filings within the required time period.


                                            PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE
         REGISTRANT;  COMPLIANCE  WITH SECTION  16(a) OF THE EXCHANGE ACT

         In December  1998,  Mr.  Anthony  Campo  resigned as  President  and
Chief Executive Officer of the Company but remained as Chairman of the Board.
Upon Mr. Campo's resignation, the Board appointed Mr. Dwight Foster as President
and CEO and Mr. Campo as Executive Vice President, Secretary and Treasurer. In
December 1998, the Board also appointed Mr. Frank Pecorella as a Director of the
Company. In April 2000, the Board appointed Mr. Dwight Foster as a Director of
the Company to replace Mr. Thomas Caltabiano, who resigned as a Director in
April 2000. In April 2002, the Board appointed Robert Van Dine as President to
replace Mr. Foster who simultaneously resigned such office but who remains the
Chief Executive Officer of the Company. In May 2005, Mr. Frank Pecorella
resigned as a Director of the Company for personal reasons. In September 2005,
the Board appointed Mr. Carmine Vano to replace Mr. Pecorella. Our present
executive officers and directors, their ages and present positions are as
follows:





                                                           First Year
Name                Age         Position                   Elected/Appointed
-------------      ----         -----------------------    ------------------
Anthony Campo       65          Chairman of the            1993
                                Board, Executive
                                Vice President,
                                Secretary and Treasurer

Dwight Foster       56          Director and               2000
                                Chief Executive Officer

Robert Van Dine     54          President                  2002

Carmine Vano        59          Director                   2005

                                       27
<PAGE>

         All of our directors will hold office until the next meeting of
shareholders and until their successors have been duly elected and qualified.
All of our executive officers will hold office until the next annual meeting of
the directors and until their successors have been duly appointed and qualified.

ANTHONY S. CAMPO

         Mr. Anthony S. Campo has been a Director of the Company since January
1993. He was elected Chairman of the Board on July 28 1995 and was appointed
Secretary of the Company in December 1995 and President and Chief Executive
Officer in December 1997. In December 1998, Mr. Campo resigned as President and
Chief Executive Officer and was appointed as Executive Vice President, Secretary
and Treasurer of the Company. Mr. Campo was President of Chester Hill Manors,
Inc. from June 1996 through October, 2002 and of The Campo Organization, Inc.
from December 1998 through October, 2002. Each of such companies developed and
constructed residential housing. From October 2002 to the present, Mr. Campo has
managed various income-producing properties owned by him and his family.


DWIGHT FOSTER

         Mr. Dwight Foster was elected President and Chief Executive Officer of
the Company in December 1998 and was appointed to the Board of Directors in
March 2000. From 1983 to 2002 Mr. Foster was the owner/operator of the National
Automobile Dealers Exchange Services, which represented automobile dealers at
premier automobile auctions. In addition, from 1972 to the present, Mr. Foster
has been employed as a consultant to start-up and emerging companies, advising
such companies on product development, marketing, public relations and
financing. From February 1999 to the present, Mr. Foster has also acted as
President of Ultra One Corp. (formerly known as Sierra Cleansafe USA, Inc.),
which markets and sells environmentally safe cleaning products.


ROBERT VAN DINE

         Mr. Robert Van Dine was appointed President of the Company in April
2002. From approximately June 1998 to the present Mr. Van Dine has been a
consultant providing engineering and administrative services to two start-up
biotechnology companies. From January 2000 to the present Mr. Van Dine has also
been a consultant to the Company. providing engineering and administrative
services to us as well. From 1994 to 1998 Mr. Van Dine was employed as President
by IMC, Inc., a manufacturing technology consulting firm. Mr. Van Dine is a
graduate of the U.S. Naval Academy where he earned a Bachelor of Science degree
in engineering in 1973. Mr. Van Dine has served tours both in Vietnam and the
Middle East.

                                       28
<PAGE>

CARMINE VANO

         Mr. Carmine Vano was appointed as a Director of the Company in
September 2005. From 1963 to the present, Mr. Vano has owned and operated Roman
Concrete Corp., a concrete contracting company located on Long Island, New York.
He is also a principal and manager of AMC Realty Properties Company, LLC and CNV
Realty Company, LLC, which own two shopping centers and an industrial building
on Long Island, New York.

         There are no family relationships among our directors and officers.

CODE OF ETHICS

         The Company has not yet adopted a code of ethics for its principal
executive officer, and its principal financial and accounting officer due to the
small number of individuals involved with the Company and due to the fact that
the Company operates principally through consultants with only one employee. The
Board of Directors will continue to evaluate, from time to time, whether a code
of ethics should be developed and adopted.

Item 10.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table shows for the last three fiscal years compensation
information for our Chief Executive Officer. No compensation was awarded during
any of such fiscal years to any executive or other officer of the Company or any
other individual serving in a similar capacity.

NAME AND PRINCIPAL POSITION         YEAR       RESTRICTED STOCK AWARD
------------------------------      ----       ----------------------
Dwight Foster, Chief Executive      2005       $ 10,000
Officer                             2004       $ - 0 -
                                    2003       $ - 0 -

         On April 11, 2002, the Board of Directors approved the issuance of a
non-qualified stock option (the "Option") for 6 million shares of the Company's
Common Stock to Dwight Foster, the Chief Executive Officer and a Director of the
Company.

         The Option granted to Mr. Foster was exercisable, cumulatively, at an
exercise price of $0.02 per share in accordance with the following schedule of
vesting: 1 million shares on October 11, 2002; 1 million shares on April 11,
2003; 1 million shares on October 11, 2003; 1 million shares on April 11, 2004;
1 million shares on October 11, 2004; and 1 million shares on April 11, 2005.
Since April 11, 2005 the Option has been exercisable for all optioned shares.

                                       29

<PAGE>
                                       40
         The Option will expire 10 years after the date of grant. The Option
issued to Mr. Foster was issued without registration pursuant to Section 4(2) of
the Securities Act of 1933. The closing price of the Company's Common Stock on
the date the Option was granted to Mr. Foster was $.041 per share.

         No options or stock appreciation rights have been granted during the
last three fiscal years to any other executive or non executive officer or to
any Director of the Company.

         The following table indicates the total number and value of exercisable
and unexercisable stock options held by all Executive Officers as of July
31,2005.

<TABLE>
<CAPTION>
-------------------------------------------------- ----------------------------------------
                     Number of Securities                     Value of Unexercised
                    Underlying Unexercised                    In-the-Money Options
                 Options at Fiscal Year-End(#)               At Fiscal Year-End (1)
                ------------------------------          -------------------------------
Name           Exercisable          Unexercisable       Exercisable          Unexercisable
-------------------------------- ----------------- ---------------------- -----------------
<S>            <C>                 <C>              <C>                     <C>
Dwight Foster   6,000,000               - 0 -              $0.00                 $0.00
-------------------------------- ----------------- ---------------------- -----------------
</TABLE>

(1) Based on the OTC  Bulletin  Board last sales  price for our common
    stock on July 29, 2005 in the amount of $ 0.008 per common share.

         None of our directors received any compensation for serving in such
capacity during our last fiscal year.

         On September 20, 2005 we issued 100,000 shares of our Common Stock to
Mr. Carmine Vano in consideration for his agreement to serve as a Director of
the Company. The shares issued to Mr. Vano were issued without registration
pursuant to Section 4(2) of the Securities act of 1933 and all therefore
"restricted" securities. The closing price of the Company's Common Stock on the
day the shares were issued to Mr. Vano was $.018 per share. Based solely on such
market price, the value of the shares issued to Mr. Vano was $1,800.


         We do not have any employment agreement with any of our executive
officers, nor are there any compensatory plans or arrangements that would
provide compensation to any executive officer upon his resignation, retirement
or other termination of employment, or as a result of a change in control of the
Company or a change in such executive officer's responsibilities following a
change in control of the Company.

                                       30
<PAGE>

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         We have provided below information as of October 24, 2005 concerning
the beneficial ownership of our Common Stock by (i) all persons whom we know to
own beneficially 5% or more of our Common Stock, (ii) each of our directors and
executive officers individually, and (iii) all of our directors and executive
officers as a group.

Name and                     Amount and
Address of                   Nature of                Percent
Beneficial Owner (1)(2)  Beneficial Ownership       of Class (%)
----------------------   --------------------      -------------
Anthony S. Campo (3)          102,731,100             58.87

Dwight Foster (4)               8,096,500              8.97

Robert Van Dine                 2,000,000              2.37

Carmine Vano                      130,000              0.15

All Directors and
Executive Officers
as a Group (4 persons)        112,957,600             62.58


(1) Unless otherwise indicated, the address of each beneficial owner is in care
of the Company, P.O. Box 224, Landing, New Jersey 07850.

(2) Except as indicated below, all of such persons have sole investment and
voting power over the shares listed as being owned by them. Unless otherwise
indicated, we believe that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by them. A person is deemed to be the beneficial owner of securities, which may
be acquired by such person within 60 days from the date of this Report upon the
exercise of options, or convertible securities. Each beneficial owner's
percentage ownership is determined by assuming that options, or convertible
securities that are held by such person (but not those held by any other person)
and which are exercisable or convertible within 60 days of this Report have been
exercised or converted.

(3) In addition to 5,570,000 shares owned individually by Mr. Campo, includes
(i) 2,150,000 shares held by Mr. Campo's wife, (ii) 4,772,400 shares held by Mr.
Campo's children, (iii) 1,100,000 shares that may be acquired by Mr. Campo upon
the exercise of Class B Warrants, (iv) 138,700 shares that may be acquired by
the children of Mr. Campo upon exercise of Class B Warrants , and (v) 89,000,000
shares that may be acquired by Mr. Campo upon the conversion of his Promissory
Note from the Company dated August 1, 2005 (see "Certain Transactions".)

                                       31
<PAGE>

(4) In addition to 2,075,000 shares owned individually by Mr. Foster, includes
21,500 shares held by Mr. Foster's wife and 6,000,000 shares that may be
acquired by Mr. Foster within sixty(60) days upon exercise of the stock option
granted to him on April 11, 2002.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On April 20, 1994, in consideration of prior loans made to us by Mr.
Anthony Campo, we issued to Mr. Campo a promissory note in the amount of
$100,000. On November 15, 1994 we issued another promissory note to Mr. Campo
for $79,300 in return for additional loans that he had made to us. On March 9,
1995 we again issued a new note in the amount of $328,000 to Mr. Campo that
consolidated the amounts that we owed to him under the previous two notes and an
additional $149,200 that he had advanced to us between November 15, 1994 and
March 9, 1995.

         On October 20, 1995 we renegotiated the March 9, 1995 promissory note
and issued a new note in the amount of $568,000, which included the former
principal amount of $328,500, accrued interest thereon, additional cash advances
that Mr. Campo had made to us during fiscal 1995, and our purchase of an
engineering workstation and software from Mr. Campo. The new note bore interest
at 7.5 % per annum and matured on July 1, 1998. The note was convertible, in
whole or in part, into Common Stock of the Company at the conversion rate one
share of our Common Stock for each of $.0075 in principal of the note converted.
The conversion feature was subject to anti-dilution. We did not make any
payments to Mr. Campo under the October 20, 1995 promissory note.

         We subsequently issued a new promissory note to Mr. Campo, dated August
1, 1998, in the amount of $807,280, which consolidated amounts owed under the
October 20, 1995 Note; accrued interest on such note to July 31, 1998 in the
amount of $122,070; cash advances made by Mr. Campo to us or on our behalf
between October 20, 1995 and July 31, 1998 in the amount of $60,090; cash
advances in the amount of $42,000 made by Mr. Campo between May 6, 1993 and July
14, 1993 for which he had not previously been credited; and interest on such
1993 advances through July 31, 1993 in the amount of $15,120. The August 1, 1998
note bore interest at 7.5% per annum and matured on August l, 2000. The note was
convertible into our Common Stock at a conversion rate of one share of our
Common Stock for each $.0075 in principal amount of the note converted up to a
maximum of 100 million shares.

         In September 2000, the Board approved the issuance of a new Note to Mr.
Campo dated August 1, 2000 in the principal amount of $1,193,294 to replace the
August 1, 1998 Note that matured on August 1, 2000. The principal amount of the
August 1, 2000 Note consolidated all amounts the Company owed Mr. Campo as of
August 1, 2000, including accrued interest on the August 1, 1998 Note through
July 31, 2000. Except for the increased principal amount of the August 1. 2000
Note, the terms of such Note were the same as the terms of the August 1, 1998
Note.

                                       32
<PAGE>

         In September 2001, the Board approved the issuance of a new Note to Mr.
Campo dated August 1, 2001 in the principal amount of $1,337,552 to replace the
August 1, 2000 Note that matured on August 1, 2001. The principal amount of the
August 1, 2001 Note consolidated all amounts the Company owed Mr. Campo as of
August 1, 2001, including accrued interest on the August 1, 2000 Note through
July 31, 2001. Except for the increased principal amount of the August 1, 2001
Note, the terms of such Note were the same as the terms of the August 1, 2000
Note. In March 2002 and April 2002, Mr. Campo exercised his conversion right
under the August 2001 Note to acquire a total of 10,000,000 shares of our Common
Stock in exchange for retirement of $75,000 of debt under such Note.

         In October 2002, the Board approved the issuance of a new Note to Mr.
Campo dated as of August 1, 2002 in the principal amount of $1,430,148 to
replace the August 1, 2001 Note that matured on August 1, 2002. The principal
amount of the August 1, 2002 Note consolidated all amounts the Company owed Mr.
Campo as of August 1, 2002, including accrued interest on the August 1, 2001
Note through July 31, 2002 in the amount of $99,827. Except for the increased
principal amount of the August 1, 2002 Note and the reduction in the number of
shares that Mr. Campo may acquire upon exercise of his conversion right to 90
million shares, which resulted from his exercise of such conversion right for 10
million shares in March and April 2002, the terms of such Note were the same as
the terms of the August 1, 2001 Note.

         In October 2003, the Board approved the issuance of a new Note to Mr.
Campo dated as of August 1, 2003 in the principal amount of $1,652,106 to
replace the August 1, 2002 Note that matured on August 1, 2003. The principal
amount of the August 1, 2003 Note consolidated all amounts the Company owed Mr.
Campo as of August 1, 2003, including accrued interest on the August 1, 2002
Note through July 31, 2003 in the amount of $110,197. Except for the principal
amount, the terms of the August 1, 2003 Note were the same as the terms of the
August 1, 2002 Note.

         In October 2004, the Board approved the issuance of a new Note to Mr.
Campo dated as of August 1, 2004 in the principal amount of $1,876,104 to
replace the August 1, 2003 Note that matured on August 1, 2004. The principal
amount of the August 1, 2004 Note consolidated all amounts the Company owed Mr.
Campo as of August 1, 2004, including accrued interest on the August 1, 2003
Note through July 31, 2004 in the amount of $123,908. Except for the principal
amount, the terms of the August 1, 2004 Note were the same as the terms of the
August 1, 2003 Note.

         In September 2005, the Board approved the issuance of a new Note to Mr.
Campo dated as of August 1, 2005 in the principal amount of $2,087,278 to
replace the August 1, 2004 Note that matured on August 1, 2005. The principal
amount of the August 1, 2005 Note consolidated all amounts the Company owed Mr.
Campo as of August 1, 2005, including accrued interest on the August 1, 2004
Note through July 31, 2005 in the amount of $140,132, additional advances made
by Mr. Campo between August 1, 2004 Note and July 31, 2005 in the amount of
$76,240, and interest on such additional advances in the amount of $2,892. As in
the case of the several preceding promissory notes to Mr. Campo, the August 1,
2005 Note is convertible, in whole or in part, into Common Stock of the Company
at a conversion rate of one share of Common Stock for each $.0075 in principal
amount of the Note converted. Except for the increased principal amount of the
August 1, 2004 Note and the reduction in the number of shares that Mr. Campo may
acquire upon exercise of his conversion right from 90 million shares to 89
million shares,which resulted from his exercise of his conversion right for 1
million shares in December 2004, the terms of the August 1, 2005 Note are the
same as the terms of the August 1, 2004 Note.

                                       33
<PAGE>

         Since we do not have any revenues, it is very doubtful that we will be
able to pay any interest or principal amounts due under the August 1, 2005 Note
until such time as we have operating revenues or until we raise funds from an
independent source, both of which events may not occur at any time.

                                     PART IV

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

(A)      Exhibits and Financial Statements:

         1.  Financial Statements

         The following financial statements are included on pages F-1 to F-19 of
         this Report.

         (i)   Report of Independent Accountants
         (ii)  Balance Sheets as of July 31, 2005 and July 31, 2004
         (iii) Statements of Income for the fiscal years ended July 31, 2005,
               2004 and 2003
         (iv)  Statements of Cash Flows for the fiscal years ended July 31,
               2005, 2004, and 2003
         (v)   Statements of Changes in Stockholders' Equity for the fiscal
               years ended July 31, 2005, 2004 and 2003
         (vi)  Notes to Financial Statements

         (B) The following exhibits, which are required by Item 601 of
         Regulation S-B, are incorporated by reference to previously filed
         documents.



Exhibit No.       Exhibit

(3)      (a) Articles of Incorporation and Bylaws.                           (1)
         (b) Amended and Restated Bylaws                                     (2)

(10)     Material contracts
         (a) Option Agreement between the Company and Dwight Foster          (3)
         covering grant of option on April 11, 2002.

         (b Consulting Agreement dated as of April 11, 2002                  (3)
         between the Company and Robert Van Dine.

         (c) Consulting Agreement dated as of April 11, 2002                 (3)
         between the Company and Newell Dimen.

                                       34
<PAGE>

         (d) Assignment dated March 13, 2002 from Robert                     (3)
         Van Dine to the Company covering Robert Van Dine's
         rights under provisional patent application no. 60/3113, 087
         relating to process of employing proprietary cleaning solution
         to the treatment of flue gases.

         (e) Assignment of Invention & Patent Rights dated                   (4)
         October 2, 2003 from George H. Johnson and
         William L. Johnson to the Company.

         (f) Consulting Agreement dated October 26, 2004                     (5)
         between the Company and John Byrne.

         (g) Promissory Note dated August 1, 2005 from the Company           (6)
         to Mr. Anthony Campo.

(23)     (a) Consent of Blanchfield, Meyer, Kober & Rizzo LLP

         (b) Consent of Albrecht, Viggiano, Zureck & Company, P.C.

(31)     (a) Certification of Chief Executive Officer in accordance with 18
         U.S.C. Section 1350, as adopted by Section 302 of the Sarbanes-Oxley
         Act of 2002.

         (b) Certification of Principal Financial Officer in Accordance with 18
         U.S.C. Section 1350, as adopted by Section 302 of the Sarbanes-Oxley
         Act of 2002.

(32)     (a) Certification of Chief Executive Officer in accordance with 18
         U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley
         Act of 2002.

         (b) Certification of Principal Financial Officer in accordance with 18
         U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley
         Act of 2002.

                                       35
<PAGE>

         Footnotes

         (1) Filed with the registrant's Registration Statement on Form S-18
         dated December 9, 1987 (registration No., 33-19048-NY) and Amendment
         Nos. 2 and 3 thereto dated February 17, 1988 and February 22, 1988,
         respectively, and incorporated herein by
`        reference.

         (2) Filed with the registrant's Registration Statement on Form SB-2
         dated April 20, 2000 (amending its Form S-18 Registration Statement)
         and incorporated herein by reference.

         (3) Filed with the registrant's Quarterly Report on Form 10-QSB for the
         quarter ended April 30, 2002 and incorporated herein by reference.

         (4) Filed with the registrant's Report on Form 8-K dated October 2,
         2003 and incorporated herein by reference.

         (5) Filed with the registrant's Annual Report on Form 10-KSB for the
         fiscal year ended July 31, 2004 and incorporated herein by reference.

         (6) Filed with the registrant's Report on Form 8-K dated September 19,
         2005 and incorporated herein by reference.

                                       36
<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

         The fees previously billed by the Company's auditors for professional
services rendered in connection with their audit of the Company's annual
financial statements for fiscal 2005 and 2004 were $10,000 for each of such
fiscal years and for such auditors' review of the financial statements included
in the Company's Forms 10-QSB for fiscal 2005 and 2004 were $6,000 and $0,
respectively.

AUDIT-RELATED FEES

         For fiscal 2005 and 2004, the Company's auditors did not bill any
additional fees for services that are reasonably related to the performance of
the audit or review of the Company's financial statements and are not reported
under "Audit Fees" above.

TAX FEES

         The aggregate fees billed by the Company's auditors for professional
services for tax compliance, tax advice, and tax planning were $0 and $0 for
fiscal 2005 and 2004, respectively.

All other fees

         The aggregate fees billed by the Company's auditors for all other
non-audit services rendered to the Company, such as attending meetings and other
miscellaneous financial consulting in fiscal 2005 and 2004 were $0 and $0,
respectively.

                                       37

<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.


                                    MURRAY UNITED DEVELOPMENT CORPORATION
                                    (Registrant)


                                    By:  /s/ DWIGHT FOSTER
                                    Dwight Foster
                                    Chief Executive Officer

                                    Dated: October 25, 2005


                                    By:  /s/ ANTHONY S. CAMPO
                                    Anthony S. Campo
                                    Executive Vice President, Secretary
                                    and Treasurer
                                    (Chief Financial Officer)

                                    Dated: October 25, 2005


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

                                     /s/ ANTHONY CAMPO
                                    Anthony S. Campo,
                                    Chairman of the Board

                                     /s/ DWIGHT FOSTER
                                    Dwight Foster, Director

                                    /s/ CARMINE VANO
                                    Carmine Vano, Director

                                    Dated:  October 25, 2005



                                       38




<PAGE>




                                TABLE OF CONTENTS



                                                                    Page

INDEPENDENT AUDITORS' REPORT....................................... F-1

FINANCIAL STATEMENTS

    Balance Sheets................................................. F-2

    Statements of Operations....................................... F-3

    Statements of Stockholders' Equity (Deficiency)................ F-4 - F-11

    Statements of Cash Flows....................................... F-12

    Notes to Financial Statements.................................. F-13 -F-19























<PAGE>


BLANCHFIELD, KOBER & COMPANY, P.C.


Certified Public Accountants                                     T  631-293-5000
1200 Veterans Memorial Hwy.                                      F  631-234-4272
Hauppauge, NY 11788                                              www.bmkr.com

                                       F-1

             Report of Independent Registered Public Accounting Firm


To the Board of Directors
Murray United Development Corporation
Landing, N.J.

We have audited the accompanying balance sheets of Murray United Development
Corporation as of July 31, 2005 and 2004 and the related statements of
operations, stockholders' equity, and cash flows for the years ended July 31,
2005 and 2004. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

The financial statements of Murray United Development Corporation as of July 31,
2003 were audited by other auditors whose report dated October 16, 2004 included
an explanatory paragraph describing conditions that raised substantial doubt
about the Company's ability to continue as a going concern.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of July 31, 2005
and 2004, and the results of its operations and its cash flows for the years
ended July 31, 2005 and 2004 in conformity with U.S generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, as of July 31, 2005, the Company had not generated any
operating revenues and had suffered recurring losses from operations from
inception and had a net capital deficiency. These matters raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.



Hauppauge, New York
October13,2005

<PAGE>
                                      F-2


                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                                 BALANCE SHEETS
                             JULY 31, 2005 AND 2004

<TABLE>
<CAPTION>

                                     ASSETS

                                                                                  2005              2004
                                                                          -----------------   -----------------
<S>                                                                      <C>                  <C>

CURRENT ASSETS
     Cash and cash equivalents                                             $           170       $       1,033
     Loan receivable                                                                 2,000               2,000
                                                                          ----------------     ---------------

         TOTAL CURRENT ASSETS                                                        2,170               3,033

FURNITURE AND EQUIPMENT, NET                                                             0              41,671
                                                                           ---------------       -------------
         TOTAL ASSETS                                                      $         2,170       $      44,704
                                                                           ===============       =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                                      $        13,817       $      22,742
                                                                           ---------------       -------------

         TOTAL CURRENT LIABILITIES                                                  13,817              22,742
                                                                           ---------------       -------------

LONG -TERM LIABILITIES
     Accrued compensation                                                          148,128             148,128
     Accrued interest payable                                                      146,515             127,399
     Notes payable - stockholder                                                 1,941,263           1,752,106
                                                                           ---------------       -------------

         TOTAL LONG - TERM LIABILITIES                                           2,235,906           2,027,633
                                                                           ---------------       -------------

         TOTAL LIABILITIES                                                       2,249,723           2,050,375
                                                                           ---------------       -------------

STOCKHOLDERS' EQUITY (DEFICIENCY)
     Capital stock - par value $.001; authorized
     200,000,000 shares; issued and outstanding
     84,153,434 and 80,153,434 shares                                                8,416               8,016
     Additional paid-in capital                                                  2,572,031           2,547,431
     Deficit accumulated in the development stage                            (  4,828,000)          (4,561,118)
                                                                           ---------------        -------------

         TOTAL STOCKHOLDERS' EQUITY
                (DEFICIENCY)                                                    (2,247,553)         (2,005,671)
                                                                           ---------------       -------------

         TOTAL LIABILITIES AND STOCKHOLDERS'
              DEFICIENCY                                                   $         2,170     $        44,704
                                                                           ===============     ===============

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

                                       F-3


                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                            STATEMENTS OF OPERATIONS
                    YEARS ENDED JULY 31, 2005, 2004 AND 2003
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                                                               CUMULATIVE
                                                                                                              AMOUNTS FROM
                                                        2005                  2004             2003             INCEPTION
                                                     ------------         -----------         ----------      -------------
<S>                                                  <C>            <C>                  <C>                 <C>
INCOME

Interest income                                      $       -0-    $          -0-       $         -0-        $      66,465

EXPENSES

Research and development costs                                               8,055                 -0-              876,771
Licensing fees-stockholder and affiliate                     -0-               -0-                 -0-               57,260
General and administrative expenses                      123,858           117,407             105,597            3,020,278
Interest expense-stockholder and affiliate               143,024           127,399             110,197              940,156
                                                     -----------      ------------       -------------        -------------

                           Total Expenses                266,882           252,861             215,794            4,894,465
                                                     -----------      ------------       -------------        -------------

                           Net Loss                  $  (266,882)     $   (252,861)      $    (215,794)       $  (4,828,000)
                                                     ===========      ============       =+===========        =============

Net loss per common share                            $    (0.003)      $    (0.003)      $      (0.003)       $      (0.057)

Weighted average number of common
Shares outstanding                                    83,084,941        80,076,174          79,953,434           84,153,434
                                                     ------------      -----------       -------------        -------------
</TABLE>








SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

                                       F-4

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JULY 31, 2005 AND 2004
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)


<TABLE>
<CAPTION>
                                                                                   Deficit
                                  Common                                          Accumulated
                                   Stock                           Additional       in the           Stock
                                 Number of                          Paid in      Developmental    Subscriptions
                                   Shares        Amounts            Capital          Stage         Receivable             Total
                               -------------     -------          -------------  -------------   --------------        ----------
<S>                            <C>               <C>              <C>            <C>             <C>                   <C>
Issuance in October 1987 to
Principal Stockholder           49,000,000       $    4,900                                      $        (4,900)

Issuance in October 1987
  for  cash                      3,000,000              300       $  49,800                                 (100)       $   50,000

Issuance through initial public
offering of 15,000,000 units in
February 1988 for cash at $.05
per unit, net of issuance
cost of $220,900                15,000,000            1,500         527,600                                                529,100

Net Loss - 1988                                                                                  $      (156,821)         (156,821)

Exercise of Class A Warrants:

at $.45 per share                  312,588               31          14,035                                                 14,066

at $.10 per share                   21,000                2           2,098                                                  2,100

Costs relating to continuing
 registration of warrants                                          (29, 532)                                               (29,532)

Reclassification of common
  Stock                           (333,588)             (33)        (16,133)                                               (16,166)

Net Loss - 1989                                                                     (362,922)                             (362,922)
                                ----------       ----------      ----------      -----------     ---------------        ----------
Balance, July 31, 1989          67,000,000       $    6,700      $  547,868      $  (519,743)    $        (5,000)       $   29,825
                                ==========       ==========      ==========      ===========     ===============        ==========


</TABLE>











SEE  NOTES TO FINANCIAL STATEMENTS.



<PAGE>

                                      F-5

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JULY 31, 2005 AND 2004
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                               Deficit
                                   Common                                     Accumulated
                                    Stock                    Additional         in the           Stock
                                 Number of                     Paid in       Developmental    Subscriptions
                                   Shares      Amounts        Capital            Stage         Receivable      Total
                               -------------   -------     -------------    --------------   --------------  ------------
<S>                           <C>             <C>        <C>              <C>               <C>             <C>
Exercise of Class A Warrants:

at $.045 per share              5,201,205     $      520  $    233,534                                       $    234,054

at $.10 per share                 409,000             41        40,859                                             40,900

Exercise of Class B Warrants:

at $.15 per share                  25,000              3         3,747                                              3,750

Costs relating to continuing
 registration and solicitation
 of warrants                                                   (24,588)                                           (24,588)

Cash received for stock subscription                                                                     5,000      5,000

Reclassification of common
 stock                         (5,635,205)          (564)     (278,140)                                          (278,704)

Charge for stock bonus                                          40,000                                             40,000

Net Loss - 1990                                                                  (422,314)                       (422,314)
                               ----------     ----------  ------------      -------------    ----------------- -----------
Balance, July 31, 1990         67,000,000     $    6,700  $    563,280      $    (942,057)   $             -0- $ (372,077)
                               ==========     ==========  ============      =============    ================= ===========


</TABLE>






SEE NOTES TO FINANCIAL STATEMENTS.



<PAGE>

                                       F-6

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JULY 31, 2005 AND 2004
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                               Deficit
                                   Common                                     Accumulated
                                    Stock                    Additional         in the           Stock
                                 Number of                     Paid in       Developmental    Subscriptions
                                   Shares     Amounts         Capital            Stage         Receivable      Total
                               ------------   -------      -------------    --------------   --------------  ------------
<S>                           <C>            <C>         <C>              <C>               <C>             <C>

Sale of 3,297,000 shares
  through private placement

at $.08 per share               3,297,000    $      329   $    244,871                                         $   245,200

Exercise of Class A Warrants:

at $.10 per share               3,152,472           315        314,933                                             315,248

Exercise of Class B Warrants:

at $.15 per share                  60,000             6          8,994                                               9,000

Costs relating to continuing
registration of warrants                                       (80,607)                                            (80,607)

Reclassification of common
 stock                         (3,212,472)         (321)      (323,927)                                           (324,248)

Net Loss - 1991                                                                  (354,727)                        (354,727)
                               ----------    ----------   ------------      -------------    ----------------- -----------
Balance, July 31, 1991         70,297,000    $    7,029   $    727,544      $  (1,296,784)   $             -0- $  (372,077)
                               ==========    ==========   ============      =============    ================= ===========


</TABLE>






SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

                                       F-7


                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JULY 31, 2005 AND 2004
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)



<TABLE>
<CAPTION>
                                                                               Deficit
                                   Common                                     Accumulated
                                    Stock                    Additional         in the
                                 Number of                     Paid in       Developmental
                                   Shares     Amounts         Capital            Stage          Total
                               -------------  -------      -------------    --------------   --------------
<S>                           <C>            <C>         <C>              <C>               <C>

Exercise of Class A Warrants:

at $.10 per share               3,779,425     $     378   $    377,565                         $  377,943

Exercise of Class B Warrants:

at $.15 per share                   4,000             1            599                                600

Exercise of underwriters
warrants                           63,000             6          4,719                              4,725

Costs relating to:

Exercise of warrants                                           (33,191)                           (33,191)

Registration of privately placed
shares                                                         (55,496)                           (55,496)

Issuance for:  Compensation at
 $.065 per share                   50,000             5          3,245
3,250

Agency fee at $.10 per share       25,000             2          2,498                              2,500

Claim settlement at
$.085 per share                     1,000             1             84                                 85

Reclassification of common
stock                           9,181,265           918        618,200                            619,118

Charge for compensation                                        180,900                            180,900

Net Loss - 1992                                                                  (606,508)       (606,508)
                               ----------    ----------   ------------      -------------       ---------
Balance, July 31, 1992         83,400,690    $    8,340   $  1,826,667      $  (1,903,292)      $ (68,285)
                               ==========    ==========   ============      =============       ==========

</TABLE>







SEE NOTES TO FINANCIAL STATEMENTS.


<PAGE>

                                       F-8

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JULY 31, 2005 AND 2004
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)


<TABLE>
<CAPTION>
                                                                                       Deficit
                                   Common                                             Accumulated
                                    Stock                            Additional         in the
                                 Number of                             Paid in       Developmental
                                   Shares         Amounts             Capital            Stage          Total
                               -------------      -------          -------------    --------------   --------------
<S>                           <C>                <C>             <C>              <C>               <C>

      ISSUANCE FOR:

Compensation at $.065
 per share                        100,000        $       10     $        6,490                          $    6,500

Exercise of Underwriters
 warrants at $.075 per share      500,000                50             37,450                              37,500

Exercise of Class B Warrants
 at $.15 per share                 13,000                 1              1,949                               1,950

Retirement of 8,970,300
 shares  of stock              (8,970,300)             (897)                                                  (897)

Net loss for 1993                                                                        (470,621)        (470,621)
                               ----------        ----------       ------------      -------------       ---------
Balance, July 31, 1993         75,043,390        $    7,504       $  1,872,556      $  (2,373,913)      $ (493,853)
                               ==========        ==========       ============      =============       ==========

</TABLE>






SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

                                       F-9


                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JULY 31, 2005 AND 2004
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                                       Deficit
                                   Common                                             Accumulated
                                    Stock                            Additional         in the
                                 Number of                             Paid in       Developmental
                                   Shares         Amounts             Capital            Stage          Total
                               -------------      -------          -------------    --------------   --------------
<S>                           <C>                <C>             <C>              <C>               <C>
         ISSUANCE FOR:

Prior period adjustment                                                             $     369,329       $  369,329

Net loss for 1994                                                                        (342,783)        (342,783)
                               ----------        ----------       ------------      -------------       ----------

Balance, July 31, 1994         75,043,390        $    7,504       $  1,872,556      $  (2,347,367   )   $ (467,307)
                               ==========        ==========       ============      =============       ==========

Issuance for: Compensation at
  $.015 per share               2,000,000               200             29,800                              30,000

Net loss for 1995                                                                        (354,155)        (354,155)
                               ----------        ----------       ------------      -------------       ----------

Balance, July 31, 1995         77,043,390        $    7,704       $  1,902,356      $  (2,701,522)      $ (791,462)
                               ==========        ==========       ============      =============       ==========

Issuance for services           2,000,000               200            262,814                             263,014

Issuance for services             340,000                34              6,766                               6,800

Private placement               8,182,833               818                                                    818

Retired shares                 (2,055,556)             (205)           (92,294)                            (92,499)

Net loss for 1996                                                                        (275,551)        (275,551)
                               ----------        ----------       ------------      -------------       ----------

Balance, July 31, 1996         85,510,667        $    8,551       $  2,079,642      $  (2,977,073)      $ (888,880)
                               ==========        ==========       ============      =============       ==========


Video fee                         200,000        $       20       $      1,980      $         -0-       $    2,000

Legal fees                      2,548,867               254             37,979                              38,233

Retirement                     (2,548,867)             (254)                                                  (254)

Net loss for 1997                                                                        (170,924)        (170,924)
                               ----------        ----------       ------------      -------------       ----------

Balance, July 31, 1997         85,710,667        $    8,571       $  2,119,601      $  (3,147,997)     $(1,019,825)
                               ==========        ==========       ============      =============      ===========


Retired                       (24,757,233)           (2,475)                                                (2,475)

Net loss for 1998                                                                         (96,900)         (96,900)
                               ----------        ----------       ------------      -------------       ----------

Balance, July 31, 1998         60,953,434        $    6,096       $  2,119,601      $  (3,244,897)     $(1,119,200)
                               ==========        ==========       ============      =============      ===========
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.


<PAGE>

                                      F-10

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JULY 31, 2005 AND 2004
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                                       Deficit
                                   Common                                             Accumulated
                                    Stock                            Additional         in the
                                 Number of                             Paid in       Developmental
                                   Shares         Amounts             Capital            Stage          Total
                               -------------      -------          -------------    --------------   --------------
<S>                           <C>                <C>             <C>              <C>               <C>
       ISSUANCE FOR:

Issuance for services           2,500,000        $      250       $    49,750      $         -0-       $   50,000

Net loss for 1999                                                                       (210,594)        (210,594)
                               ----------        ----------       -----------       ------------      -----------

Balance, July 31, 1999         63,453,434        $    6,346       $ 2,169,351       $ (3,455,491)     $(1,279,794)
                               ==========        ==========       ===========       ============      ===========

Net loss for 2000                                                                         (5,053)          (5,053)
                               ----------        ----------       ------------      ------------      -----------

Balance, July 31, 2000         63,453,434        $    6,346       $ 2,169,351       $ (3,460,544)     $(1,284,847)
                               ==========        ==========       ===========       ============      ============


Issuance for services           3,250,000               325           147,175                              147,500

Issuance for services           2,000,000               200            99,800                              100,000

Net loss for 2001                                                                        (383,922)        (383,922)
                               ----------        ----------       ------------      ------------       -----------

Balance, July 31, 2001         68,703,434        $    6,871       $  2,416,326      $  (3,844,466)     $(1,421,269)
                               ==========        ==========       ============      =============      ===========

Issuance for debt              10,000,000             1,000             74,000                              75,000

Issuance for services           1,250,000               125             51,125                              51,250

Net loss for 2002                                                                        (247,997)        (247,997)
                               ----------        ----------       ------------      -------------      -----------

Balance, July 31, 2002         79,953,434        $    7,996       $  2,541,451      $  (4,092,463)     $(1,543,016)
                               ==========        ==========       ============      =============      ===========

Net loss for 2003                                                                        (215,794)        (215,794)
                               ----------        ----------       ------------      -------------      -----------

Balance, July 31, 2003         79,953,434        $    7,996       $  2,541,451      $  (4,308,257)     $(1,758,810)
                               ==========        ==========       ============      =============      ===========


Issuance for services             200,000                20              5,980                               6,000

Net loss for 2004                                                                        (252,861)        (252,861)
                               ----------        ----------       ------------      -------------      -----------

                               80,153,434        $    8,016       $  2,547,431      $  (4,561,118)     $(2,005,671)
                               ==========        ==========       ============      =============      ===========

</TABLE>





                       SEE NOTES TO FINANCIAL STATEMENTS.


<PAGE>

                                      F-11


                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JULY 31, 2005 AND 2004
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                                       Deficit
                                   Common                                             Accumulated
                                    Stock                            Additional         in the
                                 Number of                             Paid in       Developmental
                                   Shares         Amounts             Capital            Stage          Total
                               -------------      -------          -------------    --------------   --------------
<S>                           <C>                <C>             <C>              <C>               <C>
           ISSUANCE FOR:

Issuance for services           1,000,000        $      100       $      6,400      $        -0-       $      6,500

Officer compensation            2,000,000               200             10,800                               11,000

Converted from note payable     1,000,000               100              7,400                                7,500

Net loss for 2005                                                                        (266,882)         (266,882)
                               ----------        ----------       ------------      -------------       -----------
Balance, July 31, 2005          4,153,434        $    8,416       $  2,572,031      $  (4,828,000)     $ (2,247,553)
                               ==========        ==========       ============      =============      ============



</TABLE>








SEE NOTES TO FINANCIAL STATEMENTS.




<PAGE>

                                      F-12

                      MURRAY UNITED DEVELOPMENT CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                            STATEMENTS OF CASH FLOWS
                    YEARS ENDED JULY 31, 2005, 2004 AND 2003
                  AND CUMULATIVE AMOUNTS FROM OCTOBER 13, 1987
                               (DATE OF INCEPTION)

<TABLE>
<CAPTION>
                                                                                                          CUMULATIVE
                                                                                                         AMOUNTS FROM
                                                        2005                  2004        2003             INCEPTION
                                                     ------------         ----------     ----------      -------------
<S>                                                  <C>            <C>             <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                          $  (266,882)      $  (252,861) $    (215,794)    $     (4,828,000)
   Adjustment to reconcile net loss to net cash
     used by operating activities:
   Depreciation and amortization                          41,670             8,333          8,332              260,495
   Expenses paid through issuance of
     common stock by:
      Company                                             17,500               -0-            -0-              541,285
      Principal stockholder                                  -0-               -0-            -0-              220,900
   Changes in operating assets and liabilities:
     Loans receivable                                        -0-               -0-            -0-               (2,000)
     Accounts payable and accrued expenses               134,100           137,309          3,762              548,569
                                                     -----------      ------------   -------------        ------------

               NET CASH USED BY OPERATING
                   ACTIVITIES                            (73,612)         (107,219)      (203,700)          (3,258,751)
                                                     -----------      ------------   ------------         ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of fixed assets                               -0-               -0-             -0-            (260,497)
                                                     -----------      ------------   -------------        ------------

               NET CASH USED BY INVESTING
            ACTIVITIES                                       -0-               -0-             -0-            (260,497)
                                                     -----------      ------------   -------------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from notes payable - stockholder              72,749           100,000        211,588            1,841,325
   Payments to notes payable - stockholder                   -0-               -0-            -0-             (126,667)
   Proceeds from issuance of common stock                    -0-               -0-            -0-             1,804,76
                                                     -----------      ------------   -------------        ------------


         NET CASH PROVIDED BY FINANCING
                  ACTIVITIES                              72,749           100,000         211,588           3,519,418
                                                     -----------      ------------   -------------        ------------

NET INCREASE (DECREASE) IN CASH AND
     CASH EQUIVALENTS                                       (863)           (7,219)          7,888                 170

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR             1,033             8,252             364                   0
                                                     -----------      ------------   -------------        ------------
         CASH AND CASH EQUIVALENTS AT
                   END OF YEAR                       $       170      $      1,033    $      8,252        $        170
                                                     ===========      ============    ============        ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   Cash paid during the year for interest                    -0-               -0-            -0-               32,420

</TABLE>



                       SEE NOTES TO FINANCIAL STATEMENTS.


                                      F-13
<PAGE>

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2005 AND 2004


NOTE 1 - ORGANIZATION AND BUSINESS AND BASIS OF PRESENTATION

The Company was incorporated on October 12, 1987 under the laws of the State of
Delaware. It was organized to further develop and exploit commercially certain
technology for a rotary internal combustion engine that would utilize
alternative fuels. The patent and related rights to the use of the technology
have been assigned to the Company.

The Company has been in the development stage since inception. Activities of the
Company have been limited to the acquisition of funds from the sale of its
common stock; the acquisition of the licensing rights for and, subsequently,
title to, the engine technology; research and development related to the
development of an initial fuel-driven prototype of the engine that was
successfully tested on a preliminary basis in January, 1990; additional testing
and development of the engine prototype to obtain performance data for the
demonstration of the engine to potential licensees, and research relating to the
ability of a proprietary cleaning solution, which will be licensed to the
Company, to remove air pollutants from coal burning fuel gas and certain air
pollutants and contaminants from building air, as well as other industrial uses
and research relating to the production of hydrogen using a proprietary
technology. The proprietary cleaning solution, for which we have been granted
trademark protection under the name of Klenz-Safe, is owned by a corporation
whose sole shareholders are Mr. Anthony Campo and Mr. Dwight Foster, the
Chairman of the Board and Chief Executive Officer of the Company, respectively.
The Company intends to continue research and development on the Klenz-Safe
product and the production of hydrogen during the ensuing 12-month period.
Funding will be provided through loans from the Chairman of the Company, at his
sole discretion. The Company does not intend to continue its research and
development efforts with respect to its rotary engine during the next 12-month
period, unless it is able to raise the funds necessary to conduct such research,
of which there can be no assurances.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. However, as of July 31, 2005, the
Company had not been able to commercially utilize its engine technology,
cleaning solution or hydrogen technology to generate revenues or cash flows from
operating activities. As a result, it has suffered recurring losses from
operations from inception that have generated the net stockholders' deficiency
of $2,247,553 as of July 31, 2005 and have also generated significant working
capital deficiencies from time to time. Management does not expect the Company
to generate any significant revenues or positive operating cash flows during the
twelve-month period subsequent to July 31, 2005. The limited amount of liquid
resources available at July 31, 2005, and the inability to generate operating
revenues and cash flows raise substantial doubts about the Company's ability to
continue as a going concern.

The Company plans to continue research and development activities on at least a
limited basis through the twelve-month period subsequent to July 31, 2005.
However, management believes that the net liquid assets available at July 31,
2005 will not be sufficient to enable the Company to meet its obligations and to
continue as a going concern during the ensuring twelve-month period even on this
limited basis without limiting research and development and other operating
activities more severely unless it obtains additional debt or equity financing
and/or government sponsored research grants.

Management believes that continuation of the Company as a going concern during
the twelve-month period subsequent to July 31, 2005 and thereafter will depend
upon the Company's ability to obtain sufficient additional working capital to
fund research and development activities on its Klenz-Safe and hydrogen
technology and the general and administrative expenses to be incurred during the
remaining development period.


<PAGE>

                                      F-14


                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2005 AND 2004


NOTE 1 - ORGANIZATION AND BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

Potential sources of such working capital include the private or public sale of
common stock (the Company has historically depended primarily on the sale of
equity securities to finance its operations) and borrowing additional amounts
from related parties or other sources. However, there can be no assurances that
such financing will be available. The accompanying financial statements do not
include any adjustments that might result from the uncertainties related to the
ability of the Company to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers highly liquid
temporary cash investments with an original maturity of three months or less to
be cash equivalents.

DEPRECIATION

Depreciation of furniture and equipment is provided over the estimated useful
lives of the related assets using declining balance methods. As of July 31,
2005, all of the Company's furniture and equipment is fully depreciated.

ESTIMATES

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

RESEARCH AND DEVELOPMENT

Costs and expenses related to research and development are expensed as incurred.

NET LOSS PER COMMON SHARE

Net loss per common share was computed on the basis of the weighted average
number of shares of common stock outstanding during each period. The effect of
assuming the exercise of outstanding warrants was antidilutive and, accordingly,
not included in the computation of net loss per share.





<PAGE>

                                      F-15

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2005 AND 2004


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in the
financial statements and consists of taxes currently due plus deferred taxes
related primarily to differences between the bases of assets and liabilities for
financial and income tax reporting. The deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or
settled.

Deferred taxes also are recognized for operating losses that are available to
offset future federal income taxes. The Company accounts for investment tax
credits using the flow-through method, thus reducing income tax expense in the
year the related assets are placed in service.

NOTE 3 - FURNITURE AND EQUIPMENT

Furniture and equipment consists of the following:


                                      July 31
                    ---------------------------------------          Estimated
                          2005                      2004            Useful Lives
                    ----------------          -------------         ------------

Furniture           $          2,098          $       2,098           7 years
Equipment                    129,451                129,451           5 years
Patent                       125,000                125,000          15 years
                        ------------           ------------
                             256,549                256,549
Less accumulated
      depreciation           256,549                214,878
                       -------------           ------------

                    $              0           $     41,671
                    ================           ============

Depreciation expense totaled $41,670 and $8,333 for the years ended July 31,
2005 and 2004, respectively.

NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

                                         JULY 31
                           ------------------------------------
                                2005                   2004
                           ------------           -------------

Professional fees          $     13,817           $      22,742
Other                                 0                       0
                           ------------           -------------
                           $     13,817           $      22,742
                           ============           =============


<PAGE>

                                      F-16

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENT
                             JULY 31, 2005 AND 2004


NOTE 5 - NOTES PAYABLE - STOCKHOLDER

Effective April 15, 1994, the Company issued a promissory note (the "First
Note"), to Mr. Anthony Campo, the Chairman of the Board, Executive Vice
President, Secretary and Treasurer of the Corporation, to evidence cash advances
of $79,300. The First Note provided for an interest rate of 6% on the unpaid
balance and was due in equal installments for one-half of the principal amounts
on April 15, 1996 and the remaining one-half on April 20, 1997. The First Note
had warrants attached to purchase 1,666,667 shares of common stock at an excise
price of $0.06 per common share and expired on April 30, 1997. On November 15,
1994, the Company issued a second promissory note (The "Second Note"), to Mr.
Anthony Campo to evidence cash advances to the Company amounting to $100,000.
The Second Note provided for an interest rate of 6% on the unpaid balance and
was due in equal installments for one-half of the principal amount on April 15,
1997 and the remaining one-half on April 15, 1999. The Second Note had warrants
attached to purchase 7,930,000 shares of common stock at an excise price of
$0.01 per common share, which expired on April 30,1999.

Effective March 24, 1995, the Company restructured the obligations under the
First Note and the Second Note by issuing a new note payable to Mr. Campo in the
amount of $328,500. This restructured note (the "Third Note") provided for
interest at a rate of 6% per year on the outstanding principal balance in equal
quarterly installments of principal beginning March 24, 1995 through April 30,
1999. This Third Note was issued with warrants attached to acquire 32,850,000
shares of common stock at the excise price of $0.01 per share, which expired on
April 30, 1999.

Effective October 20, 1995, the Company renegotiated the outstanding debt and
interest owed to Mr. Campo under the Third Note. The new note (the" Fourth
Note") bore interest at 7.5% per year and matured on July 1, 1999. The principal
amount of $568,000 plus interest was convertible into common shares of the
Company at $0.0075 per share. It was also agreed that any additional monies
loaned to the Company would bear interest at 7.5% per year.

Effective August 1, 1998, the Company consolidated the outstanding principal and
interest owed to Mr. Campo under the Fourth Note with additional cash advances
of $102,090 made by Mr. Campo, with accrued interest thereon at 7.5% per annum.
The new note in the amount of $807,280 bore interest at 7.5% per annum matured
on August 31, 2000 and carried a conversion feature of one share for each
$0.0075 of debt converted. In March, 2000, Mr. Campo agreed to limit the number
of shares for which he may convert the August 1, 1998 Note to 100,000,000
shares.

Effective August 1, 2000, the Company consolidated the outstanding principal and
interest owed Mr. Campo under the August 1, 1998 Note. The new note in the
amount of $1,193,294 bore interest at 7.5% per annum, matured on August 31, 2001
and carried a conversion feature of one share for each $0.0075 of debt
converted. As of July 31, 2001, the note balance increased to $1,246,619 as
additional funds were loaned to the Company by Mr. Campo.

Effective August 1, 2001, the Company consolidated the outstanding principal and
interest owed to Mr. Campo under the August 1, 2000 Note. The new note in the
amount of $1,337,552 bore interest at 7.5% per annum, matured on August 31, 2002
and carried a conversion feature of one share of each $0.0075 of debt



<PAGE>


                                      F-17

                      MURRAY UNITED DEVEL0PMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2005 AND 2004


NOTE 5 - NOTES PAYABLE - STOCKHOLDER (CONTINUED)

converted. As of July 31, 2002, the note balance decreased to $1,330,321,
additional funds were loaned by Mr. Campo in the amount of $67,769 but he
converted $75,000 of debt into equity.

Effective August 1, 2002, the Company consolidated the outstanding principal and
interest owed to Mr. Campo under the August 1, 2001 Note. The new note in the
amount of $1,430,148 bore interest at 7.5% per annum, matured on August 31, 2003
and carried a conversion feature of one share for each $0.0075 of debt
converted. As of July 31, 2003, the note balance increased to $1,541,909 as
additional funds were loaned to the Company by Mr. Campo.

The Company had defaulted on its principal payment due August 1, 2003 and its
quarterly interest payments due November 1, 2000, February 1, 2001, May 1, 2001,
August 1, 2002, November 1, 2002, February 1, 2003, and May 1, 2003. As of July
31, 2003, a total of $110,197 in unpaid interest was owed to Mr. Campo under the
August 1, 2002 Note.

Accordingly, the balances of the restructured obligations were classified as
long-term debt at July 31, 2004 and 2003.

August 1, 2003, the Company consolidated the outstanding principal and interest
owed to Mr. Campo under the August 1, 2002 Note. The new note in the amount of
$1,652,106 bore interest at 7.5% per annum and matures on August 1, 2004. This
note also carries the conversion feature of one share for each $0.0075 of debt
converted, limited to 90,000,000 shares.

On August 1, 2004, the Company consdolidated the outstanding principal and
interest owed to Mr. Campo under the prior note. The new note in the amount $
1,876,014 bears interest at 7.5% per annum and matures on August 1, 2005 ( See
note 8). The note is convertible at one share of common stock for each $0.0075
of debt converted. In December 2004, $7,500 of debt was converted into 1,000,000
shares of common stock. At July 31, 2005, the note is convertible into
89,000,000 shares of common stock.

Mr. Campo has advanced $72,749 and $100,000 during the years ended July 31, 2005
and 2004, respectively. These notes also bear interest at 7.5% per annum.

NOTE 6 - STOCKHOLDERS' EQUITY AND INITIAL PUBLIC OFFERING

In October 1987, the Company issued 49,000,000 shares of common stock to Jerome
Murray and 5,989 shares of common stock to another officer in consideration of
$4,900 and $100, respectively. Payments for the shares were received in November
1989.

In an initial public offering of the company's common stock on February 26,
1988, the Company sold 15,000,000 units at a price of $0.05 per unit. Each unit
consisted of one share of common stock, one Class A redeemable common stock
purchase warrant and one class B redeemable common stock purchase warrant.
Proceeds, net of $220,900 of underwriting discounts and other registration
costs, amounted to $529,100. Concurrent with the public offering, the Company
issued warrants (the "underwriter's warrants") to the underwriter for nominal
consideration to purchase 1,500,000 units consisting of 1,500,000 shares of
common

<PAGE>

                                      F-18

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2005 AND 2004


NOTE 6 - STOCKHOLDERS' EQUITY AND INITIAL PUBLIC OFFERING (CONTINUED)

stock and certain other warrants to purchase additional shares (the other
warrants were not exercised and expired prior to July 31, 1991). The
underwriter's warrants were exercisable through February 1993 at an exercise
price of $0.0075 per unit. In February 1993, the Company received $37,500 from
the exercise of 500,000 underwriter warrants pursuant to which, the Company
issued 500,000 shares of common stock and 500,000 Class B stock purchase
warrants, whose exercise price is 150% of the Class B warrants, or $0.225 per
share, and expire on the same date as the Class B warrants.

The Class A warrants were exercisable through October 25, 1992 (as last extended
on June 25, 1991) at an exercise price of $0.10 per share. Effective for the
sixty-day period from June 16, 1989, the Company reduced the exercise price of
the Class A warrants to $0.45 per share. The Class B warrants were exercisable
through March 11, 2001 at an exercise price of $0.15 per share. There were
3,779,425, 3,152,472, 409,000 and 21,000 Class A warrants exercised in fiscal
years ending 1992, 1991, 1990 and 1989, respectively, at $.10 per share and
5,201,205 and 312,588 Class A. warrants exercised in 1990 and 1989, respectively
at $.045 per share. The remaining 2,124,310 Class A warrants expired in 1991.
There were 13,000, 64,000 and 25,000 Class B warrants exercised in 1993, 1991
and 1990, respectively, at $0.15 per share and 500,000 underwriter's warrants
exercised in 1993 at $0.075 per share. Proceeds, net of solicitation costs, from
exercises of Class A, Class B and underwriter's warrants were credited to
stockholders' equity.

As a result of the exercises and expiration of warrants, the Company has no
Class A warrants, 14,898,000 Class B warrants, and 500,000 underwriter's B
warrants outstanding as of July 31, 2000. The Class B warrants are redeemable at
any time at the option of the Company at a price of $0.0001 per warrant. Holders
of the Class B warrants have certain rights with respect to the registration of
those warrants under the Securities Act of 1933.

During 1991, the Company offered for purchase to qualified investors a minimum
total of 1,000,000 and a maximum total of 5,000,000 shares of common stock at
$0.08 per share and received $245,200 from the sale of 3,065,000 shares prior to
the closing of the offering on March 31, 1991. The Company issued an additional
232,000 shares as commissions in connection with certain of the sales for a
total of 3,297,000 shares issued.


NOTE 7 - INCOME TAXES

At July 31, 2003, the Company had net operating loss carry forwards of
approximately $4,000,000 available to reduce future federal taxable income, and
tax credits of approximately $59,991 available to offset future federal income
tax, that expire from 2004 through 2008.

Deferred income taxes are recognized for differences between the basis of assets
and liabilities for financial statement and income tax purposes. The utilization
of these tax attributes is contingent upon the Company's ability to generate
future taxable income and tax before the tax attributes expire as well as
Internal Revenue Code limitations. As a result, a valuation allowance equal to
the full extent of the deferred tax asset has been established. The change in
the deferred tax asset (as well as the valuation account) was approximately
$5,000 for the fiscal year ended July 31, 2003.


<PAGE>


                                      F-19

                      MURRAY UNITED DEVELOPMENT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2005 AND 2004


NOTE 8 - SUBSEQUENT EVENT

Subsequent to July 31, 2005 the Company consolidated the amount due to Tony
Campo which including accrued interest totaled $2,087,278. The new note shall
pay interest at 7.5% per annum payable quarterly on November 1, February 1, May
1, and August 1, with a balloon payment due August 1, 2006.

NOTE 9 - RECLASSIFICATIONS

Certain accounts in the prior year financial statements have been reclassified
for comparative purposes to conform to the presentation in the current year
financial statements.