<PAGE>


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


                                   FORM 10KSB


[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                  For the fiscal year ended September 30, 2005
                                            ------------------

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

            For the transition period from _________ to ____________


                          Commission File No. 000-33389


                              MORGAN BEAUMONT, INC.
                              ---------------------
             (Exact name of Registrant as specified in its charter)

                 NEVADA                                         65-1071956
                 ------                                         ----------
     (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                       Identification Number)

         6015 31ST STREET EAST,
           BRADENTON, FLORIDA                                      34203
           -------------------                                     -----
(Address of principal executive offices)                        (Zip Code)

       Registrant's telephone number, including area code: (941) 753-2875
                                                           --------------


        Securities registered pursuant to Section 12(b) of the Act: none


Securities registered pursuant to Section 12 (g) of the Act: 170,000,000 common
shares par value $0.001 per share


Check whether the issuer (l) has 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.
[X] Yes [ ] No

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

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

     Revenues for our fiscal year ending September 30, 2005 were $1,120,273.

The aggregate market value of our voting stock held by non-affiliates computed
by reference to the last reported sale price of such stock as of December 16,
2005, was $24,754,223.

The number of shares of the issuer's Common Stock outstanding as of September
30, 2005 is 60,376,153.

    Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]



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<TABLE>
<S> <C>
                                                TABLE OF CONTENTS
ITEM                                                                                                       PAGE

PART I
1.        DESCRIPTION OF BUSINESS                                                                            2
2.        DESCRIPTION OF PROPERTY                                                                           32
3.        LEGAL PROCEEDINGS                                                                                 33
4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                               34
PART II
5.        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                          34
6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                                         36
7.        FINANCIAL STATEMENTS                                                                              41
8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE              41
8A.       CONTROLS AND PROCEDURES                                                                           41
8B.       OTHER INFORMATION                                                                                 43
PART III
9.        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE REGISTRANT                    43
10.       EXECUTIVE COMPENSATION                                                                            52
11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                    54
12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                    56
13.       EXHIBITS                                                                                          56
14.       PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                            56
          SIGNATURES                                                                                        58
          INDEX OF FINANCIAL STATEMENTS AND SCHHEDULES                                                      59
          INDEX OF EXHIBITS                                                                                 __


                                                       2

</TABLE>


<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Certain statements contained in this Form 10-KSB constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934 (the "Exchange Act"). These statements, identified by words such as
"plan", "anticipate," "believe," "estimate," "should," "expect" and similar
expressions, include its expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and
are subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under the caption "Management's Discussion
and Analysis or Plan of Operation" and elsewhere in this Form 10-KSB. We do not
intend to update the forward-looking information to reflect actual results or
changes in the factors affecting such forward-looking information. We advise you
to carefully review the reports and documents we file from time to time with the
Securities and Exchange Commission ("SEC"), particularly our quarterly reports
on Form 10-QSB and our current reports on Form 8-K, and the exhibits filed with
or referred to in those reports.

As used in this annual report, the terms "we", "us", "our", "MBI", "Morgan
Beaumont", and the "Company" mean Morgan Beaumont, Inc. unless otherwise
indicated. All dollar amounts in this annual report are in U.S. dollars unless
otherwise stated.

Morgan Beaumont filed a definitive information Statement on Schedule 14C with
the Securities and Exchange Commission on July 6, 2004 (the "Information
Statement"). Reference is also made to the Information Statement for a
description of the business of the Company, the new Board of Directors and
management of the resulting corporation.

COMPREHENSIVE SUMMARY AND UPDATE
--------------------------------

We sell debit cards, prepaid phone cards and long distance services. We
initially sold our products only to distributors which placed cards with
retailers. We have recently begun selling directly to retailers as well. We also
provide software and services for the processing of debit card transactions. We
are gradually expanding our marketing and sales of cards directly to retailers.
We market debit cards predominantly under the Morgan Beaumont name and a limited
number under the Pronto Banco name, and we privately label debit cards for
others. We developed the software necessary for money to be loaded onto debit
cards at numerous banks, stores and other locations, which utilizes otherwise
incompatible operating systems. We refer to these retail locations where money
can be loaded onto our cards or where its cards are sold as "points of presence"
or "POPs." The relationship with some of the POPs was established through
distributors or created at facilities owned by the distributors. Most POPs
however are a direct relationship between us and banks and other financial
transaction companies like Western Union or Money Gram. Some but not all of the
POPs sell our cards, but all can load money onto our cards. Our software allows
banks, financial services companies, retailers and other POPs to communicate


                                       3


<PAGE>

debit card transactions. We give our software away for free, but charge the card
user a use fee each time a transaction is processed. We have only recently
introduced prepaid phone cards and the sale of long distance telephone services.
Our revenues are presently almost entirely from the wholesale sales of our debit
cards to distributors and the wholesale of long distance telephone services. We
are establishing a network of direct and indirect relationships with our POPs.
We continue to grow our number of POPs; however, we believe that if our systems
are widely adopted by others within its industry, usage revenues from the use of
our integrated software applications may eventually surpass revenues from debit
and prepaid card sales.

Our debit cards are presently sold to distributors that primarily target the
sub-prime credit market, which consists primarily of those consumers who cannot
qualify for a credit card or bank account or who are otherwise unattractive to
banks, such as people who are immigrants, recently divorced, young or have no
credit history or very low income. We also began marketing payroll cards
directly to certain large employers. We have an interactive voice response
activation system for automated activation of cards and customer relationship
management technology. We also developed our networking software that supports a
network to allow cash to be loaded on to cards, which we have branded the "SIRE"
Network. We were incorporated in July 11, 2000, and we spent the period from our
incorporation until January 2005 developing our systems, establishing load
location relationships and attempting to execute our business plan. We began
selling debit cards in September 2002, and then discontinued our card sales in
the fall of 2003. We resumed card sales again in January 2005.

We generate revenue from the sale of two primary debit cards, the "Morgan
Beaumont Debit Palm Card" and the "Morgan Beaumont Stored Value Visa." Card
distributors or, in some cases, retailers, acquire the cards from us, and agree
to pay us a monthly maintenance fee associated with keeping cards active and a
transaction fee each time the card is used. We can also generate fee based
revenue through our SIRE Network when consumers load cash into their card
account so the card can be used for day to day purchases.

As of September 30, 2005, we had approximately 81,000 POPs under contract in 48
states, of which 11,000 were operational and the balance were expected to be
operational within the next 90 days. We have sold 104,635 debit cards since
January 1, 2005, of which approximately 400 have been activated and the vast
majority of which have yet to be activated and are being held by our
distributors until they roll out their individual marketing campaigns.

Our prepaid phone cards are presently sold to retailers and to prepaid phone
card distributors on a wholesale basis. These resellers are attracted to our
phone cards due to their branded packaging, profitability and ease of use.
Through direct telemarketing efforts to retailers, we recently began to sell our
own prepaid phone cards directly to retailers in transactions for which we
anticipate much better margins. By concentrating on these two segments of the
marketplace, we maximize our profitability, generate repeated sales and
continually increase our revenues. Additionally, we sell a small portion of our
cards directly to consumers via our Internet presence and website. We are the
exclusive provider to Latin.com Enterprises Inc., a company dedicated to the
sale of phone cards and Internet services at airports.


                                       4


<PAGE>

Our recent acquisition and implementation of a number of select telephone
switches, computer, server, software assets, routes and other rights from MTel
Communications has given us the ability to offer prepaid phone cards and sell
telephone traffic or usage time on a wholesale basis to others who sell their
own prepaid phone cards or long distance telephone services. We purchased and
deployed the assets in the quarter ended June 30, 2005. We paid a total of
$250,000 and issued a total of 913,636 shares of our restricted common stock for
the communication assets. We are preparing to offer debit cards that can also be
used as phone cards that utilize our telephone switches and long distance
routes. We generated approximately $369,000 in revenue from our telephone
services in the quarter and year ended September 30, 2005 against approximately
$505,000 in costs. We believe we need to continue to generate prepaid phone card
sales as well as wholesale route and switch long distance services cards to
retailers is more profitable but wholesale of long distance services increases
volume of our sales. The more volume of minutes we carry over our switch and
routes, the better rates we receive from carriers. For the quarter and year
ended September 30, 2005, our revenues from phone cards was approximately
$101,000 and our revenue from wholesale usage was approximately $268,000. We
intend to continue to grow our telephone services and presently anticipate that
our telephone services revenue will over 90% of our total revenues for the next
fiscal quarter.

HISTORICAL OVERVIEW

Since our incorporation in 2000 until late in 2004, we had primarily been in the
formational process. We have been developing systems, learning the complexities
of the debit card market, and developing our relationships with banks,
distributors, processors and points of presence. Since inception, we have
suffered from lack of operating capital which has slowed our development. Our
first significant operating capital came as part of the merger with Pan American
Energy Corporation. The status as a publicly trading company allowed us to more
easily locate additional funding for our operations. We have had limited card
services and sales of approximately $355,900 in 2003, but never had a
substantial number of POPs and card sales until various contracts became
effective starting in January 2005.

MATERIAL RELATIONSHIPS

Our material contracts and relationships fall into the five main categories of:

o        BANKS, we issue cards or card programs that we sell to distributors or
         others.

o        PROCESSORS, who collect the money and handle the financial transactions
         among the banks and the cardholders and the card distributors.

o        DISTRIBUTORS, who structure the type of card programs they want and
         sell the cards to end users or other sub distributors.

o        POINTS OF PRESENCE (POPS), which are card sales and load locations.

o        CARD ASSOCIATION COMPANIES, such as MasterCard and Visa, which sponsor
         certain types of card issuances.

The technical sophistication and procedural experience of our material
relationships varies greatly. We have, and continue to have, delays in the roll
out of our card programs partially because of the failure of our business
associates to promptly implement sales programs and technology. While we have a
commitment for nearly 100,000 POPs, less than 15% are fully functional. Delays


                                       5


<PAGE>

in implementation have resulted from the lack of technical sophistication of the
owners of the POPs to dedicate adequate internal resources to the programs and
outdated equipment utilized by certain POPs. Likewise, certain banks have failed
to obtain a MasterCard or Visa approval of card programs to which they have
committed because they lacked the sophistication or dedication of resources to
complete the necessary documentation. We continue to seek more qualified and
dedicated relationships and to work with our existing relationships to assist
where possible.

We attempt to identify a demand for a particular type of card program based upon
our understanding of the marketplace or direct requests from customers. When we
develop or structure a card or card program, we attempt to match that program
with a bank which is best suited for the particular card terms and users. Once a
bank approves a program, it will refer us to the processors with which it does
business. There are no regional or national restrictions on the issuing banks or
processors. Some banks however cannot support large numbers of retail
transactions but would prefer payroll or other programs. Likewise, certain
processors desire to handle large numbers of retail transactions while others
might be better suited for payroll. Some banks are not big enough to handle
large card programs, while larger banks may not offer as favorable of pricing as
the smaller banks.

We currently have three to five key relationships in each of the five main
categories, which break down as follows.

<TABLE>
<S> <C>
------------------------- ---------------------- ----------------------- ---------------------- ----------------
Banks                     Processors             Distributors            POPs                   Credit Cards
------------------------- ---------------------- ----------------------- ---------------------- ----------------
1.   First Gulf Bank      1.  WildCard           1.  Prime Source        1.   Western           1.    MasterCard
2.   Bank First           2.  Symmetrex          2.  Bostrom                  Union             2.    Visa
3.   MetaBank             3.  National               International       2.   Transaction
4.   First Federal            Card Services          Group                    Management
     Bank                                        3.  Network             3.  IPP
                                                     Management, Inc.    4.  Bank of
                                                 4.  Virtual America
                                                     Lending Services    5.  Money Gram
                                                 5.  iPrePay             6.  iPrePay

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

</TABLE>

We continue to add banks, processors and distributors and we are negotiating
with Discover card to offer programs through them and negotiations with Visa to
increase its level of approval from an independent service organization to a
third party processor. Certain relationships may fall into more than one
category, such as iPrePay which has its own terminal in certain retailers. The
level of importance of a particular relationship also changes periodically as
some contracts and relationships become more or less important in that period.

RECENT HISTORY OF LOSSES, ACCUMULATED DEFICIT AND ANTICIPATION OF FUTURE LOSSES

We have incurred significant losses since our inception, and expect to have
ongoing requirements for additional capital investment to implement our business
plan. In addition, our ability to continue as a going concern must be considered
in light of the problems, expenses and complications frequently encountered by
entrance into established markets and the competitive environment in which we
operate. We suffered recurring losses from operations including a net loss of


                                       6


<PAGE>

$5,761,810 for the year ended September 30, 2005 and $1,031,335 for the nine
months ended September 30, 2004. Operating expenses for the year ended September
30, 2005, including non cash items of $1,245,771, were $5,736,503. Operating
expenses for the nine months ended September 30, 2004 including non cash items
of $49,523 were $1,029,125. As of September 30, 2005, we had an accumulated
deficit of $8,196,397 which includes non cash items from inception of
$2,479,932. We had not achieved profitability in any quarterly or annual period
since inception and we expect to continue to incur net losses for the
foreseeable future. Although revenues have grown in certain recent quarters, we
cannot be certain that we will be able to sustain these growth rates or that we
will obtain sufficient revenues to achieve profitability. Even if we do achieve
profitability, we cannot be certain that we can sustain or increase
profitability on a quarterly or annual basis in the future. We expect that costs
and expenses will continue to increase in future periods, which could negatively
affect future operating results.

DESCRIPTION OF PRODUCTS AND SERVICES
------------------------------------

DEBIT CARD PRODUCTS
-------------------

THE MORGAN BEAUMONT PALM CARD (THE "PALM" CARD) IS AN ATM AND DEBIT CARD. Our
Morgan Beaumont Palm Card is an ATM/Debit card that allows the user/consumer to
withdraw cash at over 750,000 ATM's or make purchases at more than 5,500,000
merchants worldwide. Our Palm Card can be used at any location on the Interlink,
Plus, Pulse & Star ATM networks and at restaurants, gas stations, car rentals
and other locations utilizing credit card services or with ATM functions.
Certain characteristics of the card are:

o        the card is PIN activated and balances/transactions can be checked at
         any ATM on the Cirrus and Maestro network, as well as via the Internet
         or by a toll free phone call;
o        the card is anonymous; they do not require a name to be embossed on the
         card;
o        the card is available in a one or two card set;
o        the card can be used for money transfers or to withdraw cash via ATM
         network, a debit card at retail locations worldwide or as a payroll
         card;
o        the card can be loaded with money from anywhere in the world via the
         Internet or by Cashier's Check or Money Orders via mail; and
o        the transaction accounts are registered and FDIC insured.

Many in the sub prime market have a need to transfer money from the United
States to their homes and families in Mexico, Asia and South America. Funds may
be transferred from one card to another by telephone. A funds transfer on our
Palm Card may be executed from one card to another for as little as $2.00. We
have targeted several key markets for distribution of our cards, such as
convenience stores, check cashing stores and payroll services. We began sales to
distributors targeting these markets in 2005. We hope to establish sales
directly to retailers in the future.

We also intend to market our Palm and Prestige Payroll Cards to employers and
payroll services, both domestically and internationally, as a low cost means of
paying employees instead of a check. Since the fiscal year end, we have been
negotiating with certain large employers for the sale of payroll cards and have
entered into two contracts before September 30, 2005 and will expand our
marketing efforts related to the card in fiscal 2006.


                                       7


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OUR MORGAN BEAUMONT STORED VALUE CARD (THE "STORED VALUE" CARD) IS A TRUE
PREPAID DEBIT CARD. Our Morgan Beaumont Stored Value MasterCard and Visa is a
prepaid debit card that can be used anywhere MasterCard or Visa is displayed
worldwide. The cardholder determines the spending limits by the amount loaded on
the card. Certain characteristics of the card are:

o        the card includes either a VISA or MasterCard hologram on the front of
         the card and can be used worldwide anywhere Master Card and Visa are
         accepted;
o        the card is PIN activated and balances can be checked at any ATM, by a
         toll free phone call or via the Internet;
o        the card is not anonymous. The holders name is embossed on the card;
o        the card is primarily a prepaid debit card, but can be used as an ATM
         card, charge card or debit card (i.e. either pin based or signature
         based);
o        the card can be used as a payroll card; and
o        the card is widely recognized as an instrument of payment for goods and
         services.

OUR MORGAN BEAUMONT PRESTIGE PAYROLL PROGRAM (THE "PRESTIGE PAYROLL" PROGRAM)
GIVES EMPLOYER COMPANIES THE ABILITY TO LOAD AN EMPLOYEE'S PAYCHECK ONTO A
STORED VALUE VISA DEBIT CARD. THE EMPLOYEE IS THEN ABLE TO ACCESS THEIR PAYCHECK
VIA ANY ATM, PAY BILLS BY PHONE, MAKE POS PURCHASES AND PURCHASE GOODS AND
SERVICES OVER THE INTERNET. Certain characteristics of the card are:

o        the card includes a choice of ATM Debit and ATM with the VISA hologram
         on the front of the card and can be used worldwide anywhere Visa is
         accepted;
o        the card is not anonymous. The holders name is embossed on the card;
o        the card has easy direct deposit, including online reports of
         transactions;
o        the card is primarily a prepaid debit card, but can be used as an ATM
         card or debit card (i.e. either pin based or signature based); and
o        the card is widely recognized as an instrument of payment for goods and
         services.


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<PAGE>

PREPAID PHONE CARD PRODUCTS
---------------------------

THE MORGAN BEAUMONT PREPAID PHONE CARD IS A PREPAID PHONE CARD AND LONG DISTANCE
CARD which incorporates a toll-free access number and a PIN (Personal
Identification Number) printed on an array of branded phone cards. Purchasers of
these prepaid phone cards are able to place international calls from 35
countries and domestic long distance calls from any touch-tone phone in the
Continental United States at favorable rates. We believe that the branded cards,
in conjunction with our business model and successful sales programs
internationally, will allow us to more effectively penetrate the marketplace for
both phone, stored value cards and create a growing base of loyal, repeat
customers.

We are moving to link prepaid calling cards with mobile phone handsets, thereby
leveraging our distribution to take advantage of the growing demand for prepaid
cellular services. The use of mobile phones has quickly expanded in the past
three years, and is predicted by many experts to continue growing exponentially.
As a result, there is an opportunity to enter the prepaid-cellular market
through branded handset/calling card combinations. These intelligent handsets
are coded to be used with MBI Services Group calling cards exclusively, and will
provide us with a recurring revenue stream as customers with handsets "recharge"
their account by purchasing new MBI Services Group calling cards or recharging
existing cards.

SERVICES
--------

MORGAN BEAUMONT, INTERACTIVE VOICE RESPONSE ("IVR") FARM AND SOFTWARE SOLUTIONS.
We acquired Typhoon Technologies, Inc. ("Typhoon") in December 2003 and merged
it into Morgan Beaumont, Inc. Typhoon had proprietary technology that was at one
time considered by the Company to be an integral part of our development and
operation of an IVR "farm" for the service of its customers, as well as
competitive companies.

The IVR Activation System is the most common method of providing first level
customer service for products which the consumer calls to receive information
regarding card balance, recent activity and other commonly asked questions. We
did not receive any direct revenue from this feature in the year ended September
30, 2005 and we do not anticipate any direct revenue from this feature in the
future. We consider this technology to be useful, but no longer consider it to
be a critical or material component of our business.

VALUE LOAD ("SIRE") NETWORK. We have labeled the platform for cash loading and
payment locations as the SIRE Network. The SIRE Network provides a brand name,
look and feel for our technology platform and network of retail load locations.
The SIRE network is open technology that allows multiple card issuers, once
certified, to load cards onto a national platform and ultimately as a national
payment platform for goods and services. This platform connects us to the POPs,
the bank and the processor. As the use of our cards or the SIRE network by
others increases, we anticipate revenue from this source could exceed card
sales.


                                       9


<PAGE>

POINTS OF PRESENCE
------------------

As part of the branding initiative, our network of POP locations was targeted to
reach at least 100,000 locations by December 31, 2005. In the year ended
September 30, 2005, we had in excess of 81,000 POPs under contract. Included in
the 81,000 POPs under contract are load locations whereby our customers would be
able to load funds onto their Stored Value cards in the United States. Of those
locations, approximately 10,000 were operational at September 30, 2005.

An agreement was signed with Western Union whereby we would be able to load cash
onto our Stored Value cards at Western Union locations in the United States. It
was anticipated that Western Union and us would be able to deploy within 6-8
weeks from the signing of the agreement, however, Western Union has been delayed
implementing us into their system and as a result, we have not been able to
utilize the approximately 45,000 Western Union locations to load cash onto our
cards. We anticipate that Western Union will be able to complete its
implementation in January of 2006.

Subsequent to September 30, 2005, we entered into an agreement with MoneyGram
increasing the POPs under contract by approximately 22,000. These additional
POPs became active on or about November 30, 2005.

The table below provides the number of POPs as of September 30, 2005 under
contract, that are operational as of September 30, 2005 and which are in beta
testing, in a roll out phase or in engineering development.

POPS UNDER CONTRACT AS OF SEPTEMBER 30, 2005 (APPROXIMATE)
----------------------------------------------------------

In Person Payment                                            3,000
Transaction Management                                       1,400
NMI                                                          6,000
iPrePay                                                     20,000
Western Union                                               45,000
Bank Of America                                              5,880
                                                            ------

        Total                                               81,280

POPS THAT WERE OPERATIONAL AS OF SEPTEMBER 30, 2005
---------------------------------------------------

In Person Payment                                            3,000
Transaction Management                                       1,470
Bank Of America                                              5,880
                                                            ------

Total                                                       10,350


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<PAGE>

POPS UNDER CONTRACT, BUT NOT OPERATIONAL, POPS WHICH ARE IN BETA TESTING, IN A
------------------------------------------------------------------------------
ROLL OUT PHASE, OR IN ENGINEERING DEVELOPMENT
---------------------------------------------

iPrePay                       20,000       iPrePay is experiencing delays in
                                           implementing due to lack of market
                                           acceptance by its customers of the
                                           new more expensive terminal
                                           necessary to load our cards

Western Union                 45,000       Working the technical interface
                                           anticipated to be done by January
                                           of 2006

NMI                            6,000       The customer is in the process of
                              ------       buying a software

TOTAL                         70,000       download program to push
                                           information to all of their
                                           locations

MECHANICS OF PRODUCTS AND SERVICES

The Morgan Beaumont Debit Palm and Stored Value Card are printed at a facility
that has been authorized by the card association under which the card is issued
such as MasterCard or Visa. The printing of the cards can only take place once
the card program has received approval from:

         (1) the card association,
         (2) the issuing bank, and
         (3) the issuing processor.

The cards are provided to consumers in a retail sale transaction for ordinary
debit cards and provided by the employer for payroll cards. The specific method
will depend on the type of card the consumer obtains.

         1. DEBIT CARD - This card product is one the consumer may purchase over
the counter at a retail merchant such as a convenience store, grocery store or
similar merchant. This type of card product is readily available and may be
packaged in a manner that allows the product to be displayed to the consumer so
they are able to clearly understand the basic features and benefits of the card
product prior to purchase.


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<PAGE>

         2. PAYROLL CARD - This card product is typically not purchased by the
consumer, but is provided by an employer as a means for the employer to directly
deposit a consumer's paycheck for them, rather than writing a paycheck. The
packaging of this card product will be less informative, but it will contain
documents clearly outlining the usage of the card as a payroll device.

There are fees the consumer pays for use of these card products. The fees for
the payroll card may be lower for certain types of activities than for an
ordinary debit card. In all cases, the issuing processors are responsible for
debiting the cardholder account for the correct fees. These fees are to be
distributed to us and other entities to pay for the services rendered for those
fees.

All record keeping for this activity is kept at the issuing processor's data
center and is sent to our data center for monthly reconciliation.

The functions for loading money to the card, including banking functions, money
movement and other details are described below:

HOW THE CARD WORKS
------------------

Consumer To Merchant Transaction:

1. PRESENTATION. Consumer presents card to merchant, merchant swipes card
through magnetic reader and is presented with a menu.

2. LOADING. Merchant selects "load" option, and indicates the load amount. POS
sends information to a data center to verify the pos device is authorized for
use.

3. VERIFICATION AND AUTHORIZATION. The data center checks POS device ID to
verify that the device is valid.

If the above POS device login is authorized, the data center performs the
following to verify the card is valid: (i) card active y/n, (ii) load velocity
check within program parameters y/n and (iii) load amount within min/max
parameters for program y/n.

4. APPROVAL. If the POS device receives an "accept" message, the merchant
accepts the cash from the consumer and is presented with another menu choice. If
the device receives a "decline" message, the merchant is given some kind of
detail on why the transaction was declined.

If the error message was pos device or merchant specific, the message indicates
the consumer should attempt to locate another load location or return later. If
the error message is due to a velocity issue on the card account, or other
processor related issue, the message indicates the consumer should call the
processor customer service group. If the error message was of a technical
nature, the message indicates the merchant should attempt the load again, or
should contact the technical support group at the number they have been
instructed to use.


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<PAGE>

5. LOAD AMOUNT VERIFICATION. The menu presented asks the merchant to verify the
cash load amount by viewing the dollar amount shown on the POS device, and
pressing a key to accept or re-enter.

6. TRANSMISSION. If the merchant chooses re-enter, they are asked to re-key the
dollar amount of the load, then verify as indicated above. If the merchant
chooses accept, the data is sent to the data center.

7. RECEIPT. The merchant prints a receipt for the consumer with load value, load
location address and name, and time and date stamp of the transaction.

The consumer is responsible for reviewing the load receipt to verify accuracy of
the load value prior to leaving the merchant location. The merchant assumes
responsibility for accuracy of the load value entered by their employees. If the
consumer has a dispute at the time of load, the merchant will typically use the
standard procedure for balancing their cash drawer against possible inaccurate
entries. If the consumer has a dispute after the fact, (checking balance hours
or days later, reviewing the receipt after leaving the store, etc.), the
consumer and merchant are responsible for resolving the disputed transaction.

8. TRANSACTION REGISTRATION. The merchant rings the cash value of the load into
their cash drawer.

9. DEPOSIT. The merchant deposits the receipts from the daily loads.

VALUE LOAD SETTLEMENT/ RECONCILATION
------------------------------------

The following deals only with the data and cash flow for the remittance process,
With other detail in the load function addressed in other documents:

1. VERIFICATION AND AUTHORIZATION. Once a load transaction has been approved at
the POS device by the data center and the card load has been authorized, the
merchant will accept the cash from the consumer and place that cash into their
cash drawer.

2. APPROVAL. Once the consumer accepts the accuracy of the receipt, the
transaction is finalized.

         (A) ISSUING PROCESSOR. The POS device transmits the load
detail to the data center.

         (B) REMITTANCE PROCESSOR. The POS device transmits the load
detail to the processor using Morgan Beaumont's proprietary process.

3. APPROVAL. The issuing processor accepts the load data, and passes this
information to Morgan Beaumont. Morgan Beaumont uses proprietary process using
logic to route the transaction information to the correct processors based on
the POS device terminal id.


                                  13


<PAGE>

4. TRANSFER. At the pre-determined time, the processor electronically moves the
funds defined in the daily POS activity reports from the Morgan Beaumont
settlement account to the processor settlement account so that the card accounts
can be charged with the value indicated. The processor uses the data sent by the
POS device to electronically move the funds from the merchant account to the
Morgan Beaumont settlement account.

FINANCIAL TERMS OF PRODUCTS AND SERVICES

FEE ALLOCATION. Banks and processors charge the consumer fees for certain
transactions, which we pass through to the consumer. In some cases, this is a
direct pass through with no added margin. In other cases, the standard fees
charged to the consumer allow a small margin to be added prior to passing along
to the consumer. The risks associated with these certain transactions are
dependent of the type of program between the bank, the processors and us. Some
programs expose us to risk, but controls are placed on by each to manage and
minimize the risk to each party. The table below provides the average fees paid
by the consumer. Each bank and processor will set their own fee structure.

               --------------------------------------  --------------
               CARDHOLDER FEE SCHEDULE PAYROLL         FEE'S
               --------------------------------------  --------------
               MONTHLY MAINTENANCE                     $4.95
               ATM DOMESTIC                            $1.75
               ATM INTERNATIONAL                       $5.00
               ATM DECLINE/INQUIRY                     $1.00
               POS DOMESTIC                            $0.75
               POS DOMESTIC DECLINE                    $0.75
               POS INTERNATIONAL                       $0.80
               POS INTERNATIONAL DECLINE               $0.80
               BALANCE INQUIRY ONLINE                  FREE
               LIVE CALL WITH CSR                      $1/MINUTE
               LOST OR STOLEN CARD                     $20.00
               CARD LIQUIDATION                        $10.00
               RESEARCH REQUESTS                       UP TO $25/HR
               DORMANCY FEE                            $7.50
               RETAIL LOAD                             $4.95
               ACH CREDIT/DEBIT                        $1.25
               TRANSFER FROM                           $1.00
               TRANSFER TO                             $1.00

The above table is representative of a typical fee arrangement of ours. There is
no standard arrangement; the fees vary from program and arrangements we have
with our processors.

ALLOCATION OF RISKS. We believe that the majority of risks associated with our
services are primarily borne by the banks and the processors. For some of our
programs and arrangements, the risks are limited to the associated bank. For


                                  14


<PAGE>

other programs and arrangements, we may be exposed to the risks associated with
the card products as more fully described below. In each program and
arrangement, controls are placed at each level of the transaction to minimize
the risk to each individual party. Each program and arrangement has a different
method of managing risk to each individual party.

FRAUD. We have experienced virtually no fraud to date, however this condition is
likely to change as our products are more widely used. We intend to continue to
take steps to minimize our risk of losses due to fraud. On debit cards, it is a
cash-on-cash transaction. The debit card requires possession of the card and the
actual personal identification number. Unless the bank processor makes a
mistake, there is very little known risk with the debit cards at the time. In
the event of a processor error, risk is on the processor. On a hologram card,
the risk of fraud is primarily on us; such risk generally arises from the
possibility of people purchasing the card products with intent to defraud.

If a bank fails to pay or do proper paperwork with the processor, MasterCard or
Visa can shut down the bank and all cards issued by it, even if the cards have
credit balances loaded onto them.

MATERIAL RELATIONSHIPS

The process of getting our products into the hands of consumers involves
contractual relationships at several levels: (1) the bank that issues and owns
the card, (2) the processor responsible for accepting transaction information
and keeping the card account up to date and (3) our distribution partners or
customers are responsible for the distribution of the cards to retail locations.
Our current and intended operations involve us working with some of the
following business partners to sell cards and services. Each of these
relationships plays a different role.

         A)       CARD ASSOCIATIONS: MASTERCARD/ VISA. All of the cards we
                  produce which have a hologram logo on the front will require
                  approval from the card association holding the trade mark for
                  the hologram logo. We obtain access to the network of
                  financial institutions and linked ATM's and point of sale
                  systems through an arrangement among banks and MasterCard and
                  Visa, as third party providers. The MasterCard and Visa
                  relationship provides us with a package of other networks such
                  as Star(TM) and Plus(TM) and Cirrus(TM) and similar networks.
                  Our third party provider licenses with both MasterCard and
                  Visa provide access to these networks without us having to
                  negotiate access to each of the individual networks
                  separately. We are currently negotiating an agreement with
                  Discover that will allow us to produce a Discover gift card.
                  We pay an annual fee to the card association to maintain the
                  program approvals.

         B)       BANKS. The Bank is the entity with the direct relationship to
                  the card association (MasterCard or Visa), and is responsible
                  for sponsoring us as a TPP (Third Party Processor), or ISO
                  (Independent Sales Organization). Without a TPP or ISO
                  relationship with the card association, we would not be able
                  to produce the card products for sale to consumers. Once an
                  approval from a card association is obtained, we work with an
                  issuing Bank to put out a card product or program. The terms
                  of these contracts will articulate our responsibility to
                  supply adequate customer service to answer consumer questions
                  and will define the card account parameters, i.e. the maximum
                  amount the consumer can have on the card, and daily usage


                                  15


<PAGE>

                  parameters for ATM withdrawals, etc. The bank has a schedule
                  of fees for services provided to the card holder. We are
                  charged these fees, and pass them on to the consumer each time
                  a transaction that incurs a fee takes place. The bank charges
                  the issuing processor a fee for certain transactions the
                  consumer conducts, which is collected at the time of the
                  transaction by the processor and distributed to the bank. The
                  bank also charges us a monthly fee to keep the card account
                  active. This fee is collected by the issuing processor who
                  distributes those funds to the bank and to us. We currently
                  have relationships with 5 banks, First Gulf Bank, Bank First,
                  MetaBank, First Federal Bank and Merrick Bank, but sold cards
                  issued by First Federal Bank and Gulf only during the year
                  ended September 30, 2005.

                  We have an agreement with Meta Financial Services located in
                  South Dakota as an issuer of MasterCard Stored Value card
                  product for us. We are in the process of obtaining a MSP and
                  TPP license approval with MasterCard via META. We anticipate
                  we will commence sales of our Stored Value product issued by
                  MasterCard and META in our Q1 2006.

                  We have a signed an agreement with Gulf Bank located in
                  Pensacola Florida as an issuer of VISA Stored Value card
                  product for us and have started shipping payroll Stored Value
                  cards issued by the bank. We are an ISO for Gulf Bank.

                  We have a signed agreement with Merrick Bank as an issuer of
                  Stored Value MasterCards. We have expended considerable time,
                  effort and money working with Merrick and its processor
                  Galileo in the development and approval process for various
                  Stored Value MasterCard products. We have approved programs
                  for Stored Value MasterCard programs with Merrick and are a
                  MSP and TPP with MasterCard with the bank. Merrick was
                  considered essential by us for issuing of a new Stored Value
                  MasterCard cards for a program called SIRE Elite which was
                  approved by the bank and Master Card and anticipated to have
                  launched in our Q4. We were notified by Merrick in Q4 that
                  it was unable to deliver product that quarter and unsure as to
                  when it would be able to deliver product. We believe these
                  delays adversely impacted our revenue for Q4 and Q1 in the
                  sale, activation and generation of fees for Stored Value
                  cards.

                  We received notification that we were approved to do business
                  with Bank First in November 2005 and that Bank First would be
                  sponsoring a new Stored Value card payroll program with us
                  called Ultra. We anticipate shipping this card in our second
                  quarter of fiscal 2006.

         C)       PROCESSORS. Banks require an approved processor have a
                  relationship with the TPP or ISO so that all of the consumer
                  transactions are tracked and debits/credits to the consumer
                  card accounts are properly adjusted. The terms of these
                  contracts articulate how we work with the processor to address
                  fraudulent use of the cards, how any potential shortfall is
                  addressed for a legitimate consumer load and the availability


                                       16


<PAGE>

                  of customer service information. The processor has necessary
                  regulatory and banking approvals to conduct transactions from
                  point of sale terminals and banks to apply credits and debits
                  to the consumer cards. We have direct relationships with the
                  processor to facilitate the consumer reconciliation of
                  purchase and value loads to their card. WildCard Systems and
                  National Card Services are examples of our current
                  relationships. We pay a fee to the processor for the initial
                  set up of the card program and the processor charges a fee to
                  the consumer for certain transactions performed by the
                  consumer. These fees are collected by the processor and
                  distributed to the appropriate party.

                  Fraud risk is minimized in lower floor limits (the ability of
                  a store to process a transaction without a `real time'
                  verification of the card balance), and the fact that these
                  cards are intended to be used in the US. With the checks and
                  velocity use parameters in place, we have not experienced
                  significant fraudulent use of cards to date. The processor has
                  a schedule of fees for services provided to the card holder.
                  We are charged these fees, and pass them on to the consumer
                  each time a transaction that incurs a fee takes place.

         D)       DISTRIBUTION PARTNERS. The relationship to the entities
                  responsible for selling the card products to the retail store
                  is a standard wholesale sales model. We sell the cards to the
                  distributor at a wholesale price; the distributor then adds
                  their margin and sells the card to the retail store. The
                  retail store typically adds a margin and sells the card to the
                  consumer. Each entity in this chain is free to establish their
                  own margins; we simply offer suggestions regarding market
                  trends. To place our card products into the retail
                  establishments that will sell them to the consumer, we work
                  with a variety of distribution partners that are currently
                  selling a similar or related product or service to the stores.
                  Our current strategy is to use pre-paid phone card
                  distributors and agents that wish to add additional products
                  to their line. The financial arrangement between us and the
                  distributor is a fairly typical wholesale situation. The
                  distributor purchases the cards from us at a wholesale price
                  and then sells the card products to the store with a margin
                  added. There are some fees collected from the consumer, (the
                  monthly maintenance is the most common) for which we will pay
                  the distributor a commission. This is to encourage the
                  distributor to continue providing service to the store so the
                  consumer is satisfied with the features of the card product.

         E)       POPs. We currently have material relationships with certain
                  firms and companies such as iPrePay, Inc, In Person Payment,
                  Transaction Management, who offer our products to consumers
                  and utilize our network system, as well profit from the sale
                  and use of our products through their businesses. These key
                  relationships expand the number of POPs which in turn is
                  anticipated to increase revenue by increasing the coverage for
                  use without having to increase costs for the production of
                  products.

         F)       AFFILIATIONS INVOLVED OR PARTICIPATING IN THE SIRE NETWORK. We
                  currently have an agreement in place with In Person Payment
                  ("IPP") that allows IPP to load cards that can be loaded on
                  the SIRE network. We also have an agreement with iPrePay which
                  is in the process of implementing the ability to load cards
                  that can be loaded on the SIRE network through many of our
                  160,000 locations. We are also currently negotiating with
                  several other money transmitters to allow them to load SIRE
                  network loadable cards.


                                       17


<PAGE>

         G)       OUTSOURCE/DESIGN/ PACKAGING SERVICES. We design the majority
                  of our products internally with the help of outside vendors
                  experienced in the industry. These vendors also provide
                  production and packaging services for us. By using both
                  internal and external sources for this activity, we use this
                  redundancy to reduce dependence on individual sources for our
                  product's design and manufacture.

LICENSING REQUIREMENTS. We have obtained a National Association of Securities
Dealer ("NASD") Federal Money Services Business License ("MSB"), which some
states require. Additionally, due to the nature of the business we conduct, many
states require us to obtain some type of money services business license to sell
or service the card products in that particular state. There is currently no
clearly defined policy at a Federal or State level defining which segment of the
business would require that type of licensing and which states will participate
in requiring the license. We have engaged Jones Day, a law firm familiar with
the current and emerging regulatory climate, to provide guidance in obtaining
all necessary licenses. Due to the changing regulatory situation, it is possible
that a state we are doing business in that does not currently require a license,
may change its opinion, laws, rules, regulations or interpretation thereof and
later require that we obtain a license. We have no ability to predict if that
will happen, or what the period of time to obtain a license may be if it should
occur. However, we have taken a proactive approach to this by regularly
contacting the State agency in charge of those matters, and requesting updates
on their policies. We anticipate this will provide adequate time to obtain any
license that may be required.

Jones Day is evaluating and advising us on various state licensing compliance
requirements that may exist for our Stored Value and Prepaid telecommunications
products. Although this is an expensive and timely process, we feel that the
compliance process is essential in the long term success of our business. To
date, we have not obtained any state licenses.

ACQUISITIONS
------------

During the year ended September 30, 2005, we had no acquisitions of any
operating entities. We did however purchase certain assets necessary to help
establish and operate our telecom subsidiary, MBI Services Group, LLC.

HISTORY OF OUR BUSINESS OPERATIONS
----------------------------------

Pan American Energy Corp. ("Pan American" or "PAEC") was incorporated under the
laws of Nevada on May 26, 2000 and our planned principal operations
commenced in 2000. Pan American was an exploration stage company engaged in the
acquisition, exploration and development of mineral properties. Pan American's
business plan was to carry out exploration work on a mineral claim referred to
as the Flint mineral claim in order to ascertain whether it possessed
commercially developable quantities of gold, silver, lead or zinc.


                                       18


<PAGE>

Morgan Beaumont, Inc., a Florida corporation ("Morgan Beaumont"), was formed on
July 10, 2000, as a sales and marketing company providing debit card products to
the sub-prime consumer. Morgan Beaumont developed a strategy that launched a
successful sales campaign, and shipped the first cards to consumers in late
2001. Morgan Beaumont had a relationship with only one bank and one processor at
that time. The bank discontinued support of the debit card products in mid 2003
which prevented us from engaging in sales activities. This resulted in a
cessation of all card sales until December 2004. Morgan Beaumont began to
cultivate multiple Banking and processing relationships, as well as undertake
the development of value loading technology to bolster our ability to produce
debit card products, and to attempt to provide the services for these products
we believed the consumer was requesting. Sales efforts for debit card products
resumed in late 2004, and sales began in 2005.

On May 10, 2004, Pan American entered into a merger agreement pursuant to the
Agreement with former Morgan Beaumont, which became effective with the State of
Nevada as of August 6, 2004 (the "Merger"), however, since Pan American had not
satisfied all of the conditions precedent under the Merger Agreement, the Merger
was not completed until the latter part of August 2004. Morgan Beaumont merged
with and into Pan American, the separate existence of Morgan Beaumont ceased and
Pan American continued as the Surviving Corporation under the name Morgan
Beaumont, Inc., a Nevada corporation. Our business changed from oil and gas
exploration development to the business of Morgan Beaumont, as described in this
Report.

We established MBI Services Group, LLC ("MBI Services Group") on January 27,
2005, as a wholly owned subsidiary with its principal business being the
operation of the select assets purchased from MTEL and the production of pre
paid telecommunications products. We completed the purchase of property and
equipment from MTEL Communications, Inc. on May 6, 2005, transferred the
telecommunications equipment to MBI Services Group, and began operations in
Miami, Florida as a telecommunications company. MBI Services has subleased space
from MTEL and its executives in the building where the equipment resides. The
subleased facility is located in a building that has suitable bandwidth and back
up resources to support the operation during power outages. MBI Services has
applied and received a federal license to operate. A significant amount of our
revenue has been generated by the sale and support prepaid telecommunications
products produced by MBI Services LLC. We anticipate that this will continue in
2006. MBI Services Group is positioned to sell services to multi-national
carriers through Independent Sales Office ("ISO") providers in specific targeted
markets. By leveraging its relationships and increasing its network of
providers, MBI Services Group intends to introduce new profitable,
communications products on a regular basis.

INDUSTRY OVERVIEW
-----------------

The acceptance of credit and debit cards by consumers in the United States has
steadily increased over the past ten years. According to the Nilson Report, the
use of credit-based card systems in the United States grew from $0.5 trillion in
1992 to $1.9 trillion in 2002. In order to remain competitive, small and larger
businesses have embraced credit and debit cards as a necessity to their future
success. Consumer expenditures using card-based payment methods are expected to
grow to $4.6 trillion by 2012 or 50% of all U.S. payments, representing a
compound annual growth rate of 9% from 2002 levels, according to the Nilson
Report.


                                       19


<PAGE>

SUB-PRIME CREDIT CONSUMERS. According to CARDWEB.com, trade publications and the
United States payment Card Information Network, "there are perhaps as many as 60
million un-banked consumers in the United States. Analysts estimate this group
of un-banked consumers spends over $15 billion annually in check cashing and
other financial services." These individuals may be unable to avail themselves
of traditional credit and banking channels or to obtain a debit or credit card
for a number of reasons such as, recent immigration to the US, bad credit
history, lack of credit history due to divorce or age (i.e. students) or recent
emergence from bankruptcy etc. Prepaid debit and cash cards are attractive
alternatives to these individuals.

The difference between a sub prime consumer using debit cards and a prime
consumer using debit cards is that the prime consumers debit card is linked to
the individual's bank account at a bank where the consumer has a checking or
savings account. The sub prime consumers card is linked to a pool account
established as a depository for all funds linked to the BIN supplied by the
bank. Each consumer's card is a sub account in the larger pooled account.

Often times a sub prime consumer is not able to open a bank account for a
variety of reasons such as a low FICO score, or a history of bouncing checks, or
some similar activities banks shy away from. By obtaining a Morgan Beaumont
debit card the sub prime consumer is able to utilize Morgan's pooled account as
a depository with the issuing bank of the Morgan Beaumont card. This card
account becomes the sub prime consumers account where their money is stored, as
opposed to a prime consumer who simply opens an account at that bank in their
own name.

Both prime consumer and sub prime consumer accounts are a cash-on-cash
transaction, meaning both consumers must have money in their respective accounts
to use the debit card.

The MBI debit card is for a sub prime consumer and works the same as other debit
cards with the exception that MBI debit cards can have cash loaded on the card
at retail locations.

SERVICES OFFERED TO SMALL BUSINESS AND SUB-PRIME CREDIT CONSUMERS. Small
businesses and sub-prime credit consumers have traditionally been under-served
or ignored by traditional financial institutions. When services have been
available to this market segment, it has been made available at a premium price
given the perceived heightened risk potential for liability for fraud,
charge-backs and other losses. Debit cards substantially reduce that risk and
allow for more competitive terms to be offered to small businesses and sub-prime
credit consumers alike.

THE PREPAID CARD BUSINESS is a relatively young industry with increasing and
dramatic growth expected to continue well into the future. Total industry
revenues worldwide are predicted to reach $11 billion annually. Sales in the
U.S. prepaid phone card industry are expected to reach $6 billion this year, up
from just $80 million in 2003 (International Telecard Association). There are
several large providers of prepaid phone cards including AT&T, MCI, Qwest and
Sprint, as well as regional firms like Verizon, SBC and Bell South. However, the
bulk of the prepaid market belongs to smaller, independent sales firms that
concentrate in this marketplace and cater to the specific needs and desires of
prepaid consumers. It is these smaller, highly focused companies that are able
to meet the needs of the specific groups who most often utilize prepaid calling
services. This is also the same group that large providers are partnering with
to distribute their products effectively into these well-defined markets.


                                       20


<PAGE>

Prepaid phone card users, as a group, are comprised of a vast array of different
types of consumers. This $80 billion per annum industry contains certain subsets
of the general population, including trans-nationals new to the US, seasonal and
migratory workers and lower income populations create the bulk of what can be
termed the "credit challenged" segment of the prepaid market. These consumers
all have the need and desire to use telecommunications services, but for various
reasons are unable to use traditional credit based services. Another segment is
the youth market. Highly mobile, they are very strong consumers of
communications services. A third segment includes business and recreational
travelers able to use prepaid calling services to save money when calling while
away from home. Other segments include individuals and organizations seeking to
develop a collectible card and groups involved in fund raising activities.

There are various reasons for consumers to use prepaid services. Often, these
reasons may center on the inability to establish sufficient credit relationships
with product and service providers. This group can further be divided into
markets based upon:

         o        limited income,
         o        lack of credit history due to youth, and
         o        limited residence time in the US.

Typically members within this group have few financial tools available to them,
with many not having any relationship with a bank or financial institution.
Collectively, these markets are often labeled the "sub prime" market.

An average long distance domestic call using a MBI Services Group prepaid phone
card may cost anywhere from 5 to 10 cents per minute. The same call made using a
MCI or AT&T calling card can cost as much as 8 to 10 cents more to over one
dollar per minute.

We offer branded cards specifically targeted to Mexican, South American, Asian
and Caribbean consumers. These demographic groups typically exhibit a high
degree of loyalty to companies that provide products and services specifically
designed for them.

Essentially, there are two types of business organizations that have evolved to
meet the needs of the prepaid marketplace. One was the technology-driven long
distance company (AT&T) that added a pre-paid transaction platform to their long
distance switch. The other was the distribution driven sales company that
private labeled their cards and resold the long distance company's services. MBI
Services Group is a hybrid of these two business models, encompassing aspects of
both types of organization.

BUSINESS STRATEGY
-----------------

Our goal is to become a market leader in the provision of card-based products
and services to small businesses and sub-prime credit customers by:

         o        EXPANDING IN EXISTING SMALL BUSINESS MERCHANT MARKET. We
                  believe we can expand our business by focusing on the small
                  merchant market. We intend to focus our efforts towards


                                       21


<PAGE>

                  merchants who are considered small businesses and who belong
                  to certain key ethnic groups and which have not historically
                  accepted electronic payment methods.

         o        FOCUSING ON SUB-PRIME CREDIT CUSTOMERS LOCATED IN CERTAIN
                  REGIONS. We intend to direct our advertising and sales efforts
                  towards certain regions and ethnic groups we believe have been
                  under-served by traditional financial institutions. We believe
                  by focusing first on these groups we may be able to rapidly
                  build a base of loyal customers.

We acknowledge that we face substantial competition and operational and
developmental hurdles in the pursuit of this goal and that we may never achieve
profitability.

SALES AND MARKETING
-------------------

PERSONNEL

As of September 30, 2005, we had 14 sales people, of which 7 are outside sales
and 7 are in inside sales. Our outside sales people visit customers and handles
sales outside of the office. Our inside sales personnel handle telemarketing and
sales from within our offices. We also have 4 marketing personnel who prepare
collateral materials, conduct market research, handle advertising, do some web
design and graphics design and handle customer training. Both groups' efforts
center around direct mail, telephone solicitation and industry direct
advertising.

TARGET MARKETS

We primarily market our debit card products to distributors who themselves
market directly to their target markets. These are typically consumers that for
a variety of reasons do not have a traditional banking relationship. The reasons
are primarily, but not exclusively, due to low credit scores. As discussed
elsewhere, this can be due to bankruptcy, divorce, youth, bad past credit
practices, low income or other factors. We believe these subprime consumers to
be the majority of non banking debit card users; however, we believe the use of
debit cards is growing among all consumers. Our cards are used in the same
manner as traditional credit and debit cards except they are a prepaid
instrument and value can be loaded on the cards at any SIRE network location.

To conduct the necessary transactions for bill payments, these consumers rely on
alternative financial products, such as money orders, to pay their bills. We
have established marketing tools and other information to the various retail
merchants that sell money orders and similar products to provide information to
consumers about the use of Money/Stored Value cards. The consumer can then make
an informed decision about the alternatives to using money orders for some of
their transactions. The demographic of the average debit card customer is
typically not defined by age or the geographic region they reside as much as by
individuals with a lower income and credit challenged.


                                       22


<PAGE>

During the year ended September 30, 2005, we primarily relied upon distributors
to get our debit card products into the retail locations. This required us to
identify companies selling other products or services into the types of retail
establishments commonly used by our target consumer.

We sold approximately 90,000 cards from inception through September 30, 2004 but
had no card sales in fiscal year 2004. In the year ended September 30, 2005, we
sold approximately 119,000 cards.

MBI Services Group initially focused on selling calling services that are
subcontracted from other facilities-based providers. Since the prepaid phone
cards are marketed as MBI Services Group's branded products, these providers are
transparent to MBI Services Group's customers and end-users. Since then MBI
Services Group has established its own switch sites and facilities while
developing proprietary network agreements with its carriers.

INTERNET WEBSITE. During the period covered by this report, we expanded the
content on our web site and attempted to develop an on-line ordering and
customer service system. While we intend to continue to update our website and
drive certain customers to the services offered on the site, we have changed the
focus of our website since the fiscal year ended September 30, 2005. The website
will be for interactive services for existing cardholders and to provide
information about us. Potential customers can still download a card application
but are no longer able to submit an application for a card over the Internet. We
have found that Internet sales to the subprime market were unsuccessful. We may
pursue Internet sales more aggressively in the future.

CUSTOMER RELATIONS. We out-source first contact customer service for all
members. Our content providers provide all back up and product related customer
service, interfacing with our support team. We attempt to keep detailed records
of every sales contact, including source of inquiry, client needs, employment
and income.

CUSTOMER RELATIONSHIP MANAGEMENT
--------------------------------

Handling of all bilingual customer service is currently shared between in-house
and outsource customer service. Our customer service department is scaleable to
handle one or multiple programs. We also have relationships with third party
firms who wish to provide their customer service, as needed.


                                       23


<PAGE>

COMPETITION
-----------

The markets for the financial products and services offered by us are intensely
competitive. We compete with a variety of companies in various segments of the
financial service industry and our competitors vary in size, scope and breadth
of products and services they offer. Certain segments of the financial services
industry tend to be highly fragmented, with numerous companies competing for
market share. Highly fragmented segments currently include financial account
processing, customer relationship management solutions, electronic funds
transfer and card solutions. We face a number of competitors in the debit card
and payment market. We also face competition from in-house technology
departments of existing and potential clients who may develop their own product
offerings.

We believe we compete with other providers of money and stored value cards
services on the basis of the following factors:

         o        quality of service;

         o        reliability of service;

         o        ability to evaluate, undertake and manage risk;

         o        speed in approving merchant applications; and

         o        price.

We believe our focus on smaller merchants and sub-prime credit clients gives us
a competitive advantage over larger competitors that have a broader market
perspective, and over competitors of a similar or smaller size that may lack our
extensive experience and resources in this market sector. Please see Risk
Factors for additional discussions of competition.

PROPRIETARY RIGHTS
------------------

We have filed various copyrights on Stored Value and Pre Paid telco products
during the year. We have taken such action to protect our brand and marketing
initiatives. We anticipate that we will continue this practice. We do not hold
any patents and have not received any copyright or trademark registrations to
date. Where appropriate, to protect our intellectual property rights, we intend
to rely on a combination of trademark, patent and copyright law, trade secret
protection, confidentiality agreements and other contractual arrangements with
our employees, affiliates, clients, strategic partners, acquisition targets and
others. Effective trademark, copyright and trade secret protection may not be
available in every country in which we intend to offer our services. The steps
taken to date by us to protect our intellectual property rights may not be
adequate. We have not patented or trademarked any of our work through the U.S.
Patent and Trademark Office, nor have we copyrighted any of our work through the
U.S. Copyright Office. We have filed trademark applications for the name Morgan
Beaumont, our logo and for the "SIRE" network. The trademark "SIRE" is already
held by a large financial services firm in the same trademark category that
applies to our business. Third parties may infringe or misappropriate our
intellectual property rights or we may not be able to detect unauthorized use
and take appropriate steps to enforce our rights. In addition, other parties may
assert infringement claims against us. Such claims, regardless of merit, could
result in the expenditure of significant financial and managerial resources.


                                       24


<PAGE>

Further, an increasing number of patents are being issued to third parties
regarding money and debit card processes. Future patents may limit our ability
to use processes covered by such patents or expose us to claims of patent
infringement or otherwise require us to seek to obtain related licenses. Such
licenses may not be available to us on acceptable terms. The failure to obtain
such licenses on acceptable terms could have a negative effect on our business.

Our management believes that our products, trademarks and other proprietary
rights do not infringe on the proprietary rights of third parties and that we
have licensed proprietary rights from third parties.

Our proprietary intellectual property consists of:

         (1) Interactive Voice Response software, to provide access to
         information in a database using a telephone and DTMF or voice for
         queries;
         (2) Customer Relationship Management software, for use in customer
         service applications that require tightly integrated and customizable
         interaction;
         (3) Software for various Point of Sale terminals, with functionality to
         facilitate non-cash transactions for barter exchanges using either IVR
         or magnetic card transactions; and
         (4) Application server and web server software, to provide the business
         logic necessary for proper data transmission of all transactions that
         may be initiated for any other applications listed above. This software
         is a very complex set of technologies with many distinct components,
         but requires the use of all parts.

We believe that most of our proprietary software is protected by common law
copyright, but none have been registered with the United States Copyright
Office.

EMPLOYEES
---------

As of September 30, 2005, we had 44 full time employees that we now categorize
as: 4 officers and executives; 14 sales; 4 marketing; 6 technology; 5 customer
service; 7 operations and 4 finance. We also have 5 full time consultants that
presently operate our telecom division. None of our current employees are
covered by any collective bargaining agreement and we have never experienced a
work stoppage. We consider our employee relations to be good. We believe our
future success will depend in large part on our continuing ability to attract,
train and retain highly skilled technical, sales, marketing and customer support
personnel.

INVESTMENT RISKS
----------------

An investment in our stock involves a high degree of risk. Investors considering
investing should carefully consider the risks described below and other risks
inherent in doing business before investing in our common stock. If any of the
following risks or other risks occur, our business, operating results and
financial condition could be seriously harmed. The trading price of our common
stock could decline due to any of these or other risks.

MOST STATES REQUIRE US TO UNDERGO A DIFFICULT AND COSTLY PROCESS OF OBTAINING
LICENSES TO LOAD STORED VALUE CARDS. Approximately 45 states have established
laws or regulations requiring entities taking or loading money on cards or


                                       25


<PAGE>

processing such transactions, to be licensed by the state unless that entity has
a federal banking charter and is operating from a licensed bank branch. We have
engaged counsel to contact the authorities of each state in which we conduct
business to determine our compliance needs. In the interim, we intend to
continue to rely upon the licenses of our affiliated banks. Some states may
require us to obtain our own license to conduct money loading operations. This
may mean that in order for us to be able to conduct our card loading operations,
we will be required to apply for and obtain licenses in nearly every state in
which we load money on to cards. This process will include us retaining special
attorneys to assist us in the application process. We will have to file an
extensive license application in each such state. We will have to post bonds to
operate in those states which range from $100 to $16,500 per state excluding
location fees. These licenses require us to post bonds in amounts between
$25,000 to $2,000,000 for each license. We will also have to qualify to do
business in each such state and thereafter file tax returns and be subject to
service of process in each state. We have applied to the state of Florida for
our license and are currently awaiting acceptance. We have also begun the
process of licensure with six additional states and are awaiting responses from
those states regarding details of their requirements. We do not presently know
if we will be able to obtain all of the licenses we need to fulfill existing and
proposed contracts. We also do not know if we will be able to obtain the funding
necessary to purchase the bonds necessary to secure all of the licenses. In most
states we will have to obtain the bonds prior to applying for the license.

OUR CAPITAL RESOURCES HAVE NOT BEEN GENERATED FROM OPERATIONS, AND WE MAY BE
DEPENDENT ON OUR ABILTIY TO SELL ADDITIONAL STOCK TO FUND CONTINUED OPERATIONS.

From inception to September 30, 2005, we generated cash from financing
activities of $9,668,677. This amount arose primarily from sales of our common
stock, and collections under a note receivable from a stockholder that was
acquired at the time of the Pan American merger discussed above. We have used a
significant portion of this capital to fund cash outflows for operating and
investing activities of $6,185,200 and $1,008,765, respectively for the period
since our inception to September 30, 2005. Since we have not attained profitable
operations and have been dependent upon obtaining financing to pursue our plan
of operations, there is no assurance that we will not require additional
resources in the future, or that we will be able to obtain financing in the
amount required on terms satisfactory to us.

OUR POINT OF PURCHASE OPERATORS MAY SUBJECT US TO LIABILITY IF THEY FAIL TO
FOLLOW APPLICABLE LAWS.

As part of our license requirements, we may be required to have agency
agreements with each of our load centers. Among other things the agreements will
require them to comply with the Patriot Act and anti-money laundering laws.
While we do not intend to be responsible for their actions, we could be subject
to state or federal actions against them if our load center agents violate or
are accused of violating the law. Such actions could compromise our credibility
with our customers, issuing banks and state regulators, generally making it
harder for us to do business. It could also cost us a great deal of money to
investigate, defend and resolve such matters. We cannot be sure that we could
afford such actions and be able to continue in business.


                                       26


<PAGE>

STATES MAY ADOPT EVEN MORE STRINGENT LICENSING RULES AND REGULATIONS. We
anticipate that many states will later adopt regulations or laws with which we
will be required to comply. There were over one hundred stored value bills
introduced in state legislatures in the first half of 2004 alone. We expect
regulation of this industry to only increase and become more complicated.
Regulatory and tax intensive states such as California will likely adopt a
typically complex and heavily regulated scheme. The lack of license requirements
in states such as California is more likely a result of their legislature's
inability to function effectively rather than the lack of desire to tax and
regulate. It may be even more costly or difficult for us to comply with the new
state regimes and more stringent rules and regulations adopted by state and
federal government agencies. These regulatory structures could prove too
expensive or complicated for us to comply with on a cost effective basis or at
all.

OUR STOCK IS MORE DIFFICULT TO TRADE SINCE IT IS CLASSIFIED AS A PENNY STOCK.
The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in penny stocks. Penny stocks are generally equity securities
with a price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure document prepared by the Commission, that:

         (a) contains a description of the nature and level of risk in the
market for penny stocks in both public offerings and secondary trading;

         (b) contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with respect
to a violation to such duties or other requirements of Securities' laws;

         (c) contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance of the spread
between the bid and ask price;

         (d) contains a toll-free telephone number for inquiries on disciplinary
actions;

         (e) defines significant terms in the disclosure document or in the
conduct of trading in penny stocks; and

         (f) contains such other information and is in such form, including
language, type, size and format, as the Commission shall require by rule or
regulation.

The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, the customer with:

         (a) bid and offer quotations for the penny stock;


                                       27


<PAGE>

         (b) the compensation of the broker-dealer and its salesperson in the
transaction;

         (c) the number of shares to which such bid and ask prices apply, or
other comparable information relating to the depth and liquidity of the market
for such stock; and

         (d) a monthly account statements showing the market value of each penny
stock held in the customer's account. In addition, the penny stock rules require
that prior to a transaction in a penny stock not otherwise exempt from those
rules; the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written acknowledgment of the receipt of a risk disclosure
statement, a written agreement to transactions involving penny stocks, and a
signed and dated copy of a written suitability statement. These disclosure
requirements may have the effect of reducing the trading activity in the
secondary market for our stock.

RISKS RELATED TO OUR BUSINESS
-----------------------------

The following is a summary of some of the risk factors which may have an impact
on our business efforts:

WE HAVE A LIMITED OPERATING HISTORY IN A NEW AND RAPIDLY CHANGING INDUSTRY. We
were formed in May of 2000. Accordingly, we have only a limited operating
history on which an evaluation of our prospects can be made. Such prospects must
be considered in light of the substantial risks, expenses and difficulties
encountered by new entrants into the sub-prime credit industry. Significant
on-going risks include our ability to:

         o        expand our subscriber base and increase subscriber revenues;
         o        compete favorably in a highly competitive market;
         o        access sufficient capital to support our growth;
         o        recruit, train and retain qualified employees;
         o        introduce new products and services; and
         o        upgrade network systems and infrastructures.

We cannot be certain that we will successfully address any of these risks. In
addition, our business is subject to general economic conditions, which may not
be favorable for our business in the future.

WE HAVE NOT BEEN PROFITABLE AND EXPECT FUTURE LOSSES. We have suffered recurring
losses from operations including a net loss of $7,417,935 for the year ended
September 30, 2005. Other operating expenses and cost of revenues for the year
ended September 30, 2005 were $5,806,503 and $1,075,445, respectively. We have
not achieved profitability in any quarterly or annual period since inception and
we expect to continue to incur net losses for the foreseeable future. Although
revenues have grown in certain recent quarters, we cannot be certain that we
will be able to sustain these growth rates or that we will obtain sufficient
revenues to achieve profitability. Even if we do achieve profitability, we
cannot be certain that we can sustain or increase profitability on a quarterly
or annual basis in the future. We expect that costs and expenses will continue
to increase in future periods, which could negatively affect future operating
results.


                                       28


<PAGE>

WE COULD BE REQUIRED TO CUT BACK OR STOP OUR OPERATIONS IF WE LATER NEED MONEY
BUT ARE UNABLE TO OBTAIN NEEDED FUNDING. We will need to raise additional
capital to expand our business and meet ongoing cash obligations throughout the
2006 fiscal year. Should we be unsuccessful in our efforts to raise capital, we
will be required to curtail our expansion plans or we may be required to cut
back or stop operations. There can be no assurance that we will raise additional
capital or generate funds from operations sufficient to meet our obligations and
planned requirements. As with our November 2004 and June 2005 private sale of
securities, we might have to sell shares at a time when our stock price is low.
In such an event, our shareholders could experience substantial dilution.

THE LOSS OF KEY PERSONNEL COULD WEAKEN OUR TECHNICAL AND OPERATIONAL EXPERTISE,
DELAY ENTRY INTO NEW MARKETS AND LOWER THE QUALITY OF OUR SERVICE. Our success
depends on the continued efforts of our senior management team and our
technical, marketing and sales personnel. We also believe that to be successful,
we must hire and retain highly qualified personnel. Competition in the
recruitment of highly qualified personnel in the sub-prime credit industry is
intense. Hiring employees with the skills and attributes required to carry out
our strategy can be time consuming. We may not be able to retain or successfully
integrate existing personnel or identify and hire additional qualified
personnel. If we lose the services of key personnel or are unable to attract
additional qualified personnel, our business could be materially and adversely
affected. We do not have key-man life insurance.

SECURITY AND PRIVACY BREACHES OF OUR ELECTRONIC TRANSACTIONS MAY DAMAGE CUSTOMER
RELATIONS AND INHIBIT OUR GROWTH. Any failures in our security and privacy
measures could have a material adverse effect on our business, financial
condition and results of operations. We electronically transfer large sums of
money and store personal information about consumers, including bank account and
credit card information, social security numbers and merchant account numbers.
If we are unable to protect this information or if consumers perceive that we
are unable to protect it, the security and privacy of our electronic
transactions, our growth and the growth of the electronic commerce market in
general could be materially adversely affected. A security or privacy breach
may:

         o        cause our customers to lose confidence in our services;
         o        deter consumers from using our services;
         o        harm our reputation; o expose us to liability;
         o        increase our expenses from potential remediation costs; and
         o        decrease market acceptance of electronic commerce
                  transactions.

While management believes that they have utilized proven applications designed
for premium data security and integrity to process electronic transactions,
there can be no assurance that our use of these applications will be sufficient
to address changing market conditions or the security and privacy concerns of
existing and potential subscribers.


                                       29


<PAGE>

We have engaged the firm of ePlus to conduct a PCI Security and Compliance audit
and certification for our network. If successful, this audit will provide us
with certification of our SIRE Network and will allow us greater access to
expand our POPs. We anticipate the process to be completed by December 31, 2005
and with a total cost associated with this audit process to be in excess of
$265,000. We have already expended $200,000 on this project to date which
includes systems improvements as well as consulting costs.

THE MARKET FOR ELECTRONIC COMMERCE SERVICES IS EVOLVING AND MAY NOT CONTINUE TO
DEVELOP OR GROW RAPIDLY ENOUGH FOR US TO BECOME PROFITABLE. If the number of
electronic commerce transactions does not continue to grow or if consumers or
businesses do not continue as projected to adopt our products and services, it
could have a material adverse effect on our business, financial condition and
results of operations. Management believes future growth in the electronic
commerce market will be driven by the cost, ease-of-use and quality of products
and services offered to consumers and businesses. In order to reach and
thereafter maintain our profitability, consumers and businesses must continue to
adopt our products and services.

THE DEBIT CARD INDUSTRY IS A FAIRLY NEW INDUSTRY THAT IS DEVELOPING AND BUILDING
OUT STANDARDS, PROCESSES AND RELATIONSHIPS. We are a developmental company
building out networks and relationships. In the course of this build out of the
network, relationships, POPs and related systems, there exists the possibility
that the associated companies may delay payments to us, or return our products
because their customer base is in the process of being educated as to benefits
and how to use debit cards. These delays and or returns could have an adverse
effect on cash flow, sales and inventory levels.

IF WE DO NOT RESPOND TO RAPID TECHNOLOGICAL CHANGE OR CHANGES IN THE INDUSTRY
STANDARDS, ITS PRODUCTS AND SERVICES COULD BECOME OBSOLETE AND WE COULD LOSE OUR
EXISTING AND FUTURE CUSTOMERS. If competitors introduce new products and
services embodying new technologies, or if new industry standards and practices
emerge, our existing product and service offerings, proprietary technology and
systems may become obsolete. Further, if we fail to adopt or develop new
technologies or to adapt its products and services to emerging industry
standards, we may lose current and future customers, which could have a material
adverse effect on our business, financial condition and results of operations.
The electronic commerce industry is changing rapidly. To remain competitive, we
must continue to enhance and improve the functionality and features of our
products, services and technologies.

CHANGES IN BANKING REGULATIONS COULD HURT OUR ABILITY TO CARRY OUT OUR BUSINESS
PLAN. We have designed our systems and card programs to comply and work in
association with applicable banking rules and regulations. A change of those
rules and regulations could require us to dramatically alter our software
programs, the hardware upon which we operate and our implementation and
operation of debit cards and stored value cards. Such changes could be costly or
impractical and we may not be able to modify our operations and technology to
comply with dramatic changes in banking regulations.

CHANGES IN THE PATRIOT ACT COULD IMPEDE OUR ABILITY TO CIRCULATE CARDS THAT CAN
BE EASILY LOADED OR ISSUED. Our current screening process is designed to comply
with the Patriot Act requirements that financial institutions know their


                                       30


<PAGE>

cardholders. If the Patriot Act or subsequent legislation increases the level of
scrutiny that we or our affiliated banks are required to adopt to know their
customers, it may be costly or impractical for us to continue to profitably
issue and load cards for our customers or even comply with new regulation
schemes.

IF MAJOR BANKS BEGIN TO TARGET THE SUB-PRIME MARKET, IT WILL CREATE SUBSTANTIAL
COMPETITION FOR US AND OUR PRODUCTS AND SERVICES. We operate among major
financial institutions, providing products and services designed to service the
sub-prime credit market. Large and small banks alike have traditionally not
sought the typically unprofitable and undesirable sub-prime market. This allows
the symbiotic relationship between banks and us, where the banks get access to
the cumulative deposits of the cardholders, without the trouble of administering
thousands of very small individual accounts of less reliable depositors. If
banks decide to directly target the sub-prime market before we are able to
establish a strong foothold, we will not be able to compete with established
banks which have substantially greater resources.

CREDIT CARD FRAUD OR COMPUTER HACKING COULD SUBSTANTIALLY HARM US AND OUR
OPERATORS. As with any technology company, we are always at risk of computer
fraud, hacking or other electronic crime. While we believe that we have
substantial systems in place to recognize and prevent computer fraud and
hacking, the relentlessness of hackers means no system is absolutely secure. Due
to our limited financial resources, any substantial computer crime and
particularly an electronic embezzlement would adversely affect our ability to
continue as a going concern.

INTERNAL PROCESSING ERRORS COULD RESULT IN US FAILING TO APPROPRIATELY DEDUCT
TRANSACTIONS FROM CUSTOMER ACCOUNTS. In the event of a system failure by us that
went undetected for a substantial period of time, we could allow transactions on
blocked accounts, false authorizations, fail to deduct charges from accounts or
fail to detect systematic fraud or abuse. Errors or failures of this nature
could immediately adversely impact us, our credibility and our financial
standing.

A CHANGE IN LICENSING LAWS COULD IMPAIR OUR ABILITY TO MOVE MONEY OVER A BANKING
NETWORK. We are dependent upon the use of electronic banking networks owned by
major financial services institutions and major banks to load value on the cards
and record deductions against cardholders' accounts. If we lose access to such
networks by virtue of contact issues or changes in the laws or regulations
governing their use, it could render our products useless.

THE REQUIREMENTS TO MAINTAIN HIGHER RESERVE ACCOUNTS COULD IMPAIR OUR GROWTH AND
PROFITABILITY. We are required to maintain reserve deposit accounts with the
financial institutions serving the cardholders. If we are required to deposit
higher than normal reserves with the financial institutions we work with, it
could have a material impact on our cash available for operations and impede our
expansion of business.

IF WE WERE TO LOSE OUR THIRD PARTY PROCESSOR LICENSE FROM MASTERCARD OR VISA,
THE LOSS WOULD SUBSTANTIALLY INTERFERE WITH OUR ABILITY TO TRANSACT BUSINESS. We
obtain our access to the network of financial institutions and linked ATM's and


                                       31


<PAGE>
point of sale systems through an arrangement among banks and MasterCard and
Visa, as a third party provider. MasterCard and Visa relationships allow us to
come with a package of other networks such as Star(TM) and Plus(TM) and
Interlink(TM) and Cirrus(TM) and similar networks. If we lose our third party
provider licenses with both MasterCard and Visa, we would be forced to
separately negotiate access to each of the individual networks. Any down time
associated with the loss of access in the networks could render our systems and
cards as issued useless. Even if we were then able to negotiate third party
processor agreements with the individual networks, we might not be able to do so
in time to preserve our business name and customer relationships. Thus, the loss
of third party processor relationships with both Visa and MasterCard could put
us out of business.

IF MASTERCARD OR VISA CHANGES THEIR REQUIREMENTS OR STOPS ISSUING DEBIT CARDS,
THE LOSS WOULD SUBSTANTIALLY INTERFERE WITH OUR MARKETING STRATEGY AND REQUIRE
US TO ISSUE ONLY NON-HOLOGRAM PRODUCTS.

Customers readily accept the Visa and MasterCard brands on debit cards. If we
were to lose our ability to issue cards under the Visa and MasterCard brands, we
would lose substantial market acceptance for our products.

SECURITY AND PRIVACY BREACHES IN OUR ELECTRONIC TRANSACTIONS COULD DAMAGE
CUSTOMER RELATIONS AND INHIBIT ACCEPTANCE BY THE MARKET OF OUR PRODUCTS. Any
failures in our security and privacy measures could have a material adverse
affect on our business, financial condition and results of operations. We are
built upon electronic storage and transfer of money in transactions handled by
both us and associated financial institutions. We also retain a great deal of
information about our customers including bank account, other credit card
information, social security information, where applicable, as well as merchant
account numbers and similar information. If we or the financial institutions
with which we do business are not able to protect the security and privacy of
this information or if we are merely perceived to be unable to protect such
information it could cause customers to lose confidence in our services and
deter customers from using our services. It could also expose us to liability or
increase our expenses to police such problems and rehabilitate public perception
of us after a mistake occurs. While we believe we utilize proven applications
designed for data security and integrity, there can be no assurance that the use
of these applications by both us and our financial institution contractors will
be sufficient to address changing market conditions or security and privacy
concerns of existing and potential customers.

CERTAIN DELAYS COULD CAUSE LOSS OF BUSINESS OPPORTUNITIES AND INHIBIT OUR GROWTH

Delays in the development of our programs or business plans could cause loss of
opportunities. These delays could be in areas such as:

         o        Deployment of our technology;
         o        Obtaining POPs;


                                       32


<PAGE>

         o        POPs becoming active;
         o        Interfacing with technology at the POPs;
         o        Adoption of technology;
         o        Revenue due to cards being activated;
         o        Revenue due to cards being used;
         o        Revenue due to training at distribution level;
         o        Revenue due to training at POPs level; or
         o        Revenue due to bank processor approvals for card programs.

The delays could cause occurrences such as delays in launching card programs
which could cause us to burn more cash, increase our need for outsourcing or
costs of licensing technology, render the cards unusable causing us to refund
customers' money and cause the card products to be returned to distribution. The
delays may also impact our cash flow and profitability and cause us to lose our
bank sponsorship which may lead to us losing our ability to load cash onto cards
and reduce the features of the cards. Delays due to interfacing with technology
at the POPs, delays in distribution down line deployment of inventory into POPs,
delays in revenue due to cards being used or delays in revenue due to training
at the POPs level could cause extended terms to be granted to distribution.
Delays in distribution down line deployment of inventory into POPs could also
delay the sale, activation and use of the cards as could delays due to adoption
of technology, delays in revenue due to training at the distribution level, or
delays in revenue due to training at the POPs level. Delays in revenue due to
bank approvals of programs or changes in card programs could cause cards to
become unusable and result in litigation.

PROVIDING CREDIT TO THE WRONG DISTRIBUTORS COULD HARM OUR TELECOM BUSINESS AND
INHIBIT OUR GROWTH

If we provide credit to the wrong distributors it could have a material adverse
effect on our telecom business, financial condition and results of operations.
We electronically transfer credit in advance onto our prepaid phone cards which
we sell to our distributors. If the distributor does not pay us as agreed, it
could harm our telecom business. In addition, if we are unable to protect or
consumers perceive we are unable to protect, the security and privacy of our
electronic transactions, our growth in the telecom market could be materially
adversely affected. Providing credit to the wrong distributors may:

         o        cause us embarrassing and damaging disclosure obligations;
         o        cause our customers to lose confidence in our services;
         o        deter consumers from using our services;
         o        harm our reputation;
         o        expose us to risk of fraud;
         o        expose us to liability; and
         o        increase our expenses from potential remediation costs.

HAVING INSUFFICIENT BANDWIDTH, PROBLEMS ON OUR TELECOM EQUIPMENT OR CARRIERS
BEING DOWN COULD IMPAIR OUR ABILITY TO EFFECTIVELY HOST OUR TELECOM NETWORKS


                                       33


<PAGE>

We require sufficient bandwidth as well as operating equipment and carriers to
host our telecom networks. Insufficient bandwidths, problems with our telecom
equipment or carriers could impair our ability to effectively host our telecom
networks which could have a material adverse effect on our business, financial
condition and results of operations.

ITEM 2.  DESCRIPTION OF PROPERTY

FACILITIES
----------

In the year ended September 30, 2005, we moved our corporate headquarters from
2280 Trailmate Drive, Sarasota, FL, where we occupied approximately 3500 square
feet, to 6015 31st East, Suite 201, Bradenton, FL 34203, telephone number:
941-753-2875, where we occupied approximately 10,000 square feet. Subsequently,
we moved our office location from the second floor to the first floor, Suite
101, in the same building as we had been occupying which increased the space we
utilized to 20,000 square feet. We intend to sub-lease the space in Suite 201
and have been actively showing the space to potential lessees. Once the
sub-lease is complete, we believe that its cost per square foot will be
significantly reduced. Currently, total base monthly rent is approximately
$28,000. The lease of our corporate office expires on December 31, 2008.

We currently maintain our database, software and operations at 1 Wilshire Blvd
in Los Angeles, California 90017, as a "mirrored" location for security and
redundancy in the case of an emergency or power outage.

MBI Services Group, LLC currently sub-leases from Mtel, Inc. on a month to month
basis approximately 2,500 square feet of office and co-location
telecommunications space located at 1080 NW 163rd Drive, Miami, Florida. We
anticipate moving our operations for MBI Services Group to a more permanent
location in fiscal year 2006.

ITEM 3.  LEGAL PROCEEDINGS

We are involved in certain litigation in the normal course of business. We do
not believe the resolution of these matters will have a material adverse effect
on our financial position or results of operations. Listed below is a list of
litigation active on September 30, 2005:

MORGAN BEAUMONT, INC. V. ROBERT W. CLOUD, CASE NO. 2004-CA-4392 (SARASOTA
-------------------------------------------------------------------------
COUNTY, FLORIDA):
-----------------

Wade Cloud was a former short-term employee hired to be a sales person. He was
terminated for cause by us after only a few months of employment. In an attempt
to settle this dispute without litigation, we offered to pay all compensation
due to Mr. Cloud under his employment agreement through the date he was
terminated and the offer was refused. The compensation offered to Mr. Cloud has
been placed in escrow with our attorney in the case and is not included on our
balance sheet.

We filed suit against Mr. Cloud in May 2004 in order to invalidate his
employment contract. Subsequently, as a counter to the lawsuit, Mr. Cloud has
alleged that he has ownership rights to software developed by Typhoon Voice
Technology for Morgan Beaumont. The two cases were consolidated under the case
name, Robert W. Cloud v. Morgan Beaumont, Inc., Case No. 2004-CA-4392. We


                                       34


<PAGE>

additionally filed suit in September 2004 in Federal Court in Sarasota County,
Florida against Mr. Cloud, Cloud Consulting, which as of November 2004 has gone
unanswered. Mr. Cloud has since through his attorney requested arbitration in
Tampa, Florida for resolution in December of 2004. Our attorneys have submitted
a written opinion that Mr. Cloud's counter suit is not material. Management
believes they have a strong likelihood of success in this matter.

MORGAN BEAUMONT, INC. V. FIRST NATIONAL BANK OF CENTRAL TEXAS, FISCRIP,
-----------------------------------------------------------------------
TRANSEND, SUPERIOR BANK, FINANCIAL SERVICES INTERNATIONAL ("FSI"), VIRTUAL
--------------------------------------------------------------------------
MONEY, OPTIMUM PAY, CASE NO. 8:03-CV-2499-T-17MAP (MIDDLE DISTRICT OF FLORIDA):
-------------------------------------------------------------------------------

Suit was filed by us in Federal Court in Tampa, Florida in April 2004, against
the defendants named above, maintaining that the banks and processors named
failed to submit paperwork to MasterCard on Morgan Beaumont card programs while
approving the programs and advising us that MasterCard authorized the shipment
of Morgan Beaumont cards to our customers. The card program was canceled by
MasterCard due to the banks' failure to properly submit the appropriate
applications. We are seeking recovery of costs as well as damages in excess of
$75,000. No trial date has been set.

In November 2004, we had reached a settlement in the referenced lawsuit with two
defendants, FSI and TranSend, pursuant to which FSI and TranSend paid us
$10,000, forgave approximately $50,000 in notes and debt, and granted us a
royalty free license to use their software and provide us with 10,000 cards free
of charge. FSI has also agreed to use our software to load cards. Our action
against First National Bank of Central Texas, the primary defendant, is not
settled and remains pending.

CLAIMS MADE BY EMPLOYEES
------------------------

Two employees have complained of improper actions by one of our officers and
each made notification to our Human Resource Manager. Our Human Resource Manager
reported through channels to our audit committee who conducted a thorough
investigation of the claims with the assistance of outside counsel and found
them to be unsupported. To our knowledge, there has been no filing with the
EEOC. No lawsuit has been filed. We have concluded and been advised by counsel
that even if the claims were found to be true, they would not likely rise to a
level to provide any material responsibility for us. We expect to prevail if a
lawsuit is ever brought by these employees.

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

There were no matters submitted to a vote of shareholders this fiscal year. We
have scheduled an annual meeting for February 1, 2005 to be held in our
corporate offices.


                                       35


<PAGE>
                                     PART II

ITEM 5.  MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

MARKET INFORMATION
------------------

Our shares are currently trading on the OTC Bulletin Board under the stock
symbol MBEU. Formerly our shares traded under the symbol AGBM from May 16, 2002
through March 22, 2004 and PAEY from March 23, 2004, until it began trading as
MBEU on August 9, 2004 as a result of the merger between Pan American and Morgan
Beaumont. The high and the low prices for our shares for each quarter of our
last two fiscal years; and supplemented through the last quarter of operations
completed prior to filing the last amendment of this Form 10-KSB/A. Price ranges
for periods shown prior to September 1, 2004 relate to our operations prior to
its merger with Morgan Beaumont.

FISCAL QUARTER ENDED                                   HIGH                LOW
August 31, 2002                                      $   4.75           $   0.35

November 30, 2002                                    $   6.90           $   2.75

February 28, 2003                                    $   7.40           $   3.00

May 31, 2003                                         $   4.05           $   1.65

August 31, 2003                                      $   0.90           $   0.41

November 30, 2003                                    $   0.49           $   0.41

February 28, 2004                                    $   1.45           $   1.45

May 31, 2004                                         $   0.75           $   0.75

August 31, 2004                                      $   0.52           $   0.42

September 30, 2004                                   $   0.44           $   0.34

December 31, 2004                                    $   0.98           $   0.11

March 31, 2005                                       $   1.76           $   0.51

June 30, 2005                                        $   0.90           $   0.44

September 30, 2005                                   $   1.14           $   0.43

The source of the high and low bid price information is the OTC Bulletin Board.
The market quotations provided reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not represent actual transactions. We
are not aware of any sales or transfer or any trading of our shares or any
private transactions prior to its merger with the public company.

HOLDERS OF COMMON STOCK
-----------------------

As of September 30, 2005, there were one hundred four (104) registered
shareholders of our common stock.


                                       36


<PAGE>

DIVIDENDS
---------

There are no restrictions in our Articles of Incorporation or bylaws that
restrict it from declaring dividends. The Nevada Revised Statutes, however,
prohibits us from declaring dividends where, after giving effect to the
distribution of the dividend:

         A.       We would not be able to pay our debts as they become due in
                  the usual course of business; or

         B.       Our total assets would be less than the sum of our total
                  liabilities, plus the amount that would be needed to satisfy
                  the rights of shareholders who have preferential rights
                  superior to those receiving the distribution.

We have neither declared nor paid any cash dividends on our capital stock and do
not anticipate paying cash dividends in the foreseeable future. Our current
policy is to retain any earnings in order to finance the expansion of our
operations. Our board of directors will determine future declaration and payment
of dividends, if any, in light of the then-current conditions they deem relevant
and in accordance with the Nevada Revised Statutes.

RECENT SALES OF UNREGISTERED SECURITIES - DURING REPORTING PERIOD
-----------------------------------------------------------------

The issuance of shares of our common stock of under the merger was done without
registration under the Securities Act of 1933, amended, or qualification under
the securities or "blue sky" laws of any jurisdiction. The issued shares of
common stock bear a restrictive legend stating that the securities have not been
registered under the Securities Act of 1933 and set out the restrictions on
transferability and sale of the securities. The exemption which we relied on to
issue the common stock in the merger was Rule 506 of Regulation D of the
Securities Exchange Act. Rule 506 requires us to inform unaccredited investors
about the lack of registration and resale restrictions of these securities and
to provide these investors with certain information about us which includes
financial and other information. The detailed information concerning the
issuance has been included in the Form 14C of the Company filed with the
Securities and Exchange Commission in connection with the merger on July 6,
2004.

SUBSEQUENT TO YEAR END
----------------------

Agreement with MoneyGram
------------------------

On October 31, 2005, we entered into an agreement with MoneyGram pursuant to
which we will allow MoneyGram to accept funds from cardholders at MoneyGram's
domestic agent network locations. MoneyGram and us will establish a systems
interface that allows for processing of cash loads either directly between
MoneyGram and our proprietary systems or through a third party processor which
shall process the cash loads and/ or transfer information between MoneyGram and
our proprietary systems. A consumer fee for the service shall be paid to us for
each ExpressPayment transaction completed on our behalf. A copy of this
agreement is attached to our Form 8-K filed with the SEC on November 18, 2005
and incorporated herein by this reference.


                                       37


<PAGE>

ITEMS 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

PLAN OF OPERATIONS
------------------

SUMMARY.

Information prior to August 24, 2004 (the date of the reverse acquisition)
related to our predecessor entity, Pan American, has been omitted. From a legal
perspective, Pan American is the surviving company and thus continues its public
reporting obligations. However, from an accounting perspective, Morgan Beaumont
is treated as though it acquired Pan American. Therefore, all financial
information presented in this 10KSB includes Morgan Beaumont's standalone
results from the period July 10, 2000 (date of incorporation) to September 30,
2005.

As part of the merger, Morgan Beaumont changed its year end from December 31 to
September 30. As a result of this change information contained herein includes
the year ended September 30, 2005 and the nine months ended September 30, 2004.

RESULTS OF OPERATIONS. Our planned principal operations commenced in 2001,
however, to this date we have had limited revenues. In June 1975, the Financial
Accounting Standards Board, in its Statement No. 7, set forth guidelines for
identifying an enterprise in the development stage and the standards of
financial accounting and reporting applicable to such an enterprise. In the
opinion of management, we and our activities from our inception through
September 30, 2005 fall within the referenced guidelines. Accordingly, we
reported our activities in accordance with the aforesaid Statement of Financial
Accounting Standards No. 7.

LACK OF PROFITABILITY OF BUSINESS OPERATIONS SINCE 2001. We were initially
focused exclusively on the sales of our products. It became apparent there was a
flaw in solely focusing on the sales of our products, so management made the
decision to expand our focus to include the development of a process to allow
the consumer to perform value loads in a retail environment. The time and
expense of developing the process and associated technology has kept us from
achieving profitability to date.

When we began sales activities in 2001, those efforts were halted due to an
issue involving MasterCard and the issuing bank programming deviancies that the
bank had in supply paperwork to MasterCard on our programs; we then stopped
shipping our products and were working with multiple banks processors to develop
a program with the bank, MasterCard and Visa approval. We filed a lawsuit
against that issuing bank as described on page 34 of this report. During that
time, we had also been developing processes and technology to allow cards to be
loaded on the cards. Additionally, our revenues were initially used to maintain
operations. We needed to raise additional revenue to proceed with operations and
launch our programs, products and services.

This process is now well defined and the technology has been rolled out in a
limited release and is now ready for all of our strategic partners to commence
rolling out in a general availability mode. We anticipate profitability will
occur when we have approximately no less 50,000 retail load locations
operational and approximately 100,000 to 150,000 cards actively used by
consumers and a sufficient number of POPs in the geographic location which are
higher in density in cardholders. Profitability is also dependent on the
expansion of load stations and the expansion of the programs for the card
products.


                                       38


<PAGE>

In fiscal 2005, we received limited acceptance of our debit products offered in
the market primarily related to delays in the activation of POPs, and brand
recognition. To facilitate the correction of these deficiencies we purchased
property and equipment from Mtel, Inc. enabling us to provide prepaid phone
cards into the market place. Prepaid phone cards are a readily accepted product
in our targeted Sub-prime market. In July, we began releasing phone cards to the
bodegas and convenience stores that service our target market at attractive
prices to enhance brand recognition and establish relationship with distributors
and retailers in the market with a product they are more familiar with. We will
begin cross marketing our products during fiscal 2006 and launch combined
products in order to penetrate the market more effectively.

SALES AND REVENUES. Revenues for the year ended September 30, 2005, the nine
months ended September 30, 2004 and the period July 10, 2000 (date of
incorporation) to September 30, 2005 were $1,089,673, $58,602, and $1,679,891
respectively. Revenue was up in the year ended September 30, 2005 by 1,812 %
when compared to the nine months ended September 30, 2004. In addition to the
additional three months of selling opportunity in fiscal 2005, sales in fiscal
2004 were hindered because we did not have working card programs to sell and not
enough money to fund sales and development. Telecommunications revenue for the
year ended September 30, 2005, was approximately $600,000 or approximately 55%
of revenues as compared to zero in the nine months ended September 30, 2004 as
we did not then have the equipment to generate revenues from telecommunications.
During the nine months ended September 30, 2004 we had an average of
approximately 5,800 POPs excluding the approximate 4,000 Bank of America
locations that can load some of our products. These POPs were restricted to
loading its cards and did not market our cards. Cost of Sales for the year ended
September 30, 2005, the nine months ended September 30, 2004 and the period July
10, 2000 (date of incorporation) to September 30, 2005 were $1,075,445, $38,833,
and $1,391,607 respectively. The 2,669% increase in 2005 was the result of
increased revenue as well as the addition of telecommunications revenue at a
very low margin in the reporting period.

During fiscal year 2006 we intend to expand the number of active access points;
Morgan Beaumont has in place contracts that management believes have the
potential to grow our access points to over 100,000 POPs. Many of these POPs
will sell or load (or both) debit/ATM and stored value hologram cards to the
public. As of September 30, 2005, we had approximately 81,000 POPs under
contract, under 11,000 were fully functioning, while 70,000 are in various
stages of implementation and will become active by January of 2006. As of
September 30, 2004, we had less than 10,000 POPs active and, as of September 30,
2005, we have approximately 10,350 POPs active.

We have five sources of sales and revenue: initiation fees, subscription fees,
transaction fees, prepaid phone cards, and wholesale telecommunications
services. We generate income from the sale of our stored value debit and VISA
cards, and the consumer use of our prepaid phone cards. We also generate income
from the monthly maintenance fees associated with keeping stored value cards
active, the maintenance fees generated from our Prestige Payroll cards, and from
transaction fees associated with these cards. Income is also generated by the
SIRE Network when consumers load cash into their card account so the card can be
used for day to day purchases.


                                       39


<PAGE>

Hosting and Licensing Fees are charged for the use of our proprietary
technology. In a Hosted Agreement, the customer is not required to purchase the
technology, but only pay transaction fee for each use. These fees are defined in
a service agreement with the customer that stipulates a minimum monthly fee for
the use of the technology and is typically a 2-year term. In a licensing
agreement, the customer pays a fee for each product sold, (the product can be
sold under the Morgan Beaumont brand, or can be private labeled for the
customer), and also pays for any minor changes to the technology required to
meet the specific market the customer wishes to address. Transaction fees are
derived from the use and loading of cash of for ATM, debit or Stored Value Cards
and monthly maintenance fees associated with keeping ATM, debit or Stored Value
Cards active.

OTHER OPERATING EXPENSES. Other operating expenses for the year ended September
30, 2005, the nine months ended September 30, 2004 and the period July 10, 2000
(date of incorporation) to September 30, 2005 were $5,806,503, $1,029,125 and
$8,702,970, respectively. The increase in such expenses of 464% for the year
ended September 30, 2005 compared to the nine months ended September 30, 2004,
was attributable to the following:

EMPLOYEE COMPENSATION BENEFITS increased in expanding our development, sales and
marketing, customer service and accounting efforts. Employee compensation was
$2,400,555 for the year ended September 30, 2005, compared to $624,972 in the
nine months ended September 30, 2004 a 284% increase.

STOCK BASED COMPENSATION AND CONSULTING EXPENSE also increased from $14,200 for
the nine months ended September 30, 2004 to $1,088,200 for the year ended
September30, 2005, a 7,563% increase that was primarily due to our expense
recognized for consultant based options in fiscal 2005.

PROFESSIONAL AND CONSULTING FEES increased 793% from $141,116 for the nine
months ended September 30, 2004, to $1,096,838 for the year ended September 30,
2005 because of the professional services needed to comply with the registration
of our two equity private placements as well as our filings with the SEC.

IMPAIRMENTS amounted to $212,000 for the year ended September 30, 2005 compared
to approximately $43,200 for the nine months ended September 30, 2004. Statement
of Financial Accounting Standards (SFAS) 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" requires that long-lived assets, including
certain identifiable intangibles, be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying value of the assets in
question may not be recoverable. We evaluated our assets during the year ended
September 30, 2005 and determined that certain assets were impaired, including a
note receivable for $202,000.

OCCUPANCY AND EQUIPMENT COSTS increased from $88,951 to $506,712 for the nine
months ended September 30, 2004 compared to the year ended September 30, 2005
respectively. This increase was due to the additional office space and equipment
needed to support the additional staff and activity in the company during fiscal
2005.


                                       40


<PAGE>

LOSS FROM OPERATIONS. As a result of the above, our loss from operations
increased 471% to $5,792,275 in the year ended September 30, 2005 from
$1,006,356 in the nine months ended September 30, 2004. Net loss increased 619%
to $7,417,935 for the year ended September 30, 2005 compared to $1,031,335 for
the nine months ended September 30, 2004. In addition to the operating factors
described above, we also recognized a loss from derivative financial instruments
of $1,607,125 or 22% of our net loss for the year ended September 30, 2005. This
non-cash loss resulted from the accounting for warrants issued with registration
rights. From inception we have lost $10,072,873. The average loss per month in
the twelve months ended September 30, 2005 was $618,161 compared to $85,945 for
the nine months ended September 30, 2004. The increase in the rate of loss
related to our increased staffing and marketing activities compared to the
slower rate of growth in our sales and corresponding gross margin.

LIQUIDITY AND CAPITAL RESOURCES.

From inception to September 30, 2005, we raised $6,618,677 from sales of our
common stock, and warrants for purchase of our common stock, borrowed on notes
payable a total of $97,912 and received $3,000,000 of payments under a note
receivable from Paul Marshall, a stockholder. We used these proceeds to fund
operating activities of $6,185,200, to purchase property and equipment of
$791,765, and to make a loan to eChex of $202,000. On September 30, 2005, we had
a cash balance of $2,474,712 which was not sufficient for us to operate in
fiscal year 2006.

As of November 30, 2005, we had approximately $1,010,000 in cash. At September
30, 2005, we owed registration rights penalties of $99,750 for the private
placement of stock completed in December of 2004 and are accruing $28,500 per
month in additional penalties. We will also be incurring penalties for the
registration rights related to the sale of warrants and stock concluded in July
of 2005 beginning in October 2005 of approximately $98,900 per month. We are
is undertaking efforts to raise additional capital to enable us to continue to
operate.

Our ability to continue as a going concern must be considered in light of the
problems, expenses and complications frequently encountered by entrance into
established markets and the competitive environment in which it operates. Since
inception, our operations have primarily been funded through private equity, and
we may need to seek additional funding through private or public equity and/or
debt financing. Finally, we expect that operating revenues from the sales of our
products and other related revenues will increase. There can be no assurance we
will not need to raise additional funds to continue operations or that we will
be able to raise additional debt or equity capital and/or any cash generated by
our operations. These factors, among others, indicate that we may be unable to
continue as a going concern for a reasonable period of time.

We are will require additional capital resources for the expansion of our
marketing and further improvement of our technology as well as to improve our
financial controls. We are adding additional experienced personnel in Marketing,
Technological and Finance in order improve market penetration and profitability.


                                       41


<PAGE>

CHANGES IN NUMBER OF EMPLOYEES. To support the expansion of POPs, the
substantial marketing effort, and the increased administrative needs, we
anticipate that the development of our business may require the hiring of
additional employees.

OFF-BALANCE SHEET ARRANGEMENTS

Operating Leases
----------------

We are obligated under various operating lease agreements for our facilities.
Future minimum lease payments under these leases are approximately as follows at
September 30, 2005:

Years ending
September 30,                                                     Amounts
                                                             -------------------

      2006                                                   $          286,800
      2007                                                              286,800
      2008                                                              194,700
      2009                                                               48,700
                                                             -------------------

      Total                                                  $          817,000
                                                             ===================

Rent expense under all operating leases for the year ended September 30, 2005,
and the nine months ended September 30, 2004 approximated $194,100 and $31,800,
respectively.

Employment Agreements
---------------------

At September 30, 2005, we are obligated under an employment agreement with our
chief executive officer. Pursuant to the agreement, the officer received base
annual compensation of $185,000 for the year ending September 30, 2005, and is
to receive $205,000 for the year ending September 30, 2006 and $225,000 for the
year ending September 30, 2007, as well as various vacation and medical
benefits, a car allowance of $750 per month, an initial bonus of $75,000 and
annual bonuses ranging from 2.5 to 3.0% of net income. In addition, we agreed to
grant him options to purchase 3,250,000 shares of our common stock at a price of
$.20 per share (a significant portion of such grants served as consideration for

him agreeing to cancel certain benefits and protections set forth in his prior
employment agreement). The agreement, which is subject to automatic renewal
unless we exercise our rights to terminate it at the end of the initial, or any
succeeding, terms, contains a takeover provision that requires us to pay the
greater of $750,000, or an amount equal to 7.5% of any sale price in excess of
$25,000,000 to him in the event a change in control occurs. If we terminate this
officer without cause, we will be required to pay severance to him in the amount
of compensation and benefits he would have otherwise earned for a period of six
months.

At September 30, 2004, we were also obligated under a non-cancelable employment
agreement with another officer that had similar terms to the above agreement,
including the grant of options to purchase 2,500,000 shares of our common stock
at a price of $.20 per share (a significant portion of such grants served as
consideration for him agreeing to cancel certain benefits and protections set
forth in his prior employment agreement). The contract was canceled during the
year ended September 30, 2005 when this officer resigned his position. As
consideration for releasing us from any liability under the terms of his
employment agreement, we agreed to allow him to keep 1,875,000 of the
aforementioned options (or the portion of his options that vested through
September 30, 2005).

One half of the stock options mentioned above (or 2,875,000 options) vested on
October 1, 2004, and 25% of such options (or 1,437,500 options) vested on
September 30, 2005. Assuming a change in control does not occur (at which time
all remaining options would vest immediately), the remaining outstanding options
(812,500) vest on September 30, 2006. Because the option price was effectively
the same as the trading value of our stock on the date the options were granted,
we were not required to record any stock based compensation for the issuance of
these options. However, see Note A - Recent Pronouncements, regarding the
accounting for unvested options as of December 2005.

Service and Purchase Agreements
-------------------------------

We have entered into one to three year contracts with various contractors to
provide certain marketing, technology and customer support services to expand
the money card program. Since the fees to be paid are contingent primarily on
sales volume, it is not possible to calculate the amount of the future
commitment on these contracts.

Other Purchase Commitments
--------------------------

In addition to the above, as of September 30, 2005, we had committed ourselves
to purchase approximately $600,000 of inventories during the period October 1,
2005 to June 30, 2006.

We have engaged the firm of ePlus to conduct a PCI Security and Compliance audit
and certification for our network. If successful, this audit will provide us
with certification of our SIRE Network and will allow us greater access to
expand our POPs. We anticipate the process to be completed by December 31, 2005
and with a total cost associated with this audit process to be in excess of
$265,000. We have already expended $200,000 on this project to date which
includes hardware systems improvements as well as consulting costs.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with United States
generally accepted accounting principles requires our management to make
estimates and assumptions that affect the reported amount 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.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.



                                       43


<PAGE>

REVENUE RECOGNITION

We generate the following types of revenues listed in order of their
significance:

         o        INITIATION FEES, which arise from sales of our stored value
                  and debit cards.
         o        SUBSCRIPTION FEES, which arise from hosting or licensing fees.
                  Under a hosted agreement, our customers are not charged for
                  the use of our proprietary software; rather they pay a per
                  minute or per transaction fee for each use whereas under a
                  licensing agreement, our customer pays monthly fees for the
                  use of our software at each of their loading stations.
         o        TRANSACTION FEES, which arise from the use and loading of cash
                  for ATM, debit or stored value cards.
         o        MAINTENANCE FEES, which arise from charges for keeping the
                  cards active.
         o        FINANCIAL FLOAT FEES, which arise from charges for the instant
                  load of cash and convenience of stored value, ATM and debit
                  cards.
         o        Sales of prepaid phone cards and related phone card fees which
                  arise from the usage of such cards. All revenue from the sale
                  of prepaid phone cards is initially deferred and subsequently
                  amortized to revenues as the cards are used.
         o        Revenues from sales of long-distance minutes are recognized
                  when provided.

In general, our revenue recognition policy for fees and services arising from
the our products is consistent with the criteria set forth in Staff Accounting
Bulletin 104 - Revenue Recognition in Financial Statements ("SAB 104") for
determining when revenue is realized or realizable and earned. In accordance
with the requirements of SAB 104, we recognize revenue when, (1) persuasive
evidence of an arrangement exists; (2) delivery has occurred; (3) our price to
the buyer is fixed or determinable; and (4) collectibility of the receivables is
reasonably assured. More specifically, revenue for our stored value cards are
recognized when shipped and revenue for our prepaid telephone card sales are
recognized when the products are used. Costs of revenue, including the cost of
printing the prepaid cards, are recorded at the time revenue is recognized.


Stock - Based Compensation
--------------------------

Issuance of Common Shares for Various Services
----------------------------------------------

During the period July 10, 2000 (date of incorporation) to September 30, 2004,
we issued the following shares of our common stock as consideration for various
services, which were provided by employees or consultants:

  Description of Service               Value of Service        Shares Issued
  ----------------------               ----------------        -------------
  Business planning and development    $        949,663              7,395,048
  Information technology services                57,123                505,075
  Legal services                                  5,500                 38,209
                                       -----------------     ------------------

  Totals                               $      1,012,286              7,938,332
                                       =================     ==================

The value of these services, which was based on the number, and fair value, of
shares issued has been included in stock based compensation and consulting
expense in the accompanying consolidated statements of operations.

Issuances of Options
--------------------

During the year ended September 30, 2005, we engaged various consultants and
other professionals to assist us. Pursuant to the agreements, we granted an
aggregate of 2,525,000 options to these consultants at various prices, and
recognized stock based compensation expense of approximately $1,039,200.

In October 2004, we also granted options to purchase 700,000 shares of our
common stock for $0.20 per share to the members of our Board of Directors as
consideration for their service during the current year. The options, which
vested on the date of grant, had a fair value of approximately $0.07 in excess
of the exercise price on such; accordingly we recognized $49,000 of stock based
compensation as a result of the grant of these options.

ACCOUNTING FOR DERIVATIVES

In connection with the sale of certain equity instruments in 2005, we issued
freestanding warrants (see Note J of our audited financial statements for the
year ended September 30, 2005). Although the terms of the warrants do not
provide for net-cash settlement, in certain circumstances, physical or net-share
settlement is deemed to not be within our control and, accordingly, we are
required to account for these freestanding warrants as derivative financial
instrument liabilities, rather than as equity. In these cases, we deduct the
fair value of the derivative instrument from the proceeds of sales of the equity
instrument.

Derivative financial instruments are initially measured at their fair value. For
derivative financial instruments that are accounted for as liabilities, the
derivative instrument is initially recorded at its fair value and is then
re-valued at each reporting date, with changes in the fair value reported as
charges or credits to operations. For warrant-based derivative financial
instruments, we use the Black-Scholes option pricing model to value the
derivative instruments.

The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is re-assessed at the end of
each reporting period. Derivative instrument liabilities are classified in the
balance sheet as current or non-current based on whether or not net-cash
settlement of the derivative instrument could be required within 12 months of
the balance sheet date.

We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks.

ITEM 7. FINANCIAL STATEMENTS

Our auditors report, as well our following consolidated financial statements as
of and for the various period ended September 30, 2005 are included in this
report following page 65 at the pages indicated.

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

None.

ITEM 8A. CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation
of the effectiveness of the design and our operation of disclosure controls and
procedures as of September 30, 2005, being the date of our fiscal year end
covered by this Annual Report. This evaluation was carried out under the
supervision and with the participation of our Chief Executive Officer and our
Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures were not effective in timely alerting management to material


                                       45


<PAGE>

information relating to the Company required to be included in our periodic SEC
filings. There have been no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date it carried out our evaluation. Based on the evaluation, which disclosed
significant deficiencies or material weaknesses that are being addressed in the
actions currently being taken to improve our disclosure controls and procedures,
we have identified certain deficiencies and issues with our internal controls
that occurred in fiscal year end 2005. These deficiencies and issues include,
but are not limited to:

         o        On November 14, 2005, we filed amended reports on Form 10-QSB
                  for the periods ended December 31, 2004, March 31, 2005, and
                  June 30, 2005, restating our earnings/ losses to correct a
                  material misstatement resulting from what we recently
                  discovered to be an improper method of accounting used in the
                  computation of stock-based consulting expenses arising from
                  stock options issued under certain consulting agreements.

                  The guidance set forth in Auditing Standard No. 2 ("AS2") of
                  the Public Company Accounting Oversight Board states that the
                  restatement of previously issued financial statements to
                  reflect the correction of a misstatement should be regarded as
                  at least a significant deficiency in, and is a strong
                  indicator of a material weakness in internal control over
                  financial reporting. In connection with the filing of the
                  amended 10QSB's, we have concluded that a material weakness
                  existed as of December 31, 2004, which precludes us from
                  concluding that our internal control over financial reporting
                  was effective as of December 31, 2004. A material weakness is
                  a control deficiency, or combination of control deficiencies,
                  that results in a more than remote likelihood that a material
                  misstatement of the interim or annual financial statements
                  will not be detected. Therefore, our Management Assessment
                  Report on Internal Control Over Financial Reporting, which was
                  contained in Item 3 of the Form 10-QSB as of March 31, 2005
                  and which stated that our internal control over financial
                  reporting was effective as of March 31, 2005, can no longer be
                  relied on.

                  We had originally accounted for the options under Statement of
                  Financial Accounting Standards No. 148 "Accounting for
                  Stock-Based Compensation - Transition and Disclosure" (SFAS
                  No. 148). This statement amends FASB statement No. 123,
                  "Accounting for Stock Based Compensation". Under FAS 148, we
                  recognized an original fair value for the options related to
                  cancelable contracts as approximately $408,000. SEC Staff
                  accountants examined our filings as part of the review process
                  for the S-2 Registration Statement and directed us to EITF
                  96-18 Issue 3, a provision previously unknown to us. Under
                  application of this provision, we would measure the fair value
                  of the options on the date they vest and estimate their fair
                  value on the reporting dates prior to vesting. This error
                  resulted in understatements of our stock based compensation
                  expense in the quarterly reports for the reporting periods
                  ended December 31, 2004, March 31, 2005, and June 30, 2005 of
                  $441,417, $174,225, and $133,900, respectively.


                                       46


<PAGE>

                  To improve our control of the public reporting process, and
                  internal controls, we plan to establish a reporting review
                  committee with participants from throughout the Company. This
                  committee will review all publicly filed documents before they
                  are released to more thoroughly review and ensure the
                  accuracy, correctness, and appropriateness of the filing. Our
                  financial officers are increasing their level of continuing
                  education and relying less upon the review by their auditors.
                  We also intend to retain accounting specialists when we
                  encounter areas outside our normal accounting and financial
                  practices.

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure.

During the year ended September 30, 2005, there were no changes in our
internal control over financial reporting that have materially affected, or are
reasonably likely to affect, our internal control over financial reporting. An
Accounting Policy and Procedures Manual has been drafted to address many of the
internal control issues related to financial reporting and is currently being
implemented. We feel the Financial Reporting issues are being addressed and will
improve in the fiscal year of 2006.

The term "internal control over financial reporting" is defined as a process
designed by, or under the supervision of, the registrant's principal executive
and principal financial officers, or persons performing similar functions, and
effected by the registrant's board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and
procedures that:

         (1)      Pertain to the maintenance of records that in reasonable
                  detail accurately and fairly reflect the transactions and
                  dispositions of the assets of the registrant;

         (2)      Provide reasonable assurance that transactions are recorded as
                  necessary to permit preparation of financial statements in
                  accordance with generally accepted accounting principles, and
                  that receipts and expenditures of the registrant are being
                  made only in accordance with authorizations of management and
                  directors of the registrant; and

         (3)      Provide reasonable assurance regarding prevention or timely
                  detection of unauthorized acquisition, use or disposition of
                  the registrant's assets that could have a material effect on
                  the financial statements.

ITEM 8B.  OTHER INFORMATION

None.


                                       47


<PAGE>

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the names, ages, and positions with us for each
of our directors and officers for the fiscal year ended September 30, 2005. As
described below, certain officers and directors have resigned or assumed new
positions. Directors serve for a period of one year or until the next annual
meeting of our shareholders thereafter. The term of the existing board members
expire effective the next annual meeting of our shareholders.

<TABLE>
<S> <C>
Name                                       Age    Position                                               Since
----                                       ---    --------                                               -----

Clifford Wildes (1)                        55     Chief Executive Officer, Treasurer and                 2001
                                                  Director

Kenneth Craig (2)                          51     Chief Financial Officer, Secretary and                 2002
                                                  Director

Erik Jensen (2)                            47     President, Chief Operating Officer and Director        2003

Mark Brewer                                47     Director                                               2002

Virgil "Brother" Sandifer, Jr.             50     Director                                               2004

Benjamin J. Bond                           64     Director                                               2004

Theodore Misiewicz (2) (3)                 47     Director, Secretary and Chief Financial Officer        2005

Daniel Davis                               38     Chief Technical Officer                                2005

Joseph Hudgins                             50     Director - Effective October1, 2005                    2005

</TABLE>

(1) Mr. Wildes was a founding shareholder and has been a member of the board of
directors since formation of the Company. From incorporation through February
2001 Ron Noce was our CEO. Upon his resignation, Rod Braido became CEO. Mr.
Braido resigned as CEO in February 2002 and Cliff Wildes became CEO. In May
2002, Ken Craig was hired and took over as CEO and held that position until
becoming CFO in November 2003, at which time Mr. Wildes again assumed the CEO
position.

(2) Effective January 2005, Ken Craig became our Chief Operating Officer and
Theodore Misiewicz took over as Chief Financial Officer. Effective June 1, 2005
Ken Craig took over responsibility for operations of the telecommunications
subsidiary. Effective August 31 2005, we and Ken Craig entered into a separation
agreement and Mr. Craig resigned as an officer. Pursuant to the terms of his
separation agreement, Mr. Craig received a lump sum severance payment of


                                       48


<PAGE>

$82,500, less ordinary payroll withholdings, and he agreed to a bleed out
structure to limit the sales of his shares of the Company to 3% of the shares
held by him, any of his family members or any entity controlled by him other
than his father, per month for a period of 6 months. Mr. Craig remained as
director until October 1, 2005, when he was replaced by Joseph Hudgins.

(3) Effective January 2005, Rod Braido resigned as a member of the Board of
Directors and Theodore Misiewicz was appointed to the board to fill the vacancy.
Effective July 1, 2005, Mr. Braido resigned as an officer.

CLIFFORD WILDES - Chief Executive Officer, Director and Founder. Mr. Wildes has
been with us since we were founded. Prior to serving in roles as CEO, COO, CFO,
President and Founder of the Company, Mr. Wildes was our CEO and was also
Founder of several companies within the hi-tech sector, as well as business
consulting services.

         o        Mr. Wildes is the former founder and CEO of Microtech
                  International Inc., a private company that he sold to a
                  Japanese public company in 1995.
         o        He was also the founder and CEO of Nova Interactive Inc.,
                  which he sold to a public company in 1997.
         o        Mr. Wildes was co founder and an Officer of Barclay Partners
                  Inc. from 1996 to 1998.
         o        Mr. Wildes is founder and CEO of Meridian Capital Inc a
                  business consulting services from 1997 - 2004.
         o        From 1997 to 2001, Mr. Wildes consulted, or has been employed
                  with, various public companies holding positions as their CEO,
                  COO and Vice President and managing the operations of those
                  companies on a temporary or interim basis.
         o        Mr. Wildes served as the interim CEO of Beverly Hills Limited,
                  a public company where he was engaged by Board of Directors
                  and its largest shareholder from April 1999 to July 1999 to
                  evaluate and assist in evaluating potential acquisitions
                  candidates for Beverly Hills Ltd.
         o        From September 1999 to December 1999, he served as COO of
                  WCollect, an online art auction company, where he was hired at
                  the request of a financing group to evaluate and assist in
                  operations.
         o        From January to December 2000, Mr. Wildes was an affiliate of
                  MacKenzie Shea, a business consulting firm. As such, Mr.
                  Wildes was placed as officer or director of several companies
                  in need of management or operational guidance on a temporary
                  basis, similar to what Mr. Wildes had previously done on his
                  own. As part of this role with MacKenzie, Mr. Wildes helped
                  form and operate Siesta Acquisition Corp, Inc., the parent
                  company of Siesta Telecom Inc. a telecom operation purchased
                  from Fusion, Inc. Mr. Wildes also served from February 2001 to
                  June 2001 as director of Key Card Communications, Inc., a
                  private company seeking to merge with a public company, and as
                  a vice president of the Company from August 2001 to December
                  2001 after it merged with a non-trading, but fully reporting
                  public corporation in November 2001.
         o        From December 2000 to January 2004, Mr. Wildes continued his
                  business consulting services as CEO of Meridian Capital, Inc.
                  while he was simultaneously an officer and director of Morgan
                  Beaumont, Inc. In January 2002, Mr. Wildes began working full
                  time for us.


                                       49


<PAGE>

Mr. Wildes received a Bachelor of Science degree in Political Science and
Economics from the University of Massachusetts (formerly "Boston State College")
in Boston in 1972.

ERIK JENSEN - President, Chief Operating Officer and Director; effective January
2005, President and Director. Mr. Jensen has co founded and sold a number of
technology start up companies over the past 15 years. Prior to joining us, Mr.
Jensen was President, Director and Co-Founder of Typhoon Voice Technology from
2001 to 2003, a software development company described in Item 1 of this report,
which was acquired by us. From 1999 to 2002, Mr. Jensen was Technology marketing
manager for all VoIP solutions. He has extensive experience in the
telecommunications industry and related technology. He has held executive
positions at Callware Technologies and Comdial Corporation, which is currently
active. Mr. Jensen has studied Business Administration and Management
Information Systems from 1977 to 1988.

JOSEPH HUDGINS - Director, Effective October 2005. Mr. Hudgins was not a
Director in the period ended September 30, 2005. Mr. Hudgins has over 25 years
experience in the banking industry. Mr. Hudgins is Executive Vice President of
First National Bank of Pennsylvania in Sarasota, which is currently active,
where he manages its operation in Florida. Hudgins has held senior executive
positions with First Third Bank of Florida in 2001 and with First National Bank
of Florida from January 2001 through December 2004. Mr. Hudgins was President
with First National Bank of Florida F.K.A. West Coast Branch from 1992 through
2003, with SouthTrust Bank of Sarasota from 1990 through 1991 and with
SouthTrust Bank of Decatur from 1986 through 1990. From 1978 to 1986, Mr.
Hudgins was Vice President for First Union National Bank of Rome. Mr. Hudgins
was also Assistant Branch Manager with Valley Fidelity Bank from 1977 through
1978. Mr. Hudgins received a Bachelors Degree in Mathematics from Carson-Newman
College in 1977 and received a Masters of Business Administration in Banking
Management from the University of Virginia in 1982.

MARK BREWER - Director. Mr. Brewer has served as the Marketing Director for One
World Nutrition, a nutritional supplement company, since January 2003. He is the
Managing Director of Novus Capital Investment Fund. Since May of 2002, he has
served as Vice President of Lighthouse II, Inc., a marketing company. From 1997
to 2002, he has also served as President of HydroMaid International,
manufacturers of water-powered disposal units. Mr. Brewer attended the
University of Phoenix where he received a Bachelor of Arts in Business
Administration in 1985.

BENJAMIN J. BOND - Director, Audit Committee Member, Compensation Committee
Member. Mr. Bond is a certified public accountant. For the past 10 years, Mr.
Bond has been in private accounting practice specializing in tax and consulting.
Mr. Bond received a Bachelor of Science in Business Administration from the
University of Florida in 1966.

VIRGIL LEE "BROTHER" SANDIFER, JR. - Director, Audit Committee Member,
Compensation Committee Member. Mr. Sandifer is a certified public accountant and
managing partner of the accounting firm of Sayle, Sandifer & Associates, LLP,
where he has practiced since 1980. Mr. Sandifer attended the University of
Mississippi where he received a Bachelor of Arts in Accounting in 1977 and a
Master of Business Administration in 1979.


                                       50


<PAGE>

THEODORE MISIEWICZ - Effective January 2005, Director, and Chief Financial
Officer. Mr. Misiewicz is a certified public accountant. He is a financial and
operations professional with more than twenty years of extensive operational
responsibilities in a wide variety of industries including computer
manufacturing, Licensing Financial Services, Affinity Marketing, the Gift
Market, Collectibles, Syndication and Consulting. Mr. Misiewicz was director and
manager of corporate accounting for QMS, Inc. from 1985 through 1994. During the
course of his employment, that Company grew from approximately $50 million in
sales to over $300 million as a public corporation. From 1994 through 1995, Mr.
Misiewicz was Vice President of Finance & Administration for Jordan American
Holdings, Inc. where he was responsible for all corporate financial and
administration of the publicly traded holding company including accounting and
budgeting. He accomplished the tax-free spin-off of an unprofitable division
that served to materially reduce the shares and increase the book value per
share. From 1996 through 2000, he was secretary and treasurer for Mill Pond
Press, Inc. Mr. Misiewicz was Chief Financial Officer of Atlantic Syndication
from 2000 through 2004 and Senior Executive Analyst for American Management
Services from March 2004 through May 2004. Mr. Misiewicz attended Western
Michigan University where he received a Bachelor of Business Administration.

DANIEL DAVIS - CHIEF TECHNOLOGY OFFICER, effective September 16, 2005. Mr. Davis
was our Vice President of Engineering and was promoted to Chief Technology
Officer. Prior to being retained by us, Mr. Davis owned and operated Switching
Solutions, Inc., a developer of software solutions many of which were
specifically tailored to the stored value industry. Switching Solutions is still
owned by Mr. Davis; however, it is operated by employees and Mr. Davis has no
day to day responsibilities within Switching Solutions. Prior to operating
Switching Solutions, Mr. Davis was active in the telecommunications industry
serving as the Vice President of Operations for the now defunct Tel-Ops, LLC, of
Tampa Florida and Chief Operating Officer for Galaxy Long Distance. Mr. Davis
holds an Associate of Computer Technology degree from National Education Center.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
----------------------------------------

To the best of our knowledge, during the past five years, no present or former
director, executive officer, or person nominated to become one of our directors
or executive officers:

         o        filed a petition under federal bankruptcy laws or any state
                  insolvency law, nor had a receiver, fiscal agent or similar
                  officer appointed by a court for the business or property of
                  such person, or any partnership in which he was a general
                  partner at or within two years before the time of such filing
                  ,or any corporation or business association of which he was an
                  executive officer at or within two years before the time of
                  such filing;
         o        was convicted in a criminal proceeding or being subject to a
                  pending criminal proceeding (excluding traffic violations and
                  other minor offenses);
         o        was the subject of any order, judgment or decree, not
                  subsequently reversed, suspended, or vacated, of any court of
                  competent jurisdiction, permanently or temporarily enjoining
                  him or her from or otherwise limiting his/ her involvement in
                  any type of business, securities, or banking activities; or
         o        was found by court of competent jurisdiction in a civil
                  action, by the SEC or the Commodity Futures Trading
                  Commission, to have violated any federal or state securities
                  law, and the judgment in such civil action or finding by the
                  SEC has not been subsequently reversed, suspended, or vacated.


                                       51


<PAGE>

SIGNIFICANT EMPLOYEES
---------------------

We have no significant employees other than our officers and directors. We
conduct our business through agreements with consultants and arms-length third
parties.

EMPLOYMENT AGREEMENTS
---------------------

At September 30, 2005, we are obligated under an employment agreement with our
chief executive officer. Pursuant to the agreement, the officer received base
annual compensation of $185,000 for the year ending September 30, 2005, and is
to receive $205,000 for the year ending September 30, 2006 and $225,000 for the
year ending September 30, 2007, as well as various vacation and medical
benefits, a car allowance of $750 per month, an initial bonus of $75,000 and
annual bonuses ranging from 2.5 to 3.0% of net income. In addition, we agreed to
grant him options to purchase 3,250,000 shares of our common stock at a price of
$.20 per share (a significant portion of such grants served as consideration for

him agreeing to cancel certain benefits and protections set forth in his prior
employment agreement). The agreement, which is subject to automatic renewal
unless we exercise our rights to terminate it at the end of the initial, or any
succeeding, terms, contains a takeover provision that requires us to pay the
greater of $750,000, or an amount equal to 7.5% of any sale price in excess of
$25,000,000 to him in the event a change in control occurs. If we terminate this
officer without cause, we will be required to pay severance to him in the amount
of compensation and benefits he would have otherwise earned for a period of six
months.

At September 30, 2004, we were also obligated under a non-cancelable employment
agreement with another officer that had similar terms to the above agreement,
including the grant of options to purchase 2,500,000 shares of our common stock
at a price of $.20 per share (a significant portion of such grants served as
consideration for him agreeing to cancel certain benefits and protections set
forth in his prior employment agreement). The contract was canceled during the
year ended September 30, 2005 when this officer resigned his position. As
consideration for releasing us from any liability under the terms of his
employment agreement, we agreed to allow him to keep 1,875,000 of the
aforementioned options (or the portion of his options that vested through
September 30, 2005).

One half of the stock options mentioned above (or 2,875,000 options) vested on
October 1, 2004, and 25% of such options (or 1,437,500 options) vested on
September 30, 2005. Assuming a change in control does not occur (at which time
all remaining options would vest immediately), the remaining outstanding options
(812,500) vest on September 30, 2006. Because the option price was effectively
the same as the trading value of our stock on the date the options were granted,
we were not required to record any stock based compensation for the issuance of
these options. However, see Note A - Recent Pronouncements, regarding the
accounting for unvested options as of December 2005.

                                       53


<PAGE>

CONSULTING AGREEMENTS
---------------------

We have engaged several financial consultants to assist it in our operations,
since the date of our fiscal year end, under the following agreements and terms:

CONSULTING AGREEMENT WITH SCOTT CHRISTIE

Effective October 1, 2004, we entered into a Consulting Agreement with Scott
Christie to advise us on financial business and investor matters. Prior to its
cancellation, the Agreement was for a term of two (2) years, was terminable by
either party on 30 days notice and provided for us to pay Scott Christie a
monthly fee of $4,000 and issue 500,000 nonqualified stock options to Mr.
Christie exercisable at $0.20 per share on a cashless basis, vesting 100,000
options immediately and 100,000 for the following four quarters. A copy of the
Consulting Agreement was attached to our Form 8-K dated December 7, 2004 and is
incorporated herein by this reference. Effective April 1, 2005, the consulting
agreement with Mr. Christie was terminated.

CONSULTING AGREEMENT WITH ANDREW NEITLICH

Effective October 1, 2004, we entered into a Consulting Agreement with Andrew
Neitlich to advise us on financial business and investor matters. Prior to its
cancellation, the Agreement was for a term of two (2) years, was terminable by
either party on 30 days notice and provided for us to pay Andrew Neitlich a
monthly fee of $2,000 and issue 200,000 nonqualified stock options to Mr.
Neitlich exercisable at $0.20 per share on a cashless basis, vesting 40,000
options immediately and 40,000 for the following four quarters. A copy of the
Consulting Agreement was attached to our Form 8-K dated December 7, 2004 and is
incorporated herein by this reference. Mr. Neitlich was terminated in March
2005.

CONSULTING AGREEMENT WITH CASCADE PARTNERS

Effective October 1, 2004, we entered into a Consulting Agreement with Cascade
Partners ("Cascade") pursuant to which Cascade provided advisory services.
Cascade received $8,000 per month plus options to purchase 1,200,000 of our
shares for $0.20 per share on a cashless basis. Our CEO, Clifford Wildes, is a
former business partner of two of Cascade's principals and one of Cascade's
principals has and continues to provide legal services to or on behalf of Mr.
Wildes and our CFO, Theodore Misiewicz. A copy of the Consulting Agreement is
attached hereto as Exhibit 9.5. At the end of the Consulting Agreement, we
determined that we would not extend the Agreement beyond its expiration date.

JAMES CHRISTIANSEN

Effective January 1, 2005, we entered into a one year consulting agreement with
James Christiansen to advise and assist us in developing and implementing
appropriate plans and security procedures for our ATM network development. The
Agreement is terminable by either party on 30 days notice. As consideration for
various services to be rendered, we agreed to pay the consultant monthly fees,
and to issue 425,000 nonqualified stock options to him, which allow him to
purchase a like number of shares of our common stock for $1.00 per share. The
options are exercisable over the next year and may be exercised on a cashless
basis. A copy of this consulting agreement is attached as Exhibit 5.1 to our
10-QSB for the period ended March 31, 2005.


                                       54


<PAGE>

DENNARD RUPP GRAY & EASTERLY, LLC

On March 17, we entered into a consulting agreement with Dennard Rupp Gray &
Easterly, LLC ("DRG&E") for DRG&E to provide investor relations services and
advice to us for a monthly fee. Our contract at DRG&E is Kenneth Dennard.
Neither DRG&E nor its principals received any stock or additional compensation
for their services. A copy of this consulting agreement is attached as Exhibit
5.3 to our 10-QSB for the period ended March 31, 2005.

WILLIAMS PARKER HARRISON DIETZ AND GETZEN

In 2004, we engaged Williams Parker Harrison Dietz and Getzen of Sarasota
Florida to be our local corporate attorneys.

ROBERT WARDELL

We retained Robert Wardell as a consultant in operations for a 3 week period in
October and November for the purpose of providing additional in depth
implementation training our program managers and operations personnel in Stored
Value products.

COMMITTEES OF THE BOARD OF DIRECTORS
------------------------------------

We presently have an audit committee and compensation committee of our board of
directors, each of which are controlled by a majority of outside directors.

AUDIT COMMITTEE FINANCIAL EXPERT
--------------------------------

Our Audit Committee consists of two practicing accounting professionals,
Benjamin Bond (Chairman of the Committee), and V.L. Sandifer, and also serving
on the committee is Mark Brewer.

PAST RELATIONSHIPS AMONG OFFICERS, DIRECTORS AND CONSULTANTS
------------------------------------------------------------

The inside directors, the executive officers and certain consultants have
advised our Board of Directors of certain existing and past business
relationships among the parties. Cliff Wildes was formerly in partnership with
the two principal partners of Cascade Partners. Cascade Partners is now a
consultant to us. Prior to us engaging Cascade Partners as a consultant, one of
Cascade Partners principal partners represented Cliff Wildes and Ken Craig in
the negotiation of their employment agreements with us, and he is also indebted
to Clifford Wildes for certain loans that Mr. Wildes extended to him in 2000.
One of the Cascade partners has represented Mr. Wildes as personal legal counsel
since 2000. Additionally, certain members of the audit committee and Board of
Directors have acted as accountants or tax advisors to certain other officers
and directors of the Company. The Board of Directors has been advised of the
details of these relationships. Cliff Wildes and Rod Braido have been involved
in a business relationship/ in business with Meridian Capital Inc. Attorney Gary
Glassman has represented Cliff Wildes and one of his companies in the past;
Attorney Glassman has also represented one of Cascade Partners in the past.


                                       55


<PAGE>

Cliff Wildes, Ken Craig and Erik Jensen formed West Coast Construction
Management, LLC, to acquire Kesselring Construction a building restoration and
painting company in Florida, in which Mr. Wildes is a member and Mr. Jensen is a
managing member. Mr. Jensen has since resigned from being a member in the LLC.

Ben Bond was past accountant for Nova Interactive Inc., Barclay Partners Inc.
and Meridian Capital Inc. Erik Jensen's wife, who is an attorney, previously
worked for a firm that did legal work for Mr. Wildes personally and for his
companies, including Morgan Beaumont. Mr. Jensen's wife worked with the firm
that was Key Card Communication's corporate attorneys. Erik Jensen and James
Smith were previously in business together and the shareholders of Typhoon Voice
Technology. VL "Brother" Sandifer had filed our past tax returns and has been
associated with Ken Craig and his family for years and has filed Mr. Craig's
taxes. The Board of Directors has been advised of the details of these
relationships.

Cliff Wildes was an investor in Key Card Communications and a director of Key
Card Communications for approximately 4 months in 2001 and then became a vice
president of its successor after it merged with a non-trading reporting company,
until he finally resigned in December 2001. There he met Michael Rejbeni, and
others who were involved in the initial operations of Key Card. Mr. Wildes also
introduced Key Card to his professional relationships. Benjamin Bond agreed to
act as a consultant on accounting matters, Rod Braido agreed to act as member of
the board of directors of Key Card and Attorney Gary Glassman agreed to act as
one of its corporate attorneys. Mr. Wildes also introduced Key Card to several
law firms that presently represent Morgan Beaumont. Mr. Wildes resigned from Key
Card's Board of Directors in June 2001 after learning in a board meeting that
Key Card had not paid its payroll taxes as they came due. Mr. Wildes remained as
a consultant to Key Card and a vice president of its successor until December
2001, to assist in the completion of the merger. The merger was completed;
however, Key Card's shares were never listed or traded. Mr. Braido also resigned
in December 2001 to join Morgan Beaumont as our CEO. Key Card discontinued
operations in approximately July 2002, shortly after Key Card's attorneys
reported to its board that they believed that Key Card's founder and President,
who is now deceased, had misappropriated substantial amounts of cash from Key
Card. There was no known evidence to the auditors or others that anyone else was
involved in the embezzlement of Key Card's funds. Mr. Wildes filed suit against
Key Card in 2002 and received a judgment against them. Mr. Wildes believed that
although Key Card's founder had cheated and deceived him, a number of
professional services and local investors, that Key Card did employ a number of
good and intelligent individuals who were familiar with the telecom industry. As
Morgan Beaumont developed, Mr. Wildes sought out the expertise of those
employees to assist him in growing the Company.

CODE OF ETHICS
--------------

We have not yet adopted a corporate code of ethics. Our board of directors is
considering, over the next year, establishing a code of ethics to deter
wrongdoing and promote honest and ethical conduct; provide full, fair, accurate,
timely and understandable disclosure in public reports; comply with applicable
laws; ensure prompt internal reporting of code violations; and provide
accountability for adherence to the code.


                                       56



<PAGE>

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Exchange Act requires our executive officers and directors,
and persons who own more than 10% of a registered class of its equity securities
("Reporting Persons"), to file reports of ownership and changes in ownership
with the SEC. Reporting Persons are required by SEC regulations to furnish us
with copies of all forms they file pursuant to Section 16(a). Based solely on
our review of the copies of such reports received by it, the representations in
the Merger Agreement between the former Morgan Beaumont and Pan American Energy
Corporation, and the written representations from certain Reporting Persons that
no other reports were required for those persons, we believe that, during the
year ended September 30, 2005, the Reporting Persons complied with all
Section 16(a) filing requirements applicable to them.

ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The table below summarizes all compensation awarded to, earned by, or paid to
the following individuals, our "named executive officers, and directors" for the
two most recently completed fiscal years ended September 30, 2005. This table
does not reflect changes that went into effect after the end of our fiscal year.

<TABLE>
<S> <C>
                                                                                         LONG TERM COMPENSATION
                                               ANNUAL COMPENSATION                  RESTRICTED
                                                                  OTHER ANNUAL     STOCK AWARDED   OPTIONS/* SARS (#)
NAME                TITLE        YEAR      SALARY      BONUS      COMPENSATION           $              GRANTED
----                -----        ----      ------      -----      ------------     -------------        -------
Clifford Wildes     Chief        2005       $185,000  $35,000              16,500        -              3,350,000
(1) (3)             Executive    2004       $150,000     -                 $5,941        -                      -
                    Officer,     2003       $150,000     -                 $9,350        -                      -
                    Treasure
                    and
                    Director
Erik Jensen (1) (3) President,   2005       $125,000  $15,000             $11,500        -                850,000
                    Chief        2004        $96,000                       $4,800    2,000                      -
                    Operating    2003        -                         -                 -                      -
                    Officer,
                    and
                    Director
Theodore Misiewicz  Chief        2005        $74,083     -                $12,100        -                600,000
(1) (3)             Financial    2004                    -                               -                      -
                    Officer,     2003                    -                               -                      -
                    Secretary,
                    and
                    Director


                                                         57



<PAGE>

Kenneth Craig (1)   Chief        2005       $233,750  $35,000              $7,800        -              2,500,000
(3)                 Financial    2004       $150,000     -                $12,593        -                      -
                    Officer,     2003       $150,000     -                $18,860        -                      -
                    Secretary,
                    and
                    Director
Daniel Davis        Chief        2005        $78,000     -                 $4,800        -                300,000
                    Technical    2004              -     -             -                 -                      -
                    Officer      2003              -     -             -                 -                      -

James Smith III     Chief        2005         37,000     -             -                 -                150,000
                    Technical    2004        $78,000     -                 $4,800        -                      -
                    Officer      2003        -           -             -                 -                      -
Virgil "Brother"    Audit        2005         $5,000     -                 $3,750        -                100,000
Sandifer, Jr. (1)   Committee    2004         $5,000     -                 $1,000        -                      -
(2)                 Member,      2003              -     -                   $250        -                      -
                    Compensation
                    Committee
                    Member,
                    and
                    Director
Benjamin J. Bond    Audit        2005         $5,000                       $3,750        -                100,000
(1) (2)             Committee    2004         $5,000     -                 $1,000        -                      -
                    Member,      2003            -       -                   $250        -                      -
                    Compensation
                    Committee
                    Member,
                    and
                    Director
Mark Brewer (1) (2) Director;    2005         $5,000     -                 $3,750        -                100,000
                    Audit        2004          $5000     -                  $1000        -                      -
                    Committee;   2003          $5000                         $250        -                      -
                    Compensation
                    Committee
                                 2005     $747,833     $85,000            $63,950        -              8,050,000

(1)      Outside Directors receive $5,000 per year to serve on the Board, plus
         an additional $1,000 if they attend the annual meeting of our
         Shareholders. They also receive 100,000 options, which vest immediately
         upon grant. Employee Directors receive 100,000 options, which vest
         immediately upon grant.

(2)      Also a Committee Member. Committee members receive an additional $250
         for each Committee Meeting they attend.

(3)      The executive officers entered into new employment agreements with us
         effective after the period covered in this report. A description of the
         terms and copies of the agreements are set forth in this report.

STOCK OPTION GRANTS

During the year ended September 30, 2005, we granted stock options to officers,
directors, employees, and consultants according to the following table.


                                       58


<PAGE>
                                         Option/SAR Grants in Fiscal Year 2005


                                   Number of           % of Total
                                   Securities         Options/SARs
                                   Underlying          Granted to          Average
                                  Options/SARs        Employees in     Exercise Price
            Name                  Granted (#)         Fiscal Year         ($/Share)        Expiration Date
------------------------------ ------------------- ------------------- ---------------- ----------------------
Clifford Wildes                         3,350,000               27.5%            $0.20        October 1, 2014
------------------------------ ------------------- ------------------- ---------------- ----------------------
Erik Jensen                               750,000                6.2%            $0.20        October 1, 2014
------------------------------ ------------------- ------------------- ---------------- ----------------------
Theodore Misiewicz                        600,000                4.9%            $0.76        January 1, 2015
------------------------------ ------------------- ------------------- ---------------- ----------------------
Daniel Davis                              300,000                2.5%            $0.55          July 19, 2015
------------------------------ ------------------- ------------------- ---------------- ----------------------
Kenneth Craig                           2,600,000               21.3%            $0.20        October 1, 2014
------------------------------ ------------------- ------------------- ---------------- ----------------------
                        Total           7,600,000               62.4%            $0.26
                               =================== =================== ================ ======================

EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES

No stock options were exercised by our officers, directors or employees during
the period ended September 30, 2005. As of the date of this report, no options
had been exercised.

OUTSTANDING STOCK OPTIONS AND WARRANTS

As of September 30, 2005, we had options outstanding for the purchase of
10,471,667 share of our common stock at an average exercise price of $0.3 per
share. We also had 12,362,500 warrants to purchase our common stock for $0.60
per share.

SUBSEQUENT ISSUANCE OF STOCK OPTIONS

Subsequent to September 30, 2005, we granted stock options according to the
following table:

                                                                Average Exercise
                  Granted Vested   Forfeited     Outstanding         Price
                  --------------   ---------     -----------         -----
Directors                  --             --             --             --
Executive Officers         --             --             --             --
Employees           1,000,000        304,168      1,000,000          $0.53
Consultants                --             --             --             --
Total               1,000,000        304,168             --          $0.53

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of September 30, 2005, the number and
percentage of the outstanding shares of common stock which, according to the
information supplied to us, were beneficially owned by (i) each person who is
currently a director, (ii) each executive officer, (iii) all of our current
directors and executive officers as a group and (iv) each person who, to our
knowledge is the beneficial owner of more than 5% of the outstanding common
stock. Except as otherwise indicated, the persons named in the table have sole
voting and dispositive power with respect to all shares beneficially owned,
subject to community property laws where applicable. This table does not reflect
options granted to our executive officers after the period covered in this
report, which are listed in the description of their employment agreements.


                                       59


<PAGE>

Title of                Name and address                             Amount of                  Percent class(1) of
class                   beneficial owner                        beneficial ownership                  of class
-----                   ----------------                        --------------------                  --------
                                                                   As of 9/30/05                   As of 9/30/05
                                                                   -------------                   -------------


Common Stock            Clifford Wildes                         7,440,789 shares(2)                       12.3%
                        7436 Myrica Drive
                        Sarasota, FL  34241

Common Stock            Carole L. Wildes                        7,440,789 shares(3)                       12.3%
                        7436 Myrica Drive
                        Sarasota, FL  34241


Common Stock            Erik Jensen                             1,623,757 shares (4)                       2.7%
                        5105 Sunnydale Circle
                        Sarasota, FL  34233

Common Stock            Virgil "Brother" Sandifer, Jr.          100,000 shares related to options          0.2%
                        2037 Hwy 82 E.
                        Greenville, MS 38703

Common Stock            Benjamin J. Bond                        100,000 shares related to options          0.2%
                        1001 N. Washington Blvd., Suite 106
                        Sarasota, Florida 34236

Common Stock            Mark Brewer                             100,000 shares related to options          0.2%
                        12577 South 265 West
                        Draper, UT 84020


Common Stock            Theodore Misiewicz                      600,000 shares related to options          1.0%
                        3688 Quiet Pond Ln.
                        Sarasota, FL  34235

Common Stock            Daniel Davis                            300,000 shares related to options          0.5%


Common Stock            Jody Hudgins                            No shares                                  0.0%


Common Stock            All Officers and Directors              10,264,546 shares                         17.0%
                        as a Group that consists of
                        three people

</TABLE>

(1)      The percent of class is based on 60,376,153 shares of common stock
         issued and outstanding as of September 30, 2005.

(2)      Of the shares represented as of September 30, 2005 of 3,993,989 are in
         the name of Cliff Wildes and 96,800 shares are in the name of his wife,
         Carole L. Wildes, of which he is deemed to be the beneficial owner, and
         3,350,000 shares related the options granted Mr. Wildes.


                                       60


<PAGE>

(3)      Of the shares represented as of September 30, 2005 of 96,800 are in the
         name of Carole L. Wildes and 3,993,989 shares are in the name of her
         husband, Cliff Wildes, of which she is deemed to be the beneficial
         owner and 3,350,000 shares related the options granted Mr. Wildes.

(4)      Of the shares represented as of September 30, 2005, all 773,757 in the
         name of Erik Jensen and 850,000 shares related the options granted Mr.
         Jensen.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following is information with respect to the amended 2004 Stock Incentive
Plan:

<TABLE>
<S> <C>
----------------------------------------- --------------------------------------- -----------------------------------
Number of securities to be issued upon    Weighted average exercise price of      Number of securities remaining
exercise of outstanding options,          outstanding options, warrants and       available for future issuance under
warrants and rights                       rights                                  the compensation plan
----------------------------------------- --------------------------------------- -----------------------------------
                      12,576,666                                   $0.32                               2,423,334
----------------------------------------- --------------------------------------- -----------------------------------

</TABLE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There have been three transactions within the last two years where one of our
directors, officers or shareholders, had a direct or indirect interest.

o        Erik Jensen, our current President and COO, was an officer and director
         of Typhoon Voice Technologies in 2003. Typhoon had contracts with us
         for the development of the Morgan Beaumont Network and database. We
         have since acquired Typhoon and all assets thereof.

o        Virgil "Brother" Sandifer, Jr., prepared our 2002 and 2003 tax returns
         as our tax accountant before joining our Board of Directors.

o        Kesselring Corporation, a licensed Florida Contractor, performed
         remodeling services for us at various times during the year ended
         September 30, 2005. Clifford Wildes is a minority shareholder in
         Kesselring and Erik Jensen also owned a minority interest in Kesselring
         from January 2005 until September 2005.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Reports on Form 8-K:

(b) Exhibits:

Exhibits included or incorporated by reference herein are set forth in the
Exhibit Index.


                                       61


<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES
----------

The aggregate fees billed and/or expected to be billed for the year ended
September 30, 2005 and the nine months ended September 30, 2004 for professional
services rendered by the principal accountant for the audit of our annual
financial statements and reviews of our interim financial information included
in our Form 10-QSB or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for these fiscal
periods were approximately as follows:

<TABLE>
<S> <C>
                                                           Year Ended September 30,     Nine Months Ended September 30,
                                                                     2005                            2004
Audit Fees                                                          $96,000                         $44,300
Audit Related Fees                                                  $  0.00                         $  0.00
Tax Fees                                                            $  0.00                         $  0.00
All Other Fees, Including Tax Consultation and                      $  0.00
Preparation

</TABLE>

All audit fees are approved by our Board of Directors upon recommendation of the
Audit Committee prior to the commencement of the audit.

AUDIT RELATED FEES
------------------

None.

TAX FEES
--------

None.

ALL OTHER FEES
--------------

None.


                                       62


<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, we caused this
report to be signed on our behalf by the undersigned, thereunto duly authorized.

MORGAN BEAUMONT

By:         /S/CLIFFORD WILDES
            ---------------------------------------------------
            Clifford Wildes, Chief Executive Officer, Treasurer
            Director
            Date: December 23, 2005

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

By:         /S/CLIFFORD WILDES
            ------------------------------------------------------
            Clifford Wildes, Chief Executive Officer and Treasurer
            (Principal Executive Officer)
            Director
            Date: December 23, 2005

By:         /S/THEODORE MISIEWICZ
            --------------------------------------------------------------
            Theodore Misiewicz, Secretary and Chief Financial Officer
            (Principal Financial Officer and Principal Accounting Officer)
            Director
            Date: December 23, 2005


                                       63


<PAGE>

                                 EXHIBITS INDEX

                 EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-B

    EXHIBIT
    NUMBER         DESCRIPTION OF EXHIBIT

      3.1          Articles of Incorporation (1)

      3.2          Bylaws (1)

      4.1          Share Certificate (1)

      7.1          Consent of Independent Registered Public Accounting Firm (1)

      9.1          Employment Agreement with Clifford Wildes (2)
      9.2          Employment Agreement with Erik Jensen (2)
      9.3          Employment Agreement with Theodore Misiewicz (2)
      9.4          Employment Agreement with Daniel Davis (2)
      9.5          Consulting Agreement with Cascade Partners (2)

      19.1         Definitive Information on Schedule 14C (1)

      31.a         Certification of Chief Executive Officer pursuant to Section
                   302 of the Sarbanes-Oxley Act of 2002 (2)

      31.b         Certification of Chief Financial Officer pursuant to Section
                   302 of the Sarbanes-Oxley Act of 2002 (2)

      32.a         Certification of Chief Executive Officer pursuant to 18
                   U.S.C. Section 1350, as adopted pursuant to Section 906 of
                   the Sarbanes-Oxley Act of 2002 (2)

      32.b         Certification of Chief Financial Officer pursuant to 18
                   U.S.C. Section 1350, as adopted pursuant to Section 906 of
                   the Sarbanes-Oxley Act of 2002 (2)

(1) Filed as an Exhibit to the Form 10-KSB filed with the Securities and
Exchange Commission on December 19, 2004.

(2) Filed as an Exhibit to this Annual Report on Form 10-KSB.

                               REPORTS ON FORM 8-K


                                       64


<PAGE>

On November 1, 2005, we filed a report on Form 8-K announcing under Item 8 of
that report the restatement of our earnings on our Form 10-QSB for the periods
ended December 31, 2004, March 31, 2005 and June 30, 2005, the agreement with
MoneyGram and the modification of the MTel contract.

On December 16, 2005, we filed a report on Form 8-K announcing under Item 8 of
that report the agreement with Products Benefits Systems and the conference call
scheduled on December 13, 2005.


                                       65



<PAGE>










                              MORGAN BEAUMONT, INC.
                              ---------------------
                        (A DEVELOPMENT STAGE ENTERPRISE)
                        --------------------------------

                   CONSOLIDATED FINANCIAL STATEMENTS AS OF AND
                            FOR VARIOUS PERIODS ENDED
                          SEPTEMBER 30, 2005 AND 2004,
                            AND REPORT OF INDEPENDENT
                        REGISTERED PUBLIC ACCOUNTING FIRM







<PAGE>


                             MORGAN BEAUMONT, INC.
                             ---------------------
                        (A DEVELOPMENT STAGE ENTERPRISE)
                        --------------------------------

                                TABLE OF CONTENTS
                                -----------------

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

                                                                            Page
                                                                            ----

Report of Independent Registered Public Accounting Firm......................F-1

Consolidated Financial Statements as of and for various periods
  ended September 30, 2005 and 2004:
     Balance Sheet...........................................................F-2

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

     Statements of Stockholders' Equity (Deficit)............................F-4

     Statements of Cash Flows................................................F-6

     Notes to Financial Statements...........................................F-8


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


<PAGE>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF MORGAN BEAUMONT, INC. AND
SUBSIDIARY:

WE HAVE AUDITED THE ACCOMPANYING CONSOLIDATED BALANCE SHEET OF MORGAN BEAUMONT,
INC. AND SUBSIDIARY (THE "COMPANY"), A DEVELOPMENT STAGE ENTERPRISE, AS OF
SEPTEMBER 30, 2005, AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS,
STOCKHOLDERS' EQUITY (DEFICIT) AND CASH FLOWS FOR THE YEAR THEN ENDED, THE NINE
MONTHS ENDED SEPTEMBER 30, 2004 AND THE PERIOD JULY 10, 2000 (DATE OF
INCORPORATION) TO SEPTEMBER 30, 2005. THESE CONSOLIDATED FINANCIAL STATEMENTS
ARE THE RESPONSIBILITY OF THE COMPANY'S MANAGEMENT. OUR RESPONSIBILITY IS TO
EXPRESS AN OPINION ON THESE CONSOLIDATED FINANCIAL STATEMENTS BASED ON OUR
AUDITS.

WE CONDUCTED OUR AUDITS IN ACCORDANCE WITH THE STANDARDS OF THE PUBLIC COMPANY
ACCOUNTING OVERSIGHT BOARD (UNITED STATES OF AMERICA). THOSE STANDARDS REQUIRE
THAT WE PLAN AND PERFORM THE AUDITS TO OBTAIN REASONABLE ASSURANCE ABOUT WHETHER
THE FINANCIAL STATEMENTS ARE FREE OF MATERIAL MISSTATEMENT. THE COMPANY IS NOT
REQUIRED TO HAVE, NOR WERE WE ENGAGED TO PERFORM, AN AUDIT OF ITS INTERNAL
CONTROL OVER FINANCIAL REPORTING. OUR AUDIT INCLUDED CONSIDERATION OF INTERNAL
CONTROL OVER FINANCIAL REPORTING AS A BASIS FOR DESIGNING AUDIT PROCEDURES THAT
ARE APPROPRIATE IN THE CIRCUMSTANCES, BUT NOT FOR THE PURPOSE OF EXPRESSING AN
OPINION ON THE EFFECTIVENESS OF THE COMPANY'S INTERNAL CONTROL OVER FINANCIAL
REPORTING. ACCORDINGLY, WE EXPRESS NO SUCH OPINION. 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 CONSOLIDATED FINANCIAL STATEMENTS REFERRED TO ABOVE PRESENT
FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF THE COMPANY AS OF
SEPTEMBER 30, 2005, AND THE RESULTS OF ITS OPERATIONS AND CASH FLOWS FOR THE
YEAR THEN ENDED, THE NINE MONTHS ENDED SEPTEMBER 30, 2004, AND THE PERIOD JULY
10, 2000 (DATE OF INCORPORATION) TO SEPTEMBER 30, 2005, IN CONFORMITY WITH
ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA.

THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED ASSUMING
THAT THE COMPANY WILL CONTINUE AS A GOING CONCERN. AS DISCUSSED IN NOTES A AND B
TO SUCH FINANCIAL STATEMENTS, THE COMPANY IS IN THE DEVELOPMENT STAGE, HAS
SUFFERED RECURRING LOSS FROM OPERATIONS AND WILL HAVE ONGOING REQUIREMENTS FOR
ADDITIONAL CAPITAL INVESTMENT. THESE FACTORS RAISE SUBSTANTIAL DOUBT ABOUT THE
COMPANY'S ABILITY TO CONTINUE AS A GOING CONCERN. MANAGEMENT'S PLANS IN REGARD
TO THESE MATTERS ARE ALSO DESCRIBED IN NOTE B. THE CONSOLIDATED FINANCIAL
STATEMENTS DO NOT INCLUDE ANY ADJUSTMENTS THAT MIGHT RESULT FROM THE OUTCOME OF
THIS UNCERTAINTY.

KINGERY & CROUSE, P.A /S/

DECEMBER 20, 2005
TAMPA, FL

                                      F-1


<PAGE>

                             MORGAN BEAUMONT, INC.
                             ---------------------
                        (A DEVELOPMENT STAGE ENTERPRISE)
                        --------------------------------

               CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2005

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

ASSETS
------

CURRENT ASSETS:
 Cash and cash equivalents                                         $  2,474,712
 Receivables:
   Accounts (net of allowance for doubtful accounts of $90,000)       2,315,788
   Other                                                                 18,398
 Inventories                                                            204,192
 Prepaid expenses and other current assets                               89,231
                                                                   -------------
       Total current assets                                           5,102,321

PROPERTY AND EQUIPMENT - NET                                          1,348,458

OTHER ASSETS                                                             77,125
                                                                   -------------

TOTAL                                                              $  6,527,904
                                                                   =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------

CURRENT LIABILITIES:
 Accounts payable and accrued liabilities                          $    423,570
 Deferred revenues                                                    1,910,467
 Derivative financial instruments                                     5,068,625
                                                                   -------------
        Total current liabilities                                     7,402,662
                                                                   -------------

COMMITMENTS AND CONTINGENCIES (see Note F)

COMMON STOCK WITH REGISTRATION RIGHTS:
  7,125,000 shares issued and outstanding at $0.001 par value         1,425,000
  12,362,500 shares issued and outstanding at $0.001 par value        1,435,675
                                                                   -------------
         Total common stock with registration rights                  2,860,675
                                                                   -------------

STOCKHOLDERS' DEFICIT:
  Common stock - $0.001 par value: 170,000,000 shares authorized;
     40,888,653 shares issued and outstanding                            40,889
  Additional paid-in capital                                          6,296,550
  Deficit accumulated during the development stage                  (10,072,872)
                                                                   -------------
        Total stockholders' deficit                                  (3,735,433)
                                                                   -------------

TOTAL                                                              $  6,527,904
                                                                   =============


See notes to financial statements.

                                      F-2


<PAGE>
<TABLE>

                                            MORGAN BEAUMONT, INC.
                                            ---------------------
                                       (A DEVELOPMENT STAGE ENTERPRISE)
                                       --------------------------------

                                     CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                                                                        For the period
                                                   For the year       For the nine       July 10, 2000
                                                       ended          months ended          (date of
                                                   September 30,      September 30,    incorporation) to
                                                       2005               2004         September 30, 2005
                                                   -------------      -------------      -------------
<S>                                                <C>                <C>                <C>
REVENUES (NET OF RETURNS AND ALLOWANCES)           $  1,089,673       $     58,602       $  1,679,892

COST OF REVENUES                                      1,075,445             35,833          1,391,607
                                                   -------------      -------------      -------------

GROSS PROFIT                                             14,228             22,769            288,285
                                                   -------------      -------------      -------------

OTHER OPERATING EXPENSES:
Stock based compensation and consulting               1,088,200             14,200          2,100,486
Other employee compensation and benefits              2,400,555            624,972          3,475,670
Other professional and consulting fees                1,096,838            141,116          1,280,533
Purchased in process research and development                --                 --            153,190
Impairment of assets                                    212,000             43,154            255,154
Occupancy and equipment                                 506,712             88,951            691,787
Selling and marketing                                   120,211             28,301            215,792
Travel and entertainment                                102,344             24,073            130,437
Other                                                   279,643             64,358            399,921
                                                   -------------      -------------      -------------
   Total other operating expenses                     5,806,503          1,029,125          8,702,970
                                                   -------------      -------------      -------------

LOSS FROM OPERATIONS                                 (5,792,275)        (1,006,356)        (8,414,685)
                                                   -------------      -------------      -------------

OTHER INCOME (EXPENSE):
Gain (loss) from settlement of litigation                60,000            (56,000)             4,000
Loss on derivative financial instruments             (1,607,125)                --         (1,607,125)
Interest income                                          34,283             36,211             70,494
Interest expense                                         (4,159)            (5,190)           (16,897)
Registration rights penalties                           (99,750)                --            (99,750)
Other                                                    (8,909)                --             (8,909)
                                                   -------------      -------------      -------------
    Total other income (expense)                     (1,625,660)           (24,979)        (1,658,187)
                                                   -------------      -------------      -------------

NET LOSS                                           $ (7,417,935)      $ (1,031,335)      $(10,072,872)
                                                   =============      =============      =============

NET LOSS PER SHARE - Basic and diluted             $      (0.15)      $      (0.08)
                                                   =============      =============

Weighted average number of shares outstanding        49,175,851         12,697,400
                                                   =============      =============


See notes to financial statements.
</TABLE>

                                      F-3


<PAGE>
<TABLE>
                                                      MORGAN BEAUMONT, INC.
                                                      ---------------------
                                                 (A DEVELOPMENT STAGE ENTERPRISE)
                                                 --------------------------------

                                           STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                           --------------------------------------------


                                                                                                             Deficit
                                                                                                 Note      Accumulated
                                                      Common Stock      Additional  Common    Receivable   During the
                                               -----------------------   Paid-In     Stock       from      Development
                                                  Shares    Par Value    Capital   Subscribed Stockholder      Stage        Total
                                               ------------ --------- ------------- -------- ------------ ------------- ------------
<S>                                             <C>         <C>       <C>   <C>     <C>      <C>          <C>           <C>
Balances, July 10, 2000
(date of incorporation)                                 --  $     --  $         --  $    --  $        --  $         --  $        --

Common stock subscription                               --        --            --      100           --            --          100
Net loss                                                --        --            --       --           --            --           --
                                               ------------ --------- ------------- -------- ------------ ------------- ------------
Balances, December 31, 2000                             --        --            --      100           --            --          100

Issuance of common stock for cash:
     At $0.0069 per share                           50,947        51           399     (100)          --            --          350
     At $0.0063 per share                          796,047       796         4,204       --           --            --        5,000
Issuance of common stock for services -
     At $0.0785 per share                        1,557,067     1,557       120,693       --           --            --      122,250
Net loss                                                --        --            --       --           --      (216,982)    (216,982)
                                               ------------ --------- ------------- -------- ------------ ------------- ------------
Balances, December 31, 2001                      2,404,061     2,404       125,296       --                   (216,982)     (89,282)

Issuance of common stock for cash:
     At $0.0785 per share                           26,747        27         2,073       --           --            --        2,100
     At $0.1309 per share                        1,295,327     1,295       168,205       --           --            --      169,500
     At $0.157 per share                           318,419       318        49,682       --           --            --       50,000
Issuance of common stock for services:
     At $0.0785 per share                          928,254       928        71,952       --           --            --       72,880
     At $0.13111 per share                       1,509,304     1,509       196,382       --           --            --      197,891
     At $0.157 per share                            67,505        68        10,532       --           --            --       10,600
Net loss                                                --        --            --       --           --      (451,646)    (451,646)
                                               ------------ --------- ------------- -------- ------------ ------------- ------------
Balances, December 31, 2002                      6,549,617     6,549       624,122       --           --      (668,628)     (37,957)

Issuance of common stock for cash:
     At $0.0785 per share                          284,195       284        22,029       --           --            --       22,313
     At $0.157 per share                           254,735       255        39,745       --           --            --       40,000
Issuance of common stock for services:
     At $0.157 per share                         3,785,774     3,786       590,679       --           --            --      594,465

                                                                                                                 (CONTINUED)
                                                               F-4


<PAGE>

                                                      MORGAN BEAUMONT, INC.
                                                      ---------------------
                                                 (A DEVELOPMENT STAGE ENTERPRISE)
                                                 --------------------------------

                                           STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                           --------------------------------------------

                                                                                                             Deficit
                                                                                                 Note      Accumulated
                                                      Common Stock      Additional  Common    Receivable   During the
                                               -----------------------   Paid-In     Stock       from      Development
                                                  Shares    Par Value    Capital   Subscribed Stockholder      Stage        Total
                                               ------------ --------- ------------- -------- ------------ ------------- ------------

Issuance of common stock for assets of Typhoon
     Technologies at $0.157 per share            1,421,357     1,421       221,769       --           --            --      223,190
Net loss                                                --        --            --       --           --      (954,974)    (954,974)
                                               ------------ --------- ------------- -------- ------------ ------------- ------------
Balances, December 31, 2003                     12,295,678    12,295     1,498,344       --           --    (1,623,602)    (112,963)

Issuance of common stock for cash ($.0785 per
    share)                                         263,651       264        20,436       --           --            --       20,700
Issuance of common stock held in escrow            350,260       350          (350)      --
Common stock issued for services at $0.157 per
    share                                           90,428        91        14,109       --           --            --       14,200
Issuance of common stock in exchange for net
    assets in a recapitalization                27,025,000    27,025     2,941,975       --   (3,000,000)           --      (31,000)
Collections on note receivable from
    stockholder through September 30, 2004              --        --            --       --      971,051            --      971,051
Collections on note receivable from
    stockholder after September 30, 2004
    (reflected as a current asset)                      --        --            --       --      644,535            --      644,535
Net loss                                                --        --            --       --           --    (1,031,335)  (1,031,335)
                                               ------------ --------- ------------- -------- ------------ ------------- ------------

Balances, September 30, 2004                    40,025,017    40,025     4,474,514       --   (1,384,414)   (2,654,937)     475,188

Issuance of common stock and warrants for
   cash:
   At $.20  per share                            7,125,000     7,125     1,417,875       --           --            --    1,425,000
   At $.40 per share (net of stock issuance
     costs)                                     12,362,500    12,362     4,871,252       --           --            --    4,883,614
Allocation of proceeds from sales of common
    stock to derivative financial
    instruments (warrants)                              --        --    (3,461,500)      --           --            --   (3,461,500)
Allocation of proceeds from sale of common
    stock to common stock with registration
    rights                                     (19,487,500)  (19,487)   (2,827,627)      --           --            --   (2,847,114)
Value attributable to consulting and director
    options                                             --        --     1,074,700       --           --            --    1,074,700
Issuance of common stock for certain property
    and equipment of MTel                          863,636       864       747,336       --           --            --      748,200

Collections on note receivable from stockholder         --        --            --       --    1,384,414            --    1,384,414

Net loss                                                --        --            --       --           --    (7,417,935)  (7,417,935)
                                               ------------ --------- ------------- -------- ------------ ------------- ------------

Balances, September 30, 2005                    40,888,653  $ 40,889  $  6,296,550  $    --  $        --  $(10,072,872) $(3,735,433)
                                               ===========  ========  ============  =======  ===========  ============  ===========


See notes to financial statements.
</TABLE>

                                                               F-5


<PAGE>
<TABLE>

                                                      MORGAN BEAUMONT, INC.
                                                      ---------------------
                                                 (A DEVELOPMENT STAGE ENTERPRISE)
                                                 --------------------------------

                                               CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                                     For the period
                                                                                                                     July 10, 2000
                                                                                                                       (date of
                                                                                   For the year     For the nine     incorporation)
                                                                                      ended         months ended          to
                                                                                   September 30,    September 30,    September 30,
                                                                                       2005             2004             2005
                                                                                   -------------    -------------    -------------
<S>                                                                                <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                       $ (7,417,935)    $ (1,031,335)    $(10,072,872)
    Adjustments to reconcile net loss to net cash used in operating activities:
       Depreciation and amortization                                                    145,881           28,688          207,931
       Provision for bad debts                                                           90,000               --           90,000
       Amortization of intangible assets                                                  8,850            6,635           15,485
       Stock based compensation and consulting                                        1,088,200           14,200        2,100,486
       Purchased in process research and development                                         --               --          153,190
     Loss on derivative financial instruments                                         1,607,125               --        1,607,125
       Impairment of assets                                                             212,000           43,154          255,154
       Forgiveness of indebtedness as a result of litigation settlement                 (50,000)         (50,000)
    Changes in assets and liabilities, net:
        Decrease (increase)  in receivables                                          (2,418,321)          (5,865)      (2,418,321)
        Decrease (increase) in inventories                                             (204,192)              --         (204,192)
        Decrease (increase) in prepaid expenses and other current assets                (83,363)          27,432          (89,231)
        Decrease (increase) in other assets                                             (46,603)         (30,525)         (66,072)
        Increase (decrease) in deferred revenue                                       1,910,467               --        1,910,467
        Increase (decrease) in accounts payable and accrued  liabilities                 28,724          137,637          375,650
                                                                                   -------------    -------------    -------------
NET CASH USED IN OPERATING ACTIVITIES                                                (5,129,167)        (809,979)      (6,185,200)
                                                                                   -------------    -------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                                               (643,516)         (45,551)        (791,765)
     Notes receivable                                                                  (202,000)              --         (202,000)
     Initial investment in Financial Services International, Inc.                       (10,000)              --          (10,000)
     Purchase of assets from Typhoon Voice Technologies, Inc.                                --               --           (5,000)
                                                                                   -------------    -------------    -------------
 NET CASH USED IN INVESTING ACTIVITIES                                                 (855,516)         (45,551)      (1,008,765)
                                                                                   -------------    -------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from borrowings under notes payable                                             --               --           97,912
    Repayments of notes payable                                                              --          (36,500)         (47,912)
      Proceeds from the issuance of common stock and warrants (net of stock
issuance
         costs)                                                                       6,308,614           20,700        6,618,677
     Collections on note receivable from stockholder                                  2,028,949          971,051        3,000,000
                                                                                   -------------    -------------    -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                             8,337,563          955,251        9,668,677
                                                                                   -------------    -------------    -------------

                                                                                                                       (CONTINUED)

                                                               F-6


<PAGE>

                                                      MORGAN BEAUMONT, INC.
                                                      ---------------------
                                                 (A DEVELOPMENT STAGE ENTERPRISE)
                                                 --------------------------------

                                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                            (CONTINUED)


                                                                                                                   For the period
                                                                                                                   July 10, 2000
                                                                                                                     (date of
                                                                                    For the year     For the nine   incorporation)
                                                                                       ended         months ended        to
                                                                                    September 30,    September 30,  September 30,
                                                                                        2005             2004           2005
                                                                                     -----------     -----------     -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                             2,352,880          99,721       2,474,712

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                          121,832          22,111              --
                                                                                     -----------     -----------     -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                             $2,474,712      $  121,832      $2,474,712
                                                                                     ===========     ===========     ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:
Interest paid                                                                        $    4,159      $    3,031      $    7,390
                                                                                     ===========     ===========     ===========
Income taxes paid                                                                    $       --      $       --      $       --
                                                                                     ===========     ===========     ===========

SUPPLEMENTAL DISLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of assets by issuance of stock                                           $  748,200      $       --      $  818,200
                                                                                     ===========     ===========     ===========
Reclassification of proceeds from sales of common stock to common stock with
   registration rights and derivative financial instruments                          $6,322,175      $       --      $6,322,175
                                                                                     ===========     ===========     ===========
Issuance of common stock for net assets of Pan American Energy Corporation in a
   recapitalization  - see Note A                                                    $       --      $2,969,000      $2,969,000
                                                                                     ===========     ===========     ===========


See notes to financial statements.
</TABLE>

                                                               F-7


<PAGE>

                              MORGAN BEAUMONT, INC.
                              ---------------------
                        (A DEVELOPMENT STAGE ENTERPRISE)
                        --------------------------------

                          NOTES TO FINANCIAL STATEMENTS

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

NOTE A - FORMATION, BACKGROUND AND OPERATIONS OF THE COMPANY

Morgan Beaumont, Inc. (the "Company"), which is considered to be a development
stage enterprise as defined in Financial Accounting Standards Board Statement
No. 7., was incorporated under the laws of the state of Florida on July 10,
2000.

In August 2004, the Company consummated a merger and recapitalization with Pan
American Energy Corp ("PAEC"), a publicly traded company that was incorporated
under the laws of the State of Nevada on May 26, 2000. From a legal perspective,
PAEC was the surviving company and thus continued its public reporting
obligations, however for financial statement purposes, the transaction was
treated as a reverse merger and a recapitalization whereby the Company was
deemed to be the acquirer, and no goodwill or other intangible assets were
recorded. As a result, the accompanying results of operations and cash flows for
each of the periods prior to the date of the merger represent the Company's
results of operations and cash flows as if it were the accounting acquirer.
On the date of the merger, the shareholders of PAEC received 27,025,000 shares
of our common stock on the date of transaction.

In connection with this transaction, the Company received a $3,000,000 note
receivable from a representative of the PAEC shareholder group. No balance
remained outstanding on the note as of September 30, 2005.

Immediately prior to the merger, the Company reduced its outstanding shares via
a reverse stock split whereby its outstanding shares were reduced at the rate of
7.8513 to one. In addition, on June 1, 2004, its Articles of Incorporation were
amended to change the par value of common stock from $1.00 to $0.001. All
references to the number of shares, and related par values, in the accompanying
consolidated financial statements and notes thereto have been adjusted to
reflect the changes as though they occurred at the date of the Company's
incorporation.

Principles of Consolidation
---------------------------

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, MBI Services Group, LLC (collectively
"we", "us", "our"). All significant intercompany accounts and balances have been
eliminated in consolidation.

Change in Year End
------------------

In 2004, we changed our year end from December 31 to September 30. Accordingly,
the accompanying consolidated financial statements are as of and for the year
ended September 30, 2005 and for the nine months ended September 30, 2004 as
well as from inception to September 30, 2005.

                                      F-8


<PAGE>

We are headquartered in Bradenton, Florida, and at September 30, 2005 we also
have a facility in Miami, Florida. Our primary products are as follows:

     o    The Morgan Beaumont ATM and Debit Cards, Morgan Beaumont Stored Value
          VISA cards and Morgan Beaumont Stored Value MasterCard which are
          re-loadable financial products primarily for the sub-prime credit
          market. We have been providing these cards to consumers in the
          sub-prime credit market sector since the third quarter of 2002. The
          sub-prime market is generally made up of consumers that do not have
          checking accounts and/or the ability to obtain debit or credit cards.
          We have also provided these products to third party companies for
          co-branding with their company name and logo, and have been marketing
          these products under our brand name.

     o    In June of 2005, through our subsidiary, we began selling prepaid
          phone cards branded as Morgan Beaumont Phone Cards, and MBI Services
          Phone Cards. We also privately brand phone cards for some of our
          distributors and sell unique authorization codes to distributors for
          resale ("PIN"). The prepaid phone cards have a concealed PIN that the
          end user exposes in order to use. Once the user has the PIN and the
          toll-free access number, the user is then able to place both domestic
          and international long-distance phone calls through our telephone
          equipment. Our telephone equipment has the retail value of the
          associated PIN in our database and reduces the value as the user
          incurs phone charges based on our rates published on our website. Once
          the value of the PIN has been used up our telephone equipment
          disconnects any call in process and does not allow the PIN to be used
          again.

Revenue Recognition and Deferred Revenue
----------------------------------------

We generate the following types of revenues:

     o    Initiation fees, which arise from sales of our stored value and debit
          cards.

     o    Subscription fees, which arise from hosting or licensing fees. Under a
          hosted agreement, our customers are not charged for the use of our
          proprietary software; rather they pay a per minute or per transaction
          fee for each use whereas under a licensing agreement, our customer
          pays monthly fees for the use of our software at each of their loading
          stations.

     o    Transaction fees, which arise from the use and loading of cash for
          ATM, debit or stored value cards.

     o    Maintenance fees, which arise from charges for keeping the cards
          active.

     o    Financial float fees, which arise from charges for the instant load of
          cash and convenience of stored value, ATM and debit cards.

     o    Sales of prepaid phone cards and related phone card fees which arise
          from the usage of such cards. All revenue from the sale of prepaid
          phone cards is initially deferred and subsequently amortized to
          revenues as the cards are used.

                                      F-9


<PAGE>

     o    Revenues from sales of long-distance minutes are recognized when
          provided.

In general, our revenue recognition policy for fees and services arising from
our products is consistent with the criteria set forth in Staff Accounting
Bulletin 104 - Revenue Recognition in Financial Statements ("SAB 104") for
determining when revenue is realized or realizable and earned. In accordance
with the requirements of SAB 104, we recognize revenue when, (1) persuasive
evidence of an arrangement exists; (2) delivery has occurred; (3) our price to
the buyer is fixed or determinable; and (4) collectibility of the receivables is
reasonably assured. More specifically, revenue for our stored value cards are
recognized when shipped and revenue for our prepaid telephone card sales are
recognized when the products are used. Costs of revenue, including the cost of
printing the prepaid cards, are recorded at the time revenue is recognized.

Accounts Receivable and Allowance for Doubtful Accounts
-------------------------------------------------------

Our credit terms for stored value cards vary from net 30 days to up to 90 days
from the date of shipment. Our credit terms for prepaid phone cards vary from
COD to "first use" plus 3 days with first use being defined as the first time a
particular phone card is used. Accounts receivable are determined to be past due
if payment is not made in accordance with the terms of our contracts and
receivables are written off when they are determined to be uncollectible. We
perform ongoing credit evaluations of all of our customers and generally do not
require collateral.

We evaluate the allowance for doubtful accounts on a regular basis for adequacy.
The level of the allowance account, and related bad debts are based upon our
review of the collectibility of our receivables in light of historical
experience, adverse situations that may affect our customers' ability to repay,
estimated value of any underlying collateral and prevailing economic conditions.
This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.

Cash and Cash Equivalents
-------------------------

For purposes of the statement of cash flows, we consider all highly liquid
investments with an original maturity of three months or less to be cash
equivalents.

Inventories
-----------

Inventories, which are stated at the lower of cost or market as determined using
the first in first out method, consist primarily of prepaid phone cards, and
reloadable stored value cards.

Use of Estimates
----------------

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires us to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements. The reported


                                      F-10


<PAGE>

amounts of revenues and expenses during the reporting period may be affected by
the estimates and assumptions we are required to make. Estimates that are
critical to the accompanying consolidated financial statements arise from our
belief that we will secure an adequate amount of cash to continue as a going
concern, that our allowance for doubtful accounts is adequate to cover potential
losses in our receivable portfolio, that all long-lived assets are recoverable
and that the resolution of various contingencies (see Note F) will not
materially impact our consolidated financial statements. In addition, the
determination and valuation of derivative financial instruments is a significant
estimate. The markets for our products are characterized by intense competition,
rapid technological development, evolving standards, short product life cycles
and price competition, all of which could impact the future realization of our
assets. Estimates and assumptions are reviewed periodically and the effects of
revisions are reflected in the period that they are determined to be necessary.
It is at least reasonably possible that our estimates could change in the near
term with respect to these matters.

Advertising Costs
-----------------

We expense advertising costs as they are incurred. Advertising costs were
$120,211, $28,301, and $215,792 during the year ended September 30, 2005, the
nine months ended September 30, 2004 and the period July 10, 2000 (date of
incorporation) to September 30, 2005, respectively.

Equity Issued with Registration Rights
--------------------------------------

In connection with sales of our common stock during the fiscal year ended
September 30, 2005 (see Note J), we granted certain registration rights that
provide for liquidated damages in the event we fail to timely perform under the
agreements. Although the common stock does not provide for net-cash settlement,
the existence of liquidated damages provides for a defacto net-cash settlement
option. Therefore, common stock subject to such liquidated damages does not meet
the tests required for permanent equity classification, and accordingly has been
reflected between liabilities and equity in the accompanying consolidated
balance sheet until such time the conditions are eliminated.

Derivative Financial Instrument Liabilities
-------------------------------------------

In connection with the sale of certain equity instruments in 2005, we issued
freestanding warrants (see Note J). Although the terms of the warrants do not
provide for net-cash settlement, in certain circumstances, physical or net-share
settlement is deemed to not be within our control and, accordingly, we are
required to account for these freestanding warrants as derivative financial
instrument liabilities, rather than as equity. In these cases, we deduct the
fair value of the derivative instrument from the proceeds of sales of the equity
instrument.

Derivative financial instruments are initially measured at their fair value. For
derivative financial instruments that are accounted for as liabilities, the
derivative instrument is initially recorded at its fair value and is then
re-valued at each reporting date, with changes in the fair value reported as
charges or credits to operations. For warrant-based derivative financial
instruments, we use the Black-Scholes option pricing model to value the
derivative instruments.

                                      F-11


<PAGE>

The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is re-assessed at the end of
each reporting period. Derivative instrument liabilities are classified in the
balance sheet as current or non-current based on whether or not net-cash
settlement of the derivative instrument could be required within 12 months of
the balance sheet date.

We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks.

Financial Instruments
---------------------

We believe the book value of our cash and cash equivalents, receivables and
accounts payable and accrued and other liabilities approximates their fair
values due to their short-term nature. We also believe the book values of our
derivative financial instrument liabilities approximates their fair values as
such amounts were derived using a Black Scholes pricing model, and assumptions
that we believe are reasonable in the circumstances.

Property and Equipment
----------------------

Property and equipment are stated at cost. Major additions are capitalized,
while minor additions and maintenance and repairs, which do not extend the
useful life of an asset, are expensed as incurred. Depreciation and amortization
are provided using the straight-line method over the assets' estimated useful
lives, which range from three to ten years.

Concentration of Credit Risk
----------------------------

Financial instruments, which potentially subject us to significant
concentrations of credit risk, consist primarily of accounts receivable, and
cash and cash equivalents. At September 30, 2005 approximately 90% of our
accounts receivable (or approximately $2,084,000, which amount is offset by
approximately $1,811,000 of deferred revenues) arise from 10 customers, and
revenues from these customers accounted for approximately 80% of our revenues
during the year ended September 30, 2005.

With respect to cash and cash equivalents, we frequently maintain cash and cash
equivalents balances in excess of federally insured limits. We have not
experienced any losses in such accounts.

Long-Lived Assets and Impairment
--------------------------------

Statement of Financial Accounting Standards (SFAS) 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" requires that long-lived assets,
including certain identifiable intangibles, be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying value of the


                                      F-12


<PAGE>

assets in question may not be recoverable. During the year ended September 30,
2005 and the nine months ended September 30, 2004, we determined that certain
impairment losses were necessary and charged operations for approximately
$212,000 and $43,200, respectively. The 2004 losses were necessary because of
certain technology changes whereas the 2005 losses primarily arose from our
determination that a note receivable was not recoverable. At September 30, 2005,
we believe all of our remaining long-lived assets are recoverable.

Net Loss Per Share
------------------

We compute net loss per share in accordance with SFAS No. 128 "Earnings per
Share" ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98").
Under the provisions of SFAS No. 128 and SAB 98, basic net loss per share is
computed by dividing the net loss available to common stockholders for the
period by the weighted average number of common shares outstanding during the
period. Diluted net loss per share is computed by dividing the net loss for the
period by the number of common and common equivalent shares outstanding during
the period (common stock equivalent shares arise from options and warrants that
were issued in 2005 see Notes F, G, I and J). Because of our net losses in 2005,
none of these common stock equivalent shares are dilutive; accordingly basic and
diluted net loss per share are accordingly basic and diluted net loss per share
are identical for each of the periods in the accompanying consolidated
statements of operations.

Stock - Based Compensation
--------------------------

We account for equity instruments issued to employees for services based on the
intrinsic value of the equity instruments issued and account for equity
instruments issued to those other than employees based on the fair value of the
consideration received or the fair value of the equity instruments, whichever is
more reliably measurable.

We have adopted Statement of Financial Accounting Standards No. 148 "Accounting
for Stock-Based Compensation - Transition and Disclosure" (SFAS No. 148). This
statement amends FASB statement No. 123, "Accounting for Stock Based
Compensation". It provides alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for employee
stock based compensation. It also amends the disclosure provisions of FASB
statement No. 123 to require prominent disclosure about the effects on reported
net income of an entity's accounting policy decisions with respect to
stock-based employee compensation. Until such time that we are required to apply
SFAS 123 (R) (see "Recent Pronouncements"), as permitted by SFAS No.123 and
amended by SFAS No. 148, we will continue to apply the intrinsic value method
under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees," to account for our stock-based employee compensation
arrangements.

With respect to non-employee stock options that vest at various times, have no
significant disincentives for non-performance and/or specific performance
commitments, we follow the guidance in Emerging Issues Task Force Number 96-18
Pursuant to this standard, the value of these options is estimated at various
reporting dates and finally measured at the respective vesting date(s) of the
options (or the date on which the consultants' performance is complete) The
expense for each group of options is recognized ratably over the vesting period
for each group, and the estimated value of any unvested options is updated at
such time. As a result, under these arrangements, our initial and periodic
recording of stock based compensation expense represents an estimate for which
changes are reflected in the period that they are determined to be necessary.

                                      F-13


<PAGE>

Income Taxes
------------

We compute income taxes in accordance with Financial Accounting Standards
Statement No. 109 "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109,
deferred taxes are recognized for the tax consequences of temporary differences
by applying enacted statutory rates applicable to future years to differences
between the financial statement carrying amounts and the tax basis of existing
assets and liabilities. Also, the effect on deferred taxes of a change in tax
rates is recognized in income in the period that included the enactment date.
Significant temporary differences arise from accounts payable and accrued
liabilities that are not deductible for tax reporting until they are paid, and
accounts receivable, less deferred revenues, that are not recognized as revenue
for tax and reporting purposes until we receive payment.

Research and Development
------------------------

Research and development costs, which approximated $303,000, $73,600 and
$614,000 during the year ended September 30, 2005, the nine months ended
September 30, 2004 and the period July 10, 2000 (date of incorporation) to
September 30, 2005, respectively, are expensed as incurred.

Recent Pronouncements
---------------------

SFAS 154 `ACCOUNTING CHANGES AND ERROR CORRECTIONS--A REPLACEMENT OF APB OPINION
--------------------------------------------------------------------------------
NO. 20 AND FASB STATEMENT NO. 3
-------------------------------

In May 2005, the Financial Accounting Standards Board ("FASB") issued Statement
No. 154. This Statement replaces APB Opinion No. 20, Accounting Changes, and
FASB Statement No. 3, Reporting Accounting Changes in Interim Financial
Statements, and changes the requirements for the accounting for, and reporting
of, a change in accounting principle. This Statement applies to all voluntary
changes in accounting principle. It also applies to changes required by an
accounting pronouncement in the unusual instance that the pronouncement does not
include specific transition provisions. When a pronouncement includes specific
transition provisions, those provisions should be followed. SFAS 154 is
effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. It will only affect our financial statements
if we change any of our accounting principles. At this time, no such changes are
contemplated or anticipated.

SFAS 153 - EXCHANGES OF NON-MONETARY ASSETS AN AMENDMENT OF APB OPINION NO. 29
------------------------------------------------------------------------------

In December 2004, FASB Statement No. 153 was issued amending APB Opinion No. 29
to eliminate the exception allowing non-monetary exchanges of similar productive
assets to be measured based on the carrying value of the assets exchanged as
opposed to at their fair values. This exception was replaced with a general
exception for exchanges of non-monetary assets that do not have commercial
substance. A non-monetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a result of the
exchange. The provisions of this statement are effective for non-monetary asset
exchanges occurring in fiscal periods beginning after the June 15, 2005. The
adoption of this statement did not have a material impact on our financial
statements.

                                      F-14


<PAGE>

FIN 47 "ACCOUNTING FOR CONDITIONAL ASSET RETIREMENT OBLIGATIONS--AN
-------------------------------------------------------------------
INTERPRETATION OF FASB STATEMENT NO. 143"
-----------------------------------------

FASB Interpretation No. 47, issued in March 2005, clarifies that the term
conditional asset retirement obligation as used in FASB Statement No. 143,
Accounting for Asset Retirement Obligations, refers to a legal obligation to
perform an asset retirement activity in which the timing and (or) method of
settlement are conditional on a future event that may or may not be within the
control of the entity. The obligation to perform the asset retirement activity
is unconditional even though uncertainty exists about the timing and (or) method
of settlement. Thus, the timing and (or) method of settlement may be conditional
on a future event. Accordingly, an entity is required to recognize a liability
for the fair value of a conditional asset retirement obligation if the fair
value of the liability can be reasonably estimated.

This Interpretation is effective no later than the end of fiscal years ending
after December 15, 2005 (our fiscal year ending June 30, 2006). Adoption of this
Interpretation is not expected to have a material impact on our financial
statements.

SFAS 123(R) `SHARE-BASED PAYMENTS'
----------------------------------

In December 2004, the Financial Accounting Standards Board issued Statement
Number 123 ("FAS 123 (R)"), Share-Based Payments. FAS 123 (R) requires all
entities to recognize compensation expense in an amount equal to the fair value
of shared-based payments such as stock options granted to employees. We will be
required to apply FAS 123 (R) on a modified prospective method. Under this
method, we are required to record compensation expense (as previous awards
continue to vest) for the unvested portion of previously granted awards that
remain outstanding at the date of adoption. In addition, we may elect to adopt
FAS 123 (R) by restating previously issued financial statements, basing the
amounts on the expense previously calculated and reported in the pro forma
disclosures that had been required by FAS 123. FAS 123 (R) is effective for the
first reporting period beginning after December 15, 2005 The adoption of FAS
123(R) in the first quarter of fiscal 2006 will require us to recognize
stock-based compensation expense of approximately $750,000, in fiscal 2006 and
$250,000 in fiscal 2007for the unvested portion of options we have issued
through September 30, 2005.

NOTE B - GOING CONCERN

Our consolidated financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. We have incurred significant
losses and negative cash flows from operations since our inception, and at the
present time, we anticipate that we will exhaust our current cash resources in
the second quarter of fiscal 2006. In addition, we expect to have ongoing
requirements for capital investment to implement our business plan, and we have
various contingent liabilities that could adversely impact our cash availability
if they are not resolved in our favor. As such, our ability to continue as a


                                      F-15


<PAGE>

going concern is contingent upon us being able to secure an adequate amount of
debt or equity capital to enable us to meet our operating cash requirements and
successfully implement our business plan. In addition, our ability to continue
as a going concern must be considered in light of the problems, expenses and
complications frequently encountered by entrance into established markets and
the competitive environment in which we operate.

Since inception, our operations have primarily been funded through private
equity financing, and we expect to continue to seek additional funding through
private or public equity and debt financing. With respect to this matter, we
recently made the decision to allow our warrant holders (see Note J) to exercise
their warrants at a price of $.20 per share anytime through December 28, 2005.
Since we currently have 12,362,500 warrants outstanding, the exercise of all of
the warrants before such date would provide us with cash of approximately
$2,473,000. Finally, we expect that operating revenues from the sales of our
products and other related revenues will increase.

However, there can be no assurance that our plans discussed above will
materialize and/or that we will be successful in funding our estimated cash
shortfalls through additional debt or equity capital and/or any cash generated
by our operations. These factors, among others, indicate that we may be unable
to continue as a going concern for a reasonable period of time.

Our consolidated financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should we be unable to
continue as a going concern.

NOTE C - INCOME TAXES

We recognized losses for both financial and tax reporting purposes during each
of the periods in the accompanying consolidated statements of operations.
Accordingly, no provisions for income taxes and/or deferred income taxes payable
have been provided for in the accompanying consolidated financial statements.

Assuming our net operating loss carryforwards are not disallowed by taxing
authorities because of certain "change in control" provisions of the Internal
Revenue Code, at September 30, 2005 we have net operating loss carryforwards of
approximately $6,369,000 for income tax purposes (the significant difference
between our net operating carryforwards and our deficit arises primarily from
the loss on derivative financial instruments and certain stock based and
impairment expenses that are considered to be permanent differences between book
and tax reporting ). These carryforwards expire in various years through the
year ended September 30, 2025. Components of our net current and non-current
deferred income tax assets, assuming an effective income tax rate of 39.5%, are
approximately as follows at September 30, 2005:

                                      F-16


<PAGE>
<TABLE>
<S>                                                                                   <C>
Net current deferred income tax asset:
   Accounts payable and accrued liabilities                                           $   159,400
   Receivables (net of deferred revenues)                                                (159,600)
   Other                                                                                   (2,200)
   Net operating loss carryforwards                                                         2,400
                                                                                      ------------
Subtotal                                                                                       --
Less valuation allowance                                                                       --
                                                                                      ------------

Net current deferred income tax asset                                                 $        --
                                                                                      ============

Non-current deferred income tax asset:
    Intangibles                                                                       $    15,200
    Net operating loss carry forward                                                    2,407,000
                                                                                      ------------
Subtotal                                                                                2,422,200
Less valuation allowance                                                               (2,422,200)
                                                                                      ------------

Non-current deferred income tax asset                                                 $        --
                                                                                      ============

Our non-current deferred income tax asset is not recorded in the accompanying
consolidated balance sheet because we established a valuation allowance to fully
reserve such asset as its realization did not meet the required asset
recognition standard established by SFAS 109. The total valuation allowance
increased by approximately $1,823,000 during the year ended September 30, 2005

NOTE D - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at September 30, 2005:

Furniture, fixtures and equipment                                                     $ 1,375,909
Computer software                                                                         121,739
Leasehold improvements                                                                     17,297
                                                                                      ------------
                                                                                        1,514,945
Less accumulated depreciation and amortization                                           (166,487)
                                                                                      ------------

Property and equipment - net                                                          $ 1,348,458
                                                                                      ============
</TABLE>

Property and equipment includes approximately $948,000 of telecommunications
equipment that was purchased from MTEL Communications, Inc ("MTEL") on May 6,
2005. MTEL is a telecommunications provider that used the equipment to service
its prepaid phone cards that were sold in foreign markets for calls back to the
United States. We are using the equipment to offer United States based prepaid
phone cards and eventually anticipate offering a phone card feature with our
debit card products. As consideration for the purchased assets, we paid $200,000
and issued 863,636 shares of our common stock.

                                      F-17


<PAGE>

NOTE E -OTHER RELATED PARTY TRANSACTIONS

At September 30, 2005, accounts payable and accrued liabilities include
approximately $75,000 that is owed to various officers for accrued vacation.

During the year ended September 30, 2005, we engaged a construction company in
which our President and CEO has an interest to remodel our new facility to meet
our operating needs. Total amounts paid to this entity for these leasehold
improvements approximated $57,000 (including $40,000 incurred and paid
subsequent to September 30, 2005).

At the time of the purchase of the MTEL assets (see Note D), we engaged the
founder and President of MTEL to provide certain consulting services to us under
a consulting agreement that requires, at a minimum, monthly payments of $7,000
for a period of at least eighteen months. During the year ended September 30,
2005, we paid approximately $35,000 under this arrangement.

Subsequent to the date of the purchase of the MTEL assets (see Note D), we
purchased approximately $690,000 of telecommunications services from MTEL.

NOTE F - COMMITMENTS AND CONTINGENCIES

Operating Leases
----------------

We are obligated under various operating lease agreements for our facilities.
Future minimum lease payments under these leases are approximately as follows at
September 30, 2005:

Years ending
September 30,                                                     Amounts
                                                             -------------------

      2006                                                   $          286,800
      2007                                                              286,800
      2008                                                              194,700
      2009                                                               48,700
                                                             -------------------

      Total                                                  $          817,000
                                                             ===================

Rent expense under all operating leases for the year ended September 30, 2005,
and the nine months ended September 30, 2004 approximated $194,100 and $31,800,
respectively.

Employment Agreements
---------------------

At September 30, 2005, we are obligated under an employment agreement with our
chief executive officer. Pursuant to the agreement, the officer received base
annual compensation of $185,000 for the year ending September 30, 2005, and is
to receive $205,000 for the year ending September 30, 2006 and $225,000 for the
year ending September 30, 2007, as well as various vacation and medical
benefits, a car allowance of $750 per month, an initial bonus of $75,000 and
annual bonuses ranging from 2.5 to 3.0% of net income. In addition, we agreed to
grant him options to purchase 3,250,000 shares of our common stock at a price of
$.20 per share (a significant portion of such grants served as consideration for


                                      F-18


<PAGE>

him agreeing to cancel certain benefits and protections set forth in his prior
employment agreement). The agreement, which is subject to automatic renewal
unless we exercise our rights to terminate it at the end of the initial, or any
succeeding, terms, contains a takeover provision that requires us to pay the
greater of $750,000, or an amount equal to 7.5% of any sale price in excess of
$25,000,000 to him in the event a change in control occurs. If we terminate this
officer without cause, we will be required to pay severance to him in the amount
of compensation and benefits he would have otherwise earned for a period of six
months.

At September 30, 2004, we were also obligated under a non-cancelable employment
agreement with another officer that had similar terms to the above agreement,
including the grant of options to purchase 2,500,000 shares of our common stock
at a price of $.20 per share (a significant portion of such grants served as
consideration for him agreeing to cancel certain benefits and protections set
forth in his prior employment agreement). The contract was canceled during the
year ended September 30, 2005 when this officer resigned his position. As
consideration for releasing us from any liability under the terms of his
employment agreement, we agreed to allow him to keep 1,875,000 of the
aforementioned options (or the portion of his options that vested through
September 30, 2005).

One half of the stock options mentioned above (or 2,875,000 options) vested on
October 1, 2004, and 25% of such options (or 1,437,500 options) vested on
September 30, 2005. Assuming a change in control does not occur (at which time
all remaining options would vest immediately), the remaining outstanding options
(812,500) vest on September 30, 2006. Because the option price was effectively
the same as the trading value of our stock on the date the options were granted,
we were not required to record any stock based compensation for the issuance of
these options. However, see Note A - Recent Pronouncements, regarding the
accounting for unvested options as of December 2005.

We are also obligated under other employment agreements; however they have
customary and reasonable terms for the respective employees and are generally
cancelable on thirty days notice. If we elect to exercise such cancellation
options, we are obligated to pay severance to two of the employees in the amount
of compensation and benefits they would have otherwise earned for a period of
six months.

Service and Purchase Agreements
-------------------------------

We have entered into one to three year contracts with various contractors to
provide certain marketing, technology and customer support services to expand
the money card program. Since the fees to be paid are contingent primarily on
sales volume, it is not possible to calculate the amount of the future
commitment on these contracts.

Other Purchase Commitments
--------------------------

In addition to the above, as of September 30, 2005, we had committed ourselves
to purchase approximately $600,000 of inventories during the period October 1,
2005 to June 30, 2006.

We have engaged the firm of ePlus to conduct a PCI Security and Compliance audit
and certification for our network. If successful, this audit will provide us
with certification of our SIRE Network and will allow us greater access to
expand our POPs. We anticipate the process to be completed by December 31, 2005
and with a total cost associated with this audit process to be in excess of
$265,000. We have already expended $200,000 on this project to date which
includes hardware systems improvements as well as consulting costs.

                                      F-19


<PAGE>

Contingencies
-------------

In the normal course of business, we are involved in certain legal matters in
which the claimants are seeking damages in excess of $6,000,000; principally
arising from a suit with a former employee and substantially all of which
results from a claim to our stock based on the pre-merger stock count with no
consideration given to the reverse stock split discussed at Note A. The employee
was terminated for cause by us after only a few months of employment. In an
attempt to settle this dispute without litigation, we offered to pay all
compensation due to Mr. Cloud under his employment agreement through the date he
was terminated (which amount was not significant) however such offer was
refused. Mr. Cloud has also asserted that he is entitled to pre-merger shares
valued at approximately $5,200,000; however he has not filed any litigation
regarding such matter.

We have counter sued and intend to defend this claim vigorously. Because the
case is currently in the discovery stage, its ultimate outcome cannot presently
be determined, however based on the facts known to date, we and our legal
counsel believes that the resolution of this matter will not have a material
adverse effect on our consolidated financial position and/or results of
operations. Accordingly, no effect has been given to any loss that may result
from the resolution of these matters in the accompanying consolidated financial
statements.

We are also involved in certain legal matters with two employees, each of whom
has demanded that they receive two years salaries and benefits as compensation
for damages.  Our Human Resource Manager has investigated these claims with the
assistance of outside counsel and found them to be unsupported.  To our
knowledge, there has been no filing with the EEOC nor has any litigation been
filed.   We have concluded and been advised by counsel that even if the claims
were found to be true, they would not likely have a material impact on our
consolidated financial position and/or results of operations. Accordingly, no
effect has been given to any loss that may result from the resolution of these
matters in the accompanying consolidated financial statements.

NOTE G - STOCK-BASED COMPENSATION

Issuance of Common Shares for Various Services
----------------------------------------------

During the period July 10, 2000 (date of incorporation) to September 30, 2004,
we issued the following shares of our common stock as consideration for various
services, which were provided by employees or consultants:

  Description of Service               Value of Service        Shares Issued
  ----------------------               ----------------        -------------
  Business planning and development    $        949,663              7,395,048
  Information technology services                57,123                505,075
  Legal services                                  5,500                 38,209
                                       -----------------     ------------------

  Totals                               $      1,012,286              7,938,332
                                       =================     ==================

The value of these services, which was based on the number, and fair value, of
shares issued has been included in stock based compensation and consulting
expense in the accompanying consolidated statements of operations.

Issuances of Options
--------------------

During the year ended September 30, 2005, we engaged various consultants and
other professionals to assist us. Pursuant to the agreements, we granted an
aggregate of 2,525,000 options to these consultants at various prices, and
recognized stock based compensation expense of approximately $1,039,200.

                                      F-20


<PAGE>

In October 2004, we also granted options to purchase 700,000 shares of our
common stock for $0.20 per share to the members of our Board of Directors as
consideration for their service during the current year. The options, which
vested on the date of grant, had a fair value of approximately $0.07 in excess
of the exercise price on such date; accordingly we recognized $49,000 of stock
based compensation as a result of the grant of these options.

NOTE H - SETTLEMENT OF LITIGATION

On November 8, 2004, we settled certain litigation in which we were the
plaintiff. As consideration for such settlement, we received forgiveness of
notes payable totaling $50,000, cash of $10,000 and process management software
certified for use by MasterCard International. The proceeds of the settlement
were reflected as other income in the first quarter of our fiscal year ending
September 30, 2005.


CLAIMS MADE BY EMPLOYEES
------------------------

Two employees have complained of improper actions by one of our officers and
each made notification to our Human Resource Manager. Our Human Resource Manager
reported through channels to our audit committee who conducted a thorough
investigation of the claims with the assistance of outside counsel and found
them to be unsupported. To our knowledge, there has been no filing with the
EEOC. No lawsuit has been filed. We have concluded and been advised by counsel
that even if the claims were found to be true, they would not likely rise to a
level to provide any material responsibility for us. We expect to prevail if a
lawsuit is ever brought by these employees.


NOTE I - STOCK OPTIONS

Other Option Issuances
----------------------

Our 2004 Stock Option Plan (the "2004 Plan") that provides for the issuance of
up to 15,000,000 shares of common stock through the granting of stock options to
employees, officers, directors, consultants, and advisors. Our board of
directors had authority to determine awards and establish the exercise price. As
of September 30, 2005, there are 10,471,667 options outstanding under the 2004
Plan. Such options vest over various periods up to three years and expire on
various dates through 2007. We anticipate that we will be issuing more options
under the plan in the future over and above those we have issued subsequent to
September 30, 2005.

The fair value of each option grant is estimated on the date of the grant using
the Black-Scholes option pricing model. Assumptions used are approximate: risk
free interest rate of 4.0%, and 2.23%, average expected lives of 2 years, a 0%
dividend yield rate, and expected volatility of .934, and 1.923.

We account for our employee stock-based awards using the intrinsic value method
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees". Had our compensation expense for stock-based compensation
plans been determined based upon fair values at the grant dates for awards under
this plan in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation," our net loss and pro forma net loss per share amounts for the
year ended September 30, 2005 would have been as follows:

                                      F-21


<PAGE>

Net loss:
    As reported                                             $      7,417,935
                                                            =================
    Pro forma                                               $      8,806,941
                                                            =================

Loss per share:
    As reported                                             $           0.15
                                                            =================
    Pro forma                                               $           0.18
                                                            =================

The following table describes our stock option activity during the year ended
September 30, 2005:

                                                               WEIGHTED AVERAGE
                                                              EXERCISE PRICE PER
                                                                     SHARE
                                                              (PRICED AT DATE OF
                                           NUMBER OF OPTIONS        GRANT)
                                           -----------------  ----------------
Outstanding at September 30, 2004                         -   $           0.00
                        Granted                   9,440,000   $          0.364
                        Cancelled                         -   $          0.000
                                           -----------------  ----------------
Outstanding at December 31, 2004                  9,440,000   $          0.364
                        Granted                     745,000   $          1.125
                        Cancelled                 (583,333)   $          0.463
                                           -----------------  ----------------
Outstanding at March 31, 2005                     9,601,667   $          0.435
                        Granted                   1,060,000   $          0.605
                        Cancelled                  (50,000)   $          0.200
                                           -----------------  ----------------
Outstanding at June 30, 2005                     10,611,667   $          0.437
                         Granted                    945,000   $          0.594
                         Cancelled              (1,085,000)   $          0.401
                                           -----------------  ----------------
Outstanding at September 30, 2005                10,471,667   $          0.455
                                           =================  ================

Options granted at market value in 2005          14,565,000  $          0.357


The following table summarizes information regarding options outstanding at
September 30, 2005 under our option plan:
<TABLE>

                                                    OPTIONS OUTSTANDING                              OPTIONS EXERCISABLE
                                  ---------------------------------------------------------    ---------------------------------
                                                           WEIGHTED                                                  WEIGHTED
                                                           AVERAGE              WEIGHTED                             AVERAGE
                                                           REMAINING            AVERAGE                              EXERCISE
  RANGE OF EXERCISE                    NUMBER            CONTRACTUAL LIFE       EXERCISE           NUMBER           PRICE PER
       PRICES                       OUTSTANDING             IN YEARS             PRICE           EXERCISABLE          SHARE
------------------------          -----------------    -------------------    -------------    ----------------    -------------
<S>                                      <C>                  <C>                   <C>              <C>                <C>
     $0.20-$ 0.70                        9,771,667            4.13                  $ 0.31           5,781,668          $  0.27
     $0.71-$ 1.20                          620,000            4.34                  $ 0.91             225,000          $  1.01
     $1.21-$ 1.70                          125,000            4.35                  $ 1.32             125,000          $  1.32
                                  -----------------                           -------------    ----------------    -------------
                           TOTAL        10,471,667            4.15                  $ 0.36           6,131,668          $  0.32
                                  =================                           =============    ================    =============
</TABLE>

                                      F-22


<PAGE>

Subsequent to September 30, 2005, we granted stock options according to the
following table:
<TABLE>
                                                                                                          Average
                                    Granted           Vested          Forfeited        Outstanding     Exercise Price
                               ---------------------------------------------------------------------------------------
<S>                               <C>                 <C>                 <C>            <C>                <C>
Directors                              -                -                 -                 -                -
----------------------------------------------------------------------------------------------------------------------

Executive Officers                     -                -                 -                 -                -
----------------------------------------------------------------------------------------------------------------------

Employees                         1,000,000           304,168             -             1,000,000           $0.53
----------------------------------------------------------------------------------------------------------------------

Consultants                            -                -                 -                 -                -
----------------------------------------------------------------------------------------------------------------------
                          Total   1,000,000           304,168             -                 -               $0.53
                                 =====================================================================================
</TABLE>

NOTE J - PRIVATE PLACEMENTS OF COMMON STOCK

During the year ended September 30, 2005 we completed two private placements of
our common stock as follows:

     o   In December 2004, we completed a private placement of 7,125,000 of
         shares of our common stock (the "Shares") to certain accredited
         investors the (the "Purchasers") for $1,425,000. The transaction was
         consummated pursuant to a Securities Purchase Agreement by and among
         us and the Purchasers.

         The Purchasers received (i) certain anti-dilution protection entitling
         them to price adjustments in the event we sell shares for an effective
         price of less than $0.20 per share within one year from the date of the
         completion of the private placement, and (ii) the rights to participate
         in any subsequent filings for a specified period of time.

         In addition, we had also agreed to file, within 45 calendar days of the
         date of the filing of our current 10-KSB, a registration statement with
         the SEC, covering the resale of (i) the Shares and (ii) any shares of
         common stock issued or issuable upon a stock split, dividend or other
         distribution, recapitalization or similar event. Since we were unable
         to register the shares by June 15, 2005, we are subject to monetary
         penalties at the rate of 2% per month commencing on June 15, 2005 and
         continuing until we are successful in registering the shares. As a
         result, we incurred and recognized expenses of approximately $99,000 as
         a result of this arrangement through September 30, 2005. We will
         continue to incur penalties at the rate of $28,500 per month until we
         are successful in registering the shares.

     o   In July 2005, we completed the private placement of an aggregate of
         12,362,500 of shares of common stock to certain accredited investors
         (the "Purchasers") in an offering, agreed to on June 17, 2005, made
         pursuant to Rule 506 of Regulation D. The aggregate purchase price was
         $4,945,000 cash. The Purchasers paid $0.40 per share and received a
         two year warrant to purchase one (1) share of common stock for $0.60
         per share for each share of common stock purchased (see Note K for


                                      F-23


<PAGE>

         classification and Note B regarding reduction in this exercise price).
         The transaction was consummated pursuant to a Securities Purchase
         Agreement by and between us and the Purchasers (the "Purchase
         Agreement"). The net proceeds from the sale are being used for general
         working capital. The shares and warrants sold are restricted from
         transfer and may only be transferred in compliance with state and
         federal securities laws.

         We also agreed to register the shares and the shares underlying the
         warrants, pursuant to a Registration Rights Agreement (the
         "Registration Rights Agreement") and have agreed to file, within 15
         calendar days of the effective date of our S-2 Registration Statement,
         a registration statement with the SEC, covering the resale of (i) the
         shares and (ii) the shares of common stock underlying the warrants (the
         "Registrable Securities") for an offering to be made on a continuous
         basis pursuant to Rule 415. We have agreed to use our reasonable best
         efforts to have the registration statement declared effective by the
         SEC as soon as practicable thereafter. Pursuant to the Registration
         Rights Agreement and subject to certain other provisions therein, if we
         fail to timely perform or provide in accordance with our
         responsibilities under the Registration Rights Agreement and certain
         Securities Act provisions, then, in addition to any other rights the
         holder or holders of the Registrable Securities (the "Purchaser") may
         have pursuant to the Registration Rights Agreement or under applicable
         law: (x) on each such date when we have failed to timely perform or
         provide under the Registration Rights Agreement (an "Event Date"), we
         are obligated to pay to each Holder an amount in cash, as partial
         liquidated damages and not as a penalty, equal to 12.0% of the
         aggregate purchase price paid by such Purchaser pursuant to the
         Purchase Agreement for any Registrable Securities then held by such
         Purchaser; and (y) on each monthly anniversary of each such Event Date
         (if the applicable event shall not have been cured by such date) until
         the applicable event is cured, we are required to pay to each Purchaser
         an amount in cash, equal to 2.0% of the aggregate purchase price paid
         by such Purchaser pursuant to the Purchase Agreement for any
         Registrable Securities then held by such Purchaser. If we fail to pay
         any partial liquidated damages pursuant to Section 2(b) of the
         Registration Rights Agreement as summarized above in full within seven
         days after the date payable, we are also required to pay interest
         thereon at a rate of 18% per annum (or such lesser maximum amount that
         is permitted to be paid by applicable law) to the Purchaser, accruing
         daily from the date such partial liquidated damages are due until such
         amounts, plus all such interest thereon, are paid in full. The partial
         liquidated damages pursuant to the terms of the Registration Rights
         Agreement shall apply on a daily pro-rata basis for any portion of a
         month prior to the cure of an event.

         We did not incur any commissions, discounts, rebates or other
         incentives or compensation in association with this offering.

NOTE K - DERIVATIVE FINANCIAL INSTRUMENT LIABILITIES

We use the Black-Scholes option pricing model to value warrants that are
recorded as derivative liabilities. In valuing the warrants at September 30,
2005, we used the market price of our common stock on that date, the volatility
of our common stock based on its market price as of the preceding 31 weeks
ending September 30, 2005, a risk-free rate of return of 3.95% an expected


                                      F-24


<PAGE>

dividend yield of 0% and the remaining period to the expiration date of the
warrants. In valuing the warrants initially, we used the market price of our
common stock on June 17, 2005, which was the date the common shares were offered
and subscribed. The warrants can be exercised by the holder at any time.

At September 30, 2005, the following derivative liabilities related to common
stock warrants were outstanding:
<TABLE>

                                                            Number of       Exercise                       Value -
                                                            Options or      Price Per     Value -       September 30,
 Issue Date     Expiry Date                                 Warrants          Share     Issue Date          2005
------------------------------------------------------------------------------------------------------------------------
<C>              <C>           <C>                           <C>              <C>       <C>               <C>
06-17-2005       06-16-2007    Warrants issued to            12,362,500       $0.60     $3,461,500        $3,090,625
                               purchasers of common
                               stock under the June 17,
                               2005 private placement
------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      F-25