**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **Form
        10-KSB**
  xANNUAL
        REPORT UNDER SECTION 13 OR 15(d)
        OF THE SECURITIES EXCHANGE ACT OF
        1934
  For
        the
        fiscal year ended December 31, 2004
  oTRANSITION
        REPORT UNDER SECTION 13 OR
        15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For
        the
        transition period from _______ to _______
  Commission
        file number 000-32231
  **WINSONIC
        DIGITAL MEDIA GROUP, LTD.**
 (Name
        of
        small business issuer in its charter)
  Nevada
              52-2236253(State
                  or other jurisdiction of
                  incorporation or organization)
              (I.R.S.
                  Employer Identification
                  No.)
  260
                  Peachtree Street, Suite
                  2200
              30303Atlanta, GA.
              (Zip
                  Code)(Address
                  of principal executive
                  offices)




Issuer’s
                  telephone number
              (770)
                  858-0039





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




Title
                  of each class
              Name
                  of each exchange on which
                  registeredNONE


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




Common
      stock, $.001 par value


(Title
      of
      class)




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




The
      issuer’s revenues for the fiscal year ended December 31, 2004 were
      $25,000.




The
      aggregate market value of the issuer’s common stock held by non-affiliates as of
      August 25, 2005, was approximately $21,975,000. On such date, the closing price
      for the issuer’s common stock, as quoted on the Pink Sheets, LLC, was
      $0.65




The
      issuer had 33,806,962 shares of common stock outstanding as of August 25,
      2005.









**PART
      I**




Throughout
      this Annual Report on Form 10-KSB, the terms the “company,”“we,”“us,”“our,”“our
      company” and “Winsonic Digital Media Group, Ltd.” refer to Winsonic Digital
      Media Group, Ltd., and, unless the context indicates otherwise, includes our
      wholly-owned subsidiary, Winsonic Digital Cable Systems Network,
      Ltd.




**Introductory
      Comment — Forward-Looking Statements**




This
      report contains forward-looking statements about our business, financial
      condition and prospects that reflect management’s assumptions and beliefs based
      on information currently available. We can give no assurance that the
      expectations indicated by such forward-looking statements will be realized.
      If
      any of our management’s assumptions should prove incorrect, or if any of the
      risks and uncertainties underlying such expectations should materialize, our
      actual results may differ materially from those indicated by the forward-looking
      statements.




The
      key
      factors that are not within our control and that may have a direct bearing
      on
      operating results include, but are not limited to, acceptance of our services,
      our ability to attract customers, management’s ability to raise capital in the
      future, the retention of key employees and changes in the regulation of our
      industry.




There
      may
      be other risks and circumstances that management may be unable to predict.
      When
      used in this quarterly report, words such as,
“believes,”“expects,”“intends,”“plans,”“anticipates,”“estimates” and similar
      expressions are intended to identify forward-looking statements, as defined
      in
      Section 21E of the Securities Exchange Act of 1934, although there may be
      certain forward-looking statements not accompanied by such expressions.




**Item
          1.** **Description
          of Business.**




**Merger
      with Winsonic Digital Cable Systems Network**





On
      October 7, 2004 Winsonic Acquisition Sub, Inc., a newly formed Nevada
      corporation (“Merger Sub”), merged with and into Winsonic Digital Cable Systems
      Network, Ltd. f/k/a Winsonic Holdings, Ltd., a California corporation
      (“Winsonic”) with Winsonic Digital Cable Systems Network, Ltd. being the
      surviving corporation (the “Merger”) pursuant to a certain Agreement and Plan of
      Reorganization (the “Agreement”) dated July 16, 2004, as amended, by and among
      Media and Entertainment.com, Inc., now known as Winsonic Digital Media Group,
      Ltd. (the “Company”), Merger Sub, Winsonic Holdings, Ltd. and Winston D.
      Johnson. Pursuant to the Agreement, Winsonic became a wholly-owned subsidiary
      of
      the Company and Mr. Johnson, the Chief Executive Officer and formerly the sole
      shareholder of Winsonic and the Company’s Chief Executive Officer, became a
      controlling shareholder of the Company.





Following
      the Merger, the Company obtained approval from its senior management holding
      in
      excess of a majority of the issued and outstanding Common Stock to change the
      Company’s name to Winsonic Digital Media Group, Ltd. Prior to the Merger, the
      Company was known as Media and Entertainment.com, Inc. which was formed in
      Nevada on April 27, 2000.





As
      a
      result of the Agreement (i) each outstanding share of common stock of the Merger
      Sub was converted into one fully paid and non-assessable share of common stock
      of Winsonic; (ii) each outstanding share of common stock of Winsonic issued
      and
      outstanding immediately prior to the Merger was converted into fully paid and
      non-assessable shares of common stock of the Company determined by a formula
      disclosed in the Agreement (the “Exchange Ratio”) for an aggregate of 10 million
      shares (the “Merger Shares”) of the Company’s Common Stock, as described below;
      (iii) all options, warrants, convertible notes and other rights entitling the
      holder to acquire any shares of Winsonic common stock, by virtue of the Merger
      now entitle the holder of such instrument to purchase such number of shares
      of
      the Company’s common stock as would have been issued at the Exchange; and (iv)
      Winsonic common stock held by Winsonic immediately prior to the merger was
      canceled.





2


Under
      the
      Agreement, the Company issued to Winston Johnson the 10 million Merger Shares
      less then 2 million shares previously issued to Mr. Johnson under his July
      2003
      Services Agreement (described below). However, as part of the Merger, as of
      October 7, 2004, the Company entered into exchange agreements (the “Exchange
      Agreement”) with Winston D. Johnson and various creditors of Winsonic (the
“Warrantholders”) whereby the Company agreed to allow Winston Johnson to assign
      a portion of his 8 million shares (the “Exchange Shares”) that he received upon
      the consummation of the Merger to Winsonic Warrant holders in consideration
      of
      Winston Johnson assuming an aggregate of $2,000,100 of obligations of Winsonic
      to the Warrant holders at an exchange price of $1.00 per share. In addition,
      as
      of October 7, 2004, the Company entered into a Shareholder Agreement with
      Winston Johnson, Jon Jannotta and Nana Yalley (the “Principal Shareholders”),
      whereby the Principal Shareholders agreed not to sell, encumber, hypothecate
      or
      otherwise dispose of any of their shares of Common Stock without the unanimous
      approval of the other non-selling Principal Shareholders. Notwithstanding the
      foregoing, (i) Winston Johnson may transfer any or all of (A) the 2 million
      shares he received pursuant to a July 18, 2003 Consulting Agreement; and (B)
      the
      Exchange Shares pursuant to the terms and conditions of the Exchange Agreement;
      and (ii) any or all of the Principal Shareholders may sell their shares in
      accordance with the volume limitations of Rule 144 promulgated under the
      Securities Act of 1933, as amended.




**Business**




Winsonic
      is a media distribution solutions company. We believe that our software and
      network establishes a new standard for media distribution of digital information
      via the Internet, ATM, SDI, HDTV, digital cable, cable TV and satellite. Our
      network Winsonic Digital Cable Systems Network (“WDCSN”) enables users to view,
      interact, and listen to all types of audio, online video and digital TV, in
      full
      screen format, at high speed, high quality, and greatly reduced cost, reducing
      the need for expensive high-speed connections.





We
      are
      pursuing the commercialization of our products, which we believe establishes
      a
      new standard for media distribution of digital content and information seamless
      compatibility with all major networks, copyright enforcement, multi-tier
      encryption (move files in a secure environment), wireless viewing capabilities
      for laptops and hand held products, such as cellular telephones and PDA devices.
      Winsonic facilities-based products and services in out of franchise markets
      enable communications companies such as Verizon to partner with Winsonic to
      provide services to their customers. Other services include high-end consulting
      services in the areas of programming, audio research and engineering, as well
      as
      digital transport world wide telecommunications services for film and
      television.





WDCSN
      concentrates on carrier-class high-speed connectivity solutions that bring
      together a first-class facility around the country along with network,
      multimedia, and content distribution communication services to its customers,
      without requiring substantial capital investments. Verizon, Sun MicroSystems,
      and Level 3 have teamed with Winsonic to implement a high-end facilities-based
      infrastructure to aid and facilitate voice transport, audio, video, data, media
      and broadcast content over protocol-independent multi-layered communication
      systems.





To
      better
      understand the effects of this changing landscape, evidenced by cable industry
      consolidation, cross industry completion and technical standards, we have
      examined the underlying drivers, both from a market and technology viewpoint.
      The market dynamics underlying the local distribution of video, voice and data
      are a result of historically non-competing industries, including cable, long
      distance and regional telephone operating companies. Changes in government
      regulation and the consumer demand for choice are driving the new
      environment.





3


Winsonic
      has built upon its long-term business model that incorporates reliable technical
      support and service levels. This offers network resilience and sustainable
      growth for its infrastructure and customer base. This business model is expected
      to provide multiple revenue streams enabling Winsonic to fully realize its
      expansion position and potential. The result is one of the most comprehensive
      and cost effective product portfolios for the industry: one, which establishes
      a
      reputation as an established and respected facilities-based media and
      entertainment distribution service and network provider.





The
      network provides WinSonic Digital Cable’s customers an enhanced gateway to
      national and international communication lines. With the network as a
      foundation, WinSonic provides their customers sophisticated, state of the art
      application software and hardware solutions tailored to meet their specific
      needs. These applications include but are not limited to: Carrier solutions
      for
      regional phone companies such as special software that provides networks the
      capability of accommodating all software platforms as well custom hardware
      platforms that facilitate consumer, medical, commercial, and government
      applications.





Custom
      application development for Voice over Internet protocol, standard national
      and
      international communications, PDA, audio/video transport, e-commerce, radio
      frequency devices, television and satellite broadcast. Building out digital
      television networks that accommodate, high definition television, streaming
      video and real time interactive networks.





WinSonic
      Digital’s objective is to maximize product performance while reducing cost
      through technology innovation. For a more detailed explanation of Winsonic
      Digital’s capabilities we invite you to visit the WinSonic website at: www.winsonic.net .





Products
      and Services





Winsonic
      is a full-service broadband telecommunications and entertainment company that
      designs, builds and deploys value-added network solutions and applications.
      In
      1994 and 1995, Winsonic Holdings and Winsonic Digital Cable Systems Network,
      Ltd. (“WDCSN”) coordinated and integrated the first video telephone and video
      e-mail “store and forward” application. This application was based on a Pacific
      Bell (SBC) ATM Network, and implemented in partnership with Pacific Telesis
      Inc., in cooperation with the Whittaker Corporation. As a carriers’
      communications solutions provider, Winsonic offers facilities-based products
      and
      services to communications companies such as Verizon, SBC, Time Warner, MCI,
      Level-3, AOL, MSN and Sony. Winsonic is expected to provide other services
      include high-end consulting services in the areas of programming, software
      development, communications research and engineering, as well as digital
      transport worldwide telecommunications services for film and
      television.




Winsonic
      concentrates on carrier-class high-speed connectivity solutions that bring
      together a first-class facility along with network and multimedia communication
      services to its customers, without requiring substantial capital investments.
      The Company intends to implement a high-end facilities-based infrastructure
      to
      aid and facilitate in voice transport, audio, video, data, media and broadcast
      content over protocol-independent multi-layered communication
      systems.




WinSonic
      Digital Cable Systems Network is a new global infrastructure for the delivery
      of
      converged entertainment, media and distribution services (i.e., voice, audio.
      video, data, streaming media and broadcast content over a proprietary protocol
      independent multi-layered distribution systems WDCSN) That facilitates the
      distribution, digitization, and transport of content also enhances the
      performance of systems and software in the media, technology and
      telecommunications sectors. By creating variations in the core network we are
      in
      effect broadening the number of product applications, as well as expanding
      markets for our products.




4


These
      applications include, but are not limited to: java
      soft phones, sun ray's, digital distribution, professional engineering services,
      media & entertainment services, and education media services.




**Application
      Service Provider Services** :
      WinSonic provides specific market applications and/or integrated solutions,
      hardware/software combination offering hardware/software combinations over
      WinSonic Digital Cable Systems Network (WDCSN).




**Channel
      Development Provider Services:** **** WinSonic
      provides a suite of defined services to partners including market coverage,
      sales support, finance, technical pre- and post- sales training, support,
      aggregation, inventory, and network logistics services.


**WinSonic
      Service Provider Services:** WinSonic
      generates contractually repeating revenues for services delivered to customers
      over WinSonic Digital Cable Systems Network (WDCSN) including accommodations
      for
      the cost of the infrastructure to deliver the service (e.g., hardware, software,
      datacenter, labor, and intellectual property).





**Original
      Equipment Manufacturers Services:** **** Winsonic
      embeds or bundles technology in specialized turnkey systems that include the
      OEM's own hardware Intellectual Property bundled with Winsonic Solutions.





**WinSonic
      System Integration Services:** WinSonic
      provides complete end-to-end custom integrated solutions, consulting services,
      resale to end-users systems, platform-based solutions, supply implementation,
      deployment, post-sales support for third party hardware and software, e
      Business, database, data warehousing, web applications, network design,
      security, back-up/recovery, performance tuning, systems management, asset
      tracking, procurement, inventory and configuration management
      services.





**** **WinSonic
      Stream Star Services:** WinSonic
      StreamStar solution has scalable
      on-demand video streaming 100K hours of MPEG2 content, 10K to over 100K MPEG2
      streams, up to 80,000 MPEG2 streams from desk top or set top.




**Winsonic
      Cinema Services:** WinSonic
      Cinema services is integrated into wireless networks allowing end users to
      use
      their pda’s, cell phones, game boys, computers, and TV’s in order to watch
      digital video, TV, and interactive multi media files.





**Cyberhollywood.net
      System (Video Broadcasting T.V.):** WinSonic
      Digital Cable Systems Network allows television broadcast programming to your
      desktop or Set top.





**Cyberhollywood.net
      System (Audio Broadcasting System):** WinSonic
      Digital Cable Systems Network allows radio broadcast to your desktop or set
      top.





**Secure
      On Demand:** WinSonic
      Digital Media Group, Ltd. securely encrypt files with its four-tier encryption
      method with the capabilities of compressing most data files up to 63% smaller
      for Internet delivery. Encrypted files will move 100 times faster via LAN/WAN,
      Intranet, Extranet and Internet Network connection with data rights management
      in a secure environment.





**Encryption:** WinSonic
      Digital Cable Systems Network solutions allows you to securely encrypt any
      digital, JAVA, SDI, composite, component, Real Media, Windows Media and Apple
      Quick Time content, for secure pay-per-view viewing over the WinSonic Digital
      Cable Systems Network.





**File
      Conversion:** WinSonic
      Digital Cable Systems Network solutions allow you to convert any video file
      format to any Real Media, Windows Media and Apple Quick Time
      formats.





5


**Teleconferencing:** WinSonic
      Digital Cable Systems Network allows you to securely teleconference with
      multiple venues using any Real Media, Windows Media and Apple Quick Time
      encoder.





WinSonic
      solutions provides new applications that open market opportunities to companies
      seeking to expand revenues and broaden sales. Our business model is to create
      revenue sharing partnerships with companies seeking to implement the benefits
      of
      WinSonic Digital Cable Systems Network solutions.





WinSonic
      Digital Cable Systems Network media distribution network operations in Los
      Angeles, New York, Dallas, Chicago, and Atlanta at Level 3 gateways are in
      operation. We now have a formidable network that will enable diverse routing
      and
      easy connections with communications companies and other software, content,
      interactive, and distribution companies. Level 3 has earned a strong reputation
      for operational excellence and innovative network solutions which is in line
      with our reliable services protocol."





This
      delivery network will enable us to expand our media services to accommodate
      a
      broader market and a diversified customer base, thereby enhancing the company's
      ability to grow sales in a highly competitive market. This network build up
      also
      reinforces our position in online gaming networking, video and audio streaming,
      packet over optical services, online encryption solutions and Voice over IP
      markets.





Verizon,
      Level 3, and WDCSN  have
      begun designing, building, and testing one of the very first media and
      entertainment distribution networks in the world. Its network addressable
      systems and digital subscriber interface to urban, basic trading areas (BTA),
      inner city, and major trading areas (MTA) markets for digital cable, and
      telecommunication services. This strategy has strengthened our position in
      the
      development and deployment of digital content solutions for programmers, general
      public, and network operators. We are focusing on the next generation of digital
      and analog set-top terminal interfaces and is seeking to be apart of the of
      new
      improved consumer features in the digital TV domain. In addition, we are working
      with Level 3 to test digital cable transport over MPLS, Multi Protocol Label
      Switching that play an important role in the growth of international markets
      utilizing both analog and digital applications and technologies to deliver
      video, audio, voice and data.





To
      better
      understand the effects of this changing landscape, evidenced by cable industry
      consolidation, cross-industry competition and technical standards; we have
      examine the underlying drivers, both from a market and technology viewpoint.
      The
      market dynamics underlying the local distribution of video, voice and data
      are a
      result of historically non-competing industries, including cable, long distance
      and regional telephone operating companies. Changes in government regulation
      and
      the consumer demand for choice are driving the new environment. **** WinSonic
      has built upon a successful long-term business model that incorporates excellent
      technical support and service levels. This offers outstanding network resilience
      and sustainable growth for its infrastructure and customer base. This business
      model will provide multiple revenue streams enabling WinSonic to fully realize
      its expansion position and profit potential. The result is one of the most
      comprehensive and cost effective product portfolios for the industry: one that
      holds an undeniable reputation as an established and respected facilities base
      media and entertainment distribution service and network provider.





WinSonic’s
      solutions assure world class service, design and product excellence. WDCSN
      has
      rapidly grown by continuing these traditions while entering the digital age
      with
      a wide selection of innovative products and solutions that combine the latest
      advances in long-haul transport, wireless communications, data communications,
      voice communications, video communications, audio communications, and media
      & entertainment technologies.




6




**Subcontractor
      Master Consulting Agreement with CI2**





On
      December 10, 2004, Winsonic Digital Media Group, Ltd. and CI2, Inc.
      (“ CI2 ”)
      entered into a certain Subcontractor Master Consulting Agreement (the
“ SMCA ”).
      A
      prior material relationship existed between the two parties because CI2 had
      entered into a Master Purchase and Services Agreement (the “ MPA ”)
      with
      Winsonic Digital Cable Systems Network, Ltd. f/k/a Winsonic Holdings, Ltd.
      (“ Winsonic ”),
      a now
      wholly owned subsidiary of the Company, on May 5, 2004 prior to WinSonic’s
      merger with the Company. The MPA provided CI2 the ability to purchase and/or
      license various products and services for delivery and installation from
      WinSonic, to be used for CI2’s own internal use and for resale.





Pursuant
      to the SMCA, CI2 will subcontract to the Company through individual agreements
      (each an “ Agreement ”)
      comprising of (i) a purchase order that CI2 issues for the purchase of services,
      including but not limited to, consulting, programming, software analysis,
      project analysis, project management, facilities management, document
      development, testing and technical support (the “ Services ”);
      and
      (ii) a statement of work which describes any products, technology, software,
      materials or other items that the Company will provide to CI2 and a description,
      as applicable, of any services that should be delivered pursuant to the
      agreement (the “ Deliverables ”)
      or any
      milestones that should be met. CI2 will compensate the Company in a manner
      consistent with the terms of the applicable Agreement.





In
      addition, pursuant to the SMCA all of the Company’s Intellectual Property Rights
      (as defined in the SMCA) exclusive of pre-existing works, in any Services,
      Deliverables, methodologies and processes, whether or not incorporated into
      a
      Deliverable, which the Company has developed or used pursuant to a Statement
      of
      Work, and any other intellectual property developed under the SMCA shall be
      transferred and assigned solely and exclusively to CI2. Also, the Company and
      CI2 have mutual confidentiality obligations.





The
      term
      of this Agreement commenced on December 10, 2004 and unless otherwise terminated
      will continue for five (5) years with automatic renewal provisions. Either
      the
      Company or CI2 may terminate the SMCA and any Agreement if (i) if a party fails
      to cure a breach within thirty (30) days of notice by the other party; (ii)
      immediately by notice upon material breach of the other party, if in the
      reasonable determination of the non-breaching party that the breach may not
      be
      remedied within thirty days; or if at any time one of the parties becomes
      insolvent, makes a general assignment for the benefit of creditors; or suffers
      or permits the appointment of a receiver for its business or assets. CI2 may
      terminate the SMCA and any Agreement: (i) for convenience, upon thirty days
      notice; or (ii) immediately upon Notice in the event of (a) a direct or indirect
      taking over or assumption of control of the Company of substantially
      all of its
      assets by any governmental agency or any third party; or (b) acquisition of
      more
      than five percent of Company's equity or assets by a competitor of
      CI2.





Pursuant
      to the SMCA the Company shall not assign or otherwise transfer any of its
      obligations, including subcontracting or
      delegating its duties, under any Agreement without CI2's prior written consent.
      Any purported assignment or transfer of such obligations without CI2's consent
      shall be void able at CI2's option. A change of 30 percent or more of the
      beneficial ownership or control of the Company shall be considered an assignment
      of the Agreement.





**Joint
      Marketing and Development Agreement**





On
      December 10, 2004, the Company and CI2 entered into a certain Joint Marketing
      and Development Agreement (the “ JMDA ”).
      Pursuant to the JMDA the Company and CI2 will cooperate in the development and
      testing of certain Company products set forth in the JMDA (the “ Company
      Products ”),
      which
      run on a combination (the “CI2 Platforms”) of certain listed CI2 hardware and
      software (the “ CI2
      Products ”)
      creating a modified product (the “ Modified
      Product ”).
      Each
      party will bear all costs and expenses associated with its activities under
      the
      JMDA.





7


Within
      thirty days of the date of the JMDA the Company and CI2 will develop a
      development plan (the “ Development
      Plan ”)
      to
      develop the Modified Product. Also within thirty days of the date of the JMDA,
      the Company and CI2 will develop a plan to perform marketing activities (the
“ Marketing
      Plan ”).
      The
      Company will have obligations to provide CI2 with certain deliverables and to
      achieve certain milestones under the Development Plan and the Marketing
      Plan.





CI2
      will
      own all right title and interest in and to the CI2 Products and Derivative Works
      (as defined in the JMDA) thereof, including without limitation Intellectual
      Property Rights (as defined in the JMDA). The Company and CI2 shall jointly own
      all right, title and interest to the Modified Product and any Derivative Works
      of either of the foregoing, including without limitation all Intellectual
      Property Rights therein as specified by a project formula based on the
      anticipated efforts of each party as specified in the Development plan. In
      the
      event that CI2 or Company provides suggestions or improvements regarding,
      modifications to the Modified Product (collectively, “ Improvements ”),
      such
      Improvements shall be the sole and exclusive property of the party that makes
      the suggestions or improvements; provided however, that suggestion or
      improvement encompasses (i) the party’s Pre-Existing Technology (as defined in
      the JMDA) included in such Improvements, or (ii) any Derivative Works of the
      party’s Pre-Existing Technology. All Intellectual Property Rights in either of
      the foregoing shall remain the sole and exclusive property of the suggesting
      party.





The
      Term
      of the JMDA commences on December 10, 2004 and will remain in effect for two
      (2)
      years, unless earlier terminated by a party. Either party may terminate the
      JMDA
      without cause with sixty (60) days prior notice to the other party. Either
      party
      may terminate the JMDA immediately by written notice to the other party: (a)
      if
      the other party commits a non-remediable material breach; or (b) if the other
      party fails to cure any remediable material breach within thirty (30) days
      of
      receiving written notice of such breach. CI2 may terminate the JMDA without
      notice to the Company upon certain events defined in the JMDA suggesting
      insolvency. Both parties have mutual confidentiality obligations under the
      JMDA.





**Modification
      of the Master Purchase and Services Agreement**





In
      addition, on December 10, 2004, the Company agreed to take over the obligations
      of Winsonic under the MPSA. Therefore, the MPSA was modified to replace the
      name
      of the contracting party Winsonic Holdings, Ltd. to Winsonic Digital Media
      Group, Ltd. In addition, the MPA was modified to extend the period in which
      CI2
      may exercise its right of first refusal to purchase the networks as described
      in
      the MPA for $9.7 million dollars for an additional ninety (90) days until
      February 1, 2005. All other terms and conditions of the MPA remain in full
      force
      and effect.





**Native
      American Television Network, Inc.**





On
      February 17, 2005, the Company entered into a Memorandum of Understanding
      (“MOU”) with Native American Television Network, Inc. (“NATVN”). NATVN, based in
      Albuquerque, New Mexico is a recently formed company that intends to launch
      the
      first Western Hemisphere, pan-tribal digital cable channel. It is being designed
      to provide family friendly programming to Native Americans and to non-Native
      American viewers who are interested in learning more about Native American
      history, cultures, lifestyle, business and spirituality from a Native American
      point-of-view. There was no prior material relationship between the two
      companies or their affiliates other than in respect of the
      agreement.




The
      Company will provide to NATVN its nationwide distribution platform and technical
      support, expertise and personnel. The WDMG distribution platform or the Winsonic
      Digital Cable Systems Network (“WDCSN”) will enable NATVN to reach its targeted
      Native American audience in both urban and rural tribal communities via digital
      cable, satellite, broadband, wireless, copper plants and fiber option delivery
      platforms. NATVN will use its resources and expertise to develop, produce,
      package, license and acquire programming for the operation of a 24/7, 365 day
      per year digital cable channel.




8


The
      companies intend to enter into an operating agreement pursuant to which they
      will share all net revenues on a 50/50 basis generated from subscriber fees,
      less all net costs, such as regulatory and interconnection fees. NATVN will
      provide WDMG with up to two minutes of commercial airtime, per hour, per day,
      on
      regularly scheduled programming that offers air space to advertisers with the
      exception of paid programming or long form advertisements. The Company will
      provide its expertise and guidance to NATVN in obtaining and filing all permits
      and licenses required. The companies have entered into a Stock Purchase
      Agreement, under which the Company will issue to NATVN 1,670,000 Shares of
      Common Stock valued at approximately $1.20 per share, or $2 million. In return,
      NATVN will issue to the Company 4 million shares of its Common Stock valued
      at
      $.50 per share, or $2 million.




**The
      Titan Network, LLC.**




On
      March
      1, 2005, the Company and The Titan Network, LLC (“Titan”) entered into a Letter
      of Agreement regarding venture financing, business, financial consulting and
      marketing services to be provided by Titan to Winsonic. Titan will bill the
      Company at its standard hourly rates, however, discount the monthly fee to
      $20,000 plus out-of-pocket expenses and an administrative change equal to 3%
      of
      time incurred during the prior month. As additional compensation, the Company
      agreed to grant Titan a stock option to purchase 1 million shares of Common
      Stock of the Company. The option is exercisable at $.75 per share, the Closing
      price on February 28, 2005 for a period of seven years. The option vests in
      10
      equal monthly installments of 100,000 shares commencing on March 1, 2005. The
      agreement continues until terminated by either party on 60 days prior written.
      The provisions concerning Titan’s compensation shall survive termination of the
      agreement.




**PMG
      Media**




On
      March
      12, 2005, the Company and Proactive Media Group, Inc. d/b/a PMG Media entered
      into a Memorandum of Understanding (“MOU”). PMG Media provides high quality
      service in the area of Indoor and Outdoor Advertising Media anywhere in the
      U.S.
      in more than 500 markets. PMG Media will provide the Company with outdoor
      advertising of all types of media, as well as indoor digital plasma advertising.
      The Company will enable PMG to reach its targeted markets via digital cable,
      satellite, broadband and fiber optic delivery platforms. The parties will work
      on a revenue sharing model for the receipt of proceeds from subscriber
      fees.




**Lantern
      Hill Capital**




On
      March
      14, 2005, the Company entered into an agreement with Lantern Hill Capital,
      a
      management consultant firm regarding consulting services to be provided to
      the
      Company for a two-year period primarily by James Anderson, a former director
      of
      the Company. Lantern Hill will act as a long-term financial advisor to the
      Company; meet and discuss the Company’s operating strategy; assist the Company
      in formulating strategic and financial plans and assist in development of
      capitalization plans. Under the agreement, Lantern Hill will receive 150,000
      shares of common stock vesting through the first anniversary date of the
      agreement.




**Sun
      iForce Partner**




On
      May
      27, 2005 the Company signed a Contract with Sun Micro Systems as a Sun iforce
      Partner. Sun's partner model will help Winsonic build on a sales strategy and
      delivery of innovative solutions. Sun's partner model provides partners with
      a
      clear role definition and supports them with unparalleled partner development
      support, stronger go-to-market partnering and more opportunities to transact
      business/orders via streamlined, web-enabled interfaces. The iForce Partner
      programs will incorporate a portfolio of products and services offered by Sun
      Enterprise Services around the globe, including Sun Professional Services,
      Sun
      Educational Services and Sun Support Services.




9


**Level
      3 Communications**





On
      June
      9, 2003, the Company entered into a Master Service Agreement with Level 3
      Communications to deploy nationwide media delivery services on the Level 3
      Communications network. WinSonic Digital Cable Systems Network is housed in
      Level 3's Private rooms in Los Angeles, Dallas, Chicago, New York and the
      Atlanta data center. “This provides us with a formidable network that will
      enable diverse routing and easy connections with communications companies and
      other Web-based operations. Level 3 has earned a strong reputation for
      operational excellence and innovative network solutions which is in line with
      our reliable services protocol.”





On
      August
      19, 2004, the company sign a addendum to the June 9, 2003 Master Service
      Agreement with Level 3 Communications keeping the agreement in full effect.





On
      August
      17, 2004, the company sign a service
      schedule for (3) Link SM Global
      Wavelength Service - IRU with Level 3 Communications starting the planning
      of
      turning up 2.5GB or 10GB (or greater, as agreed by the parties) transparent,
      Unprotected virtual channel(s) (or wavelength(s)) on the Level 3 network between
      two (2) Termination Nodes. Each (3)Link SM Global
      Wavelength Service shall be composed of one or more Direct Segments and/or
      Express Segments with a SONET solutions for nationwide redundant.




**Verizon
      ESG**





On
      May
      10, 2004, Verizon ESG and WinSonic Holdings signed an agreement to buildout
      WDCSN into a facilities-based local, interstate, and international exchange
      transport Network with advanced technology transport solutions.. WinSonics
      solutions assure world class service, design and product excellence. WinSonic
      Digital Cable Systems Network has rapidly grown by continuing these traditions
      while entering the digital age with a wide selection of innovative products
      and
      solutions that combine the latest advances in long-haul transport, wireless
      communications, data communications, voice communications, video
      communications, audio
      communications, and media and entertainment technologies.




**Item
          2.** **Description
          of Property.**




Our
      corporate headquarters are located at 260 Peachtree Street, Suite 2200, Atlanta,
      GA 30303; telephone no. (770) 858-0039. We also maintain offices at 10120 S.
      Eastern Avenue, Suite 200, Las Vegas, Nevada 89052, telephone: (702) 492-1282.
      This office space is provided by one of our executive officers at no cost to
      us.
      We pay for our own telephone service. We maintain network offices at no
      leasehold cost at the following Level 3 locations: New York, Atlanta, Dallas,
      Chicago and Los Angeles. Winsonic Cinema and Cyberhollywood.net production
      offices and hub are located at 8255 Beverly Blvd., Suite 130 Los Angeles, Cal.
      90048.




We
      believe that we have adequate facilities to conduct our current operations,
      and
      we do not expect to seek additional administrative offices and/or research
      facilities for the next 12 months. We have no current proposed programs for
      the
      renovation, improvement or development of our current facilities.




**Item
          3.** **Legal
          Proceedings.**




Other
      than as described below, we are not currently involved in any legal proceeding,
      which may be deemed to be material to our financial condition.




10


Callozo
      vs. Media and Entertainment.com




On
      March
      22, 2004, the Company (in all cases cited herein known as Media and
      Entertainment.com, Inc.) commenced a civil lawsuit in Los Angeles Superior
      Court
      (Case No. BC312530) against Caesar Collazo, a former officer of the Company,
      seeking damages in excess of $40,000, punitive and exemplary damages. The
      Company had purchased the assets of Nexcode of which Collazo was a founder,
      and
      Collazo received 400,000 shares of the Company’s Common Stock (the “Shares”) in
      consideration of the sale. While still employed by the Company, Collazo
      allegedly formed a competing company, stole proprietary property of the Company
      and solicited Company clients on behalf of the competitor. The Company seeks
      a
      constructive trust, injunctive relief and the return of the Shares.




Prior
      thereto, in February 2004, Mr. Collazo had commenced a lawsuit in Los Angeles
      Superior Court against the Company and its transfer agent seeking to remove
      the
      restrictive legend from the Shares. The injunctive relief was denied and Mr.
      Collazo dismissed the Complaint. In March 2004, the Company commenced a lawsuit
      in U.S. District Court, Clark Country Nevada (Case No. A480587) to enjoin the
      transfer of the Shares. The Court issued an Order on March 19, 2004, enabling
      Collazo to sell 30,000 shares of Common Stock and issuing a temporary
      restraining order with regard to the remaining 370,000 Shares provided the
      Company posted a bond for the entire amount of $424,000. The Company’s
      principals chose not to pledge personal assets as collateral for the bond and
      the Nevada action was dismissed.




In
      the
      above-described pending litigation brought by the Company against Collazo,
      in
      July 2004, the defendant denied the allegations, asserted 21 affirmative
      defenses and bought a cross-complaint against the Company. Mr. Collazo alleges
      that the Company breached the agreement with Collazo because he had not been
      paid compensation due him, he had not received a percentage of gross profit
      earnings, and that the Company had not exercised a good faith effort to raise
      an
      additional $250,000 in capital, and that Collazo did not receive the equity
      promised him. The Company denied the allegations of the Cross Complaint and
      asserted 13 affirmative defenses. At a settlement conference on April 11, 2005,
      the Company agreed to issue 900,000 shares of common stock to Mr. Collazo,
      as
      well as attorney fees of $120,000. The Company also agreed to issue 900,000
      shares of common stock to Mr. Nana Yalley, an officer and current shareholder,
      as well as an equal partner of Mr. Collazo in Nexcode. The shares of common
      stock were valued as of the settlement date, and accordingly 900,000 shares
      of
      common stock valued at $450,000 for each of Mr. Collazo and Mr. Yalley, as
      well
      as $120,000 of attorney’s fees are charged as current year expenses as of
      December 31, 2004. As of July 18, 2005, neither the 900,000 shares of common
      stock for each of Messrs. Collazo and Yalley, nor the $120,000 of attorney’s
      fees have been issued and paid, respectively.




Yellowbrix,
      Inc. vs. Media and Entertainment.com:




Yellowbrix,
      Inc. filed a collection suit against Media and Entertainment.com regarding
      an
      alleged contract authorized by the former CEO of Media and Entertainment.com.
      The pending lawsuit amount in dispute is $19,800, which is expensed in general
      and administrative expense in 2004 and accrued within accounts payable of the
      Company as of December 31, 2004.





Berman,
      Romeri and Associates, LLP vs. Media and Entertainment.com:





This
      pending collection lawsuit arises from alleged contract and services obligating
      the Company, which was allegedly authorized by the former CEO of Media and
      Entertainment.com. The disputed amount of $8,733 is expensed in general and
      administrative expense in 2004 and accrued within accounts payable of the
      Company as of December 31, 2004.




11




**Item
          4.** **Submission
          of Matters To a Vote of Security Holders**




No
      matter
      was submitted to a vote of stockholders during the fourth quarter of
      2004.




**PART
      II**




**Item
          5.** **Market
          for Common Equity and Related Stockholder
          Matters.**




Our
      common stock is traded in the over-the-counter market and is quoted in the
      Pink
      Sheet, LLC., as WDMGE. The following table sets forth the high and low closing
      bid quotations for our common stock for each fiscal quarter during the last
      two
      fiscal years, as reported by Pink Sheets, LLC:





2004
            
            High
                Bid
            
            Low
                BidJan.
                1 through Mar. 31
            
            $
            1.99
            
            $
            .69Apr.
                1 through June 30
            
            
            1.37
            
            
            .55July
                1 through Sept. 30
            
            
            1.16
            
            
            .66Oct.
                1 through Dec. 31
            
            
            1.64
            
            
            .652003
            
            
            High
                Bid
            
            
            Low
                BidJan.
                1 through Mar. 31
            
            $
            .37
            
            $
            .065Apr.
                1 through June 30
            
            
            .20
            
            
            .05July
                1 through Sept. 30
            
            
            .33
            
            
            .12Oct.
                1 through Dec. 31
            
            
            .81
            
            
            .18




The
      above
      quotations represent prices between dealers and do not include retail markups,
      markdowns or commissions, nor do they represent actual
      transactions.




As
      of
      March 30, 2005, there were 79 record holders of our common stock.




We
      have
      not declared any cash dividends on our common stock since our inception and
      do
      not anticipate paying such dividends in the foreseeable future. We plan to
      retain earnings, if any, to support the development of our business. Payment
      of
      future dividends, if any, will be at the discretion of our Board of Directors
      after taking into account various factors, including our financial condition,
      operating results, current and anticipated cash needs and plans for
      expansion.




**Recent
      Sales of Unregistered Securities**





The
      Company has 50,000,000 shares of common stock authorized with a par value of
      $0.001 per share.





During
      fiscal year 2002, the Company issued stock warrants totaling $990,600 of which
      $509,600 was issued to four individuals for consulting services, $405,000 was
      issued to three individuals to settle debt, and $76,000 was issued to six
      individuals and one company for cash, all with a conversion price of $1.00
      per
      share. We received no cash proceeds and paid no commissions in connection with
      these issuances. We believe that the issuance of such warrants was exempt from
      the registration requirements of the Securities Act of 1933, as amended,
      pursuant to the provisions of Section 4(2) of the Securities Act.





12


During
      fiscal year 2003, the Company issued stock warrants totaling $820,000 to a
      company for purchase of computer equipments and infrastructure totaling
      $1,667,000 which the remaining balance
      has financed through
      promissory note payable. The stock warrants can be converted into common shares
      at a price of $1.00 per share. We received no cash proceeds and paid no
      commissions in connection with these issuances. We believe that the issuance
      of
      such warrants was exempt from the registration requirements of the Securities
      Act of 1933, as amended, pursuant to the provisions of Section 4(2) of the
      Securities Act.





During
      fiscal year 2003, the Company issued stock warrants totaling $189,500 of which
      $87,000 was issued to one individual for consulting services, and $102,500
      was
      issued to four individuals and for cash, all with a conversion price of $1.00
      per share. . We received no cash proceeds and paid no commissions in connection
      with these issuances. We believe that the issuance of such warrants was exempt
      from the registration requirements of the Securities Act of 1933, as amended,
      pursuant to the provisions of Section 4(2) of the Securities Act.





During
      fiscal year 2003, the Company issued 6,004,200 shares of common stock to the
      founder and Chairman / C.E.O. for past services totaling $6,004 or $0.001price
      per share. We received no cash proceeds and paid no commissions in connection
      with these issuances. We believe that the issuance of such shares was exempt
      from the registration requirements of the Securities Act of 1933, as amended,
      pursuant to the provisions of Section 4(2) of the Securities Act.





During
      fiscal year 2004, the Company issued 1,980,946 shares of common stock to eleven
      individuals and one company for consulting services rendered totaling $1,490,309
      or $0.75 average price per share. We received no cash proceeds and paid no
      commissions in connection with these issuances. We believe that the issuance
      of
      such shares was exempt from the registration requirements of the Securities
      Act
      of 1933, as amended, pursuant to the provisions of Section 4(2) of the
      Securities Act.





During
      fiscal year 2004, the Company issued 758,000 shares of common stock to eleven
      individuals and one company in satisfaction of debts totaling $331,000 and
      accrued interest of $242,500. . We received no cash proceeds and paid no
      commissions in connection with these issuances. We believe that the issuance
      of
      such shares was exempt from the registration requirements of the Securities
      Act
      of 1933, as amended, pursuant to the provisions of Section 4(2) of the
      Securities Act.





During
      fiscal year 2004, the Company issued 921,600 shares of common stock to eight
      individuals and one company as a result of stock warrants exercised at $1.00
      per
      share. . We received no cash proceeds and paid no commissions in connection
      with
      these issuances. We believe that the issuance of such shares was exempt from
      the
      registration requirements of the Securities Act of 1933, as amended, pursuant
      to
      the provisions of Section 4(2) of the Securities Act.





During
      fiscal year 2004, the Company converted $258,000 of outstanding stock warrants
      into $198,000 of debts and $60,000 of additional paid in capital related to
      seven individuals and one company.





During
      fiscal year 2004, the Company issued 23,956,138 shares of common stock related
      to the reverse merger with Media & Entertainment, Inc.




Pursuant
      to a Convertible Note and Warrant Purchase Agreement dated November 24, 2004
      and
      December 2004, we sold $815,000 of an aggregate $1,000,000 of 6% convertible
      promissory notes and warrants to purchase common stock. The offering was made
      to
      20 accredited investors. The notes are due the earlier of December 15, 2005,
      or
      upon the occurrence of certain events. They are convertible at the lower of
      $.70
      per share or 15% below market. The warrants related to this debt were issued
      to
      purchase 1,164,287 shares of common stock and are exercisable until December
      15,
      2007 at $.70 per share. The issuance of such securities was exempt from the
      registrations requirements of the Securities Act of 1933, as amended, pursuant
      to Section 4(6) of the Securities Act and Rule 506 of Regulation D promulgated
      thereunder.




13




In
      January 2005, we sold the remaining $185,000 of 6% convertible promissory notes
      and warrants to purchase common stock, pursuant to a Convertible Note and
      Warrant Purchase Agreement dated January 2005. The offering was to the last
      of
      21 accredited investors. The notes are due the earlier of December 15, 2005,
      or
      upon the occurrence of certain events. They are convertible at the lower of
      $.70
      per share or 15% below market. The warrants related to this debt were issued
      to
      purchase 264,286 shares of common stock and are exercisable until December
      15,
      2007 at $.70 per share. We paid no commissions in connection with these sales.
      We believe the issuance of such securities was exempt from the registrations
      requirements of the Securities Act of 1933, as amended, pursuant to Section
      4(6)
      of the Securities Act and Rule 506 of Regulation D promulgated there
      under.




**Item
      6.**  **Management’s
      Discussion and Analysis or Plan of Operation.**




**General**




In
      October 2004, Media and Entertainment.com, Inc. completed its merger with
      Winsonic, pursuant to which Winsonic Acquisition Sub, Inc. a wholly-owned
      subsidiary of the Company merged with and into Winsonic Digital Cable Systems
      Network, Ltd. (“WDCSN”) with WDCSN being the surviving entity pursuant to an
      Agreement and Plan of Reorganization dated July 16, 2004, as amended. Following
      the Merger, the Company changed its name to Winsonic Digital Media Group,
      Ltd.




**Critical
      Accounting Policies [to be taken from draft financials]**





Basis
      of Accounting





The
      Company’s policy is to prepare its financial statements on the accrual basis of
      accounting. The fiscal year end is December 31.




Use
      of
      Estimates




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




Stock
      Based Compensation




The
      Company applies Accounting Principles Board (“APB”) Opinion No. 25, Accounting
      for Stock Issued to Employees, and Related Interpretations, in accounting for
      stock options issued to employees.  Under APB No. 25, employee compensation
      cost is recognized when estimated fair value of the underlying stock on date
      of
      the grant exceeds exercise price of the stock option.  For stock options
      and warrants issued to non-employees, the Company applies SFAS No. 123,
      Accounting for Stock-Based Compensation, which requires the recognition of
      compensation cost based upon the fair value of stock options at the grant date
      using the Black-Scholes option pricing model.




14


The
        Company has elected to follow Accounting Principles Board Opinion No. 25
        (APB
        25), “Accounting for Stock Issued to Employees” and the related interpretations
        in accounting for its employee stock options because, as discussed below,
        the
        alternative fair value accounting provided for under FASB Statement No. 123
        (FASB 123), “Accounting for Stock-Based Compensation,” requires the use of
        option valuation models that were not developed for use in valuing employee
        stock options. Under APB 25, if the exercise price of the Company’s employee
        stock options is equal to or greater than the market price of the underlying
        stock on the date of the grant, no compensation expense is
        recognized.
 An
          Employee Agreement effective October 8, 2004 provides for the grant of
          3,000,000
          incentive or non-statutory stock options for three officers to purchase
          common
          stock. Employees who share the responsibility for the management growth
          or
          protection of the business of the Company and certain Non-Employee (“Selected
          Persons”), are eligible to receive options which are approved by a committee of
          the Board of Directors. These options primarily vest equally over a twelve-month
          period effective with date of the employment agreement. The agreements
          are
          terminable at will with or without cause. As of December 31, 2004, 750,000
          options have vested. There were no stock options for the year ending December
          31, 2003.
  Revnenues
        and Expenses
        Recognition
  The
        financial statements of Winsonic Media Digital Group, Ltd., have been prepared
        on the accrual basis in accordance with generally accepted accounting
        principles. Revenues are recognized when earned and expenses are recognized
        in
        the period incurred.




Recently
      Issued Accounting Pronouncements




In
      September 2004, the Emerging Issues Task Force ("EITF") reached a consensus
      on
      EITF Issue 04-08 The Effect of Contingently Convertible Instruments on Diluted
      Earnings per Share, which requires the inclusion of shares related to
      contingently convertible debt instruments for computing diluted earnings per
      share using the if- converted method, regardless of whether the market price
      contingency has been met. EITF 04-08 will be effective for all periods ending
      after December 15, 2004 and includes retroactive adjustment to historically
      reported diluted earnings per share. The adoption of EITF Issue No. 04-08 does
      not currently have an impact on the Company's operating results or financial
      position.




In
      November 2004, the FASB issued Financial Accounting Standards Statement No.
      151
“Inventory Costs-an amendment of ARB No. 43, Chapter 4.” This Statement
      clarifies the accounting for abnormal amounts of idle facility expense, freight,
      handling costs, and wasted material (spoilage). This Statement requires that
      those items be recognized as current-period charges regardless of whether they
      meet the criterion of "so abnormal." In addition, this Statement requires that
      allocation of fixed production overheads to the costs of conversion be based
      on
      the normal capacity of the production facilities. The Company does not expect
      SFAS 151 to have a material impact on its financial statements.




In
      December 2004, the FASB issued Financial Accounting Standards Statement No.
      152
“Accounting for Real Estate Time-Sharing Transactions-an amendment of FASB
      Statements No. 66 and 67.” This Statement references the financial accounting
      and reporting guidance for real estate time-sharing transactions that is
      provided in AICPA Statement of Position (SOP) 04-2, *Accounting
      for Real Estate Time-Sharing Transactions.* This
      Statement also states that the guidance for (a) incidental operations and (b)
      costs incurred to sell real estate projects does not apply to real estate
      time-sharing transactions. This Statement is effective for financial statements
      for fiscal years beginning after June 15, 2005. The Company does not expect
      SFAS
      152 to have a material impact on its financial statements.




In
      December 2004, the FASB issued Financial Accounting Standards Statement No.
      153
“Exchanges of Nonmonetary Assets-an amendment of APB Opinion No. 29.” The
      guidance in APB Opinion No. 29, *Accounting
      for Nonmonetary Transactions,* is based
      on the principle that exchanges of nonmonetary assets should be measured based
      on the fair value of the assets exchanged. This Statement amends Opinion 29
      to
      eliminate the exception for nonmonetary exchanges of similar productive assets
      and replaces it with a general exception for exchanges of nonmonetary assets
      that do not have commercial substance. The Company does not expect SFAS 153
      to
      have a material impact on its financial statements.




15




In
      December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which
      establishes standards for transactions in which an entity exchanges its equity
      instruments for goods or services. This standard replaces SFAS No. 123 and
      supersedes APB Opinion No. 25, Accounting for Stock-based compensation. This
      Standard requires a public entity to measure the cost of employee services
      received in exchange for an award of equity instruments based on the grant-date
      fair value of the award. This eliminates the exception to account for such
      awards using the intrinsic method previously allowable under APB Opinion No.
      25.
      SFAS No. 123(R) will be effective for interim or annual reporting periods
      beginning on or after June 15, 2005. Accordingly the Company is unable to
      determine at this time the impact of SFAS No. 123(R) will have on its balance
      sheet or income statements.




In
      May
      2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections - a
      Replacement of APB Opinion No. 20 and FASB Statement No. 3”. SFAS
      154
      requires retrospective application to prior period financial statements of
      changes in accounting principle, unless it is impracticable to determine either
      the period-specific effects or the cumulative effect of the change. SFAS 154
      also redefines “restatement” as the revising of previously issued financial
      statements to reflect the correction of an error. This statement is effective
      for accounting changes and corrections of errors made in fiscal years beginning
      after December 15, 2005. The Company does not believe that the adoption of
      SFAS
      154 will have a significant impact on the consolidated financial
      statements.




**Results
      of Operations**




**For
      the year ended December 31, 2004, as compared to the year ended December 31,
      2003.**




For
      the
      year ended December 31, 2004 (“Fiscal 2004”) we incurred a net loss of
      $5,309,000 as compared with a net loss of $1,914,000 during the year ended
      December 31, 2003 (“Fiscal 2003”).




Total
      revenues were $25,000 in Fiscal 2004, compared to $33,000 in Fiscal 2003. Cost
      of Goods Sold, consisting primarily of infrastructure and fiber costs, is
      $296,000 and $409,000 in Fiscal 2004 and 2003, respectively. The resulting
      gross
      loss before remaining expenses is $271,000 in Fiscal 2004 and $376,000 in Fiscal
      2003.




Total
      expenses for Fiscal 2004 were $3,332,000, consisting of vendor & employee
      stock compensation for services $1,490,000, salary expense $452,000,
      depreciation expense $350,000 , payroll
      taxes $202,000, legal  $174,000 , maintenance
      expense $116,000 and other selling, general and administrative (“SGA”) expenses.
      Total expenses for Fiscal 2003 was $1,279,000, consisting of consulting fees
      $281,000, depreciation expense $209,000, rent expense $208,000, salary expense
      $199,000, professional fees $80,000, and other selling, general and
      administrative expenses.




In
      Fiscal
      2004, the Company accrued legal settlement costs of $1,020,000 for the Callozo
      vs. Media & Entertainment.com litigation (previously explained in Item 3
      Legal Proceedings), $553,000 in interest expense, and recorded $109,000 of
      other
      income primarily due to the forgiveness of debts by vendors.




During
      Fiscal 2004, an aggregate of 1,980,946 shares of common stock were issued to
      various persons in exchange for their services, which is included in SGA
      expenses at a value of $1,490,309. The value of their services is based on
      the
      fair market value of the Company’s common stock on the dates of
      issuance.




**Liquidity
      and Capital Resources**




As
      of
      December 31, 2004, we had a working capital deficit of $5,041,000, compared
      to a
      deficit of $1,564,000 at December 31, 2003.




As
      of
      December 31, 2004, we had cash on hand of $437,000. Subsequent thereto, pursuant
      to a Convertible Note and Warrant Purchase Agreement (“Debt Financing”) dated
      November 24, 2004, in January 2005 we completed the sale of an aggregate of
      $1,000,000 of 6% convertible promissory notes and warrants to purchase common
      stock. The offering was made to 21 accredited investors. The notes are due
      the
      earlier of December 15, 2005, or upon the occurrence of certain events. They
      are
      convertible at the lower of $.70 per share or 15% below market. Warrants were
      also issued to purchase 1,428,573 shares of common stock and are exercisable
      until December 15, 2007 at $.70 per share. The net proceeds of the offering
      are
      being used to purchase or lease inventory and equipment, construct or lease
      facilities, pay salaries, repay indebtedness and for working
      capital.




16





For
      Fiscal 2004, we experienced a net increase in cash of $437,000 primarily as
      a
      result of the first closing of the Debt Financing in December 2004, as compared
      with a decrease in cash of $4,000 for Fiscal 2003.




Our
        ability to implement our business plan is dependent upon expanding our current
        revenues from sales of our products and services, and obtaining additional
        financing.


If
      we are
      unable to generate sufficient sustainable revenues or obtain additional
      financing to meet our financial obligations, we will have to further reduce
      our
      operations, and we will not be able to continue as a going concern. Our
      independent auditors have indicated in their audit report, dated August 16,
      2005, that there is substantial doubt about our ability to continue as a going
      concern without additional financing and achieving and maintaining profitable
      operations.




For
      Fiscal 2004, we used in operating activities $1,090,000 to sustain the company
      We had $1,527,000 net cash provided by financing activities primarily as a
      result of the Debt Financing $815,000 and proceeds from loan from a related
      party $684,000.. For Fiscal 2003, we had net cash provided by financing
      activities of $2,000,000 due to issuances of common stock warrants $1,009,000
      and proceeds from note payable $847,000. Fiscal year 2003 also included
      $2,100,000 net cash used in investing activities with the purchase of fixed
      assets.




**Continuing
      Operations**




Our
      priorities for the next twelve months of operations are to continue to develop
      and market our products and services. We are focused on raising capital and
      establishing a business presence with vendors, business owners and referral
      sources. As we generate revenue from our activities, we expect to hire salaried
      or hourly employees to operate certain aspects of our business including members
      of management.





On
      February 17, 2005, the Company entered into a Memorandum of Understanding
      (“MOU”) with Native American Television Network, Inc. (“NATVN”). NATVN, based in
      Albuquerque, New Mexico is a recently formed company that intends to launch
      the
      first Western Hemisphere, pan-tribal digital cable channel. It is being designed
      to provide family friendly programming to Native Americans and to non-Native
      American viewers who are interested in learning more about Native American
      history, cultures, lifestyle, business and spirituality from a Native American
      point-of-view. There was no prior material relationship between the two
      companies or their affiliates other than in respect of the
      agreement.




The
      Company will provide to NATVN its nationwide distribution platform and technical
      support, expertise and personnel. The WDMG distribution platform or the Winsonic
      Digital Cable Systems Network (“WDCSN”) will enable NATVN to reach its targeted
      Native American audience in both urban and rural tribal communities via digital
      cable, satellite, broadband, wireless, copper plants and fiber option delivery
      platforms. NATVN will use its resources and expertise to develop, produce,
      package, license and acquire programming for the operation of a 24/7, 365 day
      per year digital cable channel.




The
      companies intend to enter into an operating agreement pursuant to which they
      will share all net revenues on a 50/50 basis generated from subscriber fees,
      less all net costs, such as regulatory and interconnection fees. NATVN will
      provide WDMG with up to two minutes of commercial airtime, per hour, per day,
      on
      regularly scheduled programming that offers air space to advertisers with the
      exception of paid programming or long form advertisements. The Company will
      provide its expertise and guidance to NATVN in obtaining and filing all permits
      and licenses required. The companies have entered into a Stock Purchase
      Agreement, under which the Company will issue to NATVN 1,670,000 Shares of
      Common Stock valued at approximately $1.20 per share, or $2 million. In return,
      NATVN will issue to the Company 4 million shares of its Common Stock valued
      at
      $.50 per share, or $2 million.




17


On
      May
      27, 2005 the Company signed a Contract with Sun Micro Systems as a Sun iforce
      Partner. Sun's partner model will help Winsonic build on a sales strategy and
      delivery of innovative solutions. Sun's partner model provides partners with
      a
      clear role definition and supports them with unparalleled partner development
      support, stronger go-to-market partnering and more opportunities to transact
      business/orders via streamlined, web-enabled interfaces. The iForce Partner
      programs will incorporate a portfolio of products and services offered by Sun
      Enterprise Services around the globe, including Sun Professional Services,
      Sun
      Educational Services and Sun Support Services.




On
      June
      9, 2003, the Company entered into a Master Service Agreement with Level 3
      Communications to deploy nationwide media delivery services on the Level 3
      Communications network. WinSonic Digital Cable Systems Network is housed in
      Level 3's Private rooms in Los Angeles, Dallas, Chicago, New York and the
      Atlanta data center. "This provides us with a formidable network that will
      enable diverse routing and easy connections with communications companies and
      other Web-based operations. Level 3 has earned a strong reputation for
      operational excellence and innovative network solutions which is in line with
      our reliable services protocol."





On
      August
      19, 2004, the company sign an addendum to the June 9, 2003 Master Service
      Agreement with Level 3 Communications keeping the agreement in full effect.





On
      August
      17, 2004, the company sign a service
      schedule for (3) Link SM Global
      Wavelength Service - IRU with Level 3 Communications starting the planning
      of
      turning up 2.5GB or 10GB (or greater, as agreed by the parties) transparent,
      Unprotected virtual channel(s) (or wavelength(s)) on the Level 3 network between
      two (2) Termination Nodes. Each (3)Link SM Global
      Wavelength Service shall be composed of one or more Direct Segments and/or
      Express Segments with a SONET solutions for nationwide redundant.





On
      December 10, 2004, Winsonic Digital Media Group, Ltd. and CI2, Inc.
      (“ CI2 ”)
      entered into a certain Subcontractor Master Consulting Agreement (the
“ SMCA ”).
      A
      prior material relationship existed between the two parties because CI2 had
      entered into a Master Purchase and Services Agreement (the “ MPA ”)
      with
      Winsonic Digital Cable Systems Network, Ltd. f/k/a Winsonic Holdings, Ltd.
      (“ Winsonic ”),
      a now
      wholly owned subsidiary of the Company, on May 5, 2004 prior to WinSonic’s
      merger with the Company. The MPA provided CI2 the ability to purchase and/or
      license various products and services for delivery and installation from
      WinSonic, to be used for CI2’s own internal use and for resale.





Pursuant
      to the SMCA, CI2 will subcontract to the Company through individual agreements
      (each an “ Agreement ”)
      comprising of (i) a purchase order that CI2 issues for the purchase of services,
      including but not limited to, consulting, programming, software analysis,
      project analysis, project management, facilities management, document
      development, testing and technical support (the “ Services ”);
      and
      (ii) a statement of work which describes any products, technology, software,
      materials or other items that the Company will provide to CI2 and a description,
      as applicable, of any services that should be delivered pursuant to the
      agreement (the “ Deliverables ”)
      or any
      milestones that should be met. CI2 will compensate the Company in a manner
      consistent with the terms of the applicable Agreement. In addition, pursuant
      to
      the SMCA all of the Company’s Intellectual Property Rights (as defined in the
      SMCA) exclusive of pre-existing works, in any Services, Deliverables,
      methodologies and processes, whether or not incorporated into a Deliverable,
      which the Company has developed or used pursuant to a Statement of Work, and
      any
      other intellectual property developed under the SMCA shall be transferred and
      assigned solely and exclusively to CI2. Also, the Company and CI2 have mutual
      confidentiality obligations.





18


The
      term
      of this Agreement commenced on December 10, 2004 and unless otherwise terminated
      will continue for five (5) years with automatic renewal provisions. Either
      the
      Company or CI2 may terminate the SMCA and any Agreement if (i) if a party fails
      to cure a breach within thirty (30) days of notice by the other party; (ii)
      immediately by notice upon material breach of the other party, if in the
      reasonable determination of the non-breaching party that the breach may not
      be
      remedied within thirty days; or if at any time one of the parties becomes
      insolvent, makes a general assignment for the benefit of creditors; or suffers
      or permits the appointment of a receiver for its business or assets. CI2 may
      terminate the SMCA and any Agreement: (i) for convenience, upon thirty days
      notice; or (ii) immediately upon Notice in the event of (a) a direct or indirect
      taking over or assumption of control of the Company of substantially
      all of its
      assets by any governmental agency or any third party; or (b) acquisition of
      more
      than five percent of Company's equity or assets by a competitor of
      CI2.





On
      December 10, 2004, the Company and CI2 entered into a certain Joint Marketing
      and Development Agreement (the “ JMDA ”).
      Pursuant to the JMDA the Company and CI2 will cooperate in the development and
      testing of certain Company products set forth in the JMDA (the “ Company
      Products ”),
      which
      run on a combination (the “CI2 Platforms”) of certain listed CI2 hardware and
      software (the “ CI2
      Products ”)
      creating a modified product (the “ Modified
      Product ”).
      Each
      party will bear all costs and expenses associated with its activities under
      the
      JMDA.


Within
      thirty days of the date of the JMDA the Company and CI2 will develop a
      development plan (the “ Development
      Plan ”)
      to
      develop the Modified Product. Also within thirty days of the date of the JMDA,
      the Company and CI2 will develop a plan to perform marketing activities (the
“ Marketing
      Plan ”).
      The
      Company will have obligations to provide CI2 with certain deliverables and to
      achieve certain milestones under the Development Plan and the Marketing Plan.
      CI2 will own all right title and interest in and to the CI2 Products and
      Derivative Works (as defined in the JMDA) thereof, including without limitation
      Intellectual Property Rights (as defined in the JMDA). The Company and CI2 shall
      jointly own all right, title and interest to the Modified Product and any
      Derivative Works of either of the foregoing, including without limitation all
      Intellectual Property Rights therein as specified by a project formula based
      on
      the anticipated efforts of each party as specified in the Development plan.
      In
      the event that CI2 or Company provides suggestions or improvements regarding,
      modifications to the Modified Product (collectively, “ Improvements ”),
      such
      Improvements shall be the sole and exclusive property of the party that makes
      the suggestions or improvements; provided however, that suggestion or
      improvement encompasses (i) the party’s Pre-Existing Technology (as defined in
      the JMDA) included in such Improvements, or (ii) any Derivative Works of the
      party’s Pre-Existing Technology. All Intellectual Property Rights in either of
      the foregoing shall remain the sole and exclusive property of the suggesting
      party.




On
      May
      10, 2004,Verizon ESG and WinSonic Holdings signed an agreement to buildout
      WDCSN
      into a facilities-based local, interstate, and international exchange transport
      Network with advanced technology transport solutions.. WinSonic solutions assure
      world class service, design and product excellence. WinSonic Digital Cable
      Systems Network has rapidly grown by continuing these traditions while entering
      the digital age with a wide selection of innovative products and solutions
      that
      combine the latest advances in long-haul transport, wireless communications,
      data communications, voice communications, video communications, audio
      communications, and media and entertainment technologies.




Without
      adequate financing we will be unable to compete successfully. Furthermore,
      competitive pressures, which we face, may have an adverse effect on our
      business, results of operations and financial condition. Additionally,
      intensified competition could force us out of business. If we require additional
      capital, we may be required to raise additional capital through one or more
      public or private offerings of equity and/or debt. There are no preliminary
      loan
      agreements or understandings between us, our officers, directors or affiliates
      or lending institutions. We have no arrangements or commitments for accounts
      and
      accounts receivable financing. We cannot guarantee you that any such financing
      can be obtained or, if obtained, that it will be on reasonable
      terms.


**Off-Balance
        Sheet Arrangements**
  We
        have
        no off-balance sheet arrangements that have or are reasonably likely to have
        a
        current or future effect on our financial condition, changes in financial
        condition, revenues or expenses, results of operations, liquidity, capital
        expenditures or capital resources.




19


**RISK
        FACTORS**




We
      are
      subject to various risks that may materially harm our business, financial
      condition and results of operations. **These
      are not the only risks and uncertainties that we face. If any of these risks
      or
      uncertainties actually occurs, our business, financial condition or operating
      results could be materially harmed.**




**We
      have incurred significant and continuing losses and may not be able to generate
      revenues to sustain our operations.**




We
      have
      experienced significant operating losses since we were formed in April 2000.
      The
      Company incurred net losses of approximately $5,309,000 and $1,914,000 for
      the
      years ended December 31, 2004 and 2003, respectively, and $7,864,000 for the
      period from inception through December 31, 2004. The Company has recorded total
      revenues of only $58,000 since inception.




The
      Company will continue to have a high level of operating expenses and will be
      required to make significant up-front expenditures in connection with the
      commencement of income-generating activities (including, but not limited to,
      salaries of executive, marketing, engineering and other personnel). The Company
      expects to incur additional losses until such time as it is able to generate
      sufficient revenues to finance its operations and the costs of expansion. There
      can be no assurance that the Company will be able to generate such revenues
      and
      operate profitably.




**We
      have an immediate need for additional financing.**




The
      Company’s has limited operating funds and has nominal cash on hand as of August
      25, 2005. The Company has an immediate need for funds in order to finance its
      business operations. At December 31, 2004, the Company had a working capital
      deficit of approximately $5,041,000.




Our
      working capital requirements in the foreseeable future will depend on a variety
      of factors, including the Company’s ability to implement its business plan. In
      the event that our plans change, our assumptions change or prove to be
      inaccurate, or our cash flow proves to be insufficient to fund our operations
      (due to unanticipated expenses, delays, problems, difficulties or otherwise),
      we
      will be required to seek additional financing sooner than anticipated or have
      to
      curtail our activities.




We
      issued
      $1 million of short-term indebtedness in January 2005. To the extent that we
      incur additional indebtedness or any other transaction, we will be subject
      to
      risks associated with incurring substantial indebtedness, including the risks
      that interest rates may fluctuate and cash flow may be insufficient to pay
      principal and interest on any such indebtedness. We currently have no sources
      of
      revenue from which we can repay our indebtedness. We have no current
      arrangements with respect to, or sources of, additional financing, and it is
      not
      anticipated that existing stockholders will provide any portion of our future
      financing requirements. There can be no assurance that additional financing
      will
      be available to us on commercially reasonable or acceptable terms, if at all.
      Our ability to obtain additional capital will be dependent on market conditions,
      the national economy and other factors outside of our control. Our failure
      to
      secure necessary financing would have a material adverse effect on us and could
      require us to delay or modify our business plan.




**Qualified
      financial statements based on limited operations and establishing a long-term
      source of revenue.**




We
      have
      incurred operating losses and negative cash flow from operations in 2004 and
      2003 and since inception as stated in the Financial Statement which are part
      of
      this Report. Our Accountants issued a qualified report on our financial
      statements as at and for the year ended December 31, 2004. The report states
      that our ability to continue as a going concern is contingent upon the
      successful completion of additional financing arrangements and our ability
      to
      achieve and maintain profitable operations. See “Independent Auditors’ Report”
      and “Note 8 of Notes to Financial Statements” contained in this
      Report.




20


**Our
      limited operating history subjects us to the risks of a new
      business.**




The
      Company was organized in April 2000 and had not commenced commercial operations
      until September 2000. We have a limited operating history upon which an
      evaluation of our future performance and prospects can be made. Our prospects
      must be considered in light of the risks, expenses, delays, problems and
      difficulties frequently encountered in the establishment of a new business
      in
      the Internet, which is an evolving industry characterized by intense
      competition.




**Risks
      Relating to Winsonic**




**We
      may not be able to successfully integrate with Winsonic and achieve the benefits
      expected to result from the acquisition.**




The
      Merger presents numerous challenges to us. These include the integration of
      the
      operations, technologies and management of the Company and Winsonic and special
      risks, including possible unanticipated liabilities, unanticipated costs, and
      diversion of management attention and loss of personnel.




We
      cannot
      assure you that we will successfully integrate or profitably manage Winsonic’s
      business. In addition, we cannot assure you that our continued business will
      achieve sales levels, profitability, efficiencies or synergies that justify
      the
      acquisition or that the acquisition will result in increased earnings for us
      in
      any future period.




**We
      may not be able to successfully manage the combined
      entity.**




In
      the
      event we are able to integrate our operations, we may not be able to
      successfully manage the combined operations. The combined operations may place
      significant demands on the Company’s management, technical, financial and other
      resources. In addition, successful integration of the Company’s operations will
      depend on, among other things, our ability to attract, hire and retain skilled
      management and other personnel, none of which can be assured. To manage growth
      effectively, we will need to implement operational, financial and management
      information systems, procedures and controls. There can be no assurance that
      we
      will be able to manage the combined operations effectively, and failure to
      do so
      could have a material adverse effect on the Company’s business, financial
      condition and/or operating results.




**Potential
      Liabilities Associated with Winsonic.**




Winsonic
      may have liabilities that we did not discover or may have been unable to
      discover during our pre-acquisition investigation. Any indemnities or warranties
      may not fully cover such liabilities due to their limited scope, amount or
      duration, the financial limitations of the indemnitor or warrantor, or for
      other
      reasons. Therefore, in the event we are held responsible for the foregoing
      liabilities, the Company’s operations may be materially adversely
      affected.




21
 
  **Business
        Risks**




**Our
      dependence is on carrier networks such as Local Exchange Carriers, and Inter
      Exchange Carriers (LEC’s & IXC’s), a developing market.**




Our
      ability to derive revenues by providing online commerce, ATM, SDI, SONET
      Internet services depends, in part, upon a developed and robust industry and
      the
      infrastructure for providing these services s and carrying network traffic.
      There can be no assurance that the necessary infrastructure or complementary
      products will be developed or that the Internet will become a viable commercial
      marketplace in those segments that we target. Critical issues concerning the
      commercial use of carrier networks, including security, reliability, cost,
      ease
      of use and access, and quality of service, remain unresolved and may impact
      the
      growth of network use. In the event that the necessary infrastructure or
      complementary products are not developed or the Internet does not become a
      viable commercial marketplace for our services, future business, operating
      results and financial condition could be adversely affected if we were to expend
      significant proceeds for the development of our services.




**Our
      ability to attract and retain customers depends on factors we cannot
      control.**




Our
      ability to increase the number of our customers, and our ability to retain
      customers, will depend on a number of factors, many of which are beyond our
      control. These factors include:




·
            Our
                ability to obtain financing, a commercially viable market developing
                for
                our products and services, our ability to successfully market our
                products
                and services, provide reliable service to and retain new customers
                and
                develop a profitable business.




·
            Our
                market is characterized by rapid technological change and our products
                and
                services could become obsolete or fail to gain market
                acceptance.




The
      market for our services is characterized by rapid technological advances,
      evolving industry standards, changes in customer requirements and frequent
      new
      product and service introductions and enhancements. Our industry is
      characterized by frequent introduction of new products and services. In order
      for us to achieve market acceptance for our products and services we require
      substantial marketing efforts and the expenditure of significant funds to
      creating both awareness and demand by marketing retailers and consumers. If
      technologies or standards applicable to our products or services become obsolete
      or fail to gain widespread consumer acceptance and we are unable to adopt to
      such changes, then our business and financial results will be materially and
      adversely affected.




**We
      depend on a data transmission infrastructure largely maintained by third parties
      or subject to disruption by events outside our control.**




Our
      success will depend upon the capacity, reliability and security of the
      infrastructure used to carry data between our customers and the Internet. A
      significant portion of that infrastructure is owned by third parties including,
      but not limited to, Level 3 Communications, Inc. and CI2, Inc. Accordingly, we
      have no control over its quality and maintenance. Our operations also depend
      on
      our ability to avoid damages from power losses, telecommunications failures,
      network software flaws, transmission cable cuts, fires, earthquakes, floods
      and
      similar events. The occurrence of any of these events could interrupt our
      services. The failure of the Internet backbone, our servers, or any other link
      in the delivery chain, whether from operational disruption, natural disaster
      or
      otherwise, resulting in an interruption in our operations could have a material
      adverse effect on our business and financial results.




22


**We
      operate in an extremely competitive market and may not be able to compete
      effectively.**




Our
      current and prospective competitors are numerous. The Internet services business
      is highly competitive and there are few significant barriers to entry. All
      of
      our established competitors have substantially greater financial, technical,
      marketing, distribution, personnel and other resources, larger customer bases,
      longer operating histories, greater name recognition and more established
      relationships in the industry than we do. Our current competitors include such
      large companies as Microsoft Corporation, Apple Computer, Inc., and
      RealNetworks, Inc. If the marketplace for streaming media over the Internet
      substantially expands and becomes commercially viable, then any of these
      competitors may expand their services and seek to dominate the marketplace
      preventing us from obtaining any meaningful market share. We intend to compete
      on the terms of price, customer support, technical expertise, ease of use,
      variety of value added services and reliability.




**We
      depend on Winston Johnson, our CEO, and may have difficulty attracting and
      retaining the skilled employees we need to execute our growth
      plans.**




Our
      future success depends on the continued services of Winston Johnson, our CEO,
      as
      well as our other officers. We do not carry key person life insurance on any
      of
      our personnel. Given our early stage and plans for rapid expansion, the loss
      of
      the services of purchasing or any of our executive officers or the loss of
      the
      services of other key employees could have a material adverse effect on our
      business and financial results. Our future success also depends on our ability
      to attract, retain and motivate highly skilled employees, particularly
      marketing, sales, engineering and technical personnel. Competition for employees
      in our industry is intense. We may not be able to retain our key employees
      or
      attract, assimilate or retain other highly qualified employees in the future.
      We
      expect to experience, in the future, difficulty in hiring and retaining highly
      skilled employees.




**Unauthorized
      use of our intellectual property by third parties may adversely affect our
      business.**




We
      regard
      our copyrights, service marks, trademarks, patent applications, trade secrets,
      know-how and other intellectual property as critical to our success.
      Unauthorized use of our intellectual property by third parties may adversely
      affect our business and our reputation. We have filed patent and trademark
      applications and rely on trademark, patent and copyright law, trade secret
      protection and confidentiality and/or license agreements with our employees,
      customers, partners and others to protect our intellectual property rights.
      Despite our precautions, it may be possible for third parties to obtain and
      use
      our intellectual property without authorization. Furthermore, the validity,
      enforceability and scope of protection of intellectual property in
      Internet-related industries are uncertain and still evolving. The laws of some
      foreign countries are uncertain or do not protect intellectual property rights
      to the same extent as do the laws of the United States.




**Defending
      against intellectual property infringement claims could be time consuming and
      expensive and, if we are not successful, could subject us to significant damages
      and disrupt our business.**




We
      cannot
      be certain that our products and services do not or will not infringe valid
      patents, copyrights or other intellectual property rights held by third parties.
      We may be subject to legal proceedings and claims from time to time relating
      to
      the intellectual property of others in the ordinary course of business. We
      may
      incur substantial expenses in defending against these third-party infringement
      claims, regardless of their merit. Successful infringement claims against us
      may
      result in substantial monetary liability or may materially disrupt the conduct
      of our business.




23


**Absence
      of dividends**




We
      have
      never paid any dividends on shares of our Common Stock and do not anticipate
      that we will pay dividends in the foreseeable future. We intend to apply any
      earnings to fund the development of our business. Investment in our Company
      is
      inappropriate if you are seeking current or near term income.




**Our
      dependence on limited number of clients increases the risk of loss of a
      client.**




It
      is
      anticipated that our initial commercial operations will largely depend upon
      our
      relationship with a small number of clients. The termination of business by
      any
      of our initial clients will generally be expected to have a material adverse
      effect on our operations. Our client relationships will generally be subject
      to
      termination by either party without cause on short notice.




**Our
      management has the ability to control almost all matters.**




Winston
      Johnson, Jon Jannotta and Nana Yalley, our Chairman and CEO, President and
      Executive Vice President, respectively, and their affiliates and other officers,
      directors and affiliates of the Company currently own beneficially approximately
      49% of the Company’s shares of Common Stock. Therefore, these stockholders will
      have the ability to elect all of our directors and to control the outcome of
      all
      other issues submitted to our stockholders.




**You
      may expect difficulty of trading and obtaining quotations for common
      stock.**




Our
      Common Stock is currently quoted on the Pink Sheets, LLC. under the symbol
      “WDMGE.” As a result of trading in the over-the-counter market, an investor
      would likely find it more difficult to dispose of, or to obtain quotations
      as to
      the price of the Common Stock.




**Penny
      Stock regulation is expected to adversely affect the market for the Company’s
      securities.**




The
      trading of the our Common Stock is currently subject to Rule 15g-9 promulgated
      under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended for
      non-Nasdaq and non-exchange listed securities. Under such rule, brokers-dealers
      who recommend such securities to persons other than established customers and
      accredited investors must make a special written suitability determination
      for
      the purchaser and receive the purchaser’s written agreement to a transaction
      prior to sale. Securities are exempt from this rule if the market price is
      at
      least $5.00 per share.




The
      Commission has adopted regulations that generally define a “penny stock” to be
      an equity security that has a market price of less than $5.00 per share or
      an
      exercise price of less than $5.00 per share subject to certain exceptions.
      Such
      exceptions include equity securities listed on NASDAQ and equity securities
      issued by an issuer that has (i) net tangible assets of at least $2,000,000,
      if
      such issuer has been in continuous operation for more than three years, or
      (ii)
      net tangible assets of at least $5,000,000, if such issuer has been in
      continuous operation for less than three years, or (iii) average revenue of
      at
      least $6,000,000 for the preceding three years. Unless an exception is
      available, the regulations require the delivery, prior to any transaction
      involving a penny stock, of a risk disclosure schedule explaining the penny
      stock market and the risks associated therewith.




Our
      Common Stock is currently a penny stock as defined in the Exchange Act and
      as
      such, the market liquidity for the Common Stock is limited to the ability of
      broker-dealers to sell Common Stock in compliance with the above-mentioned
      disclosure requirements.




24


**Preferred
      stock may act as an anti-takeover device.**




We
      are
      authorized to issue 5,000,000 shares of preferred stock, $.001 par value. The
      Company has no shares of preferred stock issued and outstanding. The preferred
      stock may be issued in series from time to time with such designations, rights,
      preferences and limitations as our Board of Directors may determine by
      resolution. Unless the nature of a particular transaction and applicable
      statutes require such approval, the Board of Directors has the authority to
      issue these shares without stockholder approval. The potential exists,
      therefore, that preferred stock might be issued which would grant dividend
      preferences, liquidation preferences, voting and other rights to preferred
      stockholders over common stockholders. The issuance of preferred stock may
      have
      the effect of delaying or preventing a change in control of the Company without
      any further action by stockholders.




**Shares
      Eligible For Future Sale**




Of
      the
      shares of the Company’s Common Stock outstanding, approximately 21,600,000 are
“restricted securities,” as that term is defined in the Securities Act, and may
      be sold in compliance with the provisions of Rule 144 of the Securities Act.




**Item
          7.** **Financial
          Statements.**




Our
      audited financial statements and related notes required by this Item 7 begin
      on
      page F-1, following Part III of this report.




**Item
          8.** **Changes
          In and Disagreements With Accountants on Accounting and Financial
          Disclosure.**




On
      March
      25, 2005 Chavez and Koch, CPA’s ("Chavez and Koch"), the independent public
      accountant previously engaged as the principal accountant to audit the Company’s
      financial statements resigned. Chavez and Koch have decided to no longer
      represent public companies and will not be renewing its certification with
      the
      Public Company Accounting Oversight Board. The Company has appointed De Joya
      & Company as its new independent public accountant, effective with respect
      to the Company’s fiscal year ended December 31, 2004. The Company’s change in
      independent public accountant was approved by the full Board of Directors of
      the
      Registrant as of March 28, 2005.




The
      audit
      reports of Chavez and Koch on the financial statements of the Company as of
      and
      for the fiscal years ended December 31, 2002 and 2003 did not contain an adverse
      opinion or disclaimer of opinion, nor were they modified as to uncertainty,
      audit scope or accounting principles, other than to contain an explanatory
      paragraph as to the Company's ability to continue as a going
      concern.




During
      the Company’s two most recent fiscal years and through the date of its Form 8-K,
      there were no disagreements between the Company and Chavez and Koch, whether
      or
      not resolved on any matter of accounting principles or practices, financial
      statement disclosure, or audit scope or procedure, which, if not resolved to
      Chavez and Koch’s satisfaction would have caused Chavez and Koch to make
      reference to the subject matter of the disagreement(s) in connection with its
      reports.




During
      the Company's two most recent fiscal years and through the date of its Form
      8-K,
      the Company did not consult with De Joya & Company with respect to any
      matters or reportable events listed in Item 304(a)(2)(i) and (ii) of Regulation
      S-B.




The
      Company provided Chavez and Koch with a copy of the foregoing disclosures.
      The
      Company requested that Chavez and Koch furnish the Registrant with a letter
      addressed to the Securities and Exchange Commission stating whether they agree
      with the statements that the Company has made in this Item 4.01. A copy of
      Chavez and Koch’s letter response to the Registrant's request was filed with the
      SEC.




25


**Item
          8A.** **Controls
          and Procedures.**




Our
      management, with the participation of our Chief Executive Officer (our principal
      executive and financial officer), evaluated the effectiveness of our disclosure
      controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Securities Exchange Act of 1934), as of December 31, 2004. Based on that
      evaluation, our Chief Executive Officer concluded that our disclosure controls
      and procedures were effective as of that date.




**Item
          8B.** **Other
          Information.**




None




**PART
      III**




**Item
          9.** **Directors,
          Executive Officers, Promoters and Control Persons;** **Compliance
          with Section 16(a) of the Exchange Act.**




Our
      Board
      of Directors elects our executive officers annually. A majority vote of the
      directors who are in office is required to fill vacancies. Each director holds
      office for a term of one year, or until a successor has been duly elected and
      qualified, or until his earlier death, resignation or removal. Our executive
      officers are appointed annually by our Board of Directors and serve at the
      discretion of the Board of Directors. Each director has been elected to the
      Board of Directors pursuant to his employment agreement or consulting agreement.
      Our directors and executive officers are as follows:




**Name**
            
            **Age**
            
            **Principal
                Positions and Offices with our Company**Winston
                Johnson
            
            47
            
            Chairman
                of the Board and Chief Executive OfficerJon
                J. Jannotta
            
            55
            
            PresidentNana
                Yalley
            
            43
            
            Executive
                Vice President




Set
      forth
      below is a brief description of the background of each of our executive officers
      and directors, based on information provided to us by them.




**Winston
      Johnson** has been
      the Chairman of the Board and Chief Executive Officer of the Company since
      December 2003. Mr. Johnson founded Winsonic Holdings, Ltd. in 2002, as a
      successor to a company he founded in 1996, and has been its Chairman of the
      Board and controlling stockholder since then. Mr. Johnson, who started in the
      music, computer science, and communications industries in the 1970s, pioneered
      technological innovations in music, computer and sound engineering such as
      the
      Winsonic Process. The Winsonic Process, a digital compression technology that
      produces a superior sounding product, has been used to enable record and film
      companies to record and distribute high-end voice, data, text, audio and video
      files throughout the world. Winston Johnson’s education includes a B.S. from
      FAMU, additional labs, and studies include FSU, UCLA, Berkley, Stetson
      University, Dartmouth, NASA, USC ETC, Nortel Network, Cisco, Sonet, Stn, Atm,
      Star Hub, DMS 200/300, DMS 500, DSL, PPOE, PPOA, MPLS, OSPF, BGP4, VOIP,
      HDTV transport, e911, video switching, ss7 signaling, cable plant, catv,
      emergency disaster planning, satellite, voice, data, video, fiber optics, micro
      wave, two-way radio, management systems, and billing systems.




26
 
  **Jon
          J. Jannotta** has been
          a director since April 2000, Executive Vice President from April 2000 until
          December 2003 and since then our President. Mr. Jannotta is a licensed
          architect
          and general contractor. Since January 1997, Mr. Jannotta has been a principal
          and director of Jon J. Jannotta Architects-Planners, Inc. Mr. Jannotta
          has
          experience in the practice of architecture, the construction industry and
          urban
          development, and general business administration.


**Nana
      Yalley** has been
      a director since January 2002; Chief Information Officer from September 2001
      until December 2003 and Executive Vice President since December 2003. From
      September 1999 to September 2001, Mr. Yalley was the chief executive officer
      of
      Nexcode Inc., which he co-founded. We acquired Nexcode in August 2001. From
      February 1997 to September 1999, Mr. Yalley was the chief executive officer
      of
      Allnet Broadcasting.com Inc., a producer of digital video and audio compression
      and encryption (software and/or hardware). Mr. Yalley has more than 15 years
      of
      experience in the music and technology industries, having worked as a music
      composer and producer as well as an audio engineer and sound effects designer
      for film and television. Mr. Yalley designed metronome-based midi controller
      software for live music performers, and he built and operated a custom recording
      studio. He is a co-developer of Nexcode’s NetDVD technology.




**Directors**




Our
      bylaws currently provide for a board of directors comprised of a minimum of
      one
      director.




**Board
      Committees**




We
      currently have no audit, compensation or nominating committee or other board
      committee performing equivalent functions. Currently, the entire board of
      directors participates in discussions concerning executive officer compensation.
      Our board of directors has determined that none of its members is an audit
      committee financial expert within the meaning of paragraph (e)(2) of Item 401
      of
      Regulation S-B. There has been no material change to the procedures by which
      stockholders may recommend nominees to our board of directors.




**Director
      Compensation**




We
      currently do not have in effect a policy regarding compensation for serving
      on
      our board of directors. However, we do reimburse our directors for their
      reasonable expenses incurred in attending meetings of our board.




**Legal
      Proceedings**




No
      officer, director, or persons nominated for such positions, and no promoter
      or
      significant employee has been involved in legal proceedings that would be
      material to an evaluation of our management.




**Compliance
      with Section 16(a) of the Exchange Act**




Pursuant
      to Section 16 of the Securities Exchange Act of 1934, our directors and
      executive officers and beneficial owners of more than 10% of our common stock
      are required to file certain reports, within specified time periods, indicating
      their holdings of and transactions in the common stock and derivative
      securities. Based solely on a review of such reports provided to us and written
      representations from such persons regarding the necessity to file such reports,
      we are not aware of any failures to file reports or report transactions in
      a
      timely manner during the our fiscal year ended December 31, 2003, except the
      following: Winston Johnson filed one late Form 4 on October 12, 2004; Nana
      Yalley filed one late Form 4 on October 12, 2004; Jeff B. McConnell, a former
      officer, filed one late Form 3 on October 9, 2004; Jon J. Jannotta filed 3
      late
      Form 4’s on February 4, 2004, March 23, 2004 and October 12, 2004.


27


**Code
      of Ethics**




We
      have
      adopted a Code of Business Conduct and Ethics designed to comply with Item
      406
      of Regulation S-B. A copy of our Code of Business Conduct and Ethics is filed
      as
      an exhibit to our Annual Report on Form 10-KSB for December 31, 2003. We will
      provide a copy of the Code of Ethics, without charge, to any person who sends
      a
      written request addressed to the Secretary, Jon Jonnatta, at 10120 S. Eastern
      Avenue, Suite 200, Las Vegas, NV 89052.




The
      Company intends to disclose any waivers or amendments to its Code of Ethics
      in a
      report on Form 8-K Item 10 filing rather than from its website.




**Item
          10.** **Executive
          Compensation.**




The
      following table sets forth all compensation awarded to, earned by, or paid
      for
      all services rendered to us during the fiscal years ended December 31, 2004,
      2003 and 2002 by those persons who served as chief executive officer during
      our
      2004 fiscal year and each of our other executive officers who earned
      compensation in excess of $100,000 during the year ended December 31,
      2004.




**Summary
      Compensation Table** (1)




**Long-Term
                  Compensation****Annual
                  Compensation**
              
              
              
              
              
              
              
              **Awards****Name
                  and**
                **Principal
                  Position**
              
              **Year**
              
              **Salary**
              
              **Bonus**
              
              
              **All
                  Other Compensation**
              
              
              **Restricted**
                **Stock**
                **Awards**
              
              
              **Shares**
                **Underlying**
                **Options**
              
              
              **All
                  Other**
                **Compensation**Winston
                  Johnson
                CEO
              
              
              2004
                2003
                2002
              
              $
                $
                $
              221,900
                199,200
                -
                  0
                  -
              (2)
                (3)
              
              0
                0
                0
              
              
              0
                0
                0
              
              
              0
                0
                0
              
              
              0
                0
                0
              
              
              0
                0
                0Jon
                  Jannotta
                President
              
              
              2004
                2003
                2002
              
              $
                $
                $
              62,419
                -
                  0
                  -
                -
                  0
                  -
              (3)
              
              0
                0
                0
              
              
              0
                0
                0
              
              $
              360,774
                0
                0
              (4)
              
              0
                0
                0
              
              
              0
                0
                0Nana
                  Yalley
                Executive
                  V.P.
              
              
              2004
                2003
                2002
              
              $
                $
                $
              62,419
                -
                  0
                  -
                -
                  0
                  -
              (3)
              
              0
                0
                0
              
              
              0
                0
                0
              
              $
              765,160
                0
                0
              (5)
              
              0
                0
                0
              
              
              0
                0
                0




(1)
            These
                compensation figures do not include the cost of benefits, including
                premiums for life insurance, and any other perquisites provided by
                us to
                such persons in connection with our business, all of which does not
                exceed
                the lesser of $50,000 or 10% of such person’s annual salary and bonus for
                the subject fiscal year.




(2)
            Total
                compensation consists of $25,000 paid in cash and $196,900 accrued
                and
                unpaid as of December 31, 2004. This $25,000 amount was paid by the
                Company following the merger in October 2004 under a binding offer
                letter
                pursuant to which Mr. Johnson is to receive compensation of $221,900
                per
                annum.


28


(3)
            Accrued
                and unpaid as of December 31, 2004.




(4)
            In
                October 2004, Jon Jannotta was issued 360,774 shares of restricted
                common
                stock for services rendered as an executive bonus in consideration
                of his
                efforts in the procurement and conclusion of the Winsonic Merger.
                These
                shares were fully vested, dividends will be paid on the Shares and
                they
                were valued at the then current market
                price.




(5)
            In
                October 2004, Nana Yalley was issued 1,034,000 shares of restricted
                common
                stock for services rendered as an executive bonus in consideration
                of his
                efforts in the procurement and conclusion of the Winsonic Merger.
                These
                shares were fully vested, dividends will be paid on the shares and
                they
                were valued at the then current market price.




**Option
      Grants in Last Fiscal Year; Aggregated Option Exercises in Last Fiscal Year
      and
      Fiscal Year End Option Values**




In
      October 2002, our stockholders approved our 2002 Employee Stock Incentive Plan.
      Our executive officers are eligible to receive awards under this plan. We did
      not grant any stock options to, nor were any options exercised by, any of our
      executive officers named in the Summary Compensation Table during our fiscal
      year ended December 31, 2004. In addition, none of such named executive officers
      held options to purchase shares of our common stock at the end of our 2004
      fiscal year.




**Aggregated
      Option/Sar Exercises In Last Fiscal Year And Fiscal Year End Option/Sar
      Values**




No
      Named
      Executive Officers exercised options during the fiscal year ended December
      31,
      2004, and did not hold any unexercised options at December 31, 2004.




**Long
      Term Incentive Plans - Awards In The Last Fiscal Year**




The
      following table summarizes for each Named Executive Officer each award under
      any
      long term incentive plan for the year ended December 31, 2004:




**Estimated
                Future Payouts under non-stock price based
                plans****Name**
            **Number
                of shares, units or other rights**
            **Performance
                or other period until maturation or payout**
            **Threshold**
              **($
                or #)**
            **Target
                ($ or #)**
            **Maximum**
              **($
                or #)**None




**Employment
      Agreements**




On
      October 8, 2004, the Company entered into binding offering letters with Winston
      Johnson, as Chairman and CEO, Jon Jannotta, as President, Nana Yalley, as
      Executive Vice President, one former executive officer and two non-executive
      officers. Under the terms of employment, Messrs. Johnson, Jannotta and Yalley
      are to receive base salaries of $290,000, $270,000 and $270,000 per annum,
      respectively, with $7,000 per month deferred until the next funding occurs
      or
      January 1, 2005, whichever occurs first. Each officer is eligible for annual
      incentive bonuses based on performance. Each officer received stock options
      to
      purchase 1,000,000 shares of Common Stock at $1.00 per share with 10% vested
      individually and 90% vested at the rate of 1/12 per month for 12 months that
      vest equally over a twelve month period effective with date of the employment
      agreement. The agreements are terminable at will with or without cause (as
      defined).




29


**Item
          11.** **Security
          Ownership of Certain Beneficial Owners and
          Management.**




Our
      common stock is the only class of our voting securities presently outstanding.




The
      following table sets forth information with respect to the beneficial ownership
      of shares of our common stock as of August 26, 2005, on which date there were
      33,806,962 shares outstanding, by:




·
            each
                person known by us to beneficially own 5% or more of the outstanding
                shares of such class of stock, based on filings with the Securities
                and
                Exchange Commission and certain other
                information,




·
            each
                of our “named executive officers” and directors,
                and




·
            all
                of our executive officers and directors as a
                group.




Beneficial
      ownership is determined in accordance with the rules of the SEC and includes
      voting and investment power. In addition, under SEC rules, a person is deemed
      to
      be the beneficial owner of securities which may be acquired by such person
      upon
      the exercise of options and warrants or the conversion of convertible securities
      within 60 days from the date on which beneficial ownership is to be
      determined.




The
      term
“named executive officers” is defined in the SEC rules as those executive
      officers who are required to be listed in the Summary Compensation Table set
      forth in Item 10 of this report.




Except
      as
      otherwise indicated in the notes to the following table,




·
            we
                believe that all shares are beneficially owned, and investment and
                voting
                power is held by, the persons named as owners,
                and




·
            The
                address for each beneficial owner listed in the table, except where
                otherwise noted, is c/o Winsonic Digital Media Group, Ltd. 260 Peachtree
                Street, Suite 2200, Atlanta, GA
                30303.




30


**Name
                and Address**
            
            **Amount
                and Nature**
              **Of
                Beneficial Ownership**
            
            **Percentage
                of**
              **Outstanding**
              **Shares
                Owned**Winston
                Johnson
            
            
            7,821,700
            (1)
            
            23.1
            %Jon
                J. Jannotta
            
            
            6,208,690
            
            
            18.4
            %Nana
                Yalley
            
            
            2,724,988
            
            
            8.1
            %All
                current directors and executiveofficers
                as a group (3 persons)
            
            
            16,755,378
            
            
            49.6
            %


——————————


*
      Represents less than 1%.




(1)
            Includes
                2 million shares pledged pursuant to a loan made to Mr. Johnson on
                behalf
                of the Company which is currently in default.The
                total liability recorded as of 12/31/04 is $683,726,
                including $200,000 cash received by the Company on
                3/05/04, $400,000 of non cash expense ($600,000 vs. $200,000)
                calculated as of 9/0304 per extension agreement, $19,726 accrued
                interest
                on $600,000 @ 10 percent annually for 9/03/04 - 12/31/04,
                and $64,000
                for 80,000 shares of stock valued @ $.80 per share on
                9/03/04.




The
      following table summarizes information with respect to options under our equity
      compensation plans as of December 31, 2004:





Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
              (a)
            
            Weighted-average
                exercise price of outstanding options, warrants and rights
              (b)
            
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))
              (c)Equity
                compensation plans approved by security holders
            
            -0-
            
            -0-
            
            -0-Equity
                compensation plans not approved by security holders
            
            -0-
            
            -0-
            
            -0-Total
            
            -0-
            
            -0-
            
            -0-




**Item
          12.** **Certain
          Relationships and Related Transactions.**




We
      did
      not enter into any transaction with a related party during the last two years
      requiring disclosure under the rules and regulations adopted by the U.S.
      Securities and Exchange Commission, except in connection with the Winsonic
      Merger, which is discussed under “Merger with Winsonic Digital Cable Systems
      Network, Ltd.” subsection of Item 1 of this report.




31


**Item
          13.** **Exhibits
          and Reports on Form 8-K.**




(a)  Exhibits.


**Exhibit
                      No.**
                  
                  **Description**2.1
                  
                  Agreement
                      and Plan of Reorganization dated July 16, 2004.
                      (4)2.1
                  
                  Agreement
                      and Plan of Reorganization dated, as amended.
                      (7)3.1
                  
                  Articles
                      of Incorporation of Media and Entertainment.com, Inc., dated
                      April 27,
                      2000, as amended through October 17, 2002.
                      (1)3.2
                  
                  First
                      Amendment to Amend and Restated Articles of Incorporation.
                      (5)3.3
                  
                  By-laws
                      of Media and Entertainment.com, Inc.(2)10.1
                  
                  Form
                      of Employment Agreement entered into with each of Roger Paglia,
                      Jon
                      Jannotta, Benedict Paglia, and Bernard Grossman on October
                      1, 2001.(1)10.2
                  
                  Service
                      Agreement dated as of July 18, 2003 by and between Media and
                      Entertainment.com, Inc. and Winsonic Holdings,
                      Ltd.(3)10.3
                  
                  Stock
                      Purchase Agreement dated as of July 18, 2003, by and between
                      Media and
                      Entertainment.com, Inc. and Winsonic Holdings, Ltd.
                      (3)10.4
                  
                  Addendum
                      to the Existing Agreement between Media and Entertainment.com,
                      Inc. and
                      Winsonic Holdings, Ltd., dated December 11, 2003.(3)10.5
                  
                  Amendment
                      Agreement between Media and Entertainment.com, Inc. and Winsonic
                      Holdings,
                      Ltd., dated January 27, 2004.(3)10.6
                  
                  Amendment
                      Agreement between Media and Entertainment.com, Inc. and Winsonic
                      Holdings,
                      Ltd., dated March 29, 2004.(3)10.7
                  
                  Subcontractor
                      Master Consulting Agreement with C12, Inc.
                      (6)10.8
                  
                  Joint
                      Marketing and Development Agreement with C12, Inc.
                      (6)10.9
                  
                  Modification
                      of the Master Purchase Agreement between C12 and Winsonic Holdings.
                      (6)10.10
                  
                  Shareholder
                      Agreement dated October 6, 2004, by and among Media and Entertainment.com,
                      Inc., Winston Johnson, Nana Yalley and Jon Jannotta.
                      (7)10.11
                  
                  Form
                      of Exchange Agreement. (7)10.12
                  
                  Memorandum
                      of Understanding dated February 17, 2005, by and between Winsonic
                      Digital
                      Media Group, Ltd. and Native American Television Network, Inc.
                      (9)10.13
                  
                  Letter
                      of Agreement dated as of March 1, 2005, by and between Winsonic
                      Digital
                      Media Group Ltd. and The Titan Network, LLC.
                      (9)10.14
                  
                  Memorandum
                      of Understanding dated March 12, 2005, by and between Winsonic
                      Digital
                      Media Group, Ltd. and Proactive Media Group, Inc.
                      (9)10.15
                  
                  Agreement
                      dated March 14, 2005, by and between Winsonic Digital Media
                      Group, Ltd.
                      and Lantern Hill Capital.
(9)
  32
 **Exhibit
                    No.**
                  
                  **Description**10.16
                  
                  Exchange
                      Agreement dated as of March 15, 2005, by and among Winsonic
                      Digital Media
                      Group, Ltd., Winsonic Digital Cable Systems Network, Ltd.,
                      Winston Johnson
                      and A. Scott Roderick Investments, LLC. (9)10.17
                  
                  Office
                      Services Agreement dated May 12, 2005 by and between Interactive
                      Worldwide
                      Atlanta - 260 Peachtree LLC and Winsonic Digital Media
                      Group.10.18
                  
                  Office
                      Subleases and Services Agreements between Crowne Office Suites,
                      Inc. at
                      Peachtree Center and Winsonic Digital Media Group, Ltd. dated
                      December 22,
                      2004 and January 6, 2005.10.19
                  
                  Standard
                      Industrial/ Commercial Multi-Tenant Lease - dated January 10,
                      2005, by and
                      between Beverly Lion LLC and Winsonic Digital Media
                      Group.10.20
                  
                  Binding
                      Employment Offering Letter dated October 8, 2004 by and between
                      the
                      Registrant and Winston Johnson.10.21
                  
                  Binding
                      Employment Offering Letter dated October 8, 2004 by and between
                      the
                      Registrant and Jon Jannotta.10.22
                  
                  Binding
                      Employment Offering Letter dated October 8, 2004 by and between
                      the
                      Registrant and Nana Yalley.10.23
                  
                  Addendum
                      to the June 9, 2003 Master Service Agreement with Level 3 Communications
                      keeping the agreement in full effect On August 19,
                      2004.10.24
                  
                  Service
                      schedule for (3) LinkSM Global Wavelength Service - IRU On
                      August 17, 200410.25
                  
                  Contract
                      with Sun Micro Systems as a Sun iforce Partner On May 27,
                      2005.14.1
                  
                  Code
                      of Business Conduct and Ethics.(3)16.1
                  
                  Letter
                      from Chavez and Koch dated March 31, 2005.
                      (8)*21.1
                  
                  List
                      of subsidiaries of Registrant.*31.1
                  
                  Certification
                      of the Chief Executive Officer required by Rule 13a-14(a) or
                      Rule
                      15d-14(a)*31.2
                  
                  Certification
                      of the Chief Financial Officer required by Rule 13a-14(a) or
                      Rule
                      15d-14(a)*32.1
                  
                  Certification
                      of the Chief Executive Officer required by Rule 13a-14(b) or
                      Rule
                      15d-14(b) and 18 U.S.C. 1350*32.2
                  
                  Certification
                      of the Chief Financial Officer required by Rule 13a-14(b) or
                      Rule
                      15d-14(b) and 18 U.S.C. 1350
  33


_________________


(1)
                  Incorporated
                      herein by reference to the Registrant’s Annual Report on Form 10-KSB for
                      the year ended December 31,
                      2002.


(2)
            Incorporated
                herein by reference to the Registrant’s Form 10-SB filed on January 17,
                2001.


(3)
            Incorporated
                herein by reference to the Registrant’s Annual Report on Form 10-KSB for
                the year ended December 31, 2003.


(4)
            Incorporated
                herein by reference to the Registrant’s Form 8-K for July 16,
                2004.


(5)
            Incorporated
                herein by reference to the Registrant’s Form 8-K for November 24,
                2004.


(6)
            Incorporated
                herein by reference to the Registrant’s Form 8-K for December 10,
                2004.


(7)
            Incorporated
                herein by reference to the Registrant’s Form 8-K/A Amendment No. 1 for
                July 16, 2004.


(8)
            Incorporated
                herein by reference to the Registrant’s Form 8-K for March 25,
                2005.


(9)
            Incorporated
                herein by reference to the Registrant’s Form 8-K for July 7, 2004 filed on
                March 31, 2005.


(10)
            Incorporated
                herein by reference to the Registrant’s Form 8-K Current Report on Form
                8-K/A Amendment No. 2 for July 16, 2004 filed on December 23,
                2004.





* Filed
      herewith.




(b)  Reports
      on Form 8-K.




1.  Current
      Report on Form 8-K/A Amendment No. 1 for July 16, 2004 filed on October 15,
      2004.




2.  Current
      Report on Form 8-K for December 10, 2004 filed on December 16,
      2004.




3.  Current
      Report on Form 8-K for December 3, 2004 filed on December 8, 2004.




4.  Current
      Report on Form 8-K for November 24, 2004 filed on November 29,
      2004.




5.  Current
      Report on Form 8-K for November 5, 2004 filed on November 9,
      2004.




**Item
          14.** **Principal
          Accountant Fees and Services.**




The
      aggregate fees billed by our independent auditors, Chavez & Koch, Business
      Consultants and CPA’s, Ltd., for each of our last two fiscal years are as
      follows:




**2004**
            
            **2003**Audit
                Fees
            
            $
            87,551.17
            (1)
            $
            9,300Audit-Related
                Fees
            
            $
            -
                0
                -
            
            $
            -
                0
                -Tax
                Fees
            
            $
            -
                0
                -
            
            $
            -
                0
                -All
                Other Fees
            
            $
            -
                0
                -
            
            $
            -
                0
                -





(1)
            Does
                not include audit fees to be paid in 2005 to the Company’s current
                auditors, DeJoya & Company and accountants, Bennett Thrasher for the
                audit of the Company’s financial statements for December 31, 2004, but
                does include fees related to the May 31, 2004, December 31, 2003
&
                December 31, 2002 audit from the previous auditors, Chavez &
                Koch.




We
      do not
      have audit committee pre-approval policies and procedures described in paragraph
      (c)(7)(i) of Rule 2-01 of Regulation S-X.





34




**SIGNATURES**




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




**WINSONIC
              DIGITAL MEDIA GROUP, LTD.**Date: August
              25, 2005
            By:
            /s/ Winston
              JohnsonWinston
              JohnsonChief
              Executive Officer






In
      accordance with the 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.




Chairman
                      of the Board, and
                    Chief
                      Executive Officer, Principal Executive
                    and
                      Financial Officer and Director
                  
                  August
                      25, 2005Winston JohnsonPresident
                      and Director
                  
                  August
                      25, 2005Jon
                      J. JannottaExecutive
                      Vice President, Director
                  
                  August
                      25, 2005Nana
                      Yalley


35





**Media
      and Entertainment.com, Inc.**





Annual
      Report on Form 10-KSB for the


Year
      Ended December 31, 2004





**EXHIBIT
      INDEX**





**Exhibit
                No.**
            
            **Description**21.1
            
            List
                of subsidiaries of Registrant.31.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer required
                by
                Rule 13a-14(a) or Rule 15d-14(a)32.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer required
                by
                Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C.
                1350











36





WINSONIC
        DIGITAL MEDIA GROUP, LTD.
 
 (A
        DEVELOPMENT STAGE COMPANY)
 
 AUDITED
        FINANCIAL STATEMENTS
 
 FOR
        THE TWELVE MONTHS ENDED DECEMBER 31, 2004 & 2003
  
  **CONTENTS**
 
 **INDEPENDENT
                    AUDITORS’ REPORT****FINANCIAL
                    STATEMENTS:**Balance
                    Sheets
                F-1Statements
                    of Operations and Accumulated Deficit
                F-2Statements
                    of Changes in Stockholders’ Equity (Deficit)
                F-3
                    —
                    F-6Statements
                    of Cash Flows
                F-7**NOTES
                    TO FINANCIAL STATEMENTS:**
                F-8
                    — F-19
 ***De
              Joya & Company***
 **Certified
              Public Accountants & Consultants**
 **2425
              W. Horizon Ridge Parkway**
 **Henderson,
              Nevada 89052**
  REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
        the
        Board of Directors
 Winsonic
        Digital Media Group, Ltd.
 (A
        Development Stage Company)
 Atlanta,
        Georgia
 
 We
        have
        audited the accompanying balance sheet of Winsonic Digital Media Group, Ltd.
        (a
        development stage company) as of December 31, 2004 and the related
        statements of operations, stockholders’ deficit, and cash flows for the year the
        ended December 31, 2004 and for the period from September 10, 2002 (Inception)
        through December 31, 2004. These financial statements are the responsibility
        of
        the Company’s management. Our responsibility is to express an opinion on these
        financial statements based on our audit.
 
 We
        conducted our audit in accordance with standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the consolidated financial statements. An audit also includes
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall consolidated financial statement
        presentation. We believe that our audit provides a reasonable basis for our
        opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Winsonic Digital Media Group,
        Ltd.
        (a development stage company) as of December 31, 2004, and the results
        of
        its operations and cash flows for the year the ended December 31, 2004 and
        for
        the period from September 10, 2002 (Inception) through December 31, 2004,
        in
        conformity with accounting principles generally accepted in the United
        States.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 6 to the financial
        statements, the Company has suffered recurring losses from operations and
        accumulated deficit of $7,864,145, which raise substantial doubt about its
        ability to continue as a going concern. Management's plans regarding those
        matters also are described in Note 6. The financial statements do not include
        any adjustments that might result from the outcome of this uncertainty.
 
 
 /s/
        De
        Joya & Company
 De
        Joya
& Company
 August
        16, 2005
 Henderson,
        Nevada
 
 REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To
        the
        Board of Directors of
 Winsonic
        Digital Media Group, LTD.:
 
 We
        have
        audited the accompanying balance sheet of Winsonic Digital Media Group, LTD.
        as
        of December 31, 2003, and the related statement of operations, stockholders’
        equity, and cash flows for the year then ended. These financial statements
        are
        the responsibility of the Company's management. Our responsibility is to
        express
        an opinion on these financial statements based on our audits.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audit provides a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of the Company as of December 31,
        2003, and the results of its operations and its cash flows for the year ended
        December 31, 2003, in conformity with U.S. generally accepted accounting
        principles.
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As disclosed in Note 6 to these financial
        statements, the Company’s ability to continue as a going concern is contingent
        upon the successful completion of additional financing arrangements and its
        ability to achieve and maintain profitable operations. This raises substantial
        doubt about its ability to continue as a going concern. Management’s plan in
        regards to this issue is also described in Note 6. The financial statements
        do
        not include any adjustments that might result from the outcome of this
        uncertainty.
 
 As
        discussed in Note 12 to the financial statements, certain errors resulting
        from
        the incorrect capitalization of consulting and financial service expenses
        and
        the understatement of previously reported interest expenses and issuance
        of
        shares of common stock were discovered by management of the Company during
        the
        current year. Accordingly, adjustments have been made as of December 31,
        2003 to
        correct capitalized expenses, outstanding loan balances, accumulated deficit,
        and the number of shares of common stock outstanding.
 
 
 Chavez
        & Koch, CPA’s
  August
        16, 2005
 Henderson,
        Nevada
 
 **WINSONIC
                      DIGITAL MEDIA GROUP, LTD.**
                    **(A
                      DEVELOPMENT STAGE COMPANY)**
                    **BALANCE
                      SHEETS**
                    **AS
                      OF DECEMBER 31, 2004 & 2003 (Restated)****2004**
                  ****
                  **2003****(Restated)****ASSETS**ASSETS:Current
                    assets:Cash
                  
                  
                  
                  
                  $
                  436,749
                  
                  $
                  -Due
                      from stockholder - related party
                  
                  
                  
                  
                  
                  —
                  
                  
                  23,227Deposit
                  
                  
                  
                  
                  
                  82,490
                  
                  
                  60,000Total
                      current assets
                  
                  
                  
                  
                  
                  519,239
                  
                  
                  83,227Fixed
                      assets:Computer
                      equipment
                  
                  
                  
                  
                  
                  1,577,269
                  
                  
                  1,577,269Infrastructure
                  
                  
                  
                  
                  
                  320,000
                  
                  
                  320,000Software
                  
                  
                  
                  
                  
                  160,000
                  
                  
                  160,000Furniture
                      & fixtures
                  
                  
                  
                  
                  
                  13,040
                  
                  
                  13,040Less:
                      accumulated depreciation
                  
                  
                  
                  
                  
                  (550,955
                  )
                  
                  (208,600
                  )Total
                      fixed assets
                  
                  
                  
                  
                  
                  1,519,354
                  
                  
                  1,861,709TOTAL
                      ASSETS
                  
                  
                  
                  
                  $
                  2,038,593
                  
                  $
                  1,944,936**LIABILITIES
                      AND STOCKHOLDERS' DEFICIT**LIABILITIES:Current
                      liabilities:Accounts
                      payable and accrued expenses
                  
                  
                  
                  
                  $
                  1,514,625
                  
                  $
                  1,230,075Bank
                      overdraft
                  
                  
                  
                  
                  
                  **—**
                  
                  
                  4,205Accrued
                      payroll and related taxes
                  
                  
                  
                  
                  
                  781,575
                  
                  
                  249,000Legal
                      settlement liabilities
                  
                  
                  
                  
                  
                  1,020,000
                  
                  
                  —Loans
                      payable
                  
                  
                  
                  
                  
                  357,506
                  
                  
                  158,529Loan
                      payable -related party
                  
                  
                  
                  
                  
                  683,726
                  
                  
                  —Note
                      payable to related party
                  
                  
                  
                  
                  
                  —
                  
                  
                  5,450Note
                      payable - Digital Services International, Inc.
                  
                  
                  
                  
                  
                  847,000
                  
                  
                  —Accrued
                      interest on notes payable
                  
                  
                  
                  
                  
                  101,640
                  
                  
                  —Convertible
                      debentures, net unamortized debt discount of
                      $562,577
                  
                  
                  
                  
                  
                  254,284
                  
                  
                  —Total
                      current liabilities
                  
                  
                  
                  
                  
                  5,560,356
                  
                  
                  1,647,259Long-Term
                      liabilities:Notes
                      Payable - Digital Services International, Inc.
                  
                  
                  
                  
                  
                  —
                  
                  
                  847,000Total
                      long-term liabilities
                  
                  
                  
                  
                  
                  —
                  
                  
                  847,000TOTAL
                      LIABILITIES
                  
                  
                  
                  
                  
                  5,560,356
                  
                  
                  2,494,259Stockholders'
                      deficit:Common
                        stock, $0.001 par value, 50,000,000 sharesauthorized,
                        33,620,884and 6,004,000shares
                        issued andoutstanding at December 31, 2004 and 2003,
                        respectively
                  
                  
                  
                  
                  
                  33,621
                  
                  
                  6,004Additional
                      paid-in capital
                  
                  
                  
                  
                  
                  3,488,761
                  
                  
                  —Warrants
                      for common stock, $1.00 per share
                  
                  
                  
                  
                  
                  820,000
                  
                  
                  2,000,100Accumulated
                      deficit during development stage
                  
                  
                  
                  
                  
                  (7,864,145
                  )
                  
                  (2,555,427
                  )Total
                      stockholders' deficit
                  
                  
                  
                  
                  
                  (3,521,763
                  )
                  
                  (549,323
                  )TOTAL
                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                  
                  
                  
                  
                  $
                  2,038,593
                  
                  $
                  1,944,936
   The
          accompanying notes to the financial statements should be
 read
          in conjunction with these Balance Sheets.
 F-1
  **WINSONIC
                    DIGITAL MEDIA GROUP, LTD.**
                  **(A
                    DEVELOPMENT STAGE COMPANY)**
                  **STATEMENT
                    OF OPERATIONS**
                  **FOR
                    THE YEARS ENDED DECEMBER 31, 2004 & 2003
                    (Restated)**
                  **AND
                    FROM INCEPTION TO DECEMBER 31, 2004****For
                    the year ended December 31,**
                
                **Inception
                    to****2004**
                
                **2003**
                
                **December
                    31, 2004****(Restated)**REVENUE
                
                $
                25,000
                
                $
                32,811
                
                $
                57,811COST
                    OF GOODS SOLD
                
                
                296,120
                
                
                409,166
                
                
                707,956GROSS
                    PROFIT
                
                
                (271,120
                )
                
                (376,355
                )
                
                (650,145
                )EXPENSES:Selling,
                    general and administrative
                
                
                1,509,161
                
                
                865,315
                
                
                3,013,219Selling,
                    general and administrative, related party
                
                
                346,738
                
                
                205,204
                
                
                551,942Consulting
                    Services - related party
                
                
                1,125,934
                
                
                —
                
                
                1,125,934Depreciation
                    and amortization expense
                
                
                349,778
                
                
                208,600
                
                
                558,378Total
                    expenses
                
                
                3,331,611
                
                
                1,279,119
                
                
                5,249,473OPERATING
                    INCOME (LOSS)
                
                
                (3,602,731
                )
                
                (1,655,474
                )
                
                (5,899,618
                )OTHER
                    INCOME/(EXPENSES):Interest
                    expense
                
                
                (795,711
                )
                
                (234,524
                )
                
                (1,030,235
                )Legal
                    Settlement Costs
                
                
                (1,020,000
                )
                
                —
                
                
                (1,020,000
                )Interest
                    income
                
                
                257
                
                
                —
                
                
                257Other
                    income(expenses)
                
                
                109,467
                
                
                (24,016
                )
                
                85,451Total
                    other income/(expenses)
                
                
                (1,705,987
                )
                
                (258,540
                )
                
                (1,964,527
                )NET
                    LOSS BEFORE PROVISION FOR INCOME TAXES
                
                
                (5,308,718
                )
                
                (1,914,014
                )
                
                (7,864,145
                )PROVISION
                    FOR INCOME TAXES
                
                
                —
                
                
                —
                
                
                —NET
                    LOSS
                
                $
                (5,308,718
                )
                $
                (1,914,014
                )
                $
                (7,864,145
                )Basic
                        weighted average number ofcommon shares
                        outstanding
                
                
                15,881,606
                
                
                6,004,200Net
                    loss per basic and diluted common share
                
                $
                (0.33
                )
                $
                (0.32
                )
   The
            accompanying notes to the financial statements should be
 read
            in conjunction with these Statement of
            Operations.
 F-2
  **WINSONIC
                    DIGITAL MEDIA GROUP, LTD.**
                  **(A
                    DEVELOPMENT STAGE COMPANY)**
                  **STATEMENT
                    OF STOCKHOLDERS' DEFICIT****Accumulated****Additional**
                
                
                
                **Deficit
                    During**
                
                **Total****Common
                    Stock**
                
                **Paid-in**
                
                
                
                **Development**
                
                **Stockholders'****Shares**
                
                **Amount**
                
                **Capital**
                
                **Warrants**
                
                **Stage**
                
                **Deficit**Balance,
                    September 10, 2002 (Inception)
                
                
                —
                
                $
                —
                
                $
                —
                
                
                
                
                $
                —
                
                $
                —Issuance
                    of stock warrants
                
                
                —
                
                
                —
                
                
                —
                
                
                990,600
                
                
                —
                
                
                990,600Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (641,413
                )
                
                (641,413
                )Balance,
                    December 31, 2002
                
                
                —
                
                
                —
                
                
                —
                
                
                990,600
                
                
                (641,413
                )
                
                349,187Issuance
                    of common stock to founder for services
                
                
                6,004,200
                
                
                6,004
                
                
                —
                
                
                
                
                
                
                
                
                6,004Issuance
                    of stock warrants
                
                
                —
                
                
                —
                
                
                —
                
                
                1,009,500
                
                
                —
                
                
                1,009,500Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (1,914,014
                )
                
                (1,914,014
                )Balance,
                    December 31, 2003 (Restated)
                
                
                6,004,200
                
                
                6,004
                
                
                —
                
                
                2,000,100
                
                
                (2,555,427
                )
                
                (549,323
                )Issuance
                      of common stock for services, $0.75average price per
                      share
                
                
                1,980,946
                
                
                1,981
                
                
                1,488,328
                
                
                —
                
                
                —
                
                
                1,490,309Issuance
                      of common stock in satisafaction of debts of$331,000 and deemed
                      interest of $242,500
                
                
                758,000
                
                
                758
                
                
                572,742
                
                
                —
                
                
                —
                
                
                573,500Exercise
                      of stock warrants for common stock, $1.00price per
                      share
                
                
                921,600
                
                
                922
                
                
                920,678
                
                
                (921,600
                )
                
                —
                
                
                —Conversion
                    of stock warrants to debt
                
                
                —
                
                
                —
                
                
                60,000
                
                
                (258,500
                )
                
                —
                
                
                (198,500
                )Issuance
                    of common stock related to reverse-merger
                
                
                23,956,138
                
                
                23,956
                
                
                (123,487
                )
                
                —
                
                
                —
                
                
                (99,531
                )Debt
                    discount related to convertible debentures
                
                
                —
                
                
                —
                
                
                570,500
                
                
                —
                
                
                —
                
                
                570,500Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (5,308,718
                )
                
                (5,308,718
                )Balance,
                    December 31, 2004
                
                
                33,620,884
                
                $
                33,621
                
                $
                3,488,761
                
                $
                820,000
                
                $
                (7,864,145
                )
                $
                (3,521,763
                )
   The
            accompanying notes to the financial statements should be
 read
            in conjunction with this statement of Stockholders'
            Deficit
 F-3
  **WINSONIC
                    DIGITAL MEDIA GROUP, LTD.**
                    **(A
                      DEVELOPMENT STAGE COMPANY)**
                    **STATEMENT
                      OF CASH FLOWS**
                    **FOR
                      THE YEARS ENDED DECEMBER 31, 2004 & 2003
                      (Restated)**
                    **AND
                      FROM INCEPTION TO DECEMBER 31, 2004****Inception
                    to****For
                    the year ended December 31,**
                
                **December
                    31,****2004**
                
                
                
                **2003**
                
                **2004****(Restated)****CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    (loss)
                
                $
                (5,308,718
                )
                
                
                
                $
                (1,914,014
                )
                $
                (7,864,145
                )Adjustments
                    to reconcile net lossto
                    net cash used by operations:Depreciation
                
                
                349,778
                
                
                
                
                
                208,600
                
                
                558,378Stock
                    based compensation
                
                
                1,490,809
                
                
                
                
                
                6,004
                
                
                1,496,813Change
                    in operating assets and liabilities:Decrease
                    in due from stockholder
                
                
                23,227
                
                
                
                
                
                289,673
                
                
                —(Increase)
                    decrease in deposit
                
                
                (22,490
                )
                
                
                
                
                14,405
                
                
                (82,490
                )Increase
                    (decrease) in bank overdraft
                
                
                (4,205
                )
                
                
                
                
                4,205
                
                
                —Increase
                    in accounts payable and accrued expenses
                
                
                727,019
                
                
                
                
                
                1,209,164
                
                
                1,758,594Increase
                    accrued payroll and related taxes
                
                
                532,575
                
                
                
                
                
                199,200
                
                
                781,575Increase
                    in legal settlement liabilities
                
                
                1,020,000
                
                
                
                
                
                —
                
                
                1,020,000Increase
                    in interest payable
                
                
                101,640
                
                
                
                
                
                —
                
                
                101,640**Net
                    cash provided by (used in) operating activities**
                
                
                **(1,090,365**
                **)**
                
                
                
                
                **17,237**
                
                
                **(2,229,635**
                **)****CASH
                    FLOWS FROM INVESTING ACTIVITIES:**Purchase
                    of fixed assets
                
                
                —
                
                
                
                
                
                (2,070,309
                )
                
                (2,070,309
                )**Net
                    cash used in investing activities**
                
                
                **—**
                
                
                
                
                
                **(2,070,309**
                **)**
                
                **(2,070,309**
                **)****CASH
                    FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                    from loans payable
                
                
                31,977
                
                
                
                
                
                138,529
                
                
                389,006Proceeds
                    from loan payable - related party
                
                
                683,726
                
                
                
                
                
                —
                
                
                683,726Proceeds
                    fron note payable - related party
                
                
                —
                
                
                
                
                
                5,450
                
                
                5,450Payment
                    on note payable - related party
                
                
                (5,450
                )
                
                
                
                
                —
                
                
                (5,450
                )Proceeds
                    from note payable - Digital ServicesInternational,
                    Inc.
                
                
                —
                
                
                
                
                
                847,000
                
                
                847,000Proceeds
                    from convertible debentures
                
                
                816,861
                
                
                
                
                
                —
                
                
                816,861Proceeds
                    from warrants fro common stock
                
                
                —
                
                
                
                
                
                1,009,500
                
                
                2,000,100**Net
                    cash provided by financing activities**
                
                
                **1,527,114**
                
                
                
                
                
                **2,000,479**
                
                
                **4,736,693****NET
                    INCREASE (DECREASE) IN CASH**
                
                
                **436,749**
                
                
                
                
                
                **(52,593**
                **)**
                
                **436,749****CASH,
                    BEGINNING OF PERIOD**
                
                
                **—**
                
                
                
                
                
                **52,593**
                
                
                **—****CASH,
                    END OF PERIOD**
                
                **$**
                **436,749**
                
                
                
                
                **$**
                **—**
                
                **$**
                **436,749****SUPPLEMENTARY
                    INFORMATION:**Interest
                    paid
                
                $
                —
                
                
                
                
                $
                —
                
                $
                —Income
                    taxes paid
                
                $
                —
                
                
                
                
                $
                —
                
                $
                —
   The
            accompanying notes to the financial statements should be
 read
            in conjunction with these statement of Cash
            Flows.
 F-4
  **WINSONIC
                    DIGITAL MEDIA GROUP, LTD.**
                  **(A
                      DEVELOPMENT STAGE COMPANY)**
                    **STATEMENT
                      OF CHANGES IN STOCKHOLDERS' DEFICIT****Accumulated****Deficit**
                ******Common
                    Stock**
                
                **Additional**
                
                
                
                
                ****
                **during**
                ****
                **Tota**l**Shares**
                
                **Amount**
                
                **Paid
                        In**Capital
                
                **Warrants**
                
                **Deferred**Compensation
                
                **Development**Stage
                
                **Stockholders'**Deficit**Balance
                    at September 10, 2002 (Inception date)**
                
                **0**
                
                **0**
                
                **0**
                
                **0**
                
                **0**
                
                **0**
                
                **0**Issuance
                    of Stock Warrants
                
                
                —
                
                
                —
                
                
                —
                
                
                990,600
                
                
                —
                
                
                —
                
                
                990,600Net
                    income (loss)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (641,413
                )
                
                (641,413
                )**Balance
                    at December 31, 2002**
                
                
                **—**
                
                
                **—**
                
                
                **—**
                
                
                **990,600**
                
                
                **—**
                
                
                **(641,413**
                **)**
                
                **349,187**DSI
                    - Stock Warrants
                
                
                
                
                
                
                
                
                
                
                
                820,000
                
                
                
                
                
                
                
                
                820,000Issuance
                    of Stock Warrants
                
                
                
                
                
                
                
                
                —
                
                
                189,500
                
                
                
                
                
                
                
                
                189,500Winston
                    Johnson
                
                
                6,004,200
                
                
                6,004
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                6,004Net
                    income (loss)
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (1,914,014
                )
                
                (1,914,014
                )**Balance
                    at December 31, 2003 (Restated)**
                
                
                **6,004,200**
                
                
                **6,004**
                
                
                **—**
                
                
                **2,000,100**
                
                
                **—**
                
                
                **(2,555,427**
                **)**
                
                **(549,323**
                **)****Common
                    Stock Issued for Services:**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                —**-
                    A) Related Parties**
                
                
                —
                
                
                —
                
                
                —
                
                
                
                
                
                
                
                
                
                
                
                —Nana
                    Yalley
                
                
                1,034,000
                
                
                1,034
                
                
                764,126
                
                
                
                
                
                
                
                
                
                
                
                765,160Jon
                    Jannotta
                
                
                487,532
                
                
                488
                
                
                360,286
                
                
                
                
                
                
                
                
                
                
                
                360,774**1,521,532**
                
                
                **1,522**
                
                
                **1,124,412**
                
                
                **—**
                
                
                **—**
                
                
                **—**
                
                
                **1,125,934****-
                    B) Unrelated Parties**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                —Scott
                    Rederick
                
                
                100,000
                
                
                100
                
                
                73,900
                
                
                
                
                
                
                
                
                
                
                
                74,000Andy
                    Gobatsos
                
                
                20,000
                
                
                20
                
                
                14,780
                
                
                
                
                
                
                
                
                
                
                
                14,800Rick
                    Bennett
                
                
                20,000
                
                
                20
                
                
                14,980
                
                
                
                
                
                
                
                
                
                
                
                15,000Dee
                    Calihan
                
                
                20,000
                
                
                20
                
                
                14,980
                
                
                
                
                
                
                
                
                
                
                
                15,000Cohen
                    Pollock
                
                
                50,000
                
                
                50
                
                
                37,450
                
                
                
                
                
                
                
                
                
                
                
                37,500Pam
                    Harris
                
                
                10,000
                
                
                10
                
                
                7,490
                
                
                
                
                
                
                
                
                
                
                
                7,500Rick
                    Fuqak
                
                
                150,000
                
                
                150
                
                
                112,350
                
                
                
                
                
                
                
                
                
                
                
                112,500Melvin
                    Cooper
                
                
                10,000
                
                
                10
                
                
                7,490
                
                
                
                
                
                
                
                
                
                
                
                7,500Beverly
                    Harper
                
                
                56,200
                
                
                56
                
                
                56,144
                
                
                
                
                
                
                
                
                
                
                
                56,200Drew
                    Goya
                
                
                150,000
                
                
                150
                
                
                149,850
                
                
                (150,000
                )
                
                
                
                
                
                
                
                —Beverly
                    Harper
                
                
                7,700
                
                
                8
                
                
                7,692
                
                
                (7,700
                )
                
                
                
                
                
                
                
                —Beverly
                    Lion, LLC
                
                
                63,900
                
                
                64
                
                
                63,836
                
                
                (63,900
                )
                
                
                
                
                
                
                
                —SBK
                
                
                23,214
                
                
                23
                
                
                24,352
                
                
                
                
                
                
                
                
                
                
                
                24,375**681,014**
                
                
                **681**
                
                
                **585,294**
                
                
                **(221,600**
                **)**
                
                **—**
                
                
                **—**
                
                
                **364,375****Common
                    Stock Issued to Settle Debt**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                —**-
                    A) Related Parties**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                —**Nana
                    Yalley**
                
                
                **75,000**
                
                
                **75**
                
                
                **56,175**
                
                
                
                
                
                
                
                
                
                
                
                **56,250****-
                    B) Unrelated Parties**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                —Effective
                    Ventures
                
                
                500,000
                
                
                500
                
                
                374,500
                
                
                
                
                
                
                
                
                
                
                
                375,000James
                    Yates
                
                
                6,000
                
                
                6
                
                
                4,494
                
                
                
                
                
                
                
                
                
                
                
                4,500Steve
                    Matilla
                
                
                25,000
                
                
                25
                
                
                18,725
                
                
                
                
                
                
                
                
                
                
                
                18,750Charles
                    Phillips
                
                
                15,000
                
                
                15
                
                
                11,235
                
                
                
                
                
                
                
                
                
                
                
                11,250Bob
                    Smith
                
                
                25,000
                
                
                25
                
                
                18,725
                
                
                
                
                
                
                
                
                
                
                
                18,750Tracy
                    Langford - Notes Payable
                
                
                9,000
                
                
                9
                
                
                6,741
                
                
                
                
                
                
                
                
                
                
                
                6,750Jimmy
                    Witherspoon - Notes Payable
                
                
                3,000
                
                
                3
                
                
                2,247
                
                
                
                
                
                
                
                
                
                
                
                2,250Claude
                    Thompson - Notes Payable
                
                
                15,000
                
                
                15
                
                
                11,235
                
                
                
                
                
                
                
                
                
                
                
                11,250Bernice
                    Davis -Notes Payable
                
                
                15,000
                
                
                15
                
                
                11,235
                
                
                
                
                
                
                
                
                
                
                
                11,250Due
                    to Ron Brown
                
                
                50,000
                
                
                50
                
                
                37,450
                
                
                
                
                
                
                
                
                
                
                
                37,500Angela
                    Clayton
                
                
                20,000
                
                
                20
                
                
                19,980
                
                
                
                
                
                
                
                
                
                
                
                20,000Shahram
                    Ravanshen
                
                
                210,000
                
                
                210
                
                
                209,790
                
                
                (210,000
                )
                
                
                
                
                
                
                
                —Shahram
                    Ravanshen
                
                
                100,000
                
                
                100
                
                
                99,900
                
                
                (100,000
                )
                
                
                
                
                
                
                
                —Mike
                    Nazarain
                
                
                50,000
                
                
                50
                
                
                49,950
                
                
                (50,000
                )
                
                
                
                
                
                
                
                —Emmitt
                    McHenry
                
                
                275,000
                
                
                275
                
                
                274,725
                
                
                (275,000
                )
                
                
                
                
                
                
                
                —Paul
                    Hiles
                
                
                45,000
                
                
                45
                
                
                44,955
                
                
                (45,000
                )
                
                
                
                
                
                
                
                —Jhane
                    Issacs
                
                
                20,000
                
                
                20
                
                
                19,980
                
                
                (20,000
                )
                
                
                
                
                
                
                
                —**1,383,000**
                
                
                **1,383**
                
                
                **1,215,867**
                
                
                **(700,000**
                **)**
                
                **—**
                
                
                **—**
                
                
                **517,250**—**Warrants
                    not exercised:**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                —Steve
                    Castor
                
                
                
                
                
                
                
                
                
                
                
                (20,000
                )
                
                
                
                
                
                
                
                (20,000
                )Mike
                    Mavilia
                
                
                
                
                
                
                
                
                
                
                
                (20,000
                )
                
                
                
                
                
                
                
                (20,000
                )John
                    Ulrich
                
                
                
                
                
                
                
                
                
                
                
                (42,500
                )
                
                
                
                
                
                
                
                (42,500
                )Roberr
                    Cozzi
                
                
                
                
                
                
                
                
                
                
                
                (11,000
                )
                
                
                
                
                
                
                
                (11,000
                )Philip
                    Berry
                
                
                
                
                
                
                
                
                
                
                
                (30,000
                )
                
                
                
                
                
                
                
                (30,000
                )Ron
                    Berry
                
                
                
                
                
                
                
                
                
                
                
                (25,000
                )
                
                
                
                
                
                
                
                (25,000
                )Elaine
                    Berry
                
                
                
                
                
                
                
                
                
                
                
                (25,000
                )
                
                
                
                
                
                
                
                (25,000
                )Office
                    Pros Network
                
                
                
                
                
                
                
                
                
                
                
                (25,000
                )
                
                
                
                
                
                
                
                (25,000
                )**(198,500**
                **)**
                
                
                
                
                
                
                
                **(198,500**
                **)**
   The
            accompanying notes to the financial statements should be
 read
            in conjunction with this statement of changes in
            Stockholders' Deficit
 F-5
  **WINSONIC
                      DIGITAL MEDIA GROUP, LTD.**
                    **(A
                        DEVELOPMENT STAGE COMPANY)**
                      **STATEMENT
                        OF CHANGES IN STOCKHOLDERS' DEFICIT**
  **Common
                      Stock**
                  
                  **Additional**
                  
                  
                  
                  
                  
                  **Accumulated** Deficitduring
                  
                  **Tota**l**Shares**
                  
                  **Amount**
                  
                  **Paid
                        In**Capital
                  
                  **Warrants**
                  
                  **Deferred**Compensation
                  
                  **Development**Stage
                  
                  **Stockholders'**Deficit**Adjustments
                      to Paid in Capital:**
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  —Remove
                      Emmitt McHenry warrant from Due to Account
                  
                  
                  
                  
                  
                  —
                  
                  —
                  
                  
                  
                  
                  
                  —Reclass
                      Yalley shares from compensation expense; was for settlement
                      of
                      debt
                  
                  
                  
                  
                  
                  —
                  
                  
                  
                  
                  
                  
                  
                  ——**Adjustments
                      to Warrants:**
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  —Adjust
                      Philip Berry Warrants
                  
                  
                  
                  
                  
                  
                  
                  
                  20,000
                  
                  
                  (20,000
                  )
                  
                  
                  
                  
                  
                  
                  
                  —Adjust
                      Mike Mavilia Warrants
                  
                  
                  
                  
                  
                  
                  
                  
                  20,000
                  
                  
                  (20,000
                  )
                  
                  
                  
                  
                  
                  
                  
                  —Adjust
                      Steve Castor Warrants
                  
                  
                  
                  
                  
                  
                  
                  
                  20,000
                  
                  
                  (20,000
                  )
                  
                  
                  
                  
                  
                  
                  
                  —**60,000**
                  
                  
                  **(60,000**
                  **)**
                  
                  
                  
                  
                  
                  
                  
                  **—****—****Winsonic
                      Merger - Media & Entertainment Equity**
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  —Media
                      & Entertainment.com - Stock Balances (excluding stock issued
                      to
                      Winsonic Holdings)
                  
                  
                  23,879,948
                  
                  
                  23,880
                  
                  
                  (123,487
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (99,607
                  )**Common
                      Stock Issued for Cash - Berkley C. Badger (See Explanation
                      #1
                      Below)**
                  
                  
                  **76,190**
                  
                  
                  **76**
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  76———**23,956,138**
                  
                  
                  **23,956**
                  
                  
                  **(123,487**
                  **)**
                  
                  
                  
                  
                  **—**
                  
                  
                  **—**
                  
                  
                  **(99,531**
                  **)****Record
                      Unamortized Debt - Stock Warrants (12/15/04)**
                  
                  
                  
                  
                  
                  
                  
                  
                  **570,500**
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  **570,500****Winsonic
                      Digital Media Group, Ltd. Net income(loss) for 2004**
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  **(5,308,718**
                  **)**
                  
                  **(5,308,718**
                  **)**—
                  
                  
                  —
                  
                  
                  —
                  
                  
                  
                  
                  
                  —**Balance
                      @ December 31, 2004**
                  
                  
                  **33,620,884**
                  
                  **$**
                  **33,621**
                  
                  **$**
                  **3,488,761**
                  
                  **$**
                  **820,000**
                  
                  **$**
                  **—**
                  
                  **$**
                  **(7,864,145**
                  **)**
                  **$**
                  **(3,521,763**
                  **)**
 Media
            & Entertainment equity section.
  The
          accompanying notes to the financial statements should be
 read
          in conjunction with this statement of changes in
          Stockholders' Deficit
 
 F-6
 **NOTE
        1 - ORGANIZATION AND PURPOSE**
 
 Winsonic
        Digital Media Group, Ltd., formerly Media and Entertainment.com, Inc., (the
        “Company”) incorporated on April 27, 2000. On October 7, 2004, Media and
        Entertainment.com, Inc. (“M&E”) consummated an Agreement and Plan of
        Reorganization to acquire all of the outstanding capital stock of Winsonic
        Acquisition Sub, Inc. (“Winsonic Acquisition”), in exchange for 8,000,000 shares
        of M&E’s common stock (“Winsonic Transaction”). Prior to the Winsonic
        Transaction, M&E was non-operating public company with no operations or
        assets; 23,956,138 shares of common stock issued and outstanding; and Winsonic
        Acquisition was a privately held company. The Winsonic Transaction is considered
        to be a capital transaction in substance, rather than a business combination.
        Inasmuch, the Winsonic Transaction is equivalent to the issuance of shares
        by a
        private company (Winsonic Acquisition) for the non-monetary assets of a
        non-operational public company (M&E), accompanied by a recapitalization. The
        accounting for Winsonic Transaction is to that resulting from a reverse
        acquisition, except goodwill is not recorded. Accordingly, the historical
        financial information of the accompany financial statements are that of Winsonic
        Acquisition.
 
 Winsonic
        Acquisition was formed to merged with and into Winsonic Digital Cable Systems
        Network, Ltd. (“Winsonic Digital”) with Winsonic Digital being the surviving
        corporation.
 
 Following
        the Merger, the Company changed it’s name to Winsonic Digital Media Group, Ltd.
 
 The
        Company is a media distribution solutions company, primarily organized for
        the
        purpose of offering media distribution of digital information via the Internet,
        ATM, SDI, HDTV, digital cable, cable TV and satellite. The Company’s network
        WinSonic Digital Cable Systems Network (WDCSN) enables users to view, interact,
        transport, and listen to all types of audio, online video, and digital TV,
        in
        full screen format, at high speed, high quality, and greatly reduced cost,
        reducing the need for expensive high-speed connections.
  A
        Development Stage Company - The
        accompanying financial statements have been prepared in a accordance with
        the
        Statement of Financial Accounting Standards No. 7”According and Reporting by
        Development-Stage Enterprises”. A development-stage enterprise is one in which
        planned principal operations have not commenced or if its operations have
        commenced, there has been no significant revenues there from. As of December
        31,
        2004, the Company has not commenced its planned principal
        operations.
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 Definition
        of Fiscal Year
 
 The
        Company’s fiscal year end is December 31.
 
 Cash
        and
        Cash Equivalents
 
 Cash
        equivalents consist of highly liquid investments with maturities of three
        months
        or less when purchased. Cash and cash equivalents are on deposit with financial
        institutions without any restrictions.
 
  F-7
 Concentration
        of Credit Risk
 
 The
        Company maintains its cash and cash equivalents in bank accounts in four
        financial institutions. The Federal Deposit Insurance Corporation insures
        deposits up to $100,000 per account. The balance in one account has a balance
        of
        $427, 135, and therefore the account has an uninsured balance of $327, 135
        as of
        December 31, 2004.
 
 Use
        of
        Estimates
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosures of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenue and expense during the reported period. Actual
        results could differ from those estimates.
 
 Fair
        Value of Financial Instruments
 
 Financial
        accounting standards Statement No. 107, “Disclosure About Fair Value of
        Financial Instruments”, requires the Company to disclose, when reasonably
        attainable, the fair market values of its assets and liabilities which are
        deemed to be financial instruments. The carrying amounts and estimated fair
        values of the Company’s financial instruments approximate their fair value due
        to the short-term nature.
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 Earnings
        (Loss) Per Share Calculations
 
 Basic
        earnings (loss) per share exclude any dilutive effects of options, warrants
        and
        convertible securities. Basic earnings (loss) per share is computed using
        the
        weighted-average number of outstanding common stocks during the applicable
        period. Diluted earnings per share is computed using the weighted-average
        number
        of common and common stock equivalent shares outstanding during the period.
        Common stock equivalent shares are excluded from the computation if their
        effect
        is antidilutive.
 
 Stock
        Based Compensation
 
 The
        Company applies Accounting Principles Board (“APB”) Opinion No. 25, Accounting
        for Stock Issued to Employees, and Related Interpretations, in accounting
        for
        stock options issued to employees.  Under APB No. 25, employee compensation
        cost is recognized when estimated fair value of the underlying stock on date
        of
        the grant exceeds exercise price of the stock option.  For stock options
        and warrants issued to non-employees, the Company applies SFAS No. 123,
        Accounting for Stock-Based Compensation, which requires the recognition of
        compensation cost based upon the fair value of stock options at the grant
        date
        using the Black-Scholes option pricing model.
 
 The
        Company has elected to follow Accounting Principles Board Opinion No. 25
        (APB
        25), “Accounting for Stock Issued to Employees” and the related interpretations
        in accounting for its employee stock options because, as discussed below,
        the
        alternative fair value accounting provided for under FASB Statement No. 123
        (FASB 123), “Accounting for Stock-Based Compensation,” requires the use of
        option valuation models that were not developed for use in valuing employee
        stock options. Under APB 25, if the exercise price of the Company’s employee
        stock options is equal to or greater than the market price of the underlying
        stock on the date of the grant, no compensation expense is
        recognized.
 
 F-8
 An
        Employee Agreement effective October 8, 2004 provides for the grant of 3,000,000
        incentive or non-statutory stock options for three officers to purchase common
        stock. Employees who share the responsibility for the management growth or
        protection of the business of the Company and certain Non-Employee (“Selected
        Persons”), are eligible to receive options which are approved by a committee of
        the Board of Directors. These options primarily vest equally over a twelve-month
        period effective with date of the employment agreement. The agreements are
        terminable at will with or without cause. As of December 31, 2004, 750,000
        options have vested.
 
 Pro
        forma
        information regarding net income and earnings per share is required by FASB
        123,
        which also requires that the information be determined as if the Company
        has
        accounted for its employee stock options granted beginning in the fiscal
        year
        subsequent to December 31, 1994 under the fair value method of that Statement.
        The fair value for these options was estimated at the date of grant using
        a
        Black-Scholes option pricing model with the following weighted-average
        assumptions for the year ended December 31, 2004: risk free rate of 3.5%;
        no
        dividend yield; volatility factors of the expected market price of the Company's
        common stock of 223%; and weighted-average expected life of the option of
        two
        years. There were no stock options for the year ending December 31,
        2003.
 
 The
        Black-Scholes option valuation model was developed for use in estimating
        the
        fair value of traded options which have no vesting restrictions and are fully
        transferable. In addition, option valuation models require the input of highly
        subjective assumptions including the expected stock price volatility. Because
        the Company’s employee stock options have characteristics significantly
        different from those of traded options, and because changes in the subjective
        input assumptions can materially affect the fair value estimate, in management’s
        opinion, the existing models do not necessarily provide a reliable single
        measure of the fair value of its employee stock options.
 
 For
        purposes of pro forma disclosures, the estimated fair value of the options
        is
        amortized to expense over the option’s vesting period.
 
 The
        Company’s pro forma information follows:
 
 **December
                    31,****2004**
              
              **December
                    31,****2003
                  (Restated)**Pro
                    forma net (loss) income applicableto
                    common shareholders
              
              $
              (5,764,721
              )
              $
              (1,914,014
              )Pro
                    forma net (loss) income applicableto
                    common shareholders per share:
                  Basic
                    and fully diluted
              
              $
              (0.36
              )
              $
              (0.32
              )
 
 
 F-9
 A
        summary
        of the Company’s stock option activity follows:
 
 **December
                    31, 2004**
                
                **December
                    31, 2003****Weighted**
                
                
                
                **Weighted****Average**
                
                
                
                **Average****Exercise**
                
                
                
                **Exercise****Options**
                
                **Price**
                
                **Options**
                
                **Price**Outstanding
                      -beginning
                      of year
                
                
                0
                
                $
                0
                
                
                0
                
                $
                0Granted
                
                
                3,000,000
                
                
                1.00
                
                
                0
                
                
                0Exercised
                
                
                —
                
                
                —
                
                
                —
                
                
                —Cancelled
                
                
                —
                
                
                —
                
                
                —
                
                
                —Outstanding
                      -end
                      of year
                
                
                3,000,000
                
                $
                1.00
                
                
                0
                
                $
                0Exercisable
                    - end of year
                
                
                750,000
                
                $
                1.00
                
                
                —
                
                
                —
  Fixed
        Assets
 
 Fixed
        assets are stated at cost. Expenditures that materially increase the life
        of the
        assets are capitalized. Ordinary maintenance and repairs are charged to expense
        as incurred. When assets are sold or otherwise disposed of, the cost and
        the
        related accumulated depreciation are removed from the accounts and any resulting
        gain or loss is recognized at that time. Depreciation is computed primarily
        on
        the declining balance method for financial statement purposes over the following
        estimated useful lives:
  Telecommunication
                  Equipment
              15
                  YearsFurniture
                  & Fixtures
              7
                  YearsComputer
                  Equipment
              5
                  YearsSoftware
              3
                  Years
 
 Depreciation
        expense for the years ended December 31, 2004 and December 31, 2003 was $349,778
        and $208,600, respectively.
 
 Impairment
        of Long-Lived Assets
 
 In
        accordance with Statement of Financial Accounting Standards ("SFAS") No.
        144, "
        Accounting for the Impairment or Disposal of Long-Lived Assets ", long-lived
        assets such as property and equipment and intangible assets subject to
        amortization are reviewed for impairment whenever events or changes in
        circumstances indicate that the carrying amount of an asset group may not
        be
        recoverable. Recoverability of assets groups to be held and used is measured
        by
        a comparison of the carrying amount of an asset group to estimated undiscounted
        future cash flows expected to be generated by the asset group. If the carrying
        amount of an asset group exceeds its estimated future cash flows, an impairment
        charge is recognized by the amount by which the carrying amount of an asset
        group exceeds fair value of the asset group.
 
 F-10
 Revenues
        and Expenses Recognition
 
 Revenues
        are recognized upon services rendered to customers. Costs and expenses are
        recognized during the period in which they are incurred
 
 Advertising
        Costs
 
 The
        Company expenses all costs of advertising as incurred. There were no advertising
        costs incurred for the years ended December 31, 2004 and 2003.
 
 Research
        and Development Costs
 
 Research
        and development costs are charged to expense as incurred.
 
 Income
        Taxes
 
 Income
        taxes are generally provided for the tax effects of transactions reported
        in the
        financial statements and consist of taxes currently due plus deferred taxes
        related primarily to differences between the basis of fixed assets for financial
        and income tax reporting. The Company has no deferred tax assets and liabilities
        representing the future tax return consequences of those differences because
        currently the Company has no material temporary timing differences that give
        rise to these tax assets and liabilities. Currently there are no federal
        income
        taxes due.
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 Recently
        Issued Accounting Pronouncements
 
 In
        September 2004, the Emerging Issues Task Force ("EITF") reached a consensus
        on
        EITF Issue 04-08 The Effect of Contingently Convertible Instruments on Diluted
        Earnings per Share, which requires the inclusion of shares related to
        contingently convertible debt instruments for computing diluted earnings
        per
        share using the if- converted method, regardless of whether the market price
        contingency has been met. EITF 04-08 will be effective for all periods ending
        after December 15, 2004 and includes retroactive adjustment to historically
        reported diluted earnings per share. The adoption of EITF Issue No. 04-08
        does
        not currently have an impact on the Company's operating results or financial
        position.
  In
        November 2004, the FASB issued Financial Accounting Standards Statement No.
        151
“Inventory Costs-an amendment of ARB No. 43, Chapter 4.” This Statement
        clarifies the accounting for abnormal amounts of idle facility expense, freight,
        handling costs, and wasted material (spoilage). This Statement requires that
        those items be recognized as current-period charges regardless of whether
        they
        meet the criterion of "so abnormal." In addition, this Statement requires
        that
        allocation of fixed production overheads to the costs of conversion be based
        on
        the normal capacity of the production facilities. The Company does not expect
        SFAS 151 to have a material impact on its financial statements.
  In
        December 2004, the FASB issued Financial Accounting Standards Statement No.
        152
“Accounting for Real Estate Time-Sharing Transactions-an amendment of FASB
        Statements No. 66 and 67.” This Statement references the financial accounting
        and reporting guidance for real estate time-sharing transactions that is
        provided in AICPA Statement of Position (SOP) 04-2, *Accounting
        for Real Estate Time-Sharing Transactions.* This
        Statement also states that the guidance for (a) incidental operations and
        (b)
        costs incurred to sell real estate projects does not apply to real estate
        time-sharing transactions. This Statement is effective for financial statements
        for fiscal years beginning after June 15, 2005. The Company does not expect
        SFAS
        152 to have a material impact on its financial statements.
  F-11
 In
        December 2004, the FASB issued Financial Accounting Standards Statement No.
        153
“Exchanges of Nonmonetary Assets-an amendment of APB Opinion No. 29.” The
        guidance in APB Opinion No. 29, *Accounting
        for Nonmonetary Transactions,* is based
        on the principle that exchanges of nonmonetary assets should be measured
        based
        on the fair value of the assets exchanged. This Statement amends Opinion
        29 to
        eliminate the exception for nonmonetary exchanges of similar productive assets
        and replaces it with a general exception for exchanges of nonmonetary assets
        that do not have commercial substance. The Company does not expect SFAS 153
        to
        have a material impact on its financial statements .
  In
        May
        2005, the FASB issued SFAS 154, "Accounting Changes and Error Corrections
        - a
        Replacement of APB Opinion No. 20 and FASB Statement No. 3". SFAS 154 requires
        retrospective application to prior period financial statements of changes
        in
        accounting principle, unless it is impracticable to determine either the
        period-specific effects or the cumulative effect of the change. SFAS 154
        also
        redefines "restatement" as the revising of previously issued financial
        statements to reflect the correction of an error. This statement is effective
        for accounting changes and corrections of errors made in fiscal years beginning
        after December 15, 2005. The Company does not believe that the adoption of
        SFAS
        154 will have a significant impact on the consolidated financial
        statements.
  In
        December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which
        establishes standards for transactions in which an entity exchanges its equity
        instruments for goods or services. This standard replaces SFAS No. 123 and
        supersedes APB Opinion No. 25, Accounting for Stock-based compensation. This
        Standard requires a public entity to measure the cost of employee services
        received in exchange for an award of equity instruments based on the grant-date
        fair value of the award. This eliminates the exception to account for such
        awards using the intrinsic method previously allowable under APB Opinion
        No. 25.
        SFAS No. 123(R) will be effective for interim or annual reporting periods
        beginning on or after June 15, 2005. Accordingly the Company is unable to
        determine at this time the impact of SFAS No. 123(R) will have on its balance
        sheet or income statements.
  **NOTE
        3 - STOCKHOLDERS’ EQUITY**
 
 The
        Company has 50,000,000 shares of common stock authorized with a par value
        of
        $0.001 per share.
 
 During
        fiscal year 2002, the Company issued stock warrants totaling $990,600 of
        which
        $509,600 was issued to four individuals for consulting services, $385,000
        was
        issued to three individuals to settle debt, and $96,000 was issued to six
        individuals and one company for cash, all with a conversion price of $1.00
        per
        share.
 
 During
        fiscal year 2003, the Company issued stock warrants totaling $820,000 to
        a
        company for purchase of computer equipments and infrastructure totaling
        $1,667,000 which the remaining balance has financed through promissory note
        payable, see Note 11. The stock warrants can be converted into common shares
        at
        a price of $1.00 per share
 
 F-12
 During
        fiscal year 2003, the Company issued stock warrants totaling $189,500 of
        which
        $87,000 was issued to one individual for consulting services, and $102,500
        was
        issued to four individuals and for cash, all with a conversion price of $1.00
        per share.
 
 During
        fiscal year 2003, the Company issued 6,004,200 shares of common stock to
        the
        founder and Chairman / C.E.O. for past services totaling $6,004 or $0.001price
        per share.
 
 During
        fiscal year 2004, the Company issued 1,980,946 shares of common stock to
        eleven
        individuals and one company for consulting services rendered totaling $1,490,309
        or $0.75 average price per share
 
 During
        fiscal year 2004, the Company issued 758,000 shares of common stock to eleven
        individuals and one company in satisfaction of debts totaling $331,000 and
        accrued interest of $242,500.
 
 During
        fiscal year 2004, the Company issued 921,600 shares of common stock to eight
        individuals and one company as a result of stock warrants exercised at $1.00
        per
        share.
 
 During
        fiscal year 2004, the Company converted $258,000 of outstanding stock warrants
        into $198,000 of debts and $60,000 of additional paid in capital related
        to
        seven individuals and one company.
 
 During
        fiscal year 2004 as discussed in Note 1, the Company issued 23,956,138 shares
        of
        common stock related to the reverse merger with Media & Entertainment,
        Inc.
 
 Stock
        Warrants
 
 Certain
        stock warrants have been issued in exchange of cash proceeds, services and
        fixed
        assets at a conversion price of $1.00 per common share. These stock warrants
        have a life of three years.
 
 The
        following table summarizes the Company’s stock warrants activity with a
        conversion price of $1.00:
 
 **Number
                  of**
              
              **Exercise****Warrants**
              
              **Price**Balance,
                  September 10, 2002 (Inception)
              
              
              —
              
              $
              —Warrants
                  issued
              
              
              990,600
              
              
              1.00Warrants
                  canceled/expired
              
              
              —
              
              
              —Warrants
                  exercised
              
              
              —
              
              
              —Balance,
                  December 31, 2002
              
              
              990,600
              
              
              1.00Warrants
                  issued
              
              
              1,009,500
              
              
              1.00Warrants
                  canceled/expired
              
              
              —
              
              
              —Warrants
                  exercised
              
              
              —
              
              
              —Balance,
                  December 31, 2003
              
              
              2,000,100
              
              
              1.00Warrants
                  issued
              
              
              —
              
              
              —Warrants
                  canceled/expired
              
              
              —
              
              
              —Warrants
                  exercised
              
              
              (1,180,100
              )
              
              (1.00
              )Balance,
                  December 31, 2004
              
              
              820,000
              
              $
              1.00
 
 
 F-13
 Certain
        detachable stock warrants have been granted related to convertible dentures
        discussed in Note 11.
 
 The
        following table summarizes the Company’s detachable stock warrant
        activities:
 
 **Number
                    of**
                
                **Exercise****Warrants**
                
                **Price**Balance,
                    September 10, 2002 (Inception)
                
                
                —
                
                $
                —Warrants
                    issued
                
                
                —
                
                
                —Warrants
                    canceled/expired
                
                
                —
                
                
                —Warrants
                    exercised
                
                
                —
                
                
                —Balance,
                    December 31, 2002
                
                
                —
                
                
                —Warrants
                    issued
                
                
                —
                
                
                —Warrants
                    canceled/expired
                
                
                —
                
                
                —Warrants
                    exercised
                
                
                —
                
                
                —Balance,
                    December 31, 2003
                
                
                —
                
                
                —Warrants
                    issued
                
                
                1,164,287
                
                
                1.00Warrants
                    canceled/expired
                
                
                —
                
                
                —Warrants
                    exercised
                
                
                —
                
                
                —Balance,
                    December 31, 2004
                
                
                1,164,287
                
                $
                1.00
 F-14
  **NOTE
        4 - RELATED PARTY TRANSACTIONS**
 
 Officer’s
        compensation for services was $346,738 and $199,200 and was included in general
        and administrative expenses, related party, as of December 31, 2004 and 2003,
        respectively.
 
 Two
        individuals who acted as consultants prior to becoming officers of Winsonic
        received a total of 1,521,532 shares of common stock value at $1,125,934
        in
        consutation services regarding the merger. This value was included as consulting
        expense in the statements of operations for the year ended December 31,
        2004.
 
 During
        2003 the Company received a loan with a current balance of $36,419, bearing
        interest annually at 7%, in accordance with a loan agreement that the Company
        had executed. For the period from inception to December 30, 2003, the Company
        had accrued interest expense of $29,706 related to these notes. During 2004,
        the
        loan of $36, 419 was forgiven, and expensed toward current period operating
        results. Related interest accrued of $29,706 was also expensed toward current
        period operating results.
 
 As
        of
        December 31, 2004 the Company has a loan payable totaling $683,726 to Winston
        Johnson, C.E.O., consisting principal of $600,000 due September 3, 2004 (past
        due maturity), plus 80,000 shares of common stock valued at $64,000, both
        payable to maker of the note. Interest is 10% annually, based upon a 365-day
        calendar year. Accrued interest payable included in the $683,726 amount is
        $19,726 as of December 31, 2004.
 
 **NOTE
        5 - SUMMARY OF LEGAL PROCEEDINGS**
  Other
        than as described below, we are not currently involved in any legal proceedings
        that may be deemed to be material to our financial condition.
  Callozo
        vs. Media and Entertainment.com
  On
        March
        22, 2004, the Company (in all cases cited herein known as Media and
        Entertainment.com, Inc.) commenced a civil lawsuit in Los Angeles Superior
        Court
        (Case No. BC312530) against Caesar Collazo, a former officer of the Company,
        seeking damages in excess of $40,000, punitive and exemplary damages. The
        Company had purchased the assets of Nexcode of which Collazo was a founder,
        and
        Collazo received 400,000 shares of the Company’s Common Stock (the “Shares”) in
        consideration of the sale. While still employed by the Company, Collazo
        allegedly formed a competing company, stole proprietary property of the Company
        and solicited Company clients on behalf of the competitor. The Company seeks
        a
        constructive trust, injunctive relief and the return of the Shares.
  Prior
        thereto, in February 2004, Mr. Collazo had commenced a lawsuit in Los Angeles
        Superior Court against the Company and its transfer agent seeking to remove
        the
        restrictive legend from the Shares. The injunctive relief was denied and
        Mr.
        Collazo dismissed the Complaint. In March 2004, the Company commenced a lawsuit
        in U.S. District Court, Clark Country Nevada (Case No. A480587) to enjoin
        the
        transfer of the Shares. The Court issued an Order on March 19, 2004, enabling
        Collazo to sell 30,000 shares of Common Stock and issuing a temporary
        restraining order with regard to the remaining 370,000 Shares provided the
        Company posted a bond for the entire amount of $424,000. The Company’s
        principals chose not to pledge personal assets as collateral for the bond
        and
        the Nevada action was dismissed.
   F-15
 
 In
        the
        above-described pending litigation brought by the Company against Collazo,
        in
        July 2004, the defendant denied the allegations, asserted 21 affirmative
        defenses and bought a cross-complaint against the Company. Mr. Collazo alleges
        that the Company breached the agreement with Collazo because he had not been
        paid compensation due him, he had not received a percentage of gross profit
        earnings, and that the Company had not exercised a good faith effort to raise
        an
        additional $250,000 in capital, and that Collazo did not receive the equity
        promised him. The Company denied the allegations of the Cross Complaint and
        asserted 13 affirmative defenses. At a settlement conference on April 11,
        2005,
        the Company agreed to issue 900,000 shares of common stock to Mr. Collazo,
        as
        well as attorney fees of $120,000. The Company also agreed to issue 900,000
        shares of common stock to Mr. Nana Yalley, an officer and current shareholder,
        as well as an equal partner of Mr. Collazo in Nexcode. The shares of common
        stock were valued as of the settlement date, and accordingly 900,000 shares
        of
        common stock as well as $120,000 of attorney fees are charged as current
        year
        expenses as of December 31, 2004. The settlement was not accomplished by
        June
        10, 2005, whereby Mr. Collazo may exercise at his option the right to enforce
        the settlement agreement for payment of attorney fees or convert the obligation
        of payment for attorney fees to a demand for issuance of 200,000 shares of
        stock
        in the Company. As of July 18, 2005, neither the 900,000 shares of common
        stock
        for each of MessrsCollazo and Yalley, nor the $120,000 of attorney’s fees have
        been issued and paid, respectively.




Yellowbrix,
      Inc. vs. Media and Entertainment.com:




Yellowbrix,
      Inc. filed a collection suit against Media and Entertainment.com regarding
      an
      alleged contract authorized by the former CEO of Media and Entertainment.com.
      The pending lawsuit amount in dispute is $19,800, which is expensed in general
      and administrative expense in 2004 and accrued within accounts payable of the
      Company as of December 31, 2004.





Berman,
      Romeri and Associates, LLP vs. Media and Entertainment.com:





This
      pending collection lawsuit arises from alleged contract and services obligating
      the Company, which was allegedly authorized by the former CEO of Media and
      Entertainment.com. The disputed amount of $8,733 is expensed in general and
      administrative expense in 2004 and accrued within accounts payable of the
      Company as of December 31, 2004.





**NOTE
      6 - GOING CONCERN**





These
      financial statements have been prepared in accordance with generally accepted
      accounting principles applicable to a going concern, which contemplates the
      realization of assets and the satisfaction of liabilities and commitments in
      the
      normal course of business. As of December 31, 2004, the Company has recognized
      $57,811 of revenues to date and had accumulated losses of approximately
      $7,864,000 since inception. The Company’s ability to continue as a going concern
      is contingent upon the successful completion of additional financing
      arrangements and its ability to achieve and maintain profitable operations.
      Management plans to raise equity capital to finance the operating and capital
      requirements of the Company. Amounts raised will be used for further development
      of the Company’s products, to provide financing for marketing and promotion, to
      secure additional property and equipment, and for other working capital
      purposes. While the Company is expending its best efforts to achieve the above
      plans, there is no assurance that any such activity will generate funds that
      will be available for operations.








**NOTE
      7 - EMPLOYMENT AGREEMENTS**





On
      October 8, 2004, the Company entered into binding offering letters with Winston
      Johnson, as Chairman and CEO, Jon Jannotta, as President, Nana Yalley, as
      Executive Vice President, one former executive officer and two non-executive
      officers. Under the terms of employment, Messrs. Johnson, Jannotta and Yalley
      are to receive base salaries of $290,000, $270,000 and $270,000 per annum,
      respectively, with $7,000 per month deferred until the next funding occurs
      or
      January 1, 2005, whichever occurs first. Each officer is eligible for annual
      incentive bonuses based on performance. Each officer received stock options
      to
      purchase 1,000,000 shares of Common Stock at $1.00 per share that vest equally
      over a twelve month period effective with date of the employment agreement.
      The
      agreements are terminable at will with or without cause (as
      defined).





**NOTE
      8 - PROPERTY AND EQUIPMENT, NET**





The
      major
      classifications of property and equipment consist of the following at December
      31:




**2004**
                  ****
                  **2003**Computer
                      Equipment
                  
                  
                  
                  
                  $
                  1,577,269
                  
                  $
                  1,577,269Infrastructure
                  
                  
                  
                  
                  
                  320,000
                  
                  
                  320,000Software
                  
                  
                  
                  
                  
                  160,000
                  
                  
                  160,000Furniture
                      & Fixtures
                  
                  
                  
                  
                  
                  13,040
                  
                  
                  13,0402,070,309
                  
                  
                  2,070,309Less:
                      Accumulated Depreciation
                  
                  
                  
                  
                  
                  (550,955
                  )
                  
                  (208,600
                  )Total
                      Property and Equipment, Net
                  
                  
                  
                  
                  
                  1,519,354
                  
                  
                  1,861,709
  Depreciation
        expense was $349,778 and $208,600 for 2004 and 2003,
        respectively.





F-16


**NOTE
      9 - Loans Payable**





The
      Company has loans outstanding of $357,506 and $158,529 as of December 31, 2004
      and 2003, respectively, payable to certain individuals. Proceeds from these
      loans were used for working capital purposes. The loans payable to individuals
      consist of:




**2004**
              
              **2003**Eight
                  convertible subordinated promissory notes, due in October 2004,
                  convertible into shares of common stock at any time prior to maturity.
                  The
                  conversion options were not excercised.
              
              
              
              
              
              198,500
              
              
              —A
                  loan containing principal of $108,000, with no stated interest
                  rate,
                  repayment terms or maturity date. Interest is imputed at 6% annually,
                  based upon a 365-day calendar year. Accrued interest payable included
                  in
                  the $114, 780 amount is $6,780 as of December 31, 2004.
              
              
              
              
              
              114,780
              
              
              108,000A
                  loan containing principal of $40,000, with no stated interest rate,
                  repayment terms or maturity date. Interest is imputed at 6% annually,
                  based upon a 365-day calendar year. Accrued interest payable included
                  in
                  the $44,226 amount is $4,226 as of December 31, 2004.
              
              
              
              
              
              44,226
              
              
              40,000A
                  loan containing principal of $9,529 with no stated interest rate,
                  repayment terms or maturity date.
              
              
              
              
              
              —
              
              
              9,529A
                  loan containing principal of $1,000 with no stated interest rate,
                  repayment terms or maturity date.
              
              
              
              
              
              —
              
              
              1,000$
              357,506
              
              $
              158,529Less:
                  Current Portion
              
              
              
              
              
              (357,506
              )
              
              (158,529
              )Total
                  Loans Payable, less current portion
              
              
              
              
              $
              0
              
              $
              0





Included
      in the above values is $30,732 of accrued interest as of December 31,
      2004.





**NOTE
      10 - CONVERTIBLE DEBENTURES**





Pursuant
      to a Convertible Note and Warrant Purchase Agreement dated November 24, 2004
      and
      December 2004, we sold approximately $815,000 of an aggregate $1,000,000 of
      6%
      convertible promissory notes and warrants to purchase common stock. The offering
      was made to 21 accredited investors. The notes are due the earlier of December
      15, 2005, or upon the occurrence of certain events. They are convertible at
      the
      lower of $.70 per share or 15% below market. The warrants related to this debt
      were issued to purchase 1,164,287 shares of common stock and are exercisable
      until December 15, 2007 at $.70 per share.





The
      issuance of such securities was exempt from the registrations requirements
      of
      the Securities Act of 1933, as amended, pursuant to Section 4(6) of the
      Securities Act and Rule 506 of Regulation D promulgated thereunder.





F-17


Convertible
      debentures consist of the following at December 31, 2004 and December
      31, 2003:




**2004**
              
              
              **2003**Twenty-one
                  convertible subordinated promissory notes at 6% annual interest,
                  due in
                  December 2007, convertible into shares of common stock at any time
                  prior
                  to maturity.  Interest and principal are due at the earlier
                  of the
                  maturity date, pre-payment date, or conversion date.
              
              
              
              
              $
              816,861
              
              $
              —816,861
              
              
              —Less: 
                  Unamortized Discount
              
              
              
              
              
              (562,577
              )
              
              —Total
                  debt
              
              
              
              
              
              254,284
              
              
              —Less:
                  current portion
              
              
              
              
              
              (254,284
              )
              
              —Convertible
                  debentures, less current portion
              
              
              
              
              $
              0
              
              $
              0




Included
      in the above values are $1,861of accrued interest related to the convertible
      notes as of December 31, 2004.




The
      company is relying on both APB 14, “Accounting for Convertible Debt and Debt
      Issued with Stock Purchase Warrants” and EITF 00-19, “Accounting for Derivative
      Financial Instruments Accounting for Derivative Financial Instruments Indexed
      to
      or Potentially Settled in Indexed to or Potentially Settled in a Company's
      Own
      Stock” for treatment of the convertible stock.  They require the company to
      expense the “Beneficial Conversion Feature” in the current year.  This
      means the difference between the fair value of the common stock and the
      conversion price will be amortized over the term of the note




The
      fair
      value of the debt discount associated with the stock conversion at the time
      of
      issuance was $570,501 and will be amortized as a non-cash interest expense
      over
      the term of the convertible debt (3 years).  Proceeds from the issuance
      of
      these convertible debentures were used for working capital purposes. During
      2004, the Company recorded debt discount expense of $7,924, which $562,577
      remained as the unamortized amount as of December 31, 2004.




**NOTE
      11 - NOTE PAYABLE**





The
      Company has a note payable of $847,000 to Digital Services International, Inc.
      (“DSI”) for the purchase of computer equipment and infrastructure. Total
      consideration for the equipment received is $1,667,000, of which $820,000 was
      satisfied in warrants for common stock of the Company at the execution of the
      note agreement. The balance of $847,000 was payable within 45 days of executed
      note. **** Terms
      of
      repayment of the note were not met as of December 31, 2004. The Company and
      DSI
      are proactively negotiating resolution of payment, to be in the form of common
      stock and cash. Imputed interest expense of $50,820 was accrued on the note
      in
      the current year, at 6% per annum. An equal amount of interest expense related
      to this DSI note payable was recorded in the prior period ended December 31,
      2003.





F-18


**NOTE
      12 - RESTATEMENT OF FISCAL YEAR 2003**





**Restatement**





During
      year ended December 31, 2003, the Company had incorrectly capitalized consulting and financial services valued at $275,000, rather than
      expensing the services.  As a result, the Company has now recorded
      additional consulting expense in 2003, and reduced the asset by $275,000.





Additionally
      in 2003, interest expense related to two loans totaling $148,000 as of December
      31, 2003 had not been recorded.  As a result, 2003 interest expense
      of
      $2,127 was recorded, and the loans payable balance was appropriately increased.





Lastly,
      in 2003 the Company did not reflect issuance of 6,004,200shares to the founder
      and CEO of the Company. The shares had a par value of $6,004.  As a
      result,
      common stock was credited by $6,004 in 2003 and related party selling; general
      and administrative expense was debited.





The
      total
      restatement recorded to 2003 increased the net loss by $283,130.79, which
      resulted in a restated accumulated deficit for the period of $1,914,014.





**NOTE
      13 - SUBSEQUENT EVENTS**





**Native
      American Television Network, Inc.**





On
      February 17, 2005, the Company entered into a Memorandum of Understanding
      (“MOU”) with Native American Television Network, Inc. (“NATVN”). NATVN, based in
      Albuquerque, New Mexico is a recently formed company that intends to launch
      the
      first Western Hemisphere, pan-tribal digital cable channel. The Company will
      provide to NATVN its nationwide distribution platform and technical support,
      expertise and personnel. There was no prior material relationship between the
      two companies or their affiliates other than in respect of the
      agreement.




The
      companies intend to enter into an operating agreement pursuant to which they
      will share all net revenues on a 50/50 basis generated from subscriber fees,
      less all net costs, such as regulatory and interconnection fees. NATVN will
      provide the Company with up to two minutes of commercial airtime, per hour,
      per
      day, on regularly scheduled programming that offers air space to advertisers
      with the exception of paid programming or long form advertisements. The Company
      will provide its expertise and guidance to NATVN in obtaining and filing all
      permits and licenses required. The companies have signed a Stock Purchase
      Agreement, under which the Company will issue 1,670,000 shares of common stock
      valued at approximately $1.20 per share, or $2 million. In return, NATVN will
      issue to the Company 4 million shares of its common stock valued at $.50 per
      share, or $2 million.




**Convertible
      Notes Payable and Debentures**




In
      January 2005, pursuant to a Convertible Note and Warrant Purchase Agreement,
      the
      Company sold the remaining $185,000 of an aggregate of $1,000,000 of 6%
      convertible promissory notes and warrants to purchase common stock. The notes
      are due the earlier of December 15, 2005, or upon the occurrence of certain
      events. The warrants are convertible at the lower of $.70 per share or 15%
      below
      market.





F-19