**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10-KSB**







x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      fiscal year ended December 31, 2005




 ̈ TRANSITION 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.)








101
                Marietta Street, Suite 2600
              Atlanta,
                GA.
            
            30303(Address
                of principal executive offices)
            
            (Zip
                Code)




Issuer's
      telephone number (404) 230-5705





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




NONE




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




Common
      stock, $0.001 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.  ̈





Indicate
      by checkmark whether the registrant is a shell company (as defined in Rule
      12b-2
      of the Exchange Act). Yes  ̈ No x




The
      issuer's revenues for the fiscal year ended December 31, 2005 were
      $0.




The
      aggregate market value of the issuer's common stock held as of June
      16 th ,
      2006,
      was approximately $18,141,036. On such date, the closing price for the issuer's
      common stock, as quoted on the OTC-Pink Sheets was $0.42.




The
      issuer had 43,192,944 shares of common stock outstanding as of June 16,
      2006.









TABLE
        OF
        CONTENTS
 
 PART
                  I**Item
                  1.**
              Description
                  of Business
              2**Item
                  2.**
              Description
                  of Property
              9**Item
                  3.**
              Legal
                  Proceedings
              10**Item
                  4.**
              Submission
                  of Matters To a Vote of Security Holders
              12PART
                  II**Item
                  5.**
              Market
                  for Common Equity and Related Stockholder Matters
              12**Item
                  6.**
              Management
                  s Discussion and Analysis or Plan of Operation
              16**Item
                  7.**
              Financial
                  Statements
              26**Item
                  8.**
              Changes
                  In and Disagreements With Accountants onAccounting
                  and Financial Disclosure
              26**Item
                  8A.**
              Controls
                  and Procedures
              26**Item
                  8B.**
              Other
                  Information
              27PART
                  III**Item
                  9.**
              Directors,
                  Executive Officers, Promoters and Control Persons;Compliance
                  with Section 16(a) of the Exchange Act
              27**Item
                  10.**
              Executive
                  Compensation
              28**Item
                  11.**
              Security
                  Ownership of Certain Beneficial Owners and Management
              30**Item
                  12.**
              Certain
                  Relationships and Related Transactions
              31**Item
                  13.**
              Exhibits
              31**Item
                  14.**
              Principal
                  Accountant Fees and Services
              33
  SIGNATURES
              34REPORT
                  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBALANCE
                  SHEETS
              F1STATEMENTS
                  OF OPERATIONS
              F2STATEMENTS
                  OF CASH FLOWS
              F3STATEMENTS
                  OF STOCKHOLDERS’ DEFICIT
              F4NOTES
                  TO FINANCIALS
              F5





**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 Annual Report, words such as, “believe,” “expect,” “intend,”
“plan,” “anticipate,” “foresee,” “likely,” “will,” “goal,” “target,” “estimate”
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 Holdings, Ltd.**





Media
      and
      Entertainment.com, Inc., (the “Public Company”) was incorporated on April 27,
      2000. On October 7, 2004, the Public Company consummated an Agreement and Plan
      of Reorganization to acquire all of the outstanding capital stock of Winsonic
      Holdings, Ltd. (the “Private Company”), a closely held private company, in an
      exchange for 8,000,000 shares of the Public Company's common stock (the
“Winsonic Transaction”). Prior to the Winsonic Transaction, the Public Company
      had no operations or assets and 23,956,138 shares of common stock issued and
      outstanding. Following the transaction, the Public Company changed its name
      from
      Media and Entertainment.com, Inc. to Winsonic Digital Media Group, Ltd. and
      had
      31,956,138 shares of common stock issued and outstanding.





The
      accounting treatment of the Winsonic Transaction was determined by the following
      considerations:





1.
      The
      Public Company was a non-operating public company (having no operations or
      assets);


2.
      The
      former sole shareholder and CEO of the Private Company became the controlling
      shareholder of the combined company, and;


3.
      The
      management and operations of the combined company continue to be those of the
      Private Company.





For
      accounting purposes, the Winsonic Transaction is considered to be a capital
      transaction in substance, rather than a business combination. As a result,
      the
      Winsonic Transaction is treated in the accompanying financial statements as
      the
      equivalent of the issuance of shares by a private company (Winsonic Holdings)
      for the non-monetary assets of a non-operational public company (Media and
      Entertainment.com), accompanied by a recapitalization. The accounting treatment
      for the Winsonic Transaction is similar to that of a reverse acquisition.
      Accordingly, the historical financial information of the accompanying financial
      statements is that of the Private Company. All shares included in the Statement
      of Stockholders' Equity have been presented as if the acquisition had occurred
      at the date of inception of the Private Company, September 10,
      2002.




2





The
      shares of Common Stock of the Public Company outstanding prior to the merger
      have been shown in the accompanying financial statements as a recapitalization
      of Winsonic as of October 7, 2004.




**Business**




The
      Company is a media distribution solutions company. We believe that our software
      and network establishes a new standard for media distribution of digital content
      and data via the Internet, ATM, SDI, HDTV, digital cable, cable TV and
      satellite. Our network, the 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 (1) media distribution of digital content and information
      with
      seamless compatibility with all the major networks, (2) copyright enforcement,
      (3) multi-tier encryption (moving files in a secure environment), and (4)
      wireless viewing capabilities for laptops and hand held products, such as
      cellular telephones and PDA devices. Our facilities-based products and services
      in out-of-franchise markets enable communications companies, such as Verizon,
      to
      partner with us to provide services to their customers. Other services we
      provide include high-end consulting services in the areas of programming, audio
      research and engineering, as well as, digital transport and worldwide
      telecommunications services for film and television.





WDCSN
      concentrates on carrier-class high-speed connectivity solutions that provide
      our
      customers a first-class facility around the country, along with network,
      multimedia, and content distribution communication services, without requiring
      substantial capital investments. Additionally, our partnership with Verizon,
      Sun
      MicroSystems, and Level 3 will enable us 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.





Our
      long-term business model incorporates reliable technical support and service
      levels, which we believe offers network resilience and sustainable growth for
      our infrastructure and customer base. Our business model is expected to provide
      multiple revenue streams enabling us to fully realize our expansion potential.
      We expect this to result in one of the most comprehensive and cost effective
      product portfolios in our industry -- one, which establishes a reputation as
      an
      established and respected facilities-based media and entertainment distribution
      service and network provider.





WDCSN
      provides our customers with an enhanced gateway to national and international
      communication lines. With WDCSN as a foundation, we provide our customers with
      sophisticated, state of the art application software and hardware solutions
      tailored to meet their specific needs. These applications include, but are
      not
      limited to: (1) carrier
      solutions for regional phone companies, such as special software that provides
      networks the capability of accommodating all software platforms, as well as,
      custom hardware platforms that facilitate consumer, medical, commercial, and
      government applications; (2) custom application development for Voice Over
      Internet Protocol (“VOIP”), standard national and international communications,
      PDA, audio/video transport, e-commerce, radio frequency devices, television
      and
      satellite broadcast; and (3) building out digital television networks that
      accommodate high definition television, streaming video and real time
      interactive networks.





Our
      objective is to maximize product performance while reducing cost through
      technology innovation. For a more detailed explanation of our capabilities
      we
      invite you to visit our website at: www.winsonic.net .





**Products
      and Services**





We
      are 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, Ltd. and 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 was implemented
      in partnership with Pacific Telesis Inc., in cooperation with the Whittaker
      Corporation. As a carriers' communications solutions provider, we offer
      facilities-based products and services to communications companies such as
      Verizon, SBC, Time Warner, MCI, Level-3, AOL, MSN and Sony. We expect to provide
      other services including high-end consulting services in the areas of
      programming, software development, communications research and engineering,
      as
      well as, digital transport worldwide and telecommunications services for film
      and television.




3





We
      concentrate 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.





WDCSN
      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) that facilitates the distribution, digitization, and
      transport of content, and enhances the performance of systems and software
      in
      the media, technology and telecommunications sectors. When creating variations
      in the core network, we are in effect broadening the number of product
      applications, as well as, expanding markets for our products.





These
      applications include java soft phones, sun ray's, digital distribution,
      professional engineering services, media & entertainment services, and
      education media services. Specifically, we offer the following
      services:





**Application
      service provider services** :
      We
      provide specific market applications and/or integrated solutions, and offer
      hardware/software combinations over WDCSN.





**Channel
      development provider services:** **** We
      provide 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:** We
      generate contractually repeating revenues for services delivered to customers
      over 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:** **** We
      embed
      or bundle technology in specialized turnkey systems that include the original
      equipment manufacturer’s own hardware and intellectual property bundled with
      Winsonic Solutions.





**WinSonic
      system integration services:** We
      provide 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
      StreamStar services:** WinSonic
      StreamStar solution provides scalable on-demand video streaming with 100K hours
      of MPEG2 content, 10K to in excess of 100K MPEG2 streams, and 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 to watch digital video,
      TV, and interactive multi media files.





**Cyberhollywood.net
      system (video broadcasting T.V.):** WDCSN
      allows television broadcast programming to be sent to your desktop or
      set-top.





**Cyberhollywood.net
      system (audio broadcasting system):** WDCSN
      allows radio broadcast programming to be sent to your desktop or
      set-top.




4





**Secure
      on demand:** We
      securely encrypt files with our four-tier encryption method that has the
      capabilities to compress most data files up to 63% for Internet delivery.
      Encrypted files will move 100 times faster via LAN/WAN, Intranet, Extranet
      and
      Internet Network Connections, with data rights management in a secure
      environment.





**Encryption:** Our
      solutions allow 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 WDCSN Network.





**File
      conversion:** Our
      solutions allow you to convert any video file format to any Real Media, Windows
      Media and Apple Quick Time formats.





**Teleconferencing:** WDCSN
      allows you to securely teleconference with multiple venues using any Real Media,
      Windows Media and Apple Quick Time encoder.





In
      addition to the services and products described above, we also provide new
      applications that open market opportunities to companies looking to expand
      revenues and broaden sales and look forward to creating revenue sharing
      partnerships with companies that would benefit from WDCSN
      solutions.





WDCSN’s
      media distribution network is in operation in Los Angeles, New York, Dallas,
      Chicago, and Atlanta at Level 3 gateways. 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 that are 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, which should enhance our ability
      to increase 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 VOIP
      markets.





Verizon,
      Level 3, and WDCSN have collectively begun designing, building, and testing
      one of the very first media and entertainment distribution networks in the
      world. The 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 network 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 are seeking to be a part of the new improved consumer features
      in
      the digital TV domain. In addition, we are working with Level 3 to test digital
      cable transport over Multi Protocol Label Switching (MPLS), which plays 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
      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. **** Our
      company was built upon a business model that incorporates excellent technical
      support and service levels and offers outstanding network resilience and
      sustainable growth for our infrastructure and customer base. This business
      model
      will provide multiple revenue streams enabling us 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-based media
      and
      entertainment distribution service and network provider.





**Subcontractor
      Master Consulting Agreement with CI2**





On
      December 10, 2004, the Company and CI2, Inc. (“CI2”) entered into a
      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 “MPSA”) with Winsonic Digital Cable
      Systems Network, Ltd. f/k/a Winsonic Holdings, Ltd., a now wholly owned
      subsidiary of the Company, dated May 5, 2004, which was prior to Winsonic
      Holdings' merger with the Media and Entertainment.com. The MPSA 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.




5





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. The SMCA also
      contains mutual confidentiality obligations.





The
      term
      of the SMCA 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 (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, the breach cannot be
      remedied within thirty days; or (iii) 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 the 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 voidable 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 SMCA.





**Joint
      Marketing and Development Agreement**





On
      December 10, 2004, the Company and CI2 also entered into a 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 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.





The
      Company and CI2 created a development plan (the “Development Plan”) to develop
      the Modified Product. The Company and CI2 have also developed a plan to perform
      marketing activities (the “Marketing Plan”). The Company has 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), 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.




6





The
      Term
      of the JMDA commenced 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 Holdings under the MPSA. Therefore, the MPSA was modified to replace
      the name of the contracting party, Winsonic Holdings, Ltd., to that of the
      Company. In addition, the MPSA was modified to extend the period in which CI2
may exercise its right of first refusal to purchase the networks for $9.7
      million dollars as described in the MPSA for $9.7 million dollars for an
      additional ninety (90) days until February 1, 2005. While the option to purchase
      was not exercised by CI2, all other terms and conditions of the MPA remain in
      full force and effect.





**Native
      American Television Network, Inc.**





On
      September 29, 2005, the Company consummated a share exchange transaction with
      the Native American Television Network (“NATVN”) based in Albuquerque, New
      Mexico. NATVN 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. The
      Company will provide to NATVN its nationwide distribution platform, technical
      support, expertise and personnel. NATVN will provide the Company with commercial
      airtime on regularly scheduled program that offers air space to advertisers
      with
      the exception of paid programming or long form advertisements.





In
      accordance with a stock exchange agreement between the two parties, the Company
      issued 1,670,000 shares of common stock to NATVN, and the Company acquired
      4,000,000 shares of stock in NATVN, representing 27% of the NATVN equity.





The
      value
      of this investment to the Company is based upon the promising mutually
      beneficial opportunities of the relationship between the Company, NATVN, and
      a
      significant number of potential digital-services subscribers within the American
      Indian community; however, currently there are no signed agreements in place.
      The Company anticipates tangible progress toward contractually capturing the
      target market, and NATVN is currently negotiating with representatives of the
      potential digital-services subscribers. As of yet, contractual agreements with
      the potential subscribers have not been secured. Without the agreement in place,
      the final number of subscribers to be serviced, the actual services to be
      provided (i.e. cable television, digital television, advertising revenues,
      telephony services, and high-speed internet) and the prices to be charged for
      the services are not certain.





This
      transaction was recorded in accordance with Staff Accounting Bulletin (SAB)
      Topic 5(g), which states that the transfer of non-monetary assets by
      shareholders should be recorded at the transferor’s historical cost basis as
      determined under Generally Accepted Accounting Principles (GAAP). The President
      of the Company and a Company shareholder were also shareholders and co-founders
      in NATVN, owning approximately 9% of the total outstanding equity in NATVN.
      Because NATVN is an early development stage company, the historical cost and,
      therefore, initial value of the non-monetary asset received, is valued at zero
      as of September 29, 2005 and December 31, 2005, since there are no tangible
      or
      intangible assets and signed agreements in place.





The
      Company and NATVN are currently in ongoing discussions to consider alternatives
      in the structure of the existing agreement, that would provide both parties
      with
      the proper structure and enhance their opportunities to service their customers.
      Until then, the ongoing investment in NATVN will be accounted for under the
      “equity” method. The equity method of accounting is used if the investor has the
      ability to significantly influence the investee’s financial and operating
      policies or if an investor is accounting for an investment in a corporate joint
      venture, but holds less than 50% of the investee. Under the equity method,
      an
      investment is initially recorded at cost. Thereafter, the carrying amount of
      the
      investment is increased for the investor’s proportionate share of the investee’s
      gains, or reduced for the proportionate share of the investee’s losses or for
      distributions received from the investee. (See “Note 12 - Equity Investment” in
      the Notes to the Financial Statements for further details regarding this
      transaction.)




7





**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, as well as, business, financial and
      marketing consulting services to be provided by Titan to the Company for $20,000
      per month. As additional compensation, the Company agreed to grant Titan stock
      options to purchase 1 million shares of common stock of the Company. The options
      were exercisable at $0.75 per share for a period of seven years. The options
      were to vest in 10 equal monthly installments of 100,000 shares commencing
      on
      March 1, 2005. During 2005, the Company made one payment of $20,000 for services
      rendered. The agreement has been mutually discontinued and all terms are
      considered null and void.





**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 was to provide the Company with outdoor
      advertising of all types of media, as well as, indoor digital plasma
      advertising. PMG Media will enable the Company to reach its targeted markets
      via
      digital cable, satellite, broadband and fiber optic delivery platforms. The
      parties had planned to work on a revenue sharing model for the receipt of
      proceeds from subscriber fees, to be finalized in thirty days in a detailed
      formal agreement. No formal agreement between the two parties was completed,
      therefore, the MOU has been considered null and void.





**Lantern
      Hill Capital**





On
      March
      17, 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 serves as a long-term financial advisor to the
      Company, including meeting and discussing the Company's operating strategy,
      assisting the Company in formulating strategic and financial plans, and
      assisting the Company in the development of its capitalization plans. Under
      the
      terms of the agreement, Mr. Anderson received for services rendered 150,000
      shares of common stock valued at $105,000 or $0.70 per share on December 5,
      2005.




**A.
      Scott Roderick Investments, LLC**





On
      March
      15, 2005, the Company and Winston Johnson entered into an Exchange Agreement
      with A. Scott Roderick Investments, LLC (“ASRI”) a creditor of WDCSN, a
      wholly-owned subsidiary of the Company. Winston Johnson, the Company’s CEO,
      assumed an obligation of $562,500 from the subsidiary to ASRI in exchange for
      750,000 shares of the Company’s common stock then held by Mr. Johnson, or an
      exchange price of $0.75 per share.




The
      750,000 shares were to be transferred by Mr. Johnson to ASRI pursuant to the
      Assumption of Liabilities and Escrow Agreement dated as of October 7, 2004,
      which was entered into by Mr. Johnson at the time of the merger of the
      subsidiary with Media and Entertainment.com, Inc. In consideration of the
      transfer of the shares to ASRI, A. Scott Roderick, the sole shareholder of
      ASRI,
      executed a general release in favor of the Company, the subsidiary and Mr.
      Johnson.





On
      December 5, 2005, the Company issued 750,000 shares of its common stock shares
      to Mr. Roderick, sole shareholder of ASRI, in satisfaction of the
      obligation.





**Scott
      Roderick**





On
      September 27, 2005, the Company entered into an agreement with Scott Roderick,
      a
      consultant for development-stage companies, to provide consulting services
      to
      the Company for a period of ninety days, including assistance in formulating
      strategic and financial planning objectives, assistance in the development
      of
      capitalization plans, and financial advisement to the Company. On December
      5,
      2005, Mr. Roderick was issued 150,000 shares of the Company’s common stock
      valued at $72,000 or $0.48 per share for services rendered.




8





**Richard
      Watteyne**





On
      September 27, 2005, the Company entered into an agreement with Richard Watteyne
      for business development, management and financial consulting services for
      a
      period of forty-five days. On December 5, 2005, Mr. Watteyne was issued 75,000
      shares of the Company’s common stock valued at $36,000 or $0.48 per share for
      services rendered.





**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 the Company build on a sales strategy
      and
      to deliver 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 and 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.





**Level
      3 Communications**





On
      June
      9, 2003, the Company entered into a Master Service Agreement (“MSA”) with Level
      3 Communications to deploy nationwide media delivery services on the Level
      3
      Communications network. WDCSN 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 the Company’s reliable services protocol.





On
      August
      19, 2004, the Company signed an addendum to the June 9, 2003 MSA with Level
      3
      Communications to extend the term of the agreement.





On
      August
      17, 2004, the Company signed a service schedule for (3) Link SM Global
      Wavelength Service - IRU with Level 3 Communications to begin the planning
      for
      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 redundancy.




**Verizon
      ESG**





On
      May
      10, 2004, the Company and Verizon ESG signed an agreement to buildout WDCSN
      into
      a facilities-based local, interstate, and international exchange transport
      Network with advanced technology transport solutions.




**Intellectual
        Property**
 
 On
        December 2, 2004 the Company
        filed an application for the registration and exclusive use of
        the “Winsonic” name. The trademark was approved for publication and
        was published on March 7, 2006. Thereafter, an unrelated
        party filed a notice of intent to contest the Company's registration of the
        trademark. This unrelated party subsequently filed a request for a ninety-day
        extension of time to oppose the registration on April 6, 2006. In an effort
        to
        quickly resolve this matter without the necessity of protracted litigation,
        the Company entered into a settlement agreement with this unrelated party
        on
        June 27, 2006, wherein the party agreed not to oppose the registration and
        to
        refrain from using the Winsonic trademark in exchange for the Company's payment
        of $1,000.





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





**Network
      Operations and Office Lease Agreement**




On
      October 12, 2005, the Company entered into a 132 month commercial lease
      agreement effective as of November 1, 2005 with Atlanta Centennial, LLC (the
      “Landlord”) for office space, Data Center, Network Operations, Interconnect
      MOPE, and Fiber lab consisting of approximately 9,415 square feet of rentable
      space (the "Lease"). The space is located in Suite 2600 on the 26 th floor of
      the Centennial Tower, located at 101 Marietta Street in Atlanta, Georgia.




The
      Company will use this space to launch WDCSN network operations, data center,
      broadcast controls, switch site, application development lab, and for the
      Company’s corporate headquarters for its executives and general, clerical and
      administrative personnel.




9




Under
      the
      terms of the Lease, the Company will make annual rental payments to the Landlord
      in the following amounts:





Year
      ending December 31,





2006
            
            $
            115,3322007
            
            $
            203,6522008
            
            $
            209,7602009
            
            $
            216,0482010
            
            $
            222,528Thereafter
            
            $
            1,437,246





There
      is
      no option to renew this Lease. Notwithstanding the foregoing, the monthly base
      rent was abated for 6 months following the commencement date of the Lease,
      provided there is no default by the Company under the Lease.




Concurrently
      with the execution of the Lease, the Company issued a Fixed Price Secured
      Convertible Note (the “Note”) in the principal sum of $250,000 representing an
      increased security deposit requirement bearing simple interest at 9% per annum,
      payable monthly in arrears in cash or registered stock at the Company’s option,
      from December 1, 2005 through the earlier of (a) June 1, 2006 (the “Maturity
      Date”), (b) the date on which the outstanding principal amount of the Note is
      repaid in full prior to the Maturity Date (i.e. the “Prepayment Date”), or (c)
      the date on which the outstanding principal amount of the Note is automatically
      converted.





On
      October 12, 2005, the Company paid $16,476 as deposit on the office space.
      On
      December 14, 2005, the Note was converted into 925,927 shares of the Company’s
      common stock, valued at $250,000 or $0.27 per share.





The
      lease
      agreement was amended on February 23, 2006, to include expanded rental space
      of
      9,415 square feet, bringing the total rental square feet to 18,800. (See “Note
      14 - Subsequent Events” for further details regarding this
      amendment.)




**Additional
      Locations**





The
      Company also maintains 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.





**Callozo
      vs. Media and Entertainment.com** (Superior
      Court of CA, Los Angeles County - complaint filed 3/22/04)





On
      March
      22, 2004, the Company (then 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 Mr. Collazo was a founder, and Mr. Collazo received
      400,000 shares of the Company’s common stock (the “Shares”) in consideration of
      the sale. While still employed by the Company, Mr. Collazo allegedly formed
      a
      competing company, stole proprietary property of the Company and solicited
      Company clients on behalf of the competitor. The Company sought a constructive
      trust, injunctive relief and the return of the Shares.




10


Prior
      to
      this suit, 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
      Mr. 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 litigation brought by the Company against Mr. 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 him because he had not been paid
      compensation due him, he had not received a percentage of gross profit earnings,
      the Company had not exercised a good faith effort to raise an additional
      $250,000 in capital, and that he 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, were charged as expenses in 2004.
      The settlement was not accomplished by June 10, 2005; therefore, Mr. Collazo
      could have exercised at his option, the right to enforce the settlement
      agreement for the issuance of the 900,000 shares of the Company’s stock to him
      and the payment of his attorney fees or the issuance of 200,000 shares of stock
      to his attorney in lieu of payment. On March 16, 2006, the 900,000 shares due
      to
      Mr. Collazo were issued by the Company to Mr. Collazo in settlement.





On
      December 9, 2005, Mr. Yalley entered into a separation agreement with the
      Company, thereby rendering Mr. Yalley’s employment with the Company null and
      void. The separation agreement specifies that an identical number of restricted
      shares of common stock of the Company that were issued to Mr. Collazo in
      settlement of litigation may be issued to Mr. Yalley as well. As of May 11,
      2006, neither the 900,000 shares of common stock for Mr. Yalley, nor the 200,000
      shares or $120,000 for Mr. Collazo’s attorneys fees have been issued or
      paid.





An
      estimated liability of $1,020,000 for legal settlements was accrued as of
      December 31, 2005 and 2004. The agreement had no effect on the operating results
      for 2005.





**Yellowbrix,
      Inc. vs. Media and Entertainment.com** (Superior
      Court of CA, Los Angeles County - complaint filed 09/2004)





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 was expensed in general
      and administrative expense in 2004 and accrued within accounts payable of the
      Company as of December 31, 2005 and 2004. No further events have occurred
      regarding this suit as of May 11, 2006.





**Berman,
      Romeri and Associates, LLP vs. Media and Entertainment.com** **(** Superior
      Court of CA, Los Angeles County - complaint filed in 2004)





This
      collection lawsuit arises from an alleged contract and services obligating
      the
      Company, which was allegedly authorized by the former CEO of Media and
      Entertainment.com, Inc. The disputed amount of $8,733 was expensed as a general
      and administrative expense in 2004 and accrued within accounts payable of the
      Company as of December 31, 2004. (See “Note 14 - Subsequent Events” for further
      details regarding this lawsuit.)




11





**Netscaler
      Inc. vs. Winsonic** (Superior
      Court of CA, Los Angeles County - complaint filed 05/16/05)





The
      disputed amount of $75,000 in this collection lawsuit was expensed as a general
      and administrative expense in 2004 and accrued within accounts payable as of
      December 31, 2005 and 2004. Pursuant to a settlement agreement, the Company
      is
      to pay the sum of $75,000 in three (3) installment payments of $25,000,
      commencing in June 2006, in exchange for the dismissal of the action.





**Attorney
      Collection Services vs. Winsonic Holdings, Ltd.** (Superior
      Court of CA, Los Angeles County - complaint filed 6/30/04)





The
      disputed amount of $25,000 in this collection lawsuit was expensed as a general
      and administrative expense in 2004 and accrued within accounts payable as of
      December 31, 2005 and 2004.




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





No
      matter
      was submitted to a vote of stockholders during the year ended December 31,
      2005.





**PART
      II**




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





Our
      common stock is quoted on the OTC-Pink Sheets, as WDMG. 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 on the Pink
      Sheets:




**2005**
            
            **High
                Bid**
            
            **Low
                Bid**Jan.
                1 through Mar. 31
            
            $
            1.35
            
            $
            0.45Apr.
                1 through June 30
            
            
            0.78
            
            
            0.32July
                1 through Sept. 30
            
            
            0.68
            
            
            0.37Oct.
                1 through Dec. 31
            
            
            0.48
            
            
            0.19**2004**
            
            **High
                Bid**
            
            **Low
                Bid**Jan.
                1 through Mar. 31
            
            $
            1.99
            
            $
            0.69Apr.
                1 through June 30
            
            
            1.37
            
            
            0.55July
                1 through Sept. 30
            
            
            1.16
            
            
            0.66Oct.
                1 through Dec. 31
            
            
            1.64
            
            
            0.65





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





As
      of
      June 16, 2006, there were 102 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 990,600 stock warrants, of which 509,600
      warrants were issued to four individuals for consulting services, 385,000
      warrants were issued to three individuals to settle debts, and 96,000 warrants
      were issued to six individuals and one company for cash, all with a conversion
      price of $1.00 per share.




12





During
      fiscal year 2003, the Company recorded a common stock payable totaling $820,000
      to a company for purchase of computer equipment and infrastructure totaling
      $1,667,000. The remaining balance was financed through a promissory
      note payable of $847,000. The common stock payable was converted into common
      shares at a price of $1.00 per share. We neither received nor paid any
      commissions in connection with this transaction. We believe that this
      transaction 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 were issued to one individual for consulting services, and 102,500 were
      issued to four individuals for cash, all with a conversion price of $1.00 per
      share. We neither received nor paid any commissions in connection with these
      issuances. We believe that the issuance of such warrants were 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 as part of the merger transaction on
      October 7, 2004 6,004,200 shares of common stock to the founder and
      Chairman/C.E.O. for past services totaling $6,004 or $0.001 price per share.
      These shares were included in the Statement of Stockholders' Deficit and have
      been recasted as if the acquisition had occurred as of the date of inception
      of
      the Company, September 10, 2002. We neither received nor paid any 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 23,956,138 shares of common stock related
      to the merger with Media & Entertainment.com, Inc. These represented shares
      outstanding of the Media & Entertainment.com, Inc. as of the date of the
      merger, and are reflected as a recapitalization of Winsonic the Company as
      of
      October 7, 2004, the Winsonic transaction date.





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 neither received nor paid any 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 neither received nor paid any 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 neither received nor paid any 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. We neither received nor paid any 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
        December 2004, the Company received proceeds of $815,000 from a Convertible
        Note
        and Warrant Purchase Agreement (the “Agreement”).  The offering was made to
        21 accredited investors. The Agreement also included a detachable warrant,
        which
        allowed the Warrant Holders to purchase 1,164,286 shares of common stock
        of the
        Company at $0.70 per share through December 2007. We
        neither received nor paid any commissions in connection with these issuances.
        We
        believe that the issuance of such securities 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.




13




During fiscal
      year 2005, the Company issued 94,615 shares, 91,463 shares and 66,667 shares,
      respectively to a private investment partnership. The stock was issued at $1.30
      per share for the first 94,615 shares; $0.82 per share for the 91,463 shares;
      and $0.68 for the 66,667 shares. The stock was issued in connection with a
      warrant issuance, exercisable at $0.07 per share, which were issued to
      compensate certain professional advisors for services rendered during 2004.
      The
      stock was issued pursuant to a “cashless exercise” wherein the warrant holder
      received a reduced number of shares of common stock upon conversion and
      contributed the balance to the treasury of the Company based on the current
      market value of the stock. For January 2005, the warrant holders received 94,615
      shares of stock and contributed 5,385 shares valued at $1.30 per share worth
      $7,000 (the cost of their warrants). For June, the warrant holders received
      66,667 shares of common stock and contributed 8,333 shares valued at $0.68
      per
      share, worth $5,666 (the cost of their warrants). For September, the warrant
      holders received 91,463 shares and contributed 8,537 shares valued at $0.82
      per
      share, worth $7,000 (the cost of their warrants). We
      neither received nor paid any 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 2005, the Company issued 1,670,000 shares to Native American
      Television Network, Inc. (“NATVN”) in exchange for 4,000,000 shares of common
      stock, in accordance with a stock exchange agreement entered into by both
      parties. This transaction was recorded in accordance with Staff Accounting
      Bulletin (SAB) Topic 5(g), which states that the transfer of non-monetary assets
      by shareholders should be recorded at the transferor’s historical cost basis as
      determined under Generally Accepted Accounting Principals (GAAP). The President
      of the Company and a Company shareholder were also shareholders and co-founders
      in NATVN, owning approximately 9% of the total outstanding equity in NATVN.
      Because NATVN is an early development stage company, the historical cost, and
      therefore, initial value of the non-monetary asset received, is valued at zero
      as of December 31, 2005 since there were no tangible or intangible assets and
      signed agreements in place. (See “Note 12 - Equity Investment” for further
      details regarding this transaction.) We
      neither received nor paid any 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 2005, the Company issued 700,000 shares of common stock to its
      founder to relieve related party loan payable due him valued at $231,000 or
      $0.33 average price per share. (See “Note 4 - Related Party Transactions’ for
      further details regarding this transaction.) We
      neither received nor paid any 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 2005, the Company issued 500,000 shares of common stock to its
      founder for services valued at $165,000 or $0.33 average price per share. (See
      “Note 4 - Related Party Transactions” for further details regarding this
      transaction.) We
      neither received nor paid any 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 2005, the Company issued 900,000 shares of common stock to two
      consultants for services valued at $630,000 or $0.70 average price per share. We
      neither received nor paid any 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 2005, the Company issued 225,000 shares of common stock to two
      consultants for services valued at $108,000 or $0.48 average price per share. We
      neither received nor paid any 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 2005, the Company issued 590,000 shares of common stock to four
      investors in satisfaction of convertible debenture obligations of $118,000
      at
      $0.20 average price per share. (See “Note 10 - Convertible Debentures” for
      further details regarding this transaction.) We
      neither received nor paid any 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.




14





During
      fiscal year 2005, the Company issued 925,927 shares of common stock to its
      landlord for a lease deposit valued at $250,000 or $0.27 average price per
      share. We
      neither received nor paid any 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 2005, the Company issued 820,000 shares of common stock to one
      company as a result of the conversion of common stock payable valued at $820,000
      or $1.00 per share. We
      neither received nor paid any 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 2005, the Company credited additional paid-in capital for a $281,481
      adjustment to accumulated depreciation for the return of computer equipment,
      infrastructure and software. (See “Note 8 - Property & Equipment, Net” for
      further detail regarding this transaction.)





During
      fiscal year 2005, the Company recorded the vesting of 500,000 shares of common
      stock award for an officer for the net vested value of $185,000. (See “Note 4 -
      Related Party Transactions” for further detail regarding this transaction.) We
      neither received nor paid any 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 2005, the Company recorded common stock payable for 818,182 common
      shares valued at $270,000 or $0.33 average price per share to an officer per
      a
      separation agreement. (See “Note 7 - Commitments and Contingencies” for further
      detail regarding this transaction.) .





During
      fiscal year 2005, the Company recorded forgiveness of accrued salary to an
      officer per a separation agreement by crediting additional paid in capital
      for
      $270,000. (See “Note 7 - Commitments and Contingencies” for further detail
      regarding this transaction.)





During
      fiscal year 2005, the Company recorded forgiveness of accrued payroll taxes
      for
      officer per a separation agreement by crediting additional paid in capital
      for
      $20,655. (See Note 7 - Commitments and Contingencies for further detail
      regarding this transaction.)





During
      fiscal year 2005, the Company recorded the vesting of stock options to purchase
      500,000 shares of the Company’s common stock per a separation agreement, valued
      at $131,068 at December 31, 2005 using the Black Scholes valuation method.
      (See
“Note 2 - Summary of Significant Accounting Policies” and “Note 7 - Commitments
      and Contingencies” for further detail regarding this transaction.)





During
      fiscal year 2005, the Company recorded the forgiveness of interest expense
      of a
      related party by crediting additional paid in capital for $152,592. (See “Note
      11 - Note Payable” for further detail regarding this transaction).




During
        December 2005, the Company received proceeds of $388,250 from Convertible
        Note
        and Warrant Purchase Agreements consisting of 6 offerings to accredited
        investors. The Agreement also included a detachable warrant, which allowed
        the
        Warrant Holders to purchase shares of common stock of the Company. We
        neither received nor paid any commissions in connection with these issuances.
        We
        believe that the issuance of such securities 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.


**Equity
      Compensation Plan**





The
      following table summarizes information with respect to options under our equity
      compensation plans as of December 31, 2005:





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
            
            3,119,041
            
            $1.00
            
            630,959Equity
                compensation plans not approved by security holders
            
            -0-
            
            -0-
            
            -0-Total
            
            3,119,041
            
            $1.00
            
            630,959





15





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





The
      Public Company, Media and Entertainment.com, Inc., was incorporated on April
      27,
      2000. On October 7, 2004, the Public Company consummated an Agreement and Plan
      of Reorganization to acquire all of the outstanding capital stock of the Private
      Company, Winsonic Holdings, Ltd., a closely held private company, in an exchange
      for 8,000,000 shares of the Public Company's common stock (the “Winsonic
      Transaction”). Prior to the Winsonic Transaction, the Public Company had no
      operations or assets and 23,956,138 shares of common stock issued and
      outstanding. Following the transaction, the Public Company changed its name
      from
      Media and Entertainment.com, Inc. to Winsonic Digital Media Group, Ltd. and
      had
      31,956,138 shares of common stock issued and outstanding.





The
      accounting treatment of the Winsonic Transaction was determined by the following
      considerations:





1.
      The
      Public Company was a non-operating public company (having no operations or
      assets);


2.
      The
      former sole shareholder and CEO of the Private Company became the controlling
      shareholder of the combined company, and;


3.
      The
      management and operations of the combined company continue to be those of the
      Private Company.





For
      accounting purposes, the Winsonic Transaction is considered to be a capital
      transaction in substance, rather than a business combination. As a result,
      the
      Winsonic Transaction is treated in the accompanying financial statements as
      the
      equivalent of the issuance of shares by a private company (Winsonic Holdings)
      for the non-monetary assets of a non-operational public company (Media and
      Entertainment.com), accompanied by a recapitalization. The accounting treatment
      for the Winsonic Transaction is similar to that of a reverse acquisition.
      Accordingly, the historical financial information of the accompanying financial
      statements is that of the Private Company. All shares included in the Statement
      of Stockholders' Equity have been presented as if the acquisition had occurred
      at the date of inception of the Private Company, September 10,
      2002.





The
      shares of Common Stock of the Public Company outstanding prior to the merger
      have been shown in the accompanying financial statements as a recapitalization
      of the Private Company as of October 7, 2004.





**Critical
      Accounting Policies**





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.




16





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 Opinion No. 25, employee
      compensation cost is recognized when the estimated fair value of the underlying
      stock on the date of the grant exceeds the 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 BlackScholes option pricing model.




The
      Company has elected to follow APB Opinion No. 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 SFAS No. 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 Opinion No. 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 as of 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-Employees
      (“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 the date of the employment agreement. The
      agreements are terminable at will with or without cause.





Subsequently,
      on December 9, 2005, Nana Yalley entered into a separation agreement with the
      Company, thereby rendering his employment agreement with the Company signed
      October 8, 2004 null and void. In this separation agreement, Mr. Yalley agreed
      to a reduction of his stock options to purchase common stock of the Company
      from
      1,000,000 to 500,000 shares. These options are vested and immediately
      exercisable for (5) five years from the date of the grant at $1.00 per share.
      Mr. Yalley’s 500,000 stock options were valued using the Black Scholes valuation
      model and recorded at $131,068 as of December 31, 2005, in accordance with
      SFAS
      No. 123 “Accounting for Stock Based Compensation.”





On
      November 5, 2005, the Company entered into a binding offering letter with Eric
      Young, wherein Mr. Young accepted the Company’s offer to serve as Chief
      Operating Officer and Chief Financial Officer of the Company. Under the terms
      of
      employment, Mr. Young received non-qualified incentive stock options to purchase
      500,000 shares of Common Stock at an exercise price of $1.00 per share in
      accordance with the Company's Employee Stock Option Plan. Ten Percent (10%)
      of
      the options vested immediately upon the signing of the Employment Agreement
      and
      the remaining options shall vest at the rate of 1/12th per month for 12 months.





As
      of
      December 31, 2005, 2,119,041 options are vested, including the cancellation
      of
      500,000 options related to Mr. Yalley, as well as, the granting of 500,000
      options for Mr. Young (both noted above).





Revenues
      and Expenses Recognition





The
      Company’s financial statements of 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
      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 SFAS No. 123(R) will have on its balance
      sheet
      or income statements.




17





In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections,”
- a Replacement of APB Opinion No. 20 and SFAS 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 No. 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
      No. 154 will have a significant impact on the consolidated financial
      statements.




In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments,” which amends SFAS No. 133, “Accounting for Derivative
      Instruments and Hedging Activities,” and SFAS No. 140, “Accounting for Transfers
      and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No.
      155 permits fair value measurement for any hybrid financial instrument that
      contains an embedded derivative that otherwise would require bifurcation and
      establishes a requirement to evaluate interests in securitized financial assets
      to identify interests that are freestanding derivatives or hybrid financial
      instruments containing embedded derivatives. We expect the adoption of SFAS
      No.
      155 to have a material impact on the Company’s consolidated financial position,
      results of operations and cash flows.





In
      March
      2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
      Assets,” which amends SFAS No. 140. SFAS No. 156 may be adopted as early as
      January 1, 2006 by calendar year-end entities, provided that no interim
      financial statements have been issued. Those not choosing to early adopt are
      required to apply the provisions as of the beginning of the first fiscal year
      that begins after September 15, 2006 (e.g., January 1, 2007 for calendar
      year-end entities). The intention of the new statement is to simplify accounting
      for separately recognized servicing assets and liabilities, such as those common
      with mortgage securitization activities, as well as, to simplify efforts to
      obtain hedge-like accounting. SFAS No. 156 permits a servicer using derivative
      financial instruments to report both the derivative financial instrument and
      related servicing asset or liability by using a consistent measurement attribute
      or fair value. We do not expect the adoption of SFAS No. 156 to have a material
      impact on its consolidated financial position, results of operations or cash
      flows.





**Results
      of Operations**




**For
      the year ended December 31, 2005, as compared to the year ended December 31,
      2004.**




For
      the
      year ended December 31, 2005 (“Fiscal 2005”), we incurred a net loss of
      $4,106,000 as compared with a net loss of $5,791,000 during the year ended
      December 31, 2004 (“Fiscal 2004”).




Total
      revenues were $0 in Fiscal 2005, compared to $25,000 in Fiscal 2004. Cost of
      Goods Sold, consisting primarily of infrastructure and fiber costs, is $441,000
      and $296,000 in Fiscal 2005 and 2004, respectively. The resulting gross loss
      before remaining expenses is $441,000 in Fiscal 2005 and $271,000 in Fiscal
      2004.




Total
      operating expenses for Fiscal 2005 were $3,889,000, consisting of selling,
      general and administrative (SG&A) expenses of $1,262,000, SG&A for
      related parties expense of $1,336,000, consulting services with related parties
      expense of $945,000, and depreciation and amortization expense of $345,000.
      Total operating expenses for Fiscal 2004 were $3,332,000, consisting of SG&A
      of $1,517,000, SG&A for related parties expenses of $347,000, consulting
      services with related parties expenses of $1,126,000, and depreciation and
      amortization expense of $342,000. For 2005, our net loss before interest
      expenses, taxes, and other income and expenses was approximately $4,330,000,
      compared to approximately $3,603,000 in 2004.




**Liquidity
      and Capital Resources**




As
      of
      December 31, 2005, we had a working capital deficit of $6,513,000, compared
      to a
      deficit of $6,092,000 at December 31, 2004.




18





For
      Fiscal 2005, we used in operating activities $956,000 in cash to sustain the
      Company. Net cash provided by investing activities was $815,000, primarily
      due
      to reduction of pledged fixed assets of $842,000. We used $296,000 of net cash
      in our financing activities primarily as a result of the satisfaction of a
      $847,000 note payable and $153,000 in forgiveness of accrued interest to one
      of
      our equipment providers, proceeds of approximately $388,000 from the issuance
      of
      convertible debentures, net payments on loans of $20,000 from a related party,
      and net proceeds from a non-related party loan of $30,000. For Fiscal 2004,
      we
      had net cash provided by financing activities of $1,525,000 due to proceeds
      from
      a related party note payable of $678,000, a non-related party loan of $32,000
      and proceeds of $815,000 from the issuance of convertible debentures. For Fiscal
      2005, we experienced a net decrease in cash of $437,000 compared with an
      increase in cash of $437,000 for Fiscal 2004.





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 June 23, 2006,
      that there is substantial doubt about our ability to continue as a going concern
      without additional financing and achieving and maintaining profitable
      operations. The financial statements that accompany this annual report do not
      include any adjustments that might result from this uncertainty.





**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, including management, to operate certain aspects of our
      business.





On
      February 17, 2005, the Company entered into a Memorandum of Understanding
      (“MOU”) with 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.




The
      Company will provide to NATVN its nationwide distribution platform and technical
      support, expertise and personnel. 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.




On
      September 29, 2005, in accordance with a stock exchange agreement between the
      two parties, the Company issued 1,670,000 shares of common stock to NATVN and
      the Company acquired 4,000,000 shares of stock in NATVN, representing 27% of
      the
      NATVN equity. This transaction was recorded in accordance with SAB Topic 5(g),
      which states that the transfer of non-monetary assets by shareholders should
      be
      recorded at the transferor’s historical cost basis as determined under GAAP. The
      President of the Company and a Company shareholder were also shareholders and
      co-founders in NATVN, owning approximately 9% of the total outstanding equity
      in
      NATVN.  Because
      NATVN is an early development stage company, the historical cost, and therefore,
      initial value of the non-monetary asset received is valued at zero as of
      December 31, 2005, since there were no tangible or intangible assets and signed
      agreements in place. While management enthusiastically believes that the
      relationship will serve to provide a much needed service to customers and
      society alike, as well as, prove to be financially rewarding, management agrees
      to adhere to valuation of the investment in NATVN at the historical based cost
      of zero.





The
      value
      of this investment to the Company is based upon the promising mutually
      beneficial opportunities that exist between the Company, NATVN and a significant
      number of potential digital-services subscribers within the American Indian
      community. The Company anticipates tangible progress toward contractually
      capturing the target market, and NATVN is currently negotiating with
      representatives of the potential digital-services subscribers. As of yet,
      contractual agreements with the potentential digital subscribers have not been
      secured. Without the agreement in place, the final number of subscribers to
      be
      serviced, the actual services to be provided (i.e. cable television, digital
      television, advertising revenues, telephony services, and high-speed internet)
      and the prices to be charged for the services are not certain.




19





The
      investment in NATVN will be accounted for under the “equity” method. The equity
      method of accounting is used if the investor has the ability to significantly
      influence the investee’s financial and operating policies or if an investor is
      accounting for an investment in a corporate joint venture, but holds less than
      50% of the investee. Under the equity method, an investment is initially
      recorded at cost. Thereafter, the carrying amount of the investment is increased
      for the investor’s proportionate share of the investee’s gains or reduced for
      the proportionate share of the investee’s losses or for distributions received
      from the investee. As of March 31, 2006, there were no significant operations
      commenced by NATVN.





On
      May
      27, 2005 the Company signed a Contract with Sun Micro Systems as a Sun iForce
      Partner. Sun's partner model will help the Company build on a sales strategy
      and
      to deliver 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 MSA with Level 3 Communications to deploy
      nationwide media delivery services on the Level 3 Communications network. WDCSN
      is housed in Level 3's Private rooms in Los Angeles, Dallas, Chicago, New York
      and the Atlanta data center. This provides the Company 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 the Company’s reliable services protocol.





On
      August
      19, 2004, the Company signed an addendum to the June 9, 2003 Master Service
      Agreement with Level 3 Communications to extend the term of the
      agreement.





On
      August
      17, 2004, the Company signed a service schedule for (3) Link SM Global
      Wavelength Service - IRU with Level 3 Communications to begin the planning
      for
      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 redundancy.





On
      December 10, 2004, the Company and CI2, Inc. entered into a Subcontractor Master
      Consulting Agreement. A prior material relationship existed between the two
      parties because CI2 had entered into a Master Purchase and Services Agreement
      with Winsonic Digital Cable Systems Network, Ltd. f/k/a Winsonic Holdings,
      Ltd.,
      a now wholly owned subsidiary of the Company, on May 5, 2004 prior to Winsonic
      Holdings’ merger with Media and Entertainment.com. The MPSA provided CI2 the
      ability to purchase and/or license various products and services for delivery
      and installation from WinSonic Holdings, 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. The SMCA also
      contains mutual confidentiality obligations.




20





The
      term
      of the SMCA 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 (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, the breach cannot be
      remedied within thirty days; or (iii) 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 Joint Marketing and
      Development Agreement. 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 of certain listed CI2
hardware and software (the “CI2 Products”) and the creation of a modified
      product (the “Modified Product”). Each party will bear all costs and expenses
      associated with its activities under the JMDA.





The
      Company and CI2 created a development plan (the “Development Plan”) to develop
      the Modified Product. The Company and CI2 have also developed a plan to perform
      marketing activities (the “Marketing Plan”). The Company has obligations to
      provide CI2 with certain deliverables and to achieve certain milestones under
      the Development Plan and Marketing Plan. CI2 will own all right, title and
      interest in and to the CI2 Products and Derivative Works (as defined in the
      JMDA), 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, the Company and Verizon ESG signed an agreement to buildout WDCSN
      into
      a facilities-based local, interstate, and international exchange transport
      Network with advanced technology transport solutions.




Without
      adequate financing, we will be unable to compete successfully. Furthermore,
      competitive pressures that 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.





**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.




21





**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 September
      2002.
      The Company incurred net losses of approximately $4,106,000 and $5,791,000
      for
      the years ended December 31, 2005 and 2004, respectively, and $12,450,000 for
      the period from inception through December 31, 2005. 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 has limited operating funds and has nominal cash on hand. The Company
      has an immediate need for funds in order to finance its business operations.
      As
      of December 31, 2005, the Company had a working capital deficit of approximately
      $6,513,000.





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
      have
      issued $1,203,500 of short-term indebtedness as of December 31, 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.





**We
      have unqualified 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 2005 and
      2004, and since inception, as stated in the financial statements that are part
      of this Annual Report. Our Independent Auditors issued an unqualified report
      on
      our financial statements as of and for the year ended December 31, 2005.
      However, 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 6 - Going Concern” of the notes to Financial
      Statements contained in this Report. The financial statements which accompany
      this annual report do not include any adjustments that might result from this
      uncertainty.





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





The
      Company was organized in September 2002. We only have a limited operating
      history upon which to evaluate our future performance and prospects. 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 industry, which is an evolving industry characterized by intense
      competition.




22





**There
      may be potential liabilities associated with the Company that we were not aware
      of at the time of the merger.**




The
      Company 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 and adversely
      affected.





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





Our
      ability to derive revenues by providing online commerce, ATM, SDI, and SONET
      Internet services depends, in part, upon a developed and robust industry and
      the
      infrastructure for providing these services 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, our future business, operating
      results and financial condition could be adversely affected.





**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, the availability of a commercially viable
                market for our products and services, our ability to successfully
                market
                our products and services, our ability to provide reliable service
                to and
                retain new customers and our ability to 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 create
      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 adapt 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, which may be 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 limited 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.




23




**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,
      thereby 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 other executive officers, and may have
      difficulty attracting and retaining the additional 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 executive 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 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 on 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.




**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.




24




**Our
      dependence on a 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 Eric Young, our Chairman and CEO, President and
      Executive Vice President, and Chief Operating Officer and Chief Financial
      Officer, respectively, own approximately 34% of the Company's shares of common
      stock as of June 9, 2006. Therefore, these stockholders may have the ability
      to
      elect our directors and to control the outcome of other issues submitted to
      our
      stockholders.





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




Our
      common stock is currently quoted on the OTC-Pink Sheets under the symbol “WDMG.”
As a result of trading in the over-the-counter market, an investor would likely
      find it more difficult to purchase, dispose of, or to obtain quotations as
      to
      the price of the common stock. There can be no assurance that a more active
      trading market will develop, or if developed, that it will be
      maintained.




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




The
      trading of 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.




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




We
      are
      authorized to issue 5,000,000 shares of preferred stock, $0.001 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 as of June 16, 2006,
      approximately 29,238,000 are “restricted securities,” as that term is defined in
      the Securities Act, and may only be sold in compliance with the provisions
      of
      Rule 144 of the Securities Act.




25





**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
      Company as of March 28, 2005.




Effective
      on March 1, 2006, De Joya & Company, the independent registered public
      accounting firm who was previously engaged as the principal accountant to audit
      the Company's financial statements, resigned.  De Joya & Company has
      decided to withdraw from the Public Company Auditing Oversight Board and will
      no
      longer be performing public company audits.




De
      Joya
& Company audited the Company's financial statements for the fiscal year
      ended December 31, 2004. This firm's report on these financial statements was
      modified as to uncertainty that the Company will continue as a going concern;
      other than this, the auditor's report on the financial statements for the period
      neither contained an adverse opinion or a disclaimer of opinion, nor was
      qualified or modified as to audit scope or accounting principles.




During
      the fiscal year ended December 31, 2004, and preceding such change, there were
      no disagreements with De Joya & Company on any matter of accounting
      principles or practices, financial statement disclosure, or auditing scope
      or
      procedure. In addition, there were no "reportable events" as described in Item
      304(a)(1)(iv)(B)1 through 3 of Regulation S-B that occurred during the fiscal
      year ended December 31, 2005 and the period preceding such change.




On
      March
      3, 2006, the Company engaged De Joya Griffith & Company, LLC as its
      independent registered public accounting firm to review the Company's unaudited
      financial statements for the quarter periods ended March 31, 2005, June 30,
      2005
      and September 30, 2005. During the fiscal year ended December 31, 2005 and
      the
      subsequent interim period prior to engaging this firm, neither the Company
      (nor
      someone on its behalf) consulted the newly engaged accountant regarding any
      matter.





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





Our
      management, with the participation of our Chief Executive Officer and Chief
      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, 2005. Based
      on
      this evaluation, our management concluded that our disclosure controls and
      procedures were not effective as of December 31, 2005 to ensure that information
      required to be disclosed by us in the reports that we file or submit to the
      SEC
      is recorded, processed, summarized and reported within the time periods
      specified in the SEC’s rules and forms. Our management team is diligently
      developing & implementing disclosure controls and procedures to ensure that
      such information required for disclosure is recorded, processed, summarized
      and
      reported timely and accurately.





**Changes
      in Internal Controls**





There
      have been no significant changes in the Company’s internal controls or in other
      factors that could significantly affect these controls subsequent to the date
      of
      the evaluation thereof, including any corrective actions with regard to
      significant deficiencies and material weaknesses.




26




**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
      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
            
            President
                and DirectorEric
                Young
            
            43
            
            Chief
                Financial Officer, Chief Operating Officer and
                Director




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. 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.




**Directors
      & Officers**





**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. Mr. Johnson's education includes a B.S. from FAMU
      and additional labs and studies which 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.




**Jon
      J. Jannotta** has been
      a director since April 2000, Executive Vice President of the Company from April
      2000 until December 2003, and since then, the President of the Company. 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.





**Eric
      D. Young** ,
      age 43,
      assumed the dual roles of Chief Operating Officer and Chief Financial Officer
      on
      November 5, 2005. Mr. Young had served as senior financial consultant to the
      Company for the six months prior to November 5, 2005. In addition to performing
      financial consulting services to the Company, Mr. Young has provided services
      to
      companies such as ACE III Communications, Inc., and The Major Broadcasting
      Cable
      Network, Inc., among others. Mr. Young acted in various capacities in senior
      financial executive roles with Cox Enterprises, Inc. including the positions
      of
      Controller of Springfield Newspapers Inc. (1991), Assistant Controller of Dayton
      Newspapers, Inc. (1994), Controller of Cox Ohio Publications, Inc. (1996),
      and
      Controller of the Atlanta Journal & Constitution, (1997).




27




**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.
      Since the Company does not have an audit committee, our board of directors
      have
      determined that none of its members is an audit committee financial expert
      within the meaning of paragraph (c) (2) of Item 402 of Regulation S-B. As the
      Company continues to develop and upon the creation of an audit committee, the
      Company will seek to add an audit committee financial expert to such committee.
      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 fiscal year ended December 31, 2005, except the
      following: Winston
      Johnson has not filed a Form 4 as of December 31, 2005 for common shares
      received during fiscal year 2005.




**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 President, 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 our 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, 2005,
      2004 and 2003 by our executive officers.




28




Summary
      Compensation Table


**Annual
                  Compensation**
              
              
              
              
              **Long-Term
                  Compensation****Awards****Name
                  and**
                **Principal
                  Position**
              
              **Year**
              
              **Salary
                  $**
              
              
              **Bonus
                  $**
              
              **All
                  Other**
                **Compensation**
              
              
              **Restricted**
                **Stock**
                **Awards**
              
              **Shares**
                **Underlying**
                **Options**
              
              **All
                  Other**
                **Compensation**Winston
              
              2005
              
              $290,000
              (1)
              
              $0
              
              $0
              
              
              $165,000
              (5)
              0
              
              $231,000(7)Johnson
              
              2004
              
              $221,900
              (2)
              
              $0
              
              $0
              
              
              $0
              
              0
              
              $0CEO
                  & Chairman of the Board
              
              2003
              
              $199,200
              (3)
              
              $0
              
              $0
              
              
              $0
              
              0
              
              $0Jon
              
              2005
              
              $270,000
              (3)
              
              $0
              
              $0
              
              
              $0
              
              0
              
              $0Jannotta
              
              2004
              
              $ 
                  62,419
              (3)
              
              $0
              
              $0
              
              
              $360,774
              (4)
              0
              
              $0President
              
              2003
              
              $0
              
              
              $0
              
              $0
              
              
              $0
              
              0
              
              $0Eric
              
              2005
              
              $ 
                  25,434
              (3)
              
              $0
              
              $0
              
              
              $185,000
              (6)
              0
              
              $0Young
              
              2004
              
              $0
              
              
              $0
              
              $0
              
              
              $0
              
              0
              
              $0CFO
                  & COO
              
              2003
              
              $0
              
              
              $0
              
              $0
              
              
              $0
              
              0
              
              $0Nana
              
              2005
              
              $0
              
              
              $0
              
              $0
              
              
              $0
              
              0
              
              $0Yalley
              
              2004
              
              $0
              
              
              $0
              
              $0
              
              
              $765,160
              (8)
              0
              
              $0Executive
                  VP
              
              2003
              
              $0
              
              
              $0
              
              $0
              
              
              $0
              
              0
              
              $0


(1)
            Total
                compensation consists of $213,700 paid in cash and $76,300 accrued
                and
                unpaid as of December 31, 2005.




(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 pursuant to a binding
                offer
                letter in which Mr. Johnson is to receive compensation of $221,900
                per
                annum.(3)
            Accrued
                and unpaid as of December 31, 2005.




(4)
            In
                October 2004, Jon Jannotta was issued 487,532 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, and they were valued at the then current
                market
                price of $360,774.




(5)
            In
                December 2005, Winston Johnson was issued 500,000 shares of restricted
                common stock. These shares were fully vested, and they were valued
                at the
                then current market price of $0.33 per share or
                $165,000.




(6)
            In
                December 2005, the Company recorded the vesting of 500,000 shares
                of
                common stock award to Eric Young, for the net vested value of
                $185,000.





(7)
            In
                December 2005, Winston Johnson was issued 700,000 shares of common
                stock
                to partially relieve a related party loan payable to him, valued at
                $0.33 price per average share or
                $231,000.


(8)
              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, and they were issued 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. In
      fiscal
      year 2004, stock options were granted to officers to purchase 3,000,000 shares
      of the Company’s common stock at $1.00 per share. In fiscal year 2005, Mr. Nana
      Yalley, a former officer and former board member of the Company, signed a
      separation agreement to terminate his executive and board responsibilities,
      as
      well as, to reduce his options to purchase common stock of the Company from
      1,000,000 to 500,000 shares at an average price of $1.00 per
      share.




On
        November 5, 2005, Mr. Eric Young was hired as Chief Financial and Operating
        Officer of the Company, and was thereby granted stock options to purchase
        500,000 shares of the Company’s common stock at an average price of $1.00 per
        share, as well as, stock options to purchase 750,000 of the Company’s common
        stock at an average price of $0.01 per share. (See
        “Note 2 - Summary of Significant Accounting Policies” for further detailof
        the
        Company’s stock option activity for fiscal years ended December 31, 2004 and
        2005.)




**A** **ggregated
      Option/Share Exercises In Last Fiscal Year And Fiscal Year End Option/Share
      Values**




No
      Named
      Executive Officers exercised options during the fiscal year ended December
      31,
      2005.




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




No
      named
      executive officer received any award for the fiscal year ended December 31,
      2005
      under any long-term incentive plan.




29





**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
      were 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 occurred
      or
      January 1, 2005, whichever occurred first. Each officer is eligible for annual
      incentive bonuses based on performance. The agreements are terminable at will
      with or without cause (as defined).





Subsequently,
      on December 9, 2005, Mr. Yalley entered into a separation agreement with the
      Company, thereby terminating Mr. Yalley’s employment with the Company effective
      as of October 8, 2004. The separation agreement specifies that Mr. Yalley is
      entitled to restricted common stock of the Company equal to his base salary
      of
      $270,000, consisting of 818,182 common shares or $0.33 average price per share.
      The separation agreement also specifies that an identical number of restricted
      shares of common stock of the Company which were issued to Mr. Collazo in
      settlement of litigation may be issued to Mr. Yalley as well. (See “Note 14 -
      Subsequent Events” for further details regarding shares issued to Mr. Collazo in
      settlement of litigation.)





The
      employee agreements effective as of October 8, 2004 provided for the grant
      of
      3,000,000 incentive or non-statutory stock options for three officers to
      purchase 1,000,000 shares each of common stock for $1.00 per share, with
      10%
      vesting individually and 90% vesting at the rate of 1/12 per month for 12 months
      effective with date of the employment agreement. The agreements are terminable
      at will with or without cause (as defined).





However,
      per the separation agreement of December 9, 2005, Mr. Yalley has agreed to
      a
      reduction of the stock options to purchase common stock of the Company from
      1,000,000 to 500,000 shares. These options are vested and immediately
      exercisable for (5) five years from the date of the grant at $1.00 per share.
      Mr. Yalley’s 500,000 stock options were valued using the Black Scholes valuation
      model and recorded at $131,068 as of December 31, 2005, in accordance with
      SFAS
      No. 123 “Accounting for Stock Based Compensation.”





On
      December 3, 2004, Jeffrey B. McConnell resigned as Chief Operating Officer
      and
      Chief Financial Officer of the Company.





On
      November 5, 2005, the Company replaced Mr. McConnell by entering into a binding
      offering letter with Eric Young, as Chief Operating Officer and Chief Financial
      Officer of the Company. Under the terms of employment, Mr. Young is to receive
      a
      base salary of $200,000 per annum, with $5,000 per month deferred until the
      next
      funding occurs or January 1, 2006, whichever occurs first. Mr. Young is eligible
      for an annual incentive bonus based on performance. The agreement is terminable
      at will with or without cause (as defined). Mr. Young received non-qualified
      incentive stock options to purchase 500,000 shares of common stock at an
      exercise price of $1.00 per share in accordance with the Company's Employee
      Stock Option Plan. Ten percent of the options vested immediately upon the
      signing of the Employment Agreement and the remaining options shall vest at
      the
      rate of 1/12th per month for 12 months. In addition, Young received an
      additional restricted 750,000 shares of stock upon the signing of the Employment
      Agreement at a purchase price of $.01 per share, in which 1/3 vested upon the
      signing of the Employment Agreement, 1/3 will vest at the closing of the next
      round of financing or January 1, 2006, whichever is earlier, and the remaining
      1/3 when the company’s common stock resumes trading on the OTCBB.





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




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




30




The
      following table sets forth information with respect to the beneficial ownership
      of shares of our common stock as of December 31, 2005, on which date there
      were
      40,204,556 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.




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.
      101 Marietta Street, Suite 2600, Atlanta, GA 30303.





**Name
                and Address**
            
            **Amount
                and Nature**
              **Of
                Beneficial Ownership**
            
            **Percentage
                of**
              **Outstanding**
              **Shares
                Owned**Winston
                Johnson
            
            
            7,987,700
            
            
            18.3
            %Jon
                J. Jannotta
            
            
            6,208,690
            
            
            14.2
            %Eric
                Young
            
            
            500,000
            
            
            1.1
            %All
                current directors and executiveofficers
                as a group (3 persons)
            
            
            14,696,390
            
            
            33.6
            %








**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 (1) the Winsonic Transaction, which
      is discussed in “Merger with Winsonic Holdings” A subsection of Item 1 of this
      report; (2) a stock exchange agreement with Native American Television Network,
      Inc., which is discussed in “Discussion of Business,” a subsection of Items 1
      and “Continuing Operations,” a subsection of Item 6; and (3) certain other
      transactions discussed in Note 4 of the notes to the financial statements,
      “Related Party Transactions.”





**Item
                13.**
            **Exhibits.**





**Exhibit
                No.**
            
            **Description**2.1
            
            Agreement
                and Plan of Reorganization by and among Media and Entertainment.com,
                Inc.,
                Winsonic Acquisition Sub, Inc., Winsonic Holdings, Ltd and Winston
                Johnson, dated July 16, 2004, as amended.(6)3.1
            
            Articles
                of Incorporation of Media and Entertainment.com, Inc., dated April
                27,
                2000, as amended through October 17, 2002.(1)3.2
            
            Certificate
                of Amendment to the Articles of Incorporation dated November 5, 2003.(4)3.3
            
            By-laws
                of Media and Entertainment.com, Inc.(2)4.1
            
            Winsonic
                Digital Media Group, Ltd. 9% Convertible Subordinated Promissory
                Note
                dated October 12, 2005 in the amount of $25,000.(11)4.2
            
            Winsonic
                Digital Media Group, Ltd. Warrant Certificate dated October 12, 2005.(11)4.3
            
            Form
                of Winsonic Digital Media Group, Ltd. 6% Convertible Subordinated
                Promissory Note.(13)4.4
            
            Form
                of Winsonic Digital Media Group, Ltd. Warrant Certificate.(13)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 by and between Media and Entertainment.com, Inc. and Winsonic
                Holdings, Ltd., dated as of July 18, 2003.(3)10.3
            
            Stock
                Purchase Agreement by and between Media and Entertainment.com, Inc.
                and
                Winsonic Holdings, Ltd., dated as of July 18, 2003.(3)




31




**Exhibit
                No.**
            
            **Description**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., dated December 10, 2004.(5)10.8
            
            Joint
                Marketing and Development Agreement with C12, Inc., dated December
                10,
                2004.(5)10.9
            
            Modification
                of the Master Purchase Agreement between C12 and Winsonic Holdings,
                dated
                December 10, 2004.(5)10.10
            
            Shareholder
                Agreement dated October 6, 2004, by and among Media and Entertainment.com,
                Inc., Winston Johnson, Nana Yalley and Jon Jannotta.(6)10.11
            
            Form
                of Exchange Agreement.(6)10.12
            
            Memorandum
                of Understanding dated February 17, 2005, by and between Winsonic
                Digital
                Media Group, Ltd. and Native American Television Network, Inc.(7)10.13
            
            Letter
                of Agreement dated as of March 1, 2005, by and between Winsonic Digital
                Media Group Ltd. and The Titan Network, LLC.(7)10.14
            
            Memorandum
                of Understanding dated March 12, 2005, by and between Winsonic Digital
                Media Group, Ltd. and Proactive Media Group, Inc.(7)10.15
            
            Agreement
                dated March 17, 2005, by and between Winsonic Digital Media Group,
                Ltd.
                and Lantern Hill Capital.(7)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.(7)10.17
            
            Office
                Services Agreement dated May 12, 2005 by and between Interactive
                Worldwide
                Atlanta - 260 Peachtree LLC and Winsonic Digital Media Group.(9)10.18
            
            Office
                Sublease and Services Agreements between Crowne Office Suites, Inc.
                at
                Peachtree Center and Winsonic Digital Media Group, Ltd. dated December
                22,
                2004, December 28, 2004 and January 7, 2005.(9)10.19
            
            Standard
                Industrial/ Commercial Multi-Tenant Lease - dated January 10, 2005,
                by and
                between Beverly Lion LLC and Winsonic Digital Media Group.(9)10.20
            
            Binding
                Employment Offering Letter dated October 8, 2004 by and between the
                Registrant and Winston Johnson.(9)10.21
            
            Binding
                Employment Offering Letter dated October 8, 2004 by and between the
                Registrant and Jon Jannotta.(9)10.22
            
            Binding
                Employment Offering Letter dated October 8, 2004 by and between the
                Registrant and Nana Yalley.(9)10.23
            
            Addendum
                to the June 9, 2003 Master Service Agreement with Level 3 Communications
                keeping the agreement in full effect dated August 22, 2004.(9)10.24
            
            Service
                schedule for (3) LinkSMGlobal Wavelength Service - IRU dated August 17, 2004.(9)10.25
            
            Contract
                with Sun Micro Systems as a Sun iforce Partner dated May 24, 2005.(9)10.26
            
            Amended
                and Restated Acquisition and Share Exchange Agreement by and among
                Winsonic Digital Media Group, Ltd and Automated Interiors, LLC and
                William
                H. Mann and Jeffrey Fischer executed on May 15, 2006 and effective
                as of
                April 18, 2006.(10)10.27
            
            Office
                Lease Agreement for Centennial Tower, 101 Marietta Street, Atlanta,
                Georgia, by and between Atlanta Centennial, LLC and Winsonic Digital
                Media
                Group, Ltd., dated October 12, 2005.(11)10.28
            
            Binding
                Employment Offering Letter dated November 2, 2005 by and between
                Winsonic
                Digital Media Group, Ltd. and Eric D. Young.(12)14.1
            
            Code
                of Business Conduct and Ethics.(3)16.1
            
            Letter
                from Chavez and Koch dated March 31, 2005.(8)16.2
            
            Letter
                from DeJoya & Griffith, Changes in Registrant’s Certifying Accountant
                dated March 10, 2005.(14)*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




*  Filed
        herewith.
 (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-SB12G 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 filed November 30,
                  2004.
 (5)
              Incorporated
                  herein by reference to the Registrant’s Form 8-K filed December 17,
                  2004.
 (6)
              Incorporated
                  herein by reference to the Registrant’s Form 8-K/A Amendment No. 1 filed
                  October 19, 2004.
 (7)
              Incorporated
                  herein by reference to the Registrant’s Form 8-K filed March 31,
                  2005.
 (8)
              Incorporated
                  herein by reference to the Registrant’s Form 8-K filed March 31,
                  2005.
 (9)
              Incorporated
                  herein by reference to the Registrant’s Annual Report on Form 10-KSB for
                  the year ended December 31, 2004.
 (10)
              Incorporated
                  herein by reference to the Registrant’s Form 8-K filed May 16,
                  2005.
 (11)
              Incorporated
                  herein by reference to the Registrant’s Form 8-K filed October 18,
                  2005.
 (12)
              Incorporated
                  herein by reference to the Registrant’s Form 8-K filed November 14,
                  2005.
 (13)
              Incorporated
                  herein by reference to the Registrant’s Annual Report on Form 10-KSB/A for
                  the year ended December 31, 2004, filed January 6,
                  2006. (14)
              Incorporated herein by reference to the Registrant’s Form
                8-K filed March 16, 2006.




32






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




The
      aggregate fees billed and paid to our independent auditors, DeJoya &
Griffith, for each of our last two fiscal years are as follows:




**2005**
            
            **2004**Audit
                Fees
            
            $
            30,000
            
            $
            15,000Audit-Related
                Fees
            
            $
            15,000
            
            $
            -
                0
                -Tax
                Fees
            
            $
            -
                0
                -
            
            $
            -
                0
                -All
                Other Fees
            
            $
            -
                0
                -
            
            $
            -
                0
                -





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.




33




**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.
                (Registrant)June
                  28, 2006
              By:
              /s/
                  Winston JohnsonWinston
                  Johnson
                CEO
                  and Chairman
 
 June
                  28, 2006
              By:
              /s/
                  Eric YoungEric
                  YoungCFO and
                  COO




June
                  28, 2006
              By:
              /s/
                  Jon JannottaJon
                  JannottaPresident




34


REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 To
        the
        Board of Directors
 Winsonic
        Digital Media Group, Ltd.
 Atlanta,
        Georgia
 
 We
        have
        audited the accompanying balance sheet of Winsonic Digital Media Group, Ltd.
        as
        of December 31, 2005 and the related statements of operations, stockholders’
deficit, and cash flows for the year ended December 31, 2005. 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 did not audit the financial statements of Winsonic Digital
        Media
        Group, Ltd. as of and for the year ended December 31, 2004 and for the period
        from September 10, 2002 (Inception) through December 31, 2004. Those statements
        were audited by other auditors whose report has been furnished to us, and
        our
        opinion, insofar as it relates to the amounts included in the period ending
        December 31, 2004, is based solely on the report of the other
        auditors.
 
 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 and the report of the other auditors
        provide a reasonable basis for our opinion.
 
 In
        our
        opinion, based on our audit and the report of the other auditors, the financial
        statements referred to above present fairly, in all material respects, the
        financial position of Winsonic Digital Media Group, Ltd. as of December 31,
        2005, and the results of its operations and cash flows for the year ended
        December 31, 2005, 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 $12,449,708, 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 Griffith & Company, LLC
 De
        Joya
        Griffith & Company, LLC
 June
        28,
        2006
 Henderson,
        Nevada


2580
            Anthem Village Drive, NV 89052
 Telephone
            (702) 588-5961 ● Facsimile (702) 588-5979


WINSONIC
        DIGITAL MEDIA GROUP, LTD.
 (A
        DEVELOPMENT STAGE COMPANY)
 **BALANCE
        SHEETS**
 AS
        OF
        DECEMBER 31, 2005 & 2004 (Restated)
 **12/31/2005**
                
                **12/31/2004**(Restated)**ASSETS**ASSETS:Cash
                
                $
                —
                
                $
                436,749Prepaid
                    expense
                
                
                16,476
                
                
                —Deposit
                
                
                —
                
                
                82,490**Total
                    current assets**
                
                
                **16,476**
                
                
                **519,239**Fixed
                    assets:Computer
                    equipment
                
                
                977,669
                
                
                1,577,269Infrastructure
                
                
                158,400
                
                
                320,000Software
                
                
                82,899
                
                
                160,000Furniture
                    & fixtures
                
                
                36,682
                
                
                13,040Less:
                    accumulated depreciation
                
                
                (614,194
                )
                
                (550,955
                )Total
                    fixed assets
                
                
                641,456
                
                
                1,519,354**TOTAL
                    ASSETS**
                
                **$**
                **657,932**
                
                **$**
                **2,038,593****LIABILITIES
                    AND STOCKHOLDERS' DEFICIT**LIABILITIES:Current
                    liabilities:Accounts
                    payable and accrued expenses
                
                $
                2,094,824
                
                $
                1,514,625Bank
                    overdraft
                
                
                14,468
                
                
                —Accrued
                    payroll and related taxes
                
                
                1,353,053
                
                
                781,575Legal
                    settlement liabilities
                
                
                1,020,000
                
                
                1,020,000Loans
                    payable
                
                
                383,357
                
                
                357,506Loan
                    payable -related party
                
                
                435,398
                
                
                683,726Note
                    payable
                
                
                —
                
                
                847,000Accrued
                    interest on notes payable
                
                
                —
                
                
                101,640Derivative
                    liability related to convertible debentures
                
                
                82,483
                
                
                652,254Warrant
                    liability related to convertible debentures
                
                
                23,406
                
                
                614,609Convertible
                    debentures
                
                
                1,122,639
                
                
                37,871**Total
                    current liabilities**
                
                
                **6,529,628**
                
                
                **6,610,806****TOTAL
                    LIABILITIES**
                
                
                **6,529,628**
                
                
                **6,610,806**Stockholders'
                    deficit:Preferred
                    stock, $0.001 par value, 5,000,000 shares authorized, zero
                    sharesissued
                    and outstanding at December 31, 2005 and 2004,
                    respectively
                
                
                —
                
                
                —Common
                    stock, $0.001 par value, 50,000,000 sharesauthorized,
                    40,204,556and 33,620,884shares
                    issued andoutstanding
                    at December 31,2005 and 2004, respectively
                
                
                40,205
                
                
                33,621Additional
                    paid-in capital
                
                
                6,517,807
                
                
                2,918,261Common
                    stock payable at $0.33 and $1.00 per share at December 31, 2005
                    and2004,
                    respectively
                
                
                270,000
                
                
                820,000Deposit
                    paid by common stock
                
                
                (250,000
                )
                
                —Accumulated
                    deficit during development stage
                
                
                (12,449,708
                )
                
                (8,344,095
                )**Total
                    stockholders' deficit**
                
                
                (5,871,696
                )
                
                (4,572,213
                )**TOTAL
                    LIABILITIES AND STOCKHOLDERS' DEFICIT**
                
                **$**
                **657,932**
                
                **$**
                **2,038,593**
 
 
 *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)
 **STATEMENTS
        OF OPERATIONS**
 FOR
        THE YEARS ENDED DECEMBER 31, 2005 & 2004 (Restated)
 AND
        FROM INCEPTION TO
 DECEMBER
        31, 2005
  **For
                    the years ended December 31,**
                
                **Inception
                    to****2005**
                
                **2004**
                
                **December
                    31, 2005****(Restated)**REVENUE
                
                $
                —
                
                $
                25,000
                
                $
                57,811COST
                    OF GOODS SOLD
                
                
                441,204
                
                
                296,120
                
                
                1,149,160GROSS
                    PROFIT
                
                
                (441,204
                )
                
                (271,120
                )
                
                (1,091,349
                )EXPENSES:Selling,
                    general and administrative
                
                
                1,262,278
                
                
                1,516,584
                
                
                4,282,920Selling,
                    general and administrative, related party
                
                
                1,336,502
                
                
                346,738
                
                
                1,888,444Consulting
                    services - related party
                
                
                945,334
                
                
                1,125,934
                
                
                2,071,268Depreciation
                    and amortization expense
                
                
                344,720
                
                
                342,355
                
                
                895,675Total
                    expenses
                
                
                3,888,834
                
                
                3,331,611
                
                
                9,138,307OPERATING
                    INCOME (LOSS)
                
                
                (4,330,038
                )
                
                (3,602,731
                )
                
                (10,229,656
                )OTHER
                    INCOME/(EXPENSES):Interest
                    expense
                
                
                (1,198,096
                )
                
                (825,924
                )
                
                (2,256,418
                )Legal
                    settlement costs
                
                
                —
                
                
                (1,020,000
                )
                
                (1,020,000
                )Unrealized
                    gain (loss) on adjustment of derivative and warrantliability
                    to fair value of underlying securities
                
                
                1,422,048
                
                
                (451,863
                )
                
                970,185Interest
                    income
                
                
                473
                
                
                257
                
                
                730Equity
                    investment loss
                
                
                —
                
                
                
                
                
                —Other
                    income
                
                
                —
                
                
                109,467
                
                
                85,451Total
                    other income/(expenses)
                
                
                224,425
                
                
                (2,188,063
                )
                
                (2,220,052
                )NET
                    LOSS BEFORE PROVISION FOR INCOME TAXES
                
                
                (4,105,613
                )
                
                (5,790,794
                )
                
                (12,449,708
                )PROVISION
                    FOR INCOME TAXES
                
                
                —
                
                
                —
                
                
                —NET
                    LOSS
                
                **$**
                **(4,105,613**
                **)**
                **$**
                **(5,790,794**
                **)**
                **$**
                **(12,449,708**
                **)**Basic
                    weighted average number ofcommon
                    shares outstanding
                
                
                16,565,189
                
                
                8,787,258Net
                    loss per basic and diluted common share
                
                $
                (0.25
                )
                $
                (0.66
                )
 
 
 
 *The
        accompanying notes to the financial statements should be*
 *read
        in conjunction with these Statements of Operations.*
  F-2


WINSONIC
        DIGITAL MEDIA GROUP, LTD.
 (A
        DEVELOPMENT STAGE COMPANY)
 **STATEMENTS
        OF CASH FLOWS**
 FOR
        THE YEARS ENDED DECEMBER 31, 2005 & 2004 (Restated) AND FROM INCEPTION TO
 DECEMBER
        31,2005
 **For
                      the years ended December 31**
                  
                  **Inception
                      to****2005**
                  
                  **2004**
                  
                  **December
                      31, 2005****(Restated)**
                  
                  **(Restated)****CASH
                      FLOWS FROM OPERATING ACTIVITIES:**Net
                      (loss)
                  
                  $
                  (4,105,613
                  )
                  $
                  (5,790,794
                  )
                  $
                  (12,449,708
                  )Adjustments
                      to reconcile net lossto
                      net cash used by operations:Depreciation
                  
                  
                  344,720
                  
                  
                  342,355
                  
                  
                  895,675Accretion
                      of principal and interest relatedto
                      convertible debentures
                  
                  
                  1,073,547
                  
                  
                  37,871
                  
                  
                  1,111,418Unrealized
                      (gain) loss on adjustment of derivative andwarrant
                      liability to fair value of underlying securities
                  
                  
                  (1,422,048
                  )
                  
                  451,863
                  
                  
                  (970,185
                  )Stock
                      based compensation
                  
                  
                  1,732,402
                  
                  
                  1,490,809
                  
                  
                  3,229,215Change
                      in operating assets and liabilities:Decrease
                      in due from stockholder
                  
                  
                  —
                  
                  
                  23,227
                  
                  
                  —Decrease
                      in deposit
                  
                  
                  82,490
                  
                  
                  (22,490
                  )
                  
                  —(Increase)
                      decrease in prepaid expenses
                  
                  
                  (16,476
                  )
                  
                  —
                  
                  
                  (16,476
                  )Increase
                      (decrease) in bank overdraft
                  
                  
                  14,468
                  
                  
                  (4,205
                  )
                  
                  14,468Increase
                      (decrease) in accounts payable and accrued expenses
                  
                  
                  580,201
                  
                  
                  728,645
                  
                  
                  2,338,295Increase
                      (decrease) in accrued payroll and related taxes
                  
                  
                  862,132
                  
                  
                  532,575
                  
                  
                  1,643,707Increase
                      (decrease) in legal settlement liabilities
                  
                  
                  —
                  
                  
                  1,020,000
                  
                  
                  1,020,000(Decrease)
                      increase in interest payable
                  
                  
                  (101,640
                  )
                  
                  101,640
                  
                  
                  —**Net
                      cash used in operating activities**
                  
                  
                  (955,817
                  )
                  
                  (1,088,504
                  )
                  
                  (3,183,591
                  )**CASH
                      FLOWS FROM INVESTING ACTIVITIES:**Reduction
                      of fixed assets - Digital Services International,
                      Inc.
                  
                  
                  842,000
                  
                  
                  0
                  
                  
                  —Purchase
                      of fixed assets
                  
                  
                  (27,341
                  )
                  
                  —
                  
                  
                  (1,255,650
                  )**Net
                      cash provided by investing activities**
                  
                  
                  **814,659**
                  
                  
                  **—**
                  
                  
                  (1,255,650
                  )**CASH
                      FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                      from loans payable
                  
                  
                  30,567
                  
                  
                  31,977
                  
                  
                  419,573Proceeds
                      from loan payable - related party
                  
                  
                  140,000
                  
                  
                  683,726
                  
                  
                  823,726Payment
                      on note payable - related party
                  
                  
                  (160,000
                  )
                  
                  (5,450
                  )
                  
                  (160,000
                  )Satisfaction
                      of note payable - Digital ServicesInternational,
                      Inc.
                  
                  
                  (847,000
                  )
                  
                  —
                  
                  
                  —Forgiveness
                      of accrued interest - Digital Services International, Inc.
                  
                  
                  152,592
                  
                  
                  —
                  
                  
                  152,592Proceeds
                      from convertible debentures
                  
                  
                  388,250
                  
                  
                  815,000
                  
                  
                  1,203,250Proceeds
                      from warrants for common stock
                  
                  
                  —
                  
                  
                  —
                  
                  
                  2,000,100**Net
                      cash(used in) provided by financing activities**
                  
                  
                  (295,591
                  )
                  
                  **1,525,253**
                  
                  
                  **4,439,241****NET
                      (DECREASE) INCREASE IN CASH**
                  
                  
                  (436,749
                  )
                  
                  **436,749**
                  
                  
                  **—****CASH,
                      BEGINNING OF PERIOD**
                  
                  
                  **436,749**
                  
                  
                  **—**
                  
                  
                  **—****CASH,
                      END OF PERIOD**
                  
                  **$**
                  **—**
                  
                  **$**
                  **436,749**
                  
                  **$**
                  **—****SUPPLEMENTARY
                      INFORMATION:**Interest
                      paid
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —Income
                      taxes paid
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —**NON-CASH
                      ACTIVITIES:**Issuance
                      of common stock for common stock payable
                  
                  **$**
                  **820,000**
                  
                  **$**
                  **—**
                  
                  **$**
                  **820,000**Forgiveness
                      of salary payable to officer
                  
                  **$**
                  **270,000**
                  
                  **$**
                  **—**
                  
                  **$**
                  **270,000**Forgiveness
                      of payroll tax for officer
                  
                  **$**
                  **20,655**
                  
                  **$**
                  **—**
                  
                  **$**
                  **20,655**Issuance
                      of common stock as deposit on lease obligation
                  
                  **$**
                  **250,000**
                  
                  **$**
                  **—**
                  
                  **$**
                  **250,000**Issuance
                      of common stock as payment on notes payable - related
                      party
                  
                  **$**
                  **231,000**
                  
                  **$**
                  **—**
                  
                  **$**
                  **231,000**Issuance
                      of common stock upon conversion of debentures
                  
                  **$**
                  **118,000**
                  
                  **$**
                  **—**
                  
                  **$**
                  **118,000**Adjustment
                      to paid in capital for Accumulated Depreciation
                  
                  **$**
                  **281,481**
                  
                  **$**
                  **—**
                  
                  **$**
                  **281,481**
 
  *The
        accompanying notes to financial statements should be*
 *read
        in conjunction with these Statements of Cash Flows.*
  F-3







WINSONIC
      DIGITAL MEDIA GROUP, LTD.


(A
      DEVELOPMENT STAGE COMPANY)


STATEMENT
      OF STOCKHOLDERS' DEFICIT




AccumulatedDeposit
                
                DeficitAdditional
                
                Common
                
                Paid
                    By
                
                During
                
                TotalPreferred
                    Stock
                
                Common
                    Stock
                
                Paid-in
                
                Stock
                
                Common
                
                Development
                
                Stockholders'Shares
                
                Amount
                
                Shares
                
                Amount
                
                Capital
                
                Payable
                
                Stock
                
                Stage
                
                Deficit**Balance,
                    September 10, 2002 (Inception) - No Par Stock**
                
                
                **10,000,000**
                
                **$**
                **-**
                
                
                **10,000,000**
                
                **$**
                **-**
                
                **$**
                **-**
                
                
                
                
                
                
                
                **$**
                **-**
                
                **$**
                **-**Reverse
                    Merger - ReAcquisition of all outstanding shares of Winsonic
                    Acquisition
                    Sub, Inc. - No Par Stock (Recasted to inception)
                
                
                (10,000,000
                )
                
                -
                
                
                (10,000,000
                )
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Issuance
                    of common stock to founder for services
                
                
                
                
                
                -
                
                
                6,004,200
                
                
                6,004
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                6,004**Balance,
                    September 10, 2002 (Recasted)**
                
                
                **-**
                
                
                **-**
                
                
                **6,004,200**
                
                
                **6,004**
                
                
                **-**
                
                
                **-**
                
                
                **-**
                
                
                
                
                
                **6,004**Issuance
                    of stock warrants (December 26, 2002)
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                990,600
                
                
                -
                
                
                -
                
                
                990,600Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (647,417
                )
                
                (647,417
                )**Balance,
                    December 31, 2002 (Restated)**
                
                
                **-**
                
                
                **-**
                
                
                **6,004,200**
                
                
                **6,004**
                
                
                **-**
                
                
                **990,600**
                
                
                **-**
                
                
                **(647,417**
                **)**
                
                **349,187**Issuance
                    of stock warrants
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,009,500
                
                
                -
                
                
                -
                
                
                1,009,500Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,905,884
                )
                
                (1,905,884
                )**Balance,
                    December 31, 2003 (Restated)**
                
                
                **-**
                
                
                **-**
                
                
                **6,004,200**
                
                
                **6,004**
                
                
                **-**
                
                
                **2,000,100**
                
                
                **-**
                
                
                **(2,553,301**
                **)**
                
                **(547,197**
                **)**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
                
                
                -
                
                
                -
                
                
                -
                
                
                573,500Issuance
                    of common stock, $1.00 price per share
                
                
                -
                
                
                -
                
                
                921,600
                
                
                922
                
                
                920,678
                
                
                (921,600
                )
                
                
                
                
                -
                
                
                -Conversion
                    of common stock payable to loan payable
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                60,000
                
                
                (258,500
                )
                
                
                
                
                -
                
                
                (198,500
                )Issuance
                    of common stock related to reverse-merger
                
                
                -
                
                
                -
                
                
                23,956,138
                
                
                23,956
                
                
                (123,487
                )
                
                -
                
                
                -
                
                
                -
                
                
                (99,531
                )-
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (5,790,794
                )
                
                (5,790,794
                )**Balance,
                    December 31, 2004 (Restated)**
                
                
                **-**
                
                **$**
                **-**
                
                
                **33,620,884**
                
                **$**
                **33,621**
                
                **$**
                **2,918,261**
                
                **$**
                **820,000**
                
                **$**
                **-**
                
                **$**
                **(8,344,095**
                **)**
                **$**
                **(4,572,213**
                **)**Issuance
                    of common stock for services, $1.30 average price per
                    share
                
                
                
                
                
                
                
                
                94,615
                
                
                95
                
                
                122,905
                
                
                
                
                
                
                
                
                
                
                
                123,000Issuance
                    of common stock for services, $0.82 average price per
                    share
                
                
                
                
                
                
                
                
                91,463
                
                
                91
                
                
                74,909
                
                
                
                
                
                
                
                
                
                
                
                75,000Issuance
                    of common stock for services, $0.68 average price per
                    share
                
                
                
                
                
                
                
                
                66,667
                
                
                67
                
                
                45,267
                
                
                
                
                
                
                
                
                
                
                
                45,334Issuance
                    of common stock for equity investment in NATVN
                
                
                
                
                
                
                
                
                1,670,000
                
                
                1,670
                
                
                (1,670
                )
                
                
                
                
                
                
                
                
                
                
                -Issuance
                    of common stock founder to relieve related party note payable
                    due him,
                    at
                    $0.33 average price per share
                
                
                
                
                
                
                
                
                700,000
                
                
                700
                
                
                230,300
                
                
                
                
                
                
                
                
                
                
                
                231,000Issuance
                    of common stock to founder for services, $0.33 average price
                    per
                    share
                
                
                
                
                
                
                
                
                500,000
                
                
                500
                
                
                164,500
                
                
                
                
                
                
                
                
                
                
                
                165,000Issuance
                    of common stock for services, $0.70 average price per
                    share
                
                
                
                
                
                
                
                
                900,000
                
                
                900
                
                
                629,100
                
                
                
                
                
                
                
                
                
                
                
                630,000Issuance
                    of common stock for services, $0.48 average price per
                    share
                
                
                
                
                
                
                
                
                225,000
                
                
                225
                
                
                107,775
                
                
                
                
                
                
                
                
                
                
                
                108,000Issuance
                      of common stock in satisfaction of convertible debentures debts
                      of
                      $118,000, at $0.20 average price per share
                
                
                
                
                
                
                
                
                590,000
                
                
                590
                
                
                117,410
                
                
                
                
                
                
                
                
                
                
                
                118,000Issuance
                    of common stock as lease deposit, $0.27 average price per
                    share
                
                
                
                
                
                
                
                
                925,927
                
                
                926
                
                
                249,074
                
                
                
                
                
                (250,000
                )
                
                
                
                
                -Issuance
                    of common stock for common stock payable, $1.00 average price
                    per
                    share
                
                
                
                
                
                
                
                
                820,000
                
                
                820
                
                
                819,180
                
                
                (820,000
                )
                
                
                
                
                
                
                
                -Return
                    of pledged assets, reversal of accumulated depreciation, and
                    forgiveness
                    of debt - related party
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                281,481
                
                
                
                
                
                
                
                
                
                
                
                281,481Forgiveness
                    of interest expense - related party
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                152,592
                
                
                
                
                
                
                
                
                
                
                
                152,592Vested
                    common stock award for officer
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                185,000
                
                
                
                
                
                
                
                
                
                
                
                185,000Common
                    stock payable to officer for separation agreement, $0.33 average
                    price per
                    share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -
                
                
                270,000
                
                
                
                
                
                
                
                
                270,000Record
                    forgiveness of accrued salary for officer per separation
                    agreement
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                270,000
                
                
                
                
                
                
                
                
                
                
                
                270,000Record
                    adjustment for accrued payroll taxes for officer per separation
                    agreement
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                20,655
                
                
                
                
                
                
                
                
                
                
                
                20,655Vested
                    stock options granted to officer for separation agreement
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                131,068
                
                
                
                
                
                
                
                
                
                
                
                131,068Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (4,105,613
                )
                
                (4,105,613
                )**Balance,
                    December 31, 2005**
                
                
                **-**
                
                **$**
                **-**
                
                
                **40,204,556**
                
                **$**
                **40,205**
                
                **$**
                **6,517,807**
                
                **$**
                **270,000**
                
                **$**
                **(250,000**
                **)**
                **$**
                **(12,449,708**
                **)**
                **$**
                **(5,871,696**
                **)**






F-4
 
  **WINSONIC
          DIGITAL MEDIA GROUP, LTD**
  **NOTES
          TO THE FINANCIAL STATEMENTS**
  
 **NOTE
          1 - ORGANIZATION AND PURPOSE**
 
 Media
          and
          Entertainment.com, Inc., (the “Public Company”) was incorporated on April 27,
          2000. On October 7, 2004, the Public Company consummated an Agreement and
          Plan
          of Reorganization to acquire all of the outstanding capital stock of Winsonic
          Holdings, Ltd. (the “Private Company”), a closely held private company, in an
          exchange for 8,000,000 shares of the Public Company's common stock (the
          “Winsonic Transaction”). Prior to the Winsonic Transaction, the Public Company
          had no operations or assets and 23,956,138 shares of common stock issued
          and
          outstanding. Following the transaction, the Public Company changed its
          name from
          Media and Entertainment.com, Inc. to Winsonic Digital Media Group, Ltd.
          (the
“Company”).
 
 The
          accounting treatment of the Winsonic Transaction was determined by the
          following
          considerations:
 
 1.
              The
                  Public Company was a non-operating public company (having no operations
                  or
                  assets); 2.
              The
                  former sole shareholder and CEO of the Private Company became the
                  controlling shareholder of the combined company,
                  and; 3.
              The
                  management and operations of the combined company continue to be
                  those of
                  the Private Company.  For
          accounting purposes, the Winsonic Transaction is considered to be a capital
          transaction in substance, rather than a business combination. As a result,
          the
          Winsonic Transaction is treated in the accompanying financial statements
          as the
          equivalent of the issuance of shares by a private company (Winsonic Holdings)
          for the non-monetary assets of a non-operational public company (Media and
          Entertainment.com ),
          accompanied by a recapitalization. The accounting treatment for the Winsonic
          Transaction is similar to that of a reverse acquisition. Accordingly, the
          historical financial information of the accompanying financial statements
          is
          that of the
          Private Company .
          All
          shares included in the Statement of Stockholders' Equity have been presented
          as
          if the acquisition had occurred at the date of inception of the
          Private Company ,
          September 10, 2002.
 
 The
          shares of common stock of the Public Company outstanding prior to the merger
          -i.e., 23 million shares - have been shown in the accompanying financial
          statements as a recapitalization of the Company as of October 7,
          2004.
 
 As
          part
          of the Agreement and Plan of Reorganization, the Public Company issued
          a total
          of 8 million shares of its common stock. Of these 8 million shares,
          approximately 2 million shares were issued to various creditors of the
          Private
          Company in accordance with exchange agreements between those creditors
          and the
          Private Company.
 
 The
          Company is a media distribution solutions company. The Company primarily
          offers
          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, thereby
          reducing
          the need for expensive high-speed connections.
  **A
          Development Stage Company**
 
 The
          accompanying financial statements have been prepared in accordance with
          the
          Statement of Financial Accounting Standards (“SFAS”) No. 7 “Accounting 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 derived
          therefrom. As of December 31, 2005, the Company has not commenced its planned
          principal operations and has no significant revenues.
  F-5
 
 **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.
 
 **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. As of December 31, 2005, the Company
          had a
          deficit in its cash accounts of $14,468.
 
 **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 these estimates.
 
 **Fair
          Value of Financial Instruments**
 
 SFAS
          No.
          107, “Disclosures About Fair Value of Financial Instruments,” requires the
          Company to disclose, when reasonably attainable, the fair market values
          of its
          assets and liabilities that 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 their short-term nature.
 
 **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 are computed using
          the
          weighted-average number of outstanding common stocks during the applicable
          period. Diluted earnings per share are 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. For all periods presented, the Company has
          sustained losses, which would make use of equivalent shares antidilutive
          and, as
          such, the calculation has not been included.
 
 **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 Opinion No. 25, employee
          compensation cost is recognized when estimated fair value of the underlying
          stock on the 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 APB Opinion No. 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 SFAS No. 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 Opinion No. 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-6
 
 Employee
          Agreements effective as of October 8, 2004, provided for the grant of 3,000,000
          incentive or non-statutory stock options for three officers to purchase
          1,000,000 shares each of common stock for $1.00 per share. These options
          primarily vest equally over a twelve-month period effective with the date
          of the
          employment agreement. The agreements are terminable at will with or without
          cause.
 
 Subsequently,
          on December 9, 2005, Nana Yalley entered into a separation agreement with
          the
          Company, thereby rendering his employment agreement with the Company, signed
          October 8, 2004, null and void. In this separation agreement, Mr. Yalley
          agreed
          to a reduction of his stock options to purchase common stock of the Company
          from
          1,000,000 to 500,000 shares. These options are vested and immediately
          exercisable for five years from the date of the grant at $1.00 per share.
          Mr.
          Yalley’s 500,000 stock options were valued using the Black Scholes valuation
          model, and recorded at $131,068 as of December 31, 2005, in accordance
          with SFAS
          No. 123 “Accounting for Stock Based Compensation.”
 
 Per
          an
          employment agreement dated November 5, 2005, Mr. Eric Young was named Chief
          Operating Officer and Chief Financial Officer of the Company. Mr. Young
          received
          stock options to purchase 500,000 shares of common stock at an exercise
          price of
          $1.00 per share, which would vest equally over a twelve-month period effective
          with the date of the employment agreement. Additionally,
          Mr. Young received stock options to purchase 750,000 shares of the Company’s
          common stock at an exercise price of $0.01 per common share. The stock
          options
          vest one-third immediately, one-third at the closing of the next round
          of
          funding or January 1, 2006, whichever is earlier, and the remaining one-third
          when the Company’s common stock resumes trading on the OTCB. As of December 31,
          2005, a total of 3,119,041 options have vested.
  A
          summary
          of the Company’s stock option activity is as follows:
  December
                    31, 2005
                
                December
                    31, 2004Options
                
                Weighted
                    Average
                  Exercise
                    Price
                
                Options
                
                Weighted
                    Average
                  Exercise
                    PriceOutstanding
                    - Beginning of Year
                
                
                3,000,000
                
                $
                1.00
                
                
                0
                
                $
                0Granted
                
                
                1,250,000
                
                
                1.00
                
                
                3,000,000
                
                
                1.00Exercised
                
                
                0
                
                
                
                
                
                0Cancelled
                
                
                500,000
                
                
                
                
                
                0Outstanding
                    - End of Year
                
                
                3,750,000
                
                $
                1.00
                
                
                3,000,000
                
                $
                1.00Exercisable
                    - End of Year
                
                
                3,119,041
                
                $
                1.00
                
                
                750,000
                
                $
                1.00
 
 (See
          “Note
          7 -
          Commitment and Contingencies” for
          further
          detail of employment agreements.)
 
 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 years ended December 31, 2005 and 2004: risk free rate
          of
          3.5%; no dividend yield; volatility factors of the expected market price
          of the
          Company's common stock of 149% and 63%, respectively; and weighted-average
          expected life of the option of two years.
 
 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.
  F-7
 
 The
          Company’s pro forma information follows:
 
 **December
                    31,**
                  **2004**
                
                **December
                    31,**
                  **2003**
                  **(Restated)**Pro
                    forma net (loss) income applicable to common shareholders
                
                $
                (5,600,782
                )
                $
                (5,948,768
                )Pro
                    forma net (loss) income applicable to common shareholders per
                    share:
                  Basic
                    and fully diluted
                
                $
                (0.34
                )
                $
                (0.68
                )
 
 
 **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, 2005 and December 31, 2004 was
          $344,720
          and $342,355, respectively.
 
 **Impairment
          of Long-Lived Assets**
 
 In
          accordance with 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 asset 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.
 
 **Revenues
          and Expenses Recognition**
 
 Revenues
          are recognized upon rendering services 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, 2005 and 2004.
 
 **Research
          and Development Costs**
 
 Research
          and development costs are charged to expenses as incurred. There were no
          research and development costs incurred for the years ended December 31,
          2005
          and 2004.
  F-8
 
 **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.
 
 **Recently
          Issued Accounting Pronouncements**
 
 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 SFAS No. 123(R) will have on its balance
          sheet
          or income statements.
 
 In
          May
          2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections” -
          a Replacement of APB Opinion No. 20 and SFAS No. 3". SFAS No. 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 No.
          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
          No. 154 will have a significant impact on the consolidated financial
          statements.
  In
          February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
          Financial Instruments,” which amends SFAS No. 133, “Accounting for Derivative
          Instruments and Hedging Activities,” and SFAS No. 140, “Accounting for Transfers
          and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No.
          155 permits fair value measurement for any hybrid financial instrument
          that
          contains an embedded derivative that otherwise would require bifurcation
          and
          establishes a requirement to evaluate interests in securitized financial
          assets
          to identify interests that are freestanding derivatives or hybrid financial
          instruments containing embedded derivatives. The Company expects the adoption
          of
          SFAS No. 155 to have a material impact on the Company’s consolidated financial
          position, results of operations and cash flows.
 
 In
          March
          2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
          Assets,” which amends SFAS No. 140. SFAS No. 156 may be adopted as early as
          January 1, 2006, for calendar year-end entities, provided that no interim
          financial statements have been issued. Those not choosing to early adopt
          are
          required to apply the provisions as of the beginning of the first fiscal
          year
          that begins after September 15, 2006 (e.g., January 1, 2007, for calendar
          year-end entities). The intention of the new statement is to simplify accounting
          for separately recognized servicing assets and liabilities, such as those
          common
          with mortgage securitization activities, as well as, to simplify efforts
          to
          obtain hedge-like accounting. SFAS No. 156 permits a servicer using derivative
          financial instruments to report both the derivative financial instrument
          and
          related servicing asset or liability by using a consistent measurement
          attribute
          or fair value. The Company does not expect the adoption of SFAS No. 156
          to have
          a material impact on its consolidated financial position, results of operations
          or cash flows.
  F-9
  **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 990,600 stock warrants, of which 509,600
          warrants were issued to four individuals for consulting services, 385,000
          warrants were issued to three individuals to settle debts, and 96,000 warrants
          were 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 committed 820,000 shares of common stock
          as part
          of a payable of $820,000 for shares of stock valued at $1.00 per share
          to a
          company as part of the consideration for purchase of computer equipment
          and
          infrastructure valued at $1,667,000. The remaining balance of $847,000
          has been
          financed through a promissory note payable. (See “Note 11 - Notes Payable.”)
 
 During
          fiscal year 2003, the Company issued 189,500 stock warrants, of which 87,000
          were issued to one individual for consulting services, and 102,500 were
          issued
          to four individuals for cash, all with a conversion price of $1.00 per
          share.
 
 During
          fiscal year 2004, the Company issued 6,004,200 shares of common stock to
          the
          founder and Chairman/C.E.O. as part of the Agreement and Plan of Reorganization.
          The issue has been accounted for as part of the “B” reorganization wherein the
          Public Company acquired control of the Private Company. The shares on our
          financial statements have been recast back to inception for accounting
          purposes.
 
 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.com, Inc. These shares represent issued and outstanding shares
          of
          the Public Company prior to the merger, and have been reflected as a
          recapitalization of Winsonic as of October 7, 2004 -- the date of the
          merger.
 
 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 2005, the Company issued 252,745 shares to a private investment
          partnership. The stocks were issued at $1.30 per share for the first 94,615
          shares, $0.82 per share for 91,463 shares, and $0.68 for the remaining
          66,667
          shares. The stocks were part of a warrant, exercisable at $0.07 per share,
          which
          was issued to compensate certain professional advisors for services rendered
          during 2004. The stocks were issued pursuant to a “cashless exercise” wherein
          the warrant holder received a reduced number of shares of common stock
          upon
          conversion and contributed the balance to the treasury of the Company based
          on
          the current market value of the stock. For January 2005, the warrant holders
          received 94,615 shares of stock and contributed 5,385 shares valued at
          $1.30 per
          share worth $7,000 (the cost of their warrants). For September, the warrant
          holders received 91,463 shares and contributed 8,537 shares valued at $0.82
          per
          share, worth $7,000 (the cost of their warrants). For June, the warrant
          holders
          received 66,667 shares of common stock and contributed 8,333 shares valued
          at
          $0.68 per share, worth $5,666 (the cost of their warrants).
  During
          fiscal year 2005, the Company issued 1,670,000 shares to Native American
          Television Network, Inc. (“NATVN”) in exchange for 4,000,000 shares of common
          stock, in accordance with a stock exchange agreement entered into by both
          parties. This transaction was recorded in accordance with Staff Accounting
          Bulletin (SAB) Topic 5(g), which states that the transfer of non-monetary
          assets
          by shareholders should be recorded at the transferor’s historical cost basis as
          determined under Generally Accepted Accounting Principles (GAAP). The President
          of the Company and a Company shareholder were also shareholders and co-founders
          in NATVN, owning approximately 9% of the total outstanding equity in NATVN.
          Because NATVN is an early development stage company, the historical cost,
          and
          therefore, initial value of the non-monetary asset received is valued at
          zero as
          of December 31, 2005, since there were no tangible or intangible assets
          and
          signed agreements in place. (See “Note 12 - Equity Investment” for further
          details regarding this transaction.)
 
 During
          fiscal year 2005, the Company issued 700,000 shares of common stock to
          its
          founder to relieve related party loan payable due him valued at $231,000
          or
          $0.33 average price per share. (See “Note 4 - Related Party Transactions” for
          further details regarding this transaction.)
  F-10
 
 During
          fiscal year 2005, the Company issued 500,000 shares of common stock to
          its
          founder for services valued at $165,000 or $0.33 average price per share.
          (See
“Note 4 - Related Party Transactions” for further details regarding this
          transaction.)
 
 During
          fiscal year 2005, the Company issued 900,000 shares of common stock to
          two
          consultants for services valued at $630,000 or $0.70 average price per
          share.
 
 During
          fiscal year 2005, the Company issued 225,000 shares of common stock to
          two
          consultants for services valued at $108,000 or $0.48 average price per
          share.
 
 During
          fiscal year 2005, the Company issued 590,000 shares of common stock to
          four
          investors in satisfaction of convertible debenture obligations of $118,000
          at
          $0.20 average price per share. (See “Note 10 - Convertible Debentures” for
          further details regarding this transaction.)
 
 During
          fiscal year 2005, the Company issued 925,927 shares of common stock to
          its
          landlord for lease deposits valued at $250,000 or $0.27 average price per
          share.
 
 During
          fiscal year 2005, the Company issued 820,000 shares of common stock to
          one
          company as a result of conversion of common stock payable valued at $820,000
          or
          $1.00 per share.
  During
          fiscal year 2005, the Company credited additional paid-in capital for a
          $281,481
          adjustment to accumulated depreciation for the return of computer equipment,
          infrastructure and software. (See “Note 8 - Property And Equipment, Net” for
          further detail regarding this transaction).
  During
          fiscal year 2005, the Company recorded the vesting of 500,000 shares of
          a common
          stock award for an officer for the net vested value of $185,000. (See “Note 4 -
          Related Party Transactions” for further detail regarding this
          transaction).
 
 During
          fiscal year 2005, the Company recorded common stock payable for 818,182
          common
          shares valued at $270,000 or $0.33 average price per share to an officer
          per a
          separation agreement,. (See “Note 7 - Commitments and Contingencies” for further
          detail regarding this transaction).
 
 During
          fiscal year 2005, the Company recorded forgiveness of accrued salary to
          an
          officer per a separation agreement by crediting additional paid in capital
          for
          $270,000. (See “Note 7 - Commitments and Contingencies” for further detail
          regarding this transaction).
 
 During
          fiscal year 2005, the Company recorded forgiveness of accrued payroll taxes
          for
          an officer per a separation agreement by crediting additional paid in capital
          for $59,982. (See “Note 7 - Commitments and Contingencies” for further detail
          regarding this transaction).
 
 During
          fiscal year 2005, the Company recorded the vesting of stock options to
          purchase
          500,000 shares of the Company’s common stock per a separation agreement valued
          at $131,068 at December 31, 2005, using the Black Scholes valuation method.
          (See
“Note 2 - Summary of Significant Accounting Policies” and “Note 7 - Commitments
          and Contingencies” for further detail regarding this transaction).
 
 During
          fiscal year 2005, the Company recorded the forgiveness of interest expense
          of a
          related party by crediting additional paid in capital for $152,592. (See
“Note
          11 - Note Payable” for further detail regarding this transaction).
  F-11
 
 **Stock
          Warrants/Common Stock Payables**
 
 Certain
          stock warrants and common stock payables have been issued in exchange of
          cash
          proceeds, services and fixed assets at a conversion price of $1.00 per
          common
          share. The stock warrants have a life of three years.
 
 The
          following table summarizes the Company’s stock warrants and common stock payable
          activity with a conversion price of $1.00:
 
 Number
                    of
                  Warrants/Common
                  stock
                    payable
                
                Exercise
                    PriceBalance
                    as of September 10, 2002 (Inception)
                
                
                0
                
                $
                0.00Warrants
                    issued
                
                
                990,600
                
                
                1.00Warrants
                    canceled/expiredWarrants
                    exercisedBalance
                    as of December 31, 2002
                
                
                990,600
                
                
                1.00Warrants/stock
                    payable issued
                
                
                1,009,500
                
                
                1.00Warrants
                    canceled/expiredWarrants
                    exercisedBalance
                    as of December 31, 2003
                
                
                2,000,100
                
                
                1.00Warrants
                    issuedWarrants
                    canceled/expiredWarrants
                    exercised
                
                
                (1,180,100
                )
                
                1.00Balance
                    as of December 31, 2004
                
                
                820,000
                
                
                1.00Warrants
                    issuedWarrants
                    canceled/expiredCommon
                    stock payable exercised
                
                
                (820,000
                )
                
                1.00Balance
                    as of December 31, 2005
                
                
                0
                
                $
                0.00
  F-12
 
 Certain
          detachable stock warrants have been granted related to convertible dentures
          discussed in Note 10 - Convertible Debentures.
 
 The
          following table summarizes the Company’s detachable stock warrant
          activities:
  Number
                    of
                  Warrants
                
                Exercise
                    PriceBalance
                    as of September 10, 2002
                
                
                0
                
                $
                0.00Warrants
                    issuedWarrants
                    cancelled/expiredWarrants
                    exercisedBalance
                    as of December 31, 2002Warrants
                    issuedWarrants
                    cancelled/expiredWarrants
                    exercisedBalance
                    as of December 31, 2003Warrants
                    issued
                
                
                1,164,286
                
                
                0.70Warrants
                    cancelled/expiredWarrants
                    exercisedBalance
                    as of December 31, 2004
                
                
                1,164,286
                
                
                0.70Warrants
                    issued
                
                
                285,714
                
                
                0.70Warrants
                    cancelled due to extension agreement
                
                
                (1,450,000
                )
                
                0.70Warrants
                    replaced due to extension agreement
                
                
                2,537,500
                
                
                0.40Warrants
                    issued
                
                
                627,500
                
                
                0.30Warrants
                    cancelled/expired
                
                
                (393,333
                )
                
                0.30Balance
                    as of December 31, 2005
                
                
                2,771,667
                
                $
                0.39
 
 
 **NOTE
          4 - RELATED PARTY TRANSACTIONS**
 
 **Officer’s
          Compensation**
 
 Officer’s
          compensation for services was $935,434 and $346,738, and was included in
          general
          and administrative expenses-related party as of December 31, 2005 and 2004,
          respectively.
 
 Two
          individuals who acted as consultants prior to becoming officers of the
          Company
          received for consulting services regarding the merger a total of 1,521,532
          shares of common stock valued at $1,125,934. This value was included as
          consulting services-related party in the statement of operations for the
          year
          ended December 31, 2004.
  F-13
 
 During
          fiscal year 2005, the Company issued 500,000 shares of common stock to
          its
          founder for services valued at $165,000 or $0.33 average price per
          share.
 
 During
          fiscal year 2005, the Company recorded the vesting of 500,000 shares of
          a common
          stock award for an officer, for the net vested value of $185,000.
 
 **Loans
          Payable - Related Party**
 
 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 this note. During 2004,
          the
          loan of $36,419 was forgiven and included in 2004 operating results. The
          reversal of related accrued interest of $29,706 was also included in 2004
          operating results.
  **Loan
          From Founder (2004)**
  As
          of
          December 31, 2004 the Company had a loan payable totaling $683,726 to the
          C.E.O.
          and founder, consisting of principal of $600,000, which was due September
          3,
          2004, plus 80,000 shares of common stock valued at $64,000, both payable
          to the
          C.E.O. Under the terms of the Note, interest will be paid at the rate of
          10%
          annually. Accrued interest included in the loan balance of $683,726 is
          $19,726
          as of December 31, 2004.
  During
          the 1 st Quarter
          of 2005, the Company paid $160,000 to the CEO against this loan. On December
          5,
          2005, 700,000 shares of the Company’s common stock were issued to the CEO as
          payment to be applied against the balance of the loan. The price per share
          of
          the common stock was $0.33 per share or $231,000.
  On
          December 31, 2005, the balance of the loan was $352,726, consisting of
          principal
          of $209,000, 80,000 shares of common stock valued at $64,000, and accrued
          interest of $79,726.
 
 **Loan
          From Founder**  **(2005)**
 
 On
          September 15, 2005, the Company received a loan of $80,000 from the C.E.O.
          and
          founder. As of December 31, 2005, the loan balance totaled $82,672, consisting
          of principal of $80,000 and accrued interest of $2,672. Under the terms
          of the
          Note, interest will be paid at the rate of 10% annually, with principal
          and
          interest payable on December 1, 2005. Unpaid principal and interest after
          December 1, 2005 is subject to interest of five percent (5%) in excess
          of the
          rate otherwise applicable to the unpaid balance. As of the date of this
          report,
          the loan is unpaid.
 
 **NOTE
          5 - SUMMARY OF LEGAL PROCEEDINGS**
  Other
          than as described below, we are not currently involved in any legal proceedings
          that may be deemed material to our financial condition.
 
 **Callozo
          vs. Media and Entertainment.com, Inc.**
  On
          March
          22, 2004, the Company (then 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 punitive
          and
          exemplary damages in excess of $40,000. The Company had purchased the assets
          of
          Nexcode of which Mr. Collazo was a founder, and Mr. Collazo received 400,000
          shares of the Company’s common stock (the “Shares”) in consideration of the
          sale. While still employed by the Company, Mr. Collazo allegedly formed
          a
          competing company, stole proprietary property of the Company and solicited
          Company clients on behalf of the competitor. The Company sought a constructive
          trust, injunctive relief and the return of the Shares.
  F-14
   Prior
          to
          this suit, 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
          Mr. 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 litigation brought by the Company against Mr. 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 him because he had not been paid
          compensation due him, he had not received a percentage of gross profit
          earnings,
          the Company had not exercised a good faith effort to raise an additional
          $250,000 in capital, and that he 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 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, were charged as expenses in 2004. The
          settlement was not accomplished by June 10, 2005; therefore, Mr. Collazo
          could
          have exercised, at his option, the right to enforce the settlement agreement
          for
          the issuance of the 900,000 shares of the Company’s stock to him and the payment
          of his attorney fees or the issuance of 200,000 shares of the Company’s stock to
          his attorney in lieu of payment.
 
 On
          December 9, 2005, Mr. Yalley entered into a separation agreement with the
          Company, thereby rendering Mr. Yalley’s employment with the Company null and
          void. The separation agreement specifies that an identical number of restricted
          shares of common stock of the Company that were issued to Mr. Collazo in
          settlement of litigation may be issued to Mr. Yalley as well.
 
 An
          estimated liability of $1,020,000 for legal settlements was accrued as
          of
          December 31, 2005 and 2004. Therefore, the agreement had no effect on the
          operating results for 2005. (See “Note 14 - Subsequent Events” for further
          details regarding this lawsuit.)
 
 **Yellowbrix,
          Inc. vs. Media and Entertainment.com, Inc.**
  Yellowbrix,
          Inc. filed a collection suit against Media and Entertainment.com, Inc.
          regarding
          an alleged contract authorized by the former CEO of Media and Entertainment.com.
          The pending lawsuit amount in dispute is $19,800, which was expensed as
          a
          general and administrative expense in 2004 and accrued within accounts
          payable
          of the Company as of December 31, 2005 and 2004.
 
 **Berman,
          Romeri and Associates, LLP vs. Media and Entertainment.com,
          Inc.**
 
 This
          collection lawsuit arises from an alleged contract and services obligating
          the
          Company, which was allegedly authorized by the former CEO of Media and
          Entertainment.com, Inc. The disputed amount of $8,733 was expensed as a
          general
          and administrative expense in 2004 and accrued within accounts payable
          of the
          Company as of December 31, 2004. (See “Note 14 - Subsequent Events” for further
          details regarding this lawsuit.)
 
 **Netscaler
          Inc. vs. Winsonic**
 
 The
          disputed amount of $75,000 in this collection lawsuit was expensed as
          a general and administrative expense in 2004 and accrued within accounts
          payable
          as of December 31, 2005 and 2004. Pursuant to a settlement agreement, the
          Company is to pay the sum of $75,000 in three (3) installment payments
          of
          $25,000, commencing in June 2006, in exchange for dismissal of the action.
 
 **Attorney
          Collection Services vs. Winsonic Holdings, Ltd.**
 
 The
          disputed amount of $25,000 in this collection lawsuit was expensed as a
          general and administrative expense in 2004 and accrued within accounts
          payable
          as of December 31, 2005 and 2004.
  F-15
 
 **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, 2005, the Company has recognized
          $57,811 of revenues, and has had accumulated losses of approximately $12,449,708
          from operations 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. The Company’s financial statements do not
          include any adjustments that might result from the outcome of this
          uncertainty.
 
 **NOTE
          7 - COMMITMENTS AND CONTINGENCIES**
 
 **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
          were 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 occurred
          or
          January 1, 2005, whichever occurred first. Each officer is eligible for
          annual
          incentive bonuses based on performance. The agreements are terminable at
          will
          with or without cause (as defined).
 
 Subsequently,
          on December 9, 2005, Mr. Yalley entered into a separation agreement with
          the
          Company, thereby terminating Mr. Yalley’s employment with the Company effective
          as of October 8, 2004. The separation agreement specifies that Mr. Yalley
          is
          entitled to restricted common stock of the Company equal to his base salary
          of
          $270,000, consisting of 818,182 common shares or $0.33 average price per
          share.
          The separation agreement also specifies that an identical number of restricted
          shares of common stock of the Company that were issued to Mr. Collazo in
          settlement of litigation may be issued to Mr. Yalley as well. (See “Note 14 -
          Subsequent Events” for further details regarding shares issued to Mr. Collazo in
          settlement of litigation.)
 
 The
          employee agreements, effective as of October 8, 2004, provided for the
          grant of
          3,000,000 incentive or non-statutory stock options for three officers to
          purchase 1,000,000 shares each of common stock for $1.00 per share. However,
          per
          the separation agreement of December 9, 2005, Mr. Yalley agreed to a reduction
          of his stock options to purchase common stock of the Company from 1,000,000
          to
          500,000 shares. These options are vested and immediately exercisable for
          (5)
          five years from the date of the grant at $1.00 per share. Mr. Yalley’s 500,000
          stock options were valued using the Black Scholes valuation model and recorded
          at $131,068 as of December 31, 2005, in accordance with SFAS No. 123 “Accounting
          for Stock Based Compensation.”
 
 On
          December 3, 2004, Jeffrey B. McConnell resigned as Chief Operating Officer
          and
          Chief Financial Officer of the Company.
 
 On
          November 5, 2005, the Company replaced Mr. McConnell by entering into a
          binding
          offering letter with Eric Young, as Chief Operating Officer and Chief Financial
          Officer of the Company. Under the terms of employment, Mr. Young is to
          receive a
          base salary of $200,000 per annum, with $5,000 per month deferred until
          the next
          funding occurs or January 1, 2006, whichever occurs first. Mr. Young is
          eligible
          for an annual incentive bonus based on performance. The agreement is terminable
          at will with or without cause (as defined). Mr. Young received non-qualified
          incentive stock options to purchase 500,000 shares of common stock at an
          exercise price of $1.00 per share in accordance with the Company's Employee
          Stock Option Plan. Ten percent of the options vested immediately upon the
          signing of the Employment Agreement and the remaining options shall vest
          at the
          rate of 1/12th per month for 12 months. In addition, Mr. Young received
          an
          additional restricted 750,000 shares of stock upon the signing of the Employment
          Agreement at a purchase price of $0.01 per share, in which 1/3 vested upon
          the
          signing of the Employment Agreement, 1/3 will vest at the closing of the
          next
          round of financing or January 1, 2006, whichever is earlier, and the remaining
          1/3 when the company’s common stock resumes trading on the OTCBB.
  F-16
 
 All
          options granted to existing officers of the Company are treated in accordance
          with APB Opinion No. 25, “Accounting for Stock Issued to Employees.” 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. (See “Note 2 - Summary of Significant
          Accounting Policies,” for further details regarding stock options issued to
          employees of the Company.)
 
 **SERVICE
          AGREEMENTS**
 
 S **ubcontractor
          Master Consulting Agreement with CI2**
 
 On
          December 10, 2004, the Company and CI2, Inc. (“CI2”) entered into a
          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 “MPSA”) with Winsonic Digital Cable
          Systems Network, Ltd. f/k/a Winsonic Holdings, Ltd., a now wholly owned
          subsidiary of the Company, dated May 5, 2004, which was prior to the Private
          Company's merger with the Company. The MPSA provided CI2 the ability to purchase
          and/or license various products and services for delivery and installation
          from
          the Company, to be used for CI2's own internal use and for resale.
 
 Pursuant
          to the SMCA, CI2 will subcontract services to the Company through individual
          agreements. CI2 will compensate the Company in a manner consistent with the
          terms of the applicable agreements.
 
 **Joint
          Marketing and Development Agreement**
 
 On
          December 10, 2004, the Company and CI2 also entered into a 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 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.
 
 The
          term
          of the JMDA commenced on December 10, 2004 and will remain in effect for
          two (2)
          years, unless earlier terminated by a party.
 
 In
          addition, on December 10, 2004, the Company agreed to take over the obligations
          of the Company under the MPSA. Therefore, the MPSA was modified to replace
          the
          name of the contracting party, Winsonic Holdings, Ltd., to that of the
          Company.
          In addition, the MPSA was modified to extend the period in which CI2 may
          exercise its right of first refusal to purchase the networks for $9.7 million
          dollars as described in the MPSA for an additional ninety (90) days until
          February 1, 2005. While the option to purchase was not exercised by CI2, all
          other terms and conditions of the MPA remain in full force and effect.
 
 **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, as well as business, financial
          and
          marketing consulting services to be provided by Titan to the Company for
          $20,000
          per month. As additional compensation, the Company agreed to grant Titan
          stock
          options to purchase 1 million shares of common stock of the Company. The
          options
          were exercisable at $0.75 per share for a period of seven years. The options
          were to vest in 10 equal monthly installments of 100,000 shares commencing
          on
          March 1, 2005. During 2005, the Company made one payment of $20,000 for
          services
          rendered. The agreement has been mutually discontinued with all terms considered
          null and void.
  F-17
 
 **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 was to provide the Company with outdoor
          advertising of all types of media, as well as indoor digital plasma advertising.
          PMG Media will enable the Company to reach its targeted markets via digital
          cable, satellite, broadband and fiber optic delivery platforms. The parties
          had
          planned to work on a revenue sharing model for the receipt of proceeds
          from
          subscriber fees, to be finalized in thirty days in a detailed formal agreement.
          No formal agreement between the two parties was completed, and the MOU
          has been
          considered null and void.
 
 **Lantern
          Hill Capital**
 
 On
          March
          17, 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 serves as a long-term financial advisor to the
          Company, including meeting and discussing the Company's operating strategy,
          assisting the Company in formulating strategic and financial plans and
          assisting
          in development of capitalization plans. Under the terms of the agreement,
          Mr.
          Anderson received for services rendered 150,000 shares of common stock
          valued at
          $105,000 or $0.70 per share on December 5, 2005.
 
 **A.
          Scott Roderick Investments, LLC**
 
 On
          March
          15, 2005, the Company and Winston Johnson entered into an Exchange Agreement
          with A. Scott Roderick Investments, LLC (“ASRI”), a creditor of WDCSN, a
          wholly-owned subsidiary of the Company. Winston Johnson, the Company’s CEO,
          assumed an obligation of $562,500 from the subsidiary to ASRI in exchange
          for
          750,000 shares of the Company’s common stock then held by Mr. Johnson, or an
          exchange price of $0.75 per share.
  The
          750,000 shares were transferred by Mr. Johnson to ASRI pursuant to the
          Assumption of Liabilities and Escrow Agreement dated as of October 7, 2004,
          which was entered into by Mr. Johnson at the time of the merger of the
          subsidiary with Media and Entertainment.com, Inc. In consideration of the
          transfer of the shares to ASRI, A. Scott Roderick, the sole shareholder
          of ASRI,
          executed a general release in favor of the Company, the subsidiary and
          Mr.
          Johnson.
 
 On
          December 5, 2005, the Company issued 750,000 shares of its common stock
          shares
          to Mr. Roderick in satisfaction of the obligation.
  **Scott
          Roderick**
 
 On
          September 27, 2005, the Company entered into an agreement with Scott Roderick,
          a
          consultant for development-stage companies, to provide consulting services
          to
          the Company for a period of ninety days, including assistance in formulating
          strategic and financial planning objectives, assistance in the development
          of
          capitalization plans, and financial advisement to the Company. On December
          5,
          2005, Mr. Roderick was issued 150,000 shares of the Company’s common stock
          valued at $72,000 or $0.48 per share for services rendered.
 
 **Richard
          Watteyne**
 
 On
          September 27, 2005, the Company entered into an agreement with Richard
          Watteyne
          for business development, management and financial consulting services
          for a
          period of forty-five days. On December 5, 2005, Mr. Watteyne was issued
          75,000
          shares of the Company’s common stock valued at $36,000 or $0.48 per share for
          services rendered.
 
 **Network
          Operations and Office Lease Agreement**
  On
          October 12, 2005, the Company entered into a 132-month commercial lease
          agreement effective as of November 1, 2005 with Atlanta Centennial, LLC
          (the
“Landlord”) for office space, Data Center, Network Operations, Interconnect
          MOPE, and Fiber lab consisting of approximately 9,415 square feet of rentable
          space (the "Lease"). The space is located in Suite 2600 on the 26 th floor of
          the Centennial Tower, located at 101 Marietta Street in Atlanta, Georgia.
  F-18
  The
          Company will use this space to launch WDCSN’s network operations, data center,
          broadcast controls, switch site, application development lab, and its corporate
          headquarters for its executives and general, clerical and administrative
          personnel.
  Under
          the
          terms of the Lease, the Company will make annual rental payments to the
          Landlord
          in the following amounts:
 
 Year
          ending December 31
 
 2006
                
                $
                115,3322007
                
                $
                203,6522008
                
                $
                209,7602009
                
                $
                216,0482010
                
                $
                222,528Thereafter
                
                $
                1,437,246
 
 There
          is
          no option to renew this Lease. Notwithstanding the foregoing, the monthly
          base
          rental was abated for 6 months following the commencement date of the Lease,
          provided there is no default by the Company under the Lease.
  Concurrently
          with the execution of the Lease, the Company issued a Fixed Price Secured
          Convertible Note (the “Note”) in the principal sum of $250,000 representing an
          increased security deposit requirement bearing simple interest at 9% per
          annum,
          payable monthly in arrears in cash or registered stock at the Registrant’s
          option, from December 1, 2005 through the earlier of (a) June 1, 2006 (the
          “Maturity Date”), (b) the date on which the outstanding principal amount of the
          Note is repaid in full prior to the Maturity Date (i.e. the “Prepayment Date”),
          or (c) the date on which the outstanding principal amount of the Note is
          automatically converted.
 
 On
          October 12, 2005, the Company paid $16,476 as deposit on the office space.
          On
          December 14, 2005, the Note was converted into 925,927 shares of the Company’s
          common stock valued at $250,000 or $0.27 per share.
 
 The
          lease
          agreement was amended on February 23, 2006 to include expanded rental space
          of
          9,415 square feet, bringing the total rental square feet to 18,800. (See
“Note
          14 - Subsequent Events” for further details regarding this
          amendment.)
 
 **NOTE
          8 - PROPERTY AND EQUIPMENT, NET**
 
 The
          major
          classifications of property and equipment consist of the following as of
          December 31:
 
 **2005**
                
                **2004**Computer
                    Equipment
                
                $
                977,669
                
                $
                1,577,269Infrastructure
                
                
                158,400
                
                
                320,000Software
                
                
                82,899
                
                
                160,000Furniture
                    & Fixtures
                
                
                36,682
                
                
                13,040Total
                    Fixed Assets
                
                
                1,255,650
                
                
                2,070,309Less:
                    Accumulated Depreciation
                
                
                (614,194
                )
                
                (550,955
                )Total
                    Property and Equipment, Net
                
                $
                641,456
                
                $
                1,519,354
 
 In
          December 2005, the Company renegotiated its equipment purchase agreement
          and
          related Note Payable with Digital Service International (“DSI”). After receiving
          a $5,000 payment on the Note, and in exchange for the return pledged equipment,
          DSI agreed to forgive the remaining $842,000 of the Note Payable. (See
“Note 11
          - Notes Payable” for further detail regarding this transaction).
  F-19
 
 Depreciation
          expense for the years ended December 31, 2005 and 2004 was $344,720 and
          $342,355, respectively.
 
 **NOTE
          9 - LOANS PAYABLE**
 
 The
          Company has loans outstanding for $383,357 and $357,507 as of December
          31, 2005
          and 2004, respectively, payable to certain individuals. Proceeds from these
          loans were used for working capital purposes. The loans payable consist
          of:
   **2005**
                
                **2004**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 exercised.
                
                $
                198,500
                
                $
                198,500A
                    loan consisting of 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
                    as of
                    December 31, 2005 and 2004 is $13,261 and $6,780,
                    respectively.
                
                
                121,261
                
                
                114,780A
                    loan consisting of 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
                    as of
                    December 31, 2005 and 2004 is $6,626 and $4,226,
                    respectively.
                
                
                46,626
                
                
                44,226A
                    loan consisting of principal of $16,970 with no stated interest
                    rate,
                    repayment terms or maturity date. No interest was imputed during
                    2005.
                
                
                16,970
                
                
                -0-Total
                    Loans Payable
                
                
                383,357
                
                
                357,506Less:
                    Current Portion
                
                
                (383,357
                )
                $
                (357,506
                )Total
                    Loans Payable, less current portion
                
                $
                -0-
                
                $
                -0-
   F-20
 
 **NOTE
          10 - CONVERTIBLE DEBENTURES**
 
 During
          December 2004 and January 2005, the Company received proceeds of $815,000
          and
          $200,000, respectively, from a Convertible Note and Warrant Purchase Agreement
          (the “Agreement”). The offering was made to 21 accredited investors. The
          convertible notes, including interest of 6%, were due in December 2005
          or upon
          the occurrence of certain events relating to potential changes in the capital
          structure of the Company. The conversion feature portion of the Agreement
          included the right of the Note Holder to convert the face value of the
          note into
          common stock of the Company at the lower of $0.70 per share or 85% of the
          market
          value of the common stock (at the time of conversion). The Agreement also
          included a detachable warrant, which allowed the Warrant Holders to purchase
          1,450,000 shares of common stock of the Company at $0.70 per share through
          December 2007.
 
 On
          December 15, 2005, the Agreements totaling $1,015,000 were extended to
          June 30,
          2006. The conversion feature portion of the amended Agreements included
          the
          right of the Note Holders to convert the face value of the notes into common
          stock of the Company at the lower of $.40 per share or 85% of the market
          value
          of the common stock at the time of conversion.
 
 During
          the remainder of the 2005 calendar year, the Company received additional
          proceeds of $188,250, consisting of 6 offerings to accredited investors,
          as
          evidenced by Convertible Note and Warrant Purchase agreements. Four (4)
          of the
          six (6) investors have converted $118,000 of the $188,250 in proceeds into
          common stock shares. Total proceeds received from all Agreements as of
          December
          31, 2005 mentioned above are $1,203,250.
 
 The
          transactions, to the extent that they are to be satisfied with common stock
          of
          the Company, would normally be included as equity obligations. However,
          in the
          instant case, due to the indeterminate number of shares that may be issued
          under
          the embedded host debt conversion feature, the Company is required to record
          a
          current liability relating to both the detachable warrant and the embedded
          convertible feature of the note payable as a “derivative
          liability”.
 
 The
          accompanying financial statements comply with current requirements relating
          to
          warrants and embedded warrants as described in SFAS No. 133, Emerging Issue
          Task
          Force (“EITF”) 98-5 and 00-27, and APB Opinion No. 14 as follows:
 
 ·
              The
                  Company allocated the proceeds received between the convertible
                  debt and
                  the detachable warrant based upon the relative fair market values
                  on the
                  date proceeds were received. ·
              Subsequent
                  to the initial recording, the increase or decrease in the fair
                  value of
                  the detachable warrant, determined under the Black-Scholes option
                  pricing
                  formula, and the increase in the intrinsic value of the embedded
                  derivative in the conversion feature of the convertible debentures,
                  are
                  accrued as adjustments to the liabilities as of December 31, 2005
                  and
                  2004. ·
              The
                  same increase or decrease in the fair value of the detachable warrants
                  and
                  embedded derivative in the conversion feature of the convertible
                  debenture
                  (as noted above) is included on the company’s statement of operations as
                  an unrealized interest loss or gain arising from convertible
                  financing. ·
              Interest
                  related to the convertible debentures is accreted ratably over
                  the life of
                  the debenture or until conversion, whichever occurs
                  first. 
 F-21
 The
          following table summarizes the various components of the convertible debentures
          as of December 31, 2005 and 2004:
 
 **December
                    31, 2005**
                
                **December
                    31, 2004**Derivative
                    liability
                
                $
                82,483
                
                $
                652,254Warrant
                    liability
                
                
                23,406
                
                
                614,609Convertible
                    debentures
                
                
                1,121,360
                
                
                37,871Subtotal
                
                
                1,227,248
                
                
                1,304,734Adjustment
                    of derivative and warrant liability to fair value
                
                
                970,185
                
                
                (451,863
                )Less:
                    Accretion of principal and interest related to convertible
                    debentures
                
                
                (1,112,183
                )
                
                37,871Add;
                    Conversion of debt to common stock
                
                
                118,000
                
                
                0Total
                    Proceeds from convertible debentures
                
                
                1,203,250
                
                
                815,000Plus:
                    Accrued interest
                
                
                66,037
                
                
                2,144Total
                    Convertible debentures
                
                
                1,269,287
                
                
                817,144Less:
                    Current portion of convertible debentures
                
                
                (1,269,287
                )
                
                (817,144
                )Total
                    Non-current Convertible Debentures
                
                $
                -0-
                
                $
                -0-
 
 
 **NOTE
          11 - NOTE PAYABLE**
  NOTES
                    PAYABLE
                
                **December****31,
                    2005**
                
                **December****31,
                    2004**A
                    loan due April 13, 2003, containing principal of $847,000 with
                    no stated
                    interest rate. The loan was secured with fixed assets (computer
                    equipment,
                    infrastructure and software). On December 16, 2005, the Company
                    paid
                    $5,000 and returned certain pledged equipment; thus satisfying
                    the notes.
                    Consistent with the final resolution of the agreement, no stated
                    interest
                    rate or finance charges have accrued.
                
                $
                0
                
                $
                847,000Total
                    Notes Payable
                
                $
                0
                
                $
                847,000
 
  On
          December 16, 2005, the Company renegotiated its equipment purchase agreement
          and
          related note payable for computer equipment, software and infrastructure
          with
          Digital Service International (“DSI”). The equipment valued at $1,667,000 was
          paid in this amendment by the conversion of common stock payable to DSI
          for
          820,000 common stock shares valued at $1.00 each, a $5,000 payment from
          the
          Company against the $847,000 DSI note payable, and the forgiveness of the
          remaining $842,000 note obligation by the return of $842,000 underlying
          pledged
          equipment. The effect was to reduce the liabilities of the Company by $847,000
          (including forgiveness of $842,000 as a credit to additional paid in capital),
          reduce the value of the fixed assets of the Company by $842,000 (including
          a
          debit to additional paid in capital), reduce accumulated depreciation by
          $281,481 (including a credit to additional paid in capital) reduce cash
          by
          $5,000 and increase shares outstanding by 820,000, with a debit to common
          stock
          payable for $820,000 and a related credit to Par Value of $820 and Paid
          in
          Capital of $819,180.
  Imputed
          accrued interest charges of $152,592 relating to the note, as of December
          16,
          2005, were recaptured by a credit to paid-in-capital in the fourth quarter
          of
          2005.
  F-22
  **NOTE
          12 - EQUITY INVESTMENT**
  **Native
          American Television Network, Inc.**
 
 On
          September 29, 2005, in accordance with a stock exchange agreement between
          the
          two parties, the Company issued 1,670,000 shares of common stock to NATVN
          and
          the Company acquired 4,000,000 shares of stock in NATVN, representing 27%
          of the
          NATVN equity. This transaction was recorded in accordance with Staff Accounting
          Bulletin (SAB) Topic 5(g), which states that the transfer of non-monetary
          assets
          by shareholders should be recorded at the transferor’s historical cost basis as
          determined under Generally Accepted Accounting Principals (GAAP). The President
          of the Company and a Company shareholder were also shareholders and co-founders
          in NATVN, owning approximately 9% of the total outstanding equity in
          NATVN.  Because
          NATVN is an early development stage company, the historical cost, and therefore,
          initial value of the non-monetary asset received is valued at zero as of
          December 31, 2005, since there were no tangible or intangible assets and
          signed
          agreements in place. While management enthusiastically believes that the
          relationship will serve to provide a much needed service to customers and
          society alike, as well as prove to be financially rewarding, management
          agrees
          to adhere to valuation of the investment in NATVN at the historical based
          cost
          of zero.
 
 The
          value
          of the investment to the Company is based upon the promising mutually beneficial
          opportunities that exist between the Company, NATVN and a significant number
          of
          potential digital-services subscribers within the American Indian community;
          however, there are currently no signed agreements in place. NATVN is currently
          negotiating with representatives of the potential digital-services subscribers;
          however, contractual agreements with the potential subscribers have not
          been
          secured. Without the agreement in place, the final number of subscribers
          to be
          serviced, the actual services to be provided (i.e. cable television, digital
          television, advertising revenues, telephony services, and high-speed internet)
          and the prices to be charged for the services are not certain.
 
 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. NATVN will provide the Company with commercial
          airtime on a regularly scheduled program that offers air space to advertisers
          with the exception of paid programming or long form advertisements.
  The
          investment in NATVN will be accounted for under the “equity” method. The equity
          method of accounting is used if the investor has the ability to significantly
          influence the investee’s financial and operating policies, or if an investor is
          accounting for an investment in a corporate joint venture, but holds less
          than
          50% of the investee. Under the equity method, an investment is initially
          recorded at cost. Thereafter, the carrying amount of the investment is
          increased
          for the investor’s proportionate share of the investee’s gains, or is reduced
          for the proportionate share of the investee’s losses or for distributions
          received from the investee. As of March 31, 2006, there were no significant
          operations commenced by NATVN.
 
 **NOTE
          13 - RESTATEMENT OF FISCAL YEAR 2004**
 
 **Restatement
          of 2004**
 
 The
          Company has restated its 2004 financial statements as part of the amendment
          of
          its Form 10KSB for 2004. The restatement of the 2004 financial statements
          corrects the liabilities associated with the convertible notes payable
          (with
          attached warrants) issued on December 15, 2004. The corrected amounts include
          an
          allocation of the proceeds between the conversion rights and the warrant
          rights,
          as well as, a subsequent adjustment to account for the change in the price
          of
          the Company’s common stock on December 31, 2004. The change affects the current
          liabilities on the December 31, 2004 Balance Sheet (Derivative Liabilities,
          Warrant Liabilities, Convertible Debentures and Paid in Capital). (See
“Note 10
          - Convertible Debentures” for detail information on the convertible
          notes).
 
 The
          restatement included, in addition to the changes noted in the preceding
          paragraph, a classification of the finance costs related to the note payable
          as
“Other Comprehensive Income” in the “Stockholders’ Deficit” section. The
          restatement does not include such a category, as all related finance costs
          (arising primarily from the changes in the price of the Company’s stock) have
          been included in the 2004 Statement of Operations.
  F-23
 
 **NOTE
          14 - SUBSEQUENT EVENTS**
  **Automated
          Interiors Acquisition**
  On
          April
          18, 2006, the Company acquired Automated Interiors, (a private Georgia
          Limited
          Liability Corporation) (“AI”) in exchange for 411,956 shares of the Company’s
          common stock. The transaction will be accounted for as a purchase of the
          net
          assets of AI, creating a wholly-owned subsidiary, the operations of which
          will
          be included in consolidated financial statements of the Company commencing
          in
          the 2nd Quarter of 2006. The value of the transaction, based on an agreed
          value
          of $0.25 for each common share of the Company in exchange for the net assets
          of
          AI as of the date of the transaction and cash flows, is $102,989. The
          transaction value will be adjusted for significant changes, if any, resulting
          from the December 31, 2005 audit of AI. During the year ended 2005, AI
          had gross
          sales of $994,725.
  **Callozo
          vs. Media and Entertainment.com, Inc.**
 
 On
          March
          16, 2006, the 900,000 shares due to Mr. Collazo were issued by the Company
          to
          Mr. Collazo in settlement. As of May 11, 2006, neither the 900,000 shares
          of
          common stock for Mr. Yalley, nor the 200,000 shares or $120,000 for attorney’s
          fees have been issued or paid.
  **Berman,
          Romeri and Associates, LLP vs. Media and Entertainment.com,
          Inc.**
 
 On
          March
          9, 2006, Berman, Romeri and Associates, LLP and the Company entered into
          a
          written stipulation for Judgment, whereby the Company shall pay a settlement
          amount of $6,500 to Berman, Romeri and Associates, LLP by April 10, 2006.
          As of
          December 31, 2005, the Company adjusted the related accrued liability to
          $6,500.
          The Company paid $6,500 to Berman, Romeri and Associates, LLP on April
          5,
          2006.
 
 **Network
          Operations and Office Lease Agreement**
 
 On
          February 23, 2006, the lease agreement for Network Operations and Corporate
          residence was amended to expand rental space by 9,415 square feet, bringing
          the
          total rental square feet to 18,800. The term date of the agreement remained
          unchanged. In accordance with the amended lease agreement, a payment of
          $17,246
          was paid on March 10, 2006 and was applied to the June 2006 rent.
 
 Under
          the
          terms of the amended lease, the Company will make annual rental payments
          to the
          Landlord in the following amounts:
 
 Year
          ending December 31
 
 2006
                
                $
                170,0002007
                
                $
                406,3562008
                
                $
                416,5152009
                
                $
                426,9282010
                
                $
                437,601Thereafter
                
                $
                2,568,253
  Promotion of Joseph Morris to
          Chief
          Operating Officer of the Company
  Effective
          June 6, 2006, Joseph Morris succeeded Eric
          Young as Chief Operating Officer of Winsonic Digital Media Group, Ltd.
          Previously, Mr. Morris served as Chief Operating Officer of Automated
          Interiors, LLC, a wholly owned subsidiary of the Company, which was
          acquired on April 18, 2006.  Mr. Morris' base salay is $150,000 per
          annum. Additionally, Mr. Morris was granted stock options to purchase 100,000
          of
          the Company's common stock at an average price of $1.00 per share, of which
          10%
          vested immediately upon signing the employment agreement, and the remaining
          90%
          to vest at the rate of 1/12th per month for twelve months.
 F-24