**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10-KSB/A**


**Amendment
      No. 4**




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




For
      the
      fiscal year ended December 31, 2004




 ̈ 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:




Name
      of
      each exchange on which registered




NONE




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




Common
      stock, $.001 par value




(Title
      of
      class)




Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for past 90 days. Yes  ̈ No x




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




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




The
      aggregate market value of the issuer’s common stock held by non-affiliates as of
      December 16, 2005, was approximately $5,392,000. On such date, the closing
      price
      for the issuer’s common stock, as quoted on the Pink Sheets, LLC, was
      $0.29




The
      issuer had 33,806,962 shares of common stock outstanding as of December 16,
      2005.












**PART
      I**




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




**Introductory
      Comment — Forward-Looking Statements**




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




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




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




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




**Merger
      with Winsonic Digital Cable Systems Network**





Winsonic
      Digital Media Group, Ltd., formerly Media and Entertainment.com, Inc., (the
      “Public Company”) was incorporated on April 27, 2000. On October 7, 2004, the
      Company consummated an Agreement and Plan of Reorganization to acquire all
      of
      the outstanding capital stock of Winsonic Holdings, Ltd. f/k/a Winsonic Digital
      Cable Systems Network, Ltd. (“Winsonic”) a closely held private company, in an
      exchange for 8,000,000 shares of the Public Company’s common stock (“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 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 combination was determined
      by
      the following considerations:





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


2.
      Additionally, the former sole shareholder and CEO of Winsonic became the
      controlling shareholder of the combined company, and;


3.
      The
      management and operations of the combined company continue to be those of
      Winsonic,





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





2


The
      shares of the Public Company outstanding prior to the merger, (23 million
      shares) have been shown as a recapitalization of Winsonic as of October 7,
      2004.




**Business**




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





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





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





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





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





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





3


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





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





**Products
      and Services**





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





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





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





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





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





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





4


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





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





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




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




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





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





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





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





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





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





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





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





5


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





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





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





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





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




**Subcontractor
      Master Consulting Agreement with CI2**





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





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





6


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





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





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





**Joint
      Marketing and Development Agreement**





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





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





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





7


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





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





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




**Native
      American Television Network, Inc.**





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





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





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




8


**The
      Titan Network, LLC.**





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





**PMG
      Media**





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




**Lantern
      Hill Capital**





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




**Sun
      iForce Partner**





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




**Level
      3 Communications**





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





9


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





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




**Verizon
      ESG**





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




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





Our
      corporate headquarters are located at 101 Marietta Street, Suite 2600, Atlanta,
      GA 30303; telephone no. (404) 230-5705. We also maintain offices at 10120 S.
      Eastern Avenue, Suite 200, Las Vegas, Nevada 89052, telephone: (702) 492-1282.
      This office space is provided by one of our executive officers at no cost to
      us.
      We pay for our own telephone service. We maintain network offices at no
      leasehold cost at the following Level 3 locations: New York, Atlanta, Dallas,
      Chicago and Los Angeles. Winsonic Cinema and Cyberhollywood.net production
      offices and hub are located at 8255 Beverly Blvd., Suite 130 Los Angeles, Cal.
      90048.





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








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





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




Callozo
      vs. Media and Entertainment.com





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





10


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





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




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





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




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





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




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




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




11


**PART
      II**




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





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





**2004**
            
            **High
                Bid**
            
            **Low
                Bid**Jan.
                1 through Mar. 31
            
            $
            1.99
            
            $
            .69Apr.
                1 through June 30
            
            
            1.37
            
            
            .55July
                1 through Sept. 30
            
            
            1.16
            
            
            .66Oct.
                1 through Dec. 31
            
            
            1.64
            
            
            .65**2003**
            
            
            **High
                Bid**
            
            
            **Low
                Bid**Jan.
                1 through Mar. 31
            
            $
            .37
            
            $
            .065Apr.
                1 through June 30
            
            
            .20
            
            
            .05July
                1 through Sept. 30
            
            
            .33
            
            
            .12Oct.
                1 through Dec. 31
            
            
            .81
            
            
            .18





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





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





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




**Recent
      Sales of Unregistered Securities**





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





During
      fiscal year 2002, the Company issued stock warrants totaling 990,600 of which
      509,600 was issued to four individuals for consulting services, 385,000 was
      issued to three individuals to settle debt, and 96,000 was issued to six
      individuals and one company for cash, all with a conversion price of $1.00
      per
      share.. We received no cash proceeds and paid no commissions in connection
      with
      these issuances. We believe that the issuance of such warrants was exempt from
      the registration requirements of the Securities Act of 1933, as amended,
      pursuant to the provisions of Section 4(2) of the Securities Act.





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





12


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





During
      fiscal year 2004, the Company issued 6,004,200 shares of common stock to the
      founder and Chairman / C.E.O. for past services totaling $6,004 or $0.001price
      per share, as part of the Reverse Merger acquisition on October 7 th ,
      2004.
      These shares included in the Statement of Stockholders’ Deficit have been
      recasted as if the acquisition had occurred as of the date of inception,
      September 10, 2002. We received no cash proceeds and paid no commissions in
      connection with these issuances. We believe that the issuance of such shares
      was
      exempt from the registration requirements of the Securities Act of 1933, as
      amended, pursuant to the provisions of Section 4(2) of the Securities Act.





During
      fiscal year 2004, the Company issued 23,956,138 shares of common stock related
      to the reverse merger with Media & Entertainment, Inc. These represented
      shares outstanding of the Public Company as of the date of the merger, and
      are
      presented as a recapitalization of Winsonic as of October 7, 2004 (merger
      acquisition 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 received no cash proceeds and paid no
      commissions in connection with these issuances. We believe that the issuance
      of
      such shares was exempt from the registration requirements of the Securities
      Act
      of 1933, as amended, pursuant to the provisions of Section 4(2) of the
      Securities Act.





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





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





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





Pursuant
      to a Convertible Note and Warrant Purchase Agreement dated November 24, 2004
      and
      December 2004, we sold $815,000 of an aggregate $1,015,000 of 6% convertible
      promissory notes and warrants to purchase common stock. The offering was made
      to
      20 accredited investors. The notes are due the earlier of December 15, 2005,
      or
      upon the occurrence of certain events. They are convertible at the lower of
      $.70
      per share or 15% below market. The warrants related to this debt were issued
      to
      purchase 1,164,286 shares of common stock and are exercisable until December
      15,
      2007 at $.70 per share. The issuance of such securities was exempt from the
      registrations requirements of the Securities Act of 1933, as amended, pursuant
      to Section 4(6) of the Securities Act and Rule 506 of Regulation D promulgated
      thereunder.





In
      January 2005, we sold the remaining $200,000 of 6% convertible promissory notes
      and warrants to purchase common stock, pursuant to a Convertible Note and
      Warrant Purchase Agreement dated December 2004.. In a second round of the same
      offering, the Company sold an additional $15,000 of 6% convertible promissory
      notes and warrants to purchase common stock.  The
      offering was to the last of 21 accredited investors. The notes are due the
      earlier of December 15, 2005, or upon the occurrence of certain events. They
      are
      convertible at the lower of $.70 per share or 15% below market. The warrants
      related to this debt were issued to purchase 285,714 shares of common stock
      and
      are exercisable until December 15, 2007 at $.70 per share. We paid no
      commissions in connection with these sales. We believe the issuance of such
      securities was exempt from the registrations requirements of the Securities
      Act
      of 1933, as amended, pursuant to Section 4(6) of the Securities Act and Rule
      506
      of Regulation D promulgated there under.





13





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





**General**





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





**Critical
      Accounting Policies**





Basis
      of Accounting





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




Use
      of
      Estimates





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





Stock
      Based Compensation





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




The
      Company has elected to follow Accounting Principles Board Opinion No. 25 (APB
      25), “Accounting for Stock Issued to Employees” and the related interpretations
      in accounting for its employee stock options because, as discussed below, the
      alternative fair value accounting provided for under FASB Statement No. 123
      (FASB 123), “Accounting for Stock-Based Compensation,” requires the use of
      option valuation models that were not developed for use in valuing employee
      stock options. Under APB 25, if the exercise price of the Company’s employee
      stock options is equal to or greater than the market price of the underlying
      stock on the date of the grant, no compensation expense is
      recognized.


14





An
      Employee Agreement effective October 8, 2004 provides for the grant of 3,000,000
      incentive or non-statutory stock options for three officers to purchase common
      stock. Employees who share the responsibility for the management growth or
      protection of the business of the Company and certain Non-Employee (“Selected
      Persons”), are eligible to receive options which are approved by a committee of
      the Board of Directors. These options primarily vest equally over a twelve-month
      period effective with date of the employment agreement. The agreements are
      terminable at will with or without cause. As of December 31, 2004, 750,000
      options have vested. There were no stock options for the year ending December
      31, 2003.








Revenues
      and Expenses Recognition





The
      financial statements of Winsonic Media Digital Group, Ltd., have been prepared
      on the accrual basis in accordance with generally accepted accounting
      principles. Revenues are recognized when earned and expenses are recognized
      in
      the period incurred.





Recently
      Issued Accounting Pronouncements





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




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




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




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





15




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




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




**Results
      of Operations**




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




For
      the
      year ended December 31, 2004 (“Fiscal 2004”) we incurred a net loss of
      $5,791,000 as compared with a net loss of $1,906,000 during the year ended
      December 31, 2003 (“Fiscal 2003”).




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




Total
      operating expenses for Fiscal 2004 were $3,332,000, consisting of selling,
      general and administrative (SG&A) of $1,517,000, SG&A for related
      parties was $346,000, consulting services with related parties was $1,126,000,
      and depreciation and amortization expense of $342,000. Total operating expenses
      for Fiscal 2003 were $1,273,000, consisting of selling, general and
      administrative (SG&A) of $865,000, SG&A for related parties was
      $199,000, consulting services with related parties was $0, and depreciation
      and
      amortization expense was $209,000. For 2004 our net loss before interest
      expenses, taxes, and other income and expenses was approximately $3,603,000
      compared to approximately $1,650,000 in 2003.




In
      Fiscal
      2004, the Company accrued legal settlement costs of $1,020,000 for the Callozo
      vs. Media & Entertainment.com litigation (previously explained in Item 3
      Legal Proceedings), $826,000 in interest expense, and recorded $109,000 of
      other
      income primarily due to the forgiveness of debts by vendors. In 2003 the Company
      did not experience any charges for legal settlement costs, and incurred interest
      expenses of approximately $232,000. Additionally in 2004 the company recorded
      an
      Unrealized Loss of approximately $452,000 on the adjustment in the derivative
      and warrant liability associated with a convertible debenture issued by the
      company in December of 2004. Further information on the convertible debenture
      and the derivative liability is explained in Note 10 to the Financial
      Statements.




16


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




**Liquidity
      and Capital Resources**




As
      of
      December 31, 2004, we had a working capital deficit of $6,092,000, compared
      to a
      deficit of $1,562,000 at December 31, 2003.




As
      of
      December 31, 2004, we had cash on hand of $437,000. Subsequent thereto, pursuant
      to a Convertible Note and Warrant Purchase Agreement (“Debt Financing”) dated
      December 15, 2004, in January 2005 we completed the sale of an aggregate of
      $1,015,000 of 6% convertible promissory notes and warrants to purchase common
      stock. The offering was made to 21 accredited investors. The notes are due
      the
      earlier of December 15, 2005, or upon the occurrence of certain events. They
      are
      convertible at the lower of $.70 per share or 15% below market. Warrants were
      also issued to purchase 1,450,000 shares of common stock and are exercisable
      until December 15, 2007 at $0.70 per share. The net proceeds of the offering
      are
      being used to purchase or lease inventory and equipment, construct or lease
      facilities, pay salaries, repay indebtedness and for working
      capital.




For
      Fiscal 2004, we used in operating activities $1,089,000 cash to sustain the
      Company. We had $1,525,000 net cash provided by financing activities primarily
      as a result of the Debt Financing of $815,000 and proceeds from loan from a
      related party of $684,000, and a non-related party loan of $32,000. For Fiscal
      2003, we had net cash provided by financing activities of $2,000,000 due to
      issuances of common stock payables for $1,009,000 and proceeds from note payable
      $847,000, and a non-related party loan of $139,000. Fiscal year 2003 also
      included $2,070,000 net cash used in investing activities with the purchase
      of
      fixed assets.For Fiscal 2004, we experienced a net increase in cash of $437,000
      compared with a decrease in cash of $4,000 for Fiscal 2003.




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




If
      we are
      unable to generate sufficient sustainable revenues or obtain additional
      financing to meet our financial obligations, we will have to further reduce
      our
      operations, and we will not be able to continue as a going concern. Our
      independent auditors have indicated in their audit report, dated August 16,
      2005
      (except for Note 10, 12 and 13, December 16, 2005), that there is substantial
      doubt about our ability to continue as a going concern without additional
      financing and achieving and maintaining profitable operations.




**Continuing
      Operations**




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





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




17




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




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




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




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





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





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





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





18


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





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





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


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





19


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




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




**Off-Balance
      Sheet Arrangements**




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




**RISK
      FACTORS**




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




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




We
      have
      experienced significant operating losses since we were formed in September
      2002.
      The Company incurred net losses of approximately $5,791,000 and $1,906,000
      for
      the years ended December 31, 2004 and 2003, respectively, and $8,344,000 for
      the
      period from inception through December 31, 2004. The Company has recorded total
      revenues of only $58,000 since inception.




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




20


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




The
      Company’s has limited operating funds and has nominal cash on hand as of August
      25, 2005. The Company has an immediate need for funds in order to finance its
      business operations. At December 31, 2004, the Company had a working capital
      deficit of approximately $6,092,000.




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




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




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




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




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




The
      Company was organized in September 2002. We have a limited operating history
      upon which an evaluation of our future performance and prospects can be made.
      Our prospects must be considered in light of the risks, expenses, delays,
      problems and difficulties frequently encountered in the establishment of a
      new
      business in the Internet, which is an evolving industry characterized by intense
      competition.




**Risks
      Relating to Winsonic**




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




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




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




21


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




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




**Potential
      Liabilities Associated with Winsonic.**




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




**Business
      Risks**




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




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




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




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




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




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




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




22


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




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




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




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




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




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




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




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




23


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




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




**Absence
      of dividends**




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




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




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




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




Winston
      Johnson, Jon Jannotta and Nana Yalley, our Chairman and CEO, President and
      Executive Vice President, respectively, and their affiliates and other officers,
      directors and affiliates of the Company currently own beneficially approximately
      45% of the Company’s shares of Common Stock. Therefore, these stockholders will
      have the ability to elect all of our directors and to control the outcome of
      all
      other issues submitted to our stockholders.




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




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




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




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




24


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




**Shares
      Eligible For Future Sale**




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




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




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




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




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




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





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





25


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





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





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. The
      Registrant has been notified that 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 accountant'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 uncertainty, 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, 2004 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, 2004 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 (our principal
      executive and financial officer), evaluated the effectiveness of our disclosure
      controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Securities Exchange Act of 1934), as of December 31, 2004. Rule 13a-15 (e)
      under
      the Securities Exchange Act of 1934, requires that disclosure controls and
      procedures are disclosed by an issuer in the reports that it files or submits.
      The Act requires information to be accumulated and communicated to the issuer’s
      management as appropriate to allow timely decisions regarding required
      disclosure.




The
      following are the results of the procedures adhered to regarding Winsonic
      Digital Media Group, Ltd. (a development stage company), yielding the following
      adjustments and disclosures made to the prior year ended December 31,
      2003.




26




A.
            The
                Company undertook an organizational restructure with the merger of
                Winsonic Holdings, Ltd. and Winsonic Digital Cable Systems Network
                with
                Media and Entertainiment.com, Inc., thus creating Winsonic Digital
                Media
                Group, Ltd. The circumstances and transactions of the merger on October
                7,
                2004 were thoroughly reviewed. The merger was considered a capital
                transaction in substance, rather than a business combination, resulting
                in
                a reverse acquisition for accounting purposes, thereby yielding no
                recording of goodwill, and called for the proper recording of issuance
                of
                6,004,200 common stock shares to the founder and CEO. Also, as mentioned
                in Note 1 - Organization and Purpose (on page F-7), the Company considered
                SAB Topic 4C in disclosing that stockholders deficit and loss per
                share
                were retroactively recasted using historical data from Winsonic.
                The entry
                to record par value of $6,004 was a credit to common stock and debit
                to
                related party-selling, general and administrative expenses as of
                September
                10, 2002 (inception).





B.
            Equity
                transactions, including warrants, paid-in capital, and common stock
                transactions of the Company were reviewed in detail to ensure proper
                recording of stockholders deficit. During our review of warrants,
                paid-in
                capital, and common stock transactions, it was noted that the Company
                in
                2003 year had incorrectly capitalized a stock issuance for services,
                rather than expensing the services. The Company has now recorded
                and
                disclosed $275,000 as consulting expense in 2003, and reduced the
                asset by
                the same amount.





Management,
      in agreement with the Company’s independent registered public accounting firm,
      De Joya & Company decided that given the complexity of the organization’s
      restructure, and the fact that the Company is a development stage company,
      it
      was appropriate due diligence to review all balance sheet accounts in detail.
      Management’s due diligence in it’s review procedures and disclosure practices
      contributed to the detection of one prior year adjustment, and one entry for
      recastment of shares and restatement of the financial statements for and as
      of
      the year ended December 31, 2003 and December 31, 2004.





Each
      prior period adjustment and related disclosure was appropriately confirmed
      as
      correct via a review with the previous auditors, Chavez and Koch, as evidenced
      in their opinion of their Report of Independent Public Registered Accounting
      Firm, dated August 16, 2005, filed with the Company’s Form 10-KSB.




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




None




**PART
      III**




**Item
                9.**
            **Directors,
                Executive Officers, Promoters and Control
                Persons;**




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




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




27




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




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




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




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




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




**Directors**




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




**Board
      Committees**




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




28


**Director
      Compensation**




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




**Legal
      Proceedings**




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




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




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




**Code
      of Ethics**




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




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




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




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




29




(1)




**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
            
            2004
            
            $
            221,900
            (2)
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Johnson
            
            2003
            
            
            199,200
            (3)
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0CEO
            
            2002
            
            $
            -
                0 -
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Jon
            
            2004
            
            $
            62,419
            (3)
            
            0
            
            
            0
            
            $
            360,774
            (4)
            
            0
            
            
            0Jannotta
            
            2003
            
            $
            -
                0 -
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Pres
            
            2002
            
            $
            -
                0 -
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Nana
            
            2004
            
            $
            62,419
            (3)
            
            0
            
            
            0
            
            $
            765,160
            (5)
            
            0
            
            
            0Yalley
            
            2003
            
            $
            -
                0 -
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Executive
                V.P.
            
            2002
            
            $
            -
                0 -
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0




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




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




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




(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, dividends will be paid on the Shares and
                they
                were valued at the then current market price of
                $360,774.




(5)
            In
                October 2004, Nana Yalley was issued 1,034,000 shares of restricted
                common
                stock for services rendered as an executive bonus in consideration
                of his
                efforts in the procurement and conclusion of the Winsonic Merger.
                These
                shares were fully vested, dividends will be paid on the shares and
                they
                were valued at the then current market price of $765,160.




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




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




30




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




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




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




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




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




**Employment
      Agreements**




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




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




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




The
      following table sets forth information with respect to the beneficial ownership
      of shares of our common stock as of June 3, 2005, on which date there were
      33,806,962 shares outstanding, by:




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




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




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




31


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




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




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




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




·
            The
                address for each beneficial owner listed in the table, except where
                otherwise noted, is c/o Winsonic Digital Media Group, Ltd. 101 Peachtree
                Street, Suite 2600, Atlanta, GA
                30303.




**Name
                and Address**
            
            **Amount
                and Nature**
              **Of
                Beneficial Ownership**
            
            **Percentage
                of**
              **Outstanding**
              **Shares
                Owned**Winston
                Johnson
            
            
            8,004,200
            (1)
            
            23.7
            %Jon
                J. Jannotta
            
            
            3,354,960
            
            
            9.9
            %Nana
                Yalley
            
            
            3,760,988
            
            
            11.1
            %All
                current directors and executive
              officers
                as a group (3 persons)
            
            
            15,120,148
            
            
            44.7
            %


——————————


*
      Represents less than 1%.




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




32


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





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




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




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




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




(a)  Exhibits.





**Exhibit
                No.**
            
            **Description**2.1
            
            Agreement
                and Plan of Reorganization dated July 16, 2004.(4)2.1
            
            Agreement
                and Plan of Reorganization dated, as amended.(7)3.1
            
            Articles
                of Incorporation of Media and Entertainment.com, Inc., dated April
                27,
                2000, as amended through October 17, 2002.(1)3.2
            
            First
                Amendment to Amend and Restated Articles of Incorporation.(5)3.3
            
            By-laws
                of Media and Entertainment.com, Inc.(2)10.1
            
            Form
                of Employment Agreement entered into with each of Roger Paglia, Jon
                Jannotta, Benedict Paglia, and Bernard Grossman on October 1,
                2001.(1)10.2
            
            Service
                Agreement dated as of July 18, 2003 by and between Media and
                Entertainment.com, Inc. and Winsonic Holdings, Ltd.(3)10.3
            
            Stock
                Purchase Agreement dated as of July 18, 2003, by and between Media
                and
                Entertainment.com, Inc. and Winsonic Holdings, Ltd.(3)




33


**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.(6)10.8
            
            Joint
                Marketing and Development Agreement with C12, Inc.(6)10.9
            
            Modification
                of the Master Purchase Agreement between C12 and Winsonic Holdings.(6)10.10
            
            Shareholder
                Agreement dated October 6, 2004, by and among Media and Entertainment.com,
                Inc., Winston Johnson, Nana Yalley and Jon Jannotta.(7)10.11
            
            Form
                of Exchange Agreement.(7)10.12
            
            Memorandum
                of Understanding dated February 17, 2005, by and between Winsonic
                Digital
                Media Group, Ltd. and Native American Television Network, Inc.(9)10.13
            
            Letter
                of Agreement dated as of March 1, 2005, by and between Winsonic Digital
                Media Group Ltd. and The Titan Network, LLC.(9)10.14
            
            Memorandum
                of Understanding dated March 12, 2005, by and between Winsonic Digital
                Media Group, Ltd. and Proactive Media Group, Inc.(9)10.15
            
            Agreement
                dated March 14, 2005, by and between Winsonic Digital Media Group,
                Ltd.
                and Lantern Hill Capital.(9)10.16
            
            Exchange
                Agreement dated as of March 15, 2005, by and among Winsonic Digital
                Media
                Group, Ltd., Winsonic Digital Cable Systems Network, Ltd., Winston
                Johnson
                and A. Scott Roderick Investments, LLC.(9)




34


**Exhibit
                  No.**
              
              **Description**


10.17
            
            Office
                Services Agreement dated May 12, 2005 by and between Interactive
                Worldwide
                Atlanta - 260 Peachtree LLC and Winsonic Digital Media
                Group.10.18
            
            Office
              Subleases and
              Services Agreements between Crowne Office Suites, Inc. at Peachtree
              Center
              and Winsonic Digital Media Group, Ltd. dated December 22, 2004 and
              January
              6, 2005.10.19
            
            Standard
              Industrial/
              Commercial Multi-Tenant Lease - dated January 10, 2005, by and between
              Beverly Lion LLC and Winsonic Digital Media Group.10.20
            
            Binding
              Employment
              Offering Letter dated October 8, 2004 by and between the Registrant
              and
              Winston Johnson.10.21
            
            Binding
              Employment
              Offering Letter dated October 8, 2004 by and between the Registrant
              and
              Jon Jannotta.10.22
            
            Binding
              Employment
              Offering Letter dated October 8, 2004 by and between the Registrant
              and
              Nana Yalley.10.23
            
            Addendum
              to the June
              9, 2003 Master Service Agreement with Level 3 Communications keeping
              the
              agreement in full effect On August 19, 2004.10.24
            
            Service
              schedule for
              (3) LinkSMGlobal Wavelength Service - IRUOn
              August 17, 2004.10.25
            
            Contract
                with Sun Micro Systems as a Sun iforce Partner On May 27, 2005.14.1
            
            Code
                of Business Conduct and Ethics.(3)16.1
            
            Letter
                from Chavez and Koch dated March 31, 2005.(8)*21.1
            
            List
                of subsidiaries of Registrant.*31.1
            
            Certification
                of the Chief Executive Officer required by Rule 13a-14(a) or Rule
                15d-14(a)*31.2
            
            Certification
                of the Chief Financial Officer required by Rule 13a-14(a) or Rule
                15d-14(a)*32.1
            
            Certification
                of the Chief Executive Officer required by Rule 13a-14(b) or Rule
                15d-14(b) and 18 U.S.C. 1350*32.2
            
            Certification
                of the Chief Financial Officer required by Rule 13a-14(b) or Rule
                15d-14(b) and 18 U.S.C. 1350


35


_________________


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





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





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





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





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





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





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





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





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





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





* Filed
      herewith.




(b)  Reports
      on Form 8-K.




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




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




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




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




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




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




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




**2004**
            
            **2003**Audit
                Fees
            
            $
            11,338
            (1)
            $
            9,300Audit-Related
                Fees
            
            $
            -
                0 -
            
            $
            -
                0 -Tax
                Fees
            
            $
            -
                0 -
            
            $
            -
                0 -All
                Other Fees
            
            $
            -
                0 -
            
            $
            -
                0 -




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




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




36




**SIGNATURES**




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


**WINSONIC
                DIGITAL MEDIA GROUP, LTD.**Date: 
March
              9, 2006
            By:
            /s/ Winston
              JohnsonWinston
              JohnsonChief
              Executive Officer




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





/s/
Winston
              JohnsonWinston
                Johnson
            
            Chairman
                of the Board, and Chief Executive Officer, Principal Executive and
                Financial Officer and Director
            
            March
                  9, 2006/s/
Jon
              J. JannottaJon
                J. Jannotta
            
            President
                and Director
            
            March
                  9, 2006/s/
Eric
              YoungEric
                Young
            
            Chief
                  Financial Officer and Director
            
            March
                  9, 2006





37


Winsonic
      Digital Media Group, LTD.





Annual
      Report on Form 10-KSB for the


Year
      Ended December 31, 2004





**EXHIBIT
      INDEX**





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





38





WINSONIC
        DIGITAL MEDIA GROUP, LTD.
 
 (A
        DEVELOPMENT STAGE COMPANY)
 
 AUDITED
        FINANCIAL STATEMENTS (RESTATED)
 
 FOR
        THE TWELVE MONTHS ENDED DECEMBER 31, 2004 & 2003
   
  **CONTENTS****INDEPENDENT
                  AUDITORS’ REPORT****FINANCIAL
                  STATEMENTS:**Balance
                  Sheets
              F-1Statements
                  of Operations and Accumulated Deficit
              F-2Statements
                  of Changes in Stockholders’ Equity (Deficit)
              F-3---F-5Statements
                  of Cash Flows
              F-6**NOTES
                  TO FINANCIAL STATEMENTS:**
              F-7---F-21





***De
      Joya & Company***


**Certified
      Public Accountants & Consultants**


**2425
      W. Horizon Ridge Parkway**


**Henderson,
      Nevada 89052**







REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To
      the
      Board of Directors


Winsonic
      Digital Media Group, Ltd.


Atlanta,
      Georgia





We
      have
      audited the accompanying balance sheet of Winsonic Digital Media Group, Ltd.
      as
      of December 31, 2004 and the related statements of operations, stockholders’
deficit, and cash flows for the year the ended December 31, 2004 and for the
      period from September 10, 2002 (Inception) through December 31, 2004. These
      financial statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit. We did not audit the financial statements of Winsonic Digital Media
      Group, Ltd. as of and for the year ended December 31, 2003 and for the period
      from September 10, 2002 (Inception) through December 31, 2003. 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, 2003, 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,
      2004, and the results of its operations and cash flows for the year the ended
      December 31, 2004 and for the period from September 10, 2002 (Inception) through
      December 31, 2004, in conformity with accounting principles generally accepted
      in the United States.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 6 to the financial
      statements, the Company has suffered recurring losses from operations and
      accumulated deficit of $8,344,095, 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.





As
      discussed in Note 12 to the financial statements, the Company has restated
      its
      financial statements for the year ended December 31, 2004 for a correction
      of
      error related to the treatment of the convertible debentures.





/s/
      De
      Joya & Company





De
      Joya
& Company


August
      16, 2005 (except for Note 10, 12 and 13, December 16, 2005)


Henderson,
      Nevada




Telephone
            (702) 563-1600   ●    Facsimile (702) 920-8049


REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To
      the
      Board of Directors of


Winsonic
      Digital Media Group, LTD.:





We
      have
      audited the accompanying balance sheet of Winsonic Digital Media Group, LTD.
      as
      of December 31, 2003, and the related statement of operations, stockholders’
equity, and cash flows for the year then ended. These financial statements
      are
      the responsibility of the Company's management. Our responsibility is to express
      an opinion on these financial statements based on our audits.





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





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of the Company as of December 31,
      2003, and the results of its operations and its cash flows for the year ended
      December 31, 2003, in conformity with U.S. generally accepted accounting
      principles.





The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. As disclosed in Note 6 to these financial
      statements, the Company’s ability to continue as a going concern is contingent
      upon the successful completion of additional financing arrangements and its
      ability to achieve and maintain profitable operations. This raises substantial
      doubt about its ability to continue as a going concern. Management’s plan in
      regards to this issue is also described in Note 6. The financial statements
      do
      not include any adjustments that might result from the outcome of this
      uncertainty.





As
      discussed in Note 12 to the financial statements, certain errors resulting
      from
      the incorrect capitalization of consulting and financial service expenses and
      the understatement of previously reported interest expenses and issuance of
      shares of common stock were discovered by management of the Company during
      the
      current year. Accordingly, adjustments have been made as of December 31, 2003
      to
      correct capitalized expenses, outstanding loan balances, accumulated deficit,
      and the number of shares of common stock outstanding.





Chavez
      & Koch, CPA’s




August
      16, 2005


Henderson,
      Nevada









WINSONIC
      DIGITAL MEDIA GROUP, LTD.


(A
      DEVELOPMENT STAGE COMPANY)


**BALANCE
      SHEETS**


AS
      OF
      DECEMBER 31, 2004 & 2003


(Restate)


2004
            
            2003(Restated)
            
            (Restated)**ASSETS**ASSETS:Current
                assets:Cash
            
            
            $
            436,749
            
            $
            -Due
                from stockholder - related party
            
            
            
            -
            
            
            23,227Deposit
            
            
            
            82,490
            
            
            60,000Total
                current assets
            
            
            
            519,239
            
            
            83,227Fixed
                assets:Computer
                equipment
            
            
            
            1,577,269
            
            
            1,577,269Infrastructure
            
            
            
            320,000
            
            
            320,000Software
            
            
            
            160,000
            
            
            160,000Furniture
                & fixtures
            
            
            
            13,040
            
            
            13,040Less:
                accumulated depreciation
            
            
            
            (550,955
            )
            
            (208,600
            )Total
                fixed assets
            
            
            
            1,519,354
            
            
            1,861,709TOTAL
                ASSETS
            
            
            $
            2,038,593
            
            $
            1,944,936**LIABILITIES
                AND STOCKHOLDERS' DEFICIT**LIABILITIES:Current
                liabilities:Accounts
                payable and accrued expenses
            
            
            $
            1,514,625
            
            $
            1,227,949Bank
                overdraft
            
            
            
            **-**
            
            
            4,205Accrued
                payroll and related taxes
            
            
            
            781,575
            
            
            249,000Legal
                settlement liabilities
            
            
            
            1,020,000
            
            
            -Loans
                payable
            
            
            
            357,506
            
            
            158,529Loan
                payable -related party
            
            
            
            683,726
            
            
            -Note
                payable to related party
            
            
            
            -
            
            
            5,450Note
                payable - Digital Services International, Inc.
            
            
            
            847,000
            
            
            -Accrued
                interest on notes payable
            
            
            
            101,640
            
            
            -Derivative
                liability related to convertible debentures
            
            
            
            652,254
            
            
            -Warrant
                liability related to convertible debentures
            
            
            
            614,609
            
            
            -Convertible
                debentures
            
            
            
            37,871
            
            
            -Total
                current liabilities
            
            
            
            6,610,806
            
            
            1,645,133Long-Term
                liabilities:Notes
                payable - Digital Services International, Inc.
            
            
            
            -
            
            
            847,000Total
                long-term liabilities
            
            
            
            -
            
            
            847,000TOTAL
                LIABILITIES
            
            
            
            6,610,806
            
            
            2,492,133Stockholders'
                deficit:Common
                stock, $0.001 par value, 50,000,000 sharesauthorized,33,620,884and 6,004,000shares
                issued andoutstanding
                at December 31, 2004 and 2003, respectively
            
            
            
            33,621
            
            
            6,004Additional
                paid-in capital
            
            
            
            2,918,261
            
            
            -Common
                stock payable, $1.00 per share
            
            
            
            820,000
            
            
            2,000,100Accumulated
                deficit during development stage
            
            
            
            (8,344,095
            )
            
            (2,553,301
            )Total
                stockholders' deficit
            
            
            
            (4,572,213
            )
            
            (547,197
            )TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            
            $
            2,038,593
            
            $
            1,944,936




The
            accompanying notes to the financial statements should be
 read
            in
            conjunction with these Balance Sheets.
 F-1
 
 WINSONIC
          DIGITAL MEDIA GROUP, LTD.
 (A
          DEVELOPMENT STAGE COMPANY)
 **STATEMENTS
          OF OPERATIONS**
 FOR
          THE YEARS ENDED DECEMBER 31, 2004 && 2003
 AND
          FROM INCEPTION TO DECEMBER 31, 2004
 (Restated)
 **For
                      the year ended December 31,**
                  
                  **Inception
                      to****2004**
                  
                  **2003**
                  
                  **December
                      31, 2004****(Restated)**
                  
                  **(Restated)**
                  
                  **(Restated)**REVENUE
                  
                  $
                  25,000
                  
                  $
                  32,811
                  
                  $
                  57,811COST
                      OF GOODS SOLD
                  
                  
                  296,120
                  
                  
                  409,166
                  
                  
                  707,956GROSS
                      PROFIT
                  
                  
                  (271,120
                  )
                  
                  (376,355
                  )
                  
                  (650,145
                  )EXPENSES:Selling,
                      general and administrative
                  
                  
                  1,516,584
                  
                  
                  865,315
                  
                  
                  3,020,642Selling,
                      general and administrative, related party
                  
                  
                  346,738
                  
                  
                  199,200
                  
                  
                  551,942Consulting
                      Services - related party
                  
                  
                  1,125,934
                  
                  
                  -
                  
                  
                  1,125,934Depreciation
                      and amortization expense
                  
                  
                  342,355
                  
                  
                  208,600
                  
                  
                  550,955Total
                      expenses
                  
                  
                  3,331,611
                  
                  
                  1,273,115
                  
                  
                  5,249,473OPERATING
                      INCOME (LOSS)
                  
                  
                  (3,602,731
                  )
                  
                  (1,649,470
                  )
                  
                  (5,899,618
                  )OTHER
                      INCOME/(EXPENSES):Interest
                      expense
                  
                  
                  (825,924
                  )
                  
                  (232,398
                  )
                  
                  (1,058,322
                  )Unrealized
                      loss on adjustment of derivative and warrantliability
                      to fair value of underlying securities
                  
                  
                  (451,863
                  )
                  
                  -
                  
                  
                  (451,863
                  )Legal
                      Settlement Costs
                  
                  
                  (1,020,000
                  )
                  
                  -
                  
                  
                  (1,020,000
                  )Interest
                      income
                  
                  
                  257
                  
                  
                  -
                  
                  
                  257Other
                      income(expenses)
                  
                  
                  109,467
                  
                  
                  (24,016
                  )
                  
                  85,451Total
                      other income/(expenses)
                  
                  
                  (2,188,063
                  )
                  
                  (256,414
                  )
                  
                  (2,444,477
                  )NET
                      LOSS BEFORE PROVISION FOR INCOME TAXES
                  
                  
                  (5,790,794
                  )
                  
                  (1,905,884
                  )
                  
                  (8,344,095
                  )PROVISION
                      FOR INCOME TAXES
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -NET
                      LOSS
                  
                  $
                  (5,790,794
                  )
                  $
                  (1,905,884
                  )
                  $
                  (8,344,095
                  )Basic
                      weighted average number ofcommon
                      shares outstanding
                  
                  
                  8,787,258
                  
                  
                  6,004,200Net
                      loss per basic and diluted common share
                  
                  $
                  (0.66
                  )
                  $
                  (0.32
                  )
  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)
 STATEMENT
        OF STOCKHOLDERS' DEFICIT
 (Restated)


AccumulatedCommon
              
              Deficit
                  During
              
              TotalPreferred
                  Stock
              
              Common
                  Stock
              
              Additional
              
              Stock
              
              Development
              
              Stockholders'Shares
              
              Amount
              
              Shares
              
              Amount
              
              Paid-in
                  Capital
              
              Payable
              
              Stage
              
              Deficit**Balance,
                  September 10, 2002 (Inception) - No Par Stock**
              
              **10,000,000**
              
              **$****-**
              
              **10,000,000**
              
              **$****-**
              
              **$****-**
              
              
              
              **$****-**
              
              **$****-**Reverse
                  Merger - ReAcquisition of all outstanding sharesof
                  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, $1.00price
                  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
              )
  The
                accompanying notes to the financial statements should be
 read
                in
                conjunction with this Statement of Stockholders'
                Deficit.
 F-3
 WINSONIC
              DIGITAL MEDIA GROUP, LTD. COM, INC.
 (A
              DEVELOPMENT STAGE COMPANY)
 **STATEMENTS
              OF CASH FLOWS**
 FOR
              THE YEARS ENDED DECEMBER 31, 2004 && 2003 AND FROM INCEPTION TO DECEMBER
              31, 2004
 (Restated)
  **For
                          the year ended December 31,**
                      
                      **Inception
                          to****2004**
                      
                      **2003**
                      
                      **December
                          31, 2004****(Restated)**
                      
                      **(Restated)**
                      
                      **(Restated)****CASH
                          FLOWS FROM OPERATING ACTIVITIES:**Net
                          (loss)
                      
                      $
                      (5,790,794
                      )
                      $
                      (1,905,884
                      )
                      $
                      (8,338,091
                      )Adjustments
                          to reconcile net lossto
                          net cash used by operations:Depreciation
                      
                      
                      342,355
                      
                      
                      208,600
                      
                      
                      550,955Accretion
                          of principal and interest relatedto
                          convertible debentures
                      
                      
                      37,871
                      
                      
                      
                      
                      
                      37,871Unrealized
                          loss on adjustment of derivative andwarrant
                          liability to fair value of underlying securities
                      
                      
                      451,863
                      
                      
                      
                      
                      
                      451,863Stock
                          based compensation
                      
                      
                      1,490,809
                      
                      
                      -
                      
                      
                      1,490,809Change
                          in operating assets and liabilities:Decrease
                          in due from stockholder
                      
                      
                      23,227
                      
                      
                      289,673
                      
                      
                      -(Increase)
                          decrease in deposit
                      
                      
                      (22,490
                      )
                      
                      14,405
                      
                      
                      (82,490
                      )Increase
                          (decrease) in bank overdraft
                      
                      
                      (4,205
                      )
                      
                      4,205
                      
                      
                      -Increase
                          in accounts payable and accrued expenses
                      
                      
                      728,645
                      
                      
                      1,207,038
                      
                      
                      1,758,094Increase
                          accrued payroll and related taxes
                      
                      
                      532,575
                      
                      
                      199,200
                      
                      
                      781,575Increase
                          in legal settlement liabilities
                      
                      
                      1,020,000
                      
                      
                      -
                      
                      
                      1,020,000Increase
                          in interest payable
                      
                      
                      101,640
                      
                      
                      -
                      
                      
                      101,640**Net
                          cash provided by (used in) operating activities**
                      
                      
                      **(1,088,504**
                      **)**
                      
                      **17,237**
                      
                      
                      **(2,227,774**
                      **)****CASH
                          FLOWS FROM INVESTING ACTIVITIES:**Purchase
                          of fixed assets
                      
                      
                      -
                      
                      
                      (2,070,309
                      )
                      
                      (2,070,309
                      )**Net
                          cash used in investing activities**
                      
                      
                      **-**
                      
                      
                      **(2,070,309**
                      **)**
                      
                      **(2,070,309**
                      **)****CASH
                          FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                          from loans payable
                      
                      
                      31,977
                      
                      
                      138,529
                      
                      
                      389,006Proceeds
                          from loan payable - related party
                      
                      
                      683,726
                      
                      
                      -
                      
                      
                      683,726Proceeds
                          fron note payable - related party
                      
                      
                      -
                      
                      
                      5,450
                      
                      
                      5,450Payment
                          on note payable - related party
                      
                      
                      (5,450
                      )
                      
                      -
                      
                      
                      (5,450
                      )Proceeds
                          from note payable - Digital ServicesInternational,
                          Inc.
                      
                      
                      -
                      
                      
                      847,000
                      
                      
                      847,000Proceeds
                          from convertible debentures
                      
                      
                      815,000
                      
                      
                      -
                      
                      
                      815,000Proceeds
                          from warrants from common stock
                      
                      
                      -
                      
                      
                      1,009,500
                      
                      
                      2,000,100**Net
                          cash provided by financing activities**
                      
                      
                      **1,525,253**
                      
                      
                      **2,000,479**
                      
                      
                      **4,734,832****NET
                          INCREASE (DECREASE) IN CASH**
                      
                      
                      **436,749**
                      
                      
                      **(52,593**
                      **)**
                      
                      **436,749****CASH,
                          BEGINNING OF PERIOD**
                      
                      
                      **-**
                      
                      
                      **52,593**
                      
                      
                      **-****CASH,
                          END OF PERIOD**
                      
                      **$**
                      **436,749**
                      
                      **$**
                      **-**
                      
                      **$**
                      **436,749****SUPPLEMENTARY
                          INFORMATION:**Interest
                          paid
                      
                      $
                      -
                      
                      $
                      -
                      
                      $
                      -Income
                          taxes paid
                      
                      $
                      -
                      
                      $
                      -
                      
                      $
                      -
 The
                  accompanying notes to financial statements should be read
                    in
                    conjunction with these Statements of Cash Flows.
 F-4




**NOTE
      1 - ORGANIZATION AND PURPOSE**





Winsonic
      Digital Media Group, Ltd., formerly Media and Entertainment.com, Inc., (the
      “Public Company”) was incorporated on April 27, 2000. On October 7, 2004, the
      Company consummated an Agreement and Plan of Reorganization to acquire all
      of
      the outstanding capital stock of Winsonic Holdings, Ltd. f/k/a Winsonic Digital
      Cable Systems Network, Ltd. (“Winsonic”) a closely held private company, in an
      exchange for 8,000,000 shares of the Public Company’s common stock (“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 Company changed its name from Media
      and Entertainment.com, Inc. to Winsonic Digital Media Group, Ltd.





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





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


2.
      Additionally, the former sole shareholder and CEO of Winsonic became the
      controlling shareholder of the combined company, and;


3.
      The
      management and operations of the combined company continue to be those of
      Winsonic,





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





The
      shares of the Public Company outstanding prior to the merger, (23 million
      shares) have been shown as a recapitalization of Winsonic 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 it 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, reducing the
      need
      for expensive high-speed connections.




F-5


A
      Development Stage Company - The
      accompanying financial statements have been prepared in a accordance with the
      Statement of Financial Accounting Standards No. 7”According and Reporting by
      Development-Stage Enterprises”. A development-stage enterprise is one in which
      planned principal operations have not commenced or if its operations have
      commenced, there has been no significant revenues there from. As of December
      31,
      2004, the Company has not commenced its planned principal
      operations.





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





Definition
      of Fiscal Year





The
      Company’s fiscal year end is December 31.





Cash
      and
      Cash Equivalents





Cash
      equivalents consist of highly liquid investments with maturities of three months
      or less when purchased. Cash and cash equivalents are on deposit with financial
      institutions without any restrictions.





Concentration
      of Credit Risk





The
      Company maintains its cash and cash equivalents in bank accounts in four
      financial institutions. The Federal Deposit Insurance Corporation insures
      deposits up to $100,000 per account. The balance in one account has a balance
      of
      $427,135, and therefore the account has an uninsured balance of $327,135 as
      of
      December 31, 2004.





Use
      of
      Estimates





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





Fair
      Value of Financial Instruments





Financial
      accounting standards Statement No. 107, “Disclosure About Fair Value of
      Financial Instruments”, requires the Company to disclose, when reasonably
      attainable, the fair market values of its assets and liabilities which are
      deemed to be financial instruments. The carrying amounts and estimated fair
      values of the Company’s financial instruments approximate their fair value due
      to the short-term nature.





Earnings
      (Loss) Per Share Calculations





Basic
      earnings (loss) per share exclude any dilutive effects of options, warrants
      and
      convertible securities. Basic earnings (loss) per share is computed using the
      weighted-average number of outstanding common stocks during the applicable
      period. Diluted earnings per share is computed using the weighted-average number
      of common and common stock equivalent shares outstanding during the period.
      Common stock equivalent shares are excluded from the computation if their effect
      is antidilutive.





F-6


Stock
      Based Compensation





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





The
      Company has elected to follow Accounting Principles Board Opinion No. 25 (APB
      25), “Accounting for Stock Issued to Employees” and the related interpretations
      in accounting for its employee stock options because, as discussed below, the
      alternative fair value accounting provided for under FASB Statement No. 123
      (FASB 123), “Accounting for Stock-Based Compensation,” requires the use of
      option valuation models that were not developed for use in valuing employee
      stock options. Under APB 25, if the exercise price of the Company’s employee
      stock options is equal to or greater than the market price of the underlying
      stock on the date of the grant, no compensation expense is
      recognized.





An
      Employee Agreement effective October 8, 2004 provides for the grant of 3,000,000
      incentive or non-statutory stock options for three officers to purchase common
      stock. Employees who share the responsibility for the management growth or
      protection of the business of the Company and certain Non-Employee (“Selected
      Persons”), are eligible to receive options which are approved by a committee of
      the Board of Directors. These options primarily vest equally over a twelve-month
      period effective with date of the employment agreement. The agreements are
      terminable at will with or without cause. As of December 31, 2004, 750,000
      options have vested.





Pro
      forma
      information regarding net income and earnings per share is required by FASB
      123,
      which also requires that the information be determined as if the Company has
      accounted for its employee stock options granted beginning in the fiscal year
      subsequent to December 31, 1994 under the fair value method of that Statement.
      The fair value for these options was estimated at the date of grant using a
      Black-Scholes option pricing model with the following weighted-average
      assumptions for the year ended December 31, 2004: risk free rate of 3.5%; no
      dividend yield; volatility factors of the expected market price of the Company's
      common stock of 63%; and weighted-average expected life of the option of two
      years. There were no stock options for the year ending December 31,
      2003.





The
      Black-Scholes option valuation model was developed for use in estimating the
      fair value of traded options which have no vesting restrictions and are fully
      transferable. In addition, option valuation models require the input of highly
      subjective assumptions including the expected stock price volatility. Because
      the Company’s employee stock options have characteristics significantly
      different from those of traded options, and because changes in the subjective
      input assumptions can materially affect the fair value estimate, in management’s
      opinion, the existing models do not necessarily provide a reliable single
      measure of the fair value of its employee stock options.





For
      purposes of pro forma disclosures, the estimated fair value of the options
      is
      amortized to expense over the option’s vesting period.





F-7





The
      Company’s pro forma information follows:








A
      summary
      of the Company’s stock option activity follows:





December
                31, 2004
            
            December
                31, 2003Weighted
            
            
            
            WeightedAverage
            
            
            
            AverageExercise
            
            
            
            ExerciseOptions
            
            Price
            
            Options
            
            PriceOutstanding
                -beginning
                of year
            
            
            0
            
            $
            0
            
            
            0
            
            $
            0Granted
            
            
            3,000,000
            
            
            1.00
            
            
            0
            
            
            0Exercised
            
            
            --
            
            
            --
            
            
            --
            
            
            --Cancelled
            
            
            --
            
            
            --
            
            
            --
            
            
            --Outstanding
                -end
                of year
            
            
            3,000,000
            
            $
            1.00
            
            
            0
            
            $
            0Exercisable
                - end of year
            
            
            750,000
            
            $
            1.00
            
            
            --
            
            
            --





Fixed
      Assets





Fixed
      assets are stated at cost. Expenditures that materially increase the life of
      the
      assets are capitalized. Ordinary maintenance and repairs are charged to expense
      as incurred. When assets are sold or otherwise disposed of, the cost and the
      related accumulated depreciation are removed from the accounts and any resulting
      gain or loss is recognized at that time. Depreciation is computed primarily
      on
      the declining balance method for financial statement purposes over the following
      estimated useful lives:


Telecommunication
                    Equipment
              
              15
                  YearsFurniture
                  & Fixtures
              
              7
                  YearsComputer
                  Equipment
              
              5
                  YearsSoftware
              
              3
                  Years


Depreciation
      expense for the years ended December 31, 2004 and December 31, 2003 was $342,355
      and $208,600, respectively.





F-8


Impairment
      of Long-Lived Assets





In
      accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
      “Accounting for the Impairment or Disposal of Long-Lived Assets ", long-lived
      assets such as property and equipment and intangible assets subject to
      amortization are reviewed for impairment whenever events or changes in
      circumstances indicate that the carrying amount of an asset group may not be
      recoverable. Recoverability of assets groups to be held and used is measured
      by
      a comparison of the carrying amount of an asset group to estimated undiscounted
      future cash flows expected to be generated by the asset group. If the carrying
      amount of an asset group exceeds its estimated future cash flows, an impairment
      charge is recognized by the amount by which the carrying amount of an asset
      group exceeds fair value of the asset group.





Revenues
      and Expenses Recognition





Revenues
      are recognized upon services rendered to customers. Costs and expenses are
      recognized during the period in which they are incurred





Advertising
      Costs





The
      Company expenses all costs of advertising as incurred. There were no advertising
      costs incurred for the years ended December 31, 2004 and 2003.





Research
      and Development Costs





Research
      and development costs are charged to expense as incurred.





Income
      Taxes





Income
      taxes are generally provided for the tax effects of transactions reported in
      the
      financial statements and consist of taxes currently due plus deferred taxes
      related primarily to differences between the basis of fixed assets for financial
      and income tax reporting. The Company has no deferred tax assets and liabilities
      representing the future tax return consequences of those differences because
      currently the Company has no material temporary timing differences that give
      rise to these tax assets and liabilities. Currently there are no federal income
      taxes due.





Recently
      Issued Accounting Pronouncements





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





F-9




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




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




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




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




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




F-10


**NOTE
      3 - STOCKHOLDERS’ EQUITY**





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





During
      fiscal year 2002, the Company issued stock warrants totaling 990,600 of which
      509,600 warrants were issued to four individuals for consulting services,
      385,000 warrants were issued to three individuals to settle debt, 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 incurred common stock payable of $820,000 for
      shares of stock valued at $1.00 per share to a company for purchase of computer
      equipments and infrastructure valued at $1,667,000. The remaining balance of
      $847,000 **** has
      been
      financed through promissory note payable, see Note 11.





During
      fiscal year 2003, the Company issued stock warrants totaling 189,500 of which
      87,000 was issued to one individual for consulting services, and 102,500 was
      issued to four individuals and for cash, all with a conversion price of $1.00
      per share.





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 on October 7, 2004. The issue has been accounted
      for
      as a part of the “B” reorganization wherein the Public Company acquired control
      of the Private Company. The shares have been
      recast back to inception for accounting purposes on our financial statements.





During
      fiscal year 2004 as discussed in Note 1, the Company issued 23,956,138 shares
      of
      common stock related to the reverse merger with Media & Entertainment, Inc.
      These shares represent issued and outstanding shares of the Public Company
      prior
      to the merger, and have reflected as a recapitalization of Winsonic as of
      October 7, 2004 (date of 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.





F-11


Stock
      Warrants





Certain
      stock warrants have been issued in exchange of cash proceeds, services and
      fixed
      assets at a conversion price of $1.00 per common share. These stock warrants
      have a life of three years.





The
      following table summarizes the Company’s stock warrants activity with a
      conversion price of $1.00:


**Number
                  of**
              ****
              **Exercise**
              ********
              **Warrants**
              ****
              **Price**Balance,
                  September 10, 2002 (Inception)
              
              
              --
              
              $
              --Warrants
                  issued
              
              
              990,600
              
              
              1.00Warrants
                  canceled/expired
              
              
              --
              
              
              --Warrants
                  exercised
              
              
              --
              
              
              --Balance,
                  December 31, 2002
              
              
              990,600
              
              
              1.00Warrants
                  issued
              
              
              1,009,500
              
              
              1.00Warrants
                  canceled/expired
              
              
              --
              
              
              --Warrants
                  exercised
              
              
              --
              
              
              --Balance,
                  December 31, 2003
              
              
              2,000,100
              
              
              1.00Warrants
                  issued
              
              
              --
              
              
              --Warrants
                  canceled/expired
              
              
              --
              
              
              --Warrants
                  exercised
              
              
              (1,180,100
              )
              
              (1.00
              )Balance,
                  December 31, 2004
              
              
              820,000
              
              $
              1.00




Certain
      detachable stock warrants have been granted related to convertible dentures
      discussed in Note 10.





The
      following table summarizes the Company’s detachable stock warrant
      activities:




**Number
                  of**
              
              
              **Exercise****Warrant**
              
              
              **Price**Balance,
                  September 10, 2002 (Inception)
              
              
              --
              
              $
              --Warrants
                  issued
              
              
              --
              
              
              --Warrants
                  canceled/expired
              
              
              --
              
              
              --Warrants
                  exercised
              
              
              --
              
              
              --Balance,
                  December 31, 2002
              
              
              --
              
              
              --Warrants
                  issued
              
              
              --
              
              
              --Warrants
                  canceled/expired
              
              
              --
              
              
              --Warrants
                  exercised
              
              
              --
              
              
              --Balance,
                  December 31, 2003
              
              
              --
              
              
              --Warrants
                  issued
              
              
              1,164,286
              
              
              .70Warrants
                  canceled/expired
              
              
              --
              
              
              --Warrants
                  exercised
              
              
              --
              
              
              --Balance,
                  December 31, 2004
              
              
              1,164,286
              
              $
              .70


F-12




**NOTE
      4 - RELATED PARTY TRANSACTIONS**





Officer’s
      compensation for services was $346,738 and $199,200 and was included in general
      and administrative expenses, related party, as of December 31, 2004 and 2003,
      respectively.





Two
      individuals who acted as consultants prior to becoming officers of Winsonic
      received a total of 1,521,532 shares of common stock value at $1,125,934 for
      consulting services regarding the merger. This value was included as consulting
      expense in the statements of operations for the year ended December 31,
      2004.





During
      2003, the Company received a loan with a current balance of $36,419, bearing
      interest annually at 7%, in accordance with a loan agreement that the Company
      had executed. For the period from inception to December 30, 2003, the Company
      had accrued interest expense of $29,706 related to these notes. During 2004,
      the
      loan of $36, 419 was forgiven, and included in current period operating results.
      Related interest accrued of $29,706 was also included in the current period
      operating results.





As
      of
      December 31, 2004 the Company has a loan payable totaling $683,726 to the,
      C.E.O., consisting of principal of $600,000 due September 3, 2004 (past due
      maturity), plus 80,000 shares of common stock valued at $64,000, both payable
      to
      maker of the note. Under the terms of the Note, interest will be paid at the
      rate of 10% annually. Accrued interest included in the Note balance of $683,726
      is $19,726 as of December 31, 2004.





**NOTE
      5 - SUMMARY OF LEGAL PROCEEDINGS**




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




Callozo
      vs. Media and Entertainment.com




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




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




F-13


In
      the
      above-described pending litigation brought by the Company against Collazo,
      in
      July 2004, the defendant denied the allegations, asserted 21 affirmative
      defenses and bought a cross-complaint against the Company. Mr. Collazo alleges
      that the Company breached the agreement with Collazo because he had not been
      paid compensation due him, he had not received a percentage of gross profit
      earnings, and that the Company had not exercised a good faith effort to raise
      an
      additional $250,000 in capital, and that Collazo did not receive the equity
      promised him. The Company denied the allegations of the Cross Complaint and
      asserted 13 affirmative defenses. At a settlement conference on April 11, 2005,
      the Company agreed to issue 900,000 shares of common stock to Mr. Collazo,
      as
      well as attorney fees of $120,000. The Company also agreed to issue 900,000
      shares of common stock to Mr. Nana Yalley, an officer and current shareholder,
      as well as an equal partner of Mr. Collazo in Nexcode. The shares of common
      stock were valued as of the settlement date, and accordingly 900,000 shares
      of
      common stock as well as $120,000 of attorney fees are charged as current year
      expenses as of December 31, 2004. The settlement was not accomplished by June
      10, 2005, whereby Mr. Collazo may exercise at his option the right to enforce
      the settlement agreement for payment of attorney fees or convert the obligation
      of payment for attorney fees to a demand for issuance of 200,000 shares of
      stock
      in the Company. As of July 18, 2005, neither the 900,000 shares of common stock
      for each of Messrs Collazo and Yalley, nor the $120,000 of attorney’s fees have
      been issued and paid, respectively.




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




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





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





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





**NOTE
      6 - GOING CONCERN**





These
      financial statements have been prepared in accordance with generally accepted
      accounting principles applicable to a going concern, which contemplates the
      realization of assets and the satisfaction of liabilities and commitments in
      the
      normal course of business. As of December 31, 2004, the Company has recognized
      $57,811 of revenues to date and had accumulated losses of approximately
      $8,344,095 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.





F-14




**NOTE
      7 - EMPLOYMENT AGREEMENTS**




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





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





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





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




Depreciation
      expense was $342,355 and $208,600 for 2004 and 2003,
      respectively.





F-15




**NOTE
      9 - Loans Payable**





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


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




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





F-16




**NOTE
      10 - CONVERTIBLE DEBENTURES**





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 Convertible Note including interest of 6% were due
      on
      December 15, 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 Convertible Note 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 $.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 shares of common stock of the Company at $.70 per
      share (1,164,287 shares of common stock), thru December 15, 2007.





The
      transaction, to the extent that it is 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 which might be issued
      under the embedded host debt conversion feature, the Company is required to
      record a liability relating to both the detachable warrant and the embedded
      convertible feature of the note payable (included in the current liabilities
      as
      a “derivative liability”.





The
      accompanying financial statements comply with current requirements relating
      to
      warrants and embedded warrants as described in FAS 133, EITF 98-5 and 00-27,
      and
      APB 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 (December 15,
                2004).


·
            Subsequent
                to the initial recording, the increase 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 at December 31,
                2004.


·
            The
                expense relating to the increase in the fair value of the company’s stock
                reflected in the change in fair value of the warrants and derivatives
                (noted above) is included as an other comprehensive income item in
                the
                form of an unrealized interest expense arising from convertible financing
                on the company’s balance sheet.


·
            Accreted
                interest and principal of $35, 727 (plus accrued interest of $2,144)
                as of
                December 31, 2004.





The
      following table summarizes the various components of the convertible debentures
      as of December 31, 2004:


Convertible
                  debentures
              
              $
              37,871Warrant
                  liability
              
              
              614,609Derivative
                  liability
              
              
              652,2541,304,734Less:
                  Adjustment of derivative andwarrant
                  liability to fair value
              
              
              (451,863
              )Accretion
                  of principal and interest relatedto
                  convertiblie debenture
              
              
              (37,871
              )Plus:
                  accrued interest
              
              
              2,144Total
                  convertible debentures
              
              $
              817,14
 F-17




Convertible
      debentures proceeds received and accrued interest earned consist of the
      following at December 31, 2004 and December 31, 2003:




**2004**
            
            
            **2003**Twenty-one
                convertible subordinated promissory notes at 6% annual interest,
                due in
                December 2005, convertible into shares of common stock at any time
                prior
                to maturity. Interest and principal are due at the earlier of the
                maturity
                date, pre-payment date, or conversion date.
            
            $
            817,144
            
            $
            -817,144
            
            
            -Less:
                Unamortized Discount
            
            
            -
            
            
            -Total
                debt
            
            
            817,144
            
            
            -Less:
                current portion
            
            
            (817,144
            )
            
            -Convertible
                debentures, less current portion
            
            $
            -
            
            $
            -




Included
      in the above values is $2,244 of accrued interest related to the convertible
      notes as of December 31, 2004.




**NOTE
      11 - NOTE PAYABLE**





On
      January 27, 2003, the Company purchased fixed assets valued at $1,667,000 in
      the
      form of computer equipment and digital network infrastructure from an unrelated
      corporation [“the Seller”]. The purchase was completed by execution of a 45 day
      note payable to the seller in the amount of $847,000 and incurred
      a common stock payable of $820,000 valued at
      $1 per
      share of the Company’s common stock.





As
      of
      December 31, 2004 and 2003, the note had not been paid and is included in the
      current liabilities. While the Company has not met the terms of payment included
      in the 45-day note, the Seller and the Company have renegotiated the agreement.
      Additionally, while the Company and the Seller have been involved in negotiating
      a new agreement (to provide consideration for the obligation), the Company
      has
      accrued imputed interest expense of 6%, amounting to $50,820 during 2004 and
      2003.





Subsequent
      to December 31, 2004, the purchase agreement was renegotiated as
      follows:





A
      payment
      of $5,000 was made against the note payable and the balance of $842,000 was
      written off by Seller as an offset to a portion of the original equipment,
      which
      was no longer included in the sale. The Company reduced the value of its fixed
      assets, subsequent to December 31, 2004 by a like amount.





Seller
      received 820,000 shares of the Company’s common stock, valued at $1 per share
      (based on the value of the equipment received as well as the terms of the common
      stock payable).




The
      accrued interest was offset as of the date of the
      revised agreement.


F-18




**NOTE
      12 - RESTATEMENT OF FISCAL YEARS 2004 AND 2003**





**Restatement
      of 2004:**





The
      Company has restated its 2004 financial statements as part of the amendment
      of
      its Form 10KSB. 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 footnote
      10 for detail information on the convertible notes).





The
      second filing, 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 profit and loss included in the 2004 Statement of
      Operations.





**Restatement
      of 2003:**





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





The
      total
      restatement recorded to 2003 increased the net loss by $275,000, which resulted
      in a restated accumulated deficit for the period of $2,553,301.





**NOTE
      13 - SUBSEQUENT EVENTS**





**Native
      American Television Network, Inc.**




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





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





F-19


**Convertible
      Notes Payable and Debentures**




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





**Note
      payable and common stock payable for purchase of equipment.** During
      2005 the Company renegotiated a note and common stock payable issued as
      consideration for operating assets of the Company (see Note 11). The
      renegotiation included a cancellation of the note payable for $847,000, the
      issuance of common stock at $1.00 per share relating to $820,000 common stock
      payable and the elimination of a portion of the equipment originally sold to
      the
      Company. The effect in the fourth quarter of 2005 will be to reduce the
      liabilities of the Company by $847,000, reduce the value of the fixed assets
      of
      the Company by $847,000 and issuance of 820,000 common shares with a related
      credit to Par Value of $820 and Paid in Capital of $819,180.





F-20


Winsonic
        Digital Media Group, LTD.
 
 Annual
        Report on Form 10-KSB for the
 Year
        Ended December 31, 2004
 
 **EXHIBIT
        INDEX**
 
 **Exhibit
                  No.**
              
              **Description**21.1
              
              List
                  of subsidiaries of Registrant.31.1
              
              Certification
                  of the Chief Executive Officer and Chief Financial Officer required
                  by
                  Rule 13a-14(a) or Rule 15d-14(a)32.1
              
              Certification
                  of the Chief Executive Officer and Chief Financial Officer required
                  by
                  Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C.
                  1350
 
 
 39