**UNITED
      STATES**





**SECURITIES
      AND EXCHANGE COMMISSION**





WASHINGTON,
      D.C. 20549





**FORM
      10-KSB**





**x ANNUAL
      REPORT
      PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE****OF** **1934**





**FOR
      THE FISCAL YEAR ENDED DECEMBER 31, 2005**





**o TRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE**


**ACT
      OF 1934**





**FOR
      THE TRANSITION PERIOD FROM ________________ TO _________________**





*COMMISSION
      FILE NUMBER: 000-33231*





**INNOVA
      HOLDINGS, INC.**





(EXACT
      NAME OF THE COMPANY AS SPECIFIED IN ITS CHARTER)






DELAWARE
            
            95-4868120(STATE
                OR OTHER JURISDICTION OF
              INCORPORATION
                OR ORGANIZATION)
            
            (IRS
                EMPLOYER IDENTIFICATION
                NO.)





**17105
      SAN CARLOS BOULEVARD**


**SUITE
      A6151 FORT MYERS FL 33931**


(ADDRESS
      OF PRINCIPAL EXECUTIVE OFFICES)





(239)
      466-0488


(ISSUER
      TELEPHONE NUMBER)





**SECURITIES
      REGISTERED UNDER SECTION 12(B) OF THE ACT:**





TITLE
                OF EACH CLASS
                REGISTERED:
            
            NAME
                OF EACH EXCHANGE ON WHICH
                REGISTERED:NONE
            
            NONE







**SECURITIES
      REGISTERED UNDER SECTION 12(G) OF THE ACT:**





**COMMON
      STOCK, PAR VALUE $.001**


(TITLE
      OF
      CLASS)





Indicate
      by check mark whether the Company (1) has filed all reports required to be
      filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 12 months (or for such shorter period that the Company was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days. x Yes o
      No





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of the Company'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. x
      Yes o
      No





1


State
      issuer's revenues for its most recent fiscal year. $-0-. State the aggregate
      market value of the voting and non-voting common equity held by non-affiliates
      computed by reference to the price at which the common equity was sold, or
      the
      average bid and asked price of such common equity, as of a specified date within
      the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange
      Act.) As of March 31, 2006, approximately $6,000,000





As
      of
      March 31, 2006 there were 548,927,867 shares of the issuer's $.001 par value
      common stock issued and outstanding.





Documents
      incorporated by reference. There are no annual reports to security holders,
      proxy information statements, or any prospectus filed pursuant to Rule 424
      of
      the Securities Act of 1933 incorporated herein by reference.





Transitional
      Small Business Disclosure format (check one):





o Yes x
      No




2





TABLE
                OF CONTENTSITEM NUMBER AND CAPTION
            PAGESpecial Note Regarding Forward-Looking
              Statements
            4PART I1.
                Description of Business
            52.
                Description of Property
            173.
                Legal Proceedings
            174.
                Submission of Matters to a Vote of Security
                Holders
            17PART
                II5.
                Market for Common Equity and Related Stockholder
                Matters
            186.
                Management's Discussion and Analysis or Plan of
                Operation
            227.
                Financial Statements
            238.
                Changes in and Disagreements with Accountants on Accounting andFinancial
                Disclosures
            238A.
                Controls and Procedures
            248B.
                Other Information
            27PART III9.
                Directors, Executive Officers, Promoters and ControlPersons
                Compliance with Section 16(a) of the Exchange Act
            2710.
                Executive Compensation
            3011.
                Security Ownership of Certain Beneficial Owners and
                Management
            3112.
                Certain Relationships and Related Transactions
            3313.
                Exhibits
            3414.
                Principal Accountant Fees and Services
            36


3


**SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





This
      report contains certain financial information and statements regarding our
      operations and financial prospects of a forward-looking nature. Although these
      statements accurately reflect management's current understanding and beliefs,
      we
      caution you that certain important factors may affect our actual results and
      could cause such results to differ materially from any forward-looking
      statements, which may be deemed to be made in this report. For this purpose,
      any
      statements contained in this Report, which are not statements of historical
      fact, may be deemed to be forward-looking statements. Without limiting the
      generality of the foregoing, words such as, "may", "will", "intend", "expect",
      "believe", "anticipate", "could", "estimate", "plan" or "continue" or the
      negative variations of those words or comparable terminology are intended to
      identify forward-looking statements. There can be no assurance of any kind
      that
      such forward-looking information and statements will be reflective in any way
      of
      our actual future operations and/or financial results, and any of such
      information and statements should not be relied upon either in whole or in
      part
      in connection with any decision to invest in the shares.







4


**PART
      I**





**ITEM
      1. DESCRIPTION OF BUSINESS.**





Innova
      Holdings, Inc. (Innova or the "Company") is a robotics automation technology
      company providing open-architecture PC motion
      control solutions and  hardware
      and software systems-based solutions to the military, service, personal, and
      industrial robotic markets. The Company's plan of operations is to sell and
      license its technology to these markets and offer solutions, experience and
      know-how to meet its customers’ robotic technology needs. The motion control
      market includes software, hardware, and system integration services.
      Sophisticated controls are used on production equipment like industrial robots
      and machine tools, space and undersea exploration devices such as NASA’s robotic
      shuttle arm, homeland security and military devices such as mobile robots,
      and
      emerging technologies such as robots used in medical procedures and pharmacies.
      In addition, Innova will identify, develop and acquire technology that is or
      will become a market leader and to create opportunities to leverage its software
      into value-added applications when combined with other software solutions
      offered by the Innova group of companies.





The
      Company’s two subsidiaries are Robotic Workspace Technologies, Inc. (RWTTM) and
      Innova Robotics, Inc.





-
            RWT
                is a provider of open-architecture PC controls, software, and related
                products that improve the performance, applicability, and productivity
                of
                robots and other automated equipment in industrial environments,
                which
                according to the Robotic Industry Association there are approximately1,000,000robots installed worldwide and 121,000 in North America that are
                older
                installed units. Additionally, according to an ARC Advisory Group
                study,
                there is$65
                billionof
                installed automation equipment that is in need of PC control upgrades.
                These are targets for RWT’s robot controllers to extend the mechanical
                life of the manufacturing devices and provide added
                functionality.





-
            Innova
                Robotics enables development of technologies, applications, and markets
                in
                the mobile and service robot arena, and in particular the military
                market
                where the U.S. military has committed$33
                billionto
                spend on achieving a substantial unmanned fighting force by 2010,
                which
                management of the Company believes will employ robotic technology;
                Innova
                Robotics is focused on this opportunity and last year NASA selected
                Innova
                as asole
                sourcedprovider of control software and hardware to be used in its Hubble
                Spacecraft program.





Our
      software and hardware solutions benefit industrial robot users and developers
      of
      new robotic technologies in other markets like service robots for the military
      and homeland security uses. Innova offers its software bundled with its control
      systems or stand-alone to the development and system integration community.
      Software is sold as part of the Company’s control systems as well as through
      licensing. The Company’s patents also cover medical robotics.





Innova's
      management believes the Company is positioned to become a market leader for
      the
      industrial and service robot industry. This belief is based upon the expertise,
      experience, and patented technologies developed by RWT, which has served the
      industrial market for over ten years.








**Principal
      Technology Products and Business Solutions**





Innova,
      through RWT, delivers its software through the sale of control systems and
      the
      licensing of its software to end-user companies, system integrators,
      manufacturing support providers, software development companies, and other
      parties. RWT holds three (3) pioneer patents issued by the USPTO that cover
      all
      applications pertaining to the interface of a general use computer and the
      mobility of robots, regardless of specific applications.





**Control
      Systems**





The
      Company offers two control systems, the Universal Robot Controller and the
      Universal Automation Controller.





**Universal
      Robot Controller**





The
      Universal Robot Controller(TM) (URC(TM)) is the open-architecture control system
      that operates the robot. It includes the general purpose PC running Microsoft(R)
      Windows, the RWT-developed RobotScript ® robot
      programming software, and other software programs that can be used to
      communicate with other PC devices and platforms including the Internet. The
      URC
      also contains dedicated separate processors for real-time motion control of
      the
      robot. The URC provides a range of standard communication and interface ports
      for plug-and-play connectivity and interoperability. The URC features an
      expandable input/output bus required for auxiliary equipment. All
      electro-mechanical systems in the URC are programmed using RobotScript, which
      is
      an easy-to-use English-language programming environment.





**Universal
      Automation Controller**





The
      Universal Automation Controller(TM) (UAC(TM)), which is in the later stages
      of
      development and is expected to be released soon, is a general-purpose motion
      control system for automated machines with fewer than 5-6 axis of movement.
      The
      UAC provides the power of a full-featured open PC motion controller and
      Programmable Logic Controller (PLC) in one easy to use PC control system. It
      provides direct motion control for complex machines and adds "soft PLC"
      (software control of Input/Output). The enhanced motion control capabilities
      provide greater functionality and full motion control of less sophisticated
      machinery as well. The UAC is powered by RWT's RobotScript software.





5


The
      UAC
      provides standard communications and interface ports, providing maximum
      flexibility in choosing off-the-shelf user interface and communications
      components. The Company believes that the UAC shortens development time, reduces
      manufacturing time, and dramatically decreases the time to market of
      motion-based machines, and therefore will greatly improve productivity and
      reduce costs in all manufacturing environments.


6


**Licensing
      of Proprietary Software Solutions - Middleware**





Robotscript





RobotScript
      is a universal programming language based on Microsoft's Visual Basic(R)
      Scripting Edition (VBScript(R)) software. It provides a robot programming
      environment that is simple to use and easy to learn. From a plain text file,
      robot programmers can easily control robot motion, coordinate input and output
      for auxiliary equipment, and communicate with other PC devices for reporting
      and
      data sharing. Because RobotScript operates in the Windows environment,
      challenges common to proprietary control schemes, such as networking and file
      sharing, are eliminated. RobotScript can access anything on the operating system
      or network as well as utilize the Internet for remote monitoring and control
      of
      equipment.





The
      software can also be used to easily create custom applications specific to
      customer needs. A software development kit (SDK) is available to allow even
      novice developers to quickly create a specialized interface for a particular
      use
      in meeting a customer's need.





The
      proven success of RobotScript has supported the development of a number of
      evolutionary, application-specific modules such as arc welding, vision systems
      and automation control. Additional modules are also in development or planned
      for other robotic applications such as:





o
      Guidance Systems





o
      Sensor
      Systems





o
      Voice
      Control Systems





o
      Tactile
      Control Systems





o
      Laser
      Welding





o
      Material Handling





o
      Medical
      Applications





o
      Elder
      Care Control Systems





o
      Plasma
      Cutting





o
      Autonomous Underwater Vehicles





o
      Homeland Security Systems





o
      Security Systems





o
      Pharmaceutical Production





o
      TIG/MIG
      Welding





o
      Medical
      Robotics





Gatekeeper





Gatekeeper
      is a communication module that serves as the bridge between the RobotScript
      programming software and the motion control mechanisms. Gatekeeper implements
      a
      standard protocol that directs the device driver to activate the appropriate
      motion control of the robot, input/output of auxiliary equipment and other
      devices operating in real time. It is the core software used as a foundation
      for
      all current and future software modules and languages.





The
      Innova suite of software is marketed and sold to the service and personal robot
      markets through Innova Robotics, Inc., a wholly owned subsidiary of Innova.
      Generally, the Innova suite of software solutions is referred to as Middleware,
      which is connectivity software that consists of a set of enabling services
      that
      allow multiple processes running on one or more machines to interact across
      a
      network. Middleware is essential to migrating mainframe applications to
      client/server applications and to providing for communication across
      heterogeneous platforms. This technology has evolved during the 1990s to provide
      for interoperability in support of the move to client/server architectures.
      In
      the context of Innova’s markets, it is this Middleware that enables industrial
      robots to communicate with enterprise systems like purchasing, inventory control
      and other enterprise wide systems. In the military arena, this Middleware,
      in
      management’s opinion, would enable an unmanned mobile robotic vehicle to
      communicate reconnaissance intelligence with the Logistics Command and in return
      receive updated operational instructions. Communications to and between unmanned
      aircraft (UAV) is also possible.







7


**Markets
      Served**





The
      markets served are the military, service, personal, and industrial robotic
      markets, which are discussed below.





**Industrial
      Robots - Market Overview**





**Installations**





According
      to a report released by the UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE
      (UNECE) in cooperation with the INTERNATIONAL FEDERATION OF ROBOTICS (IFR),
      of
      which RWT is a supporting member:





o
      worldwide investment in industrial robots was up 17 percent in 2004 and in
      the
      first half of 2005, orders were up another 13 percent





Worldwide
      growth between 2005 and 2008 is forecast at an average annual rate of about
      6
      percent.





**According
      to the US-based ROBOTIC INDUSTRIES ASSOCIATION (RIA):**







o
      North
      American robotics companies posted record new orders in 2005, surpassing its
      previous high set in 1999. A total of 18,228 robots valued at $1.16 billion
      were
      ordered by North American manufacturing companies, an increase of 23% in units
      and 17% in dollars over 2004 totals. When orders placed by companies outside
      of
      North America are added, the final totals are 19,445 robots valued at $1.22
      billion, gains of 21% in units and 15% in dollars over last year.








Estimates
      are that between a minimum of 848,000 units to a possible maximum of 1,120,000
      million robots are currently operational worldwide. Japan leads with some
      356,483 units, followed by the European Union with 278,906 units and about
      125,235 units in the United States. (RIA estimates 158,000 robots are being
      used
      in the United States placing the U.S. second to Japan in robot usage).





In
      Europe, Germany leads with 120,544 units; Italy has 53,244; Spain 21,893, and
      the United Kingdom some 14,176 units, according to UNECE.





Installations
      and Operational Stock of Industrial Robots 2002 , 2003, and 2004 and Forecasts
      for 2004-2008 Number of Units


Yearly
                  Installations
              
              Operational
                  Stock at Year EndCountry
              
              2002
              
              2003
              
              2004
              
              2008
              
              2002
              
              2003
              
              2004
              
              2008Japan
              
              
              25,373
              
              
              31,588
              
              
              37,086
              
              
              45,900
              
              
              350,169
              
              
              348,734
              
              
              356,483
              
              
              390,500North
                  American
              
              
              9,955
              
              
              12,693
              
              
              13,444
              
              
              16,500
              
              
              103,515
              
              
              112,390
              
              
              121,937
              
              
              155,700(US,
                  Canada, Mexico)Germany
              
              
              11,862
              
              
              13,081
              
              
              13,401
              
              
              14,900
              
              
              105,212
              
              
              112,393
              
              
              120,544
              
              
              151,100Europe,
                  rest of
              
              
              14,816
              
              
              14,751
              
              
              15,895
              
              
              18,800
              
              
              139,566
              
              
              149,632
              
              
              158,362
              
              
              197,000Asia/Australia
              
              
              5,123
              
              
              8,991
              
              
              15,225
              
              
              24,500
              
              
              60,427
              
              
              73,987
              
              
              86,710
              
              
              142,400Other
                  Countries*
              
              
              1,466
              
              
              372
              
              
              317
              
              
              400
              
              
              11,216
              
              
              3,337
              
              
              3,728
              
              
              5,000Totals
              
              
              68,595
              
              
              81,476
              
              
              95,368
              
              
              121,000
              
              
              770,105
              
              
              800,473
              
              
              847,764
              
              
              1,041,700




*UNECE
      changed the country groups in 2003, moving smaller European countries from
      “Other Countries” to “Europe.”


Source:
      UNECE, IFR and national robot associations.





**Users**




The
      primary users of industrial robots in the United States of America include
      automotive manufacturers and automotive suppliers, food and consumer goods
      companies, semiconductor and electronics firms, metalworking companies, plastics
      and rubber manufacturers, and increasingly sciences, pharmaceutical, and
      biomedical businesses. According to RIA, small, medium, and large companies
      in
      just about every industry have taken advantage of the productivity, quality,
      and
      flexibility gains that robots provide in order to compete successfully in the
      global market. RIA notes that robot use jumped 30% in the life sciences,
      pharmaceutical, and biomedical industries in 2005. Automotive manufacturers,
      the
      largest users of robots, increased their orders by 49% in 2005. Orders jumped
      14% to automotive components companies. Combined, these two sectors accounted
      for 70% of new robot orders in 2005.


8


**Applications**





With
      regard to applications, the biggest growth areas this year have been for robots
      used in material handling applications (+45%), arc welding (+37%) and spot
      welding (+19%)., according to RIA.





**Sales**





The
      market for the Company's Universal Robot Controller is the retrofit market
      for
      mechanical arms which benefit from a controls replacement. In management’s
      opinion, virtually all of the 848,000 + older robots have antiquated control
      systems that require replacement in order to improve functionality to current
      standards of the robotic industry, and to drastically reduce the costs of spare
      parts. Currently, owners of these older robots must buy their spare parts from
      the Original Equipment Manufacturers (OEMs) and management believes that since
      these spare parts for the controller are proprietary to the OEM, the costs
      of
      these spare parts is very high compared to the cost of standard, commercially
      available, off-the-shelf components and thus provide a substantial profit margin
      to the OEMs. RWT's Universal Robotic Controller is a state-of-the-art solution
      built using standard components whenever possible which in management's opinion
      provides more features, functionality, and value than the controllers of the
      robot OEMs. The URC was developed and has been successful as a “Plug and Play”
upgrade.





**Service
      Robots - Market Overview**





The
      service robot industry is rapidly emerging and according to many it is expected
      to be large. In reporting the following data, UNECE cautions that because many
      companies did not provide market data, the figures reported probably
      underestimate significantly the true sales amounts as well as the installed
      base
      of service robots.





Regardless,
      the scope of applications is beginning to expand and we are experiencing an
      increasing demand for software to function as the middleware for connectivity,
      interoperability, and ease of integration between high-powered software and
      devices. We are beginning to see in the professional service robot sector robots
      used for handling bombs and hazardous materials evolve such that there is a
      need
      to interface with, for example, Homeland Security systems using vision, audio,
      mobility, and for data collection and data delivery. The U.S. Government has
      appropriated $33 billion to develop an unmanned fighting force. The goal is
      to
      convert 30 percent of its fighting force to unmanned systems by 2010. As the
      market better realizes the potential of such applications, there will be a
      substantial push for open software standards. RWT's RobotScript is now poised
      to
      enter this market as the only proven middleware offering with substantial scope
      of applications and functionality throughout all sectors of the Service Robots
      market.





**Professional
      Use**





According
      to UNECE, at the end of 2004, it is estimated that some 25,000 units were in
      operation. The value of professional service robots in use is estimated at
      $3.6
      billion. This market is expected to grow by 50,000 units between 2005 and 2008.
      Specific areas of use are:





o
      Underwater systems


o
      Cleaning robots


o
      Laboratory robots


o
      Demolition and construction


o
      Medical
      robots


o
      Mobile
      robot platforms/general


o
      Defense, rescue, security


o
      Field
      robots (milking, forestry)





With
      5,320 units, underwater systems accounted for 21 percent of the total number
      of
      service robots for professional use installed through 2004. Thereafter followed
      cleaning robots and laboratory robots with 14 percent each, and construction
      and
      demolition robots with 13 percent. Medical robots and mobile robot platforms
      for
      general use accounted for 11 percent each. Field robots, e.g., milking robots
      and forestry robots, had a share of nearly 9 percent and defense, rescue, and
      security applications 5 percent. Minor installation numbers were counted for
      logistic systems (270 units), inspection systems (235 units) and public relation
      robots (20).





The
      unit
      prices for professional service robots range from less than $10,000 to well
      over
      $1,000,000. The most expensive service robots are the underwater systems
      ($300,000 to more than $1,000,000), medical robots with a wide range from
      $100,000 to $1,000,000, followed by milking robots ($200,000).





The
      stock
      of service robots for professional use is forecast to increase by 50,000 units
      in the period 2005-2008. Application areas with strong growth are humanoid
      robots, underwater systems, defense, rescue and security applications,
      laboratory robots, professional cleaning robots, medical robots, and mobile
      robot platforms for multiple use.





**Entertainment
      Use**





Robots
      for entertainment and leisure use, which include toy robots, is forecast at
      about 2.5 million units most of which are very low cost. The sales value is
      estimated at $4.4 billion, according to UNECE.





9


**Personal
      Use**





At
      the
      end of 2003, about 610,000 service robots - autonomous vacuum cleaners and
      lawn-mowing robots - were in operation. It is projected that sales of all types
      of domestic robots (vacuum cleaning, lawn mowing, window cleaning and other
      types) in the period 2005-2008 could reach some 4.5 million units with an
      estimated value of $3 billion, according to UNECE.





**SALES
      AND MAKETING**





The
      sales
      and marketing channels employed by Innova include direct sales, re-sellers,
      websites, distributors, system integrators and other partners. The Company
      continues to establish these relationships.





**Industrial
      Controls**





The
      sales
      for the Universal Robot Controller (URC) and the Universal Automation Controller
      (UAC) will be directed from the company's offices in Ft. Myers, Florida. RWT
      will have a sales representative organization in place in Detroit, Cincinnati,
      Chicago and Atlanta with systems integrators through the country being supported
      from these regional offices as well as from headquarters in Ft. Myers. As the
      territories in the southwest and in the lower central U.S. develop, it is
      anticipated that sales representative organizations will be used with a direct
      support person knowledgeable in applications engineering and our software
      capabilities.





**Service
      Robots**





The
      sales, licensing and software applications support for the service robot
      activity is headquartered out of Ft. Myers, Florida, Another event for the
      Company will be several service robot conferences and expositions sponsored
      by
      Robotics Trends and AUVSI as well as other conferences and trade shows for
      the
      military market. Additionally, partnerships have been established and will
      continue to be forged with key universities such as Florida Gulf Coast
      University and another recently agreed to with Embry-Riddle Aeronautical
      University .





**Marketing**





Our
      marketing and sales materials are generated from the home office in Ft. Myers,
      Florida using our existing marketing and public relations firm, INCOMM
      International Inc. Additional high-level support for closing deals at corporate
      levels is also be supported out of Ft. Myers, Florida.





**Protection
      of Trade Secrets and Patents - Significant Litigation**





On
      December 9, 2004, RWT filed a case in the United States District Court for
      the
      Middle District of Florida against ABB, Inc. and ABB Robotics AB. The action
      alleges misappropriation and theft of trade secrets, breach of contract, and
      breach of the covenant of good faith. The action stems from dealings between
      the
      parties in 2002. RWT seeks a trial by jury, an injunction prohibiting continued
      use of RWT's trade secrets, and money damages. It is possible that ABB, Inc.
      or
      ABB Robotics AB will counterclaim, although no counterclaims have yet been
      filed. The action is entitled Robotic Workspace Technologies, Inc. v. ABB,
      Inc.
      and ABB Robotics AB, Case No. 2:04-cv-611-FtM-29-SPC . The case has progressed
      to the deposition stage.





**RWT
      Business From1994 Through 2004**





RWT
      started operations in 1994 with the intent to develop a PC based coordinated
      motion controller for industrial robots. Up to that point in time, virtually
      everyone in the industry doubted if a PC based controller, using an open
      architecture system and based on Microsoft's platform, could ever be developed
      and accepted as a standard in the industry. RWT dedicated significant resources
      and time, over $6 million and six years, to successfully develop such a
      controller and was awarded three pioneer utility patents by the USPTO. RWT
      successfully established itself as a provider of a Universal Robot Controller
      to
      the industrial market, and in particular to the automobile industry, the key
      market for RWT products. In November 2000, after 10 months of due diligence
      verifying source code and the operations of the Universal Robot Controller
      at
      Ford and other production facilities, the Ford Motor Company investment group
      invested $3.0 million in RWT and Ford planned a substantial order for RWT's
      Universal Robot Controllers. Also, Ford received the first rights to RWT's
      development and up to 80% of RWT's production capacity. The Ford Vice President
      for Body Assembly, Stamping, and Structures joined the RWT Board of Directors.





In
      June
      2001, a joint international press conference announcing the Ford investment
      in
      RWT was held at the 32nd International Robotics Conference and Exposition.
      Additionally, 10 Universal Robot Controllers were successfully sold and
      installed in non-automotive manufacturing environments. However, the business
      of
      RWT was drastically and adversely affected by the economic recession and the
      impact on the automobile industry after the September 11, 2001 attacks in the
      US. After the September 11, 2001 attacks, Ford cancelled their planned orders
      due to large losses they were incurring. The resulting continued downturn in
      the
      economy and RWT's inability to raise additional capital resulted in the
      termination of all its employees, except the Chief Executive Officer and several
      contract employees. RWT substantially shut down its operations during December
      2002. The Ford investment was subsequently purchased by the Company and the
      shares were retired.





RWT
      today
      is an aggressive company that is building market share in its core market -
      control software systems, and is pursuing new markets, in particular the
      military market. The Company’s plan is to be the solution provider for robot
      users and to make the Universal Robot Controller and Universal Automation
      Controller the systems of choice for small and medium size manufacturing
      companies as well as the automotive market and the military market.





10


**Activities
      of Hy-Tech Prior to the Merger With RWT**





Innova
      was previously named Hy Tech Technology Group, Inc. (Hy Tech) and had as its
      sole operating activities its wholly owned operating subsidiary Hy Tech Computer
      Systems, Inc. (HTCS). On August 25, 2004, Hy Tech completed the reverse
      acquisition into RWT in which RWT was deemed to be the "accounting acquirer."
      Simultaneously, Hy Tech sold its Hy-Tech Computer Systems, Inc. subsidiary
      and
      discontinued its computer systems sales and services business. Prior to these
      transactions, Hy-Tech changed its name to Innova Holdings, Inc.





In
      January 31, 2003, HTCS completed a reverse acquisition into SRM Networks, an
      Internet service provider and web hosting business, in which HTCS was deemed
      the
      "accounting acquirer.” SRM Networks, Inc., a Nevada corporation, was
      incorporated on June 8, 2001and as part of the reverse merger agreement changed
      its state of incorporation to Delaware. In connection with the transaction,
      SRM
      Networks, Inc. changed its name to Hy-Tech Technology Group, Inc. and HTCS
      discontinued SRM Network's Internet business.





HTCS
      was
      formed in 1992 in Fort Myers, Florida as a supplier to the information
      technology business. From 1992 through 2002, HTCS was a leading custom systems
      builder and authorized distributor of the world's leading computer system and
      components. The products sold by HTCS were "Hy-Tech" branded computer systems
      -
      desktops, notebooks and servers, computer components and peripherals, computer
      storage products; computer operating systems and office software; Compaq
      computer systems - desktop and servers; computer service; and computer warranty
      work. At the end of 2003, as a result of substantial losses, the management
      of
      HTCS concluded that the then existing business was not viable, and initiated
      the
      changes necessary to closing its stores, laying off employees and transferring
      all business to e-commerce. Negotiations were initiated to acquire RWT and
      to
      divest the old HTCS business, which was accomplished in August 2004. As a
      result, Innova is no longer actively selling any of the HTCS products.





On
      April
      29, 2003, Hy Tech entered into an agreement called an "Option to Purchase"
      ("Settlement Agreement") with SunTrust Bank under which Hy Tech agreed to settle
      all pending litigation and satisfy all judgments obtained against the HTCS
      subsidiary by SunTrust Bank. Hy Tech agreed to pay a total of $1.5 million
      by
      August 28, 2003 in full settlement of all of SunTrust's claims of approximately
      $3.7 million. Under the terms of the Settlement Agreement, Hy Tech delivered
      $1.0 million dollars to SunTrust on April 29, 2003. This $1.0 million represents
      all of the proceeds of the sale of the Convertible Debenture described below.
      Hy
      Tech also agreed to pay SunTrust three installments of $65,000 each in June
      2003, July 2003, and August 2003, and the balance of $305,000 on or before
      August 28, 2003. Hy Tech used part of the proceeds from the Factoring Line
      of
      Credit to pay the August 28, 2003 installment of $305,000 due to SunTrust Bank,
      and all other amounts were paid. As a result of this settlement, Hy Tech
      obtained the ownership of the Sun Trust judgment, per the Settlement Agreement.





On
      April
      22, 2003, Hy Tech entered into an Advisory Agreement (the "Advisory Agreement")
      with Altos Bancorp Inc. ("Altos") pursuant to which Altos agreed to act as
      the
      Company's exclusive business advisor for a one-year period. Martin Nielson
      was
      President of Altos and subsequently became Chairman and Chief Executive Officer
      of Hy Tech. Altos advised Hy Tech regarding equity and debt financings,
      strategic planning, mergers and acquisitions, and business developments.


11


In
      conjunction with the decision to proceed with the RWT acquisition, the agreement
      with Altos was concluded. Altos did not receive any cash compensation for its
      services rendered, but will receive 16,133,333 shares of the Company's common
      stock.





On
      April
      28, 2003, a merger between Hy Tech and Sanjay Haryama ("SH"), a Wyoming
      corporation, was effected. The merger was based upon an Agreement and Plan
      of
      Merger dated April 28, 2003 among the parties. Pursuant to the merger (i) SH
      was
      merged with and into Hy Tech; (ii) the SH shareholder exchanged 1,000 shares
      of
      common stock of SH, constituting all of the issued and outstanding capital
      stock
      of SH, for an aggregate of 1,000 shares of Hy Tech's restricted common stock;
      and (iii) SH's separate corporate existence terminated. The SH shareholder
      was
      Coachworks Auto Leasing, which is wholly owned by Jehu Hand. The determination
      of the number of shares of Hy Tech's stock to be exchanged for the SH shares
      was
      based upon arms' length negotiations between the parties.





Prior
      to
      the merger, SH completed a $1,000,000 financing transaction pursuant to Rule
      504
      of Regulation D of the General Rules and Regulations under the Securities Act
      of
      1933 as amended pursuant to a Convertible Debenture Purchase Agreement (the
      "Purchase Agreement") dated April 21, 2003 between SH and an accredited Colorado
      investor (the "Investor"). In connection therewith, SH sold a 1% 1,000,000
      Convertible Debenture due April 20, 2008 (the "SH Debenture") to the Investor.
      The unpaid principal amount of the SH Debenture was convertible into
      unrestricted shares of SH common stock to be held in escrow pending the
      repayment or conversion of the SH Debenture. Pursuant to the merger, Hy Tech
      assumed all obligations of SH under the SH Debenture and issued the holder
      thereof its 1% $1,000,000 Convertible Debenture due April 28, 2008 (the
      "Convertible Debenture") in exchange for the SH Convertible Debenture. The
      material terms of the Convertible Debenture were identical to the terms of
      the
      SH Convertible Debenture except that the unpaid principal amount of the
      Convertible Debenture was convertible into unrestricted shares of Hy Tech's
      Common Stock (the "Common Stock"). The per share conversion price for the
      Convertible Debenture in effect on any conversion date was the lesser of (a)
      $0.35 or one-hundred twenty-five percent (125%) of the average of the closing
      bid prices per share of Hy Tech's Common Stock during the five (5) trading
      days
      immediately preceding April 29, 2003 or (b) one hundred percent (100%) of the
      average of the three (3) lowest closing bid prices per share of Hy Tech's Common
      Stock during the forty (40) trading days immediately preceding the date on
      which
      the holder of the Convertible Debenture provides the escrow agent with a notice
      of conversion. The number of shares of Hy Tech's Common Stock issuable upon
      conversion was also subject to anti-dilution provisions. The Investor's right
      to
      convert the Convertible Debenture was subject to the limitation that the
      Investor may not at any time own more than 4.99% of the outstanding Common
      Stock
      of Hy Tech, unless Hy Tech was in default of any provision of the Convertible
      Debenture or the Investor gives seventy five (75) days advance notice of its
      intent to exceed the limitation.





Between
      the date of the merger and the end of November 2003, the Convertible Debenture
      was fully converted to Common Stock of Hy Tech.





The
      Company received a subpoena from the SEC dated May 10, 2005 relating to an
      investigation of trading in certain OTC stocks, including the Company's common
      stock. The subpoena seeks documents relating to the merger and financing
      transactions entered into by the Company in April 2003. The investigation is
      still in its early stages and the Company is not able to predict what actions,
      if any, the SEC may take against the Company as a result of the investigation.
      In August 2004, the Company completed a reverse merger with Robotic Workspace
      Technology, Inc. (RWT). The subpoena concerns transactions that occurred 16
      months before the RWT merger. The management of the Company, including Walter
      Weisel, who took office as Chief Executive Officer of the Company in August
      2004
      following the merger with RWT, intends to cooperate to the fullest extent
      possible in the investigation.





On
      April
      28, 2003, Hy Tech announced it had entered into a financing transaction in
      which
      it had received a firm commitment from a private equity fund for the purchase
      of
      a $750,000 convertible debenture from Hy Tech (the "Second Debenture"). The
      Second Debenture was not closed and Hy Tech arranged for alternative financing
      under a Factoring Line of Credit with Platinum Funding Corporation.





In
      May
      2003, Martin Nielson assumed full time responsibilities as Chief Executive
      Officer, brought new investors to the company, and was chartered to transform
      Hy
      Tech away from being a custom systems builder. During the fiscal year, Hy Tech
      took steps necessary to design the new business strategy and commenced the
      implementation of this strategy, which also included growth by acquisition.
      Among these steps taken were:





o
      construction of the details of the new plan that led to the decision to
      transform and then divest HTCS





o
      restructuring of the personnel and reduction of costs and writing off
      unproductive assets





o
      engagement of key professionals





o
      negotiating with sources of new investment





o
      identifying and negotiating with acquisition targets





Concurrent
      with the steps taken, Hy Tech aggressively pursued new financing from debt
      and
      equity sources to increase working capital, further reduce liabilities, and
      to
      help negotiate acquisitions to provide a platform for growth.





At
      the
      same time and due to the substantial requirement for capital to keep inventory
      in multiple outlets and to finance receivables, Hy Tech faced significant
      challenges to produce an adequate return on investment from HTCS. Hy Tech
      restructured operations by shifting its sales operations to an online store
      operated by a third party. This change was important. It was much more cost
      effective and far less capital intensive. HTCS eliminated the overhead of the
      local wholesale outlets, and all local costs became variable. Key employees
      in
      the local operations were offered positions with the contracting company, yet
      HTCS retained benefit of the sales as part of the deal.





12


In
      February 2004, Hy Tech announced its planned changes that included its planned
      acquisition of Robotic Workspace Technologies (RWT) and the intended divestiture
      of HTCS. Such changes were in keeping with Hy Tech's new plan to grow by
      acquisitions, to differentiate itself by adding unique technologies, by
      converting to e-commerce selling and distribution techniques and by adding
      complementary, higher margin services.





Effective
      July 29, 2004, Hy Tech changed its name to Innova Holdings, Inc. from Hy-Tech
      Technology Group, Inc. Hy Tech's trading symbol changed to "IVHG. Simultaneously
      with the name change, Hy Tech increased its authorized capitalization from
      101,000,000 shares, consisting of 100,000,000 shares of common stock, $.001
      par
      value and 1,000,000 shares of preferred stock, $.001 par value to 910,000,000
      shares, consisting of 900,000,000 shares of common stock, $.001 par value and
      10,000,000 shares of preferred stock, $.001 par value.





On
      July
      21, 2004, Hy Tech entered into an Agreement and Plan of Merger (the "Agreement")
      with Robotic Workspace Technologies, Inc. ("RWT"). This transaction closed
      on
      August 25, 2004. The Agreement provided that RWT Acquisition, Inc., a wholly
      owned subsidiary of Hy Tech, will merge into RWT, with RWT continuing as the
      surviving corporation. RWT became a wholly owned subsidiary of Hy Tech. The
      shareholders of RWT were issued an aggregate of 280,000,000 shares of Hy Tech's
      common stock as consideration for the merger. RWT's outstanding options were
      converted into options to acquire Hy Tech common stock at the same exchange
      ratio at which the RWT shareholders received Hy Tech common stock. For financial
      reporting purposes this transaction was treated as an acquisition of Innova
      and
      a recapitalization of RWT using the purchase method of accounting. RWT's
      historical financial statements replaced Innova's for SEC reporting purposes.
      As
      part of the agreement, the Company agreed to indemnify the directors of the
      Company from certain liabilities that were in existence on the date of closing
      of the sale, which management believes may apply to a maximum of approximately
      $500,000 of debt. If the Company issues shares of its common stock or pays
      cash
      to settle any of this debt, it shall issue an equal number of common shares
      to
      the former RWT shareholders, in proportion to their RWT share holdings.





The
      determination of the number of shares of Hy Tech common stock exchanged for
      the
      RWT common stock was determined in arms length negotiations between the Boards
      of Directors of Hy Tech and RWT. The negotiations took into account the value
      of
      RWT's financial position, results of operations, products, prospects and other
      factors relating to RWT's business. At the time of the execution of the
      Agreement, there were no material relationships between RWT and Hy Tech or
      any
      of its affiliates, any director, or officer of Hy Tech, or any associate of
      any
      such officer or director.




On
      June
      23, 2004, Hy Tech entered into and simultaneously closed an Agreement with
      Encompass Group Affiliates, Inc. (Encompass"), pursuant to which Hy Tech granted
      to Encompass exclusive, worldwide, royalty free, fully paid up, perpetual and
      irrevocable licenses to use Hy Tech's customer list for its computer and systems
      related products and its related websites. Hy Tech also assigned to Encompass
      Hy
      Tech's rights to enter into acquisitions with Cyber-Test, Inc., BCD 2000, Inc.
      and Pacific Magtron International, Inc. Hy Tech agreed for a five year period
      commencing on the closing not to compete with Encompass (i) in the business
      of
      the marketing, sale, integration, distribution or repair of computer systems,
      components, equipment or peripherals, and any related consulting work, and
      (ii)
      conducting any business of a nature (A) engaged in by Encompass or its
      subsidiaries or (B) engaged in by Hy Tech at the time of closing, or (C) engaged
      in by any of BCD 2000, Inc., Cyber Test, Inc. or Pacific Magtron International
      Corp. at the time the stock or assets of which are acquired by Encompass. For
      (i) a period of three (3) months following the closing, Hy Tech is permitted
      to
      sell, in the ordinary course of its business, any inventory not sold on or
      prior
      to the closing and (ii) so long as RWT is engaged solely in the business of
      developing or acquiring proprietary computer technology within the robotics
      field, Hy Tech will be permitted to engage in this business.





Encompass
      hired Martin Nielson, who had been Hy Tech's Chief Executive Officer, as an
      Executive Officer. Mr. Nielson will continue to serve on Hy Tech's board of
      directors and resigned as Hy Tech's Chief Executive Officer.





In
      consideration for the transaction, Encompass assumed all of Hy Tech's
      obligations under certain Convertible Debentures (the "Convertible Debentures")
      in the aggregate principal amount of $503,300. The holders of the Convertible
      Debentures released Hy Tech from all claims arising under the Convertible
      Debentures.





The
      determination of the consideration in the Encompass transaction was determined
      in arms length negotiations between the Boards of Directors of Hy Tech and
      Encompass. The negotiations took into account the value of the assets sold
      to
      Encompass and the consideration received. At the time of the transaction, there
      were no material relationships between Encompass and Hy Tech or any of its
      affiliates, any director, or officer of Hy Tech, or any associate of any such
      officer or director.





On
      June
      23, 2004, immediately after the closing of the transaction with Encompass,
      Hy
      tech entered into a private placement of 125,000 shares of its Series A
      Preferred Stock for an aggregate issue price of $125,000 with the holders of
      the
      Convertible Debentures. Each share of the Series A Preferred Stock (i) pays
      a
      dividend of 5%, payable at the discretion of Hy tech in cash or common stock,
      (ii) is convertible into the number of shares of common stock equal to $1.00
      divided by a conversion price equal to the lesser of 75% of the average closing
      bid price of Hy Tech's common stock over the twenty trading days preceding
      conversion or $0.005, (iii) has a liquidation preference of $1.00 per share,
      (iv) must be redeemed by Hy Tech five years after issuance at $1.00 per share
      plus accrued and unpaid dividends, (v) may be redeemed by Hy Tech at any time
      for $1.30 per share plus accrued and unpaid dividends and (vi) has no voting
      rights except when mandated by Delaware law.





In
      the
      event that Hy Tech has not (a) completed the merger with RWT and (2) RWT has
      not
      raised $500,000 in new capital by August 27, 2004, then each of the holders
      of
      the Series A Preferred Stock may elect to convert their shares into




13


(a)
      a
      demand note payable by Hy Tech in the principal amount equal to the purchase
      price of the Series A Preferred Stock plus accrued and unpaid dividends, with
      interest at the rate of ten percent (10%) until paid in full and


(b)
      warrants to purchase 2,500,000 shares of Hy Tech's common stock at an exercise
      price of $.005 per share, with a term of two (2) years' from the date of
      issuance, and standard anti-dilution provisions regarding stock splits,
      recapitalizations and mergers, for each $25,000 of Series A Preferred Stock
      purchased. This issuance of the Series A Preferred Stock was exempt from the
      registration requirements of the Securities Act of 1933 (the "Act") pursuant
      to
      section 4(2) of the Act.





On
      August
      18, 2004 the Company entered into an agreement with Aegis Funds, Inc (AFI)
      to
      sell all of the issued and outstanding capital stock of HTCS to AFI. The sale
      of
      HTCS to AFI closed on August 25, 2004. At the closing date, for and in
      consideration for the transfer to AFI of the HTCS Capital Stock, AFI became
      the
      record and beneficial owner of the HTCS Capital Stock, the Company transferred
      as directed by AFI and for the benefit of HTCS the sum of fifteen thousand
      dollars ($15,000) in good funds, and the judgment of Sun Trust Bank against
      HTCS
      was transferred to AFI free of all claims and liens. AFI is controlled by Gary
      McNear and Craig Conklin, who are directors of the Company. The transaction
      was
      approved by the member of the board of directors who had no interest in the
      transaction.





**Trademarks
      and Patents**





The
      Company has the following trademarks and patents:


**RWT(TM)**


**Universal
      Robot Controller(TM)**


**URC(TM)**


RobotScript(R)


TeachPoint
      File Creator(TM)


Gatekeeper(TM)


ControlScript(TM)


CMMScript(TM)


MediScript(TM)


Robotic
      Artists(TM)


Service
      Robots(TM) SM





**RWT
      Patents**





First
      Patent number 6,442,451 - awarded September 5, 2002 - Versatile robot control
      system - Abstract - An improved, versatile robot control system comprises a
      general purpose computer with a general purpose operating system in electronic
      communication with a real-time computer subsystem. The general-purpose computer
      includes a program execution module to selectively start and stop processing
      of
      a program of robot instructions and to generate a plurality of robot move
      commands. The real-time computer subsystem includes a move command data buffer
      for storing the plurality of move commands, a robot move module linked to the
      data buffer for sequentially processing the moves and calculating a required
      position for a robot mechanical joint. The real-time computer subsystem also
      includes a dynamic control algorithm in software communication with the move
      module to repeatedly calculate a required actuator activation signal from a
      robot joint position feedback signal.





Second
      Patent number 6,675,070 - awarded April 5, 2004 - Automation equipment control
      system Abstract - A automation equipment control system comprises a
      general-purpose computer with a general-purpose operating system in electronic
      communication with a real-time computer subsystem. The general-purpose computer
      includes a program execution module to selectively start and stop processing
      of
      a program of equipment instructions and to generate a plurality of move
      commands. The real-time computer subsystem includes a move command data buffer
      for storing the plurality of move commands, a move module linked to the data
      buffer for sequentially processing the moves and calculating a required position
      for a mechanical joint. The real-time computer subsystem also includes a dynamic
      control algorithm in software communication with the move module to repeatedly
      calculate a required actuator activation signal from a joint position feedback
      signal.





Third
      Patent number 6,922,611 - awarded July 26, 2005 - Reflects the company’s
      continuing R&D efforts in open-architecture PC control technology
      spearheaded by RWT. Each of the Company’s patents pertains to RWT’s versatile PC
      control system suitable for controlling robots of various electromechanical
      configurations, other automation equipment, and its common programmer/operator
      interface.





**Research
      and Development**





There
      was
      approximately $43,000 spent on R & D during the last two years, primarily to
      enhance the functionality of the Company’s software and control systems.





**Employees**





At
      the
      end of 2005, the Company had seven full time employees and several independent
      contractors providing services.





14





**Contracts**





The
      Company entered into contracts with two independent contractors, B. Smith
      Holdings, Inc. (B.Smith) and Stratex Solutions, LLC (Stratex). The contract
      with
      B. Smith, which became effective January 14, 2005, is for business development,
      sales, and marketing services, is for a term of five years, and is automatically
      renewable annually thereafter unless terminated by either party by giving
      written notice of no less than 30 days. Under the terms of the contract, the
      Company will pay B. Smith a monthly engagement fee of $10,000 provided certain
      sales and other objectives are met, a commission on such sales, stock options
      equal to 1% of the common stock outstanding on a fully dilutive basis vesting
      over a three year period, reimbursement of approved expenses, and a one-time
      payment of 6 million shares of common stock. The monthly fee is payable in
      cash
      or common stock at the option of the Company; if common stock, the price per
      share shall be $.005 for the two weeks ended January 31, 2005 and thereafter
      at
      the closing bid price on the fifteenth day of the calendar month, or the closest
      trading day, for which such fee is earned. B. Smith has agreed to keep all
      inventions, trade secrets and other information about the Company confidential
      and to not compete with the Company during the term of the agreement and for
      one
      year thereafter. This contract was terminated as of August 1, 2005.





The
      contract with Stratex, effective December 15, 2004, is for certain business
      planning, financial and accounting services and is for a term of five years
      which is automatically renewable annually thereafter unless terminated by either
      party by giving written notice of no less than 30 days. Under the terms of
      the
      contract, the Company will pay Stratex $10,000 monthly for the first 6 months
      and $15,000 monthly thereafter, provided certain stipulated objectives are
      met.
      The Company shall have the option to pay Stratex in either cash or common stock;
      if common stock, the price per share shall be $.005 through December 15, 2005
      and thereafter at the closing bid price on the first trading day of the calendar
      month for which such fee is earned. Additionally, the Company will grant to
      Stratex stock options equal to 2% of the common stock outstanding on a fully
      dilutive basis vesting over a three-year period and reimbursement of approved
      expenses. If the agreement with Stratex is terminated without just cause or
      if
      there is a change of ownership of the Company or any of its subsidiaries, then
      all remaining unexercised outstanding stock options shall immediately vest
      to
      the benefit of Stratex. Stratex is also eligible for incentive fees as
      determined by the board of directors. If the agreement with Stratex is
      terminated without just cause, Stratex will receive a payment equal to
      twenty-four months of the full monthly fee payable to Stratex immediately prior
      to the termination. Stratex has agreed to keep all inventions, trade secrets
      and
      other information about the Company confidential and to not compete with the
      Company during the term of the agreement and for one year thereafter. . Eugene
      V. Gartlan, President of Stratex, was employed by the Company on June 14, 2005
      as the Chief Financial Officer and the contract with Stratex was simultaneously
      terminated with no termination fee required.





On
      January 24, 2006, the Company entered into a Letter Agreement (the “Agreement”)
      with CoroWare, Inc. (“CoroWare”), under which the Company agreed to purchase and
      CoroWare agreed to sell all of its assets including, without limitation, all
      hardware, software, employee relations, customer contacts in the military and
      homeland security markets, contacts with Microsoft, Inc. and all other
      customers, and all other tangible and intangible assets including all developed
      software.




CoroWare
      is a systems integration firm with particular expertise in the area of mobile
      service robotics. CoroWare is the only mobile service robotics company to join
      the Microsoft ® Windows Embedded Partner Program. CoroWare uses the Windows XP
      Embedded operating system to power its mobile service robots, which are based
      on
      de facto standards, off-the-shelf hardware and proven software.




The
      Letter Agreement indicates that the purchase price will consist of: (a) up
      to
      $450,000 in cash, of which $100,000 is non-contingent and the balance of
      $350,000 is contingent based on sales and the gross profit percentage of the
      CoroWare business; (b) up to 30,000,000 restricted shares of the Company’s
      common stock, of which 5,000,000 are non-contingent and vest in three equal
      annual installments commencing one year from the closing, and the balance of
      25,000,000 is contingent based on sales and the gross profit percentage of
      the
      Coroware business; and (c) 2,000,000 common stock options exercisable at $.018
      per share, vesting in three equal annual installments commencing one year from
      the closing, with a term of ten years from the date of grant, to be allocated
      to
      employees of CoroWare. In addition, the Company shall assume specific
      liabilities of CoroWare in the amount of $98,168, and no other liabilities.
      The
      purchased business asssets will be placed in a new subsidiary of the Company,
      which will change its name to “CoroWare” after the closing.





In
      the
      event that the Company enters into a binding agreement to sell all of its stock
      or assets, or all of the assets acquired from CoroWare, prior to receipt by
      CoroWare of all of the restricted share portion of the purchase price to be
      paid
      under the Agreement, then the remaining portion of the restricted share
      component of the purchase price shall be delivered to CoroWare immediately
      prior
      to the closing of such transaction.





The
      new
      subsidiary shall enter an employment agreement with each key employee of
      CoroWare. In addition, in the first twelve month period following closing,
      such
      key employees shall be eligible for a compensation bonus, based on sales of
      not
      less than $1,900,000.





The
      Company’s obligation to purchase the assets set forth in the Agreement is
      subject to a satisfactory due diligence review. If the Company does not notify
      CoroWare on or prior to April 30, 2006 that it is not satisfied with the results
      of the due diligence review, this requirement will be deemed met. For purposes
      of the Agreement, the Company will be deemed satisfied with the due diligence
      review if (a) audited financial statements to be delivered by CoroWare are
      not
      materially different from the unaudited financial information previously
      provided to the Company by Coroware; and (b) all other information relating
      to
      the business assets of CoroWare does not differ materially from the information
      provided to the Company by CoroWare prior to the date of the
      Agreement.




The
      obligations under the Agreement terminate in the event that (a) a definitive
      written agreement is not executed by April 30, 2006; (b) the transaction
      contemplated by the Agreement has not closed by May 31, 2006; or (c) there
      is a
      material adverse change in the business of either the Company or
      CoroWare.




The
      determination of the consideration to be paid in the transaction was determined
      in arms length negotiations between the Boards of Directors of the Company
      and
      CoroWare. The negotiations took into account the value of the assets sold to
      Company and the consideration paid. At the time of the transaction, there were
      no material relationships between CoroWare and the Company, or any of its
      affiliates, any director or officer of the Company, or any associate of any
      such
      officer or director.





15


Recent
      Financing Transactions





On
      June
      14, 2005, the Company entered into a Standby Equity Distribution Agreement
      (the
“Equity Distribution Agreement”) with Cornell Capital Partners, LP (“Cornell”).
      Under the Equity Distribution Agreement, the Company may issue and sell to
      Cornell common stock for a total purchase price of up to $10,000,000 over a
      period of up to twenty four (24) months. The purchase price for the shares
      is
      equal to 96% of their market price, which is defined in the Equity Distribution
      Agreement as the lowest volume weighted average price of the common stock during
      the five trading days following the date notice is given by the Company that
      it
      desires an advance of funds. Cornell is paid a fee equal to 5% of each advance,
      which is retained by Cornell from each advance. The amount of each advance
      is
      subject to an aggregate maximum advance amount of $400,000, with no advance
      occurring within five trading days of a prior advance. The Company will pay
      a
      structuring fee of $500 for each advance made under the Equity Distribution
      Agreement. The Company agreed to file a registration statement with the
      Securities and Exchange Commission (“SEC”) that registers for resale the common
      stock that will be issued to Cornell under the Equity Distribution Agreement.
      No
      advance of funds will be made under the Equity Distribution Agreement until
      the
      registration statement is declared effective by the SEC. The registration
      statement was declared effective by the SEC on December 22, 2005.





In
      connection with the transaction, Cornell received a one-time commitment fee
      of
      2,608,696 restricted shares of the Company's common stock, equal to
      approximately $90,000 based on the Company’s stock price on May 4, 2005. These
      shares were registered for resale in the registration statement for the common
      stock to be issued under the Equity Distribution Agreement. The Company also
      issued to Cornell its promissory note for $300,000. The principal of the note
      is
      payable in three $100,000 installments due on the 30 th ,
      60 th and
      90 th days
      following the date the registration statement for the Cornell shares was
      declared effective. The promissory note does not bear interest except in the
      event of a default. The Company also paid $20,000 in cash to Cornell and its
      affiliates for structuring and due diligence fees.





On
      June
      14, 2005, the Company entered into a Placement Agent Agreement with Monitor
      Capital Inc. (the “Placement Agent”), a registered broker-dealer, to act as its
      exclusive placement agent in connection with the Equity Distribution Agreement.
      The Placement Agent agreed to advise the Company regarding the Equity
      Distribution Agreement. Pursuant to the Placement Agent Agreement, the Company
      paid a one-time placement agent fee of 289,855 restricted shares of common
      stock, equal to approximately $10,000 based on the Company’s stock price on May
      4, 2005. These shares were registered for resale in the registration statement
      for the Cornell shares.





During
      the first quarter of 2006, the Company utilized the Equity Distribution
      Agreement and sold 74,232,572 shares of common stock to Cornell for gross
      proceeds of $635,000, which increased the number of shares outstanding to
      approximately 541,307,000 shares at the end of March 2006. Of the gross
      proceeds received, Cornell was paid $31,750 in commitment fees and $4,500
      in structuring fees. Additionally, $20,000 of the promissory note due Cornell
      was paid to Cornell during the three months ended March 31, 2006. Also, the
      Company received a waiver from Cornell delaying the payment of the remaining
      amounts due on the promissory note to no later than December 31,
      2006.





On
      July
      22, 2005 the Company borrowed $30,000 from a beneficial shareholder and entered
      into a short term note for that amount, the terms of which are: interest at
      the
      annual rate of 5%, due date in six months, and principal and accrued interest
      are convertible into common stock of the Company at $.015 per share. The lender
      has agreed to a repayment plan that extends the term to December 31,
      2006.





On
      October 7, 2005, the Company entered into a Securities Purchase Agreement with
      Cornell. Pursuant to this Agreement, the Company sold a Convertible Debenture
      in
      the principal amount of $55,000 to Cornell. The Convertible Debenture bears
      interest at the rate of 12% per annum and is due on April 7, 2006. The principal
      of the Convertible Debenture is convertible into common stock of the Company
      at
      a price of $.03 per share (the “Conversion Shares”). The Company granted demand
      registration rights to Cornell Capital for the Conversion Shares. The
      Convertible Debenture is secured by a second lien on all of the assets of the
      Company. The convertible debenture was repaid in full by the due
      date.





During
      September through December 2005, the Company also entered into short-term debt
      obligations other than in the ordinary course of business. All of the short-term
      debt bears interest at the rate of 10% per annum. The following table sets
      for
      the names of the lenders, the amount of the loans, the dates of the loans and
      the due date of the loans:








Lender
            
            Amount
                of Loan
            
            Date
                of Loan
            
            Due
                DateEugene
                Gartlan
            
            $
            40,000
            
            
            September
              19, 2005
            
            
            October
              19, 2005Jerry
                Horne
            
            $
            50,000
            
            
            September
              22, 2005
            
            
            October
              22, 2005James
                Marks
            
            $
            30,000
            
            
            September
              22, 2005
            
            
            October
              22, 2005Eugene
                Gartlan
            
            $
            5,000
            
            
            October
              5, 2005
            
            
            January
              5, 2006Rick
                Wynns
            
            $
            30,000
            
            
            October
              3, 2005
            
            
            November
              3, 2005Rick
                Wynns
            
            $
            30,000
            
            
            October
              14, 2005
            
            
            February
              14, 2006Gary
                McNear
            
            $
            1,000
            
            
            November
              22, 2005
            
            
            February
              22, 2006Jerry
                Horne
            
            $
            50,000
            
            
            November
              28, 2005
            
            
            December
              28, 2005James
                Marks
            
            $
            21,000
            
            
            December
              21, 2005
            
            
            March
              21, 2006





16


All
      of
      the lenders are shareholders of the Company. Mr. Gartlan is also the Chief
      Financial Officer of the Company. Mr. McNear is a Director of the Company.
      All
      lenders have agreed to repayment terms that extend the due date to December
      31,
      2006




**ITEM
      2. DESCRIPTION OF PROPERTY**





On
      May
      15, 2005 the Company leased 4,000 square feet of space at 15870 Pine Ridge
      Road,
      Ft Myers, Florida which will be used as its primary operations. The lease is
      with Gulf To Bay Construction, Inc., with monthly payments of $3,533 through
      June 1, 2010. The lease has five (5) successive renewal options each for a
      period of two (2) years. The rent will increase annually by 3%. The space is
      the
      location of the Company's Research, Design and Engineering center as well as
      office space for up to fifteen (15) employees.





On
      June
      15, 2005 the Company entered into a lease with Bola Industries, LLC for
      approximately 4,000 square feet of production space located at 30946 Industrial
      Road, Livonia Michigan. The lease was on a monthly basis and expired on March
      31, 2006. The rent was $3,775 monthly and included all utilities, use of all
      equipment on site including certain heavy equipment, and use of internet
      service.





Rental
      expense for the operating leases for the years ended December 31, 2005 and
      2004
      was $51,035 and $17,344, respectively.




**ITEM
      3. LEGAL PROCEEDINGS**





There
      are
      no lawsuits against the Company as of March 31, 2006. There are no material
      proceedings to which any director, officer or affiliate of the Company, any
      owner of record or beneficially of more than 5% of the common stock of the
      Company is a party adverse to the Company.





The
      Company received a subpoena from the SEC dated May 10, 2005 relating to an
      investigation of trading in certain OTC stocks, including the Company's common
      stock. The subpoena seeks documents relating to the merger and financing
      transactions entered into by the Company in April 2003. The investigation is
      still in its early stages and the Company is not able to predict what actions,
      if any, the SEC may take against the Company as a result of the investigation.
      In August 2004, the Company completed a reverse merger with Robotic Workspace
      Technology, Inc. (RWT). The subpoena concerns transactions that occurred 16
      months before the RWT merger. The management of the Company, including Walter
      Weisel, who took office as Chief Executive Officer of the Company in August
      2004
      following the merger with RWT, intends to cooperate to the fullest extent
      possible in the investigation.





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





There
      were no matters submitted during the fourth quarter of 2005 to a vote of
      security holders through the solicitation of proxies or otherwise.




17


**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





**Reports
      to Security Holders**





We
      are a
      reporting company with the Securities and Exchange Commission, or SEC. The
      public may read and copy any materials filed with the SEC at the SEC's Public
      Reference Room at 100 F Street, N.E., Washington, DC 20549. The public may
      also
      obtain information on the operation of the Public Reference Room by calling
      the
      SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports,
      proxy and information statements, and other information regarding issuers that
      file electronically with the SEC. The address of that site is
      http://www.sec.gov.





**Prices
      of Common Stock**





Since
      February 2002, we have been eligible to participate in the OTC Bulletin Board,
      an electronic quotation medium for securities traded outside of the NASDAQ
      Stock
      Market, and prices for our common stock were published on the OTC Bulletin
      Board
      under the trading symbol "SRMW" until such time as our acquisition of Hy-Tech
      Technology Group, Inc. on January 31, 2003 when our symbol became HYTT. In
      August 2004 the name of the Company was changed to Innova Holdings, Inc. and
      the
      trading symbol was changed to IVHG.





The
      following table sets forth, for the fiscal quarters indicated, the high and
      low
      closing sales price of our Common Stock as reported on the NASD Over-the-Counter
      Bulletin Board for each quarterly period during fiscal year ended December
      31,
      2005 and December 31, 2004.




Common
                StockYear
                  Ended December 31, 2005
              
              High
              
              LowFirst
                  quarter
              
              $
              0.032
              
              $
              0.008Second
                  quarter
              
              $
              0.067
              
              $
              0.015Third
                  quarter
              
              $
              0.042
              
              $
              0.010Fourth
                  quarter
              
              $
              0.023
              
              $
              0.009Year
                  Ended December 31, 2004
              
              
              High
              
              
              LowFirst
                  quarter
              
              $
              0.056
              
              $
              0.012Second
                  quarte
              
              $
              0.017
              
              $
              0.006Third
                  Quarter
              
              $
              0.014
              
              $
              0.006Fourth
                  Quarter
              
              $
              0.010
              
              $
              0.005





There
      are
      approximately 130 record holders of common equity as of March 31, 2006.





**Dividend
      Policy**





The
      Company has never declared or paid any cash dividends on its common stock.
      The
      Company anticipates that any earnings will be retained for development and
      expansion of its business and does not anticipate paying any cash dividends
      in
      the foreseeable future. Additionally, the Company has issued $125,000 of Series
      A Preferred Stock and $525,000 of Series B Preferred Stock all of which earns
      a
      5% dividend, payable in either cash or common stock of the Company. Such
      dividends on these Preferred Stock will be paid before any dividends on common
      stock. The board of directors has sole discretion to pay cash dividends based
      on
      the Company's financial condition, results of operations, capital requirements,
      contractual obligations and other relevant factors.








18


**Securities
      Authorized for Issuance Under Equity Compensation Plans**





The
      following table set forth the information as of December 31, 2005 with respect
      to compensation plans under which equity securities of the Company are
      authorized for issuance:




**EQUITY
      COMPENSATION PLAN INFORMATION**




Plan
                Category
              
              Number
                              of shares to be issued upon exercise
                              of outstanding options
              
              Weighted
                  average exercise price of outstanding options
              
              Number
                          of securities remaining available for future
                          issuanceEquitycompensation
                      plansapproved by security holders
              
              
              0
              
              
              0
              
              
              0Equity
                            compensation plans not approved by security
                            holders
              
              
              103,107,400
              
              $
              0.016
              
              
              5,042,600Total
              
              
              103,107,400
              
              $
              0.016
              
              
              5,042,600




On
      April
      12, 2005 the Company adopted a Stock Option Plan authorizing options on
      100,000,000 shares. On July 15, 2003 the Company adopted a Stock Option Plan
      authorizing options on 5,000,000 shares. On October 29, 2003 the Company
      authorized options on 10,900,000 shares to be issued to senior management.
      On
      April 15, 2004 the Company adopted a Stock Option Plan authorizing options
      on
      3,150,000 shares. Under all of these plans, the Company issued options for
      1,000,000 shares. During 2004 the Company authorized 33,962,655 options to
      be
      awarded to directors, an employee and an independent contractor. During
      2005, the Company awarded a net amount of options totaling 54,719,259 to
      employees and an independent contractor.  And on April 12, 2006 the Company
      authorized an increase in the Stock Option Plan for an additional 50,000,000
      shares, bring the total options authorized to 150,000,000 shares..





The
      Company is planning to file an S-8 registration statement in June 2006 for
      the
      Company's stock option plan. Options granted through December 31, 2005 to be
      included are 71,500,000 shares to directors and management, 13,000,000 shares
      for employees and 12,121,276 shares to Stratex Solutions, LLC, a consulting
      firm that provided financial and accounting support services to the
      Company. Additionally, options were granted for another 20,000,000 shares in
      March 2006 to directors and another 5,500,000 to employees.





Robotic
      Workspace Technologies, Inc. had a stock option plan in effect at the time
      of
      the merger with the Company, under which plan there were options granted for
      the
      equivalent of 15,266,865 shares of the Company, after adjusting for the ratio
      of
      stock exchange in the merger agreement, which will also be included in the
      S-8
      filing. There are no remaining shares to be granted under that plan.





**Stock
      Options**





There
      are
      a total 128,607,400 outstanding options to purchase common equity of Innova
      Holdings, Inc. as of March 15, 2006.





**Convertible
      Securities**





On
      July
      22, 2005 the Company borrowed $30,000 and entered into a short term note for
      that amount, the terms of which are: interest at the annual rate of 5%, due
      date
      in six months, and principal and accrued interest are convertible into common
      stock of the Company at $.015 per share. The due date has been extended to
      July
      22, 2006.





On
      October 7, 2005, the Company entered into a Securities Purchase Agreement with
      Cornell Capital Partners, LP ("Cornell Capital"). Pursuant to this Agreement,
      the Company sold a Convertible Debenture in the principal amount of $55,000
      to
      Cornell Capital. The Convertible Debenture bears interest at the rate of 12%
      per
      annum and is due on April 7, 2006. The Company will pay directly to Cornell
      Capital all revenues it receives until the principal amount and all accrued
      interest on the Convertible Debenture has been paid in full. The principal
      of
      the Convertible Debenture is convertible into common stock of the Company at
      a
      price of $.03 per share (the "Conversion Shares"). In the event of default
      by
      the Company, the principal of the Convertible Debenture is convertible into
      Conversion Shares at a price of $.005 per share. The Company granted demand
      registration rights to Cornell Capital for the Conversion Shares. The
      Convertible Debenture is secured by a second lien on all of the assets of the
      Company. These debentures were paid in full as of the due date.







19





On
      June
      23, 2004, the Company entered into a private placement of 125,000 shares of
      its
      Series A Preferred Stock for an aggregate issue price of $125,000 with the
      holders of the Company's Convertible Debentures. Each share of the Series A
      Preferred Stock (i) pays a dividend of 5%, payable at the discretion of the
      Company in cash or common stock, (ii) is convertible into the number of shares
      of common stock equal to $1.00 divided by a price equal to the lesser of 75%
      of
      the average closing bid price of the Company's common stock over the twenty
      trading days preceding conversion or $0.005, (iii) has a liquidation preference
      of $1.00 per share, (iv) must be redeemed by the Company five years after
      issuance at $1.00 per share plus accrued and unpaid dividends, (v) may be
      redeemed by the Company at any time for $1.30 per share plus accrued and unpaid
      dividends (vi)
      grants rights to acquire one share of Common Stock for each share of Common
      Stock issued on conversion at a price per share equal to the average of the
      closing price of the Common Stock on the five business days preceding the date
      of conversion for a period of one year from the date of conversion, and
      (vii) has no voting rights except when mandated by Delaware law.







20


In
      the
      event that the Company had not completed the merger with RWT and RWT had not
      raised $500,000 in new capital by August 27, 2004, then each of the holders
      of
      the Series A Preferred Stock could elect to convert their shares into (a) a
      demand note payable by the Company, in the principal amount equal to the
      purchase price of the Series A Preferred Stock plus accrued and unpaid
      dividends, with interest at the rate of ten percent (10%) until paid in full
      and
      (b) warrants to purchase 2,500,000 shares of the Company's common stock at
      an
      exercise price of $.005 per share, with a term of two (2) years from the date
      of
      issuance, and standard anti-dilution provisions regarding stock splits,
      recapitalizations, and mergers, for each $25,000 of Series A Preferred Stock
      purchased. Since RWT had not raised $500,000 by August 27, 2004 the holders
      of
      the Series A Preferred Stock could have elected to convert their shares into
      the
      demand note but none of the holders elected to do so. This issuance of the
      Series A Preferred Stock was exempt from the registration requirements of the
      Securities Act of 1933 (the "Act") pursuant to section 4(2) of the Act. During
      the quarter ended September 30, 2005, 43,550 shares of Series A Preferred Stock
      were converted into 8,710,001 shares of Common Stock of the Company, and accrued
      dividends of $1,250 were converted into 25,510 shares of Common Stock of the
      Company. And in March 2006 25,000 shares of series A Preferred Stock were
      converted into 5,000,000 shares of Common Stock, and accrued dividends of $1,250
      were converted into 31,510 shares of Common Stock of the Company.





In
      September 2004, the Company authorized $525,000 of Series B Preferred Stock,
      convertible into the Company's common stock at the lesser of $.005 per share
      or
      75% of the average closing bid prices over the 20 trading days immediately
      preceding the date of conversion. At December 31, 2004 $377,000 of the Series
      B
      Preferred Stock had been sold; as of March 31, 2005 all of the Series B
      Preferred Stock was sold. During the quarter ended December 31, 2005, 33,000
      shares of Series B Preferred Stock were converted into 6,600,001 shares of
      Common Stock of the Company. This issuance of the Series B Preferred Stock
      was
      exempt from the registration requirements of the Securities Act of 1933 (the
      "Act") pursuant to section 4(2) of the Act.





**Penny
      Stock Regulation**





Shares
      of
      our common stock are subject to rules adopted by the Securities and Exchange
      Commission that regulate broker-dealer practices in connection with transactions
      in "penny stocks.” Penny stocks are generally equity securities with a price of
      less than $5.00 (other than securities registered on certain national securities
      exchanges or quoted on the NASDAQ system, provided that current price and volume
      information with respect to transactions in those securities is provided by
      the
      exchange or system). The penny stock rules require a broker-dealer, prior to
      a
      transaction in a penny stock not otherwise exempt from those rules, deliver
      a
      standardized risk disclosure document prepared by the Securities and Exchange
      Commission, which contains the following:





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





o
      a
      description of the broker's or dealer's duties to the customer and of the rights
      and remedies available to the customer with respect to violation to such duties
      or other requirements of securities' laws;





o
      a
      brief, clear, narrative description of a dealer market, including "bid" and
      "ask" prices for penny stocks and the significance of the spread between the
      "bid" and "ask" price;





o
      a
      toll-free telephone number for inquiries on disciplinary actions;





o
      definitions of significant terms in the disclosure document or in the conduct
      of
      trading in penny stocks; and





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







21


Prior
      to
      effecting any transaction in penny stock, the broker-dealer also must provide
      the customer the following:





o
      the bid
      and offer quotations for the penny stock;





o
      the
      compensation of the broker-dealer and its salesperson in the transaction;





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





o
      monthly
      account statements showing the market value of each penny stock held in the
      customer's account.





In
      addition, the penny stock rules require that prior to a transaction in a penny
      stock not otherwise exempt from those rules, the broker-dealer must make a
      special written determination that the penny stock is a suitable investment
      for
      the purchaser and receive the purchaser's written acknowledgment of the receipt
      of a risk disclosure statement, a written agreement to transactions involving
      penny stocks, and a signed and dated copy of a written suitably statement.
      These
      disclosure requirements may have the effect of reducing the trading activity
      in
      the secondary market for a stock that becomes subject to the penny stock rules.
      Holders of shares of our common stock may have difficulty selling those shares
      because our common stock will probably be subject to the penny stock rules.





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





**Plan
      Of Operation**





During
      the next twelve months, the Company expects to aggressively market and sell
      its
      Universal Robot Controller, complete the development of its Universal Automation
      Controller and license its software in the service, personal and industrial
      markets. The Company, during the past ten years, successfully developed its
      open
      architecture PC based Universal Robot Controller and developed its RobotScript,
      Gatekeeper and related software. Additionally, the development of the Universal
      Automation Controller was commenced and is now in its final stages. As discussed
      in Item 1 of this document, management believes there is a large market
      opportunity for its controllers and software, and management intends to
      aggressively pursue those opportunities. Specifically, the Company is
      implementing its operating plan and is expanding its sales organization by
      adding additional direct sales representatives and partnering with system
      integrators. Also, the Company is aggressively implementing its current
      marketing plan to create awareness of its products and to communicate the value
      of its solutions to the industrial, military and other robotic markets. In
      addition, the Company has identified several new features and functionality
      it
      wants to incorporate into its robotic control system and has commenced its
      technology development activities to develop the next generation of control
      systems and communication systems. Management expects to continue to constantly
      upgrade and improve its software and system solutions.





The
      Company does not expect to sell any of its property or equipment in the next
      twelve months, nor does it expect to purchase any real property in the next
      twelve months.. During the next twelve months the Company expects to purchase
      certain equipment to support software development, testing and continued
      deployment of its technologies. Additionally, the Company expects to purchase
      office equipment, computer equipment and laboratory development and testing
      equipment to support the planned increase of the number of employees of the
      Company.





In
      order
      to accomplish all of the goals established by the Company during the next twelve
      months, the Company intends to hire approximately 25 employees in software
      engineering and applications development, production, sales, and administration.
      The funds to finance this expansion are planned to be obtained from the use
      of
      the Standby Equity Distribution Agreement discussed below in this section as
      well as secure financing from private and institutional investors as well as
      debt financings.




Management
      believes the Company will be able to raise sufficient funds through these
      sources to meet its cash requirements for the next twelve months and beyond.





Recent
      Financing Transactions





On
      June
      14, 2005, the Company entered into a Standby Equity Distribution Agreement
      (the
“Equity Distribution Agreement”) with Cornell Capital Partners, LP (“Cornell”).
      Under the Equity Distribution Agreement, the Company may issue and sell to
      Cornell common stock for a total purchase price of up to $10,000,000 over a
      period of up to twenty four (24) months. The purchase price for the shares
      is
      equal to 96% of their market price, which is defined in the Equity Distribution
      Agreement as the lowest volume weighted average price of the common stock during
      the five trading days following the date notice is given by the Company that
      it
      desires an advance of funds. Cornell is paid a fee equal to 5% of each advance,
      which is retained by Cornell from each advance. The amount of each advance
      is
      subject to an aggregate maximum advance amount of $400,000, with no advance
      occurring within five trading days of a prior advance. The Company will pay
      a
      structuring fee of $500 for each advance made under the Equity Distribution
      Agreement. The Company agreed to file a registration statement with the
      Securities and Exchange Commission (“SEC”) that registers for resale the common
      stock that will be issued to Cornell under the Equity Distribution Agreement.
      No
      advance of funds will be made under the Equity Distribution Agreement until
      the
      registration statement is declared effective by the SEC. The registration
      statement was declared effective by the SEC on December 22, 2005.





In
      connection with the transaction, Cornell received a one-time commitment fee
      of
      2,608,696 restricted shares of the Company's common stock, equal to
      approximately $90,000 based on the Company’s stock price on May 4, 2005. These
      shares were registered for resale in the registration statement for the common
      stock to be issued under the Equity Distribution Agreement. The Company also
      issued to Cornell its promissory note for $300,000. The principal of the note
      is
      payable in three $100,000 installments due on the 30 th ,
      60 th and
      90 th days
      following the date the registration statement for the Cornell shares was
      declared effective. The promissory note does not bear interest except in the
      event of a default. The Company also paid $20,000 in cash to Cornell and its
      affiliates for structuring and due diligence fees.





22


On
      June
      14, 2005, the Company entered into a Placement Agent Agreement with Monitor
      Capital Inc. (the “Placement Agent”), a registered broker-dealer, to act as its
      exclusive placement agent in connection with the Equity Distribution Agreement.
      The Placement Agent agreed to advise the Company regarding the Equity
      Distribution Agreement. Pursuant to the Placement Agent Agreement, the Company
      paid a one-time placement agent fee of 289,855 restricted shares of common
      stock, equal to approximately $10,000 based on the Company’s stock price on May
      4, 2005. These shares were registered for resale in the registration statement
      for the Cornell shares.





During
      the first quarter of 2006, the Company utilized the Equity Distribution
      Agreement and sold 74,232,572 shares of common stock to Cornell for gross
      proceeds of $635,000, which increased the number of shares outstanding to
      approximately 541,307,000 shares at the end of March 2006. Of the gross
      proceeds received, Cornell was paid $31,750 in commitment fees and $4,500
      in structuring fees. Additionally, $20,000 of the promissory note due Cornell
      was paid to Cornell during the three months ended March 31, 2006. Also, the
      Company received a waiver from Cornell delaying the payment of the remaining
      amounts due on the promissory note to no later than December 31,
      2006.





On
      July
      22, 2005 the Company borrowed $30,000 from a beneficial shareholder and entered
      into a short term note for that amount, the terms of which are: interest at
      the
      annual rate of 5%, due date in six months, and principal and accrued interest
      are convertible into common stock of the Company at $.015 per share. The lender
      has agreed to a repayment plan that extends the term to December 31,
      2006.





On
      October 7, 2005, the Company entered into a Securities Purchase Agreement with
      Cornell. Pursuant to this Agreement, the Company sold a Convertible Debenture
      in
      the principal amount of $55,000 to Cornell. The Convertible Debenture bears
      interest at the rate of 12% per annum and is due on April 7, 2006. The principal
      of the Convertible Debenture is convertible into common stock of the Company
      at
      a price of $.03 per share (the “Conversion Shares”). The Company granted demand
      registration rights to Cornell Capital for the Conversion Shares. The
      Convertible Debenture is secured by a second lien on all of the assets of the
      Company. The convertible debenture was repaid in full by the due
      date.





During
      September through December 2005, the Company also entered into short-term debt
      obligations other than in the ordinary course of business. All of the short-term
      debt bears interest at the rate of 10% per annum. The following table sets
      for
      the names of the lenders, the amount of the loans, the dates of the loans and
      the due date of the loans:








Lender
            
            Amount
                of Loan
            
            Date
                of Loan
            
            Due
                DateEugene
                Gartlan
            
            $
            40,000
            
            
            September
              19, 2005
            
            
            October
              19, 2005Jerry
                Horne
            
            $
            50,000
            
            
            September
              22, 2005
            
            
            October
              22, 2005James
                Marks
            
            $
            30,000
            
            
            September
              22, 2005
            
            
            October
              22, 2005Eugene
                Gartlan
            
            $
            5,000
            
            
            October
              5, 2005
            
            
            January
              5, 2006Rick
                Wynns
            
            $
            30,000
            
            
            October
              3, 2005
            
            
            November
              3, 2005Rick
                Wynns
            
            $
            30,000
            
            
            October
              14, 2005
            
            
            February
              14, 2006Gary
                McNear
            
            $
            1,000
            
            
            November
              22, 2005
            
            
            February
              22, 2006Jerry
                Horne
            
            $
            50,000
            
            
            November
              28, 2005
            
            
            December
              28, 2005James
                Marks
            
            $
            21,000
            
            
            December
              21, 2005
            
            
            March
              21, 2006





All
      of
      the lenders are shareholders of the Company. Mr. Gartlan is also the Chief
      Financial Officer of the Company. Mr. McNear is a Director of the Company.
      All
      lenders have agreed to repayment terms that extend the due date to December
      31,
      2006





The
      Company does not have any off-balance sheet arrangements.





**ITEM
      7. FINANCIAL STATEMENTS**





The
      financial statements immediately follow ITEM 14 - Principal Accountant Fees
      and
      Services





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





Malone
      & Bailey, PC was the independent certifying accountant for the Company for
      the fiscal year ended February 29, 2004. The Company's fiscal year was changed
      to December 31 when the Company adopted the fiscal year of RWT after the reverse
      merger between the Company and RWT.





On
      September 22, 2004, Malone & Bailey, PLLC was dismissed as the Company's
      certifying accountant. The Company engaged Lopez, Blevins, Bork &
Associates, LLP, Three Riverway, Suite 1400, Houston, Texas 77056 as the
      Company's certifying accountant for the fiscal year ending December 31, 2004.
      The appointment of Lopez, Blevins, Bork & Associates, LLP was approved by
      the Company's board of directors.





23


The
      reports of Malone & Bailey, PLLC on the Company's financial statements for
      the fiscal years ended February 28, 2003 and February 29, 2004, contained no
      adverse opinion or disclaimer of opinion, nor was either qualified or modified
      as to uncertainty, audit scope or accounting principle, except that Malone
&
Bailey, PLLC expressed in their reports substantial doubt about the ability
      of
      the Company to continue as a going concern.





During
      the two most recent fiscal involving their engagement which
      years involving their engagement, which years ended February 29, 2004 and
      February 28, 2003 and in the subsequent interim periods through the date of
      dismissal, there were no disagreements between the Company and Malone &
Bailey, PLLC on any matter of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedures, which disagreements,
      if
      not resolved to its satisfaction, would have caused Malone & Bailey, PLLC to
      make reference to the subject matter of the disagreement in connection with
      its
      reports.





During
      the two most recent fiscal years involving their engagement, which years ended
      February 29, 2004 and February 28, 2003 and in the subsequent interim periods
      through the date of dismissal, Malone & Bailey, PLLC did not advise the
      Company that:





(A)
      Internal controls necessary for the Company to develop reliable financial
      statements did not exist;





(B)
      Information had come to its attention that led it to no longer to be able to
      rely on the Company's management's representations or made it unwilling to
      be
      associated with the financial statements prepared by management;





(C)
      There
      was a need to expand significantly the scope of its audit, or that information
      had come to its attention during such time periods that if further investigated
      might: (i) materially impact the fairness or reliability of either a previously
      issued audit report or the underlying financial statements, or the financial
      statements issued or to be issued covering the fiscal periods subsequent to
      the
      date of the most recent financial statements covered by an audit report, or
      (ii)
      cause it to be unwilling to rely on management's representations or be
      associated with the Company's financial statements.




**ITEM
      8A. CONTROLS AND PROCEDURES**





As
      of
      December 31, 2005, our principal executive officer and principal financial
      officer evaluated the effectiveness of the Company's disclosure controls and
      procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934, as amended). This evaluation of the disclosure controls
      and procedures included controls and procedures designed to ensure that
      information required to be disclosed by the Company in its reports that it
      files
      or submits under the Act is recorded, processed, summarized and reported within
      the time periods specified in the Security and Exchange Commission’s rules and
      forms. Such disclosure controls and procedures include controls and procedures
      designed to ensure that information required to be disclosed by the Company
      in
      the reports that it files or submits under the Act is accumulated and
      communicated to the Company's management, including its principal executive
      and
      principal financial officers, to allow timely decisions regarding required
      disclosure. Based on this evaluation, the Company's principal executive officer
      and principal financial officer concluded that the Company's disclosure controls
      and procedures were effective as of December 31, 2005.





24


As
      of
      December 31, 2004, our principal executive officer and principal financial
      officer evaluated the effectiveness of the Company's disclosure controls and
      procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934, as amended). This evaluation of the disclosure controls
      and procedures included controls and procedures designed to ensure that
      information required to be disclosed by the Company in its reports that it
      files
      or submits under the Act is recorded, processed, summarized and reported within
      the time periods specified in the Security and Exchange Commission’s rules and
      forms. Such disclosure controls and procedures include controls and procedures
      designed to ensure that information required to be disclosed by the Company
      in
      the reports that it files or submits under the Act is accumulated and
      communicated to the Company's management, including its principal executive
      and
      principal financial officers, to allow timely decisions regarding required
      disclosure. Based on this evaluation, the Company's principal executive officer
      and principal financial officer concluded that the Company's disclosure controls
      and procedures were ineffective because the Company had not properly accounted
      for certain beneficial conversion features associated with its Series A
      Preferred Stock and Series B Preferred Stock issued in 2004 and the accounting
      guidance provided by Emerging Issues Task Force Issue Numbers 98-5 and 00-27.
      Management concluded that the failure to properly account for and disclose
      the
      beneficial conversion features was a material weakness in its disclosure
      controls and procedures.




The
      Company issued its Series A Preferred Stock in June 2004 and its Series B
      Preferred Stock in September 2004. In its financial statements for the year
      ended December 31, 2004, the Company did not allocate any portion of the
      proceeds of these stock issuances to any beneficial conversion features of
      the
      preferred stock. After filing its annual report on Form 10-KSB, the Company
      received a comment letter from the staff of the Securities and Exchange
      Commission dated June 22, 2005 that requested, among other things, confirmation
      that management of the Company considered the guidance of certain accounting
      pronouncements in determining whether a portion of the proceeds of the Company’s
      Series A Preferred Stock issued in June 2004 and Series B Preferred Stock issued
      in September 2004 should be allocated to the beneficial conversion feature.




After
      receipt of the SEC’s comment letter, the Company’s Chief Executive Officer and
      Chief Financial Officer reevaluated the Company’s disclosure controls and
      procedures regarding the proper accounting treatment of the preferred stock
      issuances in 2004 and presented to the Company’s independent certified public
      accountants its plan to institute remedial actions to address this material
      weakness in its disclosure controls and procedures regarding the issuance of
      convertible securities and any associated beneficial conversion features and
      the
      accounting guidance provided by Emerging Issues Task Force Issue Numbers 98-5
      and 00-27. These remedial actions are the following:




-the
      Company hired a new Chief Financial Officer effective June 14, 2005 who has
      reviewed the Company’s disclosure controls and procedures regarding the issuance
      of convertible securities and any associated beneficial conversion features
      and
      the accounting guidance provided by Emerging Issues Task Force Issue Numbers
      98-5 and 00-27 and has implemented a special review and analysis process prior
      to the execution of legal agreements for all planned issuances of convertible
      securities to determine the amount of any beneficial conversion features, their
      related accounting treatment and disclosure requirements. This remedial action
      was implemented by June 30, 2005.





-
      the
      Chief Financial Officer is in the process of reviewing all of the Company’s
      other disclosure controls and procedures, as well as all accounting policies
      and
      procedures and internal controls and appropriate changes will be made to correct
      any material weaknesses or significant deficiencies identified by October 31,
      2005. There were no other material weaknesses of significant deficiencies
      identified;





-the
      Company’s accounting policies and checklists relating to the selection and
      application of appropriate accounting policies now includes, as of June 30,
      2005, an item requiring the consideration of whether or not convertible
      securities issuances include a beneficial conversion feature and, if so, to
      describe the method of accounting for this feature, as well as the method of
      calculating the amount of the beneficial conversion feature;





-the
      Company is in the process of selecting a consulting firm it will retain to
      assist in the implementation of Section 404 compliance with the Sarbanes-Oxley
      Act, which we expect to implement fully in 2006;





-the
      Company is in the process of attempting to diversify the composition of the
      Board of Directors and is planning to establish an audit committee of the Board
      of Directors.





The
      remedial actions to correct the material weakness associated with the disclosure
      controls and procedures for beneficial conversion features were implemented
      as
      of June 30, 2005. All other actions were completed as of December 31, 2005,
      except for 404 compliance which we expect to have fully implemented in 2006.
      There are no additional material costs expected to be incurred as a result
      of
      the implementation of these remedial actions, since all of these actions were
      previously planned by the Company for implementation in 2005 and 2006 or were
      insignificant in amount.





Management
      also concluded that it was necessary to restate the Company’s financial
      statements for the year ended December 31, 2004 included in its Report on
      Form10-KSB to properly account for the beneficial conversion features associated
      with its
      Series A Preferred Stock and its Series B Preferred Stock issued in 2004 and
      the
      accounting guidance provided by Emerging Issues Task Force Issue Numbers 98-5
      and 00-27. This resulted in a change made to the Company’s financial statements.
      Specifically, management calculated the values of the beneficial conversion
      features and determined that of the $125,000 proceeds received from the issuance
      of the Series A Preferred Stock, $50,000 was allocated to the beneficial
      conversion feature embedded in the Series A Preferred Stock on the date of
      issuance based on a conversion price of $.005 per share. Of this amount, $48,300
      was the unamortized embedded beneficial feature assumed as part of the reverse
      merger with Robotic Workspace Technologies, Inc. in August 2004. The beneficial
      conversion feature is being amortized over five (5) years and accordingly $3,600
      was amortized through Accumulated Deficit through December 31, 2004.
      Additionally, the excess of the aggregate fair value of the common stock to
      be
      issued upon conversion over the $125,000 of proceeds received when the Series
      A
      Preferred Stock was issued amounted to $50,000. Of the $377,000 proceeds
      received from the issuance of the Series B Preferred Stock, $146,500 was
      allocated to the beneficial conversion feature embedded in the Series B
      Preferred Stock on the date of issuance, based on a conversion price of $.005
      per share. All of the $146,500 beneficial conversion feature was amortized
      through Accumulated Deficit on the date of issuance; therefore, all of the
      beneficial conversion feature was amortized as of December 31, 2004.
      Additionally, the excess of the aggregate fair value of the common stock to
      be
      issued upon conversion over the $377,000 of proceeds received when the Series
      B
      Preferred Stock was issued amounted to $158,500.





25


Based
      upon the foregoing, management restated its financial statements for the year
      ended December 31, 2004 as follows:





(1)
            the
                Company restated its Balance Sheet and Statements of Stockholders’ Deficit
                by increasing its Accumulated Deficit from $(7,290,680) to $(7,440,780)
                to
                reflect the charge of $150,100 arising from the beneficial conversion
                features of its preferred stock
                issuances;





(2)
            the
                Company restated its Balance Sheet and Statements of Stockholders’ Deficit
                by increasing its Additional Paid In Capital from $3,492,621 to $3,687,421
                to reflect the beneficial conversion features of the Series A Preferred
                Stock of $48,300 and the Series B Preferred Stock of $146,500, for
                a total
                increase of $194,800;





(3)
            the
                Company restated its Balance Sheet and Statements of Stockholders’ Deficit
                by decreasing the amount of Stockholders’ Deficit from $(3,426,385) to
                $(3,381,685) to reflect the net change of $44,700 resulting from
                the
                beneficial conversion features of its Series A Preferred Stock and
                Series
                B Preferred Stock;





(4)
            the
                Company restated its Balance Sheet by decreasing the amount of the
                Mandatorily Redeemable Series A Preferred Stock from $125,000 to
                $80,300,
                a decrease of $44,700, to reflect the amount of $48,300 representing
                the
                unamortized beneficial conversion feature assumed at the time of
                the
                reverse merger with Robotic Workspace Technologies, Inc. in August
                2004
                associated with its Series A Preferred Stock less $3,600 representing
                the
                amount amortized to Accumulated Deficit for the period ended December
                31,
                2004;




(5)
            the
                Company restated its Statements of Operations by increasing the net
                loss
                applicable to common shareholders from $(1,426,931) to $(1,577,031)
                to
                reflect the $150,100 charge to Accumulated Deficit;





(6)
            the
                Company added a new Note 11 to its Financial Statements explaining
                the
                restated financial statements described
                above.





In
      accordance with the Exchange Act, the Company carried out an evaluation, under
      the supervision and with the participation of management, including its
      principal executive officer and principal financial officer, of the
      effectiveness of its internal controls over financial reporting as of December
      31, 2004 and the Company's principal executive officer and principal financial
      officer concluded that the Company's internal controls over financial reporting
      were ineffective because the Company had not properly accounted for certain
      beneficial conversion features associated with its Series A Preferred Stock
      and
      Series B Preferred Stock issued in 2004 and the accounting guidance provided
      by
      Emerging Issues Task Force Issue Numbers 98-5 and 00-27, as discussed above.
      Management concluded that the failure to properly account for and disclose
      the
      beneficial conversion features was a material weakness in its internal controls
      over financial reporting.





As
      stated
      above, the Company received a comment letter from the staff of the Securities
      and Exchange Commission dated June 22, 2005 that requested, among other things,
      confirmation that management of the Company considered the guidance of certain
      accounting pronouncements in determining whether a portion of the proceeds
      of
      the Company’s Series A Preferred Stock issued in June 2004 and Series B
      Preferred Stock issued in September 2004 should be allocated to the beneficial
      conversion feature. After receipt of the SEC’s comment letter, the Company
      reevaluated its internal controls over financial reporting and presented to
      the
      Company’s independent certified public accountants its plan to institute
      remedial actions to address this material weakness in its internal control
      over
      financial reporting for the issuance of convertible securities and any
      associated beneficial conversion features and the accounting guidance provided
      by Emerging Issues Task Force Issue Numbers 98-5 and 00-27. These remedial
      actions are the following:





-the
      Company hired a new Chief Financial Officer effective June 14, 2005 who has
      reviewed the Company’s internal controls over financial reporting regarding the
      issuance of convertible securities and any associated beneficial conversion
      features and the accounting guidance provided by Emerging Issues Task Force
      Issue Numbers 98-5 and 00-27 and has implemented a special review and analysis
      process prior to the execution of legal agreements for all planned issuances
      of
      convertible securities to determine the amount of any beneficial conversion
      features, their related accounting treatment and disclosure requirements. This
      remedial action was implemented by June 30, 2005.





-
      the
      Chief Financial Officer is in the process of reviewing all of the Company’s
      other internal controls over financial reporting, as well as all accounting
      policies and procedures and internal controls, and appropriate changes will
      be
      made to correct any material weaknesses or significant deficiencies identified
      by October 31, 2005. There were no other material weaknesses or significant
      deficiencies identified;





26


-the
      Company’s accounting policies and checklists relating to the selection and
      application of appropriate accounting policies now includes, as of June 30,
      2005, an item requiring the consideration of whether or not convertible
      securities issuances include a beneficial conversion feature and, if so, to
      describe the method of accounting for this feature, as well as the method of
      calculating the amount of the beneficial conversion feature.





-the
      Company is in the process of selecting a consulting firm it will retain to
      assist in the implementation of Section 404 compliance with the Sarbanes-Oxley
      Act., which we expect to implement fully in 2006;





-the
      Company is in the process of attempting to diversify the composition of the
      Board of Directors and is planning to establish an audit committee and of
      the Board of Directors.





The
      remedial actions to correct the material weakness associated with the internal
      controls over financial reporting for beneficial conversion features were
      implemented as of June 30, 2005. All other actions were completed as of December
      31, 2005, except for 404 compliance, which we expect to have fully implemented
      in 2006. There are no additional material costs expected to be incurred as
      a
      result of the implementation of these remedial actions, since all of these
      actions were previously planned by the Company for implementation in 2005 and
      2006 or were insignificant in amount.





**ITEM
      8B. OTHER INFORMATION**





None





**PART
      III**





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





Our
      directors, principal executive officers and significant employees are as
      specified on the following table:




Name
              
              Age
              
              PositionWalter
                  K. Weisel
              
              65
              
              Chairman,
                  Chief Executive Officer and DirectorMartin
                  Nielson
              
              54
              
              Previously
                  Chief Executive Officer and Chairman of the Board of Directors;
                  DirectorGary
                  F. McNear
              
              61
              
              Director;
                  Previously C F O, Vice President, and SecretaryCraig
                  W. Conklin
              
              56
              
              Director;
                  Previously Chief Operating Officer and Vice PresidentEugene
                  V. Gartlan
              
              61
              
              Chief
                  Financial OfficerSheri
                  Aws
              
              44
              
              Secretary





WALTER
      K.
      WEISEL became the Company's Chairman and Chief Executive Officer on August
      25,
      2004, the date the merger closed between the Company and RWT. With over thirty
      year’s experience, Mr. Weisel is recognized as a pioneer and leader in the
      robotics industry. An original founding member of the Robotic Industries
      Association (RIA), the U.S. robot manufacturers' trade association, Mr. Weisel
      served three terms as President. He served on the RIA Board of Directors and
      Executive Committee and, as a spokesperson for the industry, served as an
      advisor to members of the U.S. Trade Commission and the U.S. Department of
      Commerce. Mr. Weisel was a founding member of Robotics International (RI),
      a
      member society dedicated to the advancement of robotic technology. During his
      term as President the membership grew to over 16,000 members. In 1992 Mr. Weisel
      was awarded the Joseph F. Engelberger Award, which recognizes the most
      significant contribution to the advancement of robotics and automation in the
      service of mankind. Each year nominations are received from 26 nations
      worldwide. This award has been presented since 1977.









27


Mr.
      Weisel has a long record of advancing technology and growing companies that
      develop and commercialize technology. Mr. Weisel served 13 years with Prab
      Robots, Inc. as Chief Executive Officer, President, and Chief Operating Officer.
      During his tenure, Prab Robots, Inc. was transformed into an international
      organization and leader in the fields of industrial robots and automation.
      While
      under his direction, Prab Robots, Inc. was taken public in an Initial Public
      Offering and Unimation, Inc. and several other companies in the U.S. and Europe
      were acquired. By 1990, Prab Robots, Inc. was responsible for the largest
      installed base of robots in North America and had developed a very successful
      robot retrofit business with customers such as General Motors, Ford, and
      Chrysler. Mr. Weisel has served as Chairman and Chief Executive Officer of
      RWT
      since its incorporation in 1994, and continues to serve in that capacity.





Mr.
      Weisel's employment agreement is dated July 19, 2000. Mr. Weisel's salary is
      $150,000 per annum plus a bonus at the discretion of the Board of Directors.
      The
      agreement stipulates that Mr. Weisel's salary will be increased to $200,000
      and
      $250,000 when certain sales and profit objectives are met. The agreement is
      for
      a term of three years and automatically renews for successive one-year periods
      unless terminated by either party upon not less than sixty days prior to the
      renewal date. Mr. Weisel has agreed not to compete with the Company or solicit
      its customers or employees for a period of two years following the termination
      of his employment. The agreement also requires the Company to pay Mr. Weisel
      all
      accrued compensation, which amounted to $487,500 as of December 31, 2005, upon
      receipt of additional capital of no less than $3,000,000.





MARTIN
      NIELSON was the Company's Chief Executive Officer and Chairman of the Board
      of
      Directors since May 2003. He resigned effective June 1, 2004. Mr. Nielson is
      a
      principal of Altos Bancorp, Inc., serving as its Chairman and Chief Executive
      Officer since November 2002. He has also served as Chief Executive Officer
      and
      director of Inclusion Inc. since September, 2000. Mr. Nielson and Altos were
      instrumental in assisting the Company in the negotiations that led to the
      Company's settlement of its litigation with SunTrust Bank and in securing the
      financing that funded that settlement. Mr. Nielson will continue as a director
      of the Company. Mr. Nielson is a senior executive with extensive experience
      in
      operations and finance. He has been a business builder for 30 years with such
      companies as Gap, Businessland, and Corporate Express.





Altos,
      which is an outgrowth of Nielson's M&A practice during his ten years in
      London is engaged in providing investment banking and business development
      services to growth oriented, emerging companies throughout the United States
      and
      Europe. Altos was retained by the Company to act as its business advisor, but
      that contract was concluded to coincide with the acquisition of RWT. Mr. Nielson
      is also a director of Advanced Communications Technologies, Inc.





GARY
      F.
      MCNEAR was the Chief Financial Officer, Vice President and Secretary since
      May
      2003 through August 25, 2004, and a Director since May 2003. From January 2003,
      through May 2003 he served as Chief Executive Officer and Director of the
      Company. Mr. McNear has served as the Chief Executive Officer, Chairman of
      the
      Board, and Treasurer of Hy-Tech Computer Systems(HTCS) since HTCS's inception
      in
      November 1992, and was a founding shareholder. Mr. McNear has also served as
      Secretary of HTCS since March 2001. HTCS acquired the Company in a reverse
      acquisition in January 2003. Mr. McNear's duties included banking relationships,
      cash management, and financial reporting. Mr. McNear's formal education is
      in
      Industrial Administration at Iowa State University. Mr. McNear is a former
      officer and pilot in the U.S. Air Force, and a former airline pilot.





CRAIG
      W.
      CONKLIN was the Chief Operating Officer and Vice President since May 2003
      through August 25, 2004, and a Director since May 2003. From January 2003
      through May 2003, he served as President and Director of the Company. Mr.
      Conklin has served as President and Director of HTCS since HTCS's inception
      in
      November 1992, and was a founding shareholder. HTCS acquired the Company in
      a
      reverse acquisition in January 2003. Mr. Conklin's duties included marketing
      and
      operations of the Company. Mr. Conklin holds a B.S. in engineering from the
      Dartmouth College, and an MBA from the Amos Tuck School of business. Mr. Conklin
      was formerly employed by Owens-Corning Fiberglas, Inc. and he successfully
      operated and sold Golf & Electric Carriages, Inc., a local distributorship
      for Club Car Golf Carts.





EUGENE
      V.
      GARTLAN was appointed Chief Financial Officer of the Company in June 2005.
      Mr.
      Gartlan served as a consultant to the Company since December 15, 2004 through
      his wholly owned company, Stratex Solutions, LLC. ("Stratex"), a business
      consulting firm. Stratex earned 12,000,000 shares of the Company's common stock
      and received reimbursement of business expenses of approximately $12,000 as
      consideration for these consulting services. Mr. Gartlan served as the President
      of Stratex since June 2003. Stratex's compensation was based on a monthly salary
      of $10,000, payable in cash or common stock of the Company at the option of
      the
      Company. The price per share used to determine the number of shares earned
      if
      stock was paid was $.005 per share, the stock price on the date the Company
      and
      Stratex entered into the consulting agreement. No cash salary has been paid
      to
      Stratex. From June 2000 through June 2003 Mr. Gartlan was a self employed
      business consultant doing business under the name CFO Strategies and E. V.
      Gartlan. From June 2000 to June 2003, Mr. Gartlan was also an independent
      contractor with Whitestone Communications, Inc. serving in the capacity as
      a
      Managing Director of this investment banking firm specializing in mergers and
      acquisitions in the publishing industry. Mr. Gartlan's prior experience include
      positions as Chief Financial Officer of The Thomson Corporation's Information
      Publishing Group, Chief Financial Officer with Moody's Investors Service, Chief
      Financial Officer with International Data Group as well as several top financial
      management positions with The Dun & Bradstreet Corporation. Mr. Gartlan
      worked with Price Waterhouse earlier in his career and is a CPA in New
      York.





On
      June
      30, 2005, the Company and Mr. Gartlan entered into an Employment Agreement
      effective as of June 14, 2005. The term of the employment agreement is five
      years. The agreement is automatically extended for one year periods unless
      terminated on not less than thirty days notice by either party prior to any
      termination date. For all the services to be rendered by Mr. Gartlan from June
      14, 2005 through December 14, 2005, Mr. Gartlan shall be granted stock options
      to purchase 18,000,000 shares of common stock of the Company at the purchase
      price of $.036. Such options shall be granted under the terms of the Company's
      Stock Option Plan and shall vest equally over a period of three years, or upon
      death if sooner. After December 14, 2005, Mr. Gartlan shall be paid a salary
      of
      fifteen thousand dollars per month. The Company shall have the option to pay
      the
      salary in cash or in shares of common stock of the Company registered on Form
      S-8. The stock price shall be determined by the market price for the shares
      on
      the first business day of the month in which the salary is earned. If the
      Executive is terminated without cause, all remaining outstanding stock options
      that have not been exercised by Mr. Gartlan, including stock options to purchase
      12,121,276 shares of common stock of the Company awarded by the Board of
      Directors of the Company to Stratex Solutions, LLC on December 15, 2004, shall
      immediately vest on the effective date of termination. If there is a change
      of
      ownership of the Company or any of its subsidiaries, all remaining outstanding
      stock options, including the Stratex Solutions options, that have not been
      exercised by Mr. Gartlan, shall immediately vest on the day immediately
      preceding the effective date of the change of ownership. Stratex Solutions
      is
      owned by Mr. Gartlan.




28





If
      employment is terminated by the Company without cause, Mr. Gartlan shall receive
      a payment equal to twenty four months of salary paid prior to the effective
      date
      of termination. The Company has the option to make this payment either in cash
      or in the common stock of the Company based on the per share market price of
      common stock at the time of termination. If during Mr. Gartlan's employment,
      the
      Company enters into an agreement which effectively will result in a change
      of
      control of the ownership of either the Company or Robotic Workspace
      Technologies, Inc. ("RWT"), the Company's wholly-owned subsidiary, or if the
      Company enters into an agreement which effectively will result in a change
      of
      ownership of the assets of the Company or RWT, Mr. Gartlan shall receive a
      payment equal to twenty four months of the salary paid prior to the effective
      date of the change of control. The Company shall make such payment in the common
      stock of the Company based on a price per share of $.005 if the effective date
      of the change of control is December 14, 2005 or sooner; thereafter the price
      per share shall be the market price of common stock at the time of the change
      in
      control. Regarding the change of ownership of the assets of the Company or
      RWT,
      such change of ownership shall be deemed to have occurred if the rights to
      use
      the software of Robotic Workspace Technologies, Inc., is granted or sold in
      settlement of claims made by the Company or RWT of trade secret violations
      or
      patent infringements, and such rights to use the software results in a
      settlement payment to the Company or RWT in a single payment or multiple
      payments, other than a long term licensing agreement typical of software
      licensing agreements.





In
      March
      2006 the Company modified the 18,000,000 options granted to Mr. Gartlan as
      part
      of his employment agreement dated June 30, 2005 by changing their vesting from
      a
      three year period to 100% vested as of December 14, 2005, and by modifying
      the
      exercise price from $.036 to $.01. Additionally, Mr. Gartlan has 12,121,276
      options that were granted to Stratex Solutions, Inc in December 2004 with an
      exercise price of $.005 per share and vest monthly over 5 years. These options
      were modified in March 2006 to vest over three years. Additionally, Mr. Gartlan
      received a bonus of 5,625,000 on March 10, 2006 which were valued at $50,000,
      based on $.009 per share, the closing price of the Company stock on the previous
      day.





SHERI
      AWS
      was appointed Secretary of the Company on September 14, 2004. Ms. Aws has served
      as Vice President of Administration of RWT, the Company's wholly owned
      subsidiary, since February 2004. Prior to that, Ms. Aws served as Executive
      Administrator, General Mortgage Corporation of America, from August 24, 2003
      to
      February 2004; Director of Just for Kids, an after school and summer camp
      program for children, from December 2002 to August 2003; Assistant to the Chief
      Executive Officer of RWT from December 2002 through February 2004; and
      Administrative Assistant to Vice President of Marketing and Sales and Manager
      of
      Proposals and Contracts Administration for RWT.





Ms.
      Aws
      is employed as Vice President of Administration by RWT under an Employment
      Agreement dated February 24, 2004. Ms. Aws compensation is $60,000 per annum
      plus a bonus in the discretion of RWT. The agreement is for a term of one year,
      and automatically renews for successive one-year periods unless terminated
      by
      either party upon not less than thirty days notice prior to the renewal date.
      Ms
      Aws has agreed not to compete with RWT or solicit its customers or employees
      for
      a period of one year following the termination of her employment.





There
      is
      no family relationship between any of our officers or directors. There are
      no
      orders, judgments, or decrees of any governmental agency or administrator,
      or of
      any court of competent jurisdiction, revoking or suspending for cause any
      license, permit or other authority to engage in the securities business or
      in
      the sale of a particular security or temporarily or permanently restraining
      any
      of our officers or directors from engaging in or continuing any conduct,
      practice or employment in connection with the purchase or sale of securities,
      or
      convicting such person of any felony or misdemeanor involving a security, or
      any
      aspect of the securities business or of theft or of any felony or any conviction
      in a criminal proceeding or being subject to a pending criminal proceeding.





Our
      directors will serve until the next annual meeting of stockholders. Our
      executive officers are appointed by our Board of Directors and serve at the
      discretion of the Board of Directors.





Section
      16(a) Beneficial Ownership Reporting Compliance. Except for the late filing
      of
      Form 3s in 2004 associated with the merger of the Company and RWT by the RWT
      shareholders owning 10% or more of the Company after the merger, and the late
      filing of Form 3 by certain officers of the Company, we believe that our
      officers, directors, and principal shareholders have filed all reports required
      to be filed on, respectively, a Form 3 (Initial Statement of Beneficial
      Ownership of Securities), a Form 4 (Statement of Changes of Beneficial Ownership
      of Securities), or a Form 5 (Annual Statement of Beneficial Ownership of
      Securities). The individuals who filed late Form 3s are Walter K. Weisel, Sheri
      Aws and Jerry E. Horne. None of these individuals have purchased or sold shares
      of the Company's common stock or preferred stock since the merger date and
      all
      Form 3s are currently filed.





**CODE
      OF ETHICS DISCLOSURE COMPLIANCE**





The
      Company has adopted a Code of Ethics that applies to the Company's principal
      executive officer, principal financial officer, principal accounting officer
      and
      other employees performing similar functions. The Code of Ethics was filed
      with
      the Securities and Exchange Commission as part of the Company’s report on Form
      10-KSB for the year ended December 31, 2004.





29


**ITEM
      10. EXECUTIVE COMPENSATION**





Any
      compensation received by our officers, directors, and management personnel
      will
      be determined from time to time by our board of directors. Our officers,
      directors, and management personnel will be reimbursed for any out-of-pocket
      expenses incurred on our behalf.





**Summary
      Compensation Table**





The
      table
      set forth below summarizes the annual and long-term compensation for services
      payable to our executive officers during the years ending December 31, 2005,
      December 31, 2004, and February 29, 2004.





Innova
      Holdings, Inc. Summary Compensation Table




RestrictedName
                    & Position
                
                Year
                
                Salary
                
                Bonus
                
                Other
                
                Stock
                
                Options
                
                LTIP
                
                All
                    OtherWalter
                    K. Weisel
                
                
                2005
                
                $
                150,000
                
                
                0.000
                
                
                0
                
                
                0
                
                
                20,000,000
                
                
                0
                
                $
                69,100
                    Note 1Chairman
                    and CEO
                
                
                2004
                
                $
                150,000
                
                
                0.000
                
                
                0
                
                
                0
                
                
                5,000,000
                
                
                0
                
                
                0(see
                    note 1 and 3 below)
                
                
                2003
                
                $
                150,000
                
                
                0.000
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0Martin
                    Nielson
                
                
                2005
                
                $
                0
                
                
                0.000
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                Note
                    2Chairman
                    and CEO
                
                
                2004
                
                $
                100,000
                
                
                0.000
                
                
                0
                
                
                0
                
                
                5,000,000
                
                
                0
                
                
                Note
                    2(see
                    notes 1,2 and 3 below)
                
                
                2003
                
                $
                116,667
                
                
                0.000
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0Eugene
                    V. Gartlan
                
                
                2005
                
                $
                0
                
                
                0.000
                
                
                0
                
                
                12,000,000
                
                
                18,000,000
                
                
                0
                
                $
                12,000
                    Note 4Chief
                    Financial Officer(see
                    Note 4 below)







Note
      1.
      Walter K. Weisel has served as Chairman and CEO of the Company since August
      25, 2004, the date the merger between the Company and RWT closed. Martin Nielson
      served as Chairman and CEO of the Company from the beginning of the year to
      August 25, 2004. During 2005,Mr. Weisel was reimbursed for expenses incurred
      over the prior three years in an amount of $69,100.





Note
      2.
      On April 22, 2003, the Company entered into an Advisory Agreement with AltosBancorp
      Inc. ("Altos") pursuant to which Altos agreed to act as the Company's exclusive
      business advisor for a one-year period. Martin Nielson was President of Altos
      and subsequently became Chairman and Chief Executive Officer of the Company.
      Altos advised the Company regarding equity and debt financings, strategic
      planning, mergers and acquisitions, and business developments. In conjunction
      with the decision to proceed with the RWT acquisition, the agreement with Altos
      was concluded. Altos did not receive any cash compensation for its services
      rendered, but will receive 16,133,333 shares of the Company's common stock
      (valued at approximately $166,000), of which 10,633,333 shares were earned
      in
      2004 and 5,500,000 shares were earned in 2003. None of these shares have been
      issued to Altos as of this filing date.





Note
      3.
      During the past three years, Walter K. Weisel has not received any
      cash **** compensation.
      The amounts earned by Mr. Weisel remain accrued by the Company as of December
      31, 2005. Martin Nielson received $80,000 in cash compensation; $50,000 was
      paid
      in 2003 and $30,000 was paid in 2004. The balance earned but unpaid remains
      accrued by the Company as of December 31, 2005.





Note
      4 .
      Eugene V.. Gartlan did not receive any cash compensation in 2005. Mr. Gartlan
      served as a consultant to the company since December 15, 2004 through his wholly
      owned company, Stratex Solutions, LLC. ("Stratex"), a business consulting firm.
      Stratex earned 12,000,000 shares of the Company's common stock and received
      reimbursement of business expenses of approximately $12,000 as consideration
      for
      these consulting services. Additionally, on December 15, 2004 Stratex received
      12,121,276 options at an exercise price of $.005 per share with a term of ten
      years, expiring in December 2014. On June 30, 2005, the Company and Mr. Gartlan
      entered into an Employment Agreement effective as of June 14, 2005. For all
      the
      services to be rendered by Mr. Gartlan from June 14, 2005 through December
      14,
      2005, Mr. Gartlan shall be granted stock options to purchase 18,000,000 shares
      of common stock of the Company at the purchase price of $.036 with a term of
      ten
      years. After December 14, 2005, Mr. Gartlan shall be paid a salary of fifteen
      thousand dollars per month, which payment commenced in January 2006. In March
      2006 the Company modified the 18,000,000 options granted to Mr. Gartlan as
      part
      of his employment agreement dated June 30, 2005 by changing their vesting from
      a
      three year period to 100% vested as of December 14, 2005, and by modifying
      the
      exercise price from $.036 to $.01. They expire in June 2015. Additionally,
      the
      12,121,276 options that were granted to Stratex Solutions, Inc in December
      2004
      were modified in March 2006 to vest over three years. They expire in December
      2014.




In
        March
        2006 the Company modified the 18,000,000 options granted to Mr. Gartlan as
        part
        of his employment agreement dated June 30, 2005 by changing their vesting
        from a
        three year period to 100% vested as of December 14, 2005, and by modifying
        the
        exercise price from $.036 to $.01. Additionally, Mr. Gartlan has 12,121,276
        options that were granted to Stratex Solutions, Inc. in December 2004 with
        an
        exercise price of $.005 per share and vest monthly over 5 years. These options
        were modified in March 2006 to vest over three years. Additionally, Mr. Gartlan
        received a bonus of 5,625,000 on March 10, 2006 which were valued at $50,000,
        based on $.009 per share, the closing price of the Company stock on the previous
        day.




**2005
      and 2004 Stock Option Plans**





On
      April
      12, 2005 the Company adopted a Stock Option Plan authorizing options on
      100,000,000 shares On April 15, 2004 the Company adopted a Stock Option Plan
      authorizing options on 3,150,000 shares. On July 15, 2003 the Company adopted
      a
      Stock Option Plan authorizing options on 5,000,000 shares. As of December 31,
      2004, options awarded totaled 103,107,400 of which 20,000,000 were awarded
      to
      Mr, Weisel and 5,000,000 were awarded to Mr. Nielson and 18,000,000 were awarded
      to Mr. Gartlan and another 12,121,276 awarded to Stratex Solutions, LLC, a
      business owned by Mr. Gartlan that provided financial consulting services to
      the
      Company prior to Mr. Gartlan's employment date. On April 12, 2006 the Company
      authorized an increase in the Stock Option Plan from 100,000,000 shares to
      150,000,000 shares.





30


The
      Stock
      Option Plans provides for the grant of nonstatutory stock options that
      are not intended to qualify as "incentive stock options,” options.  The
      total number of shares of common stock reserved for issuance under all plans
      is 158,150,000 subject to adjustment in the event of a stock split, stock
      dividend, recapitalization or similar capital change.




The
      plan
      is presently administered by the Company's board of directors, which selects
      the
      eligible persons to whom options shall be granted, determines the number of
      common shares subject to each option, the exercise price therefore and the
      periods during which options are exercisable, interprets the provisions of
      the
      plan and, subject to certain limitations, may amend the plan. Each option
      granted under the plan shall be evidenced by a written agreement between the
      Company and the optionee.





Options
      may be granted to employees (including officers) and directors and certain
      consultants and advisors.





The
      exercise price for incentive stock options granted under the plan may not be
      less than the fair market value of the common stock on the date the option
      is
      granted, except for options granted to 10% stockholders which must have an
      exercise price of not less than 110% of the fair market value of the common
      stock on the date the option is granted. The exercise price for nonstatutory
      stock options is determined by the board of directors. Incentive stock options
      granted under the plan have a maximum term of ten years, except for 10%
      stockholders who are subject to a maximum term of five years. The term of
      nonstatutory stock options is determined by the board of directors. Options
      granted under the plan are not transferable, except by will and the laws of
      descent and distribution.





Options
                in Year Ended December 31, 2005Individual
                Grants





Name
            
            Number
                of Shares Underlying Options
            
            %
                of Total Options Granted to Employees
            
            Exercise
                Price
            
            Market
                Price
            
            Expiration
                DateWalter
                K. Weisel
            
            
            15,000,000
            
            
            30.8%
            
            $
            .017
            
            $
            .017
            
            
            4/11/2015Martin
                Nielson
            
            
            0
            
            
            0
            
            
            --
            
            
            --
            
            
            --Eugene
                V. Gartlan
            
            
            18,000,000
              Note
                1
            
            
            37.0%
            
            $
            .036
                Note 1
            
            $
            .035
            
            
            6/21/2015





Note
      1.
      Mr. Gartlan was employed as the Company’s Chief Financial Officer effective June
      14, 2005. He did not receive any cash compensation, including salary or bonus
      in
      2005. These 18,000,000 options granted were in lieu of a cash salary. In March
      2006 the Company modified the 18,000,000 options granted to Mr. Gartlan as
      part
      of his employment agreement dated June 30, 2005 by changing their vesting from
      a
      three year period to 100% vested as of December 14, 2005, and by modifying
      the
      exercise price from $.036 to $.01. The term remains ten years with expiration
      in
      June 2015.





**Director's
      Compensation**





The
      Company has not paid and does not presently propose to pay cash compensation
      to
      any director for acting in such capacity. However, the Company will give the
      directors a grant of shares of common stock or options and reimbursement for
      reasonable out-of-pocket expenses for attending meetings. In December 2004
      and
      in March 2006, the Company awarded each director 5,000,000 options in each
      year
      for services as a director, each with an exercise price of $.01 per share and
      a
      term of ten years.. In addition, Mr. Weisel received 15,000,000 options in
      April
      2005 for services as Chief Executive Officer of the Company. Originally these
      options had an exercise price of $.017 per share but were modified in March
      2006
      to have an exercise price of $.01 per share. These options have a term of ten
      years and expire in April 2015.





**Employment
      Agreements with Executive Officers**





Currently
      there are employment agreements with three executives, Walter Weisel, Chairman,
      CEO, Eugene V. Gartlan, CFO and Sheri Aws, Vice President and Secretary.





**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**





The
      following table sets forth certain information regarding the beneficial
      ownership of our common stock as of March 31, 2006, by each person or entity
      known by us to be the beneficial owner of more than 5% of the outstanding shares
      of common stock, each of our directors and named executive officers, and all
      of
      our directors and executive officers as a group. Beneficial ownership has been
      determined in accordance with Rule 13d-3 of the Securities Exchange Act of
      1934,
      as amended. Generally, a person is deemed to be the beneficial owner of a
      security if he has the right to acquire voting or investment power within 60
      days.





Percentage
      ownership in the following table is based on 548,927,867 shares of common stock
      outstanding as of March 31, 2006. A person is deemed to be the beneficial owner
      of securities that can be acquired by that person within 60 days from March
      31,
      2006 upon the exercise of options, warrants or convertible securities, or other
      rights. Each beneficial owner's percentage ownership is determined by dividing
      the number of shares beneficially owned by that person by the base number of
      outstanding shares, increased to reflect the shares underlying options,
      warrants, convertible securities, or other rights included in that person's
      holdings, but not those underlying shares held by any other person.







31


Name
                  and Address of
              
              Amount
                  and Nature
              
              Percent
                  of ClassBeneficial
                  Owner
              
              of
                  BeneficialOwnerWalter
                  K. Weisel
              
              
              62,128,047
                  -
              
              
              11.00
              %17105
                  San Carlos Blvd.
              
              
              Direct
                  OwnershipSuite
                  A6151Fort
                  Myers BeachFL,
                  33931Martin
                  Nielson
              
              
              36,751,700
                  -
              
              
              6.40
              %17105
                  San Carlos Blvd.
              
              
              Direct
                  (1
              )Suite
                  A6151Fort
                  Myers BeachFL,
                  33931Gary
                  McNear
              
              
              16,902,117
                  - (2
              )
              
              3.00
              %17105
                  San Carlos Blvd.Suite
                  A6151Ft.
                  Myers BeachFL,
                  33931Craig
                  Conklin
              
              
              18,223,617
                  - (3
              )
              
              3.20
              %17105
                  San Carlos Blvd.Suite
                  A6151Ft.
                  Myers BeachFL,
                  33931Eugene
                  V. Gartlan
              
              
              46,364,792
                  -
              
              
              8.00
              %17105
                  San Carlos Blvd.
              
              
              Direct
                  (4
              )Suite
                  A6151Ft.
                  Myers BeachFL,
                  33931Jerry
                  E. Horne
              
              
              74,329,227
                  -
              
              
              13.50
              %17105
                  San Carlos Blvd.
              
              
              DirectSuite
                  A6151Ft.
                  Myers Beach,FL,
                  33931Richard
                  K. and Johanna
                  Wynns
              
              
              48,496,996
                  -
              
              
              8.50
              %17105
                  San Carlos Blvd.
              
              
              DirectSuite
                  A6151Ft.
                  Myers BeachFL,
                  33931Directors
                  and Officers
              
              
              185,790,964
                -
              
              
              28.50
              %as
                  a Group





(1).
      On
      April 29, 2003, the Gary F. McNear Revocable Trust ("Gary Trust"), the Susan
      M.
      McNear Revocable Trust ("Susan Trust"), the Craig M. Conklin Revocable Trust
      ("Craig Trust") and the Margaret L. Conklin Revocable Trust ("Margaret Trust")
      (collectively the "Trusts") entered into a Stock Option and Irrevocable Proxy
      Agreement with Altos. Gary McNear was the Chief Financial Officer, Vice
      President, Secretary and Director of The Company; he currently is a director
      of
      the Company. Susan McNear is his wife. Craig M. Conklin was the Chief Operating
      Officer, Vice President and a Director of the Company; he currently is a
      director of the Company. Margaret Conklin is his wife. The Trusts own an
      aggregate of 15,838,444 shares of the Company's Common Stock. The Trusts granted
      to Altos an option to acquire 10,000,000 of their shares of Common Stock for
      $.01 per share for a period of three years. The Trusts also granted to Altos
      an
      irrevocable proxy to vote their shares. The irrevocable proxy is for a term
      of
      three years with respect to the 10,000,000 shares of Common Stock held by the
      Trusts that are subject to the option to purchase and for a term of six months
      with respect to the 5,838,444 shares of Common Stock held by the Trusts that
      are
      not subject to the option to purchase. The irrevocable proxy relating to the
      5,838,444 shares has expired. Additionally, Altos and Mr. Nielson earned a
      fee
      for services rendered, compensation as an executive of the Company and
      reimbursement of expenses, which are expected to be paid in full upon the
      issuance of an additional 20,085,033 shares.





32


(2).
      Includes 2,919,224 shares owned by the Susan M. McNear Revocable Trust.





(3).
      Includes 2,919,224 shares owned by the Margaret L. Conklin Revocable Trust.





(4).
      Includes 12,000,000 shares owned by Stratex Solutions, LLC, through which Mr.
      Gartlan provided consulting services to the Company from December 15, 2004
      through June 14, 2005.





**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





On
      July
      22, 2005 the Company borrowed $30,000 from a beneficial shareholder, Rick Wynns,
      and entered into a short term note for that amount, the terms of which are:
      interest at the annual rate of 5%, due date in six months, and principal and
      accrued interest are convertible into common stock of the Company at $.015
      per
      share. The due date of the note has been extended to December 31, 2006. To
      date
      there have been no conversions.





During
      September through December 2005, the Company also entered into short-term debt
      obligations other than in the ordinary course of business. All of the short-term
      debt bears interest at the rate of 10% per annum. The following table sets
      forth
      the names of the lenders, the amount of the loans, the dates of the loans and
      the due date of the loans:








Lender
            
            Amount
                of Loan
            
            Date
                of Loan
            
            Due
                DateEugene
                Gartlan
            
            $
            40,000
            
            
            September
              19, 2005
            
            
            October
              19, 2005Jerry
                Horne
            
            $
            50,000
            
            
            September
              22, 2005
            
            
            October
              22, 2005Eugene
                Gartlan
            
            $
            5,000
            
            
            October
              5, 2005
            
            
            January
              5, 2006Rick
                Wynns
            
            $
            30,000
            
            
            October
              3, 2005
            
            
            November
              3, 2005Rick
                Wynns
            
            $
            30,000
            
            
            October
              14, 2005
            
            
            February
              14, 2006Gary
                McNear
            
            $
            1,000
            
            
            November
              22, 2005
            
            
            February
              22, 2006Jerry
                Horne
            
            $
            50,000
            
            
            November
              28, 2005
            
            
            December
              28, 2005





All
      of
      the lenders are shareholders of the Company. Mr. Gartlan is also the Chief
      Financial Officer of the Company. Mr. McNear is a Director of the Company.
      All
      lenders have agreed to repayment terms that extend the due date to December
      31,
      2006





On
      June
      23, 2004, the Company entered into and simultaneously closed an Agreement with
      Encompass Group Affiliates, Inc. (Encompass"), pursuant to which the Company
      granted to Encompass an exclusive, worldwide, royalty free and fully paid up
      perpetual and irrevocable licenses to use the customer list associated with
      its
      computer and systems related products business and its related websites; this
      business was subsequently closed down. Additionally, the Company assigned to
      Encompass the Company's rights to enter into acquisitions with three companies.
      In consideration for this transaction, Encompass assumed all of the Company's
      obligations under certain Convertible Debentures (the "Convertible Debentures")
      in the aggregate principal amount of $503,300. The holders of the Convertible
      Debentures released the Company from all claims arising under the Convertible
      Debentures.




33


In
      January 2003, Craig W. Conklin, our President, and Gary F. McNear, our Chief
      Executive Officer, entered into a consulting agreement with the Company's
      subsidiary relating to the negotiation of a reduced loan amount due SunTrust
      Bank. Pursuant to the consulting agreement, the subsidiary agreed to pay each
      of
      Messrs. Conklin and McNear six percent of the discounted amount of the loan
      due
      SunTrust Bank. In consideration for six percent of the discounted amount,
      Messrs. Conklin and McNear agreed to forego any compensation due them for the
      past two years and each received. In connection with the SunTrust settlement,
      the Company issued common stock valued at $225,772 to each individual, Mr.
      Conklin and Mr. McNear.




On
      August
      18, 2004 the Company entered into an agreement with Aegis Funds, Inc (AFI)
      to
      sell all of the issued and outstanding capital stock of its subsidiary Hy Tech
      Computer Systems (HTCS) to AFI. The sale of HTCS to AFI closed on August 25,
      2004. At the closing date, for and in consideration for the transfer to AFI
      of
      the HTCS Capital Stock, AFI became the record and beneficial owner of the HTCS
      Capital Stock, the Company transferred as directed by AFI and for the benefit
      of
      HTCS the sum of fifteen thousand dollars ($15,000) in good funds, and the
      judgment of Sun Trust Bank against HTCS was transferred to AFI free of all
      claims and liens. AFI is controlled by Gary McNear and Craig Conklin, who are
      directors of the Company. The transaction was approved by the member of the
      board of directors who had no interest in the transaction.





On
      July
      22, 2002, the Company entered into a revolving line of credit of $225,000 with
      Fifth Third Bank, Florida, secured by the assets of the Company. The annual
      interest rate on unpaid principal is the prime rate plus 2%, due in monthly
      installments. Principal and interest were due on July 22, 2003. In November
      2004, a principal shareholder, Jerry E. Horne, loaned the Company $165,000
      to
      pay down the line of credit with Fifth Third Bank. The loan has the same terms
      as the Fifth Third Bank line of credit, except that it remains unsecured until
      such time as the Fifth Third Bank line of credit is fully paid, including
      principal and accrued interest, and is due upon demand. In January 2005, the
      Fifth Third Bank line of credit was paid off.





On
      August
      25, 2004 the Company issued 280,000,000 shares of common stock for 100% of
      the
      outstanding stock of Robotic Workspace Technology, Inc ("RWT"). For financial
      reporting purposes this transaction was treated as an acquisition of Innova
      and
      a recapitalization of RWT using the purchase method of accounting. As part
      of
      this transaction, Walter K. Weisel received 53,172,765 shares of the Company
      and
      Jerry E. Horne received 74,329,227 shares of the Company.





**ITEM
      13. EXHIBITS**





2.1
              Exchange
                  Agreement (1)2.2
              Agreement
                  and Plan of Merger dated as of April 29, 2003 between The Company
                  and
                  Sanjay Haryama (4)2.3
              Certificate
                  of Merger between The Company and Sanjay Haryama as filed with
                  the
                  Delaware Secretary of State on April 29, 2003. (4)2.4
              Agreement
                  and Plan of Merger among the Company, RWT Acquisition, Inc and
                  Robotic
                  Workspace Technologies, Inc. dated July 21, 2004. (5)2.5
              Agreement
                  between the Company and Encompass Group Affiliates, Inc. dated
                  June 23,
                  2004. (5)2.6
              Agreement
                  between the Company and Aegis Finance, Inc. dated August 18, 2004
                  *3.1
              Articles
                  of Incorporation (2)3.2
              Bylaws
                  (2)3.3
              Certificate
                  of Amendment to Articles of Incorporation (3)3.4
              Certificate
                  of Amendment to Articles of Incorporation (6)4.1
              Certificate
                  of Designation of Series A Preferred Stock (5)4.2
              Certificate
                  of Designation of Series B Preferred Stock (9)10.1
              Advisory
                  Agreement between The Company and Altos Bancorp Inc. dated April
                  22, 2003
                  (4)10.2
              Stock
                  Option and Irrevocable Proxy Agreement among Altos Bancorp, Inc.,
                  the Gary
                  F. McNear Trust, the Susan M. McNear Trust, the Craig W. Conklin
                  Trust and
                  the Margaret L. Conklin Trust (4)
  34
 10.3
              Convertible
                  Debenture Purchase Agreement dated as of April 21, 2003 between
                  Sanjay
                  Haryama and HEM Mutual Assurance LLC. (4)10.4
              Convertible
                  Debenture Purchase Agreement dated as of April 28, 2003 between
                  The
                  Company and HEM Mutual Assurance Fund Limited. (4)10.5
              Option
                  Purchase Agreement between the Company and SunTrust Bank
                  (4)10.6
              License
                  Agreement between the Company and Encompass Group Affiliates, Inc.
                  dated
                  June 23, 2004 for customer list (5)10.7
              License
                  Agreement between the Company and Encompass Group Affiliates, Inc.
                  dated
                  June 23, 2004 for website (5)10.8
              Assumption
                  Agreement between the Company and Encompass Group Affiliates, Inc.
                  dated
                  June 23, 2004 (5)10.9
              Noncompetition
                  and Nondisclosure Agreement between the Company and Encompass Group
                  Affiliates, Inc. dated June 23, 2004 (5)10.1
              Employment
                  Agreement of Sheri Aws dated February 24, 2004 (7)10.11
              Renewal
                  Promissory Note payable to Fifth Third Bank, Florida for $225,000
                  effective July 22, 2003 (8)10.12
              Security
                  Agreement in favor of Fifth Third Bank, Florida effective July
                  22, 2003
                  (8)10.13
              Consulting
                  Agreements with Stratex Solutions, LLC (9)10.14
              Business
                  Development Agreement with B. Smith Holdings, Inc (9)10.15
              Employment
                  Agreement with Walter K. Weisel dated July 19, 2000 (9)10.16
              Standby
                  Equity Distribution Agreement with Cornell Capital Partners, LP
                  dated June
                  14, 2005 (10)10.17
              Registration
                  Rights Agreement with Cornell Capital Partners, LP dated June 14,
                  2005
                  (10)10.18
              Escrow
                  Agreement with Cornell Capital Partners, LP and David Gonzalez,
                  Esq. dated
                  June 14, 2005 (10)10.19
              Promissory
                  Note for $300,000 issued to Cornell Capital Partners, LP dated
                  June 14,
                  2005 (10)10.2
              Placement
                  Agent Agreement with Monitor Capital Inc. dated June 14, 2005
                  (10)10.21
              Securities
                  Purchase Agreement with Cornell Capital Partners, LP dated October
                  7, 2005
                  (11)10.22
              Registration
                  Rights with Cornell Capital Partners, LP dated October 7, 2005
                  (11)10.23
              Convertible
                  Debenture issued to Cornell Capital Partners, LP dated October
                  7, 2005
                  (11)10.24
              Security
                  Agreement with Cornell Capital Partners, LP dated October 7, 2005
                  (11)10.25
              Escrow
                  Agreement with David Gonzalez and Cornell Capital Partners, LP
                  dated
                  October 7, 2005 (11)10.26
              Employment
                  Agreement dated June 30, 2005 between Eugene Gartlan and Innova
                  Holdings,
                  Inc. (12)10.27
              Termination
                  of Consulting Agreement dated June 30, 2005 between Stratex Solutions,
                  LLC
                  and Innova Holdings, Inc. (12)10.28
              Stock
                  Option Plan adopted on April 12, 2005 and amended on April 12,
                  2006*14.1
              Code
                  of Ethics (9)31.1
              Rule
                  13(a) -14(a)/15d-14(a) Certification of Principal Executive
                  Officer*31.2
              Rule
                  13(a) -14(a)/15d-14(a) Certification of Principal Financial
                  Officer*
  35
 32.1
              Section
                  1350 Certification of Chief Executive Officer *32.2
              Section
                  1350 Certification of Chief Financial Officer
                  *




(1)
      Incorporated by reference to the Form 8-K filed on February 4, 2003.





(2)
      Incorporated by reference to the Form SB-2 filed on August 7, 2001.





(3)
      Incorporated by reference to the Form 10-KSB filed on April 24, 2003.





(4)
      Incorporated by reference to the Form 8-K filed on May 13, 2003.





(5)
      Incorporated by reference to the Form 8-K filed on August 8, 2004.





(6)
      Incorporated by reference to the Form 14C filed on June 30, 2004.





(7)
      Incorporated by reference to the Form 8-K filed on September 28, 2004.





(8)
      Incorporated by reference to the Form 8-K filed on January 11, 2005.





(9)
      Incorporated by reference to the Form 10-KSB filed on April 19,
      2005.





10)
      Incorporated by reference to the Form 8-K filed on June 16, 2005.





(11)
      Incorporated by reference to the Form 8-K filed on October 19,
      2006.





(12)
      Incorporated by reference to the Form 8-K filed on July 6, 2005.





(13)
      Incorporated by reference to the Form 8-K filed on January 27,
      2006..







*Filed
      with this report.





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.**





(1)
      Audit
      Fees





The
      aggregate fees billed for professional services rendered by Lopez, Blevins,
      Bork
& Associates, LLP and Malone & Bailey, PLLC for the audit of the
      Registrant's annual financial statements and review of the financial statements
      included in the Registrant's Forms 10-QSB or services that are normally provided
      by the accountant in connection with statutory and regulatory filings or
      engagements for fiscal years 2005 and 2004, including fees paid by Hy-Tech
      Technology Group, Inc. for these periods prior to its reverse acquisition by
      Robotic Workspaces Technologies, Inc., were $37,435 and $19,500, respectively.





(2)
      Audit
      Related Fees





The
      aggregate fees billed for professional services rendered by Lopez, Blevins,
      Bork
& Associates, LLP and Malone & Bailey, PLLC for audit related fees for
      fiscal years 2005 and 2004 were $0 and $0, respectively.





(3)
      Tax
      Fees





The
      aggregate fees billed for professional services rendered by Lopez, Blevins,
      Bork
& Associates, LLP and Malone & Bailey, PLLC for the preparation of the
      Registrant's tax returns, including tax planning for fiscal years 2005 and
      2004
      were $0 and $0, respectively.





(4)
      All
      Other Fees





No
      other
      fees were paid to Lopez, Blevins, Bork & Associates, LLP and Malone &
Bailey, PLLC for fiscal years 2005 and 2004.





(5)
      Audit
      Committee Policies and Procedures





The
      Registrant does not have an audit committee. The Board of Directors of the
      Registrant approved all of the services rendered to the Registrant by Lopez,
      Blevins, Bork & Associates, LLP for fiscal year 2005 and the Board of
      Directors approved all of the services rendered to the Registrant by Lopez,
      Blevins, Bork & Associates, LLP and Malone & Bailey, PLLC for fiscal
      years 2004.





36


(6)
      Audit
      Work Attributed to Persons Other than Lopez, Blevins, Bork & Associates, LLP
      and Malone & Bailey, PLLC Full-time, Permanent Employees.





Not
      applicable.


37


**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors


Innova
      Holdings, Inc.


Ft
      Myers
      Beach, Florida





We
      have
      audited the accompanying balance sheet of Innova Holdings, Inc. as of December
      31, 2005 and the related statements of operations, stockholders' deficit, and
      cash flows for each of the two years then ended. These financial statements
      are
      the responsibility of Innova's management. Our responsibility is to express
      an
      opinion on these financial statements based on our audits.





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





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Innova Holdings, Inc. as of
      December 31, 2005 and the results of its operations and its cash flows for
      each
      of the two years then ended, in conformity with accounting principles generally
      accepted in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 2 to the financial
      statements, Innova Holdings, Inc. incurred losses of $1,881,125 and
      $1,426,931for the years ended December 31, 2005 and 2004, respectively. Innova
      Holdings, Inc. will require additional working capital to develop its business
      until it either (1) achieves a level of revenues adequate to generate
      sufficient cash flows from operations; or (2) obtains additional financing
      necessary to support its working capital requirements. These conditions raise
      substantial doubt about Innova Holdings, Inc.'s ability to continue as a going
      concern. Management's plans in regard to this matter are also described in
      Note
      2. The accompanying financial statements do not include any adjustments that
      might result from the outcome of these uncertainties.








Lopez,
      Blevins, Bork & Associates, LLP


Houston,
      Texas





April
      15,
      2006








F-1





**INNOVA
      HOLDINGS, INC.**


**CONSOLIDATED
      BALANCE SHEET**


December
      31, 2005





**ASSETS**


Current
                  assetsCash
              
              $
              6,786Inventory
              
              
              60,162Total
                  current assets
              
              
              66,948Property
                  and equipment, net
              
              
              116,091Deferred
                  financing cost
              
              
              398,500TOTAL
                  ASSETS
              
              $
              581,539**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**Current
                  liabilitiesCurrent
                  maturities of long-term debt
              
              $
              67,382Accounts
                  payable
              
              
              844,548Accrued
                  expenses
              
              
              1,519,602Notes
                  payable
              
              
              984,780Dividend
                  payable
              
              
              33,894Derivative
                  liability
              
              
              44,308Total
                  current liabilities
              
              
              3,494,514Long-term
                  debt
              
              
              921,718Mandatorily
                  redeemable Series A Preferred Stock
              
              
              58,840Total liabilities
              
              
              4,475,072CommitmentsSTOCKHOLDERS'
                  DEFICIT:Preferred
                  stock, $.001 par value, 10,000,000 shares authorized,492,000
                  Series B shares issued and outstanding
              
              
              492Common
                  stock, $.001 par value, 900,000,000 shares authorized,467,074,046
                  shares issued and outstanding
              
              
              467,075Additional
                  paid-in capital
              
              
              5,124,395Accumulated
                  deficit
              
              
              (9,485,495
              )Total
                  Stockholders' Deficit
              
              
              (3,893,533
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              581,539





The
      accompanying notes are an integral part of these consolidated financial
      statements.








F-2


**INNOVA
      HOLDINGS, INC.**


**STATEMENTS
      OF OPERATIONS**


**Years
      Ended December 31, 2005 and 2004**


2005
                  
                  2004Revenues
                  
                  $
                  --
                  
                  $
                  --Cost
                      of revenues
                  
                  
                  --
                  
                  
                  --Gross
                      profit
                  
                  
                  --
                  
                  
                  --Operating
                      expenses:Selling,
                      general and administrative
                  
                  
                  857,515
                  
                  
                  270,059Merger
                      related costs
                  
                  
                  --
                  
                  
                  570,874Outside
                      services
                  
                  
                  411,707
                  
                  
                  262,050Legal
                      fees
                  
                  
                  83,212
                  
                  
                  135,869Professional
                      fees
                  
                  
                  392,885
                  
                  
                  85,763Depreciation
                      and amortization
                  
                  
                  12,954
                  
                  
                  1,363Total
                      operating expenses
                  
                  
                  1,758,273
                  
                  
                  1,325,978Loss
                      from operations
                  
                  
                  (1,758,273
                  )
                  
                  (1,325,978
                  )Interest
                      expense
                  
                  
                  (133,544
                  )
                  
                  (100,953
                  )Derivative
                      income (loss)
                  
                  
                  10,692
                  
                  
                  --Net
                      loss
                  
                  $
                  (1,881,125
                  )
                  $
                  (1,426,931
                  )Loss
                      applicable to common shareholders:Net
                      loss
                  
                  $
                  (1,881,125
                  )
                  $
                  (1,426,931
                  )Beneficial
                      conversion features and accretions of preferred stock
                  
                  
                  (149,758
                  )
                  
                  (150,100
                  )Loss
                      applicable to common shareholders
                  
                  $
                  (2,030,883
                  )
                  $
                  (1,577,031
                  )Loss
                      per common share:Basic
                      and diluted
                  
                  $
                  0.00
                  
                  $
                  0.00Weighted
                      averaged shares outstanding:Basic
                      and diluted
                  
                  
                  430,119,706
                  
                  
                  371,296,897





The
      accompanying notes are an integral part of these consolidated financial
      statements.





F-3


INNOVA
        HOLDINGS, INC.
 STATEMENTS
        OF STOCKHOLDERS' DEFICIT
 Years
        Ended December 31, 2005 and 2004


AdditionalCommon
                    Stock
                
                Preferred
                    Stock
                
                
                paid-in
                
                
                AccumulatedShares
                
                
                Amount
                
                
                Shares
                
                
                Amount
                
                
                capital
                
                
                deficit
                
                
                Total$
                
                
                
                
                
                $
                
                
                $
                
                
                $
                
                
                $Balance,
                  December 31, 2003
                
                
                192,645,050
                
                
                192,645
                
                
                --
                
                
                --
                
                
                3,276,621
                
                
                (5,863,749
                )
                
                (2,394,483
                )Issuance
                  of common stock for notes
                  payable
                
                
                61,820,488
                
                
                61,821
                
                
                --
                
                
                --
                
                
                441,783
                
                
                --
                
                
                503,604Common
                  stock issued for services rendered
                
                
                25,534,462
                
                
                25,534
                
                
                --
                
                
                --
                
                
                182,472
                
                
                --
                
                
                208,006Issuance
                    of common stock in connection with reversemerger
                    and recapitalization
                
                
                91,296,897
                
                
                91,297
                
                
                --
                
                
                --
                
                
                (774,862
                )
                
                --
                
                
                (683,565
                )Issuance
                      of Series B Preferred
                      Stock
                
                
                --
                
                
                --
                
                
                376,834
                
                
                377
                
                
                376,457
                
                
                --
                
                
                376,834Dividend
                    declared on preferred
                    stock
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (9,850
                )
                
                --
                
                
                (9,850
                )Beneficial
                    conversion feature embedded in mandatorily redeemableSeries
                    A preferred stock
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                48,300
                
                
                (3,600
                )
                
                44,700Beneficial
                        conversionfeature embedded in Series
                        B preferred stock
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                146,500
                
                
                (146,500
                )
                
                --Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (1,426,931
                )
                
                (1,426,931
                )Balance,
                    December 31, 2004
                
                
                371,296,897
                
                
                371,297
                
                
                376,834
                
                
                377
                
                
                3,687,421
                
                
                (7,440,780
                )
                
                (3,381,685
                )Issuance
                  of Series B preferred stock
                
                
                --
                
                
                --
                
                
                148,166
                
                
                148
                
                
                148,018
                
                
                --
                
                
                148,166Common
                    stock issued for services rendered
                
                
                54,508,303
                
                
                54,508
                
                
                --
                
                
                --
                
                
                650,525
                
                
                --
                
                
                705,033Sale
                    of common stock
                
                
                25,933,334
                
                
                25,934
                
                
                --
                
                
                --
                
                
                442,066
                
                
                --
                
                
                468,000Conversion
                  of Series A preferred stock into common stock
                
                
                8,735,511
                
                
                8,736
                
                
                --
                
                
                --
                
                
                36,064
                
                
                (13,832
                )
                
                30,968Conversion
                        of Series Bpreferred
                        stock into common stock
                
                
                6,600,001
                
                
                6,600
                
                
                (33,000
                )
                
                (33
                )
                
                (6,567
                )
                
                --
                
                
                --Dividend
                      declared onpreferred
                      stock
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (25,293
                )
                
                --
                
                
                (25,293
                )Beneficial
                          conversion feature embedded in Series Bpreferred
                          stock
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                141,500
                
                
                (141,500
                )
                
                --Beneficial
                        conversion feature
                        embedded in convertible note payable
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                30,000
                
                
                --
                
                
                30,000Dividend related
                      to beneficial conversion
                      feature
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (8,258
                )
                
                (8,258
                )Financing
                      costs in association with equity line of credit
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (4,400
                )
                
                --
                
                
                (4,400
                )Stock
                    option expense
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                25,061
                
                
                --
                
                
                25,061Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (1,881,125
                )
                
                (1,881,125
                )Balance
                      December 31, 2005
                
                
                467,074,046
                
                $
                467,075
                
                
                492,000
                
                $
                492
                
                $
                5,124,395
                
                $
                (9,485,495
                )
                $
                (3,893,533
                )





The
      accompanying notes are an integral part of these consolidated financial
      statements.





F-4


**INNOVA
      HOLDINGS, INC**


**STATEMENTS
      OF CASH FLOWS**


**Years
      Ended December 31, 2005 and 2004**


2005
                
                2004CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    loss
                
                $
                (1,881,125
                )
                $
                (1,426,931
                )Adjustments
                    to reconcile net loss to cash used inoperating
                    activities:Depreciation
                    and amortization
                
                
                12,954
                
                
                1,363Stock
                    option expense
                
                
                25,061
                
                
                --Non
                    cash interest expense
                
                
                40,280
                
                
                --Derivative
                    income
                
                
                (10,692
                )
                
                --Common
                    stock issued for services rendered
                
                
                605,033
                
                
                208,006Common
                    stock issued for interest expense
                
                
                --
                
                
                58,629Changes
                    in assets and liabilities:Increase
                    in inventory
                
                
                (60,162
                )
                
                --Increase
                    in accounts payable
                
                
                267,710
                
                
                226,732Increase
                    in accrued expenses
                
                
                176,124
                
                
                610,940CASH
                    FLOWS USED IN OPERATING ACTIVITIES
                
                
                (824,817
                )
                
                (321,261
                )CASH
                    FLOWS FROM INVESTING ACTIVITIESAdditions
                    to property and equipment
                
                
                (121,357
                )
                
                (5,896
                )CASH
                    FLOWS FROM INVESTING ACTIVITIES
                
                
                (121,357
                )
                
                (5,896
                )CASH
                    FLOWS FROM FINANCING ACTIVITIESProceeds
                    from notes payable
                
                
                336,500
                
                
                158,000Payments
                    on notes payable
                
                
                (2,500)
                
                
                --Proceeds
                    from sale of common & preferred stock
                
                
                616,166
                
                
                391,834Payments
                    on long-term debt
                
                
                --
                
                
                (224,999
                )CASH
                    FLOW FROM FINANCING ACTIVITIES
                
                
                950,166
                
                
                324,835NET
                    INCREASE (DECREASE) IN CASH
                
                
                3,992
                
                
                (2,322
                )Cash,
                    beginning of period
                
                
                2,794
                
                
                5,116Cash,
                    end of period
                
                $
                6,786
                
                $
                2,794SUPPLEMENTAL
                    CASH FLOW INFORMATION:Interest
                    paid
                
                $
                19,876
                
                $
                99,597Income
                    taxes paid
                
                $
                --
                
                $
                --NON
                  CASH TRANSACTIONS:Common
                    stock issued for commitment fee
                
                $
                100,000
                
                $
                --Issuance
                    of convertible note for commitment fee
                
                $
                300,000
                
                $
                --





The
      accompanying notes are an integral part of these consolidated financial
      statements.







F-5


**INNOVA
      HOLDINGS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**








**NOTE
      1 - BASIS OF PRESENTATION**





**Nature
      of the Company**





Innova
      Holdings, Inc. (Innova or the "Company") is a robotics automation technology
      company providing hardware and software systems-based solutions to the military,
      service, personal, and industrial robotic markets. The Company's plan of
      operations is to identify, develop and acquire technology that is or will become
      a market leader and to create opportunities to leverage its software into
      value-added applications when combined with other software solutions offered
      by
      the Innova group of companies.





Innova
      has two wholly-owned subsidiaries, Robotic Workspace Technologies, Inc. (RWT)
      and Innova Robotics, Inc. RWT delivers its software through the sale of control
      systems and the licensing of its software to end-user companies, system
      integrators, manufacturing support providers, software development companies,
      and other parties, primarily in the industrial markets. RWT also offers complete
      system development and system integration services. The control systems include
      the Universal Robot Controller and the Universal Automation Controller. The
      Universal Automation Controller is in the final stages of development. The
      proprietary patents, including three pioneer utility patents issued by the
      USPTO, are owned by RWT and cover all applications pertaining to the interface
      of a general use computer and the mobility of robots, regardless of specific
      applications.





The
      Innova suite of software will be marketed and sold to the service and personal
      robot markets through Innova Robotics, Inc. Generally, the Innova suite of
      software solutions is referred to as Middleware, which is connectivity software
      that consists of a set of enabling services that allow multiple processes
      running on one or more machines to interact across a network. Middleware is
      essential to migrating mainframe applications to client/server applications
      and
      to providing for communication across heterogeneous platforms. This technology
      has evolved during the 1990s to provide for interoperability in support of
      the
      move to client/server architectures. In the context of Innova’s markets, it is
      this Middleware that enables industrial robots to communicate with enterprise
      systems like purchasing. In the military arena, this Middleware would enable
      an
      unmanned mobile robotic vehicle to communicate reconnaissance intelligence
      with
      the Logistics Command and in return receive updated operation
      instructions.





**Use
      of Estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities at the date of the balance sheet. Actual results could differ from
      those estimates.





**Cash
      and Cash Equivalents**





Cash
      and
      cash equivalents include cash and all highly liquid financial instruments with
      purchased maturities of three months or less.





**Fair
      Value of Financial Instruments**





The
      Company's financial instruments consist of cash, accounts payable, accrued
      expenses, notes payable, dividends payable, derivative liabilities and long-term
      debt. The carrying amount of cash, accounts payable, accrued expenses and notes
      payable approximates fair value due either to length of maturity, volatility,
      and interest rates that approximate prevailing market rates unless otherwise
      disclosed in these consolidated financial statements. The fair values of
      long-term debt are measured based upon the present value of cash flows using
      current borrowing rates for instruments with similar terms.





The
      Company generally does not use derivative financial instruments to hedge
      exposures to cash-flow risks or market-risks that may affect the fair values
      of
      its financial instruments. However, certain other financial instruments, such
      as
      embedded conversion features that are indexed to the Company’s common stock, are
      classified as liabilities when either (a) the holder possesses rights to
      net-cash settlement or (b) physical or net-share settlement is not within the
      control of the Company. In such instances, net-cash settlement is assumed for
      financial accounting and reporting, even when the terms of the underlying
      contracts do not provide for net-cash settlement. Such financial instruments
      are
      initially recorded at fair value and subsequently adjusted to fair value at
      the
      close of each reporting period.





**Revenue
      Recognition**





The
      Company recognizes revenue when persuasive evidence of an arrangement exists,
      delivery has occurred, the sales price is fixed or determinable and
      collectibility is probable. Product sales are recognized by the Company
      generally at the time product is shipped. Shipping and handling costs are
      included in cost of goods sold.





Allowance
      for Doubtful Accounts - Earnings are charged with a provision for doubtful
      accounts based on past experience, current factors, and management's judgment
      about collectibility. Accounts deemed uncollectible are applied against the
      allowance for doubtful accounts.





F-6


**Property
      and Equipment**





Property
      and equipment are stated at cost less accumulated depreciation. Major
      renovations and improvements are capitalized; minor replacements, maintenance
      and repairs are charged to current operations. Depreciation is computed by
      applying the straight-line method over the estimated useful lives which are
      generally five to ten years.





Impairment
      losses are recorded on long-lived assets used in operations when indicators
      of
      impairment are present and the undiscounted cash flows estimated to be generated
      by those assets are less than the assets' carrying amount.





**Income
      Taxes**





Income
      taxes are computed using the asset and liability method. Under the asset and
      liability method, deferred income tax assets and liabilities are determined
      based on the differences between the financial reporting and tax bases of assets
      and liabilities and are measured using the currently enacted tax rates and
      laws.
      A valuation allowance is provided for the amount of deferred tax assets that,
      based on available evidence, are not expected to be realized. Additionally,
      taxes are calculated and expensed in accordance with applicable tax code.





**Basic
      and Diluted Loss Per Common Share**





The
      Company is required to report basic and dilutive earnings (loss) per common
      share information. The basic net loss per common share is computed by dividing
      the net loss applicable to common stockholders by the weighted average number
      of
      common shares outstanding.




Diluted
      net loss per common share is computed by dividing the net loss applicable to
      common stockholders, adjusted on an "as if converted" basis, by the weighted
      average number of common shares outstanding plus potential dilutive securities.
      For the periods ended December 2004 and 2005, potential dilutive securities
      had
      an anti-dilutive effect and were not included in the calculation of diluted
      net
      loss per common share.





**Recent
      Accounting Pronouncements**




In
      June
      2005, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standards No. 154, Accounting Changes and Error Corrections
      (“SFAS 154”). SFAS 154 replaces Accounting Principles Board (“APB”) Opinion No.
      20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim
      Financial Statements. SFAS 154 requires that a voluntary change in accounting
      principle be applied retrospectively with all prior period financial statements
      presented on the new accounting principle. SFAS 154 also requires that a change
      in method of depreciating or amortizing a long-lived nonfinancial asset be
      accounted for prospectively as a change in estimate, and correction of errors
      in
      previously issued financial statements should be termed a restatement. SFAS
      154
      is effective for accounting changes and correction of errors made in fiscal
      years beginning after December 15, 2005. The Company does not expect the
      adoption of SFAS 154 to have a material impact on the Company’s consolidated
      financial statements.




**Stock-Based
      Compensation**





As
      permitted by SFAS No. 123, “Accounting for Stock-Based Compensation,” the
      Company accounts for share-based payments to employees using the intrinsic
      value
      method under Accounting Principles Board, or APB, Opinion No. 25. As such,
      the
      Company generally does not recognize compensation cost related to employee
      stock
      options. In December 2004, the FASB issued SFAS No. 123(R), “Share-Based
      Payment,” which is a revision of SFAS No. 123 and supersedes APB Opinion No. 25.
      SFAS No. 123(R) requires that grants of share-based payments to employees be
      measured at fair value using the modified grant date approach. This new
      standard, which will be effective for the Company’s first fiscal quarter of
      2006, allows for two adoption methods for these changes in accounting for
      employee stock-based compensation costs:




•                 
      The modified prospective method which requires companies to recognize
      compensation cost beginning with the effective date of adoption based on (a)
      the
      requirements for all share-based payments granted after the effective date
      of
      adoption and (b) the requirements for all unvested awards granted to employees
      prior to the effective date of adoption; or




•                 
      The modified retrospective method which includes the requirements of the
      modified prospective method described above, but also requires restatement
      of
      prior period financial statements using amounts previously disclosed under
      the
      pro-forma provisions of Statement 123.




SFAS
      No.
      123(R) require all share-based payments to employees and directors to be
      recognized in the financial statements based on their fair values, using
      prescribed option-pricing models. Upon adoption, pro-forma disclosure will
      no
      longer be an alternative to financial statement recognition. The Company will
      adopt the provisions of SFAS No. 123(R) in the first quarter of 2006. The
      Company intends to use the modified prospective method of adoption and continue
      to use the Black-Scholes option pricing model to value share-based payments,
      though alternatives for adoption under the new pronouncement continue to be
      reviewed by the Company. The Company continues to review the impact of SFAS
      No.
      123(R) as it relates to future use of share-based payments to compensate
      employees in 2006. Therefore, the impact of adoption cannot be predicted with
      certainty at this time because it will depend on the levels of share-based
      payments granted in the future. Due to the timing of the Company’s equity and
      option grants, the charge will not be spread evenly throughout the year. The
      adoption of the fair-value method will have a significant impact on the
      Company’s results of operations as the fair value of stock option grants and
      stock purchases under the employee stock option purchase plan will be required
      to be expensed beginning in 2006. The adoption of Statement No. 123(R) is not
      expected to have a material impact on the Company’s overall financial
      position.




F-7


Statement
      No. 123(R) also requires the benefit related to income tax deductions in excess
      of recognized compensation cost to be reported as a financing cash flow, rather
      than as an operating cash flow as required under current accounting guidance.
      This requirement will reduce net operating flows and increase financing cash
      flows of the Company in periods subsequent to adoption. These future amounts
      cannot be estimated, as they depend on, among other things, when employees
      exercise stock options.





The
      following tabular presentation reflects loss applicable to common stockholders
      had the Company applied the provisions of SFAS 123 for purposes of stock-based
      compensation during 2005 and 2004:






2005
              
              2004Loss
                  applicable to common shareholders
              
              $
              (2,030,883
              )
              $
              (1,577,031
              )Deduct:
                  Intrinsic value expense recorded
              
              
              --
              
              
              --Add:
                  total stock-based employeecompensation
                  determined under fair valuebased
                  method
              
              
              (37,628
              )
              
              --Pro
                  forma net loss applicable to commonshareholders
              
              
              ($2,068,511
              )
              
              ($1,577,031
              )Loss
                  per common share:Basic
                  and diluted - as reported
              
              $
              (.00
              )
              $
              (.00
              )Basic
                  and diluted - pro forma
              
              $
              (.00
              )
              $
              (.00
              )








The
      fair
      value of each option granted is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions used for grants in 2004 and 2005: no dividend yield and expected
      volatility of 79% in 2004 and 2005, respectively, risk-free interest rate of
      2.75%, and expected lives of 5 years.





**NOTE
      2 - FINANCIAL CONDITION AND GOING CONCERN**





Innova
      Holdings, Inc. has incurred losses for the years ended December 31, 2005 and
      2004 of $1,881,125 and $1,426,931, respectively. Because of these losses, the
      Company will require additional working capital to develop its business
      operations.





Innova
      Holdings, Inc. intends to raise additional working capital through the use
      of
      the Standby Equity Distribution Agreement discussed in Note 4, private
      placements, public offerings and/or bank financing. During 2005, Innova
      Holdings, Inc. raised approximately $148,166 from the sale of preferred stock,
      $468,000 from the sale of common stock, $85,000 from the sale of convertible
      notes, and $257,000 from debt owed to shareholders, including $45,000 from
      the
      Company’s Chief Financial Officer.





There
      are
      no assurances that Innova Holdings, Inc. will be able to either (1) achieve
      a
      level of revenues adequate to generate sufficient cash flow from operations;
      (2)
      obtain additional financing through either private placements, public offerings
      and/or bank financing necessary to support Innova Holdings, Inc.'s working
      capital requirements; or (3) that the proceeds from the use of the SEDA will
      be
      adequate to fund the working capital requirements of the Company. To the extent
      that funds generated from operations, any private placements, public offerings
      and/or bank financing, and the SEDA are insufficient, Innova Holdings, Inc.
      will
      have to raise additional working capital. No assurance can be given that
      additional financing will be available, or if available, will be on terms
      acceptable to Innova Holdings, Inc.





These
      conditions raise substantial doubt about Innova Holdings, Inc.'s ability to
      continue as a going concern. The financial statements do not include any
      adjustments relating to the recoverability and classification of asset carrying
      amounts or the amount and classification of liabilities that might be necessary
      should Innova Holdings, Inc. be unable to continue as a going concern.





**NOTE
      3 - REVERSE MERGER**





On
      August
      25, 2004, Innova Holdings, Inc., (previously Hy-Tech Technology, Inc.) issued
      280,000,000 shares of common stock for 100% of the outstanding stock of Robotic
      Workspace Technology, Inc ("RWT"). For financial reporting purposes this
      transaction was treated as an acquisition of Innova and a recapitalization
      of
      RWT using the purchase method of accounting. RWT's historical financial
      statements replace Innova's in the accompanying financial statements. As part
      of
      this merger, Innova assumed $230,000 of notes payable and $125,000 of redeemable
      Series A Preferred Stock which has a mandatory redemption provision. In
      addition, the merger agreement requires Innova to issue 37,885,033 shares of
      Innova's common stock to its previous management and business advisor for
      services rendered up through the merger date; Innova has recorded an accrued
      liability for these shares in the amount of $378,850.





The
      280,000,000 shares of Innova's common stock issued to RWT shareholders were
      comprised of the following:





F-8




Shares
                  issued to shareholders as of December 31, 2003
              
              
              192,645,050Shares
                  issued to shareholders for conversion of notes payable
              
              
              61,820,488Shares
                  issued to shareholders for services rendered
              
              
              25,534,462Total
                  shares issued in reverse merger
              
              
              280,000,000





Innova
      sold its wholly owned subsidiary and all of its operations in connection with
      the acquisition of RWT. As part of the agreement, the Company agreed to
      indemnify the directors of the Company from certain liabilities that were in
      existence on the date of closing of the sale, which management believes may
      apply to a maximum of approximately $500,000 of debt. If the Company issues
      shares of its common stock or pays cash to settle any of this debt, it shall
      issue an equal number of common shares to the former RWT shareholders, in
      proportion to their RWT share holdings. After the reorganization and stock
      purchase there were 371,296,897 shares of common stock outstanding of the
      combined entity.





**NOTE
      4 - CAPITAL STOCK**





Effective
      July 29, 2004, the Company changed its name to Innova Holdings, Inc. from
      Hy-Tech Technology Group, Inc. The Company's trading symbol changed to "IVHG."
      Simultaneously with the name change, the Company increased its authorized
      capitalization from 101,000,000 shares, consisting of 100,000,000 shares of
      common stock, $.001 par value and 1,000,000 shares of preferred stock, $.001
      par
      value to 910,000,000 shares authorized, consisting of 900,000,000 shares of
      common stock, $.001 par value and 10,000,000 shares of preferred stock, $.001
      par value.





On
      June
      23, 2004, the Company entered into a private placement and sold 125,000 shares
      of Series A Preferred Stock for $125,000. Each share of the Series A Preferred
      Stock (i) pays a dividend of 5%, payable at the discretion of the Company in
      cash or common stock, (ii) is convertible immediately after issuance into the
      number of shares of common stock equal to $1.00 divided by a conversion price
      equal to the lesser of 75% of the average closing bid price of the Company's
      common stock over the twenty trading days preceding conversion or $0.005, (iii)
      has a liquidation preference of $1.00 per share, (iv) must be redeemed by the
      Company five years after issuance at $1.00 per share plus accrued and unpaid
      dividends, (v) may be redeemed by the Company at any time for $1.30 per share
      plus accrued and unpaid dividends,(vi) grants rights to acquire one share of
      Common Stock for each share of Common Stock issued on conversion at a price
      per
      share equal to the average of the closing price of the common stock on the
      five
      business days preceeding the date of conversion for a period of one year from
      the date of conversion and,(vii) has no voting rights except when mandated
      by
      Delaware law.





In
      the
      event that the Company had not completed the merger with RWT and RWT had not
      raised $500,000 in new capital by August 27, 2004, then each of the holders
      of
      the Series A Preferred Stock could elect to convert their shares into (a) a
      demand note payable by the Company, in the principal amount equal to the
      purchase price of the Series A Preferred Stock plus accrued and unpaid
      dividends, with interest at the rate of ten percent (10%) until paid in full
      and
      (b) warrants to purchase 2,500,000 shares of the Company's common stock at
      an
      exercise price of $.005 per share, with a term of two (2) years from the date
      of
      issuance, and standard anti-dilution provisions regarding stock splits,
      recapitalizations and mergers, for each $25,000 of Series A Preferred Stock
      purchased. Since RWT had not raised $500,000 by August 27, 2004 the holders
      of
      the Series A Preferred Stock could have elected to convert their shares into
      the
      demand note but none of the holders elected to do so.





Of
      the
      $125,000 proceeds received from the issuance of the Series A Preferred Stock,
      $50,000 was allocated to the beneficial conversion feature embedded in the
      Series A Preferred Stock on the date of issuance based on a conversion price
      of
      $.005 per share. Of this amount, $48,300 was the unamortized embedded beneficial
      feature assumed as part of the reverse merger with Robotic Workspace
      Technologies, Inc. The beneficial conversion feature is being amortized over
      five (5) years and accordingly $3,600 was amortized through Accumulated Deficit
      through December 31, 2004. Additionally, the excess of the aggregate fair value
      of the common stock to be issued upon conversion over the $125,000 of proceeds
      received when the Series A Preferred Stock was issued amounted to $50,000.





During
      the quarter ended September 30, 2005, 43,550 shares of Series A Preferred Stock
      were converted into 8,710,001 shares of Common Stock of the Company, and accrued
      dividends of $1,250 were converted into 25,510 shares of Common Stock of the
      Company. Accordingly, $13,832 of the unamortized beneficial conversion feature
      associated with the converted Series A Preferred Stock was amortized to
      Accumulated Deficit and credited to Additional Paid in Capital during the three
      months ended September 30, 2005. Additionally, $8,258 of the remaining
      beneficial conversion feature was amortized through Accumulated Deficit for
      the
      twelve months ended December 31, 2005. The total beneficial conversion feature
      amortized through Accumulated Deficit associated with the Series A Preferred
      Stock was $22,090 through the twelve months ended December 31, 2005.





In
      September 2004, the Company authorized $525,000 of Series B Preferred Stock.
      Each share of Series B Preferred Stock i) pays a dividend of 5%, payable at
      the
      discretion of the Company in cash or common stock, (ii) is convertible
      immediately after issuance into the Company's common stock at the lesser of
      $.005 per share or 75% of the average closing bid prices over the 20 trading
      days immediately preceding the date of conversion (iii) has a liquidation
      preference of $1.00 per share, (iv) may be redeemed by the Company at any time
      up to five years after the issuance date for $1.30 per share plus accrued and
      unpaid dividends, (v) ranks junior to the Series A Preferred Stock upon
      liquidation of the Company and (vi) has no voting rights except when mandated
      by
      Delaware law.





F-9


At
      December 31, 2004, approximately $377,000 of the Series B Preferred Stock had
      been sold. Of the $377,000 proceeds received from the issuance of the Series
      B
      Preferred Stock, $146,500 was allocated to the beneficial conversion feature
      embedded in the Series B Preferred Stock on the date of issuance, based on
      a
      conversion price of $.005 per share. All of the $146,500 beneficial conversion
      feature was amortized through Accumulated Deficit on the date of issuance;
      therefore, all of the beneficial conversion feature was amortized as of December
      31, 2004. Additionally, the excess of the aggregate fair value of the common
      stock to be issued upon conversion over the $377,000 of proceeds received when
      the Series B Preferred Sock was issued amounted to $158,500.





During
      the first quarter of 2005, the Company sold $148,000 of the Series B Preferred
      Stock, bringing the total sold to $525,000 as of March 31, 2005 and December
      31,
      2005; none of the Series B Preferred Stock was converted into common stock
      as of
      December 31, 2005. Of the $148,000 proceeds received from the issuance of the
      Series B Preferred Stock, $141,500 was allocated to the beneficial conversion
      feature embedded in the Series B Preferred Stock on the date of issuance, based
      on a conversion price of $.005 per share. All of the $141,500 beneficial
      conversion feature was amortized through Accumulated Deficit on the date of
      issuance; therefore, all of the beneficial conversion feature was amortized
      as
      of September 30, 2005. Additionally, the excess of the aggregate fair value
      of
      the common stock to be issued upon conversion over the $148,000 of proceeds
      received when the Series B Preferred Stock was issued amounted to $39,400.
      During the quarter ended December 31, 2005, 33,000 shares of Series B Preferred
      Stock were converted into 6,600,001 shares of Common Stock of the Company.





On
      June
      14, 2005, Innova entered into a Standby Equity Distribution Agreement with
      Cornell Capital Partners. Under the Standby Equity Distribution Agreement,
      Innova may issue and sell to Cornell Capital Partners common stock for a total
      purchase price of up to $10,000,000. The purchase price for the shares is equal
      to their market price, which is defined in the Standby Equity Distribution
      Agreement as the lowest volume weighted average price of the common stock during
      the five trading days following the date notice is given by the Company that
      it
      desires an advance. The amount of each advance is subject to an aggregate
      maximum advance amount of $400,000, with no advance occurring within five
      trading days of a prior advance. Cornell Capital Partners received a one-time
      commitment fee of 2,608,699 shares of the Company's common stock equal to
      approximately $90,000 based on Innova's stock price on May 4, 2005, when the
      term sheet for the Standby Equity Distribution Agreement was signed. Cornell
      Capital Partners is paid a fee equal to 5% of each advance, which is retained
      by
      Cornell Capital Partners from each advance. The Company will pay a structuring
      fee of $500 for each advance made under the Standby Equity Distribution
      Agreement. The Company also issued to Cornell Capital Partners its promissory
      note for $300,000. The principal of the note is payable in three $100,000
      installments due on the 30th, 60th and 90th days following the date the
      registration statement for the shares to be issued under the Standby Equity
      Distribution Agreement is declared effective by the SEC, which was December
      22,
      2005. The note does not bear interest except in the event of a default. On
      June
      14, 2005, Innova entered into a Placement Agent Agreement with Monitor Capital,
      Inc. a registered broker-dealer. Pursuant to the Placement Agent Agreement,
      Innova paid a one-time placement agent fee of 289,855 restricted shares of
      common stock equal to approximately $10,000 based on Innova's stock price on
      May
      4, 2005, when the term sheet for the Standby Equity DistriAgreement was signed,
      for advising us in connection with the Standby Equity Distribution Agreement.
      In
      connection with this Standby Equity Distribution Agreement, the Company entered
      into a Registration Rights agreement with Cornell Capital Partners wherein
      the
      Company agreed to file with the Securities and Exchange Commission a
      registration statement for the sale by Cornell of the common stock of the
      Company to be purchased by Cornell under the terms of the Standby Equity
      Distribution Agreement, along with the one-time commitment fee and the placement
      agent fee. Accordingly, the Company filed an SB-2 registration statement with
      the Securities and Exchange Commission in August 2005 for a total of 284,
      364,726 shares to be sold including 250,000,000 shares estimated to be sold
      to
      Cornell Capital Partners under the Standby Equity Distribution Agreement, which
      was declared effective by the Securities and Exchange Commission on December
      22,
      2005. Additionally, 34,364,726 currently issued and outstanding shares were
      included in the registration statement for sale by existing shareholders.





The
      commitment fee of 2,608,699 shares paid to Cornell, the placement agency fee
      paid to Monitor of 289,855 shares, and the additional $300,000 commitment fee
      owed to Cornell have been accounted for as a deferred financing fee and will
      be
      amortized over the period of the financing, which can be up to twenty-four
      months from December 22, 2005.





In
      April
      and May 2005, the Company obtained an additional $368,000 of funds through
      the
      private placement sale of 19,266,667 shares of the Company's common stock at
      prices ranging from $.0125 per share to $.03 per share. Investors in these
      shares of the Company's common stock were given notice in the event that the
      Company files any registration statement with the Securities and Exchange
      Commission for its Common Stock (excluding any registration statement on Form
      S-8 or S-4) and were entitled to include any or all of the shares of Common
      Stock purchased in these investments in such Registration Statement. In August
      2005, such Registration Statement was filed with the SEC and all of these
      investors are listed as selling shareholders.





In
      July
      and August 2005 the Company obtained an additional $100,000 of funds through
      the
      private placement sale of 6,666,667 shares of the Company's common stock at
      $0.015 per share. This offering ended on August 8, 2005. On July 22, 2005 the
      Company borrowed $30,000 and entered into a short term note for that amount,
      the
      terms of which are: interest at the annual rate of 5%, due date in six months,
      and principal and accrued interest are convertible into common stock of the
      Company at $.015 per share. Of the $30,000 proceeds received from the short
      term
      note, $30,000 was allocated to the beneficial conversion feature embedded in
      the
      short term note on the date of issuance, based on a conversion price of $.015
      per share and treated as a discount of the note. The beneficial conversion
      feature is being expensed over six (6) months and accordingly $26,450 was
      expensed to Interest Expense through December 31, 2005. The discount on the
      note
      is being accreted to Notes Payable over six months. Additionally, the excess
      of
      the aggregate fair value of the common stock to be issued upon conversion over
      the $30,000 of proceeds received when the short term note was issued amounted
      to
      $38,000.





F-10


**Stock
      Options:**





No
      compensation cost has been recognized for grants under the stock option plans
      since all such grants pursuant to these plans have been made at the then current
      estimated fair values of the Company's common stock at the grant
      date.





During
      the twelve months ended December 31, 2005 there were 80,719,259 options granted
      and there were 33,962,655 options granted in 2004. Of the options granted in
      2005, 26,000,000 were subsequently cancelled, resulting in a net amount of
      options granted of 54,719,259. Of the options granted and not cancelled,
      48,658,621 were granted to employees and 6,060,638 to an independent contractor.
      The share purchase options granted to employees vest annually over three years
      from the date of grant, 20,658,621 options are exercisable at $0.017 per share,
      10,000,000 options are exercisable at $.023 per share and 18,000,000 options
      are
      exercisable at $0.036 per share, and they expire ten years after the grant
      date.
      The options granted to employees were valued using the intrinsic value method
      and had no value because the exercise price was equal to the market price on
      the
      grant date. The share purchase options granted to the independent contractor
      vest monthly over five years from the date of grant, are exercisable at $0.01
      per share, and they expire ten years after the grant date. During the twelve
      months ended December 31, 2005, $27,791 was recognized as an expense for the
      fair value of options granted to independent contractors. There were 33,962,655
      options granted in 2004, of which 20,841,379 were granted to directors and
      employees at exercise prices from $.008 to $.01 per share, and 12,121,276 were
      granted to an independent contractor at an exercise price of $.005 per
      share.





Additionally,
      the Company awarded 54,508,303 shares of the Company's common stock to
      twenty-four (24) employees, independent contractors and individuals for services
      provided to the Company in 2004 and 2005 valued at $705,033 or the equivalent
      of
      $0.013 per share. These amounts were fully accrued during 2004 and 2005.





The
      Board
      of Directors of the Company approved all of the stock options and shares of
      the
      Company's common stock awarded.





The
      fair
      value of each option granted to non-employees is estimated on the date of grant
      using the Black-Scholes option-pricing model with the following weighted average
      assumptions used for grants in fiscal 2004 and 2005: zero dividend yield,
      expected volatility of 79% in 2004 and 218% in 2005, risk-free interest rate
      of
      2.75% and expected lives of 10 years. All grants pursuant to these plans have
      been made at the current estimated fair values of the Company's common stock
      at
      the grant date. The options granted have a weighted average exercise price
      of
      $.016 per share and vest over three years. The maximum term of the options
      is
      ten years.





The
      following table summarizes stock option activity:





Outstanding,
                  December 31, 2003
              
              
              14,425,486Granted
              
              
              33,962,655Cancelled
              
              
              --Exercised
              
              
              --Outstanding,
                  December 31, 2004
              
              
              48,388,141Granted
              
              
              80,719,259Cancelled
              
              
              (26,000,000)Exercised
              
              
              --Outstanding,
                  December 31, 2005
              
              
              103,107,400Weighted-average
                  grant-date fairvalue
                  of options
              
              $
              0.016Weighted-average
                  remaining yearsof
                  contractual life
              
              
              9.1





**NOTE
      5 - LINE OF CREDIT**





On
      July
      22, 2002, the Company entered into a revolving line of credit of $225,000 with
      Fifth Third Bank, Florida, secured by the assets of the Company. The annual
      interest rate on unpaid principal was the prime rate plus 2%, due in monthly
      installments. Principal and interest were due on July 22, 2003. In November
      2004, a principal shareholder loaned the Company $165,000 to pay down the line
      of credit with Fifth Third Bank. The loan with the principal shareholder has
      the
      same terms as the Fifth Third Bank line of credit, except that it remains
      unsecured until such time as the Fifth Third Bank line of credit is fully paid,
      including principal and accrued interest, and is due upon demand. In January
      2005, the Fifth Third Bank line of credit was paid off.





**NOTE
      6 - ACCRUED EXPENSES**





On
      April
      22, 2003, the Company entered into an Advisory Agreement (the "Advisory
      Agreement") with AltosBancorp Inc. ("Altos") pursuant to which Altos agreed
      to
      act as the Company's exclusive business advisor. Altos advised the Company
      regarding equity and debt financings, strategic planning, mergers and
      acquisitions, and business developments, including the merger with RWT. Altos
      did not receive any cash compensation for services rendered. In August 2004,
      as
      a final determination of compensation, the Company agreed to pay Altos $161,333
      in common stock of the Company, or 16,133,333 shares. Martin Nielson is
      president of Altos and after entering into the Advisory Agreement became the
      Company's Chairman and Chief Executive Officer, for which he received a salary
      and expense reimbursement totaling $104,650 and $114,867 in 2004 and 2003,
      respectively. Of these amounts, $80,000 was paid in cash and $139,517 will
      be
      paid in common stock of the Company, or 13,951,700 shares. These amounts owed
      Altos and Mr. Nielson are recorded on the balance sheet as accrued expenses.





F-11


**NOTE
      7 - NOTES PAYABLE**  **AND
      LONG TERM DEBT**





On
      June
      14, 2005 the Company entered into a Standby Equity Distribution Agreement
      discussed in Note 4 above. In connection with this agreement, the Company issued
      a $300,000 promissory note to Cornell Capital partner, the major terms of which
      are as follows:





-the
      Company shall repay the Promissory Note in three equal principal payments of
      One
      Hundred Thousand Dollars ($100,000) each on the 30th, 60th and 90th days
      following the date Securities and Exchange Commission declares that a
      registration statement filed by the Company in connection with the Standby
      Equity Distribution Agreement is effective, which was December 22, 2005.





-this
      Promissory Note shall not bear interest unless and until there is an event
      of
      default.





-at
      the
      option of Cornell Capital Partners, all sums advanced under the promissory
      note
      shall become immediately due and payable, without notice or demand, upon the
      occurrence of any one or more of the following events of default: (a) the
      Company's failure to pay in full any payment of principal within 5 days of
      the
      date when such payment of principal becomes due; (b) the commencement of any
      proceedings under any bankruptcy or insolvency laws, by or against the Company;
      or (c) the registration statement is not declared effective within one hundred
      eighty (180) days of the date hereof, unless such failure to obtain
      effectiveness is solely due to reasons related to the transactions described
      in
      the Company's April 29, 2003 8-K.





-any
      payment of principal which is not paid within 5 days of the date such payment
      becomes due, shall bear interest at the rate of twelve (12) percent per annum
      commencing on the date immediately following the day upon which the payment
      was
      due. Upon the occurrence of any event of default as defined above, all sums
      outstanding shall thereupon immediately bear interest at the rate of twelve
      (12)
      percent per annum.





The
      promissory note of $300,000 issued to Cornell has been recorded as a note
      payable and as deferred financing costs. Also, the Company received a waiver
      from Cornell delaying the payment of the amounts due to no later than December
      31, 2006.





On
      July
      22, 2005 the Company borrowed $30,000 and entered into a short term note for
      that amount, the terms of which are: interest at the annual rate of 5%, due
      date
      in six months, and principal and accrued interest are convertible into common
      stock of the Company at $.015 per share. Of the proceeds received, $30,000
      was
      allocated to the beneficial conversion feature embedded in the note payable
      on
      the date of issuance, based on a conversion price of $.015 per share. All of
      the
      $30,000 beneficial conversion feature was treated as a discount and is being
      amortized to interest expense over the term of the note. Also, $30,000 was
      credited to Additional Paid in Capital. Additionally, the excess of the
      aggregate fair value of the common stock to be issued upon conversion over
      the
      $30,000 of proceeds received when the note was issued amounted to $38,000.





On
      October 7, 2005, the Company entered into a Securities Purchase Agreement with
      Cornell Capital Partners, LP ("Cornell Capital"). Pursuant to this Agreement,
      the Company sold a Convertible Debenture in the principal amount of $55,000
      to
      Cornell Capital. The Convertible Debenture bears interest at the rate of 12%
      per
      annum and is due on April 7, 2006. The Company will pay directly to Cornell
      Capital all revenues it receives until the principal amount and all accrued
      interest on the Convertible Debenture has been paid in full. The principal
      of
      the Convertible Debenture is convertible into common stock of the Company at
      a
      price of $.03 per share (the "Conversion Shares"). In the event of default
      by
      the Company, the principal of the Convertible Debenture is convertible into
      Conversion Shares at a price of $.005 per share. The Company granted demand
      registration rights to Cornell Capital for the Conversion Shares. The
      Convertible Debenture is secured by a second lien on all of the assets of the
      Company. The note was paid in full on the due date.





As
      further discussed under Derivative Liability, below, the entire proceeds from
      the Cornell Capital Convertible Debenture were allocated to a derivative
      liability, which is being carried at fair value. The resulting discount on
      the
      host instrument is being amortized over the term of the instrument using the
      effective interest method. Amortization of debt discount during the period
      from
      issuance of the debenture to December 31, 2005 amounted to $5,830.





During
      September through December 2005 the Company entered into short-term debt
      obligations other than in the ordinary course of business totaling $257,000.
      All
      of this short-term debt bears interest at the rate of 10% per annum and is
      due
      between ninety and one hundred twenty days. All of the lenders are shareholders
      of the Company, including the Chief Financial Officer who loaned the Company
      $45,000, and a Director who loaned the Company $1,000.  All lenders agreed
      to extend the due date to December 31, 2006.





On
      April
      17, 2002, the Company borrowed $989,100 under a note agreement with the Small
      Business Administration. This loan is secured by the equipment and machinery
      assets of the Company and by the personal residence and other assets of the
      Company's Chairman and CEO, a principal shareholder and founder of RWT. The
      balance outstanding as of December 31, 2005 was $989,100 The annual interest
      rate on unpaid principle is 4%, due and payable in monthly installments of
      $4,813 beginning September 17, 2002 and continuing until April 17, 2032.





In
      November 2004, a principal shareholder loaned the Company $165,000 to pay down
      the line of credit with Fifth Third Bank. The loan has the same terms as the
      Fifth Third Bank line of credit, except that it remains unsecured until such
      time as the Fifth Third Bank line of credit is fully paid, including principal
      and accrued interest, and is due upon demand. In January 2005, the Fifth Third
      Bank line of credit was paid off.




In
      February 2003 the Company issued $230,000 of notes payable, the terms of which
      were subsequently modified in July 2003. The notes earn interest at 8% unless
      they are in default, in which case they earn interest at 15%; the notes are
      currently in default. Additionally, the notes had warrants attached to purchase
      115,000 shares of common stock at $1.50 per share and were exercisable through
      February 12, 2005. None of these warrants were exercised.





F-12


Future
      maturities of these notes as of December 31, 2005 were as follows:





Years
                Ending December 31,2006
              
              $
              1,091,7172007
              
              
              20,8842008
              
              
              21,6332009
              
              
              22,5102010
              
              
              23,523Thereafter
              
              
              793,6131,973,880Less:
                  current portion
              
              
              (1,052,162
              )$
              921,718





In
      2002,
      the company entered into convertible debt notes totaling $429,966. Terms were
      8%
      per annum, without payment. Accrued interest earned during the term was to
      be
      paid upon maturity on January 31, 2007. The notes were convertible into Class
      B
      Convertible Preferred Stock upon certain future events that did not materialize,
      including raising $5 million in additional equity. In March 2004, the notes
      plus
      accrued interest were converted into 61,820,488 common shares of Innova
      Holdings, Inc. The shares were originally converted into RWT common stock at
      $.50 a share and then converted into shares of Innova Holdings, Inc. at
      61.37929356 to 1, the effective share exchange ratio for the merger between
      RWT
      and Innova.





Derivative
      Liability:





The
      balance sheet account entitled “Derivative liability” consists of the combined
      fair value of the conversion and certain other features that were embedded
      in
      the Cornell Debenture, referred to above. These features were compounded into
      one instrument and bifurcated from the debt instrument upon issuance of the
      debenture in accordance with Financial Accounting Standard No. 133, Derivative
      Financial Instruments (FAS133). On the date of issuance, the fair value of
      the
      compound derivative financial instrument amounted to $163,240, which exceeded
      the proceeds by ($108,240). In accordance with FAS133, the excess was
      immediately charged to expense. During the period from issuance to December
      31,
      2005, the fair value of the derivative declined in value by $118,932. In
      accordance with FAS133, this amount was credited to income during the period.
      The derivative financial instrument will continue to be adjusted to fair value
      until the debenture is settled. On December 31, 2005, the derivative financial
      instrument was indexed to 11,660,000 shares of the Company’s common
      stock.





The
      Company utilizes the Monte Carlo valuation model to value its complex financial
      instruments because this methodology provides for all of the necessary
      assumptions necessary for fair value determination, including assumptions for
      credit risk, interest risk and conversion/redemption behavior. Significant
      assumptions underlying this methodology are: Effective Term—remaining term of
      the host instrument; Effective Volatility—44.19%; Effective Risk Adjusted
      Yield—12.36%.





**NOTE
      8 - INCOME TAXES**





The
      Company follows Statement of Financial Accounting Standards Number 109 (SFAS
      109), "Accounting for Income Taxes." Deferred income taxes reflect the net
      effect of (a) temporary difference between carrying amounts of assets and
      liabilities for financial purposes and the amounts used for income tax reporting
      purposes, and (b) net operating loss carryforwards. No net provision for
      refundable Federal income tax has been made in the accompanying statement of
      loss because no recoverable taxes were paid previously. Similarly, no deferred
      tax asset attributable to the net operating loss carryforward has been
      recognized, as it is not deemed likely to be realized.





The
      provision for refundable Federal income tax consists of the following:





December
      31, 2005





Refundable
      Federal income tax attributable to:


Current
                  Operations
              
              $
              640,000Less,
                  Change in valuation allowance
              
              
              (640,000
              )Net
                  refundable amount
              
              $
              -








F-13


The
      cumulative tax effect at the expected rate of 34% of significant items
      comprising our net deferred tax amount is as follows:





December
      31, 2005


Deferred
      tax asset attributable to:


Net
                  operating loss carryover
              
              $
              3,100,000Less,
                  Change in valuation allowance
              
              
              (3,100,000
              )Net
                  deferred tax asset
              
              $
              -




At
      December 31, 2005, we had an unused net operating loss carryover approximating
      $9,000,000 that is available to offset future taxable income; it expires
      beginning in 2020.





**NOTE
      9 - COMMITMENTS**





**Lease
      Agreements**





On
      May
      15, 2005 the Company leased 4,000 square feet of space at 15870 Pine Ridge
      Road,
      Ft Myers, Florida which will be used as its primary operations. The lease is
      with Gulf To Bay Construction, Inc., with monthly payments of $3,533 through
      June 1, 2010. The lease has five (5) successive renewal options each for a
      period of two (2) years. The rent will increase annually by 3%. The space is
      the
      location of the Company's Research, Design and Engineering center as well as
      office space for up to fifteen (15) employees.





On
      June
      15, 2005 the Company entered into a lease with Bola Industries, LLC for
      approximately 4,000 square feet of production space located at 30946 Industrial
      Road, Livonia Michigan. The lease was on a monthly basis and expired on March
      31, 2006. The rent was $3,775 monthly and included all utilities, use of all
      equipment on site including certain heavy equipment, and use of internet
      service.





Rental
      expense for the operating leases for the years ended December 31, 2005 and
      2004
      was $51,035 and $17,344, respectively.




Employment
      Agreements


Walter
        Weisel is Chairman and Chief Executive Officer of the Company. Mr. Weisel’s
        employment agreement is dated July 19, 2000. Mr. Weisel's salary is $150,000
        per
        annum plus a bonus at the discretion of the Board of Directors. The agreement
        stipulates that Mr. Weisel's salary will be increased to $200,000 and $250,000
        when certain sales and profit objectives are met. The agreement is for a
        term of
        three years and automatically renews for successive one-year periods unless
        terminated by either party upon not less than sixty days prior to the renewal
        date. Mr. Weisel has agreed not to compete with the Company or solicit its
        customers or employees for a period of two years following the termination
        of
        his employment. The agreement also requires the Company to pay Mr. Weisel
        all
        accrued compensation, which amounted to $487,500 as of December 31, 2005,
        upon
        receipt of additional capital of no less than $3,000,000.
 
 Eugene
        Gartlan was appointed Chief Financial Officer of the Company in June 2005.
        Mr.
        Gartlan served as a consultant to the Company since December 15, 2004 through
        his wholly owned company, Stratex Solutions, LLC. ("Stratex"), a business
        consulting firm. Stratex earned 12,000,000 shares of the Company's common
        stock
        and received reimbursement of business expenses of approximately $12,000
        as
        consideration for these consulting services. Mr. Gartlan served as the President
        of Stratex since June 2003. Stratex's compensation was based on a monthly
        salary
        of $10,000, payable in cash or common stock of the Company at the option
        of the
        Company. The price per share used to determine the number of shares earned
        if
        stock was paid was $.005 per share, the stock price on the date the Company
        and
        Stratex entered into the consulting agreement. No cash salary was paid to
        Stratex.
  On
        June
        30, 2005, the Company and Mr. Gartlan entered into an Employment Agreement
        effective as of June 14, 2005. The term of the employment agreement is five
        years. The agreement is automatically extended for one year periods unless
        terminated on not less than thirty days notice by either party prior to any
        termination date. For all the services to be rendered by Mr. Gartlan from
        June
        14, 2005 through December 14, 2005, Mr. Gartlan shall be granted stock options
        to purchase 18,000,000 shares of common stock of the Company at the purchase
        price of $.036. Such options shall be granted under the terms of the Company's
        Stock Option Plan and shall vest equally over a period of three years, or
        upon
        death if sooner. After December 14, 2005, Mr. Gartlan shall be paid a salary
        of
        fifteen thousand dollars per month. The Company shall have the option to
        pay the
        salary in cash or in shares of common stock of the Company registered on
        Form
        S-8. The stock price shall be determined by the market price for the shares
        on
        the first business day of the month in which the salary is earned. If the
        Executive is terminated without cause, all remaining outstanding stock options
        that have not been exercised by Mr. Gartlan, including stock options to purchase
        12,121,276 shares of common stock of the Company awarded by the Board of
        Directors of the Company to Stratex Solutions, LLC on December 15, 2004,
        shall
        immediately vest on the effective date of termination. If there is a change
        of
        ownership of the Company or any of its subsidiaries, all remaining outstanding
        stock options, including the Stratex Solutions options, that have not been
        exercised by Mr. Gartlan, shall immediately vest on the day immediately
        preceding the effective date of the change of ownership. Stratex Solutions
        is
        owned by Mr. Gartlan.
 
 If
        employment is terminated by the Company without cause, Mr. Gartlan shall
        receive
        a payment equal to twenty four months of salary paid prior to the effective
        date
        of termination. The Company has the option to make this payment either in
        cash
        or in the common stock of the Company based on the per share market price
        of
        common stock at the time of termination. If during Mr. Gartlan's employment,
        the
        Company enters into an agreement which effectively will result in a change
        of
        control of the ownership of either the Company or Robotic Workspace
        Technologies, Inc. ("RWT"), the Company's wholly-owned subsidiary, or if
        the
        Company enters into an agreement which effectively will result in a change
        of
        ownership of the assets of the Company or RWT, Mr. Gartlan shall receive
        a
        payment equal to twenty four months of the salary paid prior to the effective
        date of the change of control. The Company shall make such payment in the
        common
        stock of the Company based on a price per share of $.005 if the effective
        date
        of the change of control is December 14, 2005 or sooner; thereafter the price
        per share shall be the market price of common stock at the time of the change
        in
        control. Regarding the change of ownership of the assets of the Company or
        RWT,
        such change of ownership shall be deemed to have occurred if the rights to
        use
        the software of Robotic Workspace Technologies, Inc., is granted or sold
        in
        settlement of claims made by the Company or RWT of trade secret violations
        or
        patent infringements, and such rights to use the software results in a
        settlement payment to the Company or RWT in a single payment or multiple
        payments, other than a long term licensing agreement typical of software
        licensing agreements.
 
 In
        March
        2006 the Company modified the 18,000,000 options granted to Mr. Gartlan as
        part
        of his employment agreement dated June 30, 2005 by changing their vesting
        from a
        three year period to 100% vested as of December 14, 2005, and by modifying
        the
        exercise price from $.036 to $.01. Additionally, Mr. Gartlan has 12,121,276
        options that were granted to Stratex Solutions, Inc in December 2004 with
        an
        exercise price of $.005 per share and vest monthly over 5 years. These options
        were modified in March 2006 to vest over three years. Additionally, Mr. Gartlan
        received a bonus of 5,625,000 on March 10, 2006 which were valued at $50,000,
        based on $.009 per share, the closing price of the Company stock on the previous
        day.  F-14
 Sheri
        Aws
        was appointed Secretary of the Company on September 14, 2004., Ms. Aws has
        served as Vice President of Administration of RWT, the Company's wholly owned
        subsidiary, since February 2004. Under an
        Employment Agreement dated February 24, 2004,  Ms. Aws compensation is
        $60,000 per annum plus a bonus in the discretion of RWT. The agreement is
        for a
        term of one year, and automatically renews for successive one-year periods
        unless terminated by either party upon not less than thirty days notice prior
        to
        the renewal date. Ms Aws has agreed not to compete with RWT or solicit its
        customers or employees for a period of one year following the termination
        of her
        employment.


**NOTE
      10 - PROTECTION OF TRADE SECRETS AND PATENTS - LITIGATION**





On
      December 9, 2004, Robotic Workspace Technologies, Inc., a wholly owned
      subsidiary of Innova Holding, Inc. filed a case in the United States District
      Court for the Middle District of Florida against ABB, Inc. and ABB Robotics
      AB.
      The action alleges misappropriation of trade secrets, breach of contract and
      breach of the covenant of good faith. The action stems from dealings between
      the
      parties in 2002. RWT seeks a trial by jury and an injunction prohibiting
      continued use of RWT's trade secrets and money damages. It is possible that
      ABB,
      Inc. or ABB Robotics AB will counterclaim, although no counterclaims have yet
      been filed. The action is entitled Robotic Workspace Technologies, Inc. v.
      ABB,
      Inc. and ABB Robotics AB, Case No. 2:04-cv-611-FtM-29-SPC.





**NOTE
      11 - RESTATEMENT OF PREVIOUSLY REPORTED FINANCIAL STATEMENTS**





There
      was
      a misstatement in the originally prepared December 31, 2004 financial statements
      discovered in 2005, which related to the beneficial conversion features of
      the
      Mandatorily Redeemable Series A Preferred Stock issued in June 2004 and assumed
      by the Company as part of the reverse merger in August 2004, and the Series
      B
      Preferred Stock issued in September 2004. Management calculated the values
      of
      the beneficial conversion features and determined that of the $125,000 proceeds
      received from the issuance of the Series A Preferred Stock, $48,300 was the
      amount of the assumed unamortized beneficial conversion feature, of which $3,600
      was amortized through Accumulated Deficit for the year ended December 31, 2004.
      Of the $377,000 proceeds received from the issuance of the Series B Preferred
      Stock, $146,500 was allocated to the beneficial conversion feature, all of
      which
      was amortized through Accumulated Deficit for the year ended December 31, 2004.
      Accordingly, the Balance Sheet, Statement of Operations and the Statement of
      Stockholders' Deficit for the year ended December 31, 2004 were restated to
      reflect the amounts and related amortization of the beneficial conversion
      features.





**NOTE
      12 - SUBSEQUENT EVENTS**





During
      the first quarter of 2006, the Company utilized the SEDA discussed in Note
      4 and
      sold 74,232,572 shares of common stock to Cornell Capital for gross proceeds
      of
      $635,000, which increased the number of shares outstanding to approximately
      541,307,000 shares at the end of March 2006. Of the gross proceeds received,
      Cornell was paid $31,750 in commitment fees and $4,500 in structuring fees.
      Additionally, $20,000 of the promissory note due Cornell and discussed in Note
      7
      was paid to Cornell during the three months ended March 31,
      2006.




On
        March
        10, 2006, the Company issued 20,000,000 stock options to four directors;
        these
        options vest immediately and have an exercise price of $.01 per share and
        a term
        of ten years. The Company also issued 5,500,000 options to employees that
        vest
        over three years with an exercise price of $.01 per share and a term of ten
        years.
  On
        January 24, 2006, the Company entered into a Letter Agreement (the “Agreement”)
        with CoroWare, Inc. (“CoroWare”), under which the Company agreed to purchase and
        CoroWare agreed to sell all of its assets including, without limitation,
        all
        hardware, software, employee relations, customer contacts in the military
        and
        homeland security markets, contacts with Microsoft, Inc. and all other
        customers, and all other tangible and intangible assets including all developed
        software.
  CoroWare
        is a systems integration firm with particular expertise in the area of mobile
        service robotics. CoroWare is the only mobile service robotics company to
        join
        the Microsoft ® Windows Embedded Partner Program. CoroWare uses the Windows XP
        Embedded operating system to power its mobile service robots, which are based
        on
        de facto standards, off-the-shelf hardware and proven software.
  The
        Letter Agreement indicates that the purchase price will consist of: (a) up
        to
        $450,000 in cash, of which $100,000 is non-contingent and the balance of
        $350,000 is contingent based on sales and the gross profit percentage of
        the
        CoroWare business; (b) up to 30,000,000 restricted shares of the Company’s
        common stock, of which 5,000,000 are non-contingent and vest in three equal
        annual installments commencing one year from the closing, and the balance
        of
        25,000,000 is contingent based on sales and the gross profit percentage of
        the
        Coroware business; and (c) 2,000,000 common stock options exercisable at
        $.018
        per share, vesting in three equal annual installments commencing one year
        from
        the closing, with a term of ten years from the date of grant, to be allocated
        to
        employees of CoroWare. In addition, the Company shall assume specific
        liabilities of CoroWare in the amount of $98,168, and no other liabilities.
        The
        purchased business assets will be placed in a new subsidiary of the Company,
        which will change its name to “CoroWare” after the closing.
 
 In
        the
        event that the Company enters into a binding agreement to sell all of its
        stock
        or assets, or all of the assets acquired from CoroWare, prior to receipt
        by
        CoroWare of all of the restricted share portion of the purchase price to
        be paid
        under the Agreement, then the remaining portion of the restricted share
        component of the purchase price shall be delivered to CoroWare immediately
        prior
        to the closing of such transaction.
 
 The
        new
        subsidiary shall enter an employment agreement with each key employee of
        CoroWare. In addition, in the first twelve month period following closing,
        such
        key employees shall be eligible for a compensation bonus, based on sales
        of not
        less than $1,900,000.
 
 The
        Company’s obligation to purchase the assets set forth in the Agreement is
        subject to a satisfactory due diligence review. If the Company does not notify
        CoroWare on or prior to April 30, 2006 that it is not satisfied with the
        results
        of the due diligence review, this requirement will be deemed met. For purposes
        of the Agreement, the Company will be deemed satisfied with the due diligence
        review if (a) audited financial statements to be delivered by CoroWare are
        not
        materially different from the unaudited financial information previously
        provided to the Company by Coroware; and (b) all other information relating
        to
        the business assets of CoroWare does not differ materially from the information
        provided to the Company by CoroWare prior to the date of the
        Agreement.
  The
        obligations under the Agreement terminate in the event that (a) a definitive
        written agreement is not executed by April 30, 2006; (b) the transaction
        contemplated by the Agreement has not closed by May 31, 2006; or (c) there
        is a
        material adverse change in the business of either the Company or
        CoroWare.
  The
        determination of the consideration to be paid in the transaction was determined
        in arms length negotiations between the Boards of Directors of the Company
        and
        CoroWare. The negotiations took into account the value of the assets sold
        to
        Company and the consideration paid. At the time of the transaction, there
        were
        no material relationships between CoroWare and the Company, or any of its
        affiliates, any director or officer of the Company, or any associate of any
        such
        officer or director.


F-15




**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly authorized.





**INNOVA
      HOLDINGS, INC.**






*Date: 
              April 19, 2006*
            By:
            /s/ Walter
              K. WeiselWalter K. WeiselChairman,
              CEO and Director








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




Date:
                April 19, 2006
              By:
              /s/ Walter
                K. WeiselWalter K. Weisel, Chairman, CEO andDirector
 Date: April
                19, 2006
              By:
              /s/ Eugene
                GartlanEugene
                  Gartlan, Chief Financial
                Officer
                  and Chief Accounting Officer
 Date: April
                19, 2006
              By:
              /s/ Gary
                F. McNear*Gary
                F. McNear, Director*
 Date: 
                April 19, 2006
              By:
              /s/ Craig
                W. Conklin*Craig
                W. Conklin, Director*
 Date: April
                19, 2006
              By:
              /s/ Martin
                Nielson*Martin
                Nielson, Director*