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**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

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**FORM 10-KSB**

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(MARK ONE)

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

**For the fiscal year ended
December 31, 2004**

**OR**

**[   ] 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 000-33033**

**PEOPLENET INTERNATIONAL CORPORATION**(Name of small business issuer in its charter)



|**Delaware**                                                   | **02-0575232**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**5201 Great America Parkway, Suite 239****Santa Clara, California 95054**(Address of Principal Executive Offices including Zip Code)

**(408) 988-1888**(Registrant's Telephone Number, Including Area Code)

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

Securities registered pursuant to Section 12(g) of
the Act:**Title of the class**
    **Name of each exchange on which
      registered**Common Stock, $ .0001 par value
    None

Indicate by check mark whether the registrant (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
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    [X]     No [     ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB, or any amendment to this Form 10-KSB.    [X]

Revenues for its most recent fiscal year: $

Aggregate market value of common stock held by
non-affiliates at March 31, 2005:  0

Number of shares of common stock outstanding
at March 31, 2005: 16,066,499

DOCUMENTS INCORPORATED BY REFERENCE:      None.

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

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**PEOPLENET INTERNATIONAL  INCORPORATION2004 ANNUAL
REPORT ON FORM 10-KSB INDEX**



|Part I.        |                                                                                             | Page
|-------------- | ------------------------------------------------------------------------------------------- | ----
|Item 1.        | Descriptions of Business                                                                    | 4   
|Item 2.        | Descriptions of Property                                                                    | 6   
|Item 3.        | Legal Proceedings                                                                           | 6   
|Item 4.        | Submission of Matters to a Vote of Security Holders                                         | 6   
|Part II.       |                                                                                             |     
|Item 5.        | Market for the Registrant's Common Equity and Related Stockholder
      Matters             | 6   
|Item 6.        | Management's Discussion and Analysis of Financial Condition and Results
      of Operations | 7   
|Item 7.        | Financial Statements                                                                        | 10  
|Item 8.        | Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosures | 10  
|Part III.      |                                                                                             |     
|Item 9.        | Directors and Executive Officers of the Registrant                                          | 10  
|Item 10.       | Executive Compensation                                                                      | 11  
|Item 11.       | Security Ownership of Certain Beneficial Owners and Management                              | 12  
|Item 12.       | Certain Relationships and Related Transactions                                              | 13  
|Part IV.       |                                                                                             |     
|Item 13.       | Exhibits and Reports on Form 8-K                                                            | 13  
|Item 14.       | Controls and Procedures                                                                     | 13  
|Signatures     |                                                                                             | 14  
|Certifications |                                                                                             | 14  
|Exhibits Index |                                                                                             | 31  



---

PART I

Our disclosure and analysis in this report contains forward-looking statements. When used in this discussion, the words
"believes," "anticipates" and "intends" and similar expressions are intended to identify forward-looking statements, but the
absence of these words does not necessarily mean that a statement is not forward looking. Forward-looking statements include,
but are not limited to, statements about our expansion plans, objectives, expectations, intentions, and target markets, and
are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these
forward-looking statements for may reasons, including the factors described under "Risk Factors Affecting Future Performance,"
"Description of Business" and elsewhere in this report. We undertake no obligation to publicly release any revisions to these
forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence
of anticipated events. Readers are urged, however, to review the factors and risks we describe in reports we file from time to
time with the Securities and Exchange Commission, which may be accessed at the Commission's website at www.sec.gov.

Item 1. Description of Business

General

PeopleNet, formerly known as American Champion Media, Inc., is a Delaware corporation headquartered in
Menlo Park,
California and incorporated on February 5, 1997. PeopleNet was formed by, and has been, a wholly owned subsidiary of
Pacific Systems Control Technology, Inc., formerly known as American Champion Entertainment, Inc., a Delaware corporation.
Pacific Systems Control Technology has been a publicly traded company since July 31, 1997, and its common stock currently
trades on the OTC Bulletin Board under the symbol PFSY.  Pacific Systems recently changed the focus of its business to
concentrate on the distribution and sale of remote access electric meters and related products.  Since this new line of
business is not complementary to the business conducted by PeopleNet, the board of directors of Pacific Systems
determined that it was in the shareholders' best interest to separate the two companies and allow them to operate
independently.  In particular, the boards of directors of both companies believes that matters related to public market
valuations, capital raising, public relations and marketing are better served when a company is focused on related business.
In addition, the boards believe that shareholder value would be increased by the ownership of two public companies rather than one.

On February 8, 2002, Pacific Systems distributed its shares of PeopleNet to the shareholders of Pacific Systems as of the record
date of January 16, 2002. The securities of PeopleNet are not currently traded on any market.

ChiBrow

In June 2001, we signed an agreement with ECapital Group, Inc. to purchase the exclusive licensing and marketing
rights to ChiBrow, a safe web browser software for children.  Under the terms of the agreement, upon the effectiveness
of the spin-off of PeopleNet from Pacific Systems, we issued 374,587 shares of our common stock on February 8, 2002
to ECapital in exchange for the worldwide exclusive rights to market and distribute ChiBrow for three years.

On March 21, 2002, we purchased all rights relating to the intellectual property of ChiBrow, including the source codes,
trademarks, copyright, domain name and website, from ECapital. The total purchase price paid was the issuance to ECapital
of 3,799,999 shares of our common stock.

We evaluated the asset of ChiBrow at December 31, 2003 and determined that
this asset has been impaired and was of no value, based upon the fair market
value of similar assets.  We recorded an impairment expense equal to the
remaining book value of this asset.

PeopleNet Communication Solution

On March 21, 2002, we purchased all rights relating to the intellectual property of a communication software package from
PeopleNet Corporation, called the PeopleNet Communication Solution, in exchange for 9,620,000 shares of our common stock.

The PeopleNet Communication Solution is a scalable, robust, and fully
customizable communication infrastructure software. Its tightly integrated
platform offers users seamless access to their productivity and communication
tools, and the ability to actively engage in their interactive communication
functions. Multilingual support and theme options are built into all components,
so users can completely control language and theme preferences.

We evaluated the asset of the Communication Solution at December 31, 2003 and
determined that this asset has been impaired and was of no value, based upon the
fair market value of similar assets.  We recorded an impairment expense
equal to the remaining book value of this asset.

The Company is currently seeking merger opportunities with other software
companies.

Television Program

Between the years 1997 and 2000, we developed and produced 29 half-hour episodes of the Kanga Roddy series
which features a six-foot tall kangaroo character named Kanga Roddy who is a martial arts expert. Unlike other
martial arts programs which feature violent content, Kanga Roddy never fights because he understands that conflict
can always be resolved through traditional martial arts values such as knowledge, compassion, humility, discipline,
respect and an open mind. The show merges these values, which are the core subjects in the field of emotional
intelligence, with contemporary music, dance, vibrant colors and exciting movements designed to capture the attention
of its target audience consisting primarily of pre-school and primary school children.

From 1997 through 2000, we and KTEH, the public broadcasting station serving the San Jose, California area,
collaborated
on the production of 29 half-hour episodes of the Kanga Roddy series.  We funded the production costs of the series and
we own all of the intellectual property to the series.  KTEH was granted the exclusive domestic (U.S.) broadcasting rights
to the series, and KTEH, through their connection to the network of public television, caused the show to be aired by
public TV stations across the country.  The exclusive broadcasting rights granted to KTEH ended on April 1, 2001.

In December 2000, we signed a licensing agreement with World Channel, Inc. of South San Francisco, California,
for a five-year worldwide licensing and distribution of the Kanga Roddy TV program and its related video and audio
products.  Pursuant to terms of the agreement, World Channel has the exclusive right to license such products of the
Kanga Roddy program and shall pay PeopleNet $600,000 in licensing fees per year from 2001 through 2005, or a total of
$3 million.  Royalties under pre-existing agreements are assigned to World Channel.  In connection with the distribution of
our stock by Pacific Systems Control Technology, we entered into an agreement with Pacific Systems pursuant to which we agreed
that all future cashflow related to the Kanga Roddy series and its intellectual property that will be generated from the
licensing agreement with World Channel shall be allocated between the two companies on a 50/50 basis.  Pursuant to this agreement,
PeopleNet will pay Pacific Systems 50% of the cash we receive in the future from World Channel.  All revenue under this agreement
will be earned and recorded by PeopleNet, with 50% of the cash received used as repayment of the note payable to Pacific Systems.
Since only partial payment from World Channel was received during the year 2001 and that the collectibility of
additional payments are not assured, we have determined to record only $450,000 in revenues at that end of the year 2001 and we
may not recognized any additional revenues from this licensing agreement in the future until payments are actually received.

The investment in the Kanga Roddy series was fully reserved as of December
31, 2003, as management believes that this investment would not generate future
revenues for the Company.

Employees

As of March 31, 2005, we have two full-time employees.

Item 2. Description of Property

On January 18, 2005, the Company subleases office from Teknion LLC commencing
February 1, 2005 and ending June 13, 2006.  The total rent for the entire
lease period amounts to $115,000 which was paid in full in January 18, 2005.

Item 3. Legal Proceedings

As of December 31, 2001, while PeopleNet International Corporation was still a subsidiary of Pacific Systems Control Technology,
the following case was either filed against Pacific Systems naming all of its subsidiaries including PeopleNet as the
defendants, or Pacific Systems' initiated complaint resulted in a cross-complaint by the defendant naming Pacific Systems and
all of its subsidiaries including PeopleNet as the defendants in the cross-complaint.  Pacific Systems has agreed to indemnify
all of its subsidiaries including PeopleNet from the liabilities of the following case including expenses, fees or judgment.

In October 2001, Pacific Systems filed a complaint against a
former employee in licensing and marketing activities for breach of contract,
breach of fiduciary duty and unjust enrichment, among other causes of action,
seeking declaratory relief from the court.  A counter claim from the
employee was filed in April 2002 against Pacific Systems and its subsidiaries.
On April 15, 2002, judgment was entered against Pacific Systems and its
subsidiaries in the amount of $70,527. As of December 31, 2002, $56,727 was
still outstanding on the judgment. On February 11, 2003, Pacific Systems and its
subsidiaries entered into a global settlement and mutual release of all claims
with the former employee. Under the agreement, the cross-defendants, including
the Company, will pay to the former employee a total sum of $100,000 plus
interest at the rate of 10% per year, payable in installments at the rate of
$3,000 per month. As of December 31, 2004, the outstanding balance under the
settlement agreement was $72,000.

With the exception of the foregoing, no lawsuits or proceedings are currently
pending against PeopleNet International Corporation.

Item 4. Submission of Matters to Vote of Security Holders

Not applicable.

**PART II**

Item 5. Market for Common Equity and Related Stockholder Matters

Market for Securities

There is currently no active market for our securities.

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

The following section discusses the significant operating
changes, business trends, financial condition, earnings and liquidity that have
occurred in the one-year period ended December 31, 2004. This discussion should
be read in conjunction with the Company's consolidated financial statements and
notes appearing elsewhere in this report.

The following discussion may contain forward-looking statements that are
subject to risks and uncertainties. When used in this discussion, the words
"believes," "anticipates" and "intends" and similar expressions are intended to identify forward-looking statements, but the
absence of these words does not necessarily mean that a statement is not forward looking. Forward-looking statements include,
but are not limited to, statements about our expansion plans, objectives, expectations, intentions, and target markets, and
are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these
forward-looking statements for may reasons, including the factors described under "Risk Factors Affecting Future Performance,"
"Description of Business" and elsewhere in this report. We undertake no obligation to publicly release any revisions to these
forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence
of anticipated events. Readers are urged, however, to review the factors and risks we describe in reports we file from time to
time with the Securities and Exchange Commission, which may be accessed at the Commission's website at www.sec.gov.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations".
SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement
of tangible long-lived assets and the associated asset retirement costs. This Statement is effective
for financial statements issued for fiscal years beginning after June 15, 2002.



SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
was issued in August 2001. SFAS No. 144 is effective for fiscal years beginning after December 15,
2001, and addresses financial accounting and reporting for the impairment or disposal of long-lived
assets. This statement supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," and the accounting and reporting provisions of APB
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business.



The adoption of above pronouncements, did not materially impact the Company's
financial position or results of operations.



In May 2002, the Board issued SFAS No. 145, Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS 145"). SFAS 145
rescinds the automatic treatment of gains or losses from extinguishments of debt as extraordinary
unless they meet the criteria for extraordinary items as outlined in APB Opinion No. 30,
Reporting the Results of Operations, Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS 145
also requires sale-leaseback accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions and makes various technical corrections
to existing pronouncements. The provisions of SFAS 145 related to the rescission of FASB
Statement 4 are effective for fiscal years beginning after May 15, 2002, with early adoption
encouraged. All other provisions of SFAS 145 are effective for transactions occurring after May
15, 2002, with early adoption encouraged. The Company does not anticipate that adoption of SFAS
145 will have a material effect on our earnings or financial position.



In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with exit or Disposal Activities." This Statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This Statement requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. Under Issue 94-3 a liability for
an exit cost as defined, was recognized at the date of an entity's commitment to an exit plan.
This statement will not have a material impact on the Company's financial statements.



In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 removes the requirement in SFAS No. 72 and Interpretation 9
thereto, to recognize and amortize any excess of the fair value of liabilities assumed over the
fair value of tangible and identifiable intangible assets acquired as an unidentifiable
intangible asset. This statement requires that those transactions be accounted for in accordance
with SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets."  In addition, this statement amends SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," to include certain financial institution-related intangible
assets.  The Company does not expect adoption of SFAS No. 147 would have a material impact, if
any, on its financial position, results of operations or cash flows.



In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" (FIN 45). FIN 45 requires that upon issuance of a guarantee, a guarantor
must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45
also requires additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The recognition provisions
of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The
disclosure requirements are effective for financial statements of interim or annual periods
ending after December 15, 2002. The adoption of FIN45 is not expected to have a material effect
on the Company's financial position, results of operations, or cash flows.



In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock Based
Compensation-Transition and Disclosure".  SFAS No. 148 amends SFAS No. 123, "Accounting for
Stock Based Compensation", to provide alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee compensation.  In addition,
this Statement amends the disclosure requirements of Statement 123 to require prominent
disclosures in both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used, on reported results.  The
Statement is effective for the Companies' interim reporting period ending January 31, 2003.  The
Companies do not expect the adoption of SFAS No. 148 would have a material impact on its
financial position or results of operations or cash flows.

Critical Accounting Policies

In the ordinary course of business, the company has made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company believes that the following discussion addresses the Company's most critical accounting policies, which are those that are most important to the portrayal of the Company's financial condition and results. The Company constantly re-evaluates these significant factors and makes adjustments where facts and circumstances dictate. Although historically, actual results have not significantly deviated from those determined using the necessary estimates inherent in the preparation of financial statements, future actual results may vary significantly. Estimates and assumptions include, but are not limited to, customer receivables, long-term asset lives, contingencies and litigation. The Company has also chosen certain accounting policies when options were available, including:

- The intrinsic value method, or APB Opinion No. 25, to account for our common stock incentive awards; and
- We record an allowance for credit losses based on estimates of customers' ability to pay. If the financial condition of our customers were to deteriorate, additional allowances may be required.
- The Company expects to apply the provisions of Statement of Position 97-2 as well as SAB 101, to account for the sales of software and related services that may be bundled with the software license.

These accounting policies are applied consistently for all years presented. Our operating results would be affected if other alternatives were used. Information about the impact on our operating results is included in the footnotes to our consolidated financial statements.



Results of Operation

PeopleNet was formed in February 1997, under the name American Champion Media, as a wholly owned subsidiary of
Pacific Systems Control Technology, formerly known as American Champion Entertainment.

Revenues

During the year ended December 31, 2004, we recognized $10,278 from software
licensing, hosting and management activities.

Costs and Expenses

For the year ended December 31, 2004, we did not have any payroll expenses. 
We incurred professional
fees of $89,383 and general and administrative expenses of $369,690. We had no
rent expenses for the year 2004 as our office space was provided without charge
by ECapital Group, Inc.

As a result of foregoing factors, our net loss was ($435,091) for the year ended December 31, 2004,
as compared to ($1,045,415) for the year ended December 31, 2003. Net loss per share decreased to ($0.03) in 2004
from ($0.07) in 2003, while weighted average number of shares outstanding
increase from 15,749,999 shares to 15,831,213
by the end of the year 2004.

Liquidity and Capital Resources

Cash flows for the twelve months ended December 31, 2004 was an
inflow of $320,855 which was primarily from financing activities in issuance of
equity in the net amount of $458,300.  Cash flow from operating activities
was a negative ($144,418).

We historically financed our operating and capital outlays from funds received from our parent company
and from loans from shareholders. However, there is no assurance that we will be
successful in raising capital from private placement or continually from
shareholders. ECapital Group, Inc. has expressed the possibility of extending
loans to us for our operational needs if any private placement is not successful.  However, there are no assurances that such
debt financing from ECapital Group is available to us for our operational needs.  Management has a reasonable belief that
we can fund our operations by the above mentioned means through the end of year
2005.

The Company is currently seeking merger opportunities with other software
companies.  However, given our current financial status and also that our
securities are not currently traded on any exchange, there is no assurance that
we will be able to do so.

Item 7. Financial Statements

The financial statements of the Company and independent auditors' reports are
filed herewith on pages 17 through
30 of this report.

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

Not applicable.



PART III

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

As of December 31, 2004 the directors, executive officers and
controlling persons of the Company are:



|Name          | Age | Position with the Company                      | Director Since
|------------- | --- | ---------------------------------------------- | --------------
|Benedict Van  | 44  | Chief Executive Officer, Chairman and Director | 2002          
|James McCargo | 53  | Director and Secretary                         | 2004          

Benedict Van.



Item 10. Executive Compensation

The following table sets forth certain summary information with respect to the compensation paid to our Chief Executive Officer and President, and our Chairman of the Board, for services rendered in all capacities for the period through December 31, 2004. We had no other executive officers whose total annual salary and bonus exceeded $100,000 for that fiscal year:





|Name          | Position                                                    | Year           | Salary          | Other Compensation | Bonus        | Long-Term Compensation       
|------------- | ----------------------------------------------------------- | -------------- | --------------- | ------------------ | ------------ | -----------------------------
|              |                                                             |                |                 |                    |              | Awards                       
|              |                                                             |                |                 |                    |              | Restricted Stock Award(s) ($)
|Benedict Van  | Chief Executive Officer &  Chairman of the Board & Director | 2004
2003
2002 | NoneNone$23,500 | NoneNoneNone       | NoneNoneNone | NoneNoneNone                 
|James McCargo | Director and Secretary                                      | 2004           | None            | None               | None         | None                         









STOCK OPTIONS GRANTS AND EXERCISES

Option/SAR Grants within 2004

Option/SAR Grants in Last Fiscal Year

|Individual Grants
|-----------------
|Name             
|Benedict Van     
|James McCargo    







The following table shows the value at December
31, 2004 of unexercised options held by the
named executive officers:





|                                                                       |                                 |                    | Number of securities underlying unexercised options at fiscal year-end (#) | Value of unexercised in-the-money options at fiscal year-end ($)
|---------------------------------------------------------------------- | ------------------------------- | ------------------ | -------------------------------------------------------------------------- | ----------------------------------------------------------------
|Name                                                                   | Shares acquired on exercise (#) | Value Realized ($) | Exercisable/ unexercisable                                                 | Exercisable/ unexercisable                                      
|Benedict Van, Chief Executive Officer, Chair or the Board and
Director | None                            | None               | 2,699,999 / 0                                                              | 0 / 0                                                           
|James McCargo,
Director and Secretary                                  | None                            | None               | 350,000 / 0                                                                | 0 / 0                                                           



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

The compensation for our key management will be evaluated from time to time by the Board. The Board
may, in its discretion, award these individuals cash bonuses, options to purchase shares of common stock under our
Equity Incentive Plan and such other compensation, including equity-based compensation, as the Board, or a committee
thereof, shall approve from time to time.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of December 31, 2004, certain information with respect to stock ownership of:

- all persons known by us to be beneficial owners of 5% or more of
our outstanding shares of Common Stock;
- each director and officer; and
- all directors and officers as a group.



|Name and Address of Beneficial Owner (1) | Number of Shares of Common Stock | Percentage of Common Stock Ownership*
|---------------------------------------- | -------------------------------- | -------------------------------------
|ECapital Group, Inc.                     | 4,869,999                        | 30.3%                                
|PeopleWeb Communications                 | 3,184,479                        | 19.8%                                
|Kevin Le                                 | 1,100,000                        | 6.8%                                 
|Norman Boether                           | 850,000                          | 5.3%                                 
|Benedict Van (director and officer) *    | 186,359                          | 1.2%                                 
|James McCargo (director and officer) *   | --                               | --                                   
|All Directors and Officers as a group    | 186,359                          | 1.2%                                 

* Mr. Van is also the controlling
person of ECapital Group, Inc. and PeopleWeb Communications.

_______________________



1. The address for the directors and executive officers,
and for Mr. Le and Mr. Boether, is c/o PeopleNet International Corporation,
5201 Great America Parkway, Suite 239, Santa Clara, California 95054.

The address for ECapital Group is
5201 Great America Parkway, Suite 446, Santa Clara, CA 95054.

The address for PeopleWeb
Communications is 5201 Great America Parkway, Suite 446, Santa Clara, CA 95054.



Item 12. Certain Relationships and Related Transactions

We had an unsecured loan in the amount of $54,000 from our previous director and Chief Executive Officer,
Anthony Chan.  On February 8, 2002 the entire amount of this loan was converted
into 27,000 shares of our common stock.  Mr. Chan resigned from the Company
as of July 2003.

On June 20, 2001, we acquired the exclusive marketing rights to ChiBrow from ECapital and issued 374,587 shares of the Company's common stock to ECapital.
On March 21, 2002, we entered into an Agreement For Sale of Assets with ECapital for the purchase by the Company from ECapital of the
entire intellectual property to ChiBrow.  As consideration for the purchase,
we issued 3,799,999 shares of our common stock to ECapital.

On March 21, 2002, we entered into an Agreement For Sale of Assets with PeopleNet Corporation ("PC") for the purchase by the Company from PC of the intellectual property rights for a software bundle including web-based email and office
communication solutions.  As consideration for the purchase, we issued 9,620,000 shares of
our common stock to PC.

Item 13. Exhibits and Reports on Form 8-K

(a) Exhibits

See Index to Exhibits on page 31 of this Form 10-KSB.

(b) Reports on Form 8-K

None.

Item 14. Controls and Procedures

Based on their most recent review, which was completed within 90 days of the filing of this report, the Company's principal
executive officer and principal financial officer has concluded that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required
disclosure and are effective to ensure that such information is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms.  There were no significant changes in the Company's internal controls or in other
factors that could significantly affect those controls subsequent to the date of their evaluation.

---

**SIGNATURES**

In accordance with Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: April 15, 2005

In accordance with the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



|Signature                             | Title                                                                    | Date          
|------------------------------------- | ------------------------------------------------------------------------ | --------------
|By: /s/ Benedict Van
    Benedict Van | Chief Executive Officer
      (Principal Executive Officer) and Director | April 15, 2005

---

CERTIFICATIONS

I, Benedict Van, Chief Executive Officer and  Chief Financial Officer of PeopleNet
International Corporation, certify that:

1. I have reviewed this annual report on Form 10-KSB of PeopleNet
International Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying Officers and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as pf the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function);

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: April 15, 2005

/s/ Benedict Van
Benedict Van
Chief Executive Officer

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Stockholders and Board of Directors

PeopleNet International Corporation



We have audited the accompanying balance sheet of Peoplenet
International Corporation, a Delaware Corporation and (the "Company") as of December 31, 2004 and the related statements of operations, stockholders' equity and cash flows for the years ended December 31, 2004 and 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audit of these statements 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 Peoplenet International Corporation as of December 31, 2004 and the results of its operations and its cash flows for the years ended December 31, 2004 and 2003, in conformity with accounting principles generally accepted in the United States of America.



The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has accumulated deficit of $19,607,930 including net losses of $435,091 and $1,045,415 for the years ended December 31, 2004 and 2003, respectively. These factors as discussed in Note 14 to the financial statements, raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 14. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





KABANI & COMPANY, INC.

CERTIFIED PUBLIC ACCOUNTANTS



Huntington Beach, California

March 30, 2005





---

PEOPLENET INTERNATIONAL CORPORATIONBALANCE SHEET

`December 31
                                              -----------
                                                  2004
                                              -----------
CURRENT ASSETS
  Cash & cash equivalents                     $   321,626

PROPERTY & EQUIPMENT - net                         13,027

                                              -----------
    Total assets                              $   334,653
                                              ===========

LIABILITIES
  Accounts payable and accrued expenses       $   379,218
  Advances from related parties                    53,191
  Notes payable - related party                     4,500
                                              -----------
    Total current liabilities                     436,909
                                              -----------

COMMITMENTS & CONTINGENCIES

STOCKHOLDERS' EQUITY
  Preferred stock, $0.0001 par value;
    10,000,000 shares authorized              $       -
  Common stock, $0.0001 par value;
    100,000,000 shares authorized;
    16,066,499 shares issued and
    outstanding at December 31, 2004                1,607
  Additional paid-in capital                   19,713,339
  Shares to be issued                             152,000
  Deferred compensation charges                  (361,272)
  Accumulated deficit                         (19,607,930)
                                              -----------
    Total stockholders' equity                   (102,256)
                                              -----------
                                              $   334,653
                                              ===========`

See accompanying notes to the financial statements.

---

PEOPLENET INTERNATIONAL CORPORATIONSTATEMENTS OF OPERATIONS

`Year Ended December 31,
                                              -------------------------
                                                  2004          2003
                                              -----------   -----------
REVENUE
  Licensing fee - Software                    $       -           2,870
  Management fees                                     -         137,300
  Hosting & other                                  10,278         8,341
                                              -----------   -----------
    Total revenue                                  10,278       148,511
                                              -----------   -----------

COSTS AND EXPENSES
  Amortization of intangibles                         -         480,266
  Impairment of intangible assets                     -         125,514
  Salaries and payroll taxes                          -           5,210
  Professional fees                                89,383        92,685
  General and administrative                      369,690       483,975
                                              -----------   -----------
    Total costs and expenses                      459,073     1,187,650

                                              -----------   -----------
LOSS FROM OPERATIONS                             (448,795)   (1,039,139)

OTHER INCOME (EXPENSE)
  Gain on sale of marketing & distributor
    rights of software                             20,000           -
  Interest expense                                 (5,496)       (5,476)
                                              -----------   -----------
                                                   14,504        (5,476)

LOSS BEFORE INCOME TAXES                         (434,291)   (1,044,615)

PROVISION FOR INCOME TAXES                            800           800
                                              -----------   -----------
NET LOSS                                      $  (435,091)   (1,045,415)
                                              ===========   ===========

Basic & diluted weighted average number
  of common stock outstanding                  15,831,213    15,749,999
                                              ===========   ===========

Basic and diluted net loss per share          $     (0.03)  $     (0.07)
                                              ===========   ===========`

Weighted average number of shares used to compute basic and diluted loss per share is the same since the effect of dilutive securities is anti-dilutive.

See accompanying notes to the financial statements.

---

PEOPLENET INTERNATIONAL CORPORATIONSTATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIT)

`Common Stock
                                -----------------   Additional               Deferred     Related                      Total
                                 Number             Paid-In     Shares to  Compensation    Party      Accumulated   Stockholders'
                                of shares  Amount    Capital    be issued    Charges     Receivable     Deficit     Equity (Deficit)
                               ----------  ------  -----------  ---------  ------------  ----------  -------------  ----------------
Balance as of
January 1, 2003                15,749,999  $1,575  $19,080,371  $     -    $(1,053,060)  $(315,791)  $(17,866,742)  $   (153,647)
                               ----------  ------  -----------  ---------  ------------  ----------  -------------  -------------
Amortization of deferred
  compensation charges                -       -            -          -        420,835         -              -          420,835

Payment on related party
  receivable                          -       -            -          -            -        55,109            -           55,109

Net loss for the year                 -       -            -          -            -           -       (1,045,415)    (1,045,415)
                               ----------  ------  -----------  ---------  ------------  ----------  -------------  -------------
Balance,
January 1, 2004                15,749,999  $1,575  $19,080,371  $     -    $  (632,225) $ (260,682)  $(18,912,157)  $   (723,118)
                               ==========  ======  ===========  =========  ============ ===========  =============  =============

Deemed divident - Write off
of related party receivable           -       -            -          -            -       260,682       (260,682)           -

Shares issued for cash            225,000      23      449,978        -            -           -              -          450,000

Shares issued to settle for debts  91,500       9      182,991        -            -           -              -          183,000

Shares to be issued                76,000     -            -      152,000          -           -              -          152,000

Amortization of deferred
compensation charges                  -       -            -          -        270,953         -              -          270,953

Net loss for the year                 -       -            -          -            -           -         (435,091)      (435,091)
                               ----------  ------  -----------  ---------  ------------  ----------  -------------  -------------
Balance,
December 31, 2004              16,142,499  $1,607  $19,713,339  $ 152,000  $  (361,272) $      -     $(19,607,930)  $   (102,256)
                               ==========  ======  ===========  =========  ============ ===========  =============  =============`

See accompanying notes to the financial statements.

---

PEOPLENET INTERNATIONAL CORPORATIONSTATEMENTS OF CASH FLOWS

`Year Ended December 31,
                                                         ---------------------------
                                                             2004           2003
                                                         ------------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss                                               $  (435,091)   $ (1,045,415)
  Adjustments to reconcile net loss to net cash
    used in operating activities
      Depreciation and amortization                              -           495,580
      Impairment of intangible assets                            -           125,514
      Gain on sale of marketing & distribution right
        of software                                          (20,000)            -
      Amortization of deferred compensation charges          270,953         420,835
      Increase / (decrease) in current liabilities:
          Accounts payable & accrued expenses                 39,719         (78,000)
                                                         ------------   ------------
      Net cash used in operating activities                 (144,418)        (81,486)
                                                         ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Receipt from sale of marketing & distribution right
    of software                                               20,000             -
  Acquisition of equipments                                  (13,027)            -
  Decrease of notes receivable                                   -            55,109
                                                         ------------   ------------
  Net cash provided by (used in) investing activities          6,973          55,109
                                                         ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of common stock                     450,000             -
  Proceeds from shares to be issued                          152,000             -
  Payment of notes from related parties                      (55,500)            -
  Payment on loans from related parties                     (174,200)            -
  Proceeds of loans from related parties                      86,000          25,754
                                                         ------------   ------------
      Net cash provided by financing activities              458,300          25,754
                                                         ------------   ------------

NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS           320,855            (623)

CASH & CASH EQUIVALENTS, beginning balance                       771           1,394
                                                         ------------   ------------
CASH & CASH EQUIVALENTS, end balance                     $   321,626             771
                                                         ============   ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

  Cash paid during the period for
    Interest                                             $       -      $       -
                                                         ============   ============
    Foreign and state income taxes                       $       -      $       800
                                                         ============   ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES

  Common stock & stock options issued for services
    & compensation                                       $       -      $ 3,751,537
                                                         ============   ============
  Common stock issued for purchase of intellectual
    properties                                           $       -      $ 1,059,500
                                                         ============   ============
  Conversion of inter-company balance upon spin-off      $       -      $12,199,785
                                                         ============   ============
  Common stock issued in settlement of debt              $   183,000    $       -
                                                         ============   ============`

``

See accompanying notes to the financial statements.

---

NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDEDDECEMBER 31, 2004

Note 1 - Nature of Operations, Stock Split, and Spin-off

Nature of Operations - PeopleNet International Corporation (the "Company") was incorporated on February 5, 1997 in the state of Delaware. The Company focuses on development and sales of communication software solutions and management of media-related programs. The software solutions include a controlled and safe Internet browser for children and a multiple-module web-based email and office automation bundle. The Company had been a wholly owned subsidiary of Pacific Systems Control Technology, Inc. ("PSCT") until February 8, 2002 when the Company completed its spin-off transaction from PSCT and became an independent entity.

During the year ended December 31, 2004, the Company sold marketing and distribution rights for Chibrow, a safe web browser software for children, for $20,000.



Note 2 - Summary of Significant Accounting Policies

Use of Estimates, Risks and Uncertainties - 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from the estimates. Significant estimates used in these financial statements include the recovery of intangible assets and film costs, which have a direct relationship to the net realizable value of the related asset. It is at least reasonably possible that management's estimate of revenue from licensing and films could change in the near term, which could have a material adverse effect on the Company's financial condition and results of operations.



Cash and cash equivalents - The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

Property and Equipment - Property and equipment is stated at cost. Depreciation for property and equipment is computed using the straight-line method over an estimated useful life of five years.



Long-lived assets - Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations for a Disposal of a Segment of a Business."  The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144.  SFAS 144 requires impairment losses to be 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 amounts.  In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets.  Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.



Intangible Assets - Intangible assets consisted of two intellectual properties: "The Children's Browser" and an office communication program & associates modules. The Company evaluates intangible assets for impairment, at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows.  Recoverability of intangible assets, other long-lived assets and, goodwill is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss.  The Company evaluated valuation of the Company's property and equipment at December 31, 2003 and determined all the non-current assets have been impaired and were of zero value.



Software development costs - The Company has adopted Statement of Position 98-1 ("SOP 98-1") "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", as its accounting policy for internally developed computer software costs.  Under SOP 98-1, computer software costs incurred in the preliminary development stage are expensed as incurred.  Computer software costs incurred during the application development stage are capitalized and amortized over the software's estimated useful life.



Revenue Recognition - Revenue from certain licensing programs is recorded when license agreement has been executed, the software has been delivered or shipped, the fee is determined and the customer is invoiced. The Company has adopted the provisions of Statements of Position 97-2 and 98-4 and SEC Staff Accounting Bulletin 104. Revenue from licensing agreements is not significant for the year ended December 31, 2004 and 2003.



Revenue from hosting services is recognized in the period in which the service is provided when the amount of revenue is determinable and collectability is reasonably assured. Subsequent to the year ended December 31, 2002, the Company discontinued the hosting operations.



The Company provided management services to two companies related through a common officer in 2003.  Through the year ended December 31, 2004 and 2003, the Company has provided services amounting $0 and $137,300 respectively to the two entities. Revenue is recognized when the services are rendered.



Research and Development - Expenditures for software development costs during the preliminary stage and research are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The period between achieving technological feasibility and the general availability of such software has been short. Consequently, costs otherwise capitalizable after technological feasibility is achieved are generally expensed because they are insignificant.

Income Taxes - Income taxes are accounted for using an asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between financial statement and tax basis of assets and liabilities at the applicable enacted tax rates. Accounting principles generally accepted in the United States of America require a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.



Stock-based compensation - SFAS No. 123 prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123 requires compensation expense to be recorded (i) using the new fair value method or (ii) using the existing accounting rules prescribed by Accounting Principles Board Opinion No. 25, "Accounting for stock issued to employees" (APB 25) and related interpretations with proforma disclosure of what net income and earnings per share would have been had the Company adopted the new fair value method. The Company has chosen to account for stock-based compensation using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and has adopted the disclosure only provisions of SFAS 123.  Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee is required to pay for the stock.



The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Valuation of shares for services is based on the estimated fair market value of the services performed.



Basic and diluted net loss per share - Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.



Fair value of financial instruments - Statement of financial accounting standard No. 107, Disclosures about fair value of financial instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.



Segment Reporting - Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure About Segments of an Enterprise and Related Information" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Currently, SFAS 131 has no effect on the Company's consolidated financial statements as substantially all of the Company's operations are conducted in one industry segment.

Concentrations of Risk - Financial instruments which potentially subject the Company to concentrations of credit risk are cash and accounts receivable. The Company places its cash with financial institutions deemed by management to be of high credit quality. The amount on deposit in any one institution that exceeds federally insured limits is subject to credit risk.

Recent pronouncements - In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment, an Amendment of FASB Statement No. 123" ("FAS No. 123R").  FAS No. 123R requires companies to recognize in the statement of operations the grant- date fair value of stock options and other equity-based compensation issued to employees.  FAS No. 123R is effective beginning in the Company's second quarter of fiscal 2006.  The adoption of FASB Statement No. 123R may have a significant impact on the Company's financial position or results of operations.



In December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of Nonmonetary Assets."  The Statement is an amendment of APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance.  The adoption of SFAS Statement No. 153 does not have a significant impact on the Company's financial position or results of operations.



In April of 2004, the EITF reached consensus on the guidance provided in EITF Issue No. 03-6, "Participating Securities and the Two-Class Method under SFAS No. 128 Earnings Per Share" ("EITF 03-6"). EITF 03-6 clarifies whether a security should be considered a "participating security" for purposes of computing earnings per share ("EPS") and how earnings should be allocated to a "participating security" when using the two-class method for computing basic EPS. The adoption of EITF 03-6 does not have a significant impact on the Company's financial position or results of operations.



SEC Staff Accounting Bulletin (SAB) No. 105, "APPLICATION OF ACCOUNTING PRINCIPLES TO LOAN COMMITMENTS," summarizes the views of the staff of the SEC regarding the application of generally accepted accounting principles to loan commitments accounted for as derivative instruments. SAB No.105 provides that the fair value of recorded loan commitments that are accounted for as derivatives under SFAS No. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," should not incorporate the expected future cash flows related to the associated servicing of the future loan. In addition, SAB No. 105 requires registrants to disclose their accounting policy for loan commitments.  The provisions of SAB No. 105 must be applied to loan commitments accounted for as derivatives that are entered into after March 31, 2004. The adoption of this accounting standard does not have a material impact on the Company's financial statements.



Reclassifications - Certain comparative amounts have been reclassified to conform to the period ended December 31, 2004 presentation.



Note 3 - Property and Equipment



`Equipment                        $  62,847
            Production equipment               290,389
                                             ---------
                                               353,236
            Less accumulated depreciation
              and amortization                 340,209
                                             ---------
                                             $  13,027
                                             =========`

Depreciation expense was $ 0 and $ 15,314 for the years ended December 31, 2004 and 2003, respectively.



Note 5 - Intangible Assets

Intangible assets include two intellectual properties: "The Children's Browser" and an office communication program and associates modules. Acquired in March 2002, a total of 13,419,999 shares of common stock were issued for the acquisition. Intangible assets are amortized on a straight-line basis over the estimated economic life which is 36 and 18 months. Amortization expenses for the year ended December 31, 2004 and 2003 was $0 and $480,266.  Intangible assets and their related accumulated amortization as of December 31, 2004 are as follows:



`ChiBrow                                   $   300,000
            Office Communication                          759,500
            Domain name                                     1,030
                                                      -----------
                                                        1,060,530
            Less accumulated amortization                 935,016
                                                      -----------
                                                          125,514

            Impairment of intangible assets in 2003       125,514
                                                      -----------
                                                      $     -
                                                      ===========`

ChiBrow was acquired from ECapital Group, Inc., a related party who owns approximately 19% of our Company prior to the acquisitions. The office communication software was acquired from PeopleNet Corporation whose certain owners indirectly own our shares through their ownership of ECapital Group, Inc. The values of the acquisitions were determined by mutually agreed prices of the software products from the sellers and the value of our common stock at $0.08 per share.



The Company evaluated valuation of the Company's intangible assets at December 31, 2003 and determined all the intangible assets have been impaired and were of no value, based upon the fair market value of similar assets. The Company recorded an impairment expense equal to the book value of the intangible assets amounting $125,514 in the accompanying financial statements



Note 7 - Advances from Related Parties

The advances from related parties are due on demand, non-interest bearing and unsecured.



Note 8 - Notes Payable - related party

At December 31, 2003, the Company had an unsecured note payable of $60,000 from a related party, related through president of the Company. The note is due on demand and bears interest at 9% per annum.  During the year ended December 31, 2004, $55,500 of the principal amount was paid off.  Interest for the year ended December 31, 2004 and 2003 amounted $1,699 and $9,000 respectively.



Note 9 - Income Taxes

No provision was made for Federal income tax since the Company has significant net operating loss carryforward.  The Company used to file a consolidated income tax return with PSCT. The Company had net operating loss (NOL) carry forwards for federal income tax purposes of approximately $16,517,000 the benefits of which is to expire in 2013 through 2021 for federal purposes. Because of changes in ownership of the Company and PSCT, the utilization of NOLs in any one-year will be limited by Section 382 of the Internal Revenue Code. Differences between financial statement and tax losses was immaterial at December 31, 2004. The provision for income taxes consists of the state minimum tax imposed on corporations.



The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Consolidated Statements of Operations:

`2004            2003
                                              -------------   -------------
    Federal tax benefit at statutory rates    $   (148,000)   $  ( 355,000)
    State tax benefit at statutory rates          ( 26,000)      (  62,000)
    Increase in valuation allowance                174,800         417,800
                                              -------------   -------------
                                              $        800    $        800
                                              =============   =============`

Significant components of the Company's deferred tax assets and liabilities as of December 31, 2004 are as follows:

`DEFERRED TAX ASSETS
               NOL carryforward          $6,600,000
               Valuation allowance       (6,600,000)
                                         -----------
                                         $      -
                                         ===========`

Due to the uncertainty of future taxable income and limitations related to Section 382 of the Internal Revenue Code, a 100% valuation allowance for the net amount of the deferred tax assets has been recorded at December 31, 2004.



Note 10 - Commitments and Contingencies

On December 27, 2000, the Company entered into a worldwide distribution agreement with respect to The Adventures with Kanga Roddytelevision program with World Channel, Inc. Under the agreement, World Channel will have the exclusive rights for exhibition, distribution, process and reproduction and all commercial exploitation of the program for a period of five years. The agreement requires World Channel to make five annual installments of $600,000 on or before the end of each of the years 2001 through 2005. For the year ended December 31, 2001, the Company recognized $450,000 film income in relation to this distribution agreement, $193,000 of which was collected before year-end. The Company did not earn any revenue from the films in 2002. A 100% reserve on the remaining receivable was also established as of June 30, 2002. Because collection activity through December 31, 2001 raises substantial doubt with respect to amounts due in future years under this agreement and because there are currently no other agreements in place, the Company has reserved the remaining unamortized film costs for "The Adventures With Kanga Roddy" television program.

In June 2001 the Company signed an agreement with ECapital Group, Inc. ("ECapital") to purchase the exclusive licensing and marketing rights to ChiBrow, a safe web browser software for children. Under the terms of the agreement and upon the effectiveness of the spin-off of the Company from PSCT, the Company issued 374,587 shares of common stock, with registration rights, to ECapital in exchange for the worldwide exclusive rights to market and distribute ChiBrow for three years (see Note 1). The Company intends to file a registration statement for such shares immediately after the effectiveness of the spin-off transaction. Pursuant to the terms of the agreement, the Company shall retain 35% of all revenues generated from such marketing efforts and the balance shall be paid to ECapital. The registration for the 374,587 shares of PeopleNet common stock issued to ECapital has not yet been filed as of December 31, 2004.

Through December 31, 2001, the Company was still a subsidiary of Pacific Systems Control Technology, the following cases were either filed against Pacific Systems naming all of its subsidiaries including PeopleNet as the defendants, or Pacific Systems' initiated complaint resulted in a cross-complaint by the defendant naming Pacific Systems and all of its subsidiaries including PeopleNet as the defendants in the cross-complaint. Pacific Systems has agreed to indemnify all of its subsidiaries including PeopleNet from the liabilities of the following cases including expenses, fees or judgment.

In October 2001, Pacific Systems filed a complaint against a former employee in licensing and marketing activities for breach of contract, breach of fiduciary duty and unjust enrichment, among other causes of action, seeking declaratory relief from the court.  A counter claim from the employee was filed in April 2002 against Pacific Systems and its subsidiaries. On April 15, 2002, judgment was entered against Pacific Systems and its subsidiaries in the amount of $70,527. As of December 31, 2002, $56,727 was still outstanding on the judgment. On February 11, 2003, Pacific Systems and its subsidiaries entered into a global settlement and mutual release of all claims with the former employee. Under the agreement, the defendants, including the Company, will pay to the former employee a total sum of $100,000 plus interest at the rate of 10% per year, payable in 8 installments.

On April 9, 2002, the Company entered into a stock exchange agreement with MarketRoot Corporation where the Company intends to acquire all of the outstanding shares of MarketRoot for 1,740,000 shares of the Company's common stock.  MarketRoot has developed and owned an e-commerce software product.  The agreement is subject to the submission of audited financial statements of MarketRoot for the years ended December 31, 2001 and 2000 and the acceptance of such financial statements by the Company. As of December 31, 2004, audited financial statements of MarketRoot have not yet been submitted to the Company.  The Company's Board of Directors have decided to cancel the stock exchange agreement due to MarketRoot's default and nullify a total of 1,620,621 shares of the Company's stock options granted in the year 2002 to owners of MarketRoot Corporation.

Note 11 - Related Party Transactions

In March 2002, the Company acquired ChiBrow from ECapital Group, Inc., which is a related party who owns approximately 19% of our Company prior to the acquisition. The Company also acquired an office communication software from PeopleNet Corporation whose certain owners indirectly own our shares through their ownership of ECapital Group, Inc. These intangible assets were evaluated as fully impaired by the Company's management on December 31, 2003 (note 5).



The Company provides management services to two companies related through a common officer. Through the year ended December 31, 2003, the Company has provided services amounting $137,300 to the two entities.



Note 12 - Common Stock / Options

Between April and May 2002, the Company issued a total of 6,680,620 stock options with exercise prices ranging from $0.08 to $0.12 per share and with gradual vesting arrangements. Due to the difference in valuation between certain intangible assets the Company acquired in March 2002 with the Company's common stock at $0.08 per share and common stock the Company sold to an investor in June 2002 at the price of $1.00 per share, the Company valued these options at a total of approximately $4.5 million..  The remaining unvested options are deferred and will be amortized over the vesting period.  During the year ended December 31, 2004, the Company amortized deferred compensation of $270,953.



During the year ended December 31, 2004, the Company issued 91,500 shares of common stock valued at $183,000 for settlement of debt.



During the year ended December 31, 2004, the Company issued 225,000 shares of common stock for cash amounting to $450,000.



On December 2004, the Company received cash of $152,000 for shares to be issued.



Stock Options

The Company applies the intrinsic value based method prescribed by Accounting Principals Board Opinion No. 25 "Accounting for Stock Issued to Employees," in accounting for employee stock options and non-employee directors. Accordingly, compensation expense is recognized only when options are granted with a discounted exercise price. Any such compensation expense is recognized ratably over the associated service period, which is generally the vesting term.

Stock options granted to employees for services provided to the Company are accounted for under Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." During the year ended December 31, 2002, the Company granted 6,680,620 options and recorded compensation expense of $ 3,915,930.



Pro forma net earnings and earnings per share information, as required by SFAS 123, has been determined as if the Company had accounted for employee and non-employee director stock options under SFAS 123's fair value method. The fair value of these options was estimated at grant date using a Black-Scholes option pricing model with the following weighted average assumptions for fiscal 2002: risk free interest rate of 5.00%; dividend yield of 0%; expected weighted average option life of 4.47 years; and volatility of 0%.



The weighted average grant date fair value and the weighted average exercise price of options issued during the year were $0.95 and $0.10, respectively, all of which were issued at an exercise price below the stock price at the grant date.



The following summary presents the incentive and non-qualified options under the plan granted, exercised, expired and outstanding at December 31, 2004 and 2003:



`Weighted
                                                      Average
                                                     Exercise
                                       Under Plan     Price
                                       ----------    --------
        Balance, December 31, 2002      6,680,620      $0.10
          Granted                             -          -
          Exercised or lapsed                 -          -
                                       ----------    --------
        Balance, December 31, 2003      6,680,620      $0.10
          Granted                             -          -
          Exercised or lapsed                 -          -
                                       ----------    --------
        Balance, December 31, 2004      6,680,620      $0.10
                                       ==========    ========`

The following summary presents the weighted average exercise prices, number of options outstanding and exercisable, and the remaining contractual lives of the Company's stock options at December 31, 2003:

`Options Outstanding             Options Exercisable
                        -------------------            ---------------------
                              Weighted
                              Average        Weighted               Weighted
                              Remaining      Average                Average
              Number         Contractual     Exercise  Number       Exercise
           Outstanding          Life          Price    Exercisable   Price
           -----------  -------------------  --------  -----------  --------
  2004
  Options   6,680,620           3.47           $0.10    4,903,063     $0.10`

The Company did not grant any options in the year 2004 and 2003.



Note 13 - Supplemental disclosure of cash flows



The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95.



The Company paid $0 and $900 for income taxes in the years ended December 31, 2004 and 2003. The Company paid $0 for interest during the year ended December 31, 2004 and 2003.



The Cash flow statements do not include effect of the non-cash investing and financing activities of issuance of 91,500 shares of common stock for acquisition of intangible assets amounting $183,000 in 2004.



Note 14 - Going concern



The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated deficit of $19,607,930 at December 31, 2004.The Company incurred a net loss of $435,091 and $1,045,415 for the years ended December 31, 2004 and 2003, respectively. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management's plans and the ongoing operations of the Company are expected to require additional working capital in the next twelve months.  The Company is marketing its software and communication products and is expected to generate revenues next quarter.  The Company is also looking at several software companies to acquire.  However, there can be no assurance that these plans could be successfully executed due to current adverse investment climate.  The management believes that the Company needs to bring in at least $2M with in the next quarter to market the Company's new products.



Note 15 - Deemed dividend



On June 22, 2001, PSCT approved a plan to spin-off the Company to the shareholders as tax-free distribution. As a part of the transaction, PSCT agreed to pay to the Company certain amount, since liabilities incurred by Pacific for the same amount, were recorded by the Company. The receivable from PSCT amounted to $260,682 at December 31, 2004. On December 31, 2004, the Company evaluated the receivable and decided to write it off as such amount was no longer collectible. The Company recorded the write off as deemed dividend in the statements of stockholders' equity in the accompanying financial statement.



Note 16 - Subsequent Events



On January 18, 2005, the Company subleases with Teknion LLC commencing February 1, 2005 ending June 13, 2006.  The total rent for the entire lease period amounts to $115,000 which was paid in full in January 18, 2005.



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INDEX TO EXHIBITS

Exhibit No.       Exhibit Description

3.1(1)     Certificate of Incorporation, as amended on July 24, 2001
3.2(1)     By-laws
4.1(1)     2001 Stock Option Plan
4.2(1)     2001 Non-Employee Director Stock Option Plan
4.3(1)     2001 Stock Incentive Plan
10.1(1)   Agreement between American Champion Media & American Champion Entertainment dated as of July 10, 2001
10.2(1)   Agreement among ACEI, American Champion Media, ECapital Group & Anthony Chan, dated as
of June 20, 2001
10.3(1)   Agreement between American Champion Media & World Channel dated as of December 27, 2000
10.4(1)   Agreement between American Champion Media & Brighter Child Interactive dated as of September 30, 1999
10.5(1)   Agreement between American Champion Media & Prestige Toys Corp dated as of October 13, 1999
10.6(2)   Agreement - Sale of Assets between ECapital Group & PeopleNet International dated March 21, 2002
10.7(2)   Agreement - Sale of Assets between PeopleNet Corporation & PeopleNet International dated March 21, 2002
23.1        Consent of Independent Auditors
99.906    Certification pursuant to the Sarbanes-Oxley Act of 2002

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1. Filed as an exhibit to the Company's Form 10-SB/A dated as of December 3,
2001
2. Filed as an exhibit to the Company's Form 8-K dated as of March 21, 2002

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