**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**First Amended
      Form 10-K/A**





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





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





OR





[
                 ]
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      transition period from _______________ to _______________.








**Commission
      file number** **0-49687**








**M-GAB
      Development Corporation**


(Exact
      name of registrant as specified in its charter)





**Florida**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            **33-0961490**
              (I.R.S.
                Employer
              Identification
                No.)**22342
                Avenida Empresa, Suite 220**
              **Rancho
                Santa Margarita, CA**
              (Address
                of principal executive offices)
            **92688**
              (Zip
                Code)





**Registrant’s
      telephone number, including area code (949) 635-1240**








Securities
      registered pursuant to Section 12(b) of the Act:





Title
                of each class
            
            Name
                of each exchange on which registeredNone
            
            None








Securities
      registered pursuant to Section 12(g) of the Act:





Common
      Stock, par value $0.001


(Title
      of
      class)








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. Yes 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-K or any amendment to
      this
      Form 10-K. [  ]





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Act).


X





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
      last sold, or the average bid and asked price of such common equity, as of
      the
      last business day of the registrant’s most recently completed second fiscal
      quarter. There was no market for our common stock.





**Applicable
      only to issuers involved in bankruptcy proceedings during the preceding five
      years:**





Indicate
      by check mark whether the registrant filed all documents and reports required
      to
      be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent
      to
      the distribution of securities under a plan confirmed by a court. Yes
      __  No  .





**Applicable
      only to corporate issuers**





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      equity, as of the latest practicable date. As of March 15, 2005, there were
      6,383,845 shares of common stock, par value $0.001, issued and
      outstanding.





**Documents
      Incorporated by Reference**





List
      hereunder the following documents if incorporated by reference and the Part
      of
      the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
      incorporated: (1) Any annual report to security holders; (2) Any proxy or
      information statement; and (3) Any prospectus filed pursuant to rule 424(b)
      or
      (c) of the Securities Act of 1933. The listed documents should be clearly
      described for identification purposes (e.g., annual report to security holders
      for fiscal year ended December 24, 1980). None.







**M-GAB
        Development Corporation**





**TABLE
      OF CONTENTS**





**PART
                  I**ITEM
                  1
              BUSINESS
              1ITEM
                  2
              PROPERTY
              5ITEM
                  3
              LEGAL
                  PROCEEDINGS
              5ITEM
                  4
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              5**PART
                  II**ITEM
                  5
              MARKET
                  FOR REGISTRANT'S COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS
                  AND ISSUER
                  PURCHASES OF EQUITY SECURITIES
              6ITEM
                  6
              SELECTED FINANCIAL DATA
              7ITEM
                  7
              MANAGEMENT’S
                    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                    OPERATION
              7ITEM 7A
              QUANTITATIVE AND
                QUALITATIVE
                DISCLOSURES ABOUT MARKET RISK
              12ITEM
                  8
              FINANCIAL
                    STATEMENTS AND SUPPLEMENTARY DATA
              12ITEM 9
              CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
              13ITEM 9A
              CONTROLS
                  AND PROCEDURES
              13ITEM 9B
              OTHER INFORMATION
              13**PART
                  III**ITEM
                  10
              DIRECTORS
                  AND EXECUTIVE OFFICERS OF THE REGISTRANT
              14ITEM
                  11
              EXECUTIVE
                  COMPENSATION
              15ITEM
                  12
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS
              16ITEM
                  13
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS
              19ITEM
                  14
              PRINCIPAL
                    ACCOUNTING FEES AND SERVICES
              19**PART
                    IV**ITEM
                  15
              EXHIBITS,
                  FINANCIAL STATEMENTS SCHEDULES
              20





**PART
      I**





**Explanatory
        Note**
 
 M-GAB
        Development Corporation has restated its Annual Report on Form 10-K. This
        Annual
        Report is for the year ended December 31, 2004, and was originally filed
        with
        the Commission on Form 10-KSB on March 25, 2005. The purpose of this amendment
        is to correctly file this Annual Report on Form 10-K rather than on Form
        10-KSB,
        since a business development company does not qualify as a small business
        issuer
        under Reg. § 228.10 of Regulation S-B, which excludes business development
        companies from the definition of “small business issuers.” References throughout
        this Annual Report are accurate as of the date originally filed. The Company
        has
        not undertaken to update all of the information in this Annual Report, but
        instead has updated only those areas related to the restatements. Please
        read
        all of the Company’s filings with the Commission in conjunction with this Annual
        Report.
 
 This
        Annual Report includes forward-looking statements within the meaning of the
        Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based
        on management's beliefs and assumptions, and on information currently available
        to management. Forward-looking statements include the information concerning
        possible or assumed future results of operations of the Company set forth
        under
        the heading “Management's Discussion and Analysis of Financial Condition or Plan
        of Operation.” Forward-looking statements also include statements in which words
        such as “expect,”  “anticipate,”  “intend,”  “plan,” 
“believe,”  “estimate,”  “consider” or similar expressions are
        used.
 
 Forward-looking
        statements are not guarantees of future performance. They involve risks,
        uncertainties and assumptions. The Company's future results and shareholder
        values may differ materially from those expressed in these forward-looking
        statements. Readers are cautioned not to put undue reliance on any
        forward-looking statements.


**ITEM
      1 - BUSINESS**





**General**





M-GAB
      Development Corporation, a Florida corporation (the “Company”) was incorporated
      in March 2001. From inception through early 2003, our business was the
      development, marketing, and distribution of an interactive travel brochure.
      On
      May 16, 2003, we filed an election to be treated as a business development
      company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”), which
      became effective on the date of filing.





Subsequent
      to the BDC election our principal business is to make venture capital
      investments in early-stage and/or developing enterprises that are principally
      engaged in the development or exploitation of inventions, technological
      improvements, and new or unique products and services. Our principal objective
      is long-term capital appreciation. We may invest in debt securities of these
      companies, or may acquire an equity interest in the form of common or preferred
      stock, warrants or options to acquire stock or the right to convert the debt
      securities into stock. We may invest alone, or as part of a larger investment
      group. Consistent with our status as a BDC and the purposes of the regulatory
      framework for BDC’s under the 1940 Act, we will provide managerial assistance,
      potentially in the form of a consulting agreement or in the form of a board
      of
      director’s seat, to the developing companies in which we invest.





In
      addition, we may acquire either a minority or controlling interest in mature
      companies in a roll-up strategy. It is anticipated that any acquisitions will
      be
      primarily for our stock, or a combination of cash and stock. The principal
      objective of acquisitions pursuant to a roll-up strategy would be to consolidate
      an industry and either sell the acquired entities as a larger unit, or take
      the
      unit public through an initial public offering, spin-off to our shareholders,
      or
      reverse merger into a publicly traded shell corporation.





We
      operate as an internally managed investment company whereby our officers and
      employees conduct our operations under the general supervision of our Board
      of
      Directors. We have not elected to qualify to be taxed as a regulated investment
      company as defined under Subchapter M of the Internal Revenue Code, we do not
      have any intellectual property protections nor does our management feel that
      any
      is necessary, and we have not spent any funds on research and development or
      compliance with environmental laws during the last two fiscal
      years.




1


**Regulation
        as a BDC**
 
 Although
        the 1940 Act exempts a BDC from registration under that Act, it contains
        significant limitations on the operations of BDC’s. Among other things, the 1940
        Act contains prohibitions and restrictions relating to transactions between
        a
        BDC and its affiliates, principal underwriters and affiliates of its affiliates
        or underwriters, and it requires that a majority of the BDC’s directors be
        persons other than “interested persons,” as defined under the 1940 Act. The 1940
        Act also prohibits a BDC from changing the nature of its business so as to
        cease
        to be, or to withdraw its election as, a BDC unless so authorized by the
        vote of
        the holders of a majority of its outstanding voting securities. BDC’s are not
        required to maintain fundamental investment policies relating to diversification
        and concentration of investments within a single industry.
 
 Generally,
        a BDC must be primarily engaged in the business of furnishing capital and
        providing managerial expertise to companies that do not have ready access
        to
        capital through conventional financial channels. Such portfolio companies
        are
        termed “eligible portfolio companies.” More specifically, in order to qualify as
        a BDC, a company must (1) be a domestic company; (2) have registered a class
        of
        its equity securities or have filed a registration statement with the Securities
        and Exchange Commission pursuant to Section 12 of the Securities Exchange
        Act of
        1934; (3) operate for the purpose of investing in the securities of certain
        types of portfolio companies, namely immature or emerging companies and
        businesses suffering or just recovering from financial distress; (4) extend
        significant managerial assistance to such portfolio companies; and (5) have
        a
        majority of “disinterested” directors (as defined in the 1940 Act).
 
 An
        eligible portfolio company is, generally, a U.S. company that is not an
        investment company and that (1) does not have a class of securities registered
        on an exchange or included in the Federal Reserve Board’s over-the-counter
        margin list; or (2) is actively controlled by a BDC and has an affiliate
        of a
        BDC on its board of directors; or (3) meets such other criteria as may be
        established by the Securities and Exchange Commission. Control under the
        1940
        Act is generally presumed to exist where a BDC owns 25% of the outstanding
        voting securities of the company.
 
 The
        1940
        Act prohibits or restricts companies subject to the 1940 Act from investing
        in
        certain types of companies, such as brokerage firms, insurance companies,
        investment banking firms and investment companies. Moreover, the 1940 Act
        limits
        the type of assets that BDC’s may acquire to “qualifying assets” and certain
        assets necessary for its operations (such as office furniture, equipment
        and
        facilities) if, at the time of acquisition, less than 70% of the value of
        the
        BDC’s assets consist of qualifying assets. Qualifying assets include: (1)
        securities of companies that were eligible portfolio companies at the time
        the
        BDC acquired their securities; (2) securities of bankrupt or insolvent companies
        that were eligible at the time of the BDC’s initial acquisition of their
        securities but are no longer eligible, provided that the BDC has maintained
        a
        substantial portion of its initial investment in those companies; (3) securities
        received in exchange for or distributed in or with respect to any of the
        foregoing; and (4) cash items, government securities and high-quality short-term
        debt. The 1940 Act also places restrictions on the nature of the transactions
        in
        which, and the persons from whom, securities can be purchased in order for
        the
        securities to be considered qualifying assets. These restrictions include
        limiting purchases to transactions not involving a public offering and acquiring
        securities from either the portfolio company or its officers, directors,
        or
        affiliates.
  2
 A
        BDC is
        permitted to invest in the securities of public companies and other investments
        that are not qualifying assets, but those kinds of investments may not exceed
        30% of the BDC’s total asset value at the time of the investment.


A
      BDC
      must make significant managerial assistance available to the issuers of eligible
      portfolio securities in which it invests. Making available significant
      managerial assistance means, among other things, any arrangement whereby the
      BDC, through its directors, officers or employees, offers to provide, and,
      if
      accepted does provide, significant guidance and counsel concerning the
      management, operations or business objectives and policies of a portfolio
      company. The portfolio company does not have to accept the BDC’s offer of
      managerial assistance, and if they do accept may be required to pay prevailing
      market rates for the services.





We
      do not
      currently have any investments in eligible portfolio companies.





**Employees**





Other
      than our current sole officer, we do not have any employees, and do not
      anticipate having any other employees other than administrative personnel in
      the
      future.





**Statement
      of Risk Factors and Other Considerations**





On
      at
      least an annual basis, we are required to provide our shareholders with a
      statement of risk factors and other considerations for their review. These
      risk
      factors and other considerations include:





***We
      have not made any investments into other companies.*** We have
      not yet made any investments into other companies, and thus we have virtually
      no
      assets. We need to raise capital before we can make investments into, and offer
      managerial assistance to, other companies. We may not be successful in raising
      capital. If we are successful in raising capital, we may make investments that
      turn out to be worthless.





***We
      have never generated any revenue, and we are not
      profitable*** *.* We
      were
      incorporated in March 2001 and have generated no revenue to date. Our primary
      activity to date has been development of our business plan, which has changed
      since our inception. Our success is dependent upon the successful development
      of
      our business model as a business development company, as to which there is
      no
      assurance. Unanticipated problems, expenses and delays are frequently
      encountered in establishing a new business. These include, but are not limited
      to, inadequate funding, competition, and investment development. Our failure
      to
      meet any of these conditions would have a materially adverse effect upon us
      and
      may force us to reduce or curtail operations. We may not ever be
      profitable.





***We
      need to raise capital in order to fulfill our business
      plan*** .
      To date
      we have relied on private funding from our founders and directors, short-term
      borrowing, and capital raised from the sale of our common stock to fund
      operations. We have generated no revenues and have extremely limited cash
      liquidity and capital resources. Any equity financings could result in dilution
      to our stockholders. Debt financing may result in high interest expense. Any
      financing, if available, may be on unfavorable terms. If adequate funds are
      not
      obtained, we may be required to reduce or curtail operations.





3


***Investing
      in our stock is highly speculative and you could lose some or all of your
      investment*** **.** The
      value
      of our common stock may decline and may be affected by numerous market
      conditions, which could result in the loss of some or the entire amount invested
      in our stock. The securities markets frequently experience extreme price and
      volume fluctuations that affect market prices for securities of companies
      generally, and very small capitalization companies in particular.




***Investing
      in
      our stock may be inappropriate for your risk tolerance*** **.** Our
      planned investments into other companies, in accordance with our investment
      objective and principal strategies, result in a far above average amount of
      risk
      and volatility and may well result in loss of principal.





***We
      will face a lot of competition, most of which is better capitalized and more
      experienced than us*** **.** We
      will
      face competition in our investing activities from private venture capital funds,
      investment affiliates of large industrial, technology, service and financial
      companies, small business investment companies, wealthy individuals and foreign
      investors. As a regulated business development company (“BDC”), we are required
      to disclose quarterly the name and business description of portfolio companies
      and value of any portfolio securities. Most of our competitors are not subject
      to this disclosure requirement. Our obligation to disclose this information
      could hinder our ability to invest in certain portfolio companies. Additionally,
      other regulations, current and future, may make us less attractive as a
      potential investor to a given portfolio company than a private venture capital
      fund.





***We
      are subject to regulatory risks as a business development
      company*** **.** We
      are
      subject to regulation as a BDC. The loans and other investments that we expect
      to make in small business concerns are extremely speculative. Many of these
      concerns will be privately held. Even if a public market for their securities
      later develops, the securities we purchase are likely to be restricted from
      sale
      or other transfer for significant periods of time. These securities will be
      very
      illiquid.





***The
      services of our directors and officer are key to our future
      success*** **.** We are
      dependent for the selection, structuring, closing and monitoring of its
      investments on the diligence and skill of our officer, Carl M. Berg, and each
      of
      our directors. Our future success depends to a significant extent on the
      continued service and coordination of its senior management team.





***We
      plan to invest primarily in small, private companies*** **.** There
      are significant risks inherent in our planned venture capital business. We
      intend to invest a substantial portion of our assets in early stage or start-up
      companies. These private businesses tend to be thinly capitalized, unproven
      small companies with risky technologies that lack management depth and have
      not
      attained profitability or have no history of operations. Because of the
      speculative nature and the lack of a public market for these investments, there
      is significantly greater risk of loss than is the case with traditional
      investment securities. We expect that some of our investments will be a complete
      loss or will be unprofitable and that some will appear to be likely to become
      successful but never realize their potential. We intend to be risk seeking
      rather than risk averse in our approach to venture capital and other
      investments. Neither our investments nor an investment in our stock is intended
      to constitute a balanced investment program. We intend to rely to a large extent
      upon proceeds from sales of investments rather than investment income to defray
      a significant portion of our operating expenses. Such sales are unpredictable
      and may not occur. The terrorist acts in the United States of September 11,
      2001
      are the type of events that could severely impact a small company that does
      not
      have as many resources to ride out market downturns and would need immediate
      investment capital that might be temporarily unavailable.





4


***There
      will be no liquid market for our portfolio investments*** **.** Most
      of
      our intended investments will be either equity securities acquired directly
      from
      small companies or below investment grade subordinated debt securities. Our
      portfolio of equity securities will usually be subject to restrictions on resale
      or otherwise have no established trading market. The illiquidity of most of
      our
      portfolio may adversely affect our ability to dispose of such securities at
      times when it may be advantageous for us.





Even
      if
      our portfolio companies are able to develop commercially viable products, the
      market for new products and services is highly competitive and rapidly changing.
      Commercial success is difficult to predict and the marketing efforts of our
      expected portfolio companies may not be successful.




***Our
        board of
        directors will value our portfolio investments*** **.** There
        is
        typically no public market of equity securities of the small privately held
        companies in which we intend to invest. As a result, the valuation of the
        equity
        securities in our portfolio are likely to be stated at fair value as determined
        by the good faith estimate of our Board of Directors. In the absence of a
        readily ascertainable market value, the estimated value of our portfolio
        of
        securities may differ significantly, favorably or unfavorably, from the values
        that would be placed on the portfolio if a ready market for the equity
        securities existed.




***Our
      quarterly results will fluctuate*** **.** Our
      quarterly operating results could fluctuate as a result of a number of factors.
      These factors include, among other things, variations in and the timing of
      the
      recognition of realized and unrealized gains or losses, the degree to which
      portfolio companies encounter competition in their markets and general economic
      conditions. As a result of these factors, results for any one quarter should
      not
      be relied upon as being indicative of performance in future
      quarters.





**ITEM
      2 - PROPERTY**





We
      utilize the office of our legal counsel, The Lebrecht Group, APLC, under a
      verbal agreement where we do not pay rent or reimburse him for the minimal
      expenses incurred.





**ITEM
      3 - LEGAL PROCEEDINGS**





We
      are
      not a party to or otherwise involved in any legal proceedings.





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





No
      matters were submitted to a vote of the security holders during the three month
      period ended December 31, 2004.






5


**PART
      II**





**ITEM
      5 - MARKET FOR REGISTRANT'S COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS
      AND
      PURCHASE OF EQUITY SECURITIES**





Our
      securities are not listed for trading on any exchange or quotation service.
      We
      are not required to comply with the timely disclosure policies of any exchange
      or quotation service. The requirements to which we would be subject if our
      securities were so listed typically included the timely disclosure of a material
      change or fact with respect to our affairs and the making of required filings.
      Although we are not required to deliver an annual report to security holders,
      we
      intend to provide an annual report to our security holders, which will include
      audited financial statements.





There
      are
      currently warrants outstanding to acquire 333,334 shares of our common stock
      at
      $0.15 per share. Other than these warrants, there are no outstanding options
      or
      warrants to purchase, or securities convertible into, shares of our common
      stock. If we are successful in getting our common stock traded, of the 6,383,845
      shares of common stock outstanding, (i) 10,000 shares held by 20 shareholders
      of
      record were sold pursuant to an effective registration statement and may be
      sold
      without restriction, (ii) 13,000 shares held by 12 shareholders of record were
      sold in a private placement over two years ago and the resale of those shares
      was subsequently registered, and thus the shares may be sold either pursuant
      to
      the effective registration statement or pursuant to Rule 144(k), (iii) 450,000
      shares are held by one shareholder who may sell all of them pursuant to Rule
      144(k), and (iv) 360,845 shares held by 42 shareholders were acquired pursuant
      to an exemption from registration under Regulation E, promulgated under the
      Securities Act, and may be sold without restriction. In addition to the above,
      Mr. Carl Berg, our sole officer and director, is the holder of 5,550,000 shares
      and may sell up to 63,838 shares every 90 days pursuant to Rule
      144.





The
      number of holders of record of shares of our common stock is seventy seven
      (77).





There
      have been no cash dividends declared on our common stock. Dividends are declared
      at the sole discretion of our Board of Directors.





The
      Securities Enforcement and Penny Stock Reform Act of 1990 requires additional
      disclosure relating to the market for penny stocks in connection with trades
      in
      any stock defined as a penny stock. The Commission has adopted regulations
      that
      generally define a penny stock to be any equity security that has a market
      price
      of less than $5.00 per share, subject to a few exceptions which we do not meet.
      Unless an exception is available, the regulations require the delivery, prior
      to
      any transaction involving a penny stock, of a disclosure schedule explaining
      the
      penny stock market and the risks associated therewith.




6


**ITEM
        6 - SELECTED FINANCIAL DATA**


**M-GAB
                  Development Corporation**
                
                For
                    the year ended December 31st2004
                
                2003
                
                2002
                
                2001(1)Statement
                    of Operations Data:Total
                    revenues
                
                $
                -
                
                
                -
                
                
                -
                
                
                -Income
                    (loss) from continuing operations
                
                
                57,059
                
                
                (63,253
                )
                
                (37,376
                )
                
                (19,575
                )Net
                    income (loss)
                
                
                57,059
                
                
                (63,253
                )
                
                (37,376
                )
                
                (19,575
                )Net
                    income (loss) per common share from continuing operations
                
                
                0.01
                
                
                (0.01
                )
                
                (0.01
                )
                
                (0.00
                )Balance
                    Sheet Data:Current
                    assets
                
                $
                17,403
                
                
                -
                
                
                6,437
                
                
                -Total
                    assets
                
                
                17,403
                
                
                -
                
                
                6,437
                
                
                -Current
                    liabilities
                
                
                9,324
                
                
                93,105
                
                
                46,289
                
                
                3,476Total
                    liabilities
                
                
                9,324
                
                
                103,105
                
                
                46,289
                
                
                3,476Total
                    stockholders’ equity (deficit)
                
                
                8,079
                
                
                (103,105
                )
                
                (39,852
                )
                
                (3,476
                )Total
                    dividends per common share
                
                
                -
                
                
                -
                
                
                -
                
                
                -


(1)  Statement
        of Operations Data is from inception (March 2001) through December 31,
        2001.


**ITEM
        7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
        OPERATION**


Our
      Management’s Discussion and Analysis contains not only statements that are
      historical facts, but also statements that are forward-looking (within the
      meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
      Securities Exchange Act of 1934). Forward-looking statements are, by their
      very
      nature, uncertain and risky. These risks and uncertainties include
      international, national and local general economic and market conditions;
      demographic changes; our ability to sustain, manage, or forecast growth; our
      ability to successfully make and integrate acquisitions; existing government
      regulations and changes in, or the failure to comply with, government
      regulations; adverse publicity; competition; fluctuations and difficulty in
      forecasting operating results; changes in business strategy or development
      plans; business disruptions; the ability to attract and retain qualified
      personnel; the ability to protect technology; and other risks that might be
      detailed from time to time in our filings with the Securities and Exchange
      Commission.





Although
      the forward-looking statements in this Annual Report reflect the good faith
      judgment of our management, such statements can only be based on facts and
      factors currently known by them. Consequently, and because forward-looking
      statements are inherently subject to risks and uncertainties, the actual results
      and outcomes may differ materially from the results and outcomes discussed
      in
      the forward-looking statements. You are urged to carefully review and consider
      the various disclosures made by us in this report and in our other reports
      as we
      attempt to advise interested parties of the risks and factors that may affect
      our business, financial condition, and results of operations and
      prospects.





7


**Plan
      of Operation**





We
      were
      incorporated in March 2001. On May 16, 2003, we filed an election to be treated
      as a business development company (“BDC”) under the Investment Company Act of
      1940 (the “1940 Act”), which became effective on the date of
      filing.





Subsequent
      to the BDC election our principal business is to make venture capital
      investments in early-stage and/or developing enterprises that are principally
      engaged in the development or exploitation of inventions, technological
      improvements, and new or unique products and services. Our principal objective
      is long-term capital appreciation. We may invest in debt securities of these
      companies, or may acquire an equity interest in the form of common or preferred
      stock, warrants or options to acquire stock or the right to convert the debt
      securities into stock. We may invest alone, or as part of a larger investment
      group. Consistent with our status as a BDC and the purposes of the regulatory
      framework for BDC’s under the 1940 Act, we will provide managerial assistance,
      potentially in the form of a consulting agreement or in the form of a board
      of
      director’s seat, to the developing companies in which we invest.





In
      addition, we may acquire either a minority or controlling interest in mature
      companies in a roll-up strategy. It is anticipated that any acquisitions will
      be
      primarily in exchange for our common stock, or a combination of cash and stock.
      The principal objective of acquisitions pursuant to a roll-up strategy would
      be
      to consolidate an industry and either sell the acquired entities as a larger
      unit, or take the unit public through an initial public offering, spin-off
      to
      our shareholders, or reverse merger into a publicly traded shell
      corporation.





We
      operate as an internally managed investment company whereby our officers and
      employees conduct our operations under the general supervision of our Board
      of
      Directors. We have not elected to qualify to be taxed as a regulated investment
      company as defined under Subchapter M of the Internal Revenue Code.




We are
        currently in discussions with different market makers regarding the possibility
        of them filing an application to list our securities on the OTC Bulletin
        Board.
        We anticipate being listed for trading on the OTC Bulletin Board during the
        second or third quarter of 2005.


Management
        does not anticipate that we will engage in any material product research
        and
        development, nor do we anticipate that we will purchase a plant or significant
        equipment.
  Our
        financial statements have been prepared assuming we will continue as a going
        concern. Because we have not generated any revenues to date and have minimal
        capital resources, our Certified Public Accountants included an explanatory
        paragraph in their report raising substantial doubt about our ability to
        continue as a going concern.
 
 **Regulation
        as a BDC**
 
 Although
        the 1940 Act exempts a BDC from registration under that Act, it contains
        significant limitations on the operations of BDC’s. Among other things, the 1940
        Act contains prohibitions and restrictions relating to transactions between
        a
        BDC and its affiliates, principal underwriters and affiliates of its affiliates
        or underwriters, and it requires that a majority of the BDC’s directors be
        persons other than “interested persons,” as defined under the 1940 Act. The 1940
        Act also prohibits a BDC from changing the nature of its business so as to
        cease
        to be, or to withdraw its election as, a BDC unless so authorized by the
        vote of
        the holders of a majority of its outstanding voting securities. BDC’s are not
        required to maintain fundamental investment policies relating to diversification
        and concentration of investments within a single industry.
  8
 Generally,
        a BDC must be primarily engaged in the business of furnishing capital and
        providing managerial expertise to companies that do not have ready access
        to
        capital through conventional financial channels. Such portfolio companies
        are
        termed “eligible portfolio companies.” More specifically, in order to qualify as
        a BDC, a company must (1) be a domestic company; (2) have registered a class
        of
        its equity securities or have filed a registration statement with the Securities
        and Exchange Commission pursuant to Section 12 of the Securities Exchange
        Act of
        1934; (3) operate for the purpose of investing in the securities of certain
        types of portfolio companies, namely immature or emerging companies and
        businesses suffering or just recovering from financial distress; (4) extend
        significant managerial assistance to such portfolio companies; and (5) have
        a
        majority of “disinterested” directors (as defined in the 1940 Act).
 
 An
        eligible portfolio company is, generally, a U.S. company that is not an
        investment company and that (1) does not have a class of securities registered
        on an exchange or included in the Federal Reserve Board’s over-the-counter
        margin list; or (2) is actively controlled by a BDC and has an affiliate
        of a
        BDC on its board of directors; or (3) meets such other criteria as may be
        established by the Securities and Exchange Commission. Control under the
        1940
        Act is generally presumed to exist where a BDC owns 25% of the outstanding
        voting securities of the company.
 
 The
        1940
        Act prohibits or restricts companies subject to the 1940 Act from investing
        in
        certain types of companies, such as brokerage firms, insurance companies,
        investment banking firms and investment companies. Moreover, the 1940 Act
        limits
        the type of assets that BDC’s may acquire to “qualifying assets” and certain
        assets necessary for its operations (such as office furniture, equipment
        and
        facilities) if, at the time of acquisition, less than 70% of the value of
        the
        BDC’s assets consist of qualifying assets. Qualifying assets include: (1)
        securities of companies that were eligible portfolio companies at the time
        the
        BDC acquired their securities; (2) securities of bankrupt or insolvent companies
        that were eligible at the time of the BDC’s initial acquisition of their
        securities but are no longer eligible, provided that the BDC has maintained
        a
        substantial portion of its initial investment in those companies; (3) securities
        received in exchange for or distributed in or with respect to any of the
        foregoing; and (4) cash items, government securities and high-quality short-term
        debt. The 1940 Act also places restrictions on the nature of the transactions
        in
        which, and the persons from whom, securities can be purchased in order for
        the
        securities to be considered qualifying assets. These restrictions include
        limiting purchases to transactions not involving a public offering and acquiring
        securities from either the portfolio company or its officers, directors,
        or
        affiliates.


A
      BDC is
      permitted to invest in the securities of public companies and other investments
      that are not qualifying assets, but those kinds of investments may not exceed
      30% of the BDC’s total asset value at the time of the investment.





A
      BDC
      must make significant managerial assistance available to the issuers of eligible
      portfolio securities in which it invests. Making available significant
      managerial assistance means, among other things, any arrangement whereby the
      BDC, through its directors, officers or employees, offers to provide, and,
      if
      accepted does provide, significant guidance and counsel concerning the
      management, operations or business objectives and policies of a portfolio
      company. The portfolio company does not have to accept the BDC’s offer of
      managerial assistance, and if they do accept may be required to pay prevailing
      market rates for the services.





9


The
      Company does not currently have any investments in eligible portfolio
      companies. However,
      we are actively seeking quality eligible portfolio companies in which to make
      an
      investment and provide managerial assistance.





**Year
      Ended December 31, 2004 Compared to the Year Ended December 31,
      2003**




**Results
      of Operations**





Introduction





We
      did
      not have any revenues for either period presented. We do not anticipate having
      revenue until we begin making investments in eligible portfolio companies and
      subsequently liquidate those investments. Because we are actively seeking
      eligible portfolio companies we anticipate that our revenues from
      quarter-to-quarter may differ significantly depending on when we realize a
      return on those investments. Our operating expenses decreased when compared
      to
      the prior year due, primarily, to the fact we incurred less costs related to
      legal services. We recorded other income in the year ended December 31, 2004,
      amounting to $83,355 related entirely to forgiveness of debt by two of our
      directors. There was no other income recorded in the prior period. A breakdown
      of our operating expenses and other expenses, as well as management’s
      explanation of each, is outlined below.





Revenues
      and Income (Loss) from Operations







As
      stated
      above, because we do not have any investments in eligible portfolio companies,
      we did not have any revenues for the either period. We generated a net income
      of
      $57,059 for the year ended December 31, 2004, compared to a net loss of
      ($63,253) for the prior year. Our expenses for the year’s ended December 31,
      2004 and 2003 were made up entirely of general and administrative expenses. Our
      general and administrative expenses for 2004 consisted of $23,480 in accounting
      and other professional fees, $1,375 in transfer agent fees, and $1,441 in
      miscellaneous expenses, such as postage, facsimiles, and copies. Our general
      and
      administrative expenses for 2003 consisted of $17,620 in accounting and other
      professional fees, $37,730 in legal fees, $6,000 in value attributed to services
      provided by officer, $460 in transfer agent fees, and $1,443 in miscellaneous
      expenses, such as postage, facsimiles, and copies.




Net
        Income







We
      had
      net income for the year ended December 31, 2004 of $57,059, compared to a net
      loss of ($63,253) for the year ended December 31, 2003. The net income in the
      current year is a direct result of the forgiveness of debt in the amount of
      $83,355 which was recorded as other income in the accompanying financial
      statements for the twelve months ended December 31, 2004. Because we do not
      have
      any investments in eligible portfolio companies, we anticipate that our net
      income (loss) could differ significantly from period to period.





**Liquidity
      and Capital Resources**





Introduction







As
      of
      December 31, 2004, we had cash of $17,403, which was a result of financing
      activities during the quarter ended March 31, 2004. This cash is our only asset.
      Our total current liabilities as of December 31, 2004 were $9,324 consisting
      entirely of accrued liabilities. Although our assets exceed our liabilities,
      given the lack of investments in eligible portfolio companies, our financial
      results at the end of future quarters could differ significantly. Until we
      begin
      to realize a return from our investment in eligible portfolio companies, we
      will
      have to fund operations from the sale of our stock and from loans. We have
      been
      successful in obtaining the necessary funding in the past, and anticipate that
      we will be able to continue to do so in the future.





10


Our
      cash,
      total current assets, total assets, total current liabilities, and total
      liabilities as of December 31, 2004 and September 30, 2004 are as
      follows:




December
                  31, 2004
              
              
              September
                  30, 2004
              
              
              ChangeCash
              
              $
              17,403
              
              $
              18,653
              
              $
              (1,250
              )Total
                  current assets
              
              
              17,403
              
              
              18,653
              
              
              (1,250
              )Total
                  assets
              
              
              17,403
              
              
              18,653
              
              
              (1,250
              )Total
                  current liabilities
              
              
              9,324
              
              
              5,900
              
              
              3,424Total
                  liabilities
              
              $
              9,324
              
              $
              5,900
              
              $
              3,424
  Cash
          Requirements
 
 Currently,
          our cash requirements are minimal, related only to the cost of maintaining
          the
          Company in good standing. During the past twelve months we raised a small
          amount
          of capital through an offering under Regulation E, which we anticipate
          will
          cover our expenses for at least the next twelve (12) months. Our two primary
          shareholders, Mr. Berg and Mr. Lebrecht, have verbally agreed to advance
          funds
          to us to fund our minimal cash requirements that cannot otherwise be covered
          by
          the proceeds from the offering. For
          the
          year ended December 31, 2004 our net cash used in operating activities
          was
          ($36,722). Due to our lack of substantial operations to date we do not
          believe
          this is necessarily indicative of our cash flow needs for future year periods
          when we may be actively providing managerial assistance to eligible portfolio
          companies. We anticipate that our cash flow needs will increase when we
          have
          active investments in eligible portfolio companies.


Sources
      and Uses of Cash





*Operations*





We
      did
      not receive any cash from operations for the year ended December 31, 2004.
      As
      noted above, we used $36,722 in cash for operating activities during this
      period. We anticipate that both our cash generated from operations and used
      for
      operations will increase as soon as we have investments in eligible portfolio
      companies. Until that time we believe this figure will be fairly indicative
      our
      cash generation and cash used for operations in a twelve month
      period.





*Financing*





During
      the year ended December 31, 2004 we paid our operating expenses primarily with
      the $54,125 raised from the sale of our stock. We anticipate that we will have
      to continue to pay our operating expenses out of the proceeds from financing
      activities until we begin to realize a return from our investments in eligible
      portfolio companies.





Debt
      Instruments, Guarantees, and Related Covenants





Currently,
      we do not have any debt instruments, guarantees or related covenants.





11


**Critical
      Accounting Policies**





The
      discussion and analysis of the Company’s financial condition and results of
      operations are based upon its consolidated financial statements, which have
      been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires the
      Company to make estimates and judgments that affect the reported amounts of
      assets, liabilities, revenues and expenses.





**Off-balance
      Sheet Arrangements**





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




**ITEM
        7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
        RISK**
 
 Since we
        have very few assets and do not have any investments in eligible portfolio
        companies there is no quantitative information, as of the end of December
        31,
        2004, about market risk that has any impact on our present business. Once
        we
        begin making investments in eligible portfolio companies we there will be
        market
        risk sensitive instruments and we will disclose the applicable market risk
        information at that time.
 
 Our
        primary financial instruments are cash in banks and money market instruments.
        We
        do not believe that these instruments are subject to material potential
        near-term losses in future earnings from reasonably possible near-term changes
        in market rates or prices. We do not have derivative financial instruments
        for
        speculative or trading purposes. We are not currently exposed to any material
        currency exchange risk.


**ITEM
      8 - FINANCIAL STATEMENTS SUPPLEMENTARY DATA**


Index
                    to Financial StatementsReport
                    of Independent Certified Public Accountants
                F-1Balance
                    Sheet
                F-2Statement
                    of Operations
                F-3Statement
                    of Stockholders Equity
                F-4Statement
                    of Cash Flows
                F-5Notes
                    to Financial Statements
                F-6






12


**ITEM 9
      - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





There
      have been no events required to be reported by this Item 9.





**ITEM
      9A - CONTROLS AND PROCEDURES**





The
      Company's Chief Executive Officer and Chief Financial Officer (or those persons
      performing similar functions), after evaluating 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) as of a date
      within 90 days of the filing of this annual report (the “Evaluation Date”), have
      concluded that, as of the Evaluation Date, the Company's disclosure controls
      and
      procedures were effective to ensure the timely collection, evaluation and
      disclosure of information relating to the Company that would potentially be
      subject to disclosure under the Securities Exchange Act of 1934, as amended,
      and
      the rules and regulations promulgated thereunder. There were no significant
      changes in the Company's internal controls or in other factors that could
      significantly affect the internal controls subsequent to the Evaluation
      Date.





**ITEM
      9B - OTHER INFORMATION**





All
      information required to be filed on a Form 8-K during the three months ended
      December 31, 2004 was filed with the Commission on a Form 8-K. For a description
      of our Form 8-Ks filed during this three month period see Item 13(b),
      below.




13


**PART
      III**





**ITEM 10
      - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**




The
      following table sets forth the names and ages of the current directors and
      executive officers of the Company, the principal offices and positions with
      the
      Company held by each person and the date such person became a director or
      executive officer of the Company. The executive officers of the Company are
      elected annually by the Board of Directors. The directors serve one-year terms
      until their successors are elected. The executive officers serve terms of one
      year or until their death, resignation or removal by the Board of Directors.
      Unless described below, there are no family relationships among any of the
      directors and officers.


Name
              
              Age
              
              Position(s)Carl
                  M. Berg
              
              35
              
              Chairman
                  of the Board, President, Secretary, and Treasurer
                  (2001)Kevin
                  J. Gadawski
              
              37
              
              Director
                  (2003)Mark
                  Stewart
              
              37
              
              Director
                  (2003)




**Carl
        M. Berg** has
        served as our director and officer since our inception. He also currently
        serves
        as a company executive with STSN, Inc., a provider of wired and wireless
        broadband communications for business travelers, where he has served since
        2003.
        Prior to STSN, from 1999 to 2003, he was a company executive with Sandlot
        Corporation, a startup subscription management software company. Sandlot
        is
        involved in managing subscription-based e-commerce. Mr. Berg directed business
        initiatives as the Business Development Manager, which resulted in growth
        of the
        company from 10 to 75 employees worldwide with offices in the U.S. and Windsor,
        United Kingdom. Prior to Sandlot Corporation, from 1992 to 1999, Mr. Berg
        served
        in various management positions in the technology division of Ameritech
        Corporation. His roles varied from the overall management of library automation
        implementation projects to directing the implementation division of roughly
        75
        technical staff. Job titles included Project Coordinator, Project Manager
        and
        Director of Implementation.




**Kevin
        J. Gadawski** joined
        our Board of Directors in May 2003. He also serves as the President of Worldwide
        Medical in Lake Forest, California, where he previously served as the Chief
        Operating Officer and Chief Financial Officer for Worldwide Medical Corporation
        from May of 2002. From May of 2001 to May of 2002, Mr. Gadawski served as
        the
        Chief Financial Officer of California Software Corporation in Irvine,
        California. From June of 2000 through May of 2001, Mr. Gadawski was the Chief
        Financial Officer for e-net Financial.com in Costa Mesa, California. His
        primary
        duties included financial reporting and financial management. For the five
        years
        prior to that, Mr. Gadawski served in various capacities including Director
        of
        Internal Audit and Divisional Controller with Huffy Corporation in Miamisburg,
        Ohio. Mr. Gadawski began his career in the audit department of KMPG Peat
        Marwick, LLP.
 
 **Mark
        Stewart** joined
        our Board of Directors in November 2003. Mr. Stewart has been a principal
        with
        Mark Stewart Securities, Inc., a NASD broker-dealer, since 1996. Mr. Stewart
        started his career with American Express Financial Advisors (IDS) in 1991,
        and
        served as head trader at numerous firms from 1991 to 1996.
  14


Audit
      Committee





On
      May
      16, 2003, an Audit Committee of the Board of Directors, established in
      accordance with section 3(a)(58)(A) of the Exchange Act, was formed. The
      directors who are members of the Audit Committee are Kevin J. Gadawski and
      Mark
      Stewart, with Mr. Gadawski considered an audit committee financial expert and
      an
      independent director.





Compliance
      with Section 16(a) of the Securities Exchange Act of 1934





Section
      16(a) of the Securities Exchange Act of 1934 requires the Company's directors
      and executive officers and persons who own more than ten percent of a registered
      class of the Company's equity securities to file with the SEC initial reports
      of
      ownership and reports of changes in ownership of Common Stock and other equity
      securities of the Company. Officers, directors and greater than ten percent
      shareholders are required by SEC regulations to furnish the Company with copies
      of all Section 16(a) forms they file.





To
      the
      Company’s knowledge, none of the required parties are delinquent in their 16(a)
      filings.





Code
      of Ethics





We
      have
      not adopted a written code of ethics, primarily because we believe and
      understand that our officers and directors adhere to and follow ethical
      standards without the necessity of a written policy.





**ITEM
      11 - EXECUTIVE COMPENSATION**





None
      of
      our employees are subject to a written employment agreement. Our president
      elected to forego a salary during the early developmental stages, and also
      provided office space. We estimate the value of these services to be $6,000
      for
      each year for the years ended December 31, 2004 and 2003. As of December 31,
      2004 we did not have any amounts owed to our president as he elected to forgive
      any outstanding amounts he was owed and to forego a salary until further
      notice.





On
      May
      15, 2001, our directors and shareholders approved the M-GAB, Inc. 2001 Stock
      Option Plan, effective June 1, 2001. The plan offers selected employees,
      directors, and consultants an opportunity to acquire our common stock, and
      serves to encourage such persons to remain employed by us and to attract new
      employees. The plan allows for the award of stock and options, up to 600,000
      shares of our common stock. In November 2003, we agreed to issue options to
      acquire 600,000 shares under the Plan to our two independent directors; however,
      these options will not be issued until such time as approved by the Commission
      in accordance with rules and regulations applicable to BDC’s. Our Application
      For an Order Pursuant to Section 61(a)(3)(B) of The Investment Company Act
      of
      1940 to Permit the Issuance of Stock Options to Non-Interested Directors is
      currently pending before the Commission. We hope to receive approval to issue
      the options to our non-interested directors during the second quarter of our
      fiscal year ended December 31, 2005.





The
      Summary Compensation Table shows certain compensation information for services
      rendered in all capacities for the fiscal years ended December 31, 2004 and
      2003. Other than as set forth herein, no executive officer's salary and bonus
      exceeded $100,000 in any of the applicable years. The following information
      includes the dollar value of base salaries, bonus awards, the number of stock
      options granted and certain other compensation, if any, whether paid or
      deferred.




15


**Annual
                  Compensation**
              
              **Long
                  Term Compensation****Awards**
              
              **Payouts****Name
                  and**
                **Principal
                  Position**
              **Year**
              **Salary**
                **($)**
              **Bonus**
                **($)**
              **Other
                  Annual**
                **Compensation**
                **($)**
              
              **Restricted
                  Stock**
                **Awards**
                **($)**
              **Securities
                  Underlying Options SARs**
                **(#)**
              
              **LTIP
                  Payouts**
                **($)**
              **All
                  Other**
                **Compensation**
                **($)**Carl
                  M. Berg
              2004
              -0-
              -0-
              $-0-
              
              -0-
              -0-
              
              -0-
              -0-Chairman,
                  President, Secretary, Treasurer
              2003
              -0-
              -0-
              $6,000
                  (1)
              
              -0-
              -0-
              
              -0-
              -0-Kevin
                  J. Gadawski
              2004
              -0-
              -0-
              $5,000
                  (2)
              
              -0-
              -0-
              
              -0-
              -0-Director
              2003
              -0-
              -0-
              $5,000
              
              -0-
              -0-
              
              -0-
              -0-Mark
                  Stewart
              2004
              -0-
              -0-
              $-0-
              
              -0-
              -0-
              
              -0-
              -0-Director
              2003
              -0-
              -0-
              $-0-
              
              -0-
              -0-
              
              -0-
              -0-


(1)
              This
                  amount was accrued until March 26, 2004, when Mr. Berg elected
                  for forgive
                  all amounts owed to him, as well as any future salary until further
                  notice.


(2)
              As
                of December 31, 2004, Mr. Gadawski received $2,500 of this amount.
                The
                other $2,500 has been accrued.
  **OPTION/SAR
                    GRANTS IN LAST FISCAL YEAR**
                  **(Individual
                    Grants)****Name**
                **Number
                    of Securities**
                  **Underlying**
                  **Options/SARs
                    Granted**
                  **(#)**
                **Percent
                    of Total**
                  **Options/SARs
                    Granted**
                  **to
                    Employees In Fiscal**
                  **Year**
                **Exercise
                    or Base Price**
                  **($/Sh)**
                **Expiration
                    Date**Carl
                    M. Berg
                -0-
                N/A
                N/A
                N/AKevin
                    J. Gadawski
                -0-
                N/A
                N/A
                N/AMark
                    Stewart
                -0-
                N/A
                N/A
                N/A






**AGGREGATED
                  OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR**
                **AND
                  FY-END OPTION/SAR VALUES****Name**
              **Shares
                  Acquired On**
                **Exercise**
                **(#)**
              **Value
                  Realized**
                **($)**
              **Number
                  of Unexercised**
                **Securities
                  Underlying**
                **Options/SARs
                  at FY-End**
                **(#)**
                **Exercisable/Unexercisable**
              **Value
                  of Unexercised**
                **In-The-Money**
                **Option/SARs**
                **at
                  FY-End**
                **($)**
                **Exercisable/Unexercisable**Carl
                  M. Berg
              N/A
              N/A
              N/A
              N/AKevin
                  J. Gadawski
              N/A
              N/A
              N/A
              N/AMark
                  Stewart
              N/A
              N/A
              N/A
              N/A






16


**Compensation
      of Directors**





In
      November 2003, we agreed to issue to each of Mr. Gadawski and Mr. Stewart
      options to acquire 300,000 shares of our common stock for serving as directors
      of the Corporation. The issuance of the options is subject to approval of the
      SEC pursuant to provisions of the Investment Company Act of 1940, and will
      not
      be issued until the issuance is approved by the SEC. The options are to be
      exercisable for a period of ten years from their grant date, at an exercise
      price equal to the fair market value on the grant date, and will expire upon
      their resignation from the Board. Our Application For an Order Pursuant to
      Section 61(a)(3)(B) of The Investment Company Act of 1940 to Permit the Issuance
      of Stock Options to Non-Interested Directors is currently pending before the
      Commission. We hope to receive approval to issue the options to our
      non-interested directors during the second quarter of our fiscal year ended
      December 31, 2005.





In
      addition, we have agreed to pay Mr. Gadawski $1,250 per quarter for additional
      consulting services.





Mr.
      Berg
      has not received any compensation for serving as a director. Other than as
      set
      forth herein, no compensation has been given to any of the directors, although
      they may be reimbursed for any pre-approved out-of-pocket expenses.





**ITEM
      12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**





The
      following table sets forth, as of March 15, 2005, certain information with
      respect to the Company’s equity securities owned of record or beneficially by
      (i) each Officer and Director of the Company; (ii) each person who owns
      beneficially more than 5% of each class of the Company’s outstanding equity
      securities; and (iii) all Directors and Executive Officers as a
      group.




Name
                  and Address (1)
              
              Nature
                  of Affiliation
              
              Common
                  Stock Ownership
              
              Percentage
                  of Common Stock Ownership (2)Carl
                  M. Berg
              
              Chairman
                  of the Board, President, Secretary and Treasurer
              
              5,550,000
                  (3)
              
              86.9%Brian
                  A. Lebrecht (4)
              
              5%
                  Shareholder
              
              450,000
              
              7.0%Kevin
                  J. Gadawski
              
              IndependentDirector
              
              300,500
                  (5)(6)
              
              4.4%
                  (5)Mark
                  Stewart
              
              IndependentDirector
              
              300,000
                  (5)
              
              4.4%
                  (5)All
                  Officers and Directors as a Group
                (3
                  Persons)
              
              
              
              6,150,500
                  (3)(5)(6)
              
              88%
                  (5)
   17


(1)
              Unless
                  stated otherwise, the address of each affiliate is c/o M-GAB Development
                  Corporation, 22342 Avenida Empresa, Suite 220, Rancho Santa Margarita,
                  CA
                  92688.
 
 (2)
              Unless
                  otherwise indicated, based on 6,383,845 shares of common stock
                  issued and
                  outstanding. Shares of common stock subject to options or warrants
                  currently exercisable, or exercisable within 60 days, are deemed
                  outstanding for purposes of computing the percentage of the person
                  holding
                  such options or warrants, but are not deemed outstanding for purposes
                  of
                  computing the percentage of any other person.
 
 (3)
              Includes
                  3,000,000 shares held of record by Sadie, LLC, an entity wholly-owned
                  and
                  controlled by Mr. Berg. Mr. Berg is our sole
                  officer.
 
 (4)
              Mr.
                  Lebrecht is President of The Lebrecht Group, APLC, which serves
                  as our
                  securities counsel.
 
 (5)
              Includes
                  options to acquire 300,000 shares of common stock which will be
                  granted to
                  each of Mr. Gadawski and Mr. Stewart upon approval by the Commission
                  in
                  compliance with the Investment Company Act of
                  1940.
 
 (6)
              Includes
                  500 shares held by Mr. Gadawski’s
                  spouse.




The
        issuer is not aware of any person who owns of record, or is known to own
        beneficially, five percent or more of the outstanding securities of any class
        of
        the issuer, other than as set forth above. The issuer is not aware of any
        person
        who controls the issuer as specified in section 2(a)(1) of the Investment
        Company Act of 1940. There are no classes of stock other than common stock
        issued or outstanding. There are currently warrants outstanding to acquire
        333,334 shares of our common stock at $0.15 per share, and other than as
        set
        forth herein, there are no options, warrants, or other rights to acquire
        common
        stock outstanding. The Company does not have an investment advisor.
 
 There
        are
        no current arrangements which will result in a change in control.
  18


**ITEM
      13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





On
      April
      20, 2001, our founder, Carl M. Berg, purchased 2,550,000 shares of common stock
      for $255.00. On April 20, 2001, Sadie, LLC, an entity wholly-owned and
      controlled by Mr. Berg, purchased 3,000,000 shares of common stock for $300.00.
      Also on April 20, 2001, Brian A. Lebrecht, our legal counsel, purchased 450,000
      shares of common stock for $45.00. The total purchase price from these
      transactions was $600.00.




We
      have
      engaged one of our shareholders, Mr. Lebrecht, as our corporate counsel. For
      the
      twelve months ended December 31, 2004, we did not incur any legal fees to Mr.
      Lebrecht’s law firm since he has agreed to forego all fees for legal services
      related to our Company until further notice. Prior to this agreement, we
      incurred fees related to legal services and out of pocket costs to Mr.
      Lebrecht’s firm of $37,730 for the twelve months ended December 31, 2003.
      However, Mr. Lebrecht agreed to forgive amounts due to his law firm in
      2004.




Our
      President, Mr. Berg, has elected to forego a salary during our early development
      stages. He also provided office space for us. We estimate the value of these
      services to be $6,000 per year for the twelve months ended December 31, 2004
      and
      2003. As of December 31, 2004, we did not have any amounts owed to Mr. Berg
      as
      he has agreed to forgive all amounts we owed to him until further notice. In
      addition, one of our directors, Mr. Gadawski, provides consulting services
      to
      us









**ITEM
        14 - PRINCIPAL ACCOUNTING FEES AND SERVICES**
 
 **Audit
        Fees**
 
 During
        the fiscal years ended December 31, 2004 and 2003, Ramirez International
        billed
        us $18,680 and $13,420, respectively, in fees for professional services for
        the
        audit of our annual financial statements and review of financial statements
        included in our Forms 10-KSB and 10-QSB.
 
 **Audit
        - Related Fees**
 
 During
        the fiscal years ended December 31, 2004 and 2003, Ramirez International
        billed
        us $18,680 and $13,420, respectively, in fees for assurance and related services related to the performance of the audit and
        review of the Company’s financial statements.
 
 **Tax
        Fees**
 
 During
        the fiscal years ended December 31, 2004 and 2003, Ramirez International
        billed
        us $175 and $200, respectively, in fees for professional services for tax planning and preparation.
 
 **All
        Other Fees**


During
        the fiscal years ended December 31, 2004 and 2003, Ramirez International
        did not
        bill the Company for any other fees.


Of
        the
        fees described above for the fiscal year ended December 31, 2004, 100% were
        approved by the by the Audit Committee of the Board of Directors of the Company.
        Of the fees described above for the fiscal year ended December 31, 2003,
        100%
        were either approved in advance by the Audit Committee if it was in existence
        at
        the time of approval, or subsequently ratified by the Audit
        Committee.




19
 
 **ITEM
          15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES** ****
 **(a)** **Exhibits**




3.1
                  (1)
              
              Articles
                  of Incorporation of M-GAB Development Corporation3.2
                  (1)
              
              Bylaws
                  of M-GAB Development Corporation10.1(2)
              
              M-GAB
                  Development Corporation Amended and Restated 2001 Omnibus Securities
                  Plan10.2(2)
              
              M-GAB
                  Development Corporation 2004 Omnibus Securities Plan31.1
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Executive
                  Officer31.2
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Financial
                  Officer32.1
              
              Chief
                  Executive Officer Certification Pursuant to 18 USC, Section 1350,
                  as
                  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.32.2
              
              Chief
                  Financial Officer Certification Pursuant to 18 USC, Section 1350,
                  as
                  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.




(1)
                Incorporated
                    by reference from our Registration Statement on Form SB-2 filed
                    with the
                    Commission on August 31, 2001.
 (2)
                Incorporated
                  by reference from our annual Form 10-KSB dated December 31, 2004
                  as filed
                  with the Commission on March 25,
                  2005.




**(b)** **Reports
        on Form 8-K**
 
 We
        made
        no 8-K filings during the quarter ended December 31, 2004.
  
 20


**SIGNATURES**





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






M-GAB
                  Development CorporationDated:July
                  22, 2005
              /s/
                  Carl M. BergBy:    Carl
                  M. BergIts:     President,
                  Chief Executive
                  Officer,Chief Financial
                  Officer




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


Dated:July
                  22, 2005
              /s/
                  Carl M. BergBy:Carl
                  M. Berg, DirectorDated:July
                  22, 2005
              /s/
                  Kevin J. GadawskiBy:Kevin
                  J. Gadawski, DirectorDated:July
                  22, 2005
              /s/
                  Mark StewartBy:Mark
                  Stewart, Director




21




Financial
        Statements and Report of
 
 Independent
        Certified Public Accountants
 
 M-GAB
        DEVELOPMENT CORPORATION
 (A
        Development Stage Enterprise)
 
 December
        31, 2004 and 2003









**Report
        of Independent Certified Public Accountants**
 
 
 
 
 To:  The
        Board
        of Directors  of
 M-GAB
        DEVELOPMENT CORPORATION
 
 We
        have
        audited the accompanying balance sheets of M-GAB DEVELOPMENT CORPORATION
        (the
“Company”) (a Development Stage Corporation) as of December 31, 2004 and 2003
        and the related statements of operations, stockholders’ equity and cash flows
        for each of the years then ended and the period from inception (March 27,
        2001)
        through December 31, 2004. These financial statements are the responsibility
        of
        the Company’s management. Our responsibility is to express an opinion on these
        statements based on our audits.
 
 We
        conducted our audits in accordance with auditing standards generally accepted
        in
        the United States of America. 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 the Company as of December 31,
        2004
        and 2003 and the results of its operations and its cash flows for each of
        the
        years then ended and the period from inception (March 27, 2001) through December
        31, 2004, in conformity with accounting principles generally accepted in
        the
        United States of America.
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As discussed in Note 2 to the financial statements,
        the Company has no established source of revenue and is dependent on its
        ability
        to raise substantial amounts of capital. Management’s plans in regard to these
        matters are also described in Note 2. These matters raise substantial doubt
        about the Company’s ability to continue as a going concern. The financial
        statements do not include any adjustments that might result from the outcome
        of
        this uncertainty.
 
 
 **RAMIREZ
        INTERNATIONAL**
 **Financial
        & Accounting Services, Inc.**
 
 March
        15,
        2005
  F
            -
            1




**M-GAB
        Development Corporation**
 **(A
        Development Stage Company)**
 
 **Balance
        Sheet**
 
 **December
        31,**


2004
              
              
              2003ASSETSCurrent
                  assetsCash
              
              $
              17,403
              
              $
              -Total
                  assets
              
              $
              17,403
              
              $
              -LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilitiesAccounts
                  payable and accrued liabilities
              
              $
              9,324
              
              $
              93,105Payable
                  to stockholder
              
              
              -
              
              
              10,000Total
                  current liabilities
              
              
              9,324
              
              
              103,105Commitments
                  and contingencies
              
              
              -
              
              
              -Stockholders'
                  equity:Preferred
                  stock, $0.001 par value;5,000,000
                  shares authorized; No shares issued or outstanding
              
              
              -
              
              
              -Common
                  stock, $0.001 par value; 100,000,000shares
                  authorized; 6,383,845 and 6,023,000 shares issuedand
                  outstanding in 2004 and 2003, respectively
              
              
              6,384
              
              
              6,023Additional
                  paid in capital
              
              
              64,840
              
              
              11,076Deficit
                  accumulated during the development stage
              
              
              (63,145
              )
              
              (120,204
              )Total
                  stockholders' equity
              
              
              8,079
              
              
              (103,105
              )Total
                  liabilities and stockholders' equity
              
              $
              17,403
              
              $
              -




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


F
          -
          2


**M-GAB
      DEVELOPMENT CORPORATION**


**(A
      Development Stage Company)**





**Statement
      of Operations**




Cumulative
                  from inception (March 27, 2001) through December
                  31, 2004
              
              
              Year
                  ended December 31, 2004
              
              
              Year
                  ended December 31, 2003Revenue
              
              $
              -
              
              $
              -
              
              $
              -General
                  and administrative expenses
              
              
              146,500
              
              
              26,296
              
              
              63,253Other
                  income (expense)
              
              
              83,355
              
              
              83,355
              
              
              -Net
                  income (loss)
              
              $
              (63,145
              )
              $
              57,059
              
              $
              (63,253
              )Basic
                  and diluted net income (loss) per share
              
              
              
              
              $
              0.01
              
              $
              (0.01
              )Weighted
                  average shares outstanding
              
              
              
              
              
              6,321,699
              
              
              6,023,000




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


F
          -
          3


**M-GAB
      DEVELOPMENT CORPORATION**


**(A
      Development Stage Company)**





**Statement
      of Stockholders’ Equity**


DeficitAdditional
              Accumulated
                DuringCommon
                  Stock
              
              Paid-in
              
              the
                  DevelopmentShares
              
              
              Amount
              
              
              Capital
              
              
              Stage
              
              
              TotalIssuance
                  of common stock tofounders
                  on April 20, 2001
              
              6,000,000
              
              $
              6,000
              
              $
              (5,400
              )
              $
              -
              
              $
              600Issuance
                  of common stock forcash
                  in August 2001
              
              13,000
              
              
              13
              
              
              1,287
              
              
              -
              
              
              1,300Contributed
                  capital-services
              
              -
              
              
              -
              
              
              14,199
              
              
              -
              
              
              14,199Net
                  loss
              
              -
              
              
              -
              
              
              -
              
              
              (19,575
              )
              
              (19,575
              )Balance,
                  December 31, 2001
              
              6,013,000
              
              
              6,013
              
              
              10,086
              
              
              (19,575
              )
              
              (3,476
              )Issuance
                  of common stock forcash
                  in September 2002
              
              10,000
              
              
              10
              
              
              990
              
              
              -
              
              
              1,000Net
                  loss
              
              -
              
              
              -
              
              
              -
              
              
              (37,376
              )
              
              (37,376
              )Balance,
                  December 31, 2002
              
              6,023,000
              
              
              6,023
              
              
              11,076
              
              
              (56,951
              )
              
              (39,852
              )Net
                  loss
              -
              
              
              -
              
              
              -
              
              
              (63,253
              )
              
              (63,253
              )Balance,
                  December 31, 2003
              
              6,023,000
              
              $
              6,023
              
              $
              11,076
              
              $
              (120,204
              )
              $
              (103,105
              )Issuance
                  of common stock for cash
                  in March 2004
              
              360,845
              
              
              361
              
              
              46,547
              
              
              -
              
              
              54,125Issuance
                  of stock warrants inconnection
                  with sale of stock
              -
              
              
              -
              
              
              7,217
              
              
              -Net
                  income
              
              -
              
              
              -
              
              
              -
              
              
              57,059
              
              
              57,059Balance,
                  December 31, 2004
              
              6,383,845
              
              $
              6,384
              
              $
              64,840
              
              $
              (63,145
              )
              $
              8,079








F
          -
          4


**M-GAB
      DEVELOPMENT CORPORATION**


**(A
      Development Stage Company)**





**Statement
      of Cash Flows**




Cumulative
                  from inception (March 27, 2001) to December 31,
                  2004
              
              
              Year
                  ended December 31, 2004
              
              
              Year
                  ended December 31, 2003Cash
                  flows from operating activities:Net
                  income (loss)
              
              $
              (63,145
              )
              $
              57,059
              
              $
              (63,253
              )Adjustments
                  to reconcile net loss to cash used inoperating
                  activities:Contributed
                  capital for services rendered
              
              
              14,199
              
              
              -
              
              
              -Forgiveness
                  of debt
              
              
              (83,355
              )
              
              (83,355
              )
              
              -Increase
                  (decrease) in accounts payable andaccrued
                  liabilities
              
              
              82,679
              
              
              (10,426
              )
              
              56,816Net
                  cash used by operating activities
              
              
              (49,622
              )
              
              (36,722
              )
              
              (6,437
              )Cash
                  flows from financing activities:Proceeds
                  from issuance of stock
              
              
              57,025
              
              
              54,125
              
              
              -Advance
                  from shareholder
              
              
              10,000
              
              
              -
              
              
              -Net
                  cash provided by financing activities
              
              
              67,025
              
              
              54,125
              
              
              -Net
                  increase (decrease) in cash
              
              
              17,403
              
              
              17,403
              
              
              (6,437
              )Cash
                  and cash equivalents, beginning of period
              
              
              -
              
              
              -
              
              
              6,437Cash
                  and cash equivalents, end of period
              
              $
              17,403
              
              $
              17,403
              
              $
              -




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




F
          -
          5


1.
            NATURE
                OF OPERATIONS AND ACCOUNTING
                POLICIES





*Nature
      of Operations* .
      The
      Company incorporated in Florida on March 27, 2001. The fiscal year end of the
      Company is December 31. Planned principal operations of the Company have not
      yet
      commenced; activities to date have been limited to forming the Company,
      developing its business plan, and obtaining initial capitalization. On May
      16,
      2003, the Company filed an election to be treated as a business development
      company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”), which
      became effective on the date of filing. Subsequent to the BDC election the
      Company’s principal business is to make venture capital investments in
      early-stage and/or developing enterprises that are principally engaged in the
      development or exploitation of inventions, technological improvements, and
      new
      or unique products and services.





*Principles
      of Accounting* .
      The
      accompanying financial statements have been prepared in conformity with
      generally accepted accounting principles.





*Accounting
      Estimates* .
      The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates that affect the
      reported amounts of assets and liabilities and disclosures of contingent assets
      and liabilities at the date of the financial statements and the reported amounts
      of revenues and expenses during the reporting period. Actual results may differ
      from those estimates.


*Shares
      Issued in Exchange for Services.* ****** The
      fair
      value of shares issued in exchange for services rendered to the Company is
      determined by the Company's officers and directors, as there is currently no
      market for the Company's stock.





*Cash
      and Cash Equivalents.* The
      Company includes cash on deposit and short-term investments with original
      maturities less than ninety days as cash and cash equivalents in the
      accompanying financial statements.





*General
      and Administrative Expenses.* The
      Company's general and administrative expenses consisted primarily of legal
      and
      accounting fees for the years ended December 31, 2004 and 2003.





*Research
      and Development.* Research
      and development costs are expensed as incurred as required by Statement of
      Financial Accounting Standards No. 2, “Accounting for Research and Development
      Costs.” As of December 31, 2004, no research and development costs have been
      incurred.





*Advertising.* Advertising
      costs are charged to operations when incurred. The Company has not incurred
      any
      advertising costs.





*Stock-Based
      Compensation* .
      Statement of Financial Accounting Standards No. 123, Accounting for Stock Based
      Compensation, encourages, but does not require, companies to record compensation
      cost for stock-based employee compensation plans at fair value. The Company
      has
      chosen to account for stock-based compensation using the intrinsic value method
      prescribed in previously issued standards. Accordingly, compensation cost for
      stock options issued to employees is measured as the excess, if any, of the
      fair
      market value of the Company's stock at the date of grant over the amount an
      employee must pay to acquire the stock. Compensation is charged to expense
      over
      the shorter of the service or vesting period. Stock options issued to
      non-employees are recorded at the fair value of the services received or the
      fair value of the options issued, whichever is more reliably measurable, and
      charged to expense over the service period.





F
          -
          6


1.  NATURE
      OF OPERATIONS AND ACCOUNTING POLICIES - Continued





*Income
      Taxes.* ****** The
      Company has not made a provision for income taxes because of its financial
      statement and tax losses since its inception on March 27, 2001. A valuation
      allowance has been used to offset the recognition of any deferred tax assets
      related to net operating loss carryforwards due to the uncertainty of future
      realization. The use of any tax loss carry-forward benefits may also be limited
      as a result of changes in Company ownership.





*Fair
      Value of*  *Financial
      Instruments.* The
      Company considers all liquid interest-earning investments with a maturity of
      three months or less at the date of purchase to be cash equivalents. Short-term
      investments generally mature between three months and six months from the
      purchase date. All cash and short-term investments are classified as available
      for sale and are recorded at market using the specific identification method;
      unrealized gains and losses are reflected in other comprehensive income. Cost
      approximates market for all classifications of cash and short-term
      investments.





*Net
      Income (Loss) per Common Share* .
      Net
      loss per share is calculated in accordance with Statement of Financial
      Accounting Standards No. 128, Earnings Per Share. 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 options are included in the
      calculation of diluted earnings per share, except when their effect would be
      anti-dilutive. 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.





*Recently
      Enacted Accounting Standards* .
      Statement of Financial Accounting Standards (“SFAS”) No. 146, “Accounting for
      Costs Associated with Exit or Disposal Activities”, SFAS No. 147, “Acquisitions
      of Certain Financial Institutions - an Amendment of FASB Statements No. 72
      and
      144 and FASB Interpretation No. 9”, SFAS No. 148, “Accounting for Stock-Based
      Compensation - Transition and Disclosure - an Amendment of FASB Statement No.
      123”, SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and
      Hedging Activities”, and SFAS No. 150, “Accounting for Certain Financial
      Instruments with Characteristics of both Liabilities and Equity”, were recently
      issued. SFAS No. 146, 147, 148, 149 and 150 have no current applicability to
      the
      Company or their effect on the financial statements would not have been
      significant.





2. GOING
      CONCERN





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As shown in the financial statements, the
      Company has no established source of revenue, and as of December 31, 2004,
      the
      Company had limited working capital of $8,079. In addition, the Company has
      been
      in the development stage since its inception on March 27, 2001 and is dependent
      on outside financing to fund its operations. These factors, among others, raise
      substantial doubt about the Company's ability to continue as a going
      concern.





Management's
      plans in regard to these matters are to continue to raise additional capital
      from selling the Company's stock. However, there is no assurance that the
      Company will be able to obtain such financing. Management believes actions
      currently being taken provide the opportunity for the Company to continue


as
      a
      going concern. The financial statements do not include any adjustments that
      might result from the outcome of this uncertainty.




F
          -
          7


3.
            STOCKHOLDERS'
                EQUITY





*Founders'
      Stock* .
      The
      Company issued 6,000,000 shares of common stock on April 20, 2001 for cash
      totaling $600.





*2001
      Private Placement Memorandum.* On
      June
      1, 2001, the Company began an offering to sell up to 100,000 shares of common
      stock at $0.10 per share pursuant to a Private Placement Memorandum. In August
      2001, the Company sold 13,000 shares of its common stock at $0.10 under this
      private placement. All proceeds from this offering were used for
      pre-incorporation expenditures, consulting fees and working
      capital.





*Registered
      Stock Offering* .
      During
      the quarter ended December 31, 2002, the Company sold 10,000 shares of its
      common stock at $0.10 per share for total proceeds of $1,000. The stock offering
      was pursuant to the Company's effective Form SB-2/A registration statement
      dated
      November 15, 2001. The Company used the proceeds to repay advances and general
      and administrative expenses. The Company's registered offering expired on
      October 30, 2002.





*2004
      Private Placement Memorandum* .
      On
      March 2, 2004, the Company sold 360,845 stock units at $0.15 each for net
      proceeds of $54,125. Each stock unit consists of one share of common stock
      and a
      warrant to purchase one share of common stock. The stock warrants are
      exercisable at any time before March 8, 2007 at $0.15 per share of common stock.
      The Company’s net proceeds of $54,125 from this stock sale will be used to fund
      Company operations.





The
      Company has computed the fair value of the stock warrants issued to be $0.02
      per
      warrant. The Company recorded the total fair value of the warrants of $7,217
      as
      an increase to its additional paid in capital in the accompanying financial
      statements. The Company used the Black-Sholes option pricing model to value
      the
      warrants with the following assumptions: risk-free interest rate of 6.0%,
      expected dividend yield of 0, expected life of 3 years, and expected volatility
      of 1.0.





*Amended
      and Restated 2001 Stock Option Plan* .
      The
      Company's Board and shareholders approved a Stock Option Plan, effective June
      1,
      2001. The plan was amended by the Board and shareholders to the Company’s
      Amended and Restated 2001 Omnibus Securities Plan, effective May 27, 2004 (“2001
      Plan”). The 2001 Plan limits the aggregate number of shares available to
      600,000. Each award under the 2001 Plan will be evidenced by a Stock Purchase
      Agreement; each agreement will establish the vesting requirements and the
      maximum term of the options granted. On November 4, 2003, the Company agreed
      to
      issue 600,000 stock options to two directors under the 2001 Plan. In accordance
      with the Company’s status as a business development company, the stock options
      will not be issued until the Securities and Exchange Commission (“SEC”) approves
      the issuances, which the Company believes will occur during the next quarter.
      If
      approved by the SEC, the exercise price of the stock options will be at or
      above
      the fair market value of the Company’s common stock on the issuance date.





*2004
      Omnibus Securities Plan* .
      The
      Company’s Board and shareholders approved the Company’s 2004 Omnibus Securities
      Plan, effective May 27, 2004 (“2004 Plan”). The 2004 Plan limits the aggregate
      number of shares that can issue under the plan to 650,000 shares. Each award
      under the 2004 Plan will be evidenced by a Stock Purchase Agreement; each
      agreement will establish the vesting requirements and the maximum term of the
      options granted. The Company has not issued, or agreed to issue, any stock
      or
      options under the 2004 Plan. In accordance with the Company’s status as a
      business development company, no stock or options will be issued under the
      Plan
      until the SEC approves the 2004 Plan. If approved by the SEC, any stock or
      option issuances under the 2004 Plan will be at or above the fair market value
      of the Company’s common stock on the date of issuance.




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4.  INCOME
      ( LOSS)
      PER SHARE





The
      following data show the amounts used in computing net income (loss) per share
      for the periods presented:




For
                  the Years EndedDecember
                  31,2004
              
              
              2003Income
                  (loss) from continuing operationsavailable
                  to commonshareholders
                  (numerator)
              
              $
              57,059
              
              $
              (63,253
              )Weighted
                  average number ofcommon
                  shares outstandingused
                  in loss per share duringthe
                  period (denominator)
              
              
              6,321,699
              
              
              6,023,000


Dilutive
        loss per share was not presented, as the Company had no common equivalent
        shares
        for all periods presented that would effect the computation of diluted loss
        per
        share.
 
 5.
              INCOME
                  TAXES
 
 The
        Company accounts for income taxes in accordance with Statement of Financial
        Accounting Standards No. 109 “Accounting for Income Taxes” which requires the
        liability approach for the effect of income taxes.
 
 The
        Company has available at December 31, 2004, unused operating loss carryforwards
        of approximately $63,000, which may be applied against future taxable income
        and
        which expire in various years through 2025. If certain substantial changes
        in
        the Company's ownership should occur, there could be an annual limitation
        on the
        amount of net operating loss carryforward which can be utilized. The amount
        of
        and ultimate realization of the benefits from the operating loss carryforwards
        for income tax purposes is dependent, in part, upon the tax laws in effect,
        the
        future earnings of the Company and other future events, the effects of which
        cannot be determined. Because of the uncertainty surrounding the realization
        of
        the loss carryforwards, the Company has established a valuation allowance
        equal
        to the tax effect of the loss carryforwards, therefore, no deferred tax asset
        has been recognized for the loss carryforwards. The net deferred tax assets
        were
        approximately $21,000 and $48,000 at December 31, 2004 and 2003, respectively,
        with an offsetting valuation allowance of the same amount resulting in a
        change
        in the valuation allowance of approximately $27,000 during the year ended
        December 31, 2004.
 
 
 6.
              RELATED
                  PARTY TRANSACTIONS
 
 The
        Company has engaged one of its shareholders, Mr. Lebrecht, as its corporate
        counsel. For the years ended December 31, 2004 and 2003, the Company incurred
        total legal services and out of pocket costs to Mr. Lebrecht’s firm of $324 and
        $37,730, respectively. As of December 31, 2004 and 2003, the Company had
        amounts
        due to Mr. Lebrecht of $24 and $32,889, respectively, which are recorded
        in
        accounts payable and accrued liabilities in the accompanying financial
        statements. In addition, the Company received an advance of $10,000 from
        Mr.
        Lebrecht for organizational costs. The Company recorded this advance as a
        payable to stockholder as of Decemebr 31, 2003. On March 26, 2004, The Lebrecht
        Group, APLC, agreed to forgive amounts owed to them of $73,955, including
        the
        $10,000 advance. The forgiveness of these amounts was recorded as other income
        in the accompanying financial statements for the year ended December 31,
        2004.
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  The
        Company’s President, Mr. Berg, has elected to forego a salary during its early
        development stages. Mr. Berg has also provided office space to the Company.
        In
        prior years, the Company estimated the value of these services to be $6,000
        for
        the year ended December 31, 2004. As of December 31, 2003, the Company had
        amounts due to Mr. Berg of $9,400, which were recorded in accounts payable
        and
        accrued liabilities in the accompanying financial statements. On March 26,
        2004,
        the Company’s director and officer agreed to forgive $9,400 of the Company’s
        debt owed to him. As of December 31, 2004, there were no amounts due Mr.
        Berg.
        The forgiveness of debt was recorded as other income in the accompanying
        financial statements for the year ended December 31, 2004.
 
 In
        addition, one of the Company’s directors, Mr. Gadawski, provided consulting
        services to the Company in in 2004 and 2003. As of December 31, 2004, the
        Company had $2,500 due to Mr. Gadawski for services rendered during the year
        ended December 31, 2004.
 
 In
        November 2003, the Company agreed to issue to each of Mr. Gadawski and Mr.
        Stewart options to acquire 300,000 shares of our common stock for serving
        as
        directors of the Corporation. As of December 31, 2004, the Company has not
        issued these options, as this issuance of options is subject to approval
        of the
        SEC pursuant to provisions of the Investment Company Act of 1940.
 
 
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