UNITED STATES

SECURITIES ANDEXCHANGE COMMISSION

 

WASHINGTON, D.C. 20549

 

FORM 10-KSB

 

ANNUAL REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

 

FOR THE FISCAL YEARENDED DECEMBER 31, 2005

 

COMMISSION FILE NUMBER0-22325

 

INFORMATION ARCHITECTSCORPORATION

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(Name of smallbusiness issuer in its charter)

 

NORTH CAROLINA                            87-0399301

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                     (State or other jurisdiction         (I.R.S. EMPLOYER IDENTIFICATION NO.)

                   of incorporation or organization

 

1420 NW 23rdAvenue,

Ft. Lauderdale,Florida 33311

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(Address of principalexecutive offices) (Zip Code)

 

Issuer's telephonenumber 954-561-7321

 

Securities registeredunder Section 12(b) of the Exchange Act:

 

Title of each class                Name of each exchange on which registered

                           None                                        N/A

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Securities registeredunder Section 12(g) of the Exchange Act:

 

COMMON STOCK, PARVALUE $0.001 PER SHARE

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(Title of class)

Indicate by check mark whether we: (1) filed all reports required to be filedby Section 13 or 15(d) of the Exchange Act during the past 12 months (or forsuch shorter period that we were required to file such reports), and (2) hasbeen subject to such filing requirements for past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405of Regulation S-B not contained in this form, and no disclosure will becontained, to the best of our knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-KSB or anyamendment to this Form 10-KSB [ ]

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The registrant's revenues for the year ended December 31, 2005 was $503,470.

 

The aggregate market value of the voting and non-voting common equity held bynon-affiliates computed by reference to the price at which the common equity wassold, or the average bid and asked price of such common equity as of April 19,2006 was $ 54,273,655.57

The number of shares of common equity outstanding as at December 31, 2005 was716,280,719

DOCUMENTS INCORPORATED BY REFERENCE

N/A

Transitional Small Business Disclosure Format Yes No X

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FORWARD-LOOKING STATEMENTS

The matters discussed in this Annual Report on Form 10-KSB should be read inconjunction with the consolidated financial statements provided under Part II,Item 8 of this Annual Report on Form 10-KSB. Certain statements contained hereinmay constitute forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. These statements involve a number ofrisks, uncertainties and other factors that could cause actual results to differmaterially, as discussed more fully herein. We undertake no duty to update thisinformation after the date of this document.

 

 

 

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PART I

 

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

Information Architects Corporation and Subsidiary (the "Company" or "IA") wasa developer of dynamic content dynamic delivery content and delivery interchangeand infrastructure interchange infrastructure software solutions for bothcorporations and individuals. The Company suspended operations in late 2002.

IA in 2004 continued to enhance its product by staying up-to-date with itscustomer's needs. We performed additional enhancements to the software, workedto enhance our backroom customer support and services systems and to expand oursales and marketing effort. In order to increase sales as quickly as possiblethe company's sales focus has been on building partner and affiliaterelationships. As of December 31, 2005 we have entered into twenty-threepartners and affiliate relationships with companies in the HR and HR associatedmarketplace as well as companies that focus on marketing various products andservices to the business community. We are actively working on training andsupporting these entities. We have also entered into several Sales PartnerSoftware Integration Agreements with HR companies looking to integrate theirsystems directly into IA's. The company maintains a website at www.ia.com 

Daystar Telecom, Inc., a Fort Lauderdale based company, which was acquired byIA in 2003, has a product timerace.net that provides automatic call tracking tothe legal and accounting vertical. This software solution integrates very wellinto small to medium professional offices that do not have the critical mass forthe expenses normally associated with both sophisticated bill-tracking systems.The system is voice activated and collects billing information, collection ofvoice data both incoming and outgoing, and collects data from these calls(including cellular phones). Other value added services such as conferencerecording and transcription production is tied into the back end, and the phonetracking and data capturing can take place from anywhere in the world. Thecurrent business model of Daystar is on-hold pending the success of thecompany's financing activities. In 2004 DayStar Telecom, Inc. was involved in acontractual dispute with one if its vendors. The vendor MemberCall filed suitagainst DayStar in December 2004. A judgment was awarded to MemberCall andDayStar has filed a Notice of Appeal.

Acquisition of Remote Credit Card Authentication Patent

On February 25, 2004 Information Architects Corp. acquired a patent US6,270,011 B1 (remote credit card authentication system) in exchange for 60,000shares of Series D preferred shares and employment agreements for two employeesof OTE Networks LTD. The patent is in relation to a fingerprint scanningmethodology for providing secure transactions with credit cards by adding afingerprint scanner at the point-of-sale to obtain fingerprint data, so that acredit card company can verify the fingerprint. The method is integrated intothe existing negotiations protocol between a point-of-sale system and a creditcard company database, and uses a human fingerprint and a secure algorithm. Thecredit card company has the customer fingerprint for comparison on its existingdatabase, and the existing credit card operation will be usual, with thefingerprint data added to it to authenticate and secure the operation viacommunication media while making the point-of-sale purchase. 

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The development of the patent goes hand-and-hand with the IPC subsidiary(Information Processing Corporation" discussed below). The ability to test anddeploy the patent using the IPC processing center will speed its deployment tothe marketplace and give IA the ability to market the patent and servicesdeveloped from it to various IPC clients and customers. 

Acquisition of ICABS.COM, Inc.

In continuing on its strategy of acquisitions that are complimentary to itsservices, the Company entered into an Acquisition Agreement in March 2004 withICABS.COM, Inc. ("ICABS" or "iCABS"), a company specializing in the managementof relationships between banks, processors and other financial institutions andcorporate clients for the issuance of Pre-Paid Debit and Credit Cards. Inexchange for 100% of the shares of ICABS, the Company issued 100,000 Series Cpreferred shares. ICABS focuses on payroll, commission and expense programs (PCE)both in the United States and internationally. 

ICABS has secured a number of marketing agreements (several on an exclusivebasis) with card issuing institutions. 

The PCE model ties in closely with the Company's core business of securityscreening for employees. The companies are seen as being mutually complimentary.With the new levels of compliance required under the terms of the recentlyenacted Patriot Act laws, companies that work to the highest standards help enduser clients conform to the requirements of "know your end user." 

As of December 31, 2004 ICABS had one employee. It currently shares officespace with IA at its' offices in Ft. Lauderdale, FL. The company maintains awebsite at www.icabs.com.
Acquisition of International Monetary Exchange Systems Corporation (IMES)

Continuing on its strategy of acquisitions that are complimentary to itsservices, Information Architects entered into an Acquisition Agreement on March9, 2004 and closed it on April 12, 2004 with IMES - International MonetaryExchange Systems Corporation, a company specializing in Pre-Paid Debit andCredit Cards primarily focused on the payroll card business and retail cardprograms. In exchange for 100% of the shares of IMES, the Company issued 50,000Series C preferred shares. The IMES stored value products enhance the Perceptreproduct as with Perceptre we offer the HR department the tools to hire anemployee and with IMES we offer the tools to pay an employee. IMES is primarilyfocused in marketing its own card programs directly to consumers and businesses.Working hand-in-hand with iCABS, which works directly with the issuing banks andprocessors, IMES' strategy is to develop stored value card programs both here inthe US and abroad. 

IMES has also developed its own back end customer service and cardholderservices module both on-line and off. The IMES system integrates seamlessly withthe processor to provide a complete set of backend fulfillment, operations,cardholder services, distributor services, treasury and settlement processreconciliation and overall portfolio management systems to manage its card base.The products IMES offers handle the complete integration for stored valueprograms, from card ordering and transaction processing, to front-end websitedesign and customer service. The company maintains a website at www.imesworldwide.com.**Acquisition of FFS Transaction, LLC Assets and Liabilities**
On June 8, 2004 Information Processing Corporation, ("IPC") a NevadaCorporation was incorporated and shares were issued to Information ArchitectsCorporation which owns 100% of the shares. On June 3rd, 2004 an AssetAcquisition Agreement was entered into between Information ProcessingCorporation and FFS Transaction Corp, LLC to acquire the assets and certainliabilities of FFS Transaction Corp, LLC. This company owns certain licenses,which allow it to do credit card processing. The acquisition of these assetsfurther complements its recent acquisitions and defines the additional directionin which the Company is heading.

IPC provides a comprehensive range of automated data processing services forbusinesses. At their secure facility in Abilene, Texas they housestate-of-the-art platforms and software systems for all manner of processingrequirements. Their clients' needs range from application service provision,through customer service interfaces, web hosting, direct response handling, allthe way to full bank transaction processing.

IPC products and services include: Application Hosting, Application Service,Provider ATM & POS driving, management and monitoring, Automated Clearing House(ACH) Services, Automated Data Processing Services, Bank Transaction Processing,Corporate eBanking, Customer Support (live and virtual), Customized ApplicationDevelopment, Debit & Stored Value Card Processing, Debit & Stored Value CardAccount Management, Embossing and Encoding of Prepaid Cards, Hardware & SystemsHosting, Prepaid Services Provision. The current business model of IPC ison-hold pending the success of the company's financing activities. It currentlyhas one employee. The company maintains a website at www.ipcamerica.com.**Acquisition of Thronburg Oil Lease**
On June 16, 2005, the Company entered into an asset acquisition agreementwith Synergistic Investments and IFGT-SI International Funding Group Trust ("IFGT-SI"a Delaware Trust. IFGT-SI assigned fifty-one and one half percent of the Oil andGas Lease with James Thronburg in exchange for 650,000,000 shares of Companycommon stock and 48,000,000 shares of Preferred stock. There is no materialrelationship, other than this acquisition, between the Company and any of itsaffiliates, or any director or officer of Company, or any associate of suchdirector or officer.
**Disposition of Thronburg Oil Lease**
On October 14, 2005 Information Architects Corporation, a North Carolinacorporation (the "Company") completed the asset acquisition agreement withPetrolium Communication Holdings Inc., formerly known as AIT Wireless (OTC: ATWL).The Company shall assign fifty-one and one half percent of the James ThronburgOil and Gas Lease (see 8-k filed by Company on June 27, 2005) in exchange for500,000,000 shares of ATWL common stock and 25,000,000 shares of Preferredstock. The Company has agreed to dividend directly to Company shareholders aportion of the ATWL stock received by Company in this transaction. There is nomaterial relationship, other than this acquisition, between the Company and anyof its affiliates, or any director or officer of Company, or any associate ofsuch director or officer.

 
**OUR HISTORY**
We were founded in 1982 as a Utah corporation under the name of EnertronixCorporation. In 1992 we changed our name to Alydaar Software Corporation ("Alydaar").Alydaar later changed its corporate domicile to North Carolina through a mergerwith and into Daar Corporation, a North Carolina corporation established byAlydaar. Alydaar was the surviving corporation. In July of 1997 we acquired allof the shares of Alydaar International, Limited, ("International") based inEngland. On June 28, 1999 we changed our name to Information ArchitectsCorporation. Information Architects Corporation and International arecollectively referred to herein as the "Company" or "IA."

Management suspended operations in connection with its original Jitzusoftware in 2002 and after acquiring from Perceptre LLC its softwarere-commenced operations in June 2003 and thus is able to license this softwareto governmental and commercial sector customers. IA has hired a sales force tomarket its unique Preceptor software as reflected in the financial statements ofthe Company.

The acquisitions of ICABS, IPC, IMES and the remote credit cardauthentication system patent allows the company to expand into the financialprocessing business from a wholesale - retail and consultant approach. A primaryproduct is the pre-paid payroll card program to be marketed to companies. Thepre-paid payroll program as discussed above adds a synergistic marketingcomponent with the core IA background screening - pre and postemployment-screening product. In most cases both products are sold to the HumanResource or Accounting Departments of a company.
**SOFTWARE DEVELOPMENT**
In keeping with the Company's new direction we have ongoing development toenhance its Perceptre Employment Screening and Background Investigation coreproduct, and as such did incur research and development expenditures in 2005. Wecapitalized approximately $87,615 and $0 related to the internal developmentcosts associated with Perceptre in 2004 and 2003, respectively.

All new software development is being focused on the deployment of PerceptreVersion 2.0. Perceptre Version 2.0 added a host of additional features to theon-line ordering and provisioning system. Development continued into 2005 for aversion that allowed small-medium sized business the use of the software and ina "pay-as-you-go" environment. Perceptre Version 2.0 interfaced a shopping cartcomponent and merchant interface that required payment by the customer prior toperforming the employment screening. A new user interface is being developed andwill be available in 2Q06 as well as a software integration module to bedeployed within software systems of companies in the HR space providing otherservices to employers, looking to add the employment screening services to theircustomer base.

Most companies in this market place have not received the level ofpermissions that IA has for the transfer of information via the Internet.Cybertrust Site Secure is a certification given only when a company satisfiesthe extensive requirements relating to security, encryption systems, redundancyof systems, and a whole host of other issues. 

Via XML, IA has developed an interface that allows IA to be a fullyintegrated application within most HRMS, ATS systems. This saves a tremendousamount of time for all HR personnel, in not having to manually enter the datawhen it already exists in another application.

The work production component of the system allows for the completion ofcredit reports and Social Security searches via Experian using Netconnect. Inaddition work is queued to the more than three thousand counties as well as IA'sproprietary call center management system, including several QA components toinsure accurate data disclosure to the employers. The servers that host thesystem are located in Albuquerque New Mexico at a hardened facility calledBigbyte. Bigbyte provides redundant power, Internet connectivity, 24-hoursecurity, as well as biometric entry systems. The system is an N-Tierenvironment to facilitate scalability to several thousand transactions perminute. Security of personal data is priority and is accomplished by severalfirewalls as well as additional monitoring systems to recognize any systemtrying to access that contains a virus. The last completed Cybertrust on siteaudit required no changes to existing technical operations to meet requirements.In addition the system has undergone the Department of Justice IT securityguidelines.
**COMPETITION**
The use of the Internet for recruiting employees is growing rapidly and ischaracterized by intense competition. According to the Internet BusinessNetwork, the electronic recruiting industry in the United States is expected togrow from $4 billion in 1998, to $10 billion in 2003, to over $28 billion by2005. Issues such as terrorism, theft and workplace violence make pre-employmentscreening an increasingly important step in the recruiting process for manyemployers. In this market, new products are frequently introduced, and existingproducts are often enhanced. In addition, new companies and alliances amongexisting companies may be formed that rapidly achieve a significant marketposition. 

In addition, many new pieces of state legislation have been added or are inthe process of being added, that will make it mandatory for pre-employmentscreening checks of all employees and volunteers who come into contact withchildren or those people who are physically or mentally challenged.

There are somewhere between 500-1000 companies that provide backgroundscreening. Not all of them provide the reports via the Web, some mail, some faxand others offer a combination. 

The major competitors for IA in this market are Sterling, ChoicePoint, FirstAdvantage, and Kroll.
**EMPLOYEES**
As of December 31, 2005 there were six employees. -Roland Breton CEO, WilliamOverhulser - COO, three employees in Lutz (Tampa FL) operations and one salesemployee. 

The Board of Directors of IA accepted the resignation of Michael Clark asPresident effective April 5, 2005. Mr. William Overhulser was been appointedInterim Chief Executive Officer. Subsequently Roland Breton was appointedInterim CEO on August 30, 2005

 
**ITEM 2. DESCRIPTION OF PROPERTY**
Presently, the Company corporate office is located at **1420 NW 23rd Avenue,**Ft. Lauderdale, Florida 33311. 
The Company closed its office in Lutz, Florida 

IA also leases cabinet/rack space at Big Byte in Albuquerque, New Mexicowhere its database and web servers are hosted. 

We do not intend to renovate, improve, or develop any of our currentproperties. We are not subject to competitive conditions for property andcurrently have no property to insure. We have no policy with respect toinvestments in real estate or interests in real estate and no policy withrespect to investments in real estate mortgages. Further, we have no policy withrespect to investments in securities of or interests in persons primarilyengaged in real estate activities.
**ITEM 3. LEGAL PROCEEDINGS**
The Company is subject to legal proceedings and claims thatarise in the ordinary course of business. In 2005, the SEC ordered that tradingof the Company's securities be suspended in connection with an Order InstitutingAdministrative Proceedings that further requested that the registration of thesecurities of IA be revoked permanently. The Company has entered intonegotiations with the SEC and has reached a preliminary agreement regardingsettlement which will require that the Company file its 2003 Form 10-KSB/A andwill timely file all other reports required so that the administrativeproceeding will be dismissed. The proceeding was initiated by the SEC inrelation to previous public filings which were not authorized by the auditfirms. The Company currently believes that these matters can be settled and willnot have a material adverse impact on the Company's financial position or itsresults of operations. These matters were settled with the SEC in 2005.
**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
Increase of authorized stock for lease transaction not needed

NONE

PART II
**ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK MATTERS**
Our common stock currently trades on the OTC Bulletin Board under the symbol"IACH". During the period between February, 2005 and December 2005, the stocktraded on the Pink Sheets under the same symbol. 

For Year Ended December 31, 2005            High             Low

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

1st Quarter Ended March 31, 2005            $0.35            $0.05

2nd Quarter Ended June 30, 2005            $0.155            $0.03

3rd Quarter Ended September 30, 2005        $0.09            $0.02

4th Quarter Ended December 31, 2005        $0.155            $0.017
**BENEFICIAL HOLDERS**
As of April 14, 2006, the number of beneficial holders of our common stockwas approximately 12,000, based on information received from our transfer agentand those brokerage firms who hold securities for customers in "street name."
**DIVIDENDS**
We have not paid any cash dividends since our inception. By reason of ourpresent financial status and contemplated future financial requirements, we donot anticipate paying any cash dividends in the foreseeable future. Dividend ofATWL stock. Make decision 
**RECENT ISSUANCES OF UNREGISTERED SECURITIES**
A total of 18,437,000 common shares were issued and 10,950,000 were issuableduring the year ended December 31, 2003 for consulting and other services(valued at $4,394,474) rendered to the Company. These issuable shares wereissued in 2004.

In connection with the three-for-one reverse stock split in 2003, 158fractional shares were cancelled.

In 2003, 285,715 common shares valued at $9,250 were issued in connectionwith the acquisition of Accurate Research Services, Inc.

In 2004, 2,190 common shares were issued in connection with the three-for-onereverse stock split in 2003.

A total of 21,672,440 common shares were issued during the year endedDecember 31, 2004 for consulting and other services (valued at $1,083,622)rendered to the Company.

In June 2005, the Company issued 650,000,000 share of common stock as part ofthe acquisition of Oil Leases.

Also in 2005, the Company recorded as shares to be issued,61,000,000 common shares at par value relating to a finders fee on the oil leasesale transaction.
**Series B Preferred Stock**
In 2003, the Company authorized 500,000 shares of Series B Preferred Stockwith a par value of $0.001 per share. Series B preferred share are convertibleinto 100 shares of common stock without any further action by the holders ofsuch shares and have the right to vote based on 200 votes for each share ofSeries B preferred stock.

In 2003, the Company issued 215,350 shares of Series B Preferred Stock inconnection with the purchase of the perceptre software and 15,000 shares ofSeries B Preferred Stock in connection with the purchase of Daystar.
**Series C Preferred Stock**
In 2003, the Company authorized 500,000 shares of Series C Preferred Stockwith a par value of $0.001 per share. Series C preferred share are convertibleinto 10 shares of common stock without any further action by the holders of suchshares and have the right to vote based on 10 votes for each share of Series Cpreferred stock.

In 2004, the Company issued 100,000 shares of Series C Preferred Stock inconnection with the acquisition of ICABS and 50,000 shares of Series C PreferredStock in connection with the acquisition of IMES.
**Series D Preferred Stock**
In 2003, the Company authorized 500,000 shares of Series D Preferred Stockwith a par value of $0.001 per share. Series D preferred share are convertibleinto 10 shares of common stock without any further action by the holders of suchshares and have the right to vote based on 10 votes for each share of Series Dpreferred stock.

In 2004, the Company issued 60,000 shares of Series D Preferred Stock inconnection with the acquisition of the patent.

We relied upon the exemption provided under section 4(2) for these issuances,which was available because:

o None of these issuances involved underwriters, underwriting Discounts    or commissions.

o Restrictive legends are placed on all certificates issued.

o The distribution did not involve general solicitation or Advertising.

o The distributions were made only to insiders, accredited investors or    investors who were sophisticated enough to evaluate the risks of the    investment. All sophisticated investors were given access to all information    about our business and the opportunity to ask questions and receive answers    about our business from our management prior to making any investment    decision.
**Series F Preferred Stock**
In 2005, the Company authorized 500,000 shares of Series FPreferred Stock with a par value of $0.001 per share. Series F preferred sharesare convertible into 1 share of common stock for 1 share of preferred stock inthe event that common stock is trading at least at $1.

In 2005, the Company issued 48,000,000 shares of Series F Preferred Stock inconnection with the acquisition of Oil Leases.
**SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS**
The Company has a stock option plan to benefit salaried employees. Under thisplan (as amended), the Company may issue stock and/or stock options, to amaximum of 10 percent of the authorized shares, through the year 2005. Theoptions become exercisable at various periods of time from thirty days to twoyears from the date of grant. Options currently expire no later than 10 yearsfrom the grant date. On January 25, 2002, the Company's shareholders voted to

Approve an amendment to the stock option plan to increase the number ofshares of common stock that may be issued under the plan from 800,000 to4,000,000 shares after giving effect to the one-for-five reverse split. Thisamendment was effective February 1, 2002. The plan has not been amended for themost recent one-for-three reverse stock split.

The Company has an employee stock purchase plan to provide eligible employeeswith the opportunity to purchase shares of its common stock through payrolldeductions. Participants of the plan purchase shares of the Company's commonstock at six-month intervals at 85 percent of the lower of the fair market valueon the first or last day of each six-month period. The fair market value ofshares that may be purchased by any participant during any calendar year may notexceed $25,000. On January 25, 2002, the Company's shareholders voted to approvean amendment to the employee stock purchase plan to increase

The number of shares available for purchase under such plan from 40,000 to200,000 shares after giving effect to the one-for-five reverse split in January2002. The plan has not been amended for the most recent one-for-three reversestock split. Of the 200,000 shares authorized to be issued under the PurchasePlan, 191,625 shares remained available for issuance as of December 31, 2004.During 2005 and 2004 employees purchased -0- and -0- shares for approximately$0.00 and $0.00, respectively.
**ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS**
Prior to December 2002, Information Architects Corporation and Subsidiary("IA" or the "Company") provided dynamic content delivery and interchangeinfrastructure solutions for businesses based on our core product, Jitzu. InDecember 2002 the Company suspended operations in connection with the sale anddistribution of its core product. In June 2003 the company re-commencedoperations. In 2005 the Company's revenues are derived from its EmploymentScreening and Background Investigations software application. 

The following discussion should be read in conjunction with the consolidatedfinancial statements provided under Part II, Item 8 of this Annual Report onForm 10-KSB. Certain statements contained herein may constitute forward-lookingstatements within the meaning of the Private Securities Litigation Reform Act of1995.

These statements involve a number of risks, uncertainties and other factorsthat could cause actual results to differ materially, as discussed more fullyherein. IA undertakes no duty to update this information after the date of thisdocument.
**CRITICAL ACCOUNTING POLICIES AND ESTIMATES**
IA's discussion and analysis of its financial condition and results ofoperations are based upon IA's consolidated financial statements, which havebeen prepared in accordance with accounting principles generally accepted in theUnited States. The preparation of these financial statements requires IA to makeestimates and judgments that affect the reported amounts of assets, liabilities,revenue, expenses, and related disclosures of contingent assets and liabilities.

IA evaluates its estimates on an on-going basis. These estimates are based onhistorical experience and on various other assumptions that are believed to bereasonable under the circumstances, the results of which form the basis formaking judgments about the carrying values of assets and liabilities that arenot readily apparent from other sources. Actual results may differ from theseestimates under different assumptions or conditions.

IA believes that the following critical accounting policies affect its moresignificant judgments and estimates used in the preparation of its consolidatedfinancial statements: revenue recognition, deferred tax assets, and estimateduseful life of assets and valuation of equity securities issued for services orsettlements. Also, please review the content under "Other Disclosures forShareholders' Benefit." Management's judgments and estimates related to deferredtax assets and the useful life of assets had a material impact on the 2001financial statements. It is likely that as our business evolves, our criticalaccounting policies will change.
**RESULTS OF OPERATIONS**
The Company re-commenced operations in June 2003 when it purchased the assetsof Perceptre LLC. after a suspension of operations in late 2002. For the fiscalyear ended December 31, 2005 the Company incurred a loss of $620,106 compared toa loss of $3,193,428 for the year ended December 31, 2004.

The following financial discussion related to our operations.

IA had revenues of $503,470 in 2005 compared to $561,318 in 2004

IA was affected by the economic weakness as generally seen throughout thetechnology industry, which caused the Company to take this new direction.
**Cost of Revenues and Gross Margin**
IA reported 2005 cost of revenues of approximately $234,811 compared to$352,392 in 2004. Cost of revenues in 2005 relates to support services requiredin connection with services provided by the Company to its customers.
**Sales and Marketing**
Sales and marketing expenses were approximately $0 in 2005 as compared to$16,152 in 2004. 
**Research and Development**
There was $0 in research and development expenses in 2005 as compared to$87,615 in 2004. 

IA technical development continues on an ongoing basis as new applicationsare brought on line for specific client needs. These features are then added tothe suite of offerings for all clients. In addition, systems are developed tostreamline work production and reduce turnaround time. 
**General and Administrative**
General and administrative expenses were approximately $626,320 in 2005compared to $3,291,285 in 2004. 
**Depreciation and Amortization**
Depreciation and amortization expenses were approximately $43,846 in 2005 ascompared to $56,407 in 2004. 
**Other Items**
We had no interest income in 2005 and 2004; due to the fact the company hadno cash or cash reserves. 
**Provision for Income Taxes**
No provision for or benefit from income taxes was recorded for 2005 or 2004.
**Other**
During 2005 and 2004, we issued common stock to raise cash, to convert debtto equity, to pay for services and to acquire assets. We also use stock optionsand warrants to reward and retain employees as well as to compensateconsultants. We anticipate the continuation of this practice.

We may continue to invest in introducing new concepts into the Internetmarketplace as we go forward. These investments have up front costs with delayedrevenue, if any, and could impact both the timing of our revenue and our netincome or loss. These investments may also cause volatility in ourquarter-to-quarter results.
**LIQUIDITY AND CAPITAL RESOURCES**
Since inception, we had an aggregate net loss of $79.6 million. In order tocontinue operations, we will once again seek additional funding from outsidesources. Among the options that are currently being explored to raise capital isthe issuance of stock and/or debt financing. Without additional funding, IA willnot be able to continue operations.
**FACTORS THAT MAY AFFECT OUR BUSINESS, FUTURE OPERATING RESULTS AND FINANCIALCONDITION**
IA participates in a highly volatile industry that is characterized byintense industry-wide competition. Industry participants confront aggressivepricing practices by competitors, continually changing customer demand patternsand rapid technological developments. The following cautionary statementsdiscuss important factors that could cause actual results to differ materially

From the projected results contained in the forward-looking statements inthis Annual Report on 10-KSB. We believe that in the future our results ofoperations and financial condition could be affected by various factors,including, but not limited to:
**GOING CONCERN AND THE NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BEAVAILABLE ON TERMS FAVORABLE TO US, IF AT ALL**
Since inception, we had an aggregate net loss of $79.6 million. In order tocontinue operations throughout 2005, we will once again seek additional fundingfrom outside sources. Among the options that are currently being explored toraise capital is the issuance of stock and/or debt financing. Without additionalfunding, we will not be able to continue operations. We can make no assurancesthat we will be able to obtain financing on favorable terms, if at all.
**OUR LIMITED OPERATING HISTORY IN THE CONTENT AGGREGATION AND SYNDICATIONBUSINESS MAY IMPEDE YOUR ABILITY TO EVALUATE OUR BUSINESS AND ITS FUTUREPROSPECTS**
Since July 1, 1999, we have continued to fund our operations primarily fromour sale of common stock and securities convertible into common stock and havenot generated net income from operations. Before buying our common stock, youshould consider the risks and difficulties frequently encountered by companiesin new and rapidly evolving markets, particularly those companies whosebusinesses depend on the Internet.

These risks and difficulties, as they apply to us in particular, include:

- Potential fluctuations in operating results and uncertain growth rates;  

- Limited market acceptance of our products;

- concentration of our revenues in a single product suite;

- our need to manage rapidly expanding operations; and 

- our need to attract and train qualified personnel.
**OUR QUARTERLY OPERATING RESULTS ARE VOLATILE AND DIFFICULT TO PREDICT, AND IFWE FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THEMARKET PRICE OF OUR COMMON STOCK MAY DECREASE SIGNIFICANTLY**
Our quarterly operating results have fluctuated significantly in the past,and we expect them to continue to fluctuate in the future, which may result in adecrease in the price of our common stock. It is possible that in some futureperiods our results of operations may not meet or exceed the expectations ofpublic market analysts and investors and the price of our common stock maydecline.
**VOLATILITY IN OUR STOCK PRICE MAY ADVERSELY AFFECT OUR BUSINESS**
Fluctuations in the market price of our common stock may adversely affect ouraccess to capital and financing and our ability to attract and retain qualifiedpersonnel. Historically, our common stock price and trading volume havefluctuated widely. We expect fluctuations to continue in the future for a numberof reasons, including the following:

- Our success or failure in meeting market expectations of our quarterly or  annual revenues, net income or earnings per share;

- Announcements by us or our competitors regarding new services and  products or technological innovations - stock prices for many technology  companies fluctuate widely for reasons, including perceived potential value,  that may be unrelated to operating results; and

- Announcements of unusual events.
**WE ARE SUBJECT TO RISKS ASSOCIATED WITH GOVERNMENTAL REGULATION AND LEGALUNCERTAINTIES**
The governing regulations on Consumer Reporting Agencies are the Fair CreditReporting Act (FCRA). IA is in compliance and monitors the FCRA for any changesthrough several professional originations as well as the Federal Governmentreleases. All documentation required to be signed by both clients and consumersis periodically reviewed to insure compliance. In addition there are multiplefeatures built into Perceptre to force compliance, including but not limited toindications of signatures required by applicants to run credit reports.

Few existing laws or regulations specifically apply to the Internet, otherthan laws and regulations generally applicable to businesses. Certain U.S.export controls and import controls of other countries, including controls onthe use of encryption technologies, may apply to our products. Many laws andregulations, however, are pending and may be adopted in the United States,individual states and local jurisdictions and other countries with respect tothe Internet. These laws may relate to many areas that impact our business,including content issues (such as obscenity, indecency and defamation),copyright and other intellectual property rights, encryption, caching of contentby server products, personal privacy, taxation, e-mail, promotions, network andinformation security and the convergence of traditional communication serviceswith Internet communications, including the future availability of broadbandtransmission capability and wireless networks. These types of regulations arelikely to differ between countries and other political and geographic divisions.

Other countries and political organizations are likely to impose or favormore and different regulation than that which has been proposed in the UnitedStates, thus furthering the complexity of regulation. In addition, state andlocal governments may impose regulations in addition to, inconsistent with, orstricter than federal regulations. The adoption of such laws or regulations, and

uncertainties associated with their validity, interpretation, applicabilityand enforcement, may affect the available distribution channels for and costsassociated with our products and services, and may affect the growth of theInternet. Such laws or regulations may harm our business.

We do not know for certain how existing laws governing issues such asproperty ownership, copyright and other intellectual property issues, taxation,gambling, security, illegal or obscene content, retransmission of media, andpersonal privacy and data protection apply to the Internet. The vast majority ofsuch laws were adopted before the advent of the Internet and related

Technologies and do not address the unique issues associated with theInternet and related technologies. Most of the laws that relate to the Internethave not yet been interpreted. In addition to potential legislation from local,state and federal governments, our business may be directly or indirectlyaffected by agreements and other laws and regulations that impose fees,royalties or unanticipated payments regarding the distribution of media over theInternet.

While our customers and we may be directly affected by such agreements, weare not a party to such agreements and have little ability to influence thedegree such agreements favor or disfavor Internet distribution or our businessmodels. Changes to or the interpretation of these laws and the entry into suchindustry agreements could:

- Limit the growth of the Internet;

- Create uncertainty or impose costs in the marketplace that could reduce  demand for our products and services;

- Increase our cost of doing business;

- Expose us to increased litigation risk, substantial defense costs and  significant liabilities associated with content available on our Web sites or  distributed or accessed through our products or services, with our provision  of products and services, and with the features or performance of our products  and Web sites;

- Lead to increased product development costs or otherwise harm our  business; and/or

- Decrease the rate of growth of our user base and limit our ability to  effectively communicate with and market to our user base.

There are a large number of legislative proposals before the United StatesCongress and various state legislatures regarding intellectual property,privacy, email marketing and security issues related to our business. It is notpossible to predict whether or when such legislation may be adopted, and certainproposals, if adopted, could materially and adversely affect our businessthrough a decrease in revenue.
**WE DO NOT PLAN TO PAY CASH DIVIDENDS ON OUR STOCK**
Since our inception, we have not paid and do not intend to pay any cashdividends on our common stock in the foreseeable future. As a result, aninvestor in the common stock would only receive a return on the investment ifthe market price of the common stock increases.
**IMPACT OF INFLATION**
We believe that inflation will not have a material impact on our futureoperating results.

 
**ITEM 7. Financial Statements**
 

 

 

. 

 

 

 

 

 
*** 

JASPERS + HALL, PC**
CERTIFIED PUBLIC ACCOUNTANTS***9175 E. Kenyon Avenue, Suite 100

Denver, CO 80237

303-796-0099***
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

To the Board of Directors andStockholders 

Information Architects Corporationand Subsidiaries

Ft. Lauderdale, Florida

We have audited the consolidated balance sheets ofInformation Architects Corporation and subsidiaries (the "Company") as ofDecember 31, 2005 and 2004, and the related consolidated statements ofoperations, shareholders' equity (deficit), and cash flows for the years thenended. These financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit. 

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

In our opinion, the consolidated financial statementsreferred to above present fairly, in all material respects, the financialposition of Information Architects Corporation and subsidiaries as of December31, 2005 and 2004 and the results of operations and its cash flows for the yearsthen ended in conformity with accounting principles generally accepted in theUnited States of America.

The accompanying financial statements have been prepared assuming that theCompany will continue as a going concern. As discussed in Note 1 to thefinancial statements, the Company's recurring losses from operations,stockholders deficit, and other conditions exist which raise substantial doubtabout the Company's ability to continue as a going concern. Management's plansin regard to these matters are also described in Note 1. The consolidatedfinancial statements do not include any adjustments that might result from theoutcome of this uncertainty.

 

 

/s/ Jaspers + Hall, PC

April 7, 2006

Denver, Colorado
**INFORMATION ARCHITECTS CORPORATIONAND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2005 AND 2004****INFORMATION ARCHITECTS, INC.

Consolidated Statements of Operations

 
 
**INFORMATION ARCHITECTS, INC.

Consolidated Statements of Cash Flows

Indirect Method**
The accompanying notes are an integral part of these financialstatements.
**INFORMATION ARCHITECHTS, INC.

Consolidated 

Statements of Stockholders' Equity(Deficit)

December 31, 2005**
 

The accompanying notes are an integral part of these financial statements.
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business**
Information Architects Corporation and Subsidiary (the"Company" or "IA"), a North Carolina corporation, was formerly a developer ofdynamic content delivery and interchange infrastructure software solutions forboth corporations and individuals. Due to the Company's inability to achieveprofitable operations and the lack of capital to continue to develop its productline and sales staff, the Company suspended its operations in December 2002 andwrote off all its assets. In 2003, the Company acquired the software ofPerceptre, LLC ("*perceptre*"), Accurate Research Solutions, Inc. ("ARS")and Daystar Telecom, Inc. (Daystar") as outlined below and commenced providingservices using the *perceptre* software. In 2004, the Company acquiredICABS.COM, Inc., International Monetary Exchange Systems Corporation, and formedInformation Processing Corporation, and purchased a patent which transactionsare more fully described below. In 2005 the Company purchased and sold OilLeases. In September 2005, the Company signed an Acquisition Agreement with AITWireless, Inc. for sale of the Oil Leases.
**Purchase Of *Perceptre* Software**
On June 16, 2003, the Company closed an Asset PurchaseAgreement whereby IA acquired that certain computer software program anddatabase commonly referred to as "*perceptre*" from Perceptre LLC, a NewMexico limited liability company for 215,350 shares of IA Series B preferredstock. The software was valued at $215,350 in 2003.

Each share of Series B Preferred shall be convertedautomatically into 100 shares of fully paid and non-assessable shares of commonstock (the "Conversion Rate") without any further action by the holders of suchshares. The holder of each share of Series B Preferred shall have the right to200 votes for each share of preferred stock on the record date for determinationof the shareholders entitled to vote on such matters, or, if no such record dateis established, at the date such vote is taken or any written consent ofshareholders is solicited, such votes to be counted together with all othershares of capital stock of the Corporation having general voting power and notcounted separately as a class. Except as otherwise required by law or as setforth in the Articles of Incorporation, the holders of Series B Preferred shallnot vote separately as a class. Holders of Series B Preferred shall be entitledto notice of any shareholders' meeting in accordance with the Bylaws of theCorporation.

The business of Perceptre, LLC is the licensing togovernmental and commercial sector customers of its on-line, pre-employmentscreening, background investigation software ordering system. The *perceptre*software ordering system consists of a user interface designed for ease of use,breadth of information availability as well as speed and flexibility. The *perceptre* software provides a fast and affordable on-line ordering systemfor use by employers, or any other inquiring entities, in their quests to reviewthe records of anyone of interest in many personnel arenas such as 
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
 

criminal records, civil court records, motor vehicle records,and, of course, credit bureau records.
**NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(continued)**
The transaction was originally contemplated to be a shareexchange as reported on Form 8-K dated December 16, 2002. In May 2002, an 8-Kwas filed stating that the transaction did not occur. Subsequent to that timethe software acquisition was completed. At the time the software acquisition wasfinalized, management of IA and Perceptre, LLC were related parties.

Acquisition Of Accurate Research Solutions, Inc.

In 2003, the Company acquired 100% of the stock of AccurateResearch Solutions, Inc. ("ARS") for 285,715 common shares, valued at $9,250 inthe 2003 financial statements. The business of ARS is providing pre-employmentand post-employment screening and background investigations to variousbusinesses. ARS is a client of Perceptre, LLC and uses the *perceptre*software system to manage its business.

With the acquisition of the Perceptre software and theacquisition of ARS IA's mission is to allow companies and government agencies ofall sizes and their HR - Risk Management or Loss Prevention Staff to easily andefficiently perform pre-employment screening on all new applicants and toperform routine background investigations on their current employment basethrough the most efficient user interface the industry can provide.

Acquisition Of Daystar Telecom, Inc.

The Company acquired 100% of the stock of Daystar Telecom,Inc., a Fort Lauderdale based company, IA in April 2003 for 15,000 Series Bpreferred shares, valued at $75 in the accompanying financial statements.Daystar has a product, timerace.net, which provides automatic call tracking tothe legal and accounting vertical. This software solution integrates very wellinto small to medium professional offices that do not have the critical mass forthe expenses normally associated with sophisticated bill-tracking systems. Thesystem is voice activated and collects billing information, collection of voicedata both incoming and outgoing, and collects data from these calls (includingcellular phones). Other value added services such as conference recording andtranscription production is tied into the back end, and the phone tracking anddata capturing can take place from anywhere in the world.

Acquisition of Remote Credit Card Authentication Patent
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
 

On February 25, 2004 Information Architects Corp. acquired apatent US 6,270,011 B1 (remote credit card authentication system) in exchangefor 60,000 shares of Series D preferred shares (valued at $6,000 in theaccompanying financial statements). The patent is in relation to a fingerprintscanning methodology for providing secure transactions with credit cards byadding a fingerprint scanner at the point-of-sale to obtain fingerprint data, sothat a credit card company can verify the fingerprint. The method is integratedinto the existing negotiations protocol between a point-of-sale system and acredit card company database, and uses a human fingerprint and a securealgorithm. The credit card company has the customer fingerprint for comparisonon its existing database, and the existing credit card operation will be usual,with the fingerprint data added to it to authenticate and secure the operationvia communication media while making the point-of-sale purchase.

Each share of Series D Preferred shall be convertedautomatically into 10 shares of fully paid and non-assessable shares of commonstock (the "Conversion Rate") without any further action by the holders of suchshares. The holder of each share of Series D Preferred shall have the right to10 votes for each share of preferred stock on the record date for determinationof the shareholders entitled to vote on such matters, or, if no such record dateis established, at the date such vote is taken or any written consent ofshareholders is solicited, such votes to be counted together with all othershares of capital stock of the Corporation having general voting power and notcounted separately as a class. Except as otherwise required by law or as setforth in the Articles of Incorporation, the holders of Series D Preferred shallnot vote separately as a class. Holders of Series D Preferred shall be entitledto notice of any shareholders' meeting in accordance with the Bylaws of theCorporation.

Acquisition of ICABS.COM, Inc.

The Company entered into an Acquisition Agreement in March2004 with ICABS.COM, Inc. ("ICABS" or "iCABS"), a company specializing in themanagement of relationships between banks, processors and other financialinstitutions and corporate clients for the issuance of Pre-Paid Debit and CreditCards. In exchange for 100% of the shares of ICABS, the Company issued 100,000Series C preferred shares (valued at $16,990 in the accompanying financialstatements). ICABS focuses on payroll, commission and expense programs (PCE)both in the United States and internationally. As of December 31, 2004 ICABS hadone employee. It currently shares office space with IA at its' offices in Ft.Lauderdale, FL. The purchase method of accounting was used for this transaction.

Each share of Series C Preferred shall be convertedautomatically into 10 shares of fully paid and non-assessable shares of commonstock (the "Conversion Rate") without any further action by the holders of suchshares. The holder of each share of Series C Preferred shall have the right to10 votes for each share of preferred stock on the record date for 
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
determination of the shareholders entitled to vote on suchmatters, or, if no such record date is established, at the date such vote istaken or any written consent of shareholders is solicited, such votes to becounted together with all other shares of capital stock of the Corporationhaving general voting power and not counted separately as a class. Except asotherwise required by law or as set forth in the Articles of Incorporation, theholders of Series C Preferred shall not vote separately as a class. Holders ofSeries C Preferred shall be entitled to notice of any shareholders' meeting inaccordance with the Bylaws of the Corporation.
**Acquisition of International Monetary Exchange SystemsCorporation (IMES)**
Information Architects entered into an Acquisition Agreementon March 9, 2004 and closed in on April 12, 2004 with IMES - InternationalMonetary Exchange Systems Corporation, a company specializing in Pre-Paid Debitand Credit Cards primarily focused on the payroll card business and retail cardprograms. In exchange for 100% of the shares of IMES, the Company issued 50,000Series C preferred shares (valued at $17,499 in the accompanying financialstatements). The IMES stored value products enhance the Perceptre product aswith Perceptre we offer the HR department the tools to hire an employee and withIMES we offer the tools to pay an employee. IMES is primarily focused inmarketing its own card programs directly to consumers and businesses. Workinghand-in-hand with iCABS, which works directly with the issuing banks andprocessors, IMES strategy is to develop stored value card programs both here inthe US and abroad. The purchase method of accounting was used for thistransaction. A consultant to the Company was a majority shareholder of IMES.
**Formation of IPC and acquisition of FFS Transaction, LLCAssets and Liabilities**
In June 2004, the Company formed Information ProcessingCorporation, ("IPC") (a Nevada Corporation) and 100% of shares were issued toInformation Architects Corporation. On June 3rd, 2004 and Asset AcquisitionAgreement was entered into between Information Processing Corporation and FFSTransaction Corp, LLC to acquire the assets and certain liabilities of FFSTransaction Corp, LLC. This company owned certain licenses which allowed it todo credit card processing. 
**Acquisition of Thornburg Oil Lease**
On June 16, 2005, the Company entered into an asset acquisition agreementwith Synergistic Investments and IFGT-SI International Funding Group Trust ("IFGT-SI"a Delaware Trust). IFGT-SI assigned fifty-one and one half percent of the Oiland Gas Lease with James Thornburg in exchange for 650,000,000 shares of Companycommon stock and 48,000,000 shares of Preferred stock. 

 
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)****Disposition of Thornburg Oil Lease**
On October 14, 2005 the Company completed the asset acquisition agreementwith Petroleum Communication Holdings, Inc., formerly known as AIT Wireless (OTC:ATWL).The Company shall assign fifty-one and one half percent of the James ThornburgOil and Gas Lease in exchange for 500,000,000 shares of ATWL common stock and25,000,000 shares of Preferred stock. The shares have been valued at $.01 in theaccompanying financial statements.
**Segment Information**
The Company operates one business segment, which is thelicensing to governmental and commercial sector customers of its on-line,pre-employment screening and background investigation software ordering system.
**Going Concern**
The Company's financial statements for the years endedDecember 31, 2005 and 2004 have been prepared on a going concern basis whichcontemplated the realization of assets and the settlement of liabilities in thenormal course of business. The Company through its acquisitions has beenoperating since June 2003. The Company has incurred losses of $3,193,428 in theyear ended December 31, 2004 and $620,106 in the year ended December 31, 2005and has accumulated losses of $79,559,249 to December 31, 2005. These factorsraise substantial doubt about the Company's ability to continue as a goingconcern. The ability of the Company to continue as a going concern is dependenton the Company's ability to generate sufficient future revenue from theacquisition of the *perceptre* software and the other recent acquisitionsand/or acquire other existing businesses that are able to generate profits.These financial statements do not include any adjustments that might benecessary if the Company is unable to continue as a going concern.
**Basis of Presentation and Consolidation**
The Company's consolidated financial statements include theaccounts of Information Architects Corporation and its wholly owned inactiveUnited Kingdom subsidiary, Alydaar International, Limited ("International")andits wholly owned subsidiaries, Accurate Research Solutions, Inc., DaystarTelecom, Inc., ICABS.COM, Inc., International Monetary Exchange SystemsCorporation, and Information Processing Corporation. All significantintercompany transactions and balances have been eliminated in consolidation.
**Use of Estimates**
The consolidated financial statements are prepared inaccordance with generally accepted accounting principles in the United States ofAmerica. This preparation requires management to include amounts based onmanagement's prudent judgments and estimates that affect the amounts 
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
 

reported in the consolidated financial statements andaccompanying notes. Actual results may differ from these estimates. Significantestimates made include the valuation of property and equipment and intangibleassets for which impairment write downs have been recorded, valuation of stockbased grants to employees and third parties, and valuation of the deferred taxassets.
**Cash and Cash Equivalents**
Cash and equivalents include cash on hand or bank overdraftsand highly liquid debt instruments purchased with a maturity of three months orless. 
**Long-Lived Assets**
The Company reviews long-lived assets and certainidentifiable assets related to those assets for impairment whenevercircumstances and situations change such that there is an indication that thecarrying amounts may not be recoverable. If the non-discounted future cash flowsof the enterprise are less than their carrying amount, their carrying amountsare reduced to fair value and an impairment loss is recognized. 
**Property and Equipment**
Property and equipment are stated at cost less accumulateddepreciation. Computers and office equipment are being depreciated over 5 yearsusing the straight-line method. Software, patents, and licenses are beingamortized on a straight-line basis over 15 years which is the estimated usefullife of these assets. Management will analyze the basis of depreciating thissoftware on an annual basis to determine if the asset value is impaired beyondthe annual depreciation rate and will adjust the annual rate accordingly inconjunction with recent accounting pronouncements.

For the years ended December 31, 2005 and 2004 depreciationand amortization expense amounted to $ 43,846 and $56,407, respectively. 
**Revenue Recognition**
The Company recognizes revenue as services are rendered. Services areconsidered rendered as background checks and related services are requested.
**Stock-Based Compensation**
The Company accounts for stock options issued to employees inaccordance with the provisions of Accounting Principles Board ("APB") OpinionNo. 25, "Accounting for Stock Issued to Employees," and related interpretations.As such, compensation cost is measured on the date of grant as the excess of thecurrent market price of the underlying stock over the exercise price. Suchcompensation amounts are amortized over the respective vesting periods of theoption grant. The Company adopted the disclosure provisions of SFAS 
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
 

No. 123, "Accounting for Stock-Based Compensation," whichpermits entities to provide pro forma net income (loss) and pro forma earnings(loss) per share disclosures for employee stock option grants as if thefair-valued based method defined in SFAS No. 123 had been applied. The Companyaccounts for stock options and stock issued to non-employees for goods orservices in accordance with SFAS 123.
**Comprehensive Income (Loss)**
Other comprehensive income (loss) refers to revenue,expenses, gains and losses that under accounting principles generally acceptedin the United States are included in comprehensive income (loss) but areexcluded from net income (loss) as these amounts are recorded directly as anadjustment to stockholders' equity, 

net of tax. The Company's other comprehensive income (loss)is composed of foreign currency translation adjustments which were adjusted in2002.
**Income Taxes**
Income taxes are accounted for under the asset and liabilitymethod of Statement of Financial Accounting Standards No. 109, "Accounting forIncome Taxes" ("SFAS 109"). Under SFAS 109 deferred tax assets and liabilitiesare recognized for the future tax consequences attributable to differencesbetween the financial statement carrying amounts of existing assets andliabilities and their respective tax bases. Deferred tax assets and liabilitiesare measured using enacted tax rates expected to apply to taxable income in theyears in which those temporary differences are expected to be recovered orsettled. Under SFAS 109, the effect on deferred tax assets and liabilities of achange in tax rates is recognized in income in the period that includes theenactment date.
**Net Loss Per Common Share**
Basic loss per share is computed on the basis of the weightedaverage number of common shares outstanding. Diluted loss per share is computedon the basis of the weighted average number of common shares outstanding plusthe effect of outstanding preferred shares using the "if-converted" method andoutstanding stock options and warrants using the "treasury stock" method. Forthe period ended December 31, 2005 and 2004, all of the Company's common stockequivalents were excluded from the calculation of diluted loss per common sharebecause they were anti-dilutive, due to the Company's net losses in those years.At December 31, 2005, there were warrants outstanding to purchase of 9,753,905common shares which may dilute future earnings per share. Also there werepreferred shares which if converted would convert to 53,158,500 shares of commonstock. 

 
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
 
**Fair Value Of Financial Instruments**
Statement of Financial Accounting Standards No. 107,"Disclosures about Fair Value of Financial Instruments," requires disclosures ofinformation about the fair value of certain financial instruments for which itis practicable to estimate that value. For purposes of this disclosure, the fairvalue of a financial instrument is the amount at which the instrument could beexchanged in a current transaction between willing parties, other than in aforced sale or liquidation.

The carrying amounts of the Company's short-term financialinstruments, including accounts receivable, accounts payable, accrued expenses,and income taxes payable approximate fair value due to the relatively shortperiod to maturity for these instruments.
**Recently Issued Accounting Pronouncements**
In February 2003, the Financial Accounting Standards Board ("FASB") issuedSFAS No. 150, "Accounting for Certain Financial Instruments with Characteristicsof Both Liabilities and Equity". The provisions of SFAS 150 are effective forfinancial instruments entered into or modified after May 31, 2003, and otherwiseare effective at the beginning of the first interim period beginning after June15, 2003, except for mandatory redeemable financial instruments of nonpublicentities. The Company has not issued any financial instruments with suchcharacteristics.

In December 2003, the FASB issued FASB Interpretation No. 46 (revisedDecember 2003), "Consolidation of Variable Interest Entities" (FIN No. 46R),which addresses how a business enterprise should evaluate , whether it has acontrolling financial interest in an entity through means other than votingrights and accordingly should consolidate the entity. FIN No. 46R replaces FASBInterpretation No. 46, "*Consolidation of Variable Interest Entities",*which was issued in January 2003. Companies are required to apply FIN 46R tovariable interests in variable interest entities ("VIE") created after December31, 2003. For variable interest in VIEs created before January 1, 2004 theinterpretation is applied beginning January 1, 2005. For any VIEs that must beconsolidated under FIN No. 46R that were created before January 1, 2004, theassets, liabilities and non-controlling interests of the VIE initially aremeasured at their carrying amounts with any difference between the net amountadded to the balance sheet and any previously recognized interest beingrecognized as the cumulative effect of an accounting change. If determining thecarrying value is not practicable, fair value at the date FIN No. 46R firstapplies may be used measure the assets, liabilities and non-controlling interestof the VIE. The Company does not have any interest in VIEs.

 
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
 

In December 2004, the FASB issued SFAS No. 123R (revised 2004) "Share-BasedPayment" which amends FASB Statement No. 123 and will be effective for publiccompanies for interim or annual periods beginning June 15, 2005. The newstatement will require entities to expense employee stock options and othershare-based payments. The new standard may be adopted in one of three ways - themodified prospective transition method, a variation of the modified transitionmethod or the modified retrospective transition method. The Company is toevaluate how it will adopt the standard and the evaluation the effect that theadoption of SFAS 123R will have on the financial position and results ofoperations.

In November 2004, the FASB issued SFAS No. 151, "*Inventory Costs, anamendment of ARB No. 43, Chapter 4."*The statement amends the guidance inARB No. 43, Chapter 4, *Inventory Pricing,*to clarify the accounting forabnormal amounts of idle facility expense, freight, handling costs and wastedmaterial (spoilage). Paragraph 5 of ARB No. 43, Chapter 4 previously stated that"under some circumstances, items such as idle facility expense, excessivespoilage, double freight and rehandling costs may be so abnormal as to requiretreatment as current period charges". SFAS No. 151 requires that those items berecognized as current-period charges regardless of whether they meet thecriterion of "so abnormal". In addition, this statement requires that allocationof fixed production overhead to the costs of conversion be based on theprospectively and are effective for inventory costs incurred during fiscal yearsbeginning after June 15, 2005, with earlier application permitted for inventorycosts incurred during fiscal years beginning after the date this Statement isissued. The adoption of SFAS No. 151 does not have an impact on the Company'sfinancial position and results of operations.

In December 2004, the FASB issued SFAS No. 153, *Exchange of Non-monetaryAssets, an amendment of APB Opinion No. 29.*The guidance in APB opinion No.29, *Accounting for Non-monetary Transactions,*is based on the principlethat exchange of non-monetary assets should be measured on the fair value of theassets exchanges. The guidance in that Opinion, however, included certainexceptions to that principle. This Statement amends Opinion 29 to eliminate theexception for non-monetary exchanges of similar productive assets that do nothave commercial substance. A non-monetary has commercial substance if the futurecash flows of the entity are expected to change significantly as a result of theexchange. SFAS No. 153 is effective for non-monetary exchanges occurring infiscal periods beginning June 15, 2005. The adoption of SFAS No. 153 is notexpected to have an impact on the Company's financial position and results ofoperations.

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting forConditional Asset Retirement Obligations" ("FIN 47"). FIN 47 provides guidancerelating to the identification of and financial reporting for 
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
legal obligations to perform an asset retirement activity. The Interpretationrequires recognition of a liability for the fair value of a conditional assetretirement obligation when incurred if the liability's fair value can bereasonably estimated. FIN 47 also defines when an entity would have sufficientinformation to reasonably estimate the fair value of an asset retirementobligation. The provision is effective no later than the end of fiscal yearsending after December 15, 2005. The Company will adopt FIN 47 beginning thefirst quarter of fiscal year 2006 and does not believe the adoption will have amaterial impact on its consolidated financial position or results of operationsor cash flows. 

In May 2005, the FASB issued SFAS No. 154, "AccountingChanges and Error Corrections" ("SFAS 154") which replaces Accounting PrinciplesBoard Opinions No. 20 "Accounting Changes" and SFAS No. 3, "Reporting AccountingChanges in Interim Financial Statements-An Amendment of APB Opinion No. 28."SFAS 154 provides guidance on the accounting for and reporting of accountingchanges and error corrections. It establishes retrospective application, or thelatest practicable date, as the required method for reporting a change inaccounting principle and the reporting of a correction of an error. SFAS 154 iseffective for accounting changes and a correction of errors made in fiscal yearsbeginning after December 15, 2005 and is required to be adopted by the Companyin the first quarter of 2006. The Company is currently evaluating the effectthat the adoption of SFAS 154 will have on its results of operations andfinancial condition but does not expect it to have a material impact.

In June 2005, the Emerging Issues Task Force, or EITF, reached a consensus onIssue 05-6, *Determining the Amortization Period for Leasehold Improvements,*which requires that leasehold improvements acquired in a businesscombination purchased subsequent to the inception of a lease be amortized overthe lesser of the useful life of the assets or a term that includes renewalsthat are reasonably assured at the date of the business combination or purchase.EITF 05-6 is effective for periods beginning after July 1, 2005. We do notexpect the provisions of this consensus to have a material impact on thefinancial position, results of operations or cash flows. **NOTE 2 - COMMITMENTS AND CONTINGENCIES:

Legal Matters****INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)****NOTE 3 - SHAREHOLDERS' EQUITY (DEFICIT)

Convertible Preferred Stock**
In 2005, the Company increased the number of authorizedpreferred shares to 500,000,000 but has not assigned these shares to individualclasses.

During 2000, the Company issued approximately 166,000 sharesof preferred stock for net proceeds of approximately $10,884,000 in connectionwith a private placement. The preferred stock has a conversion feature of 0.67shares of common stock for each share of preferred stock. Pursuant to the resetcalculation, provided for by the private placement agreement, subsequently, anadditional 58,000 shares of preferred stock were issued. In 2001 and 2000,89,587 and 39,016 preferred shares were converted to common stock. In July 2002,convertible preferred shareholders converted 20,000 shares of preferred stock to13,333 shares of the common stock in accordance the conversion terms of thepreferred stock (See Common Stock below). There were no shares issued in 2003.

Preferred shares are entitled to vote their underlying commonstock equal to five-sevenths of the number of full shares of common stock intowhich such shares of preferred stock could then be converted. Preferred sharesare entitled to receive dividends if the company declares dividends and areentitled to receive the amount paid for their shares, plus all dividends, inpreference to common shareholders in the event the Company is acquired or sold.

In 2003, the Company authorized 500,000 shares of Series BPreferred Stock with a par value of $0.001 per share. Series B preferred sharesare convertible into 100 shares of common stock without any further action bythe holders of such shares, and have the right to vote based on 200 votes foreach share of Series B preferred stock.

In 2003, the Company issued 215,350 shares of Series BPreferred Stock in connection with the purchase of the perceptre software and15,000 shares of Series B Preferred Stock in connection with the purchase ofDaystar.
**Series C Preferred Stock**
In 2003, the Company authorized 500,000 shares of Series CPreferred Stock with a par value of $0.001 per share. Series C preferred shareare convertible into 10 shares of common stock without any further action by 
** 

INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
the holders of such shares and have the right to vote basedon 10 votes for each share of Series C preferred stock.

In 2004, the Company issued 100,000 shares of Series CPreferred Stock in connection with the acquisition of ICABS and 50,000 shares ofSeries C Preferred Stock in connection with the acquisition of IMES.
**Series D Preferred Stock**
In 2003, the Company authorized 500,000 shares of Series DPreferred Stock with a par value of $0.001 per share. Series D preferred shareare convertible into 10 shares of common stock without any further action by theholders of such shares and have the right to vote based on 10 votes for eachshare of Series D preferred stock.

In 2004, the Company issued 60,000 shares of Series DPreferred Stock in connection with the acquisition of the patent.
**Series F Preferred Stock**
In 2005, the Company authorized 500,000 shares of Series FPreferred Stock with a par value of $0.001 per share. Series F preferred sharesare convertible into 1 share of common stock for 1 share of preferred stock inthe event that common stock is trading at least at $1.

In 2005, the Company issued 48,000,000 shares of Series FPreferred Stock in connection with the acquisition of Oil Leases. 
**Common Stock**
In April 2003, the Company announced a one-for-three reversestock split of the common stock and equivalents. All per share data and numbersof common shares and equivalents have been retroactively adjusted to reflect thelatter stock split. As of December 31, 2005 2,000,000,000 common shares wereauthorized.

On December 12, 2002, the Company issued 5,000,000 shares ofits common stock for services rendered. These shares were valued at $750,000 or$0.15 per share or the fair value on the date of the grant. These shares wereissued in 2003.

In 2003, the Company increased the number of authorizedcommon shares to 500,000,000.

On May 14, 2003, the Company registered pursuant to an S-8Registration Statement, 6,000,000 shares of its common stock to be issuableunder a new Year 

 
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
 

2003 Stock Award Plan (the "2003 Plan") which was approved bythe Board. Such shares under the Plan are for employees, officers, directors,key consultants and advisors.

During the period from January to September 2003 the Companyissued a total of 5,851,437 for net proceeds of $ 866,611.

On September 22, 2003 the Company registered pursuant to anS-8 Registration Statement, 6,500,000 of its common stock to be issuable tocertain consultants pursuant to agreements entered into on September 5, 2003.The shares were valued at $ 1,625,000 or $ 0.25 per share. These shares wereissued in October 2003. In addition, options for 1,000,000 shares were granted(500,000 options at $1.00 per share and 500,000 options at $2.50 per share).

In November 2003, the Board of Directors resolved that10,950,000 common shares be issued to consultants and other legally approvedvendors. The shares are shown as issuable on the 2003 financial statements andare valued at $0.05 per share. In addition, options for 8,000,000 shares weregranted (4,000,000 options at $.50, 2,000,000 options at $1.00, and 2,000,000options at $1.50).

A total of 18,437,000 common shares were issued and10,950,000 were issuable during the year ended December 31, 2003 for consultingand other services (valued at $4,394,474) rendered to the Company. Theseissuable shares were issued in 2004.

In connection with the three-for-one reverse stock split in 2003, 158fractional shares were cancelled.

In 2003, 285,715 common shares valued at $9,250 were issuedin connection with the acquisition of Accurate Research Services, Inc.

In 2004, 2,190 common shares were issued in connection withthe three-for-one reverse stock split in 2003.

A total of 21,672,440 common shares were issued during theyear ended December 31, 2004 for consulting and other services (valued at$1,083,622) rendered to the Company.

In June 2005, the Company issued 650,000,000 share of common stock as part ofthe acquisition of Oil Leases.

Also in 2005, the Company recorded as shares to be issued,61,000,000 common shares at par value relating to a finders fee on the oil leasesale transaction.
**Stock Options and Warrants

Stock Option Plan

INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
 

The Company has a stock option plan to benefit salariedemployees. Under this plan (as amended), the Company may issue stock and/orstock options, to a maximum of 10 percent of the authorized shares, through theyear 2004. The options become exercisable at various periods of time from thirtydays to two years from the date of grant. Options currently expire no later than10 years from the grant date.

On January 25, 2002, the Company's shareholders voted toapprove an amendment to the stock option plan to increase the number of sharesof common stock that may be issued under the plan from 800,000 to 4,000,000shares after giving effect to the one-for-five reverse split. This amendment waseffective February 1, 2002. The plan has not yet been amended for the mostrecent one-for-three reverse split.

A summary of the options issued under the plan as of December31, 2005 and 2004 and changes during the years is presented below:

 
Weighted Average
 
Exercise
 
 
Outstanding December 31, 2002 
8,957 
$86.25
Canceled and expired 
(6,824) 
86.25
Granted 
9,000,000 
.97
 
 
Outstanding - December 31, 2003 
9,002,133 
$ .99
Canceled and expired 
(2,133) 
86.25
 
 
Outstanding - December 31, 2004 
9,000,000 
$ .97
Canceled and expired 
-0- 
.00
Outstanding - December 31. 2005 
 
 
9,000.000 
$ .97
 
**Common Stock Warrants**
A summary of warrants issued to employees and non-employeesand changes during 2005 and 2004 is presented below (there were no warrantsissued in 2005 and 2004):

 
Number of Shares 
Weighted Average
 
 
Exercise Price
 
----------------- 
------------------
Outstanding December 31,
 
     2002 
763,471 
$ 2.82
Canceled and expired 
(370) 
118.20
 
----------------- 
---------------** 

 

INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
 

Outstanding December 31, 
 
  2003 
763,101 
$2.74
 
 

Canceled and expired 
(9,196) 
30.02
 
----------------- 
---------------
Outstanding December 31, 
 
  2004 
753,905 
$2.69
  Canceled and expired 
-0- 
-0- 
Outstanding December 31,
 
  2005 
753,905 
$ 2.69 
 

The following table summarizes information about warrants outstanding atDecember 31, 2005:

Outstanding and Exercisable Warrants
 
 
 
Weighted
 
 
Remaining 
Average
Range of 
Number of 
Contractual 
Exercise
Exercise Price 
Shares 
Life 
Price 

$ .60 
583,333 
1.62 
$ 0.60
1.23 
33,333 
1.56 
1.23
1.14 
14,000 
1.52 
1.14
2.73 
50,000 
1.38 
2.73
2.73 
23,333 
1.15 
2.73
19.95 
4,667 
.62 
19.95
 
708,666 
 
$.99
 
**Employee Stock Purchase Plan**
The Company has an employee stock purchase plan to provideeligible employees with the opportunity to purchase shares of its common stockthrough payroll deductions. Participants of the plan purchase shares of theCompany's common stock at six-month intervals at 85 percent of the lower of thefair market value on the first or last day of each six-month period. The fairmarket value of shares that may be purchased by any participant during anycalendar year may not exceed $25,000.

On January 25, 2002, the Company's shareholders voted toapprove an amendment to the employee stock purchase plan to increase the numberof shares available for purchase under such plan from 40,000 to 200,000 sharesafter giving effect to the one-for-five reverse split. The plan has not yet beenamended for the most recent one-for-three reverse split. During 2004 and 2003employees purchased 0 shares.
**INFORMATION ARCHITECTSCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

DECEMBER 31, 2005 and2004

(Continued)**
The Company has elected to follow Accounting Principles BoardOpinion No. 25, "Accounting for Stock Issued to Employees," and relatedinterpretations in accounting for its employee stock options. Under APB No. 25,because the exercise price of the company's employee stock options equals themarket price of the underlying stock on the date of grant, no compensationexpense is recognized in the Company's financial statements.
**NOTE 4 - INCOME TAXES**
There was no income tax expense for the year ended December31, 2003 due to the Company's net losses.

The effects of temporary differences that gave rise tosignificant portions of deferred tax assets and liabilities at December 31, 2004are as follows:

                                               Year Ended December 31,

                                                         2005 

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

Net operating loss

    carryforward                                   $ 79,301,552 

Valuation

    allowance                                       (79,301,552) 

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

Net deferred tax

    assets                                         $     - 

                                                   ============ 

 
**NOTE 5 - NOTE PAYABLE**
In connection with the purchase of the property by IPC, IPCassumed the obligation of the 8%, 72 month promissory note due Transend LLC(balance due at December 31, 2005 was $573,659). The note is due in monthlyinstallments of $10,520, which includes principal and interest. IPC made threepayments during the year totaling $31,560 of which $19,821 applied to principal.$26,711 of interest was accrued during 2004. Total payment for each of the nextfive years is $126,240 per year. The note was not paid in 2005 and is currentlyin default.

 
**ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE**
Our 2002 auditors, Salsberg & Company P.A., were replaced by Jaspers + Hall,PC on December 2, 2004. Their report on our financial statements for the yearended December 31, 2002 did not contain any qualifications or adverse opinion ordisclaimer of opinion, nor was it qualified or modified as to uncertainty, auditscope or accounting principles other than the uncertainty related to our abilityto continue as a going concern through December 31, 2002.

IA previously received notice from its former independent auditors - Russell& Atkins, PLC, that reflects that it is their position that their audit of IA'sfinancial statements for the year ended December 31, 2003 was not completed bytheir firm and as a result, IA had no consent to file an audit report or relatedfinancial statements as audited financial statements, as a part of IA's Form10-KSB and Forms 10-KSB/A for the year ended December 31, 2003. 

By letter dated October 19, 2004, IA received written notice from Russell &Atkins, PLC, independent auditors, advising IA that their firm did not completean audit of our financial statements for the year ended December 31, 2003, nordid that firm consent to the inclusion of an audit report or any relatedfinancial statements with any reports filed with the Commission as required bythe Securities Exchange Act of 1934. The notice given to IA by Russell & Atkins,PLC discloses that they were never engaged to perform an audit, which isinconsistent with IA's understanding. 

As a result of the receipt of the above-referenced notice, the board ofdirectors of IA has re-engaged the services of Jaspers & Hall, PC to conduct anaudit of our financial statements for the period ended December 31, 2003 and theboard has determined that until Jasper and Hall, PC completes the audit of ourfinancial statements for that period and consents to the filing of their auditreport for that period and a Form 10-KSB/A is filed with the Commission thatincludes a validly issued auditor's report with accompanying audited financialstatements, that the financial statements of IA for the period ended December31, 2003 should not be relied upon. 

On January 20, 2005, IA also received notice from Michael B. Johnson & Co.,LLC an independent auditing firm, that reflects that it is that firm's positionthat said firm did not consent to the filing of an audit report covering IA'sfinancial statements for the year ended December 31, 2003, nor did that firmcomplete an audit of IA's financial statements for that same period. That noticealso requested IA to withdraw any references to say firm name in IA's Form10-KSB/A filed with the Commission on January 4, 2005. 

Up until receipt of the notice from Michael B. Johnson & Co., LLC, IA wasunder the impression that the financial statements of IA for the year endedDecember 31, 2003 were being audited by the independent auditing firm of Jaspers& Hall, P.C. as substitute auditors for Russell & Atkins, PLC, pursuant to awritten audit engagement entered into with that firm by IA on November 30, 2004.IA had been informed that the audit report for the year ended December 31, 2003was to be issued by Michael B. Johnson & Co., LLC, due to an impending mergerbetween the two auditing firms named above. IA was under the further impressionthat it had the consent of Jaspers & Hall, P.C., and in turn, Michael B. Johnson& Co., LLC, to file the Form 10-KSB/A and related audit report on January 4,2005. IA is now relying on the Jaspers & Hall PC audit engagement to completethe December 31, 2003 audit of our financial statements for the period thenended and to issue their audit report accordingly, which is included herein.
**ITEM 8A. CONTROLS AND PROCEDURES**
Within the 90 days prior to the filing of this report, the Company carriedout an evaluation under the supervision and with the participation of theCompany's management, including the Company's Chief Executive Officer and ChiefFinancial Officer, of the effectiveness of the design and operation of theCompany's disclosure controls and procedures as defined in Rule 13a-14(c) underthe Securities Exchange Act of 1934. Based upon that evaluation, the ChiefExecutive Officer and Chief Financial Officer concluded that the Company'sdisclosure controls and procedures were effective. There were not anysignificant changes in internal controls or in other factors that couldsignificantly affect these controls subsequent to the date of their evaluation,including any corrective actions with regard to significant deficiencies andmaterial weaknesses.

**PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT**
The following table sets forth the name, age and term of office as directorfor each director and his present position(s) with the Company:

Michael Clark        29         President        February 2004 

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

William Overhulser              Director, COO

                     36         Secretary        December 2003

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

Alfred Tracy         42         Director         April 2004

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

Charles Maurice      40         Director         April 2004

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

The Board of Directors of IA accepted the resignation of Michael Clark asPresident effective April 5, 2005. Mr. Roland Breton has been appointed InterimChief Executive Officer. The Board of Directors of IA accepted the resignationof Charles Maurice as Director effective 7/05. The Board of Directors of IAaccepted the resignation of Mr. William Overhulser as COO and Director effective1/9/06

Section 16(a) of the Securities Exchange Act of 1934, as amended, requiresthe Company's directors and executive officers, and persons who beneficially ownmore than 10% of a registered class of the Company's equity securities, to filereports of beneficial ownership and changes in beneficial ownership of theCompany's securities with the SEC on Forms 3 (Initial Statement of BeneficialOwnership), 4 (Statement of Changes of Beneficial Ownership of Securities) and 5(Annual Statement of Beneficial Ownership of Securities). Directors, executiveofficers and beneficial owners of more than 10% of the Company's Common Stockare required by SEC regulations to furnish the Company with copies of allSection 16(a) forms that they file. Except as otherwise set forth herein, basedsolely on review of the copies of such forms furnished to the Company, orwritten representations that no reports were required, the Company believes thatfor the period from January 1, 2003 through December 31, 2003, the registranthas been unable to determine if the prior directors, executive officers andgreater than 10% beneficial owners complied with all Section 16(a) filingrequirements applicable to them. 

Michael Clark is a seasoned executive in the employment screening industry.As President of Accurate Research Solutions an employment screening companylocated in Tampa, Florida he handled all executive management and operationalcomponents of the business. In 2003 he sold his company to InformationArchitects Corporation. Mike's knowledge of the criminal justice system andcourt procedures is supported by his employment experience with the New YorkState Department of Corrections, Department of Children & Families, FloridaState Child Abuse Investigations and Burns International. As President heactively participates in the day-to-day operations supporting our largerclients, coordinating the efforts of our various divisions as well as workingwith our IT group in formulating enhancements to the Perceptre product. He is agraduate of Syracuse University with a Bachelor degree in Criminal Justice and aminor in Psychology. The Board of Directors of IA accepted the resignation ofMichael Clark as President effective April 5, 2005.

William Overhulser entered into active duty with the US Air Force in 1986. Heachieved Honor Graduate status, attended NCO training courses, and receivedseveral medals including Good Conduct, and Small Arms Expert Marksmanship. Whilein the Air Force, he completed several college courses under Air ForceContinuing education program. After being honorably discharged in the early 90'sWilliam held several positions in the Cellular Telephone industry related tosales and marketing. In the late 90's William was a key player in developingon-line systems using cognitive and psychometric assessments for hiringapplicants as well as background checks, this corporation was subsequently sold,William then developed the Perceptre system which is Information Architects'flagship product. The Board of Directors of IA accepted the resignation ofMichael Clark as President effective 4/5/05

ALFRED TRACY III has served as secretary and director of Greentech USA, Incsince September 2001 and just recently became a director of IA. Mr. Tracy has anextensive background in software engineering, project management, and programmanagement. Most recently, he has held the position of Director of Solutions forTechnisource Inc. During his tenure at Technisource, Mr. Tracy was responsiblefor helping to increase sales from $10 million to its 1999 volume of $146million. Mr. Tracy received his Bachelor of Science Degree in Computer Sciencefrom The University of North Florida, and a Master of Science Degree in ComputerScience from Florida State University.

Charles Maurice is a native of Newcastle Upon Tyne and a graduate of theUniversity of the South Bank's Business School. After leaving his post asGeneral Manager of the second largest direct marketing agency in the UK in 1990,Charles moved to Israel. During the 90's Charles held several positionsincluding: Senior Partner of an international business consulting firm, BridgeHouse Management Ltd; CEO of CABS Ltd, a subsidiary of Tri-United TechnologiesInc.; consultant to the Israeli Foreign Ministry and the Israeli Ministry ofScience; as well as a number of directorships with Israeli start-up firms (bothhi-tech and manufacturing). In August 2000, at the request of their parentcompany, Tri-United, Charles moved to Southern Florida to take up the positionof CEO of iCABS.com, Inc., a company that was just acquired by IA. Charlesbecame the President of iCABS in June 2001. He has recently become a director ofIA. The Board of Directors of IA accepted the resignation of Charles Maurice asa Director effective 7/05
**ITEM 10. EXECUTIVE COMPENSATION**
The following tables set forth information with respect to compensation paidby the Company for the services of the Company's Chief Executive Officer andChief Operation Officer for the years ended December 31, 2004 and December 31,2003.

 
**SUMMARY COMPENSATION TABLE 
Long-Term Compensation  
Annual Compensation
Awards 
Payouts  
(a)
(b) 
(c) 
(d) 
(e) 
(f) 
(g) 
(h) 
(i) Name and    Principle PositionYearSalary ($) Bonus ($) Other Annual    Compensation ($) Restricted Stock    Award(s) ($) Securities    Underlying Options/SARs (#) LTIP Payouts ($)    All Other    Compensation ($)          MICHAEL CLARK
    President2005
2004
$50,000

$50,000
$50,000

$50,000
$30,962

$30,962
$12,500

$12,500            WILLIAM    OVERHULSER
Chief Operating Officer2005
2004
$50,000

$50,000
$35,000

$35,000
$12,500

$12,500    
 

All options listed were granted pursuant to the Company's stock option plan.Option exercise prices were at the market price when granted. The options have aterm of ten years and vest in one year.
**ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**
The following table sets forth information regarding the beneficial ownershipof the Company's Common Stock as of April 15, 2006 by (i) each person who isknown by the Company to own beneficially more than 5% of the Company'soutstanding Common Stock; (ii) each of the Company's officers and directors and(iii) all of the aforementioned as a group:

Names of 

Beneficial Owner (1) 
Amount and Nature of Beneficial    Ownership 

of Class
Percent of Common Shares as of    12/31/04 
 
 
 
Greentech USA, Inc. 
27,213,519 * 
38%
 
 
 
William Overhulser 
657,768 Common ** 
Less than 1%% 
 
 
 
William Craig 
9,417,111 *** 
1.3%
 
 
 
Charles Maurice 
200,550**** 
Less than 1%%
 
 
 
Michael Clark 
371,078 
Less than 1%
 
 
 
Officers and Directors as a Group    (4) 
10,646,507
 
* Greentech Common Shares are based on owning 215,350 Preferred Class B whichis convertible into 100 shares of fully paid and non-assessable shares of commonstock.

**351,518 shares, covered in the above table, remained in the name of Mr.Overhulser in the Company's stock transfer agent, in error.

*** 5,000,000 shares, covered in the above table, are issued to Lewco, Mr.Craig is related to the President / Director Lewco. 2,842,111 shares are issuedto Security Xchange of which Mr. Craig is a Director. 1,575,000 shares, coveredin the above table, are issued to Magicole, Mr. Craig is related to thePresident / Director Magicole

**** Charles Maurice Common Shares are based on owning 20,055 Preferred ClassC which is convertible into 10 shares of fully paid and non-assessable shares ofcommon stock.
**ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**
In April 2003, 5,000,000 shares of common stock which were issuable in 2002were issued to Lewco Corporation. The key officer of Lewco Corporation is animmediate family member of a consultant affiliated with the Company.

The Company entered into a consulting agreement and a management agreementwith Greentech USA Inc. As a result of Greentech's acquisition of Perceptre,LLC, Greentech owns the Series B preferred shares which were issued to purchasethe perceptre software, these shares are convertible into 21,535,000 commonshares of IA. The consulting agreement dated October 29, 2003 covers feesassociated with graphics, printing, internet services, product marketing,advertising, corporate filings and legal fees as well as other specific dutiesand was for a three-month term, which was renewed for an additional three-monthterm. The Company was obligated to pay $350,000 in free trading stock theprecise number of shares to be calculated according to a formula in the contract(the shares for the first quarter were issuable at December 31, 2003 and wereissued in 2004). A total of two quarters were paid by the issuance of commonstock. The management agreement dated November 19, 2003 engaged Greentech toassist the Company in its day-to-day operations including but not limited tobookkeeping services, coordination with external auditors, senior managementservices, management of all IT functions, and supervision of sales, marketing,and public relations. The Company is obligated to pay $35,000 per month forthese services and was for an initial three-month term and renewed through July2004, subsequently the agreement was continued at a rate of $85,000 per monththrough 2004. In addition, amounts due Greentech were $1,625,434 and $8,500 atDecember 31, 2004 and 2003, respectively.

The acquisition of IMES involved a shareholder of IMES who is also aconsultant to the Company. In addition, the consultant was paid 3,500,000 commonshares during 2004 for consulting services. Another company owned by theconsultant loaned $30,000 to the Company in 2004.

A shareholder of the Company advanced $42,500 in 2004.
**ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K**
(a)(1) The following consolidated financial statements of InformationArchitects Corporation are included in Item 8:

Consolidated Balance Sheets at December 31, 2005 and 2004

Consolidated Statements of Operations for the years ended December 31, 2005and 2004

Consolidated Statements of Cash Flows for the years ended December 31, 2005and 2004

Consolidated Statements of Changes in Shareholders' Equity for the yearsended December 31, 2005 and 2004

Notes to Consolidated Financial Statements for the year ended December 31,2005.
**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
The following table sets forth fees billed to us by our auditors during thefiscal years ended December 31, 2005 and December 31, 2004 for: (i) servicesrendered for the audit of our annual financial statements and the review of ourquarterly financial statements, (ii) services by our auditor that are reasonablyrelated to the performance of the audit or review of our financial statementsand that are not reported as Audit Fees, (iii) services rendered in connectionwith tax compliance, tax advice and tax planning, and (iv) all other fees forservices rendered.

(i) Audit Fees

 

                                       2004                2005
JASPERS + HALL, PC                    $7500               $7500

 

(ii) Audit Related Fees

                                None

(iii) Tax Fees

                                None

(iv) All Other Fees

                                None

 

TOTAL FEES

                                       2004                2005
JASPERS + HALL, PC                    $7500               $7500

AUDIT FEES. Consists of fees billed for professional services rendered forthe audit of our consolidated financial statements and review of the interimconsolidated financial statements included in quarterly reports and servicesthat are normally provided in connection with statutory and regulatory filingsor engagements.

AUDIT-RELATED FEES. Consists of fees billed for assurance and relatedservices that are reasonably related to the performance of the audit or reviewof our consolidated financial statements and are not reported under "AuditFees." There were no Audit-Related services provided in fiscal 2003 or 2002.

TAX FEES. Consists of fees billed for professional services for taxcompliance, tax advice and tax planning.

ALL OTHER FEES. Consists of fees for products and services other than theservices reported above.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDITSERVICES OF INDEPENDENT AUDITORS

The Company currently does not have a designated Audit Committee, andaccordingly, the Company's Board of Directors' policy is to pre-approve allaudit and permissible non-audit services provided by the independent auditors.These services may include audit services, audit-related services, and taxservices and other services. Pre-approval is generally provided for up to oneyear and any pre-approval is detailed as to the particular service or categoryof services and is generally subject to a specific budget. The independentauditors and management are required to periodically report to the Company'sBoard of Directors regarding the extent of services provided by the independentauditors in accordance with this pre-approval, and the fees for the servicesperformed to date. The Board of Directors may also pre-approve particularservices on a case-by-case basis.

(1)(2) List of Exhibits

23.1 Consent of independent auditors

31 & 32 Sarbanes-Oxley Certification

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the SecuritiesExchange Act of 1934, the Registrant has duly caused this Report to be signed onits behalf by the undersigned, thereunto duly authorized.

INFORMATION ARCHITECTS CORPORATION

DATED: 

April 19, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, thisReport has been signed below by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated.

 

By: s/s ALFRED TRACY III

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

ALFRED TRACY III, Director April 19, 2006

 

By: s/s William Craig

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

William Craig, Acting CEO

 

 

 

 

 

 *****