**UNITED
STATES**
 **SECURITIES
AND EXCHANGE COMMISSION**
 **Washington,
D.C. 20549**
 
 **FORM
10KSB**
 
 [X]
    ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
fiscal year ended June 30, 2005
 
 [ 
]  TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For the
transition period from _________ to ____________
 
 Commission
File No. 000-33251
 
 **INTERNATIONAL
FOOD PRODUCTS GROUP, INC.**
 (Exact
name of Registrant as specified in its charter)
 
 
 **NEVADA**
    **33-0903004**(State
      or other jurisdiction of incorporation or organization)
    (I.R.S.
      Employer Identification)
 
 
 **170
      Newport Center Drive, Suite 260, Newport Beach,
CA**
    **92660**(Address
      of principal executive offices)
    (Zip
      Code)
 
 Registrant’s
telephone number **(949)
759-7775**
 
 Securities
registered pursuant to Section 12(b) of the Act: none
 
 Securities
registered pursuant to Section 12 (g) of the Act: 300,000,000 common shares par
value $0.001 per share
 
 Check
whether the issuer (l) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [ **X** ] Yes [
] No
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
 
 State
issuer’s revenues for its most recent fiscal year. $209,966.00.
 
 The
aggregate market value of the voting stock held by non-affiliates computed by
reference to the last reported sale price of such stock as of October 4, 2005 is
$14,642,210.
 
 The
number of shares of the issuer’s Common Stock outstanding as of October 4, 2005
is 244,036,834.
 
 Transitional
Small Business Disclosure Format (check one): Yes [ ] No [ X ]
  1
 **- -1
-**
  **PART
I**
 
 **Item
1. Description of Business**
 
 The
registrant (sometimes referred to the "Company" or "IFPG") has developed into an
international importer and U. S. representative for various domestic and foreign
product companies. Some of the products represented include premium coffees from
Columbia, organic fruits and vegetables from Asia and the U.S., breath strips
from Japan, and upscale potato chips from a U.S. manufacturer. In conjunction
with these new products, IFPG is now being represented by a national
broker/distributor network that will market and sell the Company's expanding
product lines. IFPG expects the sales of these new items along with its existing
product lines to begin shortly with the expectation of rapidly growing sales
revenues.
 
 We have
entered into distribution agreements for 100% Colombian and other coffee
products as well as a line of frozen vegetables from Asia. These products will
be sold under both our Golden Choice label and as private label brands. We are
currently negotiating a similar agreement for a variety of European household
cleaning products.
 
 To
facilitate the sale of these products, we entered into a brokerage contract with
Specialty Partners of St. Augustine, Florida. Specialty Partners is a division
of Tree of Life, one of the world's leading marketers of nutritional and
specialty foods. Offering coast-to-coast brokerage, Specialty Partners affords
the Company the advantages of working with national and Regional distributors
and retailers. Additionally, specialty Partners provides the following -
complete merchandising services, order fulfillment, management planning tools,
and both administrative and marketing support.
 
 We
further discuss our current business operations under Item 6 below.
 
 Employees
 
 Many of
IFPG's operations are conducted through the use of independent contractors.
Independent contractors perform such duties as selling, manufacturing, shipping
and computer services. Because of this policy, IFPG currently has three full
time employees.
 
 **- -2
-**
 Government
Regulations
 
 As a
developer and distributor of food products, the Company is subject to the
"Federal Food, Drug and Cosmetic Act" and regulations promulgated thereunder, by
the Food and Drug Administration ("FDA"). This comprehensive regulatory agency
governs the manufacture (including composition and ingredients), labeling,
packaging and safety of food. The FDA regulates manufacturing practices for
foods through its current "good manufacturing practices" regulations. It also
specifies the standards of identity of certain foods, including the products
sold by the Company. It stipulates the format and content of specific
information mandatory on food product labels.
 
 In
addition, the FDA enforces the Public Health Service Act, which regulates
conduct required in preventing the transmission or spread of communicable
diseases. The Company is also subject to state and local regulation, through the
licensing of manufacturing facilities. State and local health agencies enforce
standards for the Company's products, and inspects the Company's facilities, and
regulate its trade practices.
 
 To
monitor product quality, we maintain quality control programs during all stages
of processing. Management believes that our production and manufacturing
practices comply with applicable government regulations.
 
 
 **Item
2. Description of Property**
 
 Third
party contractors produce and ship the products of IFPG. Accordingly, the only
facilities utilized by IFPG are 500 square feet of office space located at 170
Newport Center Drive, Suite 260, Newport Beach, California. IFPG occupies the
space pursuant to a month to month lease. IFPG believes that if it should ever
lose or not be able to renew the lease, it would not be difficult to obtain a
comparable and satisfactory office location.
 
 **Item
3. Legal Proceedings**
 
 Anita's
Mexican foods Corp. filed a complaint in Orange County Superior Court alleging
that it was owed approximately $34,615.00 by the Company for food products
delivered to the Company. The proceedings were dismissed upon
payment
 of the
claim by the Company.
 
 The
Company has stipulated to a judgment against the Company in favor of Flair
Packaging in the amount of $130,000. The Company and Flair Packaging are working
out a payment schedule for the Company to pay the judgment.
 
 **Item
4. Submission of Matters to a Vote of Security Holders**
 
 There
were no matters submitted to a vote of the share holders during the fiscal year
ended June 30, 2005.
 
 **- -3
-**
 **Part
II**
 
 **Item
5. Market for Registrant’s Common Equity and Related Stockholders
Matters**
 
 MARKET
INFORMATION
 
 The
common shares of the Company are listed on the OTC Bulletin Board under the
symbol IFPG. A market for our common shares did not commence until the fourth
calendar quarter of 2002. Following is the high and low sales prices for each
each of the two years in the period ending June 30, 2005. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
 
 Quarter
    High
      LowJul
      - Sep 2003
    0.14
      0.05Oct
      - Dec 2003
    0.11
      0.05Jan
      - Mar 2004
    0.07
      0.03Apr
      - Jun 2004
    0.07
      0.03Jul
      - Sep 2004
    0.04
      0.02Oct
      - Dec 2004
    0.03
      0.02Jan
      -Mar 2005
    0.07
      0.02Apr
      - Jun 2005
    0.06
      0.01
 
 On March
14, 2005 we effected a 3-for1 split of our common stock. All references To the
number of shares and share price have been adjusted to reflect the split As if
it occurred on June 30, 2003.
 
 On the
date of this filing, October 4, 2005, the best bid price of our common shares is
$0.07 and the best ask price is $0.08.
 
 At
October 4, 2005 there were approximately 250 record holders of IFPG's Common
Stock.
 
 IFPG has
not previously declared or paid any dividends on its common stock and does not
anticipate declaring any dividends in the foreseeable future.
 
 There are
no restrictions in our articles of incorporation or bylaws that restrict us from
declaring dividends. The Nevada Revised Statutes, however, do prohibit us from
declaring dividends where, after giving effect to the distribution of the
dividend:
 
 (1) we
would not be able to pay our debts as they become due in the usual course of
business; or
 
 (2) our
total assets would be less that the sum of our total liabilities.
 
 **- -4
-**
 Recent
Sales of Unregistered Securities
 
 During
the year ended June 30, 2005, the Company issued 25,229,996 restricted shares of
common stock to thirty five individuals for various types of consulting
services. The shares were recorded at their fair value as of the date of
issuance which ranged from $0.014 to $0.01. Accordingly, the Company recognized
$401,169 in various consulting expenses during the year ended June 30, 2005. The
transactions were isolated transactions exempt from the registration
requirements of section 5 of the Securities Act of 1933 pursuant to section 4(2)
of the Act.
 
 During
the year ended June 30, 2005, we issued the following restricted shares of
common stock to two officers and directors in payment of accrued salaries and in
repayment of loans made by these two officers and directors to the Company. The
shares were at their fair market value at the dates of issuance which ranged
from $.01 to $.014 per share. The transactions were isolated transactions exempt
from the registration requirements of section 5 of the Securities Act of 1933
pursuant to section 4(2) of the Act.
 Number
      ofShares
    
    AmountAccrued
      salaries
    
    
    31,762,839
    
    $
    345,879Loan
      repayments
    
    
    31,191,339
    
    
    296,686Total
    
    
    62,954,178
    
    $
    642,565
 
 
 **Item
6. Management’s Discussion and Analysis or Plan of
Operation**
 
 The
following discussion and analysis should be read in conjunction with the
information set forth in the audited financial statements for the years ended
June 30, 2005 and June 30, 2004.
 
 **Plan
of Operations**
 
 During
the past year, IFPG has developed into an international importer and U. S.
representative for various domestic and foreign product companies. Some of the
products that we represent include premium coffees from Columbia, organic
vegetables from Asia and frozen fruits and vegetables from China, Canada, and
the United States. Fiscal year 2004 was a year of transition for IFPG.
Management made a concerted effort to acquire new products and refresh our
marketing strategies that will greatly expand the lines of products that we
offer.
 
 These
decisions have positioned us in one of the major retail categories coffee, as
well as frozen vegetables and frozen fruits, both organic and non
organic.
 
 This
repositioning allows us to seek customers for our unique, market tested snack
products G.O.T. Fries ®, AW Shucks TM, (both are patent protected), as well as
Just Popped TM a line of Gourmet style popcorn.
 
 We have
expanded our coffee resources to include both domestic and Colombian sources,
and have begun to import these products under the Golden Choice Foods® brand for
immediate resale to major retailers.
 
 We expect
to begin shipping our three pound whole bean coffee during first and second
quarter of fiscal 2006 to one of the world's largest retailers. At this time we
are discontinuing the shipping of our fractional pack coffee to this same
retailer in exchange for the whole bean coffee. We also expect to begin shipping
of our organic blueberries during the first fiscal quarter of 2006. If this test
program is successful, we expect to add regular cultivated blueberries to the
product list for fiscal 2006.
 Our
Colombian Coffee is roasted in the Coastal Valley of the Sierra Nevada de Santa
Marta mountain range in a facility which has a 100 million pound roasting
capacity and has been in the business of roasting quality coffee for over 70
years. We believe roasting the coffee in Columbia provides significant cost
advantages that should allow us to provide high quality Colombian Coffee at
competitive prices in the USA. We are also looking to domestic sources for this
same high quality coffee to insure on time deliveries in case of any disruption
due to unpredictable world events.
 
 **- -5
-**
 During
the coming year we expect to complete development of a fresh date program from
Pakistan, secure relationships that will give us the capacity to provide frozen
blueberries and other in demand fruits to the large retailers in the United
States and to complete the development of a unique snack to be introduced across
the country during the basketball season of "March Madness". We have secured the
base potato product for this product from a large supplier in Italy.
 Our
primary goal for the coming year is to establish IFPG as a company with a solid
revenue stream. We expect be able to accomplish this with the products that we
have at this time. To accomplish these strategies, we must raise capital either
as equity, debt or lines of credit. Management intends to work diligently to
accomplish raising the needed capital.
 
 In
conclusion, this coming year should reflect a dramatic expansion and presence
for our brands in many of the largest retail outlets in the country. We believe
that we have emerged stronger with a range of new, unique products that should
achieve significant revenues, profits and dramatically increase shareholder
value. We are confident in the soundness of our strategies and the choice of our
brands.
 
 **Results
of Operations for the fiscal years ended June 30, 2005 and
2004.**
 
 Net
Sales. Net sales for the fiscal year ended June 30, 2005, compared to the fiscal
year ended June 30, 2004, increased approximately 457% from $45,925 to $209,966.
This increase is a result of our change of focus to our new lines of foreign and
domestic products. We expect sales to continue to increase during fiscal year
2006. The new lines of coffee products and frozen fruits are expected to be
introduced during the first and second quarters of 2006.
 
 In
September 2005, we received our first orders of frozen fruit totaling $140,000.
We expect to deliver this product in October 2005.
 
 Cost of
Sales. The Cost of Sales for fiscal year ended June 30, 2005, was $286,671 or
approximately 137% of net sales, as compared to $46,414, or approximately 101%
of net sales for the fiscal year ended June 30, 2004. Cost of sales, for the
period, was consistent with our projections for initial sales of our new
products. The cost of coffee increased dramatically after we had committed to
the sales price of the coffee and due to our size we were unable to lock in our
cost of raw coffee prior to ordering.
 
 Cost of
sales of our initial sales is greater that we expect to realize once sales occur
on a regular basis. Initial costs, which we do not expect to recur, include less
than economic order and delivery quantities and the cost to meet customer
expectations.
 
 Selling
Expenses. Selling expenses were $528,803 as compared to $1,281,181 for the
fiscal years ended June 30, 2005 and 2004. The decrease in selling expenses of
$752,378 results from a concentration of sales efforts in 2005 to a single major
customer and the near completion of our marketing plan. We continue to invest in
sales and sales support while the new products were in development, and expect
that selling expenses will remain high in the near future.
 
 **- -6
-**
 General
and Administrative expenses. General and administrative expenses for the fiscal
year ended June 30, 2005, were $777,141 as compared to $489,860. This increase
of $287,281 relates primarily to an increase in officers' compensation of
$215,220.
 
 We
adopted SFAS 123R retrospectively effective June 30, 2005. Although this
adoption did not effect the financial statements of June 30, 2005, or for either
of the two years in the period then ended, it may have an effect on future
periods, especially if we grant options in the future.
 
 Other
Income (Expense). Other Income (Expense) including interest income and expense
for the fiscal year ended June 30, 2005, compared to fiscal year ended June 30,
2004, decreased from an expense of $19,592 to $4,534. This decrease was the
result of a debt conversion benefit of $16,814 being recognized as other income
in connection with notes payable being converted to equity offsetting interest
expense of $9,545 to related parties and $26,861 of interest expense for third
parties adjusted for past due vendor invoices that are more than 1 year past the
due date of the invoice for the period.
 
 Net
Income (Loss). For the fiscal year ended June 30, 2005, the Company had a net
loss of $(1,387,984) or $(0.01) per share as compared to a net loss of
$(1,791,922) or $(0.04) per share for the fiscal year ended June 30, 2004.
 
 **Liquidity
and Capital Resources.**
 
 Since its
inception, IFPG has financed its cash requirements from cash generated from
operations, the sale of equity securities, vendor lines of credit and short term
debt.
 
 Total
assets decreased from $247,024, at June 30, 2004, to $8,065, at June 30, 2005.
This decrease was due to a decrease in restricted assets in the form of a time
deposit of $200,120 and the collection of $44,784. The proceeds from these items
were used to reduce notes payable. Total liabilities decreased from $606,995, as
of the period ended June 30, 2004, to $487,142 for the period ended June 30,
2005 primarily due to the reduction in notes payable.
 
 **Critical
Accounting Policies**
 
 The
preparation of financial statements and related disclosure in conformity with
accounting principles generally accepted in the United States requires us to
make judgments, assumptions, and estimates that affect the amounts reported in
the financial statements and accompanying notes. Results of operations could be
impacted significantly by judgments, assumptions, and estimates used in the
preparation of the financial statements and actual results could differ
materially from the amounts reported based on these policies.
 
 Management
is of the opinion that our cash on hand and revenues from operations are
insufficient to meet our operational needs for the next twelve months.
Accordingly, management will rely upon proceeds from debt financing from related
and unrelated parties.
 
 We
adopted SFAS 123R retrospectively effective June 30, 2005. Although this
adoption did not effect the financial statements of June 30, 2005 or for either
of the two years in the period then ended, it may have an effect on future
periods, especially if we grant options in the future.
 
 **- -7
-**
 **Material
Events and Uncertainties.**
 
 We
anticipate that we will begin to be profitable during the second quarter of
fiscal year 2006. For this to happen, we must be successful in raising
additional capital in order to deliver our products to the marketplace. Prior to
this, we will continue to raise additional capital, factor accounts receivable
or obtain debt financing. Additionally, we must be able to continue to develop
markets and gain consumer acceptance of our products.
 
 While we
believe that these statements are accurate, our business is dependent upon
general economic conditions and various conditions specific to the consumer hot
beverage industry. Accordingly, future trends and results cannot be predicted
with certainty.
 
 Under
current operating conditions, management believes that our sources of cash are
insufficient to last through the next year. For IFPG continue to operate and to
grow its sales it will need to raise additional capital and have profitable
revenue.
 
 **Certain
Trends and Uncertainties:**
 
 IFPG has
in the past and may in the future make forward looking statements. Certain of
the statements contained in this document involve risks and uncertainties. The
future results of IFPG could differ materially from those statements. Factors
that could cause or contribute to such differences include, but are not limited
to those discussed in this document. These statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
predicted. Such risks and uncertainties include, but are not limited to the
following:
 
 **Commodity
Prices and Competition:**
 
 IFPG is
subject to market risk with respect to the cost of commodities because IFPG's
ability to recover increased costs through higher pricing may be limited by the
competitive environment in which it operates. Also, currency exchange rates
factor in to IFPG's ability to make a profit from its foreign produced goods
because IFPG is subject to currency exchange rates at the time of purchase. The
markets for IFPG's products are characterized by frequent new product
introductions. IFPG's future success is dependent upon the timely completion and
introduction of new products at competitive prices and quality levels. In
addition, IFPG must respond to competitors in IFPG's markets. If IFPG is not
able to accomplish timely introduction of new products, increase its market
share of existing products, or to respond effectively to competition, its
business and operating results could be adversely affected.
 
 **Raw
Materials and Other Supplies:**
 
 The
coffee industry has ample manufacturing capacity and is expected to continue to
do so in the future. The prices IFPG pays for its raw materials are subject to
fluctuation and to currency exchange rate fluctuation. When prices increase,
IFPG may or may not be able to pass on such increases to its customers. IFPG's
results of operations could be adversely affected if its raw material suppliers
are unwilling or unable to supply a timely and sufficient supply of product to
IFPG and if IFPG is unable to pass on price increases to its
customers.
 
 **Raw
Coffee Costs:**
 **- -8
-**
 
 The cost
to purchase green coffee beans is the single most important cost for IFPG.
Because it is a commodity, its price fluctuates daily. IFPG must find effective
ways to keep these costs within its budgeted limits. If IFPG is not able to
control these costs, its business and operating results could be adversely
affected.
 
 CAUTIONARY
STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
 
 From time
to time, the Company will make written and oral forward looking statements about
matters that involve risk and uncertainties that could cause actual results to
differ materially from projected results. Important factors that could cause
actual results to differ materially include, among others:
 
 ·
    General
      domestic economic and political conditions ·
    Changes
      in laws and government regulations, including without limitation
      regulations of the Securities and Exchange
Commission ·
    The
      availability and timing of receipt of necessary outside
      capital ·
    Other
      risk factors described from time to time in the Company's filings with the
      Securities and Exchange Commission. 
 Many of
these factors are beyond the Company's ability to control and predict. Investors
are cautioned not to place undue reliance on forward looking statements. The
Company disclaims any intent or obligation to update its forward looking
statements, whether as a result of receiving new information, the occurrence of
future events, or otherwise.
 
 **Item
7. Financial Statements**
 
 
 
 **International
Food Products Group, Inc.**
  **Financial
Statements**
  ***June
30, 2005 and***
 ***For
Each of the Two Years in the Period Ended June 30, 2005***
 **
 **
 **- -9
-**
 
 
  **International
Food Products Group, Inc.**
  **Index
to the Financial Statements**
  ***June
30, 2005 and***
 ***For
Each of the Two Years in the Period Ended June 30, 2005***
 
 
 
 Report
      of Independent Registered Public Accounting Firm
    11Financial
      Statements of International Food Products Group, Inc.:Balance
      Sheet, June 30, 2005
    12Statements
      of Operations For Each of the Two Years in the Period Ended June 30,
      2005
    13Statements
      of Shareholders' Deficit For Each of the Two Years in the Period Ended
      June 30, 2005
    14Statements
      of Cash Flows For Each of the Two Years in the Period Ended June 30,
      2005
    15Notes
      to the Financial Statements
    17
 
 
 
  
 **- -10
-**
 
  *Report
of Independent Registered Public Accounting Firm*
  
 To the
Board of Directors and the Shareholders of
 International
Food Products Group, Inc.
  
   We have
audited the accompanying balance sheet of International Food Products Group,
Inc. as of June 30, 2005 and the related statements of operations, shareholders'
deficit and cash flows for each of the two years in the period ended June 30,
2005. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
   We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
   In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of International Food Products Group,
Inc. as of June 30, 2005, and the results of its operations and its cash flows
for each of the two years in the period ended June 30, 2005, in conformity with
accounting principles generally accepted in the United States.
   The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 6, *Financial
Results, Liquidity and Management's Plan* to the
financial statements, the Company has suffered recurring losses from operations,
has difficulties generating sufficient cash flow to meet its obligations and
sustain its operations, and has a stockholders' capital deficiency that raise
substantial doubt about its ability to continue as a going concern.
Additionally, the Company has embarked on a sales program related to imported
products that requires significant financing. Management's plans in regard to
these matters are also described in Note 6. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
   
  Kelly
& Company
 Costa
Mesa, California
 October
12, 2005
 
  
 **- -11
-**
 
 **International
Food Products Group, Inc.**
 **Balance
Sheet**
 **June
30, 2005**
 
 *Assets*
 
 Current
      assets:Cash
    
    $
    81Prepaid
      insurance
    
    
    7,804Total
      current assets
    
    
    7,885Property
      and equipment, net
    
    
    -Deposit
    
    
    180**Total
      assets**
    
    **$**
    **8,065***Liabilities
      and Shareholders' Deficit*Current
      liabilities:Trade
      accounts payable
    
    $
    158,668Judgment
      payable
    
    
    126,136Accrued
      compensation costs
    
    
    58,513Other
      accrued expenses
    
    
    58,943Notes
      payable - related party
    
    
    36,576Notes
      payable - third party
    
    
    48,306**Total
      current liabilities**
    
    
    **487,142**Commitments
      and contingenciesShareholders'
      deficit:Common
      stock: $.001 par value; 300,000,000 shares authorized; 241,186,834 shares
      issued and outstanding
    
    
    241,187Additional
      paid-in capital
    
    
    6,691,062Accumulated
      deficit
    
    
    (7,411,326
    )**Total
      shareholders' deficit**
    
    
    **(479,077**
    **)****Total
      liabilities and shareholders' deficit**
    
    **$**
    **8,065**
 
 The
accompanying notes are an integral part of the financial
statements.
 
 
  
 **- -12
-**
 International Food Products Group, Inc.
 Statements of Operations
 For Each of the Two Years in the Period Ended June 30,
2005
 
 2005
    
    2004Gross
      sales
    
    $
    253,319
    
    $
    64,566Less:
      returns, discounts and allowances
    
    
    (43,353
    )
    
    (18,641
    )Net
      sales
    
    
    209,966
    
    
    45,925Cost
      of goods sold
    
    
    286,671
    
    
    46,414Gross
      loss
    
    
    (76,705
    )
    
    (489
    )Selling
      expenses
    
    
    528,803
    
    
    1,281,181General
      and administrative expenses
    
    
    777,142
    
    
    489,860Total
      operating expenses
    
    
    1,305,945
    
    
    1,771,041**Loss
      from operations**
    
    
    **(1,382,650**
    **)**
    
    **(1,771,530**
    **)**Other
      income (expense):Interest
      expense, net
    
    
    (1,440
    )
    
    (26,861
    )Interest
      expense - related parties
    
    
    (3,094
    )
    
    (9,545
    )Debt
      conversion benefit
    
    
    -
    
    
    16,814Total
      other expense
    
    
    (4,534
    )
    
    (19,592
    )**Loss
      before provision for income taxes**
    
    
    **(1,387,184**
    **)**
    
    **(1,791,122**
    **)**Provision
      for income taxes
    
    
    (800
    )
    
    (800
    )**Net
      loss**
    
    **$**
    **(1,387,984**
    **)**
    **$**
    **(1,791,922**
    **)****Net
      loss per share, basic and diluted**
    
    **$**
    **(0.01**
    **)**
    **$**
    **(0.02**
    **)****Shares
      used in per-share calculation, basic and diluted**
    
    
    **171,223,169**
    
    
    **101,612,655**
 
  The
accompanying notes are an integral part of the financial
statements.
 **- -13
-**
 
 
 
 **International
Food Products Group, Inc.**
 **Statements
of Shareholders' Deficit**
 **For
Each of the Two Years in the Period Ended June 30, 2005**
 
 
 AdditionalCommon
    
    Common
    
    Paid-in
    
    AccumulatedShares
    
    Stock
    
    Capital
    
    Deficit
    
    Total**Balance,
      June 30, 2003**
    
    
    **78,230,106**
    
    **$**
    **78,230**
    
    **$**
    **3,710,761**
    
    **$**
    **(4,231,420**
    **)**
    **$**
    **(442,429**
    **)**Shares
      issued for services
    
    
    31,394,751
    
    
    31,395
    
    
    1,530,803
    
    
    -
    
    
    1,562,198Shares
      issued in satisfaction of accrued payroll
    
    
    8,000,001
    
    
    8,000
    
    
    37,333
    
    
    -
    
    
    45,333Shares
      issued in satisfaction of debt
    
    
    8,412,702
    
    
    8,413
    
    
    255,196
    
    
    -
    
    
    263,609Shares
      issued in lock-up agreement
    
    
    176,100
    
    
    176
    
    
    3,064
    
    
    -
    
    
    3,240Net
      loss
    
    
    -
    
    
    -
    
    
    -
    
    
    (1,791,922
    )
    
    (1,791,922
    )**Balance
      June 30, 2004**
    
    
    **126,213,660**
    
    
    **126,214**
    
    
    **5,537,157**
    
    
    **(6,023,342**
    **)**
    
    **(359,971**
    **)**Shares
      issued for services
    
    
    52,018,996
    
    
    52,019
    
    
    574,294
    
    
    -
    
    
    626,313Shares
      issued in satisfaction of accrued payroll
    
    
    31,762,839
    
    
    31,763
    
    
    314,116
    
    
    -
    
    
    345,879Shares
      issued in satisfaction of debt
    
    
    31,191,339
    
    
    31,191
    
    
    265,495
    
    
    -
    
    
    296,686Net
      loss
    
    
    -
    
    
    -
    
    
    -
    
    
    (1,387,984
    )
    
    (1,387,984
    )**Balance,
      June 30, 2005**
    
    
    **241,186,834**
    
    **$**
    **241,187**
    
    **$**
    **6,691,062**
    
    **$**
    **(7,411,326**
    **)**
    **$**
    **(479,077**
    **)**
  The
accompanying notes are an integral part of the financial statements **.**
   
   
   
 **- -14
-**
 
 **International
Food Products Group, Inc.**
 **Statements
of Cash Flows**
 **For
Each of the Two Years in the Period Ended June 30, 2005**
 For
      the Years Ended June 30,2005
    
    2004*Cash
      flows from operating activities:*Net
      loss
    
    $
    (1,387,984
    )
    $
    (1,791,922
    )Adjustments
      to reconcile net loss to net cash used by operating
      activities:Depreciation
    
    
    441
    
    
    231Write-down
      of intangible assets
    
    
    -
    
    
    5,292Interest
      accrued on note payable-
      third party
    
    
    -
    
    
    2,071Interest
      accrued on note payable - related parties
    
    
    -
    
    
    13,323Forgiveness
      of interest by related party
    
    
    -
    
    
    (5,898
    )Debt
      conversion benefit
    
    
    -
    
    
    (16,814
    )Shares
      issued for services
    
    
    972,191
    
    
    1,562,198Shares
      issued for shares voluntarily exchanged for restricted
    shares
    
    
    -
    
    
    3,240Decrease
      (increase) in assets:Trade
      accounts receivable
    
    
    44,784
    
    
    1,946Prepaid
      expenses
    
    
    (6,125
    )
    
    (544
    )Other
      assets
    
    
    (180
    )
    
    1,000Increase
      (decrease) in liabilities:Accounts
      payable
    
    
    (53,072
    )
    
    (120,173
    )Judgment
      payable
    
    
    126,136
    
    
    -Accrued
      compensation costs
    
    
    (5,407
    )
    
    -Accrued
      expenses
    
    
    33,511
    
    
    109,119**Net
      cash provided by (used in) operating activities**
    
    
    **(275,705**
    **)**
    
    **(236,931**
    **)***Cash
      flows provided by (used in) investing activities:*Change
      in restricted cash
    
    
    200,120
    
    
    (200,120
    )**Net
      cash provided by (used in) investing activities**
    
    
    **200,120**
    
    
    **(200,120**
    **)**
 
 The
accompanying notes are an integral part of the financial
statements.
 
 
  
 **- -15
-**
 
 **International
Food Products Group, Inc.**
 **Statements
of Cash Flows**
 **For
Each of the Two Years in the Period Ended June 30, 2005**
 
 For
      the Years Ended June 30,2005
    
    2004*Cash
      flows provided by (used in) financing activities:*Proceeds
      from advances from related parties
    
    $
    293,884
    
    $
    449,083Payment
      on a note payable from a related party
    
    
    (11,018
    )
    
    (27,754
    )Payment
      on a note payable from a third party
    
    
    (207,200
    )
    
    -**Net
      cash provided by (used in) financing activities**
    
    
    **75,666**
    
    
    **421,329****Net
      increase (decrease) in cash**
    
    
    **81**
    
    
    **(15,722**
    **)****Cash
      at beginning of year**
    
    
    **-**
    
    
    **15,722****Cash
      at end of year**
    
    **$**
    **81**
    
    **$**
    **-***Supplemental
      Disclosures of Cash Flow Information*For
      the Years Ended June 30,2005
    
    
    2004Interest
      paid - third parties
    
    $
    1,528
    
    
    -Interest
      paid - related parties
    
    
    -
    
    
    -Income
      taxes paid
    
    $
    800
    
    $
    800*Supplemental
      Schedule of Non-cash Investing and Financing
    Activities*For the Years Ended June 30,2005
    
    
    2004Issuance
      of shares in satisfaction of notes payable includingaccrued
      interest:Notes
      payable - related parties
    
    $
    296,686
    
    $
    229,084Notes
      payable - third parties
    
    
    -
    
    $
    34,525Common
      stock
    
    $
    (31,191
    )
    $
    (8,413
    )Additional
      paid-in capital
    
    $
    (265,495
    )
    $
    (255,196
    )Issuance
      of shares in satisfaction of accrued payroll:Accrued
      payroll - related parties
    
    $
    345,879
    
    $
    45,333Common
      stock
    
    $
    (31,763
    )
    $
    (8,000
    )Additional
      paid-in capital
    
    $
    (314,116
    )
    $
    (37,333
    )
 The
accompanying notes are an integral part of the financial
statements.
 
 
  
 **- -16
-**
 
  
   **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **1.**  **Summary
of Significant Accounting Policies**
   *Revenue
Recognition*
   Product
revenues are recognized upon shipment to the customers. Provisions for discounts
and rebates to customers, estimated returns and allowances, and other
adjustments are provided for in the same period the related revenues are
recorded.
   *Cash*
   The
Company has no requirement for compensating balances.
   *Trade
Accounts Receivable*
   The
Company intends and has the ability to hold trade accounts receivable until they
are paid. Trade accounts receivable are reported at their outstanding principal
amount less any chargeoffs and an allowance for doubtful accounts. When a trade
account receivable is deemed uncollectible, the balance is charged off against
the allowance for doubtful accounts. An allowance for doubtful accounts is based
on the Company's historical loss experience. Recoveries of trade accounts
receivable that have been previously charged off are recorded when received as a
reduction in bad debt expense in the year of collection. The Company determines
trade accounts receivable delinquency based on contractual terms of the specific
trade account receivable. The Company's policy for determining past due is 60
days past agreed upon payment terms. As of June 30, 2005, the Company did not
have a trade accounts receivable nor did it establish an allowance for doubtful
accounts.
   *Inventories*
   Inventories
are stated at the lower of cost or market. Cost is determined on a standard cost
basis, which approximates the first in-first out method of valuation. Market is
determined based on net realizable value. The Company's management monitors its
inventories for excess, obsolete, slow moving, and calendar date sensitive items
and makes necessary valuation corrections when such adjustments are required.
The Company had no inventory at June 30, 2005.
   *Income
Taxes*
   Deferred
income taxes are determined based on the difference between the financial
reporting and tax bases of assets and liabilities. Deferred income tax expense
(benefit) represents the change during the reporting period in the deferred tax
assets and deferred tax liabilities. Deferred tax assets and/or liabilities are
classified as current and noncurrent based
  
  
 **- -17
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **1.**  **Summary
of Significant Accounting Policies, Continued**
   *Income
Taxes, Continued*
   on the
classification of the related asset or liability for financial reporting
purposes, or based on the expected reversal date for deferred taxes that are not
related to an asset or liability. Deferred tax assets include tax loss and
credit carryforwards and are reduced by a valuation allowance if, based on
available evidence, it is more likely than not that some portion or all of the
deferred tax assets will not be realized.
   The
Company currently has net operating loss ("NOL") carryforwards that can be
utilized to offset future income for federal and state tax purposes. The NOL's
generate a significant deferred tax asset. However, the Company has recorded a
valuation allowance against this deferred tax asset as it has been determined
that it is more likely than not that the Company will not generate future income
that the NOL's could offset.
   *Stock
Split*
  In
January 2005, the Company's Board of Directors approved a three-for-one stock
split of the Corporation's common stock affected in the form of a 100% stock
dividend, which was distributed on May 10, 2005, to shareholders of record on
March 15, 2005. Shareholders' equity, common stock, and stock option activity
for all periods presented have been restated to give retroactive recognition to
the stock split. As part of the forward stock split the Company transferred
$149,125 from additional paid-in capital to common stock to reflect the increase
in the number of shares outstanding at par value.
  *Share-Based
Payment*
   In
December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No.
123R, *Share-Based
Payment* . This
statement replaces SFAS No. 123, *Accounting
for Stock-Based Compensation* ,
supersedes APB Opinion No. 25, *Accounting
for Stock Issued to Employees* , and
amends SFAS No. 95, *Statement
of Cash Flows* . SFAS
No. 123R requires companies to apply a fair-value-based measurement method in
accounting for share-based payment transactions with employees and to record
compensation cost for all stock awards granted after the required effective date
and for awards modified, repurchased, or cancelled after that date. The scope of
SFAS No. 123R encompasses a wide range of share-based compensation arrangement,
including share options, restricted share plans, performance based awards, share
appreciation rights, and employee share purchase plans. The Company has elected
to adopt SFAS No. 123R retrospectively as of June 30, 2005. The adoption of SFAS
No. 123R had no significant effect on net income, loss per share, or share-based
compensation cost for either of the two years in the period ended June 30,
2005.
   *Advertising
Costs*
  Advertising
costs are expensed as incurred. There were no advertising costs during 2005 and
2004.
 
  
 **- -18
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **1.**  **Summary
of Significant Accounting Policies, Continued**
   *Shipping
Costs*
   Freight-out
costs are included in selling expenses and were $41,854 and $7,832 for each of
the two years ended June 30, 2005 and 2004, respectively.
   *Use
of Estimates*
   The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
the accompanying notes. The most significant assumption that has been made by
management with regards to the preparation of their financial statements is the
valuation allowance that has been established for the deferred income tax asset.
Changes in this and other estimates as well as the assumptions involved in the
preparation of the financial statements are considered reasonably possible and
may have a material impact on the financial statements.
   *Product
Development*
   The
Company's product development activities principally involve product name
selection, product shape determination, artistic design of the product
packaging, arrangement for the related manufacturing extrusion tools and dies,
selection of seasonings, grains and other ingredients, taste and market testing.
The costs of these activities are expensed as incurred and for the years ended
June 30, 2005 and 2004 were $14,000 and $38,420, respectively.
   *Reclassifications*
   Certain
prior year amounts have been reclassified to conform to fiscal 2005
presentation. These changes had no impact on previously reported results of
operations or shareholders' deficit.
   **2.**  **Property
and Equipment**
   Property
and equipment consisted of the following as of June 30, 2005:
  Computer
      equipment
    
    $
    35,090Furniture
      and fixtures
    
    
    2,42437,514Less:
      accumulated depreciation
    
    
    (37,514
    )**Total
      property and equipment**
    
    
    **-**
  
  
  
 **- -19
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **2.**  **Property
and Equipment, Continued**
   Depreciation
expense for the years ended June 30, 2005 and 2004 was $441 and $231,
respectively.
   **3.**  **Judgment
Payable**
   In March
2005 a vendor of the Company who supplied packaging for products during the
period from fiscal year 2000 through fiscal year 2002 obtained a judgment in the
California Superior Court against the Company for the amounts due for the
products that were provided and court determined attorney's fees. The vendor's
court-granted judgment has been recorded and a lien has been filed in the amount
of $126,135. Accordingly, the amount previously recorded as a trade account
payable has been reclassified as a judgment payable.
   **4.**  **Notes
Payable**
   *Notes
Payable - Related Parties*
   Notes
payable - related parties at June 30, 2005 are as follows:
  Note
      payable to related party who is an officer, director and major
      shareholder; the note is uncollateralized with interest. The note is due
      on December 31, 2005.
    
    $
    20,255Note
      payable to related party who is an officer, director and major
      shareholder; uncollateralized with interest; due on December 31,
      2005.
    
    $
    16,321**Notes
      payable - related parties**
    
    **$**
    **36,576***Note
      Payable - Third Party*Note
      payable - third party at June 30, 2005 isas
      follows:Note
      payable to a third party, who is a consultant with an effective interest
      rate of 20% per annum. Paid through the issuance of common stock in July
      2005.
    
    $
    48,306**Notes
      payable - third party**
    
    **$**
    **48,306**
  
  
  
 **- -20
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **5.**  **Deferred
Income Taxes**
   The
components of the provision for income taxes are as follows:
  **For
      the Years Ended June 30,**2005
    
    2004Current
      tax expense:Federal
    
    
    -
    
    
    -State
    
    $
    800
    
    $
    800800
    
    
    800Deferred
      tax expense:Federal
    
    
    -
    
    
    -State
    
    
    -
    
    
    --
    
    
    
    
    
    -**Total
      provision**
    
    **$**
    **800**
    
    **$**
    **800**
  
   Significant
components of the Company's deferred income tax assets and liabilities at June
30, 2005 and 2004 are as follows:
 **For
      the Years Ended June 30,**2005
    
    2004Deferred
      income tax assets:Net
      operating loss carryforward
    
    $
    1,975,746
    
    $
    1,747,201Allowance
      and reserves
    
    
    33,019
    
    
    53,356Depreciation
    
    
    -
    
    
    1,551Accrued
      expenses
    
    
    -
    
    
    27,418Other
    
    
    272
    
    
    272Total
      deferred income tax asset
    
    
    2,009,037
    
    
    1,829,798Valuation
      allowance
    
    
    (2,009,037
    )
    
    (1,829,798
    )**Net
      deferred income tax asset**
    
    
    -
    
    
    -
  
  The
Company, based upon its history of losses and management's assessment of when
operations are anticipated to generate taxable income, has concluded that it is
more likely than not that none of the net deferred income tax assets will be
realized through future taxable earnings and has established a valuation
allowance for them. The valuation allowance increased by $179,239 and $129,659
during the years ended June 30, 2005 and 2004, respectively.
  
  
 **- -21
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **5.**  **Deferred
Income Taxes, Continued**
   Reconciliation
of the effective tax rate to the U.S. statutory rate is as follows:
  **For
      the Years Ended June 30,**2005
    2004Tax
      expense at U.S. statutory rate
    (34.0)
      %
    (34.0)
      %State
      tax provision
    -
    -Other
    (2.0)
    -Stock-based
      compensation
    24.9
    28.3Change
      in valuation allowance
    12.2
    5.8**Effective
      income tax rate**
    **1.1%**
    **0.1%**
  The
Company also has federal and state net operating loss carryforwards of
$4,813,412 and $4,804,914, respectively. The federal and state net operating
loss carryforwards will begin to expire in the years 2018 and 2005,
respectively.
   **6.**  **Commitments**
   The
Company rents its corporate office on a month to month basis. Rental expense was
$24,194 and $6,449 for the years ended June 30, 2005 and 2004,
respectively.
   **7.**  **Contingencies
and Concentrations**
   *Financial
Results, Liquidity and Management's Plan*
   The
Company has incurred net losses since inception and for the years ended June 30,
2005 and 2004 the net losses were $(1,387,984) and $(1,791,922), respectively.
Despite its negative cash flows from operations of $(272,405) and $(236,931) for
fiscal years 2005 and 2004, respectively, the Company has been able to obtain
additional operating capital through private funding sources, which was repaid
through the issuance of common shares. Management's plans include the continued
development of the Company's new imported product distribution programs and a
new customer development program that it believes will enhance its ability to
generate revenues from the sale of the Company's products. The Company has
relied upon equity funding and loans from shareholders since
inception.
  
  
 **- -22
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **7.**  **Contingencies
and Concentrations, Continued**
   *Financial
Results, Liquidity and Management's Plan, Continued*
   During
the year ended June 30, 2005, the Company financed its operations through loans
from officers totaling $290,584. In addition, accrued compensation costs of
$345,879 and the $290,584 advanced to the Company were repaid through issuance
of common stock. In the year ended June 30, 2004, it financed its initial
imported product sales through an irrevocable standby letter of credit. The
Company may offer shares of its common stock during the fiscal year ended June
30, 2006 to raise additional capital.
   No
assurances can be given that the Company can obtain sufficient working capital
through the sale of the Company's securities, borrowing, and the presence of the
irrevocable standby letter of credit, or that the sale of the new products will
generate sufficient revenues in the future to sustain ongoing operations. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going
concern.
   *Litigation*
   The
Company is, from time to time, involved in various lawsuits arising in the
ordinary course of its business that will not, in the opinion of management,
have a material effect on the Company's results from operations.
   *Concentration
of Credit Risk*
   Financial
instruments, which potentially subject the Company to concentrations of credit
risk, consist primarily of trade accounts receivable. The Company has sold
products in the year ended June 30, 2005 to a single large retailer. Exposure to
losses on accounts receivable is principally dependent on the individual
customer's financial condition, as credit sales are not collateralized. The
Company monitors its exposure to credit loss and reserves those accounts
receivable that it deems to be uncollectible. Its one customer accounted for
100% of the Company's sales and accounts receivable for the year ended June 30,
2005. Two customers each accounted for more than 10% each of revenues and trade
accounts receivable and combined totaled 88% of revenues and 100% of the trade
receivables for the year ended June 30, 2004.
  
  
 **- -23
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **7.**  **Contingencies
and Concentrations, Continued**
   *Risks
Associated with Concentrations in the Available Sources of Supply of
Materials*
  The sole
product that was sold by the Company during the years ended June 30, 2005 and
2004 is available from a limited number of suppliers located exclusively in
foreign countries that are
 subject
to civil unrest. The inability to obtain products as required, or to develop
alternative sources, if and as required in the future, could result in delays or
reductions in product shipments, which in turn could have a material adverse
effect on the Company's business, financial condition, and results of
operations.
  **8.**  **Share-Based
Compensation**
   In prior
years, the Company granted options to its officers and certain consultants. No
options were granted during either of the two years in the period ended June 30,
2005. The Company does not have a formal plan for granting options.
   The
following table summarizes information about stock options granted and
outstanding at June 30, 2005. There were no changes during the years then ended
June 30, 2005 and 2004. All options granted are fully vested at June 30, 2005
and are exercisable, upon proper notice, in whole or in part at any time. The
options granted have contractual lives ranging from ten to sixteen
years.
  WeightedAverageShares
    
    Exercise
      PriceBalance,
      June 30, 2003
    
    
    16,650,000
    
    $
    0.133Granted
    
    
    -
    
    
    -Exercised
    
    
    -
    
    
    -Canceled
    
    
    -
    
    
    -Balance,
      June 30, 2004
    
    
    16,650,000
    
    
    0.133Granted
    
    
    -
    
    
    -Exercised
    
    
    -
    
    
    -Canceled
    
    
    -
    
    
    -**Balance,
      June 30, 2005**
    
    
    **16,650,000**
    
    **$**
    **0.133**Exercisable
      at June 30, 2004
    
    
    16,650,000
    
    $
    0.133Exercisable
      at June 30, 2005
    
    
    16,650,000
    
    $
    0.133
  
  
  
 **- -24
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **8.**  **Share-Based
Compensation, Continued**
   Summary
information about the Company's options outstanding all of which are exercisable
at June 30, 2005:
  Stock
      Options OutstandingWeightedAverage
    
    AverageOptions
    
    Remaining
    AverageExercise
    Number
    Contractual
    ExercisePrice
    Outstanding
    Life
    Price$0.083
    11,250,000
    3.5
    $0.083$0.250
    5,400,000
    6.2
    $0.25016,650,000
    $4.4
    $0.133
 
  The
Company issues shares of its common stock to non employees in payment for
services provided, and issued shares to employees in satisfaction of accrued
compensation. The Company records the fair value of the shares issued to measure
the cost of the transactions with both non employees and employees. The Company
does not have a formal share based compensation plan.
   The fair
value of unrestricted shares is determined by the quoted market price at the
measurement date of each issuance. The fair value of restricted shares is
estimated at the measurement date of each issuance using the Black-Scholes
Option Model that uses the assumptions noted in the following table. Expected
volatilities are based on historical volatility of the Company’s common stock.
Volatilities increased in 2005 as the per share value of the Company’s common
stock returned to the levels prior to the 3 for 1 split. The risk free rate is
based on the U.S. Treasury yield curve in effect at the measurement
date.
  **For
      the Years Ended June 30,**2005
    
    2004Volatility
    
    
    175%
      to 736
    %
    
    142%
      to 278
    %Expected
      dividends
    
    
    -
    
    
    -Risk-free
      rate
    
    
    2.18%
      to 3.66
    %
    
    1.16%
      to 3.87
    %Expected
      life of the options
    
    
    1.0
      to 2.0 years
    
    
    1.0
      to 2.0 years
 
 
  
 **- -25
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **8.**  **Share-Based
Compensation, Continued**
   A summary
of share activity follows.
  **For
      the Years Ended June 30,**2005
    
    2004Shares
      issued to non employees for services:Number
      of shares issued
    
    
    52,018,996
    
    
    31,394,751Estimated
      fair value
    
    $
    636,313
    
    $
    1,562,198Shares
      issued to employees in satisfaction of accrued payroll:Number
      of shares issued
    
    
    31,762,839
    
    
    8,000,001Estimated
      fair value
    
    $
    345,879
    
    $
    45,333
 
  **9.**  **Disclosures
about Fair Values of Financial Instruments**
   The
estimated fair value amounts of all financial instruments on the Company's June
30, 2005 balance sheet has been determined by using available market information
and appropriate valuation methodologies. However, considerable judgment is
required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Company could realize in a current market exchange. The use
of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
   The
Company does not have any off balance sheet financial instruments.
   *Cash
and Other*
   The
carrying amounts of cash, accounts receivable, the other asset, trade accounts
payable and certain other current liability amounts approximate fair value due
to the short term maturities of these instruments.
   *Notes
Payable*
   The
carrying amounts on the balance sheet of the notes payable approximate fair
value as the effective interest rates approximated the market rate at the time
they were made or rewritten.
  
  
 **- -26
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **10.**  **Loss
Per Share**
   Basic and
diluted loss per common share have been computed by dividing the loss available
to common shareholders by the weighted-average number of common shares, after
adjustment for the 3 for 1 stock split in March 2005, for the period.
   The
computations of basic and diluted loss per common share are as
follows:
  **For
      the Years Ended June 30,**2005
    
    2004Loss
      per common share, basic and diluted:Numerator:Net
      loss available to common shareholders
    
    $
    (1,387,984
    )
    $
    (1,791,922
    )Denominator:Weighted
      average shares - basic and diluted
    
    
    171,223,169
    
    
    101,612,655**Loss
      per common share, basic and diluted**
    
    **$**
    **(0.01**
    **)**
    **$**
    **(0.02**
    **)**
  
   The
effect of the potentially dilutive securities listed below was not included in
the computation of diluted loss per share, because to do so would have been
antidilutive for the two years presented.
   Common
shares reserved for future issuance are as follows:
  **For
      the Years Ended June 30,**2005
    2004Shares
      of common stock issuable under:Employee
      stock options
    15,150,000
    15,150,000Nonemployee
      stock options
    1,500,000
    1,500,000**Total
      shares of common stock issuable**
    **16,650,000**
    **16,650,000**
  
  
  
 **- -27
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **11.**  **Stock
Transactions**
   *Shares
Issued in Satisfaction of Obligations*
   During
the year ended June 30, 2005, the Company issued 31,191,339 shares of its common
stock to its two officers and sole employees in satisfaction of obligations
totaling $296,686. The obligations resulted from advances made to the Company.
The fair value of the common shares issued equaled the amount of obligations
satisfied.
   During
the year ended June 30, 2004 the Company issued 8,412,702 shares of its common
stock to its two officers and sole employees in satisfaction of obligations
totaling $263,609. The fair value of the common shares issued equaled the amount
of the obligations satisfied.
   *Additional
Shares Issued to Shareholders for in Lock-Up Agreements*
   During
the year ended June 30, 2004, the Company issued 176,100 shares of common stock
to certain shareholders who voluntarily allowed their already owned shares to be
restricted for one year period. The shares issued for this lock-up agreement
were recorded at the value of the shares on the date the agreement was approved
by the Company's board of directors. Accordingly, the Company recognized $3,240
of shareholder relations expense.
   **12.**  **Selling,
General and Administrative Expenses**
   Selling
expenses for each of the two years in the period ended June 30, 2005 are as
follows:
  **For
      the Years Ended June 30,**2005
    
    2004Sales
      and marketing consulting expense
    
    $
    443,526
    
    $
    1,271,147Sales
      travel
    
    
    67,063
    
    
    9,896Other
    
    
    18,214
    
    
    138**Total
      selling expenses**
    
    **$**
    **528,803**
    
    **$**
    **1,281,181**
  
  
  
 **- -28
-**
 
  **International
Food Products Group, Inc.**
   **Notes
to the Financial Statements**
   **As
of June 30, 2005 and For Each of the Two Years in the Periods Ended June 30,
2005**
   **12.**  **Selling,
General and Administrative Expenses, Continued**
   General
and administrative expenses for each of the two years in the period ended June
30, 2005 are as follows:
  For
      the Years Ended June 30,2005
    
    2004Officer
      salaries
    
    $
    364,553
    
    $
    149,333Accounting
      fees
    
    
    132,642
    
    
    124,597Legal
      and professional fees
    
    
    7,946
    
    
    61,090Package
      design
    
    
    14,000
    
    
    38,420Product
      development
    
    
    109,524
    
    
    32,549Shareholder
      relations
    
    
    40,310
    
    
    9,387Other
    
    
    108,167
    
    
    74,484**Total
      general and administrative expenses**
    
    **$**
    **777,142**
    
    **$**
    **489,860**
  
  
    **- -29
-**
  **Item
8. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure**
 
 We have
had no disagreements with our accountants on accounting or financial
disclosures.
 
 **Item
8A. Controls and Procedures.**
 
 As
required by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934 (the "Exchange Act"), we carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures as of the end
of the period covered by this report. This evaluation was carried out under the
supervision and with the participation of our Chief Executive Officer, Richard
Damion, and our Chief Financial Officer, Joseph R. Rodriguez, Jr. Based upon
that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective in timely
alerting management to material information relating to us which is required to
be included in our periodic SEC filings and that the controls and procedures
were effective in ensuring that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act are
accumulated and communicated to the Company's management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure. There have been no changes in our internal controls over financial
reporting during the most recent fiscal quarter that have materially affected,
or are reasonable likely to materially affect, our internal controls over
financial reporting.
 
 Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed our reports filed or submitted
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Securities and Exchange Commission's rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in
our reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
 
 ITEM 8B.
OTHER INFORMATION
 
 None
 
 **- -30
-**
 **PART
III**
 
 **Item
9. Directors and Executive Officers of the Registrant**
 
 The
following table sets forth the names, ages, and positions with IFPG
for
 each of
the directors and officers of IFPG.
 
 **Name**
    **Age
      Position (1)**Richard
      Damion
    60Chairman,
      CEO, Secretary, Treasurer and Director since 1996Joseph
      R. Rodriguez, Jr.
    55President
      and Director since 1996Robert
      George
    69Director
      since 2001
 
 (1) All
executive officers are elected by the Board and hold office until the next
Annual Meeting of shareholders and until their successors are elected and agree
to serve.
 
 Richard
Damion has been chairman of IFPG since it began operations in 1996.
 From 1992
through 1996 he was the president and CEO of Pacific Snax
Corporation,
 a snack
food company where he was in charge of general operations and
product
 development.
 
 Joseph R.
Rodriguez, Jr. has been an officer and director of IFPG since
 1996.
From 1987 through 1995, Mr. Rodriguez was the president of EFC
Mortgage
 Corporation
where he was responsible for operations and secondary marketing.
 
 Robert
George has been a director of the Company since August 2001. He was
 owner and
operator of RGA, Inc., at one time the largest Health Food
Brokerage
 company
in America which he sold after 18 years. In 1999 he came out of
 retirement
to become the Vice President of Sales and part owner of Dr Soy
 Nutrition,
an Energy bar company that has Distribution in over 12,000 outlets
in
 the U.S.
including Wal-Mart, Sams Clubs and all U.S.Military Commissaries to
 name a
few.
 
 **- -31
-**
 **Section
16(A) Beneficial Ownership Reporting Compliance**
 
 The
following persons have failed to file, on a timely basis, the identified reports
required by Section 16(a) of the Exchange Act during the most recent fiscal
year:
 
 Name
      and principal
      position
    Number
      of
      late
      reports
    Transactions
      not
      timely
      reported
    Known
      failures to
      file
      a required
      formRichard
      Damion CEO
    1
    0
    1Joseph
      R. Rodriguez, Jr.
    1
    1
    1Robert
      George
    0
    0
    1
 
 
 **Item
10. Executive Compensation**
 
 The
following table sets forth certain information as to our officers and directors.
 
 **Annual
Compensation Table**
 
 Annual
      Compensation
    Long
      Term CompensationName
    Title
    Fiscal
      Year
    Salary
    Bonus
    Other
      Annual
      Compensation
    Restricted
      Stock
      Awarded
    Options/
      SARs
      (#)
    LTIP
      payouts
      ($)
    All
      Other
      CompensationRichard
      Damion
    CEO,
      Secretary
      Director
    2003
      2004
      2005
    0
      0
      0
    0
      0
      0
    0
      0
      0
    1,014,492
      1,666,667
      16,766,667
    0
      800,000
      0
    0
      0
      0
    0
      0
      0Joseph
      R. Rodriguez, Jr.
    President
      Director
    2003
      2004
      2005
    0
      0
      0
    0
      0
      0
    0
      0
      0
    707,246
      1,000,000
      7,440,000
    0
      800,000
      0
    0
      0
      0
    0
      0
      0
 
 
 **- -32
-**
 **Item
11. Security Ownership of Certain Beneficial Owners and
Management**
 
 The
following table provides the beneficial ownership of our common stock by each
person known by us to beneficially own more than 5% of our common stock
outstanding as of November 12, 2004 and by the officers and directors of IFPG as
a group. Except as otherwise indicated, all shares are owned
directly.
 
 
 
 Common
    Percent
      ofName
      and Address
    Shares
    Class
      (1)Richard
      Damion (2)
    8,718,351
    17.12%170
      Newport Center Drive, Suite 260Newport
      Beach, CA 92660Joseph
      R. Rodriguez, Jr. (3)
    7,580,212
    14.87%170
      Newport Center Drive, Suite 260Newport
      Beach, CA 92660Robert
      George
    1,450,000
    2.96%170
      Newport Center Drive, Suite 260Newport
      Beach, CA 92660All
      executive officers and directors
    17,748,563
    33.51%as
      a group (three)
 
 (1) All
percentages are calculated by giving effect to the potential exercise of options
held by the applicable person, entity or group, but without giving effect to the
potential exercise of options held by any other person, entity or
group.
 
 (2) Of
the 8,718,351 common shares held by Mr. Damion, 6,718,351 shares are owned
outright. The remaining 2,000,000 shares are shares which can be acquired by Mr.
Damion through the exercise of options.
 
 (3) Of
the 7,580,212 common shares held by Mr. Rodriguez, 5,580,212 shares are owned
outright. The remaining 2,000,000 shares are shares which can be acquired by Mr.
Rodriguez through the exercise of options.
 
 **Item
12. Certain Relationships and Related Transactions**
 
 There
have been no transactions by the company within last two years where either the
company as an issuer, or a director, officer or shareholder of the company, had
an indirect or direct interest except as follows:
 
 ·
    Receipt
      of stock compensation by the officers and directors of IFPG as set forth
      in the executive compensation table; 
 ·
    The
      receipt of 899,182 shares of common stock by Joseph R. Rodriguez, Jr., for
      cancellation of debt owed to Mr. Rodriguez by
IFPG. 
 ·
    The
      receipt of 362,371 shares of common stock by Richard Damion for
      cancellation of debt owed to Mr. Damion by IFPG. 
 
 **- -33
-**
 **PART
IV**
 
 **Item
13. Exhibits**
 
 Exhibits
 
 14.1
    Code
      of Ethics (included with Form 10-KSB filing on Nov. 16,
    2004.)31.1
    Certification
      of CEO pursuant to Securities Exchange Act rules 13a-15 and 15d-15(c) as
      adopted pursuant to section 302 of the Sarbanes-Oxley act of
      2002.31.2
    Certification
      of CFO pursuant to Securities Exchange Act rules 13a-15 and 15d-15(c) as
      adopted pursuant to section 302 of the Sarbanes-Oxley act of
      2002.32.1
    Certification
      of CEO pursuant to 18 U.S.C. section 1350, as adopted pursuant to section
      906 of the Sarbanes-Oxley act of 2002.32.2
    Certification
      of CFO pursuant to 18 U.S.C. section 1350, as adopted pursuant to section
      906 of the Sarbanes-Oxley act of 2002.
 
 **Item
14. Principal Accountant Fees and Services**
 
 Audit
Fees. The aggregate fees billed by our auditors for professional services
rendered in connection with the audit of our annual financial statements for the
fiscal year ended June 30, 2004 was approximately $25,000. The aggregate fees
billed by our auditors for professional services rendered in connection with the
audit of our annual financial statements for the fiscal year ended June 30, 2005
was approximately $25,000.
 
 Audit-related
Fees. Our auditors did not bill any additional fees for assurance and related
services that are reasonably related to the performance of the audit or review
of our financial statements.
 
 Tax Fees.
The aggregate fees billed by our auditors for professional services for tax
compliance, tax advice, and tax planning were $0 and $0 for the fiscal years
ended June 30, 2004 and 2005.
 
 All other
Fees. The aggregate fees billed by our auditors for all other non-audit
services, such as attending meetings and other miscellaneous financial
consulting, for the fiscal years ended June 30, 2004 and 2005 were $0 and $0
respectively.
 
  1
 **- -34
-**
  
 **SIGNATURES**
 
 
 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 
 INTERNATIONAL
FOOD PRODUCTS GROUP, INC.
 
 
 By: /s/
Richard Damion
 -----------------------------------------------------
 Richard
Damion, Chief Executive Officer
 
 Date:
October 13, 2005
 
 In
accordance with the Securities Exchange Act, this report has been
signed
 below by
the following persons on behalf of the registrant and in the
capacities
 and on
the dates indicated.
 
 
 By: /s/
Richard Damion
 -----------------------------------------
 Richard
Damion, Director and
 Principal
Executive Officer
 Date:
October 13, 2005
 
 
 By: /s/
Joseph R. Rodriguez, Jr.
 ------------------------------------------
 Joseph R.
Rodriguez, Jr. Director and
 Principal
Financial Officer
 Principal
Accounting Officer
 Date:
October 13, 2005