UNITED
        STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
  **FORM
        10-K**
  (Mark
        One)
 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**
  o
              Transition
                  Report Pursuant to Section 13 or 15(d) of The SecuritiesExchange
                Act
                  of 1934
  Commission
        File Number 333-29903
 CALI
          HOLDINGS, INC.
 Exact
          Name of Registrant Specified in Charter
  **Utah**
                **333-229903**
                **30-0123229**(State
                    or Other Jurisdiction
                  of
                    Incorporation)
                (Commission
                  File
                    Number)
                (IRS
                    Employer
                  Identification
                    No.)
  **7658
          Municipal Dr. Orlando, Florida 32819**
 (Address
          of Principal Executive Offices) (Zip Code)
  **(407)-649-8325**
 Registrant’s
          telephone number, including area code:
  **TS&B
          Holdings Inc.**
 **7380
          Sand Lake Rd., Orlando Florida, 32819**
 (Former
          Name or Former Address, if Changed Since Last Report)
  Securities
        registered pursuant to Section 12(b) of the Exchange Act: None
  Securities
        registered pursuant to Section 12(g) of the Exchange Act: Common
  Check
        whether the issuer (1) 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. Yes xNo
o
  Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of the Registrant’s knowledge, in definitive proxy or information
        statements incorporated by reference in Part III of this Form 10-K or any
        amendment to this Form 10-K. o
  Indicate
        by check mark whether the registrant is a
        shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes  ̈No x
 State
        the
        issuer’s revenues for its most recent fiscal year - $208,488
  State
        the aggregate market value of the voting stock held by non-affiliates computed
        by reference to the price at which the stock was sold, or the average bid
        and
        ask prices of such stock as of a specified date within 60 days was $454,157
        (Based on bid price of $.008 and ask price of $.009 on June 30, 2005 and
        53,430,283 shares held by non affliates.)
  State
        the
        number of shares outstanding of each of the issuer’s classes of common equity,
        as of the latest practicable date.
  **Class**Common
                  Stock, Par Value
              ****
              **Outstanding
                  as of September 18th, 2005**
                432,030,283$.001
                  per share
  DOCUMENTS
          INCORPORATED BY REFERENCE
 NONE
  Transitional
        Small Business Disclosure Format. Yes oNo
x
   -1-
 **Page********PART
                  I**Item
                  1
              
              
              Description
                  of Business
              
              3Item
                  2
              
              
              Description
                  of Property
              
              15Item
                  3
              
              
              Legal
                  Proceedings
              
              15Item
                  4
              
              
              Submission
                  of Matter to a Vote of Security
                  Holders
              
              15**PART
                  II**Item
                  5
              
              
              Market
                  for Registrant’s Common Equity and Related
                  Stockholders Matters
              
              16Item
                  6
              
              
              Selected
                  Financial Data
              
              17Item
                  7
              
              
              Management’s
                  Discussion and Analysis of Financial Condition
                  and Result of Operations
              
              18Item
                  7A
              
              
              Quantitative
                  and Qualitative Disclosures About Market
                  Risk
              
              23Item
                  8
              
              
              Financial
                  Statements and Supplementary
                  Data
              
              24Item
                  9
              
              
              Control
&
                  Procedures
              
              39**PART
                  III**Item
                  10
              
              
              Exhibits
                  and Reports on Form 10-K
              
              39SIGNATURES
              
              39
 
 -2-




Item
        1
  Overview
 On
        January 5, 2004 the Company shareholders approved the proposal to allow the
        Company to adopt business development company (“BDC”) status under the
        Investment Company Act of 1940 (“1940 Act”). A BDC is a specialized type of
        Investment Company under the 1940 Act. A BDC may primarily be engaged in
        the
        business of furnishing capital and managerial expertise to companies that
        do not
        have ready access to capital through conventional financial channels; such
        companies are termed “eligible portfolio companies”. The Company as a BDC, may
        invest in other securities, however such investments may not exceed 30% of
        the
        Company’s total asset value at the time of such investment. The Company filed
        its BDC election with the SEC (Form N-54A) on January 13, 2004.
 
 On
        April
        8, 2005 the Company changed its name from TS&B Holdings, Inc. to CALI
        Holdings, Inc. (the Company).
 
 CALI
        Holdings, Inc. provides equity and long-term debt financing to small and
        medium-sized private companies in a variety of industries throughout the
        United
        States. The company’s investment objective is to achieve long-term capital
        appreciation in the value of its investments and to provide current income
        primarily from interest, dividends and fees paid by its portfolio companies.
 
 *Portfolio
        Investments*
 
 The
        Company has investments in 6 controlled (portfolio) companies as of June
        30,
        2005.
 
 1.  Buehler
        Earth & Waterworks, LLC
 
 Buehler
        Earth and Waterworks specializes in site development and infrastructure
        construction including, but not limited to, clearing, earthwork, utility
        construction, storm drainage, curbs, sidewalks; roadwork including sub-base,
        base and asphalt placement.
  Buehler
        Earth and Waterworks mission is to provide a full line of site construction
        and
        related services to the land/site development industry (public/private)
        utilizing a team approach to deliver the highest in quality work seeking
        expeditious performance without compromising either cost efficiency or good
        safety practices.
 
 Buehler
        Earth and Waterworks, LLC is a Florida Limited Liability Company in which
        the
        Company has a 51% interest.
 
 Buehler
        Earth and Waterworks, LLC owns 100% of BEW Landscape and Irrigation, LLC
        a
        Florida Limited Liability Company. BEW Landscape and Irrigation provides
        plants
        and irrigation services on a wholesale and retail basis to various customers
        throughout Florida.
 
 On
        March
        21, 2005 Buehler Earth & Waterworks, LLC sold its 75% interest in Advance
        Pool Technologies, Inc. to the other 25% investor for $155,880.
 
 On
        September 21, 2005, the company sold its 51% interest in Buehler Earth and
        Waterworks, LLC for $110,000 to Buehler’s managing member.
 -3-
 2. Sports
        Nation, Inc.
 
 Sports
        Nation, Inc. is involved in all aspects of the sports memorabilia merchandising
        industry. Sports Nation’s management has over 50 years of combined experience in
        product development, licensing, mass merchandise, retail, and direct marketing
        & sales. Through years of specializing in sourcing and selling the finest
        caliber sports memorabilia and collectible products, Sports Nation has forged
        numerous strategic relationships with companies and individuals in sports
        marketing, including agents and athletes, manufacturers, authenticators,
        and
        retailers.
 
 Sports
        Nation, Inc. is a Nevada Corporation, which is owned 100% by the
        Company.
  
 TSB
        Financial Services, Inc. obtains financing for various commercial real estate
        transactions through strategic relationships with outside funding sources
        and
        provides professional consulting services to portfolio companies of Cali
        Holdings, Inc. and other outside companies. TSB Financial Services, Inc.
        serves
        customers nationally from its headquarters in Orlando, Florida.
 
 TSB
        Financial Services, Inc. is a Florida Corporation, which is owned 100% by
        the
        Company.
 
 4.
        Wellstone Acquisition Corporation
 
 Wellstone
        Acquisition Corporation is a non-reporting Securities & Exchange Commission
        registrant. This Company had no business activity for the year ended June
        30,
        2005 and June 30, 2004.
 
 Wellstone
        Acquisition Corporation is a Delaware corporation that is owned 66% by the
        Company.
 
 5.  TS&B
        Gaming and Entertainment Corporation
 
 TS&B
        Gaming and Entertainment Corporation was formed on March 18, 2004 to invest
        in
        gaming, entertainment and other such ventures. TS&B Gaming and Entertainment
        had no business activity through June 30, 2005.
 
 TS&B
        Gaming & Entertainment Corporation is a Florida corporation that is 100%
        owned by the Company.
 -4-
 6.  TS&B
        Ventures, Inc.
 
 TS&B
        Ventures, Inc. was formed on April 16, 2004 to seek private investment into
        the
        Company’s various portfolio companies. TS&B Ventures, Inc. had no business
        activity through June 30, 2005.
 
 TS&B
        Ventures, Inc. is a Florida corporation that is 100% owned by the
        Company.
  *Other
        Investments*
 
 The
        Company has investments in three other companies as of June 30,
        2005.
    Gulf
        Coast Records, LLC, a Florida Limited Liability Company, is an independent
        record label. Currently, Gulf Coast Records is developing recording artist
        Glenn
        Cummings. Gulf Coast Records has released Glenn Cummings debut single and
        album
        entitled “BIG” and second hit single “Good Old Days.”
 
 The
        Gulf
        Coast Records team includes Bryan Switzer, former manager of a major record
        label and H.L. Voelker who acted as production consultant on Glenn's
        album.
 
 On
        June
        30, 2004 Gulf Coast Records formed Hare Scramble, LLC. Hare Scramble, LLC
        is a
        Florida Limited Liability Company involved in music publishing and is 100%
        owned
        by Gulf Coast Records, LLC.
 
 On
        July
        27, 2005, Cali Holdings retained a legal firm to assist in filing a selling
        stockholder registration statement for its to-be-formed portfolio company
        Gulf
        Coast Records, Inc and its to-be-wholly-owned subsidiary Gulf Coast Records,
        LLC. The purpose of the offering is to make Gulf Coast a separate SEC reporting
        company and to secure a qualification for quotation of its securities on
        the
        Over the Counter Bulletin Board.
 
 On
        July
        28, 2005 Gulf Coast Records entered into a joint venture with Brick Agency,
        LLC
        which was recently formed by Bryan Switzer. Brick Agency is a stand alone
        artist
        management company that will sign Glenn Cummings and other established artists
        into management contracts.
  
 KMA
        Capital Partners, Ltd *.* provides
        business consulting and financial services to the Company and to small and
        mid-cap companies.
 
 KMA
        Capital Partners, Ltd. is a Florida Limited Partnership in which the Company
        has
        a 25% limited partnership interest.
 -5-
 3. NEX2U,
        Inc.
 
 NEX2U
        is
        in the multimedia catalog industry.  Through
        the new patent-pending STM(TM) Technology, NEX2U takes existing print catalogs
        and transforms them into highly interactive, highly profitable direct mail
        experiences.
 
 CALI
        Holdings, Inc. owns less than 5% of the outstanding stock of NEX2U.
  *Dispositions
        of Investments*
 
 On
        June
        30, 2005, the Company sold its 51% interest in Cummings Financial Services,
        Inc.
        to a related party for $782,723.
 
 On
        June
        30, 2005, the Company sold its 51% interest in Home Savings Plan, Inc. to
        a
        related party for $1,000.
 
 *Valuation
        of Investments*
 
 The
        most
        significant estimate inherent in the preparation of the Company’s financial
        statements is the valuation of its investments and the related unrealized
        appreciation or depreciation.
 
 Upon
        the
        Company’s conversion to a business development company, the Company employed
        independent business valuation experts to value selected portfolio companies.
        The Board of Directors determined all other portfolio companies and investments
        at fair market value under a good faith standard. The Company analyzes and
        values each individual investment on a quarterly basis and records unrealized
        depreciation for an investment that it believes has become impaired, including
        where collection of a loan or realization of an equity security is doubtful.
        Conversely, the Company will record unrealized appreciation if it believes
        that
        the underlying portfolio company has appreciated in value.
 
 *Investments
        in Private Companies*
 
 The
        Company provides privately negotiated long-term debt and equity investment
        capital. The Company provides capital in the form of debt with or without
        equity
        features, such as warrants or options, often referred to as mezzanine financing.
        In certain situations the Company may choose to take a controlling equity
        position in a company. The Company’s private financing is generally used to fund
        growth, buyouts and acquisitions and bridge financing.
 
 The
        Company’s private finance portfolio currently includes investments in a wide
        variety of industries including commercial site construction, wholesale and
        retail plant sales, a record company, publishing company and financial services
        and sports memorabilia.
 
 The
        Company funds new investments using cash through the issuance of common stock.
        The Company intends to reinvest accrued interest, dividends and management
        fees
        into its various investments. When the Company acquires a controlling interest
        in a company, the Company may have the opportunity to acquire the company’s
        equity with its common stock. The issuance of its stock as consideration
        may
        provide the Company with the benefit of raising equity without having to
        access
        the public markets in an underwritten offering, including the added benefit
        of
        the elimination of any underwriting commission.
 -6-
 As
        a
        business development company, the Company is required to provide significant
        managerial assistance available to the companies in its investment portfolio.
        In
        addition to the interest and dividends received from the Company’s private
        finance investments, the Company will often generate additional fee income
        for
        the structuring, due diligence, transaction and management services and
        guarantees we provide to its portfolio companies.
 
 *Governmental
        Regulation*
 
 *Business
        Development Company*
 
 A
        business development company is defined and regulated by the 1940 Act. Although
        the 1940 Act exempts a business development company from registration under
        the
        Act, it contains significant limitations on the operations of a business
        development company.
 
 A
        business development company must be organized in the United States for the
        purpose of investing in or lending to primarily private companies and making
        managerial assistance available to them. A business development company may
        use
        capital provided by public shareholders and from other sources to invest
        in
        long-term, private investments in businesses. A business development company
        provides shareholders the ability to retain the liquidity of a publicly traded
        stock, while sharing in the possible benefits, if any, of investing in primarily
        privately owned companies. To qualify as a business development company,
        a
        company must:
 
 ·
              Have
                  registered a class of its equity securities or have filed a registration
                  statement with the Securities and Exchange Commission pursuant
                  to Section
                  12 of the Securities and Exchange Act of
                  1934;
 
 ·
              Operate
                  for the purpose of investing in securities of certain types of
                  portfolio
                  companies, namely emerging companies and businesses suffering or
                  just
                  recovering from financial distress;
 
 ·
              Extend
                  significant managerial assistance to such portfolio companies
                  and;
 
 ·
              Have
                  a majority of “disinterested” directors (as defined in the 1940
                  Act).
 
 Generally,
        a business development company must be primarily engaged in the business
        of
        furnishing capital and providing managerial expertise to companies that do
        not
        have ready access to capital through conventional financial channels. An
        eligible portfolio company is generally a domestic company that is not an
        investment company (other than a small business investment company wholly
        owned
        by a business development company), and that:
 
 ·
              Does
                  not have a class of securities registered on an exchange or included
                  in
                  the Federal Reserve Board’s over-the-counter margin list;
                  or
 
 ·
              Is
                  actively controlled by a business development company and has an
                  affiliate
                  of a business development company on its board of directors;
                  or
 
 ·
              Meets
                  such other criteria as may be established by the Securities and
                  Exchange
                  Commission.
 -7-
 Control
        under the 1940 Act is presumed to exist where a business development Company
        beneficially owns more than 25% of the outstanding voting securities of the
        portfolio company.
 
 The
        1940
        Act prohibits or restricts companies subject to the 1940 Act from investing
        in
        certain types of companies such as brokerage firms, insurance companies,
        investment banking firms and investment companies.
 
 As
        a
        business development company, the Company may not acquire any asset other
        than
        "qualifying assets" unless, at the time the Company makes the acquisition,
        the
        value of its qualifying assets represent at least 70% of the value of its
        total
        assets. The principal categories of qualifying assets relevant to our business
        are:
 
 ·
              Securities
                  purchased in transactions not involving any public offering, the
                  issuer of
                  which is an eligible portfolio
                  company;
 
 ·
              Securities
                  received in exchange for or distributed with respect to securities
                  described in the bullet above or pursuant to the exercise of options,
                  warrants or rights relating to such securities;
 
 ·
              Securities
                  of bankrupt or insolvent companies that were eligible at the time
                  of the
                  business development company’s initial acquisition of their securities but
                  are no longer eligible, provided that the business development
                  company has
                  maintained a substantial portion of its initial investment in those
                  companies; and
 
 ·
              Cash,
                  cash items, government securities or high quality debt securities
                  (within
                  the meaning of the 1940 Act), maturing in one year or less from
                  the time
                  of investment.
 
 A
        business development company is permitted to invest in the securities of
        public
        companies and other investments that are not qualifying assets, but those
        kinds
        of investments may not exceed 30% of the business development company’s total
        asset value at the time of the investment.
 
 As
        a
        business development company, the Company is entitled to issue senior securities
        in the form of stock or senior securities representing indebtedness, including
        debt securities and preferred stock, as long as each class of senior security
        has asset coverage of at least 200% immediately after each such
        issuance.
 
 The
        Company is also prohibited under the 1940 Act from knowingly participating
        in
        certain transactions with its affiliates without the prior approval of its
        board
        of directors who are not interested persons and, in some cases, prior approval
        by the Securities and Exchange Commission.
 
 A
        business development company must make significant managerial assistance
        available to the issuers of eligible portfolio securities in which it invests.
        Making available significant managerial assistance means among other things,
        any
        arrangement whereby the business development company, through its directors,
        officers or employees, offers to provide and, if accepted does provide,
        significant guidance and counsel concerning the management, operation or
        business objectives and policies of a portfolio company.
 
 The
        Company may be periodically examined by the Securities and Exchange Commission
        for compliance with the 1940 Act. As of the date of this filing the Company
        has
        not been examined by the Securities and Exchange Commission and has not been
        notified of a pending examination.
 -8-
 As
        with
        other companies regulated by the 1940 Act, a business development company
        must
        adhere to certain substantive regulatory requirements. A majority of its
        directors must be persons who are not interested persons, as that term is
        defined in the 1940 Act. Additionally, the Company is required to provide
        and
        maintain a bond issued by a reputable fidelity insurance company to protect
        it
        against larceny and embezzlement. Furthermore,
        as a business development company, the Company is prohibited from protecting
        any
        director or officer against any liability to the Company or its shareholders
        arising from willful malfeasance, bad faith, gross negligence or reckless
        disregard of the duties involved in the conduct of such person's
        office.
 
 The
        Company maintains a Code of Ethics that establishes procedures for personal
        investment and restricts certain transactions by its personnel. The Company’s
        Code of Ethics generally does not permit investment by its employees in
        securities that may be purchased or held by the Company. The Code of Ethics
        is
        filed as an exhibit to this 10K, which will be on file at the SEC.
 
 The
        Company may not change the nature of its business so as to cease to be, or
        withdraw its election as, a business development company unless authorized
        by
        vote of a "majority of the outstanding voting securities," as defined in
        the
        1940 Act, of its shares. A majority of the outstanding voting securities
        of a
        company is defined under the 1940 Act as the lesser of: (i) 67% or more of
        such
        company's shares present at a meeting if more than 50% of the outstanding
        shares
        of such company are present and represented by proxy or (ii) more than 50%
        of
        the outstanding shares of such company. Since the Company elected to become
        a
        business development company, it has not made any substantial change in the
        nature of its business.
 
 *Regulated
        Investment Company*
 
 The
        Company has not elected to be taxed as a regulated investment company under
        Subchapter M of the Internal Revenue Code of 1986.
 
 *Compliance
        with the Sarbanes-Oxley Act of 2002 and NYSE Corporate Governance Regulations.*
 
 On
        July
        30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the
        "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide variety of new
        regulatory requirements on publicly held companies and their insiders. Many
        of
        these requirements will affect the Company. For example:
 
 ·
              The
                  Company’s chief executive officer and chief financial officer must now
                  certify the accuracy of the financial statements contained in its
                  periodic
                  reports;
 
 ·
              The
                  Company’s periodic reports must disclose conclusions about the
                  effectiveness of its disclosure controls and
                  procedures;
 
 ·
              The
                  Company’s periodic reports must disclose whether there were significant
                  changes in its internal controls or in other factors that could
                  significantly affect these controls subsequent to the date of their
                  evaluation, including any corrective actions with regard to significant
                  deficiencies and material weaknesses;
                  and
 
 ·
              The
                  Company may not make any loan to any director or executive officer
                  and may
                  not materially modify any existing
                  loans.
 
 -9-
 The
        Sarbanes-Oxley Act has required the Company to review its current policies
        and
        procedures to determine whether it complies with the Sarbanes-Oxley Act and
        the
        new regulations promulgated thereunder. The Company will continue to monitor
        its
        compliance with all future regulations that are adopted under the Sarbanes-Oxley
        Act and will take actions necessary to ensure that we are in
        compliance.
 
 *Employees*
 
 As
        of
        June 30, 2005 the Company had five employees.
  *Risk
        Factors and Other Considerations*
  Investing
        in the Company’s common stock involves a high degree of risk. Careful
        consideration should be given to the risks described below and all other
        information contained in this Annual Report, including the financial statements
        and the related notes and the schedules as exhibits to this Annual
        Report.
  *Limited
        Operating History as a Business Development Company Which May Impair Your
        Ability to Assess Our Prospects.*
  Prior
        to
        January 2004 the Company had not operated as a business development company
        under the Investment Company Act of 1940. As a result the Company has limited
        operating results under this regulatory framework that can demonstrate either
        its effect on its business or management’s ability to manage the Company under
        these frameworks. In addition, the Company’s management has no prior experience
        managing a business development company. The Company cannot assure that
        management will be able to operate successfully as a business development
        company.
  *Because
        there is generally no established market for which to value its investments,
        the
        Company’s board of directors’ determination of the value of its investments may
        differ materially from the values that a ready market or third party would
        attribute to these investments.*
  Under
        the
        1940 Act the Company is required to carry its portfolio investments at market
        value, or, if there is no readily available market value, at fair value as
        determined by the board. The Company is not permitted to maintain a general
        reserve for anticipated loan losses. Instead, the Company is required by
        the
        1940 Act to specifically value each individual investment and to record any
        unrealized depreciation for any asset that has decreased in value. Because,
        there is typically no public market for the loans and equity securities of
        the
        companies in which it invests, the Company’s board will determine the fair value
        of these loans and equity securities pursuant to its valuation policy. These
        determinations of fair value may necessarily be somewhat subjective.
        Accordingly, these values may differ materially from the values that would
        be
        determined by a party or placed on the portfolio if there existed a market
        for
        our loans and equity securities.
  *Investing
        in Private Companies Involves a High Degree of Risk.*
  The
        Company’s portfolio consists of primarily long-term loans to and investments in
        private companies. Investments in private businesses involve a high degree
        of
        business and financial risk, which can result in substantial losses and
        accordingly should be considered speculative. There is generally no publicly
        available information about the companies in which the Company invests, and
        the
        Company relies significantly on the due diligence of its employees and agents
        to
        obtain information in connection with its investment decisions. If the Company
        is unable to uncover all material information about these companies, it may
        not
        make a fully informed investment decision and the Company may lose money
        on its
        investments.
 -10-
 In
        addition, some smaller businesses have narrower product lines and market
        shares
        than their competition, and may be more vulnerable to customer preferences,
        market conditions or economic downturns, which may adversely affect the return
        on, or the recovery of, the Company’s investment in such business.
  *The
        Lack of Liquidity of the Company’s Privately Held Investments may Adversely
        Affect Our Business.*
  Substantially
        all of the investments the Company expects to acquire in the future will
        be,
        subject to restrictions on resale, including in some instances, legal
        restrictions, or will otherwise be less liquid than publicly traded securities.
        The illiquidity of these investments may make it difficult for the Company
        to
        quickly obtain cash equal to the value at which it records its investments
        if
        the need arises. This could cause the Company to miss important business
        opportunities. In addition, if the Company were required to quickly liquidate
        all or a portion of its portfolio, it may realize significantly less than
        the
        value at which it had previously recorded its investments.
  *If
        the Industry Sectors in which the Company’s Portfolio is Concentrated Experience
        Adverse Economic or Business Conditions, Our Operating Results may be Negatively
        Impacted.*
  The
        Company’s customer base is primarily in the Manufacturing and Distribution;
        Product Marketing and Sales; Construction; Financial Services; and Sports,
        Entertainment & Gaming; and Management Services industry sectors. These
        customers can experience adverse business conditions or risks related to
        their
        industries. Accordingly, if the Company’s customers suffer due to these adverse
        business conditions or risks or due to economic slowdowns or downturns in
        these
        industry sectors, the Company will be more vulnerable to losses in its portfolio
        and the operating results may be negatively impacted.
  Some
        of
        these companies may be unable to obtain financing from public capital markets
        or
        from traditional credit sources, such as commercial banks. Accordingly, advances
        made to these types of customers may entail a higher degree of risk than
        advances made to customers who are able to utilize traditional credit sources.
        These conditions may also make it difficult to obtain repayment of
        loans.
  *Economic
        downturns or recessions may impair the Company’s customers’ ability to repay its
        loans, harm its operating results.*
  Many
        of
        the companies in which the Company has made or will make investments may
        be
        susceptible to economic slowdowns or recessions. An economic slowdown may
        affect
        the ability of a company to engage in a liquidity event. The Company’s
        non-performing assets are likely to increase and the value of its portfolio
        is
        likely to decrease during these periods. These conditions could lead to
        financial losses in its portfolio and a decrease in its revenues, net income
        and
        assets.
  The
        Company’s business of making private equity investments and positioning them for
        liquidity events also may be affected by current and future market conditions.
        The absence of an active senior lending environment may slow the amount of
        private equity investment activity generally. As a result, the pace of the
        Company’s investment activity may slow. In addition, significant changes in the
        capital markets could have an effect on the valuations of private companies
        and
        on the potential for liquidity events involving such companies. This could
        affect the amount and timing of gains realized on its investments.
 -11-
 *The
        Company’s Borrowers May Default on Their Payments, Which May Have an Effect on
        Financial Performance.*
  Some
        of
        these companies may be unable to obtain financing from public capital markets
        or
        from traditional credit sources, such as commercial banks. Accordingly, advances
        made to these types of customers may entail a higher degree of risk than
        advances made to customers who are able to utilize traditional credit sources.
        These conditions may also make it difficult for the Company to obtain repayment
        of its loans. Numerous factors may affect a borrower’s ability to repay its
        loan; including the failure to meet its business plan, a downturn in its
        industry, or negative economic conditions. Deterioration in a borrower’s
        financial condition and prospects may be accompanied by deterioration in
        any
        related collateral.
  *If
        the Company Fails to Manage Its Growth, its Financial Results Could be Adversely
        Affected.*
  The
        Company has expanded its operations and strategic relationships at a rapid
        pace.
        The Company’s growth has placed and continues to place significant strain on its
        management systems and resources. The Company must continue to refine and
        expand
        its marketing capabilities, its management of the investing process, access
        to
        financing resources and technology. As the Company grows, it must continue
        to
        hire, train, supervise and manage new employees. The Company may not develop
        sufficient lending and administrative personnel and management and operating
        systems to manage its expansion effectively. If the Company is unable to
        manage
        its growth, operations could be adversely affected and the financial results
        could be adversely affected.
  *The
        Company’s Private Finance Investments May Not Produce Current Returns or Capital
        Gains.*
  The
        Company’s private finance investments are typically structured as debt
        securities with a relatively high fixed rate of interest and with equity
        features such as conversion rights, warrants or other options. As a result,
        the
        Company’s private finance investments are generally structured to generate
        interest income from the time they are made and may also produce a realized
        gain
        from an accompanying equity feature. The Company cannot be sure that its
        portfolio will generate a current return or capital gain.
  *The
        Company Operates in a Competitive Market for Investment
        Opportunities*
  The
        Company competes for investments with a large number of private equity funds
        and
        mezzanine funds, investment banks and other equity and non-equity based
        investment funds, and other sources of financing, including traditional
        financial services companies such as commercial banks. Some of its competitors
        have greater resources than the Company. Increased competition would make
        it
        more difficult for the Company to purchase or originate investments at
        attractive prices. As a result of this competition, sometimes the Company
        may be
        precluded from making otherwise attractive investments.
  *Investing
        in the Company’s Stock Is Highly Speculative and an Investor Could Lose Some or
        All of the Amount Invested*
  The
        value
        of the Company’s common stock may decline and may be affected by numerous market
        conditions, which could result in the loss of some or the entire amount invested
        in its shares. The securities markets frequently experience extreme price
        and
        volume fluctuations, which affect market prices for securities of companies
        generally, and very small capitalization companies in particular. The price
        of
        its common stock may be higher or lower than the price paid for shares,
        depending on many factors, some of which are beyond the Company’s control and
        may not be directly related to its operating performance. These factors include
        the following:
 -12-
 ·
              Price
                  and volume fluctuations in the overall stock market from time to
                  time;
  ·
              Significant
                  volatility in the market price and trading volume of securities
                  of
                  business development companies or other financial service
                  companies;
  ·
              Changes
                  in the regulatory policies or tax guidance with respect to business
                  development companies;
  ***·***
              Actual
                  or anticipated changes in the earnings or fluctuations of operating
                  results or changes in the experience of securities
                  analysts.
  *The
        Company‘s Business Depends on Key Personnel*
  The
        Company depends on the continued service of its executive officers and other
        key
        management personnel. If the Company were to lose any of these officers or
        other
        management personnel, such a loss could result in inefficiencies in the
        Company’s operations and the loss of business opportunities. The Company does
        not maintain any key man life insurance on any of its officers or
        employees.
  *The
        Company’s Business Plan is dependent upon External Financing which may Expose
        the Company to Risks Associated with Leverage*
  The
        Company will require a substantial amount of cash to operate and grow. The
        Company may acquire additional capital from the following sources:
 
 Senior
        Securities .
        The
        Company intends to issue debt securities, other evidences and preferred stock,
        up to the maximum amount permitted by the 1940 Act. The 1940 Act currently
        permits the Company, as a business development company, to issue debt securities
        and preferred stock, to which it refers collectively as senior securities,
        in
        amounts such that the asset coverage, as defined in the 1940 Act, is at least
        200% after each issuance of senior securities. As a result of issuing senior
        securities, the Company will be exposed to the risks associated with leverage.
        Although borrowing money for investments increases the potential for gain,
        it
        also increases the risk of a loss. A decrease in the value of investments
        will
        have a greater impact on the value of its common stock to the extent that
        the
        Company borrowed money to make investments. There is a possibility that the
        costs of borrowing could exceed the income received on the investments made
        with
        such borrowed funds. In addition, the ability to pay dividends or incur
        additional indebtedness would be restricted if asset coverage is not at least
        twice the Company’s indebtedness. If the value of the Company’s assets declines,
        it might be unable to satisfy that test. If this happens, it may be required
        to
        liquidate a portion of its loan portfolio and repay a portion of its
        indebtedness at a time when a sale may be disadvantageous. Furthermore, any
        amounts that the Company uses to service its indebtedness will not be available
        for distributions to stockholders.
 
 Common
        Stock .
        Because
        the Company is limited in its ability to issue debt for the reasons given
        above,
        the Company is dependent on the issuance of equity as a financing source.
        If the
        Company raises additional funds by issuing more common stock or debt securities
        convertible into or exchangeable for our common stock, the percentage ownership
        of its stockholders at the time of the issuance would decrease and they may
        experience dilution. In addition, any convertible or exchangeable securities
        issued in the future may have rights, preferences and privileges more favorable
        than those of the Company’s common stock.
 -13-
 Securitization .
        In
        addition to issuing securities to raise capital as described above, the Company
        anticipates that in the future it will securitize loans to generate cash
        for
        funding new investments. An inability to successfully securitize the Company’s
        loan portfolio could limit its ability to grow the business, fully execute
        the
        business strategy and impact its profitability. Moreover, successful
        securitization of the Company’s loan portfolio might expose it to losses as the
        loans in which it does not plan to sell interests will be those that are
        riskier
        and more apt to generate losses.
  *Shares
        of Closed-End Investment Companies Frequently Trade at a Discount from Net
        Asset
        Value.*
  Shares
        of
        closed-end investment companies frequently trade at a discount from net asset
        value. This characteristic of shares of closed-end investment companies is
        separate and distinct from the risk that the Company’s net asset value per share
        will decline.
  *Changes
        in the Law or Regulations That Govern the Company Could Have a Material Impact
        on its Operations*
  The
        Company is regulated by the Securities and Exchange Commission. In addition,
        changes in the laws or regulations that govern business development companies
        may significantly affect its business. Any changes in the law or regulations
        that govern its business could have a material impact on operations. The
        Company
        is subject to federal, state and local laws and regulations and is subject
        to
        judicial and administrative decisions that affect its operations. If these
        laws,
        regulations or decisions change, or if the Company expands its business into
        jurisdictions that have adopted more stringent requirements than those in
        which
        it currently conduct business, the Company may incur significant expenses
        in
        order to comply or might restrict operations.
  *Acts
        of God, Hurricane, Flood, etc May Affect Operations and Subject the Company
        To
        Risk of Damage or Loss.*
  The
        Company and its portfolio companies could be subject to acts of God, hurricane,
        fire, flood or other disaster, condition or event that adversely affects
        the
        Company or its portfolio companies or their ability to do business and could
        result in a loss of sales and revenue and impair operating results.
 
 -14-
 **Item
        2. Properties**
 
 The
        Company’s principal offices are located at 7658 Municipal Drive, Orlando,
        Florida. The office is equipped with an integrated network of computers for
        word
        processing, financial analysis, accounting and loan services. The Company
        believes its office space is suitable for its needs for the foreseeable
        future.
 
 **Item
        3. Legal Proceedings**
 
 There
        are
        no material pending legal proceedings to which the Company or any of its
        subsidiaries is a party or to which any of its property is subject and, to
        the
        best of its knowledge, no such actions against the Company are contemplated
        or
        threatened.
  **Item
        4. Submission of Matters to a Vote of Security
        Holders**
  Not
        applicable .
 -15-
 **PART
        II**
  **Item
        5. Market for Registrant’s Common Equity and Related
        Stockholders Matters**
  CALI
        Holdings, Inc. common stock, par value, $.001 per share (“Common Stock”) is
        traded on the Over the Counter NADAQ Electronic Bulletin Board (“OTC”) under the
        symbol “CALI.OB” The following table sets forth, for the period indicated, the
        range of high and low closing prices reported by the OTC. Such quotations
        represent prices between dealers and may not include markups, markdowns,
        or
        commissions and may not necessarily represent actual transactions.
  ****
              **HIGH**
              **LOW****2005
                  Quarter Ended**March
                  31st
              .02
              .004June
                  30th
              .25
              .007**2004
                  Quarter Ended**March
                  31st
              .05
              .01June
                  30th
              .01
              .01September
                  30th
              .10
              .07December
                  31st
              .07
              .001**2003
                  Quarter Ended**March
                  31st
              .03
              .01June
                  30th
              .02
              .01September
                  30th
              .02
              .01December
                  31st
              .03
              .01
  On
        August 4, 2004, the Company’s Board of Directors approved a 40 - 1 reverse split
        of the Company’s common stock and April 8, 2005, the Board of Directors approved
        a 100 - 1 reverse split of the Company’s common stock.
  As
        of June 30, 2005 the authorized capital of the company is 2,000,000,000 shares
        of common voting stock par value $.001 per share. The Company also has
        authorized 10,000,000 shares and has issued and outstanding 3,725,000 shares
        of
        Class A, no par, preferred stock. The Class A preferred stock has conversion
        rights to the Company’s common voting stock of 4-1. As of the date of this
        report no preferred shares have been converted to common stock. The Company
        has
        authorized but not issued an additional 10,000,000 shares of Class B, no
        par,
        preferred stock. The Company has authorized and issued an additional 10,000,000
        shares of convertible Class C, .001 per share preferred stock. The Class
        C
        preferred stock has conversion rights to the Company’s common voting stock of
        1-1. The Company has authorized but not issued an additional 10,000,000 shares
        of Class D, no par, preferred stock.
 -16-
 **Item
        6. Selected Financial Data**
  The
        selected financial data should be read in conjunction with the Company’s
“Management’s Discussion and Analysis of Financial Condition and Result of
        Operations” and the Financial Statements and notes thereto. As discussed in Note
        A to the Financial Statements, the Company converted to a Business Development
        Company effective January 5, 2004. The results of operations for the year
        ended
        June 30, 2005 are divided into two periods, the “Post Conversion as a Business
        Development Company period” and “Pre-Conversion prior to becoming a Business
        Development Company” period. Different accounting principles are used in the
        preparation of financial statements of a business development company under
        the
        Investment Company Act of 1940 and, as a result, the financial results for
        periods prior to January 1, 2004 are not comparable to the period commencing
        on
        January 1, 2004 and are not expected to be representative of its financial
        results in the future.
  
 **Year
                  Ended**
              
              **Year
                  Ended****06/30/05**
              
              **06/30/04****Total
                  Assets**
              
              $
              3,010,660
              
              $
              2,947,274**Total
                  Liabilities**
              
              
              577,889
              
              
              503,328**Total
                  Stockholders' Equity (Deficit)**
              
              
              2,432,771
              
              
              2,443,946**Revenue**
              
              
              208,488
              
              
              45,000**Net
                  Unrealized Appreciation (Depreciation)**
              
              
              (529,371
              )
              
              1,368,543**Net
                  Income (Loss)**
              
              
              (1,345,381
              )
              
              (18,962
              )
  -17-
 **Item
        7. Management’s Discussion and Analysis of Financial Condition
        and Results of Operations.**
  The
        following information should be read in conjunction with the financial
        statements and notes thereto appearing elsewhere in this Form 10-K.
  *Forward
        Looking Statements*
  This
        Form
        10-K including the Management’s Discussion and Analysis of Financial Condition
        and Results of Operation contains forward-looking statements that involve
        substantial risk and uncertainties. These forward-looking statements are
        not
        historical facts but rather are based on current expectations, estimates
        and
        projections about the Company’s industry, beliefs, and assumptions. Such
        forward-looking statements involve risks and uncertainties that could cause
        risks or outcomes to differ materially from those expressed in the
        forward-looking statements. Forward-looking statements may include without
        limitation statements relating to the Company’s plans, strategies, objectives,
        expectations and intentions and are intended to be made pursuant to the Safe
        Harbor provisions of the Private Securities Litigation Reform Act of 1995.
        Words
        such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, and
“estimates” and variations of these words and similar expressions are intended
        to identify forward-looking statements. These statements are not guarantees
        of
        future performance and are subject to certain risks, uncertainties, and other
        factors, some of which are beyond the Company’s control and difficult to predict
        and could cause actual results to differ materially from those expressed
        or
        forecasted in the forward-looking statements including without
        limitation:
  ·
              The
                  state of securities markets in which the securities of the Company’s
                  portfolio company trade or could be
                  traded;
  ·
              The
                  liquidity within the national financial
                  markets;
  ·
              Economic
                  downturns or recessions may impair the Company’s customers’ ability to
                  repay its loans and increase its non-performing
                  assets;
  ·
              A
                  contraction of available credit and/or inability to access the
                  equity
                  markets could impair its lending and investment
                  activities;
  ·
              The
                  risks associated with the possible disruption in the Company’s operations
                  due to terrorism; and
  ·
              The
                  risks and uncertainties described under the caption “Risk Factors and
                  Other Considerations” contained in Part I, Item I, which is incorporated
                  herein by reference.
  Although
        the assumptions on which these forward looking statements are based are
        reasonable, any of those assumptions also could be incorrect. In light of
        these
        and other uncertainties, the inclusion of a projection or forward-looking
        statements in this Annual Report should be regarded as a representation of
        the
        Company that its plans and objectives will be achieved. Undue reliance should
        not be placed on these forward-looking statements, which apply only as of
        the
        date of this Annual Report.
 -18-
 *Overview*
  The
          Financial Statements do not show a consolidation of subsidiaries as did
          prior
          year end financial statements. The company started reporting non-consolidated
          financial statements in the third quarter of 2005.
  CALI
        Holdings, Inc. is a financial service company providing financing and advisory
        services to small and medium-sized companies throughout the United States.
        Effective January 5, 2004 the Company shareholders approved the proposal
        to
        allow the Company to convert to a business development company (“BDC”) under the
        Investment Company Act of 1940 (“1940 Act”).
 
 The
        Company’s investments in portfolio companies typically range from $100,000 to
        $1,000,000. The Company invests either directly in the equity of a company
        through equity shares or through a debt instrument. The Company’s debt
        instruments usually do not have a maturity of more than five years. Interest
        is
        either currently paid or deferred.
 
 Investment
        opportunities are identified for the Company by the management team. Investment
        proposals may, however, come to the Company from many sources, and may include
        unsolicited proposals from the public and from referrals from banks, lawyers,
        accountants and other members of the financial community. The management
        team
        brings an extensive network of investment referral relationships.
 
 *Critical
        Accounting Policies and Estimates*
 
 The
        Company prepares its financial statements in accordance with accounting
        principles generally accepted in the United States of America for investment
        companies. For a summary of all of its significant accounting policies,
        including the critical accounting policies, see Note A to the consolidated
        financial statements in Item 8.
 
 The
        increasing complexity of the business environment and applicable authoritative
        accounting guidance requires the Company to closely monitor its accounting
        policies. The Company has identified three critical accounting policies that
        require significant judgment. The following summary of the Company’s critical
        accounting policies is intended to enhance your ability to assess its financial
        condition and results of operation and the potential volatility due to changes
        in estimates.
 
 *Valuation
        of Investments*
 
 At
        June
        30, 2005 35.75%  of the
        Company’s total assets represented investments recorded at fair value. Value as
        defined in Section 2(a)(41) of the 1940 Act, is (i) the market price for
        those
        securities for which a market quotation is readily available and (ii) for
        all
        other securities and assets, fair value is determined in good faith by the
        board
        of directors. Since there is typically no readily ascertainable market value
        for
        the investments in its portfolio, the Company values substantially all of
        its
        investments at fair value as determined in good faith by the board of directors
        pursuant to a valuation policy and consistent valuation process. Because
        of the
        inherent uncertainty in determining the fair value of investments that do
        not
        have a readily ascertainable market value, the fair value of its investments
        determined in good faith by the board of directors may differ significantly
        from
        the values that would have been used had a ready market existed for the
        investments, and the differences could be material.
 
 Initially,
        the fair value of each such portfolio investment is based upon original cost.
        There is no single standard for determining fair value in good faith. As
        a
        result, determining fair value requires the judgment be applied to the specific
        facts and circumstances of each portfolio investment. The Board of Directors
        considers fair value to be the amount which the Company may reasonably expect
        to
        receive for portfolio securities when sold on the valuation date. The Company
        analyzes and values each individual investment on a quarterly basis, and
        records
        unrealized depreciation for an investment that it believes has become impaired,
        including where collection of a loan or realization of an equity security
        is
        doubtful. Conversely, the Company will record unrealized appreciation if
        it
        believes that the underlying portfolio company has appreciated in value and,
        therefore, the Company’s equity security has also appreciated in value. Without
        a readily ascertainable market value and because of the inherent uncertainty
        of
        valuation the fair value of the Company’s investments determined in good faith
        by the Board of Directors may differ significantly from the values that would
        have been used had a ready market existed for the investments, and the favorable
        or unfavorable differences could be material.
 -19-
 
 In
        the
        valuation process, the Company uses financial information received monthly,
        quarterly, and annually from the portfolio companies, which include both
        audited, and unaudited financial information supplied by portfolio companies
        management. This information is used to determine financial condition,
        performance and valuation of the portfolio investments. Valuation should
        be
        reduced if a company’s performance and potential have significantly
        deteriorated. If the factors, which led to the reduction in valuation, are
        overcome, the valuation may be restated.
 
 Another
        key factor used in valuation of the equity investments is recent arms-length
        equity transactions entered into by the investment company that the Company
        utilizes to form a basis for its underlying value. Many times the terms of
        these
        equity transactions may not be identical to those of the Company and the
        impact
        on these variations as it relates to market value may be impossible to
        quantify.
 
 Any
        changes in estimated fair value are recorded in the statements of operations
        as
“Net increase (decrease) in unrealized appreciation 
        (depreciation).”
 
 *Valuation
        of Equity Securities*
 
 With
        respect to private equity securities, each investment is valued using industry
        valuation benchmarks and then the value is assigned a discount reflecting
        the
        illiquid nature of the investment, as well as the Company’s minority non-control
        positions. When an external event such as a purchase transaction, public
        offering, or subsequent equity sale occurs, the pricing indicated by the
        external event will be used to corroborate the Company’s private equity
        valuation. Securities that are traded in the over-the-counter market or on
        a
        stock exchange will generally be valued at the prevailing bid price on the
        valuation date. However, restricted and unrestricted publicly traded securities
        may be valued at discounts from the public market value due to restrictions
        on
        sale, the size of its investment or market liquidity concerns.
 
 
 *Valuation
        of Loans and Debt Securities*
 
 As
        a
        general rule, the Company does not value its loans or debt securities above
        cost, but loans and debt securities will be subject to fair value write-down
        when the asset is considered impaired.
 
 Financial
        Condition
 
 The
        Company’s assets increased by $63,386 or 2.15% to $3,010,660 from the prior
        year.
 
 The
        Company’s financial condition is dependent on the success of its portfolio
        holdings. It has invested a substantial portion of its assets in small and
        medium-sized companies. These businesses tend to be thinly capitalized, small
        companies that may lack experienced management. The following summarizes
        the
        Company’s investment portfolio as of June 30, 2005.
 -20-
  June
                  30,
                  2005Investment
                  at Cost
              
              $
              419,072Unrealized
                  (depreciation) appreciation, net
              
              
              657,328Investment
                  at fair value
              
              $
              1,076,400
  During
        the Company’s fiscal year, the Company valued its equity and investment holdings
        in accordance with the established valuation policies (see “Valuation of
        Investments and Equity Holdings”) above.
 
 The
        cash and cash equivalents approximated 1.03% of net assets as of June 30,
        2005.
  *Results
        of Operations*
 
 The
        results of operations for the year ended June 30, 2005 reflect the Company’s
        results as a business development company under the Investment Company Act
        of
        1940. The results of operations prior to January 1, 2004 reflect the Company’s
        results of operations prior to operating as a business development company
        under
        the Investment Company Act of 1940. The principal difference between these
        two
        reporting periods relate to accounting for investments. See Note A to the
        Financial Statements. In addition, certain prior year items have been
        reclassified to conform to the current year presentation as a business
        development company.
 
 *Dividends
        and Interest*
 
 Dividends
        and interest income on investments for the years ended June 30, 2005 and
        June
        30, 2004 was $72,895 and $62,363 respectively. The
        increase in interest and dividends was primarily due to the sources of income
        shifting from a transactional base business to the Company receiving interest
        income from its portfolio companies.
 
 *Management
        Fees*
 
 Management
        fees for the years ended June 30, 2005 and June 30, 2004 was $180,000 and
        $45,000 respectively. The
        management fees were due to services rendered to Buehler Earth and Waterworks,
        LLC, Gulf Coast Records, LLC and Cummings Financial Services, Inc.
 
 *Operating
        Expenses*
 
 Total
        operating expenses for the years ended June 30, 2005 and June 30, 2004 was
        $1,349,339 and $1,242,752. A
        significant component of total operating expenses was general and administrative
        expenses of $972,760 and $382,527 for the years ending June 30, 2005 and
        2004,
        respectively. The increase in general and administrative expenses is primarily
        due to the Company operating as a BDC beginning in January 2004. The expenses
        increased as needed to investigate and complete due diligence on potential
        portfolio companies. A second component of total operating expenses was
        professional fees of $373,712 for the year ended June 30, 2005 and $859,806
        for
        the year ended June 30, 2004. The decrease in professional fees is primarily
        due
        to the Company using employees rather than outside consultants to complete
        due
        diligence on potential portfolio companies.
 -21-
 Liquidity
        and Capital Resources
 
 At
        June 30, 2005 and June 30, 2004, the Company had $31,034 and $431,746
        respectively in cash and cash equivalents. The Company’s objective is to have
        sufficient cash on hand to cover current funding requirements and
        operations.
 
 The
        Company expects its cash on hand and cash generated from operations to be
        adequate to meet its cash needs at its current level of operations, including
        the next twelve months. The Company generally funds new investments using
        cash
        on hand and equity financing and outside investments.
  Private
        Portfolio Company Investments
 
 The
        following is a list of the private companies in which the Company had an
        investment in and the cost and fair market value of such securities at June
        30,
        2005:
 
 **Name
                  of Company**
              
              **Cost**
              
              **FMV**Sports
                  Nation
              
              $
              25,000
              
              $
              46,000Buehler
                  Earth & Waterworks, LLC
              
              
              203,493
              
              
              100,000Gulf
                  Coast Records, LLC
              
              
              173,868
              
              
              575,000TSB
                  Financial Services, Inc.
              
              
              -
              
              
              250,000Wellstone
                  Acquisition Corporation
              
              
              632
              
              
              75,000KMA
                  Capital Partners, Ltd.
              
              
              -
              
              
              -TS
                  & B Gaming & Entertainment Corporation
              
              
              79
              
              
              1,000TS
                  & B Ventures, Inc.
              
              
              -
              
              
              600NEX2U
              
              
              16,000
              
              
              28,800Total
              
              $
              419,072
              
              $
              1,076,400
  Recent
        Developments
 
 On
        September 21, 2005, the company sold its 51% interest in Buehler Earth and
        Waterworks, LLC for $110,000 to Buehler’s managing member.
 
 -22-
 Item 7A. Quantitative and Qualitative
        Disclosures About Market
        Risk
 
 The
        Company’s investment activities contain elements of risk. The portion of the
        Company’s investment portfolio consisting of equity or equity-linked debt
        securities in private companies is subject to valuation risk. Because there
        is
        typically no public market for the equity and equity-linked debt securities
        in
        which it invests, the valuation of the equity interest in the portfolio is
        stated at “fair value” and determined in good faith by the Board of Directors on
        a quarterly basis in accordance with the Company’s investment valuation
        policy.
 
 In
        the
        absence of a readily ascertainable market value, the estimated value of the
        Company’s portfolio may differ significantly from the value that would be placed
        on the portfolio if a ready market for the investments existed. Any changes
        in
        valuation are recorded in the Company’s consolidated statement of operations as
“Net unrealized appreciation (depreciation) on investment”.
 
 At
        times
        a portion of the Company’s portfolio may include marketable securities traded in
        the over-the-counter market. In addition, there may be a portion of the
        Company’s portfolio for which no regular trading market exists. In order to
        realize the full value of a security, the market must trade in an orderly
        fashion or a willing purchaser must be available when a sale is to be made.
        Should an economic or other event occur that would not allow the markets
        to
        trade in an orderly fashion the Company may not be able to realize the fair
        value of its marketable investments or other investments in a timely
        manner.
 
 As
        of
        June 30, 2005, the Company did not have any off-balance sheet investments
        or
        hedging investments.
 
 *Impact
        of Inflation*
 
 The
        Company does not believe that its business is materially affected by inflation,
        other than the impact inflation may have on the securities markets, the
        valuations of business enterprises and the relationship of such valuation
        to
        underlying earnings all of which will influence the value of the Company’s
        investments.
 
 -23-
 **Item
        8. Financial Statements and Supplementary
        Data**
 **Report
                      of Independent Registered Public Accounting Firm**
                    
                    
                    
                    
                    To
                      the Board of Directors
                    Cali
                      Holdings, Inc. (F/K/A TS&B Holdings, Inc.)
                    Orlando,
                      Florida
                    
                    We
                      have audited the balance sheets of Cali Holdings, Inc. (F/K/A
                      TS&B
                      Holdings, Inc.) as of June 30, 2005 and 2004, and the related
                      statements
                      of operations, changes in stockholders’ equity and cash flows for the
                      years then ended. 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 audit to obtain reasonable
                      assurance
                      about whether the financial statements are free of material
                      misstatement.
                      An audit includes examining, on a test basis, evidence supporting
                      the
                      amounts and disclosures in the financial statements. An audit
                      also
                      includes assessing the accounting principles used and significant
                      estimates made by management, as well as evaluating the overall
                      financial
                      statement presentation. We believe that our audits provided
                      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 Cali Holdings,
                      Inc. as of
                      June 30, 2005 and 2004, and the results of operations and cash
                      flows for
                      the years then ended, in conformity with U.S. generally accepted
                      accounting principles.
                    
                    
                    
                    
                    */s/Baumann,
                      Raymondo & Company PA*
                    Baumann,
                      Raymondo & Company PA
                    Tampa,
                      FloridaSeptember
                      8, 2005, except for Note L, as to which the date is September
                      21, 2005
                      -24-
                    **CALI
                        HOLDINGS, INC.**
                      **(F/K/A
                        - TS&B HOLDINGS, INC.)****BALANCE
                        SHEETS****JUNE
                    30, 2005 AND 2004**
 
 **ASSETS**
                
                
                **06/30/05**
                
                
                **06/30/04**Cash
                
                $
                31,034
                
                $
                431,746Investments,
                    at fair value
                
                
                1,076,400
                
                
                1,832,600Accounts
                    receivable
                
                
                3,692
                
                
                -Other
                    assets
                
                
                254,207
                
                
                45,000Fixed
                    assets, net of accumulated depreciation
                
                
                9,658
                
                
                7,945Goodwill
                
                
                489,000
                
                
                489,000Notes
                    receivable
                
                
                1,141,097
                
                
                103,783Deferred
                    income taxes
                
                
                -
                
                
                27,200Security
                    deposit
                
                
                5,572
                
                
                10,000**TOTAL
                    ASSETS**
                
                $
                3,010,660
                
                $
                2,947,274**LIABILITIES
                    AND STOCKHOLDERS' (DEFICIT)EQUITY****LIABILITIES**Accounts
                    payable and accrued expenses
                
                $
                77,989
                
                $
                100,804Notes
                    payable
                
                
                499,900
                
                
                300,000Deferred
                    income taxes
                
                
                -
                
                
                102,524**TOTAL
                    LIABILITIES**
                
                
                577,889
                
                
                503,328**STOCKHOLDERS'
                    EQUITY**Class
                    A - Preferred stock, no par value, 10,000,000 sharesauthorized,
                    3,725,000 issued and outstanding
                
                
                -
                
                
                -Class
                    B - Preferred stock, no par value, 10,000,000 sharesauthorized,
                    none issued and outstanding
                
                
                -
                
                
                -Class
                    C - Convertible Preferred stock, $.001 par value,10,000,000
                    shares issued and outstanding
                
                
                10,000
                
                
                -Class D
                  - Preferred
                  stock, no par value, 10,000,000 sharesauthorized,  none issued and outstanding
                
                
                -
                
                
                -Common
                    stock, $.001 par value, 2,000,000,000 sharesauthorized
                    53,430,283 and 121,330 issuedand
                    outstanding
                
                
                53,430
                
                
                121Additional
                    paid-in capital
                
                
                17,262,963
                
                
                15,992,006Stock
                    subscription receivable
                
                
                (4,760
                )
                
                (4,700
                )Accumulated
                    deficit
                
                
                (14,888,862
                )
                
                (13,543,481
                )**TOTAL
                    STOCKHOLDERS' EQUITY**
                
                
                2,432,771
                
                
                2,443,946**TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY**
                
                $
                3,010,660
                
                $
                2,947,274
  -25-
  **CALI
                    HOLDINGS, INC.****(F/K/A
                    - TS&B HOLDINGS, INC.)****STATEMENT
                    OF OPERATIONS****FOR
                    THE YEARS ENDED JUNE 30, 2005 AND 2004****6/30/2005**
                
                **6/30/2004****REVENUES**
                
                $
                208,488
                
                $
                45,000**OPERATING
                    EXPENSES**Depreciation
                    and amortization
                
                
                2,867
                
                
                418Professional
                    fees
                
                
                373,712
                
                
                859,806General
                    and administrative
                
                
                972,760
                
                
                382,5271,349,339
                
                
                1,242,751**NET
                    OPERATING (LOSS)**
                
                
                (1,140,851
                )
                
                (1,197,751
                )**NET
                    UNREALIZED APPRECIATION (DEPRECIATION) ON
                    INVESTMENTS**
                
                
                (529,371
                )
                
                1,368,543**OTHER
                    INCOME (EXPENSE)**Interest
                    Income
                
                
                72,895
                
                
                62,363Interest
                    Expense
                
                
                (70,996
                )
                
                (5,955
                )Realized
                    gain on sale of investment
                
                
                256,436
                
                
                -Other
                
                
                66,506
                
                
                (170,838
                )324,841
                
                
                (114,430
                )**INCOME
                    (LOSS) BEFORE INCOME TAX**
                
                
                (1,345,381
                )
                
                56,362**DEFERRED
                    INCOME TAX (EXPENSE)**
                
                
                -
                
                
                (75,324
                )**NET
                    (LOSS)**
                
                $
                (1,345,381
                )
                $
                (18,962
                )**NET
                    (LOSS) PER SHARE BASIC AND FULLY DILUTED**
                
                $
                (0.352
                )
                $
                (0.53
                )**WEIGHTED
                    AVERAGE COMMON SHARES OUTSTANDING**
                
                
                3,820,129
                
                
                35,953
 
  -26-
  **CALI
                    HOLDINGS, INC.****(F/K/A
                    - TS&B HOLDINGS, INC.)****STATEMENT
                    OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY****FOR
                    THE YEARS ENDED JUNE 30, 2005 AND 2004******
                **Additional**
                ****
                **Stock**
                ****
                **Accumulated**
                ****
                ****
                ********
                ****
                **Preferred
                    Stock**
                ****
                **Common
                    Stock**
                ****
                **paid-in**
                ****
                **Subscription**
                ****
                **Income**
                ****
                ****
                ********
                ****
                **Shares**
                ****
                **Par
                    Value**
                ****
                **Shares**
                ****
                **Par
                    Value**
                ****
                **capital**
                ****
                **receivable**
                ****
                **(Deficit)**
                ****
                **Total****BALANCE****JUNE
                    30, 2003**
                
                
                -
                
                $
                -
                
                
                53,260,000
                
                $
                53,260
                
                $
                14,487,595
                
                $
                (1,250,000
                )
                $
                (13,524,518
                )
                $
                (233,663
                )**STOCK
                    ISSUED FOR****PROFESSIONAL****SERVICES**
                
                
                -
                
                
                -
                
                
                42,937,000
                
                
                42,937
                
                
                480,655
                
                
                -
                
                
                -
                
                
                523,592**STOCK
                    ISSUED FOR****CASH**
                
                
                -
                
                
                -
                
                
                333,372,000
                
                
                333,372
                
                
                846,308
                
                
                (4,700
                )
                
                -
                
                
                1,174,980**STOCK
                    ISSUED FOR****ACQUISITIONS**
                
                
                -
                
                
                -
                
                
                37,000,000
                
                
                37,000
                
                
                532,000
                
                
                -
                
                
                -
                
                
                569,000**STOCK
                    ISSUED FOR****DEBT
                    CONVERSIONS**
                
                
                -
                
                
                -
                
                
                18,750,000
                
                
                18,750
                
                
                410,250
                
                
                -
                
                
                -
                
                
                429,000**EXPIRATION
                    OF OPTION**
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                (1,250,000
                )
                
                1,250,000
                
                
                -
                
                
                -**40-1
                    REVERSE STOCK****SPLIT**
                
                
                -
                
                
                -
                
                
                (473,185,733
                )
                
                (473,186
                )
                
                473,186
                
                
                -
                
                
                -
                
                
                -**100-1
                    REVERSE STOCK**
                
                
                
                
                
                
                
                
                -
                
                
                -**SPLIT**
                
                
                
                
                
                
                
                
                (12,011,937
                )
                
                (12,012
                )
                
                12,012
                
                
                
                
                
                
                
                
                -**NET
                    INCOME**
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (18,963
                )
                
                (18,963
                )**BALANCE
                    JUNE 30, 2004**
                
                
                -
                
                
                -
                
                
                121,330
                
                
                121
                
                
                15,992,006
                
                
                (4,700
                )
                
                (13,543,481
                )
                
                2,443,946**STOCK
                    ISSUED FOR****PROFESSIONAL****SERVICES**
                
                
                10,000,000
                
                
                10,000
                
                
                97,375
                
                
                97
                
                
                88,850
                
                
                -
                
                
                -
                
                
                98,947**STOCK
                    ISSUED FOR****CASH**
                
                
                -
                
                
                -
                
                
                53,211,578
                
                
                53,212
                
                
                1,182,107
                
                
                (60
                )
                
                -
                
                
                1,235,259**NET
                    INCOME**
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,345,381
                )
                
                (1,345,381
                )**BALANCE**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -**JUNE
                    30, 2005**
                
                
                10,000,000
                
                $
                10,000
                
                
                53,430,283
                
                $
                53,430
                
                $
                17,262,963
                
                $
                (4,760
                )
                $
                (14,888,862
                )
                $
                2,432,771
 
 -27-
  **CALI
                    HOLDINGS, INC.****(F/K/A
                    - TS&B HOLDINGS, INC.)****STATEMENT
                    OF CASH FLOWS****FOR
                    THE YEARS ENDING JUNE 30, 2005 AND 2004**CASH
                    FLOWS FROM OPERATING ACTIVITIES:
                
                **6/30/2005**
                
                **6/30/2004**NET
                    INCOME (LOSS)
                
                $
                (1,345,381
                )
                $
                (18,962
                )RECONCILIATION
                    OF NET INCOME (LOSS) TO CASH FLOWS(USED
                    IN) PROVIDED BY OPERATING ACTIVITIESDepreciation
                    and amortization
                
                
                2,867
                
                
                418Stock
                    issued for services
                
                
                98,947
                
                
                523,592Unrealized
                    depreciation on investments
                
                
                529,371
                
                
                (1,368,543
                )Gain
                    on sale of investments
                
                
                (256,436
                )
                
                -Bad
                    debt expense
                
                
                33,643
                
                
                80,000Increase
                    (decrease) in deferred tax
                
                
                (75,324
                )
                
                75,324(Increase)
                    in goodwill
                
                
                -
                
                
                (489,000
                )(Increase)
                    in advances to officers/stockholders
                
                
                -
                
                
                (144,869
                )(Increase)
                    decrease in receivables
                
                
                (3,692
                )
                
                7,000Decrease
                    in acquisition deposit
                
                
                -
                
                
                40,500Increase
                    (decrease) in stock subscription receivable
                
                
                (60
                )
                
                1,245,300(Increase)
                    decrease in deposits
                
                
                4,428
                
                
                (10,000
                )(Increase)
                    decrease in other assets
                
                
                (209,207
                )
                
                108,082(Decrease)
                    in accounts payable and accrued expenses
                
                
                (22,816
                )
                
                (76,749
                )CASH
                    FLOWS (USED IN) OPERATING ACTIVITIES
                
                
                (1,243,660
                )
                
                (27,907
                )CASH
                    FLOWS FROM INVESTING ACTIVITIES:Increase
                    in notes receivable
                
                
                (924,316
                )
                
                (183,783
                )Disposition
                    of property and equipment
                
                
                5,352
                
                
                -Purchase
                    of property and equipment
                
                
                (9,932
                )
                
                (8,363
                )Purchase
                    of investments
                
                
                (46,100
                )
                
                (463,957
                )CASH
                    FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES
                
                
                (974,996
                )
                
                (656,103
                )CASH
                    FLOWS FROM FINANCING ACTIVITIES:Proceeds
                    from note payable
                
                
                682,623
                
                
                200,000Payment
                    of notes payable to related parties
                
                
                (100,000
                )
                
                (50,000
                )Issuance
                    of common stock
                
                
                1,235,321
                
                
                927,680CASH
                    FLOWS PROVIDED BY FINANCING ACTIVITIES
                
                
                1,817,944
                
                
                1,077,680NET
                    INCREASE IN CASH
                
                
                (400,712
                )
                
                393,670CASH,
                    BEGINNING OF THE PERIOD
                
                
                431,746
                
                
                38,076CASH,
                    END OF THE PERIOD
                
                $
                31,034
                
                $
                431,746**Supplementary
                    Disclosure of Cash Flow Information:****Cash
                    paid during the period for:**Interest
                
                $
                42,359
                
                $
                5,995
 -28-
 **NOTE
          A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 Company
          Activities
 
 CALI
          Holdings, Inc. (the “Company”) was incorporated in the state of Utah in 1980.
          The company was formerly known as TS&B Holdings, Inc. On April 8, 2005 the
          Company changed its name from TS&B Holdings, Inc. to CALI Holdings,
          Inc.
 
 On
          January 5, 2004 the Company’s shareholders consented to the proposal to allow
          the Company to adopt business development company ("BDC") status under
          the
          Investment Company Act of 1940 ("1940 Act"). A BDC is a specialized type
          of
          Investment Company under the 1940 Act. A BDC may primarily be engaged in
          the
          business of furnishing capital and managerial expertise to companies that
          do not
          have ready access to capital through conventional financial channels; such
          companies are termed "eligible portfolio companies". The Company as a BDC,
          may
          invest in other securities, however such investments may not exceed 30%
          of the
          Company's total asset value at the time of such investment. The Company
          filed
          its BDC election with the SEC (Form N-54A) on January 13, 2004.
 
 CALI
          Holdings, Inc. provides equity and long-term debt financing to small and
          medium--sized private companies in a variety of industries throughout the
          United
          States. The Company’s investment objective is to achieve long-term capital
          appreciation in the value of its investments and to provide current income
          primarily from interest, dividends and fees paid by its portfolio
          companies.
 
 Basis
          of Presentation
 
 The
          results of operations for the years ended June 30, 2005 and June 30, 2004
          are
          divided into two periods, the “Post Conversion as a Business Development
          Company" period and “Pre-Conversion prior to becoming a Business Development
          Company” period. Different accounting principles are used in the preparation of
          financial statements of a business development company under the Investment
          Company Act of 1940 and, as a result, the financial results for periods
          prior to
          January 1, 2004 are not comparable to the period commencing on January
          1, 2004
          and are not expected to be representative of its financial results in the
          future. By becoming a BDC, the Company has effected a change in accounting
          principle and no longer consolidates its investments in portfolio companies
          in accordance
          with Article 6 of Regulation S-X under the Securities Act of 1933 and Securities
          Act of 1934 in which a BDC does not consolidate portfolio company investments,
          including those in which it has a controlling interest.
 
 Revenue
          Recognition
 
 The
          Company recognizes revenue using the accrual method of accounting. The
          accrual
          method provides for a better matching of revenues and expenses.
 
 The
          Company also accrues interest income on loans made to various portfolio
          companies. The Company accrues the interest on such loans until the portfolio
          company has the necessary cash flow to repay such interest. If the Company’s
          analysis of the portfolio company’s performance indicates that the portfolio
          company may not have the ability to pay the interest and principal on a
          loan,
          the Company will make an allowance provision on that entity and in effect
          cease
          recognizing interest income on that loan until all principal has been paid.
          However, the Company will make exceptions to this policy if the investment
          is
          well secured and in the process of collection.
 
 For
          certain investment companies, the Company provides management services
          and
          recognizes an agreed upon fixed monthly fee and expenses.
 -29-
 Advertising
          Costs
 
 Advertising
          costs, except for costs associated with direct-response advertising, are
          charged
          to operations when incurred.
 
 Use
          of
          Estimates
 
 The
          preparation of financial statements in conformity with generally accepted
          accounting principles requires management to make estimates and assumptions.
          These estimates and assumptions affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of
          the financial statements and the reported amounts of revenues and expenses
          during the reporting period. Actual results could differ from these
          estimates.
 
 Net
          (Loss) Per Common Share
 
 Net
          (Loss) per common share is computed using the weighted average of shares
          outstanding during the periods presented in accordance with *Statement
          of Financial Accounting Standards No. 128, Earnings Per Share.* As
          discussed further in Note K, any references to amounts per share or weighted
          average common shares have been restated to reflect the reverse splits
          during
          the year.
 
 Cash
          and Cash Equivalents
 
 For
          the
          propose of the statement of cash flows, cash and cash equivalents includes
          time
          deposits with original maturities of three months or less.
 
 Segments
 
 The
          Company operates as one segment as defined by the Statement of Financial
          Accounting Standards No. 131 *Disclosures
          about Segments of an Enterprise and Related Information.*
  Fixed
          Assets
 
 Fixed
          assets are stated at cost. The cost of equipment is charged against income
          over
          their estimated useful lives, using the straight-line method of depreciation.
          Repairs and maintenance which are considered betterments and do not extend
          the
          useful life of equipment are charged to expense as incurred. When property
          and
          equipment are retired or otherwise disposed of, the asset and accumulated
          depreciation is removed from the accounts and the resulting profit and
          loss are
          reflected in income.
 
 Goodwill
          and Other Intangibles
 
 The
          Company records Goodwill in accordance with *Statement
          of Financial Accounting Standards No.142, Goodwill and Other Intangible
          Assets.* Intangible
          assets such as goodwill are not amortized; instead the Company reviews
          goodwill
          not less than annually to see if it has been impaired. If an impairment
          occurs,
          it will be recorded as an expense in that period. During the years ending
          June
          30, 2005 and 2004, no adjustments for impairment to goodwill have been
          made.
 
 -30-
 **NOTE
          B - INVESTMENTS**
 
 Valuation
          of Investments
 
 The
          most
          significant estimate inherent in the preparation of the Company's financial
          statements is the valuation of its investment and the related unrealized
          appreciation or depreciation.
 
 Upon
          conversion to a BDC, the Company engaged independent business valuation
          experts
          to value selected portfolio companies, which had significant activity in
          the
          Company’s first year as a BDC. The Board of Directors states all other portfolio
          companies and investments at fair market value as determined under a good
          faith
          standard. The Company analyzes the investments on a regular basis and records
          unrealized gains or losses if and when an investment significantly gains
          or
          loses market value as determined by a good faith standard.
 
 The
          Company has investments in 6 controlled (portfolio) corporations as of
          June 30,
          2005.
  Buehler
          Earth & Waterworks, LLC.
 
 Buehler
          Earth & Waterworks, LLC specializes in site development and infrastructure
          construction including, but not limited to, clearing, earthwork, utility
          construction, storm drainage, curbs, sidewalks, roadwork including sub-base,
          base and asphalt placement.
 
 Buehler
          Earth & Waterworks, LLC mission is to provide a full line of site
          construction and related services to the land/site development industry
          (public/private) utilizing a team approach to deliver the highest in quality
          work seeking expeditious performance without compromising either cost efficiency
          or good safety practices.
 
 Buehler
          Earth & Waterworks, LLC. has a 100% interest in BEW Landscape &
          Irrigation, LLC. BEW Landscape & Irrigation, LLC. provides plants and
          irrigation to wholesale and retail distribution outlets.
 
 On
          March
          21, 2005 Buehler Earth & Waterworks, LLC sold its 75% interest in Advance
          Pool Technologies, Inc. to the other 25% investor for $155,880.
 
 Buehler
          Earth & Waterworks, LLC is a Florida Limited Liability Company in which the
          Company has a 51% interest. In addition, the Company receives an ongoing
          monthly
          management fee in the amount of $5,000.
 
 On
          September 21, 2005, the company sold its 51% interest in Buehler Earth
          and
          Waterworks, LLC for $110,000 to Buehler’s managing member.
 
 
 Sports
          Nation, Inc.
 
 Sports
          Nation, Inc. is involved in all aspects of the sports memorabilia merchandising
          industry. Sports Nation’s management has over 50 years of combined experience in
          product development, licensing, mass merchandise, retail, and direct marketing
          & sales. Through years of specializing in sourcing and selling the finest
          caliber sports memorabilia and collectible products, Sports Nation has
          forged
          numerous strategic relationships with companies and individuals in sports
          marketing, including agents and athletes, manufacturers, authenticators,
          and
          retailers.
 
 Sports
          Nation Inc is a Nevada Corporation, which is owned 100% by the
          Company.
 -31-
 
 TSB
          Financial Services, Inc.
 
 TSB
          Financial Services, Inc. obtains financing for various commercial real
          estate
          transactions through strategic relationships with outside funding sources
          and
          provides professional consulting services to portfolio companies of Cali
          Holdings, Inc. and other outside companies. TSB Financial Services, Inc.
          serves
          customers nationally from its headquarters in Orlando, Florida.
 
 TSB
          Financial Services, Inc. is a Florida Corporation, which is owned 100%
          by the
          Company.
 
 TS&B
          Gaming & Entertainment Corporation
 
 TS&B
          Gaming & Entertainment Corporation was formed on March 18, 2004 to invest in
          gaming, hotels and other ventures. TS&B Gaming & Entertainment
          Corporation has had minimal business activity through June 30,
          2005.
 
 TS&B
          Gaming & Entertainment Corporation is a Florida corporation that is 100%
          owned by the Company.
 
 TS
          & B Ventures, Inc.
 
 TS
&
          B Ventures, Inc. was formed in April, 2004 to raise money from the private
          equity market. TS & B Ventures, Inc. has had minimal business activity
          through June 30, 2005.
 
 TS
&
          B Ventures, Inc. is a Florida corporation that is 100% owned by the
          Company.
  Wellstone
          Acquisition Corporation
 
 Wellstone
          Acquisition Corporation is a non-reporting Securities and Exchange Commission
          registrant. Wellstone Acquisition had no business activity for the year
          ending
          June 30, 2005.
 
 Wellstone
          Acquisition Corporation is a Delaware corporation that is owned 66 2/3%
          by the
          Company.
 
 Other
          Investments
 
 The
          Company has investments in three other companies as of June 30,
          2005.
 -32-
 Gulf
          Coast Records, LLC
 
 Gulf
          Coast Records, LLC is an independent record label for recording artist
          Glenn
          Cummings. Glenn Cummings has released his debut CD “BIG” and his second single
          entitled “Good Old Days”.
 
 Gulf
          Coast Records, LLC is a Florida Limited Liability Company in which the
          Company
          has a 49% limited partnership interest. In addition, the Company receives
          an
          ongoing monthly management fee in the amount of $5,000.
 
 The
          Gulf
          Coast Records team includes Bryan Switzer, former manager of a major record
          label and H.L. Voelker who acted as production consultant on Glenn's
          album.
 
 On
          June
          30, 2004 Gulf Coast Records formed Hare Scramble, LLC. Hare Scramble, LLC
          is a
          Florida Limited Liability Company involved in music publishing and is 100%
          owned
          by Gulf Coast Records, LLC.
 
 On
          July
          27, 2005, Cali Holdings retained a legal firm to assist in filing a selling
          stockholder registration statement for its to-be-formed portfolio company
          Gulf
          Coast Records, Inc and its to-be-wholly-owned subsidiary Gulf Coast Records,
          LLC. The purpose of the offering is to make Gulf Coast a separate SEC reporting
          company and to secure a qualification for quotation of its securities on
          the
          Over the Counter Bulletin Board.
 
 On
          July
          28, 2005 Gulf Coast Records entered into a joint venture with Brick Agency,
          LLC
          which was recently formed by Bryan Switzer. Brick Agency is a stand alone
          artist
          management company that will sign Glenn Cummings and other established
          artists
          to management contracts.
 
 
 KMA
          Capital Partners, Ltd .
 
 KMA
          Capital Partners, Ltd. provides business consulting and financial services
          to
          small and mid-cap companies.
 
 KMA
          Capital Partners, Ltd. is a Florida Limited Partnership in which the Company
          has
          a 25% interest.
 
 NEX2U,
          Inc.
 
 NEX2U
          is
          in the multimedia catalog industry.  Through
          the new patent-pending STM(TM) Technology, NEX2U takes existing print catalogs
          and transforms them into highly interactive, highly profitable direct mail
          experiences.
 
 CALI
          Holdings, Inc. owns less than 5% of the outstanding stock of NEX2U,
          Inc.
 
 
 *Dispositions
          of Investments*
 
 During
          the year ended June 30, 2005, the Company sold two of its investments to
          a
          related party.
 1.
                Cummings
                    Financial Services, Inc. - The Company sold its 51% interest
                    in Cummings
                    Financial Services on June 30, 2005 for
                    $782,723.
 
 2.
                Home
                    Savings Plan, Inc. - The Company sold its 51% interest in Home
                    Savings
                    Plan, Inc. for $1,000.
 -33-
 **NOTE
          C - FIXED ASSETS**
 
 The
          Company owns computer and office equipment with useful lives ranging from
          5 - 7
          years.
 Depreciation
          expense for the years ended June 30, 2005 and June 30, 2004 was $2,867
          and $418
          respectfully.
 
 
 **NOTE
          D - STOCK ISSUED FOR SERVICES**
 
 During
          the years ended June 30, 2005 and June 30, 2004 the Company issued shares
          of the
          Company’s common stock and preferred stock for various professional consulting
          services. A summary of these activities is as follows:
 
 **2004**
                
                
                
                **2005****Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**Consulting
                    Services- Common
                
                
                10,484
                
                $
                523,592
                
                
                97,375
                
                $
                88,947Consulting
                    Services- Preferred
                
                
                -
                
                
                -
                
                
                10,000,000
                
                $
                10,000
  
 
 (The
          share totals have been adjusted for the 40:1 reverse split in August 2004
          and
          the 100:1 reverse split in April 2005.)
 
 The
          value
          assigned to the above shares is based on the stocks’ traded market price on or
          about the date the shares were issued. For the years ended June 30, 2005
          and
          2004, the above amounts are included in professional fees.
 
 
 **NOTE
          E - UNREALIZED GAINS (LOSSES) ON INVESTMENTS**
 
 For
          the years ended June 30, 2005 and 2004, the Company recognized unrealized
          gain
          (loss) of the Company’s investments in the amount of ($529,371) and $1,368,543,
          respectively.
 -34-
 **NOTE
          F- INCOME TAXES**
 
 Net
          deferred tax liabilities consist of deferred taxes related to unrealized
          gains
          on investments at June 30, 2004. The net deferred tax asset consists of
          deferred
          taxes related to a receivable allowance at June 30, 2004. There is a deferred
          tax asset of approximately $1,922,017 due to tax net operating loss
          carryforwards reduced to zero by a valuation allowance as of June 30, 2005.
          There are no deferred tax liabilities at June 30, 2005.
 
 Deferred
                    Tax Assets:
                
                **6/30/2005**
                
                **6/30/2004**Receivable
                    Allowance
                
                $
                -
                
                $
                27,200Loss
                    Carryforwards
                
                
                1,922,017
                
                
                1,271,327Less
                    Valuation Allowance
                
                
                (1,922,017
                )
                
                (1,271,327
                )Net
                    Deferred Tax Assets
                
                $
                -
                
                $
                27,200Deferred
                    Tax LiabilitiesUnrealized
                    Gains
                
                $
                -
                
                $
                102,524
 
 At
          June
          30, 2005, the Company has approximately $6,310,320 of tax net operating
          loss
          carryforwards that expire as follows:
 
 
 **Expiration
                    Date**
                ****
                **Amount**2022
                
                $
                2,350,4692023
                
                
                1,581,5662024
                
                
                1,486,9502025
                
                
                891,335$
                6,310,320
  **NOTE
          G - COMMITMENTS**
 
 The
          Company leases office and operating facilities under short-term operating
          leases.
 
 Rent
          expense for the years ended June 30, 2005 and 2004 was $106,239 and $51,429
          respectively.
 
 
 -35-
 **NOTE
          H - NOTES PAYABLE**
 
 8%
                    convertible debenture to an individual due no later than August
                    2, 2005
                    convertible to 50% of the closing bid price of the common stock
                    on the
                    date the Company issues such conversion notice.
                
                $
                6,3008%
                    convertible debenture to an individual due no later than August
                    11, 2005
                    convertible to 50% of the closing bid price of the common stock
                    on the
                    date the Company issues such conversion notice.
                
                
                50,0008%
                    convertible debenture to an individual due no later than August
                    21, 2005
                    convertible to 50% of the closing bid price of the common stock
                    on the
                    date the Company issues such conversion notice.
                
                
                50,0008%
                    convertible debenture to an individual due no later than May
                    27, 2006
                    convertible to 50% of the closing bid price of the common stock
                    on the
                    date the Company issues such conversion notice.
                
                
                21,0008%
                    convertible debenture to an individual due no later than May
                    27, 2006
                    convertible to 50% of the closing bid price of the common stock
                    on the
                    date the Company issues such conversion notice.
                
                
                27,3508%
                    convertible debenture to an individual due no later than June
                    1, 2006
                    convertible to 50% of the closing bid price of the common stock
                    on the
                    date the Company issues such conversion notice.
                
                
                50,9508%
                    convertible debenture to Sprout Investments, LLC due no later
                    than May 27,
                    2006 convertible at a price equal to $.005 per share of common
                    stock. In
                    the event the Company’s common stock is trading at $.005 or less, the
                    Company will immediately amend the offering circular for the
                    currently
                    effective 1E registration statement.
                
                
                88,0008%
                    convertible debenture to Sequoia International due no later than
                    September
                    30, 2005 convertible to 50% of the closing bid price of the common
                    stock
                    on the date the Company issues such conversion notice.
                
                
                20,0008%
                    convertible debenture to Sequoia International due no later than
                    September
                    30, 2005 convertible to 50% of the closing bid price of the common
                    stock
                    on the date the Company issues such conversion notice.
                
                
                85,0008%
                    convertible debentures to an Sequoia International due no later
                    than
                    September, 2005 convertible to 50% of the closing bid price of
                    the common
                    stock on the date the Company issues such conversion
                    notice
                
                
                26,3008%
                    convertible debentures to Sequoia International, Inc. due no
                    later than
                    October 30, 2005 convertible to 50% of the closing bid price
                    of the common
                    stock on the date the Company issues such conversion
                    notice
                
                
                50,0008%
                    convertible debentures to Sequoia International, Inc. due no
                    later than
                    October 30, 2005 convertible to 50% of the closing bid price
                    of the common
                    stock on the date the Company issues such conversion
                    notice
                
                
                25,000Total
                
                $
                499,900Less
                    Current Portion
                
                
                499,900$
                0
 The
          Company incurred $70,996 of interest expense for the year ended June 30,
          2005.
 -36-
 **NOTE
          I -**  **STOCKHOLDERS’
          EQUITY**
  As
          of June 30, 2005 the authorized capital of the company is 2,000,000,000
          shares
          of common voting stock par value $.001 per share.
  The
          Company has authorized 10,000,000 shares of Class A, no par, preferred
          stock and
          has issued and outstanding 3,725,000 shares. The Class A preferred stock
          has
          conversion rights to the Company’s common voting stock of 4-1.
  The
          Company has authorized but not issued 10,000,000 shares of Class B, no
          par,
          preferred stock.
  The
          Company has authorized and
          issued 10,000,000 shares of convertible Class C, .001 per share, preferred
          stock. The Class C preferred stock has conversion rights to the Company’s common
          voting stock of 1-1. If at any time or time to time, there is a capital
          reorganization of the common stock (reverse split, forward split, etc.)
          the
          number of Class C preferred stock authorized, issued and outstanding, and
          the
          number of shares of common stock into which such Class C preferred shall
          not be
          entitled to vote such shares (except as otherwise expressly provided herein
          or
          as required by law, voting together with the common stock as a single class),
          but shall be entitled to notice of any stockholders’ meeting in accordance with
          the Company’s bylaws. In lieu of voting rights, the holders of Class C
          preferred, voting as a class shall be entitled to elect two of the Board
          of
          Directors at each meeting.
  The
          Company has authorized but not issued 10,000,000 shares of Class D, no
          par,
          preferred stock.
 As
          of the date of this report no preferred shares have been converted to common
          stock.
  **NOTE
          J -**  **CONCENTRATION
          OF CREDIT RISK**
 
 Financial
          instruments, which potentially expose the Company to concentrations of
          credit
          risk, consist principally of cash.
 
 The
          Company maintains its cash accounts with financial institutions located
          in
          Florida. Federal Deposit Insurance Corporation (FDIC) guarantees the Company's
          deposits in financial institutions up to $100,000 per account.
 
 The
          Company’s deposits with financial institutions that exceeded federally insured
          guarantees amounted to $0 and $0 as of June 30, 2005 and 2004, respectively.
          Historically, the Company has not experienced any losses on its deposits
          in
          excess of federally insured guarantees.
 -37-
 **NOTE
          K - REVERSE STOCK SPLITS**
 
 On
          August
          13, 2004, the Board of Directors authorized a 40 to 1 reverse stock split
          of the
          Company’s $.001 par value common stock. As a result of the reverse split,
          473,185,733 shares were returned to the Company and additional paid in
          capital
          was increased by $473,186. All references in the accompanying financial
          statements to the number of common shares and per share amounts for 2005
          and
          2004 have been restated to reflect the reverse stock split.
 On
          April
          4, 2005, the Board of Directors authorized a 100 to 1 reverse stock split
          of the
          Company’s $.001 par value common stock. As a result of the reverse split,
          962,151,879 shares were returned to the Company and additional paid in
          capital
          was increased by $962,152. All references to the accompanying financial
          statements to the number of common shares and per share amounts for 2005
          and
          2004 have been restated to reflect the reverse stock split.
 
 **NOTE
          L- SUBSEQUENT EVENTS**
 
 On
          September 21, 2005, the company sold its 51% interest in Buehler Earth
          and
          Waterworks, LLC for $110,000 to Buehler’s managing member.
  
 -38-
 **Item
        9. Control & Procedures**
 
 *Evaluation
        of Disclosure Control and Procedures*
 
 Management,
        with the participation of the principal executive officer and principal
        financial officer, has evaluated the effectiveness of disclosure controls
        and
        procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
        Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the
        period covered by this Annual Report on Form 10-K. Based on such evaluation,
        the
        principal executive officer and principal financial officer have concluded
        that
        as of such date, the disclosure controls and procedures were designed to
        ensure
        that information required to be disclosed by management in reports that are
        filed or submitted under the Exchange Act is recorded, processed, summarized
        and
        reported with the time periods specified in applicable SEC rules and forms
        were
        effective.
 
 *Changes
        in Internal Control Over Financial Reporting*
 
 There
        have been no significant changes in internal control or in other factors
        that
        could significantly affect those controls subsequent to our evaluation,
        including corrective actions with regard to significant deficiencies and
        material weaknesses.
  **PART
        III**
 **Item
        10. Exhibits and Reports on Form 10-K**
 
 
 Exhibit
                  No.
              Description31.1
              Certification
                  of President and Chief Executive Officer pursuant to 18 U.S.C.
                  Section
                  1350, as adopted pursuant to Section 302 of the Sarbanes Oxley
                  Act of
                  200231.2
              Certification
                  of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                  as adopted
                  pursuant to Section 302 of the Sarbanes Oxley Act of
                  200232.1
              Certification
                  of President and Chief Executive Officer pursuant to 18 U.S.C.
                  Section
                  906, as adopted pursuant to Section 302 of the Sarbanes Oxley Act
                  of
                  200232.2
              Certification
                  of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                  as adopted
                  pursuant to Section 906 of the Sarbanes Oxley Act of
                  2002
  Company
        Financial Statements as of June 30, 2005
 
 **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.
  
  **CALI
                HOLDINGS, INC.**Date: September
                26, 2005
              By:
              /s/ Donald
                M. SteinDonald
                M. SteinChief
                Financial Officer
  -39-
   In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on behalf of the Registrant and in the capacities and on
        the
        dates indicated:
  
  **CALI
                  HOLDINGS, INC.**Date: September
                  26, 2005
                By:
                /s/ James
                  E. JenkinsJames E. JenkinsPresident,
                    CEO and Director
 **CALI
                  HOLDINGS, INC.**Date: September
                  26, 2005
                By:
                /s/ Donald
                  M. SteinDonald
                  M. SteinChief
                  Financial Officer
  -40-