UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-KSB**


(Mark
      One)




x
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,
                2004





OR




o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE TRANSITION PERIOD FROM _____TO
                _______





COMMISSION
      FILE NUMBER: 33-43423





**NUWAY
      MEDICAL, INC.**


(Name
      of
      Small Business Issuer in its Charter)





Delaware
            65-0159115(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification No.)2603
                Main Street, Suite 1150, Irvine, CA 92614(Address
                of principal executive offices, Zip Code)Issuer’s
                telephone number, including area code: (949) 235-8062Securities
                registered under Section 12(b) of the Exchange Act:
                NoneSecurities
                registered under Section 12(g) of the Exchange Act:
              Common
                Stock, $0.00067 par value





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) been subject
      to
      such filing requirements for the past 90 days. Yes o No x.





Check
      if
      disclosure of delinquent filers in response to Item 405 of Regulation S-B is
      not
      contained in this form, and no disclosure will be contained, to the best of
      Registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB o.





Issuer’s
      revenue for its most recent fiscal year: $
      -0-





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of December
      31, 2004 was $0.01.





The
      number of shares outstanding of the issuer’s class of common equity as of May
      31, 2005 was 51,981,236 .





Transitional
      Small Business Disclosure Format (check one): Yes o No x








TABLE
      OF
      CONTENTS





**PART
                I**
            **3**Item
                1. Description of Business
            3Item
                2. Description of Property
            14Item
                3. Legal Proceedings
            15Item
                4. Submission of Matters to a Vote of Security Holders
            16**PART
                II**
            **17**Item
                5. Market for Common Equity and Related Stockholders
                Matters
            17Item
                6. Management’s Discussion and Analysis of Financial Condition and Results
                of Operation
            21Item
                7. Financial Statements
            30Item
                8. Changes In and Disagreements with Accountants on Accounting and
                Financial Disclosure
            30Item
                8A. Controls and Procedures
            30Item
                8B. Other Information
            31**PART
                III**
            **32**Item
                9. Directors, Executive Officers, Promoters and Control Persons;
                Compliance with Section 16(a) of the Exchange Act
            32Item
                10. Executive Compensation
            35Item
                11. Security Ownership of Certain Beneficial Owners and
                Management
            37Item
                12. Certain Relationships and Related Transactions
            38Item
                13. Exhibits
            42Item
                14. Principal Accountant Fees and Services
            45Signatures
            46Report
                of Independent Registered Public Accounting Firm
            47Index
                to Financial Statements
            48Consolidated
                Financial Statements for the Years Ended December 31, 2004 and
                2003
            F-1Exhibits
                Filed With This Report







-2-


**PART
      I**







**ITEM
      1. DESCRIPTION OF BUSINESS**




**Use
      of Forward Looking Statements in this Report**




This
      Annual Report on Form 10-KSB (the “Annual Report”) contains forward-looking
      statements. These forward-looking statements include predictions regarding
      our
      future:




·
            business
                plans;




·
            financing
                plans;




·
            general
                and administrative expenses;




·
            liquidity
                and sufficiency of existing cash;




·
            the
                outcome of pending or threatened litigation;
                and




·
            the
                effect of recent accounting pronouncements on our financial condition
                and
                results of operations.




You
      can
      identify these and other forward-looking statements by the use of words such
      as
“may,”“will,”“expects,”“anticipates,”“believes,”“estimates,”, “continues,”
      or the negative of such terms, or other comparable terminology. Forward-looking
      statements also include the assumptions underlying or relating to any of the
      foregoing statements.




Our
      actual results could differ materially from those anticipated in these
      forward-looking statements as a result of various factors, including those
      set
      forth below under the heading “Risk Factors.” All forward-looking statements
      included in this document are based on information available to us on the date
      hereof. We assume no obligation to update any forward-looking statements.




The
      information contained in this Annual Report is as of December 31, 2004, unless
      expressly stated otherwise.




**Overview**




NuWay
      Medical, Inc., a Delaware corporation (the "Company") had no continuing business
      operations as of December 31, 2004. At this time, the Company is operating
      as a
      public shell and management is seeking merger and acquisition candidates with
      ongoing operations.




Over
      the
      course of several years, the Company has attempted to enter various businesses
      through the acquisitions of entities operating ongoing businesses or technology
      that needed to be developed and marketed. However, as a result of various
      factors, primarily inadequate capital and the inability to raise sufficient
      financing successfully, these acquisitions could not be properly exploited
      and
      integrated to produce profitable operations by the Company. Management of the
      Company has elected to dispose, through sales or other means, these
      acquisitions.




-3-


The
      Company was initially organized as Repossession Auction, Inc. under the laws
      of
      the State of Florida in 1989. In 1991, the Company merged into a Delaware
      corporation bearing the same name. In 1994, the Company's name was changed
      to
      Latin American Casinos, Inc. to reflect its focus on the gaming and casino
      business in South and Central America, and in 2001 the Company changed its
      name
      to NuWay Energy, Inc. to reflect its new emphasis on the oil and gas development
      industry. During October 2002, the Company's name was changed to NuWay Medical,
      Inc. coincident with the divestiture of its non-medical assets and the retention
      of new management.




Since
      March 2003, new management of the Company has struggled to deal with the
      following issues, often simultaneously:




·
            Limited
                capital resources in a prolonged period of difficulty in the capital
                markets, especially for small public companies, creating severe
                limitations on the Company's ability to maintain its reporting obligations
                under the Securities Exchange Act of 1934, as amended (the "Exchange
                Act"), and its business operations




·
            Trying
                to exploit technologies or businesses that existed when the Company’s
                president, Dennis Calvert, took the helm of management




·
            Determining
                which businesses were worth pursuing and which were not




·
            Trying
                to acquire or develop new businesses




·
            Because
                of the scarcity of cash on hand, using common stock and securities
                convertible into common stock to bring on board employees, directors,
                consultants, professional service provides and
                advisors




·
            Because
                of the scarcity of cash on hand, using common stock and securities
                convertible into common stock to acquire businesses




·
            Dealing
                with inquiries from the SEC regarding certain practices and transactions
                in the Company's past, including questions raised about any continued
                involvement of Mark Roy Anderson in the ongoing business of the
                Company




·
            Dealing
                with the NASDAQ Qualifications Panel hearing process in May 2003




·
            Dealing
                with the delisting of the Company's common stock from the NASDAQ
                Small Cap
                Market




·
            Dealing
                with inquiries from the Federal Bureau of Investigations ("FBI")
                related
                to any past dealings with Mr. Anderson or his
                affiliates




·
            Dealing
                with litigation with former officers of the Company and related litigation
                stemming from their leadership of the Company






-4-


These
      issues present extraordinary challenges to management as it tries slowly to
      turn
      the situation around. The Company is presently focused primarily on maintaining
      the corporate entity, complying with its reporting obligations under the
      Securities Exchange Act and seeking new business opportunities, including
      without limitation, healthcare and technology businesses. The Company will
      need
      working capital resources to maintain the Company's status and satisfy its
      reporting obligations, and to fund other anticipated costs and expenses during
      the year ending December 31, 2004 and beyond. The Company's ability to continue
      as a going concern is dependent on the Company's ability to raise capital to,
      at
      a minimum, meet its corporate maintenance requirements and reporting
      obligations. If the Company is able to acquire an ongoing business and/or
      technology that must be exploited, it would need additional capital until and
      unless that prospective operation is able to generate positive working capital
      sufficient to fund the Company's cash flow requirements form operations.




Until
      April 2005, the Company also continued to deal with the effects of certain
      matters that arose (i) under prior management and (ii) from its business
      dealings with a former consultant and principal stockholder of the Company,
      Mark
      Roy Anderson.




Mr.
      Anderson is a former affiliate of the Company and was involved in the Company
      from June 2002 until March 2003 through a series of transactions between the
      Company and Mr. Anderson or companies affiliated with Mr. Anderson. See "Related
      Parties and Certain Transactions". Mr. Anderson became involved with the Company
      during a period of transition of management from the Company's prior management
      team led by Mr. Sanders and a shift in the Company's business focus from a
      variety of businesses in gaming, tobacco and oil and gas, to healthcare and
      health-related technology.




In
      June
      2002, Mr. Anderson purchased 1,000,000 shares of the Company's common stock
      for
      $250,000. In July 2002, Med Wireless, Inc. ("Med Wireless"), a company in which
      Mr. Anderson was the founder and principal stockholder, licensed certain
      medical-related technology to the Company for a 15-year term. In exchange for
      the license, the Med Wireless stockholders in the aggregate received 6,600,000
      shares, or approximately 44%, of the Company's then outstanding common stock.
      Of
      that amount, Mr. Anderson and his affiliates received 2,868,928, or
      approximately 19%, of the Company's then outstanding common stock.




Camden
      Holdings, Inc. ("Camden Holdings"), another company controlled by Mr. Anderson,
      was active in the development of the business of Med Wireless, beginning prior
      to the acquisition of the Med Wireless technology by the Company.




In
      addition, Camden Holdings was actively involved in the Company's sale-leaseback
      program of ultrasound machines, which were marketed primarily to doctors,
      medical clinics and hospitals. Under this program, the Company attempted to
      arrange the purchase of ultrasound machines by investors, who would lease the
      machines to the Company. In turn, the Company would sub-lease the ultrasound
      machines to the end user. Camden Holdings secured purchase orders from both
      investors and prospective end-use lessees of the ultrasound machines. These
      purchase orders were conditioned upon the Company's ability to secure financing
      of its own lease obligations of the ultrasound machines from the investors.
      This
      was not accomplished because the Company lacked the financial resources and
      credit to obtain such financing. The Company continued to pursue attempts to
      arrange such financing through March 2003.




Also
      in
      June 2002, the Company purchased a marketing database of healthcare providers
      in
      the United States from Genesis Healthtech, Inc. ("Genesis"), a wholly-owned
      subsidiary of Camden Holdings, which was controlled by Mark Roy Anderson. The
      total purchase price of $300,000 was satisfied by the issuance of 666,667 shares
      of the Company's common stock. The database was purchased with the intention
      of
      marketing the Company's sale-leaseback program of ultrasound machines. When
      the
      Company was unable to make the sale-leaseback program commercially viable,
      the
      marketing database became useless to the Company.




-5-


In
      order
      to focus the Company's then-primary business opportunity in healthcare
      technology, the Company divested its non-core businesses in gaming, oil and
      gas
      and tobacco, during the period that Mr. Anderson exerted his influence over
      the
      Company. In October 2002, the Company sold its Latin America gaming businesses,
      Latin American Casinos Del Peru S.A., a Peruvian corporation, and Latin American
      Casinos of Colombia LTDA, a Colombian corporation, to Casino Venture Partners
      ("CVP"), another entity controlled by Mr. Anderson.




Also
      in
      October 2002, the Company sold its Canadian oil and gas development businesses,
      NuWay Resources, Ltd., to Summit Oil & Gas, Inc. ("Summit Oil"), yet another
      entity which was controlled by Mr. Anderson. In November 2002, World's Best
      Rated Cigars, Inc., the Company's wholly-owned subsidiary, which was engaged
      in
      the distribution and sale of premium brand cigars, was shut down and
      discontinued.




As
      a
      result of all of the foregoing transactions with Mr. Anderson and companies
      controlled by Mr. Anderson, the Company believes that Mr. Anderson was the
      beneficial owner of an aggregate of 5,777,479 shares, or more than 30%, of
      the
      Company's common stock outstanding as of December 31, 2002, assuming Mr.
      Anderson beneficially owned all the shares at the same time. The Company
      believes that Mr. Anderson sold some of the shares which were issued pursuant
      to
      the Company's 2002 Consultant Equity Plan (the "2002 Plan"), and as such the
      number and percentage of the Company's common stock held by Mr. Anderson at
      any
      one time may have been less than that indicated above. In any event, Mr.
      Anderson failed to file any reports with the Securities and Exchange Commission
      ("SEC") on Schedules 13D or 13G, or on Forms 3 or 4, and, therefore, the Company
      cannot confirm any of these numbers at any given point in time.




By
      the
      end of 2002 and into the beginning of 2003, it had become apparent to the
      Company that Mr. Anderson had divergent business objectives to those of the
      Company, and the Company had concerns about additional dealings with Mr.
      Anderson. In March 2003, the relationship between the Company and Mr. Anderson
      reached a climax when the Company severed its business relationships with Mr.
      Anderson. At that time, the Company actively supported Dennis Calvert, the
      Company's current President, in his purchase of Mr. Anderson's interests in
      the
      Company. New Millennium Capital Partners, LLC, a Nevada limited liability
      company ("New Millennium") controlled by Mr. Calvert, purchased the Company's
      promissory note in the principal amount of $1,120,000 and an aggregate of
      4,182,107 shares of the Company's common stock from various entities controlled
      by Mr. Anderson, although the total number of shares purchased is in
      dispute.




The
      transaction was executed as part of a plan to remove Mr. Anderson totally from
      any involvement in the Company and provide a completely new focus and direction
      for the Company under new management led by Mr. Calvert. Please see "Related
      Parties and Certain Transactions" for more information regarding these
      businesses and the relationship between the Company and Mark Roy
      Anderson.




-6-


**Impaired
      Assets and Discontinued**  **Businesses**




***Med
      Wireless and PRLS Technologies***




Management
      of the Company deemed it necessary to discontinue the Company's attempt to
      develop and market the Med Wireless and Player Record Library System ("PRLS")
      technologies, because the Company was unable to raise additional funds to
      further develop and market those technologies. The Med Wireless technology
      consists of software that is compliant with the Health Insurance Portability
      and
      Accountability Act ("HIPAA"), to electronically organize, store and retrieve
      medical records and medical images. Although the formal decision to discontinue
      the operations was made subsequent to December 31, 2003, the Company's financial
      statements for the year ended December 31, 2003 reflect a discontinued
      operations segment related to the abandonment of the exploitation of the Med
      Wireless and PRLS technologies after a charge to impairment in an amount equal
      to the remaining net book value of the acquired technology. See Note 3 to Notes
      to Consolidated Financial Statements.




Based
      on
      the rapid increase in the number of well-capitalized companies offering
      competing technologies, as well as the fact that the Company has been unable
      to
      continue funding any technology enhancements or development related to the
      Med
      Wireless technology, management came to believe that the Med Wireless technology
      had lost the ability to be a viable competing technology in its sector and
      that
      it was not in the Company's best interest to continue to pursue the Med Wireless
      technology. Moreover, management is doubtful if the Med Wireless technology
      will
      be considered of any significant value to a prospective buyer or licensee of
      the
      technology. The Company desires to sell this technology, if the opportunity
      presents itself, but expects to realize only nominal net proceeds, if any,
      for
      the technology.




In
      addition, the Company has abandoned its efforts to market a variety of products
      and services to the sports industry with an emphasis on health and technology
      related products. In 2003, the Company focused its primary efforts on developing
      and marketing PRLS, a technology product that is derived, in part, from the
      Med
      Wireless technology. In December 2002, the Company had established NuWay Sports,
      LLC ("NuWay Sports"), to develop and market the PRLS technology. NuWay Sports
      is
      owned 51% by the Company and 49% by former NFL football player Kenyon Rasheed.
      PRLS is a highly specialized electronic medical record and workflow process
      software application, designed to address the information technology needs
      of
      the sports industry relating to player health.




In
      2004,
      the Company attempted to sell NuWay Sports to a third party; however, these
      negotiations were unsuccessful and a sale was not consummated. It is not likely
      that the Company will find a party to sell its interest in NuWay Sports. If
      it
      did, it is not likely that the Company would receive any up-front cash payments.
      It should also be noted that because Augustine II, LLC (the "Augustine Fund"),
      a
      creditor of the Company, has a lien on the Company's 51% membership interest
      in
      NuWay Sports, they would have to approve any such sale. See "Management's
      Discussion and Analysis of Financial Condition and Results of Operations -
      Liquidity and Capital Resources".




***Ultrasound
      Machine Sale-Leaseback Program***




Under
      the
      Company's ultrasound machine sale-leaseback program, the Company attempted
      to
      arrange the purchase of ultrasound machines by investors, who would lease the
      machines to the Company. In turn, the Company would sub-lease the ultrasound
      machines to the end user. Camden Holdings secured purchase orders from both
      investors and prospective end-use lessees of the ultrasound machines. These
      purchase orders were conditioned upon the Company's ability to secure financing
      of its own lease obligations of the ultrasound machines from the investors.
      This
      was not accomplished because the Company lacked the financial resources and
      credit to obtain such financing.




-7-


The
      Company continued to pursue attempts to arrange such financing through March
      2003. Thereafter, the Company focused primarily on the Med Wireless and PRLS
      technologies and, after occasional attempts to pursue the sale-leaseback program
      through mid-2003, this program was no longer pursued.




The
      termination of the sale-leaseback program also rendered useless the marketing
      database, which the Company had purchased from Genesis, a wholly-owned
      subsidiary of Camden Holdings. The database had been purchased with the
      intention of marketing the Company's sale-leaseback program of ultrasound
      machines.




Please
      see Part II, Item 12, "Certain Relationships and Related Transactions” for more
      information regarding these businesses and the relationship between the Company
      and Mr. Anderson.




***Abandoned
      Acquisition***




On
      January 31, 2004, the Company entered into a Stock Purchase Agreement (the
      "Stock Purchase Agreement") with Premium Medical Group, Inc., a Florida
      corporation ("PMG") and PMG's sole stockholders, Eduardo A. Ruiz and Luis A.
      Ruiz (the "PMG Stockholders"). Prior to this transaction, there was no business
      or other relationship between the Company and its affiliates and PMG or the
      PMG
      Stockholders and, to the Company's knowledge, there was no business or other
      relationship between PMG or the PMG Stockholders and Mark Roy Anderson.




Pursuant
      to the Stock Purchase Agreement, the Company agreed to acquire 100% of the
      shares of PMG from the PMG Stockholders in exchange for 30,000,000 shares of
      the
      Company's common stock, subject to certain adjustments. The exact number of
      Company Shares to be issued to the PMG Stockholders was subject to adjustment
      in
      the event certain revenue was or was not generated by PMG during one year
      following the closing of the transaction. PMG had been organized in June 2003
      to
      provide medical products to hospitals and medical clinics in South America,
      primarily Venezuela. Luis A. Ruiz became a director of the Company in connection
      with the transaction.




The
      parties had a difference in expectations regarding who would be ultimately
      responsible for paying for the audit of PMG that was required in order for
      the
      Company to complete its disclosure obligations under the Securities Exchange
      Act. Additionally, the Company did not have a sufficient number of authorized
      and unissued shares of its common stock to both satisfy its obligations to
      the
      PMG Stockholders and to issue shares of common stock in a meaningful financing
      transaction, given the low price per share at which the Company's common stock
      trades. The Company lacked the financial resources to schedule a stockholders'
      meeting, prepare a proxy statement and solicit proxies for the purpose of
      amending its Certificate of Incorporation to increase its authorized capital
      stock.




As
      a
      result of these and other factors, the Company and PMG never consolidated their
      operations, the Company never exercised control over PMG or its operations
      and
      the parties never exchanged stock certificates evidencing their ownership in
      each other.




-8-


Therefore,
      the parties entered into discussions and concluded amicably that it was in
      the
      mutual best interest of the respective companies and their respective
      stockholders, to rescind the transactions provided for in the Stock Purchase
      Agreement and return all parties to their respective positions prior to the
      transactions contemplated in the Stock Purchase Agreement.




The
      parties entered into a Rescission Agreement on October 14, 2004 that provides,
      in relevant part, that (i) all transactions contemplated by the Stock Purchase
      Agreement shall be rescinded as if the Stock Purchase Agreement had never been
      executed and delivered; (ii) the parties forever waive all rights to receive
      stock in PMG and the Company, as the case may be; (iii) Luis A. Ruiz shall
      resign as a director of the Company; and (iv) the Company and PMG shall file
      appropriate documents with the Secretary of State of the State of Florida with
      respect to the rescission of the exchange of shares provided for in the Stock
      Purchase Agreement.




**Employees**




At
      December 31, 2004, the Company employed two full-time employees, reflecting
      the
      reduced operations of the Company at that time.




**Risk
      Factors**




The
      Company faces a number of significant risks associated with its current plan
      of
      operations. These include the following:




***We
      have a limited operating history and a history of losses.***




The
      Company has no current operations and, as such, may not be able to overcome
      unanticipated difficulties that may be encountered related to the implementation
      of its business plan. The Company has a limited operating history, limited
      revenue from operations and a history of losses. In addition, because the
      Company currently has no operations, the Company faces all of the risks inherent
      with a start-up business, including the possibility that the Company cannot
      acquire or develop a business that is viable. There is no assurance that, if
      the
      Company does find or develop a business, to acquire, whether such business
      will
      ever be profitable. The Company may also face unforeseen problems, difficulties,
      expenses or delays in implementing its business plan . ****




***We
      need additional funds.***




If
      it
      necessary for the Company to seek to secure additional funds for any new
      business, general and administrative expenses and period reporting requirements,
      there can be no assurance that such funds will be available, or will be
      available on favorable terms. Failure to secure needed funds will directly
      impact the Company's ability to maintain its publicly-traded status and,
      potentially, the corporate entity itself. While management has dedicated itself
      to the efforts to secure needed funds, the outcome and ultimate success of
      those
      efforts is uncertain .




***The
      cost of maintaining our reporting obligations is high.***




The
      Company is obligated to maintain its periodic public filings and public
      reporting requirements, on a timely basis, to remain a public company and
      maintain its registration as a listed stock. In order to meet these obligations,
      the Company will need to continue to raise capital. If adequate funds are not
      available to the Company, it will be unable to comply with those requirements
      and could cease to be qualified to have its stock traded in the public market.
      The Company has a history of delinquencies in its filing obligations with the
      Securities and Exchange Commission .




-9-


***Our
      stockholders face potential dilution in any new financing.***




Any
      additional equity that the Company raises would dilute the interest of the
      current stockholders and any persons who may become stockholders before such
      financing. Given the low price of the Company's common stock, such dilution
      in
      any financing of a meaningful amount, could be substantial .




***Our
      stockholders face potential adverse effect from the terms of any newly issued
      preferred stock.***




In
      order
      to raise capital to meet expenses or to acquire a business, the Board of
      Directors of the Company may issue additional stock, including preferred stock.
      Any preferred stock which the Company may issue may have voting rights,
      liquidation preferences, redemption rights and other rights, preferences and
      privileges. The rights of the holder's of the Company's Common Stock will be
      subject to, and in many respect subordinate to, the rights of the holders of
      any
      such preferred stock. Furthermore, such Preferred Stock may have other rights,
      including economic rights, senior to the Company's Common Stock that could
      have
      a material adverse effect on the value of the Company's Common Stock. Preferred
      stock, while providing desirable flexibility in connection with possible
      acquisitions and other corporate purposes, can also have the effect of making
      it
      more difficult for a third party to acquire a majority of outstanding voting
      stock of the Company, thereby delaying, deferring or preventing a change in
      control of the Company .




***We
      have been unable to obtain a quorum and schedule a vote of stockholders to
      approve certain material transactions.***




The
      Company will be required to obtain stockholder approval to approve certain
      material transactions and amend its charter to increase the authorized number
      of
      shares to approve a transaction with New Millennium, which is controlled by
      our
      President Dennis Calvert; raise funds; or effect a conversion of the convertible
      notes beyond the number of shares of common stock currently authorized but
      unissued. Obtaining stockholder approval is both costly and uncertain as to
      its
      success. The Company has attempted to secure stockholder votes for certain
      corporate actions in the past and has been unable to secure a quorum. As a
      result, the Company has been unable to effect certain material transactions,
      and
      this inability to act could threaten the viability of the Company .




***If
      we acquire any business, we will be dependent upon market acceptance and
      competitive factors.***




The
      success of any business the Company acquires or develops will be highly
      dependent upon, among other things, gaining market acceptance from customers
      that will use the company's products and services. More specifically, these
      factors include, among other things, how well its products or services perform
      (ease of implementation, ease of use by customers, reliability, and scope of
      products and services), competitive forces, the level of consumer demand for
      products and services offered, the selling prices of its products and services,
      and the effectiveness of the Company's marketing activities .




-10-


***Our
      common stock is thinly traded and largely illiquid.***




In
      June
      2003, our common stock was delisted from the NASDAQ SmallCap Market. Our stock
      currently trades on the Pink Sheets. The delisting has made it more difficult
      to
      buy or sell our stock and has lead to a significant decline in the frequency
      of
      trades and trading volume. The delisting will likely adversely affect the
      Company's ability to obtain financing in the future due to the decreased
      liquidity of the Company's shares. There can be no assurance when or if the
      Company's common stock will be quoted on the OTC Bulletin Board, in light of
      the
      public interest concerns previously raised by NASDAQ in connection with the
      delisting of the Company's shares.




***Our
      common stock is subject to “penny stock” regulations that may affect the
      liquidity for our common stock.***




Our
      common stock is subject to the rules adopted by the Securities and Exchange
      Commission that regulate broker-dealer practices in connection with transactions
      in "penny stocks." Penny stocks are generally equity securities with a price
      of
      less than $5.00 (other than securities registered on certain national securities
      exchanges or quoted on the NASDAQ Stock Market, provided that current price
      and
      volume information with respect to transactions in such securities is provided
      by the exchange or system). The penny stock rules require a broker-dealer,
      prior
      to a transaction in a penny stock not otherwise exempt from those rules, deliver
      a standardized risk disclosure document prepared by the Securities and Exchange
      Commission, which contains the following:




·
            a
                description of the nature and level of risk in the market for penny
                stocks
                in both public offerings and secondary
                trading




·
            a
                description of the broker's or dealer's duties to the customer and
                of the
                rights and remedies available to the customer with respect to violation
                to
                such duties or other requirements of Securities'
                laws




·
            a
                brief, clear, narrative description of a dealer market, including
                "bid"
                and "ask" prices for penny stocks and significance of the spread
                between
                the "bid" and "ask" price




·
            a
                toll-free telephone number for inquiries on disciplinary actions;
                definitions of significant terms in the disclosure document or in
                the
                conduct of trading in penny stocks,
                and




·
            such
                other information and is in such form (including language, type,
                size and
                format), as the Commission shall require by rule or
                regulation.




Prior
      to
      effecting any transaction in penny stock, the broker-dealer also must provide
      the customer the following:




·
            the
                bid and offer quotations for the penny
                stock




·
            the
                compensation of the broker-dealer and its salesperson in the
                transaction




·
            the
                number of shares to which such bid and ask prices apply, or other
                comparable information relating to the depth and liquidity of the
                market
                for such stock




·
            the
                depth and liquidity of the market for such stock,
                and




·
            monthly
                account statements showing the market value of each penny stock held
                in
                the customer's account.






-11-


In
      addition, the penny stock rules require that prior to a transaction in a penny
      stock not otherwise exempt from those rules, the broker-dealer must make a
      special written determination that the penny stock is a suitable investment
      for
      the purchaser and receive the purchaser's written acknowledgment of the receipt
      of a risk disclosure statement, a written agreement to transactions involving
      penny stocks, and a signed and dated copy of a written suitably statement.
      These
      disclosure requirements may have the effect of reducing the trading activity
      in
      the secondary market for a stock such as our common stock if it is subject
      to
      the penny stock rules.




***The
      Company, some of its directors and its officers face risks in connection with
      the criminal investigation of a former consultant and principal stockholder
      of
      the Company*** **.**




In
      or
      about May 2003, the Company learned through verbal discussions with
      representatives of NASDAQ, in preparation for the Company's pending NASDAQ
      qualifications hearing, that Mark Roy Anderson had a criminal background. In
      or
      about May and June 2003, the Company was informed in writing by the United
      States Attorney's office in Los Angeles, that Mr. Anderson (i) was the target
      of
      a criminal investigation (the "Investigation") pertaining to the sale of
      securities by Med Wireless (from which the Company licensed certain assets
      in
      2002), and (ii) had been convicted of multiple felonies unrelated to Med
      Wireless in the 1990s. Mr. Anderson was the founder and principal stockholder
      of
      Med Wireless, and first introduced the concept of licensing the Med Wireless
      software application and contracts to the Company in May 2002.




Dennis
      Calvert had been approached initially by Mr. Anderson some time in 1996 to
      consider entering into a business consulting relationship with
      Anderson-controlled entities. Over the period from 1996 to 2001, Mr. Calvert
      worked as a consultant periodically with Anderson-related entities for the
      purpose of evaluating potential new businesses and potential investment
      opportunities being considered by Mr. Anderson and these entities. In June
      2002,
      Mr. Calvert agreed to become president of Med Wireless, primarily for the
      purpose of completing the Med Wireless transaction with the Company. As
      consideration for his agreeing to become President of Med Wireless, Mr. Calvert
      received 1,327,700 shares of Med Wireless stock from Mr. Anderson's holdings.
      These shares were subsequently converted into 600,000 shares of the Company's
      common stock pursuant to the terms of the transaction between Med Wireless
      and
      the Company.




On
      June
      28, 2002, Mr. Calvert was appointed president of the Company. At the same time,
      Joseph Provenzano, who at that time was an employee of Camden Holdings, another
      affiliate of Mr. Anderson, joined the Company's board of directors. In addition
      to the Med Wireless transaction, and as disclosed elsewhere in this Annual
      Report, entities that Mr. Anderson controls, including Camden Holdings, Genesis,
      Summit Oil and CVP, invested $250,000 in the Company, sold the Company
      additional assets and purchased the Company's previous operating businesses.
      See
      Part II, Item 12, "Certain Relationships and Related Transactions”. Although Mr.
      Anderson never served as an officer or director of the Company, he served as
      a
      consultant to the Company and received consulting fees in the form of an
      aggregate 1,241,884 shares of the Company's common stock. Since December 2002
      Mr. Anderson has not been a consultant to the Company and since March 2003
      has
      not been involved in any way in the Company's operations.




-12-


In
      the
      purchase agreement between Mr. Anderson, his affiliates and New Millennium
      in
      March 2003 (the "New Millennium Agreement"), Mr. Anderson represented that
      he
      was selling 100% of his stock to New Millennium and would no longer own any
      of
      the Company's stock. Mr. Calvert is the Manager and, together with his wife,
      the
      sole members of New Millennium, and this transaction was engaged in to eliminate
      Mr. Anderson as a stockholder of the Company and to remove him from any
      involvement in the operations of the Company.




Subsequent
      to the closing of that transaction, management learned through the Company's
      transfer agent that Camden Holdings still owns 340,894 shares of the Company's
      common stock. The Company and New Millennium believe that the existence of
      these
      340,894 shares of the Company's common stock owned by Camden Holdings Inc.
      is a
      material breach of the New Millennium Agreement, and the Company and New
      Millennium are reviewing their respective legal rights with regards to this
      matter.




Technically,
      under the terms of the New Millennium Agreement, it is possible that Camden
      Holdings or Mr. Anderson has the right to reacquire the shares of the Company's
      common stock that were sold to New Millennium, if New Millennium defaults on
      the
      promissory note issued by New Millennium to Camden Holdings to purchase the
      shares (the "New Millennium Note"). See " Part II, Item 12, "Certain
      Relationships and Related Transactions”. The New Millennium Note is purportedly
      secured by the purchased shares of the Company's common stock; however, New
      Millennium and Mr. Calvert believe that Camden Holdings and Mr. Anderson have
      not perfected their security interest in those shares. New Millennium has
      defaulted on the New Millennium Note. However, New Millennium believes that
      Camden Holdings failed to deliver all the shares of the Company held by Camden
      Holdings, and thus breached the terms of their purchase agreement, making the
      New Millennium Note void by its terms. In addition, the Augustine Fund is the
      pledgee of 2,500,000 of these shares and holds those shares as pledgee.




On
      or
      about May 17, 2003, the Company was served by a subpoena issued by the grand
      jury impaneled to investigate Mr. Anderson, requesting documents relating to
      Mr.
      Anderson and his affiliates, including Med Wireless, Camden Holdings, Summit
      Oil
      and Gas, and Summit Health Care. Additionally, the subpoena requested
      information relating to the identity of the Company's officers, directors,
      stockholders and consultants (legal, accounting and otherwise), and that the
      Company provide copies of its filings and correspondence with the SEC, the
      National Association of Securities Dealers and the NASDAQ Stock Market. The
      Company cooperated fully with that request by providing the requested
      information and intends to continue to fully cooperate with any future
      investigative requests.




The
      Company has learned that private placement memoranda distributed to Med Wireless
      investors stated that Dennis Calvert was the president of Med Wireless as early
      as 2001, and additionally believes that Mr. Anderson apparently made a number
      of
      similar false representations throughout 2001 and 2002. Mr. Calvert did not
      approve this disclosure contained in those private placement memoranda nor
      in
      any other form, and has informed the Company that he was not engaged as the
      president of Med Wireless until June 2002 and not any earlier, and that any
      statements to the contrary are untrue.




Mr.
      Provenzano joined Camden Holdings in 2001 to assist in its mergers and
      acquisitions department, and he worked at Camden Holdings until March 2003.
      Both
      Mr. Calvert and Mr. Provenzano have informed both the Company and, through
      their
      own legal counsel, the Assistant U.S. Attorney, that they intend to cooperate
      fully with law enforcement officials in the Investigation.




-13-


In
      mid-2003, the Company was also informed by the Assistant United States Attorney
      handling the Investigation that Dennis Calvert and Joseph Provenzano were not
      considered "targets" of the Investigation; however, until their respective
      roles, if any, in the specific events being investigated are determined, they
      will be considered to be "subjects" of the Investigation, meaning that their
      conduct is believed by the U.S. Attorney's office to be "within the scope"
      of
      the grand jury's investigation.




Although
      neither the Company nor any of its officers or directors is currently the target
      of any criminal investigation, including the one described in the previous
      paragraph, there can be no assurance that such an investigation will not be
      undertaken. Additionally, although neither the Company nor its officers or
      directors have been contacted by either the U.S. Attorney's Office, or the
      FBI
      regarding the Investigation since mid-2003, neither the Company nor its officers
      and directors can be certain that such requests will not be made in the future.
      Furthermore, the ongoing Investigation has in the past occupied, and may in
      the
      future occupy, a significant amount of time of the Company and Messrs. Calvert
      and Provenzano, creating a distraction from the Company's business. The mere
      existence of the Investigation, not to mention the outcome thereof, depending
      upon such outcome, could have a material adverse effect on the
      Company.




***The
      Company may have violated certain securities laws and is delinquent in its
      SEC
      filings.***




While
      the
      Company and its management seek to operate fully within the scope of the law
      and
      fulfill any and all regulatory obligations, the Company has been subject to
      informal inquiries by the civil enforcement division of the
      SEC for possible securities violations in the past, including the acts of Mark
      Roy Anderson and its previous failure to timely file its reports under the
      Exchange Act. On or
      about August 19, 2004, the Company received a "Wells Notice" from the SEC that
      the Company is delinquent in its filing of periodic reports with the SEC and
      the
      staff of the SEC may recommend enforcement proceedings be commenced against
      the
      Company. Since that time, the Company has cured this delinquency. Although
      the SEC formally terminated its investigation on April 19, 2005, and recommended
      no enforcement action by the SEC against the Company, there can be no assurance
      that the SEC will not begin a new investigation into the Company should
      circumstances warrant.




**ITEM
      2. DESCRIPTION OF PROPERTY**




As
      of
      December 31, 2003, the Company maintained its principal place of business at
      23461 South Pointe Drive, Suite 200, Laguna Hills, California 92653. The lease
      for the office was on a month-to-month basis, and was cancelable by either
      party
      with sixty days' written notice. Monthly rent was $7,850, payable in cash or
      shares of the Company's common stock, valued at the then-current market price.
      In 2003, the Company recorded $96,560 of rental expense in connection with
      this
      lease.




On
      April
      1, 2004, the Company terminated this lease. The Company's offices are currently
      located at 2603 Main Street, Suite 1150, Irvine, California 92614. The Company
      currently occupies space from a consultant at no cost to the
      Company.




-14-


**ITEM
      3. LEGAL PROCEEDINGS**




In
      June
      2002, Geraldine Lyons, the Company's former Chief Financial Officer, sued the
      Company and the Company's former president Todd Sanders, for breach of her
      employment contract. The lawsuit was brought in the Circuit Court of the 11th
      Judicial Circuit in Miami-Dade County in Florida. Ms. Lyons seeks approximately
      $25,000 due under the contract and the issuance of 100,000 shares of common
      stock, with a guarantee that the stock could be sold by Ms. Lyons for $300,000.
      Ms. Lyons alleges that additional funds are due under her employment contract;
      that the contract requires the Company guarantee that she can sell for $300,000
      the 100,000 shares of stock the Company is required to issue her; and, that
      Mr.
      Sanders promised to purchase from her 100,000 shares of Company common stock
      held by her at the price of $4.00 per share.




The
      Company has counter-sued Ms. Lyons for breach of fiduciary duty, fraud,
      violation of Section 12(a)(2) of the Securities Act of 1933, violation of
      Section 517.301 of the Florida Statutes, negligent misrepresentation, conversion
      and unjust enrichment resulting from the required restatement of the Company's
      financial statements for the years ended December 31, 2000 and December 31,
      1999. The restatements corrected the previous omission of certain material
      expenses related primarily to compensation expense arising from warrants issued
      and repriced stock options, as well as other errors.




The
      case
      is ongoing at this time, although it has not been vigorously prosecuted by
      Ms.
      Lyons or the Company, in the Company's case primarily because the Company had
      lacked the resources to do so. The Company entered into an agreement (“Legal
      Defense Agreement”) in December 2004 such that Augustine Fund would pay for the
      legal expenses associated with the Company’s defense and affirmative claims in
      this lawsuit (with the right to withdraw funding at any time), and in exchange
      would share any net proceeds awarded to the Company pursuant to a settlement
      or
      judgment. The sharing arrangement provides that Augustine Fund will recover
      first, out of any money available from recovery, its legal and out of pocket
      expenses related to the lawsuit; second, 85% of any additional amounts recovered
      up to $500,000; and third, 50% of amounts recovered beyond $500,000. While
      the
      Company believes that it has meritorious positions in this litigation, given
      the
      inherent nature of litigation, it is not possible to predict the outcome of
      this
      litigation or the impact it would have on the Company.




In
      May
      2004, the Company was sued by Flight Options, Inc. (“Flight Options”), a jet
      plane leasing company, in the Superior Court of Orange County California. The
      lawsuit alleges that the Company owes Flight Options approximately $418,300,
      pursuant to a five-year lease assigned to the Company by the Company's former
      president Todd Sanders, from his corporation, Devenshire Management Corporation
      (“Devenshire”). Management of the Company believes that the assignment of the
      lease was not properly authorized or approved by the Company, and that by Mr.
      Sander's failure to identify the lease in a December 2002 settlement agreement
      with the Company, he breached the terms of that settlement agreement and,
      pursuant to the settlement agreement, must indemnify the Company for any losses
      owed to Flight Options. The Company has cross-complained against Mr. Sanders
      for
      indemnity, and has added the affirmative claim of breach of fiduciary duty.




On
      March
      17, 2005, the Company settled the lawsuit with Flight Options pursuant to a
      stipulation that allows the Company to either pay Flight Options $100,000 on
      or
      before August 5, 2005, or allows Flight Options to file a judgment against
      the
      Company for $163,310 after such date. The Company’s claims against Devenshire
      and Mr. Sanders will be litigated through binding arbitration prior to the
      date
      on which it must pay $100,000 to Flight Options. The Company’s Legal Defense
      Agreement with the Augustine Fund applies also to the Flight Options litigation.
      While the Company believes that it has meritorious positions against Devenshire
      and Mr. Sanders, given the inherent nature of litigation, it is not possible
      to
      predict the outcome of this litigation or the impact it would have on the
      Company.




-15-


On
      December 4, 2004, the Company was sued by the law firm of Enenstein Russell
      and
      Saltz, LLP to collect fees that had been billed to the Company in the amount
      of
      $15,233, which had been disputed by the Company. The case is in its beginning
      stage, and discovery has not yet been commenced. While the Company believes
      that
      it has meritorious positions in this litigation, given the inherent nature
      of
      litigation, it is not possible to predict the outcome of this litigation or
      the
      impact it would have on the Company.




The
      Company is party to various other claims, legal actions and complaints arising
      periodically in the ordinary course of business. In the opinion of management,
      no such matters will have a material adverse effect on the Company's financial
      position or results of operations.




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




None.







-16-


**PART
      II**




**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**




**Market
      Information**




From
      October 31, 1998 until June 10, 2003, the Company's common stock were listed
      on
      the NASDAQ Small Cap Market. Since such date, the Company's common stock has
      been quoted on the National Quotation Service Bureau, commonly known as the
      "pink sheets", under the symbol "NMED".




The
      table
      below represents the quarterly high and low bid prices for the Company's Common
      Stock and Warrants for the last two fiscal years as reported by NASDAQ through
      June 10, 2003 and as reported by Historical Stock Price Reports available at
      www.yahoo.com thereafter.




Common
      Stock High/Low Bid Prices:





2003
            
            
            1stQuarter
            
            $
            0.25
            
            $
            0.102ndQuarter
            
            $
            0.14
            
            $
            0.083rdQuarter
            
            $
            0.09
            
            $
            0.054thQuarter
            
            $
            0.06
            
            $
            0.042004
            
            
            1stQuarter
            
            $
            0.01
            
            $
            0.012ndQuarter
            
            $
            0.01
            
            $
            0.013rdQuarter
            
            $
            0.01
            
            $
            0.014thQuarter
            
            $
            0.01
            
            $
            0.01





The
      closing price for the Company's common stock on December 31, 2004 was $.01
      per
      share. As of December 31, 2004, there were approximately 280 registered owners
      and of the Company's common stock.




At
      December 31, 2004, the Company also had the following warrants outstanding:




·
            stock
                purchase warrants to purchase an aggregate 300,000 shares of the
                Company's
                common stock, which warrants had been issued in private offerings.
                These
                warrants permit the holder to purchase shares of common stock at
                an
                exercise price of $1.75 per share through December 11, 2005.




·
            stock
                purchase warrants to purchase an aggregate 519,322 shares of the
                Company's
                common stock, which warrants had been issued in private offerings.
                These
                warrants allow for the holder to purchase shares of common stock
                at an
                exercise price of $0.20 per share through March 7, 2006 (120,000
                shares)
                and April 15, 2006 (399,322 shares).




·
            stock
                purchase warrants to purchase an aggregate 6,158,381 shares of the
                Company's common stock, which warrants had been issued in a private
                offering to the Augustine Fund. These warrants initially allowed
                for the
                holder to purchase shares of common stock at an exercise price of
                $0.16
                per share through August 10, 2008, but were re-priced in 2004 (in
                conjunction with an extension of the financing provided by Augustine
                Fund)
                to $0.035 per share.




·
            stock
                purchase warrants to purchase an aggregate 333,333 shares of the
                Company's
                common stock, which warrants had been issued to a consultant that
                provided
                services to the Company. These warrants allow for the holder to purchase
                shares of common stock at an exercise price of $0.06 per share through
                August 29, 2008.






-17-


**Dividends**




The
      Company has never declared or paid a cash dividend to stockholders. The board
      of
      directors presently intends to retain any earnings which may be generated in
      the
      future to finance Company operations.




**Sales
      of Unregistered Securities**




The
      Company engaged in the following sales of unregistered securities during the
      fiscal year ended December 31, 2004:




In
      January 2004, The Company issued 30,000,000 shares of common stock to the
      Premium Medical Group Shareholders in connection with a transaction in which
      the
      Company acquired the outstanding stock of Premium Medical Group. This
      transaction has since been rescinded by the parties. See Note 15 to Notes to
      Consolidated Financial Statements.




In
      February 2004, the Company received gross and net proceeds of $5,000 from an
      individual investor in connection with the sale of 156,250 shares of the
      Company’s common stock. The issuance of the shares described above was made in
      reliance on the exemption from registration set forth in Section 4(2)
      of
      the Securities Act of 1933, as amended.




In
      February, 2004, the Company issued 600,000 shares of its common stock to former
      convertible debenture holders to partially satisfy its obligations on a
      settlement agreement. The shares issued reduced the Company’s settlement
      obligations by approximately $17,000.




In
      February, 2004, the Company issued an unvested warrant to Sachi International,
      Inc. to purchase up to 3,000,000 shares of common stock at $0.04 a share. The
      Warrant vests based on the amount of investment proceeds brought to the Company
      by the Holder, with 100% vesting if the Holder brings $500,000 in investment
      capital. In the event less than $500,000 is invested, the warrant vests in
      a
      pro-rata amount. The closing of any such investment shall be in the sole and
      absolute discretion of the Company. Sachi International, Inc., has not met
      the
      conditions to vest the warrant.




In
      March
      2004, the Company issued 200,000 shares to David Wiechert in exchange for
      professional services provided to the Company.




In
      March
      2004, the Company issued 3,000,000 shares to three of its four directors in
      exchange for services provided to the Company.




In
      September, 2004, the Company received gross and net proceeds of $25,000 from
      two
      individual investors in connection with the sale of 5,000,000 shares of the
      Company’s common stock.




-18-


In
      October, 2004, the Company received gross and net proceeds of $50,000 from
      an
      outside investor and issued its convertible promissory note due and payable
      one
      year from the date of issuance. The note bears interest at a rate of 10% per
      annum, payable on the maturity date. The note can be converted, in whole or
      in
      part, into shares of the Company’s Series A Preferred stock, on the basis of
      $.005 per share, at any time prior to maturity by either the Company or the
      lender. Each share of Series A Preferred Stock may be converted by the holder
      into one share of the Company’s common stock. If the noteholder converts the
      note into Series A Preferred Stock, on or after the note’s original maturity
      date the noteholder may require the Company to buy back the shares of Series
      A
      Preferred Stock for 110% of the principal amount of the promissory note (the
      “Buy Back Provision”). If the Company is unable to do so, the Company’s
      president, Dennis Calvert, has agreed to buy back the shares on the same terms.
      If shares of Series A Preferred Stock are converted into common stock, the
      holder has the right to include (piggyback) the shares of common stock in a
      registration of securities filed by the Company (other than on Form S-4 or
      Form
      S-8).




The
      Company’s payment obligations under the note may be accelerated upon the
      following events: (i) the sale of the Company’s assets outside the ordinary
      course of business; (ii) a breach of the representations and warranties
      contained within the agreement evidencing the loan; (iii) the failure to timely
      pay the note; (iv) the Company’s default in any other loan obligation greater
      than $100,000; (v) the Company’s dissolution, liquidation, merger,
      consolidation, bankruptcy, or future insolvency; and (vi) the commencement
      of
      any suit that threatens to have a material adverse effect on the Company,
      including the entry of a final judgment or settlement in excess of
      $100,000.




In
      November, 2004, the Company received gross and net proceeds of $10,000 from
      an
      outside investor and issued a convertible promissory note on substantially
      the
      same terms as the previously described note.




In
      December 2004, the Company issued 500,000 shares of its common stock to its
      remaining former convertible debenture holder to partially satisfy its
      obligations on a settlement agreement. The shares issued reduced the Company’s
      settlement obligations by approximately $8,700.




All
      of
      these offerings and sales were made in reliance on the exemption from
      registration contained in Section 4(2) of the Securities Exchange Act and/or
      Regulation D promulgated thereunder as not involving a public offering of
      securities.




***Sales
      of Unregistered Securities In 2005***




In
      January 2005, the Company received gross and net proceeds of $25,000 from an
      outside investor and issued a convertible promissory note on substantially
      the
      same terms the previously described note.




Also
      in
      January 2005, the Company received gross and net proceeds of $75,000 from two
      outside investors and issued convertible promissory notes on substantially
      the
      same terms as the previously described notes, except the notes do not include
      buy back provisions, and allow conversion into a total of 18,000,000 shares
      of
      common stock (at $0.0042 per common share, rather than $0.005 per Series A
      Preferred share).




-19-


In
      February 2005, the Company amended its obligations to Dr. James Seay (the
“noteholder”) under its promissory note dated November 20, 2003 in the principal
      amount of $50,000 and which matured on February 18, 2004. On the maturity date
      of the note the Company was obligated to pay the noteholder $65,000. The Company
      has paid the noteholder $30,000 and the balance of $35,000 remains outstanding.
      The amendment to the note entered into on February 10, 2005, (i) extends the
      maturity date of the note to February 3, 2006, (ii) provides for interest to
      accrue at a rate of 10% per annum (15% upon default), and (iii) allows for
      the
      conversion of the note into 7,000,000 shares of the Company’s common stock, or
      $.005 per share.




In
      February 2005, the Company received gross and net proceeds of $16,000 from
      three
      outside investors and issued convertible promissory notes on substantially
      the
      same terms as the previously described notes, except the note does not include
      buy back provisions, and allow conversion into a total of 2,261,701 shares
      of
      common stock (at $0.007 per common share, rather than $0.005 per Series A
      Preferred share).




In
      February 2005, the Company received gross proceeds of $40,000 and net proceeds
      of $36,000 from two outside investors and issued convertible promissory notes
      on
      substantially the same terms as the previously described notes, except the
      notes
      do not include buy back provisions, and allow conversion into a total of
      4,000,000 shares of common stock (at $0.01 per common share, rather than $0.005
      per Series A Preferred share).




In
      April
      2005, the Company received gross proceeds of $25,000 and net proceeds of $23,750
      from an outside investor and issued a convertible promissory note on
      substantially the same terms as the previously described notes, except the
      note
      does not include buy back provisions, and allows conversion into a total of
      2,500,000 shares of common stock (at $0.01 per common share, rather than $0.005
      per Series A Preferred share).




In
      May
      2005, the Company received gross and net proceeds of $50,000 and $47,500 from
      an
      outside investor and issued a convertible promissory note on substantially
      the
      same terms as the previously described notes, except the note does not include
      buy back provisions, and allows conversion into a total of 7,142,857 shares
      of
      common stock (at $0.007 per common share, rather than $0.005 per Series A
      Preferred share).




In
      June
      2005, the Company received gross and net proceeds of $5,000 from an outside
      investor and issued a convertible promissory note on substantially the same
      terms as the previously described notes, except the note does not include buy
      back provisions, and allows conversion into a total of 500,000 shares of common
      stock (at $0.01 per common share, rather than $0.005 per Series A Preferred
      share).




In
      June
      2005, the Company received gross and net proceeds of $100,000 from two outside
      investors and issued convertible promissory notes on substantially the same
      terms as the previously described notes, except the notes do not include buy
      back provisions, and allow conversion into a total of 13,000,000 shares of
      common stock (at approximately $0.008 per common share, rather than $0.005
      per
      Series A Preferred share).




All
      of
      these offerings and sales were made in reliance on the exemption from
      registration contained in Section 4(2) of the Securities Exchange Act and/or
      Regulation D promulgated thereunder as not involving a public offering of
      securities.




-20-


Until
      the
      Company’s stockholders approve an amendment to the Company’s charter to increase
      the number of authorized shares of common stock, the Company will be unable
      to
      fulfill its obligations to all convertible noteholders to permit the conversion
      into common stock of amounts due pursuant to the terms of the convertible notes.
      In the event that the Company has not raised further capital prior to the
      maturity dates of the convertible notes, the Company would be in default of
      those notes if its stockholders have not formally approved an increase in the
      number of authorized common shares. The Company is not, at this time, in default
      of the convertible notes. Securities Authorized for Issuance Under Equity
      Compensation Plans




**Equity
      Compensation Plan Information**





Plan
                category
            
            Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
            
            Weighted
                average exercise price of outstanding options, warrants and
                rights
            
            Number
                of securities remaining available for future issuance(a)
            
            (b)
            
            (c)Equity
                compensation plans approved by security holders
            
            
            0
            
            
            0
            
            
            0Equity
                compensation plans not approved by security holders
            
            
            0
            
            
            0
            
            
            14,320,000Total
            
            
            0
            
            
            0
            
            
            14,320,000


**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATIONS**




The
      following discussion and analysis should be read in conjunction with our audited
      consolidated financial statements and the related notes to the consolidated
      financial statements included elsewhere in this report.




This
      discussion contains forward-looking statements that involve risks and
      uncertainties. Such statements, which include statements concerning future
      revenue sources and concentration, selling, general and administrative expenses,
      research and development expenses, capital resources, additional financings
      and
      additional losses, are subject to risks and uncertainties, including, but not
      limited to, those discussed above in Part I, Item 1 and elsewhere in this Form
      10-KSB, particularly in "Risk Factors," that could cause actual results to
      differ materially from those projected. The forward-looking statements set
      forth
      in this Form 10-KSB are as of December 31, 2004, and we undertake no duty to
      update this information.




**Plan
      of Operations**




The
      Company had no continuing business operations as of December 31, 2004. At this
      time, the Company is operating as a public shell and management is seeking
      merger and acquisition candidates with ongoing operations.




-21-


Over
      the
      course of several years, the Company has attempted to enter various businesses
      through the acquisitions of entities operating ongoing businesses or technology
      that needed to be developed and marketed. However, as a result of various
      factors, primarily inadequate capital and the inability to raise sufficient
      financing successfully, these acquisitions could not be properly exploited
      and
      integrated to produce profitable operations by the Company. Management of the
      Company has elected to dispose, through sales or other means, these
      acquisitions, including the Company's attempt to develop and market the 15-year
      licensing rights acquired from Med Wireless in July 2002. Although the formal
      decision to discontinue these operations was made subsequent to December 31,
      2003, the Company's financial statements for the year ended December 31, 2003
      reflect a discontinued operations segment related to the abandonment of the
      exploitation of the Med Wireless and PRLS technologies after a charge to
      impairment in an amount equal to the remaining net book value of the acquired
      technology. See Note 3 to Notes to Consolidated Financial
      Statements.




Based
      on
      the rapid increase in the number of well-capitalized companies offering
      competing technologies, as well as the fact that the Company has been unable
      to
      continue funding any technology enhancements or development related to the
      Med
      Wireless technology, management came to believe that the technology had lost
      the
      ability to be a viable competing technology in its sector and that it was not
      in
      the Company's best interest to continue to pursue the Med Wireless technology.
      Moreover, management is doubtful if the Med Wireless technology will be
      considered of any significant value to a prospective buyer or licensee of the
      technology. The Company desires to sell this technology, if the opportunity
      presents itself, but expects to realize only nominal net proceeds, if any,
      for
      the technology.




In
      addition, the Company has abandoned its efforts to market a variety of products
      and services to the sports industry with an emphasis on health and technology
      related products, primarily PRLS. In 2004, the Company attempted to sell NuWay
      Sports to a third party; however, these negotiations were unsuccessful and
      a
      sale was not consummated. It is not likely that the Company will find a party
      to
      sell its interest in NuWay Sports. If it did, it is not likely that the Company
      would receive any up-front cash payments.




The
      Company is presently focused on maintaining the corporate entity and seeking
      new
      business opportunities. The Company will need working capital resources to
      maintain the Company's status and to fund other anticipated costs and expenses
      during the year ending December 31, 2004 and beyond. The Company's ability
      to
      continue as a going concern is dependent on the Company's ability to raise
      capital to, at a minimum, meet its corporate maintenance requirements. If the
      Company is able to acquire an ongoing business and/or technology that must
      be
      exploited, it would need additional capital until and unless that prospective
      operation is able to generate positive working capital sufficient to fund the
      Company's cash flow requirements form operations.




As
      a
      result of the dramatic change in direction of the Company's scope and focus,
      and
      the discontinuation of its operating businesses in 2003 and 2004, comparisons
      of
      year-to-year results of operations are not meaningful.




**Results
      of Operations - Comparison of the Years Ended December 31, 2004 and
      2003**




***Revenue***




The
      Company had no revenues from continuing operations during 2004 or 2003.




-22-


***Selling,
      General and Administrative Expense***




Selling,
      and General and Administrative expenses were $970,000 for the year ending
      December 31, 2004, as compared to $2,339,000 for the year ending December 31,
      2003, or a net decrease of 59%. The largest components of these expenses were:




a. Salaries
      and Payroll-related Expenses: These expenses were $371,000 in 2004, versus
      $323,000 in 2003, an increase of $48,000 or 15 percent. The $48,000 increase
      is
      almost entirely attributable to an expense recorded by the Company for the
      issuance of 3,000,000 shares of the Company’s common stock to an officer of the
      Company in lieu of cash compensation in the amount of $118,000, and relates
      to
      the efforts by management to obtain additional financing, comply with SEC
      reporting requirements, and find a viable merger candidate.




b. Consulting
      Expenses: These expenses were $24,000 in 2004, versus $1,108,000 in 2003, a
      decrease of $1,084,000. This decrease is primarily attributable to the fact
      that
      during 2004 the Company substantially reduced the use of and thus compensation
      to outside consultants in all areas of the company, including those efforts
      focused on identifying potential acquisition candidates for the Company.
      Consulting expense for 2004 included $142,000 of expense related to the issuance
      of the Company’s common stock, which was offset by a reversal of accrued
      consulting expense relating to the issuance (and subsequent return to treasury)
      of the Company’s common stock totaling $142,000.




c. Legal
      Expenses: These expenses were $307,000 in 2004, versus $694,000 in 2003, a
      decrease of $387,000. This decrease is primarily attributable to the high level
      of legal assistance required in 2003 for matters such as (i) addressing NASDAQ
      compliance issues (ii) a major shift in the Company’s core business (iii)
      numerous tock issuances to consultants.




d. Settlement
      Charge: This expense was $163,000 in 2004, versus $0 in 2003. This increase
      is
      attributable to the settlement reached in the Flight Options, Inc. litigation,
      in which the Company may be obligated to pay up to approximately $163,000 to
      Flight Options, Inc. (See Part I, Item 3, “Legal Proceedings”.)




***Expenses
      Associated With Stock Issued for Services***




In
      2004,
      the Company recorded an expense of $346,000 related to the issuance of 9,900,000
      shares to approximately 14 directors, employees and consultants. Of this amount,
      $135,000 related to consulting services, $80,000 related to service by directors
      and advisory board members, and $118,000 related to salary expense.




In
      2003,
      the Company recorded an expense of $1,555,000 related to the issuance of
      19,248,759 shares to approximately 20 directors, employees and consultants.
      Of
      this amount, $1,046,000 related to consulting services, $394,000 related to
      legal services, $63,000 related to service by directors and advisory board
      members, and $52,000 related to salary expense.




***Discontinued
      Operations***




The
      Company disposed of all operating entities and discontinued all operations
      during 2003. The Company recorded a Net Loss from Discontinued Operations for
      the year ended December 31, 2004 of $0, as compared to a Net Loss from
      Discontinued Operations for the year ended December 31, 2003 of $4,938,113.




-23-


***Net
      Loss***




Net
      Loss
      for the year ended December 31, 2004 was $1,218,048 or $0.03 per share compared
      to a $7,622,209 loss or $.25 per share for the year the year ended December
      31,
      2003.




**Liquidity
      and Capital Resources**




Cash
      and
      cash equivalents totaled $0 at December 31, 2004. The Company had no revenues
      in
      the twelve-month periods ended December 31, 2004 and was forced to consume
      cash
      on hand to fund operations. The Company’s cash position is insufficient to meet
      its expenses. The Company will be required to raise additional capital to
      sustain basic operations through the remainder of 2005 and until a merger
      candidate with operations of its own is located and a transaction is
      consummated. While the Company is actively seeking investments through private
      investors and other parties, there is no assurance that the Company will be
      able
      to raise additional capital for the entire period required.




Total
      Current Liabilities were $3,707,521, as of December 31, 2004, versus $2,924,344
      as of December 31, 2003, an increase of $783,177 from. The increase is due
      to
      (i) an increase of Accrued Expenses of $321,540 related to operating expenses
      incurred but not paid (ii) an increase of Officer Payable of $281,083 related
      to
      business expenses paid on behalf of the Company’s president and compensation but
      not paid (iii) an increase of Accrued Interest of $188,572 related to the
      Company’s outstanding obligations (iv) an increase in Notes Payable as a result
      of the write-off of the Company’s discount on Notes Payable and the funding of
      $60,000 from outside sources; offset by (v) a decrease in Debenture Payable
      of
      $103,849 arising from the conversion of debenture holders of the debentures
      into
      equity.




The
      Company will be required to raise additional capital to sustain operations
      and
      meet its liabilities as they become due for the next twelve months, and is
      actively seeking investments from third parties. There is no assurance that
      the
      Company will be able to raise additional capital. It is unlikely that the
      Company will be able to qualify for bank debt until such time as the Company
      is
      able to demonstrate the financial strength to provide confidence for a lender.




The
      Company's consolidated financial statements have been prepared assuming the
      Company will continue as a going concern, which contemplates the realization
      of
      assets and satisfaction of liabilities in the normal course of business. During
      2003, 2004, and as of May 31, 2005, the Company had limited liquid and capital
      resources and management is incurring personal losses, while seeking acquisition
      opportunities. Total Stockholders' Deficit increased by $1,216,048 during the
      year ending December 31, 2004. The reason for the increase is that net loss
      totaled $1,216,048.




The
      financial statements accompanying this Annual Report have been prepared on
      a
      going concern basis, which contemplates the realization of assets and the
      settlement of liabilities and commitments in the normal course of our business.
      As reflected in the accompanying financial statements, we had a net
      loss of
      $6,803,280 and a negative cash flow from operations of $2,411,464 for the year
      ending December 31, 2004, and a stockholders’ deficiency of $2,007,144 as
      of December 31, 2004. These factors raise substantial doubt about our
      ability to continue as a going concern. Our ability to continue as a going
      concern is dependent on our ability to raise additional funds and implement
      our
      business plan. The financial statements do not include any adjustments that
      might be necessary if we are unable to continue as a going concern.




-24-


During
      2004, the Company raised $221,033. These funds were raised through straight
      debt
      financing, convertible debt financing, and equity financing, as described
      below.




***Straight
      Debt Financing***




The
      Company’s President, Dennis Calvert, loaned money to the Company by paying from
      his personal funds certain of the Company’s expenses. A significant portion of
      these personal funds was obtained by Mr. Calvert by refinancing his primary
      residence and cashing out equity thereon. For the year ended December 31, 2004,
      Mr. Calvert loaned to the Company $131,033. As of December 31, 2004, the Company
      repaid $29,263 of this amount. On March 7, 2005, the Company and Mr. Calvert
      agreed that the $101,770 still outstanding and owed by the Company to Mr.
      Calvert will be repaid under the terms of a promissory note bearing interest
      of
      10% per annum, requiring monthly payments and maturing on January 15, 2006.




***Convertible
      Debt Financing***




During
      2004, the Company raised $60,000 and issued convertible promissory notes due
      and
      payable one year from the date of issuance. The notes bear interest at a rate
      of
      10% per annum, payable on the maturity date, and can be converted, in whole
      or
      in part, into shares of the Company’s Series A Preferred stock, on the basis of
      $.005 per share, at any time prior to maturity by either the Company or the
      lender. Each share of Series A Preferred Stock may be converted by the holder
      into one share of the Company’s common stock. If the noteholder converts the
      note into Series A Preferred Stock, on or after the note’s original maturity
      date, the noteholder may require the Company to buy back the shares of Series
      A
      Preferred Stock for 110% of the principal amount of the promissory note. If
      the
      Company is unable to do so, the Company’s president, Dennis Calvert, has agreed
      to buy back the shares on the same terms. If shares of Series A Preferred Stock
      are converted into common stock, the holder has the right to include (piggyback)
      the shares of common stock in a registration of securities filed by the Company
      (other than on Form S-4 or Form S-8).




***Equity
      Financing***




During
      the year ended December 31, 2004, the Company received $30,000 (gross and net
      proceeds), from the sale of 5,156,250 shares of its common stock which were
      restricted and unregistered.




***Other
      Obligations***




Significant
      debt obligations at December 31, 2004 included:




(i) $420,000
      (plus interest) due to Augustine II, LLC (the “Augustine Fund”), described in
      more detail below;




(ii) a
      $1,120,000
      note payable which was purchased in March 2003 by New Millennium Capital
      Partners, LLC, an entity owned and controlled by the Company's president, Dennis
      Calvert, and certain members of his family, together with accrued but unpaid
      interest, described in more detail below.




(iii) approximately
      $15,000 outstanding remaining on a settlement agreement with former convertible
      debenture holders **;** and




(iv) $32,100
      due
      to a former advisory board member, reduced from a promissory note dated November
      20, 2003 in the principle amount of $65,000.




-25-


For
      the
      year ended December, 2004, there was $189,000 of accrued interest recorded
      related to these obligations.




***Augustine
      Fund Note***




On
      June
      10, 2003 the Company entered into a Term Loan Agreement ("Loan Agreement")
      with
      the Augustine Fund, pursuant to which the Augustine Fund agreed to lend the
      Company $420,000, payable in installments of $250,000, $100,000, and $70,000
      (the "Augustine Loan"). The proceeds of the Augustine Loan were used by the
      Company for working capital.




Principal
      and interest, at an annual rate of 10%, of the Augustine Loan, was originally
      due on February 29, 2004. In addition, the Loan Agreement contains certain
      requirements that the Company make mandatory prepayments of the Augustine Loan
      from the proceeds of any asset sales outside of the ordinary course of business,
      and, on a quarterly basis, from positive cash flow. In addition, all or any
      portion of the Augustine Loan may be prepaid by the Company may prepay all
      or
      any portion of the Augustine Loan at any time without premium or penalty.




As
      additional consideration for making the Augustine Loan, the Augustine Fund
      received five-year warrants to purchase up to 6,158,381 shares of the Company's
      common stock at an exercise price of $0.16 per share. The Company could require
      that the warrants be exercised if certain conditions were satisfied. Since
      these
      conditions were not fully satisfied by the maturity date, the Loan Agreement
      provides that the Augustine Fund may, at any time following the maturity date
      and so long as the warrants remain exercisable, elect to exercise all or any
      portion of the warrants pursuant to a "cashless exercise", whereby the Augustine
      Fund would be issued the net amount of shares of our common stock, taking into
      consideration the difference between the exercise price of the warrants and
      the
      fair market value of our common stock at the time of exercise, without having
      to
      pay anything to the Company for such exercise.




As
      security for the Augustine Loan, New Millennium Capital Partners LLC ("New
      Millennium"), a company controlled and owned by the Company's president, Dennis
      Calvert, and members of his family, pledged 2.5 million shares of the Company's
      common stock owned by New Millennium, and, in addition, the Company has granted
      the Augustine Fund a security interest in its 51% membership ownership interest
      in NuWay Sports. As a result, the Company will need to consent of the Augustine
      Fund to release its security interest in NuWay Sports if the Company is able
      to
      sell NuWay Sports.




Prior
      to
      the original maturity date of the Augustine Loan, the Company spoke with
      representatives of the Augustine Fund and advised them that the Company was
      unable to pay the amount due under the Augustine Loan by the February 29, 2004
      maturity date. On March 30, 2004, the Augustine Fund agreed to extend the
      maturity date of the Loan Agreement to August 2004. In addition to the extension
      of the maturity date, the Augustine Fund was given the option of having the
      Augustine Loan satisfied in cash or by the conversion of any remaining principal
      balance and any accrued interest on the Augustine Loan to shares of the
      Company's common stock at a 15% discount to market, so long as Augustine Fund's
      holdings do not exceed 4.9% of the total issued and outstanding shares of the
      Company's common stock at any time. In addition, the warrants held by the
      Augustine Fund to purchase 6,158,381 shares of the Company's common stock were
      re-priced to an exercise price of $.035 per share. Exercise of the warrants
      is
      also subject to the limit that the Augustine Fund does not hold more than 4.9%
      of the issued and outstanding shares of the Company's common stock. The Company
      recorded $19,000 and $50,000 of interest expense for the three- and nine-month
      periods ended September 30, 2004, related to the Augustine Loan.




-26-


On
      March
      7, 2005, the Company and the Augustine Fund agreed to extend the maturity date
      of the Augustine Loan to May 2006, in exchange for the issuance of a warrant
      that gives the Augustine Fund the right to purchase 8,000,000 shares of the
      Company’s common stock at $0.005 per share for a period of five years. The final
      documentation of the extension and the warrant is being finalized and has not
      yet been completed.




***Obligation
      to New Millennium***




In
      conjunction with the acquisition from Med Wireless of the license for the Med
      Wireless and PRLS technologies on August 21, 2002, the Company assumed a
      $1,120,000 note (the “Note”) with interest at 10% per annum payable by Med
      Wireless to Summitt Ventures, Inc. (“Summitt Ventures”). Summitt Ventures is
      controlled by Mark Anderson, a former consultant and principal stockholder
      of
      the Company. The Note is secured by the Company's assets and was originally
      due
      on June 15, 2003.




As
      part
      of a series of transactions that the Company undertook to separate itself
      completely from Mr. Anderson, on March 26, 2003, Summitt Ventures sold the
      Note,
      together with 4,182,107 shares of the Company's common stock owned by Mr.
      Anderson’s affiliates, Camden Holdings and Summit Healthcare, Inc. (“Summit
      Healthcare”), to New Millennium, in exchange for a $900,000 promissory note
      issued by New Millennium in favor of Summitt Ventures, Camden Holdings, and
      Summit Healthcare (the “New Millennium Note”). The New Millennium Note is
      secured by all of the stock of the Company owned by New Millennium and Mr.
      Calvert. (See “Augustine Fund Note” above.) Other than Mr. Calvert, no
      individual, entity or party presently or previously associated with the Company
      has ever had any ownership interest in New Millennium. Mr. Anderson, a principal
      of those companies that sold and/or licensed the technologies to the Company,
      conditioned the transaction with New Millennium on the Company’s agreeing to
      convert the Note to common stock.




Since
      New
      Millennium purchased the Note, the Company has attempted multiple times to
      convert the Note, but has been unable to obtain the required stockholder vote,
      due to a lack of quorum, to do so. The three attempts are described
      below.




On
      March
      26, 2003, the Company's board of directors voted to convert the Note by New
      Millennium into 22,400,000 shares of common stock of the Company, at a
      conversion price discounted 37.5% from the then market price of $0.08. New
      Millennium agreed to this conversion.




In
      arriving at a conversion price, the board of directors determined that a 37.5%
      discount to market price was appropriate based on a number of factors, including
      that (i) with the quantity of the shares that would be issued, a block of shares
      that size could not be liquidated without affecting the market price of the
      shares, and (ii) the shares would be "restricted shares" and could therefore
      not
      be sold by New Millennium in the public markets prior to two years from the
      date
      of the conversion, and thereafter would be subject to the volume and manner
      of
      sale limitations of Rule 144 under the Securities Act of 1933.




-27-


Subsequent
      to the vote by the board to convert the Note, the Company received notification
      from NASDAQ’s Listing Qualifications Department that converting the Note without
      stockholder approval violated certain NASDAQ Marketplace Rules. In response
      to
      this notification, the board, with the concurrence of New Millennium, voted
      to
      amend its resolution and delay conversion of the Note until the Company's
      stockholders approved the conversion.




At
      the
      Company's June 6, 2003 board meeting, Mr. Calvert, on behalf of New Millennium,
      and the Company, through the unanimous action of the board (with Mr. Calvert
      abstaining), agreed that, in light of current market conditions (namely the
      significant increase in the trading price of the Company's common stock since
      March 26, 2003, the date on which the conversion of the Note was originally
      approved by the board, from $0.08 to $0.28 as of June 6, 2003), it would be
      inequitable for New Millennium to convert the Note at the originally agreed
      to
      $0.05 per share price. Mr. Calvert, on behalf of New Millennium, and the Company
      orally agreed to rescind the agreement to convert the Note.




In
      addition, New Millennium orally agreed with the Company to extend the maturity
      date of the Note to a first payment due October 1, 2003 in the amount of
      $100,000 and the balance of the principal due on April 1, 2004, with interest
      due according to the original terms of the Note (to correspond to the payment
      terms of the New Millennium Note), and furthermore to reduce the Company's
      obligation on the Note to the extent that New Millennium might be able to reduce
      its obligation on the New Millennium Note. While the prior holder of the Note,
      Summitt Ventures, purported to condition New Millennium's purchase on the
      conversion of the Note, Mr. Calvert has represented to the Company that due
      to
      Mr. Anderson's failure to honor his obligations in the purchase agreement,
      Mr.
      Calvert now believes that conversion of the Note is no longer a required term
      of
      the agreement between New Millennium and Summitt Ventures.




The
      Company was unable to make the $100,000 payment on the Note on the extended
      due
      date of October 1, 2003. At a board meeting on October 15, 2003, the board
      decided to put the issue of conversion of the Note to the Company's stockholders
      at a special meeting of the stockholders scheduled for December 9, 2003. The
      stockholders meeting was held on December 9, 2003, but adjourned without a
      vote,
      because not enough shares to constitute a quorum were represented. The
      stockholders meeting was rescheduled for December 30, 2003, at which a quorum
      was also not present. Because this was the second attempt to obtain a quorum,
      and more than 4,000,000 additional shares were required to be voted to obtain
      a
      quorum, the board adjourned the meeting indefinitely. As a result, the Note
      was
      not converted into stock and the outstanding principal amount, together with
      accrued and unpaid interest, remains as a liability of the Company.




In
      conjunction with the Company’s January 31, 2004 purchase of Premium Medical
      Group (“PMG”) (later rescinded in October 2004), and as a condition to that
      transaction, the Premium Medical Group shareholders (the “PMG Shareholders”)
      required the Company to convert the note so as to eliminate the obligation
      from
      the Company’s balance sheet. At a meeting on February 10, 2004, the board of
      directors voted to convert the note into 30,869,992 shares of its common stock,
      at a conversion price of $0.04, discounted 20% from the then market price of
      $0.05. New Millennium agreed to this conversion. In arriving at a conversion
      price, the board of directors determined that a 20% discount to market price
      was
      appropriate based on a number of factors, including (i) the holding period
      of
      the stock will be two years, and thus is not liquid until that point, and (ii)
      the amount of the stock issued would make it impossible to liquidate the stock
      at the current market price. This discount was equal to the discount proposed
      to
      the stockholders in December 2003 at the abandoned stockholders meeting, and
      less than the discount used by the board at the first conversion attempt in
      April 2003.




-28-


The
      board
      approved the conversion knowing that, since its conversion was a condition
      imposed by the PMG Shareholders, they (who would hold 45% of the Company’s
      common stock at the time of such meeting) would provide the additional shares
      necessary to obtain a quorum and formal stockholder approval. Stockholder
      approval was also necessary to increase the number of authorized shares
      necessary to convert the Note. However, due to lack of operational capital,
      the
      Company was unable to remain current in its SEC filings, and thus was unable
      to
      hold the required stockholder meeting.




In
      October 2004, the Company, PMG and the PMG Shareholders rescinded the Stock
      Purchase Agreement. Because the board of director’s decision to convert the Note
      was based in part on the requirements of the PMG Stock Purchase Agreement,
      the
      board on October 28, 2004, determined not to convert the Note. Considering
      that
      the Company at the time was a shell corporation with no operations, Mr. Calvert
      also agreed to extend the maturity of the Note indefinitely until the Company’s
      status changed.




Accordingly,
      as of September 30, 2004, the principal amount of the loan, together with
      $73,504 in accrued but unpaid interest, had not been repaid.




Under
      the
      terms of the New Millennium Note, it is possible that Summitt Ventures, Camden
      Holdings, and Summit Healthcare may have a claim to reacquire the shares of
      the
      Company's common stock that were sold to New Millennium. The New Millennium
      Note
      is purportedly secured by the purchased shares of the Company's common stock;
      however, New Millennium and Mr. Calvert believe that Mr. Anderson and his
      affiliates have not perfected their security interest in those shares. In
      addition, the Augustine Fund is the pledgee of 2,500,000 of these shares and
      has
      physical possession of those shares.




New
      Millennium has informed the Company’s board of directors that New Millennium
      still intends to fully convert the Note to stock as soon as it is practical,
      following stockholder approval. As of the date of the filing of this report,
      the
      stockholder vote has not taken place and the Note has not been converted into
      shares of the Company’s common stock.




**Critical
      Accounting Policies**




The
      Securities and Exchange Commission ("SEC") recently issued Financial Reporting
      release No. 60, "Cautionary Advice Regarding Disclosure About Critical
      Accounting Policies" (FRR 60"), suggesting companies provide additional
      disclosure and commentary on their most critical accounting policies. In FRR
      60,
      the SEC defined the most critical accounting policies as the ones that are
      most
      important to the portrayal of a company's financial condition and operating
      results, and require management to make its most difficult and subjective
      judgments, often as a result of the need to make estimates of matters that
      are
      inherently uncertain. Based on this definition, the Company's most critical
      accounting policies include: non-cash transactions and compensation valuations
      that affect the total expenses reported in the current period and/or values
      of
      assets received in exchange.




-29-


The
      Company has established a policy relative to the methodology to determine the
      value assigned to each intangible acquired with or licensed by the Company
      and/or services or products received for non-cash consideration of the Company's
      common stock. The value is based on the market price of the Company's common
      stock issued as consideration, at the date of the agreement of each transaction
      or when the service is rendered or product is received, as adjusted for
      applicable discounts.




The
      methods, estimates and judgments the Company uses in applying these most
      critical accounting policies have a significant impact on the results of the
      Company reports in its financial statements.




**ITEM
      7. FINANCIAL STATEMENTS.**




Our
      consolidated financial statements as of and for the years ended December 31,
      2004 and 2003 are presented in a separate section of this report following
      Item
      14 and begin with the index on page F-1.




**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.**




As
      disclosed in our Current Report on Form 8-K filed on September 10, 2004, as
      amended on September 17, 2004, we dismissed Haskell & White LLP (“H&W”)
      as our principal accounting firm as of September 9, 2004. As disclosed in our
      Current Report on Form 8-K filed on September 16, 2004, we engaged Jeffrey
      S.
      Gilbert, CPA ("Gilbert") as our principal accountant. Gilbert was engaged to
      audit our consolidated financial statements for the year ended December 31,
      2003. The decision to change auditors was recommended by our audit committee
      and
      approved by our board of directors. During the Company's relationship with
      H&W, since H&W's initial engagement as the principal auditors on March
      31, 2003, through September 9, 2004, there were no disagreements with H&W,
      whether or not resolved, on any matter of accounting principles or practices,
      financial statement disclosure, or auditing scope or procedure, which, if not
      resolved to H&W's satisfaction, would have caused it to make reference to
      the subject matter of the disagreement(s) in connection with its report on
      the
      consolidated financial statements for the year ended December 31,
      2002.




**Item 8A.
      Controls and Procedures**




(a)
      Evaluation of disclosure controls and procedures. Our management evaluated,
      with
      the participation of Dennis Calvert, who serves as both our Chief Executive
      Officer and Chief Financial Officer, the effectiveness of our disclosure
      controls and procedures as of the end of the period covered by this Annual
      Report on Form 10-KSB. Based on this evaluation, our Chief Executive Officer
      and
      Chief Financial Officer have concluded that our disclosure controls and
      procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934) are effective to ensure that information required to
      be
      disclosed by us in reports that we file or submit under the Exchange Act is
      recorded, processed, summarized and reported within the time periods specified
      in Securities and Exchange Commission rules and forms. It should be noted that
      the design of any system of controls is based in part upon certain assumptions
      about the likelihood of future events, and there can be no assurance that any
      design will succeed in achieving its stated goals under all potential future
      conditions, regardless of how remote.




-30-


(b)
      Changes in internal control over financial reporting. There was no change in
      our
      internal control over financial reporting that occurred during the period
      covered by this Annual Report on Form 10-KSB that has materially affected,
      or is
      reasonably likely to materially affect, our internal control over financial
      reporting.




**Item 8B.
      Other Information**




During
      2004, the Company conducted a private offering of stock and convertible debt,
      which offering continued during the fourth quarter of 2004. The Company filed
      a
      Current Report on Form 8-K with respect to this offering on February 23, 2005.




In
      August
      2004, the Company defaulted on its payment obligations in the Augustine Loan.
      This event was reported in the Company’s Annual Report on Form 10-KSB for the
      year ended December 31, 2003.







-31-


**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS AND COMPLIANCE WITH SECTION 16(A) OF THE
      EXCHANGE ACT.**




**Directors
      and Executive Officers.**




The
      following table sets forth information regarding our directors as of December
      30, 2004:




**Name**
            
            **Age**
            
            **Position**
            
            **Director
                Since**Dennis
                Calvert
            
            
            42
            
            
            President,
                Chief Executive Officer and Chairman of the Board
            
            
            2002Joseph
                Provenzano
            
            
            35
            
            
            Secretary
                and Director
            
            
            2002Steven
                V. Harrison II (1)(2)
            
            
            45
            
            
            Director
            
            
            2003Gary
                Cox(1)(2)
            
            
            44
            
            
            Director
            
            
            2003





(1)
            Member
                of the Audit Committee.


(2)
            Member
                of the Compensation Committee.




There
      are
      no family relationships between any director and any executive officer of the
      Company.




DENNIS
      CALVERT is our President, Chief Executive Officer, Chairman of the Board, and
      Interim Chief Financial Officer. Dennis Calvert was appointed a director in
      June
      2002, and has served as President and Chief Executive Officer since June 2002,
      Corporate Secretary from September 2002 until March 2003, and Interim Chief
      Financial Officer since March 2003. Mr. Calvert holds a BA degree in Economics
      from Wake Forest University, where he was a varsity basketball player on full
      scholarship. Mr. Calvert also studied at Columbia University and Harding
      University. He was an honor student in high school with numerous leadership
      awards. He is also an Eagle Scout.




Mr.
      Calvert has an extensive entrepreneurial background as an operator, investor
      and
      consultant. From June 2002 to September 2002 he served as president of Med
      Wireless, Inc. In 1998 he was a founder, president and board member of Utelecom
      Communications, Inc. where he led the acquisition of four companies and secured
      a line of credit for $7.5 million. He remains an owner and board member of
      that
      firm. He was an investor and served as a manager of Beep for Free.com, LLC
      beginning in the year 2000, a consumer products and technology related company.
      Mr. Calvert resigned as the manager of Beep For Free.com, LLC in June 2002
      and
      the company ceased operations in December 2002. Mr. Calvert was a founder and
      chairman of ZZYZX Technologies, Inc., a company that designed and produced
      high
      tech equipment. ZZYZX was sold in 2001. From 1990 to 1996 Calvert served as
      head
      of mergers and acquisitions for Medical Asset Management, Inc., a company that
      acquired and managed medical-related businesses. During his tenure he
      participated in more than 50 acquisitions and served in numerous positions
      with
      the Company. Prior, he was a founder and officer of a medical recruiting and
      consulting firm named Merritt Hawkins and Associates from 1987 to 1990. Earlier,
      he was a top producing sales associate for a leading physician recruitment
      firm,
      Jackson and Coker, Inc. and served as a sales associate for Diamond Shamrock,
      Inc. from 1985 to 1986.




-32-


JOSEPH
      PROVENZANO was appointed a director in June 2002 and assumed the role of
      Corporate Secretary in March 2003. Mr. Provenzano heads the Investor Relations
      effort and manages the mergers and acquisitions function for NuWay. He began
      his
      corporate career in 1988 as a Personnel Manager and Recruiter for First American
      Travel, a marketing company in Southern California. He then entered into an
      entry-level Technician position within the Commercial and Residential security
      industry. He left the industry as a General Manager in the mid 1990's to apply
      his marketing and sales training to the logistics industry. He was then employed
      by two major Southern California moving and storage companies as head of
      marketing. He formed his own marketing company called Pre-Move Marketing
      Services (PMSA), offering advertising and direct marketing products for the
      moving and storage industry, in 1996. He joined Camden Holdings, Inc., an
      investment holding company to manage their mergers and acquisitions department,
      in mid 2001, and participated in more than 50 corporate mergers and
      acquisitions. He was employed there until March 2003, at which time he became
      employed full time by the Company. Mr. Provenzano has participated in organized
      rodeo and motocross competitions.




STEVEN
      V.
      HARRISON II has been a director since March 2003. Mr. Harrison is the president
      of Empact, Inc. a consumer products based marketing company. From 1997 to 2001,
      he was the founder, president and CEO of In Touch Communications, Inc., a
      Competitive Local Exchange Carrier (CLEC), providing residential and business
      telephone services within the state of California, with annual revenue of more
      than $15 million. During 2001 and 2002 he was an investor in a number of
      healthcare and consumer products based companies including Beep for Free.com,
      LLC. Mr. Harrison was President of Beep for Free.com, LLC from June 2002 until
      it ceased operations in December 2002. From 1991 to 1997, Mr. Harrison was
      Chief
      Executive Officer of Resource Medical Group, Inc., providing management
      consultancy services to the healthcare industry assisting hospitals, Health
      Maintenance Organizations, clinics, and practice management firms with medical
      staff planning and contracting issues, feasibility studies and physician
      recruitment and retention. Mr. Harrison also played Division I football at
      Appalachian State University.




GARY
      COX
      has been a director since May 2003. Mr. Cox has more than 10 years in the
      healthcare field as consultant to hospitals and medical groups. He started
      his
      own firm in 1995 named Resource Medical International and is still active in
      that business. He served for more than 10 years with UK firms in sales and
      marketing positions prior to beginning his healthcare career. He holds a
      technical degree in engineering from Leicester University in England. He was
      also a competitive athlete and played for a number of professional soccer
      (football) clubs in England in his early career.




**Committees
      Of The Board Of Directors**




The
      board
      of directors has established an Audit Committee and a Compensation
      Committee.




The
      Audit
      Committee meets with management and the Company's independent public accountants
      to review the adequacy of internal controls and other financial reporting
      matters. Mr. Harrison is Chairman of the Audit committee. Mr. Cox also serves
      on
      the audit committee. The board of directors has not designated an audit
      committee financial expert and does not believe that either member of the Audit
      Committee would satisfy the current definitional requirements of SEC rules
      and
      regulations to be an audit committee financial expert.




-33-


The
      Compensation Committee reviews the compensation for all officers and directors
      and affiliates of the Company. The Committee also administers the Company's
      stock option plan. Mr. Harrison is Chairman of the Compensation Committee and
      Mr. Cox serves on the Compensation Committee.




The
      board
      of directors has determined that each of Messrs. Harrison and Cox is independent
      as defined under NASDAQ Marketplace rules. In 2003, the staff of NASDAQ had
      questioned whether Mr. Harrison was independent, and the NASDAQ Qualifications
      Panel discussed those issues with the Company at a hearing held on May 16,
      2003.
      The determination letter delivered to the Company by the NASDAQ Qualifications
      Panel, which resulted in the delisting of the Company's common stock from the
      NASDAQ SmallCap Market, stated, "While the Panel acknowledged that it appears
      the Company may have regained compliance with the independent directors and
      audit committee composition requirements based on the appointment of Messrs.
      Cox
      and Harrison, it [the Panel] determined not to make a finding on these
      deficiencies given that the appropriate NASDAQ background checks have not yet
      been completed".




The
      Company continues to believe that Mr. Harrison is independent, because has
      no
      business dealings with the Company other than in his role as board member.
      However, Mr. Harrison formerly was a partner of Mr. Calvert in a business named
      Beep For Free.com, LLC, from which Mr. Calvert resigned as the managing member
      in June 2002. Beep For Free.com, LLC ceased operations in December
      2002.




In
      October 2004, the board of directors adopted a written code of ethics that
      applies to its principal executive officer, principal financial officer,
      principal accounting officer or controller, or persons performing similar
      functions.




**Compliance
      with Section 16(a) of the Exchange Act**




Section
      16(a) of the Securities Exchange Act of 1934 requires the Company's directors,
      certain officers and persons holding 10% or more of the Company's common stock
      to file reports regarding their ownership and regarding their acquisitions
      and
      dispositions of the Company's common stock with the Securities and Exchange
      Commission. Such persons are required by SEC regulations to furnish the Company
      with copies of all Section 16(a) forms they file.




To
      our
      knowledge, based solely upon review of Forms 3, 4, and 5 (and amendments
      thereto) and written representations provided to the Company by executive
      officers, directors and stockholders beneficially owning 10% or greater of
      the
      outstanding shares, the Company believes that such persons filed pursuant to
      the
      requirements of the Securities and Exchange Commission on a timely basis, other
      than  one
      Mr.
      Provenzano’s failure to file a report with respect to two grants of common
      stock. Mr. Provenzano intends to file a Form 5 with respect to these
      transactions.







-34-


**ITEM
      10. EXECUTIVE COMPENSATION**




The
      following table sets forth the cash compensation paid by the Company to the
      chief executive officer and the next four highest paid executive officers who
      received compensation in excess of $100,000 (the "Named Executive Officers")
      during 2004 and 2003:




Annual
                Compensation
            
            
            
            Long-term
                CompensationAwards
            
            
            
            PayoutsName
                and Principal Position
            
            Year
            
            Annual
              Salary
            
            Other
                Annual Compensation
            
            Restricted
                Stock Awards
            
            Securities
                Underlying Options/SARs
            
            TIP
                Payouts
            
            Other
                CompensationDennis
                Calvert,
              Chief
                Executive Officer
            
            
            2003
              2004
            
            
            168,000
                168,000
            
            
            --
              --
            
            
            4,000,000
              --
            (2)
            
            --
              --
            
            
            --
              --
            
            
            --
              --Joseph
                Provenzano,
              Secretary
            
            
            2003
              2004
            (1)
            
            129,600
                154,750
            (3)
              (3)
            
            --
              --
            
            
            1,200,000
              2,000,000
            
            
            --
              --
            
            
            --
              --
            
            
            --
              --







(1)
            Became
                Secretary in March 2003.


(2)
            Mr.
                Calvert was issued 1,000,000 shares on January 9, 2003, and subsequently
                returned the shares to the Company. He was also issued 3,000,000
                shares on
                March 18, 2003, and subsequently returned the shares to the Company.


(3)
            A
                portion of the annual compensation for Mr. Provenzano was paid pursuant
                to
                issuances of a total of 3,000,000 shares of common stock, 1,000,000
                of
                which was registered pursuant to the Company’s 2004 Equity Plan, and
                2,000,000 of which was restricted stock, and is reflected in the
                column
                “Restricted Stock Awards”.




**Employment
      Agreements**




The
      Company entered into an employment agreement with Dennis Calvert in December
      2002. Mr. Calvert's employment agreement provides for him to be employed for
      five years at an annual salary of $168,000. The employment agreement further
      provides that Mr. Calvert work with the Company on a full time basis, that
      the
      office be located in Laguna Hills, California, that he receive annual increases
      of 10% of his base income, that bonuses will be payable based on the greater
      of
      a performance scale established by the Compensation Committee, assigned by
      the
      board of directors, or 3% of the annual increase in market capitalization value.
      The compensation plan includes benefits of a car allowance, insurance and a
      standard vacation package. The agreement has certain minimum performance
      standards and calls for a severance package equal to one year's base
      compensation, plus an additional one half year's compensation for each year
      of
      service beginning in 2003. Standard confidentiality, company ownership rights
      to
      property and assets and arbitration clauses are included in the
      agreement.




-35-


The
      Company entered into an employment agreement with Mr. Provenzano in March 2003.
      Mr. Provenzano's employment agreement provides for him to be employed for five
      years at an annual salary of $130,800. The employment agreement provides that,
      at the Company's discretion, the Company may choose to pay up to $4,900 of
      Mr.
      Provenzano's monthly salary in the form of stock in lieu of cash. Mr. Provenzano
      is also eligible to receive incentive bonuses, stock ownership participation
      and
      employee related benefits. The employment agreement further provides that Mr.
      Provenzano receive annual increases of 5% of his base income, that bonuses
      will
      be payable based on the greater of a performance scale established by the
      Compensation Committee, assigned by the board of directors, or 1.5% of the
      annual increase in market capitalization value. The compensation plan includes
      those benefits of car allowance and insurance benefits and a standard vacation
      package. The agreement has certain minimum performance standards and calls
      for a
      severance package equal to one year's base compensation, plus an additional
      one
      half year's compensation for each year of service beginning in 2003. Standard
      confidentiality, company ownership rights to property and assets and arbitration
      clauses are included in the agreement.




**Options
      Granted During Last Fiscal Year**




No
      options were granted to the Named Executive Officers during 2004.




**Equity
      Compensation Plans**




***2002
      Consultant Equity Plan***




In
      August
      2002, the Company's board of directors approved the formation of the 2002
      Consultant Equity Plan (the "2002 Plan"), designed to allow consultants to
      be
      compensated with shares of Company common stock for services provided to the
      Company. A total of 1,500,000 shares under the 2002 Plan were registered with
      the SEC. The 2002 Plan was amended by the Company's board of directors in
      December 2002. A total of 3,500,000 additional shares were registered with
      the
      SEC on a Form S-8 registration statement on December 27, 2002. Approval of
      the
      2002 Plan was not submitted to the vote of the stockholders. Persons eligible
      to
      receive stock awards under the 2002 Plan included "consultants" that provide
      bona fide consulting services to the Company, excluding any services incident
      to
      the raising of capital or promotion or maintenance of a market for the Company's
      securities.




The
      2002
      Plan was terminated by the board of directors on December 16, 2004. From August
      2002 through February 2003, the Company issued all but 84,452 of the 5,000,000
      shares available under the 2002 Plan to approximately 26 consultants, employees
      and directors.




***2003
      Stock Compensation Plan***




In
      February 2003, the board of directors approved the 2003 Stock Compensation
      Plan
      (“2003 Plan”) as a means of providing directors, key employees and consultants
      additional incentive to provide services to the Company. The 2003 Plan was
      terminated by the board of directors at its meeting on December 16, 2004. The
      2003 Plan set aside up to 15,000,000 shares of the Company's common stock for
      these purposes, which shares were registered with the SEC on a Form S-8
      registration statement on February 27, 2003. Approval of the 2003 Plan was
      not
      submitted to a vote of the stockholders. The board of directors administered
      the
      2003 Plan. The 2003 Plan allowed the board of directors to award grants of
      shares of the Company's common stock or options to purchase shares of the
      Company's common stock.




From
      February through September 2003, the Company issued 14,863,230 shares under
      the
      2003 Plan to 27 directors, employees and consultants.




-36-


In
      March
      2003, the board of directors approved, and the Company issued, 3,000,000 shares
      of common stock to Dennis Calvert, President and Chief Executive Officer of
      the
      Company, as consideration for his services. The board of directors subsequently
      modified its approval of this issuance to make it conditioned upon stockholder
      approval of the transaction because of NASDAQ Marketplace Rules governing change
      of control transactions. Mr. Calvert returned the 3,000,000 shares to the
      Company. On December 9, 2003, the Company attempted to conduct a stockholder
      meeting to approve the terms of the issuance of 3,000,000 shares of the
      Company's common stock to Dennis Calvert. The Company was unable to obtain
      a
      quorum at the meeting. The meeting was adjourned to December 30, 2003, but
      again
      the Company was unable to obtain a quorum. As of the date of the filing of
      this
      Annual Report, the 3,000,000 shares of the Company's common stock have not
      been
      issued to Mr. Calvert.




***2004
      Equity Plan***




On
      March
      10, 2004, the board of directors approved the Company's 2004 Equity Plan as
      a
      means of providing directors, key employees and consultants additional incentive
      to provide services for the Company. Both stock options and stock grants may
      be
      made under this plan. The Plan sets aside up to 20,000,000 shares of the
      Company's common stock for these purposes, which were registered with the SEC.
      Approval of this plan was not submitted to the vote of the stockholders. The
      Board administers this plan. The plan allows the Board to award grants of common
      shares or options to purchase common shares. As plan administrator, the board
      has sole discretion to set the price of the options. The Board may at any time
      amend or terminate the plan. It does not expire on its terms.




During
      2004, the Company issued 9,780,000 shares to 16 consultants, directors, and
      employees. Of this total 5,680,000 have been registered with the SEC, while
      the
      balance, 3,500,000 shares were not registered and are restricted securities.
      Of
      the total issued in 2004, 1,580,000 shares relate to services performed in
      2003
      and 7,600,000 shares relate to 2004. The effect of the shares issued for 2003
      services in 2004 was accrued in the Company's financial statements for the
      year
      ending December 31, 2003. In 2004 there was $275,400 of expenses recorded
      related to the issuance of these shares. Of this amount $120,000 related to
      consulting services, $5,400 related to legal services, $60,000 related to Board
      of Directors expense, and $90,000 related to salary expense.




**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT.**




The
      following table sets forth information regarding the beneficial ownership of
      shares of the Company's common stock as of May 31, 2005 by (i) all stockholders
      known to the Company to be beneficial owners of more than 5% of the outstanding
      common stock; (ii) each director and executive officer of the Company
      individually and (iii) all directors and executive officers of the Company
      as a
      group.




Name
                and Address of Beneficial Owner (1)(2)
            
            Amount
                of Beneficial Ownership (3)
            
            Percent
                of Class
              (5)Dennis
                Calvert
            
            
            4,782,107
                (4
            )
            
            9.2
            %Joseph
                Provenzano
            
            
            4,224,936
            
            
            8.2
            %Steven
                Harrison
            
            
            1,167,043
            
            
            2.3
            %Gary
                Cox
            
            
            1,000,000
            
            
            1.9
            %All
                directors and officers as a group (4 persons)
            
            
            11,174,086
            
            
            21.6
            %





(1)
            Except
                as noted in any footnotes below, each person has sole voting power
                and
                sole dispositive power as to all of the shares shown as beneficially
                owned
                by them.


(2)
            Unless
                otherwise indicated, the address for each person is 2603 Main Street,
                Suite 1150, Irvine, California
                92614.


(3)
            Other
                than as footnoted below, none of these security holders has the right
                to
                acquire any amount of the shares within sixty days from options,
                warrants,
                rights, conversion privilege, or similar obligations. The amount
                owned is
                based on issued common stock, as well as stock options, which are
                currently exercisable.


(4)
            This
                amount excludes 30,869,992 shares of the Company’s common stock issuable
                upon conversion of the NuWay Note. The conversion of the NuWay Note
                is
                subject to the prior approval of theCompany’sstockholders. (See Part III, Item 12, “Certain
                Relationships and Related
                Transactions”)


(5)
            Percentage
                ownership is based on51,981,236shares
                of common stock outstanding on May 31, 2005. Beneficial ownership
                is
                determined in accordance with the rules of the SEC and generally
                includes
                voting or investment power with respect to securities. Shares of
                common
                stock subject to options, warrants and convertible notes currently
                exercisable or convertible, or exercisable or convertible within
                60 days,
                are deemed outstanding for determining the number of shares beneficially
                owned and for computing the percentage ownership of the person holding
                such options, but are not deemed outstanding for computing the percentage
                ownership of any other person. Except as indicated by footnote, and
                subject to community property laws where applicable, the persons
                named in
                the table have sole voting and investment power with respect to all
                shares
                of common stock shown as beneficially owned by
                them.





-37-


**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**




**Transactions
      with Dennis Calvert**




***New
      Millennium Capital Partners, LLC Purchase of Common Stock and Promissory Note
      from Mark Anderson and Affiliates***




In
      March
      2003, New Millennium, which is controlled by our president Dennis Calvert,
      purchased the Company's promissory note in the principal amount of $1,150,000
      (the "NuWay Note"), which notes was held by Summitt Ventures, Inc. ("Summitt
      Ventures"), and purchased an aggregate of 5,000,000 shares of the Company's
      common stock from Camden Holdings and Summit Healthcare, Inc. ("Summit
      Healthcare") in consideration of the New Millennium Note. Camden Holdings,
      Summitt Ventures and Summit Healthcare are controlled by Mark Roy Anderson.
      The
      transaction was executed as part of a plan to remove Mr. Anderson totally from
      any involvement in the Company and provide a completely new focus and direction
      for the Company under management led by Mr. Calvert.




The
      New
      Millennium Note is secured by all the shares of the Company's common stock
      purchased in the transaction and is further secured by shares of the Company's
      common stock personally owned by Mr. Calvert, of which he currently owns none.
      The transaction was conditioned, among other things, on the Company's converting
      the NuWay Note into shares of the Company's common stock.




The
      sellers only delivered share certificates representing 4,182,107 shares of
      the
      Company's common stock, which certificates were delivered to Mr. Calvert on
      April 9, 2003. In the New Millennium Agreement, Mr. Anderson represented that
      he
      was selling 100% of his stock to New Millennium and would no longer own any
      of
      the Company's stock. Subsequent to the closing of that transaction, management
      learned through the Company's transfer agent that Camden Holdings still owns
      340,894 shares of the Company's common stock. The Company and New Millennium
      believe that the existence of these 340,894 shares of the Company's common
      stock
      owned by Camden Holdings Inc. is a material breach of the New Millennium
      Agreement, and the Company and New Millennium are reviewing their respective
      legal rights with regards to this matter.




Technically,
      as a matter of the terms of the New Millennium Agreement, it is possible that
      Camden Holdings or Mr. Anderson could reacquire the shares of the Company's
      common stock that were sold to New Millennium, should New Millennium default
      on
      the promissory note issued by New Millennium to Camden Holdings to purchase
      the
      shares, which note is secured by the purchased shares of the Company's common
      stock




***Conversion
      of NuWay Note to Common Stock***




Pursuant
      to the NuWay Note, the Company owes New Millennium $1,120,000 plus accrued
      and
      outstanding interest. On March 26, 2003, the board of directors of the Company
      voted to convert the NuWay Note into 22,400,000 shares of common stock of the
      Company, reflecting a 37.5% discount to market price. New Millennium consented
      to the proposed conversion.




The
      business purpose of the conversion was to fulfill one of the conditions to
      the
      transaction between New Millennium and Mr. Anderson and his affiliates, and
      to
      retire $1,120,000 in debt owed by the Company with the effect increasing
      stockholder equity. The board of directors determined that a 37.5% discount
      to
      market price was appropriate given that (i) the shares into which the NuWay
      Note
      would be convertible would be subject to the one-year holding period provided
      by
      of Rule 144 prior to resale and (ii) even after such holding period, this large
      amount of shares could only be resold in the market over a significant period
      of
      time in light of the volume limitations of Rule 144 that would apply to such
      resales. The conversion was approved by the Company's non-interested
      directors.




After
      receiving advice from the staff of NASDAQ regarding the requirements of
      applicable NASDAQ Marketplace Rules, the board of directors made the conversion
      of the NuWay Note conditional upon receiving stockholder approval of the
      conversion. New Millennium agreed to extend the terms of the NuWay Note from
      June 15, 2003 to September 15, 2003, to allow sufficient time for the Company
      to
      obtain the requisite stockholder approval.




On
      December 9, 2003, the Company attempted to conduct a stockholder meeting to
      approve the terms of the conversion of the Company's Promissory Note. The
      Company was unable to obtain a quorum at the meeting. The meeting was adjourned
      to December 30, 2003, but again the Company was unable to obtain a quorum,
      and
      the conversion has not taken place as of the date of the filing of this Annual
      Report.




-38-


In
      conjunction with the Company’s January 31, 2004 purchase of Premium Medical
      Group (“PMG”) (later rescinded in October 2004), and as a condition to that
      transaction, the Premium Medical Group shareholders (the “PMG Shareholders”)
      required the Company to convert the note so as to eliminate the obligation
      from
      the Company’s balance sheet. At a meeting on February 10, 2004, the board of
      directors voted to convert the note into 30,869,992 shares of its common stock,
      at a conversion price of $0.04, discounted 20% from the then market price of
      $0.05. New Millennium agreed to this conversion. In arriving at a conversion
      price, the board of directors determined that a 20% discount to market price
      was
      appropriate based on a number of factors, including (i) the holding period
      of
      the stock will be two years, and thus is not liquid until that point, and (ii)
      the amount of the stock issued would make it impossible to liquidate the stock
      at the current market price. This discount was equal to the discount proposed
      to
      the stockholders in December 2003 at the abandoned stockholders meeting, and
      less than the discount used by the board at the first conversion attempt in
      April 2003.




The
      board
      approved the conversion knowing that, since its conversion was a condition
      imposed by the PMG Shareholders, they (who would hold 45% of the Company’s
      common stock at the time of such meeting) would provide the additional shares
      necessary to obtain a quorum and formal stockholder approval. Stockholder
      approval was also necessary to increase the number of authorized shares
      necessary to convert the Note. However, due to lack of operational capital,
      the
      Company was unable to remain current in its SEC filings, and thus was unable
      to
      hold the required stockholder meeting.




In
      October 2004, the Company, PMG and the PMG Shareholders rescinded the Stock
      Purchase Agreement. Because the board of director’s decision to convert the Note
      was based in part on the requirements of the PMG Stock Purchase Agreement,
      the
      board on October 28, 2004, determined not to convert the Note. Considering
      that
      the Company at the time was a shell corporation with no operations, Mr. Calvert
      also agreed to extend the maturity of the Note indefinitely until the Company’s
      status changed.




Accordingly,
      as of September 30, 2004, the principal amount of the loan, together with
      $73,504 in accrued but unpaid interest, had not been repaid.




Under
      the
      terms of the New Millennium Note, it is possible that Summitt Ventures, Camden
      Holdings, and Summit Healthcare may have a claim to reacquire the shares of
      the
      Company's common stock that were sold to New Millennium. The New Millennium
      Note
      is purportedly secured by the purchased shares of the Company's common stock;
      however, New Millennium and Mr. Calvert believe that Mr. Anderson and his
      affiliates have not perfected their security interest in those shares. In
      addition, the Augustine Fund is the pledgee of 2,500,000 of these shares and
      has
      physical possession of those shares.




New
      Millennium has informed the Company’s board of directors that New Millennium
      still intends to fully convert the Note to stock as soon as it is practical,
      following stockholder approval. As of the date of the filing of this report,
      the
      stockholder vote has not taken place and the Note has not been converted into
      shares of the Company’s common stock.




Since
      that time, New Millennium has agreed to a further indefinite extension of the
      maturity date of the NuWay Note pending stockholder approval of the transaction.
      The Company has been unable to schedule such a meeting due to the delinquent
      status of its periodic reports with the SEC and limited resources to plan the
      meeting.




-39-


***Transactions
      with Mark Roy Anderson***




During
      the period from approximately June 2002 through March 2003, the Company entered
      into several transactions with entities controlled by Mark Roy Anderson. These
      entities are Med Wireless, Genesis, Camden Holdings, Summit Healthcare, Summitt
      Ventures, Summit Oil & Gas, Inc. ("Summit Oil") and CVP. The transactions
      are listed in chronological order. Neither the Company, nor any of its directors
      or officers, has had any communication with Mr. Anderson since May
      2003.




***Financing
      Agreement with Camden Holdings, Inc.***




During
      June 2002, as part of a plan introduced to the Company by Mr. Anderson to shift
      the Company's focus to the medical technology field and bring in new management,
      Camden Holdings purchased 1,000,000 shares of the Company's common stock for
      $250,000. At the time of the transaction, Camden Holdings, whose president
      at
      the time of the transaction was Mr. Anderson, owned no shares in the Company,
      this being the initial transaction between the Company and Mr. Anderson and
      his
      affiliates. After this purchase, the 1,000,000 shares represented approximately
      12.9% of the then-issued and outstanding shares of the Company's common stock.




***Genesis
      Health Tech, Inc.***




On
      June
      28, 2002, the Company purchased a database of healthcare providers in the United
      States from Genesis, a wholly-owned subsidiary of Camden Holdings, which was
      controlled by Mr. Anderson. The total purchase price of $300,000 was satisfied
      by the issuance of 666,667 shares of the Company's common stock. After this
      purchase, the 1,666,667 shares of the Company's common stock beneficially owned
      by Mr. Anderson represented approximately 19.8% of the then-issued and
      outstanding shares of the Company's common stock.




***Med
      Wireless, Inc.***




By
      way of
      an agreement dated July 16, 2002 and amended August 21, 2002, the Company
      acquired a 15-year, fully paid license to certain technology from Med Wireless,
      a company whose founder and principal stockholder was Mr. Anderson. Pursuant
      to
      the related license agreement (i) the Company would license from Med Wireless
      all of its rights and interest in certain software applications relating to
      the
      movement of medical images and data over the Internet and via handheld wireless
      devices as well as customer lists; (ii) Med Wireless would assign its customers
      and distribution agreements related to the licensed intellectual property to
      the
      Company; and (iii) the Company would assume $1,120,000 of outstanding debt
      (see
      further discussions below). In return, the Company agreed to issue to the Med
      Wireless stockholders an aggregate of 6,600,000 shares, or approximately 44%,
      of
      the Company's common stock.




Through
      Camden Holdings and Summit Healthcare, Mr. Anderson received an additional
      2,868,928 shares of the Company's common stock, as a result of the Med Wireless
      transaction, which increased Mr. Anderson's beneficial ownership to 4,535,595
      shares, or approximately 28.3%, of the Company's common stock at the time this
      transaction was approved by the Company's stockholders. Mr. Anderson also held
      a
      minority interest in Med Wireless.




-40-


In
      addition, the Company's current president, Dennis Calvert, was entitled to
      receive approximately 9.9% of the stock of Med Wireless and 600,000 shares
      of
      the Company's common stock as a result of this transaction. Prior to this
      transaction, Mr. Calvert was not a stockholder of Med Wireless.




The
      transaction was approved by the board of directors and the vote of a majority
      of
      the Company's shares of common stock, including the shares held by Camden
      Holdings. Stockholders of the Company owning 3,930,183 shares of the 7,761,353
      shares then outstanding consented to the transaction with Med Wireless,
      including the shares held by Mr. Anderson and his affiliates.




***Sale
      of Casino Operations***




The
      Company sold its wholly-owned casino rental subsidiaries, Latin American Casinos
      del Peru S.A., and Latin American Casinos of Colombia, LTDA, to CVP in October
      2002. Mr.. Anderson was a general partner of CVP at the time of the transaction.
      Although the purchase price for the stock was $300,000, less all outstanding
      liabilities of the two subsidiaries, the outstanding liabilities exceeded that
      amount and the Company received no cash in the sale. The transaction price
      was
      determined as a result of the Company's receiving no viable suitors, bidders
      or
      offers for the stock or assets of the Company's gaming businesses. The Company's
      board of directors approved this transaction, but it was not voted upon by
      the
      Company's stockholders.




***Sale
      of Oil Operations***




The
      Company entered into an agreement on December 15, 2002 to sell 100% of the
      stock
      of NuWay Resources, Ltd. ("NuWay Resources"), the Company's oil and gas
      subsidiary, for $100,000 less outstanding liabilities, to Summit Oil. Mr.
      Anderson was president of Summit Oil at the time of the transaction. The Company
      received no cash from the sale of the stock, but was able to insure
      contractually that it would not retain any liabilities, or incur new liabilities
      (which had been increasingly significantly), beyond October 1, 2002. The
      transaction price was determined as a result of the Company's receiving no
      other
      viable offers for NuWay Resources or its assets. The Company's board of
      directors approved the transaction, but it was not voted upon by the Company's
      stockholders.




***Consultancy
      Arrangement***




Beginning
      in September 2002, Mr. Anderson also served as a consultant to the Company
      pursuant to a written agreement and received 1,241,884 shares of the Company's
      common stock pursuant to the 2002 Consultant Equity Plan. The Consultancy
      Agreement was terminated in December 2002.




As
      a
      result of all of the foregoing transactions, the Company believes that Mr.
      Anderson was the beneficial owner of an aggregate of 5,777,479 shares, or more
      than 30%, of the Company's common stock outstanding as of December 31, 2002,
      assuming Mr. Anderson beneficially owned all the shares at the same time. The
      Company believes that Mr. Anderson sold some of the shares which were issued
      pursuant to the 2002 Plan, and as such the number and percentage of the
      Company's common stock held by Mr. Anderson at any one time may have been less
      than that indicated above. In any event, Mr. Anderson failed to file any reports
      with the SEC on Schedules 13D or 13G, or on Forms 3 or 4, and therefore, the
      Company cannot confirm any of these numbers at any given point in time.







-41-


**ITEM
      13. EXHIBITS.**




**Index
      of exhibits:**




Exhibit No.
            Description of
              Exhibit  3.1
            Certificate
                of Incorporation
                (1)





3.2
            Certificate
                of Amendment of Certificate of Incorporation filed 11/26/1991
                (9)





3.3
            Certificate
                of Amendment of Certificate of Incorporation filed 6/24/1994
                (9)





3.4
            Certificate
                of Amendment of Certificate of Incorporation filed 7/22/1999
                (10)





3.5
            Certificate
                of Amendment of Certificate of Incorporation filed 8/31/2001 (1)





3.6
            Certificate
                of Amendment of Certificate of Incorporation filed 10/30/2002
                (2)





3.7
            Certificate
                of Amendment of Certificate of Incorporation filed 12/26/2002
                (2)





3.8
            Certificate
                of Merger merging Repossession Auction, Inc. (Florida corporation)
                and
                Repossession, Inc. (Delaware corporation)
                (9)





3.9
            Certificate
                of Designations creating Series A Preferred Stock
                (12)





3.10
            Bylaws,
                as amended and restated (2)





4.1
            Form
                of Warrant to Purchase Common Stock issued to Preferred Stock investors
                (12)





4.2
            Warrant
                to Purchase Common Stock issued to Arthur Lipper
                (12)





4.3
            Warrant
                No. AG-1 to purchase up to 6,158,381 shares of NuWay Medical, Inc.
                common
                stock held by Augustine II LLC (5)





4.4
            Amended
                and Restated Warrant No. AG-1 to purchase up to 6,158,381 shares
                of NuWay
                Medical, Inc. common stock held by Augustine II LLC
                (12)







-42-


10.1
              Employment
                  Agreement between the Company and Dennis Calvert dated December
                  11, 2002
                  (2)





10.2
            Employment
                Agreement between the Company and Joseph Provenzano dated March 1,
                2003
                (2)





10.3
            2002
                Consultant Equity Plan, as amended on December 27, 2002.
                (3)





10.4
            License
                Agreement with Med Wireless Inc. dated August 21, 2002
                (2).





10.5
            Amendment
                to License Agreement with Med Wireless Inc. dated September 18, 2002
                (2)





10.6
            Secured
                Promissory Note in the face amount of $1,120,000
                (4)





10.7
            Secured
                Term Promissory Note in the face amount of $900,000
                (4)





10.8
            Convertible
                Preferred Stock and Warrant Purchase Agreement
                (4)





10.9
            Agreement
                to issue warrant dated February 24, 2003 between NuWay Medical, Inc.
                and
                Sachi International, Inc. (12)





10.10
            Term
                Loan Agreement dated as of June 10, 2003 between NuWay Medical, Inc.
                and
                Augustine II LLC (5)





10.11
            Stock
                Pledge Agreement dated as of June 10, 2003, between New Millennium
                and
                Augustine II LLC (5)





10.12
            Stock
                Pledge Agreement dated as of June 10, 2003, between NuWay Medical,
                Inc.
                and Augustine II LLC (5)





10.13
            Promissory
                Note dated November 20, 2003 between NuWay Medical, Inc. and James
                Seay,
                DDS. (12)





10.14*
            Amendment
                No. 1 to Promissory Note (dated November 20, 2003 between NuWay Medical,
                Inc. and James Seay, DDS) dated February 10,
                2005





10.15
            Promissory
                Note by NuWay Medical, Inc. in favor of Augustine II, LLC
                (5)





10.16
            Amendment
                No. 1 to Term Loan Agreement dated as of March 30, 2004 between NuWay
                Medical, Inc. and Augustine II LLC
                (12)




-43-




10.17
            Amended
                and Restated Convertible Term Note by NuWay Medical, Inc. in favor
                of
                Augustine II, LLC (12)





10.18
            2003
                Stock Compensation Plan (11)





10.19
            Convertible
                Loan Agreement and Note between NuWay Medical, Inc. and James Burchard
                (12)





10.20
            Conversion
                Agreement with New Millennium dated October 16, 2003
                (6)





10.21
            Stock
                Purchase Agreement with Premium Medical Group, Luis Ruiz and Eduardo
                Ruiz
                (7)





10.22
            Rescission
                Agreement with Premium Medical Group, Luis Ruiz and Eduardo Ruiz
                (8)





10.23
            Unsecured
                Promissory Note dated March 7, 2005 in favor of Dennis Calvert
                (13)





10.24*
            Form
                of Convertible Term Note





14.1
            Code
                of Ethics (12)





21.1*
            List
                of Subsidiaries of the Registrant





23.1*
            Consent
                of Jeffrey S. Gilbert, CPA





31.1*
            Certification
                of Chief Executive Officer and Interim Chief Financial Officer Pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13(a)-14
                and
                15(d)-14 under the Securities Exchange Act of
                1934





32.1*
            Certification
                of Chief Executive Officer and Interim Chief Financial Officer Pursuant
                to
                18 U.S.C. Section 1350.





*
            Filed
                herewith


(1)
            Incorporated
                herein by reference from the 10-KSB filed by the Company for the
                year
                ended December 31, 2001.


(2)
            Incorporated
                herein by reference from the 10-KSB filed by the Company for the
                year
                ended December 31, 2002.


(3)
            Incorporated
                herein by reference from the Form S-8 filed by the Company on August
                8,
                2002, and amended on Form S-8 filed by the Company on December 27,
                2002.


(4)
            Incorporated
                herein by reference from the Form 8K filed by the Company on May
                1,
                2003.


(5)
            Incorporated
                herein by reference from the 10-QSB filed by the Company for the
                period
                ending March 31, 2003.


(6)
            Incorporated
                herein by reference from the Form 8-K filed by the Company on October
                31,
                2003.


(7)
            Incorporated
                herein by reference from the Form 8-K filed by the Company on February
                17,
                2004.


(8)
            Incorporated
                herein by reference from the Form 8-K filed by the Company on October
                15,
                2004.


(9)
            Incorporated
                herein by reference from the 10-KSB filed by the Company for the
                year
                ended December 31, 1998


(10)
            Incorporated
                herein by reference from the 10-KSB filed by the Company for the
                year
                ended December 31, 1999


(11)
            Incorporated
                herein by reference from the Form S-8 filed by the Company on February
                27,
                2003.


(12)
            Incorporated
                herein by reference from the 10-KSB filed by the Company for the
                year
                ended December 31, 2003


(13)
            Incorporated
                herein by reference from the 10-QSB filed by the Company for the
                period
                ending March 31, 2004.






-44-


**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**




The
      following table summarizes the fees charged by Gilbert, for certain services
      rendered to the Company relating to fiscal years 2003 and 2004.




Gilbert
      was retained by the Company in September 2004 to audit the Company’s financial
      statements and provide audit-related services for fiscal year 2003. 
      Because of the date of Gilbert’s engagement, he did not commence audit and
      audit-related services until September 2004. Accordingly, all of Gilbert’s fees
      were billed and partially paid during 2004 for the audit of the 2003
      fiscal year and are shown in the column below under "Fiscal Year
      2003".




**Amount
                Billed and Paid****Type
                of Fee**
            
            **Fiscal
                Year 2003**
            
            **Fiscal
                Year 2004**Audit(1)
            
            $
            40,050
            
            $
            18,000Audit-Related(2)
            
            
            2,500
            
            
            8,000Tax(3)
            
            
            -All
                Other(4)
            
            
            5,705Total
            
            $
            48,255
            
            $
            26,000





(1)
            This
                category consists of fees for the audit of our annual financial statements
                included in the Company’s annual report on Form 10-KSB and review of
                the financial statements included in the Company’s quarterly reports on
                Form 10-QSB. This category also includes advice on audit and
                accounting matters that arose during, or as a result of, the audit
                or the
                review of interim financial statements, statutory audits required
                by
                non-U.S. jurisdictions and the preparation of an annual “management
                letter” on internal control matters.(2)
            Represents
                services that are normally provided by the independent auditors in
                connection with statutory and regulatory filings or engagements for
                those
                fiscal years, aggregate fees charged for assurance and related services
                that are reasonably related to the performance of the audit and are
                not
                reported as audit fees. These services include consultations regarding
                Sarbanes-Oxley Act requirements, various SEC filings and the
                implementation of new accounting requirements.(3)
            Represents
                aggregate fees charged for professional services for tax compliance
                and
                preparation, tax consulting and advice, and tax planning.(4)
            Represents
                aggregate fees charged for products and services other than those
                services
                previously reported as charged by former auditors.






-45-


**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Company has duly caused this report to be signed on its behalf by
      the
      undersigned, thereunto duly authorized.


**NUWAY
              MEDICAL, INC.**Date: June
              28, 2005
            By:
            /s/ Dennis
              CalvertDennis
                Calvert, President,
              Chief Executive Officer and
              Interim Chief Financial
                Officer





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Company and in the
      capacities and on the date indicated:




NAME
            
            TITLE
            
            DATE/s/Dennis
                Calvert
            
            Chairman
                of the Board, Chief Executive Officer,
            
            June
                28, 2005Dennis
                Calvert
            
            President
                and Interim Chief Financial
                Officer/s/Joseph
                Provenzano
            
            Director
            
            June
                28, 2005Joseph
                Provenzano/s/Steven
                V. Harrison II
            
            Director
            
            June
                28, 2005Steven
                V. Harrison II/s/
                Gary Cox
            
            Director
            
            June
                28, 2005Gary
                Cox








-46-


**Report
      of Independent Registered Public Accounting Firm**




To
      the
      Board of Directors and Stockholders


NuWay
      Medical, Inc.




I
      have
      audited the consolidated balance sheets of NuWay Medical, Inc. and Subsidiary
      (the "Company") as of December 31, 2004 and 2003 and the related consolidated
      statements of operations, stockholders' deficit and cash flows for the years
      then ended. These consolidated financial statements are the responsibility
      of
      the Company's management. My responsibility is to express an opinion on these
      consolidated financial statements based on my audits.




I
      conducted my audits in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that I
      plan
      and perform the audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. An audit
      includes consideration of internal control over financial reporting as a basis
      for designing audit procedures that are appropriate in the circumstances, but
      not for the purpose of expressing an opinion on the effectiveness of the
      Company's internal control over financial reporting. Accordingly, I express
      no
      such opinion. An audit also includes examining, on a test basis, evidence
      supporting the amounts and disclosures in the consolidated 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. I believe my audits provide a reasonable basis for
      my
      opinion.




In
      my
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of NuWay Medical,
      Inc. and Subsidiary as of December 31, 2004 and 2003 and the results of their
      operations and their cash flows for the years then ended, in conformity with
      accounting principles generally accepted in the United States of
      America.




As
      discussed in Note 1 and 3 to the consolidated financial statements, the Company
      during 2003 discontinued its remaining operations.




The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern. As discussed in Note 1 to the
      consolidated financial statements, the Company has limited liquid resources,
      recurring losses, and is seeking to implement its business plan, which requires
      the Company to acquire or develop a business. These matters raise substantial
      doubt about its ability to continue as a going concern. Management's plans
      in
      regard to these matters are also discussed in Note 1. The consolidated financial
      statements do not include any adjustment that might result from the outcome
      of
      this uncertainty.




/s/
      JEFFREY S. GILBERT




Los
      Angeles, California




June
      17,
      2005







-47-


**INDEX
      TO FINANCIAL STATEMENTS**




Consolidated
                Balance Sheets as of December 31, 2004 and December 31,
                2003
            F-1Consolidated
                Statements of Operations for the years ended December 31, 2004 and
                2003
            F-2Consolidated
                Statements of Changes in Stockholders' Deficit for the years ended
                December 31, 2004 and 2003
            F-3Consolidated
                Statements of Cash Flows for the years ended December 31, 2004 and
                2003
            F-4Notes
                to Consolidated Financial Statements
            F-5
                - F-30














-48-


**NUWAY
      MEDICAL, INC AND SUBSIDIARY**


**CONSOLIDATED
      BALANCE SHEETS**


**AS
      OF DECEMBER 31, 2004 AND 2003**





ASSETSDecember
                31,
              2004
            
            December
                31, 2003CURRENT
                ASSETSCash
                and Cash Equivalents
            
            
            
            
            $
            --
            
            $
            671Total
                Current Assets
            
            
            
            
            
            --
            
            
            671TOTAL
                ASSETS
            $
            --
            
            $
            671LIABILITIES
                AND STOCKHOLDERS' EQUITYCURRENT
                LIABILITIESAccounts
                Payable and Accrued Expenses
            
            
            
            
            $
            2,054,270
            
            $
            1,256,475Notes
                Payable
            
            
            
            
            
            1,632,100
            
            
            1,605,000Discount
                on Note, Net
            
            
            
            
            
            --
            
            
            (62,131
            )Debentures
                Payable, Net
            
            
            
            
            
            21,151
            
            
            125,000Total
                Current Liabilities
            
            
            
            
            
            3,707,521
            
            
            2,924,344COMMITMENTS,
                CONTINGENCIES AND SUBSEQUENT EVENTSSHAREHOLDERS'
                EQUITYConvertible
                Preferred Series A, $.00067 Par Value, 25,000,000Shares
                Authorized, 559,322 Shares Issued andOutstanding
                at December 31, 2004 and December 31, 2003
            
            
            
            
            
            375
            
            
            375Common
                Stock, $.00067 Par Value, 100,000,000 SharesAuthorized,
                51,981,236 and 36,386,486 Shares IssuedAt
                December 31, 2004 and December 31, 2003, respectively
            
            
            
            
            
            34,120
            
            
            23,976Additional
                Paid-In Capital
            
            
            
            
            
            23,299,870
            
            
            23,002,818Accumulated
                Deficit
            
            
            
            
            
            (27,041,886
            )
            
            (25,823,838
            )Treasury
                Stock, at cost, 44,900 Shares Held as of December 31 2003
            
            
            
            
            
            --
            
            
            (127,004
            )Total
                Shareholders’ Equity
            
            
            
            
            
            (3,707,521
            )
            
            (2,923,673
            )TOTAL
                LIABILITIES AND SHAREHOLDERS’ EQUITY
            $
            --
            
            $
            671


See
        accompanying notes to consolidated financial statements


F-1








**NUWAY
                MEDICAL, INC AND SUBSIDIARY**
              **STATEMENTS
                OF OPERATIONS FOR THE YEARS ENDED**
              **DECEMBER
                31, 2004 AND 2003**  2004
                  
                  2003RevenueTotal
                      Revenues
                  
                  
                  --
                  
                  
                  --Costs
                      and ExpensesSelling,
                      General and Administrative
                  
                  $
                  971,944
                  
                  $
                  2,339,264Depreciation,
                      Depletion and Amortization
                  
                  
                  --
                  
                  
                  --Total
                      Costs and Expenses
                  
                  
                  971,944
                  
                  
                  2,339,264Loss
                      from operations
                  
                  
                  (971,944
                  )
                  
                  (2,339,264
                  )Other
                      Income and ExpenseInterest
                      Expense
                  
                  
                  (250,704
                  )
                  
                  (344,832
                  )Other
                      Income
                  
                  
                  4,600
                  
                  
                  --Net
                      Other Expense
                  
                  
                  (246,104
                  )
                  
                  (344,832
                  )Loss
                      Before Income Taxes
                  
                  
                  (1,218,048
                  )
                  
                  (2,684,096
                  )Net
                      Loss from Continuing Operations
                  
                  
                  (1,218,048
                  )
                  
                  (2,684,096
                  )Loss
                      from Discontinued Operations
                    (Includes
                      $651,750 of depreciation and amortization expense and $3,693,250
                      of
                      impairment charge of intangible assets)
                  
                  
                  --
                  
                  
                  (4,938,113
                  )Net
                      Loss
                  
                  $
                  (1,218,048
                  )
                  $
                  (7,622,209
                  )Loss
                      Per Common Share - Basic and DilutedLoss
                      per share from Continuing Operations
                  
                  $
                  (0.03
                  )
                  $
                  (0.08
                  )Loss
                      per share from Discontinued Operations
                  
                  
                  (0.00
                  )
                  
                  (0.7
                  )Net
                      Loss per Share, rounding
                  
                  $
                  (0.03
                  )
                  $
                  (0.25
                  )Weighted
                      Average Common Share Equivalents Outstanding
                  
                  
                  45,987,808
                  
                  
                  30,466,628


See
      accompanying notes to consolidated financial
      statements





F-2


**NUWAY
      MEDICAL, INC AND SUBSIDIARY**


**STATEMENTS
      OF STOCKHOLDERS’ DEFICIT**


**FOR
      THE YEARS ENDED DECEMBER 31, 2003 AND 2004**




Preferred
                  Stock
              
              Common
                  StockNumber
              
              Par
              
              Number
              
              Par
              
              Additional
              
              Retainedof
              
              Value
              
              of
              
              Value
              
              Paid-In
              
              Earnings
              
              TreasuryShares
              
              $.00067
              
              Shares
              
              $.00067
              
              Capital
              
              (Deficit)
              
              StockBALANCE
                  DECEMBER 31, 2002
              
              
              
              
              
              17,137,727
              
              $
                  11,483
              
              $20,239,936
              
              $(18,201,629)
              
              $(127,004)SALE
                  OF PREFERRED SHARES
              
              
              559,322
              
              
              375
              
              
              
              
              
              
              
              
              279,282STOCK
                  ISSUED FOR SERVICES
              
              
              
              
              
              
              
              
              18,623,759
              
              
              12,478
              
              
              2,458,611CONVERSION
                  OFDEBENTURES
              
              
              
              
              
              
              
              
              625,000
              
              
              15
              
              
              24,984NET
                  LOSS FOR THE YEAR ENDED
                DECEMBER
                  31, 2003
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (7,622,209
              )BALANCE
                  DECEMBER 31, 2003
              
              
              559,322
              
              
              375
              
              
              36,386,486
              
              
              23,976
              
              
              23,002,818
              
              
              (25,823,838
              )
              
              (127,004
              )STOCK
                  ISSUED FOR SERVICES
              
              
              
              
              
              
              
              
              9.183,400
              
              
              6,181
              
              
              362,885CONVERSION
                  OFDEBENTURES
              
              
              
              
              
              
              
              
              1,100,000
              
              
              405
              
              
              34,595RETIREMENT
                  OF TREASURY STOCK
              
              
              
              
              
              
              
              
              (44,900
              )
              
              (30
              )
              
              (126,974
              )
              
              
              
              
              127,004SALE
                  OF COMMON STOCK
              
              
              
              
              
              
              
              
              5,156,250
              
              
              3,454
              
              
              26,546ADJUSTMENT
                  TO COMMON STOCK
              
              
              
              
              
              
              
              
              2000,000
              
              
              134NET
                  LOSS
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,218,048
              )BALANCE
                  DECEMBER 31, 2004
              
              
              559,322
              
              $
              375
              
              
              51,981,236
              
              $
              34,120
              
              $
              23,299,870
              
              $
              (27,041,886
              )
              $
              --


See
        accompanying notes to consolidated financial
        statements




F-3


**NUWAY
      MEDICAL, INC AND SUBSIDIARY**


**STATEMENTS
      OF CASH FLOWS FOR THE YEARS ENDED**


**DECEMBER
      31, 2004 AND 2003**




2004
            
            2003CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                Loss
            
            $
            (1,218,048
            )
            $
            (7,622,209
            )Adjustments
                to Reconcile Net Loss to Net Cash Used in Operating
                Activities:Depreciation
                and Amortization
            
            
            --
            
            
            660,302Impairment
                of Property, Plant & Equipment
            
            
            --
            
            
            20,292Issuance
                of Stock for Services
            
            
            362,898
            
            
            2,175,459Loss
                on disposal of Discontinued Operations
            
            
            --
            
            
            3,693,250Amortization
                of Discount on Note
            
            
            62,131
            
            
            183,499Increase
                in Accounts Payable and Accrued Expenses
            
            
            725,248
            
            
            154,896Net
                Cash Used In Operating Activities
            
            
            (67,771
            )
            
            (734,511
            )CASH
                FLOWS FROM INVESTING ACTIVITIESNo
                Cash Used In or Provided by Investing Activities
            
            
            --
            
            
            --CASH
                FLOWS FROM FINANCING ACTIVITIESFunds
                from Loan
            
            
            60,000
            
            
            455,000Payments
                to reduce Note Payable
            
            
            (22,900
            )
            
            --Proceeds
                from Sale of Common Stock
            
            
            30,000
            
            
            --Proceeds
                from Sale of Preferred Stock
            
            
            --
            
            
            279,661Net
                Cash Provided By Financing Activities
            
            
            67,100
            
            
            734,661NET
                (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
            
            
            (671
            )
            
            150CASH
                AND CASH EQUIVALENTS - BEGINNING
            
            
            671
            
            
            521CASH
                AND CASH EQUIVALENTS - ENDING
            
            $
            --
            
            $
            671





SUPPLEMENTAL
                DISCLOSURES OF CASHFLOW INFORMATIONCash
                Paid During the Period for:Interest
            
            $
            --
            
            $
            --Income
                Taxes
            
            $
            --
            
            $
            --Conversion
                of Debentures and Accrued Interest to Capital
            
            $
            103,849
            
            $
            --


See
        accompanying notes to consolidated financial
        statements





F-4


**Note
      1. Business and Organization**




**Outlook**




As
      of
      December 31, 2004, and as of May 31, 2005, the Company had no continuing
      business operations. Any perceived value in the Company is both speculative
      and
      intangible in nature. The Company is operating as a public shell and its
      business operations consist of management seeking merger and acquisition
      candidates with ongoing operations.




Cash
      and
      cash equivalents totaled $0 at December 31, 2004. The Company had no revenues
      in
      the twelve-month period ended December 31, 2004 (except insignificant other
      income) and was forced to consume cash on hand and sell the Company’s common
      stock to fund operations. The Company’s cash position is insufficient to meet
      its operating expenses for any reasonable period of time. The Company will
      be
      required to raise additional capital to sustain basic operations through the
      remainder of 2005 and until a merger candidate with operations of its own is
      located and a transaction is consummated. While the Company is actively seeking
      investments through private investors and other parties, there is no assurance
      that the Company will be able to raise additional capital for the period
      required.




The
      Company's consolidated financial statements have been prepared assuming the
      Company will continue as a going concern, which contemplates the realization
      of
      assets and satisfaction of liabilities in the normal course of business. As
      of
      December 31, 2004, the Company had limited liquid and capital resources and
      the
      Company’s president is incurring costs on the Company’s behalf while seeking
      acquisition opportunities.




Ultimately,
      the Company's ability to continue as a going concern is dependent upon its
      ability to attract new sources of capital, establish an acquisition or reverse
      merger candidate with continuing operations, attain a reasonable threshold
      of
      operating efficiencies and achieve profitable operations.




For
      the
      twelve-month period ended December 31, 2004, the Company raised $221,033. These
      funds were raised through straight debt financing, convertible debt financing,
      equity financing, and advances from the Company’s president.




**Organization**




NuWay
      Energy, Inc., a Delaware corporation (formerly known as Latin American Casinos,
      Inc.), changed its name to NuWay Medical Inc. (NuWay) in October 2002. The
      name
      change reflected the Company's operating focus after it acquired a 15-year
      licensing right to certain medical technology from Med Wireless, Inc. in July
      2002. (See Note 3.) The Med Wireless software is a HIPAA (Health Insurance
      Portability and Accountability Act) compliant technological solution to
      electronically organize, store, and retrieve medical records and medical images.
      To market this licensing right, the Company formed NuWay Sports Medicine
      Ventures, LLC (subsequently renamed NuWay Sports LLC), in which it holds a
      51%
      membership interest, in December 2002. Although formed in 2002, the subsidiary
      did not begin




See
        accompanying notes to consolidated financial
        statements


F-5


operations
      until 2003. NuWay Sports developed the Player Record Library System (PRLS),
      which is a derivative product of the Med Wireless technology. PRLS is a secure
      database for athlete/patient medical data that can be acquired, displayed,
      analyzed, interpreted, and archived in a completely digital format, which has
      been customized for the sports industry. NuWay Sports generated $40,000 in
      revenue during the first quarter of 2003 and entered into negotiating for the
      possible use of the product with several professional sports leagues and
      individual professional sport clubs. However, these negotiations did not result
      in a transaction and the Company has had little success in generating ongoing
      revenue. As of December 2004, NuWay Sports had ceased marketing the PRLS system
      as a result of inadequate capital, marketing resources, and market competition.
      The PRLS system has not developed into a profitable operation and the Company
      desires to sell its licensing rights and PRLS product, but does not have any
      offers with tangible value.




In
      addition, the Company pursued a business opportunity related to an ultrasound
      machine sale-leaseback program. The business opportunity came about as a result
      of the Med Wireless License transaction with the Company, but no cost associated
      with this business opportunity was recorded on the books of the Company. Under
      this program, the Company attempted to arrange the purchase of ultrasound
      machines by investors, who would lease the machines to the Company. In turn,
      the
      Company would sub-lease the ultrasound machines to the end user. The Company
      secured purchase orders from both investors and prospective end-use lessees
      of
      the ultrasound machines. These purchase orders were conditioned upon the
      Company's ability to secure financing of its own lease obligations of the
      ultrasound machines from the investors. This was not accomplished because the
      Company lacked the financial resources and credit to obtain such financing.
      The
      Company continued to pursue attempts to arrange such financing through March
      2003. After March 2003, the Company focused primarily on the Med Wireless and
      PRLS technologies and, after occasional attempts to pursue the sale-leaseback
      program through mid-2003, this ultrasound program was no longer pursued.




**Note
      2. Summary of Significant Accounting Policies**




a)  Principles
      of Consolidation .




Management
      intends to sell NuWay Sports, LLC. Therefore as of December 31, 2003 revenues
      and expenses related to NuWay Sports, LLC have been reclassified from continuing
      operations to a Loss from Discontinued Operations. (Note 4) There are no other
      subsidiaries.




The
      consolidated balance sheets include the accounts of NuWay Medical, Inc. and
      NuWay Sports, LLC. The Company has significant influence of the business
      operations of NuWay Sports and operations are consolidated. All significant
      inter-company balances have been eliminated in consolidation.




b)  Property
      and Equipment .




On
      April
      1, 2004 the Company closed its offices and has in storage its furniture,
      fixtures and office equipment. As these items are idle and there is no
      foreseeable plan of use, management recorded a write down of the remaining
      net
      book value totaling $20,292 as of December 31, 2003. Any gain from the sale
      of
      these items would not have a material affect on these financial statements.
      While in use during 2003, depreciation was provided on a straight-line basis
      over the estimated useful life of the respective asset. Maintenance and repairs
      are charged to expense as incurred. There were no major renewals or
      betterments.




See
        accompanying notes to consolidated financial
        statements


F-6


c)  Impairment
      of Long-Lived Assets .




The
      Company periodically reviews its long-lived assets for potential impairment
      as
      required by Statement of Financial Accounting Standards No. 144, "Accounting
      for
      the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
      of." As discussed in Note 3, the Company recorded an impairment charge totaling
      $3,693,250, and $651,750 of depreciation and amortization charges relating
      to
      the acquired technology.




d)  Subsidiary
      and Technology Held for Sale and Discontinued Operations .




The
      Company is attempting to sell its majority-owned subsidiary, NuWay Sports and
      the Med Wireless technology. Thus, as of December 31, 2003 the Company has
      reflected on its Statement of Operations a loss from Discontinued Operations
      of
      $4,938,113 related to the Med Wireless technology and its investment in NuWay
      Sports, LLC. (Note 3) This amount includes the impairment and depreciation
      and
      amortization amounts described above and $593,113 in net operation charges
      incurred in 2003. There are minimal future costs expected to be incurred to
      sell
      this subsidiary or the technology and, in accordance with FASB Statement No.
      146
      "Accounting for Costs associated with the exit or disposal activities", any
      costs will be expensed as incurred.




e)  Earnings
      (Loss) Per Share .




The
      Company reports basic and diluted earnings (loss) per share (EPS) for common
      and
      common share equivalents. Basic EPS is computed by dividing reported earnings
      by
      the weighted average shares outstanding. Diluted EPS is computed by adding
      to
      the weighted average shares the dilutive effect if stock options and warrants
      were exercised into common stock. For the years ended December 31, 2004 and
      2003, the denominator in the diluted EPS computation is the same as the
      denominator for basic EPS due to the anti-dilutive effect of the warrants and
      stock options on the Company's net loss.




See
        accompanying notes to consolidated financial
        statements


F-7





For
      the
      years ended December 31, 2004 and 2003, the computation of basic EPS is as
      follows:




**Continuing
                Operations:**
            
            **2004**
            
            **2003**Numerator
                - net loss
            
            $
            (1,218,048
            )
            $
            (2,406,358
            )Denominator
                - weighted shares outstanding
            
            
            45,987,808
            
            
            30,466,628Loss
                per share from Continuing Operations
            
            $
            (0.03
            )
            $
            (0.08
            )**Discontinued
                Operations:**Numerator
                - net loss
            
            $
            --
            
            $
            (4,871,019
            )Denominator
                - weighted shares outstanding
            
            
            --
            
            
            30,466,628Loss
                per share from discontinued operations
            
            $
            (0.00
            )
            $
            (0.17
            )**TOTAL:**Numerator
                - net loss
            
            $
            (1,218,048
            )
            $
            (7,622,209
            )Denominator
                - weighted shares outstanding
            
            
            45,987,808
            
            
            30,466,628Loss
                per share
            
            $
            (0.03
            )
            $
            (0.25
            )


f)  Use
      of
      Estimates .




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities, the disclosure of contingent assets and liabilities at the date
      of
      the financial statements, and revenues and expenses during the period reported.
      Actual results could differ from those estimates. Estimates are used when
      accounting for stock-based transactions, uncollectible accounts receivable,
      asset depreciation and amortization, and taxes, among others.




g)  Stock
      Options and Warrants issued for Services .




As
      permitted under the Statement of Financial Accounting Standards No. 123 (SFAS
      No. 123), "Accounting for Stock-Based Compensation," the Company accounts for
      its stock-based compensation to employees in accordance with the provisions
      of
      Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
      to Employees," and related interpretations. The Company provides the pro forma
      net earnings, pro forma earnings per share, and stock based compensation plan
      disclosure requirements set forth in SFAS No. 123.




See
        accompanying notes to consolidated financial
        statements


F-8


In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued FASB
      Statement No. 123 (Revised 2004), “Share-Based Payment” (“SFAS No.123(R)”). SFAS
      No. 123(R) replaces SFAS No. 123 “Accounting for Stock-Based Compensation”,
      which supersedes Accounting Principles Board (“APB”) Opinion No. 25 “Accounting
      for Stock Issued to Employees”, (“APB 25”), and amends FASB Statement No 95,
“Statement of Cash Flows”. SFAS No. 123 (R) requires all share-based payments to
      employees, including grants to employee stock options, to be recognized in
      the
      financial statements based on their fair values. SFAS No. 123(R) is effective
      for the first annual reporting period beginning after June 15, 2005. The Company
      does not expect the impact of the adoption of SFAS 123(R) to have a material
      effect on the Company’s results of operations.




For
      stock
      issued to consultants and other non-employees for services, the Company records
      the expense based on the fair market value of the securities as of the date
      of
      the stock issuance.




h)  Advertising




The
      Company expenses all advertising costs as incurred. Included in the Statement
      of
      Operations is approximately $0 and $4,500 of advertising expense charged to
      operations for the years ended December 31, 2004 and 2003, respectively. During
      2003, substantially all advertising expenses to promote the Company's PRLS
      product, marketed through NuWay Sports, were paid through issuance of shares
      of
      the Company's common stock.




i)  Non-Cash
      Transactions




The
      Company has established a policy relative to the methodology to determine the
      value assigned to each intangible acquired with or licensed by the Company
      and/or services or products received for non-cash consideration of the Company's
      common stock. The value is based on the market price of the Company's common
      stock issued as consideration, at the date of the agreement of each transaction
      or when the service is rendered or product is received, as adjusted for
      applicable discounts.




The
      methods, estimates and judgments the Company uses in applying these most
      critical accounting policies have a significant impact on the results of the
      Company reports in its financial statements.




**Note
      3. Impairment of Intangible Assets - 2003**




During
      the third quarter of 2003, management conducted an impairment analysis of its
      two intangible assets, a marketing database purchased from Genesis Health Tech,
      Inc. and the Med Wireless software technology license acquired from Med
      Wireless, Inc. Both of those entities were controlled by Mark Roy Anderson.




With
      respect to the marketing database, management had no success in its marketing
      efforts and its future use was uncertain and at that time it had not used the
      marketing database to market any product or generate any revenue for the
      Company, and has thus determined to record a 100% impairment of that asset
      in
      the amount of $216,750.




See
        accompanying notes to consolidated financial
        statements


F-9


With
      respect to the Med Wireless license, management analyzed the sales prospects
      of
      its PRLS system (which is a derivative product based upon the technology
      licensed from Med Wireless) to the various professional and collegiate sports
      organizations. It evaluated the successes the Company's NuWay Sports subsidiary
      had in its sales efforts, and the revenue from projected future sales, and
      determined to record an impairment charge to the recorded value of the Med
      Wireless license of $1,649,594. This amount was calculated projecting sales
      over
      a three year period (calendar years 2004, 2005 and 2006), factoring in the
      costs
      of sales and the product costs, discounting projected net revenue to their
      present value using a 7.5% interest factor, and further discounts of the
      Company's projections for uncertainties relative to the timing of acceptance
      of
      this technology.




It
      was
      stated in the Company's Quarterly Report on Form 10-QSB for the period ended
      September 30, 2003 that management did not believe that further impairment
      of
      the Med Wireless license would be necessary. However, due to the lack of capital
      to sustain marketing, product development, and operational needs, the Company
      was unable to obtain significant sales and had not met any projected results.
      In
      addition, the Company is attempting to sell the NuWay Sports subsidiary that
      was
      marketing the PRLS system. In light of these circumstances, management
      determined that the book value of the license would not exceed the expected
      discounted cash flows of its sales projections. Thus management has recorded
      an
      additional impairment charge of $1,826,906 in the fourth quarter of the year
      ending December 31, 2003. For the fiscal year ending December 31, 2003, the
      Company recorded a total impairment charge of $3,693,250. Of this amount,
      $216,750 was related to the impairment of the marketing database and the
      remaining $3,476,500 related to the Med Wireless license. For the year ended
      December 31, 2003, the Company recorded an impairment charge totaling
      $3,693,250, and $651,750 of depreciation and amortization charges related to
      the
      technology acquired in 2002.




**Note
      4. Discontinued Operations**




Management
      determined that because of the Company's limited financial resources and
      increased competition, it would discontinue operations of NuWay Sports and
      any
      effort to exploit the Med Wireless license, including development and marketing
      of the product. The Company faces increased competition from other more
      established companies with more human resources and capital recourses to market
      their competing products. While PRLS is narrowly defined in its application
      to
      the sports industry, management believes the technology related to the PRLS
      and
      the Med Wireless license could be expanded by others to serve corporate,
      government or health provider markets. However, the Company is unable to
      adequately support the continued development and marketing of the product to
      take advantage of those potential markets. Because NuWay Sports was able to
      demonstrate its application with the NFL in the past, the underlying asset
      and
      its potential for future deployment has potential value to an entity desiring
      and capable of exploiting the pursuit of those customers. Therefore, management
      is actively seeking to sell NuWay Sports.




The
      consolidated statement of operations for the year ended December 31, 2003
      reflects a discontinued operations segments related to the abandonment of the
      exploitation of the Med Wireless technology after a charge to impairment in
      an
      amount equal to the remaining net book value related to 2002 acquired
      technology. The aggregate of impairment, depreciation and amortization and
      net
      loss from discontinued operations was $4,938,113. Although the formal decision
      to discontinue the operations was made subsequent to December 31, 2003,
      management of the Company believes that this presentation appropriately reflects
      the current activity and status of the Company.




See
        accompanying notes to consolidated financial
        statements


F-10


**Note
      5. Property and Equipment.**




On
      April
      1, 2004 the Company closed its offices and has in storage its furniture,
      fixtures and office equipment. As these items are idle and there is no
      foreseeable plan of use, management recorded a write down of the remaining
      balance net book value totaling $20,292 as of December 31, 2003.




**Note
      6. Warrants**




During
      2003, the Company issued warrants to purchase a total of 7,011,036 shares of
      common stock on the following terms: (i) 120,000 shares to an investor in
      connection with a purchase of the Company's preferred stock, at a price of
      $0.20
      per share, which expires March 7, 2006 (ii) 399,322 shares to investors in
      connection with a purchase of the Company's preferred stock, at a price of
      $0.20
      per share, which expires April 15, 2006; (iii) 6,158,381 shares to an investor
      in connection with a loan to the Company, originally at a price of $0.16 per
      share, which price adjusted to $0.035 per share in connection with an extension
      of the loan repayment obligation, which expires June 10, 2008; (iv) 333,333
      shares to a consultant in connection with consulting services, at a price of
      $0.06 per share, which expires August 29, 2008. The compensation expense related
      to (iv) above is immaterial.




On
      October 29, 2003, the Company issued an unvested warrant to an individual to
      purchase 2,000,000 shares of common stock at $0.05 a share. The warrant expired
      on October 29, 2004. The Warrant was not exercisable unless and until the Holder
      introduced to the Company an investor or investors which invest net proceeds
      in
      the Company of at least $250,000 within three months of the introduction. This
      condition was not satisfied and the warrant expired unvested.




In
      August
      2002, the Company issued a warrant to purchase 100,000 shares of common stock
      at
      $0.30 per share to a former executive in connection with his resignation from
      the Company. The Company recorded compensation expense of $25,000 based on
      the
      difference between the exercise price and the market price at the date of
      issuance. These warrants expired unexercised February 23, 2004.




In
      December 2000, the board of directors authorized the issuance of 3,300,000
      private five-year stock warrants to acquire common stock at $1.75 per share.
      1,500,000 of these warrants as well as 200,000 shares of restricted stock were
      issued to the then existing executive officers. In February 2002, 3,000,000
      of
      the 3,300,000 warrants issued in year 2000 were cancelled. The remaining 300,000
      warrants expire in 2005.




See
        accompanying notes to consolidated financial
        statements


F-11


Effective
      June 5, 1998, the Company contracted with an investment banker to provide on
      a
      non-exclusive basis to the Company assistance in possible mergers, acquisitions
      and capital structuring. The duration of the contract is for five years. In
      consideration for these services, the Company granted warrants to purchase
      an
      aggregate of 225,000 shares of common stock at the closing bid price of $1.875
      as of June 5, 1998. Effective February 8, 2000, the board of directors reduced
      the exercise price to $1.06, which was the closing price of the stock on that
      date. These warrants expired unexercised in June 2003.




**Note
      7. Stock Compensation Plans**




**1994
      STOCK OPTION PLAN**




On
      June
      13, 1994, the board of directors adopted the 1994 Stock Option Plan in which
      the
      aggregate number of shares for which options may be granted under the Plan
      shall
      not exceed 1,000,000 shares . In June 1999, the Company increased the shares
      allocated to the plan to 1,500,000. The term of each option shall not exceed
      ten
      years from the date of granting (five years for options granted to employees
      owning more than 10 percent of the outstanding shares of the voting stock of
      the
      Company). The 1994 Plan terminated in June 2004.




At
      December 31, 2004 and 2003, the Company had options outstanding and exercisable
      as follows:




Number
                of Shares
            
            Price
                Per ShareOptions
                Outstanding at December 31, 2002
            
            
            65,000
            
            $
            1.00
                - $1.75Options
                Issued
            
            
            --Options
                Exercised
            
            
            --Options
                Expired
            
            
            (65,000
            )
            $
            1.00
                - $1.75Options
                Outstanding at December 31, 2003
            
            
            --Options
                Issued
            
            
            --Options
                Exercised
            
            
            --Options
                Expired
            
            
            --Options
                Outstanding at December 31, 2004
            
            
            --


All
      outstanding stock options and warrants were fully exercisable at December 31,
      2003. The following shows the years in which these options and warrants will
      expire:




Private
                Warrants
            
            Investment
                Banker Warrants
            
            Employee
                Stock Options and WarrantsRange
                of Prices
            
            $0.06
                to $1.75
            
            $1.06
            
            $0.30
                to $1.75Expired
                in 2003
            
            
            --
            
            
            225,000
            
            
            65,000Expired
                in 2004
            
            
            --
            
            
            --
            
            
            100,000To
                Expire in 2005
            
            
            300,000
            
            
            --
            
            
            --To
                Expire in 2006
            
            
            559,322
            
            
            --
            
            
            --To
                Expire in 2008
            
            
            6,491,714
            
            
            --
            
            
            --


See
      accompanying notes to consolidated financial
      statements


F-12


The
      Company also had 1,725,000 publicly traded warrants to purchase the Company's
      common stock at an exercise price of $3.00 per share which expired unexercised
      on December 11, 2003.




**2002
      CONSULTANT EQUITY PLAN**




In
      August
      of 2002, the board approved the formation of the 2002 Consultant Equity Plan
      designed to allow consultants to be compensated with shares of Company common
      stock for services provided to the Company. A total of 5,000,000 shares were
      registered under this plan with the Securities and Exchange Commission (the
      "SEC") during 2002. The Board amended this plan in December 2002. Approval
      of
      this plan was not submitted to the vote of the shareholders. Persons eligible
      to
      receive stock awards under this plan included "consultants" that provide bona
      fide consulting services to the Company, excluding any services incident to
      the
      raising of capital or promotion or maintenance of a market for the Company's
      securities. The plan is set to expire 10 years from its inception. A plan
      committee of two or more members of the Board administers the plan. The plan
      committee can award shares or options to purchase shares at a price in its
      discretion, so long as the price chosen is not less than 85% of the fair market
      value of the underlying shares as of the date of the grant.




At
      December 31, 2002, there were 2,636,000 of unrestricted shares that were issued
      in January 2003 for services performed in 2002. Of this amount, 1,200,000 shares
      were issued to executive officers and the remaining balance was issued to
      various individuals for consulting, legal and accounting services. Compensation
      and consulting expense equal to the market value of the stock at the date of
      issuance totaling $645,000 was accrued in December 2002.




From
      August 2002 through February 2003, the Company issued all but 84,452 of the
      5,000,000 shares available under this plan to approximately 26 consultants,
      employees and directors. Part of this issuance was a grant of 1,000,000 shares
      to Mr. Dennis Calvert, president and CEO of the Company, as consideration for
      his services. Those 1,000,000 shares were issued in January of 2003, but were
      returned by Mr. Calvert to the Company for cancellation that same
      month.






**2003
      STOCK COMPENSATION PLAN**




On
      February 14, 2003, the board of directors approved the Company's 2003 Stock
      Compensation Plan as a means of providing directors, key employees and
      consultants' additional incentive to provide services for the Company. Both
      stock options and stock grants may be made under this plan. The Plan sets aside
      up to 15,000,000 shares of the Company's common stock for these purposes, which
      were registered with the SEC. Approval of this plan was not submitted to the
      vote of the shareholders. The Board administers this plan. The plan allows
      the
      Board to award grants of common shares or options to purchase common shares.
      The
      board has discretion to set the price of the options, but in no event shall
      that
      price be less than 100% of the fair market value of the shares at the time
      of
      the grant. The Board may at any time amend or terminate the plan. It does not
      expire on its terms.




See
        accompanying notes to consolidated financial
        statements


F-13


During
      2003, the Company issued 19,248,759 shares to approximately 37 consultants,
      directors, and employees. Of this total, 17,327,753 have been registered with
      the SEC, while the balance of 1,921,006 shares, were not registered and are
      restricted securities. Of the total issued in 2003, 2,633,590 relate to services
      performed in 2002 and 16,519,169 relate to 2003. The expenses related to the
      shares issued for 2002 services in 2003 were recorded in the Company's financial
      statements for the year ending December 31, 2002. In 2003 there were $1,554,700
      of expenses recorded related to the issuance of these shares. Of this amount
      $1,045,600 related to consulting services, $394,000 related to legal services,
      $63,000 related to Advisory and Board of Directors expense, and $52,100 related
      to salary expense.




At
      December 31, 2003, there were 900,000 unrestricted shares held, to be issued
      when the Company is in compliance with its regulatory filings. All of these
      shares are to be issued and the consulting expense related to these share totals
      $81,000 and is included in the Accounts Payable and Accrued Expenses as of
      December 31, 2003 .




The
      board
      of directors approved a grant of 3,000,000 shares of stock pursuant to the
      Company's 2003 Stock Compensation Plan to Mr. Dennis Calvert, president and
      CEO
      of the Company, as consideration for his services. Those 3,000,000 shares were
      issued in March 2003. The board of directors subsequently modified its approval
      of this issuance to make it conditioned upon stockholder approval of the
      transaction because of NASDAQ Marketplace Rules governing change of control
      transactions. Mr. Calvert returned those 3,000,000 shares to the Company and
      they are not included in the above-described issuance.




**NUWAY
      MEDICAL, INC. 2004 EQUITY PLAN**




On
      March
      10, 2004, the board of directors approved the Company's 2004 Equity Plan as
      a
      means of providing directors, key employees and consultants additional incentive
      to provide services for the Company. Both stock options and stock grants may
      be
      made under this plan. The Plan sets aside up to 20,000,000 shares of the
      Company's common stock for these purposes, which were registered with the SEC.
      Approval of this plan was not submitted to the vote of the shareholders. The
      Board administers this plan. The plan allows the Board to award grants of common
      shares or options to purchase common shares. As plan administrator, the board
      has sole discretion to set the price of the options. The Board may at any time
      amend or terminate the plan. It does not expire on its terms.




During
      2004, the Company issued approximately 9,180,000 shares to 16 consultants,
      directors, and employees. Of this total 5,680,000 have been registered with
      the
      SEC, while the balance, 3,500,000 shares were not registered and are restricted
      securities. Of the total issued in 2004, 1,580,000 shares relate to services
      performed in 2003 and 7,600,000 shares relate to 2004. The effect of the shares
      issued for 2003 services in 2004 was accrued in the Company's financial
      statements for the year ending December 31, 2003. In 2004 there were $275,400
      of
      expenses recorded related to the issuance of these shares. Of this amount
      $120,000 related to consulting services, $5,400 related to legal services,
      $60,000 related to Board of Directors expense, and $90,000 related to salary
      expense.




See
        accompanying notes to consolidated financial
        statements


F-14


**Note
      8. Sale of Unregistered Securities in 2004**




In
      January 2004, The Company issued 30,000,000 shares of common stock to the
      Premium Medical Group Shareholders in connection with a transaction in which
      the
      Company acquired the outstanding stock of Premium Medical Group. This
      transaction has since been rescinded by the parties. (Note 15)




In
      February 2004, the Company received gross and net proceeds of $5,000 from an
      individual investor in connection with the sale of 156,250 shares of the
      Company’s common stock. The issuance of the shares described above was made in
      reliance on the exemption from registration set forth in Section 4(2)
      of
      the Securities Act of 1933, as amended.




In
      February, 2004, the Company issued 600,000 shares of its common stock to former
      convertible debenture holders to partially satisfy its obligations on a
      settlement agreement. The shares issued reduced the Company’s settlement
      obligations by approximately $17,000.




In
      February, 2004, the Company issued an unvested warrant to Sachi International,
      Inc. to purchase up to 3,000,000 shares of common stock at $0.04 a share. The
      Warrant vests based on the amount of investment proceeds brought to the Company
      by the Holder, with 100% vesting if the Holder brings $500,000 in investment
      capital. In the event less than $500,000 is invested, the warrant vests in
      a
      pro-rata amount. The closing of any such investment shall be in the sole and
      absolute discretion of the Company. Sachi International, Inc., has not met
      the
      conditions to vest the warrant.




In
      March
      2004, the Company issued 200,000 shares in exchange for professional services
      provided to the Company.




In
      March
      2004, the Company issued 3,000,000 shares to three of its four directors in
      exchange for services provided to the Company.




In
      September, 2004, the Company received gross and net proceeds of $25,000 from
      two
      individual investors in connection with the sale of 5,000,000 shares of the
      Company’s common stock.




In
      October, 2004, the Company received gross and net proceeds of $50,000 from
      an
      outside investor and issued its convertible promissory note due and payable
      one
      year from the date of issuance. The note bears interest at a rate of 10% per
      annum, payable on the maturity date. The note can be converted, in whole or
      in
      part, into shares of the Company’s Series A Preferred stock, on the basis of
      $.005 per share, at any time prior to maturity by either the Company or the
      lender. Each share of Series A Preferred Stock may be converted by the holder
      into one share of the Company’s common stock. If the noteholder converts the
      note into Series A Preferred Stock, on or after the note’s original maturity
      date the noteholder may require the Company to buy back the shares of Series
      A
      Preferred Stock for 110% of the principal amount of the promissory note (the
      “Buy Back Provision”). If the Company is unable to do so, the Company’s
      president, Dennis Calvert, has agreed to buy back the shares on the same terms.
      If shares of Series A Preferred Stock are converted into common stock, the
      holder has the right to include (piggyback) the shares of common stock in a
      registration of securities filed by the Company (other than on Form S-4 or
      Form
      S-8).




See
        accompanying notes to consolidated financial
        statements


F-15


The
      Company’s payment obligations under the note may be accelerated upon the
      following events: (i) the sale of the Company’s assets outside the ordinary
      course of business; (ii) a breach of the representations and warranties
      contained within the agreement evidencing the loan; (iii) the failure to timely
      pay the note; (iv) the Company’s default in any other loan obligation greater
      than $100,000; (v) the Company’s dissolution, liquidation, merger,
      consolidation, bankruptcy, or future insolvency; and (vi) the commencement
      of
      any suit that threatens to have a material adverse effect on the Company,
      including the entry of a final judgment or settlement in excess of
      $100,000.




In
      November, 2004, the Company received gross and net proceeds of $10,000 from
      an
      outside investor and issued a convertible promissory note on substantially
      the
      same terms as the previously described note.




In
      December, 2004, the Company issued 500,000 shares of its common stock to its
      remaining former convertible debenture holder to partially satisfy its
      obligations on a settlement agreement. The shares issued reduced the Company’s
      settlement obligations by approximately $8,700.




**Sale
      of Preferred Shares**




During
      the year ended December 31, 2003, the Company entered into two Convertible
      Preferred Stock and Warrant Purchase Agreements whereby the Company sold an
      aggregate of 559,322 shares of a newly created series of Preferred Stock, Series
      A Convertible Preferred Stock, par value $.00067, for a total consideration
      of
      $279,661. Each share of the Series A Preferred Stock is convertible into one
      share of the Company's common stock. In addition, for each share of preferred
      stock sold, the purchaser received one warrant to purchase one share of common
      stock at a price of $0.20 per share. Using the Black-Scholes pricing model,
      the
      Company estimated the fair value of these warrants to be approximately $35,000,
      and such amount has been netted in additional paid in capital on the December
      31, 2003 consolidated balance sheet. The Black Scholes calculation assumed
      a
      discount rate of approximately five percent, volatility of 180 percent, and
      no
      dividends. The Series A Preferred Stock may be converted by the holder, at
      any
      time after six months from the purchase date and the warrant is exercisable
      for
      a period of three years from the purchase date. These Preferred Shares shall
      vote with the holders of the outstanding shares of Common Stock and not as
      a
      separate class or series.




The
      holders of outstanding shares of Series 2003 Convertible Preferred Stock (which
      may be referred to as the "Series 2003 Preferred Stock") shall be entitled
      to
      receive in any fiscal year, dividends, if, when and as declared by the Board
      of
      Directors, out of any assets at the time legally available therefore in cash
      at
      a rate equal to 7% per share, per annum, of the original liquidation preference
      of $2.00 per share, subject to adjustment as provided herein. There have been
      no
      dividends declared by the Board of Directors of the Company.




See
        accompanying notes to consolidated financial
        statements


F-16


**Note
      9. Convertible Debentures**




In
      December 2000, the Company, through a private placement, issued $3,500,000
      principal amount of 6 percent Convertible Debentures to several investors.
      These
      debentures were originally due June 13, 2001 and their maturity date was
      subsequently extended to December 13, 2001. They are convertible into common
      stock at a price of $1.75 per share. The interest on the debentures is payable
      either in cash or shares of common stock, at the discretion of the Company.
      During 2001, $1,100,000 of the debentures plus accrued interest was converted
      into 666,283 shares of the Company's common stock. During 2002, $2,250,000
      of
      the remaining debentures plus accrued interest was converted into 1,332,570
      shares of common stock.




In
      December 2002 the Company received a notice from the remaining two debenture
      holders (the "Remaining Debenture Holders") requesting conversion of the
      remaining outstanding $150,000 of debentures. The notice provided that, as
      a
      condition to conversion, the certificates representing the shares issuable
      upon
      conversion of the debentures would need to be delivered to the Remaining
      Debenture Holders prior to the end of 2002. Pursuant to the request, and to
      complete the conversion, the Company issued to the Remaining Debenture Holders
      96,006 shares of common stock and promptly notified the Remaining Debenture
      Holders' counsel and the Company's transfer agent of the approval and
      ratification of the issuance. However, the actual certificates representing
      the
      shares were not delivered to the Remaining Debenture Holders until the first
      quarter of 2003. The Remaining Debenture Holders then refused acceptance of
      the
      shares, claiming that because the actual certificates representing the shares
      were not delivered in 2002 as specified in the conversion notice, the conversion
      was invalid and the debentures would therefore remaining outstanding and
      continue to accrue interest until repaid in full. The Remaining Debenture
      Holders then demanded full payment on their $150,000 of debentures (plus accrued
      interest).




In
      June
      2003, the Remaining Debenture Holders filed suit in the Orange County Superior
      Court against the Company claiming it breached the debenture agreement by
      failing to honor the terms of the notice of conversion. The Company and the
      Remaining Debenture Holders then entered into a settlement agreement in which
      the Remaining Debenture holders would convert the debentures into common stock
      equal to approximately $70,000. The settlement agreement called for conversion
      into stock over a period of three months. The Company had partially satisfied
      the obligations under this agreement as of December 31, 2003, and further
      satisfied its obligations in 2004.




See
        accompanying notes to consolidated financial
        statements


F-17


**Note
      10. Loan Agreement**




On
      June
      10, 2003 the Company entered into a Term Loan Agreement ("Loan Agreement")
      with
      Augustine II, LLC ("Augustine"), pursuant to which Augustine agreed to loan
      the
      Company $420,000, payable in installments of $250,000, $100,000, and $70,000
      (the "Loan"). The Company received all scheduled installments, and principal
      and
      interest (at an annual rate of 10%) were originally due in full on February
      29,
      2004. Augustine, however, agreed to extend the maturity date of the Loan
      Agreement to August 2004. In addition to the extension of the maturity date,
      Augustine was given the option of having the Loan satisfied in cash or by the
      conversion of any remaining principal balance and any accrued interest on the
      Loan to shares of the Company's common stock at a 15% discount to market, so
      long as Augustine's holdings do not exceed 4.9% of the total issued and
      outstanding shares of the Company's common stock at any time. Since that time,
      the Company and Augustine have entered into negotiations to further extend
      the
      maturity date of the Loan and those negotiations are currently being finalized
      and the new terms documented. While the precise terms have not been finalized
      and are subject to change, the Company believes that the loan will be extended
      an additional six months. The Company recorded $69,445 for the year ended
      December 31, 2004 and $23,210 of interest expense for the year ended December
      31, 2003. The Loan Agreement is subject to certain requirements that the Company
      make mandatory prepayments of the Loan from the proceeds of any asset sales
      outside of the ordinary course of business, and, on a quarterly basis, from
      positive cash flow. In addition, the Company may prepay all or any portion
      of
      the Loan at any time without premium or penalty. The proceeds of the Loan were
      used by the Company for working capital.




As
      additional consideration for making the Loan, Augustine received five year
      warrants to purchase up to 6,158,381 shares of the Company's common stock at
      an
      exercise price of $0.16 per share. The Company can require that the warrants
      be
      exercised if the Company's shares trade at or above $0.60 per share for each
      trading day within the 30 calendar days prior to the maturity date of the Loan,
      trading volume of the shares equals or exceeds 100,000 shares per day during
      such period, and the shares of the Company's common stock underlying the
      warrants have been included on a registration statement filed with and declared
      effective by the SEC prior to the maturity date. If these conditions are not
      fully satisfied by the maturity date, then Augustine may, at any time following
      the maturity date and so long as the warrants remain exercisable, elect to
      exercise all or any portion of the warrants pursuant to the "cashless exercise"
      provisions of the warrants. Using the Black-Scholes pricing model, the Company
      allocated approximately $245,000 of the Loan proceeds to the warrants and
      $175,000 to the note payable, which allocations were made on a pro rata basis
      based on the fair value of the warrants. The Black Scholes calculation assumed
      a
      discount rate of approximately four percent, volatility of 257 percent and
      no
      dividends. Given that the warrants were issued in conjunction with Loan
      Agreement, such fair value represents an effective discount on the debt and
      will
      be amortized over the term of the loan. Amortization of this discount for the
      year ended December 31, 2003 was approximately $183,500 and $61,500 for the
      year
      ended December 31, 2004 and is recorded as effective interest expense in the
      accompanying consolidated statement of operations. In conjunction with the
      extension of the maturity date of the Loan from February 2004 to August 2004,
      the warrants held by Augustine to purchase 6,158,381 shares of the Company's
      common stock were re-priced to an exercise price of $.035 per
      share.




As
      security for the Loan, New Millennium (an affiliate of Mr. Calvert) pledged
      2.5
      million shares of the Company's common stock owned by New Millennium, and the
      Company has granted Augustine a security interest in its ownership interest
      in
      the Company's subsidiary, NuWay Sports, LLC.




See
        accompanying notes to consolidated financial
        statements


F-18


**Note
      11. Other Loan**




On
      November 20, 2003, the Company received $50,000 in exchange for a promissory
      note in which it agreed to pay $65,000 to Dr. James Seay (the “noteholder”) 90
      days from the date of the loan. The Company's president personally guaranteed
      the note. The note matured on February 18, 2004. The Company has paid the
      noteholder $30,000 and the balance of $35,000 remains outstanding. On February
      10, 2005, the Company amended its obligations to the noteholder, which amendment
      (i) extends the maturity date of the note to February 3, 2006, (ii) provides
      for
      interest to accrue at a rate of 10% per annum (15% upon default), and (iii)
      allows for the conversion of the note into 7,000,000 shares of the Company’s
      common stock, or $.005 per share.




During
      2004, the Company raised $60,000 and issued convertible promissory notes due
      and
      payable one year from the date of issuance. The notes bear interest at a rate
      of
      10% per annum, payable on the maturity date, and can be converted, in whole
      or
      in part, into shares of the Company’s Series A Preferred stock, on the basis of
      $.005 per share, at any time prior to maturity by either the Company or the
      lender. Each share of Series A Preferred Stock may be converted by the holder
      into one share of the Company’s common stock. If the noteholder converts the
      note into Series A Preferred Stock, on or after the note’s original maturity
      date, the noteholder may require the Company to buy back the shares of Series
      A
      Preferred Stock for 110% of the principal amount of the promissory note. If
      the
      Company is unable to do so, the Company’s president, Dennis Calvert, has agreed
      to buy back the shares on the same terms. If shares of Series A Preferred Stock
      are converted into common stock, the holder has the right to include (piggyback)
      the shares of common stock in a registration of securities filed by the Company
      (other than on Form S-4 or Form S-8).




**Note
      12. Provision for Income Taxes**




Any
      deferred tax assets have been subjected to a 100% valuation allowance, as
      management is unable to determine that it is more likely than not that such
      will
      be realized. Due to changes in the Company's ownership through various issuance
      of common stock during 2002 and 2003, the utilization of net operating loss
      carryforwards may be subjected to annual limitations under provisions of the
      Internal Revenue Code. Such limitations could result in the permanent loss
      of a
      portion of the net operating loss carry forwards. The Company has not yet
      evaluated the status of its net operating loss carry forwards and may not do
      so
      until such time as the Company expects operating profits.




The
      Company has not filed its 2002, 2003 and 2004 Federal and State Income tax
      returns. Management of the Company does not feel that it will have a material
      impact on the financial condition of the Company.




See
        accompanying notes to consolidated financial
        statements


F-19


**Note
      13. Related Party Transactions**




**Due
      To President**




***New
      Millennium Note***




In
      conjunction with the acquisition of the technology license from Med Wireless,
      Inc. on August 21, 2002, the Company assumed a $1,120,000 note with interest
      at
      10% per annum payable by Med Wireless to Summitt Ventures, Inc., a company
      controlled by Mark Roy Anderson. The note is secured by the Company's assets
      and
      was originally due on June 15, 2003. On March 26, 2003, Summitt Ventures sold
      the note, together with 4,182,107 shares of the Company's common stock, to
      New
      Millennium Capital Partners LLC ("New Millennium"), a limited liability company
      controlled and owned by the Company's president and family, in exchange for
      a
      $900,000 promissory note issued by New Millennium in favor of Summitt
      Ventures.




This
      note
      is secured by all of the stock of the Company owned by New Millennium and Mr.
      Calvert. On March 26, 2003, the Company's board of directors voted to convert
      the $1,120,000 note held by New Millennium into 22,400,000 shares of restricted
      common stock of the Company (at a conversion price discounted 37.5% to the
      then
      market price of $0.08). New Millennium agreed to this conversion. Subsequent
      to
      the vote by the board to convert the note, the Company received notification
      from NASDAQ's Listing Qualifications Department that converting the note without
      shareholder approval violated certain NASDAQ Marketplace Rules. In response
      to
      this notification, the board, with the concurrence of New Millennium, voted
      to
      amend its resolution and withhold issuance of the shares to New Millennium
      until
      the Company's shareholders approved the conversion. This shareholder vote has
      not taken place and the shares have not been issued to New Millennium.




New
      Millennium Capital Partners, LLC, a Nevada limited liability company partially
      owned and controlled by the Company's President and his family as an investment
      vehicle was formed in 1999. No individual, entity or party (s) associated with
      the Company's business has ever had any ownership interest in New Millennium
      and
      it is an independent company. Mark Anderson, a principal or controlling
      stockholder of those companies, conditioned the purchase by New Millennium
      on
      the Company converting the promissory note to common stock. The conversion
      of
      the note held by New Millennium is a matter to be brought before the NuWay
      shareholders at its next available shareholders meeting.




The
      business purpose of the original decision to convert the note into equity was
      to
      retire $1,120,000 in debt owed by the Company thereby increasing shareholder
      equity by that amount and avoiding a default on the note and the insolvency
      and
      possible liquidation of the Company. In arriving at a conversion price, the
      board of directors determined that a 37.5% discount to market price was
      appropriate based on a number of factors, including that (i) with the quantity
      of the shares that would be issued, a block of shares that size could not be
      liquidated without affecting the market price of the shares, and (ii) the shares
      would be "restricted shares" and could therefore not be sold by New Millennium
      (an affiliate of the Company) in the public markets prior to two years from
      the
      date of the conversion, and thereafter would be subject to the volume and manner
      of sale limitations of Rule 144 under the Securities Act of 1933.




See
        accompanying notes to consolidated financial
        statements


F-20


To
      allow
      time for a shareholder vote with respect to the conversion, New Millennium
      agreed to extend the terms of the note, from June 15, 2003 to October 1,
      2003.




At
      the
      Company's June 6, 2003 board meeting, Mr. Calvert, on behalf of New Millennium,
      and the Company, through the unanimous action of the Board (with Mr. Calvert
      abstaining), agreed that, in light of current market conditions (namely the
      significant increase in the trading price of the Company's common stock since
      March 26, 2003, the date on which the conversion of the note to equity was
      originally approved by the Board, from $0.08 to $0.28 as of June 6, 2003),
      it
      would be inequitable for New Millennium to convert the note at the originally
      agreed to $0.05 per share price. In this regard, Mr. Calvert, on behalf of
      New
      Millennium, and the Company orally agreed to rescind the agreement to convert
      the note. In addition, New Millennium orally agreed with the Company to extend
      the maturity date of the note to a first payment due October 1, 2003 in the
      amount of $100,000 and the balance of the principal due on April 1, 2004, with
      interest due according to the original terms of the note (to correspond to
      the
      payment terms of the note made by New Millennium in favor of Summitt), and
      furthermore to reduce the Company's obligation on the note to the extent that
      New Millennium is able to reduce its obligation on its note with Summitt
      Ventures. While the prior holder of the note, Summitt Ventures, purported to
      condition New Millennium's purchase on the conversion of the note, Mr. Calvert
      has represented to the Company that due to Mr. Anderson's actions, Mr. Calvert
      now believes that conversion of the note is no longer a required term of the
      agreement between New Millennium and Summitt.




The
      Company was unable to pay the note at the due date of October 1, 2003. At the
      board meeting on October 15, 2003, the board determined to put the issue of
      conversion of the note to the Company's shareholders at a special meeting of
      the
      shareholders scheduled for December 9, 2003. On November 7, 2003, the Company
      with respect to that meeting filed a Definitive 14a. The shareholders meeting
      was held on December 9, 2003, but adjourned without a vote, as there were not
      enough shareholders present to hold a vote. The meeting was rescheduled for
      December 30, 2003. At the December 30, 2003 shareholder meeting, the board
      was
      again advised that there was not a quorum, and therefore the vote could not
      be
      held. Because this was the second attempt to obtain a quorum, and more than
      4,000,000 additional shares were required to be voted to obtain a quorum, the
      board voted to adjourn the meeting indefinitely.




Since
      that time, New Millennium has agreed to an indefinite extension of the maturity
      date of the NuWay Note pending stockholder approval of the transaction. The
      Company has been unable to schedule such a meeting due to the delinquent status
      of its periodic reports with the SEC and limited resources to plan the meeting.
      The amounts due to Mr. Anderson by New Millennium are in default.Technically,
      under the terms of the New Millennium Agreement, it is possible that Mr.
      Anderson has the right to reacquire the shares of the Company's common stock
      that were sold to New Millennium, if New Millennium defaults on the promissory
      note issued by New Millennium to Camden Holdings to purchase the shares. The
      New
      Millennium Note is purportedly secured by the purchased shares of the Company's
      common stock; however, New Millennium and Mr. Calvert believe that Mr. Anderson
      has not perfected his security interest in those shares. Moreover, the Augustine
      Fund is the pledgee of 2,500,000 of these shares and holds those shares as
      pledgee.




See
        accompanying notes to consolidated financial
        statements


F-21


***Operating
      Capital Loan***




The
      Company’s President, Dennis Calvert, loaned money to the Company by paying from
      his personal funds certain of the Company’s expenses. A significant portion of
      these personal funds was obtained by Mr. Calvert by refinancing his primary
      residence and cashing out equity thereon. For the year ended December 31, 2004,
      Mr. Calvert loaned to the Company $131,033. **** From
      October, 2003 to February 28, 2005, Mr. Calvert loaned the Company a total
      of
      $143,141. As of December 31, 2005 and February 28, 2005, the Company repaid
      $10,371 and $41,371 of this amount, respectively. On March 7, 2005, the Company
      and Mr. Calvert agreed such that the $101,770 still outstanding and owed by
      the
      Company to Mr. Calvert will be repaid under the terms of a promissory note
      bearing interest of 10% per annum, requiring monthly payments and maturing
      on
      January 15, 2006.




As
      of
      December 31, 2004, the Company had accrued an expense related to the unpaid
      accrued compensation due its president, Mr. Calvert, in the amount of
      $204,900.




**Transactions
      with Mark Roy Anderson**




During
      the period from approximately June 2002 through March 2003, the Company entered
      into several transactions with entities controlled by Mark Roy Anderson. These
      entities are Med Wireless, Genesis, Camden Holdings, Summit Healthcare, Summitt
      Ventures, Summit Oil & Gas, Inc. ("Summit Oil") and CVP. The transactions
      are listed in chronological order. Neither the Company, nor any of its directors
      or officers, has had any communication with Mr. Anderson since May
      2003.




***Financing
      Agreement with Camden Holdings, Inc.***




During
      June 2002, as part of a plan introduced to the Company by Mr. Anderson to shift
      the Company's focus to the medical technology field and bring in new management,
      Camden Holdings purchased 1,000,000 shares of the Company's common stock for
      $250,000. At the time of the transaction, Camden Holdings, whose president
      at
      the time of the transaction was Mr. Anderson, owned no shares in the Company,
      this being the initial transaction between the Company and Mr. Anderson and
      his
      affiliates. After this purchase, the 1,000,000 shares represented approximately
      12.9% of the then-issued and outstanding shares of the Company's common stock.




***Genesis
      Health Tech, Inc.***




On
      June
      28, 2002, the Company purchased a database of healthcare providers in the United
      States from Genesis, a wholly-owned subsidiary of Camden Holdings, which was
      controlled by Mr. Anderson. The total purchase price of $300,000 was satisfied
      by the issuance of 666,667 shares of the Company's common stock. After this
      purchase, the 1,666,667 shares of the Company's common stock beneficially owned
      by Mr. Anderson represented approximately 19.8% of the then-issued and
      outstanding shares of the Company's common stock.




See
        accompanying notes to consolidated financial
        statements


F-22


***Med
      Wireless, Inc.***




By
      way of
      an agreement dated July 16, 2002 and amended August 21, 2002, the Company
      acquired a 15-year, fully paid license to certain technology from Med Wireless,
      a company whose founder and principal stockholder was Mr. Anderson. Pursuant
      to
      the related license agreement (i) the Company would license from Med Wireless
      all of its rights and interest in certain software applications relating to
      the
      movement of medical images and data over the Internet and via handheld wireless
      devices as well as customer lists; (ii) Med Wireless would assign its customers
      and distribution agreements related to the licensed intellectual property to
      the
      Company; and (iii) the Company would assume $1,120,000 of outstanding debt
      (see
      further discussions below). In return, the Company agreed to issue to the Med
      Wireless stockholders an aggregate of 6,600,000 shares, or approximately 44%,
      of
      the Company's common stock.




Through
      Camden Holdings and Summit Healthcare, Mr. Anderson received an additional
      2,868,928 shares of the Company's common stock, as a result of the Med Wireless
      transaction, which increased Mr. Anderson's beneficial ownership to 4,535,595
      shares, or approximately 28.3%, of the Company's common stock at the time this
      transaction was approved by the Company's stockholders. Mr. Anderson also held
      a
      minority interest in Med Wireless.




In
      addition, the Company's current president, Dennis Calvert, was entitled to
      receive approximately 9.9% of the stock of Med Wireless and 600,000 shares
      of
      the Company's common stock as a result of this transaction. Prior to this
      transaction, Mr. Calvert was not a stockholder of Med Wireless.




The
      transaction was approved by the board of directors and the vote of a majority
      of
      the Company's shares of common stock, including the shares held by Camden
      Holdings. Stockholders of the Company owning 3,930,183 shares of the 7,761,353
      shares then outstanding consented to the transaction with Med Wireless,
      including the shares held by Mr. Anderson and his affiliates.




***Sale
      of Casino Operations***




The
      Company sold its wholly-owned casino rental subsidiaries, Latin American Casinos
      del Peru S.A., and Latin American Casinos of Colombia, LTDA, to CVP in October
      2002. Mr.. Anderson was a general partner of CVP at the time of the transaction.
      Although the purchase price for the stock was $300,000, less all outstanding
      liabilities of the two subsidiaries, the outstanding liabilities exceeded that
      amount and the Company received no cash in the sale. The transaction price
      was
      determined as a result of the Company's receiving no viable suitors, bidders
      or
      offers for the stock or assets of the Company's gaming businesses. The Company's
      board of directors approved this transaction, but it was not voted upon by
      the
      Company's stockholders.




***Sale
      of Oil Operations***




The
      Company entered into an agreement on December 15, 2002 to sell 100% of the
      stock
      of NuWay Resources, Ltd. ("NuWay Resources"), the Company's oil and gas
      subsidiary, for $100,000 less outstanding liabilities, to Summit Oil. Mr.
      Anderson was president of Summit Oil at the time of the transaction. The Company
      received no cash from the sale of the stock, but was able to insure
      contractually that it would not retain any liabilities, or incur new liabilities
      (which had been increasingly significantly), beyond October 1, 2002. The
      transaction price was determined as a result of the Company's receiving no
      other
      viable offers for NuWay Resources or its assets. The Company's board of
      directors approved the transaction, but it was not voted upon by the Company's
      stockholders.




See
        accompanying notes to consolidated financial
        statements


F-23


***Consultancy
      Arrangement***




Beginning
      in September 2002, Mr. Anderson also served as a consultant to the Company
      pursuant to a written agreement and received 1,241,884 shares of the Company's
      common stock pursuant to the 2002 Consultant Equity Plan. The Consultancy
      Agreement was terminated in December 2002.




As
      a
      result of all of the foregoing transactions, the Company believes that Mr.
      Anderson was the beneficial owner of an aggregate of 5,777,479 shares, or more
      than 30%, of the Company's common stock outstanding as of December 31, 2002,
      assuming Mr. Anderson beneficially owned all the shares at the same time. The
      Company believes that Mr. Anderson sold some of the shares which were issued
      pursuant to the 2002 Plan, and as such the number and percentage of the
      Company's common stock held by Mr. Anderson at any one time may have been less
      than that indicated above. In any event, Mr. Anderson failed to file any reports
      with the SEC on Schedules 13D or 13G, or on Forms 3 or 4, and therefore, the
      Company cannot confirm any of these numbers at any given point in
      time.




**Note
      14. Commitments and Contingencies**




**Litigation**




The
      Company is a defendant from time to time in litigation arising out of the normal
      course of its business, none of which is expected to have a material adverse
      effect on its business, operations, financial position or corporate
      liquidity.




During
      2002, Ms. Geraldine Lyons, the Company's former Chief Financial Officer, sued
      the Company for breach of her employment contract. The lawsuit was brought
      in
      the Circuit Court of the 11th Judicial Circuit in Miami-Dade County in of
      Florida and was initiated by the filing of the complaint in June 2002. The
      principal parties in the case are Ms. Lyons, the Company, and the Company's
      former president Todd Sanders. The amount at issue in her affirmative claim
      is
      the sum of approximately $25,000 due under the contract, and the issuance of
      100,000 shares of common stock, with a guarantee that the stock could be sold
      by
      Ms. Lyons for $300,000. Ms. Lyons alleges that additional funds are due under
      her employment contract; that the contract requires the Company guarantee that
      she can sell for $300,000 the 100,000 shares of stock the Company is required
      to
      issue her; and, that Mr. Sanders promised to purchase from her 100,000 shares
      of
      Company common stock held by her at the price of $4.00 per share. The Company
      has counter-sued Ms. Lyons for breach of fiduciary duty, fraud, violation of
      section 12(a)(2) of the 1933 Securities Act, violation of section 517.301 of
      the
      Florida Statutes, negligent misrepresentation, conversion, and unjust enrichment
      resulting from the required restatement of the Company's financial statements
      for the years ended December 31, 2000 and December 31, 1999. The restatements
      corrected the previous omission of certain material expenses related primarily
      to compensation expense arising from warrants issued and repriced stock options,
      as well as other errors. The case is ongoing at this time. The Company intends
      to vigorously defend its actions and pursue its affirmative claims to the
      fullest extent possible. Management does not expect that this case will have
      a
      material adverse effect on the Company's financial position.




In
      December 2002, the Company settled an outstanding lawsuit filed by Devenshire
      Management Corp., a company owned by the Company's former president Todd
      Sanders. The settlement involved no payment of cash by the Company, and resolved
      all issues relating to the Company's obligation to remove restrictive legends
      from stock owned by Devenshire. As part of this settlement the Company agreed
      to
      defend, but not indemnify, Mr. Sanders in the Lyons lawsuit described
      immediately above.




See
        accompanying notes to consolidated financial
        statements


F-24


In
      May
      2004, the Company was sued by Flight Options, Inc., a jet plane leasing company,
      in the Superior Court of Orange County California. The lawsuit alleges that
      the
      Company owes Flight Options approximately $418,300, pursuant to a five-year
      lease assigned to the Company by the Company's former president Todd Sanders,
      from his corporation, Devenshire Management Corporation (“Devenshire”).
      Management of the Company believes that the assignment of the lease was not
      properly authorized or approved by the Company, and that by Mr. Sander's failure
      to identify the lease in a December 2002 settlement agreement with the Company,
      he breached the terms of that settlement agreement and, pursuant to the
      settlement agreement, must indemnify the Company for any losses owed to Flight
      Options. The Company has cross-complained against Mr. Sanders for indemnity,
      and
      has added the affirmative claim of breach of fiduciary duty. The Company has
      settled with plaintiff Flight Options pursuant to a stipulation that allows
      the
      Company to either pay to Flight Options $100,000 on or before August 5, 2005,
      or
      allow Flight Options to file a judgment against the Company for $163,310. The
      Company’s claims against Devenshire and Mr. Sanders will be litigated through
      binding arbitration prior to the date in which it must pay $100,000 to Flight
      Options. While the Company believes that it has meritorious positions in this
      litigation against Devenshire and Mr. Sanders, given the inherent nature of
      litigation, it is not possible to predict the outcome of this litigation or
      the
      impact it would have on the Company.




On
      December 4, 2004 the Company was sued by the law firm of Enenstein Russell
      and
      Saltz, LLP to collect fees that had been billed to the Company in the amount
      of
      $15,233, which had been disputed by the Company. The Company is defending its
      rights in the lawsuit. The case is in its beginning stage, and a trial date
      has
      not been set. While the Company believes that it has meritorious positions
      in
      this litigation, given the inherent nature of litigation, it is not possible
      to
      predict the outcome of this litigation or the impact it would have on the
      Company.




**Employment
      Agreements**




In
      January 1997, the Company entered into a five year employment agreement with
      Lloyd Lyons, which provided in part that in the event of a merger,
      consolidation, sale or conveyance of substantially all the assets of the Company
      which resulted in the discharge of Mr. Lyons, he would be entitled to 200
      percent of the balance of payments remaining under the contract. The contract
      provided salary continuation for a period of two years after his death. In
      January 2000, Mr. Lyons passed away and effective August 2, 2000 the Company
      amended its employment contract with his widow and primary beneficiary of his
      estate, whereby the salary continuation clause included in his contract was
      replaced with a severance arrangement that requires the Company to pay Mrs.
      Lyons $100,000 over a one year period commencing on the first month following
      the termination of her employment with the Company. Furthermore, upon her
      termination she is to receive 100,000 shares of common stock pursuant to an
      amendment to her employment agreement. The amended employment agreement will
      obligate the Company to register these shares and reimburse her for the
      difference in the gross proceeds upon the sale of such shares and $300,000;
      regardless of the time she holds such shares. Effective October 29, 2001 Mrs.
      Lyons tendered her resignation and based upon the terms of her severance
      agreement, expenses of $350,000 had been recorded of which $308,000 is included
      in accounts payable and accrued expenses at December 31, 2003 and 2004.




In
      December of 2002, The Company entered into a five-year employment agreement
      with
      the Company's current president, Dennis Calvert. His agreement calls for a
      base
      monthly income of $14,000 plus performance bonuses and employee related
      benefits. He serves as president, Chief Executive Officer, Interim CFO and
      Chairman of the Board.




In
      March
      2003, the Company entered into a five-year employment agreement with Joseph
      Provenzano. Mr. Provenzano serves the Company as Secretary, Board Member and
      Senior Executive reporting to Mr. Calvert. His agreement calls for him to
      receive not less than $10,900 per month in salary plus incentive bonuses, stock
      ownership participation and employee related benefits. At the Company's
      discretion, the Company may choose to pay up to $4,900 of this monthly salary
      with stock in lieu of cash.




See
        accompanying notes to consolidated financial
        statements


F-25


**Lease
      Commitment**




The
      Company was obligated on a month-to-month office lease at its California
      facility. This lease required monthly rentals of $7,850. All other leases are
      of
      short duration or are on a month-to-month arrangement. Rent expense for December
      31, 2004 and 2003 was $0 and $70,200, respectively. The lease was terminated
      in
      April 2004.




**Stock-Based
      Commitments**




The
      Company has utilized the services of a number of consultants who were
      compensated with shares of common stock. While each agreement can generally
      be
      terminated with a 15-day notice, the Company may be obligated to issue
      additional shares to the consultants.




**Note
      15. Abandoned Acquisition**




On
      January 31, 2004, the Company entered into a Stock Purchase Agreement (the
      "Stock Purchase Agreement") with Premium Medical Group, Inc., a Florida
      corporation ("PMG") and PMG's sole stockholders, Eduardo A. Ruiz and Luis A.
      Ruiz (the "PMG Stockholders"). Prior to this transaction, there was no business
      or other relationship between the Company and its affiliates and PMG or the
      PMG
      Stockholders.




Pursuant
      to the Stock Purchase Agreement, the Company agreed to acquire 100% of the
      shares of PMG from the PMG Stockholders in exchange for 30,000,000 shares of
      the
      Company's common stock, subject to certain adjustments. The exact number of
      Company Shares to be issued to the PMG Stockholders was subject to adjustment
      in
      the event certain revenue was generated by PMG during one year following the
      closing of the transaction. PMG had been organized in June 2003 to provide
      medical products to hospitals and medical clinics in South America, primarily
      Venezuela. Luis A. Ruiz became a director of the Company in connection with
      the
      transaction.




The
      parties had a difference in expectations regarding who would be ultimately
      responsible for paying for the audit of PMG that was required in order for
      the
      Company to complete its disclosure obligations under the Securities Exchange
      Act. Additionally, the Company did not have a sufficient number of authorized
      and unissued shares of its common stock to both satisfy its obligations to
      the
      PMG Stockholders and to issue shares of common stock in a meaningful financing
      transaction, given the low price per share at which the Company's common stock
      trades. The Company lacked the financial resources to schedule a stockholders'
      meeting, prepare a proxy statement and solicit proxies for the purpose of
      amending its Certificate of Incorporation to increase its authorized capital
      stock. As a result of these and other factors, the Company and PMG never
      consolidated their operations, the Company never exercised control over PMG
      or
      its operations and the parties never exchanged stock certificates evidencing
      their ownership in each other.




Therefore,
      the parties entered into discussions and concluded amicably that it was in
      the
      mutual best interest of the respective companies and their respective
      stockholders, to rescind the transactions provided for in the Stock Purchase
      Agreement and return all parties to their respective positions prior to the
      transactions contemplated in the Stock Purchase Agreement.




See
        accompanying notes to consolidated financial
        statements


F-26


The
      parties entered into a Rescission Agreement on October 14, 2004 that provides,
      in relevant part, that (i) all transactions contemplated by the Stock Purchase
      Agreement shall be rescinded as if the Stock Purchase Agreement had never been
      executed and delivered; (ii) the parties forever waive all rights to receive
      stock in PMG and the Company, as the case may be; (iii) Luis A. Ruiz shall
      resign as a director of the Company; and (iv) the Company and PMG shall file
      appropriate documents with the Secretary of State of the State of Florida with
      respect to the rescission of the exchange of shares provided for in the Stock
      Purchase Agreement.




**Note
      16. Retirement of Treasury Stock**




During
      2004, the Company determined that based on reconciliations of its stock records
      and its stock transfer agent that 200,000 shares of the Company’s common stock
      has been issued in prior years but not recorded in the Company’s books. An
      adjustment was made as of December 31, 2004 to give effect to this non-material
      error. In addition, the shares included in treasury stock were determined to
      have been formally cancelled and an adjustment was made at December 31, 2004
      to
      reflect this cancellation.




**Note
      17. Subsequent Events**




**Sales
      of Unregistered Securities**




On
      January 6, 2005, the Company received gross and net proceeds of $25,000 from
      an
      outside investor and issued a convertible promissory note on substantially
      the
      same terms as in Note 8.




On
      January 7, 2005, the Company received gross and net proceeds of $75,000 from
      two
      outside investors and issued convertible promissory notes on substantially
      the
      same terms as the previously described notes, except the notes do not include
      buy back provisions, and allow conversion into a total of 18,000,000 shares
      of
      common stock (at $0.0042 per common share, rather than $0.005 per Series A
      Preferred share).




On
      February 10, 2005, the Company amended its obligations to Dr. James Seay (the
      “noteholder”) under its promissory note dated November 20, 2003 in the principal
      amount of $50,000 and which matured on February 18, 2004. On the maturity date
      of the note the Company was obligated to pay the noteholder $65,000. The Company
      has paid the noteholder $30,000 and the balance of $35,000 remains outstanding.
      The amendment to the note entered into on February 10, 2005, (i) extends the
      maturity date of the note to February 3, 2006, (ii) provides for interest to
      accrue at a rate of 10% per annum (15% upon default), and (iii) allows for
      the
      conversion of the note into 7,000,000 shares of the Company’s common stock, or
      $.005 per share.




In
      February, 2005, the Company received gross and net proceeds of $16,000 from
      three outside investors and issued convertible promissory notes on substantially
      the same terms as the previously described notes, except the note does not
      include buy back provisions, and allow conversion into a total of 2,261,701
      shares of common stock (at $0.007 per common share, rather than $0.005 per
      Series A Preferred share).




See
        accompanying notes to consolidated financial
        statements


F-27


On
      February 24, 2005, the Company received gross proceeds of $40,000 and net
      proceeds of $36,000 from two outside investors and issued convertible promissory
      notes on substantially the same terms as the previously described notes, except
      the notes do not include buy back provisions, and allow conversion into a total
      of 4,000,000 shares of common stock (at $0.01 per common share, rather than
      $0.005 per Series A Preferred share).




On
      April
      18, 2005, the Company received gross and net proceeds of $25,000 and $23,750,
      respectively, from an outside investor and issued a convertible promissory
      note
      on substantially the same terms as the previously described notes, except the
      note does not include buy back provisions, and allows conversion into a total
      of
      2,500,000 shares of common stock (at $0.01 per common share, rather than $0.005
      per Series A Preferred share).




On
      May 2,
      2005, the Company received gross and net proceeds of $50,000 and $47,500,
      respectively, from an outside investor and issued a convertible promissory
      note
      on substantially the same terms as the previously described notes, except the
      note does not include buy back provisions, and allows conversion into a total
      of
      7,142,857 shares of common stock (at $0.007 per common share, rather than $0.005
      per Series A Preferred share).




On
      June
      7, 2005, the Company received gross and net proceeds of $5,000 from an outside
      investor and issued a convertible promissory note on substantially the same
      terms as the previously described notes, except the note does not include buy
      back provisions, and allows conversion into a total of 500,000 shares of common
      stock (at $0.01 per common share, rather than $0.005 per Series A Preferred
      share).




On
      June
      9, 2005, the Company received gross and net proceeds of $100,000 from two
      outside investors and issued convertible promissory notes on substantially
      the
      same terms as the previously described notes, except the notes do not include
      buy back provisions, and allow conversion into a total of 13,000,000 shares
      of
      common stock (at approximately $0.008 per common share, rather than $0.005
      per
      Series A Preferred share).




All
      of
      these offerings and sales were made in reliance on the exemption from
      registration contained in Section 4(2) of the Securities Exchange Act and/or
      Regulation D promulgated thereunder as not involving a public offering of
      securities.




Until
      the
      Company’s stockholders approve an amendment to the Company’s charter to increase
      the number of authorized shares of common stock, the Company will be unable
      to
      fulfill its obligations to all convertible noteholders to permit the conversion
      into common stock of amounts due pursuant to the terms of the convertible notes.
      In the event that the Company has not raised further capital prior to the
      maturity dates of the convertible notes, the Company would be in default of
      those notes if its stockholders have not formally approved an increase in the
      number of authorized common shares. The Company is not, at this time, in default
      of the convertible notes.




See
        accompanying notes to consolidated financial
        statements


F-28