U.S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549







FORM
      10-KSB










ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES ACT OF 1934





(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, 2005





[ 
]
      Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934





For
      the
      transition period from _______________ to _______________





Commission
      File No. 000-27365








MANAKOA
      SERVICES CORPORATION


(Exact
      name of registrant as specified in its charter)






Nevada
            000-27365
            88-0440528(State
                or other Jurisdiction of
                incorporation)
            (Commission
                File Number)
            (I.R.S.
                Employer Identification
                No.)










7203
      W. Deschutes Avenue, Suite B, Kennewick, WA 99336


(Address
      of principal executive offices) (Zip Code)








Registrant's
      telephone number, including area code: (509) 736-7000


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





None


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


Common
      Stock, $0.001 Par Value


(Title
      of
      Class)








1








Check
      whether the Issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the preceding 12 months (or for such shorter
      period that the Company was required to file such reports), and (2) has been
      subject to such filing requirements for the past 90 days. Yes [X] No [ 
]





Check
      if
      there is no disclosure contained herein of delinquent filers in response
      to Item 405 of Regulation S-B, and will not be contained, to the best of
      the
      Company'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. [  ]





The
      Issuer's revenues for its year ended December 31, 2005 were $
      21,856.





As
      of
      April 13, 2006, the aggregate market value of the voting and non-voting common
      equity held by non-affiliates was approximately $ 4,659,789 based upon the
      closing price per share as reported on the NASDAQ Bulletin Board Market of $0.115





There
      were 44,403,685 outstanding shares of the issuer's Common Stock on December
      31, 2005





DOCUMENTS
      INCORPORATED BY REFERENCE





None.





FORWARD-LOOKING
      STATEMENTS





Statements
      contained in this report, which are not historical in nature, are
      forward-looking statements within the meaning of the Private Securities
      Litigation Reform Act of 1995. These forward-looking statements include
      statements in Item 1 - Business, Item 5 - Market for Common Equity and Related
      Stockholder Matters, and Item 6 - Management's Discussion and Analysis of
      Financial Condition and Results of Operations, which can be identified by the
      use of forward-looking terminology such as believes, expects, plans, estimates,
      predicts, potential, continue, may, will, should, or anticipates or the negative
      thereof or other variations thereon or comparable terminology, or by discussions
      of strategy. These statements are only predictions and involve known and unknown
      risks, uncertainties and other factors, including the risks in the section
      entitled "Risk Factors", that may cause our or our industry's actual results,
      levels of activity, performance or achievements to be materially different
      from
      any future results, levels of activity, performance or achievements expressed
      or
      implied by these forward-looking statements. Although we believe that the
      expectations reflected in the forward looking statements are reasonable, we
      cannot guarantee future results, levels of activity, performance or
      achievements. Except as required by applicable law, including the securities
      laws of the United States, we do not intend to update any of the forward-looking
      statements to conform these statements to actual results.





Such
      forward-looking statements involve certain risks and uncertainties that could
      cause actual results to differ materially from anticipated results. These risks
      and uncertainties include regulatory constraints, changes in laws or regulations
      governing the Company's products and international trade, the ability of the
      Company to market successfully its products in an increasingly competitive
      worldwide market, changes in the Company's operating or expansion strategy,
      failure to consummate or successfully integrate proposed product developments,
      the ability of the Company to manage growth, the general economy of the United
      States and the specific global markets in which the Company competes, the
      availability of financing from internal and external sources and other factors
      as may be identified from time to time in the Company's filings with the
      Securities and Exchange Commission or in the Company's press
      releases.











2





MANAKOA
      SERVICES CORPORATION





FORM
      10-KSB


FOR
      THE
      FISCAL YEAR ENDED DECEMBER 31, 2005




PageITEM
                    1
                DESCRIPTION
                    OF BUSINESS
                4ITEM
                    2
                DESCRIPTIONS
                    OF PROPERTIES
                11ITEM
                    3
                LEGAL
                    PROCEEDINGS
                11ITEM
                    4
                SUBMISSIONS
                    OF MATTERS TO A VOTE OF SECURITY HOLDERS
                11ITEM
                    5
                MARKETS
                    FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                11ITEM
                    6
                MANAGEMENT'S
                    DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                13ITEM
                    7
                FINANCIAL
                    STATEMENTS
                19ITEM
                    8
                CHANGES
                    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                    DISCLOSURE
                41ITEM
                    8A
                CONTROLS
                    AND PROCEDURES
                41ITEM
                    9
                DIRECTORS,
                    EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
                    WITH SECTION
                    16(a) OF THE EXCHANGE ACT
                41ITEM
                    10
                EXECUTIVE
                    COMPENSATION
                43ITEM
                    11
                SECURITY
                    OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND
                    MANAGEMENT AND RELATED STOCKHOLDER MATTERS
                44ITEM
                    12
                CERTAIN
                    RELATIONSHIPS AND RELATED TRANSACTIONS
                45ITEM
                    13
                EXHIBITS
                    AND REPORTS ON FORM 8-K
                45ITEM
                    14
                PRINCIPAL
                    ACCOUNTANT FEES AND SERVICES
                45SIGNATURES
                46








3





ITEM
      1
      DESCRIPTION OF BUSINESS





Background





The
      Company was incorporated in Nevada on May 14, 1992 and its principal business
      activities were directed towards the development and marketing of contact-less
      smart ID card systems (Smart Card(s) or Smart ID Card System(s). This
      development effort was unsuccessful. The Company then proceeded to look for
      other business opportunities.





The
      Company located a business opportunity in the form of Manakoa Services
      Corporation. As was disclosed in the Company's Form 8-K filed on December 16,
      2003, the Company entered into a Stock Purchase Agreement to acquire Manakoa
      Services Corporation, a Washington corporation. As disclosed in the Company's
      Form 8-K filed on March 15, 2004, this acquisition closed in March 2004. The
      Company, which is a Nevada corporation, changed its name to Manakoa Services
      Corporation as well. At this time, the Washington Company is a subsidiary of
      the
      Nevada Corporation. It is anticipated that the Washington Corporation will
      be
      merged into the Nevada Corporation. Whenever necessary to be clear, the
      Washington Corporation is referred to as "MSC Washington".





The
      balance of this Form 10-KSB filing describes the business of Manakoa Services
      Corporation ("Manakoa", the "Company" or "we"). Manakoa was a development stage
      company throughout the 2005 calendar year. The Company made available during
      the
      first quarter of 2005 the Manakoa KnowledgeBase(TM) regulatory compliance
      research engine and while failing to commercialize that product,the Company
      did
      enter into a Joint Venture with Secure Vantage Corporation and is finding
      success with the SCMP software.





Overview





Manakoa
      Services Corporation (www.Manakoa.com) is an enterprise risk management software
      and services company focusing on regulatory compliance solutions.





Manakoa
      Compliance Suite(TM) is being developed to meet the vertical security and risk
      management requirements of organizations complying with regulations stemming
      from the Gramm Leach Bliley Act (GLBA), Health Insurance Portability
      Accountability Act (HIPAA), Sarbanes Oxley Act, USA Patriot Act, and Federal
      Informational Security Management Act (FISMA). The Company anticipates expanding
      its support to other U.S. regulations plus international regulatory requirements
      emerging from the European Union, Japan, United Kingdom and Canada. The market
      sectors that the Company believes initially will be most significantly impacted
      are public corporations, health care, insurance, financial services and federal
      contractors. The Company intends to focus its sales efforts through channel
      partners that are envisioned to include trade and professional associations,
      accounting and legal firms, security consultants and system integrators, as
      well
      as non profit associations.





With
      its
      technology partner Secure Venture Technologies (SVT) The Company is developing
      the Manakoa ComplianceSuite(TM) as both an integrated solution set and a series
      of standalone component products. The underlying architecture for the Manakoa
      ComplianceSuite(TM) was completed in 2004 but is subject to adaptations and
      change to meet market, technology and regulatory shifts over time. The Manakoa
      KnowledgeBase(TM) is the first standalone product component, and was launched
      on
      February 28, 2005. It is an Internet subscription portal for regulatory
      compliance information,and a commercial failure.





The
      Compliance WorkCenter(TM) asset and policy engine known as the Manakoa
      Compliance Services(TM) together with related interfaces to the Microsoft
      Operations Manager shipped second quarter, 2005.





Manakoa
      terminated its involvement in homeland security of a licensing and joint
      development agreement with the U.S. Department of Energy sponsored by Battelle
      Pacific Northwest National Laboratory for the nation's first Cyber Attack
      Simulation Trainer (CAST), due to the inability of past management to support
      and put forth the personnel resources to the project.





4


ITEM
      1
      DESCRIPTION OF BUSINESS - continued




Principle
      Markets





The
      principle markets for the Manakoa platforms initially center on financial
      institutions, health care, insurance industry, and public companies that are
      most directly impacted by current regulatory pressures. This list of industry
      sectors is anticipated to grow. The Company also anticipates targeting homeland
      security and other governmental sectors.





The
      size
      of the market opportunity appears very large. The regulatory compliance software
      market is experiencing rapid growth due to the influx in governmental
      regulations being instituted by Congress. These new regulations will account
      for
      billions of dollars in IT costs over the coming years. Nemerts Research found
      that 80% of companies surveyed have yet to purchase regulatory compliance
      software, with 77% predicted to either begin or increase spending 2005. Industry
      growth is projected at over $8.0 Billion and growing. AMR Research, December
      2003 estimated corporate cost for Sarbanes Oxley alone at $5.5 billion in 2005.
      CIO Update, Oct, 2003 stated "Compliance with new federal regulations that
      address security, privacy, and corporate accountability will have a broad impact
      on IT operations at many organizations" and goes on to state, "Compliance is
      reminding some people of another, recent event that led to a surge in IT
      activity and spending: Y2K. This time, however, there's no "end-time" for the
      event; compliance is something that must continue as long as the laws are in
      effect."





Competitive
      Situation





The
      Company has not identified a competitor that is approaching enterprise risk
      management and regulatory compliance in the same manner or with the same breadth
      as Manakoa. The company makes no representation that despite its investigation
      that other companies may exist and directly compete in the precisely same market
      sectors. However, many other companies exist in the compliance arena. Companies
      that are providing software IT compliance modules include NetIQ, Bindview,
      and
      Oracle. Consulting services companies in the field include integrators like
      CSC,
      Protiviti and IBM and auditors such as the Big Four accounting firms. Point
      product solutions for everything from document imaging to document control
      are
      supplied by companies such as Kodak. Other forms of point products include
      vendors of firewalls, anti-virus software, and hardware remediation devices.
      The
      opportunities associated with compliance are well understood and many large
      competitors are engaged in developing and marketing solutions. Nevertheless,
      there are no clear leaders, nor any tiers of leaders. The opportunity thereby
      projects itself.





Risk
      Factors





An
      investment in our securities is very risky. You should carefully consider the
      risk factors described below, together with all other information herein, before
      making an investment decision. The trading price of our common stock could
      decline due to any of these risks, and you could lose all or part of your
      investment. The investment is only suitable to qualified investors who have
      no
      immediate need for liquidity in their investment and who can bear the risk
      of
      potential total loss. You also should refer to the other information set forth
      herein, including our financial statements and the related notes
      thereto.





If
      we do
      not successfully address any of the risks described below, there could be a
      material adverse effect on our business, financial condition or results of
      operations, and the trading price of our common stock may decline and investors
      may lose all or part of their investment. We cannot assure any investor that
      we
      will successfully address these risks.





Our
      products require additional enhancements to achieve commercial
      viability.





We
      are
      still in the development phase for many of our products. Substantial additional
      efforts and expenditures to enhance their capabilities are critical to our
      commercial viability. There is no assurance given that we will achieve such
      enhancements or such commercial viability.





5


ITEM
      1
      DESCRIPTION OF BUSINESS - continued




We
      are in
      an early stage of organization without any proven track record in achieving
      our
      objectives.





We
      have
      no material revenues from operations and no significant tangible assets.
      Accordingly, there is no assurance that we will ever operate at a profitable
      level. Our business involves the development, production and marketing of
      software based products. Future development and operating results will depend
      on
      many factors, including the completion of developed products, demand for our
      products, level of product and price competition, success in setting up and
      expanding distribution channels, and whether we can develop and market new
      products and control costs. In addition, our future prospects must be considered
      in light of the risks, expenses and difficulties frequently encountered in
      establishing a new business in the software industry, which is characterized
      by
      intense competition and rapid technological change. There is no assurance that
      our future financial forecasts will be met. If we are unable to generate an
      operating profit at some future date, we may eventually have insufficient
      working capital to maintain operations.





We
      may
      incur substantial operating losses for several years, may never generate profits
      and will need additional capital.





It
      is
      very possible that we will incur significant operating losses and generate
      negative cash flow from operating activities during the next few years, while
      we
      develop additional technologies and products. There is no assurance that we
      will
      be able to obtain sufficient additional debt or equity financing or achieve
      or
      sustain profitability or positive cash flow from operating activities in the
      future or that we will generate sufficient cash flow to service any debt
      requirements.





We
      will
      be dependent on third parties for other matters.





We
      are a
      small enterprise and have yet to establish substantial internal management,
      personnel and other resources. We depend substantially upon third parties for
      several critical elements of our business including, among other things,
      promotion and marketing, technology and infrastructure development and
      distribution activities. The loss of or inability to engage additional third
      party suppliers, providers or personnel would impair or interfere with our
      operations and, accordingly, could have a material, adverse effect on our
      revenues and financial results. We will need future strategic partnerships
      in
      order to achieve financial success.





The
      successful execution of our business strategy is dependent upon enlisting key
      strategic partners in order to assist in product development, the marketing
      effort and to provide financial strength. There is no assurance that we will
      be
      successful in developing such strategic partnerships on a timely basis or in
      developing enough strategic partnerships to successfully market our technologies
      and products globally.





If
      we are
      not able to maintain our management team, it will be more difficult for us
      to
      manage our operations and our operating performance would suffer.





We
      are
      reliant on our management team. We do not have written employment agreements
      with our management team. Without written employment agreements there is no
      assurance that we will be able to retain the services of one or more members
      of
      our management team. In addition, we may not have adequate resources to replace
      any of the management team who may leave us or to recruit necessary additional
      key members of our management team.





Despite
      our dependence on certain members of management, we do not maintain any key
      life
      insurance on them.





We
      are a
      growing company dependent upon the services of certain management and technical
      personnel, for day-to-day operations and for development of new products. The
      loss of the services of any one of these persons, or an inability to recruit
      and
      retain additional qualified personnel, could have a material adverse effect
      on
      us. We have no plans at present to obtain key person life insurance for officers
      and directors. In the event of the death of any of such persons, we may
      experience, at least for a short period, a delay in the growth of our revenues
      and any profits could decrease substantially without life insurance benefits
      to
      offset at least a portion of such revenues or profits.





6


ITEM
      1
      DESCRIPTION OF BUSINESS - continued




The
      market for our products is new and evolving.





The
      risk
      management market place is a dynamic and evolving sector and there is no
      assurance that our products will be marketed successfully or become widely
      accepted. Additionally, future regulatory compliance may be altered based upon
      changes in the political landscape, and may have an adverse effect on our
      business. In addition, there is no assurance that our products will be adopted
      widely as an industry standard, even if similar products have been introduced
      successfully to the marketplace.





The
      markets for our products have only recently begun to develop. As is typical
      in
      the case of a new and rapidly evolving industry, demand and market acceptance
      for recently introduced products and services are subject to a high level of
      uncertainty and risk. Because the markets for our products are new and evolving,
      it is difficult to accurately predict the future growth rate, if any, and size
      of this market. There is no assurance either that the markets for our products
      will emerge or become sustainable. If the markets fail to develop, develop
      more
      slowly than expected or become saturated with competitors, or if our products
      do
      not achieve or sustain market acceptance, our business, results of operations
      and financial condition will be materially and adversely affected.





The
      risk
      management marketplace is highly competitive.





We
      will
      compete with a substantial number of other companies, many of which have larger
      technical staffs, established market shares and greater financial and
      operational resources than we do. These greater resources permit our competitors
      to implement extensive advertising and promotional programs, which we have
      not
      been, and may never be, able to meet. As these competitors enter thefield,
      our
      market share may fail to increase or may decrease despite our efforts to
      continue to produce superior products. The risk management and regulatory
      compliance industry is characterized by rapidly evolving technology and
      potentially intense competition. We will be at a disadvantage with respect
      to
      many other companies. There is no assurance that we will be able to compete
      successfully. There is no assurance that our competitors will not succeed in
      developing products or competing technologies that are more effective or more
      effectively marketed than products marketed by us, or that render our technology
      obsolete. Earlier entrants into a market often obtain and maintain significant
      market share relative to later entrants. We believe that an increasing number
      of
      products in the market and the desire of other companies to obtain market share
      will result in increased price competition. Price reductions by us in response
      to competitive pressure could have a material, adverse effect our business,
      financial condition, and results of operations.





If
      our
      competition misappropriates our proprietary know-how and trade secrets, we
      will
      have greater difficulty in competing with them for business.





Our
      chances of success will depend in part on our ability to preserve and protect
      our trade secrets and any proprietary technology, and to operate without
      infringing upon the patents or proprietary rights of third parties in both
      the
      United States and other countries. At this time we have no pending patents.
      We
      currently seek to protect our proprietary technology though copyrights and
      agreements with employees and others requiring that such information be kept
      confidential and that software code not be reverse engineered. There can be
      no
      assurance that such protection will be sufficient or that copyright claims
      will
      not be challenged. We may have to sue to defend our intellectual property,
      to
      prosecute infringers, or to defend ourselves from infringement claims by others.
      Intellectual property litigation is expensive and time-consuming, and can be
      used by well-funded adversaries as a strategy for depleting the resources of
      a
      small company such as we are. There is no assurance that we will have sufficient
      resources to successfully prosecute our interests in any patent-related
      litigation that may be brought.





If
      we are
      found to have infringed on patents or copyrights held by others, our business
      would suffer.





The
      possibility exists that we could be found to be infringing on patents or
      copyrights held by others. We are not aware of any disputes with respect to
      any
      of our intellectual property at this time The possibility exists, however,
      that
      either the companyor its subsidiaries could be found to infringe on patents,
      service marks, trade marks or copyrights held by others. The use of trademarks,
      service marks, trade names, slogans, phrases and other expressions in the course
      of our business or the business of our subsidiaries may be the subject of
      dispute and possible litigation.





7


ITEM
      1
      DESCRIPTION OF BUSINESS - continued




If
      we
      cannot keep pace with technological developments, our products could become
      obsolete.





Technological
      obsolescence of our products remains a possibility. There is no assurance that
      our competitors will not succeed in developing related products using similar
      processes and marketing strategies before we do, or that they will not develop
      products that are more effective than any which have been or are being developed
      by us. Accordingly, our ability to compete will be dependent on timely
      enhancement and development of our products, as well as the development and
      enhancement of future products.





We
      need
      to manage our growth and maintain procedures and controls.





If
      we are
      to grow, we can expect to place a significant strain on our management,
      operational and financial resources. Such growth may require development of
      and
      improvements in our operational, accounting and information systems, procedures
      and controls.





Our
      management may have conflicts of interest from time to time.





Management,
      Board Members, Board of Advisors and other controlling persons may have
      conflicts of interest with regard to potential business clients and partners.
      These conflicts will be disclosed and appropriately managed.





If
      you
      purchase our securities and later decide to sell shares of common stock, you
      may
      have difficulty selling the shares, and the price at which you can sell the
      shares (if at all) could be less than you might otherwise obtain if a broad
      public market for the common stock existed.





Our
      common stock is quoted on the OTC electronic bulletin board (symbol): MKOS
      There
      can be no assurance that a stable market for our common stock will ever develop
      or, if it should develop, be sustained. It should be assumed that the market
      for
      our common stock will continue to be highly illiquid, sporadic and volatile.
      Our
      stock should not be purchased by anyone who cannot afford the loss of the entire
      investment.





We
      are
      required to maintain status as a "reporting" issuer under the Securities
      Exchange Act of 1934 in order to be traded by broker-dealers regulated by NASD
      ("NASD"). If we fail to continue to be a reporting issuer, management may
      encounter difficulty in maintaining or expanding a trading market in the near
      term, if at all, and shareholders may not be able to sell their shares in the
      public market. While management currently intends to maintain status as a
      reporting issuer under the Exchange Act, there can be no assurance that we
      can
      or will maintain such status.





We
      will
      need additional funding in order to succeed.





We
      recognize that substantial additional funding will be needed to achieve our
      objectives. No assurance is given that such funding will be obtained. If we
      cannot obtain such financing, it is possible that we will be unable to
      successfully commercialize and market our products, ultimately resulting in
      our
      failure.





Future
      financings could adversely affect your ownership interest and rights in
      comparison with those of other shareholders.





If
      additional funds are raised through the issuance of equity or convertible debt
      securities, the percentage ownership of our shareholders will be reduced, and
      these newly-issued securities may have rights, preferences or privileges senior
      to those of existing shareholders.





8


ITEM
      1
      DESCRIPTION OF BUSINESS - continued




Our
      common stock is subject to penny stock regulation that may affect the liquidity
      for our common stock.





Shares
      of
      our common stock are subject to the rules adopted by the Securities and Exchange
      Commission has adopted rules that regulate broker-dealer practices in connection
      with transactions in "penny stocks." Penny stocks generally are equity
      securities with a price of less than $5.00 per share (other than securities
      registered on certain national securities exchanges or quoted on the NASDAQ
      system, if 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, before consummation of a transaction in a penny stock
      not otherwise exempt from the rules, to deliver a standardized risk disclosure
      document prepared by the SEC that contains the following:





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




o
            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;




o
            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;




o
            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




o
            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:





o
            the
                bid and offer quotations for the penny
                stock;




o
            the
                compensation of the broker-dealer and its salesperson in the
                transaction;




o
            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; and




o
            to
                the depth and liquidity of the market for such stock;
                and




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





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 that is subject to
      the
      penny stock rules. Our board of directors has the power to issue additional
      shares of common stock and shares of preferred stock.





Our
      Certificate of Incorporation authorizes the issuance of 200,000,000 shares
      of
      common stock and 25,000,000 shares of preferred stock. Our Board of Directors
      may issue all such shares that are not yet issued, without stockholder approval,
      and has the right to determine the rights, preferences and privileges of any
      preferred stock issued. Our Board of Directors may choose to issue some or
      all
      of such shares to acquire one or more businesses or other types of property,
      or
      to provide additional financing in the future. The issuance of any such shares
      may result in a reduction of the book value or market price of the outstanding
      shares of our common stock. If we do issue any such additional shares, such
      issuance also will cause a reduction in the proportionate ownership and voting
      power of all other shareholders. Further, any such issuance may result in our
      being subject to a change of control.





We
      do not
      intend to declare any cash dividends in the foreseeable future.





We
      have
      never paid cash dividends on our common stock and do not anticipate paying
      any
      dividends on common stock in the foreseeable future. The declaration and payment
      of dividends are subject to the discretion of our Board of Directors. Any
      determination as to the payment of dividends in the future will depend upon
      results of operations, capital requirements, and restrictions in loan
      agreements, if any, and such other factors as the Board of Directors may deem
      relevant.





9


ITEM
      1
      DESCRIPTION OF BUSINESS - continued




Our
      stock
      option plan could result in the dilution of existing shareholders. Such options
      may be granted under certain circumstances at exercise prices below market
      at
      the time of grant. In any event, if the price of our common stock should
      increase, the difference between the current market stock price the exercise
      prices of outstanding options will increase.





The
      existence of below-market options could adversely affect the market price of
      our
      common stock and impair our ability to raise additional capital through the
      sale
      of our equity securities or debt financing.





Exercise
      of any such options will result in dilution of the proportional interests of
      shareholders at the time of exercise, and, to the extent that the exercise
      price
      is less than the book value of the common stock at that time, to the book value
      per share of the common stock.





Patents,
      Trademarks, etc.





The
      Company has engaged counsel for the purpose of securing patents, copyrights,
      and
      trademarks. The Company is engaged in the process of supporting this
      effort.





Number
      of
      Employees - part and full time.





The
      Company had 6 full-time employees, and 4 consultants at year-end 2005. Our
      employees are not represented by a labor union and we have never suffered an
      interruption of business as a result of a labor dispute. We consider our
      relations with our employees to be good.































10


ITEM
      2
      DESCRIPTION OF PROPERTY





Our
      Company's headquarters are located in Kennewick, WA. The following table sets
      forth certain information regarding the principal properties used by Manakoa
      Services, all of which are leased:







LOCATION
            FUNCTION
            LEASE
                TERM BEGINNING
              AND
                END (MM/DD/YR)
            SQUARE
                FOOTAGE
            COST
                PER MO.Kennewick, WA
            Company
                Headquarters (1)
            month-to-month
            2,500
            $5,000




(1)
            The
                Company's headquarters is shared with one of its shareholders, Apogee
                Biometrics, Inc., in Kennewick,
                Washington.




(2)
            The
                lease began at $1,500 for the first 6 months and is now $5,000 per
                month
                for one-year with two one-year
                extensions





We
      believe the facilities we occupy are well maintained and in good operating
      condition.





The
      company closed its engineering facilities in Boulder, Colorado November,
      2005.





ITEM
      3
      LEGAL PROCEEDINGS





On
      January 5, 2006 Boulder Police Department Police Report CR:P06-171 was filed
      as
      various equipment, files, marketing materials, and corporate files were
      apparently stolen, and there was no sign of forced entry to the office. Four
      servers, three laptops, two desktops, and other items are missing. The Company
      has hired Colorado counsel to pursue certain ex-employees that it suspects
      may
      have been involved.





On
      January 16, 2006, former employee Edward Nichols filed suit in Boulder County,
      Colorado against the company and its Board of Directors claiming default on
      a
      note he holds with the company for $100,000 for purported past services while
      with Secure Logistix Corporation. Also included in the suit are demands for
      past
      wages and expenses owed to Mr. Nichols while employed by the Company. The exact
      amount owed for wages and or expenses are yet to be determined and any failure
      to pay is denied. There can be no assurance that a settlement can be reached,
      or
      as to the terms as to any proposed settlement.





On
      May 5,
      2006, the Company received from former employee Jon Foucault a demand letter
      regarding a demand promissory note dated December 30, 2004, in the original
      amount of $25,000 due him by the Company.





ITEM
      4
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None
      during the year ended December 31, 2005.





ITEM
      5
      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





REPORTS
      TO SECURITY HOLDERS. We are a reporting company with the Securities and Exchange
      Commission, or SEC. The public may read and copy any materials filed with the
      SEC at the SEC's Public Reference Room at 450 Fifth Street N.W., Washington,
      D.C. 20549. The public may also obtain information on the operation of the
      Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains
      an
      Internet site that contains reports, proxy and information statements, and
      other
      information regarding issuers that file electronically with the SEC. The address
      of that site is http://www.sec.gov.





PRICES
      OF
      COMMON STOCK. We participate in the OTC Bulletin Board, an electronic quotation
      medium for securities traded outside of the Nasdaq Stock Market, and prices
      for
      our common stock are published on the OTC Bulletin Board under the trading
      symbol "MKOS". This market is extremely limited and the prices quoted are not
      a
      reliable indication of the value of our common stock.





11


ITEM
      5
      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS -
      continued




Following
      is information about the range of high and low bid prices for our common stock
      for each fiscal quarter since our stock commenced trading. These quotations
      reflect inter-dealer prices, without retail mark-up, mark-down or commission,
      and may not necessarily represent actual transactions.





The
      Company's Common Stock is currently quoted on the OTC Bulletin Board under
      the
      symbol MKOS.OB. The Company's Common Stock was previously quoted on NASD Pink
      Sheet market under the symbol EIDT, until March 19, 2004. The following table
      sets forth, for the periods indicated the range of high and low closing sales
      prices per share of the Company's Common Stock, as reported on NASD
      Over-The-Counter Bulletin Board




FISCAL
              PERIOD
            FISCAL
                2003
            FISCAL
                2004
            FISCAL
                2005HIGH
            LOW
            HIGH
            LOW
            HIGH
            LOWFirst Fiscal Quarter
            $0.24
            $0.01
            $1.28
            $0.50
            $1.15
            $0.42Second Fiscal Quarter
            $0.51
            $0.05
            $0.90
            $0.45
            $0.65
            $0.30Third Fiscal Quarter
            $1.00
            $0.06
            $0.95
            $0.50
            $0.40
            $0.115Fourth Fiscal Quarter
            $0.90
            $0.30
            $1.25
            $0.25
            $0.18
            $0.05




(Note)
      The source of this information are from quotation services and broker-dealers
      making a market in the Company's common stock. These prices reflect inter-dealer
      prices, without retail markup, markdown or commission and may not represent
      actual transactions.





As
      of
      December 31, 2005 there were 353 shareholders of record held the Company's
      common stock and the Company believes that there are approximately 3,000
      additional shareholders through nominee or street name accounts with brokers.





The
      Company has not declared or paid dividends on its Common Stock since its
      formation, and the Company does not anticipate paying dividends in the
      foreseeable future. Although the Company does not currently have a credit
      facility, future credit facilities, if any, are likely to prohibit the payment
      of dividends. Declaration or payment of dividends, if any, in the future, will
      be at the discretion of the Board of Directors and will depend on the Company's
      then current financial condition, results of operations, capital requirements
      and other factors deemed relevant by the Board of Directors.





The
      Transfer Agent and Registrar for our common stock is American Registrar &
Transfer Co., 342 East 900 South, and Salt Lake City, Utah 84111.





OUR
      STOCK
      PRICE MAY BE VOLATILE AND AN INVESTMENT IN SUCH COMMON STOCK COULD SUFFER A
      DECLINE IN VALUE:





The
      market price of our common stock may fluctuate significantly and violently
      in
      response to a number of factors, some of which are beyond our control. These
      factors include:





o
                government
                    regulatory action affecting the Companies services orcompetitors'
                    services;




o
            actual
                or anticipated fluctuations in operating
                results;




o
            the
                loss of key management or other
                personnel;




o
            the
                loss of major customers;




o
            the
                outcome of any future litigation;




o
            broad
                market fluctuations; and economic conditions in the UnitedStates
                or abroad.











12


ITEM
      6
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





The
      following discussion should be read in conjunction with, and is qualified in
      its
      entirety by, our consolidated financial statements and notes thereto included
      elsewhere in the annual report. Historical results are not necessarily
      indicative of trends in operating results for any future period.





The
      statements contained in the annual report that are not historical facts are
      forward-looking statements that evolve a number of risks and uncertainties.
      The
      actual results of the future events described in such forward-looking statements
      in this annual report could differ materially from those stated in such
      forward-looking statements.





The
      Company has embarked upon an entirely new business enterprise apart from the
      original Electronic Identification, Inc. "EIDT" contact less smart ID card
      systems. Prior to the merger, EIDT had abandoned the smart ID card system
      business. The technology being developed by the old EIDT, on information and
      belief, was not well received by a market place where technologically superior
      solutions emerged. There are no plans to utilize the smart ID card
      system.





Manakoa
      Services Corporation was a privately held Washington state corporation prior
      to
      any merger activity. It was a consulting services start up without sales but
      with a focus on the financial sector. The merger between Manakoa-Washington
      and
      SLX occurred as a result of the value perceived by the principles of the two
      private companies. No financial impact analysis entered into the decision to
      merge. It was based solely on the belief of private owners that a merger was
      appropriate based on mutual interest and strategies. The reverse merger with
      EIDT occurred as the method to become a public company. The Board of Directors
      of EIDT did conduct an independent analysis and determined it was to the benefit
      of its stockholders to approve the action. The financial impact of that merger
      is documented in the pre and post merger financial statements on file with
      the
      SEC. (please refer to: www.sec.gov)





Manakoa
      Corporation acquired Secure Logistix Corporation (SLX) in November 2003. SLX
      was
      organized in October 2001 as a Colorado corporation in specific response to
      terrorist attacks. SLX, through its employees and consultants, developed
      contingency plans and models in conjunction with a number of governmental and
      private sector organizations. The Company's first task was to identify third
      party solutions that could be applied to specific risk management and security
      issues facing clients. It became clear that this market place was disjointed
      and
      point product oriented. There was no way to "connect the dots" without an
      integrated solution. The second major activity was to define what might be
      driving the adoption of risk management and security best practices in the
      near
      term.





The
      team
      recognized that a number of government regulations and laws would soon be
      driving organizations to take these issues seriously. Based upon these two
      findings, the Company made a strategic decision to shift from an emphasis on
      consulting services to a product driven organization dedicated to the
      development of an integrated solution that addresses basic risk management
      best
      practices and the resolution of related regulatory compliance. The next step
      was
      to validate the conceptual underpinning of a new product as an integrated
      software platform. This effort included (1) review of the precise impact of
      the
      regulations, (2) assessment of available software platforms that would permit
      rapid, repeatable, and scalable solutions, (3) potential customer assessment
      of
      interest in the conceptual product, and (4) exploration of channel
      relationships. The initial management team behind this approach
      failed.





Manakoa
      Services Corporation (www.Manakoa.com) is an enterprise risk management software
      and services company focusing on regulatory compliance solutions.





Manakoa
      ComplianceSuite(TM) is being developed to meet the vertical security and risk
      management requirements of organizations complying with regulations stemming
      from the Gramm Leach Bliley Act (GLBA), Health Insurance Portability
      Accountability Act (HIPAA), Sarbanes Oxley Act, USA Patriot Act, and Federal
      Informational Security Management Act (FISMA). The Company anticipates expanding
      its support to other U.S. regulations plus international regulatory requirements
      emerging from the European Union, Japan, United Kingdom and Canada. The market
      sectors that the Company believes initially will be most significantly impacted
      are public corporations, health care, insurance, financial services and federal
      contractors. The Company intends to focus its sales efforts through channel
      partners that are envisioned to include trade and professional associations,
      accounting and legal firms, security consultants and system integrators, as
      well
      as non profit associations.





13


ITEM
      6
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -
      continued




The
      Company is developing the Manakoa ComplianceSuite(TM) as both an integrated
      solution set aas well as a series of standalone component products. The
      underlying architecture for the Manakoa ComplianceSuite(TM) was completed in
      2004 but is subject to adaptations and change to meet market, technology and
      regulatory shifts over time. The Manakoa KnowledgeBase(TM) is the first
      standalone product component, and was launched on February 28, 2005. It is
      an
      Internet subscription portal for regulatory compliance information. The
      Compliance WorkCenter(TM) asset and policy engine known as the Manakoa
      Compliance Services(TM) together with related interfaces to the Microsoft
      Operations Manager were released in second quarter of 2005.





The
      Company was involved in research, design, product prototyping and initial sales
      throughout the 2005 calendar year. As a result of this effort, in the first
      quarter of 2005the company made commercial available the Manakoa
      KnowledgeBase(TM) regulatory compliance research engine. This first commercial
      effort failed.





On
      July
      1,2005 Manakoa Services Corporation ("Manakoa") (PK:MKOS) acquired Vigilant
      Network Technologies, Inc. (VNT), a wholly owned subsidiary of UTEK
      Corporation("UTEK"), in a stock for stock transaction.





VNT
      holds
      an exclusive license to an advanced network topology mapper and quarantine
      software system, developed and currently in use at Los Alamos National
      Laboratory. The network topology mapper can rapidly scan an entire network
      and
      can quarantine any area down to an individual user to halt the pread of a virus.
      The licensed technology is independent of switch, hub, or router manufacturer
      and can be deployed and manipulated from any node in the network.





Subject
      to the terms and conditions of the Agreement and Plan of Acquisition, all
      conditions precedent to closing were fulfilled and the transaction was completed
      June 30, 2005. Upon completion, the acquisition was made effective as of the
      date the Agreement and Plan of Acquisition was signed, July 1, 2005. All
      outstanding VNT shares were acquired from UTEK by MANAKOA in exchange for
      5,365,854 shares of Manakoa common stock, all issued to UTEK. At this time,
      Manakoa will continue to hold VNT, as a wholly-owned subsidiary of
      MANAKOA.





The
      License Agreement held by VNT is with The Regents of the University of Cal-
      ifornia having its prinicpal office in Oakland, California ("Licensor"). The
      license entitles VNT to use certain software owned by Licensor ("Software")
      and
      certain intellectual property relating to part of the software for which
      Licensor has applied for a patent (the "Invention"). VNT may use this Software
      and Invention and derivatives thereof to train and certify personnel to enable
      such personnel to perform testing and assessment of enterprise
      vulnerabilities.





The
      Software consists of three parts: certain Network Topology Mapper Patent
      (S#102,394; Network Mapper Software (Copyright C-05,071) and Quantine Software
      (Copyright C-05,069) which were developed in the course of the University's
      research and development at Los Alamos National Laboratory.





The
      University desires that such Technology be developed and utilized to the fullest
      extent possible so as to enhance the accrual of economic and technological
      benefits to the U.S. domestic economy, and is therefore willing to grant an
      exclusive license in Patent Rights and Copyrights that protect the
      Technology.





The
      University grants to the Licensee an exclusive worldwide right and license
      to
      make, have made, use, import, sell and offer to sell, and have sold Licensed
      Inventions under the Patent Rights, with the right to sublicense others. The
      University expressly reserves the right to use the Technology, including the
      right to make, have made, use and have used Licensed Invesntions for any
      noncommercial purpose, including, but not limited to, Cooperative Research
      and
      Development Agreements, Work for Others Agreements, and User Facility
      Agreements.





14


ITEM
      6
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -
      continued




In
      consideration for the License, the Licensee (VNT) has agreed to the following
      fees and royalties. VNT has made an initial, nonrefundable License Issue Fee
      payment of $100,000 upon execution of this License Agreement. VNT will pay
      a
      royalty of five percent (5.0%) of its net sales during the term of this License
      Agreement.





Starting
      in July 2006, certain minimum Annual License Fees must be made to maintain
      the
      license ($10,000 in 2006, rising to $40,000 in 2009 and years thereafter through
      2021). In addition, VNT will pay eighty percent (80%) of all consideration,
      including, but not limited to, royalties, equity, and sublicense issue and
      annual fees received from sublicensee(s) in consideration for the Licensed
      Invention for the life of the sublicense in cases where the University is
      involved in the development of the sublicense within the first twelve (12)
      months after execution of this agreement. In cases where the Company developed
      the sublicense without the involvement of the University, the University will
      receive fifty percent (50%). The Licensee will not owe any consideration to
      the
      University for the first thirty-five thousand dollars ($35,000) (cumulative)
      of
      sublicense issue fees paid to the Licensee during the first twelve (12) months
      after execution of this license for sulicense where the University was involved
      in the development of the sublicens.





VNT
      shall
      prepay a $15,000 fee for licensing technical assistance to assist implementation
      of the Licensed Technology to be utilized by Licensee. Specifics of the
      technical assistance program will be defined by mutual agreement subsequent
      to
      the execution of the license agreement. Any amount not used in excess of $1,000
      will be returned to the licensee.





VNT
      will
      present a revised commercialization plan to the University within ninety (90)
      days of the execution of this agreement. If the commercialization plan is deemed
      unacceptable by the University for the appropriate commercialization of this
      technology, this exclusive license agreement shall terminate and my be converted
      to a non-exclusive license agreement. If this license agreement is converted
      to
      a non-exclusive license, then the University will refund to the Licensee
      fifty-thousand dollars ($50,000) from the original license issue
      fee.





The
      Licensee will demonstrate a working (beta) version of the software on or before
      Januray 1, 2006.





The
      Licensee will make first sales of a commercial product based on Licensed
      Invention on or before July 1, 2006.





If
      the
      minimum royalties are not paid, or the other amounts described above are not
      paid, Licensor may convert the entire license into a non-exclusive license
      or
      terminate the license, at Licensor's sole discretion.





As
      announced in our 8K of January 26, 2006, and later amended February 21, 2006:
      Due to the inability of past management's efforts involved in completing the
      Manakoa Compliance Services release, the company was unable to deliver the
      working version of the software on or before the January 1, 2006 deadline.
      On
      January 9, 2006, the exclusive license was formally terminated by Los Alamos
      National Laboratory, and a new non-exclusive license was presented for
      acceptance.





On
      January 13,2006, Manakoa Services Corporation entered into a new non-exclusive
      Patent and Copyright License Agreement with the Regents of the University of
      California and Los Alamos National Laboratory. Manakoa Services Corporation
      paid
      a non-refundable License Issue Fee in the amount of $50,000 and a Technical
      Assistance Fee in the amount of $15,000. Any amount not used in excess of $1,000
      of the Technical Assistance Fee will be refunded.











15


ITEM
      6
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -
      continued




License
      rights





The
      Company acquired Non-exclusive license rights to a certain Network Topology
      Mapper Patent and certain Network Mapper Software and Quarantine Software
      copyrights.





In
      consideration for the license, the Company agreed to the following
      payments:




o
                $50,000
                    License Issue Fee;


o
            $15,000
                Technical Assistance Fee;


o
            Annual
                license fees due and payable as follows: July 1, 2006
                $10,000;




July
      1,
      2007 $30,000; July 1, 2008 $40,000; and $40,000 per year continuing each July
      1st, through 2021.





In
      addition, royalties equal to 12% of net sales are due quarterly during the
      term
      of the agreement.





Milestones
      and Contingencies include: A product available for inspection by 12/31/2007;
      and
      first commercial sale by 12/31/2008.





This
      non-exclusive license was formally accepted on January 13, 2006.





The
      original terms of the agreement were disclosed in an 8K filing dated July 7,
      2005.The Audited Financials were filed November 21,2005. See also Amended
      10QSB/A filing dated January 25, 2006.




Product
      Overview





The
      company made a strategic decision to make available its products in the form
      of
      both integrated suites and standalone products. A well-known example of this
      type of strategy is the release by Microsoft of its entire Office suite together
      with independent standalone applications like Word or Excel. By launching
      "slices" of the integrated suites, Manakoa is able to go to market earlier
      while
      development continues for the more complex enterprise risk management
      suite.





There
      are
      two primary pillars in to this product roll-out strategy: Manakoa Risk and
      Regulatory ComplianceSuite(TM) and Standalone Applications





o
            Compliance
                WorkCenter(TM) accesses the state of compliance, performs appropriate
                shortfall analyses, and provides Board of Director level plans for
                achieving compliance. This product is divided into several independent
                applications that will also be released separately. The first announced
                stand alone product is the Manakoa Compliance Service that aligns
                critical
                IT assets with regulatory and best practices policies shipped second
                quarter.




Compliance
      Command and Control Center(TM) or C4(TM) will transform the Board approved
      plan
      into a mapped enterprise control environment via Preventative, Detective and
      Recovery. Technical controls are designed to alert, minimize, or recover from
      non-compliant and vulnerable states; displayed with progress monitored on
      current, user-specific dashboard views. The first announced stand alone products
      associated with C4(TM) are the Manakoa Compliance Microsoft Operations
      Management packs that provide event reports and alert management with a mid
      2006
      release date.





Manakoa
      Knowledge Transfer and Certification Products





o
            Manakoa
                Risk KnowledgeBase(TM) is an Internet based research engine forcorporate
                risk management and compliance issues, resources and questions.It
                provides subscribers a common site that unites the various facets
                ofManakoa's
                Risk Management Information System. The portal site containsaccessto
                specific legislation, cross referenced internal standards,securitybulletins,
                legal opinions, policy templates and guidelines, livelinked
                reports and publications. The Manakoa KnowledgeBase(TM) was madecommercially
                available the first quarter of
                2005.




o
            The
                Advanced Network Topology Mapper (ANTM) and quarantine sofware system
                will
                be designed to rapidly scan an entire network and can quarantine
                any area
                down to an individual user to halt the spread of a virus. The licensed
                technology will be independent of switch, hub, or router manufacturer
                and
                can be deployed and manipulated from any node in the
                network.





16


ITEM
      6
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -
      continued




The
      Advanced Network Topology Mapper (ANTM) is an acquired worldwide technology
      license, as reported in the company's 8K filing of July 7, 2005 and amended
      via
      8k filing dated February 21, 2006. Manakoa's role is to work jointly with Los
      Alamos Labs to augment the development and commercialize the technology on
      a
      world wide basis. The first year of joint development has been much slowerthan
      both parties anticipated.





The
      primary risk associated with not completing development in a reasonable period
      of time is that market expectations will have been established with potential
      channel partners and end user customers. A failure to deliver would damage
      the
      reputation of an emerging company and limit its ability to retain market
      relationships. The technological uncertainties are mitigated by the fact that
      the underlying solutions are being built upon commercially available products
      and based around standards like ISO 17799, the NIST-800 series and the COSO
      framework. There are tremendous content development and workflow process
      pressures requiring the company to retain and expand its high end professionals.
      The company will need to continue its fund raising efforts to pay for these
      professionals in order to meet development deadlines.





The
      risks
      associated with failure to complete projects in a timely fashion are fairly
      typical of software development. We are focusing initial releases on regulations
      (GLBA, HIPAA, FISMA) that have specific associated deadlines and reasonably
      clear governmental audit guidelines. While the company believes the scheduled
      release of its ComplianceSuite(tm) will map well to potential client
      requirements, development slippage could adversely impact market penetration.
      Beyond the risk associated with internal schedule delays, changes in the timing,
      tone and specific requirements set forth by regulators may also have an impact.
      Finally, competition is also a real risk component. By failing to come to market
      in a timely fashion, others could enter and capture market share.





Market
      Opportunity





The
      regulatory compliance market is rapidly growing and a number of reputable
      research firms like AMR Research and The Garner Group state that billions of
      dollars in projected corporate spending will occur. Manakoa believes that there
      exist underlying similarities between the targeted regulations. The following
      summarizes initial U.S. regulations targeted by Manakoa's compliance
      platforms:





Gramm
      Leach Bliley Act - GBLA compliance involves over 238,000 firms in the financial
      services industry and any organization using non-public financial information
      and their technical service providers





Sarbanes
      Oxley Act -Impacts all public companies, estimated at 14,000 organizations
      involving corporate governance





HIPAA
      -Health care and insurance providers impacted with an emphasis on privacy
      matters





FISMA
      -
      Federal Information Security Management Act impacts both government agencies
      and
      government contractors





The
      company also envisions expanding the number of supported regulations to other
      federal and regional laws as well as certain international
      regulations..





Need
      for
      Additional Financing.





The
      Company will need to raise additional funds in the next twelve months to satisfy
      its cash requirements. The Company is currently seeking to raise $2 million
      in a
      private placement of securities and intends to seek an additional $5 million
      in
      public offering of securities. The Company anticipates, based on currently
      proposed plans and assumptions relating to its operations, that these
      financings, or other sources of additional funding, will be essential for the
      Company to satisfy its cash requirements for more than approximately eighteen
      months. In the event that the Company's plans change, its assumptions prove
      to
      be inaccurate or its cash flow proves to be insufficient (due to unanticipated expenses,
      inadequate revenues, difficulties, problems or otherwise), the Company may
      be
      required to obtain financing sooner than anticipated, seek further additional
      financing or curtail its activities. Any issuance of equity securities would
      result in dilution to the interests of the Company's stockholders and any
      issuance of debt securities would subject the Company to risks that interest
      rates may increase or cash flow may be insufficient to repay such
      indebtedness.





17


ITEM
      6
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -
      continued




The
      Company envisions a requirement for two rounds of funding. Initially, it is
      expected that the Company will raise $2.0 million in a private placement in
      order to accelerate the development and market entry for its compliance
      solutions and provide general administrative expenses. A second round of public
      financing will be sought for $5 million to advance market penetration and
      support second-generation product development. The Company currently has no
      commitments or understandings for these or any other additional financings
      and
      there can be no assurance that any additional financing will be available to
      the
      Company.






MANAKOA Use of Proceeds
            Initial
                Round
            Second
                Round-$5.0
                millionAdministrative/Funding Costs
            $250,000
            $
                625,000Product Development
            $800,000
            $1,500,000Market Validation and Use Cases
            $225,000
            $
                400,000Expand Facilities and
              Infrastructure
            $250,000
            $
                850,000Market Development and Demand Creation
            $275,000
            $
                625,000Working Capital
            $200,000
            $1,000,000




Plant
      & Equipment





The
      Company foresees no expected purchase or sale of plant or related facilities
      at
      this time.





Dependence
      Upon Qualified Personnel and Executive Officers.





The
      Company's operations depend in part upon its ability to retain and hire
      qualified personnel, of which there can be no assurance. The Company's
      operations are also dependent upon the continued services of its executive
      management team and certain other consultants. The loss of services of the
      Chief
      Executive Officer, its executive management team or any of its consultants,
      whether as a result of death, disability or otherwise, could have a material
      adverse effect upon the Company's operations. The Company does not have
      employment agreements with its executive officers.





Revenue
      Model





As
      a new
      product in an emerging market, MANAKOA Services Corporation has conducted early
      validation for pricing and client acquisition estimates. These figures are
      based
      upon feedback from our strategic partners together with potential customers.
      The
      pricing has been estimated using a combination of cost up and market value
      considerations. Review by MANAKOA and our partners is still underway and
      significant changes in the pricing model may evolve prior to product
      releases.





The
      level
      of market penetration required to achieve our plan, requires significantly
      less
      than 1% of all financial institutions to recognize the compliance issues and
      take a responsible approach to risk mitigation.







18





ITEM
      7
      FINANCIAL STATEMENTS





PageReport
                    of Independent Registered Public Accounting Firm
                20Consolidated
                    Balance Sheet at December 31, 2005
                21Consolidated
                    Statements of Operations for the years ended December 31, 2005
                    and 2004,
                    and from November 21, 2001 (inception) through December 31,
                    2005
                22Consolidated
                    Statement of Changes in Shareholders' Deficit for the period
                    from November
                    21, 2001 (inception) through December 31, 2005
                23Consolidated
                    Statements of Cash Flows for the years ended December 31, 2005
                    and 2004,
                    and from November 21, 2001 (inception) through  December 31,
                    2005
                24Notes
                    to Consolidated Financial Statements
                25
















19




REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
        the
        Board of Directors and Shareholders
 Manakoa
        Services Corporation:
 
 
 We
        have
        audited the consolidated balance sheet of Manakoa Services Corporation (a
        development stage enterprise) as of December 31, 2005, and the related
        consolidated statements of operations, changes in shareholder’s deficit, and
        cash flows, for the years ended December 31, 2005 and 2004, and from November
        21, 2001 (inception) through December 31, 2005. These consolidated financial
        statements are the responsibility of the Company’s management. Our
        responsibility is to express an opinion on these consolidated financial
        statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the financial statements. An audit also includes assessing
        the
        accounting principles used and significant estimates made by management,
        as well
        as evaluating the overall financial statement presentation. We believe that
        our
        audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of Manakoa Services Corporation
        as of December 31, 2005, and the results of their operations and their cash
        flows for the years ended December 31, 2005 and 2004, and from November 21,
        2001
        (inception) through December 31, 2005 in conformity with accounting principles
        generally accepted in the United States of America.
 
 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 suffered recurring losses,
        used significant cash in support of its operating activities and, based upon
        current operating levels, requires additional capital or significant
        restructuring to sustain its operations for the foreseeable future. Management’s
        plans in regard to these matters are also described in Note 1. The consolidated
        financial statements do not include any adjustments that might result from
        the
        outcome of this uncertainty.
 
 
 
 /s/
        Cordovano and Honeck LLP
 Englewood,
        Colorado
 May
        18,
        2006






20






MANAKOA
      SERVICES CORPORATION


(A
      development Stage Company)


Consolidated
      Balance Sheet




**December
                  31, 2005****Assets**Prepaid
                  expenses:Prepaid
                  consulting services (Note 2)...
              
              
              
              
              
              $
              14,000Prepaid
                  expenses, related party (Note 2)...
              
              
              
              
              
              
              16,203Prepaid
                  expenses, other...
              
              
              
              
              
              
              20,000Property
                  and equipment, net of accumulated depreciationof
                  $296 (Note 3)...
              
              
              
              
              
              
              1,095Deposit
                  (Note 2)...
              
              
              
              
              50,000$
              101,298**Liabilities
                  and Shareholders' Deficit**Liabilities:Bank
                  overdraft
              
              
              
              
              
              $
              1,005Accounts
                  payable, related party (Note 2)
              
              
              
              
              
              
              81,634Accounts
                  payable, other
              
              
              
              
              
              
              569,421Accrued
                  payroll and payroll taxes
              
              
              
              
              
              
              523,473Notes
                  payable:Related
                  party, current maturities (Note 2)
              
              
              
              
              
              
              
              
              
              273,991Other
                  (Note 5)
              
              
              
              
              
              
              
              
              
              1,325,000Accrued
                  interest payable:Related
                  party (Note 2)
              
              
              
              
              
              
              
              
              
              30,634Other
                  (Note 5)
              
              
              
              
              
              
              
              
              
              185,455Indebtedness
                  to related parties (Note 2)
              
              
              
              
              
              
              220,375Other
                  accrued liabilities
              
              
              
              
              
              
              11,900Total
                  liabilities...
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              3,222,888Shareholders'
                  deficit (Notes 2, 5 and 6):Preferred
                  stock, $.001 par value; 25,000,000 shares authorized,-0-
                  shares issued and outstanding
              
              
              
              
              
              
              
              
              
              —Common
                  stock, $.001 par value; 200,000,000 shares authorized,44,264,847
                  shares issued and outstanding
              
              
              
              
              
              
              
              
              
              44,265Additional
                  paid-in capital
              
              
              
              
              
              
              6,173,989Deficit
                  accumulated during the development stage
              
              
              
              
              
              
              (9,339,844
              )Total
                  shareholders’ deficit...
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (3,121,590
              )$
              101,298




21


MANAKOA
        SERVICES CORPORATION
 (A
        development Stage Company)
 Consolidated
        Statements of Operations


**November
                  21,****2001****(Inception)****For
                  the Years Ended**
              
              **Through****December
                  31,**
              
              **December
                  31,****2005**
              
              
              **2004**
              
              
              **2005**Service
                  revenue
              
              $
              21,856
              
              $
              —
              
              $
              111,481Operating
                  expenses:Cost
                  of services
              
              
              —
              
              
              —
              
              
              83,775Stock-based
                  compensation (Notes 2 and 6):Software
                  research and development
              
              
              —
              
              
              67,500
              
              
              547,500Consulting,
                  related parties
              
              
              —
              
              
              700,000
              
              
              700,000Consulting,
                  other
              
              
              479,546
              
              
              515,542
              
              
              995,088Investor
                  relations
              
              
              —
              
              
              289,000
              
              
              289,000Common
                  stock options
              
              
              60,881
              
              
              526,050
              
              
              586,931Research
                  and development
              
              
              666,757
              
              
              696,256
              
              
              2,013,013Loss
                  on disposal of assets
              
              
              26,664
              
              
              —
              
              
              26,664Impairment
                  of license rights (Note 8)
              
              
              126,137
              
              
              —
              
              
              126,137Rent
                  and utilities, related party (Note 2)
              
              
              70,629
              
              
              71,857
              
              
              194,593General
                  and administrative costs:Salaries
                  and payroll taxes
              
              
              469,696
              
              
              239,766
              
              
              859,462Professional
                  fees
              
              
              195,102
              
              
              279,265
              
              
              513,182Consulting
              
              
              306,520
              
              
              290,798
              
              
              645,368Insurance
              
              
              41,443
              
              
              80,987
              
              
              122,430Other
              
              
              271,138
              
              
              146,565
              
              
              392,195Total
                  operating expenses
              
              
              2,714,513
              
              
              3,903,586
              
              
              8,095,338Loss
                  from operations
              
              
              (2,692,657
              )
              
              (3,903,586
              )
              
              (7,983,857
              )Interest
                  expense:Debt
                  issue costs (Note 5)
              
              
              (517,500
              )
              
              (517,500
              )
              
              (1,035,000
              )Related
                  party (Note 2)
              
              
              (15,300
              )
              
              (14,500
              )
              
              (29,800
              )Other
              
              
              (200,414
              )
              
              (89,939
              )
              
              (291,187
              )Total
                  interest expense
              
              
              (733,214
              )
              
              (621,939
              )
              
              (1,355,987
              )Loss
                  before income taxes
              
              
              (3,425,871
              )
              
              (4,525,525
              )
              
              (9,339,844
              )Income
                  tax provision (Note 4)
              
              
              —
              
              
              —
              
              
              —Net
                  loss
              
              $
              (3,425,871
              )
              $
              (4,525,525
              )
              $
              (9,339,844
              )Basic
                  and diluted loss per share
              
              $
              (0.09
              )
              $
              (0.15
              )Weighted
                  average common shares outstanding
              
              
              37,970,622
              
              
              29,228,641






22


MANAKOA
        SERVICES CORPORATION
 (A
        development Stage Company)
 Consolidated
        Statement of Changes in Stockholders'
        Deficit


**Deficit****Accumulated****Common**
              
              
              **Additional**
              
              
              **During
                  the****Common
                  Stock**
              
              **Stock**
              
              
              **Paid-In**
              
              
              **Development****Shares**
              
              
              **Par
                  Value**
              
              
              **Subscriptions**
              
              
              **Capital**
              
              
              **Stage**
              
              
              **Total**Balance,
                  November 21, 2001 (inception)
              
              
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Balance,
                  December 31, 2001
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —January
                  1, 2002, stock sold to anofficer
                  (Note 2)
              
              
              6,100,000
              
              
              6,100
              
              
              —
              
              
              (6,000
              )
              
              —
              
              
              100Management
                  and administrative servicescontributed
                  by an officer (Note 2)
              
              
              —
              
              
              —
              
              
              —
              
              
              75,000
              
              
              —
              
              
              75,000Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (167,871
              )
              
              (167,871
              )Balance,
                  December 31, 2002
              
              
              6,100,000
              
              
              6,100
              
              
              —
              
              
              69,000
              
              
              (167,871
              )
              
              (92,771
              )November
                  24, 2003, stock issued toacquire
                  net liabilities of ManakoaServices
                  Corporation (Note 1)
              
              
              12,200,000
              
              
              12,200
              
              
              (610
              )
              
              (13,626
              )
              
              —
              
              
              (2,036
              )November
                  25, 2003, followingrecapitalization
              
              
              18,300,000
              
              
              18,300
              
              
              (610
              )
              
              55,374
              
              
              (167,871
              )
              
              (94,807
              )December
                  2003, stock issued in exchangefor
                  software development services(Note
                  6)
              
              
              1,000,000
              
              
              1,000
              
              
              —
              
              
              479,000
              
              
              —
              
              
              480,000December
                  18, 2003, stock issued toacquire
                  net liabilities of ElectronicIdentification,
                  Inc (Note 1)
              
              
              8,553,783
              
              
              8,554
              
              
              —
              
              
              (409,769
              )
              
              —
              
              
              (401,215
              )December
                  19, 2003, followingrecapitalization
              
              
              27,853,783
              
              
              27,854
              
              
              (610
              )
              
              124,605
              
              
              (167,871
              )
              
              (16,022
              )Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,220,577
              )
              
              (1,220,577
              )Balance,
                  December 31, 2003
              
              
              27,853,783
              
              
              27,854
              
              
              (610
              )
              
              124,605
              
              
              (1,388,448
              )
              
              (1,236,599
              )Receipt
                  of stock subscription
              
              
              —
              
              
              —
              
              
              610
              
              
              —
              
              
              —
              
              
              610Common
                  stock issued in exchange forservices
                  (Note 6)
              
              
              2,433,000
              
              
              2,433
              
              
              —
              
              
              1,312,567
              
              
              —
              
              
              1,315,000July
                  2004, warrants granted as debtissue
                  costs (Note 5)
              
              
              —
              
              
              —
              
              
              —
              
              
              1,035,000
              
              
              —
              
              
              1,035,000September
                  2004, sale of common stock($50/share)
                  (Note 6)
              
              
              500,000
              
              
              500
              
              
              —
              
              
              249,500
              
              
              —
              
              
              250,000September
                  2004, common stock issuedto
                  acquire Advanced Cyber Security,Inc
                  (Note 9)
              
              
              1,900,000
              
              
              1,900
              
              
              —
              
              
              179,837
              
              
              —
              
              
              181,737September
                  to December 2004, grantedcommon
                  stock options (Note 6)
              
              
              —
              
              
              —
              
              
              —
              
              
              526,050
              
              
              —
              
              
              526,050October
                  2004, common stock issuedto
                  repay convertible debt (Note 5)
              
              
              125,000
              
              
              125
              
              
              —
              
              
              49,875
              
              
              —
              
              
              50,000December
                  2004, common stock issued topay
                  for shareholder obligations andservices
                  rendered (Note 2)
              
              
              1,750,000
              
              
              1,750
              
              
              —
              
              
              873,250
              
              
              —
              
              
              875,000Cancellation
                  of common shares
              
              
              (50,270
              )
              
              (50
              )
              
              —
              
              
              50
              
              
              —
              
              
              —Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (4,525,525
              )
              
              (4,525,525
              )Balance,
                  December 31, 2004
              
              
              34,511,513
              
              
              34,512
              
              
              —
              
              
              4,350,734
              
              
              (5,913,973
              )
              
              (1,528,727
              )February
                  2005, common stock optionsexercised
              
              
              150,000
              
              
              150
              
              
              —
              
              
              1,350
              
              
              —
              
              
              1,500February
                  2005, beneficial conversionfeature
                  related to issuance of convertiblepromissory
                  notes (Note 5)
              
              
              —
              
              
              —
              
              
              —
              
              
              24,100
              
              
              —
              
              
              24,100March
                  2005, common stock issuedin
                  exchange for services (Note 6)
              
              
              11,250
              
              
              11
              
              
              —
              
              
              6,177
              
              
              —
              
              
              6,188March
                  2005, common stock warrantsexercised
              
              
              125,000
              
              
              125
              
              
              —
              
              
              7,375
              
              
              —
              
              
              7,500March
                  to June 2005, common stock issuedto
                  repay convertible debt and relatedaccrued
                  interest (Note 5)
              
              
              2,456,230
              
              
              2,456
              
              
              —
              
              
              1,155,483
              
              
              —
              
              
              1,157,939May
                  2005, common stock optionsexercised
              
              
              50,000
              
              
              50
              
              
              —
              
              
              450
              
              
              —
              
              
              500June
                  2005, common stock warrantsexercised
              
              
              1,500,000
              
              
              1,500
              
              
              —
              
              
              13,500
              
              
              —
              
              
              15,000July
                  2005, common stock issued toacquire
                  Vigilant assets (Note 2)
              
              
              5,365,854
              
              
              5,366
              
              
              —
              
              
              523,634
              
              
              —
              
              
              529,000July
                  2005, common stock issuedin
                  exchange for services (Note 6)
              
              
              95,000
              
              
              95
              
              
              —
              
              
              30,305
              
              
              —
              
              
              30,400Common
                  stock options vested in 2005
              
              
              —
              
              
              —
              
              
              —
              
              
              60,881
              
              
              —
              
              
              60,881Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (3,425,871
              )
              
              (3,425,871
              )Balance,
                  December 31, 2005
              
              
              44,264,847
              
              $
              44,265
              
              $
              —
              
              $
              6,173,989
              
              $
              (9,339,844
              )
              $
              (3,121,590
              )






23


MANAKOA
        SERVICES CORPORATION
 (A
        development Stage Company)
 Consolidated
        Statement of Cash Flows


**November
                  21,****2001****(Inception)****For
                  the Years Ended**
              
              **Through****December
                  31,**
              
              **December
                  31,****2005**
              
              
              **2004**
              
              
              **2005**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (3,425,871
              )
              $
              (4,525,525
              )
              $
              (9,339,844
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Depreciation
                  and amortization
              
              
              5,197
              
              
              23,779
              
              
              28,976Stock-based
                  compensation - services (Notes 2 and 6)
              
              
              479,546
              
              
              1,572,042
              
              
              2,531,588Stock-based
                  compensation - options (Note 6)
              
              
              60,881
              
              
              526,050
              
              
              586,931Debt
                  issue costs, net (Note 5)
              
              
              517,500
              
              
              517,500
              
              
              1,035,000Loss
                  on disposal of assets
              
              
              26,664
              
              
              —
              
              
              26,664Loss
                  on impairment of license rights (Note 8)
              
              
              126,137
              
              
              —
              
              
              126,137Services
                  contributed by an officer
              
              
              —
              
              
              —
              
              
              75,000Changes
                  in operating assets and liabilities:Perpaid
                  expenses
              
              
              459,102
              
              
              (55,474
              )
              
              403,628Accounts
                  payable
              
              
              441,790
              
              
              289,982
              
              
              862,421Accrued
                  liabilities
              
              
              776,547
              
              
              138,311
              
              
              1,618,202Net
                  cash used inoperating
                  activities
              
              
              (532,507
              )
              
              (1,513,335
              )
              
              (2,045,297
              )Cash
                  flows from investing activities:Property
                  and equipment purchases
              
              
              (8,579
              )
              
              (25,122
              )
              
              (33,701
              )Cash
                  acquired in EIDT merger
              
              
              —
              
              
              —
              
              
              4,797Net
                  cash used ininvesting
                  activities
              
              
              (8,579
              )
              
              (25,122
              )
              
              (28,904
              )Cash
                  flows from financing activities:Proceeds
                  from issuance of convertible debt (Note 5)
              
              
              57,500
              
              
              857,500
              
              
              915,000Principal
                  payments on promissory noteowed
                  to an officer (Note 2)
              
              
              —
              
              
              (15,000
              )
              
              (15,000
              )Proceeds
                  from issuance of promissory notes (Notes 2 and 5)
              
              
              188,991
              
              
              725,000
              
              
              913,991Proceeds
                  from exercise of common stock awards
              
              
              9,500
              
              
              —
              
              
              9,500Proceeds
                  from sale of common stock (Note 6)
              
              
              —
              
              
              250,610
              
              
              250,710Net
                  cash provided byfinancing
                  activities
              
              
              255,991
              
              
              1,818,110
              
              
              2,074,201Net
                  change in cash
              
              
              (285,095
              )
              
              279,653
              
              
              —Cash,
                  beginning of period
              
              
              285,095
              
              
              5,442
              
              
              —Cash,
                  end of period
              
              $
              —
              
              $
              285,095
              
              $
              —Supplemental
                  disclosure of cash flow information:Cash
                  paid during the period for:Income
                  taxes
              
              $
              —
              
              $
              —
              
              $
              —Interest
              
              $
              —
              
              $
              —
              
              $
              —Non-cash
                  investing and financing activities:Common
                  stock issued to acquire assets ofVigilant
                  Network Technologies, Inc (Note 2)
              
              $
              529,000
              
              $
              —
              
              $
              529,000Common
                  stock issued to repay convertible promissorynotes
                  and related accrued interest (Note 5)
              
              $
              1,157,940
              
              $
              —
              
              $
              1,157,940Common
                  stock issued to acquire AdvancedCyber
                  Security, Inc (Note 9)
              
              $
              —
              
              $
              181,737
              
              $
              181,737Common
                  stock issued to extinguish aconvertible
                  promissory note (Note 5)
              
              $
              —
              
              $
              50,000
              
              $
              50,000Common
                  stock issued for prepaidconsulting
                  services (Note 6)
              
              $
              —
              
              $
              (442,958
              )
              $
              (442,958
              )Common
                  stock issued in Manakoa/SLXStock
                  Purchase Agreement (Note 1)
              
              $
              —
              
              $
              —
              
              $
              (2,036
              )Common
                  stock issued in Manakoa/EIDTStock
                  Purchase Agreement (Note 1)
              
              $
              —
              
              $
              —
              
              $
              (401,215
              )









24
 **MANAKOA
            SERVICES CORPORATION**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**





**NOTE
      1:**  **NATURE
      OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**





***Nature
      of Organization***





Manakoa
      Services Corporation (the “Company” or “Manakoa”) was incorporated under the
      laws of Colorado on November 21, 2001 as Secure Logistix Corporation (“SLX”). On
      November 25, 2003, the Company entered into a Stock Purchase Agreement with
      Manakoa Services Corporation-Private Company (“MSC”). On December 19, 2003, the
      Company entered into a Stock Purchase Agreement with Electronic Identification,
      Inc. (“EIDT”), a public company registered with the Securities and Exchange
      Commission (“SEC”). The Company is a development stage enterprise in accordance
      with Statement of Financial Accounting Standard (“SFAS”) No. 7. The Company
      plans to develop its regulatory compliance software operations.





The
      Company operates as a consultant, developer and publisher of risk management
      and
      regulatory software-based solutions for corporate security and Federal
      regulatory compliance. The Company has worked with Federal agencies and private
      companies to define enhanced risk management and the effective corporate
      response to Federal regulations such as the Gramm Leach Bliley Act, Health
      Insurance Portability and Accountability Act, Sarbanes Oxley Act, and the USA
      Patriot Act.





**MSC
      Recapitalization**





On
      November 25, 2003, MSC, a private shell company incorporated on May 20, 2003,
      entered into a Stock Purchase Agreement with SLX (now known as Manakoa, or
      the
      Company). Under the terms of the agreement, MSC agreed to acquire all of the
      issued and outstanding common stock of SLX in exchange for 6,100,000 shares
      of
      MSC common stock and $300,000 cash. The parties subsequently amended the
      agreement to replace the $300,000 cash with the assumption of $300,000 in
      liabilities. Following the acquisition, SLX became a wholly-owned subsidiary
      of
      MSC. However, for accounting purposes, the acquisition has been treated as
      a
      recapitalization of SLX, with MSC the legal surviving entity. Since MSC had
      minimal assets and no operations, the recapitalization has been accounted for
      as
      the sale of 12,200,000 shares of SLX common stock for the net liabilities of
      MSC. Therefore, the historical financial information prior to the date of the
      recapitalization, is the financial information of SLX.





In
      addition to the above terms of the Stock Purchase Agreement, the Company granted
      1,000,000 compensatory common stock options (see Note 6) and agreed to pay
      $500,000 to its employees and contractors as payment for 2003 services. The
      $500,000 is currently due in the form of promissory notes within the
      accompanying consolidated financial statements.





**EIDT
      Recapitalization**





On
      December 18, 2003, the Company entered into a Stock Purchase Agreement with
      EIDT, a Nevada corporation. Under the terms of the Agreement, EIDT agreed to
      acquire all of the issued and outstanding common stock of the Company in
      exchange for 19,300,000 shares of EIDT’s common stock. This acquisition has been
      treated as a recapitalization of Manakoa, with EIDT the legal surviving entity.
      Since EIDT had minimal assets and no operations, the recapitalization has been
      accounted for as the sale of 8,553,783 shares of Manakoa common stock for the
      net liabilities of EIDT. Therefore, the historical financial information prior
      to the date of the recapitalization, is the financial information of Manakoa.
      Costs of the transaction have been charged to the period. The recapitalization
      took place on December 18,





25
 
 **MANAKOA
          SERVICES CORPORATION**
 **(A
          Development Stage Company)**
 **Notes
          to Consolidated Financial Statements**




NOTE
      1:  **NATURE
      OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      continued**





2003;
      however, the consolidated financial statements have been prepared as if the
      recapitalization took place on December 31, 2003.





**Going
      Concern**





The
      accompanying consolidated financial statements have been prepared on a going
      concern basis, which contemplates the realization of assets and satisfaction
      of
      liabilities in the normal course of business. As shown in the accompanying
      financial statements, the Company has suffered recurring losses, used
      significant cash in support of its operating activities and, based upon current
      operating levels, requires additional capital or significant reconfiguration
      of
      its operations to sustain its operations for the foreseeable future. These
      factors, among others, may indicate that the Company will be unable to continue
      as a going concern for a reasonable time.





The
      consolidated financial statements do not include any adjustments relating to
      the
      recoverability and classification of liabilities that might be necessary should
      the Company be unable to continue as a going concern. The Company’s continuation
      as a going concern is dependent upon its ability to generate sufficient cash
      flow to meet its obligations on a timely basis and ultimately to attain
      profitability. The Company plans to seek additional funding to maintain its
      operations through debt and equity financing. There is no assurance that the
      Company will be successful in its efforts to raise additional working capital
      or
      achieve profitable operations. The consolidated financial statements do not
      include any adjustments that might result from the outcome of this uncertainty.





***Summary
      of Significant Accounting Policies***





**Use
      of estimates**





The
      preparation of the consolidated 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 and disclosure of contingent assets and
      liabilities at the date of the consolidated financial statements and the
      reported amounts of revenues and expenses during the reporting period. Actual
      results could differ from those estimates.





**Cash
      equivalents**





For
      the
      purposes of the statement of cash flows, the Company considers all highly liquid
      debt instruments purchased with an original maturity of three months or less
      to
      be cash equivalents. The Company had no cash equivalents at December 31,
      2005.





**Property,
      equipment and depreciation**





Property
      and equipment are stated at cost and are depreciated over their estimated useful
      lives, approximately five years, using the straight-line method.





Upon
      retirement or disposition of equipment, the cost and accumulated depreciation
      are removed from the accounts and any resulting gain or loss is reflected in
      operations. Repairs and maintenance are charged to expense as incurred and
      expenditures for additions and improvements are capitalized.





**Software
      Development Costs**





26
 
 **MANAKOA
          SERVICES CORPORATION**
 **(A
          Development Stage Company)**
 **Notes
          to Consolidated Financial Statements**




NOTE
      1:  **NATURE
      OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      continued**


Software
      development costs are recorded in accordance with Statement on Financial
      Accounting Standards (“SFAS”) Statement No. 86, “Accounting for the Costs of
      Computer Software to be Sold, Leased or Otherwise Marketed”. Costs incurred to
      establish the technological feasibility of computer software to be sold, leased,
      or otherwise marketed are expensed as incurred to research and development
      costs. Once technological feasibility is established, the cost of producing
      product masters for the software is capitalized. Capitalization of the software
      development costs ceases and amortization of the capitalized costs commences
      when the product is available for general release to customers. Capitalized
      costs are amortized based on the greater of (a) the ratio of current gross
      revenues to the total current and anticipated future gross revenues, or (b)
      the
      straight-line method over the remaining estimated economic life of the product.





Research
      and development costs totaled $666,757 and $696,256 for the years ended December
      31, 2005 and 2004, respectively. The Company has not capitalized any software
      development costs as of December 31, 2005.





**Impairment
      of Software Development Costs**





The
      Company will review software development costs for impairment whenever events
      or
      changes in circumstances indicate that the carrying amount of these assets
      may
      not be recoverable. These assets are assessed for impairment based on estimated
      undiscounted future cash flows from these assets. If the carrying value of
      the
      assets exceeds the estimated future undiscounted cash flows, a loss is recorded
      for the excess of the asset’s carrying value over the fair value. The Company
      did not have any capitalized software development costs at December 31, 2005.





**Impairment
      of Long-Lived Assets**





The
      Company evaluates the carrying value of its long-lived assets under the
      provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets”. Statement No. 144 requires impairment losses to be recorded
      on long-lived assets used in operations when indicators of impairment are
      present and the undiscounted future cash flows estimated to be generated by
      those assets are less than the assets’ carrying amount. If such assets are
      impaired, the impairment to be recognized is measured by the amount by which
      the
      carrying amount of the assets exceeds the fair value of the assets. Assets
      to be
      disposed of are reported at the lower of the carrying value or fair value,
      less
      costs to sell.





**Net
      loss per share**





Basic
      earnings/loss per share is computed by dividing income available to common
      shareholders (the numerator) by the weighted-average number of common shares
      (the denominator) for the period. The computation of diluted earnings per share
      is similar to basic earnings per share, except that the denominator is increased
      to include the number of additional common shares that would have been
      outstanding if potentially dilutive common shares had been issued.





At
      December 31, 2005, there was no variance between basic and diluted loss per
      share as all potentially dilutive common shares outstanding (including 1,200,000
      common stock options and 115,000 common stock warrants) were anti-dilutive.





27
 
 **MANAKOA
          SERVICES CORPORATION**
 **(A
          Development Stage Company)**
 **Notes
          to Consolidated Financial Statements**




NOTE
      1:  **NATURE
      OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      continued**


Income
      taxes





Income
      taxes are provided for the tax effects of transactions reported in the consolidated
      financial statements and consist of taxes currently due plus deferred taxes
      related primarily to differences between the recorded book basis and the tax
      basis of assets and liabilities for financial and income tax reporting. The
      deferred tax assets and liabilities represent the future tax return consequences
      of those differences, which will either be taxable or deductible when the assets
      and liabilities are recovered or settled. Deferred taxes are also recognized
      for
      operating losses that are available to offset future taxable income and tax
      credits that are available to offset future federal income taxes.





**Revenue
      recognition**





Service
      revenue is recognized after services are provided and collection is probable.
      Expenses are recognized when incurred. The Company did not make any sales of
      software products during the periods presented in the accompanying consolidated
      financial statements.





**Fair
      value of financial instruments**





The
      carrying amounts of cash, accounts and notes payable and other accrued
      liabilities approximate fair value due to the short-term maturity of the
      instruments.





**Stock-based
      compensation**





The
      Company accounts for compensation expense for its stock-based employee
      compensation plans using the intrinsic value method prescribed in Accounting
      Principles Board Opinion No. 25, “Accounting for Stock Issued to
      Employees” ** (“APB
      25”), and complies with the disclosure provisions of SFAS No. 123, “Accounting
      for Stock-Based Compensation” ** (“SFAS
      123”), and SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and
      Disclosure” *.* Under
      APB
      25, compensation expense of fixed stock options is based on the difference,
      if
      any, on the date of the grant between the deemed fair value of the Company’s
      stock and the exercise price of the option. Compensation expense is recognized
      on the date of grant or on the straight-line basis over the option-vesting
      period. The Company accounts for stock issued to nonemployees in accordance
      with
      the provisions of SFAS 123 and EITF Issue No. 96-18, “Accounting for Equity
      Instruments That Are Issued to Other Than Employees for Acquiring, or in
      Conjunction with Selling, Goods or Services”.





Pro
      forma
      information regarding the results of operations is determined as if the Company
      had accounted for its employee stock options using the fair-value method. The
      fair value of each option grant is estimated on the date of grant using the
      Black-Scholes method. Pro forma disclosures have been included in Note 6.





**Recent
      accounting pronouncements**





In
      May 2005, the FASB issued SFAS 154, “Accounting Changes and Error
      Corrections,” which replaces APB Opinion No. 20, “Accounting Changes,” and
      supersedes FASB Statement No. 3, “Reporting Accounting Changes in Interim
      Financial Statements - an amendment of APB Opinion No. 28.” SFAS 154 requires
      retrospective application to prior periods’ financial statements of changes in
      accounting principle, unless it is impracticable to determine either the
      period-specific effects or the cumulative effect of the change. When it is
      impracticable to determine the period-specific effects of an accounting change
      on one or more individual prior periods presented, SFAS 154 requires that the
      new accounting principle be applied to the balances of assets and liabilities
      as
      of the beginning of the earliest period for which retrospective





28
 
 **MANAKOA
          SERVICES CORPORATION**
 **(A
          Development Stage Company)**
 **Notes
          to Consolidated Financial Statements**




NOTE
      1:  **NATURE
      OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      continued**


application
      is practicable and that a corresponding adjustment be made to the opening
      balance of retained earnings for that period rather than being reported in
      an
      income statement. When it is impracticable to determine the cumulative effect
      of
      applying a change in accounting principle to all prior periods, SFAS 154
      requires that the new accounting principle be applied as if it were adopted
      prospectively from the earliest date practicable. SFAS 154 shall be effective
      for accounting changes and corrections of errors made in fiscal years beginning
      after December 15, 2005. The Company does not expect the provisions of SFAS
      154
      will have a significant impact on its results of operations.





In
      December 2004, the FASB issued SFAS 153, “Exchanges of Non-Monetary Assets,” an
      amendment of APB 29. This statement amends APB 29, which is based on the
      principle that exchanges of non-monetary assets should be measured at the fair
      value of the assets exchanged with certain exceptions. SFAS 153 eliminates
      the
      exception for non-monetary exchanges of similar productive assets and replaces
      it with a general exception for exchanges of non-monetary assets that do not
      have commercial substance. A non-monetary exchange has commercial substance
      if
      the future cash flows of the entity are expected to change significantly as
      a
      result of the exchange. This statement is effective for non-monetary asset
      exchanges occurring in fiscal periods beginning on or after June 15, 2005.
      The
      Company does not expect the provisions of SFAS 153 will have a significant
      impact on its results of operations.





In
      December 2004, the FASB issued SFAS No. 123R, “Share Based Payment.” SFAS 123R
      is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation,” and
      supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and
      its related implementation guidance. SFAS 123R establishes standards for the
      accounting for transactions in which an entity exchanges its equity instruments
      for goods or services. It also addresses transactions in which an entity incurs
      liabilities in exchange for goods or services that are based on the fair value
      of the entity’s equity instruments or that may be settled by the issuance of
      those equity instruments. SFAS 123R focuses primarily on accounting for
      transactions in which an entity obtains employee services in share-based payment
      transactions. SFAS 123R does not change the accounting guidance for share-based
      payment transactions with parties other than employees provided in SFAS 123
      as
      originally issued and Emerging Issues Task Force Issue No. 96-18, “Accounting
      for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services.” SFAS 123R does not address the
      accounting for employee share ownership plans, which are subject to AICPA
      Statement of Position 93-6, “Employers’ Accounting for Employee Stock Ownership
      Plans.” SFAS 123R requires a public entity to measure the cost of employee
      services received in exchange for an award of equity instruments based on the
      grant-date fair value of the award (with limited exceptions). That cost will
      be
      recognized over the period during which an employee is required to provide
      service in exchange for the award - the requisite service period (usually the
      vesting period). SFAS 123R requires that the compensation cost relating to
      share-based payment transactions be recognized in financial statements. That
      cost will be measured based on the fair value of the equity or liability
      instruments issued. The scope of SFAS 123R includes a wide range of share-based
      compensation arrangements including share options, restricted share plans,
      performance-based awards, share appreciation rights, and employee share purchase
      plans. Public entities (other than those filing as small business issuers)
      will
      be required to apply SFAS 123R as of the first interim or annual reporting
      period that begins after June 15, 2005. Public entities that file as small
      business issuers will be required to apply SFAS 123R in the first interim or
      annual reporting period that begins after December 15, 2005. The adoption of
      this standard will have a significant effect on the Company’s financial
      statements if management continues to issue equity instruments in exchange
      for
      employee services. In addition, the Company will be required to record the
      fair
      value of compensation costs for services performed after January 1, 2006 to
      meet
      the vesting requirements of any equity awards granted prior to the SFAS 123R
      effective date.





29
 
 **MANAKOA
          SERVICES CORPORATION**
 **(A
          Development Stage Company)**
 **Notes
          to Consolidated Financial Statements**




NOTE
      1:  **NATURE
      OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      continued**


In
      November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of
      ARB No. 43, Chapter 4.” This statement is effective for fiscal years beginning
      after June 15, 2005. This standard clarifies that abnormal amounts of idle
      facility expense, freight, handling costs, and wasted material should be
      expensed as incurred and not included in overhead. In addition, this standard
      requires that the allocation of fixed production overhead costs to inventory be
      based on the normal capacity of the production facilities. The adoption of
      this
      standard is not expected to have a material effect on the Company’s results of
      operations or financial position.





**NOTE
      2:**  **RELATED
      PARTY TRANSACTIONS**





**Indebtedness
      to related parties**





At
      December 31, 2005, the Company owed a former director $81,634, respectively,
      for
      services performed on behalf of the Company. This balance is included in the
      accompanying condensed consolidated financial statements as “Accounts payable,
      related party”.





As
      of
      December 31, 2005, the Company owed its officers, employees and an affiliate
      a
      total of $220,375 for accrued salaries, accrued rent, and expenses paid on
      behalf of the Company. These liabilities are non-interest bearing and are due
      on
      demand. Management plans to settle these liabilities with cash or stock. The
      $220,375 is included in the accompanying consolidated financial statements
      as
“Indebtedness to related parties”.





As
      part
      of its merger with EIDT, the Company assumed $206,275 in advances owed to two
      shareholders of the Company. These advances are non-interest bearing and are
      due
      on demand. During the year ended December 31, 2004, the Company repaid $31,275
      in cash and extinguished the remaining $175,000 through the issuance of
      1,750,000 shares of the Company’s common stock. The common stock was valued at
      $875,000 based on the quoted market price of the stock on the transaction date,
      or $.50 per share. The excess valuation of the common stock, totaling $700,000,
      has been charged to consulting for services performed on behalf of the Company.
      The $700,000 is included in the accompanying consolidated financial statements
      as “Stock-based compensation - consulting, related parties”.





Promissory
      notes payable to related parties consist of the following at December 31, 2005:


Note
                  payable to former CEO issued on November 23, 2003,matures
                  March 31, 2006, 8% annual interest rate,unsecured
              
              $
              185,000Note
                  payable to an officer issued on December 31, 2005,payable
                  on demand after June 30, 2006, 10% annualinterest
                  rate,
                  unsecured
              
              
              50,991Note
                  payable to an officer issued on December 31, 2005,payable
                  on demand after June 30, 2006, 10% annualinterest
                  rate,
                  unsecured
              
              
              38,000$
              273,991


Accrued
        interest payable on the above notes totaled $30,634 at December 31,
        2005.
  30
 **MANAKOA
              SERVICES CORPORATION**
 **(A
              Development Stage Company)**
 **Notes
              to Consolidated Financial Statements**
  NOTE
        2:  **RELATED
        PARTY TRANSACTIONS - continued**


**Vigilant
        asset acquisition**
  On
        July
        1, 2005, the Company acquired the assets of Vigilant Network Technologies,
        Inc.
        (“Vigilant”) from Utek Corporation (amex: UTK) (“Utek”). Utek is a shareholder
        of more than 10% of the Company’s issued and outstanding common stock and is
        considered a related party. The Company acquired Vigilant’s assets from Utek in
        exchange for 5,365,854 shares of the Company’s common stock. The Company
        conducted the acquisition in order to obtain Vigilant’s cash, rights, and
        customer relationships. Because the transaction occurred between related
        parties, the assets acquired by the Company were recorded at the predecessor’s
        (Utek) historical cost basis, or $529,000, as follows:


**July
                  1, 2005**Cash
              
              $
              465,000Prepaid
                  consulting services (Technical Assistance fee)
              
              
              14,000License
                  issue fee
              
              
              50,000Net
                  assets acquired
              
              $
              529,000




On
        June
        30, 2005, Vigilant entered into an Exclusive Patent and Copyright License
        Agreement with the Regents of the University of California. Vigilant paid
        a
        non-refundable License Issue Fee in the amount of $100,000 and a Technical
        Assistance Fee in the amount of $15,000. The license fee is non-refundable
        unless the Company’s commercialization plan is deemed unacceptable by the
        University. If the plan is deemed unacceptable, the license agreement will
        terminate and may be converted to a non-exclusive license. If the license
        is
        converted to a non-exclusive license, the University will refund $50,000
        to
        Vigilant. To date, no commercialization plan has been deemed acceptable or
        unacceptable. Any amount not used in excess of $1,000 of the Technical
        Assistance Fee will be refunded to Vigilant.
 
 **License
        rights**
 
 The
        Company acquired exclusive license rights to a certain Network Topology Mapper
        Patent and certain Network Mapper Software and Quarantine Software copyrights.
 
 In
        consideration for the license, the Company agreed to the following payments:
 
 **·**
              $100,000
                  License Issue Fee, described above;
 **·**
              $15,000
                  Technical Assistance Fee, described
                  above;
 **·**
              Annual
                  license fees due and payable according to the following
                  schedule:




July
                  1, 2006
              
              **$**
              **10,000**
              
              
              July
                  1, 2014
              
              **$**
              **40,000**July
                  1, 2007
              
              **$**
              **20,000**
              
              
              July
                  1, 2015
              
              **$**
              **40,000**July
                  1, 2008
              
              **$**
              **30,000**
              
              
              July
                  1, 2016
              
              **$**
              **40,000**July
                  1, 2009
              
              **$**
              **40,000**
              
              
              July
                  1, 2017
              
              **$**
              **40,000**July
                  1, 2010
              
              **$**
              **40,000**
              
              
              July
                  1, 2018
              
              **$**
              **40,000**July
                  1, 2011
              
              **$**
              **40,000**
              
              
              July
                  1, 2019
              
              **$**
              **40,000**July
                  1, 2012
              
              **$**
              **40,000**
              
              
              July
                  1, 2020
              
              **$**
              **40,000**July
                  1, 2013
              
              **$**
              **40,000**
              
              
              July
                  1, 2021
              
              **$**
              **40,000**








31
 **MANAKOA
            SERVICES CORPORATION**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**


NOTE
        2:  **RELATED
        PARTY TRANSACTIONS - continued**
  In
        addition, royalties equal to 5% of net sales are due quarterly during the
        term
        of the agreement. The University will credit the annual license fee against
        any
        royalties earned during the same year. Moreover, if the University is involved
        in the sublicense within the first 12 months, the University will receive
        80% of
        all consideration, except the first $35,000 of sublicense issue fees, for
        such
        sublicense of the licensed invention. The Company will not owe any consideration
        to the University for the first $35,000 of sublicense issue fees. If the
        University is not involved with the sublicense, the University will receive
        50%
        of all consideration for the licensed invention.
 
 **Rent
        and other administrative expenses**
 
 The
        Company began renting office space located in Kennewick, Washington from
        Apogee
        Biometrics, Inc. (“ABI”), an affiliate under common control, in December 2003.
        Commencing January 1, 2004, the parties verbally agreed that the Company
        would
        make monthly rent payments of $5,000 on a month-to-month basis. In addition,
        the
        Company pays 50% of certain administrative expenses utilized by both parties.
        During the years ended December 31, 2005 and 2004, the Company incurred rent and
        administrative expenses totaling $70,629 and $71,857, respectively. The Company
        made payments to ABI totaling $57,864 and $112,903 during the years ended
        December 31, 2005 and 2004, resulting in prepaid expenses of $16,203 as of
        December 31, 2005.
 
 **Common
        stock sale**
 
 On
        January 1, 2002, the Company sold 6,100,000 shares of its $.001 par value
        common
        stock to the officer for $100.
 
 **NOTE
        3:**  **PROPERTY
        AND EQUIPMENT**
 
 Property
        and equipment consisted of the following at December 31,
        2005:




Computer
                  equipment
              
              $
              1,391Less
                  accumulated depreciation
              
              
              (296
              )$
              1,095





Depreciation
      expense totaled $5,197 and $11,279, for the years ended December 31, 2004 and
      2003, respectively.







32
 **MANAKOA
            SERVICES CORPORATION**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**





**NOTE
          4:**  **INCOME
          TAXES**
 
 A
          reconciliation of the U.S. statutory federal income tax rate to the effective
          rate is as follows:




December
                  31,2005
              
              
              2004U.S.
                  federal statutory graduated rate.
              
              
              34.00
              %
              
              34.00
              %State
                  income tax rate, net of federal benefit
              
              
              3.06
              %
              
              3.06
              %Net
                  operating loss for which no tax benefitis
                  currently available.
              
              
              -37.06
              %
              
              -37.06
              %Effective
                  rate
              
              
              0.00
              %
              
              0.00
              %







At
      December 31, 2005, deferred taxes consisted of a net tax asset of $3,421,412,
      due to operating loss carryforwards of approximately $9,171,973, which was
      fully
      allowed for in the valuation allowance of $3,421,412. The valuation allowance
      offsets the net deferred tax asset for which there is no assurance of recovery.
      The deferred tax assets for the years ended December 31, 2005 and 2004 were
      $1,269,484 and $1,676,969, respectively. The change in the valuation allowance
      for the years ended December 31, 2005 and 2004 were also $1,269,484 and
      $1,676,969, respectively. Net operating loss carryforwards will expire through
      2025.





The
      valuation allowance will be evaluated at the end of each year, considering
      positive and negative evidence about whether the asset will be realized. At
      that
      time, the allowance will either be increased or reduced; reduction could result
      in the complete elimination of the allowance if positive evidence indicates
      that
      the value of the deferred tax asset is no longer impaired and the allowance
      is
      no longer required.





Should
      the Company undergo an ownership change as defined in Section 382 of the
      Internal Revenue Code, the Company’s tax net operating loss carryforwards
      generated prior to the ownership change will be subject to an annual limitation,
      which could reduce or defer the utilization of these losses.





**NOTE
      5:**  **NOTES
      PAYABLE AND CONVERTIBLE DEBT**





***Convertible
      notes payable***





As
      of
      December 31, 2004, the Company had issued $997,500 in convertible promissory
      notes along with warrants to purchase 1,995,000 shares of the Company’s common
      stock at $1.10 per share. The notes carried a 10 percent interest rate and
      matured one year from the date of the note. The first $310,000 in notes issued
      between October 2003 and January 2004 could be converted into the Company’s
      common stock, at a rate of $.40 per share. The remaining $687,500 of notes
      issued in 2004 could be converted into the Company’s common stock, at a rate of
      $.50 per share. On the maturity date of the respective notes, the Company held
      the right and option to automatically convert the unpaid principal balance
      and
      accrued interest then outstanding into the number of common shares resulting
      from dividing the entire unpaid principal and accrued interest by an amount
      equal to the established exercise price ($.40 or $.50 per share).





During
      the three months ended March 31, 2005, the Company issued warrants to the debt
      holders to purchase 1,085,000 shares of the Company’s common stock. The warrants
      carried an exercise price of $1.10 per share and expired on September 30, 2005.
      The Company valued the options in accordance with SFAS 123. The fair value
      of
      the warrants was calculated at $.019 per share and totaled $20,615, which was
      recorded as stock-based compensation in the accompanying condensed consolidated
      financial statements for the year ended December 31, 2005.





33
 **MANAKOA
            SERVICES CORPORATION**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**




NOTE
      5:  **NOTES
      PAYABLE AND CONVERTIBLE DEBT - continued**





The
      fair
      value of the options was estimated at the date of grant using the Black-Scholes
      option-pricing model with the following assumptions:




Risk-free
                  interest rate
              
              
              2.50
              %Dividend
                  yield
              
              
              0.00
              %Volatility
                  factor
              
              
              53.473
              %Weighted
                  average expected life
              
              
              180
                  days


During
        February 2005, the Company issued an additional $57,500 in convertible
        promissory notes with warrants to purchase 115,000 shares of the Company’s
        common stock at $1.10 per share. The notes carried a 10 percent interest
        rate
        and matured one year from the date of the note. The notes could be converted
        into the Company’s common stock, at a rate of $.50 per share. The quoted market
        price of the Company’s common stock ranged between $.68 and $.72 on the dates
        the notes were issued, which resulted in a beneficial conversion totaling
        $24,100.
 
 During
        March and June 2005, the Company issued 2,456,230 shares of its common stock
        to
        extinguish all of the convertible promissory notes, totaling $1,055,000,
        (including all $310,000 convertible at $.40 per share and $745,000 convertible
        at $.50 per share) and $102,940 in related accrued interest.
 
 As
        of
        December 31, 2005, warrants remained to purchase 115,000 shares of the Company’s
        common stock at a price of $1.10 per share. The warrants expired in February
        2006.
 
 **Other
        notes payable**
 
 The
        Company’s remaining promissory notes payable consist of the following at
        December 31, 2005:




Note
                    payable to an individual issued on June 30, 2004,matured June 30,
                    2005, convertible to the Company's common stock at a rate of
                    $.50 per
                    share, 10% annual interest rate (In Default)
              
              $
              250,000Note
                    payable to an individual issued on November 15, 2004,payable on
                    demand after February 15, 2005, 10% annual interest rate, unsecured
                    (Payment demanded and in Default)
              
              
              150,000Note
                    payable to an individual issued on December 3, 2004,payable on
                    demand after June 30, 2005, 10% annual interest rate,
                    unsecured
              
              
              300,000Note
                    payable to an individual issued on April 13, 2005,payable on
                    demand after June 30, 2005, 10% annual interest rate,
                    unsecured
              
              
              100,000Note
                    payable to an individual issued on December 30, 2004,payable on
                    demand after June 30, 2005, 10% annual interest rate, unsecured
                    (Payment
                    demanded and in Default)
              
              
              25,000Note
                    payable to an individual issued on November 25, 2003,payable on
                    demand, 8% annual interest rate, unsecured
              
              
              100,000Note
                    payable to an individual issued on November 25, 2003,payable on
                    demand, 8% annual interest rate, unsecured
              
              
              135,000Note
                    payable to an individual issued on November 25, 2003,payable on
                    demand, 8% annual interest rate, unsecured
              
              
              265,000$
              1,325,000




Accrued
        interest payable on the above notes totaled $184,957 at December 31,
        2005.


34
 **MANAKOA
            SERVICES CORPORATION**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**


**NOTE
        6:**  **STOCKHOLDERS’
        DEFICIT**
  Accrued
          interest payable on the above notes totaled $184,957 at December 31,
          2005.
 
 The
          Company issued the $250,000 note holder warrants to purchase 1,500,000
          shares of
          common stock as a loan origination fee. The exercise price on the warrants
          was
          $.01 per share and the warrants were to expire on July 1, 2005. The warrants
          were issued below the quoted market price ($.70 per share) of the common
          stock
          on the grant date. Accordingly, the Company determined the fair value of
          the
          warrants in accordance with SFAS 123 and capitalized debt issue costs of
          $1,035,000 at July 1, 2004. The debt issue costs are amortized to interest
          expense over the term of the loan (one year). As of June 30, 2005, all
          $1,035,000 was amortized to interest expense. On June 30, 2005, the note
          holder
          exercised the warrants. Accrued interest expense on the promissory note
          was
          reduced by $15,000 as payment to exercise the warrants.
 
 The
          fair
          value for the warrants granted with the loan was estimated at the date
          of grant
          using the Black-Scholes option-pricing model with the following
          assumptions:
 Risk-free
                      interest rate
                  
                  
                  
                  
                  1.01%Dividend
                      yield
                  
                  
                  
                  
                  0.00%Volatility
                      factor
                  
                  
                  
                  
                  115.15%Weighted
                      average expected life
                  
                  
                  
                  
                  1
                      year
  **Common
        stock**
 
 During
        July 2005, the Company issued 95,000 shares of its common stock in exchange
        for
        business consulting services. The transaction was recorded based on the quoted
        market price of stock on the transaction date, or $.32 per share. Stock-based
        compensation expense of $30,400 has been recognized in the accompanying
        condensed consolidated financial statements for the year ended December 31,
        2005.
 
 During
        March 2005, the Company issued 11,250 shares of its common stock in exchange
        for
        business consulting services. The transaction was recorded based on the quoted
        market price of stock on the transaction date, or $.55 per share. Stock-based
        compensation expense of $6,188 has been recognized in the accompanying condensed
        consolidated financial statements for the year ended December 31,
        2005.
 
 During
        the year ended December 31, 2004, the Company issued 2,185,000 shares of
        its
        common stock in exchange for research and development, investor relations
        and
        business consulting service contracts. The transactions were valued at the
        quoted market price of the common stock on the transaction date and totaled
        $1,191,000. Stock-based compensation expense of $748,042 was recognized in
        the
        accompanying consolidated financial statements for the year ended December
        31,
        2004. The remaining $442,958 was recorded as prepaid consulting services
        at
        December 31, 2004 and charged to stock-based compensation during the year
        ended
        December 31, 2005.
 
 On
        September 30, 2004, the Company issued 248,000 shares of its common stock
        and
        248,000 stock purchase warrants in exchange for investor relations services.
        The
        transaction was valued at the quoted market price of the common stock on
        the
        transaction date. Stock-based compensation expense of $124,000 was recognized
        in
        the accompanying consolidated financial statements for the year ended December
        31, 2004. The warrants are exercisable at a price of $1.10 per share and
        expired
        on September 30, 2005.
 
 During
        September 2004, the Company sold 500,000 units to UTEK Corporation (amex:
        UTK)
        through a private offering. Each unit consisted of one share of the Company’s
        common stock and one warrant to purchase an additional share of common stock
        at
        a price of $1.10 per share. The unit price was $.50 per unit, resulting in
        total
        proceeds of $250,000. The offering was made pursuant to exemptions from
        registration provided by Section 4(2) of the Securities Act of 1933, as amended,
        and Rule 506 of Regulation D promulgated thereunder. The units were sold
        through
        the Company’s officers and directors.
 
 During
        September 2004, the Company issued 1,900,000 shares of its common stock to
        acquire Advanced Cyber Security, Inc. (“ACSI”), see Note 8.
 
 35
 **MANAKOA
              SERVICES CORPORATION**
 **(A
              Development Stage Company)**
 **Notes
              to Consolidated Financial Statements**
  **NOTE
        6:****STOCKHOLDERS’
        DEFICIT - continued**
  **Common
        stock options**
 
 ***Options
        granted to non-employees, accounted for under the fair value
        method***
 
 During
        January and March 2005, the Company granted two consultants options to purchase
        an aggregate of 120,000 shares of the Company’s common stock. 100,000 options
        carry an exercise price of $.66 per share and the remaining 20,000 options
        carry
        an exercise price of $.01 per share. The options vest as follows:
  Number
                    ofOptions
                
                Vesting
                    Date25,000
                
                Date
                    of grant20,000
                
                September
                    15, 200575,000
                
                Ratably
                    over 36 months120,000
  All
          of
          the options expire three years from the grant date. The quoted market price
          of
          the common stock ranged between $.70 and $.80 per share. The Company valued
          the
          options in accordance with SFAS 123. The fair value of the options ranged
          between $.355 and $.691 per share and totaled $49,320, of which $26,581
          had
          vested and was recorded as stock-based compensation in the accompanying
          consolidated financial statements for the year ended December 31,
          2005.
 
 The
          fair
          value of the options was estimated at the date of grant using the Black-Scholes
          option-pricing model with the following assumptions:
  Risk-free
                    interest rate
                
                
                
                
                2.50%Dividend
                    yield
                
                
                
                
                0.00%Volatility
                    factor
                
                
                
                
                53.473%Weighted
                    average expected life
                
                
                
                
                3
                    years
 The
          above
          options were cancelled as of December 31, 2005 following the termination
          of the
          consultants’ engagements.
 
 Between
          September and December 2004, the Company granted its consultants options
          to
          purchase an aggregate of 850,000 shares of the Company’s common stock. 500,000
          options carry an exercise price of $.66 per share and the remaining 350,000
          options carry an exercise price of $.01 per share. 100,000 options vest
          on
          November 4, 2005, the remaining options vested on the date of grant. All
          of the
          options expire three years from the grant date. The quoted market price
          of the
          common stock ranged between $.40 and $.70 per share. The Company valued
          the
          options in accordance with SFAS 123. The fair value of the options ranged
          between $.243 and $691 per share and totaled $281,050, which was recorded
          as
          stock-based compensation in the accompanying consolidated financial statements
          for the year ended December 31, 2004.
   36
 **MANAKOA
              SERVICES CORPORATION**
 **(A
              Development Stage Company)**
 **Notes
              to Consolidated Financial
              Statements**




NOTE
      6:  **STOCKHOLDERS’
      DEFICIT - continued**




The
      fair value of the options was estimated at the date
      of grant using the Black-Scholes option-pricing model with the following
      assumptions:




Risk-free
                    interest rate
                
                
                
                
                2.00%Dividend
                    yield
                
                
                
                
                0.00%Volatility
                    factor
                
                
                
                
                115.15%Weighted
                    average expected life
                
                
                
                
                3
                    years
 ***Options
            and warrants assumed in recapitalization***
 
 During
            the year ended December 31, 2003, EIDT granted non-employees options
            to purchase
            50,000 shares of the Company’s common stock and warrants to purchase 125,000
            shares. The stock awards were granted for services provided. The exercise
            prices
            range from $.06 (125,000 shares) to $.10 (50,000 shares). The options
            and
            warrants expired between January 27, 2005 and September 10, 2005. The
            fair value
            of the awards were determined in accordance with SFAS 123 and resulted
            in
            stock-based compensation expense of $25,400.
 
 The
            fair
            value for the options granted during the period was estimated at the
            date of
            grant using the Black-Scholes option-pricing model with the following
            assumptions:


Risk-free
                      interest rate
                  
                  
                  
                  
                  2.00%Dividend
                      yield
                  
                  
                  
                  
                  0.00%Volatility
                      factor
                  
                  
                  
                  
                  286.12%Weighted
                      average expected life
                  
                  
                  
                  
                  1
                      year
 ***Options
              granted to employees, accounted for under the intrinsic value
              method***
 
 During
              March 2005, the Company granted its employees options to purchase an
              aggregate
              of 80,000 shares of the Company’s common stock. 30,000 options carry an exercise
              price of $.66 per share and the remaining 50,000 options carry an exercise
              price
              of $.01 per share. The options vest as follows:




Number
                  ofOptions
              
              Vesting
                  Date15,000
              
              April
                  1, 200530,000
              
              April
                  18, 200515,000
              
              July
                  1, 200520,000
              
              September
                  5, 200580,000




All
        of
        the options expire three years from the grant date. The quoted market price
        of
        the common stock ranged between $.63 and $.70 per share. All of the options
        were
        granted at an exercise price below the quoted market price on the date of
        grant,
        which resulted in total stock-based compensation of $34,300, of which all
        $34,300 had vested and was recorded as stock-based compensation in the
        accompanying consolidated financial statements for the year ended December
        31,
        2005.
 
 The
        above
        options were cancelled as of December 31, 2005 following the departure of
        the
        employees from the Company.
 
 37
 **MANAKOA
              SERVICES CORPORATION**
 **(A
              Development Stage Company)**
 **Notes
              to Consolidated Financial
              Statements**




NOTE
      6:  **STOCKHOLDERS’
      DEFICIT - continued**


Between
      September and December 2004, the Company granted its employees options to
      purchase an aggregate of 2,785,000 shares of the Company’s common stock.
      2,185,000 options carry an exercise price of $.66 per share and the remaining
      600,000 options carry an exercise price of $.01 per share. The options vest
      as
      follows:




Number
                  ofOptions
              
              Vesting
                  Date1,350,000
              
              Date
                  of grant100,000
              
              January
                  1, 20051,335,000
              
              Ratably
                  over 36 months2,785,000




All
        of
        the options expire three years from the grant date. The quoted market price
        of
        the common stock ranged between $.40 and $.70 per share. The 600,000 options
        granted at an exercise price of $.01 were below the quoted market price on
        the
        date of grant. These options resulted in total stock-based compensation of
        $294,000 ($49,000 of which will vest on January 1, 2005). As a result, the
        Company recorded $245,000 as stock-based compensation in the accompanying
        consolidated financial statements for the year ended December 31,
        2004.
 
 On
        November 25, 2003, the Company granted 1,000,000 compensatory common stock
        options to its employees and contractors as payment for 2003 services. The
        1,000,000 options had an exercise price of $.0001 per share and vested on
        the
        grant date. Due to the nominal exercise price the options were immediately
        exercised and, for accounting purposes, the transaction has been recorded
        as the
        issuance of 1,000,000 shares of the Company’s common stock in exchange for
        services. The shares issued in the transaction were valued based on the fair
        market value of the Company’s common stock on the transaction date, or $.48 per
        share (following the December 19, 2003 merger with Electronic Identification,
        Inc.). Stock-based compensation expense totaling $480,000 was recognized
        in the
        accompanying consolidated financial statements.
 
 As
        stated
        in the Summary of Significant Accounting Polices, the Company accounts for
        awards of stock-based employee compensation under the intrinsic value method
        of
        Opinion 25. Companies that elect to use the method provided in Opinion 25
        are
        required to disclose pro forma net income and pro forma earnings per share
        information that would have resulted from the use of the fair value based
        method. Had compensation expense been recorded based on the fair value at
        the
        grant date, and charged to expense over vesting periods, consistent with
        the
        provisions of SFAS 123, the Company’s net loss and net loss per share would have
        increased to the pro forma amounts indicated below:






38
 **MANAKOA
            SERVICES CORPORATION**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**




NOTE 6:  **STOCKHOLDERS’
      DEFICIT - continued**





For
                The Years EndedDecember
                31,2005
            
            
            2004Net
                loss, as reported
            
            $
            (3,4325,871
            )
            $
            (4,525,525
            )Stock-based
                employee compensation, as reported
            
            $
            34,300
            
            $
            245,000Stock-based
                employee compensation, fair value
            
            $
            68,467
            
            $
            375,979Pro
                forma net loss
            
            $
            (3,460,038
            )
            $
            (4,656,504
            )Basic
                  and diluted net loss per common share, as
                  reported
            
            $
            (0.09
            )
            $
            (0.15
            )Pro
                  forma basic and diluted net lossper common share
            
            $
            (0.09
            )
            $
            (0.16
            )




The
        following schedule summarizes the changes in the Company’s stock
        awards:




Awards
                  Outstanding and Exercisable
              
              
              Weighted
                  Average
              
              
              Weighted
                  AverageNumber
                  of
              
              
              Exercise
                  Price
              
              
              Exercise
                  Price
              
              
              RemainingShares
              
              
              Per
                  Share
              
              
              Per
                  Share
              
              
              Contractual
                  LifeBalance
                  at January 1, 2004
              
              
              175,000
              
              $
              .06
                  to $.10
              
              $
              0.07
              
              
              1.5
                  yearsAwards
                  granted
              
              
              5,883,000
              
              $
              .01
                  to $1.10
              
              $
              0.45
              
              
              3
                  yearsAwards
                  exercised
              
              
              -
              
              $
              0.00
              
              $
              -
              
              
              N/AAwards
                  cancelled/expired
              
              
              -
              
              $
              0.00
              
              $
              -
              
              
              N/ABalance
                  at December 31, 2004
              
              
              6,058,000
              
              $
              .01
                  to $1.10
              
              $
              0.43
              
              
              2.75
                  yearsAwards
                  granted
              
              
              1,400,000
              
              $
              .01
                  to $1.10
              
              $
              1.00
              
              
              0.1
                  yearsAwards
                  exercised
              
              
              (1,825,000
              )
              $
              .01
                  to $.06
              
              $
              0.01
              
              
              N/AAwards
                  cancelled/expired
              
              
              (4,318,000
              )
              $
              .01
                  to $1.10
              
              $
              0.77
              
              
              N/ABalance
                  at December 31, 2005
              
              
              1,315,000
              
              $
              .01
                  to $1.10
              
              $
              0.53
              
              
              1.64
                  years




**NOTE
        7:**  **COMMITMENTS**
 
 On
        February 16, 2004, the Company began leasing office space in Boulder, Colorado
        for its product development team. Lease payments increase from $1,660 per
        month
        to $6,500 per month through May 31, 2006, when the lease expires. Rent expense
        under the lease totaled $63,595 and $11,333 for the years ended December
        31,
        2005 and 2004, respectively.
 
 Future
        minimum payments due under the lease agreements are as
        follows:




December
                  31,2006
              
              $
              32,500






39
 **MANAKOA
            SERVICES CORPORATION**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**




NOTE
        8:LICENSE
        RIGHTS AND IMPAIRMENT




Advanced
        Cyber Security, Inc. ("ACSI"), the Company's wholly-owned subsidiary, acquired
        license rights to a prototype program for systems administrator simulation
        training (SAST) from Battelle Memorial Institute (the "Licensor") in August
        2004. The program purportedly provided rapid evaluation of the cyber security
        experience of system administrators to identify, circumvent or recover from
        hacker activity. Manakoa management subsequently concluded that material
        deficiencies existed in the purported functionality of the licensed matter.
        These discrepancies were documented by Manakoa and set forth Battelle officials
        without satisfactory resolution. As stated in the 8K filing dated July 13,
        2005,
        Manakoa Services Corporation and Battelle Corporation have bi-laterally
        terminated the agreement disclosed in the 8K filing dated September 7, 2004.
        Manakoa conducted discussions with Pacific Northwest National Laboratory
        managed
        by the Battelle Corporation regarding the technological viability of licensed
        technology beginning in the fourth quarter of 2004. Despite documented concerns
        from Manakoa management, roadmap discussions with PNNL lab officials continued
        from December 2004 through April 2005. Manakoa’s internal analysis of the
        licensed technology continued through the second quarter of 2005 including
        investigations on adopting the Cyber Attack Simulator Trainer in its conceptual
        form and bundling off-the-shelf alternatives technologies. The Company still
        believes in the concept but concluded that the actual source material that
        was
        licensed from Battelle lacked commercial value. Officials at the national
        laboratory were apprised of the issues and they agreed to renegotiate the
        contract. Manakoa renegotiated its professional services contract with Battelle
        Corporation under which the Pacific Northwest National Laboratories would
        perform an expanded set of functions including review and verification of
        Manakoa technology. Requests for support under this amended agreement occurred
        in the second quarter. Telephone and e-mail exchanges regarding non-performance
        occurred in the May to June timeframe. The two organizations have subsequently
        given notice of termination.
 
 During
        the three months ended June 30, 2005, the Company completed a review of the
        license technology and determined that the carrying amount of the license
        rights
        were not recoverable. As a result of this review, the Company recorded an
        asset
        impairment charge of $126,137 during the quarter ended June 30, 2005 for
        the
        write-off of the carrying value of the license rights.
 
 **NOTE
        9:**  **SUBSEQUENT
        EVENTS**
 
 During
        March 2005, the Company granted its consultants options to purchase an aggregate
        of 200,000 shares of the Company’s common stock. 130,000 options carry an
        exercise price of $.66 per share and the remaining 70,000 options carry an
        exercise price of $.01 per share. All of the options expire three years from
        the
        grant date.
 
 During
        January and February 2005, stock awards were exercised resulting in the issuance
        of 275,000 shares of the Company’s common stock. Proceeds from the stock awards
        totaled $9,000.
 
 During
        February 2005, an employee left the Company resulting in the cancellation
        of
        350,000 common stock options.








40




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





NONE.





ITEM
      8A
      CONTROLS AND PROCEDURES





The
      chief
      executive officer and the president of the Company have concluded based on
      their
      evaluation that as of the end of the period covered by this report the Company's
      disclosure controls and procedures are effective to ensure that information
      required to be disclosed by the Company in the reports filed or submitted by
      it
      under the Securities Act of 1934, as amended, is recorded, processed, summarized
      and reported within the time periods specified in the Securities and Exchange
      Commission's rules and forms, and include controls and procedures designed
      to
      ensure that information required to be disclosed by the Commission in such
      reports is accumulated and communicated to the Company's management, including
      the president, as appropriate to allow timely decisions regarding required
      disclosure.





There
      were no significant changes in the Company's internal controls or in other
      factors that could significantly affect these controls subsequent to the date
      of
      the period covered by this report.





ITEM
      9
      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
      SECTION 16(a) OF THE EXCHANGE ACT





The
      members of the Board of Directors of the Company serve until the next annual
      meeting of the stockholders, or until their successors have been elected. The
      officers are appointed by the Board of Directors and hold office until their
      earlier death, retirement, resignation or removal.





There
      are
      no agreements for any officer or director to resign at the request of any other
      person, and none of the officers or directors named below is acting on behalf
      of, or at the direction of, any other person.




Name
            Age
            Position
            Year
              first  electedStuart Platt
            72
            Chairman of The Board
            2003James C. Katzaroff
            49
            President, Director
            2003Ken Hatch
            70
            Director
            2004Robert A. Papke
            50
            Director and Secretary
            2004





Executive
      Officers of the Company are elected on an annual basis and serve at the
      discretion of the Board of Directors. Directors of the Company are elected
      on an
      annual basis. All directors agreed to remain until the 2005 annual
      meeting.





Rear
      Admiral (ret) Stuart Platt--MS, MBA, Chairman of the Board





The
      author of THE ARMAMENT TIDE - REARMING AMERICA, Stuart Platt was promoted early
      ahead of his peers; he went on to become a Rear Admiral and completed a
      distinguished 31 year military career as a highly decorated Vietnam veteran.
      He
      has followed his military success with an equally successful executive career
      in
      business, principally in the technology and defense sectors. Appointed by
      President Reagan as the Navy's first Competition Advocate General, he led an
      historic reform program to improve the way the Navy buys ships, aircraft, and
      weapon systems. He also served as deputy commander of the Naval Sea Systems
      Command, where he was responsible for acquiring Navy surface ships and
      submarines during the build-up of the 600 ship Navy. He was recently honored
      by
      being named to the Cold War Leadership Hall of Fame by the Submarine Force
      Library & Museum Association, and was a presidential appointee to the Board
      of Governors of the United States Merchant Marine Academy. Admiral Platt has
      a
      Master of Science from the William E. Simon Graduate School of Business at
      the
      University of Rochester, an MBA from the School of Business at the University
      of
      Michigan, and is a graduate of the Executive Program, Graduate School of
      Business at Stanford University.





41


ITEM
      9
      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
      SECTION 16(a) OF THE EXCHANGE ACT - continued




James
      C.
      Katzaroff, C.E.O. and Director





Mr.
      Katzaroff brings a wealth of business and corporate finance experience to
      Manakoa. Since 1998, Mr. Katzaroff has held senior positions at Telemac,
      including Chief Financial Officer, Senior Vice President-Finance, Sr. Vice
      President, and Corporate Secretary of Telemac, Inc., an international
      communications venture active in the wireless telephony market. At Telemac,
      he
      was responsible for the venture's corporate strategy, investors and investment
      banking relationships, and the creation of the original executive team. Prior
      to
      Telemac, Mr. Katzaroff was a financial consultant with Smith Barney, Bateman
      Eichler and E.F. Hutton. Mr. Katzaroff has been a financial advisor for numerous
      start-up and development stage companies, and has assisted numerous companies
      with their initial public offerings. Mr. Katzaroff holds a Bachelor's Degree
      in
      Business Economics from the University of California, Santa Barbara, and has
      completed advanced management courses at the University of
      Washington.




Robert
      A.
      Papke, President and Director





Mr.
      Papke
      has served as Manakoa's VP and Corporate Secretary for several years. He has
      held senior management/executive positions with a number of companies and is
      currently President and board member of Apogee Biometrics, Inc. Prior to ABI,
      Mr.Papke was the Founder & CEO of IMGI, a marketing & distribution
      company that licensed and leveraged existing brands into complimentary markets.
      Prior to IMGI, Mr. Papke served as President/CEO of PhotoTrust, a professional
      B2B enterprise solutions company. Mr. Papke has also served as General Manager-
      Professional Services Business Unit for Intel Corporation. Mr. Papke holds
      a
      Bachelor's Degree in Business Administration from the University of Southern
      California.





Ken
      Hatch
      - Member, Board of Directors





Mr.
      Hatch
      is a respected business executive who has served on numerous corporate, charity,
      civic and higher education Boards of Directors. Mr. Hatch currently is CEO
      of
      Hatch Enterprises, Inc. which he founded in 1997 to provide organizational
      and
      corporate image communications consulting for corporations under development,
      in
      transition, or in crisis. He previously was President of The Pacific Institute
      from 1995-1997. The Pacific Institute does business in 41 countries and in
      13
      languages. Mr. Hatch was Chairman and President of KIRO, Inc. a Seattle CBS
      television and radio station complex, from 1980-1995. He also served as the
      Senior Vice President, Broadcast Division for the A. H. Belo Corporation, then
      the 11th largest U.S. communication company.





Conflicts
      of Interest Related to Other Business Activities





James
      C.
      Katzaroff, Chief Executive Officer, is also Chairman and CEO of Apogee
      Biometrics, a shareholder that currently owns approximately 1,972,838 shares
      or
      3.3% of Manakoa Services Corporation. The company rents space from Apogee
      Biometrics, Inc. for $5,000 per month. Robert Papke is President of Apogee
      Biometrics, Inc.





Section
      16(a) Beneficial Ownership Reporting Compliance





Section
      16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
      requires that the Company's officers and directors, and persons who own more
      than ten percent (10%) of a registered class of the Company's equity securities,
      file reports of ownership and changes of ownership with the SEC. Officers,
      directors and greater than ten percent (10%) shareholders are required by SEC
      regulation to furnish the Company with copies of all such reports they
      file.





Based
      solely on its review of the copies of such reports received by the Company,
      and
      on written representations by the Company's officers and directors regarding
      their compliance with the applicable reporting requirements under Section 16(a)
      of the Exchange Act, the Company believes that, with respect to its fiscal
      year
      ended December 31, 2004, the Company's officers and directors and all of the
      persons known to the Company to own more than ten percent (10%) of the Company's
      Common Stock, either failed to file, on a timely basis, or have yet to file
      the
      required beneficial ownership reports with the SEC.





42


ITEM
      10
      EXECUTIVE COMPENSATION





The
      following table furnishes compensation information for the year ending for
      the
      Company Officers; the Chief Executive Officer and President. The company does
      not have any employment contracts or change of control agreements with the
      parties.






ANNUAL
                COMPENSATION
            LONG
                TERM COMPENSATIONNAME
                AND PRINCIPAL
                POSITION
            YEAR
            SALARY
                ($)
            BONUS
                ($)
            OTHER
                ANNUALCOMPENSATION
                ($)
            AWARDS
            PAYOUTS
            ALL
                OTHERCOMPENSATIONRESTRICTED
                STOCK
                  AWARDS($)
            SECURITIES
                UNDERLYING
                  OPTIONS/SARS
                    (#)*
            PAYOUTS
                  **
            LTIP($)James
                C Katzaroff
              None
                Chief
                    Executive Officer
            2005
            150,308
                (1)
            None
            None
            None
            None
            None
            NoneRobert
                A. Papke,
              None
                  President
            2005
            114,577
                (2)
            None
            None
            None
            None
            None
            NoneDeborah
                S.Kasparek
                Chief
                  Financial Officer
                None
            2005
            $
                36,038 (3)
            None
            None
            None
            None
            None
            None




(1)
      James
      C. Katzaroff received $53,116 in salary, and deferred $96,922, which is carried
      as an account payable.





(2)
      Robert A. Papke received $46,039 in salary and deferred $68,538 which is carried
      as an account payable.





(3)
      Deborah S. Kasparek received $19,149 in salary and deferred $16,889 which is
      carried as an account payable





43


ITEM
      10
      EXECUTIVE COMPENSATION - continued




Compensation
      of Outside Directors.





As
      approved August 12, 2004 by the Board of Directors and retroactive to July
      1,
      2004, the following outside director fee schedule is: Monthly Stipend: $5,000
      payable monthly or quarterly at Directors' option; Attendance at Meetings:
      Directors meeting: $1,500 per day, Committee meeting: $1,500 per day (Committee
      Chair $2,000), Telephonic Meeting: $500, Emergency meetings (called with less
      than 30 hours notice): $1,000, Shareholders Meeting: $1,500; Stock Options
      and
      Grants: Base Service Options 50,000 shares at $0.01 per share, Audit and
      Compensation Chairman 100,000 shares options at $0.01 per share, One time Board
      option plan 250,000 shares at $0.66 per share (same as current ESOP).





Only
      one
      director, who has since resigned, took advantage of the BOD motion and actually
      was paid certain amounts and billed certain amounts pursuant to the schedule
      above.





Any
      compensation received by our officers,directors,and management personnel, will
      be determined from time to time by our board of directors. Our officers,
      directors, and management personnel will be reimbursed for any out-of-pocket
      expenses incurred on our behalf.





Board
      of
      Directors Committees





Persuant
      to Company by-laws the company has two committees: an Audit and Compensation
      Committees. The three member Audit Committee is chaired by Admiral Stuart Platt.
      The three member Compensation is chaired by Ken Hatch. Each committee member's
      term on the respective committees shall run co-terminously with their term
      as
      director, unless terminated by the Board of Directors prior to said natural
      expiration of said term or terminated due to said Director's resignation from
      the Board of Directors.





Stock
      Option Plan





The
      Board
      of Directors adopted and a majority of the shareholders approved the Company's
      2004 Combined Incentive and Non-Qualified Stock Option Plan that authorized
      the
      granting of options for up to 3,000,000 shares of the Company's common. A copy
      of the full text of the plan was filed with the Company's Form 8-K filed on
      March 15, 2004.





ITEM
      11
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





The
      following table sets forth certain information concerning the ownership of
      the
      Company's common stock as of December 31, 2004, with respect to: (i) each person
      known to the Company to be the beneficial owner of more than five percent of
      the
      Company's common stock; (ii) all directors; and (iii) directors and executive
      officers of the Company as a group.




Title
              Class
            Name
              of Beneficial Owner of Group
            Nature
              of Beneficial Ownership
            Amount
            Percent
                of ClassCommon
            James C. Katzaroff
            CEO/Director
            13,336,521
            22.4%*1,2Common
            Utek
                Corporation
            Investor
            7,647,561
            10.3%*5,6Common
            Robert A. Papke
            President/Director
            6,147,838
            10.3%*5,6Common
            Dr. G. Robert Williams
            Founder
            6,103,000
            10.2%Common
            Michael Sandoval/Founders Group
              Inc.
            Founder
            6,100,000
            10.2%Common
            Admiral Stuart Platt
            Director
            3,352,808
            5.6%*3Common
            Kenneth L. Hatch
            Director
            3,300,000
            5.5%*4Common
            Kenin
                M.
                Spivak
            Investor
            3,000,000
            5.0%Common
            Deborah Kasparek
            CFO
            838,888
            1.4%*7Common
            Common All Directors and Executive
              Officers As a Group (5 in number)
            
            26,976,055
            45.2%




44




ITEM
      12 CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS


James 
        C.  Katzaroff, Chief Executive Officer, directly owns an approximate 
15% interest in  Apogee Biometrics,
        Inc.
 
 *1  
        James C. Katzaroff, President of Manakoa, directly owns 7,497,017 common
        shares
        of Manakoa
        and 3,000,000 options and 644,444 warrants
 *2  
        James C.  Katzaroff is Chairman  and CEO of Apogee 
Biometrics,  Inc.,  and indirectly owns 2,195,060 shares
 *3  
        Admiral Stuart Platt owns 3,152,808 common shares and 200,000
        options
 *4  
        Kenneth L. Hatch owns 3,000,000 common shares and 300,000 options
 *5  
        Robert A. Papke owns 3,438,889 common shares and 225,000 options and 288,889
        warrants
 *6  
        Robert A. Papke is President of Apogee Biometrics, Inc., and indirectly owns
        2,195,060 shares





ITEM
      13
      EXHIBITS AND REPORTS ON FORM 8-K





Exhibits





3.1
            Articles
                of Incorporation (incorporated by reference to the Company's SEC
                Form
                10KSB/A filed with the SEC on June 20,
                2000)





3.2
            Certificate
                of Amendment to Articles of Incorporation (incorporated by reference
                to
                the Company's Form 8-K filed with the SEC on March 15,
                2004)





3.3
            By
                Laws (incorporated by reference to the Company's SEC Form 10KSB/A
                filed
                with the SEC on June 20, 2000)





10.1
              2004
                  Combined Incentive and Non-Qualified Stock Option Plan (incorporated
                  by
                  reference to the Company's Form 8-K filed with the SEC on March
                  15,
                  2004)





31.1
              *Certificationpursuant
                  to Section 302 of the Sarbanes-Oxley Act of 2002 of James C. Katzaroff,
                  as
                  Principal Executive Officer.





31.2
              *Certificationpursuant
                  to Section 302 of the Sarbanes-Oxley Act of 2002 of Debra Kasparek,
                  as
                  Principal Financial Officer.





32.1
                *Certification
                    pursuant
                    to Section 906 of the Sarbanes-Oxley Act of 2002 of  James.
                    C. Katzaroff, CEO, as Principal Executive Officer and Debra Kasparek,
                    Interim-CFO, as Principal Financial
                    Officer.





*Filed
      herewith








ITEM
      14
      PRINCIPAL ACCOUNTANT FEES AND SERVICES





Cordovano
      and Honeck, P.C., Denver, Colorado served as independent auditors of the Company
      for the year ended December 31, 2005.





The
      Company's board of directors pre-approves all services performed by the
      Company's principal auditor.




2005
            
            
            2004Audit
              Fees
            
            $
            20,893.75
            
            $
            17,015.70Tax
              Fees
            
            $
            0.00
            
            $
            0.00$
            20,893.75
            
            $
            17,015.70




The
      Audit
      fees for the years ended December 31, 2005 and 2004 were for professional
      services rendered for the audit of the annual consolidated financial statements
      and review of the financial statements included in the of the Company's form
      10KSB.





45


SIGNATURES





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.




Manakoa
                Services CorporationDate: May
              19,
              2006
            By:
            /s/ James
              C.
              KatzaroffJames
              C. KatzaroffC.E.O.








46