U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   -----------
                                   FORM 10-KSB

/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 Number: 1-9431

                                ADAL GROUP, INC.
              (Exact name of small business issuer in its charter)

               Delaware                                      94-3012230
    (State or other jurisdiction of                       (I.R.S. Employer
    incorporation or organization)                       Identification No.)

                                 67 Wall Street
                                   22nd Floor
                          New York, New York 10005-3111
                                  United States
                    (Address of principal executive offices)

                   Registrant's Telephone Number: 212.709.8122

           Securities registered under 12(b) of the Exchange Act: None

             Securities registered under 12(g) of the Exchange Act:
                        Common Stock, par value $0.0001

Check whether the issuer is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act.
        Yes [ ]        No [X]

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this form  10-KSB or any
amendment to this Form 10-KSB. [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ]          No [X]

The  issuer's  revenues  for the  fiscal  year  ended  December  31,  2005  were
$33,519,000.

The  aggregate   market  value  of  the   registrant's   common  stock  held  by
non-affiliates as of April 3, 2006 was $1,529,295.
<PAGE>

State the number of shares outstanding of each of the issuer's classes of equity
securities, as of the latest practicable date:

<TABLE>
<CAPTION>
Title of Each Class of Equity Securities               Number of Shares Outstanding as of April 3, 2006
----------------------------------------               ------------------------------------------------
<S>                                                    <C>
Common Stock, $0.0001 par value                        23,019,665
</TABLE>

Transitional Small Business Disclosure Format (check one): Yes [ ]     No [X]

Duments Incorporated by Reference: None.


                                       2
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

PART I.........................................................................2
      Item 1.    Description of Business.......................................2
      Item 2.    Description of Property......................................17
      Item 3.    Legal Proceedings............................................18
      Item 4.    Submission of Matters to a Vote of Security Holders..........18

PART II.......................................................................18
      Item 5.    Market for Common Equity and Related Stockholder Matters.....18
      Item 6.    Management's Discussion and Analysis.........................20
      Item 7.    Financial Statements.........................................27
      Item 8.    Changes in and Disagreements with Accountants on Accounting
                 and Financial Disclosure.....................................28
      Item 8A.   Controls and Procedures......................................28
      Item 8B.   Other Information............................................28

PART III......................................................................29
      Item 9.    Directors, Executive Officers, Promoters And Control
                Persons, Compliance With Section 16(A) Of The Exchange Act....29
      Item 10.   Executive Compensation.......................................32
      Item 11.   Security Ownership of Certain Beneficial Owners and
                 Management and Related Stockholder Matters...................34
      Item 12.   Certain Relationships and Related Transactions...............35
      Item 13.   Exhibits.....................................................36
      Item 14.   Principal Accountant Fees and Services.......................37


                                        i
<PAGE>

                                     PART I

Item 1.     Description of Business.

      The Company's financial position  deteriorated further during 2005 and the
first half of 2006.  Operating  conditions in 2005 were exceptionally  difficult
with rapidly  rising raw material  prices,  major  mechanical  breakdowns  and a
declining  demand in the marketplace.  All operating  companies posted losses in
the 2005 financial  year, as they did in 2004. The company's SG&A costs continue
to be a burden on the Company.  The Company  received funding through the Laurus
Fund in 2005, in the form of a convertible note in the amount of $2,000,000,  to
support cash flow  requirements and to cover operating  losses.  In May 2006 the
Company was unable to meet  interest and  principal  repayments  under a revised
repayment  schedule and is currently working with the Laurus Fund to restructure
the terms of the note. Although we have no formal notice from Laurus advising us
that we are in default, Laurus management are working with us to restructure the
terms of the note, although there can be no assurance that we will be able to do
so. As a result of the continued losses creditor pressure has increased. We have
been formally advised by a former supplier that they intend to take legal action
to recover their debt, which could lead to a bankruptcy proceeding.  We will try
to  negotiate  with this  creditor and hope to reach  agreement  with respect to
repayment over an extended  timeframe.  In addition,  several of our current raw
material  vendors are refusing to grant us  additional  credit and are requiring
payment  for  material  in advance,  plus  repayment  of a portion of the unpaid
balances owed. We are working with an Investment  Bank and private  investors to
provide additional capital,  which could involve significant dilution to current
shareholders  or the  possible  sale of assets.  While we do not have any formal
agreements,  we have signed  non-disclosure  agreements  with four  parties with
respect  to  possible  sale  of one or  more  of our  operating  companies.  The
Company's key intellectual  property, in particular Ticalium, is showing promise
but is at present a cost center and is not generating any revenue.  We expect to
restructure the group in 2006 and expect the group to report losses for the full
year of 2006.

                                       2
<PAGE>

                                ----------------
                                Adal Group, Inc.
                                ----------------
        -----------------------------------------------------------------
        |                    |                     |                    |
----------------     ----------------      ----------------     ----------------
                                              Products &
 Manufacturing        Architectural          Technologies          Real Estate
    Division             Division              Division             Division
----------------     ----------------      ----------------     ----------------
  |                   |                            |                   |
  | ----------------  | ----------------   ----------------     ----------------
  |      Adal         |       Adal               Adal                 Adal
  |-     Seco         |-    Guilform          Innovation             Estates
  |     Limited       |     Limited            Limited               Limited
  | ----------------  | ----------------   ----------------     ----------------
  |                   |                                                 |
  | ----------------  | ----------------                        ----------------
  |       Adal        |        Adal                                 Guilform
  |-   Engineering    |-    Structures                              Holdings
  |      Limited      |      Limited                                Limited
  | ----------------  | ----------------                        ----------------
  |                   |
  | ----------------  | ----------------
  |       Adal        |       Adal
  |-      Extra       |-    Climatix
  |      Limited      |     Limited
  | ----------------  | ----------------

Historical Development

      On July  29,  1986,  we were  incorporated  in  Delaware  under  the  name
ESCAgenetics   Corporation.   ESCAgenetics   was   organized   to  develop   and
commercialize  high-value  plant  derived  products  for  the  agricultural  and
pharmaceutical markets. In January 1995, ESCAgenetics became a dormant business,
and, in January 1996, it filed for bankruptcy protection under Chapter 11 of the
U.S. Bankruptcy Code.

      On August 22, 2003,  pursuant to an Agreement and Plan of  Reorganization,
as  amended,  ESCAgenetics  completed a merger of its  wholly-owned  subsidiary,
Shecom  Acquisition  Corporation,  with and  into  Shecom  Corporation,  thereby
acquiring  100% of the capital  stock of Shecom.  Pursuant  to the 2003  Merger,
ESCAgenetics  changed its name to Krystal Digital  Corporation.  On February 29,
2004, the Merger was rescinded  because Shecom was unable to produce the audited
financial  statements  required  to be filed with the  Securities  and  Exchange
Commission.  In April  2004,  Krystal  Digital  Corporation  changed its name to
Sunningdale, Inc.

      Also, on April 15, 2004,  Sunningdale,  Inc. entered a Mutual  Termination
Agreement by and between Shecom Acquisition  Corporation and Shecom Corporation.
The  termination  agreement  became  effective on April 15, 2004, and the merger
agreement among the parties was rescinded.  Prior to such agreement's  effective
date,  the members of the board of directors of Sunningdale  appointed  Kevin R.
Keating to the board of directors and appointed him as president, secretary, and
treasurer of Sunningdale. Consequently, on the agreement's effective date, Kevin
R.  Keating  was  appointed  to our  board of  directors,  and all of the  other
officers and directors resigned.

      On October 28, 2004, pursuant to a Share Exchange Agreement (the "Exchange
Agreement"),  dated September 22, 2004,  Sunningdale,  Inc.  acquired all of the
outstanding  shares of Adal  Group  (UK)  Limited,  formerly  known as  Advanced
Aluminium Group Limited.

      On November  5, 2004,  Sunningdale,  Inc.  changed its name to Adal Group,
Inc. Currently,  our headquarters are located at 67 Wall Street, 22nd Floor, New
York, New York, 10005.

Share Exchange

      On October 28, 2004, we consummated  the  transactions  contemplated  by a
Share Exchange Agreement (the "Exchange  Agreement"),  dated September 22, 2004,
by and among us, Advanced Aluminium Group Limited, a company  incorporated under
the laws of the  United  Kingdom  ("AAG"),  now Adal  Group  (UK)  Limited,  the
stockholders of AAG, and Keating Reverse Merger Fund, LLC ("KRM Fund"). Pursuant
to the terms of the  Exchange  Agreement,  we  acquired  all of the  outstanding
capital  stock of AAG in exchange  for the issuance to the AAG  stockholders  of
16,065,000  shares (or 2,295,000 on a pre 1-for-7  forward stock split basis) of
our common  stock (the "Share  Exchange").  The issuance of shares of our common
stock to AAG's  stockholders was exempt from  registration  under the Securities
Act,  pursuant to Section  4(2)  thereof.  As a result of the  transaction,  AAG
became our  wholly-owned  subsidiary.  Immediately  following the closing of the
share  exchange,  the AAG  stockholders  owned 90% of our common stock,  and our
pre-transaction  stockholders  (the  "Existing  Stockholders")  held 10%, of the
issued and outstanding shares of our common stock.


                                       3
<PAGE>

      Under the Exchange Agreement,  the Existing Stockholders had anti-dilution
protection if we issued any  securities  in any offering  within 12 months after
closing of the Share Exchange and had anti-dilution  protection if we issued any
securities in connection with the contemplated  license and/or acquisition by us
of technology  related to  electricity-generating  roadway  ramps  following the
closing (collectively,  the "Events").  In such cases, we were required to issue
to the  Existing  Stockholders,  in  proportion  to their  respective  ownership
interests prior to the closing,  such additional  number of shares of our common
stock such that the Existing  Stockholders  would own, in the aggregate,  10% of
the issued and outstanding shares of our common stock, on a fully diluted basis,
after  giving  effect to the Events.  On April 8, 2005,  the Company and the KRM
Fund agreed to amend the  Exchange  Agreement  to  terminate  the  anti-dilution
provision.  As consideration for this termination,  we issued 875,000 or 125,000
pre 1-for-7 stock split shares of our common stock to the KRM Fund.

      In connection with the Exchange  Agreement,  Kevin R. Keating  resigned as
our  President,  Secretary,  Treasurer  and sole  director.  Kevin R.  Keating's
resignation  as director  and officer was not due to any  disagreement  with us.
Prior to Kevin R. Keating's  resignation as a director, he appointed Nicholas A.
Shrager and Charles K. Howe to serve on our board of  directors.  David W. Beale
was disclosed as one of the initial directors appointed, but that disclosure was
erroneous.  Three director positions remained vacant. Two of the three positions
were filled pursuant to a Voting  Agreement among AAG, the AAG  stockholders and
the KRM Fund (the "Voting Agreement"),  and we continued  discussions with David
W. Beale as to his  appointment  to the board of directors to fill the remaining
vacancy.  Pursuant to the Voting Agreement,  the AAG stockholders agreed to vote
their shares of our common stock to elect a person  designated by KRM Fund,  who
would be an independent director and a financial expert, qualified and available
to serve on our  Audit  Committee  and  Compensation  Committee,  and  otherwise
acceptable to the AAG stockholders (the "KRM Fund Designee"). Under the terms of
the Exchange  Agreement,  the remaining vacant director position would be filled
by a  person  selected  by the  AAG  stockholders  and  who  was an  independent
director.  On January 18, 2005, Messrs. Brian Alleman,  David W. Beale, and John
Sanderson were appointed to serve on our board of directors,  with Mr. Sanderson
being the KRM Fund Designee, to bring the total number of directors to five.

      On October 28, 2004, in connection with the Exchange Agreement, we entered
a Financial Advisory Agreement (the "Financial Advisory Agreement") with Keating
Securities,  LLC, under which we compensated Keating Securities for its advisory
services in connection with the Share  Exchange.  Kevin R. Keating is the father
of the principal  member,  Tim Keating,  of Keating  Investments,  LLC.  Keating
Investments,  LLC is the managing  member of KRM Fund and Keating  Securities is
the registered  broker-dealer  affiliate of Keating  Investments,  LLC. Kevin R.
Keating  is  not  affiliated   with  and  has  no  equity  interest  in  Keating
Investments,  LLC, KRM Fund or Keating  Securities  and disclaims any beneficial
interest in the shares of our common stock owned by KRM Fund. Similarly, Keating
Investments,  LLC,  KRM Fund and  Keating  Securities  disclaim  any  beneficial
interest in the shares of our common stock currently owned by Kevin R. Keating.

      Under the Financial Advisory Agreement,  the advisory services provided by
Keating   Securities  in  connection  with  the  Share  Exchange   included  the
identification and presentation of suitable private company acquisition targets,
corporate,  business,  and  financial  due  diligence  evaluation  of the target
company,  capital and  transaction  structuring,  development of capital markets
strategy, valuation analysis, company, market and industry research, analysis of
various  exchange  listing   requirements,   and  transaction   negotiation  and
execution.  We paid a  transaction  advisory  fee equal to  $190,000  to Keating
Securities.

      The Financial  Advisory Agreement also appointed Keating Securities as our
exclusive  placement  agent for private and public  offerings of our  securities
until  October 28, 2005 and  required  us to pay Keating  Securities  10% of the
gross proceeds of any public or private offering of equity securities, 5% of the
gross  proceeds of any public or private  offering of debt  securities,  and 10%
warrant  coverage  on all  shares  of  our  common  issuable  upon  exercise  or
conversion of our securities in a public or private offering. As of December 31,
2005,  we paid  Keating  Securities  a 6.5%  commission  equal to  $130,000  for
introducing us to Laurus Master Fund, Ltd.


                                       4
<PAGE>

Recent Developments

John Sanderson resigned from the board on March 1, 2006. Mr. Sanderson was given
33,333 shares as a termination payment from Adal Group, Inc.

Stock Dividend

      On October 12,  2005,  the Company  declared a 7-for-1  stock split in the
form of a stock  dividend.  Stockholders  on the close of business on October 6,
2005, the dividend record date,  received six additional  shares of common stock
for each share held. The ex-dividend date was October 14, 2005.

Convertible Loan and Short term Bridge Loan

On December 29, 2005, due to various complications,with the deal structure, Adal
Group Inc. were requested to withdraw  Bridge our share  registration  statement
and to work with Laurus Master Fund to restructure our contacts. The Company has
agreed with Laurus Master Funds in 2006 to withdraw the SB-2 share  registration
document and to  restructure  the loan.  Principal  repayments  are scheduled at
$25,000 in April, May and June with a full review in July 2006 The interest as a
temporary  arrangement  to be charged  on the loan will be 3%  greater  than the
prime rate  quoted on the Wall Street  Journal.  The  Company  received  funding
through the Laurus Fund in 2005, in the form of a convertible note in the amount
of $2,000,000,  to support cash flow requirements and to cover operating losses.
In May 2006 the Company was unable to meet  interest  and  principal  repayments
under a revised repayment schedule and is currently working with the Laurus Fund
to  restructure  the terms of the note.  Although we have no formal  notice from
Laurus advising us that we are in default, Laurus management are working with us
to restructure the terms of the note, although there can be no assurance that we
will be able to do so.

Prior to the deal restructuring the following arrangements were in place:

The company  entered  into two  agreements  with Laurus  Master Fund in 2005 and
issued an SB-2 share registration document.

On November 21, 2005, we entered a Securities  Purchase Agreement (the "November
Purchase Agreement") with Laurus Master Fund, Ltd. ("Laurus"), pursuant to which
we sold a non-convertible Secured Term Note in the aggregate principal amount of
Five Hundred Thousand Dollars  ($500,000) to Laurus (the "November  Note").  The
principal  amount and any and all accrued and unpaid interest  payable under the
November Note shall be paid on or before May 21, 2006.  This has been superseded
with the  agreement  described  above.  We shall pay  interest on the  principal
amount  of the  November  Note at a rate per  annum  equal to the  "prime  rate"
published in The Wall Street  Journal,  plus three percent,  payable  monthly in
arrears.  Interest accrued but was not payable during the period which commenced
on November 21, 2005 and ended on November 30, 2005. We began paying interest on
the principal amount commencing on December 1, 2005 and shall continue to pay on
the first business day of each consecutive calendar month thereafter.

         We also entered a Reaffirmation and Ratification Agreement, dated as of
November  21,  2005,  with Laurus (the  "Reaffirmation  Agreement"),  whereby we
ratified and confirmed the terms of the Master Security  Agreement,  dated as of
June 29, 2005 by and between us and Laurus (as further described in the Form 8-K
filed with the Securities and Exchange Commission on July 6, 2005).  Pursuant to
the  Reaffirmation  Agreement  and Master  Security  Agreement,  we assigned and
granted to Laurus a continuing  security interest in certain of our, and each of
our  subsidiaries'  assets,  including,   without  limitation,   cash,  accounts
receivable, and equipment.

On June 29, 2005, we entered a Securities Purchase Agreement (the "June Purchase
Agreement"),  with Laurus,  pursuant to which we sold a Secured Convertible Term
Note (the "June Note") in the aggregate principal amount of $1,500,000, which is
convertible  into  shares  of  our  common  stock.  Subject  to  adjustment  and
anti-dilution  provisions set forth in the June Note, the fixed conversion price
with respect to the first $1,000,000 principal amount of the June Note is $0.43,
and with  respect to the  remaining  principal  amount is $0.50.  The  principal
amount and any and all accrued and unpaid  interest  payable under the June Note
is due June 29, 2008 (the  "Maturity  Date").  We paid interest on the principal
amount of the June Note at a rate per annum equal to the "prime rate"  published
in The Wall Street  Journal,  plus three  percent,  payable  monthly in arrears,
commencing on July 1, 2005 and we will pay such  interest on the first  business
day of each consecutive calendar month thereafter.  The interest rate is subject
to adjustment  at the end of each month until the Maturity  Date, as provided in
the June Note.

         Also on June 29, 2005, in connection with the financing transaction, we
issued to Laurus (i) a warrant to purchase up to 2,625,000  shares of our common
stock at an  exercise  price  equal  to $0.90  for the  first  1,312,500  shares
acquired  thereunder  and an exercise  price  equal to $0.98 for any  additional
shares  acquired  thereunder,  and (ii) an option to  purchase  up to  1,054,914
shares of our common  stock at an  exercise  price  equal to $0.0001  per share.
Laurus exercised this option for 1,051,610 shares on June 30, 2005.


                                       5
<PAGE>

         To  secure  the  payment  obligations  arising  under,  out  of  or  in
connection with the June Purchase  Agreement or the other agreements  entered in
connection with the financing,  we entered a Master Security  Agreement pursuant
to which we  assigned  and  granted to Laurus a security  interest in all of our
assets.  We, among other things,  agreed to keep all of the  collateral  free of
additional  liens in excess of $50,000 or as necessary  for taxes or  government
charges,  not to sell any of the collateral without the prior written consent of
Laurus, and keep all collateral insured in Laurus' name.

      We  agreed  to  file a  Registration  Statement  on  Form  SB-2  with  the
Securities  and Exchange  Commission to register the shares  underlying the June
Note, warrant, and option within 45 days of the closing of the June Note, and to
have  this  Registration  Statement  declared  effective  within  120 days  such
closing.  We initially filed this Registration  Statement on August 12, 2005. On
November 21, 2005, we agreed with Laurus to extend our obligation such that this
Registration Statement must be declared effective by the Securities and Exchange
Commission by February 14, 2006. If we fail to have this Registration  Statement
declared effective by February 14, 2006, we shall pay a penalty to the holder of
the June  Note an  amount  equal to  approximately  $1,000  per day  until  this
Registration Statement is declared effective.

Licensing Agreements

Our licensing  agreement for the Stonescreen  product expired  February 7, 2006.
Meetings  were held to agree a long term  license  during the fourth  quarter of
2005 and up to and including the end of February  2006.  After various  meetings
with Adal Group,  Inc.  board  members a final  meeting was held on February 28,
2006 with Nick  Shrager,  our  Chairman  and CEO,  Keith  Broome,  Non-executive
director and Gary O'Connor.  At this meeting Gary O'Connor  decided not to renew
the Stonescreen license and terminated his employment contract.

The history of the Stonescreen licensing agreement:  In February 2005, we signed
an  interim   global   licensing   agreement  with   Stonescreen,   a  designer,
manufacturer,  and  installer  of  stone  building  facades.  Pursuant  to  that
agreement,  we were granted a 12 month  exclusive,  non-transferable  license to
reproduce  drawings,  and  manufacture and install  materials  pertaining to the
Stonescreen  stone cladding and curtain wall system,  which is constructed using
extruded aluminum sections.  Under the terms of the license, the licensee,  Adal
Structures, shall pay a royalty of either 4% of sales in cash or 5% of sales, if
settled,  in  shares  of  our  common  stock  to  Gary  O'Connor,  owner  of the
Stonescreen  system.  Before the end of 2005, we expected to enter into a second
license  agreement  with Mr.  O'Connor for our  continued  use of the  exclusive
license to the Stonescreen system. During the fourth quarter of 2005, management
discussed a draft  contract with Mr.  O'Connor which would have the same royalty
terms as the  existing  license,  including  payment  of cash and  shares of our
common  stock as  consideration  to the  licensee  and would have been  directly
linked to Mr.  O'Connor's  employment  contract  as  managing  director  of Adal
Structures and Adal Guilform.

Acquisitions

The Company  acquired  Guilform  Holdings  through a  leveraged  by-out with the
assistance  of  Keith  Broome  and Ms  Janice  Conley  in the  form of  personal
guarantees on three loans, a real estate mortgage,  accounts receivable revolver
and machinery and equipment asset finance.  These loans have now been refinanced
with all previous lenders  liabilities  settled and personal  guarantees are now
removed.

The history of the acquisition:

On  February  7,  2005,  we  entered a Share Sale and  Purchase  Agreement  (the
"Guilform  Agreement")  relating to Guilform Holdings Limited, to buy from Keith
Malcolm  Broome,  the  sole  shareholder,  all of  Guilform  Holdings  Limited's
outstanding  shares.  In  consideration  of the sale,  we paid $636,000 in cash,
issued a 6% promissory note in the aggregate  principal amount of $375,000,  and
issued  21,000,000 shares (or 300,000 shares on a pre-split basis) of our common
stock.


                                       6
<PAGE>

      In  connection  with the  Guilform  Agreement,  we agreed  to pay  certain
obligations  under  commercial  loan  facilities  provided to Guilform  Holdings
Limited,  which  has  re-advanced  such  loan to  Guilform  Holdings,  by  State
Securities plc in the aggregate sum of  approximately  $1,930,000.  The interest
rate on this loan is LIBOR plus 4.25%. The initial  installment of this loan was
paid by Guilform  Holdings  Limited on December  15, 2001 and  installments  are
payable monthly for a period of 180 months. Guilform Holdings Limited repaid the
entire  outstanding  principal amount plus interest before the end of 2005. This
loan  facility  includes the standard  covenants  and  obligations  and Guilform
Holdings  Limited  is in full  compliance  with the loan  facility.  There is no
prepayment  penalty on the loan but rather Guilform  Holdings Limited may prepay
the loan at  anytime by payment of the  outstanding  principal  amount  plus any
interest due and payable and all interest  payable on the outstanding  principal
amount.  Approximately  $615,000  of the loan  facility  was loaned by  Guilform
Holdings  Limited to us in  connection  with the  consummation  of the  Guilform
Agreement.  Mr. Broome and Ms. Janice Conley, the previous Secretary of Guilform
Holdings  Limited,  agreed to personally  guarantee the  obligations of Guilform
Holdings Limited to pay back the loans.  Under the Guilform  Agreement,  we have
released Mr. Broome and Ms. Conley as guarantors on the loan facility.


BUSINESS OPERATIONS

Products and Services

The following describes the products and services that we provide:

MANUFACTORING DIVISION - ADAL SECO, ADAL ENGINEERING AND ADAL EXTRA

Adal Seco - Aluminum Extrusion Design and Production Services

Adal Seco  (formerly  Seco  Aluminium  Limited)  is a  leading  UK  provider  of
customized  aluminum  extrusions,  such as  hollow  and solid  tubing.  Extruded
products are strong,  lightweight and versatile,  and account for  approximately
50% of the market for aluminum  products,  of which the  building and  transport
industries consume the majority.

Adal Seco provides  volume  production with rapid  turnaround  time, and aims to
meet just-in-time delivery schedules.  Adal Seco operates its presses on shorter
cycles,  compared  to its  competitors,  and  therefore  responds  promptly  and
flexibly  to its  customers'  demands.  At the same time,  Adal Seco  offers its
customers  the  benefit  of  its  team's   considerable   design  expertise  and
experience, to help improve the performance and profitability of their products.

Adal Seco can provide its  customers  with complete  "supply-chain  management",
handling all stages of their product's  production  in-house - including design,
fabrication,   finishing,   assembly,  warehousing  and  delivery.  Adal  Seco's
capabilities have been developed especially to deliver product precision,  speed
of order completion,  extensive design knowledge,  and a flexible  manufacturing
process. Adal Seco can provide rapid turnaround and precision as a result of its
technology and its customization of dies.

Adal  Seco  manufactures  aluminum  extrusions  from  aluminum  billets,  a  raw
material.  Extrusions are manufactured by placing an aluminum billet in a sealed
container,   and   heating   the   containers   to   approximately   450-500(0)C
(842-932(0)F).  At such  temperature  it is  possible to force the metal to flow
through a  uniquely  shaped  steel  die.  A length of metal  emerges,  the cross
sectional shape of which is defined by the shape of the die. As it emerges,  the
section  is  cooled,  pulled out along a long  'run-out  table',  and cut to the
desired  length.  Heat  treatment  may then be used to optimize  the  material's
inherent  mechanical  properties.  In  addition  to the normal  mill  condition,
various  finishes can be applied to the  extrusions  for protection and improved
appearance - including  'anodizing' in natural or artificial  color,  and a full
range of colors in polyester  powder coatings and  electrophoretic  white/bronze
acrylic paint.  These  extrusions are then either packed and shipped directly to
customers  or receive  further  finishing  or  fabrication  as  specified by the
customer.  The complete  extrusion process produces a strong,  lightweight,  and
versatile product that can be utilized across multiple industries.

Adal Seco uses computer aided design and  manufacture to reduce  production time
and the  fluctuations  in the  extrusion  and  product  performance.  Adal  Seco
regularly keeps onsite  approximately 10,000 steel die, 8,000 of which Adal Seco
has  customized  for the  particular  customers who own them;  the remainder are
standardized die for general use.

Adal Seco uses three extrusion presses: two seven-inch presses that together can
produce  roughly 6,500 tons of extrusions  annually and one five-inch press that
can produce up to 400 tons of product  annually.  Adal Seco  operates  the seven
inch presses an average of 20 hours per day and 5 days per week,  under constant
supervision.  Adal Seco  operates  the five inch press 8 hours per day, and five
days per week, also under constant supervision.  The extrusion presses currently
operate at a 65% utilization  rate, and we hope to improve that rate to 75% with
investment  in new  technologies  that  enable more rapid die  changes.  The two
larger presses produce extrusions that range in size and alloys, and the smaller
press is a specially  crafted Adal Seco model that produces a `very fine' higher
margin niche product.


                                       7
<PAGE>

Outside customers purchase  approximately 92% of the extrusions produced by Adal
Seco, and the other 8% is used for Adal's own  finished-goods  manufacturing  by
Adal Engineering. Adal Seco has a customer base of approximately 1,000 customers
across  the   architectural,   construction,   automotive,   medical,   defense,
transportation, and HVAC industries of which, at any one time, approximately 400
are active customers,  and 600 are inactive  customers.  We consider an inactive
customer  one that has not  purchased  anything  from us within 18 months to two
years.  Adal Seco is currently  undertaking a data mining process to investigate
the inactive customers and help to increase the number of active customers.

Adal  Engineering  - Precision  Engineering  and Volume  Production  of Machined
Aluminum Components

Adal Engineering  (formerly W.H.J. Fagg and Son Ltd.),  incorporated in 1972 and
purchased by the Company in January 2004,  uses milling and turning  machines to
make  customized  machined  aluminum  components out of the aluminum  extrusions
produced by Adal Seco.

      Adal Engineering  uses Computer  Numeric  Controlled (CNC) machines in its
      production  facilities.  Each  milling  and turning  machine is  initially
      manually loaded by an operator,  and, through a computer program,  the CNC
      machine  controls  the movement of the output (the  aluminum  components).
      Adal Engineering has an automation program with the goal of reducing labor
      As of December  2005,  Adal  Engineering  has the majority of its machines
      semi-automated machines and in the fourth quarter of 2005 has successfully
      fully  automated  one machine.  The  automation  program will  continue to
      increase the volume and flexibility of production.

Adal Engineering  predominantly  manufactures motor vehicle tube connector parts
for sale to two major original equipment manufacturers ("OEMs"), Calsonic Kansei
and Denso  Manufacturing UK Ltd.,  which account for 11% of Adal's  consolidated
revenues. Adal Engineering's products can be found in noted motor vehicle brands
such  as  Land  Rover,  Renault,  Ford,  Audi,  Volkswagen,   and  Toyota.  Adal
Engineering  provides its components directly to the OEMs' production lines on a
just-in-time  basis  (for  which it  receives  no  premium).  Under  its  supply
agreement with Calsonic  Kansei,  Adal  Engineering  provides 100% of Calsonic's
requirements for the parts Adal Engineering manufactures.  Denso buys automotive
parts from Adal Engineering by purchase order under a general purchase agreement
that renews  automatically  each year and obligates Adal  Engineering to provide
replacement services for ten years after a part is sold.

Adal Engineering's  building products consist primarily of aluminum window bars,
hardware, and handles. Some of our machine products include precision engineered
components  that are attached to electric  motors and  hydraulic  and  pneumatic
motors of automobiles.

Adal  Engineering  also  manufactures gun cleaning kits for the United Kingdom's
Ministry of Defense,  which are used by the  country's  frontline  soldiers  for
their standard issue SA-80 rifles. Adal Engineering  manufactures  complete kits
and produces replacement parts for all of the kits.

Adal Seco and Adal Engineering have complementary  roles.  Nearly every piece of
extruded  aluminum  produced  by Adal Seco  requires  some  degree of  secondary
machining,  which  Adal  Engineering  provides.   Specifically,  the  extrusions
produced  by Adal Seco are raw  material  for the  components  produced  by Adal
Engineering.  Thus, Adal  Engineering  complements  Adal Seco's overall business
model to offer customers value-added production by cutting,  drilling,  milling,
and turning all extruded aluminum components.

Adal Extra - Value-Added Finishing Services

Adal Extra specializes in modifying extrusions by drilling,  punching,  cutting,
machining  and welding.  Adal Extra can also provide the finish  coating to your
extrusion  by either  having  polyester  powder or anodized  finish.  Adal Extra
provides complete product manufacturing,  assembly, warehousing, and delivery of
parts.

Our management plans that Adal Extra will become a supplier of a full assortment
of  off-the-shelf  and  customer  specific  products,   a  carrier  of  standard
components, and a parts distribution company through catalog marketing.


                                       8
<PAGE>

One of Adal Extra's  current  projects is the production of Privacy  Screens for
shared prison cells. Under current European Union law, dividers must be provided
in each prison cell to separate the toilet and bathroom  area from the remainder
of the cell.  The  government  engaged Adal Extra to produce these  dividers for
each prison cell. Adal Extra uses aluminum  extrusions produced by Adal Seco and
adds value by designing,  forming,  and painting  each  extrusion to produce the
finished product. Adal Extra's work accounts for the additional 80% of the value
of the finished product.

Other Adal Extra  customers are in the lighting,  display and shelving  products
industries,  as well as  manufacture  and  assembly  of  running  boards for 4x4
vehicles.  Adal Extra aims to build its stock of  standard  extrusions  that are
used in the  automotive  and  construction  industries,  and increase  sales and
marketing of its  products.  Adal Seco  produces 95% of the aluminum  extrusions
maintained in inventory by Adal Extra.

In 2006,  Adal Extra and Adal  Innovation  aim to develop  and market a range of
smoking  shelters and smoking  accessories in preparation for the smoking ban in
the UK in 2007.

ARCHITECTURAL DIVISION - ADAL GUILFORM, ADAL STRUCTURES AND ADAL CLIMATIX

Adal Guilform

In  February  2005,  we  purchased  all of the  outstanding  shares of  Guilform
Holdings  Limited and its  wholly-owned  subsidiary,  Adal Guilform,  a UK-based
fabricator  of  aluminum  building   facades.   Guilform  Holdings  Limited  was
incorporated in 1976. We believe that since its incorporation the Guilform brand
has  built  an  excellent  reputation  for  designing  and  fabricating  unique,
reliable,  and highly  efficient metal panels and cladding for the  construction
industry.

Adal Guilform produces specialist metal cladding panels, and provides a range of
sheet metal fabrication  services.  Adal Guilform has an informal agreement with
Schucco,  a  major  curtain  wall  supplier  (glass  facades),   to  manufacture
components  for Schucco  systems.  The  factory  features  specialist  machinery
including a 24 foot CNC metal guillotine and 24 foot CNC brake press,  among the
largest in Europe.

Adal Structures

Until February 2006, Adal Structures  held a twelve-month  exclusive  license to
market and sell the  "Stonescreen"  cladding system,  which was Adal Structures'
first product. Stonescreen is a trademarked system that allows stone to be fixed
to  building  facades by using an  aluminum  framework.  The  license  lapsed in
February 2006.

Adal Climatix - Architecturally Designed HVAC Systems

      Adal   Climatix   specializes   in  the   design  and   manufacturing   of
      'architectural' radiant heating skirting (base boards) and ceiling panels.

      Climatix   has  a  patent  in  the   United   Kingdom   for  its   turnkey
      aluminum-based,  radiant heating  gas-fired  ceiling panel that we believe
      are unique,  reliable,  and more  efficient  than other  systems  sold for
      commercial  and  residential  heating.  We  have  an  exclusive  marketing
      arrangement  for our radiant  ceiling panel "modular  panels"  marketed by
      Frenger Systems.

      Our base boards can operate using electricity or gas fired hot water.

      Adal Seco  supplies 80% of the aluminum  extrusions  that Climatix uses in
      the  production of the base board heating  systems and 50% of the aluminum
      extrusions  that  Climatix uses in the  production of the ceiling  heating
      systems.

PRODUCTS AND TECHNOLOGIES DIVISION - ADAL INNOVATION

Adal Innovation

We established Adal Innovation in 2005 for the purpose of receiving profits from
intellectual  property  held by us.  One of the  products  that we  expect  Adal
Innovation to receive profits from is Ticalium(TM).


                                       9
<PAGE>

Ticalium  combines  aluminum  with  titanium  and carbon to produce a super-hard
extrusion that is designed to increase the strength, hardness, and above all the
wear  resistance  of aluminum.  Ticalium is up to three times lighter than - and
has comparable  strength and wear-resistance to - cast iron and carbon steel. We
expect Ticalium to be more  cost-effective than other metal matrix composites as
a result  of its  microstructural  characteristics  and  mechanical  properties,
enabling an easier production process.

Ticalium has been  identified as having  potential uses in many different  areas
such as the automotive industry,  train wheels, tire studs, and snowmobiles.  In
particular,  we believe  Ticalium can be used to produce  automobile brake discs
and drums with  comparative wear resistance but far lighter weight than standard
cast iron brake discs and drums. We also believe Ticalium can be used to improve
stiffness and reduce flexibility of brake calipers. For train wheels, we believe
Ticalium can result in weight  savings,  reduced energy  consumption  and faster
acceleration  and braking and thereby  increase train speed and reduce traveling
time.  Winter-long tests in Helsinki,  Finland,  with Ticalium tire stud jackets
have shown  comparable  wear to  standard  steel  studs,  but with much  reduced
weight.  Tests with snowmobile  steering components have shown that Ticalium can
reduce weight as well as increase resistance and stiffness.

In the spring of 2006, we received  delivery of our first trial production batch
of Ticalium billets, in 5WT%, 7WT% and 10WT% reinforcement  levels.  Performance
in extrusion and strength property tests has so far exceeded  expectations,  and
we have been  approached  by a number of  prestigious  companies in a variety of
industries, to many of whom we have issued material in return for the sharing of
test result data. Once we have completed our trial  production  tests, we aim to
begin marketing Ticalium to customers in a wide range of industries. We expect a
slow  initial  response  to our  marketing  efforts of  Ticalium  because of the
extended length of time customers will likely use to evaluate the product.

In 2005, we filed a United  Kingdom  patent for the sole rights to use Ticalium,
to which we were entitled as the lead member of the development project.

Principal Customers

We have a broad range of customers in various  industries that utilize  aluminum
products,  such as,  automotive-heat  exchange and vehicle  finishing  products,
domestic,  and commercial  properties  (windows,  doors,  showers,  blinds,  and
partitioning),  lighting,  heating,  and  ventilation,  aircraft and  aerospace,
shipbuilding,  oil/gas  platforms,  electrical  machinery  and  equipment,  shop
fittings,  and  supply  fabricators  and  extrusion  wholesalers.   We  have  no
dependence on any individual customer or small number of customers,  the loss of
which  would  have a  material  adverse  effect  on our  business  or  financial
condition.

Each of our top ten  customers  accounts  for  less  than  10% of our  revenues.
Calsonic  and Denso,  two large  automotive  customers,  account  for 11% of our
revenues,  in total. All of our customers require  customized  production,  and,
thus, our companies produce little to no standardized products.

Sales and Marketing

Sales and customer service for each of our operating  subsidiaries is handled by
in-house  sales  employees.  Over  the  next  year,  we  plan  to  focus  on the
cross-selling of products and services among  subsidiaries.  We have a marketing
plan that will encourage the businesses to focus on value-added  products (i.e.,
extrusions modified by drilling,  cutting,  machining,  and welding). We plan to
win our  competitors'  customers by  emphasizing  our short lead time,  delivery
capabilities,  and reputation for high quality production.  Currently, our sales
are  predominantly to customers in the United Kingdom,  with less than 5% of our
sales being sold overseas, in the year ended December 31, 2005 the exports were:

Spain - $990,000

Ireland - $259,00

Holland - $58,000

Denmark - $30,000


                                       10
<PAGE>

Germany - $15,000

Belgium - $14,000

Slovakia - $11,000

France - $3,000

We believe that most  important  elements of customer  service in the  extrusion
industry are  responsiveness to customer orders,  predictable lead times,  short
delivery cycles and on-time delivery. We must provide high quality products with
rapid turnaround time for production to compete  effectively in our marketplace.
We seek to provide our customers with  predictable  lead times and short product
delivery cycles so that our customers can optimize their inventory management.

Pricing in the aluminum  extrusion industry is typically based upon markups over
the base aluminum prices, with the amount of the markups determined primarily by
the type of extrusion.  For example,  markups are generally  higher for products
that are relatively more difficult or time consuming to extrude,  such as hollow
shapes or  thin-wall  items.  In general,  we also  capture  higher  premiums on
products that we produce and deliver on a faster schedule than our competitors.

We deliver the majority of products ourselves,  instead of outsourcing  delivery
to a common carrier  enabling us to deliver our products in a more timely manner
with less  damage.  While we lease the  vehicles  that we use for  delivery,  we
manage  delivery  schedules  and timing and  packing  processes  through our own
staff.  Each  of the  leased  vehicles  carries  our  logo  when  used  for  our
deliveries.  We sometimes use contract  carriers and common carriers for certain
long hauls and partial loads where no back haul is available,  thereby  reducing
the number of leased  tractors and vehicles  necessary,  and reducing  operating
costs without materially affecting delivery capabilities.

Adal Climatix has several concepts underway, and in varying stages, ranging from
establishment  of  trademarks to prototype  testing and contracts  including low
surface temperature products,  innovative space and cost saving domestic heating
products and radiant heat products for use in the building and  refurbishment of
hospitals.  For  instance,  Climatix is  developing a  technology  to custom fit
copper tubing into the aluminum  heating system to permit an easy  connection to
both residential and commercial heating systems.

Raw Materials

Adal Seco's major raw materials are aluminum  billets,  which we purchase in the
open market.  Adal Engineering's and Adal Extra's major raw material is aluminum
extrusions,  which are  predominantly  produced by Adal Seco. Our  Architectural
Division  buys sheet  aluminum,  as its primary  raw  materials,  from  external
suppliers.

The steep  increase in the cost of raw material on the London Metal  Exchange in
the  second  half of 2005 and the  first  quarter  of 2006  resulted  in  little
opportunity or desire for forward buying.  Although some forward  contracts have
been  entered  into,  it is likely  that  extruders  will only enter  short term
contracts in 2006. We re-negotiate the purchase orders annually, and billets are
priced  at a set  rate at the  time  of  renegotiation.  We do not use a  formal
hedging strategy,  but rather rely upon our forward purchasing,  up to 18 months
ahead of time, to limit our exposure to extreme price fluctuations.

Additionally,  management has partially  offset the negative  impact of aluminum
price volatility by increasing selling prices and will attempt to continue to do
so in the future.

Principal Suppliers

We purchase our raw materials from the world's principal smelters such as Alcoa,
Dubai  Aluminum,  Hydro Aluminum and Rio Tinto  Aluminum.  There is an excellent
supply of aluminum globally,  and the raw materials for smelting are abundant in
the earth's crust. As a global commodity,  aluminum is widely available,  and no
single supplier or group of suppliers has been able to dictate pricing.


                                       11
<PAGE>

Licensing Agreement

In  February  2005,  we  signed  an  interim  global  licensing  agreement  with
Stonescreen, a designer,  manufacturer, and installer of stone building facades.
Pursuant   to  that   agreement,   we  were   granted  a  12  month   exclusive,
non-transferable  license to reproduce  drawings,  and  manufacture  and install
materials  pertaining to the Stonescreen stone cladding and curtain wall system,
which is constructed  using extruded aluminum  sections.  Under the terms of the
license,  the  licensee,  Adal  Structures,  shall pay a royalty of either 4% of
sales in cash or 5% of sales, if settled,  in shares of our common stock to Gary
O'Connor,  owner of the Stonescreen system.  Before the end of 2005, we expected
to enter into a second license agreement with Mr. O'Connor for our continued use
of the exclusive license to the Stonescreen system. During the fourth quarter of
2005,  management  discussed a draft contract with Mr. O'Connor which would have
had the same royalty terms as the existing  license,  including  payment of cash
and shares of our common stock as  consideration  to the licensee and would have
had a term directly related to Mr.  O'Connor's  position as managing director of
Adal  Structures and Adal  Guilform.  However,  in February  2006, Mr.  O'Connor
decided not to renew the contract  with  Stonescreen  and Mr.  O'Connor left our
company.

Competition

The UK extrusion market is dominated by three major extruders, Alcoa, Hydro, and
SAPA, which collectively  account for 75% of the market.  Adal Seco is the fifth
largest supplier.  UK extruders  provided the market with nearly 130,000 tons of
aluminum in 2005. Adal Seco,  produced  approximately  5,600 tons of product, or
4.3%, of the total estimated UK market  production.  UK domestic  production was
down approximately 13.33% and with consumption flat year on year this represents
a  significant  increase in imports.  Adal Seco rarely  competes  with the three
market leaders or overseas  extruders,  which  generally  focus on  high-volume,
low-priced extrusions. Adal Seco does win work to top up supply to customers who
import to help them to manage long lead times. Adal Seco  differentiates  itself
by providing very flexible,  high quality, short order lead time services.  Adal
Seco's presses are more suited for short-run  production  than the  competitors'
presses as operators  can more easily change and replace the die on each of Adal
Seco's presses to maximize  output.  Adal Seco's customers expect rapid and high
volume production,  which is mostly unmatched by its competitors who have slower
production  processes.  We  believe  that  ample  opportunities  exist for us to
increase our sales and reach  maximum  capacity in the next few years.  Although
price is a  competitive  factor,  we  believe  a greater  emphasis  is placed on
service  and   quality  and  Adal  Seco  is  well  placed  to  explore   further
opportunities within its niche.

Adal  Engineering  has focused its core  business on automotive  tube  connector
parts.  This market place is largely  untapped as the barriers to entry are very
high. The barriers to entry in the automotive market are cost and time,  quality
approval by manufacturers, and the time period required to achieve that approval
(up to two years).  Adal  Engineering  has  achieved the quality  standards  ISO
9001:2000 and TS16949:2002. Adal Engineering has also had to demonstrate that it
is working towards zero defects within the production process.  Milling machines
and turning machines are relatively  expensive and require skilled  operators to
supervise production.  Adal Engineering has overcome this barrier to entry as it
already owns and operates these machines.

Component  qualification  requirements coupled with the life cycles of a vehicle
model  (six  plus  years)  assure  to  some  degree  that a  long-term  customer
relationship  will be maintained.  We expect that the use of Adal  Engineering's
parts in cars (in a wide range of noted brands) will continue to the move toward
standardization  of automobile air  conditioner  processes and thereby  increase
market demand for such parts.  Adal Engineering  hopes to increase the number of
customers that rely upon its components.  Even though competition in this market
sector is  limited,  customers  demand  prices  that keep our  margins  on these
products  low. We intend to maintain our quality and delivery  standards for our
main automotive customers while diversifying Adal Engineering's product mix.

Governmental Regulation

We  currently  comply with the  environmental  manufacturing  requirements  with
respect to waste.  There are no material  costs  associated  with  environmental
compliance.  Environmental  regulations  have very little impact on our business
operations.  We expect that the government is likely to increase its support for
the aluminum industry in the UK and will promote the environmentally responsible
nature of the product,  emphasizing the excellent  recycling  achievements  over
recent years.

Other than  regulations  associated  with our  disposal  of waste,  there are no
government  regulations that specifically affect the aluminum extrusion business
nor do we have  to  obtain  any  government  approval  for  the  production  and
distribution of our products.


                                       12
<PAGE>

Employees

As of December 31, 2005,  we employed 262  employees,  including,  152 full-time
employees at Adal Seco and Adal Climatix (132 manufacturing  staff and 20 office
and management  staff),  66 employees at Adal Engineering (56 production  staff,
including 20 temporary staff members and 10 office and management employees), 39
employees at Adal Guilform and 5 employees at our headquarters.

Research and Development

At  Adal  Engineering,  we  invested  in  machine  automation  and  new  product
development.  Our research and development costs for the machine automation were
$100,000.  For the development of Ticalium,  we primarily  relied on grants from
the European Union, which we also shared among our strategic partners.

Our current research and development efforts are focused on bringing Ticalium to
market. We have now cast billet slabs in a commercial casting house and have had
several  customers testing the product with our in-house  metallurgist,  Dr. Cem
Selcuk, hired in June 2005.

Risk Factors

      THE FOLLOWING  MATTERS MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION, LIQUIDITY, RESULTS OF OPERATIONS OR PROSPECTS, FINANCIAL OR
OTHERWISE.   REFERENCE  TO  THIS  CAUTIONARY  STATEMENT  IN  THE  CONTEXT  OF  A
FORWARD-LOOKING  STATEMENT OR STATEMENTS  SHALL BE DEEMED TO BE A STATEMENT THAT
ANY ONE OR MORE OF THE  FOLLOWING  FACTORS  MAY CAUSE  ACTUAL  RESULTS TO DIFFER
MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENT OR STATEMENTS.

Risks Related to Profitability and Survival

Our 2005 financial  statements include a going concern  qualification,  meaning
that our  ability to  continue  in  business  is in  question.  Our  independent
auditors  have added an  explanatory  paragraph  to their  audit  opinion on our
financial  statements  for the year ended December 31, 2005 citing Note 1 of the
Notes to Consolidated  Financial  Statements,  which,  states that the financial
statements  raise  substantial  doubt as to our  ability to  continue as a going
concern.  Our  ability  to  make  operations  profitable  or  obtain  additional
financing will determine our ability to continue as a going concern.

The Company's financial position  deteriorated further during 2005 and the first
half of 2006.  Operating  conditions in 2005 were  exceptionally  difficult with
rapidly rising raw material prices, major mechanical  breakdowns and a declining
demand in the  marketplace.  All operating  companies  posted losses in the 2005
financial  year, as they did in 2004.  The company's SG&A costs continue to be a
burden on the Company.  The Company  received funding through the Laurus Fund in
2005, in the form of a convertible note in the amount of $2,000,000,  to support
cash flow  requirements and to cover operating  losses.  In May 2006 the Company
was unable to meet interest and principal  repayments under a revised  repayment
schedule and is currently  working with the Laurus Fund to restructure the terms
of the note.  Although we have no formal notice from Laurus  advising us that we
are in default,  Laurus  management are working with us to restructure the terms
of the note,  although  there can be no assurance that we will be able to do so.
As a result of the continued  losses  creditor  pressure has increased.  We have
been formally advised by a former supplier that they intend to take legal action
to recover their debt, which could lead to a bankruptcy proceeding.  We will try
to  negotiate  with this  creditor and hope to reach  agreement  with respect to
repayment over an extended  timeframe.  In addition,  several of our current raw
material  vendors are refusing to grant us  additional  credit and are requiring
payment  for  material  in advance,  plus  repayment  of a portion of the unpaid
balances owed. We are working with an Investment  Bank and private  investors to
provide additional capital,  which could involve significant dilution to current
shareholders  or the  possible  sale of assets.  While we do not have any formal
agreements,  we have signed  non-disclosure  agreements  with four  parties with
respect  to  possible  sale  of one or  more  of our  operating  companies.  The
Company's key intellectual  property, in particular Ticalium, is showing promise
but is at present a cost center and is not generating any revenue.  We expect to
restructure the group in 2006 and expect the group to report losses for the full
year of 2006.

      We have a history of losses and we anticipate  future  losses.  We make no
assurances that we will be able to achieve profitability. Our ability to operate
profitably depends on increasing our sales,  expanding our markets and achieving
sufficient  gross  profit  margins  is a  very  difficult  challenge  given  the
volatility of the commodity market, particularly from July 2005 to May 2006.. We
can not assure you that we will achieve profitable operations in the future.

      We do not  generate  enough cash to sustain our  operations.  Although our
revenue is sufficient for operations during our busy seasons, we do not generate
enough cash to sustain the business  during  December  through March and rely on
non-bank financing for cash for that period.  However, such financing may not be
available  when we need it or, if available,  it may not be on favorable  terms.
There can be no assurance  that our current cash will be  sufficient  to sustain
our business in the future.

      We may be  deprived  of cash,  if we  default on our  accounts  receivable
revolving  facility.  We finance our  business  through an  accounts  receivable
revolver facility,  pursuant to which all our accounts  receivable are deposited
into a "lockbox"  account  controlled  by our lender.  The lender  transfers the
receipts  from the account into our checking  account  daily,  but the lender is
entitled to not transfer the funds if we are in default of the loan facility. In
periods  in which  there is a dispute  regarding  our  compliance  with the loan
agreement,  or in other  circumstances,  the  lender  could  block  transfer  of
accounts receivable receipts into our checking account, leaving us with no cash.
In such a case, the failure of our business would become highly likely.

      All of our assets are subject to security  interests.  We have  granted to
Laurus  Master Fund,  Ltd. a security  interest in all our assets not  otherwise
subject to liens. As a result, we may be unable to procure debt financing on the
most favorable terms,  and, upon a default in our obligations to Laurus,  Laurus
might be able to seize  some or all of our  assets  subject  to its lien,  which
could disrupt our operations.


                                       13
<PAGE>

      Additional financing could result in dilution to our existing stockholders
or  restrictions on our financial  discretion.  We must raise  additional  funds
through  public or private  financings.  To the extent that we raise  additional
capital by issuing equity  securities,  the issuance of these  securities  could
dilute our existing  stockholders.  Any debt financing we enter into may involve
covenants that restrict our operations.  These restrictive covenants may include
limitations on additional borrowing, specific restrictions on our use of assets,
as well as,  prohibitions on our ability to create liens, pay dividends,  redeem
our common stock, or make investments.

      We have a limited  operating history and are subject to the risks of a new
enterprise  any  one  of  which  could  limit  growth  and  product  and  market
development.   Our  underlying   operating   subsidiaries   had  been  operating
independently  for between 30 and 40 years, but, our short operating history may
be insufficient for you to evaluate our prospects. As we expand our business, we
may  increase  our  borrowings  and, as a result,  we may  increase our interest
expenses.  We will  continue  to  encounter  risks and  difficulties  frequently
experienced  by  companies  at a similar  stage of  development,  including  our
potential failure to:

      o     implement our business  model and strategy and adapt and modify them
            as needed;

      o     increase awareness of our brands,  protect our reputation,  maintain
            and expand our  relationship  with customers,  and develop  customer
            loyalty;

      o     manage our expanding operations and service offerings, including the
            integration of any future acquisitions;

      o     maintain adequate control of our expenses;

      o     anticipate  and adapt to changing  conditions in markets in which we
            operate  as well as the  impact of  technological  developments  and
            other significant competitive and market dynamics;

      o     implement and improve our operational and financial systems; and

      o     manage and train our growing employee base.

If we are not successful in addressing  any or all of these risks,  our business
may be unable to properly grow and expand,  we may be unable to retain  existing
customers  and  acquire  new  customers,  and we may  therefore  fail to realize
anticipated revenue growth and suffer significant operating losses.

Risks Related to our Business and Strategy

      Our gross  profits  will  suffer,  if we are  unable to offset  rising raw
material prices with higher product sales prices.  Rising costs of raw materials
are  adversely  impacting  our margins.  Our  principal raw material is aluminum
billets, which are generally available from a variety of suppliers. The price of
billets is controlled through London Metals Exchange.  Increases or decreases in
the LME price can have a substantial adverse effect on our revenues and earnings
insofar  as we are  unable to adjust  our  product  selling  prices as  readily.
Recently,  commodity  prices for aluminum have risen faster than our  short-term
ability  to  recoup  increases  in  these  costs  from our  customers,  and such
circumstances  might occur again,  impairing our gross profit and net income. We
try to mitigate  this risk  through our  purchasing  policies  and  committing a
portion of our forward requirements ahead of time. This strategy could introduce
further risk, however,  if the price of aluminum  decreases.  Price fluctuations
are affected by numerous factors beyond our control, including:

      o     the overall demand for, and worldwide supply of, primary aluminum;

      o     the availability and price of competing commodities;

      o     energy costs;

      o     international economic trends;


                                       14
<PAGE>

      o     currency exchange rate fluctuations;

      o     expectations of inflation;

      o     actions of commodity market participants; and

      o     consumption  and  demand  patterns  and  political  events  in major
            producing countries.

      We will lose sales if we cannot continue to differentiate our products and
services from our competitors. We operate in a marketplace that is becoming more
global,  and the threat of lower cost imports of extruded  aluminum  products is
increasing.  If we are not able to differentiate ourselves in ways other than by
reducing prices, such as through technical expertise,  short delivery lead time,
and high quality, we may lose sales.

      We may be unable to obtain the  additional  capital  required  to grow our
business.  We may have to  curtail  our  business  if we  cannot  find  adequate
funding. Our ability to grow depends  significantly on our ability to expand our
operations  through  internal  growth and by acquiring other companies or assets
that  require  significant  capital  resources.  We may need to seek  additional
capital  from  public or private  equity or debt  sources to fund our growth and
operating plans and respond to other contingencies such as:

      o     shortfalls in anticipated revenues or increases in expenses;

      o     the development of new products; or

      o     the  expansion  of our  operations,  including  the  recruitment  of
            additional personnel.

We cannot be  certain  that we will be able to raise  additional  capital in the
future on terms acceptable to us or at all. If alternative  sources of financing
are  insufficient  or  unavailable,  we may be required to modify our growth and
operating plans in accordance with the extent of available financing.

      Fluctuating  demand  for our  products  may  prevent  us from  maintaining
sufficient sales. Fluctuating customer demand for our products may result from a
variety of factors,  including an overall  decline in the  profitability  of our
customers'  businesses,  seasonal and weather changes, and increased competition
from imports.  If customer demand for our products  declines or is inconsistent,
our revenues could be adversely affected.

      We manufacture  most of our products on two machines,  either of which, if
idle for an extended period, would substantially impair our business.  Adal Seco
uses two main  presses to produce  the  extrusions.  If either of these  presses
break-down,  Adal Seco will be unable to meet its delivery  commitments on time.
Because just-in-time  delivery is a crucial basis upon which we operate, we will
likely lose customers for whom very short lead time deliveries is important.  If
we make additional use of one press when the other is down, we risk damaging the
one in use.

      Power  failures  could  seriously  impair  our  business.  The  heating of
aluminum  billets  as  part  of the  extrusion  process  requires  a  large  and
continuous supply of electricity.  The ovens that we use to age the aluminum are
powered  by  electricity.  Interruptions  of  electricity  supply  can result in
lengthy  production  shutdowns,   increased  costs  associated  with  restarting
production, and waste of production in progress. In extreme cases, interruptions
of electricity  supply can also damage or destroy our equipment and  facilities.
We  encountered  shortages  of electric  power in 2004 and were able to employ a
generator to help offset our potential  losses.  We may be unable to offset such
potential losses in the future if we encounter future shortages of electricity.

      An  inability  to respond  quickly and  effectively  to new  technological
developments  could  reduce  demand for our products  and  adversely  impact our
competitive  position.  Our  customers  rely upon our  ability to deliver a high
volume of extrusions  rapidly,  and we require the most efficient  machinery and
processes  to  meet  this  demand.   Many  of  our  machines   require  constant
supervisions by our employees.  However,  we  continuously  seek to automate the
processes to eliminate the need for supervision and the risk of human error. Our
failure  to  maintain  our  current  quality  and  reputation  through  lack  of
investment  in new  products,  new  machinery,  and new  processes or failure to
respond to other  technological  changes could  adversely  affect our ability to
retain existing customers and secure new customers.


                                       15
<PAGE>

      Our  business is seasonal,  so our revenues  vary from quarter to quarter.
Our core business experiences  significantly reduced sales between each December
and through the following March. Although, historically, the slow-down reflected
seasonal demand for our principal  products,  more recently,  our customers have
lengthened their year-end holiday  vacations,  further reducing our sales during
this time of year. To mitigate this seasonality,  we intend to further diversify
our product lines, but we can give no assurance that we will be successful.

      We rely on third  parties  for  technology  and backup  systems and cannot
assure the security and  integrity  of our data and  information  systems to the
extent  we might if we had our own  equipment.  While we  currently  manage  our
technology  at various  sites and at our  headquarters,  we are  planning to add
additional  technology and systems to support our business.  Some of our website
hosting and backup systems are to be managed by third parties offsite on outside
servers.  We may not be able to control  access and security to these servers as
we would if they  were  onsite.  While we make  every  effort  to  maximize  the
security and integrity of our data, we cannot  guarantee that third parties will
do the same, regardless of their contractual obligation to do so.

      Our business  involves  exchange-rate  risk.  Our operations are currently
based in the United Kingdom. Our sales are paid predominately in pounds sterling
(over 95%), but aluminum  billets trade on the London Metal Exchange  (LME),  in
U.S.  dollars.  Our U.S. Dollar expenses  currently  represent 35% to 40% of our
total  expenses.  The  industry  does pass  aluminum  billet and  exchange  rate
increases onto its customers, but, with a very competitive market, we often have
to bear the additional costs longer than we would like.

      Our  executive  management  has no  previous  experience  in the  aluminum
industry.   Although  our  executive   management  has  experience  in  business
consulting,  acquisitions,  and public  accounting,  none has had any experience
operating an aluminum  extrusion  business or any recent  experience  managing a
manufacturing  business.  Adal's  businesses  might not  operate  optimally,  if
managing  an  aluminum  extruding  business  at  the  executive  level  requires
significant experience in addition to that of our executive management.

      We plan to grow, in part, by  acquisition,  a risky  strategy.  Our growth
strategy,  in part, is to acquire  businesses and assets in the United  Kingdom,
the United States,  and elsewhere that have  services,  products,  technologies,
industry  specializations  or geographic  coverage that extend or complement our
existing business.  We believe that such acquisitions could support our position
as a leading extrusion  producer by combining our current products and expertise
with  more  advanced  aluminum  production.  However,  we may  not  achieve  the
anticipated  benefits of future  acquisitions.  We may be unable to successfully
identify or acquire such  companies on favorable  terms.  Even if we are able to
identify an acquisition  candidate,  the resources  expended may be significant.
Any future acquisitions will be subject to a number of challenges, including:

      o     the  diversion of  management  time and  resources and the potential
            disruption of our ongoing business;

      o     difficulties in maintaining uniform standards,  controls, procedures
            and policies; and

      o     potential unknown liabilities associated with acquired businesses.

Risks Specific to our Securities

      Because our stock is listed on the OTC Bulletin Board, our stock price may
be volatile. There has only been a limited public market for our securities, and
there can be no assurance that an active trading market will be maintained.  The
OTC Bulletin Board is a relatively unorganized,  inter-dealer,  over-the-counter
market that provides  significantly  less liquidity than NASDAQ and the national
securities  exchanges.  The  trading  price of our common  stock is  expected to
fluctuate  significantly,  and, as is the case for OTC Bulletin Board securities
generally, is not published in newspapers.

      Limitations  of the OTC Bulletin  Board can hinder  completion  of trades.
Trades and  quotations on the OTC Bulletin  Board involve a manual  process that
may delay order processing.  Price fluctuations during a delay can result in the
failure of a limit order to execute or cause  execution  of a market  order at a
price  significantly  different  from the  price  prevailing  when an order  was
entered. Consequently, one may be unable to trade in our common stock at optimum
prices.


                                       16
<PAGE>

      Penny stock  regulations may restrict the market for our common stock. The
Securities and Exchange Commission has adopted regulations that generally define
a "penny  stock" to be any equity  security  having a market  price (as defined)
less than $5.00 per share,  or an  exercise  price of less than $5.00 per share,
subject to certain exceptions.  As a result,  broker-dealers  selling our common
stock are subject to additional  sales  practices when they sell such securities
to persons  other than  established  clients  and  "accredited  investors."  For
transactions  covered by these rules,  before the  transaction is executed,  the
broker-dealer must make a special customer  suitability  determination,  receive
the  purchaser's  written  consent  to  the  transaction,  and  deliver  a  risk
disclosure  document relating to the penny stock market.  The broker-dealer must
also  disclose  the  commission  payable  to  both  the  broker-dealer  and  the
registered   representative   taking  the  order;  current  quotations  for  the
securities;   and,  if  the   broker-dealer   is  the  sole  market  maker,  the
broker-dealer must disclose this fact and the  broker-dealer's  presumed control
over the market.  Finally,  monthly  statements must be sent  disclosing  recent
price information for the penny stock held in the account and information on the
limited  market in penny  stocks.  Consequently,  the  "penny  stock"  rules may
restrict trading in our common stock.

      Securities  listed  on the OTC  Bulletin  Board are  vulnerable  to market
fraud,  and, since our common stock is listed on the OTC Bulletin  Board,  it is
vulnerable to such market fraud. Securities listed on the OTC Bulletin Board are
frequent  targets  of fraud or market  manipulation,  both  because of their low
prices  and the  OTC  Bulletin  Board  reporting  requirements  which  are  less
stringent than those of national  securities  exchanges or NASDAQ. Such patterns
of fraud and abuse may include:

      o     control  of  the  market   for  the   security   by  one  or  a  few
            broker-dealers that are often related to the promoter or issuer;

      o     manipulation  of prices through  pre-arranged  matching of purchases
            and sales and false and misleading press releases;

      o     "boiler room"  practices  involving  high pressure sales tactics and
            unrealistic price projections by inexperienced sales persons;

      o     excessive  and  undisclosed  bid-ask  differentials  and  markups by
            selling broker-dealers; and

      o     dumping of securities  after prices have been  manipulated to a high
            level, resulting in investor losses.

Our  management  is aware of the abuses that have occurred  historically  in the
penny  stock  market  and  aware of the  possibility  of such  fraud  and  abuse
affecting our common stock.

      Increased dealer  compensation  could adversely affect our stock price. On
the OTC Bulletin Board, dealers' spreads (the difference between the bid and ask
prices) may be large,  causing higher purchase prices and less sale proceeds for
purchasers of sellers of our securities.

Potential Impact on our Business from Risks Related to our Securities

      The risks outlined above could result in our operations being curtailed if
we are unable to react quickly  enough to mitigate the impact of the  particular
risk. Management believes the risks could cause us operational  difficulties but
may not result in total business failure.

Item 2.     Description of Property.

We operate from the following facilities:

      o     We own a 160,000 square foot facility in Witham, Essex UK. Adal Seco
            utilizes 49,000 square feet for production and warehouse space. Adal
            Engineering utilizes approximately 20,000 square feet located on the
            site of the Adal Seco plant in Witham.  Approximately  13,000 square
            feet is ground level  production  floor space,  3,000 square feet of
            storage & production  mezzanine floor and approximately 4,000 square
            feet of office space. The current amount outstanding on our mortgage
            for this site is $4,264,000,  payable at a rate of 6.435%.  The site
            was valued at $5,897,000 as of December 31, 2005.


                                       17
<PAGE>

      o     We own a 25,000 square foot facility in St.  Albans,  Hertfordshire,
            UK. Adal Guilform uses this space for  manufacturing  facilities and
            office space.  The current  amount  outstanding  on our mortgage for
            this site is $1,667,000,  payable at a rate of 6.435%.  The site was
            valued at $2,223,000 as of December 31, 2005.

Item 3.     Legal Proceedings.

      We are not subject to any legal proceedings.

Item 4.     Submission of Matters to a Vote of Security Holders.

      There were no matters  submitted to a vote of security  holders during the
fourth quarter of 2005.

                                     PART II

Item 5.     Market for Common Equity and Related Stockholder Matters.

      Our  common  stock is listed on the OTC  Bulletin  Board  under the symbol
"ADGR".  The  following  table  sets  forth the range of high and low bid prices
reported by the OTC Bulletin  Board in each quarter from January 1, 2004 through
to December 31, 2005, and the subsequent  interim period. The quotations reflect
inter-dealer prices,  without retail mark-up,  mark-down or commission,  and may
not represent  actual  transactions.  Information  for dates before  October 28,
2004, relate to the price of our common stock prior to the Share Exchange.

      --------------------------------------------------------------------
                                                       High        Low
      --------------------------------------------------------------------
      Fiscal 2004
      --------------------------------------------------------------------
      Quarter Ended March 31, 2004                     $0.75       $0.36
      --------------------------------------------------------------------
      Quarter Ended June 30, 2004                      $0.46       $0.21
      --------------------------------------------------------------------
      Quarter Ended September 30, 2004                 $0.46       $0.14
      --------------------------------------------------------------------
      October 1, 2004 - October 27, 2004               $0.14       $0.14
      --------------------------------------------------------------------
      October 28, 2004 -  December 31, 2004            $0.71       $0.14
      --------------------------------------------------------------------
      Fiscal 2005
      --------------------------------------------------------------------
      Quarter Ended March 31, 2005                     $0.73       $0.71
      --------------------------------------------------------------------
      Quarter Ended June 30, 2005                      $0.85       $0.57
      --------------------------------------------------------------------
      Quarter Ended September 30, 2005                 $0.75       $0.64
      --------------------------------------------------------------------
      Quarter Ended December 31, 2005                  $0.79       $0.20
      --------------------------------------------------------------------
      Fiscal 2006
      --------------------------------------------------------------------
      Quarter Ended March 31, 2006                     $0.40       $0.23
      --------------------------------------------------------------------

      As of March 31, 2006, there were  approximately  490 record holders of the
common stock.  This number does not reflect  shareholders  who  beneficially own
common stock held in nominee or "street  name".  On October 13, 2005,  we paid a
6-for-1  stock  dividend in the form of a reverse  stock split to the holders of
record as of October 6, 2005.

      Recent Sales of Unregistered Securities

      On February 11, 2005,  the Company issued 35,000 shares of common stock to
each of Brian Alleman and John  Sanderson,  each a director of the Company.  The
issuance  to  these  directors  was  made  in  reliance  on  an  exemption  from
registration  under Section 4(2) of the  Securities Act of 1933, as amended (the
"Securities  Act").  Appropriate  restrictive  legends  are affixed to the stock
certificates  issued in such transactions.  No commission was paid in connection
with the issuance.

      On February 14, 2005,  the Company issued 7 shares of common stock to Doug
Marlette as  consideration  to the  resolution  of an ongoing  dispute  with the
Company and Mr. Marlette.  The issuance to this employee was made in reliance on
an  exemption  from  registration  under  Section  4(2) of the  Securities  Act.
Appropriate  restrictive legends are affixed to the stock certificates issued in
such transactions. No commission was paid in connection with the issuance.


                                       18
<PAGE>

      On April 1, 2005,  the Company issued 3,500 shares of common stock to each
of Brian  Alleman,  John  Sanderson  and Keith  Broome,  each a director  of the
Company.  The issuance to these  employees  was made in reliance on an exemption
from  registration  under  Section  4(2)  of  the  Securities  Act.  Appropriate
restrictive  legends  are  affixed  to the  stock  certificates  issued  in such
transactions. No broker commissions were paid on this issuance.

      On April 8, 2005,  the Company  issued  875,000  shares of common stock to
Keating  Reverse Merger Fund, LLC (the "KRM Fund") and Garish  Financial Inc. in
consideration  for the KRM  Fund's  agreement  to  terminate  the  anti-dilution
provisions of the Exchange Agreement, dated September 22, 2004, by and among the
Company,  KRM Fund and each signatory  thereto.  The issuance of these shares of
common  stock was made in  reliance  on an  exemption  from  registration  under
Section 4(2) of the  Securities  Act. As such, the shares of common stock issued
to the KRM Fund will be restricted  shares, and the holder thereof may not sell,
transfer or  otherwise  dispose of such shares  without  registration  under the
Securities Act or an exemption there from.  Appropriate  restrictive legends are
affixed to the stock certificates issued in such transactions.

      On April 22, 2005,  the Company  issued  12,656  shares of common stock to
Paul Michael  Geary and 5,068 shares of common stock to Steve Pearce as employee
bonuses.  These  issuances  were  made in  reliance  on the  exemption  from the
registration  under Section 4(2) of the  Securities  Act. No broker  commissions
were paid on these issuances.

      On April 22, 2005,  the Company  issued  35,000  shares of common stock to
Your Money  Television  LLC ("Your  Money") in  consideration  for Your  Money's
services for raising  investor  awareness  and  attracting  new  investors.  The
Company  believes that the issuance and sale of the restricted  shares is exempt
from registration pursuant to Section 4(2) of the Act as a privately negotiated,
isolated,  non-recurring transaction not involving any public solicitation.  The
recipient  represented its intention to acquire the restricted  shares of common
stock  for  investment  only  and not with a view to the  distribution  thereof.
Appropriate  restrictive legends are affixed to the stock certificates issued in
such transactions.

      On May 3, 2005,  the Company issued 140,000 shares of common stock to UTEK
Corporation ("UTEK"), the Company's investment banker and a strategic partner of
the company in consideration  for UTEK's services  rendered to the Company.  The
Company  believes that the issuance and sale of the restricted  shares is exempt
from registration pursuant to Section 4(2) of the Act as a privately negotiated,
isolated,  non-recurring transaction not involving any public solicitation.  The
recipients  represented its intention to acquire the restricted shares of common
stock  for  investment  only  and not with a view to the  distribution  thereof.
Appropriate  restrictive legends are affixed to the stock certificates issued in
such transactions.

      On June 1, 2005, the Company  issued  700,000  shares of common stock,  as
compensation,  to the Chief Financial Officer, Stephen Goodacre. The issuance to
Mr.  Goodacre  was made in  reliance on an  exemption  from  registration  under
Section 4(2) of the Securities Act. Appropriate  restrictive legends are affixed
to the stock  certificates  issued in such  transactions.  No broker commissions
were paid on this issuance.

      On March 15, 2006 the Company issued 44,500 shares of common stock to Paul
Michael  Geary as an employee  bonus.  This issuance was made in reliance on the
exemption from the  registration  under Section 4(2) of the  Securities  Act. No
broker commissions were paid on these issuances.

      Pending Issuances of Unregistered Securities

      On May 4, 2006 each independent director,  including Brian Alleman,  Keith
Broome and John Sanderson received 20,000 shares of our common stock pursuant to
each such director's  quarterly  share issuances  payable on October 1, 2005 and
January  1,  2005,  collectively.   These  shares  are  issuable  to  each  such
independent director in reliance on an exemption from registration under Section
4(2) of the Securities Act.  Appropriate  restrictive legends will be affixed to
each stock certificate issued in such  transactions.  No broker commissions will
be or have been paid on these  issuances.  Mr Sanderson  also received a further
33,333  shares  on May 4,  2006  that the  company  issued  after  Mr  Sanderson
resigned.

      We will also  issue  177,525  shares of our common  stock to our  investor
relations  firm and 19,725 shares of common stock to a certain  employee of such
firm, as part of our agreement with our investor  relations  firm.  These shares
are issuable in reliance on an exemption from registration under Section 4(2) of
the  Securities  Act.  Appropriate  restrictive  legends will be affixed to each
stock certificate issued in such transactions.  No broker commissions will be or
have been paid on these issuances.


                                       19
<PAGE>

      We have entered into an agreement with a US firm of Investor  Bankers.  As
part of the deal shares will be issued as follows:

      (1) 142,857 shares (which  represents  $40,000 divided by $1.18 per share)
restricted  redeemable  common  stock.  The  redeemable  common  stock  shall be
redeemable  by the  Investor  Bankers  for  $70,000 and shall be redeemed at the
closing of the first  financing  by the Company  proceeding  the signing of this
agreement;

      (2) 142,857 (which  represents  $40,000 divided by $1.18 per share) shares
of restricted common stock with piggy-back registration rights

Item 6.     Management's Discussion and Analysis.

THIS  ANNUAL  REPORT  ON  FORM  10-KSB  CONTAINS   STATEMENTS  WHICH  CONSTITUTE
FORWARD-LOOKING  STATEMENTS  WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE  "EXCHANGE  ACT").  DISCUSSION  CONTAINING
SUCH FORWARD-LOOKING STATEMENTS MAY BE FOUND IN THE MATERIAL SET FORTH BELOW AND
UNDER  "BUSINESS," AS WELL AS WITHIN THE ANNUAL REPORT  GENERALLY.  IN ADDITION,
WHEN USED IN THIS ANNUAL REPORT, THE WORDS "BELIEVES," "ANTICIPATES," "EXPECTS,"
"PLANS,"  "INTENDS,"  "SHOULD,"  "WILL" AND SIMILAR  EXPRESSIONS ARE INTENDED TO
IDENTIFY FORWARD-LOOKING  STATEMENTS.  FORWARD-LOOKING STATEMENTS AND STATEMENTS
OF  EXPECTATIONS,  PLANS  AND  INTENT  ARE  SUBJECT  TO A NUMBER  OF  RISKS  AND
UNCERTAINTIES.  ACTUAL RESULTS IN THE FUTURE COULD DIFFER  MATERIALLY FROM THOSE
DESCRIBED  IN  THE  FORWARD-LOOKING   STATEMENTS  AS  A  RESULT  OF  CHANGES  IN
TECHNOLOGY,  CUSTOMER  REQUIREMENTS AND NEEDS, AMONG OTHER FACTORS. WE UNDERTAKE
NO  OBLIGATION  TO  RELEASE  PUBLICLY  THE  RESULTS  OF ANY  REVISIONS  TO THESE
FORWARD-LOOKING  STATEMENTS  THAT MAY BE MADE TO REFLECT  ANY  FUTURE  EVENTS OR
CIRCUMSTANCES.

OVERVIEW

The Company's financial position  deteriorated further during 2005 and the first
half of 2006.  Operating  conditions in 2005 were  exceptionally  difficult with
rapidly rising raw material prices, major mechanical  breakdowns and a declining
demand in the  marketplace.  All operating  companies  posted losses in the 2005
financial  year, as they did in 2004.  The company's SG&A costs continue to be a
burden on the Company.  The Company  received funding through the Laurus Fund in
2005, in the form of a convertible note in the amount of $2,000,000,  to support
cash flow  requirements and to cover operating  losses.  In May 2006 the Company
was unable to meet interest and principal  repayments under a revised  repayment
schedule and is currently  working with the Laurus Fund to restructure the terms
of the note.  Although we have no formal notice from Laurus  advising us that we
are in default,  Laurus  management are working with us to restructure the terms
of the note,  although  there can be no assurance that we will be able to do so.
As a result of the continued  losses  creditor  pressure has increased.  We have
been formally advised by a former supplier that they intend to take legal action
to recover their debt, which could lead to a bankruptcy proceeding.  We will try
to  negotiate  with this  creditor and hope to reach  agreement  with respect to
repayment over an extended  timeframe.  In addition,  several of our current raw
material  vendors are refusing to grant us  additional  credit and are requiring
payment  for  material  in advance,  plus  repayment  of a portion of the unpaid
balances owed. We are working with an Investment  Bank and private  investors to
provide additional capital,  which could involve significant dilution to current
shareholders  or the  possible  sale of assets.  While we do not have any formal
agreements,  we have signed  non-disclosure  agreements  with four  parties with
respect  to  possible  sale  of one or  more  of our  operating  companies.  The
Company's key intellectual  property, in particular Ticalium, is showing promise
but is at present a cost center and is not generating any revenue.  We expect to
restructure the group in 2006 and expect the group to report losses for the full
year of 2006.

We  manufacture  diverse  extruded  aluminum  products,   providing  value-added
services for the  architectural,  construction,  automotive,  medical,  defense,
transportation,  and HVAC industries.  Our principal subsidiaries are Adal Seco,
Adal Engineering,  and Adal Guilform.  Our worldwide  headquarters is located in
New York City, and our manufacturing facilities for Adal Seco, Adal Engineering,
and Adal Guilform are all currently  located in the United  Kingdom,  in Witham,
Essex and St. Albans, Hertfordshire.

We are  primarily  engaged in providing  manufacturing,  fabricating,  precision
machining,  and product  design  services.  We believe Adal Seco to be the fifth
largest  extruder in the United  Kingdom,  with  approximately  4% market share,
based  on  industry  data  published  by  the  Aluminum  Federation.  Adal  Seco
differentiates  itself from the other large United  Kingdom  extruders and lower
cost  importers  by offering  customers  low volume  production  orders and fast
turnaround  services.  Adal Seco typically produces and ships customer orders in
less than 30 days.

The United Kingdom aluminum extrusion industry has seen the impact of lower cost
imports  from  China and India.  Based on  information  published  by the United
Kingdom Aluminum  Federation,  there has been a 13% overall decrease in the tons
of aluminum  extruded in the United Kingdom in 2006.  Adal Seco has  experienced
approximately  only a one percent  decline in demand for extrusions  compared to
our competitors who have experienced more significant  declines. We believe that
our  strategy  of  providing  customers  with the option to place  lower  volume
orders,  with  shorter  lead times,  has  protected  our sales in 2005.  We also
acknowledge  that we were unable to apply raw  material  cost  increases  to our
customers  as timely as we would have  liked.  We believe  that this rise in raw
material costs equally impacted our competitors.

We believe  our  diversification  into  precision  machining  and  architectural
products  positions us well for future  growth.  We sell to customers in several
industries,  thereby  mitigating  our  risks to a  particular  industry.  In the
future,  we plan to enhance our margins by investing  in plant and  machinery to
improve quality, efficiency, and service levels. Seeking to expand our precision
engineering  business,  we hired another salesperson to explore opportunities in
the medical and construction  industries.  In addition, we have trained our Adal
Seco sales force to sell Adal  Engineering's  capabilities and have won some new
business through this route.


                                       20
<PAGE>

In the first quarter of 2005, we diversified into the architectural  market when
we acquired  Guilform Holdings Limited,  and its wholly-owned  subsidiary,  Adal
Guilform,  previously known as Guilform Limited.  This acquisition was the first
step in building our  Architectural  Division.  In the third quarter of 2005, we
expanded  the  Architectural  Division  by  acquiring a start-up  company,  Adal
Structures.  Adal  Structures  served  as a  construction  contractor  providing
complete  building  facades.  In the fourth quarter of 2005, we  concentrated on
further building the  Architectural  Division and improving its productivity and
efficiency.  We have  decided  to focus on the  fabrication  and  design  in the
division and not to provide the complete service.

We will  focus on  organic  growth  in the  United  Kingdom  from  our  existing
businesses and possible  future  acquisitions of United Kingdom or United States
based businesses that complement or enhance our current businesses. We also hope
to receive  future  revenue  growth  from new and  innovative  products  such as
TicaliumTM,  a new  composite  material  developed  by Adal  Seco and  strategic
partners.  Ticalium  combines  aluminum  with  titanium  and carbon to produce a
super-hard  extrusion that is designed to increase the strength,  hardness,  and
wear resistance of aluminum.  Ticalium has been  identified as having  potential
uses in many different  areas such as the  automotive  industry for brake discs,
drums and callipers,  train wheels,  tire studs,  and  snowmobiles.  In 2005, we
filed a patent for the sole rights to use Ticalium to which we were  entitled as
the lead developer.

Critical Accounting Policies and Estimates

This  discussion  and  analysis  of  our  financial  condition  and  results  of
operations  is based on our  consolidated  financial  statements  that have been
prepared under accounting  principles  generally  accepted in the United States.
The  preparation  of  financial  statements  requires  our  management  to  make
estimates  and  assumptions  that  affect  the  reported  amount of  assets  and
liabilities at the date of the financial  statements and the reported amounts of
revenue  and  expenses  during  the  reporting  periods.  Actual  results  could
materially  differ  from those  estimates.  We have  disclosed  all  significant
accounting policies in Note 1 to the consolidated  financial statements included
in this Annual Report on Form 10-KSB. The consolidated  financial statements and
the related  notes  thereto  should be read in  conjunction  with the  following
discussion of our critical accounting policies. Critical accounting policies and
estimates include but are not limited by the following:

o     Revenue Recognition

o     Accounting for Long-Lived Assets

o     Impairment of Long-Lived Assets

Revenue Recognition

Revenue  recognition  rules are very complex,  and certain  judgments affect the
application  of our  revenue  policy.  The amount  and timing of our  revenue is
difficult  to  predict,  and any  shortfall  in revenue or delay in  recognizing
revenue could cause our operating results to vary  significantly from quarter to
quarter. Adal recognizes revenue when title, ownership, and risk of loss pass to
the customer,  in accordance  with the provisions of Staff  Accounting  Bulletin
101, "Revenue Recognition in Financial Statements."

Accounting for Long-Lived Assets

We state our property and equipment at acquisition cost and compute depreciation
for book purposes by the straight-line method over estimated useful lives of the
assets.  In  accordance  with SFAS No. 144,  "Accounting  for the  Impairment or
Disposal of Long-Lived  Assets,"  long-lived  assets are reviewed for impairment
whenever events or changes in circumstances  indicate the carrying amount of the
asset may not be  recoverable.  Recoverability  of assets to be held and used is
measured by  comparison  of the  carrying  amount of an asset to the future cash
flows expected to be generated by the asset. If the carrying amount of the asset
exceeds its estimated  future cash flows, an impairment  charge is recognized to
the extent the carrying amount of the asset exceeds the fair value of the asset.
These computations are complex and subjective.


                                       21
<PAGE>

Impairment of Long-Lived Assets

In assessing the  recoverability  of our  intangibles,  we must make assumptions
regarding  estimated  future cash flows and other  factors to determine the fair
value of the respective  assets.  If the fair value of the  intangible  asset is
less than its carrying value, an impairment loss will be recognized in an amount
equal to the difference.  If these estimates or their related assumptions change
in the future, we may be required to record impairment charges for these assets.

Recently Issued Accounting Standards

In May 2005,  the FASB issued SFAS No.  154,  "Accounting  for Changes and Error
Corrections--a Replacement of APB Opinion No. 20 and FASB Statement No. 3" (SFAS
154).  SFAS 154  requires  retrospective  application  of  voluntary  changes in
accounting principles, unless impracticable. SFAS 154 supersedes the guidance in
APB Opinion No. 20 and SFAS No. 3, but does not change any transition provisions
of existing  pronouncements.  Generally,  elective  accounting  changes  will no
longer  result in a cumulative  effect of a change in  accounting  in the income
statement,  because the effects of any  elective  changes  will be  reflected as
prior period  adjustments to all periods  presented.  SFAS 154 will be effective
beginning in 2006 and will affect any  accounting  changes that we elect to make
thereafter.

In March 2005, the FASB Interpretation No. 47, "Accounting for Conditional Asset
Retirement  Obligations and  interpretation of FASB Statement No. 143" (FIN 47).
FIN  47  clarifies  that  conditional  asset  retirement  obligations  meet  the
definition of liabilities  and should be recognized  when incurred if their fair
values can be reasonably estimated.  The cumulative effect of initially applying
FIN 47 would  be  recognized  as a change  in  accounting  principle.  FIN 47 is
effective no later than the end of fiscal years ending after  December 15, 2005.
Adoption of FIN 47 is not  expected to have a material  impact on our  financial
condition or results of operations.

In June 2005,  the EITF reached  consensus on Issue No.  05-6,  Determining  the
Amortization  Period for  Leasehold  Improvements,  and (EITF  05-6).  EITF 05-6
provides   guidance  on  determining  the  amortization   period  for  leasehold
improvements  acquired in a business combination or acquired subsequent to lease
inception.  The  guidance  on EITF 05-6  will be  applied  prospectively  and is
effective for periods  after June 29, 2005.  EITF 05-6 is not expected to have a
material impact on our consolidated financial statements.

In February 2006, FASB issued FASB 155,  Accounting for Certain Hybrid Financial
Instruments an amendment to FASB 133, Accounting for Derivative  Instruments and
Hedging  Activities,  and FASB 140,  Accounting  for  Transfers and Servicing of
Financial  Assets and  Extinguishments  of Liabilities.  FASB 155,  provides the
framework for fair value  remeasurement of any hybrid financial  instrument that
contains an embedded derivative that otherwise would require bifurcation as well
as  establishes a requirement  to evaluate  interests in  securitized  financial
assets to identify interests.  FASB 155 further amends FASB 140 to eliminate the
prohibition  on a  qualifying  special-purpose  entity from holding a derivative
financial  instrument that pertains to a beneficial  interest other than another
derivative  financial  instrument.  The FASB 155 guidance also  clarifies  which
interest-only   strips  and  principal-only   strips  are  not  subject  to  the
requirement  of FASB  133  and  concentrations  of  credit  risk in the  form of
subordination are not embedded derivatives.  This statement is effective for all
financial  instruments  acquired or issued  after the  beginning  of an entity's
first fiscal year that begins after September 15, 2006. FASB 155 is not expected
to have a material impact on our consolidated financial statements.

In March 2006,  FASB issued FASB 156,  Accounting  for  Servicing  of  Financial
Assets--an   amendment  of  FASB  Statement  No.  140.  FASB  156  requires  the
recognition  of  a  servicing   asset  or  servicing   liability  under  certain
circumstances when an obligation to service a financial asset by entering into a
servicing contract.  FASB 156 also requires all separately  recognized servicing
assets  and  servicing  liabilities  to be  initially  measured  at  fair  value
utilizing  the  amortization  method or fair market  value  method.  FASB 156 is
effective the beginning of the first fiscal year that begins after September 15,
2006.  FASB 156 is not  expected to have a material  impact on our  consolidated
financial statements.

For  further  information  concerning  accounting  policies,  refer to Note 4 of
consolidated financial statements.

Results of Operations

When evaluating the financial and operating results,  management views Adal Seco
and  Adal  Engineering  as a  single  business  segment.  These  businesses  are
principally involved in extruding aluminum and providing additional finishing to
such extrusions. The Architectural businesses,  Adal Guilform and Structures are
also aluminum based  businesses but most of their raw material is aluminum sheet
as opposed to extrusions.


                                       22
<PAGE>

When reviewing the results of the  operations  compared to the prior year, it is
important to consider the evolution of the Company.  The year ended December 31,
2004  include a full year for Adal  Seco,  eleven  months  for Adal  Engineering
(acquired  January 30,  2004),  and do not include the results of Adal  Guilform
(acquired on February 7, 2005) and only  reflects the start up of our  corporate
office and the very  beginnings  of our corporate  infrastructure,  and does not
include the costs  associated  with being a US public  company which occurred on
October 28, 2004. 2005 includes a full year for Adal Seco, Adal Engineering, our
corporate  office and costs  associated with being a public company and includes
eleven months of Adal Guilform and six months of Adal Structures.

YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

Revenues.  For the year ended December 31, 2005, our consolidated  revenues were
$33,519,000  compared to $29,228,000 for the comparable 2004 period, an increase
of  $4,291,000  or (17%).  The increase is due to revenues from Adal Guilform of
$3,162,000,  revenues from Adal Structures of $372,000,  incremental increase in
revenues from Adal  Engineering of $449,000  (mainly due to the additional month
of operation as a consolidated  business in 2005 compared to 2004), and revenues
from Adal Seco of  $537,000,  which were mainly due to a slight  increase in the
average  selling  price and a decrease of  $228,000  from  unfavorable  exchange
rates.

Based on published industry data from the Aluminium Federation,  we believe that
the aluminum extrusion  production in the United Kingdom has suffered a downturn
of 10% in the year,  thus Adal Seco  appears to be achieving  revenue  growth in
excess of its  market in  general  by  concentrating  sales to more  specialized
markets.

Cost of  Goods  Sold.  Cost of  goods  sold as a  percentage  of  sales  was 98%
($32,831,000) for the year ended December 31, 2005 and 95% ($27,897,000) for the
same period in 2004.

The  increase  in the cost of goods  sold in the amount of  $217,000  was due to
exchange rate differences. The remaining increase in the amount of $4,934,000 is
largely due to the increased raw material costs..  In line with our competition,
we have started  increasing the selling price of the products towards the end of
2005.  Our cost  reduction  plans and price  increases  are beginning to have an
impact, but the price of aluminum has continued to rise through 2006.

Adal Seco's cost of goods sold was 97% ($24,397,000) for the year ended December
31, 2005 compared to 96% ($23,653,000) for the year ended December 31, 2004. Raw
material  costs were 58% of sales for the year ended  December  31, 2005 and 52%
for the year ended December 31, 2004. Adal Seco's increased cost of sales is due
to not passing on the raw material  price  increases to its customers  until the
end of the year and two exceptional  mechanical breakdowns including (a) a delay
in the  installation  of a new roll out table which caused two weeks downtime on
one press and (b) two weeks of  downtime  due to the failure of a pump which the
replacement had to come from the United States. This resulted in the significant
payroll expenses in overtime to make up the lost production time.

Adal Engineering's cost of goods sold was 91% ($4,641,000) of sales for the year
ended December 31, 2005 compared to 87% ($4,046,000) for the year ended December
31, 2004. In the last quarter of 2005 and the first quarter of 2006,  management
has been increasing prices to customers.

Adal  Guilform's  cost of goods  sold was 112%  ($3,550,000)  for the year ended
December  31,  2005.  The high  cost of goods  sold is due to the  start of Adal
Structures and Guilform positioning itself within the market place.

Adal  Structures  cost of  goods  sold was 106%  ($394,000)  for the year  ended
December 31, 2005. The costs of goods sold were high at Adal  Structures and was
one factor in management's decision not to offer a full construction service.

Selling,  General &  Administrative  Expenses.  For the year ended  December 31,
2005,  selling,  general and  administrative  costs were $4,690,000  compared to
$2,783,000  for the year ended  December  31,  2004.  The  increase in SG&A is a
result of an increase in SG&A at Adal Seco by $1,442,000 from $1,312,000 for the
year ended December 31, 2004 to $2,755,000 for the year ended December 31, 2005.
Additionally,  the increase is due to the inclusion of Adal Guilform's SG&A. For
the eleven months from the  acquisition  of Adal Guilform  through  December 31,
2005,  Adal  Guilform's SG&A was $121,000 and we did not include this expense in
our 2004  operating  results.  An  increase in the SG&A at Adal  Engineering  of
$77,000 due to one extra month in the period and  changes in the  management  of
Adal Engineering.


                                       23
<PAGE>

The remaining increase in SG&A is due to the following:

      a.  The  costs  associated  with  being  a  US  public  company,  $214,000
($1,030,000  in the year ended  December 31,  2005,  compared to $816,000 in the
same  period  of  2004).  The  additional  costs  were  largely  due to  issuing
non-recurring shares to our Investment Banker, UTEK a strategic partner and Your
Money TV. UTEK has the rights to many innovative patents that the Adal Group may
wish to use to  increase  sales.  Your Money TV is being used to raise  investor
awareness of Adal Group Inc. The additional increase was due to higher legal and
accounting  fees in the period  ended  December  31,  2005  compared to the same
period in 2004;

      b. The  expenses  associated  with  running  the group  corporate  office,
$313,000  ($1,063,000  for the year ended December 31, 2005 compared to $750,000
in the same period of 2004) and costs associated with the appointment of a chief
financial officer.  The SG&A expenses,  also included shares issued to employees
totaling $101,000;

      c. The effect of exchange rates, which reduced SG&A by $39,000.

Interest  Expense.  Interest  expense for the year ended  December  31, 2005 was
$1,292,000  compared to  $651,000  for the year ended  December  31,  2004.  The
increase of  $633,000  was due to: (a)  increases  in short term  borrowings  of
$112,000 at Adal Sec;  (b)  additional  debt of  $222,000,  associated  with the
acquisition of Adal Guilform;  (c) additional  debt of $59,000,  associated with
the  development  of the  Witham  site  and the  building  of new  manufacturing
facilities  on that site;  (d) the  interest  from the  additional  financing of
$231,000 and foreign exchange differences which reduced the interest by $9,000.

Net Loss.  For the year ended  December 31, 2005, the net loss was $6,059,000 or
$0.30 per share, compared to net loss of $2,294,000,  or $0.02 per share for the
year ended  December 31, 2004.  The net loss reflects the effects of the revenue
and expense items discussed above.

Liquidity and Capital Resources

The group  received  funding  through  the Laurus fund in 2005,  $2,000,000,  to
support cash flow  requirements  and to cover  trading  losses.  In May 2006 the
group were unable to meet  interest  and  principal  repayments  under a revised
repayment  schedule and are working with the Laurus fund to restructure the loan
again. Although we have no formal notice from Laurus advising us that we are in
default,  Laurus  management are working with us to restructure the terms of the
note,  although  there can be no assurance that we will be able to do so. We are
working  with an  Investment  Bank and private  investors to improve the capital
structure  of  the  company  and  we  are  considering  disposing  of  operating
companies.  We have signed  non-disclosure  agreements  with four  parties  with
respect to disposing of operating companies;  we have no formal letter of intent
or sale agreements as yet.

Our total assets at December 31, 2005 were  $19,672,000,  which was comprised of
$8,419,000 of property, plant and equipment,  accounts receivable of $7,344,000,
inventory of  $2,075,000,  cash and cash  equivalents  of $493,000,  $779,000 of
intangible  assets  (capitalized  customer list from Adal  Engineering  and Adal
Guilform acquisitions), $466,000 of prepaid expenses and $58,000 of deferred tax
asset of $37,000.

As of December 31, 2005, our current  liabilities were $16,134,000.  The Company
has long-term  debt of  $9,740,000  which is made up of a mortgage on the Witham
property of  $4,259,000,  a mortgage on the St. Albans  property of  $1,683,000,
leases raised against plant and machinery of 1,368,000, loans from two directors
of $258,000, loans from Laurus Master Fund, Ltd. of $2,118,000. The Company must
repay  $696,000 of the long term debt  within one year and thus this  portion is
treated as current liabilities.

The other current liabilities are:

      o     $6,708,000 of borrowings secured against the accounts  receivable of
            the  operating   entities  Adal  Seco,  Adal  Engineering  and  Adal
            Guilform.

      o     $6,011,000 accounts payable

      o     $1,461,000 of accrued expenses

      o     $1,468,000 of payroll and sales taxes


                                       24
<PAGE>

Adal Engineering has a deferred income tax liability of $55,000.

The main movements in the cash flow are:

      o     An  increase  in the  accounts  receivable  $1,311,000  which is due
            partly to  increased  revenues in the year ended  December  31, 2005
            compared  to  the  same  period  in  2004  but  mainly  due  to  the
            acquisition  of Adal Guilform  where the accounts  receivable at the
            year end were $663,000

      o     An increase in the tangible  assets  $3,031,000 of which  $2,709,000
            relates to the acquisition of Adal Guilform

      o     An increase in short term  borrowings of $883,000 of which  $665.000
            relates to the purchase of Adal Guilform

      o     An  increase  in taxes on income  and sales of $1,019  partly due to
            higher  sales  values  and  $258,000  due to the  purchase  of  Adal
            Guilform.

The accumulated deficit as of December 31, 2005 was $5,507,000.  At December 31,
2005, we had a working capital deficit of $5,660,000. The company incurred a net
loss for year ending December 31, 2005 of $5,266,000.  Management  believes that
the  loss is due to the:  (a)  exceptional  market  conditions  in the  aluminum
extrusion industry, rapidly increasing raw material costs and the fall of 10% to
15% in UK domestic extrusion  production;  (b) costs associated with moving Adal
Engineering  to a  new  site;  (c)  costs  associated  with  integrating  a  new
subsidiary  and the marketing and  development  of that  Division;  (d) interest
costs associated with  acquisitions and funding in connection with Laurus Master
Fund, Ltd.; and (e) the costs associated with being a US public company.

As of December 31, 2005, the Company  consolidated its short term bank debt with
a single  major UK bank.  All short term bank debt is  secured  by our  accounts
receivable and finished goods inventory.  As of December 31, 2005, we had credit
available of approximately $ 486,000 under our revolving bank lines.

The company owns freehold land and  buildings,  held on asset  register at cost,
with a market value of $8,164,000.  The company has fifteen year mortgages,  75%
loan to  market  value,  which is major  component  of our  long  term  debt and
represents $5,942,000 as of December 31, 2005. This loan is secured by a lien on
the land and buildings.  The Company is in compliance  with the covenants on the
mortgages.

Our  machinery  and  equipment  loans  are  secured  by a lien  on the  specific
machinery and equipment financed.

Deferred  consideration  from the Guilform Holdings  acquisition of $363,000 was
due to be paid on February 7, 2006.  However,  with Keith Broome's  consent,  we
delayed this payment until the company obtains cash from a capital raise.  There
are no penalties  associated with late payment, but interest continues to accrue
at 6% pa on the principal of $344,000.

The Company  entered loan  agreements  with Laurus  Master  Fund,  Ltd. in 2005,
pursuant to which,  on June 29,  2005,  Laurus  advanced  $1,500,000  (the "June
Note") and, on November 22, 2005,  Laurus advanced $500,000 (the "November Note"
and, collectively,  the "Notes"). The Notes were for $2,000,000 with funds to be
advanced for specific  events in the Company's  business plan. The June Note was
intended to be an equity convertible loan. Due to various complications with the
structure  of the June Note,  we are in the  process of  restructuring  the June
Note.  Additionally,  pursuant to the June Note,  the Company  granted Laurus an
option,  exercisable  upon  completion of the June loan.  Laurus  exercised this
option in June 2005,  immediately  after  funding  the loan,  and,  as a result,
currently owns 1,051,610 shares of common stock.

The June Note is secured by a lien on certain  of our  assets,  pursuant  to the
terms of the Master  Security  Agreement  executed by us. If an event of default
occurs under the Master Security Agreement or the June Note, Laurus Master Fund,
Ltd. has the right to accelerate  payments  under the June Note and, in addition
to any other remedies  available to it,  foreclose upon the assets  securing the
June Note.  The documents  executed in connection  with the issuance of the June
Note and such financing  contain certain  restrictions  regarding our operations
while the June Note remains outstanding. Such restrictions include our agreement
that,  except  with  Laurus'  prior  written  consent  (such  consent  not to be
unreasonably  withheld), we will not issue certain classes of debt securities or
equity  securities.  In  addition,  so  long  as 25% of the  June  Note  remains
outstanding,  the Securities Purchase Agreement,  among other things, prohibits,
except with Laurus'  prior  written  consent:  (i) our payment of dividends or a
redemption of our shares of common stock,  (ii) the issuance of preferred  stock
that is manditorily  redeemable  prior to June 29, 2009, and (iii) the incurring
of additional  debt in excess of $3,000,000,  or any refinancing or replacements
thereof on terms no less favorable  than the  indebtedness  being  refinanced or
replaced,  so long as any lien  relating  thereto  shall only encumber the fixed
assets  so  purchased  and no  other  assets  of ours or our  subsidiaries.  The
presence of the Notes and the associated security arrangements raise substantial
doubt about the Company's ability to raise further financing.


                                       25
<PAGE>

We have not paid our principal and interest to the Laurus fund in May 2006,  our
payments were current prior to May 2006,and we have discussed this with them and
are working to further restructure our agreement.

Two of our directors,  Charles Howe and Nicolas  Shrager,  each lent $129,000 to
the  company,  in the form of  unsecured  loans in May  2005.  The loans are not
repayable  until the Company has  positive  cash flows.  The loans are  accruing
interest at the rate of 6% per annum.

The accompanying financial statements do not include any adjustments relating to
the  recoverability  and  classification  of recorded assets, or the amounts and
classification  of liabilities  that might be necessary in the event the Company
cannot continue in existence.

Our Architectural Division is going through a restructure and is not expected to
become  profitable  until the second half of 2006.  The Company  continues to be
burdened by the costs of being a public company.

If the Company does not raise  sufficient  additional  equity capital to provide
positive  working capital and is unable to return to  profitability  in the near
term, it may be required to curtail future operations and/or liquidate assets or
enter into credit arrangements on less favorable terms than.

Capital Expenditures

Adal Seco has implemented  improvements to its production facilities in the past
year. Through process enhancements and equipment upgrades,  Adal Seco expects to
increase the volume and quality of its  production  output and reduce the volume
of scrap materials. In particular,  in 2005, Adal Seco implemented the following
enhancements to its presses:

      o     Added a puller to one of the larger  presses,  reducing  the current
            amount of scrap made during production. We completed installation in
            January  2005 at a cost of  $150,000,  which was  funded  through an
            asset finance loan.

      o     Replaced the existing heating elements on one press. By installing a
            new  state-of-the-art  heating element,  we reduced the downtime for
            heating   element   repair  by   approximately   80%.  We  completed
            installation in January 2005 at a cost of $30,000,  which was funded
            from working capital.

      o     Added a  complete  new  handling  system  for one of the seven  inch
            presses. This new handling system, known as a run table,  transports
            extruded aluminum from the press to the cutting stations.  The table
            has improved the quality of the  extrusions  and thereby  opened new
            market  opportunities.  We completed  installation in June 2005 at a
            cost of $350,000, which was funded through an asset finance loan.


                                       26
<PAGE>

Adal Seco is  planning  the  following  enhancements  to its presses in the near
future:

      o     Adding another  cutting station to the extrusion line to eliminate a
            bottleneck  created by the production of extruded raw product faster
            than the  cutting  station  can cut metal.  The  addition of another
            cutting  station will reduce costs related to production  delays and
            labor  (overtime).  The estimated cost of the new cutting station is
            approximately $100,000, which we plan to fund through equity capital
            investment.

      o     Adding a puller,  new heating  elements and a new handling system to
            the other large press. This requires an investment of some $350,000,
            which we plan to fund through an equity investment in 2006.

      o     Installing  post-press materials handling and packing systems.  This
            requires  an  investment  in excess of $550,000 is planned for 2007,
            and the funding source has not yet been decided.

To  support  its  anticipated   expansion  into  the  medical  and  construction
industries,  Adal Engineering plans to invest in additional  automated equipment
and advance technological  operations.  In this regard, Adal Engineering intends
to purchase two fully automated machining centers, upgrade existing machinery to
semi- and full-automation and adopt lean process practices that reduce waste.

Adal  Structures  was a start up  company  that was set up to  improve  building
quality  and  increase  business  opportunities.  We have  entered  an  informal
agreement with Shucco  providing us with preferred  finisher status and a credit
limit of approximately  $300,000.  Shucco produces  curtain walling,  structures
that support the glass on the  exterior of  buildings.  Adal  Guilform is on the
preferred  finishers list for Shucco  extrusions,  meaning that Adal Guilform is
identified  as an  authorized  supplier.  Adal  Structures  completed  the first
construction project in December but has decided not to proceed with providing a
full service for the  construction  industry but to focus on the  fabrication of
panels for the  construction  industry.  Adal Structures will continue until the
retentions are paid on the completed project.

Off Balance Sheet Arrangements

The Company does not have any off balance sheet financing  arrangements  and has
not established any special purpose entities.

Item 7.     Financial Statements.

      The  information  required by Item 7 appears after the  signature  page to
this report.


                                       27
<PAGE>

Item 8.     Changes in and  Disagreements  with  Accountants  on Accounting  and
            Financial Disclosure.

None.

Item 8A.    Controls and Procedures.

      Under  the  supervision  and  with  the  participation  of  the  Company's
management,  including  our Chief  Executive  Officer  and the  Chief  Financial
Officer,  the Company conducted an evaluation of the effectiveness of the design
and operation of its  disclosure  controls and  procedures,  as defined in Rules
13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of 1934, as amended,
as of the end of the period  covered by this  report  (the  "Evaluation  Date").
Based on this  evaluation,  our Chief Executive  Officer and the Chief Financial
Officer  concluded  as of the  Evaluation  Date  that the  Company's  disclosure
controls  and  procedures  were  effective  such that the  material  information
required to be included in our  Securities  and Exchange  Commission  reports is
recorded,  processed,  summarized and reported within the time periods specified
in Securities and Exchange Commission's rules and forms relating to the Company,
including our consolidating  subsidiaries,  and was made known to them by others
within those entities, particularly during the period when this report was being
prepared.

Item 8B.    Other Information.

None.


                                       28
<PAGE>

                                    PART III

Item 9.     Directors,   Executive  Officers,  Promoters  And  Control  Persons,
            Compliance With Section 16(A) Of The Exchange Act.

      Set forth below are the names of our directors,  executive  officers,  and
key employees as of December 31, 2005:

<TABLE>
<CAPTION>
Name                     Age         Position                                Date of Appointment
----                     ---         --------                                -------------------
<S>                      <C>         <C>                                     <C>
Nicholas A. Shrager      58          Chairman, Chief Executive Officer,      October 28, 2004
                                     President and Director

Stephen B. Goodacre      49          Chief Financial Officer and Director    June 1, 2005

Charles K. Howe          71          Executive Vice President, Secretary     October 28, 2004
                                     and Director

Brian Alleman (1)        48          Director                                January 18, 2005

John Sanderson (2)       60          Director                                January 18, 2005

Keith Broome             57          Director                                February 7, 2005
</TABLE>

      (1)   Denotes a member of our Audit Committee.

      (2)   Resigned from the Board of Directors, effective as of March 1, 2006.

      Our  directors  are  elected at our annual  meeting to serve for one year,
until our next annual meeting or until their  successors  have been duly elected
and have qualified.  There are no family  relationships  between any director or
executive officer and any other director or executive officer.

      The  following is a brief  description  of each  director's  and executive
officer's business experience:

      Nicholas A. Shrager is our Chairman,  Chief Executive  Officer,  President
and  Director.  Mr.  Shrager was a  co-founder  and  director of Adal Group (UK)
Limited,  formerly Advanced  Aluminium Group Limited,  in 2003, serving as Chief
Executive Director of the company and each of its subsidiaries since October 28,
2004. He has served as Non-Executive  Chairman of Riverside  Business  Solutions
Ltd.,  a  consulting  firm,  since 1999.  From 1994 to 1999,  Mr.  Shrager was a
consultant with Riverside Management  Consultants Limited,  assisting clients in
the areas of corporate strategy, acquisitions, and marketing. From 1991 to 1994,
Mr. Shrager was a Director of Old Nick's, a liquor and beer retailers. From 1987
until its sale in 1991,  Mr.  Shrager served as Chairman of The Shrager Group, a
timber  business  in the  United  Kingdom.  Mr.  Shrager  received  an MBA  from
Southbank University in London where he specialized in international marketing.

      Stephen B.  Goodacre  is our Chief  Financial  Officer and  Director.  Mr.
Goodacre was appointed Chief  Financial  Officer on October 28, 2004. From April
2002 until May 2005, Mr. Goodacre was employed,  as a consultant,  by Blackwater
Consulting Ltd., a financial recruitment and consultancy business.  Mr. Goodacre
was employed by Lehman  Brothers Inc. from January 1990 to March 2002,  where he
held various positions  including Head of International  Management  Accounting,
Finance & Operations,  Director of Lehman's Global Equity Derivatives  operation
and Head of European  Expense  Management.  Lehman promoted Mr. Goodacre to Vice
President in 1994 and Senior Vice President in 2000. Prior to joining Lehman, he
spent seven years with Philip  Morris,  serving  last as UK  Financial  Planning
Manager.


                                       29
<PAGE>

      Charles K. Howe is our Executive Vice  President,  Secretary and Director.
Mr.  Howe  was one of the  co-founders  of Adal  Group  (UK)  Limited,  formerly
Advanced Aluminium Group Limited, in 2003. Since 1985 and continuing through and
including the present date, he is a director of CH Resources Limited, a business
consultancy,  through which he holds and has held  directorships  in a number of
private  manufacturing  companies.  From 1971 to 1985, he was a board member and
then Chief  Executive  Officer of Crystalate  Holdings plc, a UK public  company
primarily  engaged in the  production  of plastic  molding  and the  business of
acoustic and electronic components, particularly for the telephone industry.

      Brian Alleman is on our Board of Directors. Since August 2002, Mr. Alleman
has been a partner with Tatum CFO Partners  LLP, a national  partnership  of 400
career CFO's which provides accounting and financial services to clients through
advisory or employment  relationships.  In this capacity,  Mr. Alleman served as
Chief Financial Officer of Polar Molecular Holding  Corporation,  a developer of
fuel additives,  from August 2003 to August 2004. From 1989 to July 2002, he was
employed by TCW Capital,  a private equity firm. Through his connection with TCW
Capital,  Mr.  Alleman  served  from April 1993 to June 2002 as Chief  Financial
Officer of Centuri Corporation, a leading U.S. manufacturer of model rockets and
small gas  powered and  electric  radio  controlled  airplanes,  becoming  Chief
Operating  Officer in August 2000. Mr. Alleman  received an B.A. from Seton Hall
University in Accounting.

      John Sanderson was on our Board of Directors from January 18, 2005 through
March 1, 2006. Mr.  Sanderson has been retired as the managing  director of Legg
Mason Limited, London, which he established in 1995, as the London subsidiary of
Legg Mason (NYSE: LM), an investment banking firm based in Baltimore,  Maryland.
After  retirement and until recently,  Mr.  Sanderson  served as a consultant to
Legg Mason  Limited,  London.  From 1967 until 1995,  Mr.  Sanderson  worked for
Kidder Peabody & Co. (and  associated  firms) in London,  where, in 1988, he was
appointed managing director and Head of Equities in London,  responsible for the
United  Kingdom,  the  Middle  East,  and  Scandinavia.  He was also a member of
Kidder,  Peabody's  management  counsel  and  chaired  its  European  management
committee. Mr. Sanderson resigned from the Board of Directors on March 1, 2006.

      Keith Broome,  from 1977 until February 2005, was managing director of the
companies that were part of Guilform Holdings Limited,  which were all companies
involved in the  manufacturing  of aluminum  products.  On January 8, 2002,  GFM
Realisations Ltd. (f/k/a Guilform Limited),  a corporation formed under the laws
of England  and Wales  ("GFM"),  went into  receivership,  a process  similar to
Chapter 11 in the United States, and subsequently liquidated. Mr. Broome was the
managing  director  of GFM from its  incorporation  until the  appointment  of a
receiver. GFM was in the business of manufacturing aluminum products. On January
9, 2004, Law Link (Legal Expenses) Ltd., a corporation  formed under the laws of
England  and Wales  ("Law  Link"),  went into  receivership.  Mr.  Broome  was a
guarantor  on a loan  received by Law Link from a local bank and, at the request
of the bank, acted as a director and secretary of the Law Link.

Audit Committee of the Board of Directors

      The Audit Committee operates under a formal charter in accordance with all
applicable  laws. The charter was approved and adopted by our board of directors
on February 23, 2005 and will be reviewed and  reassessed  annually by the Audit
Committee. The charter sets forth the responsibilities,  authority, and specific
duties of the Audit Committee.  The charter  specifies,  among other things, the
structure and membership  requirements  of the Audit  Committee,  as well as the
relationship  of the Audit Committee to the Company's  independent  auditors and
our management.

      As of December 31, 2005,  the members of the Audit  Committee were Messrs.
Brian  Alleman  and John  Sanderson.  Both  Messr.  Alleman  and  Sanderson  are
independent as defined in the NASDAQ Marketplace  listing standards currently in
effect and neither Messr.  Alleman nor Messr.  Sanderson is a current officer or
employee of our Company or any of our affiliates.  However, as of March 1, 2006,
John Sanderson resigned from the Board of Directors and therefore Mr. Alleman is
the only remaining member of our Audit Committee.  The Board has determined that
Brian Alleman, Chairman of the Audit Committee, qualifies as an "audit committee
financial expert" under the Securities and Exchange Commission's definition.

Compliance with Section 16(a) of Exchange Act

      Based on the Company's  review of Forms 3, 4 and 5 and amendments to these
forms  filed  with  the   Securities   and   Exchange   Commission   or  written
representations  from certain reporting  persons,  we believe that during fiscal
year 2005, all parties subject to the reporting requirements of Section 16(a) of
the Exchange Act filed all such required  reports during and with respect to the
fiscal year ended December 31, 2005.


                                       30
<PAGE>

Code of Ethics

      On February  23, 2005,  the Board of Directors  adopted a Code of Business
Conduct and Ethics to promote its commitment to the legal and ethical conduct of
the Company's  business.  The Chief Executive Officer,  Chief Financial Officer,
and other senior officers are required to abide by the Code of Business  Conduct
and Ethics,  which provides the  foundation  for  compliance  with all corporate
policies  and  procedures,   and  best  business  practices.  The  policies  and
procedures  address  a  wide  array  of  professional  conduct,   including  the
establishment of sound employment  policies,  methods for avoiding and resolving
conflicts   of  interest,   safeguarding   intellectual   property,   protecting
confidential  information,  and a strict  adherence to all laws and  regulations
applicable  to the conduct of the  Company's  business.  The Company  intends to
satisfy  its  obligations,  imposed  under the  Sarbanes-Oxley  Act, to disclose
promptly on the Company's  website  amendments  to, or waivers from, the Code of
Business Conduct and Ethics, if any.


                                       31
<PAGE>

Item 10.    Executive Compensation.

      The following table sets forth all cash compensation paid or to be paid by
the Company, as well as certain other compensation paid or accrued,  for each of
the last three fiscal years of our company to each named executive officer.

                                     ------------------------------------------
                                                  Annual Compensation
                                     ------------------------------------------

-------------------------------------------------------------------------------
Name / Principal Position              Year    Salary     Bonus    Other Annual
                                               (Cash &      ($)    Compensation
                                               Non-cash)                ($)
                                                  ($)
-------------------------------------------------------------------------------
Nicholas A. Shrager                    2005     $130,923       $0           $0
Chief Executive Officer,               2004     $150,000       $0           $0
Chairman, President and         (1)    2003           $0       $0           $0
Director
-------------------------------------------------------------------------------
Stephen B. Goodacre                    2005     $211,136       $0           $0
Chief Financial Officer and     (2)    2004      $37,000       $0           $0
Director                               2003           $0       $0           $0
-------------------------------------------------------------------------------

1.    On October 28, 2004,  Mr.  Shrager was  appointed as our  Chairman,  Chief
      Executive  Officer,  and President.  The salary  disclosed  represents the
      compensation  paid to Mr.  Shrager from January 2004 through  December 31,
      2004 and January 2005 through December 2005.

2.    On April 21,  2004,  Mr.  Goodacre  was  appointed  as our  Interim  Chief
      Financial  Officer and, on October 28, 2004, Mr. Goodacre was appointed as
      our Chief Financial Officer.  Mr. Goodacre entered an employment  contract
      with the  Company,  effective  June 1, 2005,  whereby he will receive base
      salary of $200,000 for a full fiscal year. On June 1, 2005,  Mr.  Goodacre
      received  700,000  shares  of our  common  stock  in  connection  with his
      employment agreement.

Option Grants in Last Fiscal Year

None.

Aggregate Options Exercised In Last Fiscal Year

None.

Equity Compensation Plan Information

      We do not have an equity  compensation plan under which options,  warrants
or rights are authorized for issuance to employees or non-employees. We have not
issued  any  options,  warrants  or  rights  under any  individual  compensation
arrangement.

Directors' Compensation

      The Company pays each of its independent  directors  US$20,000 per year in
connection with their activities on behalf of the Company,  plus travel expenses
in connection with the Board of Directors meetings.  The director's fee are paid
quarterly,  in  arrears,  on April 1,  July 1,  October  1 and  January  1, in a
combination of shares of our common stock and cash.  Each  independent  director
receives shares of our common stock equal to US$3,000 per quarter,  based on the
closing  price of our  common  stock on the date of grant,  as quoted on the OTC
Bulletin Board (or applicable  quotation medium or exchange as of such date) and
US$2,000 per quarter in cash.  For the October 1, 2005  payment,  we have agreed
with each  independent  director  to  postpone  the  payment of such  director's
quarterly  compensation of $3,000, in shares of our common stock,  until January
1, 2006.  As of December  31,  2005,  each  independent  director is entitled to
receive  20,000 shares of common stock  pursuant to each's  quarterly  issuances
which were initially payable on October 1, 2005 and January 1, 2006.


                                       32
<PAGE>

Employment Contracts with Executive Officers

      The Company entered an oral employment agreement with Nicholas A. Shrager,
effective  on October  28,  2004,  pursuant to which Mr.  Shrager  will serve as
Chairman,  Chief  Executive  Officer,  and President,  reporting to the Board of
Directors. Mr. Shrager's initial salary is (pound)75,000,  which will be subject
to  an  increase  to  (pound)100,000   provided  that  the  Company's  financial
performance  objectives  are  achieved  for each of the first  three (3)  fiscal
years, as determined by the Board of Directors each year. He is also eligible to
participate in the annual discretionary bonus program for executive  management,
which is  potentially  five (5) percent of his current  annual base salary.  The
bonus  payments  shall  be made in  accordance  with the  following  performance
targets: (i) 70% of the bonus potential shall be earned if the Company meets its
annual operating EBITDA target  established by the Board of Directors each year;
(ii) 20% of the bonus  potential shall be earned if the Company meets its annual
revenue target established by the Board of Directors each year; and (iii) 10% of
the bonus  potential  shall be earned  based on Mr.  Shrager's  performance  and
contribution  to the business as determined by the Board of Directors each year.
In the  event  Mr.  Shrager  is  terminated  involuntarily  without  cause or he
terminates  voluntarily for good reason as defined in the employment  agreement,
the Company  will pay him a  termination  benefit  equal to (i) 100% of his base
salary plus his prior year bonus over a 12-month  period if  termination  occurs
after  January  1, 2005 but before  January  1,  2006,  or (ii) 100% of his base
salary  plus the  average  of his bonus for the prior two  fiscal  years  over a
12-month  period if  termination  occurs after January 1, 2006. In the event Mr.
Shrager  voluntarily  terminates  the employment  agreement  without cause or is
terminated  involuntarily  with good  reason,  he shall  receive no  termination
benefit.

      The Company  entered an  employment  agreement  with Stephen B.  Goodacre,
effective on June 1, 2005,  pursuant to which Mr.  Goodacre  will serve as Chief
Financial Officer.  Mr. Goodacre's initial annual base salary is (pound)100,000,
and is subject to an automatic  increase to (pound)150,000 per annum in the year
following the Company achieving a net income of $1 million or more. Mr. Goodacre
will be  entitled  to an annual  bonus  equal to 25% of his annual  base  salary
provided  certain  financial  measures  relating to the  Company's  revenues and
EBITDA are  reached.  On the  effective  date of his  employment  contract,  Mr.
Goodacre  received 100,000 shares of common stock of the Company.  Two thirds of
these shares shall be returned to, and cancelled by the Company if Mr.  Goodacre
voluntarily  terminates his employment  with the Company before June 1, 2006 and
one third of the shares  shall be returned  to, and  cancelled by the Company if
Mr. Goodacre voluntarily  terminates his employment with the Company before June
1,  2007.  If Mr.  Goodacre  is  terminated  "without  cause" or he  voluntarily
terminates  his  employment  with the  Company  for "good  reason",  he shall be
entitled  to  severance  equal to:  (a) 50% of his  annual  base  salary if such
termination  occurs prior to November 30, 2005; (b) 100% of his base salary plus
any bonus due if such termination occurs on or after December 1, 2005 but before
May 31,  2006;  and (c) 100% of his base salary plus the average  bonus from the
prior two years if termination occurs on or after June 1, 2006.

      The  Company  entered an oral  consulting  agreement  with  Charles  Howe,
effective  on October  28,  2004,  pursuant  to which Mr.  Howe will serve as an
executive level consultant. Mr. Howe's initial salary is $100,000, which will be
subject to an increase to $150,000 provided that certain revenue targets for the
Company,  as  established  by the Board of Directors,  are achieved for the year
ended  December 31, 2005. Mr Howe has taken a reduced  income in 2005 of $44,000
as the company has negative cashflow.


                                       33
<PAGE>

Item 11.    Security  Ownership of Certain  Beneficial Owners and Management and
            Related Stockholder Matters.

      The following  table sets forth, as of April 3, 2006, the number of shares
of our common stock  beneficially owned by (i) each person who is known by us to
be the  beneficial  owner of more than five  percent of our common stock (each a
"5% Owner");  (ii) each director;  (iii) each of the named executive officers in
the Summary  Compensation  Table; and (iv) all directors and executive officers,
as a group.

      Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and  investment  power with  respect to all shares of
common stock beneficially owned by them. A person is deemed to be the beneficial
owner of  securities  that can be acquired by such person within sixty (60) days
upon the exercise of options,  warrants or convertible  securities (in any case,
the  "Currently  Exercisable  Options").   Each  beneficial  owner's  percentage
ownership is determined by assuming that the Currently  Exercisable Options that
are held by such  person  (but not  those  held by any other  person)  have been
exercised and converted.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                                                     Amount and
                                                     Title of        Nature of             Percent of
Name (1)                    Position Held            Class           Beneficial Owner      Class (2)
-----------------------------------------------------------------------------------------------------
<S>                         <C>                      <C>                  <C>                  <C>
Nicholas A. Shrager   (3)   Chief Executive
                            Officer, Chairman,       Common
                            President and Director   Stock                 9,783,585           42.54%
------------------------------------------------------------------------------------------------------
Stephen B. Goodacre         Chief Financial
                            Officer                  Common
                            and Director             Stock                   700,000            3.04%
------------------------------------------------------------------------------------------------------
Charles K. Howe       (4)   Executive Vice
                            President, Secretary     Common
                            and Director             Stock                 5,092,605           22.15%
------------------------------------------------------------------------------------------------------
Brian Alleman         (5)   Director                 Common
                                                     Stock                    72,497                *
------------------------------------------------------------------------------------------------------
John Sanderson        (5)   Director                 Common
                                                     Stock                    72,497                *
------------------------------------------------------------------------------------------------------
Keith Broome          (5)   Director                 Common
                                                     Stock                 2,137,497            9.29%
------------------------------------------------------------------------------------------------------
Keating Reverse       (6)              -             Common
Merger Fund LLC                                      Stock                 2,165,507            9.42%
------------------------------------------------------------------------------------------------------
Total Ownership of
Common Stock by
All Directors and
Officers as a Group                    -                                  17,858,681           77.02%
------------------------------------------------------------------------------------------------------
</TABLE>

----------------------
* Less than one percent

1.    Unless  otherwise  indicated,  the  address  for holder is c/o Adal Group,
      Inc., 67 Wall Street, 22nd Floor, New York, NY 10005-3111.

2.    Reflects  22,906,332 shares of our common stock outstanding as of April 3,
      2006.

3.    Includes (a) 9,381,960 shares of common stock owned by Mr. Shrager and (b)
      401,625 shares owned by The Nicholas  Shrager Family Trust. Mr. Shrager is
      co- Trustee of The Nicholas  Shrager Family Trust.  Mr. Shrager has voting
      and dispositive power over the shares owned by The Nicholas Shrager Family
      Trust.


                                       34
<PAGE>

4.    Includes 1,204,875 shares owned by The C.K. Howe Discretionary  Settlement
      2004 over which Mr. Howe is co-Trustee  and shares voting and  dispositive
      power over the  shares.  Mr.  Howe has no right to  acquire  any shares of
      common stock upon conversion or exercise of an outstanding  note,  warrant
      or option.

5.    Includes  13,334 shares of common stock issuable as  compensation  to each
      independent director as payable on October 1, 2005 and January 1, 2006.

6.    The address of the Keating  Reverse  Merger Fund, LLC is 5251 DTC Parkway,
      Suite 1090,  Greenwood  Village,  CO  80111-2739.  Kevin R. Keating is the
      father  of the  principal  member of  Keating  Investments,  LLC.  Keating
      Investments,  LLC is the managing  member of Keating  Reverse Merger Fund,
      LLC and Keating  Securities is the registered  broker-dealer  affiliate of
      Keating Investments,  LLC. Kevin R. Keating is not affiliated with and has
      no equity  interest in Keating  Investments,  LLC,  Keating Reverse Merger
      Fund, LLC or Keating  Securities and disclaims any beneficial  interest in
      the shares of our common stock owned by Keating  Reverse Merger Fund, LLC.
      Similarly, Keating Investments, LLC, Keating Reverse Merger Fund, LLC, and
      Keating Securities  disclaim any beneficial  interest in the shares of our
      common stock currently owned by Kevin R. Keating.

Item 12.    Certain Relationships and Related Transactions.

Guilform Agreement

      On February 7, 2005, we entered a Share Sale and Purchase  Agreement  (the
"Guilform  Agreement") relating to Guilform Holdings Limited, with Keith Malcolm
Broome,  the sole  shareholder.  We  purchased  100% of the  shares of  Guilform
Holdings Limited from Mr. Broome in consideration of (i) approximately  $636,000
in cash; (ii) a promissory note in the amount of approximately  $380,000 bearing
interest  at a rate of 6% per annum;  and (iii)  21,000,000  shares (or  300,000
shares on a pre 1-for-7 forward stock split basis) of our common stock.

      In  connection  with the  Guilform  Agreement,  we agreed  to pay  certain
obligations  under  commercial  loan  facilities  provided to Guilform  Holdings
Limited,  which has re-advanced such loan to Adal Guilform,  by State Securities
plc in the aggregate sum of  approximately  $1,930,000,  of which  approximately
$950,000  was  new  borrowing  in  connection  with  the   consummation  of  the
transactions contemplated by the Guilform Agreement. This loan facility includes
the standard  covenants and obligations and Guilform Holdings Limited is in full
compliance with the loan facility.  Approximately  $615,000 of the loan facility
was  loaned  by  Guilform   Holdings  Limited  to  us  in  connection  with  the
consummation of the Guilform  Agreement.  Mr. Broome and Ms. Janice Conley,  the
previous Secretary of Guilform Holdings Limited,  agreed to personally guarantee
the obligations of Guilform  Holdings  Limited to pay back the loans.  Under the
Guilform Agreement,  we have released Mr. Broome and Ms. Conley as guarantors on
the loan facility.

Keating Reverse Merger Fund, LLC

      In connection  with the Share  Exchange,  dated as of October 28, 2004, as
described further herein, we entered a Financial Advisory Agreement with Keating
Securities, the registered broker-dealer affiliate of Keating Investments,  LLC,
under which we  compensated  Keating  Securities  for its  advisory  services in
connection with this  transaction.  The  transaction  advisory fee was $190,000.
Pursuant to the Financial Advisory Agreement,  the advisory services provided by
Keating Securities included  identification and presentation of suitable private
company acquisition targets,  corporate,  business,  and financial due diligence
evaluation  of  the  target  company,   capital  and  transaction   structuring,
development of capital markets strategy, valuation analysis, company, market and
industry  research,  analysis  of various  exchange  listing  requirements,  and
transaction  negotiation and execution.  We have paid a transaction advisory fee
equal to $190,000 to Keating Securities.

      The Financial  Advisory Agreement also appointed Keating Securities as our
exclusive  placement  agent for private and public  offerings of our  securities
until  October 28, 2005 and  required  us to pay Keating  Securities  10% of the
gross proceeds of any public or private offering of equity securities, 5% of the
gross  proceeds of any public or private  offering of debt  securities,  and 10%
warrant  coverage  on all  shares  of  our  common  issuable  upon  exercise  or
conversion of our securities in a public or private offering.


                                       35
<PAGE>

      Kevin  R.  Keating  is the  father  of the  principal  member  of  Keating
Investments,  LLC. Keating Investments,  LLC is the managing member of KRM Fund,
and Keating  Securities  is the  registered  broker-dealer  affiliate of Keating
Investments,  LLC.  Kevin R.  Keating is not  affiliated  with and has no equity
interest  in  Keating  Investments,  LLC,  KRM Fund or  Keating  Securities  and
disclaims any beneficial interest in the shares of our common stock owned by KRM
Fund.  Similarly,  Keating  Investments,  LLC,  KRM Fund and Keating  Securities
disclaim any  beneficial  interest in the shares of our common  stock  currently
owned by Kevin R. Keating.

Item 13.    Exhibits.

      The following is a list of exhibits to the Annual Report on Form 10-KSB of
the registrant. With the exception of the CEO and CFO certifications pursuant to
Section  302  and  906  of  The  Sarbanes-Oxley  Act of  2002  and as  otherwise
disclosed,  these exhibits are not contained herein, but have been filed as part
of, or  incorporated  by reference  into, the Annual Report on Form 10-KSB filed
with the Securities  and Exchange  Commission.  The registrant  will furnish any
exhibit  upon  the  payment  of a  fee,  which  fee  shall  be  limited  to  the
registrant's reasonable expenses in furnishing such exhibit.

Exhibit Number    Description
--------------------------------------------------------------------------------

2.1               Share Exchange Agreement, by and among the Registrant, the
                  stockholders of Advanced Aluminium Group, Ltd., Advanced
                  Aluminium Group, Ltd. and the Keating Reverse Merger Fund,
                  dated September 22, 2004 (1)

2.2               Financial Advisory Agreement, by and between the Registrant
                  and Keating Securities, LLC dated October 28, 2004 (2)

2.3               Voting Agreement, by and among the Registrant, the Keating
                  Reverse Merger Fund, LLC and the Stockholders of Advanced
                  Aluminium Group, Ltd., dated October 28, 2004 (2)

2.4               Share Sale and Purchase Agreement Relating to Guilform Holding
                  Limited, by and between Keith Malcolm Broome and the
                  Registrant, dated February 7, 2005 (3)

3.1               Certificate of Incorporation, as amended (4)

3.2               Amended and Restated By-laws (7)

4.1               Specimen Stock Certificate (6)

10.1              Securities Purchase Agreement, by and between the Registrant
                  and Laurus Master Fund, Ltd., dated June 29, 2005 (5)
                  (originally filed as Exhibit 4.2)

10.2              Secured Convertible Term Note, dated June 29, 2005 (5)
                  (originally filed as Exhibit 4.3)

10.3              Common Stock Purchase Warrant, dated June 29, 2005 (5)
                  (originally filed as Exhibit 4.4)

10.4              Option, dated June 29, 2005 (5) (originally filed as Exhibit
                  4.5)

10.8              Securities Purchase Agreement, by and between the Registrant
                  and Laurus Master Fund, Ltd., dated November 21, 2005 (8)

10.9              Secured Term Note, dated November 21, 2005 (8)

10.10             Reaffirmation and Ratification Agreement, dated November 21,
                  2005 (8)

10.11             Summary of Oral Employment Agreement with Nicholas A. Shrager*

10.12             Employment Agreement with Stephen Goodacre*


                                       36
<PAGE>

10.13             Summary of Oral Consulting Agreement with Charles Howe*

14                Code of Business Conduct and Ethics (4)

21                Subsidiaries of the Registrant (4)

* Filed herewith.

(1)   Incorporated by reference to the  Registrant's  Current Report on Form 8-K
      filed with the Securities and Exchange Commission  Securities and Exchange
      Commission on September 22, 2004.

(2)   Incorporated by reference to the  Registrant's  Current Report on Form 8-K
      filed with the Securities and Exchange Commission on October 28, 2004.

(3)   Incorporated by reference to the  Registrant's  Current Report on Form 8-K
      filed with the Securities and Exchange Commission on February 11, 2005.

(4)   Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
      filed with the Securities and Exchange Commission on April 15, 2005.

(5)   Incorporated by reference to the  Registrant's  Current Report on Form 8-K
      filed with the Securities and Exchange Commission on July 6, 2005.

(6)   Incorporated  by  reference to the  Registrant's  Form SB-2 filed with the
      Securities and Exchange Commission on August 12, 2005.

(7)   Incorporated  by reference to the  Registrant's  Quarterly  Report on Form
      10-QSB filed with the Securities  and Exchange  Commission on November 18,
      2005.

(8)   Incorporated by reference to the  Registrant's  Current Report on Form 8-K
      filed with the Securities and Exchange Commission on November 22, 2005.


Item 14.    Principal Accountant Fees and Services.


Audit Fees

      The aggregate fees billed for each of the last two years for  professional
services  rendered  by the  principal  accountant  for our  audits of our annual
financial statements and interim reviews of our financial statements included in
our Form  10-KSB and  10-QSBs or  services  that are  normally  provided  by the
accountant in connection  with statutory and  regulatory  filings or engagements
for those years were approximately:

            ------------------------------------------------------------
               2005:          $123,336  Moore Stephens, P.C.
            ------------------------------------------------------------
               2004:           $70,352  Moore Stephens, P.C.
            ------------------------------------------------------------

Audit Related Fees

      The aggregate  fees billed in each of the last two years for the assurance
and  related  services  provided  by  the  principal  accountant  that  are  not
reasonably  related to the  performance  of the audit or review of the Company's
financial statements and are not reported in paragraph (1) were approximately:


                                       37
<PAGE>

            ------------------------------------------------------------
               2005:            $18201  Moore Stephens, P.C.
            ------------------------------------------------------------
               2004:                $0  Moore Stephens, P.C.
            ------------------------------------------------------------

We incurred these fees in connection with registration  statements and financing
transactions.

Tax Fees

      The  aggregate  fees  billed  in  each  of the  last  two  years  for  the
professional  services rendered by the principal  accountant for tax compliance,
tax advice and tax planning were approximately:

            ------------------------------------------------------------
               2005:              $915  Moore Stephens, P.C.
            ------------------------------------------------------------
               2004:                $0  Moore Stephens, P.C.
            ------------------------------------------------------------

All Other Fees

      The  aggregate  fees billed in each of the last two years for the products
and  services  provided by the  principal  accountant,  other than the  services
reported in paragraph (1) were approximately:

            ------------------------------------------------------------
               2005:                $0  Moore Stephens, P.C.
            ------------------------------------------------------------
               2004:                $0  Moore Stephens, P.C.
            ------------------------------------------------------------

Audit Committee Approval

      The Audit Committee  pre-approves  all services,  including both audit and
non-audit services, provided by the Company's independent accountants. For audit
services, each year the independent auditor provides the Audit Committee with an
engagement  letter  outlining  the scope of the audit  services  proposed  to be
performed  during the year,  which must be formally  accepted  by the  Committee
before  the audit  commences.  The  independent  auditor  also  submits an audit
services fee proposal,  which also must be approved by the Committee  before the
audit commences.

                                       38
<PAGE>

                                   SIGNATURES

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

Date:  April __, 2006                  ADAL GROUP, INC


                                       By: /s/ Nicholas A. Shrager
                                           -------------------------------------
                                           Name:  Nicholas A. Shrager
                                           Title: Chief Executive Officer and
                                                  President (Principal Executive
                                                  Officer)


                                       By: /s/ Stephen Goodacre
                                           -------------------------------------
                                           Name:  Stephen Goodacre
                                           Title: Chief Financial Officer
                                                  (Principal Accounting Officer)

      Pursuant to the  requirements  of the Securities Act of 1934,  this Annual
Report on Form 10-KSB is signed below by the following  persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
          Signature                                      Title                                 Date

<S>                                           <C>                                         <C>
/s/ Nicholas A. Shrager                       Chief Executive Officer, President and      May 19, 2006
------------------------------------          Director (Principal Executive Officer)
Nicholas A. Shrager

/s/ Stephen Goodacre                          Chief Financial Officer (Principal          May 19, 2006
------------------------------------          Accounting Officer) and Director
Stephen Goodacre

/s/ Charles K. Howe                           Executive Vice President, Secretary and     May 19, 2006
------------------------------------          Director
Charles K. Howe

/s/ Brian Alleman                             Director                                    May 19, 2006
------------------------------------
Brian Alleman

/s/ Keith M. Broome                           Director                                    May 19, 2006
------------------------------------
Keith M. Broome
</TABLE>


                                       39
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying  consolidated balance sheet of Adal Group, Inc.
and its  subsidiaries  (the  "Company") as of December 31, 2005, and the related
consolidated  statements  of  operations,  stockholders'  equity  (deficit)  and
comprehensive  income  (loss),  and cash  flows for each of the two years in the
period ended 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  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated financial statements are free of material misstatement. The Company
is not  required  to  have,  nor were we  engaged  to  perform,  an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the consolidated  financial statements,  assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall consolidated 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 consolidated  financial position of Adal
Group,  Inc. and its  subsidiaries as of December 31, 2005, and the consolidated
results  of their  operations  and their cash flows for each of the two years in
the period ended  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
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated  financial  statements,  the Company has suffered  recurring losses
from operations and has a working capital and stockholders' deficiency and is in
default  with  regard  to  certain  of  its  financial  commitments  that  raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also discussed in Note 1. The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


                                        MOORE STEPHENS, P. C.
                                        Certified Public Accountants.

New York, New York

April 12, 2006


                                       40
<PAGE>

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------

December 31,
------------
                                                                       2005
                                                                   ------------
Assets:
Current Assets:
    Cash and Cash Equivalents                                      $        655
    Accounts Receivable - Net                                             7,363
    Inventories                                                           1,798
    Other Current Assets                                                    800
                                                                   ------------
    Total Current Assets                                                 10,616

Property, Plant and Equipment - Net                                       8,611
                                                                   ------------
    Total Assets                                                   $     19,227
                                                                   ============

Liabilities and Stockholders' Deficit:
Current Liabilities:
    Convertible Loan and short term Bridge Loan                           2,000
    Short-Term Borrowings and Credit
    Agreements                                                     $      7,011
    Accounts Payable                                                      6,026
    Current Portion of Long-Term Debt                                       696
    Other Current Liabilities                                             2,515
                                                                   ------------
    Total Current Liabilities                                            16,248

Long-Term Debt, Net of Current
Portion                                                                   6,621
Loans Repayable - Related Party                                             258

Deferred Tax Liability                                                       55
                                                                   ------------
    Total Liabilities                                                    25,182
                                                                   ------------
Stockholders' Deficit:
Common Stock, $0.0001 par value,
      100,000,000 shares authorized,
      shares issued and outstanding                                           2
    Additional Paid in Capital                                            1,477
    Accumulated Deficit                                                  (8,513)
    Accumulated Other Comprehensive Income:
         Cumulative Translation Adjustment                                1,079
                                                                   ------------
    Total Stockholders' Deficit                                          (5,955)
                                                                   ------------
    Total Liabilities and Stockholders'
        Deficit                                                    $     19,227
                                                                   ============

              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       41
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------

                                                   Year                Year
                                                   ended              ended
                                               December 31,        December 31,
                                                   2005                2004
                                               ------------        ------------

Net Sales                                      $     33,519        $     29,228

Cost of Sales                                        32,558              27,898

Inventory Write Down                                    258                  --
                                               ------------        ------------
    Gross Profit                                        703               1,330

Selling, General and
    Administrative Expenses                           4,690               2,783

Intangible Assets Write-Off                             779
Advisory Fee - Related Party                                                190
    Loss from                                  ------------        ------------
        Operations                                   (4,766)             (1,643)

Interest Expense                                      1,293                 650
                                               ------------        ------------

    Income Before Income
        Taxes / (Benefit)                            (6,059)             (2,293)

Provision For Income Tax
    (Benefit)                                            --                  (3)
                                               ------------        ------------

    Net Loss                                   $     (6,059)       $     (2,290)
                                               ============        ============

Basic and Diluted Loss Per Share               $      (0.29)       $      (0.02)
                                               ============        ============

Weighted Average Number of
Common Shares Outstanding -
Basic and Diluted                                20,942,544          17,850,000
                                               ============        ============

              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements


                                       42
<PAGE>

ADAL GROUP INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------

CONSOLIDATED  STATEMENTS OF  STOCKHOLDERS'  EQUITY  (DEFICIT) AND  COMPREHENSIVE
INCOME (LOSS)
(IN THOUSANDS OF U.S. DOLLARS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                      Accumulated        Total
                              Comprehensive                               Additional     Retained         Other      Stockholders'
                                  Income            Common Stock           Paid-in       Earnings     Comprehensive      Equity
                                  (Loss)        Shares        Amount       Capital      (Deficit)        (Loss)        (Deficit)
                              ------------   ------------  ------------  ------------  ------------   ------------   ------------
<S>                           <C>            <C>           <C>           <C>           <C>            <C>            <C>
Inception - October 20, 2003  $         --             --  $         --  $         --  $         --   $         --   $         --

Issuance of Common Stock
   For Cash                             --      2,295,000            --             2            --             --              2

Net Loss                              (164)            --            --            --          (164)            --           (164)

Effect of Currency
   Translation in Period                (3)            --            --            --            --             (3)            (3)
                              ------------   ------------  ------------  ------------  ------------   ------------   ------------

   Balances -
   December 31, 2003          $       (167)     2,295,000            --             2          (164)            (3)          (165)
                              ============   ============  ============  ============  ============   ============   ============

Shares Issued in Connection
    With Merger               $         --        255,000            --            --            --             --             --
Net Loss                            (2,293)            --            --            --        (2,290)            --         (2,290)

Effect of Currency
   Translation In Period               657             --            --            --            --            657            657
                              ------------   ------------  ------------  ------------  ------------   ------------   ------------

   Balances -
        December 31, 2004     $     (1,636)     2,550,000  $          2  $         --  $     (2,454)  $        654   $     (1,798)
                              ============   ============  ============  ============  ============   ============   ============

Issuance of Common Stock
   For Cash                             --        715,976            --         1,477            --             --             --

7-For-1 Stock Split                     --     19,595,856                          --            --             --             --

Net Loss                            (6,059)            --            --            --        (6,059)            --         (6,059)

Effect of Currency
   Translation in Period               425             --            --            --            --            425            425
                              ------------   ------------  ------------  ------------  ------------   ------------   ------------

   Balances -
        December 31, 2005     $     (5,634)    22,861,832  $          2  $     1,477   $     (8,513)  $      1,079   $     (5,965)
                              ============   ============  ============  ============  ============   ============   ============
</TABLE>

              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       43
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF U.S. DOLLARS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                 Year ended
                                                                                 December 31,
                                                                       ------------------------------
                                                                           2005               2004
                                                                       ------------      ------------
<S>                                                                    <C>               <C>
Operating Activities:
      Net Loss                                                         $     (6,059)     $     (2,290)
      Adjustments to Reconcile Net (Loss) to Cash From Operations:
           Depreciation and Amortization                                      2,001             1,212
            Deferred tax (Benefit)                                               --                (3)
            Stock based compensation                                            677

      Changes in Assets and Liabilities:
           Decrease (Increase):
                 Accounts Receivable                                           (635)            1,086
                 Inventories                                                    484              (217)
                 Other Current Assets                                          (506)             (150)

           Increase (Decrease):
                 Accounts Payable                                              (200)              888
                 Taxes                                                          879               127
                 Other Current Liabilities                                      397               162
                                                                       ------------      ------------

      Net Cash - Operating Activities                                        (2,962)              815
                                                                       ------------      ------------

Investing Activities:
      Business Acquisition                                                     (636)             (732)
      Capital Expenditures                                                   (1,535)           (2,713)
                                                                       ------------      ------------

      Net Cash - Investing Activities                                        (2,171)           (3,445)
                                                                       ------------      ------------

Financing Activities:
      Borrowing of Short-Term Debt                                           41,355            (1,948)
      Payment of Short term debt                                            (39,038)
      Borrowing of Long-Term Debt                                             2,943             4,530
      Payment of Long-Term Debt                                                (140)             (480)
                                                                       ------------      ------------
      Net Cash - Financing Activities                                         5,120             2,102

Effect Of Exchange Rates Changes on Cash                                        279              767
                                                                       ------------      ------------

      Net Increase (Decrease) in Cash - Forward                        $        266     $        239
</TABLE>

              The Accompanying Notes are an Integral Part of these
                        Consolidated Financial Statements


                                       44
<PAGE>

Adal Group, Inc and Subsidiaries
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF U.S. DOLLARS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       Year Ended
                                                                       December 31,
                                                              ------------------------------
                                                                  2005              2004
                                                              ------------      ------------
<S>                                                           <C>               <C>
      Net Increase (Decrease) in Cash - Forwarded             $        266     $        239

Cash - Beginning of Years                                              389               150
                                                              ------------      ------------

Cash - End of Years                                           $        655      $        389
                                                              ============      ============

Supplemental Cash Flow Information:
      Cash paid during the years for:
           Interest                                           $      1,283      $        343
           Income Taxes                                       $         --      $         --
</TABLE>

ADAL GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1) Going Concern

The accompanying financial statements have been prepared in conformity with
United States generally accepted accounting principles which contemplate the
continuation of the Company as a going concern and realization of assets and
settlement of liabilities and commitments in the normal course of business. For
the year ended December 31, 2005, the Company has a net loss of approximately
$6,059,000, a working capital deficiency of approximately $5,634,000 and an
accumulated deficit of approximately $8,733,000. Several key suppliers have
refused to grant the company additional credit and require that payment for
material be made in advance, and in some cases require payment of some portion
of the outstanding balance owed. We have been formally advised by a former
supplier that they intend to take legal action to recover their debt, which
could lead to a bankruptcy proceeding. We will try to negotiate with this
creditor and hope to reach agreement with respect to repayment over an extended
timeframe. In addition, several of our current raw material vendors are refusing
to grant us additional credit and are requiring payment for material in advance,
plus repayment of a portion of the unpaid balances owed. These factors raise
substantial doubt about our ability to continue as a going concern. The
accompanying financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence. We are working with an Investment Bank and private
investors to provide additional capital, which could involve significant
dilution to current shareholders or the possible sale of assets. While we do not
have any formal agreements, we have signed non-disclosure agreements with four
parties with respect to possible sale of one or more of our operating companies.
There can be no assurance that our plans will be successful.

(2) Business

Adal Group Inc. (the "Company"), through its operating subsidiaries, is a
diversified producer of aluminum extrusions and manufactured parts. The
Company's three principal operating subsidiaries are Adal Seco ("Seco" or "Adal
Seco"), Adal Engineering (formerly W.H.J. Fagg & Son Ltd.) ("Engineering" or
"Adal Engineering") and Adal Guilform, all of which are located in England. The
Company's customers are also based in England. Seco is a provider of aluminum
extrusion design and production services, providing complete supply-chain
management including component design, fabrication, warehousing and delivery.
These added value products are sold through the Adal Seco brands, Adal Extra and
Adal Climatix. Engineering provides precision engineering, tool making and
volume production of machined (primarily aluminum) components principally for
the automotive industry. Adal Guilform was acquired effective February 7, 2005
and is a fabricator of panels for the construction industry.


                                       45
<PAGE>

(3) Organization and Basis of Presentation

Adal Group, Inc., a Delaware corporation, was formerly known as Sunningdale,
Inc. ("Sunningdale") a shell corporation. A merger of Sunningdale and Advanced
Aluminium Group Ltd. ("AAG") incorporated under the laws of England, was
completed on October 28, 2004. The merger has been treated for accounting and
financial reporting purposes as a reverse acquisition of Sunningdale by AAG,
since the former AAG stockholders controlled the Company after the merger. Under
this accounting treatment, AAG is deemed for accounting purposes to be the
acquiring entity and Sunningdale the acquired entity. Accordingly, the
transaction has been treated as a recapitalization of AAG, with no goodwill
recorded. The financial statements of the Company after the merger now reflect
AAG on a historical basis. All references to the "Company" means Adal Group Inc.
and its subsidiaries. As of the date of the merger, Sunningdale had total assets
of $15,000 and total liabilities of $15,000, which were assumed by the Company.

Effective October 20, 2003, AAG acquired all of the outstanding capital stock of
Advanced Aluminium Industries, Ltd. ("AAI"). AAI's activities as of the date of
acquisition consisted solely of the ownership of Seco, which was acquired by AAI
on October 20, 2003.

Since October 20, 2003 ("Inception") the Company's activities consisted solely
of activities related to the operation of AAI and Seco. Such activities, which
were not significant, have been included in the consolidated statement of
operations for the Company for the period from Inception through December 31,
2003. The primary operating activities included in the consolidated statement of
operations for the Company for the period from Inception through December 31,
2003 are those of Seco, which became a subsidiary of the Company, through its
AAI subsidiary, on October 20, 2003.

The consolidated balance sheet as of December 31, 2005 and the consolidated
statement of operations and cash flows for the period from January 1, 2005 to
December 31, 2005 represent the financial position and results of operations and
cash flows for the Company and its subsidiaries.

The operations of Adal Guilform have been included since February 7, 2005, the
date on which Adal Group, Inc acquired all of the outstanding capital stock of
Guilform Holdings the parent company of Adal Guilform.

All amounts in the financial statements are presented in thousands of U.S.
Dollars.

(4) Significant Accounting Policies

Principles of Consolidation - The consolidated financial statements of the
Company include the accounts of its wholly-owned direct and indirect
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

Foreign Currency - The Company headquarters and principal business operations
are located in England. Although most purchase orders for aluminum are
denominated in U.S. dollars, all other expenses and all revenues are denominated
in UK Pound Sterling. As such, management has determined that the functional
currency for financial reporting purposes is the UK Pound Sterling. Translation
into U.S. dollars has been accomplished in the following manner: assets and
liabilities using the exchange rates in effect at the balance sheet date,
stockholders equity at historical rates, and results of operations and cash
flows at the average exchange rates during the period. The effect of exchange
rate changes is reflected as a separate component of stockholders' equity.

Use of Estimates - The preparation of the 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 disclosures of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the periods reported. Actual results could differ from those
estimates.


                                       46
<PAGE>

Cash and Cash Equivalents - The Company considers all highly liquid debt
securities purchased with an original maturity of three months or less to be
cash equivalents.

Inventories - Inventories consist primarily of raw materials (principally
aluminum billets, extrusions and bar stock) and work in process/finished goods,
(aluminum extrusions and machined parts). Inventories are stated at the lower of
cost (first-in, first-out method) or market. Inventories consist of:

                                 December 31,
                                     2005
                                  ----------

Raw Materials                     $  660,000
Work in Process                      289,000
 and Finished Goods                  849,000
                                  ----------
Totals                            $1,798,000
                                  ==========

Income Taxes - The Company accounts for income taxes under the liability method,
whereby current and deferred tax assets and liabilities are determined based on
tax rates and laws enacted as of the balance sheet date. Deferred tax expense
(benefit) represents the change in the deferred tax asset/liability balance.

Property, Plant and Equipment - Property and equipment is stated at cost.
Depreciation is computed principally using the straight-line method. The
estimated useful lives are:

Buildings and Improvements - 50 Years Equipment; Furniture and Fixtures - 3 to
15 Years; and Vehicles 3 to 5 Years

Expenditures for maintenance and repairs that do not materially extend the
useful lives of property, plant and equipment are charged to earnings. When
property or equipment is sold or otherwise disposed of, the cost and related
accumulated depreciation are removed from the respective accounts with the
resulting gain or loss reflected in earnings. Property, plant and equipment
consist of the following:

                                                   December 31,
                                                       2005
                                                   ------------

Land, Buildings and Improvements                   $  4,039,000
Equipment, Furniture and Fixtures                    14,809,000
Vehicles                                                 66,000
                                                   ------------

Totals                                               18,914,000
Less Accumulated Depreciation                       (10,303,000)
                                                   ------------

Property, Plant and Equipment - Net                $  8,611,000
                                                   ============

Depreciation expense was $1,107,000 for the year ended December 31,2005 ,
$1,100,000 for the year ended December 31, 2004.

Intangibles - The Company assesses intangible assets for impairment on a
periodic basis and more frequently when circumstances warrant.


                                       47
<PAGE>

The Company has written off the intangible assets relating to the customer lists
of Adal Engineering and Adal Guilform. The decision was made to write off
$779,000 due to the losses made by the operating entities in the year ended
December 31, 2005.

Revenue Recognition - Revenue recognition rules are very complex, and certain
judgments affect the application of our revenue policy. The amount and timing of
our revenue is difficult to predict, and any shortfall in revenue or delay in
recognizing revenue could cause our operating results to vary significantly from
quarter to quarter. Adal recognizes revenue when title, ownership, and risk of
loss pass to the customer, in accordance with the provisions of Staff Accounting
Bulletin 101, "Revenue Recognition in Financial Statements."

Net Sales - Net sales include the amounts charged for products shipped to
customers, plus recoveries of the freight charges to ship the product from the
manufacturing facility to the customer.

Cost of Sales - Cost of sales includes the direct cost of the product, including
material, labor, overhead, depreciation and the freight charges to ship the
product to the customer.

Selling, General and Administrative Expenses - Selling general and
administrative expenses include costs for administrative and sales employee
wages, benefits, legal, accounting and consulting services and other general and
administrative costs.

Impairment of Long-Lived Assets - The Company reviews its long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. When such factors and
circumstances exist, the projected undiscounted future cash flows associated
with the future use and disposal of the related asset or group of assets is
compared to their respective carrying amounts. Impairment, if any, is measured
as the excess of the carrying amount over the fair value, based on market value
when available, or discounted expected cash flows, of those assets and is
recorded in the period in which the determination is made.

Fair Value of Financial Instruments - The Company adopted Statement of Financial
Accounting Standards ("SFAS") No.107, "Disclosure about Fair Value of Financial
Instruments," which requires disclosing fair value, to the extent practicable,
for financial instruments which are recognized or unrecognized in the balance
sheet. The fair value of the financial instruments disclosed herein is not
necessarily representative of the amount that could be realized or settled, nor
does the fair value amount consider the tax consequences of realization or
settlement.

In assessing the fair value of these financial instruments, the Company used a
variety of methods and assumptions, which were based on estimates of market
conditions and risks existing at that time. For certain instruments, including
cash and cash equivalents, related party and trade and notes payable, it was
assumed that the carrying amount approximated fair value for the majority of
these instruments because of their short maturities.

The fair value of long-term debt is based upon current rates at which the
Company could borrow funds with similar remaining maturities. It was assumed
that the carrying amount approximated fair value for these instruments.

Research and Development Costs - The Company does not have a research and
development department. The development activity generally relates to designing
new products, which is principally done by employees with general administrative
or other operating responsibility. As such, the Company does not separately
account for such costs. However, management believes the total amounts expended
on these activities are not significant. All such costs are expensed as
incurred.

Advertising - The Company expenses advertising costs as incurred. Advertising
expenses were approximately $12,000 for the year ended December 31,2005, and
$15,000 for the year ended December 31, 2004.

Stock-Based Compensation - We account for stock-based compensation utilizing the
intrinsic value method in accordance with the provisions of Accounting
Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to
Employees" and related Interpretations. Accordingly, no compensation expense is
recognized because the exercise prices of these employee stock options equal or
exceed the estimated fair market value of the underlying stock on the dates of
grant.


                                       48
<PAGE>

In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123R, "Share-Based
Payment". SFAS No. 123R is a revision of SFAS No. 123, "Accounting for Stock
Based Compensation", and supersedes APB 25. Among other items, SFAS 123R
eliminates the use of APB 25 and the intrinsic value method of accounting, and
requires companies to recognize the cost of employee services received in
exchange for awards of equity instruments, based on the grant date fair value of
those awards, in the financial statements. The effective date of SFAS 123R is
the first reporting period beginning after December 15, 2005, although early
adoption is allowed. SFAS 123R requires companies to adopt its requirements
using a "modified prospective" method. Under the "modified prospective" method,
compensation cost is recognized in the financial statements beginning with the
effective date, based on the requirements of SFAS 123R for all share-based
payments granted after that date, and based on the requirements of SFAS 123 for
all unvested awards granted prior to the effective date of SFAS 123R.

We currently utilize a standard option pricing model (i.e., Black-Scholes) to
measure the fair value of stock options granted to employees. While SFAS 123R
permits entities to continue to use such a model, the standard also permits the
use of a "lattice" model. We have not yet determined which model we will use to
measure the fair value of employee stock options upon the adoption of SFAS 123R.

SFAS 123R also requires that the benefits associated with the tax deductions in
excess of recognized compensation cost be reported as a financing cash flow,
rather than as an operating cash flow as required under current literature. We
have not yet determined what effect, if any, this change will have on future
periods.

We currently expect to adopt SFAS 123R effective January 1, 2006; however, we
have not yet determined which of the aforementioned adoption methods we will
use.

Earnings (Loss) Per Share - Basic earnings (loss) per share is computed by
dividing net income (loss) by the weighted-average number of common shares
outstanding for the period. Diluted earnings (loss) per share is computed giving
effect to all potentially dilutive common stock. There were no potentially
dilutive items for the periods presented.

Recent Accounting Pronouncements - In May 2005, the FASB issued SFAS No. 154,
"Accounting for Changes and Error Corrections--a Replacement of APB Opinion No.
20 and FASB Statement No. 3" (SFAS 154). SFAS 154 requires retrospective
application of voluntary changes in accounting principles, unless impracticable.
SFAS 154 supersedes the guidance in APB Opinion No. 20 and SFAS No. 3, but does
not change any transition provisions of existing pronouncements. Generally,
elective accounting changes will no longer result in a cumulative effect of a
change in accounting in the income statement, because the effects of any
elective changes will be reflected as prior period adjustments to all periods
presented. SFAS 154 will be effective beginning in 2006 and will affect any
accounting changes that we elect to make thereafter.

In March 2005, the FASB Interpretation No. 47, "Accounting for Conditional Asset
Retirement Obligations and interpretation of FASB Statement No. 143" (FIN 47).
FIN 47 clarifies that conditional asset retirement obligations meet the
definition of liabilities and should be recognized when incurred if their fair
values can be reasonably estimated. The cumulative effect of initially applying
FIN 47 would be recognized as a change in accounting principle. FIN 47 is
effective no later than the end of fiscal years ending after December 15, 2005.
Adoption of FIN 47 is not expected to have a material impact on our financial
condition or results of operations.

In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the
Amortization Period for Leasehold Improvements, and (EITF 05-6). EITF 05-6
provides guidance on determining the amortization period for leasehold
improvements acquired in a business combination or acquired subsequent to lease
inception. The guidance on EITF 05-6 will be applied prospectively and is
effective for periods after June 29, 2005. EITF 05-6 is not expected to have a
material impact on our consolidated financial statements.


                                       49
<PAGE>

In February 2006, FASB issued FASB 155, Accounting for Certain Hybrid Financial
Instruments an amendment to FASB 133, Accounting for Derivative Instruments and
Hedging Activities, and FASB 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. FASB 155, provides the
framework for fair value remeasurement of any hybrid financial instrument that
contains an embedded derivative that otherwise would require bifurcation as well
as establishes a requirement to evaluate interests in securitized financial
assets to identify interests. FASB 155 further amends FASB 140 to eliminate the
prohibition on a qualifying special-purpose entity from holding a derivative
financial instrument that pertains to a beneficial interest other than another
derivative financial instrument. The FASB 155 guidance also clarifies which
interest-only strips and principal-only strips are not subject to the
requirement of FASB 133 and concentrations of credit risk in the form of
subordination are not embedded derivatives. This statement is effective for all
financial instruments acquired or issued after the beginning of an entity's
first fiscal year that begins after September 15, 2006. FASB 155 is not expected
to have a material impact on our consolidated financial statements.

In March 2006, FASB issued FASB 156, Accounting for Servicing of Financial
Assets--an amendment of FASB Statement No. 140. FASB 156 requires the
recognition of a servicing asset or servicing liability under certain
circumstances when an obligation to service a financial asset by entering into a
servicing contract. FASB 156 also requires all separately recognized servicing
assets and servicing liabilities to be initially measured at fair value
utilizing the amortization method or fair market value method. FASB 156 is
effective the beginning of the first fiscal year that begins after September 15,
2006. FASB 156 is not expected to have a material impact on our consolidated
financial statements.

(5) Acquisitions

On February 7, 2005, the Company purchased all of the outstanding shares of
Guilform Holdings Ltd. ("Guilform"), for a total investment of $1.8 million.
Payment was made in the form of cash of $636,000 and notes in the amount of
$375,000 and from the issuance of 300,000 shares of the Company's common stock.
Guilform makes aluminum-based products for use in architecture, notably metal
cladding panels and composite panels which provide thermal and acoustic
insulation and fire protection.

The investment in excess of the net book value of Guilform Holdings Limited has
been allocated to intangible assets, representing the value assigned to
Guilform's customer list, which were being amortized over five years using the
straight-line method. The results of operations of Guilform are included in the
consolidated financial statements beginning February 8, 2005.

In connection with the Guilform Agreement, we agreed to pay certain obligations
under commercial loan facilities provided to Guilform Holdings Limited, which
has re-advanced such loan to Guilform Holdings, by State Securities plc in the
aggregate sum of approximately $1,930,000. The interest rate on this loan is
LIBOR plus 4.25%. The initial installment of this loan was paid by Guilform
Holdings Limited on December 15, 2001 and installments are payable monthly for a
period of 180 months. Guilform Holdings Limited repaid the entire outstanding
principal amount plus interest before the end of 2005. This loan facility
includes the standard covenants and obligations and Guilform Holdings Limited is
in full compliance with the loan facility. There is no prepayment penalty on the
loan but rather Guilform Holdings Limited may prepay the loan at anytime by
payment of the outstanding principal amount plus any interest due and payable
and all interest payable on the outstanding principal amount. Approximately
$615,000 of the loan facility was loaned by Guilform Holdings Limited to us in
connection with the consummation of the Guilform Agreement. Mr. Broome and Ms.
Janice Conley, the previous Secretary of Guilform Holdings Limited, agreed to
personally guarantee the obligations of Guilform Holdings Limited to pay back
the loans. Under the Guilform Agreement, we have released Mr. Broome and Ms.
Conley as guarantors on the loan facility.

The assets acquired and liabilities assumed in the acquisition of Guilform are
as follows:

Assets acquired at Fair Value                        $ 3,267,000
Customer List                                            557,000
Liabilities Assumed at Fair Value                     (2,024,000)
                                                     -----------

    Total Purchase Price                             $ 1,800,000
                                                     ===========

The intangible assets of $557,000 were written off during the year ended
December 31, 2005.

US Private Equity Valuation Guidelines, issued in December 2003, by the Private
Equity Industry Guidelines Group, provides guidance on valuing thinly traded
shares of public companies. Section III "Valuation of Public Securities", states
that

      "A marketability discount should be taken on publicly traded securities
      when there is a formal restriction that limits sale. Discounts for
      restricted equity securities from market price typically range from 0% to
      30%. When applying a discount to publicly traded securities, factors that
      should be taken into consideration include the company's trading
      characteristics (the extent to which the market for the security is liquid
      or thinly traded), the investor's ability to sell its position when the
      restriction expires, the magnitude of the investors position (the extent
      to which orderly liquidation of the security would take a significant time
      to complete, or would otherwise reduce the sales price), the term of the
      restriction and other company factors such as its age, size, and industry
      presence."


                                       50
<PAGE>

In February 2005, when Adal acquired Guilform Holdings Limited, it applied a
discount to the quoted price for its shares based on the above guidelines. That
discount resulted in a pre-split fair value of $2.6259 per share and a
post-split fair value of $0.38 per share.

Selected unaudited proforma combined results of operations for the year ended
December 31, 2005 and for the year ended December 31, 2004, assuming that the
Adal Guilform acquisitions occurred on January 1, 2004, including activity
subsequent to their actual acquisitions is as follows:

                                                           Year
                                                           ended
                                                       December 31,
                                                 2005               2004
                                                  $                   $

          Revenues                           33,827,000          33,230,000
          Net Loss                           (6,441,000)         (2,351,000)
          Loss per share                          (0.31)              (0.31)
(6) Related Party Transactions

For 2004 and for the first seven months of the year ended December 31, 2005, the
Company leased office space from a Director on a month-to-month basis. The total
of such rental expenses was approximately $5,000 during the year ended December
31, 2005 with approximately $9,000 expensed in the year ended December 31,2004.
This rent was included as a component of selling, general and administrative
expense.

In May 2005, two directors of the Company loaned the Company $129,000 each.
Interest is accruing at 6% pa ($9,000 in 2005). The loan will not be repaid
until the company has positive cashflows.

(7) Concentrations

(A) Concentration of Credit Risk - Financial instruments that potentially
subject the Company to significant concentrations of credit risk consists
principally of cash and cash equivalents and accounts receivable.

The Company and its subsidiaries maintain their cash and cash equivalents in
accounts with two major financial institutions in England and, principally in
the form of demand deposit accounts. Deposits in these banks may exceed the
amounts of insurance provided on such deposits. The Company has not experienced
any losses on its deposits of cash and cash equivalents.

The Company believes that the concentration of credit risk in its accounts
receivables is substantially mitigated by the Company's evaluation process,
relatively short collection terms, the high level of credit worthiness of its
customers and the purchase of credit insurance for its accounts receivable. The
Company performs ongoing credit evaluations of its customers' financial
condition, but generally requires no collateral. Management has entered into an
insurance agreement to guarantee certain customer accounts receivable balances
up to specified limits as defined in the insurance agreement. For those customer
not covered under the insurance agreement the Company often requires the
customer to prepay for goods as a condition of sale. The Company records an
allowance for doubtful accounts specific to the accounts receivable balances
outstanding based upon the results of its evaluation of its customers' financial
condition and consideration of the insured balance. As of December 31, 2005, the
Company determined that no allowance for doubtful accounts was required.
Historically, the Company has recorded an immaterial amount of bad debt
write-offs.


                                       51
<PAGE>

(B) Concentration of Sources of Labor - Approximately 50% of the employees of
Adal Seco are members of a trade union. Seco is not a party to any collective
bargaining agreement with this trade union. Management believes that it has a
good relationship with its employees.

(C) Concentration of Sources of Materials - Throughout 2005, Seco purchased
aluminum billets from four smelters. Though these billets are commonly used by
extruders, a disruption in the supply from these smelters could cause production
delays or a material increase in production costs.

(8) Commitments and Contingencies

Operating Leases - The Company leases various vehicles and equipment under
operating leases. Rent expense for such vehicles and equipment was $405,000 for
the year ended December 31, 2005 and $68,000 for the year ended December 31,
2004.

Future minimum lease payments under operating leases at December 31, 2005 are as
follows:

                      Years Ending
                      December 31,       Amount
                      ------------     ----------

                           2006        $  710,000
                           2007           540,000
                           2008           450,000
                           2009           216,000
                           2010            15,000
                                       ----------

                          Total        $1,932,000
                                       ==========

Purchase Orders - Adal Seco, an indirect subsidiary of the Company, requires a
supply of aluminum billets as raw materials for its production process. Though
these billets are generally available on the open market, the Company has, in
previous years, entered into purchase orders with five smelters At December 31,
2005 there were no purchase contracts. At December 31, 2004, there were purchase
agreements totaling approximately $3,500,000.

(9) Debt

The Company has a Credit Agreement with a bank that allows the Company to borrow
against customer accounts receivable of Adal Seco, Adal Engineering and Adal
Guilform, subject to certain restrictions. Under the terms of the Credit
Agreement, the Company may borrow up to a maximum of $8,594,000, subject to the
availability of eligible customer receivables. Interest is charged at the rate
of 2% above the Base Rate of the Bank of England for the first $4,000,000
borrowed and 1.4% above the Base Rate of the Bank of England for the balance. At
December 31, 2005, the Base Rate of the Bank of England was 4.50%. The Company
pays a commitment fee equal to 0.14% of the eligible accounts receivable, at the
time the accounts receivable are reported to the bank. The amounts outstanding
under this agreement are secured by all of the outstanding accounts receivable
of Adal Seco, Adal Engineering and Adal Guilform. The term of the Credit
Agreement is open, but can be terminated by either party with 90 days notice and
as such is classified as a component of current liabilities. As of December 31,
2005, there was $6,708,000 outstanding under the Credit Agreement. As of
December 31, 2005, the Company had unused borrowing availability of $486,000.

The Company has an overdraft agreement with a bank that allows the Company to
borrow up to $215,000. As of December 31, 2005, there was $303,000 outstanding
under the agreement. The outstanding balance bears interest at 1.5% above the
Base Rate of the Bank of England.


                                       52
<PAGE>

Long-term debt consisted of the following at December 31, 2005:

                                               December 31,
                                                   2005
                                               -----------

      Mortgage Witham, Due Jan 2019            $ 4,259,000
      Mortgage St. Albans Due Dec 2020           1,681,000
      Machinery and Equipment Loans              1,377,000
                                               -----------
      Total Long-Term Debt                       7,317,000
      Less: Amounts Due Within One Year           (696,000)
                                               -----------

         Long-Term Portion                     $ 6,621,000
                                               ===========

The mortgage loan, Witham, is secured by the real estate, including land,
buildings and improvements of the facilities located in Witham, England, and has
a 15 year term. The interest rate on the mortgage is fixed for five years, after
which time the Company has the option to accept a fixed rate based upon the then
market rates or accept a variable rate at the Bank of England Base Rate plus
1.5%.

The mortgage loan, St. Albans, is secured by the real estate, including land,
buildings and improvements of the facilities located in St. Albans, England, and
has a 15 year term. The interest rate on the mortgage is fixed for five years,
after which time the Company has the option to accept a fixed rate based upon
the then market rates or accept a variable rate at the Bank of England Base Rate
plus 1.5%.

The machinery and equipment loans are secured by certain machinery and equipment
of Engineering. The agreements range from 3 to 5 years with interest ranging
between 5% and 8%.

Following are the principal amounts due under long-term debt as of December 31,
2005 by fiscal year:

                Years Ending
                December 31,            Amount
                ------------          ----------

                    2006              $  696,000
                    2007                 513,000
                    2008                 386,000
                    2009                 337,000
                    2010                 264,000
                    Thereafter         5,121,000
                                      ----------

                    Total             $7,317,000
                                      ==========

(9a)

Convertible Loan and Short term Bridge Loan


On December 29, 2005, due to various complications,with the deal structure, Adal
Group Inc. were  requested to withdraw our share  registration  statement and to
work with Laurus Master Fund to restructure our contacts. The Company has agreed
with  Laurus  Master  Funds  in 2006 to  withdraw  the SB-2  share  registration
document and to  restructure  the loan.  Principal  repayments  are scheduled at
$25,000 in April, May and June with a full review in July 2006 The interest as a
temporary  arrangement  to be charged  on the loan will be 3%  greater  than the
prime rate  quoted on the Wall Street  Journal.  The  Company  received  funding
through the Laurus Fund in 2005, in the form of a convertible note in the amount
of $2,000,000,  to support cash flow requirements and to cover operating losses.
In May 2006 the Company was unable to meet  interest  and  principal  repayments
under a revised repayment schedule and is currently working with the Laurus Fund
to  restructure  the terms of the note.  Although we have no formal  notice from
Laurus advising us that we are in default, Laurus management are working with us
to restructure the terms of the note, although there can be no assurance that we
will be able to do so.


Prior to the deal restructuring the following arrangements were in place:


The company  entered  into two  agreements  with Laurus  Master Fund in 2005 and
issued an SB-2 share registration document.


On November 21, 2005, we entered a Securities  Purchase Agreement (the "November
Purchase Agreement") with Laurus Master Fund, Ltd. ("Laurus"), pursuant to which
we sold a non-convertible Secured Term Note in the aggregate principal amount of
Five Hundred Thousand Dollars  ($500,000) to Laurus (the "November  Note").  The
principal  amount and any and all accrued and unpaid interest  payable under the
November Note shall be paid on or before May 21, 2006.  This has been superseded
with the  agreement  described  above.  We shall pay  interest on the  principal
amount  of the  November  Note at a rate per  annum  equal to the  "prime  rate"
published in The Wall Street  Journal,  plus three percent,  payable  monthly in
arrears.  Interest accrued but was not payable during the period which commenced
on November 21, 2005 and ended on November 30, 2005. We began paying interest on
the principal amount commencing on December 1, 2005 and shall continue to pay on
the first business day of each consecutive calendar month thereafter.

         We also entered a Reaffirmation and Ratification Agreement, dated as of
November  21,  2005,  with Laurus (the  "Reaffirmation  Agreement"),  whereby we
ratified and confirmed the terms of the Master Security  Agreement,  dated as of
June 29, 2005 by and between us and Laurus (as further described in the Form 8-K
filed with the Securities and Exchange Commission on July 6, 2005).  Pursuant to
the  Reaffirmation  Agreement  and Master  Security  Agreement,  we assigned and
granted to Laurus a continuing  security interest in certain of our, and each of
our  subsidiaries'  assets,  including,   without  limitation,   cash,  accounts
receivable, and equipment.

On June 29, 2005, we entered a Securities Purchase Agreement (the "June Purchase
Agreement"),  with Laurus,  pursuant to which we sold a Secured Convertible Term
Note (the "June Note") in the aggregate principal amount of $1,500,000, which is
convertible  into  shares  of  our  common  stock.  Subject  to  adjustment  and
anti-dilution  provisions set forth in the June Note, the fixed conversion price
with respect to the first $1,000,000 principal amount of the June Note is $0.43,
and with  respect to the  remaining  principal  amount is $0.50.  The  principal
amount and any and all accrued and unpaid  interest  payable under the June Note
is due June 29, 2008 (the  "Maturity  Date").  We paid interest on the principal
amount of the June Note at a rate per annum equal to the "prime rate"  published
in The Wall Street  Journal,  plus three  percent,  payable  monthly in arrears,
commencing on July 1, 2005 and we will pay such  interest on the first  business
day of each consecutive calendar month thereafter.  The interest rate is subject
to adjustment  at the end of each month until the Maturity  Date, as provided in
the June Note.

         Also on June 29, 2005, in connection with the financing transaction, we
issued to Laurus (i) a warrant to purchase up to 2,625,000  shares of our common
stock at an  exercise  price  equal  to $0.90  for the  first  1,312,500  shares
acquired  thereunder  and an exercise  price  equal to $0.98 for any  additional
shares  acquired  thereunder,  and (ii) an option to  purchase  up to  1,054,914
shares of our common  stock at an  exercise  price  equal to $0.0001  per share.
Laurus exercised this option for 1,051,610 shares on June 30, 2005.

         To  secure  the  payment  obligations  arising  under,  out  of  or  in
connection with the June Purchase  Agreement or the other agreements  entered in
connection with the financing,  we entered a Master Security  Agreement pursuant
to which we  assigned  and  granted to Laurus a security  interest in all of our
assets.  We, among other things,  agreed to keep all of the  collateral  free of
additional  liens in excess of $50,000 or as necessary  for taxes or  government
charges,  not to sell any of the collateral without the prior written consent of
Laurus, and keep all collateral insured in Laurus' name.

         We  agreed to file this  Registration  Statement  on Form SB-2 with the
Securities  and Exchange  Commission to register the shares  underlying the June
Note, warrant, and option within 45 days of the closing of the June Note, and to
have  this  Registration  Statement  declared  effective  within  120 days  such
closing.  We initially filed this Registration  Statement on August 12, 2005. On
November 21, 2005, we agreed with Laurus to extend our obligation such that this
Registration Statement must be declared effective by the Securities and Exchange
Commission by February 14, 2006. If we fail to have this Registration  Statement
declared effective by February 14, 2006, we shall pay a penalty to the holder of
the June  Note an  amount  equal to  approximately  $1,000  per day  until  this
Registration Statement is declared effective.


                                       53
<PAGE>

(10) Common Stock

The Company has 100,000,000 shares of common stock authorized and 22,861,832
shares issued and outstanding as of December 31, 2005. The Company does not have
any equity incentive plans or other stock based compensation plans. There are no
outstanding warrants for the purchase of common stock.

(11) Income Taxes

A reconciliation between the Company's effective tax rate and the U.S. statutory
rate is as follows:

                                                              Year Ended
                                                             December 31,
                                                         2005           2004
                                                       --------       --------

U.S. statutory rate applied to
   income from continuing operations
   before taxes                                              35%            35%
                                                       --------       --------
Differential arising from:
   Foreign operations                                        (5%)           (5%)
   Other Permanent Differences                                              --
   Utilization of Net Operating
   Loss Carryforwards                                       (30%)          (30%)

Effective Rate                                              --%            --%
                                                       ========       ========

Foreign operations comprised substantially all operations for fiscal 2005 and
2004. The provision (benefit) from income taxes shown in the consolidated
statements of operations consists of the following:

                                                     Year Ended
                                                    December 31,
                                         2005            2004
                                      ----------      ----------

       Current Provision
       Federal                        $       --
       Foreign                                --      $       --
       State                                  --              --
                                      ----------      ----------

       Total                          $       --      $       --
                                      ----------      ----------

       Deferred Provision
       Federal                        $       --
       Foreign                                --      $   (3,000)
       State                                  --              --
       Total                                  --      $   (3,000)
                                      ----------      ----------
       Grand Total                            --      $   (3,000)
                                      ==========      ==========


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<PAGE>

Deferred Income taxes consisted of the following:

                                                            Year Ended
                                                           December 31,
                                                                2005
                                                           ------------

         Total


         Non-Current Deferred Tax Liability:
              Depreciation and Amortization                $    (55,000)
                                                           ============

Tax benefits of operating loss carryforwards are evaluated on an ongoing basis,
including a review of historical and projected future operating results, the
eligible carryforward period, and other circumstances. Management believes that
it is more likely than not that the deferred tax assets will be realized. During
fiscal 2004 the Company had no current tax liability due to current period
losses, foreign tax adjustments and utilization of net operating loss
carryforwards. Management has recorded a valuation allowance on available net
operating losses to adjust the deferred tax asset to an amount that is more
likely than not to be realizable.

(12) Retirement Plans

The Company has defined contribution plans covering certain employees. The
Company's annual contribution to the defined contribution plans is based on the
matching of employee minimum contributions up to 2% of annual salary and
amounted to $80,000 for the year ended December 31, 2005 and $82,000 for the
year ended December 31, 2004

(13) Accounts Payable

The breakdown of the accounts payable as at December 31, 2005 is:

                     Metal Suppliers               $3,756,000
                     Sub Contractors               $  411,000
                     Toolmakers                    $  297,000
                     Transport                     $  206,000
                     Others                        $1,356,000
                                                   ----------

                     Total                         $6,026,000
                                                   ==========
(14) Subsequent Event (Unaudited)

      On May 4, 2006 each independent director, including Brian Alleman, Keith
Broome and John Sanderson received 20,000 shares of our common stock pursuant to
each such director's quarterly share issuances payable on October 1, 2005 and
January 1, 2005, collectively. These shares are issuable to each such
independent director in reliance on an exemption from registration under Section
4(2) of the Securities Act. Appropriate restrictive legends will be affixed to
each stock certificate issued in such transactions. No broker commissions will
be or have been paid on these issuances. Mr Sanderson also received a further
33,333 shares on May 4, 2006 that the company issued after Mr Sanderson
resigned.

      We will also issue 177,525 shares of our common stock to our investor
relations firm and 19,725 shares of common stock to a certain employee of such
firm, as part of our agreement with our investor relations firm. These shares
are issuable in reliance on an exemption from registration under Section 4(2) of
the Securities Act. Appropriate restrictive legends will be affixed to each
stock certificate issued in such transactions. No broker commissions will be or
have been paid on these issuances.


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