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, 2004

                                       or

[_]   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: 000-29611

                          THE CHILDREN'S INTERNET, INC.
           (Name of Small Business Issuer as specific in its Charter)

                 Nevada                                          20-1290331
                 ------                                          ----------
     (State or Other Jurisdiction of                          (I.R.S. Employer
     Incorporation or Organization)                          Identification No.)

5000 Hopyard Rd, Suite 320 Pleasanton, CA                           94588
-----------------------------------------                           -----
       (Address of Principal Executive Offices)                  (Zip Code)

         Issuer's telephone number, including area code: (925) 737-0144
                                                         --------------

        Securities registered pursuant to Section 12(b) of the Act: None
                                                                    ----

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

                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of Class)

Indicate by check mark whether the issuer (1) has filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such shorter  periods 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 _

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein,  and will not be contained herein, 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. Yes X No __


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<PAGE>

As of December 31, 2004,  the  aggregate  market value of the  Company's  common
stock  held by  non-affiliates  call  persons  other  than  executive  officers,
directors  and  holders  of 10% or more of the  Company's  common  stock was not
determinable.

For the fiscal year ended December 31, 2004, the Company's revenue was $0.00.

As of March 31, 2005 there were  26,578,138  post-split  shares of the Company's
common stock outstanding.


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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
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<S>                                                                                                              <C>
PART I

ITEM 1   DESCRIPTION OF BUSINESS..................................................................................1

ITEM 2   DESCRIPTION OF PROPERTY..................................................................................6

ITEM 3   LEGAL PROCEEDINGS........................................................................................6

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......................................................7

PART II

ITEM 5   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS......................................................................................7

ITEM 6   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND PLAN OF OPERATIONS.........................................................................8

ITEM 7   FINANCIAL STATEMENTS....................................................................................12

ITEM 8   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.....................................................................12

ITEM 8A  CONTROLS AND PROCEDURES.................................................................................12

PART III

ITEM 9   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS & CONTROL PERSONS; COMPLIANCE
         WITH SECTION 16(A) OF THE EXCHANGE ACT..................................................................14

ITEM 10  EXECUTIVE COMPENSATION..................................................................................16

ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........................................18

ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................................................18

PART IV

ITEM 13  EXHIBITS  ..............................................................................................20

ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES..................................................................20

SIGNATURES ......................................................................................................22
</TABLE>


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<PAGE>

PART I

ALL SHARE  AMOUNTS  REFLECT THE  COMPANY'S  2:1 FORWARD  SPLIT OF ITS ISSUED AND
OUTSTANDING  SHARES OF COMMON STOCK EFFECTIVE ON MARCH 11, 2005 UNLESS OTHERWISE
INDICATED.

Forward-Looking Statements

Certain  portions of this Annual Report on Form 10-KSB contain  "forward-looking
statements".  Such  forward-looking  statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance
or  achievements  of  The  Children's  Internet,  Inc.  (the  "Company")  to  be
materially  different  from any future  results,  performance,  or  achievements
expressed  or implied by such  forward-looking  statements,  including  that the
Company's  lack of revenue is not  necessarily  indicative of its future revenue
levels or future financial  performance.  The Company's future operating results
are dependent  upon many factors,  including but not limited to: (i) whether the
Company  is  able to  obtain  sufficient  funding  to fund  its  operations  and
business;  (ii)  whether the Company is able to build the  management  and human
resources  and  infrastructure  necessary to support the growth of its business;
(iii) competitive  factors and developments in the industry in which the Company
competes; (iv) intellectual property protection; and (v) any economic conditions
that would negatively affect the Company's business and expansion plans.

ITEM 1.       DESCRIPTION OF BUSINESS.

Business Development

We were  incorporated  in the State of Nevada on  September  25,  1996 as D.W.C.
Installations,  Inc. We changed  our name to The  Children's  Internet,  Inc. on
December 27, 2002.  We are a development  stage  company and  currently  have no
revenues, only minimal assets, and have incurred losses since our inception.

On July 3, 2002,  Shadrack Films, Inc.  ("Shadrack")  purchased  2,333,510 newly
issued post-split  shares of our common stock for $150,000,  thereby obtaining a
majority  ownership  interest and becoming our parent  company.  Our  President,
Chief Executive Officer and one of our directors,  Sholeh Hamedani,  is the sole
officer, director and shareholder of Shadrack.

On September  10, 2002,  we entered into a License  Agreement  with Two Dog Net,
Inc. ("Two Dog Net") for an exclusive  worldwide  license to market and sell The
Children's  Internet(R)  service.  We were required to pay Two Dog Net a monthly
royalty  payment of 7% of net sales of The Children's  Internet(R)  product.  We
acquired the license for $2,000,000  required to be paid no later than September
10, 2004.

This  original  agreement  did not reflect the true intent of the parties and on
March 3, 2003,  we replaced  the  License  Agreement  with a  Wholesale  Sales &
Marketing  Agreement with the same  effective  date of September 10, 2002.  This
Wholesale Sales and Marketing  Agreement gives us the exclusive  worldwide right
to market, sell, and distribute The Children's Internet(R) service and


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<PAGE>

wholesale  dial-up Internet service of Two Dog Net. We agreed to pay Two Dog Net
a per user  charge of $3.00 per month  for each user  accessing  The  Children's
Internet(R)  service.  The Wholesale  Sales & Marketing  Agreement has a term of
five years and renews for additional five year terms automatically unless either
we or Two Dog Net give written  notice of  termination of the agreement not less
than one year  before  the end of any five year term.  We are moving  ahead with
marketing  The  Children's  Internet(R)  but  have no  plans  to  offer  dial-up
services,  as allowed by our  agreement  with Two Dog Net. In  February  2005 we
amended the Wholesale Sales & Marketing  Agreement  reducing the per user charge
from $3.00 to $1.00. In consideration  for this decrease,  on February 15, 2005,
the Company  granted Two Dog Net, or its  designees an option (the  "Option") to
acquire up to 18,000,000  post-split  shares of our restricted common stock at a
price of $0.07 per share,  exercisable  in whole or in part at any time for five
years  from the date of  grant.  The  Option  also  provides  for  "piggy  back'
registration  rights for all shares  underlying  the Option on any  registration
statement  filed by the Company for a period of one year  following any exercise
of the Option.

Our  President,  Chief  Executive  Officer,  and  one of our  directors,  Sholeh
Hamedani,  was President of Two Dog Net until August 1, 2002.  Ms.  Hamedani,  a
co-founder,  also  owns  approximately  10% of the total  outstanding  shares of
common stock of Two Dog Net. Ms.  Hamedani's  father,  Nasser  Hamedani,  is the
current  President,  Chairman  and  majority  shareholder  of Two Dog  Net.  See
"Certain Relationships and Related Transactions."

Principal products or services and their markets

The  Children's  Internet(R)  offers  access to  pre-selected  and  pre-approved
educational and entertaining age appropriate web pages as well as secure e-mail,
homework help, games, news, super portals to learning activities and educational
resources  all  within,  a protected  online  environment.  We believe  that the
proprietary,  patent-pending security software, Safe Zone Technology(R),  offers
security against  Internet  predators and Internet content that is inappropriate
for children. The target market for The Children's Internet(R) is the 48 million
children  on-line  in 2002  (Report  from  Internet  Commerce  &  Communications
Division,  Information  Technology Association of America,  February,  2002), as
well as America's  schools,  which are  connected to the  Internet.  The rate of
general  Internet use in the United  States is expected to grow by 2 million new
users per month.  (Report  from  Internet  Commerce &  Communications  Division,
Information   Technology  Association  of  America,   February,   2002.)  Nearly
two-thirds  (62%) of US families have  computers at home, but roughly 1 out of 5
(17%)  of those  with  computers  do not  have  Internet  access  due to  safety
concerns. (Report from Internet Commerce & Communications Division,  Information
Technology Association of America,  February,  2002) Surveys tell us that 85% of
all parents with children under 11 years of age have expressed concern for their
child's safety on the Internet by overseeing each and every click and 45% of all
parents  feel the  Internet is critical for  educational  purposes.  (Greenfield
Online, Inc. April 1999)

Competition

In the past four years, competition has significantly declined as many providers
have gone out of  business.  However,  the  market  for  Internet  products  and
services is still  highly  competitive  and there is no  substantial  barrier to
entry in these markets.  Although we currently believe that the diverse segments
of the  Internet  market  provide  opportunities  for more than one  supplier of
products and services similar to ours, it is possible that a single supplier may
dominate one or more market segments.


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<PAGE>

Our management believes that the principal competitive factors in our market are
brand  recognition,   ease  of  use,  comprehensiveness  of  available  content,
customization by the consumer, quality and responsiveness of search results, the
availability  of  high-quality,  focused  value  added  services,  and  required
technology  to offer  access to end users  with few  interruptions.  Competition
among current and future suppliers of Internet  navigational  and  informational
services,  high-traffic  websites  and ISPs could  result in  significant  price
competition  and reductions in revenues.  There can be no assurance that we will
be able to compete successfully.

We compete with other providers of security software,  information and community
services.  Many  companies  offer  competitive  products or services  addressing
filtering of Internet  content,  including,  among others,  Net Nanny (Net Nanny
Software,  Inc.),  Cyber  Patrol (The  Learning  Company),  Cyber  Snoop  (Pearl
Software,  Inc.), Cyber Sentinel (Security Software Systems, Inc.),  Cybersitter
97  (Solid  Oak  Software,   Inc.),   SurfWatch  (SurfWatch   Software,   Inc.),
WebChaperone  (WebCo  International,  Inc.), EdView Channel Lock and EdViewsmart
Zone (EdView, Inc.) and X-Stop (Log-On Data, Inc.). In addition, we compete with
online services such as Yahooligans!  (Yahoo!),  an Internet  navigator designed
for children in grades K-12; America Online (America Online, Inc.), which offers
parental control options for Internet access;  and Disney's Blast Online,  which
also offers child-oriented Internet navigation.  These companies already have an
established  market  presence,  and are far ahead of us in gaining market share.
Also, entities that sponsor or maintain high-traffic websites or that provide an
initial point of entry for Internet  users,  such as the Regional Bell Operating
Companies or commercial  online  services such as the Microsoft  Network ("MSN")
and America Online ("AOL"),  currently offer and could further develop,  acquire
or license Internet search and navigation  functions that could compete with our
product.

Many  of our  existing  competitors,  as  well  as a  number  of  potential  new
competitors,  have  significantly  greater financial,  technical,  marketing and
distribution  resources.  In addition,  providers of Internet tools and services
may be acquired by,  receive  investments  from, or enter into other  commercial
relationships with larger, well-established and well-financed companies, such as
Microsoft or AOL. Greater  competition  resulting from such relationships  could
have a material adverse effect on our business,  operating results and financial
condition.

Sources and availability of raw materials and principal suppliers

We currently offer one product, The Children's Internet(R) service,  through our
agreement  with  Two  Dog  Net.  Because  our  plan  is to  initially  focus  on
establishing a base of subscribers to the primary service,  we do not have plans
to offer dial-up  Internet  service as allowed by our agreement with Two Dog Net
for at least the next twelve months. Any events adversely  affecting Two Dog Net
will also affect us as we are entirely  dependent on our agreement  with Two Dog
Net for any revenues. If Two Dog Net were to cease its operations, we would need
to find alternative  sources of revenues,  which we may be unable to do. In such
an event, we could be forced to cease operations entirely.

We are also dependent upon private third party  providers such as EmeryTech Data
Center to host our servers and provide the principal  Internet  connections  for
The Children's  Internet(R).  Any disruption in the Internet  access provided by
third-party  providers or any failure of third-party  providers to handle higher
volumes of user traffic  could have a material  adverse  effect on our business,
operating results, and financial condition.


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<PAGE>

Dependence on one or a few major customers

We currently do not have any customers.

Intellectual property

Our success is dependent on the proprietary technology from Two Dog Net, that we
market and sell.  Two Dog Net owns the  proprietary  technology  underlying  The
Children's  Internet(R)  service.  We  do  not  have  any  patents,  pending  or
otherwise.  Following  is a list  of  the  intellectual  property  we  have  the
exclusive rights to use from Two Dog Net:

      o     "The Children's Internet(R)" registered trademark;

      o     "Safe Zone Technology(R)" registered trademark;

      o     The Safe Zone Technology(R) software patent application pending; and

      o     "Two Dog Net(TM)" trademark.

"Children's  Internet" is a service mark of Two Dog Net and was registered  with
the U.S. Patent and Trademark  Office on October 9, 2001 as Registration  Number
Serial  Number  75378450.  We do  not  hold  any  registered  service  marks  or
trademarks.

Two Dog Net filed  U.S.  Patent  Application  No.  08/971,447  for the Safe Zone
Technology(R)  software on or about  December 1, 1997 and, on or about  November
20, 2000, filed a continuation  application.  They have advised us that there is
no assurance that the patent will ever be issued and that the patent application
process may continue through the year 2005.

Despite our efforts to protect our proprietary rights,  unauthorized parties may
attempt to copy  aspects of  products or to obtain and use  information  that we
regard as proprietary.  Policing  unauthorized use of our products is difficult,
and while we  cannot  determine  the  extent  to which  piracy  of our  software
products  exists,  such  piracy  can be  expected  to be a  persistent  problem,
particularly in international  markets and as a result of the growing use of the
Internet. Some courts have held that shrink-wrap licenses,  because they are not
signed  by the  licensee,  are not  enforceable.  In  addition,  there can be no
assurance that patent  applications  filed by Two Dog Net will result in patents
being  issued,  and any  patents  that may be issued to it in the  future,  will
afford protection against competitors with similar technology;  nor can there be
any assurance  that patents  issued to Two Dog Net will not be infringed upon or
designed  around by others or that others will not obtain  patents that we would
need to license or design around. Impairment of our intellectual property rights
could negatively  affect our business or could allow competitors to minimize any
advantage that our proprietary technology may give us.

Government approval and effect of existing or probable governmental  regulations
on the business

Due to the increasing  popularity and use of the Internet,  laws and regulations
with respect to the Internet may be adopted at federal,  state and local levels,
covering  issues  such  as  user  privacy,   freedom  of  expression,   pricing,
characteristics  and quality of products and  services,  taxation,  advertising,


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<PAGE>

intellectual  property  rights,  information  security  and the  convergence  of
traditional telecommunications services with Internet communications.  We cannot
predict  the nature of future  legislation  and the  manner in which  government
authorities may interpret and enforce that legislation. As a result, we could be
subject to potential  liability  under future  legislation,  which in turn could
restrict our operations or cause additional  expenses or losses. For example, if
legislation were adopted in the U.S. or  internationally  that makes transacting
business  over the Internet less  favorable or otherwise  curtails the growth of
the Internet,  this could reduce demand for our products and services and reduce
sales and profits.

In addition,  applicability  to the Internet of existing laws  governing  issues
such as property  ownership,  copyright and other intellectual  property issues,
taxation,  libel,  obscenity  and  personal  privacy  is  uncertain.  These laws
generally pre-date the advent of the Internet and related technologies and, as a
result, do not consider or address the unique issues of the Internet and related
technologies.  Changes to laws  intended to address  these  issues  could create
uncertainty in the  marketplace,  reducing demand for our services or increasing
the cost of doing business as a result of litigation costs or increased  service
delivery costs.

Research and Development

Based on our  agreement  with Two Dog  Net,  we will  look to Two Dog Net as our
research  and  development  partner and will  continue to rely on Two Dog Net to
keep The Children's Internet(R) technology current. To date, all of the research
and development efforts have been performed by Two Dog Net.

Over the course of the past  seven  years,  Two Dog Net has been  focused on the
development  of Safe Zone  Technology(R),  The Children's  Internet(R),  and the
creation of unique user interfaces and feature  functionality for The Children's
Internet(R).  In the future,  in  association  with Two Dog Net, we will explore
ways to leverage our current knowledge on compatible product  enhancements.  For
example,  some of the development may focus on interactive  learning systems,  a
parent's  portal,   multiple  participant  interactive  games  for  children,  a
companion product to The Children's  Internet(R)  aimed at the teen market,  and
on-line books.

We will  only  begin  development  of new  products  after we have  successfully
launched The Children's  Internet(R) and feel  comfortable that the research and
development  effort will not dilute our focus and resources  from the success of
The Children's Internet(R).

Staff and Consultants

We currently have five  individuals  serving as our key staff:  Sholeh Hamedani,
Roaya Hamedani,  Jamshid Ghosseiri Tyler Wheeler and John Heinke.  Four of these
are full-time  staff:  Sholeh  Hamedani,  Roaya Hamedani,  John Heinke and Tyler
Wheeler. In September 2004, our Parent Company, Shadrack retained John Heinke to
serve as our full-time controller.  We anticipate hiring additional staff during
calendar  year 2005.  We hire  independent  contractors  on an "as needed" basis
only. We have no collective bargaining agreements.

On February  25, 2005 we entered  into a  Consulting  Agreement  with  Crosslink
Financial Communications,  Inc., a California corporation (herein referred to as
"Consultant")  for a term commencing  February 25, 2005 and ending twelve months
thereafter. Consultant is to represent the Company in stockholder communications
and public  relations  with existing  shareholders,  brokers,  dealers and other
investment  professionals as to the Company's  current and proposed  activities,
and to consult with management.


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<PAGE>

For undertaking  this engagement the Company agreed to issue to the Consultant a
"Commencement  Bonus"  payable in the form of 200,000  restricted  shares of the
Company's  common  stock.  In addition,  the Company  agreed to a monthly  stock
compensation  of 8,000  shares  of  common  stock  every  month on the  contract
anniversary  date,  and a cash  fee of  $5,000  per  month  for the  term of the
Agreement.  Out of this  fee,  Consultant  will pay for  complementary  services
(e.g.,  other mailing services,  email services,  data base extensions) up to an
average of $2,500 per month, never less than $1,500 per month.

ITEM 2. DESCRIPTION OF PROPERTY

Our parent company, Shadrack, has agreed to allow us to operate from its offices
located at 5000  Hopyard  Rd.,  Suite 320,  Pleasanton,  CA 94588 under a verbal
lease revocable at any time without prior notice. These offices are 2,059 square
feet and are leased by Shadrack from Principal Life Insurance  Company,  an Iowa
corporation.  From March 22, 2004 until April 30,  2004,  we occupied the office
space on a rent-free basis.  From month two (May 2004) through 13 the basic rent
per month is $3,603, for months 14 through 25 the basic rent per month is $3,706
and for months 26  through  37 the basic rent per month is $3,809  under a lease
agreement that expires on May 1, 2007.

ITEM 3. LEGAL PROCEEDINGS

On November 24, 2004 Oswald & Yap, A Professional  Corporation ("O & Y") filed a
complaint  in the  Superior  Court of  California,  County of  Orange,  Case No.
04CC11623,  against the Company, seeking recovery of allegedly unpaid legal fees
in the amount of $50,984.86 in connection with the legal  representation  of the
Company. The complaint includes causes of action for breach of contract, account
stated,  and quantum merit.  The contract sued upon contains an attorney's  fees
clause  that  would  entitle  the  prevailing  party on the claim to an award of
reasonable  attorney's fees as determined by the court. The Company disputes the
amounts alleged owed,  alleging that some payments have not been credited by O&Y
and that O&Y's  services  were  otherwise  unsatisfactory.  O&Y has submitted an
Offer to Compromise for a $15,000  payment by the Company to O&Y in exchange for
mutual releases that the Company has taken under consideration.

The  Company  has  cross-claimed   against  O&Y  alleging  breach  of  contract,
professional negligence, negligent representation,  and breach of good faith and
fiduciary  duty.  The Company is seeking  damages in an  unspecified  amount for
costs,  legal fees and losses incurred.  O&Y has vigorously  disputed the claims
set forth in the  cross-complaint  and has  indicated its  intention,  should it
prevail in  defending  the  cross-claim,  to  institute a malicious  prosecution
action  against  the  Company,  Nasser  Hamedani,  Sholeh  Hamedani  and Company
counsel.

The Company  perceives a contingent asset with respect to the cross-claim  filed
in the Superior Court of California, County of Orange, Case No. 04CC11623 by TCI
against O&Y,  the  principal  allegation  is that O&Y was retained to assist its
predecessor company in the purchase and acquisition of D.W.C. Installations with


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<PAGE>

the  expectation  that D.W.C.  had available  free-trading  shares such that TCI
could immediately raise capital on the relevant markets and that in advising TCI
through  the  purchase,  O&Y failed to  properly  advise TCI as to the status of
D.W.C.  Installations and its shares which in fact were not  free-trading.  As a
result of this  conduct,  TCI  alleges  damages  in an  unspecified  amount  but
including purchase costs, extended operation costs, refiling costs, audit costs,
legal fees, loan fees, lost market share,  and costs for  registration.  At this
stage of the litigation,  we believe recovery is probable but any amount certain
is not calculable as of this date.

The Company  perceives  a  contingent  liability  in  connection  with the Stock
Purchase Agreement executed on October 11, 2002, between identified Shareholders
and  identified  Purchasers.  Under the  terms of Stock  Purchase  Agreement,  a
payment of  $150,000  is due to be paid into  escrow in part  consideration  for
purchase  of the  stock  of  D.W.C.  Installations,  Inc.  The  payment  date is
designated  as 90 days from the date that the Company's  [D.W.C.  Installations,
Inc.,  a Nevada  Corporation]  shares  of  common  stock  become  quoted  on the
over-the-counter  bulletin  board  system.  The  shares  became  quoted  on  the
over-the-counter  bulletin board system on December 23, 2004. If this payment is
not  made,   there  could  be  exposure  in  connection   with  the   identified
shareholders' efforts to collect the amounts allegedly due.

On September  30, 2004 the Company  received a demand for  arbitration  from its
former   auditor,   Stonefield   Josephson,   relating  to  the   collection  of
approximately  $21,700 in fees  allegedly  owed by the  Company  for  accounting
services which were disputed by the Company.  The parties  settled their dispute
and on November 30, 2004 entered into a Settlement  Agreement and Mutual General
Release,  which was executed on December 10,  2004.  Pursuant to the  Settlement
Agreement the Company agreed to pay  Stonefield  Josephson the sum of $15,500 in
two  installments.  The first installment of $7,750 was paid on January 18, 2005
and the second and final installment of $7,750 was paid on March 4, 2005.

On  February  13,  2004  Shadrack  received  notice  that their  landlord,  Hill
Physicians Medical Group, Inc. had filed an unlawful detainer action against the
Company on February 6, 2004 in the Contra  Costa County  Superior  Court as case
number  WS04-0238.  On February 19, 2004 the Company signed a Mutual  Settlement
Agreement  and  Release.  The effect of the  release has been  reflected  in the
operating  statements as a decrease in rent expense for the years ended December
31, 2003 and 2002 in the amounts of $32,059 and $4,276, respectively.

We are not aware of any other pending or threatened litigation that could have a
material adverse effect on our business.

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

None.

PART II

ITEM 5. MARKET  FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
        MATTERS.

The Company's common stock was approved for trading in the OTC Bulletin Board on
December 23, 2004 under the trading symbol CITC:OB. Actual trading of our shares
began on February 23,  2005.  The  following  are the  approximate  high and low
closing bid quotations on the OTC Bulletin Board for the first quarterly  period
of trading:


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<PAGE>

<TABLE>
<CAPTION>
Period                                        High Closing Bid                   Low Closing Bid
------                                        ----------------                   ---------------
<S>                                           <C>                                         <C>
1st Quarter 2005                              $6.35                                       $1.75

April 1 - May 31                              $8.40                                       $1.65
</TABLE>

Holders

As of March 31, 2005 there were  approximately  230 shareholders of record.  The
Company's transfer agent is Transfer Online, 227 S.W. Pine, Suite 300, Portland,
OR 97204.

Dividend Policy

The  Company  has not paid any cash  dividends  on its  Common  Stock  since its
inception and does not  anticipate or  contemplate  paying cash dividends in the
foreseeable future.

Shares Issued During Fiscal 2004

The Company did not issue any shares during the 2004 fiscal year.

In October 2002, the Company  entered into an agreement with five  shareholders,
none of whom are  shareholders of either Shadrack or Two Dog Net, which provided
that, in consideration for the agreement of these shareholders to exchange their
freely  tradable shares in the aggregate of 1,118,500 in exchange for restricted
common stock the Company agreed to issue each such shareholder or their designee
four  shares of  restricted  common  stock for every one freely  tradable  share
owned,  or an aggregate of 4,474,000  pre-split  shares as a debt financing fee.
The agreement and the agreed upon issuance of 4,474,000 shares was not accounted
for in the Company's  financial  statements  for any effected  interim period or
fiscal year nor was the agreement  disclosed by the Company in previous  filings
with the SEC or  included  as an exhibit  to any such  filings as a result of an
error of omission.  Nevertheless,  the  obligation of the Company to issue these
shares  accrued in fiscal year 2002.  As a result of the  Company's  forward 2:1
stock split of March 2005 the number of shares owed, without  restrictive legend
in accordance  with Rule 144(k) of the  Securities  Act of 1933, as amended,  is
8,948,00 post-split shares.

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
        OPERATIONS.

Critical Accounting Policies and Estimates

The  Company's  financial  statements  have been  prepared  in  accordance  with
accounting principles generally accepted in the United States of America,  which
contemplate  continuation of the Company as a going concern.  The preparation of
these financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.


                                       8
<PAGE>

Selected Financial Data

The  following  selected  statement  of  operations  data  for the  period  from
September 25, 1996, the date of our inception, through December 31, 2004 and for
the  fiscal  year  ended  December  31,  2004 were  derived  from our  financial
statements  and notes thereto  included in this annual report which are audited.
Historical  results  are not  necessarily  indicative  of  results  that  may be
expected for any future period. The following data should be read in conjunction
with "Plan of Operation"  and our audited  financial  statements,  including the
related footnotes.

<TABLE>
<CAPTION>
------------------------------------------------------- ---------------------------- ---------------------------
                                                                                        For the period from
                                                               For the year              September 25, 1996
                                                            ended December 31,          (inception) through
                                                                   2004                  December 31, 2004
------------------------------------------------------- ---------------------------- ---------------------------
<S>                                                                       <C>                       <C>
Statement of Operations Data
------------------------------------------------------- ---------------------------- ---------------------------
Net sales                                                                       --                          --
------------------------------------------------------- ---------------------------- ---------------------------
Operating expenses                                                        $379,979                  $1,802,934
------------------------------------------------------- ---------------------------- ---------------------------
Operating loss                                                            (379,979)                 (1,802,934)
------------------------------------------------------- ---------------------------- ---------------------------
Net Loss                                                                 ($380,779)                ($1,805,334)
------------------------------------------------------- ---------------------------- ---------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                        As of December 31, 2004
------------------------------------------------------- --------------------------------------------------------
<S>                                                                                                 <C>
Balance Sheet Data:
------------------------------------------------------- --------------------------------------------------------
Total assets                                                                                                $0
------------------------------------------------------- --------------------------------------------------------
Current liabilities                                                                                    474,373
------------------------------------------------------- --------------------------------------------------------
Long-Term Liabilities                                                                                       $0
------------------------------------------------------- --------------------------------------------------------
Total stockholders' deficit                                                                          ($474,373)
------------------------------------------------------- --------------------------------------------------------
</TABLE>

Plan of Operation

You should read the  following  plan of operation  together  with our  financial
statements and related notes  appearing  elsewhere in this report.  This plan of
operation contains forward-looking statements that involve risks, uncertainties,
and assumptions. The actual results may differ materially from those anticipated
in these forward-looking  statements as a result of certain factors,  including,
but not limited to, those described elsewhere in this Report.

On September 10, 2002, we entered into a License  Agreement with Two Dog Net for
an exclusive  worldwide  license to market and sell The  Children's  Internet(R)
service.  However,  because  this  agreement  did not  reflect the intent of the
parties,  we replaced the royalty and license agreement with a Wholesale Sales &
Marketing  Agreement with the same effective date of September 10, 2002. The new
agreement  provides  for us to be the  exclusive  marketers  of  Two  Dog  Net's
proprietary and patent pending secured Internet service for pre-school to junior
high school aged children called The Children's Internet(R).  We further amended
this  agreement  in  February  2005 to  decrease  the per user fee from $3.00 to
$1.00. In consideration for this decrease,  Two Dog Net was granted an option to
acquire 18,000,000 post split shares of the Company's restricted common stock at
an exercise  price of $.07 per share for five years from the date of grant.  The
shares underlying the option have "piggy back" registration  rights for a period
of one year following any exercise of the option.


                                       9
<PAGE>

We plan to introduce The Children's  Internet(R)  service designed  specifically
for  children  3-14  years  of age that  allows  them to have  completely  safe,
unrestricted  live  access to the  Internet.  The  cornerstone  of our  consumer
marketing plan is a national  television  advertising  campaign which includes a
30-minute  infomercial  that was produced over a two-year  period of time by Two
Dog Net and is ready to air. We intend to utilize the  infomercial  to introduce
The  Children's  Internet(R)  service  to the  public,  as well as  build  brand
recognition  and generate  customer  subscriptions.  We plan to first  conduct a
media test in the fourth  quarter of 2005. We believe the results from the media
test will give us the platform to launch the advertising  campaign on a national
basis thereafter and be the basis for the ongoing infomercial media schedule for
2005 and 2006.

In a Stock Purchase Agreement dated October 11, 2002, our original  shareholders
sold then 2,237,000 post-split shares of our common stock to various purchasers,
two of whom are  related  parties to our  management,  Nasser  Hamedani,  Sholeh
Hamedani's father, and Soraiya Hamedani, Sholeh Hamedani's sister. Some of these
purchasers were introduced to the original shareholders by Sholeh Hamedani,  our
President,  Chief Financial  Officer,  and a Director.  Some of these purchasers
resold their shares to unrelated  third  parties.  The proceeds  received by the
purchasers from the stock sales was loaned to Two Dog Net who, in turn, loaned a
portion of the proceeds to Shadrack,  our parent company, to finance our initial
operations.  These amounts are reflected on the financial  statements as "Due to
Parent  Company".  Our  President,  Chief  Executive  Officer,  and  one  of our
directors,  Sholeh  Hamedani,  is the sole  shareholder  of our parent  company,
Shadrack.

Pursuant to the Stock  Purchase  Agreement  dated October 11, 2002,  the Company
entered into a subsequent agreement with five shareholders,  none of whom was an
affiliate of the Company, to issue four shares of its restricted common stock in
exchange for every one freely tradable share owned by the five shareholders as a
debt financing fee. None of the 8,948,000  post-split shares were ever issued by
the Company,  accounted for in its financial  statements or disclosed in filings
previously  made with the SEC. See "Item  5-Market for the  Registrant's  Common
Equity and Related Stockholder Matters - Shares Issued During Fiscal 2004."

As of  December  31,  2004,  we had net loss  from  inception  of  approximately
$1,805,000. Of this amount, approximately $595,000 represents the estimated fair
market value for the cost of wages,  if paid,  for the services  rendered by our
President,  Chief Executive Officer and an outside  consultant (we have recorded
these amounts for the cost of wages,  since they did not charge the Company,  as
additional paid in capital), $417,000 represents professional fees such as legal
and  accounting  expenses,  $575,000  represents  a debt  financing  fee and the
balance of $218,000 consists primarily of occupancy and telecommunications costs
including internet costs. To date, our parent company,  Shadrack, has funded all
of our expended costs.

Currently,  we are dependent on funding from Shadrack for our current operations
and for providing  office space and utilities  that, for the year ended December
31, 2004 averaged $9,300 per month in operating costs, exclusive of professional
fees and time  donated  by  employees.  At  February  15,  2005,  the amount due
Shadrack was approximately $457,000. Shadrack is under no obligation to continue
to fund our  operations and could stop at any time without  notice.  We estimate
that we need a minimum of $220,000 in cash to continue  our  operations  for the
next twelve  months.  On February 15,  2005,  the  Company's  Board of Directors
authorized the conversion of all debt owed to Shadrack of approximately $457,000
into  13,054,628  post-split  shares of restricted  common stock at a conversion
price of $0.07 per share.


                                       10
<PAGE>

Where  practicable we plan to contract with third party  companies to market The
Children's  Internet  Service  as  well  as to  provide  administrative  support
services  such as billing,  level one technical  support,  and the like. We have
already entered into two agreements with Infolink  Communications,  Ltd, a third
party company, for the marketing of our service.  However, there is no assurance
that we will be able to enter into  additional  arrangements  for  marketing and
administrative support services.

On February  25, 2005 we entered  into a  Consulting  Agreement  with  Crosslink
Financial Communications,  Inc., a California corporation (herein referred to as
"Consultant")  for a term commencing  February 25, 2005 and ending twelve months
thereafter. Consultant is to represent the Company in stockholder communications
and public  relations  with existing  shareholders,  brokers,  dealers and other
investment  professionals as to the Company's  current and proposed  activities,
and to consult with management.

For undertaking  this engagement the Company agreed to issue to the Consultant a
"Commencement  Bonus"  payable in the form of 200,000  restricted  shares of the
Company's  common  stock.  In addition,  the Company  agreed to a monthly  stock
compensation  of 8,000  shares  of  common  stock  every  month on the  contract
anniversary  date,  and a cash  fee of  $5,000  per  month  for the  term of the
Agreement.  Out of this  fee,  Consultant  will pay for  complementary  services
(e.g.,  other mailing services,  email services,  data base extensions) up to an
average of $2,500 per month, never less than $1,500 per month.

On May 5, 2004,  our  registration  statement on Form SB-2 ("SB-2") was declared
effective by the SEC. The SB-2 registered 2,237,000 post-split shares for resale
by our selling  shareholders and an additional  8,000,000 post-split shares were
registered for public sale directly by us. We had planned on using the proceeds,
if any,  from  the  sale of the  shares  registered  for  sale by us to fund the
Company's  business  plans and  operations.  However,  management  determined to
de-register the 8,000,000  post-split  shares and on October 19, 2004 we filed a
post-effective  amendment to the SB-2 which was declared effective by the SEC on
October 25, 2004. As a result, we did not realize any of the anticipated funding
we may have received from the sale of these shares. Since such time, we have not
had any financing except from loans received from Shadrack.

Need for Additional Funds

Since our anticipated  offering of shares to the public was terminated,  we have
relied exclusively on loans from Shadrack to fund all of our expenses.  There is
no  assurance  that  Shadrack  will be able or willing to continue  such funding
indefinitely.  We will be required to obtain  additional  funds through  private
placements  of our debt or equity  securities or by borrowing  money.  We do not
have any arrangements with potential  investors or lenders to provide such funds
and there is no assurance that such additional  financing will be available when
required in order to proceed with our  business  plan.  Further,  our ability to
respond  to   competition   or  changes  in  the  market  place  or  to  exploit
opportunities  will  be  significantly  limited  by lack  of  available  capital
financing.  If we are unsuccessful in securing the additional  capital needed to
continue  operations  within the time required,  we will not be in a position to
continue operations. In this event, we would attempt to sell the Company or file
for bankruptcy.


                                       11
<PAGE>

Off-Balance Sheet Arrangements

None.

ITEM 7.   FINANCIAL STATEMENTS.

The financial  statements  required to be filed pursuant to this Item 7 begin on
page F-1 of this report.

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

Effective July 16, 2004, the Company's Board of Directors  dismissed  Stonefield
Josephson,  Inc.  ("Stonefield") as its independent  auditor for the fiscal year
ended  December 31, 2004 and approved  the  engagement  of Marc Lumer & Company,
Certified Public Accountants ("Lumer") as Stonefield's replacement. The decision
to change auditors was approved by the Company's Board of Directors.

For the last two fiscal years,  Stonefield's reports on the financial statements
of the Company did not contain an adverse  opinion or a  disclaimer  of opinion,
nor were the reports  qualified or modified as to  uncertainty,  audit scope, or
accounting  principles.  During the fiscal  years  ended  December  31, 2002 and
December 31, 2003,  and the  subsequent  interim  period  through July 16, 2004,
there  were  no  disagreements  with  Stonefield  on any  matter  of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure  which, if not resolved to the  satisfaction of Stonefield  would have
caused  Stonefield to make reference to the matter in their reports.  There were
no  "reportable  events",  as that term is  described  in Item  304(a)(1)(v)  of
Regulation S-K.

ITEM 8A.  CONTROLS AND PROCEDURES

(a)  Restatement.

     In the course of the due  diligence for the Annual Report on Form 10-KSB of
     the Company for the fiscal year ended  December  31, 2004,  our  management
     identified an agreement  that the Company had entered into with five of our
     shareholders  on  October  11,  2002.  This  agreement   provided  that  in
     consideration for the agreement of these  shareholders to loan an affiliate
     of the Company  proceeds  from the sale of their  shares of common stock of
     the Company to third  parties,  the Company  would issue four shares of its
     restricted  common stock for every one share owned. The aggregate number of
     shares of  restricted  common stock that the Company was obligated to issue
     pursuant to the agreement was 4,474,000  pre-split  (8,948,000  post-split)
     shares.  The agreement  was not disclosed in any of the Company's  previous
     SEC filings or otherwise  included as an exhibit as a result of an error of
     omission.  In addition,  the  4,474,000  pre-split  (8,948,000  post-split)
     shares to be issued  were not  included in any of the  Company's  financial
     statements  for the fiscal years ended  December 31, 2003 or 2002 or in any
     interim reporting period.


                                       12
<PAGE>

     Management  brought this matter to the  attention of its Board of Directors
     and the Board of Directors  brought it to the  attention  of the  Company's
     independent  auditor.  After  discussions  with  management,  the  Board of
     Directors determined that previously reported financial information for the
     Company be  restated  to reflect the  agreement.  In light of the  expected
     restatement, the Company filed a Form 8-K on April 21, 2005 under Item 4.02
     (a)  advising  that  due  to an  error,  its  previously  issued  financial
     statements  for the fiscal years ended  December 31, 2003 and 2002 and such
     interim  periods covered thereby and for the interim periods in fiscal 2004
     should no longer be relied upon.

(b)  Evaluation of Disclosure Controls and Procedures and Remediation

     In  connection  with the  restatement,  under  the  direction  of our Chief
     Executive  Officer  and  Controller,  we have  reevaluated  our  disclosure
     controls and  procedures.  We have  identified  a material  weakness in our
     internal controls and procedures relating to the handling and disclosure of
     material agreements.

     We are  confident  that,  as of the  date of  this  filing,  we have  fully
     remediated the material weakness in our internal controls and procedures by
     ensuring  that all  agreements  be  reviewed  by  management  to  determine
     materiality and that all relevant personnel  understand and apply the rules
     relating to disclosure of material agreements.

     In  connection  with this Form  10-KSB,  under the  direction  of our Chief
     Executive Officer, we have evaluated our disclosure controls and procedures
     as currently in effect, including the remedial actions discussed above, and
     we have  concluded  that,  as of this date,  our  disclosure  controls  and
     procedures are effective.

It should be noted that while our management believe our disclosure controls and
procedures provide a reasonable level of assurance,  they do not expect that our
disclosure  controls and procedures or internal  controls will prevent all error
and all fraud. A control system,  no matter how well conceived or operated,  can
provide only  reasonable,  not absolute,  assurance  that the  objectives of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource  constraints,  and the benefits of controls must be
considered relative to their costs.  Because of the inherent  limitations in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control issues and instances of fraud,  if any, within the Company have been
detected.  These  inherent  limitations  include the realities that judgments in
decision-making  can be faulty,  and that breakdowns can occur because of simple
error or mistake.  Additionally,  controls can be circumvented by the individual
acts of some  persons,  by  collusion of two or more  people,  or by  management
override of the controls.  The design of any system of internal control is based
in part upon certain  assumptions  about the  likelihood of future  events,  and
there can be no assurance  that any design will succeed in achieving  its stated
goals under all  potential  future  conditions.  Over time,  controls may become
inadequate  because of changes in conditions,  or the degree of compliance  with
the policies or procedures may deteriorate.  Because of the inherent limitations
in a  cost-effective  control  system,  misstatements  due to error or fraud may
occur and not be detected.


                                       13
<PAGE>

ITEM 8B.   OTHER INFORMATION

None.

                                    PART III

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

Our directors and executive officers are as follows:

<TABLE>
<CAPTION>
---------------------------------------- --------------------- -------------------------------------------------------
Name                                     Age                   Position
---------------------------------------- --------------------- -------------------------------------------------------
<S>                                      <C>                   <C>
Sholeh Hamedani                          37                    President, Chief Executive Officer, Chief Financial
                                                               Officer, Chairman of the Board of Directors
---------------------------------------- --------------------- -------------------------------------------------------
Jamshid Ghosseiri                        65                    Secretary, Director
---------------------------------------- --------------------- -------------------------------------------------------
Tyler Wheeler                            34                    Director
---------------------------------------- --------------------- -------------------------------------------------------
Roger Campos, Esq.                       58                    Director
---------------------------------------- --------------------- -------------------------------------------------------
Dale Boehm                               36                    Director
---------------------------------------- --------------------- -------------------------------------------------------
</TABLE>

Ms. Sholeh  Hamedani,  has been our President,  Chief Executive  Officer,  Chief
Financial Officer and Chairman of the Board since August 23, 2002. From May 2002
through  the  present,  she has  served as the  President,  CEO and  founder  of
Shadrack Films, Inc., our parent company. From July 1995 to August 2002, she was
President  and  co-founder  of Two Dog Net, a security  solutions  provider  and
software  developer  and an affiliate of the Company.  She was  responsible  for
managing  product  development  of new  technologies,  as well as  creating  and
implementing  their marketing  strategies.  Ms. Hamedani's  experience  includes
local and national advertising campaigns on television, radio, and print as well
as producing,  scripting and directing educational video programs and television
infomercials.  Prior to Two Dog Net, Ms.  Hamedani was part of the founding team
at SyberVision  Systems in the Production and TV Media  Department  from 1985 to
1989. Ms. Hamedani  attended  California State  University,  Hayward majoring in
Business Administration from 1985 to1988.

Mr.  Jamshid  Ghosseiri has been a director  since August 23, 2002 and Secretary
since January 2, 2003.  From January 9, 1989 through the present,  he has served
as Chief of the  Microbiology  Department  at Mt.  Diablo  Medical  Center.  Mr.
Ghosseiri has over 35 years of experience in the field of clinical  microbiology
and  research in  infectious  diseases.  He received a B.S.  from San Jose State
University  in 1966  and  completed  his Post  Graduate  Studies  in  Infectious
Diseases at Stanford University in 1969.

Mr. Tyler Wheeler has been our Chief  Software  Architect  and a director  since
August 23, 2002. He  co-founded  Micro Tech Systems in 1989. In 1993, he and his
father  founded  Integrative  Systems,  Inc., a hardware  and software  computer
consulting  firm.  From January 1996 to August 2002 , Mr. Wheeler served as Vice
President of Technology at Two Dog Net Mr.  Wheeler  completed a B.A. in Finance
and Business Law at California State University, Fresno in 1996.


                                       14
<PAGE>

Mr. Roger  Campos,  Esq. has been a director  since August 23, 2002.  Mr. Campos
received his J.D. (law) degree in June 1972 from the United States International
University (San Diego,  CA) and received his B.A. in 1969 from the University of
California at Santa Barbara.  From February 2002 through the present,  he serves
as President and CEO of the Minority Business Roundtable,  a national membership
organization,  based  in  Washington  DC,  for  CEOs  of  the  nation's  largest
minority-owned  companies.  From January 2000 to February  2002,  Mr. Campos was
Executive  Director of the Minority  Business  Roundtable.  From January 1997 to
January  2000,  he served as Vice  President  of  government  relations  for the
Hispanic   Association  of  Colleges  and  Universities.   Mr.  Campos  provides
consulting  services  in the  areas  of  contracting,  marketing,  and  business
transactions.

Mr. Dale Boehm has been a director  since August 23, 2002.  From  September 2002
continuing  through  today Mr.  Boehm is the  Founder and  President  of Caspian
Technology  Concepts,  a  consulting  firm  specializing  in network  management
services.  Previous  to this,  Mr.  Boehm  served as  Director of Sales at Qwest
Telecommunications, Inc from July 2001 continuing until August 2002 where he was
responsible  for 90+  direct  reports  and all of the  revenue  in the  National
Accounts  division in Illinois and  Wisconsin.  From December 2000 to July 2001,
Mr. Boehm was the Regional Vice  President of Central Region Sales at One Secure
Inc.,  a managed  security  services  provider  enabling  clients  to  co-manage
firewalls.  Mr.  Boehm was  Regional  Vice  President  Enterprise  Solutions  of
GlobalCenter  from  November  1999  through  December  2000 prior to its sale to
Exodus.  He was also the Manager of IP Network  Solutions at AT&T from  February
1997 through November 1999. From January 2000 through the present, Mr. Boehm has
been an instructor of TCP/IP, Business-to-Business e-Commerce, and IP Technology
programs at the  University of  Wisconsin-Milwaukee  where he is the Chairman on
the Executive Steering Committee for the University Outreach Program. He is also
a member of the Information Systems Security  Association  (ISSA)(R).  Mr. Boehm
received his Certificate of  Telecommunications  Analysis from the University of
Wisconsin-Milwaukee  in 1994 and is currently enrolled at Concordia  University,
Mequon, Wisconsin for a Bachelor of Arts, Management & Communication degree.

Key Staff

John J. Heinke, C.P.A. has been our Controller since September 2004. He received
his B.A. Degree in Economics from California State University, Chico, and became
a Certified Public  Accountant in the District of Columbia in 1967. From 1996 to
2004,  he was  Accounting  Manager at  HighSoft,  Inc.,  a software  development
company and reseller of computer products and services.  Previously,  Mr. Heinke
served as Controller of SyberVision Systems where he directed the accounting and
management  information  systems,  as SyberVision  grew from a startup to a $100
million company in four years. Other experience includes managing the accounting
for a $1.7 billion  investment  portfolio at Prudential's Real Estate Investment
Department in San  Francisco  from 1978 through  1982.  Previously,  he was with
Price Waterhouse, serving as Manager of the El Salvador office from 1974 through
1977.

Directors are elected to serve until the next annual meeting of stockholders and
until their  successors  have been  elected  and have  qualified.  Officers  are
appointed  to serve until the meeting of the Board of  Directors  following  the
next annual meeting of stockholders and until their successors have been elected
and qualified.


                                       15
<PAGE>

Meetings of The Board of Directors and Information Regarding Committees

There  currently  are no  committees  of the  Board of  Directors.  The Board of
Directors met in fiscal year 2004 to manage various company issues.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities  Exchange Act of 1934 requires our directors and
officers,  as  well as  persons  who  own  more  than  10% of our  common  stock
("Reporting  Persons") to file reports of ownership  and changes in ownership on
Forms  3, 4 and 5 with the  Securities  and  Exchange  Commission.  The  Company
believes that for the 2004 fiscal year all Reporting  Persons have complied on a
timely basis with all filing requirements applicable to them.

ITEM 10. EXECUTIVE COMPENSATION.

General Compensation Discussion

All decisions  regarding  compensation for our executive  officers and executive
compensation  programs  are  reviewed,  discussed,  and approved by the Board of
Directors. All compensation decisions are determined following a detailed review
and assessment of external  competitive data, the individual's  contributions to
our success,  any significant  changes in role or  responsibility,  and internal
equity of pay relationships.


                                       16
<PAGE>

Summary Compensation Table

The following table sets forth the total  compensation  earned by or paid to the
executive  officers for the last three fiscal  years.  None of our officers were
paid more than $100,000 in the last three fiscal years.

<TABLE>
<CAPTION>
============================================================================================================================
                                   ANNUAL COMPENSATION                   LONG TERM COMPENSATION
                           ====================================  ========================================
                                                                          Awards               Payouts
                                                                 =======================    =============
                                                                             Securities
                                                                             Underlying
                                                   Other Annual  Restricted    Options/         LTIP
                              Salary               Compensation   Stock         SARs           Payouts       All Other
                   Year         ($)     Bonus ($)      ($)       Awards ($)     (#)              ($)      Compensation ($)
============================================================================================================================
<S>                <C>      <C>           <C>        <C>            <C>          <C>             <C>              <C>
Sholeh Hamedani,   2002     $ 75,000(1)                  $0         $0           -0-             $0               $0
President, CEO,    2003     $180,000(1)   $0             $0         $0           -0-             $0               $0
CFO                2004     $180,000(1)
============================================================================================================================
Alan Schram,       2002          $0       $0         $142,848       $0           -0-             $0               $0
President,
Secretary and
Treasurer(2)
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

No options or SARs (Stock  Appreciation  Rights) were  granted to any  executive
officers.

Employment and Related Agreements

We have not entered into any employment agreements.

----------
(1)   The officer did not charge the Company for her  services - this amount was
      the estimated fair market value for  comparable  services and was recorded
      as additional paid in capital as of December 31, 2002, 2003, and 2004.

(2)   Resigned  August 12, 2002. In July 2002, the Company (which was then named
      DWC Installations)  sold 1,166,755 newly issued shares of its common stock
      to Shadrack  Films,  Inc. (then named The Children's  Internet,  Inc.) for
      $150,000. This was the transaction in which the current management assumed
      control of the Company. Out of this $150,000 received by the Company, Alan
      Schram received $142,848 for other annual compensation.


                                       17
<PAGE>

Compensation of Directors

Directors of the Company do not receive any cash compensation,  but are entitled
to reimbursement of their reasonable  expenses incurred in attending  directors'
meetings.

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

The following table sets forth  information with respect to the number of shares
of common stock beneficially  owned by (i) each of our directors,  (ii) each our
executive  officers,  (iii) all executive officers and directors as a group, and
(iv) each  shareholder  known by us to be a beneficial  owner of more than 5% of
any class of our voting securities as of March 31, 2005.

<TABLE>
<CAPTION>
----------------------------------------------- -------------------------------- --------------------------------------
                Name                                  Number of Shares              Percentage Beneficially Owned(6)
----------------------------------------------- -------------------------------- --------------------------------------
<S>                                                       <C>                                    <C>
Sholeh Hamedani, President, CEO, CFO,                                                            57.9%
Director(3)(4)(5)                                         15,388,138
----------------------------------------------- -------------------------------- --------------------------------------
Jamshid Ghosseiri, Ph.D., Secretary, Director                 -0-                                 -0-
----------------------------------------------- -------------------------------- --------------------------------------
Tyler Wheeler, CTO, Director                               1,000,000(4)                          3.6%
----------------------------------------------- -------------------------------- --------------------------------------
Roger Campos, Esq.,  Director                                 -0-                                 -0-
----------------------------------------------- -------------------------------- --------------------------------------
Dale Boehm, Director                                          -0-                                 -0-
----------------------------------------------- -------------------------------- --------------------------------------
All  Officers  and  Directors  as a  group  (5
people)                                                   16,388,138                             59.4%
----------------------------------------------- -------------------------------- --------------------------------------
Shadrack Films, Inc.(3,5)                                 15,388,138                             57.9%
----------------------------------------------- -------------------------------- --------------------------------------
Two Dog Net, Inc.                                         18,000,000(4)                          40.4%
----------------------------------------------- -------------------------------- --------------------------------------
</TABLE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Our  President,  Chief  Executive  Officer,  and  one of our  Directors,  Sholeh
Hamedani,  is the sole officer,  director and shareholder of our parent company,
Shadrack.  Ms.  Hamedani  was also  President  of Two Dog Net,  the owner of The
Children's  Internet(R)  technology until August 1, 2002. Ms. Hamedani also owns
approximately  10% of the total  outstanding  shares of common  stock of Two Dog
Net.

Ms Hamedani's father,  Nasser Hamedani,  is the current President,  Chairman and
majority shareholder of Two Dog Net.

----------
(3)   Except as otherwise  indicated,  we believe that the beneficial  owners of
      common stock listed above, based on information  furnished by such owners,
      have sole investment and voting power with respect to such shares, subject
      to  community  property  laws where  applicable.  Beneficial  ownership is
      determined in accordance with the rules of the SEC and generally  includes
      voting or investment  power with respect to  securities.  Shares of common
      stock subject to options or warrants currently exercisable, or exercisable
      within 60 days,  are deemed  outstanding  for  purposes of  computing  the
      percentage  of the person  holding such  options or warrants,  but are not
      deemed  outstanding  for purposes of computing the percentage of any other
      person.

(4)   Shares  of  common  stock   subject  to  options   granted  and  currently
      exercisable, but not exercised as of March 31, 2005.

(5)   Consists of  15,388,138  shares of common  stock owned by Shadrack  Films,
      Inc.  formerly  known  as The  Children's  Internet,  Inc.,  a  California
      corporation, of which Sholeh Hamedani is the sole shareholder


                                       18
<PAGE>

On July 3, 2002,  we entered into an agreement  with  Shadrack.  Pursuant to the
agreement,  we sold 2,333,510 newly issued post-split shares of our common stock
to Shadrack in exchange for an  aggregate  purchase  price of  $150,000.  Sholeh
Hamedani is the sole officer, director and shareholder of Shadrack.

On September 10, 2002, we entered into a License  Agreement  with Two Dog Net to
license The Children's Internet(R) technology and intellectual property. We paid
$15,500 in cash to Two Dog Net in consideration for the License Agreement.  This
agreement was subsequently cancelled and on March 3, 2003, we entered into a new
Wholesale Sales & Marketing  Agreement with Two Dog Net. Under the terms of this
agreement,  we were to pay Two Dog Net $3.00  per month for each user  accessing
The Children's Internet(R) service. The Agreement also provides that we will pay
Two Dog Net $3.79 per month for each user accessing  Internet  dial-up  service,
but we have no  plans  to  offer  dial-up  service.  On  February  15,  2005 the
Company's  Board  of  Directors  granted  Two  Dog  Net an  option  to  purchase
18,000,000  post-split shares of restricted common stock at an exercise price of
$.07  per  share   exercisable  for  five  years.  The  option  was  granted  in
consideration of amending the Wholesale Sales & Marketing Agreement reducing the
per user charge from $3.00 to $1.00.

In a Stock  Purchase  Agreement  dated  October  11,  2002 and in reliance on an
exemption  from  registration  pursuant to Section 4(1) of the Securities Act of
1933, our original shareholders sold 2,237,000 of their post-split shares of our
common stock to various  purchasers,  two of who are related to our  management,
Nasser  Hamedani,   Sholeh  Hamedani's  father,  and  Soraiya  Hamedani,  Sholeh
Hamedani's  sister.  Some of these  purchasers  were  introduced to the original
shareholders by Sholeh Hamedani,  our President,  Chief Financial  Officer,  and
Director.  Some of these  purchasers  resold  their  shares to  unrelated  third
parties,  relying on an exemption from registration  pursuant to Section 4(1) of
the Securities Act of 1933. The proceeds received from the stock sale was loaned
to Two Dog Net who, in turn, loaned a portion of such proceeds to Shadrack,  and
Shadrack  loaned a portion of these  funds to the Company to finance our initial
operations.  These amounts are reflected on the financial  statements as "Due to
Parent  Company."  The original  shareholders  received  their shares from us in
reliance on the  exemption  from  registration  pursuant to Section  4(2) of the
Securities Act of 1933. On February 15, 2005,  debt owed to Shadrack of $456,912
was converted into 13,054,628 post-split shares of restricted common stock at an
conversion  price of $0.07  per share  based  upon the most  recent  sale by the
Company of shares of its common stock on October 11, 2002.


                                       19
<PAGE>

ITEM 13. EXHIBITS

      Exhibits

<TABLE>
<S>            <C>
      3.1      Articles of Incorporation, dated September 25, 1996(6)
      3.2      Certificate of Amendment of Articles of Incorporation, dated February 10, 2000(6)
      3.3      Certificate of Amendment of Articles of Incorporation, dated December 27, 2002(6)
      3.4      Certificate of Designation of Series A Preferred Stock, dated November 8, 2002(6)
      3.5      Bylaws(6)
      10.1     Plan of Reorganization and Acquisition, July 3, 2002(6)
      10.2     Consulting Agreement with Alan Schram, dated June 28, 2002(6)
      10.3     License Agreement dated September 10, 2002(6)
      10.4     Amendment to License Agreement, dated November 5, 2002(6)
      10.5     Wholesale Sales & Marketing Agreement, dated March 3, 2003(7)
      10.6     Stock Purchase Agreement, dated October 11, 2002(8)
      10.7     Co-Location Agreement, dated July 11, 2003(9)
      10.8     Independent Sales Agreement with Infolink, dated August 14, 2003(8)
      10.9     Licensing Agreement with Infolink, dated August 14, 2003(8)
      10.10    Co-Location Agreement, dated September 26, 2003(1)(0)
      10.11    Agreement dated October 11, 2002
      10.12    Agreement between the Company and Crosslink Financial Communications dated February 25, 2005
      31.1     Certification  of  Chief  Executive  Officer  Pursuant  to the
               Securities  Exchange Act of 1934, Rules 13a-14 and 15d-14,  as
               adopted pursuant to Section 302 of the  Sarbanes-Oxley  Act of 2002
      31.2     Certification  of  Chief  Financial  Officer  Pursuant  to the
               Securities  Exchange Act of 1934, Rules 13a-14 and 15d-14,  as
               adopted pursuant to Section 302 of the  Sarbanes-Oxley  Act of 2002
      32       Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002
</TABLE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Marc Lumer & Company has been the Company's  independent  auditor beginning with
the  second  quarter  of 2004.  Stonefield  Josephson,  Inc.  was the  Company's
independent auditor during 2003 and through the first quarter of 2004.


----------
(6)   Incorporated  by reference  from the Company's  Registration  Statement on
      Form SB-2,  filed on  February  10,  2003,  as amended  (Registration  No.
      333-103072).

(7)   Incorporated by reference from the Company's  Annual Report on Form 10-KSB
      for the fiscal year ended December 31, 2002,  filed on March 31, 2003 (SEC
      File No. 000-29611).

(8)   Incorporated  by reference from Amendment 2 to the Company's  Registration
      Statement  on  Form  SB-2,   filed  on  September  11,  2003,  as  amended
      (Registration No. 333-103072).

(9)   Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
      for the quarter  ended June 30, 2003 (File No.  000-29611)  filed on EDGAR
      August 14, 2003.

(10)  Incorporated  by reference  from the Company's  Registration  Statement on
      Form SB-2,  filed on  February  2,  2004,  as  amended  (Registration  No.
      333-103072).


                                       20
<PAGE>

Audit Fees

Marc Lumer & Co billed  aggregate  fees of  approximately  $12,000  for the year
ended December 31, 2004, for professional services rendered including the review
of the  Company's  Quarterly  Reports  on Form  10-QSB  for the second and third
quarters of 2004,  and to date for the audit of the Company's  annual  financial
statements

Stonefield  Josephson,  Inc.  billed  aggregate fees of  approximately  $21,000,
$30,000  and  $10,000  for  years  ended  December  31,  2004,  2003  and  2002,
respectively,  for professional services rendered for the audit of the Company's
annual financial  statements and review of the financial  statements included in
the  Company's  Quarterly  Reports on Form 10-QSB and on Form SB-2  Registration
Statement.

Tax Fees

Su-Gene, Inc. provided professional services in preparing the income tax returns
for the Company for the years 2003 and 2002 and for advice on tax compliance and
tax planning, for which approximately $2,000 was billed during 2004.

Marc Lumer & Company and Stonefield Josephson,  Inc. did not provide or bill for
any  professional  services  during the two years  ended  December  31,  2004 in
connection with tax advise, tax compliance or tax planning.

All Other Fees

Marc Lumer & Company and Stonefield Josephson,  Inc. did not provide or bill for
any other professional services during the three years ended December 31, 2004.


                                       21
<PAGE>

INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS OF THE CHILDREN'S INTERNET, INC.:

We have audited the accompanying balance sheets of The Children's Internet,  Inc
(formerly DWC  Installations)  (A Development  Stage Company) as of December 31,
2004,  2003 and 2002 and the related  statements  of  operations,  stockholders'
deficit and cash flows for each of the three years in the period ended  December
31, 2004 and for the period from September 25, 1996  (inception) to December 31,
2004.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States.) Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of The Children's Internet,  Inc.
(formerly  DWC  Installations)  as of  December  31, 2004 and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December  31, 2004 and for the period from  September  25, 1996  (inception)  to
December 31, 2004 in conformity with generally accepted accounting principles in
the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 of the
accompanying  financial  statements,  the Company has no  established  source of
revenue  and has no funds to pay its current  liabilities.  These  issues  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plan in regard to these  matters  is  discussed  in Note 1.  These
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

Marc Lumer & Company
CPA's An Accountancy Corporation
San Francisco, California

June 1, 2005



                                      F-1
<PAGE>

                          THE CHILDREN'S INTERNET, INC.
                          (Formerly DWC Installations)
                          (A Development Stage Company)
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                   December 31,
                                                                   -----------------------------------------------
                                                                                      Restated          Restated
                                                                      2004              2003              2002
                                                                   -----------       -----------       -----------
<S>                                                                <C>               <C>               <C>
                                ASSETS

Other Assets
     Deferred Tax Asset (net of valuation allowance of
       $213,119, $144,855 and $90,623 at December 31,
       2004, 2003 and 2002, respectively)                                   --                --                --
                                                                   -----------       -----------       -----------
TOTAL ASSETS                                                       $        --       $        --       $        --
                                                                   ===========       ===========       ===========


                LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
     Accounts Payable and Accrued Expenses                         $    76,243       $    63,592       $    58,114
     Due to Parent Company                                             395,490                --                --
     Franchise Tax Board                                                 2,640             1,840               920
                                                                   -----------       -----------       -----------
               Total Current Liabilities                               474,373            65,432            59,034
Long-Term Liabilities:
     Due to Parent Company                                                  --           208,162            55,504
                                                                   -----------       -----------       -----------
TOTAL LIABILITIES                                                      474,373           273,594           114,538
                                                                   -----------       -----------       -----------

COMMITMENTS AND CONTINGENCIES                                               --                --                --
                                                                   -----------       -----------       -----------

STOCKHOLDERS' DEFICIT
     Preferred Stock, $0.001 par value; 10,000,000 shares
       authorized; zero shares issued and outstanding                       --                --                --
     Common stock, $0.001 par value; 75,000,000 shares
       authorized; 13,523,510 shares issued and outstanding,
       after giving retroactive effect to 2 for 1 stock split
       on March 11, 2005                                                13,524            13,524            13,524
     Additional paid-in capital                                      1,317,437         1,137,437           847,437
     Deficit accumulated during the development stage               (1,805,334)       (1,424,555)         (975,499)
                                                                   -----------       -----------       -----------
TOTAL STOCKHOLDERS' DEFICIT                                           (474,373)         (273,594)         (114,538)
                                                                   -----------       -----------       -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $        --       $        --       $        --
                                                                   ===========       ===========       ===========
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                      F-2
<PAGE>

                          THE CHILDREN'S INTERNET, INC.
                          (Formerly DWC Installations)
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
      For the Years Ended December 31, 2004, 2003, 2002 and From Inception

<TABLE>
<CAPTION>
                                                                                   Restated           Restated          Inception
                                                                  2004               2003               2002             to Date
                                                              ------------       ------------       ------------       ------------
<S>                                                           <C>                <C>                <C>                <C>
REVENUE                                                       $         --       $         --       $         --       $         --

General and Administrative Expenses                                379,979            448,256            966,094          1,802,934
                                                              ------------       ------------       ------------       ------------
Operating Loss before Provision for Income Taxes                  (379,979)          (448,256)          (966,094)        (1,802,934)

Provision for Income Taxes                                             800                800                800              2,400
                                                              ------------       ------------       ------------       ------------
NET LOSS                                                      $   (380,779)      $   (449,056)      $   (966,894)      $ (1,805,334)
                                                              ============       ============       ============       ============

Net Loss per Common Share, after giving retroactive
     effect to 2 for 1 stock split on March 11, 2005
             - basic and diluted                              $      (0.03)      $      (0.03)      $      (0.18)      $      (0.34)
                                                              ============       ============       ============       ============

Weighted Average Number of Common
     Shares Outstanding (post-split equivalent)
             - basic and diluted                                13,523,510         13,523,510          5,415,794          5,357,342
                                                              ============       ============       ============       ============


                             PRO FORMA INCOME DATA

Net loss as reported (2003 & 2002 restated)                   $   (380,779)      $   (449,056)      $   (966,894)      $ (1,805,334)
Effect of errors corrected (net of tax)                                 --            (28,391)           574,505            546,114
                                                              ------------       ------------       ------------       ------------
Pro Forma Net Loss previously reported                        $   (380,779)      $   (477,447)      $   (392,389)      $ (1,259,220)
                                                              ============       ============       ============       ============
Pro forma Net Loss per Common Share, after giving
retroactive effect to 2 for 1 stock split on March 11, 2005
             - basic and diluted                              $      (0.03)      $      (0.04)      $      (0.07)      $      (0.24)
                                                              ============       ============       ============       ============
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                      F-3
<PAGE>

                          THE CHILDREN'S INTERNET, INC.
                          (Formerly DWC Installations)
                          (A Development Stage Company)
                       STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>

                                                                                                 Deficit
                                               Common Stock, after giving                       Accumulated
                                                  retroactive effect to                         During the
                                                   2 for 1 stock split      Additional Paid-    Development       Stockholders'
                                                    on March 11, 2005         In Capital           Stage            Deficit
                                                ------------------------      -----------      ------------       ----------
                                                  Shares         Amount
                                                ----------      --------
<S>                                              <C>            <C>           <C>              <C>                <C>
Balance, December 31, 2001                       2,242,000      $  2,242      $     6,363      $     (8,605)      $       --

Issuance of common stock for cash
on July 3, 2002 at $0.0643 per                                                                           --
post-split share to activate the
development stage                                2,333,510         2,334          147,666                --          150,000

Expenses paid by former officer on
behalf of the Company                                                 --            2,000                --            2,000

Services performed as capital contribution                            --          125,000                --          125,000
Net Loss (as originally reported)                                                                  (392,389)
Issuance of common stock for debt
financing fee on October 11, 2002
at $0.0643 per post-split share                  8,948,000         8,948          566,408          (575,356)
Other adjustments, net                                                                                  851
                                                                                               ------------
Net Loss (restated)                                                                                (966,894)        (966,894)
                                                ----------      --------      -----------      ------------       ----------
Balance, December 31, 2002                      13,523,510        13,524          847,437          (975,499)        (114,538)

Services performed as capital contribution                            --          290,000                --          290,000
Net Loss (as originally reported)                                                                  (477,447)
Rent expense forgiven by landlord
per settlement agreement and release
signed on February 19, 2004                                                                          32,059
Other adjustments, net                                                                               (3,668)
                                                                                               ------------
Net Loss (restated)                                                                                (449,056)        (449,056)
                                                ----------      --------      -----------      ------------       ----------
Balance, December 31, 2003                      13,523,510        13,524        1,137,437        (1,424,555)        (273,594)

Services performed as capital contribution                            --          180,000                --          180,000
Net Loss                                                              --               --          (380,779)        (380,779)
                                                ----------      --------      -----------      ------------       ----------
Balance, December 31, 2004                      13,523,510      $ 13,524      $ 1,317,437      $ (1,805,334)      $ (474,373)
                                                ==========      ========      ===========      ============       ==========
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                      F-4
<PAGE>




                          THE CHILDREN'S INTERNET, INC.
                          (Formerly DWC Installations)
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
      For the Years Ended December 31, 2004, 2003, 2002 and From Inception




<TABLE>
<CAPTION>
                                                                                  Restated          Restated         Inception
                                                                  2004              2003              2002            to Date
                                                               -----------       -----------       -----------       -----------
<S>                                                            <C>               <C>               <C>                <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:

Net Loss                                                       $  (380,779)      $  (449,056)      $  (966,894)       (1,805,334)

Adjustments to reconcile net loss to net cash
     used in operating activities:

     Services performed as capital contribution                    180,000           290,000           125,000           595,000
     Shares issued for services                                         --                --           575,356           575,356
     Expenses paid by former officer on behalf of company               --                --             2,000             5,000

     Increase in liabilities
        Accounts payable and accrued expenses                       13,451             6,398            59,034            78,883
        Due to Parent Company                                      187,328           152,658            55,504           395,490
                                                               -----------       -----------       -----------       -----------

Net cash (used in) provided by operating activities                     --                --          (150,000)         (155,605)
                                                               -----------       -----------       -----------       -----------


CASH PROVIDED BY FINANCING ACTIVITIES:

Issuance of common stock                                                --                --           150,000           155,605
                                                               -----------       -----------       -----------       -----------

Net cash provided by financing activities                               --                --           150,000           155,605
                                                               -----------       -----------       -----------       -----------


Net change in cash and cash equivalents                                 --                --                --                --

Cash and cash equivalents - beginning of period                         --                --                --                --
                                                               -----------       -----------       -----------       -----------
Cash and cash equivalents - end of period                      $        --       $        --       $        --       $        --
                                                               ===========       ===========       ===========       ===========
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                      F-5
<PAGE>

                          THE CHILDREN'S INTERNET, INC.
                          (Formerly DWC Installations)
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2004

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

The Children's Internet,  Inc. [formerly D.W.C.  Installations  ("Company")] was
incorporated under the laws of the State of Nevada on September 25, 1996.

On July 3, 2002, Shadrack Films, Inc. (Parent Company) purchased 2,333,510 newly
issued post-split  shares of our common stock for $150,000,  thereby obtaining a
majority  ownership  interest and becoming our parent company.  Total issued and
outstanding shares were increased to 4,575,510  post-split shares as a result of
this sale.

On October 11, 2002,  8,948,000  newly issued  restricted  post-split  shares of
common  stock were issued as a debt  financing  fee,  bringing  the total of the
Company's  issued and outstanding  post-split  shares to 13,523,510.  The Parent
Company retained control through ownership of a plurality of the shares (17.2%).
See Note 2 - Restatement,  of Financial Statements,  for additional  information
regarding these shares.

Development Stage Enterprise

The  Company is a  development  stage  enterprise  as defined  by  Statement  of
Financial  Accounting  Standards  (SFAS) No. 7,  "Accounting  and  Reporting  by
Development Stage  Enterprises."  All losses  accumulated since the inception of
the Company (formerly D.W.C.  Installations) have been considered as part of the
Company's development stage activities.  The Company's focus is on marketing The
Children's Internet(R) service.

Basis of Presentation

The  accompanying  financial  statements  have been prepared in conformity  with
accounting principles generally accepted in the United States, which contemplate
continuation of the Company as a going concern. At present, although the Company
has signed contracts establishing revenue sources, the Company has not generated
any  revenues  from these  established  sources of revenue.  This factor  raises
substantial  doubt about the Company's  ability to continue as a going  concern.
Without  realization of additional  capital or established  revenue sources,  it
would be unlikely for the Company to continue as a going concern.  The financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of recorded  asset  amounts,  or amounts and  classification  of
liabilities  that might be necessary should the Company be unable to continue in
existence.

Use of Estimates

The preparation of financial statement in conformity with accounting  principals
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period.  Actual  results  could  differ  from those  estimates.  The Company has
estimated the fair market value of the cost of wages,  if paid, for the services
rendered by its officer and an outside consultant.


                                      F-6
<PAGE>

Cash and Cash Equivalents

The Company  considers all highly  liquid  investments  purchased  with original
maturities of three months or less to be cash equivalents.

Fair Value of Financial Instruments

The carrying amounts of financial  instruments,  including  accounts payable and
accrued expenses,  professional fees, and payable to related parties approximate
fair value as of December 31, 2004.

Going Concern

The  accompanying  financial  statements  have been  prepared on a going concern
basis,  which  contemplates  the  realization  of assets and the  settlement  of
liabilities  and  commitments in the normal course of business.  As reflected in
the accompanying financial statements, the Company had net losses and a negative
cash flow from operations for the year ended December 31, as follows:

                                        2004            2003             2002
                                      ---------       ---------       ---------
Net loss                              $ 380,779       $ 449,056       $ 966,894
                                      ---------       ---------       ---------
Cash flow from operations             $(187,328)      $(152,658)      $(155,605)
                                      ---------       ---------       ---------


These factors raise  substantial  doubt about its ability to continue as a going
concern.  The ability of the Company to continue as a going concern is dependent
on the Company's  ability to raise additional funds and implemented its business
plan.  The  financial  statements do not include any  adjustments  that might be
necessary if the Company is unable to continue as a going concern.

Income Taxes

Income  taxes are  provided  for  based on the  liability  method of  accounting
pursuant to SFAS No. 109, "Accounting for Income Taxes".  Deferred income taxes,
if any,  are  recorded  to  reflect  the tax  consequences  on  future  years of
differences  between the tax bases of assets and liabilities and their financial
reporting amounts at each year-end.

Valuation  allowances  are  provided  against  assets that may not be  realized.
Deferred tax assets and  liabilities  are  measured  using the enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment date.

Loss Per Share

SFAS No. 128,  "Earnings  (Loss) Per Share",  requires the presentation of basic
loss per share and diluted  loss per share.  The  computation  of basic loss per
share is computed by  dividing  loss  available  to common  stockholders  by the
weighted average number of outstanding common shares during the period.  Diluted
loss per share gives effect to all dilutive  potential common shares outstanding
during the  period.  As of December  31,  2004,  the Company has no  potentially
dilutive common shares outstanding.

Comprehensive Income

As of December 31, 2004, the Company has no items that  represent  comprehensive
income and therefore,  has not included a Statement of  Comprehensive  Income in
the accompanying financial statements.

Segment Reporting

The Company identifies its operating segments based on how management internally
evaluates separate financial information (if available), business activities and
management responsibility. The Company believes it operates in a single business
segment. Through December 31, 2004 there have been no foreign operations.


                                      F-7
<PAGE>


Reclassifications

Certain prior year amounts have been reclassified to conform to the current year
presentation.  These  reclassifications  did not have an  impact  on  previously
reported financial position, cash flows or results of operations.

New Accounting Pronouncements

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable Interest Entities" (an  interpretation of Accounting  Research Bulletin
(ARB) No. 51, Consolidated  Financial  Statements).  Interpretation 46 addresses
consolidation  by business  enterprises of entities to which the usual condition
of consolidation  described in ARB-51does not apply. The Interpretation  changes
the criteria by which one company  includes  another entity in its  consolidated
financial  statements.  The general  requirement to consolidate  under ARB-51 is
based  on the  presumption  that an  enterprise's  financial  statements  should
include all of the  entities in which it has a  controlling  financial  interest
(i.e., majority voting interest). Interpretation 46 requires a variable interest
entity to be  consolidated  by a company  that does not have a  majority  voting
interest,  but  nevertheless,  is subject to a majority of the risk of loss from
the variable interest  entity's  activities or entitled to receive a majority of
the entity's  residual  returns or both. A company that  consolidates a variable
interest entity is called the primary beneficiary of that entity.

In December  2003,  the FASB  concluded  to revise  certain  elements of FIN-46,
primarily to clarify the required  accounting for interests in variable interest
entities.  FIN-46R  replaces  FIN-46,  that was issued in January 2003.  FIN-46R
exempts  certain  entities  from  its  requirements  and  provides  for  special
effective  dates for entities that have fully or partially  applied FIN-46 as of
December 24, 2003. In certain  situations,  entities have the option of applying
or  continuing  to apply  FIN-46  for a short  period  of time  before  applying
FIN-46R.  In general,  for all entities that were previously  considered special
purpose entities,  FIN 46 should be applied in periods ending after December 15,
2003.  Otherwise,  FIN  46 is to be  applied  for  registrants  who  file  under
Regulation SX in periods  ending after March 15, 2004, and for  registrants  who
file under Regulation SB, in periods ending after December 15, 2004. The Company
does  not  expect  the  adoption  to have a  material  impact  on the  Company's
financial position or results of operations.

During April 2003, the FASB issued SFAS No. 149 - "Amendment of Statement 133 on
Derivative  Instruments and Hedging Activities," effective for contracts entered
into or modified  after June 30,  2003,  except as stated  below and for hedging
relationships  designated  after June 30, 2003.  In  addition,  except as stated
below,  all provisions of this Statement  should be applied  prospectively.  The
provisions of this Statement that relate to Statement 133 Implementation  Issues
that have been effective for fiscal  quarters that began prior to June 15, 2003,
should  continue to be applied in  accordance  with their  respective  effective
dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases
or sales of when issued  securities or other  securities  that do not yet exist,
should be applied to both  existing  contracts  and new  contracts  entered into
after June 30, 2003.  The Company  does not  participate  in such  transactions;
however,  it is evaluating  the effect of this  pronouncement,  if any, and will
adopt SFAS No. 149 within the prescribed time.

During  May  2003,  the FASB  issued  SFAS No.  150 -  "Accounting  for  Certain
Financial  Instruments  with  Characteristics  of both  Liabilities and Equity,"
effective for financial instruments entered into or modified after May 31, 2003,
and  otherwise is effective  for public  entities at the  beginning of the first
interim  period  beginning  after  June 15,  2003.  This  Statement  establishes
standards  for  how  an  issuer   classifies  and  measures  certain   financial
instruments with  characteristics  of both  liabilities and equity.  It requires
that an issuer classify a freestanding  financial  instrument that is within its
scope  as a  liability  (or an  asset  in some  circumstances).  Many  of  those
instruments were previously classified as equity. Some of the provisions of this
Statement are  consistent  with the current  definition of  liabilities  in FASB
Concepts  Statement  No. 6,  Elements of  Financial  Statements.  The Company is
evaluating the effect of this  pronouncement  and will adopt SFAS No. 150 within
the prescribed time.

In  December  2003,  the  FASB  issued  a  revised  SFAS  No.  132,  "Employers'
Disclosures about Pensions and Other Postretirement Benefits" which replaces the
previously  issued  Statement.  The revised  Statement  increases  the  existing
disclosures  for  defined  benefit  pension  plans  and  other  defined  benefit
postretirement plans. However, it does not change the measurement or recognition
of those  plans as  required  under  SFAS No.  87,  "Employers'  Accounting  for
Pensions," SFAS No. 88, "Employers'  Accounting for Settlements and Curtailments
of Defined  Benefit  Pension Plans and for  Termination  Benefits," and SFAS No.
106,  "Employers'  Accounting for Postretirement  Benefits Other Than Pensions."
Specifically,  the revised Statement  requires  companies to provide  additional
disclosures  about pension plan assets,  benefit  obligations,  cash flows,  and
benefit  costs of  defined  benefit  pension  plans  and other  defined  benefit
postretirement  plans.  Also,  companies  are required to provide a breakdown of
plan assets by category,  such as debt,  equity and real estate,  and to provide
certain  expected rates of return and target  allocation  percentages  for these
asset  categories.  The  Company  has  implemented  this  pronouncement  and has
concluded that the adoption has no material impact to the financial statements.



                                      F-8
<PAGE>

In  December  2004,  the FASB issued SFAS No.  153,  "Exchanges  of  Nonmonetary
Assets",  an  amendment  of APB  Opinion  No.  29.  SFAS No 153  eliminates  the
exception  from fair value  measurement  for  nonmonetary  exchanges  of similar
productive  assets in  paragraph  21(b) of APB Opinion No. 29,  "Accounting  for
Nonmonetary  Transactions," and replaces it with an exception for exchanges that
do not have commercial  substance.  This Statement  specifies that a nonmonetary
exchange  has  commercial  substance  if future  cash  flows of the  entity  are
expected to change  significantly as a result of the exchange,  and is effective
for nonmonetary asset exchanges occurring in fiscal periods beginning after June
15, 2005.  The Company is currently  assessing the final impact of this standard
on the company's results of operations, financial position, and cash flows. This
assessment includes evaluating option valuation methodologies and assumptions as
well as potential changes to the Company's compensation strategies.

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment." SFAS No.
123R addresses the accounting for share-based  payment  transactions in which an
enterprise  receives employee services in exchange for (a) equity instruments of
the  enterprise  or (b)  liabilities  that are  based  on the fair  value of the
enterprise's  equity  instruments or that may be settled by the issuance of such
equity  instruments.  SFAS No.  123R  eliminates  the  ability  to  account  for
share-based compensation  transactions using Accounting Principles Board Opinion
No. 25 and generally  requires that such  transactions  be accounted for using a
fair-value-based method. The Company is required to adopt SFAS No. 123(R) in the
third quarter of fiscal 2005,  beginning  July 1, 2005. The Company is currently
assessing  the  final  impact  of this  standard  on the  company's  results  of
operations,  financial  position,  and  cash  flows.  This  assessment  includes
evaluating  option valuation  methodologies and assumptions as well as potential
changes to the Company's compensation strategies.

NOTE 2 - RESTATEMENT OF FINANCIAL STATEMENTS

In the course of the due  diligence  for the Annual Report on Form 10-KSB of the
Company for the fiscal year ended  December 31, 2004,  management  identified an
agreement that the Company had entered into with five shareholders, none of whom
are  Shareholders  of either  Shadrack or Two Dog Net, on October 11, 2002. This
agreement provided that in consideration for the agreement of these shareholders
to loan an  affiliate of the Company  proceeds  from the sale of their shares of
common  stock of the  Company to third  parties,  the  Company  would issue four
shares of its restricted  common stock for every one share owned.  The aggregate
number of shares of  restricted  common stock that the Company was  obligated to
issue pursuant to the agreement was 4,474,000 pre-split  (8,948,000  post-split)
shares.  The agreement  was not  disclosed in any of the Company's  previous SEC
filings or otherwise included as an exhibit as a result of an error of omission.
Also,  these  shares  were  not  included  in  any of  the  Company's  financial
statements  for the fiscal  years  ended  December  31,  2003 or 2002 nor in any
interim reporting period.

Management  brought this matter to the  attention of its Board of Directors  and
the Board of Directors brought it to the attention of the Company's  independent
auditor.  After  discussions  with management the Board of Directors  determined
that previously  reported  financial  information for the Company be restated to
reflect the agreement. In light of the expected restatement, the Company filed a
Form 8-K on April 21,  2005 under Item 4.02 (a)  advising  that due to an error,
its previously  issued financial  statements for the fiscal years ended December
31, 2003 and 2002 and such interim  periods  covered thereby and for the interim
periods in fiscal  2004  should no longer be relied  upon.  The value of the new
8,948,000 post-split shares was set at $0.0643 per post-split share; the same as
the amount paid by Shadrack Films, Inc. for 2,333,510 new post-split  restricted
shares issued on July 3, 2002.  Accordingly,  the financial  statements  for the
year ended December 31, 2002 have been restated to reflect $575,356 charged as a
debt financing fee.

On  February  13,  2004,  Shadrack  received  notice that their  landlord,  Hill
Physicians  Medical Group,  Inc., had filed an unlawful  detainer action against
the Company on February 6, 2004 in the Contra  Costa  County  Superior  Court as
case  number  WS04-0238.  On February  19,  2004,  the  Company  signed a Mutual
Settlement  Agreement  and  Release.  The effect of the release  was  originally
reflected  in the  quarterly  operating  statements  for  2004  as a  gain  from
forgiveness of rent in the amount of $36,335.  The Company has  determined  that
this amount should have been reflected in the operating  statements as decreases
in rent expense of $32,059 and $4,276 for the years ended  December 31, 2003 and
2002, respectively



                                      F-9
<PAGE>

As a result of the above-mentioned  error corrections and other relatively minor
adjustments, the Company has restated its previously issued financial statements
for the years ended December 31, 2003 and 2002. The Company previously  reported
net losses of $477,447 or $(0.04) per share,  and  $392,389 or $(0.07) per share
for the years ended December 31, 2003 and 2002,  respectively.  The restatements
resulted in the Company  reporting  net losses of $449,056 or $(0.03) per share,
and  $966,894  or $(0.18) per share for the years  ended  December  31, 2003 and
2002, respectively.

NOTE 3 - SALES AND MARKETING AGREEMENT

On September 10, 2002, the Company  entered into a renewable  five-year  royalty
and licensing agreement with Two Dog Net, Inc. ("TDN").  Under the terms of that
license  agreement with TDN, in addition to the monthly royalty payment due, the
Company was required to pay an additional $2,000,000 no later than September 10,
2004. The Company temporarily capitalized this amount for the technology license
and established an amortization  period of three years, the expected useful life
of the license.

This  original  agreement  did not reflect the true intent of the parties and on
March 3, 2003,  the parities  replaced the royalty and license  agreement with a
wholesale  sales  and  marketing  agreement  with  the  same  effective  date of
September 10, 2002.  The new  agreement was for an exclusive and renewable  five
year  wholesale  sales  and  marketing  agreement  with TDN to be the  exclusive
marketers of their  proprietary and patent pending secured  internet service for
children  pre-school  to junior high called The  Children's  Internet(R)  and an
internet  dial-up  service.  Under the terms of the  agreement,  the Company can
continue the  agreement  for an  additional  five years on the same terms unless
either party  terminates  by written  notice to the other party no less than one
year  before  the end of the term.  Under  the terms of the sales and  marketing
agreement  with TDN, the Company will pay TDN a fee per month per subscriber for
the services subscribed.  The Wholesale Sales & Marketing Agreement with TDN was
further amended in February 2005 as explained in Note 9- Subsequent Events.

NOTE 4 - RELATED PARTY TRANSACTIONS

Leases

The Parent Company has provided for the office space utilized by the Company and
paid for the  Company's  utility  costs.  The  Company  has  accrued a  payable,
included in Due to Parent Company,  for  reimbursement  of such costs. The basic
rent under Shadrack's  current lease agreement is $3,603 per month through April
2005,  $3,706 per month from May 2005 through  April 2006,  and $3,809 per month
from May 2006 through April 2007. Annual rent expense was as follows:

               Year            Amount
               2004           $ 28,734
            ----------        --------
               2003           $ 12,800
            ----------        --------
               2002           $ 21,382
            ----------        --------


Services Provided

The Company's President,  Chief Executive Officer,  Chief Financial Officer, and
Director,  Sholeh  Hamedani and an outside  financial  consultant  have provided
services  to the  Company  at a fair  market  value of  $180,000,  $290,000  and
$125,000  during the twelve  months  ended  December  31,  2004,  2003 and 2002,
respectively, and will not seek payment for the services provided.

In July  2002,  the  Company  (which  was then  named  DWC  Installations)  sold
1,166,755 newly issued shares of its common stock to Shadrack Films,  Inc. (then
named The Children's Internet,  Inc.) for $150,000.  This was the transaction in
which  the  current  management  assumed  control  of the  Company.  Out of this
$150,000 received by the Company, Alan Schram received $142,848 for other annual
compensation.  Alan Schram was the Company's former President,  Secretary, Chief
Financial Officer and Director until he resigned on August 12, 2002.

Advances

In February 2005, the Company owed Shadrack,  our parent company,  approximately
$457,000.  This amount was converted into  13,054,628  post-split  shares of our
common stock as explained in Note 9 - Subsequent Events.  From July 2002 through
January 2005 Shadrack  advanced  operative  funds to the Company as needed.  The
advances  did not bear  interest.  The  average  balance of the  advance  was as
follows:


                                      F-10
<PAGE>

               Year             Amount
               2004            $ 301,826
            ----------         ---------
               2003            $ 131,833
            ----------         ---------
               2002            $  27,752
            ----------         ---------

Beneficial Ownership

The  Company,  Shadrack  and TDN are related  parties,  in that,  the  Company's
President,  Chief  Executive  Officer,  Chief Financial  Officer,  and Director,
Sholeh Hamedani,  is the sole shareholder of Shadrack which as of March 31, 2005
owns 58% of the Company's  common stock. Ms. Hamedani was President of TDN until
August  1,  2002 and is a 10%  shareholder  of TDN.  In  addition,  the  current
President,  Chairman and Founder of TDN, Nasser  Hamedani,  is the father of the
Company's  President,  Chief Executive  Officer,  Chief Financial  Officer,  and
Director,  Sholeh  Hamedani.  See Note 9 -  Subsequent  Events  relating  to the
amendment of the Wholesale Sales and Marketing  Agreement and the issuance of an
option to TDN.

Wholesale Sales & Marketing Agreement

The Company has a royalty agreement with Two Dog Net as described in Note 3.

NOTE 5 - SB-2 REGISTRATION STATEMENT

On February  10,  2003,  the Company  filed a Form SB-2  Registration  Statement
offering  for sale of up to a  maximum  of  8,000,000  post-split  shares of the
Company's common stock directly to the public. The Company received notification
from the SEC that their SB-2 Registration  Statement No. 333-103072 was declared
effective on May 5, 2004. On October 19, 2004 the Company filed a post-effective
amendment  to the  SB-2  deregistering  the  8,000,000  post-split  shares.  The
post-effective amendment was declared effective by the SEC on October 25, 2004.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

On November 24, 2004, Oswald & Yap, A Professional  Corporation  ("O&Y") filed a
complaint  in the  Superior  Court of  California,  County of  Orange,  Case No.
04CC11623,  against the Company, seeking recovery of allegedly unpaid legal fees
in the amount of $50,984.86 in connection with the legal  representation  of the
Company. The complaint includes causes of action for breach of contract, account
stated,  and quantum merit.  The contract sued upon contains an attorney's  fees
clause  that  would  entitle  the  prevailing  party on the claim to an award of
reasonable  attorney's fees as determined by the court. The Company disputes the
amounts  allegedly  owed,  alleging that some payments have not been credited by
O&Y and that O&Y's services were otherwise unsatisfactory.  O&Y has submitted an
Offer to Compromise for a $15,000  payment by the Company to O&Y in exchange for
mutual  releases that the Company has taken under  consideration.  Nevertheless,
the  Company's  accounts  payable at December  31,  2004,  include the amount of
$39,069 as a provision for possible liability in this matter.

The  Company  has  cross-claimed   against  O&Y  alleging  breach  of  contract,
professional negligence, negligent representation,  and breach of good faith and
fiduciary  duty.  The Company is seeking  damages in an  unspecified  amount for
costs,  legal fees and losses incurred.  O&Y has vigorously  disputed the claims
set forth in the  cross-complaint  and has  indicated its  intention,  should it
prevail in  defending  the  cross-claim,  to  institute a malicious  prosecution
action  against  the  Company,  Nasser  Hamedani,  Sholeh  Hamedani  and Company
counsel.



                                      F-11
<PAGE>

The Company  perceives  a  contingent  liability  in  connection  with the Stock
Purchase Agreement executed on October 11, 2002 between identified  Shareholders
and  identified  Purchasers.  Under the  terms of Stock  Purchase  Agreement,  a
payment of  $150,000  is due to be paid into  escrow in part  consideration  for
purchase  of the  stock  of  D.W.C.  Installations,  Inc.  The  payment  date is
designated  as 90 days from the date that the Company's  [D.W.C.  Installations,
Inc.,  a Nevada  Corporation]  shares  of  common  stock  become  quoted  on the
over-the-counter  bulletin  board  system.  The  shares  became  quoted  on  the
over-the-counter  bulletin board system on December 23, 2004. If this payment is
not  made,   there  could  be  exposure  in  connection   with  the   identified
shareholders' efforts to collect the amounts allegedly due.

The Company  perceives a contingent asset with respect to the cross-claim  filed
in the Superior Court of California, County of Orange, Case No. 04CC11623 by TCI
against O&Y,  the  principal  allegation  is that O&Y was retained to assist its
predecessor company in the purchase and acquisition of D.W.C. Installations with
the  expectation  that D.W.C.  had available  free-trading  shares such that TCI
could immediately raise capital on the relevant markets and that in advising TCI
through  the  purchase,  O&Y failed to  properly  advise TCI as to the status of
D.W.C.  Installations and its shares which in fact were not  free-trading.  As a
result of this  conduct,  TCI  alleges  damages  in an  unspecified  amount  but
including purchase costs, extended operation costs, refiling costs, audit costs,
legal fees, loan fees, lost market share,  and costs for  registration.  At this
stage of the litigation,  we believe recovery is probable but any amount certain
is not calculable as of this date.

On September 30, 2003,  the Company  signed a 13-month  colocation  agreement to
house the Company's search engine, servers and related equipment.  For the years
ended  December 31, 2004 and 2003, the total amount paid was $34,800 and $5,800,
respectively. The Company has continued under this agreement on a month to month
basis.

NOTE 7- INCOME TAXES:

The significant components of the company's deferred tax assets are as follows:

<TABLE>
<CAPTION>
                                                         December 31,
                                           -----------------------------------------
                                             2004            2003            2002
                                           ---------       ---------       ---------
<S>                                        <C>             <C>             <C>
Deferred tax assets:
     Net operating loss carryforwards      $ 213,119       $ 144,855       $  90,623
Less -Valuation allowance                   (213,119)       (144,855)        (90,623)
                                           ---------       ---------       ---------
Net deferred tax assets                    $       0       $       0       $       0
                                           =========       =========       =========
</TABLE>

For the year ended December 31, 2004,  the valuation  allowance was increased by
$68,264 due to  uncertainties  surrounding  the  realization of the deferred tax
assets,  resulting  from the  Company's net loss of $380,779 for the year and an
accumulated deficit of $1,805,334 at December 31, 2004.

The provision  (benefit)  for income taxes differs from the provision  (benefit)
amount computed by applying the statutory  federal tax rate (34%) to the taxable
loss due to the following:

<TABLE>
<CAPTION>
                                          2004           2003           2002
                                        --------       --------       --------
<S>                                     <C>            <C>            <C>
Computed expected benefits              $ 68,264       $ 54,232       $ 90,623
Increase in valuation allowance          (68,264)       (54,232)       (90,623)
                                        --------       --------       --------

Provision (benefit) for income tax      $      0       $      0       $      0
                                        ========       ========       ========
</TABLE>

As of December 31, 2004, the Company had a net operating loss  carryforward  for
federal income tax purposes of $626,822.  This net operating  loss  carryforward
will begin to expire in 2022.  The valuation  allowance has been estimated in an
amount equal to the projected future benefit of the loss carryforward due to the
assumption the Company may not generate  sufficient income to utilize the future
tax benefit.



                                      F-12
<PAGE>

NOTE 8 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Summarized  unaudited  financial  information  for the years ended  December 31,
2004, 2003 and 2002 are noted below:

<TABLE>
<CAPTION>
                                                          2004 (3rd, 2nd & 1st quarters restated)
                                              -----------------------------------------------------------------
                                                Dec. 31           Sept. 30          June 30           March 31
                                              -----------       -----------       -----------       -----------
<S>                                           <C>               <C>               <C>               <C>
Net Revenues                                  $        --       $        --       $        --       $        --
Gross Profit                                  $        --       $        --       $        --       $        --
Net (loss)                                    $   (93,329)      $  (105,181)      $   (85,678)      $   (96,591)
Net (loss) per share - basic and diluted      $     (0.01)      $     (0.01)      $     (0.01)      $     (0.01)
</TABLE>


<TABLE>
<CAPTION>
                                                                        2003 (restated)
                                              -----------------------------------------------------------------
                                                Dec. 31           Sept. 30          June 30           March 31
                                              -----------       -----------       -----------       -----------
<S>                                           <C>               <C>               <C>               <C>
Net Revenues                                  $        --       $        --       $        --       $        --
Gross Profit                                  $        --       $        --       $        --       $        --
Net (loss)                                    $  (103,295)      $  (127,768)      $  (107,785)      $  (110,208)
Net (loss) per share - basic and diluted      $     (0.01)      $     (0.01)      $     (0.01)      $     (0.01)
</TABLE>


<TABLE>
<CAPTION>
                                                                 2002 (4th & 3rd quarters restated)
                                              -----------------------------------------------------------------
                                                Dec. 31           Sept. 30          June 30           March 31
                                              -----------       -----------       -----------       -----------
<S>                                           <C>               <C>               <C>               <C>
Net Revenues                                  $        --       $        --       $        --       $        --
Gross Profit                                  $        --       $        --       $        --       $        --
Net (loss)                                    $  (695,677)      $  (256,265)      $   (10,702)      $    (4,250)
Net (loss) per share - basic and diluted      $     (0.06)      $     (0.06)      $     (0.00)      $     (0.00)
</TABLE>


                                      F-13
<PAGE>

NOTE 9- SUBSEQUENT EVENTS

On February 15, 2005, the Company's  Board of Directors  authorized and approved
the  conversion  of all debt owed by the Company to Shadrack  Films,  Inc.,  the
parent company, as of December 31, 2004 into 13,054,628 post-split shares of the
Registrant's  restricted  common stock at a  conversion  price of $.07 per share
based upon the most recent sale of a share of the  Registrant's  common stock by
the Company which occurred in October 2002 in a private transaction.

At  February  15,  2005,   the  Company  was  indebted  to  Shadrack  Films  for
approximately  $457,000 representing loans made by Shadrack to the Company since
activating the  development  stage on July 3, 2002 when it agreed to fund all of
the Company 's operations.  The amount of $456,912 was converted into 13,054,628
post-split  restricted shares.  Shadrack Films is an entity owned and controlled
by the Company's President, Chief Executive Officer, Chief Financial Officer and
Chairman of the Board,  Sholeh Hamedani,  who is the sole officer,  director and
shareholder of Shadrack  Films.  Shadrack  Films also owns 2,333,510  post-split
shares of the Company's  common stock.  Together with the 13,054,628  post-split
shares issued upon  conversion of the debt,  Shadrack Films owns an aggregate of
15,388,138  post-split  shares of the  Company  's common  stock or 58%  without
giving  effect  to any  presently  exercisable  options.  The  shares  issued to
Shadrack Films upon conversion are exempt from registration  pursuant to Section
4 (2) of the Securities Act of 1933, as amended.

On February 15, 2005, the Company 's Board of Directors  authorized and approved
an amendment to the Wholesale Sales and Marketing  Agreement between the Company
and Two Dog Net, Inc. dated March 3, 2003,  (the "Amended  License  Agreement").
The  Amended  License  Agreement  reduces  the  license  fee for The  Children's
Internet(R) technology from Two Dog Net from $3.00 to $1.00 per subscription. In
consideration  for the reduction of the fee, the Company  granted Two Dog Net or
its designees an option (the  "Option") to purchase up to 18,000,000  post-split
shares of the Company's restricted common stock at an exercise price of $.07 per
share based upon the most recent sale of a share of the  Company's  common stock
which  occurred  in  October  2002  in a  private  transaction.  The  Option  is
exercisable, in whole or in part at any time and from time to time, for a period
of five years from the date of grant.  The Option also provides Two Dog Net with
"piggyback"  registration  rights  for all shares  underlying  the Option on any
registration  statement  filed by the Company for a period of one year following
any exercise of the Option.

On February 15, 2005,  the Company 's Board of Directors  granted Tyler Wheeler,
the  Company  's Vice  President  of  Technology  and a  director,  an option to
purchase up to 1,000,000  post-split  shares of the Company 's restricted common
stock at an exercise  price of $.07 per share based upon the most recent sale of
a share of the  Company 's common  stock  which  occurred  in October  2002 in a
private transaction.  The option is exercisable, in whole or in part at any time
and from time to time, for a period of five years from the date of grant.

On February  15, 2005,  the Company 's Board of  Directors  authorized a 2 for 1
forward  split  of the  Company  's  issued  and  outstanding  common  stock  to
shareholders  of  record  on March  7,  2005,  to take the form of a 100%  stock
dividend.  The  effective  date of the forward split on the OTC:BB was March 11,
2005.

On April 21,  2005,  the Company  filed a Current  Report on Form 8-K under Item
4.02(a)  reporting that as a result of an error,  the Company has not previously
disclosed or included as an exhibit in any of its previous  filings with the SEC
an agreement  dated  October 11, 2002 between the Company and five  shareholders
which  provides for the Company to issue an  aggregate  of 8,948,000  post-split
shares of common stock to such  shareholders or their designees in consideration
for the  agreement of such  shareholders  to loan the proceeds they receive from
third parties  resulting  from the sale of their shares of the Company's  common
stock to Two Dog Net, an affiliate of the Company.  The number of shares  issued
was four shares for every one share owned.



                                      F-14


<PAGE>

                                   SIGNATURES

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

                                       THE CHILDREN'S INTERNET, INC.

DATED: June 8, 2005                    By: /s/ Sholeh Hamedani
                                           -------------------------------------
                                           Sholeh Hamedani
                                           President, Director
                                           (Principal Executive Officer)

DATED: June 8, 2005                    By: /s/ Sholeh Hamedani
                                           -------------------------------------
                                           Sholeh Hamedani
                                           Chief Financial Officer, Director

(Principal Financial Officer and Principal  Accounting  Officer).  In accordance
with the  Securities  Exchange  Act of 1934,  this Report has been signed by the
following persons on behalf of the registrant in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
Signature                                   Title                         Date
---------                                   -----                         ----
<S>                                 <C>                                <C>
/s/ Jamshid Ghosseiri               Secretary, Director                June 8, 2005
-----------------------
    Jamshid Ghosseiri

/s/ Tyler Wheeler                   Director                           June 8, 2005
-----------------------
    Tyler Wheeler

/s/ Roger Campos                    Director                           June 8, 2005
-----------------------
    Roger Campos

/s/ Dale Boehm                      Director                           June 8, 2005
-----------------------
    Dale Boehm
</TABLE>


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