UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE ACT
         OF 1934

                    For the fiscal year ended: June 30, 2005

                                       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 No. 0-28541

                           QUINTEK TECHNOLOGIES, INC.
                 (Name of Small Business Issuer in its charter)

           California                                      77-0505346
  ----------------------------                        --------------------
  (State or other jurisdiction                          (I.R.S. Employer
of incorporation or organization)                      Identification No.)

                               17951 Lyons Circle
                           Huntington Beach, CA 92647
                    ----------------------------------------
                    (Address of principal executive offices)

                     Issuer's telephone number: 714-848-7741

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

           Securities registered pursuant to Section 12(g) of the Act:
                           Common stock, no par value

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B is not contained herein,  and will not be contained,  to the best
or  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 l0-KSB. [ ]

Issuer's revenues for its most recent fiscal year: $1,547,923.

At September 19, 2005, the aggregate  market value of registrant's  Common Stock
held by  non-affiliates  was $8,550,063  based on the closing OTC Bulletin Board
bid price of $0.08 per share on that date.

At September  19, 2005, a total of  109,267,761  shares of  registrant's  Common
Stock were outstanding.

<PAGE>

                               TABLE OF CONTENTS

ITEM 1      BUSINESS DESCRIPTION
ITEM 2      DESCRIPTION OF PROPERTY
ITEM 3      LEGAL PROCEEDINGS
ITEM 4      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
               5.1   Market for Common Stock
               5.2   Dividends
               5.3   Securities Authorized for Issuance Under Equity
                       Compensation Plans
               5.4   Recent Sales of Unregistered Securities
ITEM 6      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS
ITEM 7      FINANCIAL STATEMENTS
ITEM 8      CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE
ITEM 8A     CONTROLS AND PROCEDURES
ITEM 8B     OTHER INFORMATION
ITEM 9      DIRECTORS, EXECUTIVE OFFICERS, AND CONTROL PERSONS;
              COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
                     9.1   Board of Directors and Executive Officers
                     9.2   Compensation of Directors
                     9.3   Management Committees
                     9.4   Section 16(a) Beneficial Ownership Reporting
                             Compliance
                     9.5   Code of Ethics
ITEM 10     EXECUTIVE COMPENSATION
ITEM 11     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 12     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13     EXHIBITS
ITEM 14     PRINCIPAL ACCOUNTANT FEES AND SERVICES
SIGNATURES
FINANCIAL STATEMENTS
EXHIBITS


                                      -2-
<PAGE>

Forward-Looking Statements

This  annual  report  contains  certain  forward-looking  statements  within the
meaning of section  21 of the  Securities  Act of 1934,  as  amended,  including
statements   that  indicate  what  the  Company   "believes,"   "expects,"   and
"anticipates" or similar expressions. These statements involve known and unknown
risks,   uncertainties  and  other  factors  which  may  cause  actual  results,
performance  or  achievements  of the  Company to differ  materially  from those
expressed or implied by such forward-looking  statements.  Readers are cautioned
not to place undue  reliance on these forward  looking  statements,  which speak
only as of the date of this annual  report.  There can be no assurance  that the
forward looking information contained herein will in fact transpire. The Company
undertakes  no  obligation  to  publicly  update or revise any  forward  looking
statements, whether as a result of new information, future events, or otherwise.

Item 1.    Description of Business

Business Development

Quintek Technologies,  Inc. and Subsidiary (referred to herein as the "Company",
"Quintek",  "Our",  or "We") is a California  corporation.  Quintek's  corporate
headquarters are located at 17951 Lyons Circle,  California,  92647. Our contact
information  at that  location is: phone  number (714)  848-7741,  fax number is
(714) 848-7701 and our website is  www.quintek.com.  Our corporate  filings with
the Securities and Exchange  Commission ("SEC") and amendments to these filings,
as well as other  information  is  available  free of charge at our website soon
after such  reports  are filed  electronically  with the SEC, or directly on the
SEC's website at www.sec.gov.

Quintek Electronics,  Inc., our predecessor company was founded in July 1991. On
January 14, 1999, Quintek Electronics,  Inc. was acquired in a merger by Pacific
Diagnostics  Technologies,  Inc. and the surviving  entity's name was changed to
Quintek  Technologies,  Inc.  On  February  24,  2000,  we  acquired  all of the
outstanding   shares  of  common  stock  of  Juniper   Acquisition   Corporation
("Juniper").  Upon effectiveness of that acquisition,  Quintek elected to become
the successor  issuer to Juniper for  reporting  purposes  under the  Securities
Exchange Act of 1934.

Quintek  provides  back office  services and  solutions to improve  efficiencies
within     organizations.     The    Company     accomplishes    this    through
out-sourcing/in-sourcing  services,  consulting  services  and  solution  sales.
Quintek, through its wholly owned subsidiaries Quintek Services, Inc. (QSI), and
Sapphire Consulting  Services,  Inc. provides services to enable Fortune 500 and
Global 2000 corporations to reduce costs and maximize revenues.

Quintek Services, Inc.

The Company's  Quintek Services,  Inc. (QSI) business unit provides  back-office
services to reduce our customer's  costs by enabling them to focus on their core
competencies.  We  reduce  our  customer's  costs by  converting  their  mission
critical  documents  from paper to electronic  formats,  making these  documents
readily  organized  and  available  and  automating  the  routing  and  approval
processes related to electronic documents via the internet.  We deliver the best
customer service, the fastest turnaround and the best price.

Market Overview

On August  31,  the  Institute  for Policy  Studies  released a report  that top
executives  at the firms  that use  outsourcing  the most got a 46  percent  pay
increase.   Leading  the  way  in  outsourcing  are  General  Electric,   United
Technologies, Citigroup, Oracle and Bank of America.

The  outsourcing  of jobs that can be performed  via the Internet has come to be
called BPO or business process  outsourcing.  Forester estimates that the market
for BPO  services  will grow at a CAGR of 66% from $19  billion  in 2004 to $146
billion in 2008.  The  Aberdeen  Group,  a provider  of IT market  intelligence,
forecasts 13% annual growth for the BPO industry  through 2005,  when the market
is  projected  to reach $248  billion.

Quintek  solves three major  problems for the  outsourcing  market.  First,  the
outsourced worker has to have the current data to do his job in his web browser.

                                      -3-
<PAGE>

The reality is that now more than ever, much of that data is in paper and has to
be quickly and efficiently  digitized to be made available offshore. In the 2001
book, The Myth of the Paperless  Office,  from MIT Press, the authors found that
the use of e-mail in an  organization  causes an average 40 percent  increase in
paper consumption.

In his book,  "Business @ The Speed of Thought,"  Bill Gates writes,  "... paper
consumption has continued to double every four years, and 95% of all information
in the US remains on paper,  compared with just 1% stored  electronically."

The American Forest and Paper  Association,  reports that paper use increased by
over 30 percent between 1986 and 1997. From 1992 to 2002,  world  consumption of
paper and board products grew from 250m metric tones to 325m metric tones.

Second,  closing a multi-year,  multi-million  dollar  outsourcing deal requires
specialized sales skill.

Lastly, there are system integration  requirements that must be supported with a
US presence. Quintek brings high-quality, high-volume imaging, scanning and data
capture services,  specialized sales and systems integration  experience to this
growing market.

According  to a March 2004  report by  research  firm IDC,  the global  document
management  and imaging  outsourcing  market  reached $13 billion in 2003 and is
expected to expand at a compound annual growth rate of 19.7% over the next three
years.  The rapid  growth of the  document  management  market has been  largely
unnoticed by industry  watchers  because it is manifested very  differently from
industry to industry,  IDC noted. For example growth in the health care industry
has  been  driven  in  part  by  government  regulation.  The  Health  Insurance
Portability and Accountability Act (HIPAA) requirements has legislated companies
to implement cross-company document management standards and technologies.

"Growth  in this  market  is being  fueled  by the rapid  adoption  of  imaging,
document,  and  content  technologies  overall,  user  demand for easy access to
documents,  as well as the  evolving  need for imaging and  document  management
within  particular   vertical  segments,"  said  Ron  Glaz,  director  of  IDC's
digital-imaging  solutions and services. "In fact, survey participants indicated
that the most important  factors in choosing an imaging and document  management
outsourcing  vendor  is  their  track  record  and  specific  vertical  industry
expertise."
Our Addressable Market

Our core  competencies are converting  mission critical  documents from paper to
electronic  formats,  making these documents readily organized and available and
automating the routing and approval  processes  related to electronic  documents
via the internet.  We go to market with these core  competencies in three market
segments.

We see the market for our  mortgage  document  processing  services  as follows.
According to the Mortgage  Banking  Association,  there will be $1.8 Trillion in
mortgage  originations  in 2006,  down from $1.96 Trillion in 2005. We calculate
that this  represents 13 million loans to be processed.  Our  experience is that
each loan  yields an average of 200  documents  and that the  customer  will pay
approximately  $0.10 per mortgage  page.  This yields an  addressable  market of
$260m.  If we  capture  10% of that  market,  we are on a $26m  run  rate in the
mortgage space.

We see the market for our healthcare  document  processing  services as follows.
According to Healthcare  Informatics.com,  there were 15B health claims filed in
2004.  Our  experience  is that  customers pay an average of $0.10 per claim for
processing. This yields an addressable market of $1.5B for our healthcare claims
processing service.

We see the market for our accounts payable  processing  services as follows.  In
2005, total revenues from the Fortune 500 were $8.2 Trillion.  Our experience is
that a company will spend 0.025% of its revenue on A/P Outsourcing.  This yields
an  addressable  market  of  $1.7B  for our A/P  processing  services.

Services Overview

Most BPO  processes  start by  capturing  data and  organizing  it into  digital
formats.  This has increased the need for service  provider  support.  Companies
wanting  to bring  unstructured  data on line have been  faced  with the task of
converting  this  information  into  electronic  form.   Unstructured   data  is
considered any media in paper,  film,  fiche or other forms that are not readily
available to the knowledge worker.

Companies electing to image capture their paper documents are turning to service
providers as a source of digitizing this information.  Outsourcing this business
to service  providers has proven less  expensive  than hiring  permanent  staff.
Temporary  employees have proven ineffective since conversions are not generally
done all at once.  Companies attempting to purchase equipment and train staff to
do their work in-house cannot keep up with the changing technologies in hardware
and software.
                                      -4-
<PAGE>

Quintek is targeting document imaging and scanning,  accounts payable processing
and inbound mailroom processing business across all vertical markets. Quintek is
targeting  Outsourced  Mortgage Processing in the mortgage sector and Outsourced
Healthcare Claims Processing in the healthcare sector.

Core Competencies

Mailroom Outsourcing

The most efficient  solution for a customer is for the customer to outsource the
mail  handling  function  to  Quintek.  Quintek  physically  retrieves  the mail
directly from the post office through a P.O. box, sorts,  scans and captures key
data fields from each document.  The scanned images and  corresponding  data are
uploaded  directly to the  customer's  ECM or one of Quintek's ASP  (Application
Service  Provider)  partners  systems for online  viewing by the  customer's end
user. This service is sold per piece of mail processed.

High-Speed Scanning at Client Site or Quintek Production Center.

Fortune 500  companies  and other large  organizations  manage  documents  using
Enterprise  Content Management (ECM) systems such as OnBase from Hyland Software
Inc.,  Documentum from EMC  Corporation or FileNet P8 from Filenet  Corporation.
These are very large databases with web browser interfaces that allow people all
over the  world  to  access  and  interact  with  document-based  content  in an
organized manner twenty-four hours a day and seven days a week.

The  scope of work for a High  Speed  Scanning  contract  will  usually  include
Quintek  receiving paper documents and delivering these documents  directly into
the  customer's  Enterprise  Content  Management  (ECM) system.  Scanning is the
process of converting a paper  document into a digital image saved in electronic
format  such as a TIFF or PDF file.  High-end  scanners  are similar to high-end
copiers with sheet feeders,  but they output  electronic  files, not more paper.
Quintek  provides the ground  transportation  and secure facility for processing
the documents,  the trained staff for processing the documents, the expertise to
index,  scan and  categorize the  documents,  the expertise to  re-assemble  the
original documents in the format and order they were delivered and the expertise
to upload the documents and the indexing into the  customer's  ECM system.  This
often has to be done in less than 24 hours from receipt of the document.

In its current  configuration,  Quintek's  Huntington Beach facility can convert
60,000  images in an eight hour shift and 2,400,000 per month running two shifts
at a rate of $0.05 an image. This would result in approximately $120,000 a month
in billings  and a gross  profit of $48,000.  Upon  subsequent  financing,  with
additional  equipment and  reconfiguration,  this facility has the capability of
processing  600,000  images in an eight hour  shift.  Running two shifts at full
capacity,  the facility could process 13,200,000 documents a month. At a rate of
$0.05 an image this would result in  approximately  $660,000 a month in billings
and a gross profit of $264,000.

Domestic/Offshore Data Capture, OCR, and Indexing

Quintek can use manual and OCR (Optical Character  Recognition)  technologies to
create indexing for converted digital images.  Indexing of documents facilitates
a more efficient  means of retrieving  critical  documents and  information  for
future use.

We guarantee  our  customers  "Sigma Level 5," a 99.5%  accuracy  rate.  Quintek
ensures  this by  utilizing  an "Enter - Enter - Compare"  process,  whereby two
separate operators  independently index the same document,  then compare results
using automated  systems.  If  discrepancies  are found between the two separate
operator  versions,  the batch is  immediately  rejected  and routed to a senior
project manager for rework.

Quintek can perform  this service  in-house or offshore.  Services are priced by
the keystroke.  A typical healthcare claim form may require between 400 and 1000
keystrokes. With volumes in the millions, our customers may pay $0.01- $0.02 per
keystroke.

ASP (Application Service Provider) Hosting of Scanned Images

Once  images  have  been  scanned,  end-users  need an ECM  (Enterprise  Content
Management)  system.  Quintek will continue to provide  clients with support for
best of breed  choice  preferred  by the  customer  such as OnBase  from  Hyland

                                      -5-
<PAGE>

Software  Inc.,  Documentum  and  Application  Extender from EMC  Corporation or
FileNet P8 from Filenet  Corporation.  For customers that do not want to install
and maintain their own ECM system,  Quintek resells  web-based  document hosting
ASP services from  Quintek's  partners such as Hyland  Software's  OnBase.  This
provides  Quintek's  clients the efficient  and immediate  capability of viewing
business critical documents online.

Workflow Automation

Quintek  designs and installs  software  systems for  automating the routing and
approval processes related to electronic documents via the internet.

Delivery of products or services

Quintek's High Speed Scanning, Data Capture, OCR & Indexing and In-house Imaging
Solutions  services are performed either in Quintek's  Huntington Beach facility
or on client site in Thousand Oaks, CA, Los Angeles, CA, and Costa Mesa, CA.

The Company's ASP Hosting of Scanned Images service is delivered to the customer
by Quintek's partner Hyland Software, Inc.

Quintek's Mailroom  Outsourcing  service is delivered from our Huntington Beach,
CA facility.

Sales of products or services

Quintek is establishing  customer  relationships  directly as well as with sales
partners,  large  prime  contractors  and  vertical-specific  solution  brokers.
Quintek  will  continue  expanding  its  sales  staff and  developing  its sales
partnerships.

Direct Sales

Quintek  currently has one full-time  direct sales person.  The Company plans to
grow this to a national staff. These senior salespeople are experienced and paid
a base salary and a sales commission  commensurate  with that experience and are
expected to meet an annual sales  quota.  Quintek  provides an  incentive  stock
option plan to attract top sales talent.

Sales Incentives and Compensation

Salespeople  receive a stock option bonus for meeting  specific  revenue  goals.
Quintek's  sales people are  compensated  based on the Gross Profit of the sale.
Sales people receive no commission for jobs sold at less than 20% Gross Profit.

                                      -6-
<PAGE>

In April 2004,  Quintek announced that the Company was entering the BPO services
market. All of these services are new within the last year. The Company executed
and is  delivering  on  long-term  customer  contracts  for  all of  these  five
services. The Company also sold, delivered and been paid for numerous short-term
contracts for these five new services.

On June 1, 2004,  Quintek  signed a sales partner  agreement with FedEx Kinko's.
With the  relationship  that has been put in place  between  FedEx  Kinko's  and
Quintek,  FedEx Kinko's can resell Quintek's BPO services.  Quintek's sales team
has been  training  FedEx  Kinko's  sales  representatives  on  selling  Quintek
services.  Quintek has sold and delivered on several  customer  contracts  under
this  agreement.  Under this  agreement,  Quintek  executed and delivered on one
long-term  contract.   This  contract  is  with  a  leading  life  sciences  and
biotechnology Company is providing services in Thousand Oaks, CA

On June 4,  2004,  Quintek  signed  a sales  partner  agreement  with a  leading
technology integrator. Under the relationship that has been put in place between
the  integrator and Quintek,  the integrator can resell  Quintek's BPO services.
For more than a year,  Quintek has been  providing  ongoing  services  under our
subcontracting relationship to a major medical center in Los Angeles, CA.

On March 22,  2004,  Quintek  signed a sales  partner  agreement  with a medical
services  company.  With the relationship that has been put in place between the
medical  services  company and Quintek,  the medical services company can resell
Quintek's  BPO  services.  Quintek's  sales team has been  training  the medical
services company on selling Quintek services.  Quintek has sold and delivered on
several customer contracts under this agreement.

On April 26, 2004,  Quintek  signed an  agreement  with Single  Source  Partners
(SSP).  Single Source  Partners is a provider of mortgage  solutions  located in
Newport  Beach,  CA that  brokers  services in the  mortgage  industry.  Quintek
executed and delivered on one long-term contract with under this agreement. This
contract  is with a Fortune 10 company  with  annual  revenues  in excess of $20
billion. In July, 2005 Quintek and SSP executed an Exclusive Sales and Marketing
Agreement.

COMPETITION

The Company's  Document Imaging and BPO services are a mix of existing microfilm
conversion service providers,  scanning service providers,  document  management
system integrators, and offshore data entry organizations.  There are only a few
truly national  providers of BPO and Document  Imaging.  Most often Quintek will
compete with Affiliated  Computer Services  (NYSE:ACS) of Dallas, TX, SourceCorp
(NASDAQ:SRCP) of Dallas, TX and EDS (NYSE:EDS).

EDS is a Fortune 500 company with reported  annual  revenues of over $20 billion
that provides a broad portfolio of business and technology solutions to help its
clients  worldwide  improve  their  business  performance.  The  company's  core
portfolio  comprises  information-technology,  applications and business process
services, as well as information-technology transformation services.

ACS is a Fortune 500 company with  reported  annual  revenues of over $4 billion
more than 40,000 employees  supporting client operations in nearly 100 countries
provides business process and information  technology  outsourcing  solutions to
world-class commercial and government clients.

SourceCorp is a business process outsourcing solutions to clients throughout the
U.S. SourceCorp reported annual revenues of $385 million. The company focuses on
business processes in  information-intensive  industries  including  healthcare,
legal, financial services, government, transportation and logistics. The company
has offices in 24 states and  operates in  approximately  40 states,  Washington
D.C., Mexico and both domestically and offshore through alliances.

                                      -7-
<PAGE>

The Company's competitive advantage is better, faster and cheaper.  Quintek sees
a void  created by these large multi  national  providers.  There is a lack of a
middle tier service  provider with a national scope and a commitment to quality.
The Company is focused on providing its customers a high quality  service with a
rapid turn  around  time for less than its  competitors.  Quintek can do this by
having low operational employee turnover and effective job costing.

An Employee Incentive Program (EIP) provides incentive to its employees to be as
productive  as  possible  and to stay at  Quintek.  An (EIP)  will  enable us to
deliver quality service at less cost than our competitors.

The Company's  publicly  traded company status will allow Quintek to continue to
attract high quality experienced  professionals that desire the upside of equity
options in a high  quality  early stage BPO  services  provider  with a focus on
growth.

The  Company  relies on  non-union  skilled  labor  for  mailroom  and  scanning
production  services.  The Company relies on widely available  technologies from
Kodak, Dell, EMC, Hyland, and Kofax to deliver services.

Quintek has three customers that  individually  represented more than 10% of its
revenues  for the fiscal year;  GMAC  represented  46% of its  revenue,  Precyse
Solutions,  Inc.  represented  19% of its  revenue,  and Peter  Pepper  Products
represented  12% of its  revenue.  The Company  has a five year Master  Services
Agreement with GMAC and a month-to-month  contract with Precyse.  The Company is
not aware of any reason why revenue from GMAC or Precyse would cease in the next
fiscal year.  The revenue from GMAC is based on their volume of  mortgages.  The
Company's  revenues  could be impacted  positively  or  negatively  based on its
customers  projected  mortgage  volume.  Quintek's  business  with Peter  Pepper
Products  in the  fiscal  year  ended  June  30,  2005  was a  one-time  systems
implementation  project. The Company's ongoing business with Peter Pepper is not
expected to be of the same volume. This is part of the Company's business model.
Quintek  expects to have other  systems  implementation  projects in the current
fiscal year of similar or greater  revenue.  Revenues from GMAC and Precyse have
trended up over the last fiscal  year.  The Company  expects that the portion of
revenue that it derives from GMAC and Precyse as a percentage of overall revenue
will  decrease  in the current  fiscal year  reducing  its  dependence  on these
customers.

Increased regulatory environment such as HIPAA (Health Insurance Portability and
Accountability Act) and Sarbanes-Oxley  drives demand for the Company's services
and also increases its costs.

Quintek  does not account for research and  development  as a separate  account.
Quintek has been  investing  in bringing  new  services to market as part of the
Company's  normal course of business.  The costs and effects of compliance  with
environmental laws are negligible.

Quintek has thirty-four  (34) employees,  twenty-four  (24) hourly employees and
ten (10) salaried employees.


Item 2. Description of Property.

The Company  leases 7,062 square feet for its  executive  offices at 17951 Lyons
Circle,  Huntington Beach, California.  The lease expires on June 30, 2008, with
an option to extend at the end of the  commencement  year.  The current  monthly
lease rent on this facility is $7,627.

                                      -8-
<PAGE>

The Company rents, on a  month-to-month  basis,  1,800 square feet of office and
warehouse space at 720 N. 4th Street, Montpelier,  Idaho, for its accounting and
purchasing function. The current monthly rent is $1,384.

Item 3.     Legal Proceedings.

On April 16, 2004, Decision One Corporation filed suit in the County of Bannock,
Idaho against the Company for $22,662 for goods provided.  Since 2000,  Decision
One  (formerly  Imation) has been both a vendor and a reseller of the  Company's
products.  The Company filed a  counterclaim  on August 1, 2004  asserting  that
Decision  One used its  authority  as a  dealer  to  disparage  the  Company  in
violation of its dealer agreement. The Company sought relief for the hundreds of
thousands of dollars in business  lost.  On January 11, 2005,  the Court granted
Judgment for the sum of $21,000 in favor of the Decision  One  Corporation.  The
Court ruled that the  Company  would be allowed to file the  counterclaim  under
this  action,  rather  than a separate  lawsuit.  In March 2005,  a  stipulation
settlement  was accepted by the Creditor  where they agreed to accept $15,000 in
full satisfaction of their debt. The Company agreed to pay $2,000 upon execution
of the  stipulation  plus $1,000 for 13 months  thereafter.  Upon receipt of the
final payment,  a Satisfaction of Judgment will be entered in the matter. If the
Company fails to meet the payment  schedule,  the Creditor,  after giving credit
for payments  received,  shall be allowed to proceed  with the full  judgment of
$21,000 plus  accumulated  interest and costs. The amount of Judgment of $21,000
is  included  in accounts  payable  and  accrued  expenses  in the  accompanying
financial statements as of June 30, 2005.

We are a party to an  arbitration  hearing on  December  19,  2005 of  Brownell,
Robert vs. Quintek  Technologies,  Inc. at JAMS, 707 Wilshire Blvd., 46th Floor,
Los Angeles,  CA 90017. Robert Brownell and Quintek  Technologies,  Inc. are the
principal  parties.  Robert  Brownell  was  employed  as  President  of  Quintek
Technologies,  Inc.  from March 31, 2004 to until he resigned on March 31, 2005.
On July 6, 2005,  Robert  Brownell  filed an arbitration  claim against  Quintek
Technologies,  Inc. for Promissory Fraud;  Breach of Written Contract;  Wrongful
Constructive  Termination  Based on  Public  Policy  and  Invasion  of  Privacy.
Brownell seeks relief as follows: one year's severance, or $150,000, prejudgment
interest  at 10% per annum  general  damages,  punitive  damages,  costs of suit
incurred and for such relief as the arbitrator deems proper.


ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.


ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

5.1       Market for Common Stock

Since  January  14,  1999,  Common  Stock has traded on the OTC  Bulletin  Board
(symbol "QTEK").  On September 19, 2005,  there were 495 listed  shareholders of
record.  The high and low bid prices per share for the Company's  stock for each
quarter  commencing July 1, 2002 and ending June 30, 2005 are listed below.  The
high and low bid prices per share for  Quintek's  stock for the  quarter  ending
June 30, 2005 were $0.11 and $0.10, respectively.  This information was obtained
from Media General Financial Services, Reuters and Yahoo Finance.

                1st Quarter      2nd Quarter      3rd Quarter      4th Quarter
             High     Low      High    Low      High   Low      High     Low
FY2003       $0.14    $0.03    $0.13   $0.02    $0.07  $0.03    $0.19    $0.03
FY2004       $0.17    $0.09    $0.19   $0.10    $0.26  $0.13    $0.20    $0.12
FY2005       $0.21    $0.20    $0.24   $0.20    $0.16  $0.15    $0.11    $0.10

The quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.

                                      -9-
<PAGE>

5.2       Dividends

Quintek presently intend to retain future earnings, if any, to provide funds for
use in the operation and expansion of its business. Accordingly, the Company has
not  declared  or paid  any  dividends  to its  common  shareholders  and do not
presently  intend to do so. Any future  decision  whether to pay dividends  will
depend on our financial condition and any other factors that the Company's Board
of Directors deems relevant.

5.3       Securities Authorized for Issuance Under Equity Compensation Plans

Quintek's  Chief  Executive  Officer and Chief  Financial  Officer  entered into
employment  agreements on January 31, 2003 with the Company which grants each of
them the  right  to earn  substantial  equity  compensation  from  the  Company.
Pursuant to the employment agreements, the Company has agreed to sell to each of
them  stock (or grant to each  rights to  purchase  additional  shares of common
stock) at $0.03 per share such that,  including all options or shares previously
issued to or purchased by each of them, each would own, in the aggregate, shares
of common stock or rights to purchase  shares of common stock  representing  ten
percent  (10%)  of  the  current  outstanding  common  stock  of  Quintek,  on a
fully-diluted  basis after taking into  account the issuance of such  additional
shares to each officer and assuming the issuance of all other shares  subject to
currently outstanding options or warrants.  The employment agreements state that
the  agreement(s)  specifically  granting  the  shares  to be  purchased  by the
officers will have, at minimum, new termination and repurchase provisions,  with
the termination  provisions to be consistent with new termination and repurchase
provisions  set forth in this  Agreement.  The  agreement(s)  also will  contain
provisions providing the officers with pre-emptive rights to purchase additional
shares of common stock under certain circumstances.  Options to the two officers
shall vest  according to the following  schedule:  Right of each to purchase two
and a half percent (2.5%) of outstanding common stock, upon the authorization of
additional shares by the shareholders of Quintek; assuming that authorization of
more shares is approved by the shareholders of the Company,  options giving each
of the  officers  the right to purchase  an  additional  two and a half  percent
(2.5%) of  outstanding  common stock at the time of grant,  will be granted upon
the one (1) year  anniversary  of each  officer's  employment  agreement for the
following three (3) years. In the event of a sale of Quintek, termination of the
officers'  employment  agreements  by the  Company,  or any other event that may
impede  Quintek's  ability  to  fulfill  its  obligations  under  the  officers'
employment agreements, all options will be immediately vest.

5.4       Recent Sales of Unregistered Securities

On July 11, 2004,  the Company sold a one year  $20,000  convertible  promissory
note bearing ten percent annual  interest to an accredited  investor.  On August
30,  2004,  the note  converted  into  200,000  shares of common stock at $0.10.
Additionally, the investor was granted, for each share converted pursuant to the
note, one warrant to purchase a share of common stock at $0.15 expiring July 11,
2007.

On July 15, 2004, the Company granted 300,000 of common stock to a consultant in
consideration of services performed pursuant to a consulting agreement.

On July 27, 2004 the Company sold a one year $50,000 convertible promissory note
bearing ten percent  annual  interest to an accredited  investor.  On August 30,
2004 the note was  converted  into  500,000  shares  of  common  stock at $0.10.
Additionally, the investor was granted, for each share converted pursuant to the
note,  one warrant to purchase a share of common stock at $0.15 expiring May, 27
2007.

On August  5,  2004,  the  Company  sold  500,000  shares of common  stock to an
accredited  investor in  consideration  of $35,000 and sold 1,000,000  shares of
common stock to an accredited investor in consideration of $70,000.

                                      -10-
<PAGE>

On August 31, 2004, the Company issued  consultant 50,000 shares of common stock
under a consulting agreement.

On August 26,  2004,  the Company  granted  150,000  shares of common stock to a
consultant  in  consideration  of services  performed  pursuant to a  consulting
agreement.

On September 14, 2004, the Company  issued an employee  300,000 shares of common
Stock per their employee agreement.

On September  15,  2004,  Company  sold  1,000,000  shares of common stock to an
investor in consideration of $100,000;  additionally, the investor was granted a
three year warrant to purchase 1,000,000 of common stock at an exercise price of
$0.14 per share.

On September 20, 2004,  the Company  issued  investor  660,000  shares of common
stock for repayment of loans.

On September 30, 2004, the Company sold 14,000,000  shares of common stock to an
institutional investor at $0.139 per share.

On  October 4, 2004,  the  Company  sold  250,000  shares of common  stock to an
investor in consideration of $25,000. The investor was also granted a three-year
warrant to purchase 250,000 shares of common stock at an exercise price of $0.15
per share.

On October 16, 2004, the Company sold a $250,000 promissory note, 5.75% interest
per annum, to an accredited  investor.  The note is due six months from the date
of  issuance.  Additionally,  the  investor  was granted  5,000,000  warrants to
purchase common stock at $0.10, expiring October 16, 2007.

On October 19, 2004 the Company  issued to Robert  Steele,  its Chief  Executive
Officer, and Andrew Haag, its Chief Financial Officer, 1,000,000 shares each, of
Series A Preferred  Stock as per their  employment  agreement with Quintek.  The
Company also issued Bob Brownell, its then President, 250,000 shares of Series A
Preferred Stock and per his employment agreement with the company.

On October 19, 2004, the Company issued  1,006,854  Series A Preferred  Stock to
various  employees  as part of an  agreement  dated  January 31, 2003 in lieu of
their back compensation of $201,211.

On October 19, 2004,  the Company  issued  724,077  shares of Series A Preferred
Stock to Bill Rice as part of an agreement to convert monies due of $36,204.

On October  19,  2004 the company  issued  648,255  shares of Series B Preferred
Stock to three investors for conversion of $162,062 in debt.

On October 19, 2004 the company issued 32,000 shares of Series B Preferred Stock
to a vendor for investor relation services valued at $2,080 in debt.

On October 19, 2004 the company issued 20,148 shares of Series C Preferred Stock
to 13 vendors for conversion of $20,148 in debt.

On October 25, 2004,  the Company  issued the Bosphorus  Group 700,000 shares of
common ctock as finder' fee valued at $133,000.

On  November  10,  2004 the  Company  issued  44,000  shares of common  stock as
conversion of Series C convertible Preferred Stock valued at $2,200.

                                      -11-
<PAGE>

On November  24, 2004,  the Company  issued  54,545  shares of common stock to a
consultant  for  services  provided  valued at $7,091  pursuant to a  consulting
agreement.

On November 24, 2004, the Company issued 2,794,920 shares of common Sctock to an
investor pursuant to the investor's conversion of Series B convertible Preferred
Stock valued at $111,797.

On December 3, 2004, the Company issued 500,000 shares of common ctock to Gerald
Hannahs pursuant to an exercise of warrants valued at $23,000.

On December  13,  2004,  the Company  issued  7,500  shares of common ctock to a
consultant  for  services  rendered  valued at $1,650  pursuant to a  consulting
agreement.

On December  13,  2004,  the Company  issued  2,000 shares of Series A Preferred
Stock to various  employees  as part of an agreement  dated  January 31, 2003 in
lieu of their remaining back compensation of $400.

On December 22, 2004,  the Company  issued  1,967,824  shares of common ctock to
Andrew Haag,  an officer and  director of Quintek,  pursuant to an exercise of a
warrant on a cashless basis.

On January 10, 2005,  the Company  issued  328,000  shares of common stock to an
investor  pursuant to the  investor's  conversion  of Series A  Preferred  Stock
valued at $65,600.

On January 12, 2005,  the Company  issued  250,000 shares of common shares to an
accredited investor for sale of stock valued at $25,000 on October 12, 2004.

On January 14, 2005, the Company  entered into an agreement with a consultant to
provide  consulting  services for a twelve month  period.  In  consideration  of
consulting  services,  the consultant  shall receive  1,800,000 shares of common
shares to be issued under rule 144 (restricted  stock) and shall have a one year
restriction  before  the  sale of any  shares,  and  after  two  years  shall be
unrestricted under rule 144k. As of June 30, 2005, the Company did not issue any
shares to the consultant.

On February  2, 2005,  in  consideration  of investor  relations  services,  the
Company agreed to issue  6,250,000  Warrants to purchase  Common Shares at $0.18
per share.  The Warrants  shall become  exercisable  as follows:  (a)  3,125,000
Warrants are vested and fully exercisable; and (b) 3,125,000 Warrants shall vest
and become exercisable on July 1, 2005. The Warrants shall expire on February 1,
2008. The Company did not issue these warrants as of June 30, 2005.

On  February  3, 2005,  the Company  entered  into an  addendum  to  Convertible
Debenture  and  Warrant to  Purchase  shares of common  stock by and between the
Company and an accredited investor.  Under this agreement,  the Company received
$100,000 on March 30,  2005,  as a  prepayment  towards the  exercise of Warrant
Shares under them  Convertible  Debenture and Warrant to Purchase  Common Shares
agreement.

On February 8, 2005,  the Company  issued 186,375 shares of common shares valued
at $2,500 to an accredited  investor.  On February 16, 2005,  the Company issued
5,000,000  Common  Shares  valued  at  $750,000  to be  held  in  escrow  for an
accredited investor, for future debenture conversions and warrant exercises.  On
March 30, 2005, the Company issued an additional  2,500,000 Common Shares valued
at $300,000 to be held in escrow for the same accredited investor.

On March 7, 2005,  the Company  issued  6,804,164  shares of common shares to an
accredited investor upon conversion of convertible promissory note of $408,250.

                                      -12-
<PAGE>

On March 10, 2005,  the Company  issued 400,000 shares of common stock valued at
$56,000 in settlement of debt of a shareholder.

On April 8,  2005,  the  Company  issued  457,000  shares of common  stock to an
investor  pursuant to the  investor's  conversion  of Series A  Preferred  Stock
valued at $91,320.

On May 25, 2005, the Company issued a consultant  390,193 shares of common stock
for advisory and consulting services valued at $26,000.

On June 14, 2005, the Company issued Vucan Ruzic/Profit Concepts  International,
288,500  shares of common  shares  for  compensation  under a release  of claims
valued at $33,466.

The  proceeds  from the sales of  unregistered  securities  have been  allocated
towards general working capital and to promote the growth of the business.


Unless  otherwise  noted,  the sales set forth above  involved no  underwriter's
discounts or commissions and are claimed to be exempt from registration with the
Securities and Exchange  Commission  pursuant to Section 4 (2) of the Securities
Act of 1933,  as amended,  as  transactions  by an issuer not involving a public
offering,  the issuance and sale by the Company of shares of its common stock to
financially  sophisticated  individuals  who are  fully  aware of the  Company's
activities,  as well as its business and financial  condition,  and who acquired
said  securities for investment  purposes and  understood the  ramifications  of
same.


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

The Company's revenues totaled $1,547,923 and $298,653 and for the twelve months
ended June 30, 2005 and 2004, respectively,  an increase of $1,249,270 (418%) in
2005 due to changing the Company's sales focus to the services business.

For the  twelve  months  ended  June 30,  2005 and  2004,  cost of  revenue  was
$1,070,001 and $184,964  respectively,  an increase of $885,037 (478%).  Cost of
revenue for both periods consisted mostly of labor and production costs. Cost of
revenue increased in 2005 due to increased  revenues from changing the Company's
sales focus to the services business.

Net cash used in  operating  activities  was  $1,418,456,  for the  twelve-month
period  ended June 30, 2005 as compared to $595,947  for the prior  twelve-month
period.  The (138%)  increase  is  attributable  to the  efforts  focused in the
services business.

Total operating expenses were $5,982,314 for the twelve-month  period ended June
30,  2005 as compared  to  $1,083,246  for the prior  twelve-month  period.  The
$4,899,068  (452%) increase in operating  expenses is mostly a non-cash increase
primarily due to the conversion of debt to equity,  stock-based compensation , a
permanent  decline  in  the  market  value  of  marketable  securities  held  as
investment,  and an increase  in expenses as the Company  focused its efforts in
the services business.

During the 12 month  period  ending June 30,  2005,  the Company  sold eight (8)
contracts  for  services.  The Company has not  renewed any  additional  service
contracts since January 1, 2005.

For the twelve months ended June 30, 2005, total assets equaled  $1,402,264,  an
increase  of  $1,254,989  (852%)  primarily  due  to  an  increase  in  accounts
receivable,   property  and  equipment  and  restricted   cash;   total  current
liabilities equaled $2,168,067,  a decrease of $9,513 (.004%),  accounts payable
and accrued expenses equaled  $863,320,  an increase of $424,494 (97%) primarily
due to increased spending due to growth,  factoring payable equaled $136,936, an
increase of $93,706 (216%) due to increased funding for capitalization.

                                      -13-
<PAGE>

The  Company  is  currently  in  default on two  outstanding  convertible  bonds
totaling $62,495.  Interest continues to accrue against the principal. The notes
are unsecured.  The holders of the bonds that are in default have indicated that
they do not want to  convert  their debt to stock and wish to be repaid in cash.
At present the Company does not have the funds to repay the indebtedness.  It is
not known whether the Company will be able to repay or renegotiate this debt. If
the Company is unable to cure the default or  renegotiate  its debt, the Company
may not be able to continue as a going concern.

The Company  owes  $96,661 in payroll  withholding  taxes that were assumed in a
merger and are past due.

Liquidity and Capital Resources

The Company's principal capital  requirements during the fiscal year 2006 are to
fund the internal operations and the acquisitions of growth-oriented businesses.
The Company plans to raise  necessary  funds by selling its own common shares to
selected investors and bringing in business partners whose contributions include
the  necessary  cash. In view of low borrowing  interest  rates,  the Company is
actively pursuing additional credit facilities with financial  institutions as a
means  to  obtain  new  funding.  The  Company's  management  estimates  that it
currently  has the funding  facilities  in place to operate for at least  twelve
months.

As shown in the accompanying  financial  statements,  the Company incurred a net
loss of $7,417,687 for the year ended June 30, 2005 as compared to a net loss of
$998,531  for the same  period  in 2004.  Additionally,  the  Company's  current
liabilities  exceeded its current  assets by $1,461,696 at June 30, 2005.

The Company has  historically  financed  operations  from the sale of its Common
Stock and the conversion of Common Stock warrants. At June 30, 2005, the Company
had cash on hand of  $12,669  as  compared  cash on hand of  $15,600 at June 30,
2004.

Net cash used in  operating  activities  for the year  ended  June 30,  2005 was
$1,418,456,  primarily  attributable  to the  increases in accounts  payable and
accrued  expenses of  $424,494,  increase in payroll  taxes  payable of $14,517,
increase in accounts  receivable of $286,542,  increase in deposits of $101,162,
and an increase in deferred revenue of $61,963.

Net cash used in  investing  activities  for the year  ended  June 30,  2005 was
$428,389,  primarily  due to the  acquisition  of equipment of $175,764 and cash
used for security bond of $250,000.

Net cash provided by financing  activities  for the year ended June 30, 2005 was
$1,843,914. The increase was primarily attributable to proceeds from issuance of
debentures of $300,000,  issuance of convertible notes of $200,000,  issuance of
convertible bonds of $250,000, issuance of common stock from warrant exercise of
$1,003,468,  prepayments  of  warrants  to be  issued  for  note  conversion  of
$295,000,  payments  for the  leases of  $48,260,  proceeds  from  factor net of
payments of $93,706 and payments of note payable of $250,000.

As a result of the above activities,  the Company  experienced a net decrease in
cash and cash equivalents of $2,931 for the year ended June 30, 2005 as compared
to a net  decrease in cash and cash  equivalents  of $5,562 as of June 30, 2004.
The ability of the Company to continue as a going concern is still  dependent on
its success in obtaining additional financing from institutional investors or by
selling its common shares and fulfilling its plan.

                                      -14-
<PAGE>

Subsequent Events

On July 14, 2005, the Company sold 1,750,000 common shares of Endexx Corporation
(formerly known as PanaMed  Corporation) to an accredited  investor in a private
placement for a cash consideration of $89,400. On June 30, 2004, the Company had
impaired its investment in PanaMed and recognized an impairment loss of $28,778.

On July 15, 2005,  the Company  entered into an  exclusive  sales and  marketing
agreement  with a third party  whereby the third  party for an  engagement  fee,
agreed to market  the  Company's  products  and  services  to the third  party's
contacts in the mortgage lending  industry.  As part of the consideration of the
agreement,  the  Company  signed a  promissory  note for  $36,478  to settle its
disputed fees.

On August 30, 2005,  the Company sold 2,000,000  restricted  common shares to an
accredited investor in a private placement, and raised $80,000 in cash.

In September  2005,  the Company sold 544,158 common shares of its investment in
Langley Park Investments, PLC for a cash consideration of $147,017.

ITEM 7 FINANCIAL STATEMENTS

See pages F-l, et seq., included herein.

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

On March 15, 2004, the Company received a letter dated March 8, 2004 from Heard,
McElroy  &Vestal  ("Heard  McElroy")  resigning as the Company's its independent
public  accountants.  The decision to resign by Heard  McElroy did not involve a
dispute with the Company over  accounting  policies or  practices.  On March 24,
2004, the Company appointed Kabani & Company, Inc., Certified Public Accountants
("Kabani") as its new  independent  public  accountants.  The decision to retain
Kabani was made by the Company's Board of Directors.

The report of Heard McElroy on the Company's  financial  statements for the year
ended June 30, 2003 did not contain an adverse opinion or disclaimer of opinion,
nor was it qualified or modified as to  uncertainty,  audit scope or  accounting
principles,  except  for the fact that  Heard  McElroy,  in its  report for that
fiscal year,  had included an opinion that, due to the Company's lack of revenue
producing  assets and  history of losses,  there was doubt  about the  Company's
ability to continue as a going concern.

During  the  Company's   fiscal  year  ended  June  30,  2003,   there  were  no
disagreements  with  Heard  McElroy on any matter of  accounting  principles  or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to Heard McElroy  satisfaction,  would have caused
Heard McElroy to make  reference to the subject  matter of the  disagreement  in
connection with its reports on the financial statements for the year, except for
the fact that Heard McElroy, in its report for that fiscal year, has included an
opinion that, due to the Company's lack of revenue  producing assets and history
of losses,  there is doubt  about the  Company's  ability to continue as a going
concern.

During the Company's most recent fiscal year, there were no  disagreements  with
Kabani & Co. on any matter of  accounting  principles  or  practices,  financial
statement disclosure, or auditing scope or procedure, which disagreements if not
resolved to Kabani's satisfaction, would have caused Kabani to make reference to


                                      -15-
<PAGE>

the subject  matter of the  disagreement  in connection  with its reports on the
financial  statements  for the year,  except  for the fact that  Kabani,  in its
report for the past  fiscal  year,  has  included  an opinion  that,  due to the
Company's lack of revenue producing assets and history of losses, there is doubt
about the Company's ability to continue as a going concern.

During the  Company's  two most recent  fiscal  years and through June 30, 2005,
there  have been no  reportable  events  (as  defined  in Item  304(a)(1)(v)  of
Regulation S-K).

The Company has provided Heard McElroy with a copy of this Item 4 disclosure and
has requested  that Heard McElroy review such  disclosures  and provide a letter
addressed  to the  Securities  and  Exchange  Commission  as  specified  by Item
304(a)(3)  of  Regulation  S-K.  Such  letter  is filed as  Exhibit  16.1 to the
Company's Current Report on Form 8K filed April 7, 2004.

During the fiscal year ended June 30, 2003, and the subsequent interim period up
to March 8, 2004,  the  Company did not consult  with Kabani  regarding  (i) the
application  of  accounting  principles  to  a  specified  transaction,   either
completed  or proposed;  or the type of audit  opinion that might be rendered on
the registrant's financial statements,  and either a written report was provided
to the registrant or oral advice was provided that the new accountant  concluded
was an important  factor  considered by the registrant in reaching a decision as
to the accounting,  auditing or financial reporting; or (ii) any matter that was
either the subject of a disagreement or a reportable event, as described in Item
304(a)(1)(iv) and (a)(1)(v) of Regulation S-K.


ITEM 8A    CONTROLS AND PROCEDURES

Our Chief  Executive  Officer and Chief  Financial  Officer  (collectively,  the
"Certifying   Officers")  are  responsible  for   establishing  and  maintaining
disclosure controls and procedures for the Company. Such officers have concluded
(based on their  evaluation of these controls and procedures as of a date within
90 days of the filing of this report) that the Company's disclosure controls and
procedures are effective to ensure that information  required to be disclosed by
the Company in this report is  accumulated  and  communicated  to the  Company's
management,  including its principal executive officers as appropriate, to allow
timely decisions  regarding required  disclosure.  The Certifying  Officers also
have indicated that there were no significant  changes in the Company's internal
controls  or  other  factors  that  could  significantly  affect  such  controls
subsequent to the date of their evaluation, and there were no corrective actions
with regard to significant deficiencies and material weaknesses.


ITEM 8B    OTHER INFORMATION

Not applicable.


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

9.1  Board of Directors and Executive Officers

The Company's board of directors consists of two members.  Directors are elected
at the Annual Meeting of Shareholders and serve until their successors have been
elected and qualified.  Officers are appointed by and serve at the discretion of
the Board of Directors.

The  following  is a summary  description  of the current  directors,  executive
officers and significant employees:

                                      -16-
<PAGE>

Robert Steele, Age 39, Chief Executive Officer and Director
-----------------------------------------------------------

Robert Steele has been the Company's Chief  Executive  Officer,  President,  and
Chairman of the Board of Directors  since  January 30, 2003.  In 1999, Mr Steele
founded iBrite, a wireless  information software company in Reston, VA, and from
May 1999 through  June 2001 served as its Chief  Executive  Office.  The company
established  contractual  partnerships with AOL and Global  Knowledge.  For nine
years,  from 1988 through 1998,  Mr. Steele served as Corporate Vice President &
Chief  Technology  Officer for CADD  Microsystems,  Inc.  (CMI),  currently  the
leading  provider  of  Autodesk  Computer  Aided  Design  software,  consulting,
training and  integration  services in the  Washington,  DC  Metropolitan  Area.
During his time at CMI,  the company  grew from  $50,000 in annual sales to more
than $3,000,000.  Mr. Steele sold and supervised significant systems integration
contracts with clients such as Lucent Technologies, Long Airdox Mining (Division
of the Fortune 500 Marmon Group),  ABB, GSA (General  Services  Administration),
FAA (Federal Aviation  Administration) and NRO (National Reconnaissance Office).
Mr. Steele received a Bachelor of Science in Electronic and Computer Engineering
from George Mason University in 1988.

Andrew Haag, Age 38, Chief Financial Officer and Director
---------------------------------------------------------

Andrew Haag has been the Company's Chief Financial  Officer and a Director since
January 31, 2003.  Prior to that,  from  December  2002,  he was employed by the
Camelot Group, Inc., an investment banking firm, to assist its corporate clients
on capital structure,  the structure of PIPE transactions and the preparation of
offering documents. From May 2001, Mr. Haag was employed by Aquasearch,  Inc., a
publicly held company,  where he raised  significant funds from private sources,
advised  its CEO on  strategic  business  development  issues  and  successfully
negotiated  several  contracts  to benefit the  company.  Mr.  Haag  assisted in
drafting corporate business plan, terms of investment,  press releases and other
corporate  documents.  From  November 1998 through April 2001 he was employed by
Nutmeg Securities, Ltd., where he advised institutional and individual clientele
on corporate offerings and equity trading, and performed corporate advisory work
for both public and private  companies.  From June 1998 through October 1998 Mr.
Haag was a Managing  Director of Waldron & Co. Inc., an investment  bank located
in Irvine, CA.

From  1992  through  1998 he was  employed  by  Auerbach,  Pollak &  Richardson,
investment  bankers,  located in Stamford,  CT and Beverly Hills,  CA, rising to
Managing Director, where he: assisted in the development of the firm, attracting
and  referring  new hires and clients to all  offices;  developed a national and
international  client base for the firm that  participated  in a majority of the
firm's corporate  offerings;  set up and managed road shows for firm's corporate
clientele;  attracted a wide  variety of  corporate  clientele;  assisted in the
structuring  and funding of offerings  for  corporate  clientele;  and increased
visibility of the firm through  networking of research and  offerings.  Mr. Haag
attended the University of Maine and CUNY Hunter College.

9.2      Compensation of Directors

All of the Company's  directors are full time  employees of Quintek.  Because we
have no independent directors, we pay no compensation to any directors for their
service on the board over and above their employment compensation.  There are no
family relationships among the directors or executive officers.

9.3      Management Committees

The Company has not established compensation or executive committees. Currently,
our entire  board of  directors  serves as our audit  committee.  Because of the

                                      -17-
<PAGE>

small size of the Company and the risk attendant to a small public company,  the
Company is currently  unable to attract an audit committee  financial  expert to
our Board of Directors.

9.4      Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities  Exchange Act requires the directors,  executive
officers  and persons who own more than 10% of our Common  Stock to file reports
of ownership  and changes in  ownership of our common stock with the  Securities
and Exchange Commission.  Directors, executive officers and persons who own more
than 10% of the Company's  common stock are required by Securities  and Exchange
Commission  regulations  to furnish to the Company  copies of all Section  16(a)
forms they file.

To the  Company's  knowledge,  based  solely  upon  review of the copies of such
reports  received or written  representations  from the reporting  persons,  the
Company  believes  that  during our 2005 fiscal  year our  directors,  executive
officers and persons who own more than 10% of our common stock complied with all
Section 16(a) filing requirements.

9.5      Code of Ethics

On June 10, 2003, the Company's board of directors  adopted a code of ethics,  a
copy of which was filed as an exhibit  to our  report on Form  10-KSB for fiscal
year 2003, that applies to our principal executive and financial  officers.  The
Company intends to file amendments,  changes or waivers to the code of ethics as
required by SEC rules.


ITEM 10 EXECUTIVE COMPENSATION

The following table summarizes the annual compensation of the Company's past and
current President for the three years ended June 30, 2005.
<TABLE>
<CAPTION>

                           ----------------- Annual Compensation ---------------        ---- Long Term Compensation ---

                                                                                        Securities
                                            Other Annual           Restricted           Underlying         All Other
Name                        Year        Salary  Compensation (3)   Stock Awards           Options         Compensation
----                        ----        ------------------------   ------------         -----------      -------------

Robert Steele
<S>                          <C>        <C>            <C>         <C>              <C>                  <C>
Chairman & CEO             FY2005       $  85,500      $  15,438   1,000,000        4,267,276 options             --
Chairman & CEO             FY2004       $  72,000           --          --               --                       --
President                  FY2003       $30,000 (1)    $   2,500        --               --                       --

Andrew Haag
CFO                        FY2005       $  85,500      $  15,433   1,000,000        4,267,276 options             --
                           FY2004       $  72,000           --          --               --                       --
                           FY2003       $  30,000(5)        --          --               --                       --

Robert Brownell
President                  FY2005       $ 119,000(4)        --       250,000        611,062 options               --
                           FY2004       $  37,500(2)        --          --               --                       --

</TABLE>

Notes:

1) Represents compensation received by Steele while serving as our President and
CEO from 2/1/03 to 6/30/03 2) Represents compensation received by Brownell while

                                      -18-
<PAGE>

serving as our President from 3/12/04 to 6/30/04
3) These amounts  represent the Company's  payments to provide an automobile and
health insurance for Mr. Steele and Mr. Haag.
4) Mr. Brownell resigned on March 31, 2005.
5)  Represents  compensation  received by Mr. Haag while serving as our CFO from
2/1/03 to 6/30/03.

Quintek  did not  grant  any  stock  options  or stock  appreciation  rights  or
Long-Term  Incentive  Plan Awards to its  officers or  employees,  in the fiscal
years ended June 30, 2004 or June 30, 2003.


ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the ownership of our common stock, as of June 30,
2005  by  our  directors  and  significant  shareholders.   On  June  30,  2005,
200,000,000  shares of our stock were authorized and  101,739,983  shares of our
common stock were outstanding.  This information was given to us by the transfer
agent and the  numbers are based on  definitions  found in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934.
<TABLE>
<CAPTION>

Shareholder                                             Title                     Shares                %
-----------                                             -----                     ------              ----
Officers, Directors and Key Employees
<S>                                                     <C>                       <C>                 <C>
Robert Steele, CEO and Chairman (1) (2)                 CEO & Chairman            5,667,276           5.6%
Andrew Haag (2) (5)                                     CFO, Director             5,183,803           5.1%
Kurt Kunz (7)                                           Founder/VP Engineering    3,806,111           3.7%
Key Investors
Zubair Kazi(9)                                          Investor                  9,720,536           9.6%
Institutional Ownership
Langley Park Investments PLC(10)                        Investor                  14,000,000          13.7%
Golden Gate Investors (8)                               Investor                  2,856,049           2.8%
All directors and officers as a group (3 persons)
</TABLE>

(1)    Includes  2,275,297 options to purchase stock at $0.03 until September 8,
       2009 and  1,991,979  options to purchase  Common Stock at $0.03 per share
       until February 8, 2010.
(2)    Includes 1,000,000 Series A Preferred Stock convertible into Common Stock
       on a 1 for 1 basis
(5)    Includes  1,991,979  options to purchase Common Stock at $0.03 per shares
       until February 8, 2010.
(7)    Includes  options to purchase 142,857 shares of Common Stock at $0.13 and
       1,100,000 shares of Common Stock at $0.175.
(8)    Includes  2,670,000  options to purchase  Common Stock at $1.00 per share
       until August 2, 2007.
(9)    Include an option to purchase 1,500,000 shares of Common Stock at $0.423.
       Mr. Kazi does not have the right to convert  any portion of the  Warrants
       that would cause him to be deemed the  beneficial  owner of more than ten
       percent (9.9%) of the outstanding shares of Common Stock of the Company.
(10)   As of June 30,  2005,  Langley  Park  Investment's  14,000,000  shares of
       Quintek Common Stock were issued and held in escrow until  fulfillment of
       conditions  by Langley  Park  Investment  pursuant  to its  July29,  2004
       agreement with Quintek .

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On July 11, 2004,  the Company sold a one year  $20,000  convertible  promissory
note bearing ten (10%) percent  annual  interest to an accredited  investor.  On


                                      -19-
<PAGE>

August 30, the note  converted  into  200,000  shares of common  stock at $0.10.
Additionally, the investor was granted, for each share converted pursuant to the
note, one warrant to purchase a share of common stock at $0.15 expiring July 11,
2007.

On December 22, 2004,  the Company  issued  1,967,824  shares of common stock to
Andrew Haag,  an officer and  director of Quintek,  pursuant to an exercise of a
warrant on a cashless basis.


ITEM 13 EXHIBITS


2.1 #    Agreement  and Plan of  Reorganization  between  Quintek  Technologies,
         Inc., and Juniper Acquisition Corporation.

3.1 *    Articles of Incorporation.


4.1 **   Form of  Irrevocable  Proxy  Granted to Chief  Executive  Officer dated
         January 30 or 31, 2003


10.4***  Consulting  Agreement  between  Quintek  Technologies,  Inc. and Robert
         Steele dated December 16, 2002 (previously filed as Exhibit 10.1)

10.5***  Consulting Agreement between Quintek Technologies, Inc. and Zubair Kazi
         dated January 31, 2003 (previously filed as Exhibit 10.2).

10.6***  Warrant  Agreement between Quintek  Technologies,  Inc. and Zubair Kazi
         dated January 31, 2003 (previously filed as Exhibit 10.3).

10.7**** Purchase  Order  Financing  Agreement  dated June 2, 2003  between Kazi
         Management VI, LLC and Quintek Technologies,  Inc. (previously filed as
         Exhibit 10.1).

10.8*****Consulting Agreement between Quintek  Technologies,  Inc. and Gary Litt
         dated February 3, 2003 (previously  filed as Exhibit 10.4).  Employment
         Agreement  between Quintek  Technologies,  Inc. and Robert Steele dated
         January 10.9# 31, 2003

10.10#   Employment Agreement between Quintek Technologies, Inc. and Andrew Haag
         dated January 31, 2003

10.11##  Employment  Agreement  between  Quintek  Technologies,  Inc. and Robert
         Brownell dated March 12, 2004

10.12##  Note Purchase  Agreement  between Quintek  Technologies,  Inc. and Kazi
         Management V.I. LLC dated November 26, 2003.

10.13##  Convertible  Note  I  between  Quintek  Technologies,   Inc.  and  Kazi
         Management V.I. LLC dated November 26, 2003.

10.14##  Convertible  Note  II  between  Quintek  Technologies,  Inc.  and  Kazi
         Management V.I. LLC dated February 8, 2004.

10.15##  Convertible  Note  III  between  Quintek  Technologies,  Inc.  and Kazi
         Management V.I. LLC dated March 13, 2004.

10.16##  Convertible  Note  IV  between  Quintek  Technologies,  Inc.  and  Kazi
         Management V.I. LLC dated April 26, 2004.

                                      -20-
<PAGE>

10.17##  Convertible  Note  V  between  Quintek  Technologies,   Inc.  and  Kazi
         Management V.I. LLC dated June 7, 2004.

10.18##  Loan and Security Agreement between Quintek Technologies, Inc. and Kazi
         Management V.I. LLC dated November 26, 2003.

10.19##  Warrant to Purchase Common Stock of Quintek  Technologies,  Inc. issued
         to Kazi Management V.I., Inc. dated November 26, 2003.

10.20##  Registration  Rights Agreement between Quintek  Technologies,  Inc. and
         Kazi Management V.I. LLC dated November 26, 2003.

10.21##  Stock Purchase  Agreement  between Quintek  Technologies,  Inc. Langley
         Park Investments PLC dated July 7, 2004

10.22##  Securities  Purchase Agreement between Quintek  Technologies,  Inc. and
         Golden Gate Investors, Inc. dated August 2, 2004
         (10.22a)  $300,000 5 3/4 %  CONVERTIBLE  DEBENTURE  dated August 2,2004
         (10.22b) Letter regarding  "Registration Statement Legal and Accounting
         Fees" to Golden Gate  Investors,  Inc.  dated August 2, 2004.  (10.22c)
         Letter regarding  "Warrant  Prepayment" to Golden Gate Investors,  Inc.
         dated August 2, 2004.  (10.22d)  Registration Rights Agreement dated as
         of August 2,, 2004 between Quintek Technologies,  Inc., and Golden Gate
         Investors, Inc. (10.22e) Warrant To Purchase 3,000,000 shares of Common
         Stock of Quintek Technologies, Inc. dated August 2, 2004.

10.23### Agreement with GMAC Mortgage  Corporation  dated July 16, 2004. Form 8K
         dated 11-03-04 incorporated by reference. (10.23a) Agreement with Nalco
         dated  November  17,  2004.  Form 8K  dated  11-17-04  incorporated  by
         reference.  (10.23b)  Agreement  with  FedEx  Kinko's Office  and Print
         Services,   Inc.  dated  January  20,  2005.   Form  8K  dated  1-24-05
         incorporated by reference.  (10.23c) Departure of principal officers on
         March 31, 2005. Form 8K dated 4-1-05 incorporated by reference.

20.1#    Code of Ethical Conduct adopted June 10, 2003

20.2#    Audit Committee Charter adopted June 11, 2003

31.1     Certification  pursuant to Rule 13a-14 of the Securities  Exchange Act,
         as adopted pursuant to Section 302 of the  Sarbanes-Oxley  Act of 2002,
         of the Chief Executive Officer of Quintek Technologies, Inc.

31.2     Certification  pursuant to Rule 13a-14 of the Securities  Exchange Act,
         as adopted pursuant to Section 302 of the  Sarbanes-Oxley  Act of 2002,
         of the Chief Financial Officer of Quintek Technologies, Inc.

32.1     Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
         to  Section  906  of  the  Sarbanes-Oxley  Act of  2002,  of the  Chief
         Executive Officer of Quintek Technologies, Inc.

32.2     Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
         to  Section  906  of  the  Sarbanes-Oxley  Act of  2002,  of the  Chief
         Financial Officer of Quintek Technologies, Inc.

                                      -21-
<PAGE>

33.1     Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
         to  Section  906  of  the  Sarbanes-Oxley  Act of  2002,  of the  Chief
         Executive Officer of Quintek Technologies, Inc.

33.2     Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
         to  Section  906  of  the  Sarbanes-Oxley  Act of  2002,  of the  Chief
         Financial Officer of Quintek Technologies, Inc.


#  Incorporated  by reference to Exhibit 2.1 to the Form 8-K dated  February 24,
2000.
*  Incorporated  by  reference to Form 10-KSB for the fiscal year ended June 30,
2000.
** Incorporated by reference to Form 10-QSB for quarter ended Dec.31, 2002.
*** Incorporated by reference to Registration  Statement on Form S-8 filed March
11, 2003.
**** Incorporated by reference to Form 8-K filed July 14, 2003.
*****  Incorporated  by  reference to  Registration  Statement on Form S-8 filed
August 18, 2003.
#  Incorporated  by  reference to Form 10-KSB for the fiscal year ended June 30,
2003
##  Incorporated  by  reference  to Form  10-K/A for the fiscal  year ended June
30,2004
###  Incorporated by reference to Form 10-KSB for the fiscal year ended June 30,
2005.


ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed by the Company's  auditors for  professional  services
rendered  in  connection  with the audit of the  Company's  annual  consolidated
financial  statements  for fiscal 2005 and 2004 and reviews of the  consolidated
financial  statements  included in the  Company's  Forms 10-QSB were $20,000 for
2004 and $41,000 for 2005.

Audit-Related Fees

For  fiscal  2005 and 2004,  the  Company's  auditors  did not bill any fees for
assurance and related services that are reasonably related to the performance of
the audit or review of the Company's  financial  statements and are not reported
under "Audit Fees" above.

Tax Fees

No fees were billed by the Company's auditors for professional  services for tax
compliance, tax advice, and tax planning for fiscal 2005 and 2004, respectively.

All Other Fees

No fees were billed by the Company's  auditors for all other non-audit  services
rendered to the  Company,  such as attending  meetings  and other  miscellaneous
financial consulting, in fiscal 2005 and 2004.

Audit Committee

The  audit  committee  meets  prior to  filing  of any Form  10-QSB or 10-KSB to
approve those filings.  In addition,  the committee meets to discuss audit plans
and  anticipated  fees for audit and tax work prior to the  commencement of that
work. Approximately 100% of all fees paid to our independent auditors for fiscal
2005 are pre-approved by the audit committee.

                                      -22-
<PAGE>

                                   SIGNATURES

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





Date:  October 12, 2005           QUINTEK TECHNOLOGIES, INC.


                                  By:  /s/ Robert Steele
                                  --------------------------------------
                                  Robert Steele, Chief Executive Officer



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





Date:  October 12, 2005           /s/ Robert Steele
                                  ---------------------------------------
                                  Robert Steele, Chief Executive Officer
                                  and Director


Date:  October 12, 2005           /s/ Andrew Haag
                                  ---------------------------------------
                                  Andrew Haag, Chief Financial Officer
                                  and Director


                                      -23-

                   QUINTEK TECHNOLOGIES, INC. AND SUBSIDIARY




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders and Board of Directors
Quintek Technologies, Inc

We  have  audited  the  accompanying   consolidated  balance  sheet  of  Quintek
Technologies, Inc. and subsidiary (a California Corporation) as of June 30, 2005
and the related consolidated statements of operations, stockholders' deficit and
cash flows for the year then ended and the  related  statements  of  operations,
stockholders'  deficit and cash flow for the year ended June 30, 2004 of Quintek
Technologies,  Inc. 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 of these  statements 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 consolidated  financial statements referred to above present
fairly,   in  all  material   respects,   the  financial   position  of  Quintek
Technologies,  Inc.  and  subsidiary  as of June 30, 2005 and the results of its
operations  and its cash flows for the years ended June 30, 2005 and the results
of operations  and cash flows of Quintek  Technologies,  Inc. for the year ended
June 30, 2004 in conformity with accounting principles generally accepted in the
United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in the notes to
the  consolidated  financial  statements,  the Company's  significant  operating
losses and  insufficient  capital raise  substantial  doubt about its ability to
continue as a going concern. Management's plans regarding those matters also are
described  in  the  notes  to  the  consolidated   financial   statements.   The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.


KABANI & COMPANY, INC.
---------------------------------
Los Angeles, California
September 30, 2005


                                      -24-
<PAGE>

<TABLE>
<CAPTION>
                                      QUINTEK TECHNOLOGIES, INC. AND SUBSIDIARY
                                                    BALANCE SHEET
                                                    June 30, 2005

                                                       ASSETS

                Current assets:
<S>                                                                           <C>
  Cash and cash equivalents                                                   $     12,669
  Restricted Cash                                                                  252,625
  Accounts receivable, net of allowance
   for doubtful accounts of $7,929                                                 315,278
  Investment in marketable securities                                              120,238
  Prepaid expenses                                                                   5,562
                                                                              ------------
         Total current assets                                                      706,372

Property and equipment, net                                                        585,431

Other assets:
  Deposits                                                                         109,578
  Other assets                                                                         883
                                                                              ------------
                                                                                   110,461
                                                                              ------------
Total assets                                                                  $  1,402,264
                                                                              ============

                        LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
  Accounts payable and accrued expenses                                       $    863,320
  Factoring payable                                                                136,936
  Payroll and payroll taxes payable                                                201,655
  Payroll taxes assumed in merger                                                   96,661
  Advances from lenders                                                            295,000
  Current portion of long-term debt                                                241,094
  Convertible bonds                                                                 62,495
  Convertible debentures                                                           137,504
  Convertible notes                                                                 91,750
  Deferred revenue                                                                  25,077
  Dividend payable                                                                  16,575
                                                                              ------------
        Total current liabilities                                                2,168,067

Long-term debt                                                                     128,162

Commitments and contingencies                                                         --

Stockholders' deficit:
  Preferred stock, convertible, no par value, 50,000,000 shares authorized,
  3,436,750 shares issued and outstanding                                     $    752,005
  Common stock, $0.01 par value, 200,000,000 shares authorized,
  98,480,532 shares issued and outstanding                                         984,805
  Additional paid-in capital                                                    27,994,614
  Shares to be issued                                                                8,000
  Unamortized consulting fees                                                       (3,120)
  Unrealized loss on marketable securities                                          (8,374)
  Investments held in escrow                                                      (126,567)
  Accumulated deficit                                                          (30,495,328)
                                                                              ------------
        Total stockholders' deficit                                               (893,965)
                                                                              ------------
        Total liabilities and stockholders' deficit                           $  1,402,264
                                                                              ============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      -25-
<PAGE>

<TABLE>
<CAPTION>

                 QUINTEK TECHNOLOGIES, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                              For the year ended June 30,
                                                                                  2005           2004
                                                                             ------------    ------------

<S>                                                                          <C>             <C>
   Net revenue                                                               $  1,547,923    $    298,653

   Cost of revenue                                                              1,070,001         184,964
                                                                             ------------    ------------
   Gross margin                                                                   477,922         113,689

   Operating expenses:
     Selling, general and administrative                                        2,200,475         960,209
     Inventory write off                                                             --            35,259
     Impairment - Investment                                                         --            28,778
     Permanent decline on value of marketable securities                        2,338,321            --
     Stock-based compensation                                                   1,443,517          59,000
                                                                             ------------    ------------
   Total operating expenses                                                     5,982,314       1,083,246
                                                                             ------------    ------------
   Loss from operations                                                        (5,504,392)       (969,557)

   Non-operating income (expense):
     Investment Income                                                               --                16
     Other income                                                                   6,961             157
     Decrease in the allowance for former officers receivables                    104,051            --
     Beneficial conversion feature                                               (317,021)           --
     Loss on conversion of debt                                                  (594,892)           --
     Interest Income                                                               11,109          11,136
     Interest expense                                                          (1,122,703)        (39,483)
                                                                             ------------    ------------
   Total non-operating income (expense)                                        (1,912,495)        (28,174)

                                                                             ------------    ------------
   Loss before provision for income taxes                                      (7,416,887)       (997,731)

   Provision for income taxes                                                         800             800
                                                                             ------------    ------------
   Net loss                                                                    (7,417,687)       (998,531)

   Dividend requirement for preferred stock                                        16,575            --
                                                                             ------------    ------------
   Net loss applicable to common shareholders                                  (7,434,262)       (998,531)

                                                                             ------------    ------------
   Comprehensive loss                                                        $ (7,434,262)   $   (998,531)
                                                                             ============    ============

   Basic and diluted net loss per share                                      $      (0.10)   $      (0.02)

   Basic and diluted net loss per share for dividend
     for preferred stock                                                     $       0.00    $       0.00

   Basic and diluted net loss per share applicable to                                --              --
     common shareholders                                                     $      (0.10)   $      (0.02)
                                                                             ============    ============

   Basic and diluted weighted average
      shares outstanding                                                       77,455,774      48,164,549
                                                                             ============    ============
</TABLE>

The accompanying notes are an integral part of these financial statements

                                      -26-
<PAGE>

<TABLE>
<CAPTION>
                    QUINTEK TECHNOLOGIES, INC. AND SUBSIDIARY
                            STATEMENTS OF CASH FLOWS

                                                                       Twelve months periods ended
                                                                                June 30,
                                                                          2005            2004
                                                                       -----------    -----------
        OPERATING ACTIVITIES
<S>                                                                    <C>            <C>
   Net loss                                                            $(7,417,687)   $  (998,531)
   Adjustments to reconcile net loss to net cash used in operations:
       Depreciation and amortization                                       130,666         50,730
       Impairment of investment                                               --           28,778
       Inventory write-off                                                  (6,758)        35,259
       Issuance of shares for consulting services                          918,129         15,000
       Issuance of stock for interest payment                                 --           17,222
       Loss on conversion of debt                                          594,892           --
       Shares to be issued for compensation                                  8,000         40,000
       Permanent decline on value of marketable securities               2,338,321           --
       Beneficial conversion feature expense                               317,021           --
       Stock options granted                                             1,636,652          4,000
       Warrants granted to consultant                                         --            5,774
       Commission paid out of investments                                   66,500           --
       Changes in current assets and liabilities:
          (Increase) decrease in accounts receivable                      (286,542)        44,382
          (Increase) decrease in inventory                                   6,758        (30,888)
          Decrease in other current assets                                       6          3,593
          (Increase) decrease in prepaid expenses                             (300)         3,353
          (Increase) in deposits                                          (101,162)        (6,021)
          (Increase) in investments                                           --              (16)
          Increase in accounts payable                                     424,494        119,040
          Increase in payroll taxes payables                                14,517         51,023
          (Decrease} in payroll taxes assumed in merger                       --          (26,611)
          Increase (decrease) in deferred revenue                          (61,963)        46,006
          Increase in liabilities in process of conversion to stock           --            1,960
                                                                       -----------    -----------
   Net cash used in operating activities                                (1,418,456)      (595,947)
                                                                       -----------    -----------

INVESTING ACTIVITIES
   Acquisition of equipment                                               (175,764)          --
   Increase in cash invested                                              (252,625)          --
                                                                       -----------    -----------
   Net cash used in investing activities                                  (428,389)          --
                                                                       -----------    -----------

FINANCING ACTIVITIES
   Payments on factoring payable                                          (135,586)      (131,885)
   Proceeds from factor                                                    229,292         28,225
   Proceeds on loans from stockholders                                        --          211,756
   Payments on leases                                                      (48,260)          --
   Proceeds from issuance of debentures                                    300,000           --
   Proceeds from convertible bonds                                         250,000           --
   Proceeds from convertible notes                                         200,000        500,000
   Prepayments for warrants to be issued for note conversion               295,000           --
   Proceeds from issuance of common stock and warrants                   1,003,468           --
   Payment of notes payable                                               (250,000)       (17,711)
                                                                       -----------    -----------
Net cash provided by financing activities                                1,843,914        590,385
                                                                       -----------    -----------

Net decrease in cash and cash equivalents                                   (2,931)        (5,562)
Cash and cash equivalents, beginning balance                                15,600         21,162
                                                                       -----------    -----------
Cash and cash equivalents, ending balance                              $    12,669    $    15,600
                                                                       ===========    ===========
</TABLE>

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

<TABLE>
<CAPTION>

                                      -27-
<PAGE>

                    QUINTEK TECHNOLOGIES, INC. AND SUBSIDIARY
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                   FOR THE YEARS ENDED JUNE 30, 2005 AND 2004
                          (Split table - Part 1 of 3)

                                                                      Preferred Stock                  Common Stock
                                                                ----------------------------    ---------------------------

                                                                  Number of                      Number of
                                                                   Shares         Amount          shares          Amount
                                                                ------------    ------------    ------------   ------------

<S>                                                              <C>            <C>               <C>          <C>
           Balance at June 30, 2003                                     --      $       --        46,762,008   $    467,620

           Issuance of shares for services                              --              --           200,000          2,000

           Issuance of shares for conversion of bond                    --              --         1,773,695         17,737

           Issuance of shares for debt settlement                       --              --            14,291            143

           Shares to be issued for compensation                         --              --              --             --

           Common stock options granted                                 --              --              --             --

           Issuance of stock warrants                                   --              --              --             --

           Net loss for the year ended June 30, 2004                    --              --              --             --
                                                                ------------    ------------    ------------   ------------

           Balance at June 30, 2004                                     --      $       --        48,749,994   $    487,500
                                                                ============    ============    ============   ============

           Issuance of shares for cash                                  --              --         2,750,000         27,500

           Issuance of shares for debt settlement                  1,027,602         280,262      12,132,736        121,327

           Conversion of preferred stocks                         (1,345,184)       (696,315)      3,624,320         36,243

           Issuance of shares for services                         2,342,000         367,400       3,894,560         38,946

           Issuance of shares for conversion of bond               1,372,332         760,658       7,426,098         74,261

           Issuance of shares for purchase of investment                --              --        14,000,000        140,000

           Shares to be issued for services                             --              --              --             --

           Shares issued for Services                                40,000           40,000            --             --

           Common stock options granted                                 --              --              --             --

           Issuance of shares upon exercise of warrants                 --              --         5,902,824         59,028

           Amortization of warrants granted                             --              --              --             --

           Investment held in escrow                                    --              --              --             --

           Unrealized loss on investment                                --              --              --             --

           Beneficial conversion feature                                --              --              --             --

           Preferred Dividends                                          --              --              --             --

           Net loss for the year ended June 30, 2005                    --              --              --             --
                                                                ------------    ------------    ------------   ------------

           Balance at June 30, 2005                                3,436,750    $    752,005      98,480,532   $    984,805
                                                                ============    ============    ============   ============


                                                                                                       (continued)
</TABLE>
The accompanying notes are an integral part of these financial statements

                                      -28A-
<PAGE>


<TABLE>
<CAPTION>

                    QUINTEK TECHNOLOGIES, INC. AND SUBSIDIARY
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                   FOR THE YEARS ENDED JUNE 30, 2005 AND 2004
                          (Split table - Part 2 of 3)

                                                                 Additional                    Unamortized
                                                                  paid in       Shares to       consulting     Investment
                                                                  capital       be issued          fees         in escrow
                                                                ------------   ------------    ------------    ------------

<S>                                                             <C>            <C>             <C>             <C>
           Balance at June 30, 2003                             $ 20,326,780   $       --      $       --      $       --

           Issuance of shares for services                            13,000           --              --              --

           Issuance of shares for conversion of bond                  88,685           --              --              --

           Issuance of shares for debt settlement                      1,643           --              --              --

           Shares to be issued for compensation                         --           40,000            --              --

           Common stock options granted                                4,000           --              --              --

           Issuance of stock warrants                                 41,572           --           (35,798)           --

           Net loss for the year ended June 30, 2004                    --             --              --              --
                                                                ------------   ------------    ------------    ------------

           Balance at June 30, 2004                             $ 20,475,680   $     40,000    $    (35,798)   $       --
                                                                ============   ============    ============    ============

           Issuance of shares for cash                               196,000           --              --              --

           Issuance of shares for debt settlement                    578,679           --              --              --

           Conversion of preferred stocks                            660,072           --              --              --

           Issuance of shares for services                           510,730           --              --              --

           Issuance of shares for conversion of bond                 225,240           --              --              --

           Issuance of shares for purchase of investment           2,520,000           --              --              --

           Shares to be issued for services                             --            8,000            --              --

           Shares issued for Services                                   --          (40,000)           --              --

           Common stock options granted                            1,676,375           --              --              --

           Issuance of stock warrants (exercise of warrants)         720,940           --              --              --

           Amortization of warrants granted                            2,950           --            32,678            --

           Investment held in escrow                                    --             --              --          (126,567)

           Unrealized loss on investment                                --             --              --              --

           Beneficial conversion feature                             427,948           --              --              --

           Preferred Dividends                                          --             --              --              --

           Net loss for the year ended June 30, 2005                    --             --              --              --
                                                                ------------   ------------    ------------    ------------

           Balance at June 30, 2005                             $ 27,994,614   $      8,000    $     (3,120)   $   (126,567)
                                                                ============   ============    ============    ============

                                                                                                       (continued)
</TABLE>

The accompanying notes are an integral part of these financial statements

                                     -28B-

<PAGE>

<TABLE>
<CAPTION>

                    QUINTEK TECHNOLOGIES, INC. AND SUBSIDIARY
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                   FOR THE YEARS ENDED JUNE 30, 2005 AND 2004
                          (Split table - Part 3 of 3)

                                                                                    Other            Total
                                                                 Accumulated     Comprehensive   Stockholder's
                                                                   Deficit          Income          Deficit
                                                                 ------------    ------------    ------------

<S>                                                              <C>             <C>             <C>
           Balance at June 30, 2003                              $(22,062,534)   $       --      $ (1,268,134)

           Issuance of shares for services                               --              --            15,000

           Issuance of shares for conversion of bond                     --              --           106,422

           Issuance of shares for debt settlement                        --              --             1,786

           Shares to be issued for compensation                          --              --            40,000

           Common stock options granted                                  --              --             4,000

           Issuance of stock warrants                                    --              --             5,774

           Net loss for the year ended June 30, 2004                 (998,531)           --          (998,531)
                                                                 ------------    ------------    ------------

           Balance at June 30, 2004                              $(23,061,065)   $       --      $ (2,093,683)
                                                                 ============    ============    ============

           Issuance of shares for cash                                   --              --           223,500

           Issuance of shares for debt settlement                        --              --           980,268

           Conversion of preferred stocks                                --              --              --

           Issuance of shares for services                               --              --           917,077

           Issuance of shares for conversion of bond                     --              --         1,060,159

           Issuance of shares for purchase of investment                 --              --         2,660,000

           Shares to be issued for services                              --              --             8,000

           Shares issued for Services                                    --              --              --

           Common stock options granted                                  --              --         1,676,375

           Issuance of stock warrants (exercise of warrants)             --              --           779,968

           Amortization of warrants granted                              --              --            35,628

           Investment held in escrow                                     --              --          (126,567)

           Unrealized loss on investment                                 --            (8,374)         (8,374)

           Beneficial conversion feature                                 --              --           427,948

           Preferred Dividends                                        (16,576)           --           (16,576)

           Net loss for the year ended June 30, 2005               (7,417,687)           --        (7,417,687)
                                                                 ------------    ------------    ------------

           Balance at June 30, 2005                              $(30,495,328)   $     (8,374)   $   (893,965)
                                                                 ============    ============    ============

                                                                                                       (concluded)

</TABLE>

The accompanying notes are an integral part of these financial statements

                                      -29-
<PAGE>
                    QUINTEK TECHNOLOGIES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. DESCRIPTION OF BUSINESS

The  Company  was  originally  incorporated  under  the  laws  of the  State  of
California on April 16, 1993, as Quintek Electronics,  Inc. On January 14, 1999,
the Company  merged with  Pacific  Diagnostic  Technologies,  Inc. in a business
combination accounted for as a purchase. The acquisition took place under a plan
of reorganization.  Quintek Electronics,  Inc. ("QEI") became public when it was
acquired by Pacific  Diagnostic  Technologies,  Inc.  ("PDX")  through a reverse
merger and Chapter 11 Plan of Reorganization.  Under the plan, all assets of QEI
were sold to PDX, all PDX management  resigned once the Plan was confirmed,  and
QEI's  management and operating  plan were adopted by the new operating  entity.
Shortly after the  confirmation of the plan, the name of the reorganized  debtor
was  changed to Quintek  Technologies,  Inc.  ("QTI").  QTI  assumed the assets,
liabilities, technology and public position of both QEI and PDX.

On February 24, 2000, the Company  acquired all of the outstanding  common stock
of Juniper Acquisition  Corporation  ("Juniper").  For accounting purposes,  the
acquisition was treated as a  capitalization  of the Company with the Company as
the acquirer (reverse acquisition).

On May 5, 2005, the Company  formed  Sapphire  Consulting  Services to focus its
efforts on the Supply  Chain  Services  market.  Sapphire  provides  back office
services and solutions to improve efficiencies within organizations. The Company
accomplishes this through out-sourcing/in-sourcing services, consulting services
and solution sales.

Quintek provides business process  outsourcing  services to Fortune 500, Russell
2000 companies and public sector  organizations.  The Company's business process
includes outsourcing services range from consulting,  digitizing,  indexing, and
uploading of source  documents  through  simple  customer-specific,  rules-based
decision making. The Company sells hardware,  software and services for printing
large-format  drawings such as blueprints and computer-aided  design (CAD) files
directly to the  microfilm  format off aperture  cards.  The Company is the only
manufacturer of a patented, chemical-free desktop microfilm printer for aperture
cards.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS

Principles of Consolidation

The  consolidated   financial   statements   include  the  accounts  of  Quintek
Technologies,   Inc.  and  its  wholly  owned  subsidiary,  Sapphire  Consulting
Services. The results of operations of Sapphire are included in the consolidated
financial  statements  from its formation  date. All  intercompany  balances and
transactions are eliminated on consolidation.

Use of estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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 revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all liquid  investments with a maturity of three months or
less from the date of purchase that are readily convertible into cash to be cash
equivalents.

                                      -30-
<PAGE>

Accounts Receivable

The  Company  maintains   reserves  for  potential  credit  losses  on  accounts
receivable.  Management  reviews  the  composition  of accounts  receivable  and
analyzes  historical  bad  debts,  customer   concentrations,   customer  credit
worthiness,  current economic trends and changes in customer payment patterns to
evaluate the adequacy of these  reserves.  Reserves are recorded  primarily on a
specific  identification basis.  Allowance for doubtful debts amounted to $7,929
as at June 30, 2005.

Inventories

Inventories  are  valued at the  lower of cost  (determined  on FIFO,  first-in,
first-out) or market.  The Management  compares the cost of inventories with the
market value and  allowance is made for writing  down the  inventories  to there
market value, if lower.

Equity Method of Accounting for Investments

Investments  in  companies in which the Company has a 20% to 50% interest or has
significant influence over the operating and financial policies of the investee,
are  carried  at  cost,  adjusted  for  the  Company's  proportionate  share  of
undistributed earnings or losses.

Property & Equipment

Property and  equipment are stated at cost.  Expenditures  for  maintenance  and
repairs are charged to earnings as incurred; additions, renewals and betterments
are capitalized.  When property and equipment are retired or otherwise  disposed
of,  the  related  cost  and  accumulated  depreciation  are  removed  from  the
respective   accounts,   and  any  gain  or  loss  is  included  in  operations.
Depreciation of property and equipment is provided using the straight-line  over
the estimated useful lives (3-7 years) of the assets.

Intangible Assets

Intangible assets consist of patents and purchased proprietary processes and are
being amortized using straight-line  method over their remaining useful lives of
four years. The Company evaluates intangible assets for impairment,  at least on
an annual basis and whenever  events or changes in  circumstances  indicate that
the carrying value may not be recoverable  from its estimated future cash flows.
Recoverability  of intangible  assets,  other long-lived assets and, goodwill is
measured by comparing their net book value to the related projected undiscounted
cash flows from these  assets,  considering a number of factors  including  past
operating  results,  budgets,  economic  projections,  market trends and product
development  cycles.  If the net book  value of the asset  exceeds  the  related
undiscounted cash flows, the asset is considered impaired,  and a second test is
performed to measure the amount of  impairment  loss.  Potential  impairment  of
goodwill after July 1, 2002 is being  evaluated in accordance with SFAS No. 142.
The SFAS No.  142 is  applicable  to the  financial  statements  of the  Company
beginning July 1, 2002.

                                      -31-
<PAGE>

Long-lived Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards  No. 144,  "Accounting  for the  Impairment  or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment  or  disposal  of  long-lived  assets and  supersedes  SFAS No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting  provisions of APB Opinion No.
30,  "Reporting  the  Results of  Operations  for a  Disposal  of a Segment of a
Business." The Company  periodically  evaluates the carrying value of long-lived
assets  to be held and used in  accordance  with  SFAS  144.  SFAS 144  requires
impairment  losses to be recorded on long-lived  assets used in operations  when
indicators of impairment are present and the  undiscounted  cash flows estimated
to be generated by those assets are less than the assets' carrying  amounts.  In
that  event,  a loss is  recognized  based on the  amount by which the  carrying
amount  exceeds  the  fair  market  value  of the  long-lived  assets.  Loss  on
long-lived  assets to be disposed of is determined in a similar  manner,  except
that fair market values are reduced for the cost of disposal.

Accounts Payable & Accrued Expenses

Accounts payable and accrued expenses consist of the following:

            Accounts payable                            $   507,405
            Accrued interest                                190,177
            Accrued legal fees                               38,250
            Accrued payroll                                  17,059
            Settlement payables                              24,827
            Other accrued expenses                           85,602
                                                            --------
                                                        $   863,320
                                                            =======

Software Development Costs

The Company has adopted Statement of Position 98-1 ("SOP 98-1")  "Accounting for
the Costs of Computer  Software  Developed or Obtained for Internal Use", as its
accounting policy for internally  developed  computer software costs.  Under SOP
98-1, computer software costs incurred in the preliminary  development stage are
expensed as incurred.  Computer  software costs incurred  during the application
development  stage are capitalized  and amortized over the software's  estimated
useful life.

The Company makes on-going  evaluations of the recoverability of its capitalized
software by comparing the amount  capitalized  for each product to the estimated
net  realizable  value of the product.  If such  evaluations  indicate  that the
unamortized  software  development  costs exceed the net realizable  value,  the
Company writes off the amount which the unamortized  software  development costs
exceed net realizable value.

Research and Development

Expenditures  for  software  development  costs and  research  are  expensed  as
incurred.  The amounts  charged to operations  for the years ended June 30, 2005
and 2004 were $886 and $5,026, respectively.

                                      -32-
<PAGE>

Income Taxes

Deferred taxes are provided for on a liability method for temporary  differences
between the  financial  reporting and tax basis of assets and  liabilities  that
will result in taxable or deductible amounts in the future.  Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws and rates on
the date of enactment.  Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will be realized.  For the year ended June 30,
2005, such differences were insignificant.

Stock-based Compensation

SFAS No. 123 prescribes  accounting and reporting  standards for all stock-based
compensation plans, including employee stock options, restricted stock, employee
stock  purchase  plans and stock  appreciation  rights.  SFAS No.  123  requires
compensation  expense to be recorded (i) using the new fair value method or (ii)
using the existing  accounting rules  prescribed by Accounting  Principles Board
Opinion No. 25,  "Accounting for stock issued to employees" (APB 25) and related
interpretations  with  pro-forma  disclosure of what net income and earnings per
share would have been had the Company  adopted  the new fair value  method.  The
Company  has chosen to account for  stock-based  compensation  using  Accounting
Principles Board Opinion No. 25,  "Accounting for Stock Issued to Employees" and
has  adopted  the  disclosure   only   provisions  of  SFAS  123.   Accordingly,
compensation  cost for stock  options is measured as the excess,  if any, of the
quoted  market  price of the  Company's  stock at the date of the grant over the
amount an employee is required to pay for the stock.

The Company's  board of directors  authorized a stock option plan which included
certain stock incentive awards.  The plan was approved by the shareholders as of
June 30, 2004. Additionally, the Company's board of directors authorized a stock
bonus plan as of December 7, 2004.

Fair Value of Financial Instruments

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial  instruments,  requires that the Company  disclose  estimated  fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current  liabilities  qualifying as
financial instruments are a reasonable estimate of fair value.

Basic and Diluted Net Loss Per Share

Net loss per share is calculated  in accordance  with the Statement of financial
accounting  standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128
superseded  Accounting  Principles  Board  Opinion  No.15 (APB 15). Net loss per
share for all periods  presented  has been  restated to reflect the  adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of  common  shares  outstanding.  Diluted  net  loss  per  share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised.  Dilution is computed by applying the treasury stock method. Under
this method,  options and warrants are assumed to be exercised at the  beginning
of the period (or at the time of issuance,  if later),  and as if funds obtained
thereby were used to purchase  common  stock at the average  market price during
the period.

                                      -33-
<PAGE>

Revenue Recognition

Revenue is  recognized  when  earned.  The  Company  recognizes  its  revenue in
accordance with the Securities and Exchange Commissions ("SEC") Staff Accounting
Bulletin No. 104, "Revenue Recognition in Financial  Statements" ("SAB 104") and
The American  Institute of Certified Public Accountants  ("AICPA")  Statement of
Position ("SOP") 97-2, "Software Revenue  Recognition," as amended as amended by
SOP 98-4 and SOP 98-9.

Issuance of Shares for Services

The Company accounts for the issuance of equity instruments to acquire goods and
services  based on the fair value of the goods and services or the fair value of
the  equity  instrument  at the time of  issuance,  whichever  is more  reliably
measurable.

Derivative Instruments

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as
amended by SFAS No. 137, is effective for fiscal years  beginning after June 15,
2000.  SFAS No. 133 requires the Company to recognize all  derivatives as either
assets or liabilities  and measure those  instruments at fair value.  It further
provides  criteria for  derivative  instruments  to be designated as fair value,
cash flow and foreign  currency  hedges and  establishes  respective  accounting
standards for reporting changes in the fair value of the derivative instruments.
After  adoption,  the Company is required to adjust hedging  instruments to fair
value in the  balance  sheet and  recognize  the  offsetting  gains or losses as
adjustments  to be  reported  in net income or other  comprehensive  income,  as
appropriate.  The Company has complied  with the  requirements  of SFAS 133, the
effect of which was not material to the Company's  financial position or results
of operations as the Company does not participates in such activities.

Reporting Segments

Statement of financial  accounting standards No. 131, Disclosures about segments
of an  enterprise  and related  information  (SFAS No.  131),  which  superseded
statement of financial  accounting  standards  No. 14,  Financial  reporting for
segments of a business enterprise, establishes standards for the way that public
enterprises  report  information  about operating  segments in annual  financial
statements  and  requires  reporting  of selected  information  about  operating
segments  in interim  financial  statements  regarding  products  and  services,
geographic areas and major customers. SFAS No. 131 defines operating segments as
components  of an  enterprise  about which  separate  financial  information  is
available that is evaluated  regularly by the chief operating  decision maker in
deciding how to allocate  resources  and in assessing  performances.  Currently,
SFAS 131 has no effect on the  Company's  consolidated  financial  statements as
substantially  all of the  Company's  operations  are  conducted in one industry
segment.

                                      -34-
<PAGE>

Reclassifications

Certain  comparative  amounts have been reclassified to conform with the current
year's presentation.

Recent Pronouncements

In November 2004, the FASB has issued FASB Statement No. 151,  "Inventory Costs,
an Amendment of ARB No. 43, Chapter 4" ("FAS No. 151").  The amendments  made by
FAS No. 151 are  intended to improve  financial  reporting  by  clarifying  that
abnormal amounts of idle facility expense,  freight,  handling costs, and wasted
materials  (spoilage)  should be  recognized  as  current-period  charges and by
requiring the allocation of fixed production overheads to inventory based on the
normal capacity of the production facilities.

The guidance is effective  for  inventory  costs  incurred  during  fiscal years
beginning  after June 15, 2005.  Earlier  application is permitted for inventory
costs  incurred  during  fiscal years  beginning  after  November 23, 2004.  The
provisions  of FAS No. 151 will be applied  prospectively.  The Company does not
expect the adoption of FAS No. 151 to have a material impact on its consolidated
financial position, results of operations or cash flows.

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R").  FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based  compensation  issued to employees.  FAS
No. 123R is effective  beginning in the Company's  first quarter of fiscal 2006.
The Company  believes  that the adoption of this  standard will have no material
impact on its financial statements.

In December  2004,  the FASB  issued  SFAS  Statement  No.  153,  "Exchanges  of
Nonmonetary  Assets."  The  Statement  is an  amendment of APB Opinion No. 29 to
eliminate the exception for nonmonetary  exchanges of similar  productive assets
and replaces it with a general  exception  for exchanges of  nonmonetary  assets
that do not have commercial substance. The Company believes that the adoption of
this standard will have no material impact on its financial statements.

In March 2004, the Emerging  Issues Task Force  ("EITF")  reached a consensus on
Issue  No.  03-1,  "The  Meaning  of  Other-Than-Temporary  Impairment  and  its
Application  to Certain  Investments."  The EITF  reached a consensus  about the
criteria  that should be used to  determine  when an  investment  is  considered
impaired,  whether that impairment is other-than-temporary,  and the measurement
of an  impairment  loss and how that criteria  should be applied to  investments
accounted for under SFAS No. 115, "ACCOUNTING IN CERTAIN INVESTMENTS IN DEBT AND
EQUITY   SECURITIES."  EITF  03-01  also  included   accounting   considerations
subsequent to the recognition of an other-than-temporary impairment and requires
certain  disclosures  about  unrealized  losses that have not been recognized as
other-than-temporary   impairments.   Additionally,   EITF  03-01  includes  new
disclosure  requirements  for  investments  that are  deemed  to be  temporarily
impaired.  In September  2004, the Financial  Accounting  Standards Board (FASB)
delayed  the  accounting  provisions  of  EITF  03-01;  however  the  disclosure
requirements remain effective for annual reports ending after June 15, 2004. The
Company will evaluate the impact of EITF 03-01 once final guidance is issued.

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections."  This  statement  applies to all  voluntary  changes in accounting
principle and requires  retrospective  application to prior  periods'  financial
statements   of  changes  in   accounting   principle,   unless  this  would  be
impracticable.  This statement also makes a distinction  between  "retrospective
application"  of an  accounting  principle  and the  "restatement"  of financial
statements to reflect the  correction of an error.  This  statement is effective
for accounting  changes and corrections of errors made in fiscal years beginning
after  December  15,  2005.  We are  evaluating  the effect the adoption of this
interpretation  will have on its financial  position,  cash flows and results of
operations.

                                      -35-
<PAGE>

3. RESTRICTED CASH

The Company entered into a consulting  agreement with General Motors  Acceptance
Corporation  under which it is required to provide at its own cost a performance
bond.  Such bond shall be solely for the  protection  of its  client  GMAC.  The
initial  bond was drafted in the amount of  $250,000  and will cover a period of
twelve (12) months starting October 1, 2004.

The  Company  opened a  certificate  of deposit for one year for  $250,000.  The
Company has accrued interest income of $2,625 through June 30, 2005. The Company
has recorded $252,625 as restricted cash in the accompanying balance sheet as of
June 30, 2005.

4. INVENTORIES

Inventory consists of parts and supplies.  The Company has recorded an allowance
of  obsolesce  amounting  $323,612  as on June 30,  2005.  As a result,  100% of
inventory totaling $323,612 was reserved for obsolescence.

5. PROPERTY AND EQUIPMENT

Property and equipment at June 30, 2005, consists of the following:

             Computer and office equipment             $  781,013
             Other depreciable assets                     102,881
             Furniture and fixture                         40,653
                                                       ----------
                                                          924,547
             Accumulated depreciation                    (339,116)
                                                       ----------
                                                       $  585,431
                                                       ==========

6. INTANGIBLE ASSETS

Intangible assets at June 30, 2005 were as follows:

             Patents and proprietary processes         $  136,067
             Accumulated amortization                    (136,067)
                                                       ----------
                                                       $     --
                                                       ==========

7. EMPLOYEE RECEIVABLES

             Notes receivable from former officers, unsecured,
             due on June 30, 2019, interest at 4% per anum          $ 262,254

             Interest receivable in connection with the above
             employee receivables                                      26,903
                                                                    ----------
                                                                      289,157
             Valuation allowance                                     (289,157)
                                                                    ---------
                                                                    $    --
                                                                    =========

                                      -36-
<PAGE>

8. NOTE PAYABLE

On October 19,  2004,  the Company  executed a note payable to a third party for
$250,000.  The term of the note was for a period of six months bearing an annual
interest at 5-3/4%. The Company granted 5,000,000 warrants to a third party upon
exercising their rights to advance $250,000 to the Company. The Company recorded
$589,602 as expense for the cost of the  issuance  of such  warrants  during the
period  ended June 30, 2005.  The Company  made  payments of $50,000 in cash and
allowed the third party to exercise 2,000,000 of the 5,000,000 warrants at $0.10
per share to payoff the remaining  principal  amount of the note payable  during
the period ended June 30, 2005.

9. FACTORING PAYABLE

The Company entered into an agreement with a factoring company ("the Factor") to
factor purchase orders with recourse. The Factor funds 97% or 90% based upon the
status of the purchase order.  The Factor agreed to purchase up to $4,800,000 of
qualified  purchase orders over the term of the agreement;  however,  the Factor
does not have to purchase more than $200,000 in any given month. The term of the
agreement  term was from June 2, 2003 to June 2, 2005. The Company agreed to pay
a late fee of 3% for  payments not made within 30 days and 5% for those not made
in 60 days. At the option of the Factor,  the late fees may be paid with Company
stock.  If paid by Company stock,  the stock bid price will be discounted 50% in
computing the shares to be issued in payment of the late fee.

The Company issued the Factor 1,500,000 warrants  purchasing the Company's stock
as a fee for the factoring  agreement.  Pursuant to the terms of agreement,  the
stock issued under the warrants can be purchased at the average closing price of
the Company's stock for the 90 days prior to the factoring agreement.

The Company has also agreed to issue the Factor bonus warrants.  The Factor will
receive two (2) bonus warrants for each dollar of purchase orders purchased. The
bonus warrants will be exercisable at the average closing price of the Company's
common  stock for the 90 days  prior to the  purchase  order  transactions  they
represent or a 50% discount to the closing price of the  Company's  stock at the
time  exercised at the option of the Factor.  Both  warrants are for a five year
period. No bonus warrants were issued to the Factor as of June 30, 2005.

At June 30, 2005, the Company had a factoring payable balance of $136,936.

10. PAYROLL TAXES-ASSUMED IN MERGER

The  Company  assumed  $205,618 of payroll  tax  liabilities  in the merger with
Pacific Diagnostic Technologies,  Inc. The balance was $96,661 at June 30, 2005.
The Company is delinquent on payments of these payroll tax liabilities.

                                      -37-
<PAGE>


11. LONG TERM DEBT
<TABLE>
<CAPTION>

<S>                                                                             <C>
            Lease payable, interest at 7.9% to 20%, due various dates           $ 405,704
            in 2005 to 2007
            Note payable, DFS, interest at 15.99%, due various dates                1,146
            in 2005 and 2006
            Notes payable - AP conversion, interest at 8%, due 2006                32,785
            Notes payable - vendor, monthly installments $404, due July 2005        2,022
                                                                                ---------
                                                                                  441,657
            Less current portion                                                 (241,094)
                                                                                ---------
                                                                                  200,563

            Less Unamortized discount                                             (72,401)
                                                                                ---------
                                                                                  128,162
                                                                                =========
</TABLE>

The company issued warrants  744,000 to the leasing company and the value of the
warrants was calculated using the Black-Schole  with the following  assumptions:
discount rate of 3.4%,  volatility of 100% and expected term of three year.  The
value of the  warrants  is $96,367 and it is  amortized  over the periods of the
leases, the company had amortized $23,966 of this value as an interest.


            The future maturity of the long term debt is as follows:

                              2006                            $ 241,094
                              2007                              174,845
                              2008                               25,718
                                                             ----------
                                               Total         $  441,657
                                                             ==========

12. ADVANCES FROM LENDER

On August 2, 2004 the Company signed a convertible  debenture  agreement with an
accredited  investor  whereby  the Company  received an advance of $730,000  for
prepayment of warrants to be exercised. The agreement expires on August 2, 2006.
During the twelve  month period ended June 30,  2005,  the  accredited  investor
exercised  $435,000 of warrants into common  shares.  The remaining  $295,000 is
recorded as advances from lender in the accompanying  financial statements as of
June 30, 2005.

13. CONVERTIBLE BONDS

         Bonds payable with interest at 9%, due on October 2001
         convertible to shares of common stock in increments
         of $1,000 or more                                           $  21,354

         Bonds payable with interest at 12%, due July 2001,
         convertible to shares of common stock in increments
         of $500 or more.                                               41,141
                                                                     ---------
                                                                     $  62,495
                                                                     =========


Certain of the  outstanding  convertible  bonds have matured as of July 2001 and
October  2001.  The holders of the matured  bonds do not wish to renew the bonds
and have asked for payment; however, the Company does not have the cash to repay
these bonds.

Bondholders  have been asked to exchange their bonds for preferred  stock. As of
June 30, 2005, holders of $198,268 of bonds including accrued interest had acted
on this. The Company  issued Series A Preferred  shares in the amount of $36,204
and Series B Preferred  share in the amount of $162,064 as of June 30, 2005. The
company recognized loss on the conversion of $594,892.

                                      -38-
<PAGE>

14. CONVERTIBLE DEBENTURES

The Company raised $300,000 through the issuance of convertible debentures as of
June 30, 2005. The term of the convertible debentures area as follows:  pursuant
to the terms of conversion, debenture in the amount of $300,000 pays interest at
5 3/4% interest and includes  3,000,000  warrants to purchase common stock for a
period of three years at the  exercise  price of $1.00.  The  "Conversion  Price
shall be equal to the lesser of (i) $0.50,  or (ii) 75% of the  average of the 5
lowest  Volume  Weighted  Average  Prices  during the 20  trading  days prior to
Holder's election to convert,  or (iii) 75% of the Volume Weighted Average Price
on the trading day prior to the Holders  election to convert market price of the
Company's  common stock prior to conversion.  Upon  conversion of the debenture,
the holder is obligated to simultaneously  exercise the $1.00 warrants providing
added funding to the Company.  The warrant must be exercised  concurrently  with
the  conversion  of this  debenture  in an amount  equal to ten times the dollar
amount of the Debenture  conversion.  Upon execution of the securities  purchase
agreement,  $225,000 of the purchase price was due and paid to the Company.  The
remaining $75,000 was paid to the Company on February 7, 2005 upon effectiveness
of the Securities and Exchange Commission's  Registration  Statement. As of June
30, 2005, the Holder of the debenture  converted $43,500 of the debenture amount
into 5,026,098 common shares of the Company and exercised 435,000 warrants.

The Company  allocated the proceeds  from the debenture  between the warrant and
the debt based on relative fair value of the warrant and the debt.  The value of
the warrant was  calculated  using the  Black-Scholes  model using the following
assumptions:  Discount rate of 3.4%, volatility of 100% and expected term of one
year.  The amount  allocated to the warrant is being  amortized over the term of
the debt. The Company  calculated a beneficial  conversion feature of $279, 652.
The Company amortized the beneficial  conversion  feature in accordance with the
conversion  terms of the note. At June 30, 2005 the note is presented net of the
unamortized  beneficial  conversion feature of $110,924 and unamortized discount
arising from the warrant of $8,072.

Pursuant to addendums to the  securities  purchase  agreement  dated February 3,
2005 and March 30, 2005,  the Company  delivered  7,500,000  common shares to an
escrow agent in accordance to the terms of the  agreement.  Such shares may only
be released by valid debenture conversion and warrant exercise notices submitted
to the Company by the  Holder.  As of June 30,  2005,  3,259,451  common  shares
remain in the escrow account.

A second  convertible  debenture  in the amount of $200,000 was  converted  into
common  stock on April 15,  2005.  Conversion  price was  $0.10 per  share.  The
convertible denbenture was originally funded in two $100,000 issuances on August
18, 2004 and  November 23, 2004,  The Company  recorded a beneficial  conversion
feature of $120,000 which represents the difference between the conversion price
and the market value of the shares at the transaction dates.

15. CONVERTIBLE NOTES

During the year ended June 30,  2005,  the Company  raised  $70,000  through the
issuance of convertible  promissory  notes.  All notes are for a one year period
and bear simple interest at the rate of 10%. The due dates


                                      -39-
<PAGE>

of these notes are from July 15, 2004 through  June 30, 2005.  The note plus any
accrued  interest  through the date of conversion are convertible to the company
common stocks at $0.10, the Company recorded a beneficial  conversion feature of
$28,297.  The note was  converted  in August  31,  2004 and the  company  issued
700,000 shares.

Another  convertible  note for $500,000  issued  during the year ending June 30,
2004,  the note plus any accrued  interest is  convertible to the company common
stocks  at $0.06 but  limited  to 10% of the  outstanding  shares at the time of
conversion.  Additionally,  the holder will  receive one bonus  warrant for each
conversion share. Each bonus warrant will be exercisable for a period of 5 years
from the date of  issuance  into one share of common  stock at a price of $0.10.
The  conversion  right of the note holder with respect to the  individual  notes
shall  exist upon (i) the  approval  of a proxy  statement  to be filed with the
Securities and Exchange Commission and approval of an amendment by the Company's
shareholders  to authorize to 200,000,000  the number of shares common stock and
(ii) the Company's  registration statement registering the Shares underlying the
notes and other  Securities  has been declared  effective by the  Securities and
Exchange  Commission.   The  company  issued  6,804,164  Common  stocks  on  the
conversion  of $408,250 of the note.  During the year ended June 30,  2005,  the
Company became  obligated to issue  6,804,164 bonus warrants to the debt holders
upon conversion of shares. The Company recorded  additional interest of $938,431
representing the fair value of warrants  issued.  The fair value of the warrants
was calculated  using the Black-Scholes model using the  following  assumptions:
volatility of 100%, discount rate of 3.4% and estimated life of 3 years.

The total interest on these  convertible  notes for the year ended June 30, 2005
amounted to $65,867.

16. STOCKHOLDERS' EQUITY

a.       Common Stock and Warrants

The Company has  authorized  200 million shares of common stock with a par value
of $0.01 per share.  Each share  entitles  the holder to one vote.  There are no
dividend or liquidation preferences, participation rights, call prices or rates,
sinking  fund  requirements,  or unusual  voting  rights  associated  with these
shares.

During the year 2003,  the  Company  established  the Class L warrants  with the
following  general terms:  1) exercise  price of $0.25 per share,  2) expiration
date of  January  14,  2005,  and 3)  Series A  Preferred  stock  designated  as
underlying  stock.  During the fiscal  year ended  June 30,  2003,  the  Company
initiated an exchange program with the existing Class J Warrant holders in which
the Company  offered to  exchange  one Class L Warrant for two Class J warrants,
with the exchange  number  rounded up to the next whole number in cases where an
odd number of Class J Warrants were submitted for exchange. The Class J Warrants
expired on January 14,  2004.  The Class L Warrants  expired on January 14, 2005
and no new  warrants  were issued to replace  Class J and Class L warrants as of
June 30, 2005.

During the twelve month period  ended June 30,  2005,  the Company  recorded the
following equity transactions:

     o   The Company issued  2,725,652 Common Shares to consultants for services
         valued  at  $367,040  and  4,628,572  Common  Shares  were  issued  for
         conversion of loans from shareholders valued at $221,756.
     o   The Company  issued  2,492,824  Common Shares upon exercise of warrants
         and received cash amounting to $49,968.
     o   The  Company  issued  6,804,164  Common  Shares  upon  conversion  of a
         promissory  note of $408,250.  The Company issued 700,000 Common Shares
         upon conversion of promissory notes of $70,000. In connection with this
         transaction,  a beneficial  conversion  feature  expense of $28,297 was
         recorded.

                                      -40-
<PAGE>

     o   The Company issued  7,026,098  Common Shares  pursuant to conversion of
         debentures into common stock valued at $243,500.
     o   The Company issued a total of 3,624,321  Common Shares upon  conversion
         of Preferred  Shares.  785,400 Series A Preferred Shares were converted
         to 785,400 common Shares valued at $156,920; 558,984 Series B Preferred
         Shares were  converted to 2,794,920  Common  Shares valued at $531,035;
         2,200 Series C Preferred  Shares were converted to 44,000 Common Shares
         valued at $8,360.
     o   The Company  issued  490,215 Common Shares to employees as bonus valued
         at $85,750.
     o   The Company issued  14,000,000  Common Shares  pursuant to an Agreement
         with  Langley  Park  Investments  PLC,  whereby,  the Company  received
         1,145,595  shares of Langley in exchange of its common shares issuance.
         The company paid out of Langely shares 28,639 as a commission.
     o   The Company  issued  2,750,000  Common Shares under  private  placement
         agreements and raised $223,500 from sale of shares.
     o   The  Company  issued  400,000  Common  Shares  to  a  shareholder   for
         converting its loan of $56,000 to equity.
     o   The Company issued  457,400  Common Shares upon  conversion of Series A
         Preferred Shares valued at $91,320.
     o   The Company  issued  1,000,000  Common Shares upon exercise of warrants
         and received cash in the amount of $120,000.
     o   The Company  issued  2,000,000  Common Shares upon exercise of warrants
         upon which the the Company  used the  proceeds  to pay the note.
     o   The   Company   issued   390,193   Common   Shares   pursuant   to   an
         advisory/consultant agreement valued at $50,725.
     o   The Company issued 288,500 Common Shares to avoid  assessment of future
         liability valued at $46,160.

During the year ended June 30, 2004,  200,000 shares of warrants were issued for
consulting  services for three years beginning February 2004, valued at $41,572.
The Company amortized  $32,678 in consulting  expense during the year ended June
30, 2005. On October 19, 2004, the Company granted 5,000,000 warrants to a third
party upon  exercising  their  rights to advance  $250,000 to the  Company.  The
amount  advanced  was for a period of six months  bearing an annual  interest at
5-3/4%. The Company recorded $589,602 as expense for the cost of the issuance of
such  warrants  during the period ended June 30, 2005.  Pursuant to the security
purchase  agreement dated August 2, 2004, the Company granted 3,000,000 warrants
to a  third  party,  to be  exercised  concurrently  with or  subsequent  to the
issuance of a conversion notice under the debenture agreement. The fair value of
the warrants is $20,348 using the Black-Schole  Model and the its amortized over
the terms of the note and  accordingly  with the exercise of the  warrants.  The
Company  recorded  $5,727 as  expense  for the cost of the  issuance  of 150,000
warrants to consultant  during the period ended June 30, 2005. The fair value of
the warrants is estimated on the grant date using the  Black-Scholes  Model. The
following assumptions were made in estimating fair value.

                                      -41-
<PAGE>


Annual rate of quarterly dividends                       0.00%
Discount rate - Bond Equivalent Yield                    3.40%
Expected life                                           3 years
Expected volatility                                       100%

       b.    Common Stock Reserved

At June 30, 2005, common stock was reserved for the following reasons:


Outstanding convertible bonds               151,919 shares

                                                Number
                                                  of
                                               Warrants
Warrants                                       ---------

 Outstanding June 30, 2004                     4,263,432
 Issued during the period                     13,443,425
 Exercised                                    (2,500,000)
                                              ----------
 Outstanding June 30, 2005                    15,206,857
 Warrants to be issued                         6,804,164
                                              ----------
   Total                                      22,011,021
                                              ==========

       c.    Stock Option Agreements

The Company granted 11,745,614 stock options to eleven (11) employees during the
year ended June 30, 2005. The company had recorded intrinsic value of $39,500 as
compensation

The number  and  weighted  average  exercise  prices of  options  granted by the
Company are as follows:

                                                         Options    Outstanding
                                                         -------    -----------
                                                                    Weighted
                                                         Number      Average
                                                           of       Exercise
                                                         Options     Price

         Outstanding June 30, 2003                      2,015,000   $    1.01

         Granted during the year                          200,000        0.10
         Exercised                                              0        0
         Expired/forfeited                                      0        1.00
                                                       ----------   ----------
         Outstanding June 30, 2004                      2,215,000   $    0.93
                                                       ==========   ==========
         Granted during the year                       11,745,614        0.05
         Exercised                                      2,275,297        0.001
         Expired/forfeited                              2,215,000        0.93
                                                       ----------   ----------
         Outstanding June 30, 2005                      9,470,317   $    0.93
                                                       ==========   ==========

                                      -42-
<PAGE>
Following is a summary of the status of options outstanding at June 30, 2005:
<TABLE>
<CAPTION>
                                       Outstanding Options                  Exercisable Options
                                 --------------------------------     ------------------------------
                                      Remaining        Average                             Average
                                      Contractual      Exercise                            Exercise
Exercise Price       Number              Life           Price             Number            Price
--------------      ---------     ------------------ -------------     ------------     ------------
<C>                 <C>                <C>              <C>              <C>               <C>
$0.10               1,061,062          21 months        $ 0.10           1,061,062         $  0.93
$0.03 - $0.16       8,409,255          35 months        $ 0.04           8,409,255          $ 0.04
</TABLE>

Pro forma  information  regarding  the effect on  operations is required by SFAS
123, and has been  determined  as if the Company had  accounted for its employee
stock  options  under  the  fair  value  method  of that  statement.  Pro  forma
information  using the  Black-Scholes  method at the date of grant  based on the
following assumptions for the year ended June 30, 2005 was as follows:

                  Expected life (years)                                1 year
                  Risk-free interest rate                      1.40% and 3.40%
                  Dividend yield                                     0% and 0%
                  Volatility                                      45% and 100%

Had the Company  determined  employee stock based  compensation  cost based on a
fair value  model at the grant date for its stock  options  under SFAS 123,  the
Company's  net  earnings  per share  would have been  adjusted  to the pro forma
amounts  for the year ended June 30,  2005 and 2004 as follows ($ in  thousands,
except per share amounts):
                                             Year ended June 30,
                                             2005          2004
                                           ---------    ---------

 Net loss - as reported                  $    (7,316)   $    (999)

 Stock based employee compensation
   expense included in reported net
   income, net of tax                             40         --

 Total stock-based employee
   compensation expense determined
   under fair-value-based method for all
   rewards, net of tax                        (1,718)          (8)
                                           ---------    ---------
 Pro forma net loss                      $    (8,994)   $  (1,006)
                                           =========    =========
Earnings (loss) per share:

 Basic, as reported                      $    (0.09)    $  (0.02)
 Diluted, as reported                    $    (0.09)    $  (0.02)
 Basic, pro forma                        $    (0.12)    $  (0.02)
 Diluted, pro forma                      $    (0.12)    $  (0.02)

      d. Stock transactions approved by the shareholders

At the annual meeting of the  shareholders  held June 30, 2004, the shareholders
approved by a majority vote to increase to 200,000,000  shares,  $0.01 par value
common stock,  and 50,000,000  shares no par value preferred stock. The board of
directors  are  authorized  to divide  the  preferred  stock  into any number of
classes or series,  fix the designation and number of shares of each such series
or  class  and  alter or  determine  the  rights,  preferences,  privileges  and
restrictions of each or series of preferred stock

                                      -43-
<PAGE>
Series A Preferred Stock

The  general  terms of the Series A Preferred  Stock is as follows:  Par value -
$0.00;  Liquidation  Preference  - $0.25 per share plus any  unpaid  accumulated
dividends;  Dividends -  cumulative  annual rate of $0.005 per share when and as
declared by the Board of Directors;  Conversion  Rights - convertible  to common
stock at a 1:1 ratio ;  Redemption  Rights - the Company has the right to redeem
part or all of the  stock  upon 30 days  written  notice  at a rate of $0.25 per
share plus all accumulated and unpaid dividends  thereon at the dividend rate of
$0.005  annually  per share;  Voting  Rights - one vote per share on all matters
requiring  shareholder  vote. At June 30, 2005, the Company had issued 4,082,931
shares of Series A Preferred  stock.  These  shares were used to pay for officer
compensation valued at $360,000,  accrued payroll valued at $252,213 the company
recorded a gain on the  settlement  of the  liabilities  of $50,503 and for bond
conversion  valued at $36,204 the Company  recorded a loss on conversion of debt
in amount of $108,612  in the  accompanying  financials  from Series A preferred
stock.  The  Company  has  recorded a  cumulative  dividend  of $16,453  for the
preferred  stockholders  for the period ended June 30, 2005 in the  accompanying
financial statements.

Series B Preferred Stock

The  general  terms of the Series B Preferred  Stock is as follows:  Par Value -
$0.00;  Liquidation  Preference  - $0.25 per share plus any  unpaid  accumulated
dividends;  Dividends - cumulative  annual rate of $0.0005 per share when and as
declared by the Board of Directors;  Conversion  Rights - convertible  to common
stock at a 1:5 ratio (i.e.  1 share of Series B Preferred  Stock is  convertible
into 5 shares of common stock); Redemption Rights - the Company has the right to
redeem part or all of the stock upon 30 days  written  notice at a rate of $0.25
per share plus all accumulated and unpaid dividends thereon at the dividend rate
of $0.0005 annually per share; Voting Rights - one vote per share on all matters
requiring  shareholder  vote. At June 30, 2005,  the Company had issued  680,255
shares of Series B Preferred Stock valued at $646,243. The Company recorded loss
on conversion of debt in amount of $480,460 in the accompanying  financials from
Series B Preferred Stock. The Company has recorded a cumulative dividend of $115
for the  preferred  stockholders  for the  period  ended  June  30,  2005 in the
accompanying financial statements.

Series C Preferred Stock

The  general  terms of the Series C Preferred  Stock is as follows:  Par value -
$0.00;  Liquidation  Preference  - $1.00 per share plus any  unpaid  accumulated
dividends;  Dividends  -  cumulative  annual  rate of $.0005  per share  when as
declared by the Board of Directors; Conversion Rights - 1:20 ratio (i.e. 1 share
of  Preferred  Series C stock is  convertible  into 20 shares of common  stock);
Redemption Rights - the Company has the right to redeem part or all of the stock
upon 30 days written notice at the rate of $1.00 per share plus all  accumulated
and unpaid dividends thereon at the dividend rate of $.0005 annually per share.;
Voting Rights - one vote per share on all matters requiring shareholder vote. At
June 30, 2005, the Company had issued 20,148 shares of Series C Preferred  Stock
valued at $76,562.  The Company recorded loss on conversion of debt in amount of
$56,423 in the  accompanying  financials  from  Series C  Preferred  Stock.  The
Company has recorded a cumulative dividend of $7 for the preferred  stockholders
for period ended June 30, 2005, in the accompanying financial statements.

                                      -44-
<PAGE>
Conversion of  Preferred Stock

o The Company  issued a total of  3,624,321  Common  Shares upon  conversion  of
Preferred  Shares.  785,400 Series A Preferred  Shares were converted to 785,400
common  Shares  valued at  $156,920;  558,984  Series B  Preferred  Shares  were
converted  to  2,794,920  Common  Shares  valued  at  $531,035;  2,200  Series C
Preferred Shares were converted to 44,000 Common Shares valued at $8,360.

17. INCOME TAXES

The Company accounts for income taxes using the liability  approach to financial
accounting  and  reporting.  The  Company  has a  deferred  tax asset due to net
operating  loss   carry-forwards  and  temporary  taxable   differences  due  to
stock-based  compensation  for income tax  purposes  and reserve  for  inventory
obsolescence.  Through June 30, 2005, the Company  incurred net operating losses
for federal tax purposes of $7,417,687. The net operating loss carry-forward may
be used to reduce taxable income through the year 2025. The  availability of the
Company's net operating loss  carry-forwards  are subject to limitation if there
is a 50% or more positive change in the ownership of the Company's stock.

The deferred tax assets are  $5,579,965 and  $3,057,951 as of June 30, 2005 and
2004,  respectively.  However,  due to the ongoing  nature of the losses and the
potential  inability  of the Company to ever  realize the  benefit,  a valuation
allowance has been established for 100% of the deferred tax asset. Net operating
loss carryforwards expire at various times through the year 2023.

The effects of temporary  differences that give rise to significant  portions of
the  deferred  tax  benefit  for the  years  ended  June  30,  2005 and 2004 are
presented below:

                                                      2005           2004
                                                  -----------    -----------

Net operating loss                                $   764,350    $   319,441
Inventory reserve                                     323,612           --
Stock-based compensation                              498,290         20,060
                                                  -----------    -----------
                                                    1,586,252        339,501

Less-valuation allowance                           (1,586,252)      (339,501)
                                                  -----------    -----------

                               Total              $      --      $      --
                                                  ===========    ===========

The following is a reconciliation  of the provision for income taxes at the U.S.
federal  income  tax rate to the  income  taxes  reflected  in the  Consolidated
Statements of Operations:

                                                     June 30,    June 30,
                                                       2005        2004
                                                   ----------   ---------

Tax expense (credit) at statutory rate-federal           (34%)        (34%)
State tax expense net of federal tax                      (6%)         (6%)
Permanent differences                                     (1%)         (1%)
Valuation allowance                                      (39%)        (39%)
                                                   ----------   ----------
Tax expense at actual rate                              --           --
                                                   ==========   ==========


                                      -45-
<PAGE>

18. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company  prepares its statements of cash flows using the indirect  method as
defined under the Financial Accounting Standard No. 95.

The  Company  paid $-0- for income tax during the years  ended June 30, 2005 and
2004. The Company paid $58,970 and $29,937  interest during the years ended June
30, 2005 and 2004, respectively.

The cash flow  statement  for the year ended June 30,  2005 does not include the
following non-cash investing and financing transaction;

     19,558,834 shares of common stock and 2,399,934  shares of preferred  stock
         were issued for conversion of debt amounting to $2,040,427.


19. MAJOR CUSTOMERS AND SUPPLIERS

The Company had two  customers  that  accounted  for 20- 45 % of revenue for the
year ended June 30, 2005.  Accounts  receivable  from these major customers were
$245,615 and $604,208  respectively-  at June 30, 2005.  For the year ended June
30,  2004,  the Company had one  customer  that  accounted  for more than 21% of
revenue.  Accounts  receivable from this major customers were approximately $-0-
at June 30, 2004.

20. COMMITMENTS AND CONTINGENCIES

a)    Operating Leases

Effective  July 1,  2004  the  Company  relocated  their  executive  offices  to
Huntington Beach,  California and entered into a four year lease agreement.  The
agreement  contains a base rent escalation  clause. The Company leases its Idaho
office facility under a month-to-month rental agreement at $1,384 per month. For
the years ended June 30, 2005 and 2004, rent expense for these operating  leases
totaled $89,829 and $56,997, respectively.

The future minimum lease payments under non-cancelable leases are as follows:

                       2006                  $  91,524
                       2007                     93,218
                       2008                     94,913
                                             ---------
                                             $ 279,655
                                             =========

b)    Litigation

On April 16, 2004, Decision One Corporation filed suit in the County of Bannock,
Idaho against the Company for $22,662 for goods provided.  Since 2000,  Decision
One  (formerly  Imation) has been both a vendor and a reseller of the  Company's
products.  The Company filed a  counterclaim  on August 1, 2004  asserting  that
Decision  One used its  authority  as a  dealer  to  disparage  the  Company  in
violation of its dealer agreement. The Company sought relief for the hundreds of
thousands of dollars in business  lost.  On January 11, 2005,  the Court granted


                                      -46-
<PAGE>

Judgment for the sum of $21,000 in favor of the Decision  One  Corporation.  The
Court ruled that the  Company  would be allowed to file the  counterclaim  under
this  action,  rather  than a separate  lawsuit.  In March 2005,  a  stipulation
settlement  was accepted by the Creditor  where they agreed to accept $15,000 in
full satisfaction of their debt. The Company agreed to pay $2,000 upon execution
of the  stipulation  plus $1,000 for 13 months  thereafter.  Upon receipt of the
final payment,  a Satisfaction of Judgment will be entered in the matter. If the
Company fails to meet the payment  schedule,  the Creditor,  after giving credit
for payments  received,  shall be allowed to proceed  with the full  judgment of
$21,000 plus  accumulated  interest and costs. The amount of Judgment of $21,000
is  included  in accounts  payable  and  accrued  expenses  in the  accompanying
financial statements as of June 30, 2005.

21. BASIC AND DILUTED NET LOSS PER SHARE

Net loss per share is calculated  in accordance  with the Statement of financial
accounting  standards  No. 128 (SFAS No. 128),  "Earnings  per share." Basic net
loss per share is based  upon the  weighted  average  number  of  common  shares
outstanding.  Diluted  net loss per  share is based on the  assumption  that all
dilutive  convertible  shares and stock  options were  converted  or  exercised.
Dilution is computed by applying the treasury  stock method.  Under this method,
options and warrants are assumed to be exercised at the  beginning of the period
(or at the time of issuance,  if later),  and as if funds obtained  thereby were
used to purchase common stock at the average market price during the period.

Weighted  average  number of shares used to compute  basic and diluted  loss per
share for the years  ended June 30,  2005 and 2004 are the same since the effect
of dilutive securities is anti-dilutive.

22. GOING CONCERN

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles,  which contemplate continuation of the
Company as a going concern.  This basis of accounting  contemplates the recovery
of the Company's  assets and the  satisfaction  of its liabilities in the normal
course of business.  Through June 30, 2005, the Company had incurred  cumulative
losses of  $30,495,328  including net losses of $7,417,687  and $998,531 for the
fiscal years 2005 and 2004,  respectively.  In view of the matters  described in
the preceding paragraph, recoverability of a major portion of the recorded asset
amounts  shown in the  accompanying  balance sheet is dependent  upon  continued
operations of the Company, which in turn is dependent upon the Company's ability
to raise  additional  capital,  obtain  financing  and to  succeed in its future
operations.  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 as a going concern.

Management  has taken the following  steps to revise its operating and financial
requirements,  which it believes are  sufficient to provide the Company with the
ability to continue as a going concern.  Management devoted  considerable effort
during the period ended June 30, 2005,  towards (i) obtaining  additional equity
financing and (ii) evaluation of its distribution and marketing methods.

                                      -47-
<PAGE>

23. SUBSEQUENT EVENTS

On July 14, 2005, the Company sold 1,750,000 common shares of Endexx Corporation
(formerly known as PanaMed  Corporation) to an accredited  investor in a private
placement  for a cash  consideration  of $89,400.  The Company had  impaired its
investment in PanaMed in fiscal year 2004 and had recognized an impairment  loss
of $28,778.

On July 15, 2005,  the Company  entered into an  exclusive  sales and  marketing
agreement  with a third party  whereby the third  party for an  engagement  fee,
agreed to market  the  Company's  products  and  services  to the third  party's
contacts in the mortgage lending  industry.  As part of the consideration of the
agreement,  the  Company  signed a  promissory  note for  $36,478  to settle its
disputed fees.

On August 30, 2005,  the Company sold 2,000,000  restricted  common shares to an
accredited investor in a private placement, and raised $80,000 in cash.

In September  2005,  the Company sold 544,158 common shares of its investment in
Langley Park Investments, PLC for a cash consideration of $147,017.

The  Company  is a party to a  litigation  filed  by its  former  President  for
promissory fraud, breach of written contract,  wrongful constructive termination
based on public  policy and  invasion of  privacy.  The  plaintiff  is seeking a
monetary  relief of $150,000 and for costs  incurred for the  litigation  as the
arbitrator  deems  proper.  The  parties  are  set  for an  arbitration  hearing
scheduled for December19, 2005.


                                      -48-