SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                   For the Fiscal Year Ended December 31, 2005

                        Commission File Number: 000-19404

                          AMERICAN UNITED GLOBAL, INC.
             (Exact name of registrant as specified in its charter)

            Delaware                                   95-4359228
            --------                                   ----------
    (State of Incorporation)               (IRS Employer Identification No.)

                   108 Village Square, # 327 Somers, NY 10589
                    (Address of principal executive offices)

                                  425-869-7410
                         (Registrant's telephone number)

           Securities registered pursuant to section 12(g) of the Act:
                     Common Stock, par value $.01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. YES [ ] NO [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. YES [ ] NO [X]

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for each 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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer.

[ ] large accelerated filer       [ ] accelerated filer     [X]  non-accelerated
                                                                 filer

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

The aggregate market value of any voting or non-voting common equity held by
non-affiliates as of June 30, 2005 was $3,035,954.88.

As of April 24, 2006, there were 10,313,056 shares outstanding of the
Registrant's common stock.

Documents incorporated by reference: None.

<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                           ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

                                                                            Page

                             PART I

Item 1.  Business                                                              3
Item 2.  Properties                                                            6
Item 3.  Legal Proceedings                                                     6
Item 4.  Submission of Matters to a Vote of Security Holders                   6

                             PART II

Item 5.  Market for Registrant's Common Equity and Related                     7
Item 6.  Selected Financial Data                                               9
Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                            10
Item 7A. Quantitative And Qualitative Disclosures
         About Market Risk                                                    12
Item 8.  Financial Statements And Supplementary Data                          12
Item 9.  Changes In and Disagreements With
         Accountants On Accounting and Financial Disclosure                   12
Item 9A. Controls And Procedures                                              12
Item 9B. Other Information1                                                   12

                             PART III

Item 10. Directors and Executive Officers of the Registrant                   13
Item 11. Executive Compensation                                               15
Item 12. Security Ownership Of Certain Beneficial Owners And
         Management And Related Stockholder Matters                           16
Item 13. Certain Relationships And Related Transactions                       16
Item 14. Principal Accounting Fees and Services                               19


                             PART IV

Item 15. Exhibits, Financial Statement Schedules                              20

Signatures


                                        1
<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

THE FEDERAL SECURITIES LAWS PROVIDE FOR A SAFE HARBOR FOR CERTAIN
FORWARD-LOOKING STATEMENTS. THIS SAFE HARBOR PROTECTS US FROM LIABILITY IN A
PRIVATE ACTION ARISING UNDER EITHER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, FOR FORWARD-LOOKING STATEMENTS THAT ARE
IDENTIFIED AS SUCH AND ACCOMPANIED BY MEANINGFUL CAUTIONARY STATEMENTS OR ARE
IMMATERIAL.

WHEN USED IN THIS FORM 10-K, THE WORDS OR PHRASES "ESTIMATE", "INTENDS", "MAY",
"EVALUATING" OR SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY "FORWARD LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995, AS AMENDED. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO, OUR ABILITY TO CONTINUE AS A GOING
CONCERN, OUR ABILITY TO MAKE REQUIRED PAYMENTS ON SENIOR SECURED NOTES, OUR NEED
FOR ADDITIONAL FINANCING, OUR HISTORY OF LOSSES, THE SUCCESSFUL IDENTIFICATION
OF STRATEGIC BUSINESS PARTNERS, THE SUCCESSFUL EXECUTION OF AGREEMENTS WITH
STRATEGIC BUSINESS PARTNERS REQUIRED FOR THE IMPLEMENTATION OF BUSINESS PLANS
AND THE SUCCESSFUL IDENTIFICATION, ACQUISITION AND INTEGRATION OF ADDITIONAL

TARGET BUSINESSES. SUCH FACTORS COULD AFFECT OUR COMPANY'S, INCLUDING THAT OF
OUR SUBSIDIARIES', FINANCIAL PERFORMANCE AND COULD CAUSE OUR ACTUAL RESULTS FOR
FUTURE PERIODS TO DIFFER MATERIALLY FROM ANY OPINION OR STATEMENTS EXPRESSED
HEREIN WITH RESPECT TO FUTURE PERIODS. AS A RESULT, WE CAUTION READERS NOT TO
PLACE UNDUE RELIANCE ON ANY SUCH FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS
OF THE DATE MADE.

THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE
AND, EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE ANY
FORWARD-LOOKING STATEMENT TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON
WHICH THE STATEMENT IS MADE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED
EVENTS. IN ADDITION, WE CANNOT ASSESS THE IMPACT OF EACH FACTOR ON OUR BUSINESS
OR THE EXTENT TO WHICH ANY FACTOR OR COMBINATION OF FACTORS MAY CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING
STATEMENTS.


                                        2
<PAGE>

                                     PART I

ITEM 1. BUSINESS

American United Global, Inc. (the "Company" or "AUGI") was initially organized
as a New York corporation on June 22, 1988 under the name Alrom Corp. ("Alrom"),
and completed an initial public offering of securities in August 1990. Alrom
effected a statutory merger in December 1991, pursuant to which Alrom was
reincorporated in the State of Delaware under the name American United Global,
Inc. We intend to focus our business strategy on acquisitions of operating
businesses in various sectors. In connection with our business strategy, we have
entered into agreements to purchase 85.5% of the outstanding securities of Kraft
Rt., an equipment manufacturing company headquartered in Budapest, Hungary
engaged in the design, development and manufacturing of vacuum based production
and quality control equipment used in several hi-tech industries. Kraft Rt. is
presently focusing its efforts on the development of its manufacturing business
relating to the production of thin film based photovoltaic modules.

In connection with the acquisition of the controlling interest of Kraft Rt., on
August 9, 2005, AUGI entered into a Share Purchase Agreement (the "Agreement")
with Kraft Rt., a Hungarian corporation, and the shareholders of Kraft Rt. (the
"Sellers"). Pursuant to the Agreement, the Company agreed to acquire and, the
Sellers agreed to sell, 100% of the Seller's interest in Kraft Rt. On January
30, 2006, the Agreement expired pursuant to its own terms.

On March 16, 2006, the Company entered into a Securities Purchase Agreement with
Zoltan Kiss and Dr. Laszlo Farkas, two shareholders of Kraft Rt. that together
own 47.5% of the equity interest in Kraft Rt. In addition, on March 20, 2006,
the Company entered into a Securities Purchase Agreement with Nagyezsda Kiss,
Joseph Gregory Kiss, Maria Gabriella Kiss and Gyula Winkler, four shareholders
of Kraft Rt. that together own 38% of the equity interest in Kraft Rt. As a
result, the Company has entered into agreements to acquire 85.5% of the equity
interest of Kraft Rt. In consideration for the sellers' interest in Kraft Rt.,
the Company shall issue the sellers an aggregate of 85,500 shares of Series B-4
Preferred Stock of the Company (the "Preferred Shares"). The Preferred Shares
are each automatically convertible into 350 shares of common stock upon the
Company increasing its authorized shares of common stock and, prior to such
conversion, the Preferred Shares will have the same voting rights of the shares
of common stock and vote together with the shares of common stock on all
matters. The Company is presently negotiating with the remaining shareholders of
Kraft Rt. to acquire their interest in Kraft Rt. The Company cannot provide any
guarantee that it will be able to enter into agreements with the remaining
shareholders of Kraft Rt.

The closing of the acquisition of Kraft Rt. is expected to occur no later than
45 days from the completion and delivery to the Company of the Kraft Rt. audited
financial statements for the year ended December 31, 2005 by Kraft Rt. Prior to
closing, all closing conditions must be satisfied including, but not limited to,
the satisfaction of various material liabilities and the closing of a financing
in the minimum amount of $6,000,000 by the Company. No material relationship
exists between the shareholders of Kraft Rt. and the Company and/or its
affiliates, directors, officers or any associate of an officer or director.

Western Power & Equipment Corp.

Western Power & Equipment Corp. ("Western") commenced operations in November
1992 with the acquisition from Case Corporation of seven retail distribution
facilities located in Oregon and Washington. Western became our subsidiary
simultaneous with such acquisition. Prior to November 1, 2000, Western was our
59.6% majority owned operating subsidiary. On November 1, 2000, we distributed
777,414 shares of Western common stock owned by us pursuant to the final court
approved settlement of the shareholder class action. In addition, on September
23, 2005, the Company sold 1,222,586 shares of Western to various accredited
investors in consideration of gross proceeds in the amount of $2,286,235.

Informedix

InforMedix, Inc. developed a portable medical device linked to an integrated
hardware and software system that its management believes will enable
pharmaceutical and biotechnology companies to get new drugs to market faster and
at a lower cost than traditional methods.

On May 8, 2003, Informedix merged with a public entity whose name was changed to
Informedix Holdings, Inc. and 54,000 shares of their common stock were issued to
our company pursuant to the automatic conversion feature of the loan and all
accrued interest. On July 25, 2003, we loaned $20,000 to Informedix pursuant to
the terms of a 12% promissory note originally due January 31, 2004 which due
date was extended to April 2, 2004. The note was paid in full on that date.

NY Medical

We acquired 55% of New York Medical, Inc., a New York corporation ("NY
Medical"), from Redwood Investment Associates, LLP ("Redwood") pursuant to an
amended and restated agreement and plan of merger agreement effective June 17,
2003 (the "Merger Agreement") and had intended to acquire the remaining 45%
pursuant to a share exchange agreement with NY Medical's employee stock option
plan (the "ESOP"), the holder thereof. However, the acquisition of NY Medical
has been rescinded, effective December 9, 2003, as is more fully set forth under
"Item 3. Legal Proceedings" and "Item 13. Certain Relationships and Related
Transactions."


                                        3
<PAGE>

Employees

As of the filing date of this Form 10-K, we employed 2 full-time employees,
neither of whom is a member of a union, and no part-time employees.

Item 1A.  Risk Factors

FOR THE TWO YEARS WE HAVE NOT HAD ANY BUSINESS OPERATIONS OR ANY REVENUES AND WE
DO NOT HAVE SIGNIFICANT ASSETS. IF WE DO NOT CONSUMMATE A BUSINESS COMBINATION,
WE WILL CONTINUE TO HAVE NO REVENUES AND OUR SHARE PRICE WILL LIKELY DECLINE.

As of December 31, 2005, our cash and cach equivalents consisted of $91,000.
Since July 1, 1995, we have not generated any revenue. As of December 31, 2005,
we had an accumulated deficit of $58,355,000. For the fiscal years ended
December 31, 2005 and 2004, we incurred total expenses of $1,023,000 and
$1,265,000, respectively. We will, in all likelihood, continue to incur
operating expenses without corresponding revenues, at least until the
consummation of a business combination or the successful commercialization of
assets that we acquire. As a result, we will continue to operate at a loss at
least until a business combination with Kraft Rt. or another company can be
completed or we successfully develop acquired assets into a viable business. We
have entered into an agreement to acquire 85% of the securities of Kraft Rt. and
are presently in negotiations to acquire the remaining 15%. There is no
guarantee that we will be able to acquire the securities of Kraft Rt. If we are
unable to finalize the Kraft Rt. acquisition or complete a business combination,
or develop assets that we acquire into a viable business, and generate revenues,
our share price will likely decline.

THE NATURE OF OUR PROPOSED PLAN OF OPERATION IS EXTREMELY SPECULATIVE AND OUR
SUCCESS AND POTENTIAL PROFITABILITY DEPENDS ON A NUMBER OF FACTORS THAT ARE NOT
WITHIN OUR CONTROL. ACCORDINGLY, IT IS VERY DIFFICULT FOR ANYONE TO ACCURATELY
EVALUATE THE MERITS AND RISKS OF AN INVESTMENT IN US. THESE RISKS MAKE IT VERY
LIKELY THAT OUR SHARE PRICE COULD DECLINE.

The success of our proposed plan of operation depends to a great extent on the
operations and financial condition of a target business to combine with us.
While our management would prefer business combinations with entities having
established operating histories, there can be no assurance that we will be
successful in locating a candidate that meets such criteria. In the event we
complete a business combination - an event for which there can be no assurance -
the success of our operations will depend upon management of the target
business, other risks inherent to business combination transactions and specific
risks to the type of business acquired, which cannot be determined at this time.
Acquisitions involve numerous risks, including increased expenses and working
capital requirements and the potential loss of key employees and customers of
acquired companies. In addition, acquisitions involve financial risks, such as
potential liabilities of the acquired business, dilutive effects of the issuance
of additional equity securities, the incurrence of additional debt, the
financial impact of transaction expenses and the amortization of goodwill and
other intangible assets involved in any transactions that are accounted for by
using the purchase method of accounting, and possible adverse tax and accounting
effects. All of the foregoing increase the speculative nature of our plan of
operation and make it difficult to accurately evaluate the merits and risks of
an investment in us. All of the foregoing factors make it very likely that that
our share price could decline.

FAILURE TO PROPERLY MANAGE OUR POTENTIAL GROWTH POTENTIAL WOULD BE DETRIMENTAL
TO HOLDERS OF OUR SECURITIES.

Since we currently have no operations and our cash and cash equivalents at
December 31, 2005 was only $91,000, any significant growth will place
considerable strain on our financial resources and increase demands on our
management and on our operational and administrative systems, controls and other
resources. There can be no assurance that our existing personnel, systems,
procedures or controls will be adequate to support our operations in the future
or that we will be able to successfully implement appropriate measures
consistent with our growth strategy. As part of this growth, we may have to
implement new operational and financial systems, procedures and controls to
expand, train and manage our employees and maintain close coordination among our
technical, accounting, finance, marketing, sales and editorial staff. We cannot
guarantee that we will be able to do so, or that if we are able to do so, we
will be able to effectively integrate them into our existing staff and systems.
We may fail to adequately manage our anticipated future growth. We will also
need to continue to attract, retain and integrate personnel in all aspects of
our operations. Failure to manage our growth effectively could hurt our
business.

CONSUMMATION OF A BUSINESS COMBINATION INVOLVING THE ISSUANCE OF OUR EQUITY
SECURITIES AS CONSIDERATION OR PARTIAL CONSIDERATION WILL DILUTE THE OWNERSHIP
AND VOTING INTERESTS OF OUR CURRENT STOCKHOLDERS.

Our plan for a business combination may involve the issuance of our equity
securities as consideration, or partial consideration, for acquiring a business.
Specifically, our current agreements to acquire 85% of Kraft Rt. will require
that we issue Preferred Shares that are convertible into approximately
29,925,000 shares of common stock. Further, if we are able to enter into an
agreement to acquire the remaining 15% of Kraft Rt. we will be required to issue
Preferred Shares that are issuable into approximately 6,075,000 shares of common
stock. The issuance of these equity securities as consideration for such a
business combination, the ownership and voting interests of our current
stockholders will be materially diluted.


                                        4
<PAGE>

SEC REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION TARGETS.

Sections 13 and 15(d) of the Exchange Act, and rules promulgated thereunder,
require reporting companies to provide certain information about significant
acquisitions, including audited financial statements for businesses acquired,
covering one, two, or three years, depending on the relative size of the
acquisition. New SEC rules and forms effective in August 2005 require that
reporting companies with insignificant operations must file such audited
financial statements with the SEC within four business days of completing the
acquisition. The time and additional costs that may be incurred by some target
businesses to prepare such financial statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition by us.

EXISTING TAX LAWS COULD RESULT IN THE IMPOSITION OF BOTH FEDERAL AND STATE TAXES
IN CONNECTION WITH A BUSINESS COMBINATION, WHICH MAY HAVE AN ADVERSE EFFECT OUR
BUSINESS.

Federal and state tax consequences will, in all likelihood, be significant
considerations in any business combination undertaken by us. Currently, such
transactions may be structured so as to result in tax-free treatment to all
parties involved, pursuant to various federal and state tax laws. We intend to
structure any business combination so as to minimize the federal and state tax
consequences to both us and the target business. However, there can be no
assurance that such business combination will meet the statutory and regulatory
requirements of a tax-free reorganization or that the parties will obtain the
intended tax-free treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state taxes
which may have an adverse effect on both parties to the transaction.

                        RISKS RELATED TO OUR COMMON STOCK

OUR HISTORIC STOCK PRICE HAS BEEN VOLATILE AND THE FUTURE MARKET PRICE FOR OUR
COMMON STOCK IS LIKELY TO CONTINUE TO BE VOLATILE. FURTHER, THE LIMITED MARKET
FOR OUR SHARES WILL MAKE OUR PRICE MORE VOLATILE. THIS MAY MAKE IT DIFFICULT FOR
YOU TO SELL OUR COMMON STOCK FOR A POSITIVE RETURN ON YOUR INVESTMENT.

The public market for our common stock has historically been very volatile. Any
future market price for our shares is likely to continue to be very volatile.
This price volatility may make it more difficult for you to sell shares when you
want at prices you find attractive. We do not know of any one particular factor
that has caused volatility in our stock price. However, the stock market in
general has experienced extreme price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of companies.
Broad market factors and the investing public's negative perception of our
business may reduce our stock price, regardless of our operating performance.
Further, the market for our common stock is limited and we cannot assure you
that a larger market will ever be developed or maintained. The average daily
trading volume of our common stock has historically been insignificant. Market
fluctuations and volatility, as well as general economic, market and political
conditions, could reduce our market price. As a result, this may make it
difficult or impossible for you to sell our common stock or to sell our common
stock for a positive return on your investment.

OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE
TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR
STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.

The SEC has adopted Rule 3a51-1 which establishes the definition of a "penny
stock," for the purposes relevant to us, as any equity security that has a
market price of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, Rule 15g-9 requires:

o that a broker or dealer approve a person's account for transactions in penny
stocks; and
o the broker or dealer receive from the investor a written agreement to the
transaction, setting forth the identity and quantity of the penny stock to be
purchased.

In order to approve a person's account for transactions in penny stocks, the
broker or dealer must:

o obtain financial information and investment experience objectives of the
person; and
o make a reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prescribed by the SEC relating to the penny stock
market, which, in highlight form:

o sets forth the basis on which the broker or dealer made the suitability
determination; and
o that the broker or dealer received a signed, written agreement from the
investor prior to the transaction.


                                        5
<PAGE>

Disclosure also has to be made about the risks of investing in penny stocks in
both public offerings and in secondary trading and about the commissions payable
to both the broker-dealer and the registered representative, current quotations
for the securities and the rights and remedies available to an investor in cases
of fraud in penny stock transactions. Finally, monthly statements have to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.

Generally, brokers may be less willing to execute transactions in securities
subject to the "penny stock" rules. This may make it more difficult for
investors to dispose of our common stock and cause a decline in the market value
of our stock.

Item 1B.  Unresolved Staff Comments

None.

ITEM 2. PROPERTIES

Our mailing address is located at 108 Village Square, # 327 Somers, NY 10589.

ITEM 3. LEGAL PROCEEDINGS

Bridge Investment

In April 2004, certain bridge investors commenced an action against our company
in the Supreme Court of the State of New York, County of New York, alleging,
among other things, that we owe plaintiffs repayment of $700,000 in principal
face amount notes issued in connection with our intended acquisition of New York
Medical, a New York corporation (Altitude Group, LLC, Birch Associates, LLC and
D.C. Capital, LLC v. American United Global, Inc., Index No. 600936/04).
Plaintiffs filed a motion seeking summary judgment against us in aggregate
amount of $787,546, consisting of the allegedly outstanding principal and
interest on the notes as well as attorneys' costs, and we opposed that motion.
On September 24, 2004, judgment was rendered in favor of these three investors
in the amount of $840,695. The Company utilized $2,054,000 of the net proceeds
generated from the sale of the shares of Western Power to payoff the note
holders that purchased 10% convertible notes in June 2003 (the "June 2003
Notes"). In connection with the payment of the June 2003 Notes, the Company and
the note holders each signed a mutual release. Further, the note holders that
obtained a judgment against the Company in the amount of $840,695 have agreed to
file a satisfaction of judgment with the appropriate court in connection
therewith.

New York Medical, Inc.

New York Medical, Inc. and Redwood Investment Associates, L.P. vs American
United Global, Inc., et al. (Supreme Court, New York State, New York County). In
this suit, filed on December 12, 2003, plaintiffs seek a declaration that a
series of transactions by which we allegedly acquired Lifetime Healthcare
Services, Inc. ("Lifetime") and Lifetime acquired an interest in NY Medical from
Redwood (collectively "Transactions") were properly rescinded or, alternatively,
that because the Transactions were induced by fraudulent conduct of our company
and others, that the Transactions should be judicially rescinded. In addition to
the requests for equitable relief, plaintiffs also seek monitory damages in
excess of $5 million and exemplary damages in the amount of $15 million.

Currently, the suit has not proceeded past the filing and service of the
complaint. We have obtained an open-ended extension of time in which to answer
and/or move with regard to the complaint. We are attempting to resolve the
matter amicably. However, in the event litigation proceeds, it will be
aggressively defended.

Howard Katz

Howard Katz, a former member of our board of directors, was is in discussions
with us over the terms of a settlement of a debt that he claims we owe him. We
entered into a settlement agreement with Mr. Katz in April 2006, pursuant to
which we issued 176,000 shares of common stock in consideration for our company
and Mr. Katz signing mutual releases. In connection therewith, Mr. Katz also
resigned as a member of our board of directors.

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

None.


                                        6
<PAGE>

                                     PART II

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

Our shares of common stock are presently quoted on the pink sheets under the
symbol AUGB. Listed below are the high and low sale prices for the shares of our
common stock during the years ended December 31, 2005 and 2004. These quotations
reflect inter-dealer prices, without mark-up, mark-down or commission and may
not represent actual transactions.

                                        Common Stock
                                        ------------

                                    High             Low
                                    ----             ---

     Fiscal 2004
     -----------
     First Quarter                 $2.75            $1.50
     Second Quarter                $2.50            $1.50
     Third Quarter                 $4.50            $1.70
     Fourth Quarter                $2.00            $0.90

     Fiscal 2005
     -----------
     First Quarter                 $1.65            $0.65
     Second Quarter                $1.20            $0.72
     Third Quarter                 $2.25            $0.70
     Fourth Quarter                $2.50            $1.50

     Fiscal 2006
     -----------
     First Quarter                 $2.00            $0.86



                                        7
<PAGE>

On April 26, 2006, there were approximately 147 holders of record of our common
stock then issued and outstanding.

As of April 26, 2006, the last sale price of the shares of our common stock as
reported on the pink sheets was $1.05.

Dividend Policy

We have never paid cash dividends and have no plans to do so in the foreseeable
future. Our future dividend policy will be determined by our board of directors
and will depend upon a number of factors, including our financial condition and
performance, our cash needs and expansion plans, income tax consequences, and
the restrictions that applicable laws and our credit arrangements then impose.

<TABLE>
<CAPTION>

                                    Number of securities to be     Weighted-average exercise   Number of securities
                                      issued upon exercise of      price of outstanding        remaining available for
                                       outstanding options,        options, warrants and       future issuance under
                                        warrants and rights        rights                      equity compensation plans
<S>                                             <C>                             <C>                        <C>
    Equity compensation plans
    approved by security holders
               2001 Stock Option
               Plan                                        None                       - - -                     806,000
    Equity compensation plans not
    approved by security holders
                                                           None                       - - -                        None
               Total                                       None                       - - -                     806,000
</TABLE>

Issuance of Restricted Securities

The Company entered into a Securities Purchase Agreement (the "September 2005
Agreement") with Iroquois Master Fund Ltd., Smithfield Fiduciary LLC and Lilac
Ventures Master Fund (collectively, the "September 2005 Investors") on September
22, 2005 for the sale of (i) $525,000 in senior secured convertible notes (the
"Notes") and (ii) 525,000 shares of common stock of the Company (the "September
2005 Shares"). On September 26, 2005, the Investors purchased the September 2005
Notes and September 2005 Shares. The Company received net proceeds in cash in
the amount of $500,000 on September 26, 2005 less $25,000 paid for legal fees.
The Company used the net proceeds to provide Kraft Rt. a short term loan as
required under the Share Purchase Agreement entered between the Company, Kraft
Rt. and the shareholders of Kraft Rt.

The September 2005 Notes are interest free, mature in March 2007 and are
convertible into our common stock, at the Investors' option, at a conversion
price equal to 50% of the closing price on the day prior to the submission of
the conversion notice, however, the conversion price may not be lower than $0.40
(the "Floor Price"). Upon maturity of the September 2005 Notes, the Company, at
the option of the Investors, may pay the principal of the September 2005 Notes
in cash or shares. The Company may only pay in shares if proper notice has been
sent to the Investors indicating that the Company intends to pay in shares, the
number of authorized but unissued shares is sufficient for issuance, the shares
are registered for resale and the Company is not in default under the
transaction documents. If the September 2005 Notes are paid in shares upon
maturity, then the number issuable is determined by dividing the principal then
payable by the lower of (i) 50% of the closing price on the day prior to the
submission of the conversion notice or (ii) 85% of the arithmetic average of the
volume weighted average price for the 20 trading days immediately prior to the
date of conversion. However, in no event shall the conversion price be less than
the Floor Price. Based on the Floor Price, the September 2005 Notes are
convertible into a maximum of 1,312,500 shares of our common stock.

We have granted the Investors a security interest in all of our assets as well
as registration rights. We are required to file a registration statement
registering the September 2005 and the shares of common stock issuable upon
conversion of the September 2005 Notes on the earlier of (i) 30 days from
acquiring Kraft Rt. or (ii) 90 days from closing, and we are required to have
such registration statement declared effective within 135 days from closing.
Further, Robert Rubin, CEO and a director of the Company, has personally
guaranteed payment of the September 2005 Notes.

The Investors have contractually agreed to restrict their ability to convert the
September 2005 Notes and receive shares of our common stock such that the number
of shares of the Company common stock held by them and their affiliates after
such conversion does not exceed 4.99% of the Company's then issued and
outstanding shares of common stock.

On March 16, 2006, the Company entered into a financing arrangement with several
investors (the "March Investors") for the sale of (i) $1,250,000 in notes (the
"March 2006 Notes"), (ii) 625,000 shares of common stock of the Company (the
"March 2006 Shares") and (iii) common stock purchase warrants to purchase
625,000 shares of common stock at $1.20 price per share for a period of five
years (the "March 2006 Warrants"). The March 2006 Notes are interest free and
mature on the earlier of (i) March 16, 2009 or (ii) the Company closing on a
financing in the aggregate amount of $12,000,000. We have granted the March
Investors piggy back registration rights with respect to the March 2006 Shares
and the shares of common stock underlying the March 2006 Warrants.


                                        8
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

The Consolidated Statements of Operations set forth below with respect to fiscal
year 2002 and the periods of August 1, 2002 through June 16, 2003 and June 17,
2003 through December 31, 2003 and the Consolidated Balance Sheet Data at July
31, 2001 and 2002, June 16, 2003 and December 31, 2003, 2004 and 2005 are
derived from, and should be read in conjunction with, the audited Consolidated
Financial Statements and Notes thereto of American United Global, Inc. included
in this Annual Report on Form 10-K. The Consolidated Statements of Operations
Data set forth below with respect to the Consolidated Balance Sheet Data at July
31, 2002 and 2001 are derived from the audited Consolidated Financial Statements
of the Company which are not included in this Annual Report on Form 10-K. The
data set forth in the following tables should be read in conjunction with, and
are qualified in their entirety by, Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Company's Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Annual Report
on Form 10-K.

<TABLE>
<CAPTION>

                                                               June 17,        August 1,
                                                                 2003            2002
                                                                Through        Through
                                Year ended December 31,       December 31,     June 16,           Year ended July 31,
                                 2005            2004            2003            2003            2002             2001

<S>                            <C>            <C>              <C>              <C>            <C>              <C>
Net sales                      $    --        $      --        $      --        $    --        $      --        $     --

Income (Loss) from continuing
 operations                       (602)          (2,296)          (4,036)          (698)          (1,217)          (6,400)

Net Income (Loss)                 (602)          (2,296)          (4,036)          (698)          (1,217)          (6,400)

Basic and Diluted Loss
 Per Share:

Loss from continuing
 operations                        0.06           (0.28)           (0.56)         (0.35)           (1.50)          (13.02)

Net Income (Loss)                  0.05           (0.28)       $   (0.56)       $ (0.35)       $   (1.50)       $  (13.02)

</TABLE>

<TABLE>
<CAPTION>

                Consolidated Balance Sheet Data (in $ thousands)

                                             Period           Ended                        Year ended July 31
                               December        December         December         June              2002            2001
                               31, 2005        31, 2004         31, 2003       16, 2003
<S>                               <C>           <C>            <C>                <C>          <C>              <C>
Total assets                        684         $   128        $     584          1,424        $   3,000        $   1,724

Total liabilities                 3,585          (5,316)           4,242          2,700            3,587            2,909

Working capital (deficit)        (2,804)         (5,188)          (3,658)         (1.28)            (587)          (2,137)

Stockholders' (deficiency)
equity                          $(2,901)        $(5,188)       $  (3,656)       $(1,276)       $    (587)       $  (1,185)
</TABLE>


                                        9
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the
selected historical financial data, financial statements and notes thereto and
the other historical financial information of our company contained elsewhere in
this Annual Report on Form 10-K. The statements contained in this Annual Report
on Form 10-K that are not historical are forward looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Exchange Act of 1934, including statements regarding our company's
expectations, intentions, beliefs or strategies regarding the future.
Forward-looking statements include, but are not limited to, our statements
regarding liquidity, anticipated cash needs and availability and anticipated
expense levels. All forward-looking statements included in this annual report of
Form 10-K are based on information available to our company on the date hereof,
and we assume no obligation to update any such forward-looking statement. Our
actual results could differ materially from those in such forward-looking
statements.

Overview

During the past year we have focused our business strategy on acquisitions of
operating businesses in various sectors. In connection with our business
strategy, we have entered into agreements to purchase 85.5% of the outstanding
securities of Kraft Rt., an equipment manufacturing company headquartered in
Budapest, Hungary engaged in the design, development and manufacturing of vacuum
based production and quality control equipment used in several hi-tech
industries.

Results of Operations

The fiscal year ended December 31, 2005 compared to the year ended December 31,
2004

General and administrative expenses totaled $1,023,000 for the year ended
December 31, 2005 as compared to $1,265,000 for the year ended December 31,
2004, a decrease of $242,000. The reason for the decrease was the result of a
decrease in officers salaries and a decrease in professional fees.

Net interest expense for the year ended December 31, 2004 was $956,000 as
compared to $626,000 during the year ended December 31, 2005. The decrease in
net interest expense is primarily due to payoff of Bridge Notes during the
period ended September 30, 2005.

In September, 2005, the Company sold 1,222,586 shares of Western Power resulting
in a gain of 2,162,000.

The fiscal year ended December 31, 2004 compared to the period of June 17, 2003
to December 31, 2003

General and administrative expenses for the year ended December 31, 2004 were
$1,265,000 compared to $1,281,000 for the six and one half month period ended
December 31, 2003. The higher monthly average in the six and one half month
period ended December 31, 2003 was primarily attributable to higher legal and
other professional fees having to do with the Lifetime merger, the NY Medical
acquisition and the rescission thereof as well as costs associated with the
abandoned private placement.

Net interest expense for the year ended December 31, 2004 was $956,000 compared
to $1,247,000 for the six and one half month period ended December 31, 2003. The
decrease is primarily due a charge of $1,083,000 in the 2003 period for the
beneficial conversion feature and warrants associated with the Bridge Notes for
which the comparable charge in 2004 was $417,000. This was somewhat offset by a
higher interest rate on the Bridge Notes in 2004 due to the Notes being in
default. In addition, the current year reflected $87,000 of interest expense
paid with common stock to the Rubin Family Irrevocable Stock Trust on a loan of
$218,000 (see Note 6).

Liquidity and Capital Resources

The Company's primary needs for liquidity and capital resources are the funding
of salaries and other administrative expenses related to the management of the
Company.

During the year ended December 31, 2005, cash and cash equivalents increased to
$91,000. This increase was attributable to the sale of investments, proceeds
from trust under beneficial conversion feature, and proceeds from issuance of
secured convertible notes.

The Company's cash, cash equivalents and marketable securities of $95,000 as of
December 31, 2005 are not sufficient to support current levels of operations for
the next twelve months and it will be necessary for the Company to seek
additional financing.

In addition, the Company is in default on uncollateralized notes payable in the
amount of $1,500,000, plus accrued interest of approximately $1,361,000.
Although the holder of such indebtedness has not sought to collect the debt,
were the Company required to pay such indebtedness it would be necessary to
secure additional financing.


                                       10
<PAGE>

The Company remains contingently liable for certain capital lease obligations
assumed by eGlobe, Inc. as part of the Connectsoft Communications Corp. asset
sale which was consummated in June 1999 (see Note 5).

In connection with the proposed acquisition of the shares of Kraft Rt., the
Company has entered into the following transactions:

      o     on September 23, 2005, the Company sold 1,222,586 shares of Western
            Power to various accredited investors in consideration of gross
            proceeds in the amount of $2,286,235. The Company utilized
            $2,054,000 of the net proceeds generated from the sale of the shares
            of Western Power to payoff the note holders that purchased 10%
            convertible notes in June 2003 (the "June 2003 Notes"). In
            connection with the payment of the June 2003 Notes, the Company and
            the note holders each signed a mutual release. Further, the note
            holders that obtained a judgment against the Company in the amount
            of $840,695 filed a satisfaction of judgment with the appropriate
            court in connection therewith.

      o     the Company entered into a Securities Purchase Agreement (the
            "September 2005 Agreement") with Iroquois Master Fund Ltd.,
            Smithfield Fiduciary LLC and Lilac Ventures Master Fund
            (collectively, the "September 2005 Investors") on September 22, 2005
            for the sale of (i) $525,000 in senior secured convertible notes
            (the "Notes") and (ii) 525,000 shares of common stock of the Company
            (the "September 2005 Shares"). On September 26, 2005, the Investors
            purchased the September 2005 Notes and September 2005 Shares. The
            Company received net proceeds in cash in the amount of $500,000 on
            September 26, 2005 less $25,000 paid for legal fees. The Company
            used the net proceeds to provide Kraft Rt. a short term loan as
            required under the Share Purchase Agreement entered between the
            Company, Kraft Rt. and the shareholders of Kraft Rt.

            The September 2005 Notes are interest free, mature in March 2007 and
            are convertible into our common stock, at the Investors' option, at
            a conversion price equal to 50% of the closing price on the day
            prior to the submission of the conversion notice, however, the
            conversion price may not be lower than $0.40 (the "Floor Price").
            Upon maturity of the September 2005 Notes, the Company, at the
            option of the Investors, may pay the principal of the September 2005
            Notes in cash or shares. The Company may only pay in shares if
            proper notice has been sent to the Investors indicating that the
            Company intends to pay in shares, the number of authorized but
            unissued shares is sufficient for issuance, the shares are
            registered for resale and the Company is not in default under the
            transaction documents. If the September 2005 Notes are paid in
            shares upon maturity, then the number issuable is determined by
            dividing the principal then payable by the lower of (i) 50% of the
            closing price on the day prior to the submission of the conversion
            notice or (ii) 85% of the arithmetic average of the VWAP for the 20
            trading days immediately prior to the date of conversion. However,
            in no event shall the conversion price be less than the Floor Price.
            Based on the Floor Price, the September 2005 Notes are convertible
            into a maximum of 1,312,500 shares of our common stock.

            We have granted the Investors a security interest in all of our
            assets as well as registration rights. We are required to file a
            registration statement registering the September 2005 Shares and the
            shares of common stock issuable upon conversion of the September
            2005 Notes on the earlier of (i) 30 days from acquiring Kraft Rt. or
            (ii) 90 days from closing, and we are required to have such
            registration statement declared effective within 135 days from
            closing. Further, Robert Rubin, CEO and a director of the Company,
            has personally guaranteed payment of the September 2005 Notes.

            The Investors have contractually agreed to restrict their ability to
            convert the September 2005 Notes and receive shares of our common
            stock such that the number of shares of the Company common stock
            held by them and their affiliates after such conversion does not
            exceed 4.99% of the Company's then issued and outstanding shares of
            common stock.

      o     The net proceeds in the amount of $500,000 generated from the sale
            of the September 2005 Notes to the Investors were loaned to Kraft
            Rt. by the Company in accordance with the Share Purchase Agreement
            entered by and between the Company, Kraft Rt. and the shareholders
            of Kraft Rt. on August 9, 2005 pursuant to which the provision of a
            short term loan by the Company to Kraft Rt. is a closing condition.
            The loan to Kraft Rt. is evidenced by a promissory note that is due
            on December 28, 2005 and has interest in the amount of 10% per
            annum. The loan is secured by shares of Kraft Rt. pledged by Zoltan
            Kiss, a director of Kraft Rt. The shares of Kraft Rt. pledged by Mr.
            Kiss represent 5% of the total outstanding of Kraft Rt.

      o     On March 16, 2006, the Company entered into a financing arrangement
            with several investors (the "March Investors") for the sale of (i)
            $1,250,000 in notes (the "March 2006 Notes"), (ii) 625,000 shares of
            common stock of the Company (the "March 2006 Shares") and (iii)
            common stock purchase warrants to purchase 625,000 shares of common
            stock at $1.20 price per share for a period of five years (the
            "March 2006 Warrants"). The March 2006 Notes are interest free and
            mature on the earlier of (i) March 16, 2009 or (ii) the Company
            closing on a financing in the aggregate amount of $12,000,000. We
            have granted the March Investors piggy back registration rights with
            respect to the March 2006 Shares and the shares of common stock
            underlying the March 2006 Warrants.

      o     The Company loaned $1,000,000 to Kraft Rt. on March 16, 2006. The
            proceeds loaned to Kraft Rt. were generated from the sale of the
            March 2006 Notes to the March Investors. The loan to Kraft Rt. is
            evidenced by a promissory note that is due by Mach 16, 2007 that
            incurs interest in the amount of 10% per annum. The loan is secured
            by shares of Kraft Rt. pledged by Zoltan Kiss, a director of Kraft
            Rt. The shares of Kraft Rt. pledged by Mr. Kiss represent 20% of the
            total outstanding of Kraft Rt.


                                       11
<PAGE>

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies

The Company's discussion and analysis of its financial condition and results of
operations are based upon AUGI's financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires the use of
estimates that affect the reported amounts of assets, liabilities and expenses.
AUGI evaluates its estimates on an ongoing basis, including estimates for income
tax assets and liabilities and the impairment of the value of investments. The
Company bases its estimates on historical experience and on actual information
and assumptions that are believed to be reasonable under the circumstances at
that time. Actual results may differ from these estimates under different
assumptions or conditions. AUGI believes that the following critical accounting
policies affect its more significant estimates used in the preparation of its
financial statements.

Accounting for Income Taxes.

AUGI currently records a full valuation allowance against the deferred tax
benefit for net operating losses generated, since in management's opinion the
net operating losses do not meet the more likely than not criteria for future
realization.

Impairment of Investments.

AUGI reviews estimates of the value of its investments each reporting period and
records an impairment loss to the extent that management believes that there has
been an impairment to the carrying value.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to market risk related to fluctuations in interest rates on our
debt. An increase in prevailing interest rates could increase our interest
payment obligations relating to variable rate debt.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See page F-1 for an index to the Consolidated Financial Statements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation,
under the supervision and with the participation of our chief executive officer
and chief financial officer of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon
this evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are effective to ensure
that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission's rules and forms.

(b) Changes in Internal Controls

There was no change in our internal controls or in other factors that could
affect these controls during our last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

ITEM 9B. OTHER INFORMATION

Not applicable.


                                       12
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Our directors serve until the next annual meeting of stockholders or until their
successors are elected and qualified. The executive officers serve at the
discretion of the Board of Directors in the absence of employment agreements.
The following information is submitted with respect to each of our directors and
executive officers as of the date of the filing of this annual report of Form
10-K.

Name                        Age           Positions presently held

Robert M. Rubin             65            Chairman of the Board of Directors
                                          and Chief Executive Officer

David M. Barnes             63            Chief Financial Officer and Director

Michael Metter              54            Director

Robert M. Rubin. Mr. Rubin has served as the Chairman of our Board of Directors
since May 1991, and was our Chief Executive Officer from May 1991 to January 1,
1994. Between October 1990 and January 1, 1994, Mr. Rubin served as the Chairman
of the Board and Chief Executive Officer of our company and its subsidiaries;
from January 1, 1994 to January 19, 1996, he served only as Chairman of the
Board of our company and its subsidiaries. From January 19, 1996 to the present,
Mr. Rubin served as Chairman of the Board, President and Chief Executive
Officer. Mr. Rubin was the founder, President, Chief Executive Officer and a
Director of Superior Care, Inc. ("SCI") from its inception in 1976 until May
1986, when the business was sold to Olsten Corporation (NYSE). Mr. Rubin
continued as a director of SCI until the latter part of 1987. Mr. Rubin is also
a Director of Western Power and Equipment Corp. Mr. Rubin was a director of
Med-Emerg, Inc., a publicly held Canadian management company for hospital
emergency rooms and outpatient facilities until November 2001. Mr. Rubin was
also a director of StyleSite Marketing, Inc., which liquidated its assets for
the benefit of secured creditors in January 2000.

David M. Barnes. Mr. Barnes has served as our Chief Financial Officer since May
15, 1996, and was a director from November 8, 1996 through June 17, 2003. Mr.
Barnes resigned as a member of our board of directors effective on June 17, 2003
but was reappointed to our board of directors upon the effectiveness of the
rescission agreement with NY Medical. Mr. Barnes is also a member of the board
of directors of each of SearchHelp, Inc. (OTC: SHLP). Mr. Barnes has served as a
director and a member of the audit committee of Thinkpath, Inc. (OTCBB: THPHF)
since September 2005. Mr. Barnes has served as a director a member of the audit
committee and compensation committee of Mdwerks, Inc. (OTCBB: MDWK) since
September 2005. Since August 2005, Mr. Barnes has served as the CFO if Cyber
Defense Systems, Inc. (OTCBB: CYDF). Since April 2006, Mr. Barnes has served as
the CFO of Neah Power Systems, Inc., (OTCBB: NPWS)

Michael Metter. Mr. Metter has served as a Director since December 14, 2001. Mr.
Metter resigned as a member of our board of directors effective on June 17,
2003, but was reappointed to our board of directors upon the effectiveness of
the rescission agreement with NY Medical on May 27, 2004. Since March 2001, Mr.
Metter has been the President of RME International, Ltd.(RME) Mr. Metter also
currently consults to a broad range of businesses, including IT communications
and media businesses, on mergers, acquisitions, restructuring, financing and
other matters. From October 1998 to February 2001, Mr. Metter was a principal of
Security Capital Trading, Inc, and was a principal at Madison Capital from
September 1997 to October 1998. Prior thereto, Mr. Metter was the President of
First Cambridge Securities from October 1994 to August 1997. Since 2001, Mr.
Metter has served as the President, CEO and director of Spongetech Delivery
Systems, Inc.

Family Relationships

There is no family relationship between any of the directors and/or executive
officers, by blood, marriage or adoption.

Involvement in certain legal proceedings

Except as set forth herein, no officer or director of our company has, during
the last five years: (i) been convicted in or is currently subject to a pending
a criminal proceeding; (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to any federal or
state securities or banking laws including, without limitation, in any way
limiting involvement in any business activity, or finding any violation with
respect to such law, nor (iii) has any bankruptcy petition been filed by or
against the business of which such person was an executive officer or a general
partner, whether at the time of the bankruptcy of for the two years prior
thereto.


                                       13
<PAGE>

Compliance with Section 16 of the Exchange Act

Section 16(a) of the Securities Exchange Act, as amended (the "Exchange Act")
requires our executive officers and directors, and persons who beneficially own
more than ten percent of our common stock, to file initial reports of ownership
and reports of changes in ownership with the SEC and the National Association of
Securities Dealers, Inc. Executive officers, directors and persons who
beneficially own more than ten percent of our common stock are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file.

Based solely upon our review of the copies of reporting forms furnished to us,
and written representations that no other reports were required, we do not
believe that all filing requirements under Section 16(a) of the Securities
Exchange Act of 1934 applicable to our directors, officers and any persons
holding 10% or more of our common stock with respect to our fiscal year ended
December 31, 2005, were satisfied on a timely basis.

Code of Ethics

Our board of directors adopted a Code of Ethics that covers all executive
officers of our company and its subsidiaries. The Code of Ethics requires that
senior management avoid conflicts of interest; maintain the confidentiality of
information relating to our company; engage in transactions in shares of our
common stock only in compliance with applicable laws and regulations and the
requirements set forth in the Code of Ethics; and comply with other requirements
which are intended to ensure that such officers conduct business in an honest
and ethical manner and otherwise act with integrity and in the best interest of
our company.

All our executive officers are required to affirm in writing that they have
reviewed and understand the Code of Ethics.

Any amendment of our Code of Ethics or waiver thereof applicable to any of our
principal executive officer, principal financial officer and controller,
principal accounting officer or persons performing similar functions will be
disclosed on our website within 5 days of the date of such amendment or waiver.
In the case of a waiver, the nature of the waiver, the name of the person to
whom the waiver was granted and the date of the waiver will also be disclosed. A
copy of our Code of Ethics was attached as Exhibit 14 to our Form 10-K filed
with the SEC on July 16, 2004 and is incorporated herein by reference.

Audit Committee

Our board of directors has an audit committee comprised of Michael Metter. The
audit committee makes recommendations to our board of directors regarding the
independent auditors for our company, approves the scope of the annual audit
activities of our independent auditors, review audit results and will have
general responsibility for all of our auditing related matters.

The purpose of the Audit Committee is to assist our board of directors in the
oversight of the integrity of the consolidated financial statements of our
company, our company's compliance with legal and regulatory matters, the
independent auditor's qualifications and independence, and the performance of
our company's independent auditors. The primary responsibilities of the Audit
Committee are set forth in its charter, and include various matters with respect
to the oversight of our company's accounting and financial reporting process and
audits of the consolidated financial statements of our company on behalf of our
board of directors. The Audit Committee also selects the independent certified
public accountants to conduct the annual audit of the consolidated financial
statements of our company; reviews the proposed scope of such audit; reviews
accounting and financial controls of our company with the independent public
accountants and our financial accounting staff; and reviews and approves
transactions between us and our directors, officers, and their affiliates.

Accordingly, the Audit Committee discusses with our independent auditors, our
audited financial statements, including among other things the quality of our
accounting principles, the methodologies and accounting principles applied to
significant transactions, the underlying processes and estimates used by our
management in our financial statements and the basis for the auditor's
conclusions regarding the reasonableness of those estimates, in addition to the
auditor's independence.

Audit Committee Financial Expert

We do not have an audit committee financial expert. We have not yet been able to
identify and appoint a suitable nominee as of the date of this annual report.
Our management is currently diligently pursuing such a candidate.

Compensation of the Board of Directors

Directors who are also our employees do not receive additional compensation for
serving on the Board or its committees. Non-employee directors are not paid any
annual cash fee. In addition, directors are entitled to receive options under
our Stock Option Plan. All directors are reimbursed for their reasonable
expenses incurred in attending Board meetings. We intend to procure directors
and officers liability insurance.


                                       14
<PAGE>

Limitation on Liability and Indemnification of Directors and Officers Under
Delaware General Corporation Law a director or officer is generally not
individually liable to the corporation or its shareholders for any damages as a
result of any act or failure to act in his capacity as a director or officer,
unless it is proven that:

1. his act or failure to act constituted a breach of his fiduciary duties as a
director or officer; and

2. his breach of those duties involved intentional misconduct, fraud or a
knowing violation of law.

This provision is intended to afford directors and officers protection against
and to limit their potential liability for monetary damages resulting from suits
alleging a breach of the duty of care by a director or officer. As a consequence
of this provision, stockholders of ours will be unable to recover monetary
damages against directors or officers for action taken by them that may
constitute negligence or gross negligence in performance of their duties unless
such conduct falls within one of the foregoing exceptions. The provision,
however, does not alter the applicable standards governing a director's or
officer's fiduciary duty and does not eliminate or limit our right or any
stockholder to obtain an injunction or any other type of non-monetary relief in
the event of a breach of fiduciary duty.

As permitted by Delaware law, our By-Laws include a provision which provides for
indemnification of a director or officer by us against expenses, judgments,
fines and amounts paid in settlement of claims against the director or officer
arising from the fact that he was an officer or director, provided that the
director or officer acted in good faith and in a manner he or she believed to be
in or not opposed to our best interests. We have purchased insurance under a
policy that insures both our company and our officers and directors against
exposure and liability normally insured against under such policies, including
exposure on the indemnities described above.

Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

ITEM 11. EXECUTIVE COMPENSATION

The following table summarizes the compensation for services rendered to our
company during fiscal years 2003, 2004 and 2005 by (i) our Chief Executive
Officer, and (ii) each of our other most highly compensated executive officers
whose total annual salary and bonus exceeded $100,000 and whose compensation is
required to be disclosed under SEC rules.

<TABLE>

                                      Annual Compensation ($)         Long Term Compensation
                                                                              Awards         Payouts
      Name and                                           Other Annual Securities Underlying  LTIP      All Other
      Principal Position      Year    Salary   Bonus     Compensation Options/ SARs(#)       Payouts   Compensation
      ------------------      ----    ------   -----     ------------ ----------------       -------   ------------
<S>                           <C>   <C>       <C>        <C>                                   <C>        <C>
      Robert M. Rubin (1)     2005  $275,000   - - -     - - -                                 - - -      - - -
                              2004  $265,000   - - -     - - -                                 - - -      - - -
                              2003  $274,000   - - -     - - -                                 - - -      - - -

      David M. Barnes         2005  $ 15,000   - - -     - - -                                 - - -      - - -
                              2004  $ 45,000   - - -     - - -                                 - - -      - - -
                              2003  $120,000   - - -     - - -                                 - - -      - - -
</TABLE>

(1) Effective in July 1999, Mr. Rubin was entitled to an annual salary of
$225,000 plus a minimum increase each year equal to the percentage rise in the
New York City wage index (approximately 4% per year).


                                       15
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

As of the most recent practicable date, our authorized capitalization consisted
of forty million shares of common stock, par value $0.01 per share. As of April
12, 2006, there were 10,313,056 shares of our common stock issued and
outstanding, all of which were fully paid, non-assessable and entitled to vote.
Each share of our common stock entitles its holder to one vote on each matter
submitted to our stockholders. The following table sets forth, as of such date,
the number of shares of our common stock owned by (i) each person who is known
by us to own of record or beneficially five percent (5%) or more of our
outstanding shares, (ii) each of our directors, (iii) each of our executive
officers and (iv) all of our directors and executive officers as a group. Unless
otherwise indicated, each of the persons listed below has sole voting and
investment power with respect to the shares of our common stock beneficially
owned.

<TABLE>
<CAPTION>

        Name and Address                                   Amount Owned (1)    Percent of Class (2)

<S>                                                         <C>                          <C>
        Rubin Family Irrevocable Stock Trust (3)            5,357,452                    51.94%
        Robert M. Rubin                                             0                         *
        David M. Barnes                                       709,000                     6.87%
        Michael Metter                                         20,000                         *
        All officers and directors as a group (3 persons)   6,096,452                    58.81%
</TABLE>

* Less than one percent.

(1) Beneficial ownership is determined in accordance with the Rule 13d-3(d)(1)
of the Exchange Act, as amended and generally includes voting or investment
power with respect to securities. Pursuant to the rules and regulations of the
Securities and Exchange Commission, shares of common stock that an individual or
group has a right to acquire within 60 days pursuant to the exercise of options
or warrants are deemed to be outstanding for the purposes of computing the
percentage ownership of such individual or group, but are not deemed to be
outstanding for the purposes of computing the percentage ownership of any other
person shown in the table.

(2) Figures may not add up due to rounding of percentages.

(3) The Rubin Family Irrevocable Stock Trust (the "Trust") was created by Robert
M. Rubin, our chairman and chief executive officer, for the benefit of his wife
Margery Rubin and their children. Mr. Rubin disclaims beneficial interest in all
securities of our company held by the Trust.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On June 16, 2003, our company, Lifetime Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of our company ("Merger Sub"), and
Lifetime Healthcare Services, Inc., a Delaware corporation ("Lifetime"), entered
into an Amended and Restated Agreement and Plan of Merger (the "Merger
Agreement").

Upon the terms and subject to the conditions set forth in the Merger Agreement,
Merger Sub was merged into Lifetime as of June 17, 2003 (the "Merger"). As a
result of the Merger, the outstanding shares of capital stock of each of Merger
Sub and Lifetime were converted or canceled, the separate corporate existence of
Merger Sub ceased, and Lifetime continued as the surviving corporation in the
Merger as a wholly owned subsidiary of our company.

Immediately prior to the Merger, 55% of the capital stock of NY Medical was
acquired by Lifetime pursuant to that certain Stock Purchase Agreement, dated
March 21, 2003, as amended (the "NY Medical Stock Purchase Agreement") entered
into by and among Lifetime, Redwood, and NY Medical.

Prior to the Merger, the Rubin Family Irrevocable Stock Trust (the "Trust")
owned approximately 77.6% of the shares of common stock, par value $.01 per
share of our company. In connection with the Merger, our company:

      o     issued to the former stockholders of Lifetime, an aggregate of
            467,500 shares of our company's Series B-2 Convertible Preferred
            Stock (the "B-2 Preferred"), convertible into an aggregate of
            9,350,000 shares of our common stock, which B-2 Preferred votes on
            an "as converted" basis with our common stock on all matters as to
            which holders of our common stock may vote; and

      o     entered into a certain agreement (the "Closing Agreement") which was
            to govern the constitution of our board of directors and materially
            impact its decision-making capability.

In contemplation of the Merger Agreement, we declared a stock dividend on our
common stock with a record date of June 10, 2003. The stock dividend took the
form of the issuance of 232,500 shares of our newly authorized and designated
Series B-3 Convertible Preferred Stock (the "B-3 Preferred") to the holders of
our common stock on the record date on a pro rata basis. Each share of the B-3
Preferred is convertible, on or after December 17, 2003, into 20 shares of our
common stock at the discretion of our board of directors. Accordingly, an
aggregate of 4,650,000 shares of our common stock would be issued to the record
holders of the B-3 Preferred if all shares of B-3 Preferred were converted. The
shares of B-3 Preferred vote together with our common stock on an "as converted
basis."


                                       16
<PAGE>

We attempted to consummate a private placement of our securities beginning in
September, 2003 in order to raise approximately $5.7 million to pay $2.0 million
principal amount of the Lifetime Note and retire the Landow Note, among other
purposes. In October 2003, Dr. Landow, acting on behalf of NY Medical, Tracy
Landow and Redwood, extended the due date to satisfy the payment events (the
"Payment Events") under the Closing Agreement. The Payment Events were postponed
from October 17, 2003 to November 17, 2003 in consideration for our agreement to
extend the due date of the $1,500,000 NY Medical Note payable to us to January
2, 2005.

We were unable to consummate the requisite financing by the extended date, and
in November 2003, Dr. Landow declared a default event. On December 5, 2003, a
written notice of a special telephonic meeting of the board of directors to be
held on Monday, December 8, 2003 was transmitted by Messrs. Landow, Fause and
Good to Messrs. Rubin and McLain; the purpose of the special meeting was, among
other things, to consider a possible rescission of the acquisition of 55% of the
capital stock of NY Medical by our company and the transactions relating
thereto.

On December 8, 2003, a telephonic meeting of the board was allegedly convened.
As a result of such alleged board meeting, minutes were prepared and executed by
Messrs. Landow, Fause and Good, and on December 9, 2003, a rescission agreement
among our company, Merger Sub, Lifetime, NY Medical, Redwood and the ESOP, dated
as of December 9, 2003 (the "Rescission Agreement") was entered into and
delivered to counsel to our company and Messrs. Rubin and McLain.

Under the terms of such Rescission Agreement:

      o     the Merger, Merger Agreement and all related documents were
            cancelled and rescinded and rendered null and void, ab initio, for
            all purposes, including for tax purposes;

      o     the NY Medical Stock Purchase Agreement, the acquisition of capital
            stock of NY Medical and all transactions relating thereto were
            cancelled and rescinded and rendered null and void, ab initio, for
            all purposes, including for tax purposes;

      o     the share exchange agreement between our company and the ESOP
            pursuant to which we were to acquire the remaining 45% of NY Medical
            not acquired through the Merger Agreement (the "Share Exchange
            Agreement") and all transactions relating thereto were cancelled and
            rescinded and rendered null and void, ab initio, for all purposes,
            including for tax purposes; and

      o     in order to enable us to repay the $1.5 million of bridge notes (the
            "Bridge Notes") owed to certain investors in March 2004, NY Medical
            agreed under the terms of the Rescission Agreement that "the NY
            Medical Note shall be modified such that all principal and interest
            thereunder shall be due from NY Medical to AUGI on March 30, 2004."
            In consideration of such modification, the Rescission Agreement
            permits NY Medical or its representatives to communicate directly
            with the holders of the Bridge Notes for the purpose of, among other
            things, negotiating an alternative mechanism for the payment of the
            Bridge Notes.

Subsequent to December 9, 2003, Mr. Rubin objected to the December 8, 2003
meeting and the Rescission Agreement for a variety of reasons, including the
alleged failure to properly convene such meeting. On December 12, 2003, counsel
for NY Medical and Redwood commenced a lawsuit against our company, Lifetime,
Robert M. Rubin, Kenneth Orr and Robert DePalo in the New York State Supreme
Court seeking, among other things to declare the Rescission Agreement as valid
and effective and also seeking monetary damages against the defendants for
fraudulent inducement, unjust enrichment and breach of fiduciary duties and
breach of contract. Our company and our counsel believe that the suit is totally
without merit and that we have a number of valid defenses and counterclaims
against Dr. Landow and NY Medical.

Since late December 2003, the parties have been holding discussions with a view
toward settling the dispute, and the defendants in the above litigation have
been granted extensions to answer or otherwise plead.

On March 8, 2004, our corporate counsel advised counsel to NY Medical, Redwood
and its affiliates that each of our company and Messrs. Rubin and McLain, as
members of our board of directors, have reconsidered their position and that
they agree with NY Medical, Redwood, Dr. Landow, Tracy Landow and the ESOP that:

      o     effective as of December 9, 2003, the Merger, Lifetime Merger
            Agreement and all related merger documents are null and void, ab
            initio, for all purposes, including, without limitation, for tax
            purposes;

      o     effective as of December 9, 2003, the NY Medical Stock Purchase
            Agreement, the acquisition of capital stock of NY Medical and all
            transactions contemplated thereby are null and void, ab initio, for
            all purposes, including, without limitation, for tax purposes;

      o     effective as of December 9, 2003, the Share Exchange Agreement
            between our company and the ESOP and all transactions contemplated
            thereby are null and void, ab initio, for all purposes, including,
            without limitation, for tax purposes; and

      o     all principal amount of and accrued interest on the NY Medical Note
            is, in fact, due and payable on March 30, 2004, and NY Medical shall
            have the right to communicate directly with the holders of the
            Bridge Notes for the purpose of, among other things, negotiating an
            alternative mechanism for the payment of the Bridge Notes.


                                       17
<PAGE>

Our counsel's letter did not condition acceptance of the above arrangements upon
a dismissal or voluntary settlement of the pending litigation, but rather
requested that NY Medical or its counsel advise as to mechanisms for NY Medical
to (a) communicate with the holders of the Bridge Notes, (b) effect full payment
on March 30, 2004 of the NY Medical Note, and (c) return the stock certificates
and other documents to effect the transactions contemplated by the Rescission
Agreements. To date, neither our company nor its counsel have been formally
contacted by NY Medical or its counsel concerning such matters.

As a result of the consummation of the transactions contemplated by the
Rescission Agreement:

      o     55% of the capital stock of NY Medical will be returned to Redwood
            and the proposed Share Exchange with the ESOP will be cancelled;

      o     the Merger is cancelled and rescinded, and all 467,500 shares of our
            Series B-2 Preferred Stock issued to the former stockholders of
            Lifetime are rendered null and void, without any further value or
            rights, and returned to the treasury of our company for
            cancellation;

      o     all stock options issued to Dr. Landow, Joseph Ciavarella, the
            directors designated by Dr. Landow and other employees of NY Medical
            are cancelled, which options were exercisable for an aggregate of
            2,100,000 shares of our common stock;

      o     effective as of December 9, 2003 each of Dr. Landow, Stuart Fause
            and John Good is deemed to have resigned as a member of our board of
            directors; and

      o     we cancelled the $5,500,000 Landow Note.


                                       18
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Aggregate fees billed to our company for the periods indicated by our principal
accountants, are as follows:

<TABLE>
                                 Year Ended           Year Ended             June 17, 2003             August 1, 2002
                                 December 31,         December 31,           to December 31,           to June 16,
                                 2005                 2004                   2003                      2003
                                 -------------        -------------          ----------------          ----------------
<S>                              <C>                  <C>                    <C>                       <C>
Audit Fees

Seligson & Giannatassio          $12,000              $20,000                $10,000                    $10,000

Eisner, LLP                                           $20,000                $10,000                    $10,000

Audit Related Fees

Seligson & Giannatassio          $15,000              $13,000

Eisner, LLP                                                                  $10,000                    $10,000

Bagell & Joseph                                                                                         $ 1,000

Tax Fees:                        --                   --                     --                             --

All other fees:

Bagell & Joseph                                                                                         $ 7,500

Eisner LLP                                                                   $25,000                    $35,000
</TABLE>


                                       19
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE STOCKHOLDERS AND
BOARD OF DIRECTORS
AMERICAN UNITED GLOBAL, INC AND SUBSIDIARIES

WE HAVE AUDITED THE ACCOMPANYING CONSOLIDATED BALANCE SHEETS OF AMERICAN UNITED
GLOBAL, INC. AND SUBSIDIARIES AS OF DECEMBER 31, 2005 AND 2004 AND THE RELATED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS), CHANGE IN
STOCKHOLDERS' DEFICIT AND CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2005 AND
2004 AND FOR THE PERIODS JUNE 17 2003 TO DECEMBER 31, 2003 AND AUGUST 1, 2002 TO
JUNE 16, 2003. THESE FINANCIAL STATEMENTS ARE THE RESPONSIBILITY OF THE
COMPANY'S MANAGEMENT. OUR RESPONSIBILITY IS TO EXPRESS AN OPINION ON THESE
FINANCIAL STATEMENTS BASED ON OUR AUDITS.

WE CONDUCTED OUR AUDITS IN ACCORDANCE WITH THE STANDARDS OF THE PUBLIC COMPANY
ACCOUNTING OVERSIGHT BOARD (UNITED STATES). THOSE STANDARDS REQUIRE THAT WE PLAN
AND PERFORM THE AUDITS 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 THE AUDITS
PROVIDE A REASONABLE BASIS FOR OUR OPINION.

IN OUR OPINION, THE FINANCIAL STATEMENTS REFERRED TO ABOVE PRESENT FAIRLY, IN
ALL MATERIAL RESPECTS, THE CONSOLIDATED FINANCIAL POSITION OF AMERICAN UNITED
GLOBAL, INC. AND SUBSIDIARIES AS OF DECEMBER 31, 2005 AND 2004, AND THE
CONSOLIDATED RESULTS OF THEIR OPERATIONS AND THEIR CONSOLIDATED CASH FLOWS FOR
THE YEARS ENDED DECEMBER 31, 2005 AND 2004 AND THE PERIODS JUNE 17 2003 TO
DECEMBER 31, 2003 AND AUGUST 1, 2002 TO JUNE 16, 2003 IN CONFORMITY WITH
ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA.

THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED ASSUMING
THE COMPANY WILL CONTINUE AS A GOING CONCERN. THE REALIZATION OF A MAJOR PORTION
OF ITS ASSETS IS DEPENDENT UPON ITS ABILITY TO MEET ITS FUTURE FINANCING
REQUIREMENTS, AND THE SUCCESS OF FUTURE OPERATIONS. THESE FACTORS RAISE
SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A GOING CONCERN.
MANAGEMENT'S PLANS CONCERNING THESE MATTERS ARE ALSO DESCRIBED IN NOTE 1. THE
CONSOLIDATED FINANCIAL STATEMENTS DO NOT INCLUDE ANY ADJUSTMENTS THAT MIGHT
RESULT FROM THIS UNCERTAINTY.

SELIGSON AND GIANNATTASIO, LLP
WHITE PLAINS, NY
April 21, 2006


                                       F-1
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>

                                                                                          DECEMBER 31,
                                                                              ------------------------------------
                                                                                  2005                    2004
                                                                              ------------            ------------
                                        ASSETS
<S>                                                                           <C>                     <C>
CURRENT ASSETS:
 CASH AND CASH EQUIVALENTS                                                    $     91,000            $      8,000
 INVESTMENT IN MARKETABLE SECURITIES                                                 4,000                      --
 INVESTMENT IN - SPONGE TECH                                                        50,000                  50,000
 NOTES RECEIVABLE                                                                       --                  65,000
 NOTE RECEIVABLE - KRAFT RT., IN DEFAULT                                           500,000                      --
 OTHER ASSETS                                                                       39,000                   5,000
                                                                              ------------            ------------

TOTAL CURRENT ASSETS                                                               684,000                 128,000
                                                                              ------------            ------------

TOTAL ASSETS                                                                  $    684,000            $    128,000
                                                                              ============            ============

                         LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
 SHORT TERM BORROWING IN DEFAULT,
  INCLUDING ACCRUED INTEREST OF $1,361,000 AND $1,210,000,
  RESPECTIVELY                                                                $  2,861,000            $  2,710,000
 ACCRUED INTEREST                                                                   29,000                 389,000
 ACCRUED LIABILITIES - RELATED PARTIES                                              60,000                  75,000
 ACCRUED LIABILITIES                                                               317,000                 602,000
 DISTRIBUTION PAYABLE TO SERIES B-3
  PREFERRED SHAREHOLDERS                                                            40,000                  40,000
BRIDGE NOTES PAYABLE                                                                    --               1,500,000
 NOTES PAYABLE - RUBIN FAMILY TRUST
  NET OF DISCOUNT OF $258,000 AND $218,000, RESPECTIVELY                           181,000                      --
                                                                              ------------            ------------
     TOTAL CURRENT LIABILITIES                                                   3,488,000               5,316,000

OTHER LIABILITIES:
 SECURED CONVERTIBLE NOTES PAYABLE, NET OF DISCOUNT OF $428,000                     97,000                      --
                                                                              ------------            ------------
     TOTAL LIABILITIES                                                           3,585,000               5,316,000
                                                                              ------------            ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT:
 PREFERRED STOCK, 12.5% CUMULATIVE, $1.00 PER
 SHARE LIQUIDATION VALUE .01 PAR VALUE;
  1,200,000 SHARES AUTHORIZED, NONE ISSUED AND
   OUTSTANDING                                                                          --                      --
SERIES B-1 PREFERRED STOCK, EACH 25 SHARES
 CONVERTIBLE INTO 1 COMMON SHARE, $3.50 PER SHARE
 LIQUIDATION VALUE $.01 PAR VALUE; 1,000,000 SHARES
 AUTHORIZED; 255,094 ISSUED AND OUTSTANDING                                          3,000                   3,000
SERIES B-3 PREFERRED STOCK, EACH SHARE
 CONVERTIBLE INTO 20 COMMON SHARES,
 $20 PER SHARE LIQUIDATION VALUE, 232,500 SHARES AUTHORIZED
 $.01 PAR VALUE; 48,426 AND 48,505 ISSUED
 AND OUTSTANDING, RESPECTIVELY                                                       1,000                   1,000
COMMON STOCK $.01 PAR VALUE; 40,000,000
 SHARES AUTHORIZED, 10,940,999 AND 8,487,399 SHARES
 ISSUED RESPECTIVELY; 10,501,999 AND 8,487,399
 SHARES OUTSTANDING, RESPECTIVELY                                                  105,000                  85,000
ADDITIONAL PAID IN CAPITAL                                                      55,446,000              53,760,000
ACCUMULATED DEFICIT                                                            (58,355,000)            (58,957,000)
ACCUMULATED COMPREHENSIVE LOSS ON AVAILABLE FOR SALE SECURITIES                    (21,000)                     --
LESS TREASURY SHARES, AT COST                                                      (80,000)                (80,000)
                                                                              ------------            ------------
                  TOTAL SHAREHOLDERS' DEFICIT                                   (2,901,000)             (5,188,000)
                                                                              ------------            ------------
                  TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                 $    684,000            $    128,000
                                                                              ============            ============
</TABLE>


SEE ACCOUNTANTS' REPORT AND ACCOMPANYING NOTES.


                                       F-2
<PAGE>



                          AMERICAN UNITED GLOBAL, INC.
      CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>

                                                      YEAR ENDED DECEMBER 31,         JUNE 17, 2003 TO    AUGUST 1, 2002 TO
                                                    2005                2004          DECEMBER 31, 2003    JUNE 16, 2003
                                                ------------        ------------        ------------        ------------
<S>                                             <C>                 <C>                 <C>                 <C>
GENERAL AND ADMINISTRATIVE EXPENSES             $  1,023,000        $  1,265,000        $  1,281,000        $    591,000
                                                ------------        ------------        ------------        ------------
OPERATING LOSS                                    (1,023,000)         (1,265,000)         (1,281,000)           (591,000)

INTEREST EXPENSES                                   (626,000)           (956,000)         (1,247,000)           (107,000)
GAIN (LOSS) ON SALE OF
 INVESTMENTS                                       2,150,000             (75,000)                 --                  --
RESERVE FOR NOTES DUE FROM
  NEW YORK MEDICAL, INC                                   --                  --          (1,508,000)                 --
GAIN ON DEBT SETTLEMENT                              101,000                  --                  --                  --
                                                ------------        ------------        ------------        ------------
INCOME (LOSS) FROM OPERATIONS                        602,000          (2,296,000)         (4,036,000)           (698,000)
                                                ------------        ------------        ------------        ------------
NET INCOME (LOSS)                                    602,000          (2,296,000)         (4,036,000)           (698,000)

OTHER COMPREHENSIVE INCOME (LOSS):
 UNREALIZED HOLDINGS LOSS ON AVAILABLE
   FOR SALE SECURITIES                               (21,000)                 --                  --                  --
 RECLASSIFICATION ADJUSTMENT - LOSS
   ON SALE OF SECURITIES                                  --              75,000                  --                  --
                                                ------------        ------------        ------------        ------------
TOTAL COMPREHENSIVE INCOME/(LOSS)               $    581,000        $ (2,221,000)       $ (4,036,000)       $   (698,000)
                                                ============        ============        ============        ============
WEIGHTED SHARES OUTSTANDING:
BASIC                                             10,514,735           8,090,745           7,181,419           1,997,624
DILUTED                                           11,907,436           8,090,745           7,181,419           1,997,624

EARNINGS (LOSS) PER SHARE
BASIC                                           $        .06        $       (.28)       $       (.56)       $       (.35)
DILUTED                                         $        .05        $       (.28)       $       (.56)       $       (.35)
</TABLE>


SEE ACCOUNTANTS' REPORT AND ACCOMPANYING NOTES.


                                       F-3
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
          FOR THE YEAR ENDED DECEMBER 31, 2005 AND 2004 AND THE PERIODS
     JUNE 17, 2003 TO DECEMBER 31,2003 AND AUGUST 1, 2002 TO JUNE 16, 2003

                                                                     PAGE 1 OF 2

<TABLE>
<CAPTION>

                                                                 PREFERRED STOCK                             COMMON STOCK
                                               NUMBER OF SHARES                   AMOUNT               NUMBER OF      AMOUNT
                                              B-1          B2 & B3          B-1         B2 & B3

<S>                                        <C>            <C>           <C>            <C>           <C>            <C>
BALANCE AT AUGUST 1, 2002                    407,094             --     $    4,000     $       --      1,997,624    $   20,000
ACCUMULATED HOLDING LOSS                          --             --             --             --             --            --
PURCHASE OF TREASURY STOCK                        --             --             --             --             --            --
STOCK COMPENSATION                                --             --             --             --             --            --
NET LOSS                                          --             --             --             --             --            --
                                          ----------     ----------     ----------     ----------     ----------    ----------

BALANCE AT JUNE 16, 2003                     407,094             --          4,000             --      1,997,624        20,000
ISSUANCE OF B-3 PREFERRED STOCK                   --        232,437             --          2,000             --            --
ISSUANCE OF SHARES IN PAYMENT
  OF LEGAL FEES                                   --             --             --             --        535,075         5,000
UNREALIZED HOLDING LOSS                           --             --             --             --             --            --
BENEFICIAL CONVERSION FEATURE
  ON BRIDGE NOTES                                 --             --             --             --             --            --
STARTUP COSTS OF LIFETIME                         --             --             --             --             --            --
DISTRIBUTION OF MARKETABLE SECURITY
  TO B-3 SHAREHOLDERS                             --             --             --             --             --            --
NET LOSS                                          --             --             --             --             --            --
                                          ----------     ----------     ----------     ----------     ----------    ----------

BALANCE AT DECEMBER 31, 2003                 407,094        232,437          4,000          2,000      2,532,699        25,000
NET LOSS                                          --             --             --             --             --            --
ISSUANCE OF COMMON STOCK
 TO OFFICERS                                      --             --             --             --      1,270,000        13,000
CONVERSION OF B-3
 PREFERRED STOCK                                  --       (183,931)            --         (1,000)     3,678,620        37,000
CONVERSION OF B-3
 PREFERRED STOCK                            (152,000)            --         (1,000)            --          6,080            --
SHARES ISSUED FOR
 SERVICES RENDERED                                --             --             --             --      1,000,000        10,000
                                          ----------     ----------     ----------     ----------     ----------    ----------

BALANCE AT DECEMBER 31, 2004                 255,094         48,506     $    3,000     $    1,000      8,487,399    $   85,000
NET LOSS                                          --             --             --             --             --            --
ISSUANCE OF COMMON
 STOCK TO OFFICERS                                --             --             --             --        798,000         8,000
SALE OF COMMON STOCK                              --             --             --             --        190,000         2,000
CONVERSION OF B-3
  PREFERRED STOCK                                 --            (80)            --             --          1,600            --
SHARES ISSUED IN CONNECTION
 WITH NOTES                                       --             --             --             --        525,000         5,000
SHARES ISSUED FOR
 VARIOUS LIABILITIES                              --             --             --             --        500,000         5,000
                                          ----------     ----------     ----------     ----------     ----------    ----------

BALANCE AT DECEMBER 31, 2005                 255,094         48,426     $    3,000     $    1,000     10,501,999    $  105,000
                                          ==========     ==========     ==========     ==========     ==========    ==========
</TABLE>


SEE ACCOUNTANTS' REPORT AND ACCOMPANYING NOTES.


                                       F-4
<PAGE>



                          AMERICAN UNITED GLOBAL, INC.
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
         FOR THE YEAR ENDED DECEMBER 31, 2005 AND 2004 AND THE PERIODS
     JUNE 17, 2003 TO DECEMBER 31,2003 AND AUGUST 1, 2002 TO JUNE 16, 2003

                                                                     PAGE 2 OF 2


<TABLE>
<CAPTION>

                                              ADDITIONAL     OTHER                               COSTS OF        SHAREHOLDERS
                                              CONTRIBUTED    COMPREHENSIVE     ACCUMULATED       TREASURY          (DEFICIT)
                                                CAPITAL      INCOME (LOSS)      (DEFICIT)          STOCK            EQUITY

<S>                                          <C>              <C>              <C>              <C>              <C>
BALANCE AT AUGUST 1, 2002                    $ 51,375,000     $    (59,000)    $(51,927,000)    $         --     $   (587,000)
ACCUMULATED HOLDING LOSS                               --          (11,000)              --               --          (11,000)
PURCHASE OF TREASURY SHARES                            --               --               --          (80,000)         (80,000)
STOCK COMPENSATION                                100,000               --               --               --          100,000
NET LOSS                                               --               --         (698,000)              --         (698,000)
                                             ------------     ------------     ------------     ------------     ------------
BALANCE AT JUNE 16, 2003                       51,475,000          (70,000)     (52,625,000)         (80,000)      (1,276,000)
ISSUANCE OF B-3 PREFERRED STOCK                    (2,000)              --               --               --               --
ISSUANCE OF SHARES IN PAYMENT
  OF LEGAL FEES                                   170,000               --               --               --          175,000
UNREALIZED HOLDING LOSS                                --           (4,000)              --               --           (4,000)
BENEFICIAL CONVERSION FEATURE OF
  BRIDGE NOTES                                  1,500,000               --               --               --        1,500,000
STARTUP COSTS OF LIFETIME                          83,000               --               --               --           83,000
DISTRIBUTION OF MARKETABLE SECURITY
 TO B-3 SHAREHOLDERS                             (100,000)              --               --               --         (100,000)
NET LOSS                                               --               --       (4,036,000)              --       (4,036,000)
                                             ------------     ------------     ------------     ------------     ------------
BALANCE AT DECEMBER 31, 2003                   53,126,000          (74,000)     (56,661,000)         (80,000)      (3,658,000)
NET LOSS                                               --               --       (2,296,000)              --       (2,296,000)
ISSUANCE OF COMMON STOCK
  TO OFFICERS & DIRECTOR                          463,000               --               --               --          476,000
CONVERSION OF B-3
 PREFERRED STOCK                                  (37,000)              --               --               --           (1,000)
RUBIN FAMILY TRUST NOTE
  - BENEFICIAL CONVERSION FEATURE                 218,000               --               --               --          218,000
CONVERSION OF B-1
 PREFERRED STOCK                                       --               --               --               --           (1,000)
SHARES ISSUED FOR SERVICES
 RENDERED                                         (10,000)              --               --               --               --
SALE OF MARKETABLE SECURITIES                          --           74,000               --               --               --
                                             ------------     ------------     ------------     ------------     ------------
BALANCE AT DECEMBER 31, 2004                   53,760,000               --      (58,957,000)         (80,000)      (5,188,000)

NET INCOME                                             --               --          602,000               --          602,000
ISSUANCE OF COMMON STOCK
  TO OFFICERS & DIRECTORS                         591,000               --               --               --          599,000
SALE OF COMMON STOCK                               93,000               --               --               --           95,000
CONVERSION OF B-3 PREFERRED STOCK
BENEFICIAL CONVERSION FEATURE                     334,000               --               --               --          334,000
CONVERSION OF B-1 PREFERRED STOCK
SHARES ISSUED IN CONNECTION WITH
 NOTES                                            407,000               --               --               --          412,000
UNREALIZED HOLDING LOSS                                --          (21,000)              --               --          (21,000)
SHARES ISSUED FOR VARIOUS
 LIABILITIES                                      261,000               --               --               --          266,000
                                             ------------     ------------     ------------     ------------     ------------
BALANCE AT DECEMBER 31, 2005                 $ 55,446,000     $    (21,000)    $(58,355,000)    $    (80,000)    $ (2,901,000)
                                             ============     ============     ============     ============     ============
</TABLE>


SEE ACCOUNTANTS' REPORT AND ACCOMPANYING NOTES.


                                       F-5
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                            YEAR ENDED DECEMBER 31,        JUNE 17, 2003 TO   AUGUST 1, 2002 TO
CASH FLOWS FROM OPERATING ACTIVITIES                        2005                2004      DECEMBER 31, 2003     JUNE 16, 2003
------------------------------------                     -----------        -----------   -----------------     -------------
<S>                                                      <C>                 <C>               <C>                <C>
  NET INCOME (LOSS)                                      $   602,000         (2,296,000)       $(4,036,000)       $  (698,000)
  ADJUSTMENTS TO RECONCILE NET INCOME TO
  NET CASH USED BY OPERATING ACTIVITIES:
  INTEREST PAID IN COMMON STOCK                                   --             87,000                 --                 --
 (INCOME) LOSS ON SALES OF MARKETABLE
    SECURITIES                                            (2,150,000)            75,000                 --                 --
  AMORTIZATION OF DISCOUNTS                                  278,000            417,000          1,083,000                 --
  STOCK AWARD COMPENSATION                                   599,000            476,000            435,000            100,000
   RESERVE FOR NYMI NOTE RECEIVABLE                               --                 --          1,508,000                 --
   LITIGATION SETTLEMENT                                          --                 --                 --          2,875,000
  CHANGE IN ASSETS AND LIABILITIES:
  PREPAID EXPENSES & OTHER RECEIVABLES                        (6,000)            20,000             22,000            (87,000)
   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                 (243,000)           610,000            118,000           (816,000)
                                                         -----------        -----------        -----------        -----------

    NET CASH (USED)PROVIDED BY OPERATING ACTIVITIES         (920,000)          (611,000)          (870,000)         1,374,000
                                                         -----------        -----------        -----------        -----------

Cash Flows From Investing Activities

  PROCEEDS FROM SALES OF MARKETABLE
   SECURITIES                                              2,162,000              2,000                 --                 --
  REPAYMENT OF NOTE FROM INFORMEDIX                               --             20,000            (20,000)          (100,000)
   LOANS ADVANCED                                                 --                 --           (708,000)          (875,000)
   PURCHASE OF TREASURY STOCK                                     --                 --                 --            (80,000)
  INCREASE IN NOTE RECEIVABLE TO KRAFT RT                   (500,000)                --                 --                 --
                                                         -----------        -----------        -----------        -----------

   NET CASH PROVIDED(USED)FROM INVESTING
    ACTIVITIES                                             1,662,000             22,000           (728,000)        (1,055,000)
                                                         -----------        -----------        -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   SALE OF COMMON STOCK                                       95,000                 --
   PROCEEDS FROM THE SALE OF BRIDGE NOTES                         --                 --          1,500,000                 --
   NET BORROWINGS UNDER TERM LOANS                                --                 --            (40,000)            47,000
   REPAYMENT OF NOTES PAYABLE                                     --                 --                 --           (250,000)
   PROCEEDS FROM NOTES PAYABLE                               221,000            218,000            164,000            131,000
   SETTLEMENT OF BRIDGE NOTES                             (1,500,000)                --                 --                 --
   PROCEEDS FROM ISSUANCE OF CONVERTIBLE NOTES               525,000                 --                 --                 --
                                                         -----------        -----------        -----------        -----------

  NET CASH (USED)PROVIDED BY FINANCING
   ACTIVITIES                                               (659,000)           218,000          1,624,000            (72,000)
                                                         -----------        -----------        -----------        -----------


NET CHANGE IN CASH                                            83,000           (371,000)            26,000            247,000

CASH AND CASH EQUIVALENTS, BEGINNING                           8,000            379,000            353,000            106,000
                                                         -----------        -----------        -----------        -----------

CASH AND CASH EQUIVALENTS, ENDING                        $    91,000        $     8,000        $   379,000        $   353,000
                                                         ===========        ===========        ===========        ===========

SUPPLEMENTAL CASH FLOW INFORMATION:

INTEREST PAID                                            $   554,000        $        --        $        --        $        --
                                                         ===========        ===========        ===========        ===========
INCOME TAXES PAID                                        $        --        $        --        $        --        $        --
                                                         ===========        ===========        ===========        ===========

NONCASH FINANCING AND INVESTING ACTIVITIES:

SHARES ISSUED AS PAYMENT OF ACCRUED EXPENSES             $   266,000        $        --        $        --        $        --
                                                         ===========        ===========        ===========        ===========
</TABLE>


SEE ACCOUNTANTS' REPORT AND ACCOMPANYING NOTES.


                                       F-6
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, BASIS OF PRESENTATION OF CONSOLIDATED
FINANCIAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

AMERICAN UNITED GLOBAL, INC. (THE "COMPANY" OR "AUGI"), IS INCORPORATED IN
DELAWARE AND ITS CORPORATE OFFICE IS IN SOMERS, NEW YORK. AUGI HAS HAD OPERATING
SUBSIDIARIES IN PRIOR YEARS AND IS CURRENTLY A NON-OPERATING PUBLICLY HELD SHELL
CORPORATION.

ON JUNE 16, 2003, AUGI, LIFETIME ACQUISITION CORP., A NEWLY FORMED WHOLLY OWNED
SUBSIDIARY OF AUGI ("MERGER SUB") AND LIFETIME HEALTHCARE SERVICES, INC.
("LIFETIME") ENTERED INTO AN AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
(THE "MERGER AGREEMENT"). AUGI CONSUMMATED THE ACQUISITION OF LIFETIME WHICH WAS
A HOLDING COMPANY WHOSE ONLY ASSETS CONSISTED OF A NOTE RECEIVABLE FORM NEW YORK
MEDICAL, INC. ("NYMI") AND ITS OWNERSHIP OF 55% OF THE CAPITAL STOCK OF NYMI
ACQUIRED BY LIFETIME IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE MERGER.

FOR ACCOUNTING PURPOSES, THE TRANSACTION BETWEEN AUGI AND LIFETIME WAS
CONSIDERED, IN SUBSTANCE, A CAPITAL TRANSACTION RATHER THAN A BUSINESS
COMBINATION. THE EXCHANGE WAS ACCOUNTED FOR AS A REVERSE ACQUISITION SINCE THE
FORMER SHAREHOLDERS OF LIFETIME WOULD HAVE OWNED A MAJORITY OF THE OUTSTANDING
COMMON STOCK OF AUGI UPON CONVERSION OF THE PREFERRED SHARES THEY RECEIVED IN
THE MERGER. HOWEVER, ON DECEMBER 8, 2003 CERTAIN MEMBERS OF THE BOARD OF
DIRECTORS OF AUGI, LIFETIME, NYMI AND REDWOOD INVESTMENT ASSOCIATES, LLP
("REDWOOD", THE PREVIOUS MAJORITY OWNER OF NYMI) EXECUTED A RESCISSION AGREEMENT
EFFECTIVE AS OF DECEMBER 9, 2003. THE REMAINING MEMBERS OF THE BOARD OF
DIRECTORS EXECUTED THE RESCISSION AGREEMENT ON MARCH 8, 2004, EFFECTIVE DECEMBER
9, 2003. THE REMAINING MEMBERS OF THE BOARD OF DIRECTORS EXECUTED THE RESCISSION
AGREEMENT ON MARCH 8, 2004, EFFECTIVE DECEMBER 9, 2003.

AS A RESULT OF THE MERGER WITH LIFETIME, AUGI CHANGED ITS YEAR END OF JULY 31,
TO DECEMBER 31, THE YEAR END OF LIFETIME, AND HAS CONTINUED TO REPORT ON A
DECEMBER 31 YEAR END BASIS SUBSEQUENT TO THE RESCISSION AGREEMENT.

PRINCIPLES OF CONSOLIDATION

THE CONSOLIDATED FINANCIAL INFORMATION INCLUDED IN THIS REPORT HAS BEEN PREPARED
IN CONFORMITY WITH THE ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA AND HAS BEEN PREPARED ON THE BASIS THAT THE COMPANY WILL
CONTINUE AS A GOING CONCERN, WHICH CONTEMPLATES THE REALIZATION OF ASSETS AND
THE SATISFACTION OF LIABILITIES AND COMMITMENTS IN THE NORMAL COURSE OF
BUSINESS. THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ACCOUNTS OF THE
COMPANY AND ITS SUBSIDIARIES (SUPERIOR VENTURES, CORP, EXODUS TECHNOLOGIES,
INC., CONNECTSOFT COMMUNICATIONS, CORP. AND LIFETIME ACQUISITION CORP.). ALL
SIGNIFICANT INTERCOMPANY BALANCES AND TRANSACTIONS HAVE BEEN ELIMINATED IN
CONSOLIDATION.


                                       F-7
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, BASIS OF PRESENTATION OF CONSOLIDATED
FINANCIAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

GOING CONCERN

AT DECEMBER 31, 2005, THE COMPANY HAD A WORKING CAPITAL DEFICIENCY OF
$2,804,000, AN ACCUMULATED DEFICIT OF $58,355,000. IN ADDITION, THE COMPANY'S
CASH OF $91,000 AT DECEMBER 31, 2005 IS NOT SUFFICIENT TO FUND OPERATIONS FOR
THE NEXT TWELVE MONTHS. SUCH ACCUMULATED LOSSES AND WORKING CAPITAL DEFICIENCY
RAISE SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A GOING
CONCERN. THE COMPANY'S FINANCIAL STATEMENTS DO NOT INCLUDE ANY ADJUSTMENTS
RELATING TO THE RECOVERABILITY AND RECLASSIFICATION OF RECORDED ASSETS AMOUNTS
OR TO AMOUNTS AND CLASSIFICATION OF LIABILITIES THAT MAY BE NECESSARY SHOULD THE
COMPANY BE UNABLE TO CONTINUE AS A GOING CONCERN.

THE COMPANY'S INTENTION WAS TO SEEK AN ACQUISITION CANDIDATE WITH A VIABLE
BUSINESS THAT COULD BE FINANCED AND EXPANDED BOTH BY INTERNAL GROWTH AND BY THE
ACQUISITION AND CONSOLIDATION OF SIMILAR OPERATIONS. AS DISCLOSED IN NOTE 10,
THE COMPANY AND SEVERAL SHAREHOLDERS OF KRAFT, RT., AN OPERATING ENTITY IN
BUDAPEST, HUNGARY, HAVE SIGNED A SHARE EXCHANGE AGREEMENT AND IT IS ANTICIPATED
THAT THE TRANSACTION WILL CLOSE, SUBJECT TO CERTAIN CONDITIONS, BY APRIL 30,
2006 OR WITHIN 45 DAYS FROM THE COMPLETION AND DELIVERY TO THE COMPANY OF THE
KRAFT RT. AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2005 BY
KRAFT RT. ALTHOUGH MANAGEMENT IS CONFIDENT OF SUCH CLOSING, THERE CAN BE NO
ASSURANCE THAT THE COMPANY WILL BE SUCCESSFUL IN MEETING SUCH CONDITIONS TO
CLOSING OR THAT SHOULD THIS TRANSACTION NOT CLOSE THAT THE COMPANY WILL BE ABLE
TO LOCATE OTHER ACQUISITION CANDIDATES OR THAT IF SUCH OPERATIONS ARE FOUND THAT
A MERGER OR ACQUISITION AGREEMENT CAN BE FINALIZED. IN ADDITION, AS DISCUSSED IN
NOTE 13, THE COMPANY RAISED ADDITIONAL FINANCING IN MARCH 2006.

USE OF ESTIMATES

THE PREPARATION OF THE FINANCIAL STATEMENTS IN CONFORMITY WITH ACCOUNTING
PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA REQUIRES
MANAGEMENT TO MAKE CERTAIN ESTIMATES AND ASSUMPTIONS THAT EFFECT THE AMOUNTS
REPORTED IN THE FINANCIAL STATEMENTS AND ACCOMPANYING NOTES. ALTHOUGH THESE
ESTIMATES ARE BASED ON THE KNOWLEDGE OF CURRENT EVENTS AND ACTIONS THE COMPANY
MAY UNDERTAKE IN THE FUTURE, THEY MAY ULTIMATELY DIFFER FROM ACTUAL RESULTS. THE
COMPANY USES ESTIMATES, AMONG OTHERS, TO DETERMINE WHETHER ANY IMPAIRMENT IS TO
BE RECOGNIZED.

CASH AND CASH EQUIVALENTS

THE COMPANY CONSIDERS ALL HIGHLY LIQUID INVESTMENTS PURCHASED WITH AN ORIGINAL
MATURITY OF THREE MONTHS OR LESS TO BE CASH EQUIVALENTS.


                                       F-8
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, BASIS OF PRESENTATION OF CONSOLIDATED
FINANCIAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

MARKETABLE SECURITIES

THE COMPANY ACCOUNTS FOR MARKETABLE SECURITIES IN ACCORDANCE WITH STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS ("SFAS") NO. 115, "ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT, AND EQUITY SECURITIES". UNDER THIS STANDARD, CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES ARE REPORTED AT FAIR VALUE. THE
COMPANY'S MARKETABLE SECURITIES, WHICH CONSIST OF COMMON SHARES OF A PUBLIC
COMPANY, ARE REPORTED AS SECURITIES AVAILABLE FOR SALE. THE UNREALIZED LOSS ON
THESE SECURITIES IS REFLECTED AS A SEPARATE COMPONENT OF SHAREHOLDERS' DEFICIT
AND ANY CHANGES IN THEIR VALUE ARE INCLUDED IN COMPREHENSIVE LOSS. AUGI REVIEWS
ESTIMATES OF THE VALUE OF ITS INVESTMENTS EACH REPORTING PERIOD AND RECORDS AN
IMPAIRMENT LOSS TO THE EXTENT THAT MANAGEMENT BELIEVES THAT THERE HAS BEEN
IMPAIRMENT TO THE CARRYING VALUE. THE VALUE OF THESE SECURITIES ARE AS FOLLOWS:

                                                          DECEMBER 31,
                                                   2005                 2004
                                                 ---------           ---------
COST                                             $  25,000           $      --
GROSS UNREALIZED GAIN                                   --                  --
GROSS UNREALIZED LOSS                               21,000                  --
                                                 ---------           ---------

MARKET VALUE                                     $   4,000           $      --
                                                 =========           =========

COST USED IN THE COMPUTATION OF REALIZED GAINS AND LOSSES IS DETERMINED USING
THE FIRST-IN-FIRST-OUT COST METHOD. SALES OF MARKETABLE SECURITIES TOTALED
$2,286,000 FOR THE YEAR ENDED DECEMBER 31, 2005, RESULTING IN A NET GAIN OF
$2,162,000 IN 2005 RESULTING FROM SALES OF SHARES OF WESTERN POWER TOTALING
$2,162,000. THE VALUE OF THESE SHARES WERE PREVIOUSLY WRITTEN DOWN TO $- AS A
RESULT OF THE COMPANY DETERMINING THE STOCK HAD AN OTHER THAN TEMPORARY DECREASE
IN ITS VALUE. ALSO INCLUDED IN THE NET GAIN ON MARKETABLE SECURITIES IS AN OTHER
THAN TEMPORARY DECREASE IN THE SHARES OF SCANTEK MEDICAL TOTALING $12,000. THERE
WERE NO GAINS OR LOSSES FROM THE SALE OF MARKETABLE SECURITIES DURING THE YEAR
ENDED DECEMBER 31, 2004.

CONCENTRATION OF CREDIT RISK

FINANCIAL INSTRUMENTS THAT POTENTIALLY SUBJECT THE COMPANY TO CONCENTRATIONS OF
CREDIT RISK CONSIST PRINCIPALLY OF NOTES RECEIVABLE. THE COMPANY MAINTAINS CASH
BALANCES AT TWO FINANCIAL INSTITUTIONS. THESE BALANCES ARE INSURED FOR UP TO
$100,000 PER BANK BY THE FEDERAL DEPOSIT INSURANCE CORPORATION. THE CASH
BALANCES MAY BE IN EXCESS OF THE INSURANCE LIMIT AT TIMES DURING THE YEAR.


F-9
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, BASIS OF PRESENTATION OF CONSOLIDATED
FINANCIAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK BASED COMPENSATION

IN OCTOBER 1995, THE FINANCIAL ACCOUNTING STANDARDS BOARD ("FASB") ISSUED
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS (SFAS) NO. 123. "ACCOUNTING FOR
STOCK-BASED COMPENSATION". THE COMPANY CURRENTLY ACCOUNTS FOR ITS STOCK-BASED
COMPENSATION PLANS USING THE ACCOUNTING PRESCRIBED BY ACCOUNTING PRINCIPLES
BOARD OPINION NO. 25, (APB 25) "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES". AS
THE COMPANY IS NOT YET REQUIRED TO ADOPT THE FAIR VALUE BASED RECOGNITION
PROVISIONS PRESCRIBED UNDER SFAS NO. 123, IT HAS ELECTED ONLY TO COMPLY WITH THE
DISCLOSURE REQUIREMENTS SET FORTH IN THE STATEMENT WHICH INCLUDES DISCLOSING PRO
FORMA NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE AS IF THE FAIR VALUE BASED
METHOD OF ACCOUNTING HAD BEEN APPLIED.

<TABLE>
<CAPTION>
                                                   YEAR ENDED DECEMBER 31,            JUNE 17, 2003 TO     AUGUST 1, 2002 TO
                                                   2005                2004           DECEMBER 31, 2003      JUNE 16, 2003
                                               -----------        -------------       -----------------    -----------------
<S>                                            <C>                <C>                   <C>                   <C>
NET INCOME (LOSS) AS REPORTED                  $   602,000        $  (2,296,000)        $  (4,036,000)        $  (698,000)
STOCK OPTION COMPENSATION
 INCLUDED IN NET LOSS                                   --                   --                    --             100,000
TOTAL STOCK-BASED COMPENSATION                          --             (176,000)             (176,000)           (270,000)
                                               -----------        -------------         -------------         -----------
PROFORMA NET INCOME (LOSS)                     $   602,000        $  (2,472,000)        $  (4,212,000)        $  (868,000)
                                               ===========        =============         =============         ===========
BASIC EARNINGS (LOSS) PER SHARE
 AS REPORTED                                   $       .06        $        (.28)        $        (.56)        $      (.35)
DILUTED EARNINGS (LOSS) PER SHARE
 AS REPORTED                                   $       .05        $        (.28)        $        (.56)        $      (.35)
PROFORMA BASIC EARNINGS (LOSS) PER
 SHARE AS REPORTED                             $       .06        $        (.31)        $        (.59)        $      (.43)
PROFORMA DILUTED EARNINGS (LOSS)
 PER SHARE AS REPORTED                         $       .05        $        (.31)        $        (.59)        $      (.43)
</TABLE>

FAIR VALUE OF FINANCIAL INSTRUMENTS

CASH BALANCES AND THE CARRYING AMOUNT OF THE ACCOUNTS PAYABLE AND ACCRUED
EXPENSES APPROXIMATE THEIR FAIR VALUE BASED ON THE NATURE OF THOSE ITEMS.
ESTIMATED FAIR VALUES OF FINANCIAL INSTRUMENTS ARE DETERMINED USING AVAILABLE
MARKET INFORMATION. IN EVALUATING THE FAIR VALUE INFORMATION, CONSIDERABLE
JUDGMENT IS REQUIRED TO INTERPRET THE MARKET DATA USED TO DEVELOP THE ESTIMATES.
THE USE OF DIFFERENT MARKET DATA USED TO DEVELOP THE ESTIMATES. THE USE OF
DIFFERENT MARKET ASSUMPTIONS AND/OR DIFFERENT VALUATION TECHNIQUES MAY HAVE A
MATERIAL EFFECT ON THE ESTIMATED FAIR VALUE AMOUNTS. ACCORDINGLY, THE ESTIMATES
OF FAIR VALUE PRESENTED HEREIN MAY NOT BE INDICATIVE OF THE AMOUNTS THAT COULD
BE REALIZED IN A CURRENT MARKET EXCHANGE.


                                      F-10
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, BASIS OF PRESENTATION OF CONSOLIDATED
FINANCIAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

THE COMPANY'S DEFERRED INCOME TAXES ARISE PRIMARILY FROM THE DIFFERENCES IN THE
RECORDING OF NET OPERATING LOSSES AND CAPITAL LOSSES FOR FINANCIAL REPORTING AND
INCOME TAX PURPOSES. INCOME TAXES ARE REPORTED UNDER THE LIABILITY METHOD
PURSUANT TO SFAS NO. 109 "ACCOUNTING FOR INCOME TAXES." A VALUATION ALLOWANCE IS
PROVIDED WHEN THE LIKELIHOOD OF REALIZATION OF DEFERRED TAX ASSETS IS NOT
ASSURED.

THE COMPANY HAS RECORDED A FULL VALUATION ALLOWANCE AGAINST THE DEFERRED TAX
BENEFIT FOR NET OPERATING LOSSES GENERATED, SINCE IN MANAGEMENT'S OPINION THE
NET OPERATING LOSSES DO NOT MEET THE MORE LIKELY THAN NOT CRITERIA FOR FUTURE
REALIZATION. THE COMPANY HAS NOT HAD STATE INCOME TAXES AS A RESULT OF THE LACK
OF A CORPORATE INCOME TAX IN ITS STATE OF DOMICILE.

PER SHARE DATA

THE COMPANY HAS ADOPTED SFAS NO. 128 "EARNINGS PER SHARE". BASIC INCOME (LOSS)
PER SHARE IS COMPUTES BY DIVIDING THE LOSS AVAILABLE TO COMMON SHAREHOLDERS BY
THE WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING. DILUTED INCOME (LOSS)
PER SHARE IS COMPUTED IN A MANNER SIMILAR TO THE BASIC LOSS PER SHARE, EXCEPT
THAT THE NUMBER OF SHARES OUTSTANDING IS INCREASED TO INCLUDE ALL COMMON SHARES,
INCLUDING THOSE WITH THE POTENTIAL TO BE ISSUED BY VIRTUE OF WARRANTS, OPTIONS,
CONVERTIBLE DEBT AND OTHER SUCH CONVERTIBLE INSTRUMENTS. BASIC AND DILUTED LOSS
PER SHARE INCLUDES THE COMMON SHARES ISSUABLE UPON CONVERSION OF THE SERIES B-3
CONVERTIBLE PREFERRED STOCK WHICH WAS ISSUED AS A DIVIDEND TO ALL COMMON
SHAREHOLDERS EFFECTIVE AS OF JUNE 17, 2003. THE REMAINING 48,426 COMMON SHARES
ISSUABLE UPON CONVERSION OF THE SERIES B-3 PREFERRED STOCK ARE INCLUDED BASED ON
THE PREFERRED SHAREHOLDERS ABILITY TO SHARE IN DISTRIBUTIONS OF EARNINGS
AVAILABLE, IF ANY TO THE HOLDERS OF COMMON SHARES. POTENTIALLY DILUTIVE COMMON
SHARES EXCLUDED FROM THIS COMPUTATION WERE SHARES TOTALING 749,522, 1,268,000,
1,050,000 AND 1,050,000 ON DECEMBER 31, 2005, 2004 AND 2003 AND JUNE 16, 2003,
RESPECTIVELY. THE RECONCILIATION BETWEEN BASIC AND DILUTED AVERAGE SHARES
OUTSTANDING IS AS FOLLOWS:

<TABLE>
<CAPTION>

                                                       YEAR ENDED DECEMBER 31,         JUNE 17, 2003 TO     AUGUST 1, 2002 TO
                                                      2005                2004         DECEMBER 31, 2003      JUNE 16, 2003
                                                   ----------          ----------          ----------          ----------
<S>                                                <C>                  <C>                 <C>                 <C>
BASIC WEIGHTED SHARES OUTSTANDING                  10,514,735           8,090,745           7,181,419           1,997,624
ASSUMED CONVERSION OF CONVERTIBLE
  DEBT                                              1,392,701                  --                  --                  --
                                                   ----------          ----------          ----------          ----------
DILUTED WEIGHTED SHARES OUTSTANDING                11,907,436           8,080,745           7,181,419           1,997,624
                                                   ==========          ==========          ==========          ==========
</TABLE>


                                      F-11
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, BASIS OF PRESENTATION OF CONSOLIDATED
FINANCIAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

IN DECEMBER 2004, THE FASB ISSUED SFAS NO. 123 (REVISED 2004), SHARE-BASED
PAYMENT, ("SFAS NO. 123(R)"). THE STATEMENT ESTABLISHES STANDARDS FOR THE
ACCOUNTING FOR TRANSACTIONS IN WHICH AN ENTITY EXCHANGES ITS EQUITY INVESTMENTS
FOR GOODS AND SERVICES. IT ALSO ADDRESSES TRANSACTIONS IN WHICH AN ENTITY INCURS
LIABILITIES IN EXCHANGE FOR GOODS OR SERVICES THAT ARE BASED ON THE FAIR VALUE
OF THE ENTITY'S EQUITY INSTRUMENTS OR THAT MAY BE SETTLED BY THE ISSUANCE OF
THOSE EQUITY INSTRUMENTS. THE STATEMENT DOES NOT CHANGE THE ACCOUNTING GUIDANCE
FOR SHARE-BASED PAYMENTS WITH PARTIES OTHER THAN EMPLOYEES.

THE STATEMENT REQUIRES A PUBLIC ENTITY TO MEASURE THE COST OF EMPLOYEE SERVICE
RECEIVED IN EXCHANGE FOR AN AWARD OF EQUITY INSTRUMENTS BASED ON THE GRANT-DATE
FAIR VALUE OF THE AWARD (WITH LIMITED EXCEPTION). THAT COST WILL BE RECOGNIZED
OVER THE PERIOD DURING WHICH AN EMPLOYEE IS REQUIRED TO PROVIDE SERVICE IN
EXCHANGE FOR THE AWARD (USUALLY THE VESTING PERIOD). A PUBLIC ENTITY WILL
INITIALLY MEASURE THE COST OF EMPLOYEE SERVICES RECEIVED IN EXCHANGE FOR AN
AWARD OF A LIABILITY INSTRUMENT BASED ON ITS CURRENT FAIR VALUE; THE FAIR VALUE
OF THAT AWARD WILL BE REMEASURED SUBSEQUENTLY AT EACH REPORTING DATE THROUGH THE
SETTLEMENT DATE. CHANGES IN FAIR VALUE DURING THE REQUISITE SERVICE PERIOD WILL
BE RECOGNIZED AS COMPENSATION OVER THAT PERIOD.

THE GRANT-DATE FOR FAIR VALUE OF EMPLOYEE SHARE OPTIONS AND SIMILAR INSTRUMENTS
WILL BE ESTIMATED USING OPTION-PRICING MODELS ADJUSTED FOR THE UNIQUE
CHARACTERISTICS OF THESE INSTRUMENTS. THE COMPANY WILL BE REQUIRED TO COMPLY
WITH THIS PRONOUNCEMENT WITH PERIODS BEGINNING AFTER DECEMBER 15, 2005. THE
COMPANY WILL BE ADOPTING SFAS NO. 123(R) FOR THE COMPANY'S CALENDAR YEAR ENDING
DECEMBER 31, 2006. THE ADOPTION OF THIS PRONOUNCEMENT IS EXPECTED TO AFFECT THE
COMPANY'S STATEMENTS OF OPERATIONS IN FUTURE PERIODS. THE AMOUNT OF THE EFFECT
CANNOT BE MEASURED AT THIS TIME. THE COMPANY IS CURRENTLY EVALUATING THE IMPACT
OF SFAS NO. 123(R) ON ITS FINANCIAL STATEMENTS. THE APPLICATION OF THIS
STATEMENT IS NOT EXPECTED TO HAVE A MATERIAL IMPACT ON THE FINANCIAL STATEMENTS
OF THE COMPANY.

IN JUNE 2005, THE FASB ISSUED SFAS NO. 154, "ACCOUNTING CHANGES AND ERROR
CORRECTIONS" - A REPLACEMENT OF APB OPINION NO. 20 (ACCOUNTING CHANGES) AND FASB
NO. 3 (REPORTING ACCOUNTING CHANGES IN INTERIM FINANCIAL STATEMENTS), WHICH
CHANGED THE REQUIREMENTS FOR THE ACCOUNTING FOR AND REPORTING OF A CHANGE IN
ACCOUNTING PRINCIPLE. THIS STATEMENT REQUIRES RETROSPECTIVE APPLICATION TO PRIOR
PERIODS' FINANCIAL STATEMENTS OF CHANGES IN ACCOUNTING PRINCIPLE UNLESS IT IS
IMPRACTICABLE TO DETERMINE EITHER THE PERIOD-SPECIFIC EFFECTS OR THE CUMULATIVE
EFFECT OF THE CHANGE. WHEN IT IS IMPRACTICABLE TO DETERMINE THE PERIOD-SPECIFIC
EFFECTS OF AN ACCOUNTING CHANGE ON ONE OR MORE INDIVIDUAL PRIOR PERIODS
PRESENTED, THIS STATEMENT REQUIRES THAT THE NEW ACCOUNTING PRINCIPLE BE APPLIED
TO THE BALANCES OF ASSETS AND LIABILITIES AS OF THE BEGINNING OF THE EARLIEST
PERIOD FOR WHICH RETROSPECTIVE APPLICATION IS PRACTICABLE AND THAT A
CORRESPONDING ADJUSTMENT BE MADE TO THE OPENING BALANCE OF RETAINED EARNINGS (OR
OTHER APPROPRIATE COMPONENTS OF EQUITY OR NET ASSETS IN THE STATEMENT OF
FINANCIAL POSITION) FOR THAT PERIOD RATHER THAN BEING REPORTED IN AN INCOME
STATEMENT. WHEN IT IS IMPRACTICABLE TO DETERMINE THE CUMULATIVE EFFECT OF
APPLYING A CHANGE IN ACCOUNTING PRINCIPLE TO ALL PRIOR PERIODS, THIS STATEMENT
REQUIRES THE NEW ACCOUNTING PRINCIPLE BE APPLIED AS IF IT WERE ADOPTED
PROSPECTIVELY FROM THE EARLIEST DATE PRACTICABLE. STATEMENT NO. 154 IS EFFECTIVE
FOR ACCOUNTING CHANGES AND ERROR CORRECTIONS MADE IN FISCAL YEARS BEGINNING
AFTER DECEMBER 15, 2005.



                                      F-12
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - OTHER LOANS AND ADVANCES

ON SEPTEMBER 4, 2002 THE COMPANY LOANED $100,000 TO INFORMEDIX, INC.
("INFORMEDIX") PURSUANT TO THE TERMS OF A 12% CONVERTIBLE SECURED PROMISSORY
NOTE WHICH WAS AUTOMATICALLY CONVERTIBLE INTO 50,000 COMMON SHARES OF INFORMEDIX
IF INFORMEDIX BECOME PUBLICLY TRADED. ON MAY 8, 2003, INFORMEDIX MERGED WITH A
PUBLIC ENTITY WHOSE NAME WAS CHANGED TO INFORMEDIX HOLDING, INC. AND 54,000
SHARES OF THEIR COMMON STOCK WERE ISSUED TO AUGI PURSUANT TO THE AUTOMATIC
CONVERSION FEATURE OF THE LOAN AND ACCRUED INTEREST.

THE COMPANY ALSO LOANED $20,000 TO INFORMEDIX PURSUANT TO THE TERMS OF A 12%
PROMISSORY NOTE ORIGINALLY DUE JANUARY 31, 2004 WHICH DUE DATE WAS EXTENDED TO
APRIL 2, 2004 ON WHICH DATE THE NOTE WAS PAID IN FULL. THE COMPANY RECEIVED
50,000 SHARES AND OPTIONS TO BUY ANOTHER 50,000 SHARES AT $.50 PER SHARE AS
ADDITIONAL CONSIDERATION FOR THIS LOAN. THE SHARES CURRENTLY HELD BY THE COMPANY
ARE TO BE DISTRIBUTED IN DIVIDEND TO THE SERIES B-3 PREFERRED SHAREHOLDERS. THE
COMPANY HAS DETERMINED THERE TO BE NO VALUE FOR THE OPTIONS AT DECEMBER 31, 2005
DUE TO THERE BEING NO MARKETABILITY OF THE OPTIONS, THE EXERCISE PRICE BEING IN
EXCESS OF THE MARKET VALUE AS WELL AS OTHER COMPANY ESTIMATES WITH REGARDS TO
THE UNDERLYING SHARES.

ON JANUARY 13, 2003, THE COMPANY PROVIDED A WORKING CAPITAL LOAN OF $25,000 TO
SPONGETECH DELIVERY SYSTEMS, INC. (SPONGETECH") PURSUANT TO THE TERMS OF AN 8%
PROMISSORY NOTE ORIGINALLY DUE MAY 15, 2003 WHICH WAS SUBSEQUENTLY EXTENDED TO
JULY 31, 2004. THE COMPANY LOANED AN ADDITIONAL $25,000 TO SPONGETECH ON JULY 7,
2003 UNDER THE SAME TERMS AND CONDITIONS. THE COMPANY ALSO RECEIVED 250,000
SHARES OF SPONGETECH COMMON STOCK AS ADDITIONAL CONSIDERATION FOR THE LOANS AND
MATURITY DATE EXTENSIONS. SPONGETECH IS A DISTRIBUTOR OF REUSABLE SPECIALTY
SPONGES FOR COMMERCIAL AND EVERYDAY USE. MICHAEL METTER, A DIRECTOR OF THE
COMPANY, IS A DIRECTOR AND EXECUTIVE OFFICER OF SPONGETECH. SPONGETECH WAS IN
DEFAULT ON THE PAYMENTS THAT WERE DUE ON JULY 31, 2004 AND WAS UNABLE TO REPAY
ANY AMOUNT AT THAT TIME. IN NOVEMBER 2004, THE COMPANY AGREED TO CONVERT ALL
PRINCIPLE AND INTEREST DUE UNDER THE NOTES INTO 466,667 SHARES OF SPONGETECH
COMMON STOCK, BASED ON THE ESTIMATED MARKET VALUE OF THE SHARES ON THE DATE OF
THE CONVERSION. SPONGETECH IS ACTIVELY SEEKING FINANCING IN ORDER TO CONTINUE IN
BUSINESS. THE COMPANY CURRENTLY OWNS APPROXIMATELY 2% OF SPONGETECH COMMON
STOCK, WHICH IS NOT PUBLICALLY TRADED, AND AS SUCH REFLECTS THE INVESTMENT AS A
NON-MARKETABLE SECURITY ON THE COST BASIS.


                                      F-13
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - OTHER LOANS AND ADVANCES (CONTINUED)

ON AUGUST 5, 2003, THE COMPANY LOANED $25,000 TO SCANTECK MEDICAL, INC.
("SCANTECK") PURSUANT TO THE TERMS OF A 12% PROMISSORY NOTE WHICH WAS DUE
OCTOBER 15, 2004. AS CONSIDERATION TO AUGI FOR PROVIDING THE LOAN, SCANTECK
ADDED INTEREST OF $5,000 TO THE NOTE AND BOTH PARTIES AGREED THAT ANY FURTHER
INTEREST WOULD ONLY BE DUE, AT THE 12% RATE, IF THERE WAS A BREACH OF THE
DEFAULT AND REPAYMENT PROVISIONS OF THE NOTE. THE NOTE WAS NOT PAID ON OCTOBER
15, 2004 NOR ON THE EXTENDED DUE DATE OF DECEMBER 31, 2004 NOR BY THE SECOND
EXTENDED DUE DATE OF JUNE 15, 2005. THE COMPANY REACHED AN AGREEMENT WITH
SCANTECK ON JULY 22 2005 WHEREBY THE DEBT OF $30,000 PLUS ADDITIONAL INTEREST OF
$7,000 WOULD BE SATISFIED WITH 125,000 SHARES OF SCANTECK COMMON STOCK, THE
VALUE OF THE SHARES ON THE DATE OF THE CONVERSION. SCANTEK IS A PUBLICALLY
TRADED COMPANY; AND AS SUCH, THE COMPANY'S INVESTMENT IN SCANTEK COMMON STOCK IS
REFLECTED AS A MARKETABLE SECURITY IN THE FINANCIAL STATEMENTS.

IN SEPTEMBER 2005 THE COMPANY HAS EXTENDED A $500,000 BRIDGE LOAN TO KRAFT RT.
AS PART OF ITS OBLIGATION IN THE ACQUISITION OF KRAFT RT. (SEE NOTE 10). THE
NOTE WAS ORIGINALLY DUE ON DECEMBER 28, 2005 AND ACCRUES INTEREST AT A RATE OF
10% PER ANNUM. THE DUE DATE ON THE NOTE WAS EXTENDED TO JANUARY 30, 2006. THE
NOTE, NOT BEING PAID BY THE EXTENDED DUE DATE IS IN DEFAULT EFFECTIVE JANUARY
31, 2006.

NOTE 3 - BRIDGE NOTES PAYABLE

ON JUNE 17, 2003, THE COMPANY RECEIVED AGGREGATE NET PROCEEDS OF $1,350,000 FROM
THE SALE OF $1,500,000 PRINCIPAL AMOUNT OF 10% CONVERTIBLE NOTES DUE IN MARCH
2004. THE BRIDGE NOTES WERE CONVERTIBLE INTO COMMON STOCK OF THE COMPANY AT ANY
TIME AT THE RATE OF $1.00 OF NOTES FOR ONE SHARE OF COMMON STOCK. IN ADDITION,
THE PURCHASERS OF THE BRIDGE NOTES HAS RECEIVED FIVE YEAR WARRANTS TO PURCHASE
AN AGGREGATE OF $1,500,000 SHARES AT $.75 PER SHARE. THE COMPANY UTILIZED AN
AGGREGATE OF $650,000 OF THE NET PROCEEDS FROM THE SALE OF THE BRIDGE NOTES TO
INCREASE ITS OUTSTANDING LOANS TO LIFETIME AND NYMI FROM $850,000 TO $1,500,000
(SEE NOTE 1).

IN APRIL 2004, CERTAIN BRIDGE NOTE INVESTORS COMMENCED AN ACTION AGAINST THE
COMPANY IN THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK,
ALLEGING, AMONG OTHER THINGS, THAT WE OWE PLAINTIFFS REPAYMENT OF $700,000 IN
PRINCIPAL FACE AMOUNT NOTES ISSUED IN CONNECTION WITH OUR INTENDED ACQUISITION
OF NEW YORK MEDICAL, A NEW YORK CORPORATION (ALTITUDE GROUP, LLC, BIRCH
ASSOCIATES, LLC AND D.C. CAPITAL, LLC V. AMERICAN UNITED GLOBAL, INC., INDEX NO.
600936/04). PLAINTIFFS FILED A MOTION SEEKING SUMMARY JUDGMENT AGAINST US IN
AGGREGATE AMOUNT OF $787,546, CONSISTING OF THE ALLEGEDLY OUTSTANDING PRINCIPAL
AND INTEREST ON THE NOTES AS WELL AS ATTORNEYS' COSTS, AND WE OPPOSED THAT
MOTION. ON SEPTEMBER 24, 2004, JUDGMENT WAS RENDERED IN FAVOR OF THESE THREE
INVESTORS IN THE AMOUNT OF $840,695.


                                      F-14
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - BRIDGE NOTES PAYABLE (CONTINUED)

IN SEPTEMBER 2005, THE COMPANY SETTLED, PER AGREEMENTS, TO PAY $2,054,000 FOR
FULL RELEASE OF THE COMPANY'S INDEBTEDNESS FOR THE BRIDGE NOTES ($1,500,000) AND
ACCRUED INTEREST ($554,000). USING THE PROCEEDS FROM THE SALE OF ITS INVESTMENT
IN WESTERN POWER, THE COMPANY HAS RECORDED A GAIN OF $101,000 ON THE
EXTINGUISHMENT OF THIS DEBT.

NEW YORK MEDICAL, INC. AND REDWOOD INVESTMENT ASSOCIATES, L.P. V. AMERICAN
UNITED GLOBAL, INC. ET AL (SUPREME COURT, NEW YORK STATE, NEW YORK COUNTY). IN
THIS SUIT, FILED ON DECEMBER 12, 2003, PLAINTIFFS SEEK A DECLARATION THAT A
SERIES OF TRANSACTIONS BY WHICH AUGI ALLEGEDLY ACQUIRED LIFETIME HEALTHCARE
SERVICES, INC. ("LIFETIME") AND LIFETIME ACQUIRED AN INTEREST IN NEW YORK
MEDICAL, INC. FROM REDWOOD INVESTMENT ASSOCIATES, L.L.P. (COLLECTIVELY
TRANSACTIONS") WERE PROPERLY RESCINDED OR, ALTERNATIVELY, THAT BECAUSE THE
TRANSACTIONS WERE ALLEGEDLY INDUCED BY FRAUDULENT CONDUCT OF AUGI, AND OTHERS,
THAT THE TRANSACTIONS SHOULD BE JUDICIALLY RESCINDED. PLAINTIFFS ALSO SEEK
MONETARY DAMAGES IN EXCESS OF $5 MILLION AND EXEMPLARY DAMAGES IN THE AMOUNT OF
$15 MILLION.

CURRENTLY, THE SUIT HAS NOT PROCEEDED PAST THE FILING AND SERVICE OF THE
COMPLAINT. AUGI HAS OBTAINED AN OPEN-ENDED EXTENSION OF TIME IN WHICH TO ANSWER
AND/OR MOVE WITH REGARD TO THE COMPLAINT. THE PARTIES ARE ATTEMPTING TO RESOLVE
THE MATTER AMICABLY. HOWEVER, IN THE EVENT LITIGATION PROCEEDS, IT WILL BE
AGGRESSIVELY DEFENDED AND COUNTER CLAIMS WOULD BE FILED.

NOTE 4 - OTHER SHORT TERM BORROWINGS

THE COMPANY IS IN DEFAULT ON AN UNCOLLATERALIZED NOTE PAYABLE DUE TO AN
UNRELATED THIRD PARTY IN THE PRINCIPAL AMOUNT OF $1,500,000 PLUS ACCRUED
INTEREST OF APPROXIMATELY $1,361,000 AT DECEMBER 31, 2005. ORIGINALLY BEARING
INTEREST AT 8%; THE NOTE ACCRUES INTEREST AT 10% WHILE IN DEFAULT. THE HOLDER OF
SUCH INDEBTEDNESS HAS NOT SOUGHT TO COLLECT THE AMOUNTS DUE; HOWEVER, WERE THE
COMPANY REQUIRED TO PAY SUCH CERTAIN INDEBTEDNESS IT WOULD BE NECESSARY TO
SECURE ADDITIONAL FINANCING.

ON SEPTEMBER 23, 2005 THE COMPANY ISSUED $525,000 SENIOR SECURED CONVERTIBLE
NOTES DUE MARCH 23, 2007 WITH INTEREST OF 18% PER ANNUM PAYABLE AT DUE DATE. THE
NOTES ARE GUARANTEED BY ROBERT RUBIN, THE COMPANY'S PRESIDENT. THESE LOANS ARE
CONVERTIBLE AT ANY TIME INTO COMPANY COMMON STOCK AT 50% OF THE FAIR MARKET
VALUE ON THE DATE OF SUCH CONVERSION, BUT MAY NOT BE LOWER THAN $.40, RESULTING
IN A TOTAL BENEFICIAL CONVERSION FEATURE OF $222,000 WHICH IS BEING AMORTIZED
FROM THE DATE OF RECEIPT OF PROCEEDS FOR EACH LOAN THROUGH MARCH 23, 2007. THE
NOTE HOLDERS RECEIVED 525,000 SHARES OF COMPANY COMMON STOCK AS ADDITIONAL
INTEREST. THE VALUE OF THESE SHARES HAS BEEN RECORDED AS A DISCOUNT ON THE
RELATED CONVERTIBLE NOTES AND WILL BE AMORTIZED OVER THE TERM OF THE NOTES. THE
DISCOUNTS RELATED TO THE ISSUANCE OF THE SHARES TOTALED $303,000 AND ARE BEING
AMORTIZED AS ADDITIONAL INTEREST EXPENSE OVER THE TERM OF THE NOTES.THE NOTES
ARE SECURED BY AN INTEREST IN ALL OF THE COMPANY'S ASSETS.


                                      F-15
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - CONTINGENT OBLIGATIONS

THE COMPANY REMAINS CONTINGENTLY LIABLE FOR CERTAIN CAPITAL LEASE OBLIGATIONS
ASSUMED BY EGLOBE, INC. ("EGLOBE") AS PART OF THE CONNECTSOFT COMMUNICATIONS
CORP. ASSET SALE WHICH WAS CONSUMMATED IN JUNE 1999. THE LESSOR FILED FOR
BANKRUPTCY IN 2000 AND THE LEASES WERE ACQUIRED BY ANOTHER LEASING ORGANIZATION
WHICH SUBSEQUENTLY ALSO FILED FOR BANKRUPTCY IN 2001. IN ADDITION, EGLOBE FILED
FOR BANKRUPTCY IN 2001. THE COMPANY HAS BEEN UNABLE TO OBTAIN ANY FURTHER
INFORMATION ABOUT THE PARTIES BUT BELIEVES THAT IN THE NORMAL COURSE OF THE
PROCEEDINGS THAT ANOTHER COMPANY MOST LIKELY ACQUIRED THE ASSETS AND RELATED
LEASES AND THAT A MUTUALLY ACCEPTABLE FINANCIAL ARRANGEMENT WAS REACHED TO
ACCOMPLISH SUCH A TRANSFER. TO DATE, THE COMPANY HAS NOT BEEN CONTACTED AND HAS
NOT BEEN NOTIFIED OF ANY DELINQUENCY IN PAYMENTS DUE UNDER THESE LEASES. THE
ORIGINAL LEASES WERE ENTERED INTO DURING EARLY TO MID 1997 EACH OF WHICH WAS FOR
A FIVE-YEAR TERM. EXTENSIONS OF AN ADDITIONAL 20 MONTHS WERE NEGOTIATED WITH THE
ORIGINAL LESSOR IN 1998 AND 1999 MOVING THE ENDING DATE TO APPROXIMATELY MID
2004. THE BALANCE DUE UNDER THE LEASES IN JUNE 1999 UPON TRANSFER AND SALE TO
EGLOBE WAS APPROXIMATELY $2,800,000 INCLUDING ACCRUED INTEREST AND THE MONTHLY
PAYMENTS WERE APPROXIMATELY $55,000. THE BALANCE THAT IS CURRENTLY DUE UNDER THE
LEASES IS UNKNOWN AND THERE WOULD MOST LIKELY HAVE BEEN NEGOTIATED REDUCTIONS OF
AMOUNTS DUE DURING THE PROCEEDINGS.

NOTE 6 - LOANS PAYABLE - RUBIN FAMILY TRUST

DURING SEPTEMBER THROUGH DECEMBER 2004 THE COMPANY BORROWED $218,000 FROM THE
RUBIN FAMILY TRUST (THE "TRUST") FOR WORKING CAPITAL REQUIREMENTS. THE LOAN IS
EVIDENCED BY A NOTE PAYABLE WHICH BEARS INTEREST AT AN ANNUAL RATE OF 8% AND
MATURES ON DECEMBER 31, 2006. THE TRUST WILL ALSO RECEIVE 218,000 SHARES OF
COMPANY COMMON STOCK AS ADDITIONAL INTEREST. THE VALUE OF THESE SHARES HAS BEEN
RECORDED AS A DISCOUNT ON THE RELATED CONVERTIBLE NOTES AND WILL BE AMORTIZED
OVER THE TERM OF THE NOTES.

DURING THE THREE MONTHS ENDED MARCH 31, 2005, THE TRUST ADVANCED AN ADDITIONAL
$76,000 UNDER THE SAME TERMS AND CONDITIONS WHEREBY THE TRUST WILL RECEIVE AN
ADDITIONAL 76,000 SHARES OF COMPANY STOCK AS ADDITIONAL INTEREST. THE VALUE OF
THESE SHARES HAS BEEN RECORDED AS A DISCOUNT ON THE RELATED CONVERTIBLE NOTES
AND WILL BE AMORTIZED OVER THE TERM OF THE NOTES.

DURING THE THREE MONTHS ENDED JUNE 30, 2005, THE TRUST ADVANCED AN ADDITIONAL
$75,000 UNDER THE SAME TERMS AND CONDITIONS WHEREBY THE TRUST WILL RECEIVE AN
ADDITIONAL 75,000 SHARES OF COMPANY STOCK AS ADDITIONAL INTEREST. THE VALUE OF
THESE SHARES HAS BEEN RECORDED AS A DISCOUNT ON THE RELATED CONVERTIBLE NOTES
AND WILL BE AMORTIZED OVER THE TERM OF THE NOTES.

DURING THE THREE MONTHS ENDED SEPTEMBER 30, 2005, THE TRUST ADVANCED AN
ADDITIONAL $70,000 UNDER THE SAME TERMS AND CONDITIONS WHEREBY THE TRUST WILL
RECEIVE AN ADDITIONAL 70,000 SHARES OF COMPANY STOCK AS ADDITIONAL INTEREST. THE
VALUE OF THESE SHARES HAS BEEN RECORDED AS A DISCOUNT ON THE RELATED CONVERTIBLE
NOTES AND WILL BE AMORTIZED OVER THE TERM OF THE NOTES.


                                      F-16
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - LOANS PAYABLE - RUBIN FAMILY TRUST (CONTINUED)

THESE LOANS ARE CONVERTIBLE AT ANY TIME INTO COMPANY COMMON STOCK AT 50% OF THE
FAIR MARKET VALUE ON THE DATE OF SUCH CONVERSION RESULTING IN A TOTAL BENEFICIAL
CONVERSION FEATURE OF $271,000 WHICH IS BEING AMORTIZED FROM THE DATE OF RECEIPT
OF PROCEEDS FOR EACH LOAN THROUGH DECEMBER 31, 2006. THE DISCOUNTS RELATED TO
THE ISSUANCE OF THE SHARES TOTALED $168,000 AND ARE BEING AMORTIZED AS
ADDITIONAL INTEREST EXPENSE OVER THE TERM OF THE NOTES. THE SHARES WHICH HAVE
YET TO BE ISSUED, HAVE BEEN TREATED FOR ACCOUNTING PURPOSES AS BEING ISSUED BUT
NOT OUTSTANDING.

NOTE 7 - INCOME TAXES

DEFERRED INCOME TAXES REFLECT THE NET TAX EFFECTS OF TEMPORARY DIFFERENCES
BETWEEN THE CARRYING AMOUNTS USED FOR INCOME TAX PURPOSES USING THE ENACTED TAX
RATES IN EFFECT IN THE YEARS IN WHICH THE DIFFERENCES ARE EXPECTED TO REVERSE.
DEFERRED TAX ASSETS ARE COMPRISED AS FOLLOWS:

                                                           DECEMBER 31,
                                                    2005                 2004
                                                 -----------         -----------
NET OPERATING LOSSES                             $11,343,000         $10,918,000
CAPITAL LOSSES                                     1,281,000           2,759,000
                                                 -----------         -----------
                                                  12,624,000          13,677,000
LESS VALUATION ALLOWANCE                          12,624,000          13,677,000
                                                 -----------         -----------
NET DEFERRED TAX ASSETS                          $        --         $        --
                                                 ===========         ===========

THE COMPANY FILES A CONSOLIDATED INCOME TAX RETURN WITH ITS WHOLLY-OWNED
SUBSIDIARIES AND HAS NET OPERATING LOSS CARRYFORWARDS OF APPROXIMATELY
$37,131,000 FOR FEDERAL AND STATE PURPOSES, WHICH EXPIRE THROUGH 2025. THE
UTILIZATION OF THIS OPERATING LOSS CARRYFORWARD MAY BE LIMITED BASED UPON
CHANGES IN OWNERSHIP AS DEFINED IN THE INTERNAL REVENUE CODE.


                                      F-17
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - INCOME TAXES (CONTINUED)

A RECONCILIATION OF THE DIFFERENCE BETWEEN THE EXPECTED INCOME TAX RATE USING
THE STATUTORY FEDERAL TAX RATE AND THE COMPANY'S EFFECTIVE RATE FOR CONTINUING
OPERATIONS IS AS FOLLOWS:

<TABLE>
<CAPTION>
                                              YEAR ENDED DECEMBER 31,      JUNE 17, 2003 TO     AUGUST 1, 2002 TO
                                              2005              2004       DECEMBER 31, 2003      JUNE 16, 2003
<S>                                            <C>              <C>              <C>                  <C>
U.S. FEDERAL STATUTORY RATE                    34%              (34%)            (34%)                (34%)
STATE INCOME TAX                               --                --               --                   --
OTHER, PRIMARILY VALUATION ALLOWANCE
  OF DEFERRED INCOME TAXES                    (34)               34               34                   34
                                              ----              ----             ----                 ----
EFFECTIVE TAX RATE                             --%               --%              --%                  --%
                                              ====              ====             ====                 ====
</TABLE>

NOTE 8 - STOCKHOLDERS EQUITY

SERIES B-1 PREFERRED STOCK

IN CONNECTION WITH THE MERGER WITH CONNECTSOFT IN 1996, THE COMPANY ISSUED
SERIES B-1 PREFERRED STOCK (THE "B-1 PREFERRED STOCK"). SUCH B-1 PREFERRED STOCK
DOES NOT PAY A DIVIDEND, IS NOT SUBJECT TO REDEMPTION, HAS A LIQUIDATION
PREFERENCE OF $3.50 PER SHARE OVER COMPANY'S COMMON STOCK AND VOTES TOGETHER
WITH THE COMPANY'S COMMON STOCK AS A SINGLE CLASS ON A ONE SHARE FOR TWENTY-FIVE
VOTE BASIS. THE B-1 PREFERRED STOCK IS ONLY CONVERTIBLE INTO COMMON STOCK ON A
ONE-FOR-TWENTY-FIVE BASIS.

SERIES B-3 PREFERRED STOCK

IN CONTEMPLATION OF THE MERGER WITH NY MEDICAL, THE COMPANY DECLARED A STOCK
DIVIDEND ON THE COMPANY COMMON STOCK WITH A RECORD DATE OF JUNE 10, 2003. THE
STOCK DIVIDEND TOOK THE FORM OF THE ISSUANCE OF 232,500 SHARES OF THE COMPANY'S
NEWLY AUTHORIZED AND DESIGNATED SERIES B-3 CONVERTIBLE PREFERRED STOCK (THE "B-3
PREFERRED") TO THE HOLDERS OF THE COMPANY COMMON STOCK ON THE RECORD DATE ON A
PRO RATA BASIS. EACH SHARE OF THE B-3 PREFERRED IS CONVERTIBLE, ON OR AFTER
DECEMBER 17, 2003 INTO 20 SHARES OF COMPANY COMMON STOCK. THE SHARES OF B-3
PREFERRED ARE CONVERTIBLE AT THE OPTION OF THE HOLDER OF SUCH SHARES.

STOCK OPTION GRANTS UNDER THE 2001 STOCK OPTION PLAN

ON MARCH 31, 2003, THE COMPANY GRANTED FIVE-YEAR STOCK OPTIONS TO FOUR DIRECTORS
TO PURCHASE A TOTAL OF 450,000 SHARES OF COMMON STOCK AND ALSO GRANTED FIVE-YEAR
OPTIONS TO THE SENIOR PARTNER AT ITS PRIMARY LAW FIRM TO PURCHASE 50,000 SHARES
OF COMMON STOCK. ALL SUCH OPTIONS ARE EXERCISABLE AT A PRICE OF $0.62 PER SHARE,
THE FAIR MARKET VALUE ON THE DATE OF GRANT, AND VESTED UPON GRANT.


                                      F-18
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - STOCKHOLDERS EQUITY (CONTINUED)

ON AUGUST 8, 2003, FIVE YEAR OPTIONS TO ACQUIRE 200,000 SHARES OF COMMON STOCK
WERE GRANTED TO DEAN MCLAIN, A DIRECTOR AND EXECUTIVE OFFICER OF THE COMPANY AT
THE CLOSING MARKET PRICE ON THAT DATE OF $1.70, OF WHICH OPTIONS FOR 50,000
SHARES EACH VESTED ON THE GRANT DATE, WITH THE REMAINING OPTIONS VESTING AT THE
RATE OF 50,000 SHARES EACH ON THE THREE SUCCESSIVE GRANT ANNIVERSARY DATES
THROUGH 2006. ON SEPTEMBER 17, 2003 A FIVE-YEAR OPTION TO PURCHASE 350,000
COMMON SHARES WAS GRANTED TO AN OFFICER OF THE COMPANY AT THE CLOSING MARKET
PRICE OF $1.25 OF WHICH 87,500 SHARES VESTED ON THE DATE OF GRANT WITH THE
REMAINING OPTIONS VESTING AT THE RATE OF 87,500 SHARES ON EACH OF THE NEXT THREE
GRANT ANNIVERSARY DATES. THERE WERE NO STOCK OPTIONS GRANTED DURING THE FISCAL
YEAR ENDED DECEMBER 31, 2004. IN JUNE 2005, THE REMAINING OPTIONS WERE EXCHANGED
FOR SHARES OF THE COMPANY'S COMMON STOCK (SEE BELOW).

EXCHANGE OF DIRECTOR'S OPTIONS FOR COMMON STOCK

IN JUNE 2005, THE COMPANY'S BOARD OF DIRECTORS APPROVED A STOCK AWARD TO CERTAIN
DIRECTORS AND A PRIOR DIRECTOR IN EXCHANGE FOR ALL OUTSTANDING STOCK OPTIONS
HELD BY SUCH PERSONS. MR. MCLAIN RECEIVED 250,000 SHARES; MR. METTER RECEIVED
120,000 SHARES; MR. KATZ RECEIVED 64,000 SHARES AND MR. BARNES RECEIVED 364,000
SHARES. FOR ACCOUNTING PURPOSES, A CHARGE FOR STOCK COMPENSATION IN THE AMOUNT
OF $.75 PER SHARE OR $599,000, WAS RECORDED DURING THE QUARTER ENDED JUNE 30,
2005.

RESIGNATION OF A DIRECTOR

ON JUNE 10, 2005 DEAN MCLAIN RESIGNED FROM THE BOARD OF DIRECTORS. THERE WERE NO
DIFFERENCES OR DISAGREEMENTS BETWEEN MR. MCLAIN AND THE COMPANY.

NOTE 9 - TERMINATION OF PROPOSED TRANSACTION WITH SOUTHERN GAS

ON MARCH 15, 2005, THE EXCHANGE AGREEMENT DATED SEPTEMBER, 2004 BY AND BETWEEN
SOUTHERN GAS HOLDING LLC, A DELAWARE LIMITED LIABILITY COMPANY; AMERICAN UNITED
GLOBAL, INC., A DELAWARE CORPORATION ("AUGI"); SOUTHERN GAS COMPANY LLC, A
LIMITED LIABILITY COMPANY INCORPORATED UNDER THE LAWS OF THE RUSSIAN FEDERATION'
AND THE SOUTHERN GAS GROUP EQUITY OWNERS WAS DEFINITIVELY TERMINATED. UNDER THE
TERMS OF THE EXCHANGE AGREEMENT, THE SOUTHERN GAS GROUP EQUITY OWNERS WERE TO
CONTRIBUTE AND EXCHANGE THE SOUTHERN GAS GROUP EQUITY (AS DEFINED IN THE
EXCHANGE AGREEMENT) TO THE CAPITAL OF SOUTHERN GAS HOLDINGS, LLC, SOLELY IN
EXCHANGE FOR THE EXCHANGE SHARES (AS DEFINED IN THE EXCHANGE AGREEMENT). BECAUSE
THE CONDITIONS PRECEDENT TO CLOSING SET FORTH IN SECTION 4.2 OF THE EXCHANGE
AGREEMENT WERE NOT SATISFIED OR WAIVED ON OR BEFORE THE CLOSING DATE, DECEMBER
31, 2004, AND THE CLOSING DATE WAS NOT EXTENDED BY THE MUTUAL WRITTEN AGREEMENT
OF THE PARTIES, THE EXCHANGE AGREEMENT, INCLUDING ALL RIGHTS AND OBLIGATIONS OF
THE PARTIES THERE UNDER, HAS TERMINATED. WHILE THE PARTIES TO THE EXCHANGE
AGREEMENT ATTEMPTED TO REACH A NEGOTIATED RESOLUTION OF THE MATTERS PRECLUDING
THE FULFILLMENT OF THE CLOSING CONDITIONS, AUGI ABANDONED SUCH DISCUSSIONS ON
MARCH 15, 2005, HAVING CONCLUDED THAT NO RESOLUTION COULD BE REACHED.

IN SEPTEMBER AND DECEMBER OF 2004, THE COMPANY ISSUED AN AGGREGATE OF 1,000,000
COMMON SHARES TO VERTEX CAPITAL CORP. IN CONNECTION WITH THE ENTRY INTO THE
SHARE EXCHANGE AGREEMENT WITH SOUTHERN GAS COMPANY, A LIMITED LIABILITY COMPANY
INCORPORATED UNDER THE LAWS OF THE RUSSIAN FEDERATION AND CERTAIN OF ITS EQUITY
OWNERS. THE SHARE EXCHANGE AGREEMENT WAS SUBSEQUENTLY TERMINATED AS OF MARCH 15,
2005. THE COMPANY INTENDS TO CANCEL THE 1,000,000 SHARES ISSUED TO VERTEX, BUT
SUCH CANCELLATION HAS NOT YET OCCURRED, AND THERE CAN BE NO ASSURANCE THAT AUGI
WILL BE SUCCESSFUL IN ITS ATTEMPTS TO CANCEL THESE SHARES.


                                      F-19
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - PROPOSED SHARE AGREEMENT WITH KRAFT RT.

ON AUGUST 9, 2005, AMERICAN UNITED GLOBAL, INC. (THE "COMPANY") ENTERED INTO A
SHARE PURCHASE AGREEMENT (THE "AGREEMENT") WITH KRAFT RT., AN HUNGARIAN
CORPORATION, AND THE SHAREHOLDERS OF KRAFT RT. (THE "SELLERS"). KRAFT RT. IS AN
EQUIPMENT MANUFACTURING COMPANY HEADQUARTERED IN BUDAPEST, HUNGARY ENGAGED IN
THE DEVELOPMENT AND MANUFACTURING OF VACUUM BASED PRODUCTION AND QUALITY CONTROL
EQUIPMENT USED IN SEVERAL HI-TECH INDUSTRIES. KRAFT RT. IS PRESENTLY FOCUSING
ITS EFFORTS ON THE DEVELOPMENT OF ITS MANUFACTURING BUSINESS RELATING TO THE
PRODUCTION OF THIN FILM BASED PHOTOVOLTAIC MODULES. PURSUANT TO THE AGREEMENT,
THE COMPANY HAS AGREED TO ACQUIRE AND, THE SELLERS HAVE AGREED TO SELL, 100% OF
THE SELLER'S INTEREST IN KRAFT RT., THE COMPANY WILL ISSUE TO THE SELLERS
24,000,000 SHARES OF COMMON STOCK OF THE COMPANY (THE "SHARES"). ON JANUARY 30,
2006, THE ORIGINAL SHARE AGREEMENT EXPIRED.

ON MARCH 16, 2006, THE COMPANY ENTERED INTO A SECURITIES PURCHASE AGREEMENT WITH
ZOLTAN KISS AND DR. LASZLO FARKAS, TWO SHAREHOLDERS OF KRAFT RT. THAT TOGETHER
OWN 47.5% OF THE EQUITY INTEREST IN KRAFT RT. IN ADDITION, ON MARCH 20, 2006,
THE COMPANY ENTERED INTO A SECURITIES PURCHASE AGREEMENT WITH NAGYEZSDA KISS,
JOSEPH GREGORY KISS, MARIA GABRIELLA KISS AND GYULA WINKLER, FOUR SHAREHOLDERS
OF KRAFT RT. THAT TOGETHER OWN 38% OF THE EQUITY INTEREST IN KRAFT RT. AS A
RESULT, THE COMPANY HAS ENTERED INTO AGREEMENTS TO ACQUIRE 85.5% OF THE EQUITY
INTEREST OF KRAFT RT. IN CONSIDERATION FOR THE SELLERS' INTEREST IN KRAFT, THE
COMPANY SHALL ISSUE THE SELLERS AN AGGREGATE OF 85,500 SHARES OF SERIES B-4
PREFERRED STOCK OF THE COMPANY (THE "B-4 PREFERRED SHARES"). THE COMPANY HAS NOT
YET AUTHORIZED THE B-4 PREFERRED SHARES. THE B-4 PREFERRED SHARES ARE EACH
AUTOMATICALLY CONVERTIBLE INTO 350 SHARES OF COMMON STOCK UPON THE COMPANY
INCREASING ITS AUTHORIZED SHARES OF COMMON STOCK AND, PRIOR TO SUCH CONVERSION,
WILL HAVE THE SAME VOTING RIGHTS OF THE SHARES OF COMMON STOCK ON ALL MATTERS.
THE COMPANY IS PRESENTLY NEGOTIATING WITH THE REMAINING SHAREHOLDERS OF KRAFT
RT. TO ACQUIRE THEIR INTEREST IN KRAFT RT. THERE CAN BE NO ASSURANCE THE COMPANY
WILL BE ABLE TO ENTER INTO AGREEMENTS WITH THE REMAINING SHAREHOLDERS OF KRAFT
RT.

THE CLOSING OF THE ACQUISITION OF 85.5% OF KRAFT RT. IS EXPECTED TO OCCUR NO
LATER THAN 45 DAYS FROM THE COMPLETION AND DELIVERY TO THE COMPANY OF THE KRAFT
RT. AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2005 BY KRAFT
RT. PRIOR TO CLOSING, ALL CLOSING CONDITIONS MUST BE SATISFIED INCLUDING, BUT
NOT LIMITED TO, THE SATISFACTION OF VARIOUS MATERIAL LIABILITIES AND THE CLOSING
OF A FINANCING IN THE MINIMUM AMOUNT OF $6,000,000 BY THE COMPANY. NO MATERIAL
RELATIONSHIP EXIST BETWEEN THE SHAREHOLDERS OF KRAFT RT. AND THE COMPANY AND/OR
ITS AFFILIATES, DIRECTORS, OFFICERS OR ANY ASSOCIATE OF AN OFFICER OR DIRECTOR.


                                      F-20
<PAGE>

                          AMERICAN UNITED GLOBAL, INC.
                                 & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - SUBSEQUENT EVENTS

MARCH 2006 DEBT OFFERING

ON MARCH 16, 2006, THE COMPANY ENTERED INTO A FINANCING ARRANGEMENT WITH SEVERAL
INVESTORS (THE "MARCH INVESTORS") FOR THE SALE OF (I) $1,250,000 IN NOTES (THE
"NOTES"), (II) 625,000 SHARES OF COMMON STOCK OF THE COMPANY (THE "SHARES") AND
(III) COMMON STOCK PURCHASE WARRANTS TO PURCHASE 625,000 SHARES OF COMMON STOCK
AT $1.20 PRICE PER SHARE FOR A PERIOD OF FIVE YEARS (THE "WARRANTS").

THE NOTES ARE INTEREST FREE AND MATURE ON THE EARLIER OF (I) MARCH 16, 2009 OR
(II) THE COMPANY CLOSING ON A FINANCING IN THE AGGREGATE AMOUNT OF $12,000,000.
THE COMPANY HAS GRANTED THE MARCH INVESTORS PIGGY BACK REGISTRATION RIGHTS WITH
RESPECT TO THE SHARES AND THE SHARES OF COMMON STOCK UNDERLYING THE WARRANTS.

THE SALE OF THE NOTES WAS COMPLETED ON MARCH 16, 2006. AS OF THE DATE HEREOF,
THE COMPANY IS OBLIGATED ON $1,235,000 IN FACE AMOUNT OF NOTES ISSUED TO THE
MARCH INVESTORS.

THE NOTES, SHARES AND WARRANTS WERE OFFERED AND SOLD TO THE MARCH INVESTORS IN A
PRIVATE PLACEMENT TRANSACTION MADE IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
PURSUANT TO SECTION 4(2) UNDER THE SECURITIES ACT OF 1933 AND RULE 506
PROMULGATED THEREUNDER. EACH OF THE MARCH INVESTORS IS AN ACCREDITED INVESTOR AS
DEFINED IN RULE 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF
1933.


SECURED PROMISSORY NOTE RECEIVABLE

THE COMPANY LOANED $1,000,000 TO KRAFT RT. ON MARCH 16, 2006. THE NOTE IS DUE BY
MARCH 16, 2007 AND INCURS INTEREST IN THE AMOUNT OF 10% PER ANNUM. THE LOAN IS
SECURED BY SHARES OF KRAFT RT. PLEDGED BY ZOLTAN KISS, A DIRECTOR OF KRAFT RT.
THE SHARES OF KRAFT RT. PLEDGED BY MR. KISS REPRESENT 20% OF THE TOTAL
OUTSTANDING OF KRAFT RT.

Howard Katz

Howard Katz, a former member of our board of directors, was is in discussions
with us over the terms of a settlement of a debt that he claims we owe him. We
entered into a settlement agreement with Mr. Katz in April 2006, pursuant to
which we issued 176,000 shares of common stock in consideration for our company
and Mr. Katz signing mutual releases. In connection therewith, Mr. Katz also
resigned as a member of our board of directors.

                                      F-21
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) The following documents are being filed as part of this Report:

(1) See page F-1 for an index of consolidated financial statements.

(2) Not applicable

(3) Exhibits:

See 15(b) below for a listing of items filed as exhibits to this Form 10-K as
required by Item 601 of Regulation S-K.

(b) Exhibits:

4.1   Securities Purchase Agreement dated September 22, 2005 by and among the
      Company and Iroquois Master Fund Ltd., Smithfield Fiduciary LLC and Lilac
      Ventures Master Fund (2)

4.2   Form of Senior Secured Convertible Note September 23, 2005 (2)

4.3   Security Agreement dated September 22, 2005 by and among the Company and
      Iroquois Master Fund Ltd., Smithfield Fiduciary LLC and Lilac Ventures
      Master Fund (2)

4.4   Guaranty of Payment (2)

4.5   Form of Note issued on March 16, 2006(4)

4.6   Form of Warrant issued on March 16, 2006(4)


                                       20
<PAGE>

10.1  Share Purchase Agreement between the Company and the shareholders of Kraft
      Rt. dated August 9, 2005 (1)

10.2  Secured Promissory Note made by Kraft Rt. dated September 28, 2005(2)

10.3  Security Interest and Pledge Agreement entered by and between American
      United Global, Inc., Kraft Rt. and Zoltan Kiss. (3)

10.4  Agreement of Settlement entered on September 27, 2005 by and among
      American United Global, Inc., North Sound Legacy International Ltd. and
      North Sound Legacy Institutional Fund LLC (2)

10.5  Supplemental Agreement entered on September 22, 2005 by and among Altitude
      Group, LLC, Birch Associates, Inc., and D.C. Capital LLC and American
      United Group, Inc. (2)

10.6  Amendment No. 1 to the Share Purchase Agreement dated December 29, 2005
      (3)

10.7  Letter Agreement by and between the Company and Kraft Rt. (3)

10.8  Securities Purchase Agreement dated March 16, 2006 by and between the
      Company, Kraft Rt., Zoltan Kiss and Dr. Laszlo Farkas (4)

10.9  Securities Purchase Agreement dated March 20, 2006 by and between the
      Company, Kraft Rt., Nagyezsda Kiss, Joseph Gregory Kiss, Maria Gabriella
      Kiss and Gyula Winkler (4)

31.1  Certification of the Chief Executive Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"). *

31.2  Certification of the Chief Financial Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"). *

32.1  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002. *

32.2  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002. *

---------------------------

(1) Incorporated by reference to the Form 8-K Current Report filed with the
Securities and Exchange Commission on August 15, 2005

(2) Incorporated by reference to the Form 8-K Current Report filed with the
Securities and Exchange Commission on September 30, 2005

(3) Incorporated by reference to the Form 8-K Current Report filed with the
Securities and Exchange Commission on December 30, 2005

(4) Incorporated by reference to the Form 8-K Current Report filed with the
Securities and Exchange Commission on March 23, 2006

(c) Financial Statement schedules:

Financial Statement Schedules have been either omitted due to inapplicability or
because required information is shown in the Consolidated Financial Statements
or the Notes thereto.


                                       21
<PAGE>

                                   SIGNATURES

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

AMERICAN UNITED GLOBAL, INC.


                 By: /s/ Robert M. Rubin                         April 28, 2006
                 -----------------------------
                 Robert M. Rubin
                 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 in
the capacities and on the dates indicated.



Signature                  Title                               Date
--------------------       -------------------------------     ------------

/s/ Robert M. Rubin        CEO and Chairman of the Board       April 28, 2006
-------------------
Robert M. Rubin

/s/ David M. Barnes        Chief Financial Officer             April 28, 2006
-------------------        and Director
David M. Barnes

/s/ Michael Metter         Director                            April 28, 2006
------------------
Michael Metter


                                       22