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

                                   FORM 10-KSB

(Mark One)

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

     For the fiscal year ended: DECEMBER 31, 2004

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from ___________ to ___________

                       Commission file number: 33-33042-NY

                            CORONADO INDUSTRIES, INC.
                 (Name of small business issuer in its charter)

            NEVADA                                       22-3161629
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or organization)

16857 E. SAGUARO BLVD., FOUNTAIN HILLS, ARIZONA             85268
(Address of principal executive offices)                 (Zip Code)

                    Issuer's telephone number: (480) 837-6810

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

Securities registered under Section 12(g) of the Exchange Act: NONE

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

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

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State issuer's revenues for its most recent fiscal year. $41,286

State the aggregate market value of the voting and non-voting common equity held
by  non-affiliates  computed by  reference  to the trading  price of such common
equity,  as of a specific  date within the last 60 days.  $7,094,131 as of March
22, 2005

State the number of shares  outstanding  of issuer's  common  equity,  as of the
latest practicable date. 186,582,438 as of March 21, 2005

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                            CORONADO INDUSTRIES, INC.

                                   FORM 10-KSB
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

                                                                            PAGE

PART I

Item 1(a). Business Development...........................................    4
Item 1(b). Business of Issuer.............................................    4
Item 2.    Description of Property........................................    9
Item 3.    Legal Proceedings..............................................    9
Item 4.    Submission of Matters to a Vote of Security Holders............    9

PART II

Item 5.    Market for Registrant's Common Equity and Related
           Stockholder Matters............................................    9
Item 6.    Management's Discussion and Analysis or Plan of Operation......   11
Item 7.    Financial Statements...........................................   12
Item 8.    Changes In and Disagreements with Accountants on Accounting
           and Financial Disclosure.......................................   12
Item 8A.   Controls and Procedures........................................   13

PART III

Item 9.    Directors, Executive Officers, Promoters and Control
           Persons'Compliance with Section 16(a) of the Exchange Act......   13
Item 10.   Executive Compensation.........................................   15
Item 11.   Security Ownership of Certain Beneficial Owners and
           Management.....................................................   16
Item 12.   Certain Relationships and Related Transactions.................   18
Item 13.   Exhibits.......................................................   19
Item 14.   Principal Accountant Fees and Services.........................   19

SIGNATURES................................................................   20

SUPPLEMENTAL INFORMATION AND EXHIBITS.....................................   21


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                                     PART I

                   SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

Except for  historical  information  contained  herein,  this document  contains
forward-looking  statements.  Such forward-looking  statements involve risks and
uncertainties and include,  but are not limited to, statements  regarding future
events and the Registrant's  plans and  expectations.  The  Registrant's  actual
results may differ  materially  from such  statements.  Although the  Registrant
believes that the assumptions  underlying the forward-looking  statements herein
are reasonable,  any of the assumptions  could prove inaccurate and,  therefore,
there can be no assurance that the results  contemplated in such forward-looking
statements  will be realized.  In addition,  the business and  operations of the
Registrant  are subject to substantial  risks which  increase the  uncertainties
inherent  in the  forward-looking  statements  included  in this  document.  The
inclusion  of such  forward-looking  information  should  not be  regarded  as a
representation  by the  Registrant  or any other person that the future  events,
plans or expectations contemplated by the Registrant will be achieved.

ITEM 1(a).  BUSINESS DEVELOPMENT.

INITIAL PUBLIC OFFERING

The  Registrant  was  incorporated  under the name  First  Lloyd  Funding,  Inc.
pursuant  to the  laws of the  State  of New  York on  December  21,  1989.  The
effective  date of the  Registrant's  public  offering was March 13,  1990.  The
Offering  closed  on  May  1,  1990.  For  further  information  concerning  the
Registration Statement,  see File No. 33-33042-NY at the Securities and Exchange
Commission's  Regional  Office  in New York City or at its  principal  office in
Washington,  D.C. In January 1997,  the New York  corporation at that time named
Coronado  Industries,  Inc.  merged into and became a Nevada  corporation of the
same name.

OPHTHALMIC INTERNATIONAL, L.L.C. AND AMERICAN GLAUCOMA, INC.

After a  series  of  immaterial  acquisitions  and  spin-offs  from  May 1990 to
September  1996,  on  November  5,  1996 the  Registrant  entered  into an Asset
Purchase Agreement with Ophthalmic  International,  L.L.C.  ("OI"), and American
Glaucoma,  a joint venture ("AG"), which provided for the purchase of the assets
of OI and AG in exchange for 15,592,224 shares of the Registrant's  common stock
(85%) to be issued to the Registrant's  current three  Directors.  An additional
855,000 shares were issued as finders fees to twelve  entities and  individuals.
The  assets  of OI were a  patent  pending  and  other  proprietary  information
concerning equipment and a process for the treatment of open angle glaucoma. The
assets of AG were the concept and a business plan for forty  glaucoma  treatment
centers in the United States.

ITEM 1(b).  BUSINESS OF ISSUER

OVERVIEW

The  Registrant is a holding  company and all business  operations are conducted
through  its  three  wholly-owned  subsidiaries.  The  Registrant,  through  its
Ophthalmic International,  Inc. subsidiary,  manufactures and markets a fixation
device  with a  patented  designed  suction  ring  that  treats  Open  Angle and
Pigmentary  glaucoma.   American  Glaucoma,  Inc.  ("AGI"),  another  Registrant
subsidiary,  operated a glaucoma  treatment  center in Scottsdale,  Arizona from

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September 1997 to March 1999. OI, an Arizona limited  liability  company,  holds
the Registrant's patent.

In the  United  States,  glaucoma  is the  second  leading  cause  of  blindness
affecting  approximately  3,000,000 persons.  Of those, about 60,000 are legally
blind. If detected and treated early,  glaucoma need not cause blindness or even
severe vision loss. While there is no cure for glaucoma, the Registrant believes
that its  patented  device  and  process  provide  an  effective  treatment  for
afflicted persons and that a significant global market for its patented process,
equipment and rings currently exists.

Glaucoma  may have many forms  which  cause or present a feature of  progressive
damage to the optic nerve due to increased  pressure within the eyeball.  As the
optic nerve  deteriorates,  blind spots and patterns develop. If left untreated,
the result may be total blindness.  The space between the lens and the cornea in
the eye is filled with a fluid called the aqueous humor.  This fluid  circulates
from behind the colored portion of the eye (the iris) through the opening at the
center of the eye  (pupil) and into the space  between the iris and cornea.  The
aqueous  humor is produced  constantly,  so it must be drained  constantly.  The
drain is at the point  where the iris and  cornea  meet,  known as the  drainage
angle,  which directs fluid into a channel  (Schlemm's canal) that then leads it
to a system of small veins  outside the eye.  When the  drainage  angle does not
function properly, the fluid cannot drain and pressure builds up within the eye.
Pressure also is exerted on another fluid in the eye, the vitreous  humor behind
the lens, which in turn presses on the retina.  This pressure affects the fibers
of the optic  nerve,  slowly  damaging  them.  The result over time is a loss of
vision.

THE FIXATION DEVICE

After  four years of ongoing  studies  involving  Dr.  John T.  LiVecchi,  M.D.,
F.A.C.S.,  Assistant Clinical Professor of Ophthalmology,  Allegheny  University
and Dr. Guillermo Avolos, Professor of Ophthalmology, University of Guadalajara,
Mexico,   it  was  determined   that  a  2  minute   treatment  with  Ophthalmic
International's  "vacuum  fixation  device and  patented  design  suction  ring"
temporarily  reduced  inter-ocular  pressure ("I.O.P.") in the treatment of Open
angle  Glaucoma by  approximately  6 Hg for an average of three  months at which
time the treatment  can be repeated  with no serious side  effects.  This I.O.P.
lowering  is  achieved  when the  external  suction  device is applied  over the
perilimbal  area for a  specified  time.  With  this  treatment  the  Registrant
believes that there are no harmful side effects,  like those associated with eye
drop treatments. In addition, the patent entitled "Open Angle Glaucoma Treatment
Apparatus and Method" has been approved and is believed to allow the  Registrant
to achieve a significant market advantage over competitors.

The first  clinical  study of the  Registrant's  product (the "PNT  device") was
conducted  on 86  patients  over an 8 month  period  in  1992 by Dr.  Avolos  in
Guadalajara,  Mexico. The second clinical study of the Registrant's  product was
conducted on 250 patients  over a two-year  period  ending in 1996 by Dr. Avolos
and Dr.  LiVecchi.  The  Registrant  initiated a third study in  September  1997
conducted by Dr. Leo Bores, the Medical Director of the Registrant's  Scottsdale
treatment center. This third study involved approximately 150 patients.

Dr. John LiVecchi, a Registrant Director, and Dr. Leo Bores, a consultant,  have
been asked to address  to  different  medical  conventions  of  ophthalmologists
concerning the results of the studies of Registrant's procedure and equipment. A
published  report on  Registrant's  clinical  studies is presently  scheduled to

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appear in a future issue of Annals of Ophthalmology.  A European publication has
also committed to publish a report in 2005,  but a publication  date has not yet
been set. These  presentations to and publications for the ultimate end-users of
Registrant's  products  serve to educate  the  industry  about the  Registrant's
products  and  their  efficacy.  They  also  aid in  building  credibility  with
potential product distributors.

Registrant  executed  a  distribution  agreement  dated  September  9, 2003 with
EuPharmed s.r.l. of Rome, Italy ("EuP") which grants the exclusive  distribution
rights  for  Registrant's  PNT  products  for the  country of Italy to EuP for a
period of five years (the "Italian Contract").  EuP may extend the agreement for
an additional two years by agreeing to additional  minimum  purchases.  EuP will
conduct a one year randomized clinical trial of PNT involving 90 to 120 patients
and between 5 and 7 different  clinics in Italy. EuP will bear all costs of this
trial, except for the PNT equipment and rings which Registrant will provide free
of charge.  The  clinical  trial was to  commence  in  September  2003,  but was
postponed until the Fall of 2004. This clinical study should be completed by the
end of 2005.  This agreement  provides for monthly minimum  purchase  quantities
commencing  in March  2004.  That  date was  postponed  until  after the Type 2a
product classification was received by Registrant.  Registrant received its Type
2a product classification in July 2004.

Registrant  executed  another  agreement dated September 29, 2003 with EuP which
grants to EuP the  exclusive  distribution  rights to EuP for the  countries  of
Algeria,  Libya,  Morocco and Tunisia on the same terms as the Italian Contract,
except for the monthly  minimum  purchase  quantities  for these  North  African
countries.

Registrant executed a distribution agreement dated November 10, 2003 with Izasa,
S.A. of Madrid,  Spain ("Izasa") which grants the exclusive  distribution rights
for  Registrant's PNT products for the country of Spain to Izasa for a period of
five  years.  Izasa may  extend the  agreement  for an  additional  two years by
agreeing to additional  minimum  purchases.  This agreement  provides for annual
minimum purchase quantities  commencing in January 2004. That date was postponed
until after the Type 2a product classification was received by Registrant.

In the fourth quarter of 2004 Registrant sold and delivered 18 PNT units and 100
patented  rings  to  its  European  distributors.  Registrant  expects,  without
assurance,  that its European  product  sales will  continue to grow  throughout
2005.

The Registrant's  vacuum  equipment is composed of special order parts,  such as
the molded  case,  display  board,  circuit  boards,  and motors,  all for which
Registrant  has  established  manufacturing  relationships  with  manufacturers.
Registrant's subsidiary,  Ophthalmic  International,  Inc., assembles the vacuum
fixation  device at its  offices in  Fountain  Hills,  Arizona.  At such time as
Registrant  executes an agreement with a major distributor,  Registrant may also
sell the manufacturing rights to the same company. The Registrant has contracted
for the  manufacture of the patented  rings with a medical  device  manufacturer
located in California.

GOVERNMENTAL REGULATION

No medical  device may be sold or  distributed  in the United States without FDA
approval or an exemption from such approval. The FDA has the authority to enjoin
the manufacture  and sale of a medical device,  to seize such device and to levy

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fines against a  manufacturer  or seller of a medical  device which has not been
registered or approved for sale in the United  States.  A device which needs FDA
approval is  considered  a Class III  device,  unless a similar  product  with a
similar  intended  use has  previously  been  granted FDA  approval (a "Class II
Device") or the FDA has listed the product as generally safe and not needing FDA
approval  (a "Class I  Device").  The process for having the FDA remove a device
from  the  Class  III  category  to a Class  II  category  is  called  a  510(k)
application.

The Registrant  submitted a 510(k) premarket  notification to the FDA on its PNT
product in August of 1998.  The FDA  rejected  this  notification  in October of
1998,  on the basis that the  Registrant's  PNT  product  was not  substantially
equivalent  to other  products  currently  on the market and  intended  to lower
intraocular  pressure.  The  Registrant  met with the FDA in February of 1999 to
discuss the concerns  expressed  by the agency with  respect to the  substantial
equivalence  and safety of the PNT product.  The Registrant made a submission to
the FDA in April 1999 that was  intended  to provide  the agency  with  detailed
information addressing many of the concerns expressed by the FDA at the February
1999  meeting.  This  submission  did not  satisfy  the FDA with  respect to the
patient risk associated with the clinical use of the PNT product.

In February 1999,  the FDA requested  more  information be submitted on patients
treated  to date with the PNT  product.  In  September  1999,  the FDA  demanded
Registrant  submit a new clinical  protocol for additional  patient studies.  In
October 2000 Registrant negotiated a protocol with the FDA which provides for an
additional  six-month  study  of a  minimum  of 204  patients  (with a  two-year
follow-up)  from 5 different  study sites.  Registrant  continues in negotiation
with the FDA concerning  various features of the protocol and the study, such as
the length of the study and the number of patients,  in hopes of expediting  FDA
approval. However, there can be no assurance Registrant's PNT products will ever
receive FDA approval for sale in the United States.

A Class III  device  may be  approved  for sale and  distribution  in the United
States by the FDA pursuant to a Premarket Approval  Application ("PMA"). The FDA
approves  PMAs  after a review  of the  clinical  trials  information  contained
therein  demonstrating  that the device is safe and  effective  for its  labeled
indications.  In addition,  the FDA will inspect the facilities where the device
is manufactured  prior to approving a PMA. The Registrant has not discussed with
the FDA the type and quantity of clinical  and  manufacturing  information  that
might be required to secure PMA  approval  for its PNT  product,  because of the
Registrant's continuing belief that the product is more suitably reviewed by the
FDA in a 510(k) premarket notification, rather than a PMA.

Clinical data to support either a 510(k) premarket notification or a PMA must be
collected  pursuant  to  the  FDA's  Investigational  Device  Exemption  ("IDE")
regulation.  The IDE  regulation  describes  two  types of  device  studies:  1)
significant risk and 2) nonsignificant  risk studies.  The principal  difference
from a  regulatory  point  of view  between  the two  types of  studies  is that
significant  risk  studies  must be reviewed and approved by both the FDA and an
Institutional  Review  Board  ("IRB")  before  they  may  be  initiated,   while
nonsignificant  risk studies require only IRB review and approval prior to study
initiation.  The  Registrant  believes  that its  studies of its PNT product are
nonsignificant  risk in nature.  The Registrant  therefore has conducted several
clinical  studies of the PNT product after receiving IRB approval in 1994, 1996,
and 1998 from three different IRBs. The  approximately  170 patients  treated at
the  Registrant's  Scottsdale  treatment  center  since  1997  were  treated  in
accordance with the  clinical protocols  that received IRB  approval in 1994 and

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1998,  while the future  treatment  of patients at the  Registrant's  Clearwater
center will be in  accordance  with the  clinical  protocol  that  received  IRB
approval in 1998. To date, no negative  adverse  reactions have been reported in
connection  with the use of the PNT device on glaucoma  patients  for any of the
studies conducted. However, as of March 3, 2000, the FDA is maintaining that the
PNT  product  presents  "significant  risk" to  patients  and is  requiring  the
additional patient study proceed under "significant risk" criteria.

Under the IDE  regulation,  a sponsor  of a  clinical  study may  charge for the
investigational  device,  provided  that the price  charged for the device is no
larger  than  that  necessary  to  recover  costs  of   manufacture,   research,
development,  and handling  associated with the device.  The IDE regulation does
not  prohibit or limit  charges for medical or  laboratory  services.  It is the
Registrant's  position that  approximately  $1,000,000 of net losses incurred by
the Registrant in connection  with its Scottsdale  treatment  center and certain
past management salaries are properly recoverable under the IDE regulation,  and
the Registrant  therefore  intends to impose a charge on the distribution of PNT
product to clinical investigators who purchase the PNT product and enroll in its
IDE studies which are consistent with the IDE regulation.

The  manufacturer  of a medical  device which is to be distributed in the United
States must be inspected  and licensed by the FDA. The company  which  currently
manufactures the Registrants's suction ring and the company which sterilizes and
packages this ring are licensed as medical device  manufacturers by the FDA. The
Registrant's facility was inspected and licensed by the FDA as a manufacturer of
the predecessor fixation device product and the PNT product in 1996.

No medical  device may be advertised  for sale in the United States with a false
or misleading label or advertisement. The fixation device which preceded the PNT
product  device was  advertised,  used and sold as a device for certain types of
invasive eye surgeries.  Therefore,  that product was labeled as only being used
for  eye  surgery,  and not the  treatment  of  glaucoma.  The  labeling  of the
Registrant's  PNT  product  as a glaucoma  treatment  device or a device for the
lowering of inter-ocular  pressure of glaucoma  patients must be approved by the
FDA (or the product must be exempt from FDA  registration  as a Class I or Class
II  device),  for the  Registrant  to  advertise  and sell its PNT  device  as a
glaucoma treatment product.

PATENT

On February 11, 1997 the U.S.  Patents and Trademarks  Office issued a patent to
Ophthalmic  International,  L.L.C.,  Patent Number  5,601,548,  for the process,
equipment and the procedure.  The Registrant believes,  without assurance,  that
this patent  provides the Registrant  with a substantial  competitive  advantage
over current and future glaucoma  treatment  competitors.  The Registrant is not
aware of any other patent being granted for glaucoma treatment.  The granting of
a patent to the  Registrant  does not assure that the FDA will ever  approve the
commercial distribution of the Registrant's PNT product in the U.S.

The Registrant  intends to follow a policy of  aggressively  pursuing  claims of
infringement  on its patent and the Registrant  does not believe its patent,  or
product or services infringe on the rights of any other person.

COMPETITION

The  medical  device  and  service  industries  are  highly   competitive.   The
Registrant's   patented  device  and  treatment  process  are  and  will  be  in

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competition  with  established  and future  glaucoma  treatment  procedures  and
products.  Since Medicare does not currently  reimburse patients for the cost of
these  prescription  medications  but  has  paid  for  the  PNT  procedure,  the
Registrant  believes a substantial  number of the glaucoma  patients in the U.S.
would  benefit   economically  from  the  PNT  procedure  to  the  extent  their
prescription medication could be reduced.

EMPLOYEES

In addition to its two officers,  Dr.  LiVecchi,  its Medical  Director and John
Sharkey,  its  Director of  Business  Development,  during  2004 the  Registrant
engaged three persons as full-time consultants at the corporate headquarters and
an  administrative  employee.  In  addition,  in September  2004 the  Registrant
engaged  Francesco  Aspes  as a  consultant  to  be  responsible  for  marketing
Registrant's product in Europe.

ITEM 2.  DESCRIPTION OF PROPERTY.

Through  November  2004,  the  Registrant's  offices  were  located  at 16929 E.
Enterprise Drive,  Suite 202, Fountain Hills, AZ 85268,  where Registrant leased
approximately  3,400 square feet of space from a third party landlord for $2,780
per month, including utilities, in rent for this space.

In December 2004,  Registrant  entered into a five-year lease for  approximately
3,500  square  feet of new space at a monthly  rent of  $4,520  to  commence  on
December  1,  2004.  Registrant's  new  address is 16857 E.  Saguaro  Boulevard,
Fountain  Hills,  Arizona  85268.  This  new  space  will  be  adequate  for the
Registrant's needs for the foreseeable future.

ITEM 3.  LEGAL PROCEEDINGS.

No legal proceedings are currently pending against or by the Registrant.

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

During  calendar  year  2004  no  matters  were  submitted  to  a  vote  of  the
Registrant's security holders.


                                    PART II


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

MARKET INFORMATION

The principal U.S. market in which the Registrant's  common shares (all of which
are one class,  $.001 par value) were traded was the  over-the-counter  bulletin
board market under the symbol "CDIK." Such  over-the-counter  market  quotations
reflect  inter-dealer  prices without retail markup,  markdown or commission and
may not necessarily represent actual transactions. The following table shows the
low and the high trading price  reported by Yahoo - Finance in 2003 and 2004, by
fiscal quarter, and through March 23, 2005.

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                                                     Low             High
                                                    -----            -----

         January 1, 2003 - March 31, 2003           $0.01            $0.04
         April 1, 2003 - June 30, 2003              $0.01            $0.12
         July 1, 2003 - September 30, 2003          $0.05            $0.14
         October 1, 2003 - December 31, 2003        $0.06            $0.17

         January 1, 2004 - March 31, 2004           $0.05            $0.14
         April 1, 2004 - June 30, 2004              $0.05            $0.12
         July 1, 2004 - September 30, 2004          $0.07            $0.19
         October 1, 2004 - December 31, 2004        $0.05            $0.09

         January 1, 2005 - March 23, 2005           $0.05            $0.10

Registrant's  common stock is also traded on the Frankfurt and Hamburg,  Germany
exchanges.

RECENT SALES OF RESTRICTED SECURITIES

All securities  sold by Registrant  were registered on Form S-8 or were reported
previously in a filing by Registrant.

STOCKHOLDERS

The Registrant has approximately  917 stockholders of record,  including nominee
firms for securities dealers.

DIVIDENDS

The  Registrant  has not paid or declared any  dividends  upon its common shares
since its  inception  and,  by reason of its  present  financial  status and its
contemplated  financial  requirements,  does not  intend to pay or  declare  any
dividends upon its common shares within the foreseeable future.

COMMON STOCK

During  2004  the  authorized  capital  stock  of the  Registrant  consisted  of
400,000,000  shares of common stock, par value $0.001 per share. As of March 21,
2005,  there were  186,582,438  shares of common stock  issued and  outstanding.
Holders  of common  stock are  entitled  to one vote for each share held on each
matter to be acted upon by stockholders  of the Registrant.  Stockholders do not
have  preemptive  rights or the right to  cumulate  votes  for the  election  of
directors. Shares are not subject to redemption nor to any liability for further
calls. All shares of common stock issued and outstanding are entitled to receive
such  dividends,  if any, as may be declared  by the Board of  Directors  in its
discretion out of funds legally  available for that purpose,  and to participate
pro rata in any  distribution  of the  Registrant's  assets upon  liquidation or
dissolution.

In the  event of  liquidation  or  dissolution  of the  Registrant,  all  assets
available for distribution after satisfaction of all debts and other liabilities
and after  payment or provision  for any  liquidation  preference  on any issued
Preferred  Stock are  distributable  among the holders of the common stock.  The
transfer agent for the Registrant's common stock is Olde Monmouth Stock Transfer
Co., Inc., 200 Memorial Parkway, Atlantic Highlands, New Jersey 07716.


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PREFERRED STOCK

The Registrant is authorized to issue 3,000,000  shares of Preferred  Stock, par
value $.0001 per share,  of which no shares were issued and  outstanding  at the
date of this  Prospectus.  The  Preferred  Stock  shares  shall have the rights,
limitations and obligations  which the Board of Directors shall determine at the
time the Preferred Stock is issued.  The Registrant has no present  intention of
issuing any Preferred Stock in the foreseeable future.

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

The following  discussion and analysis  should be read in  conjunction  with our
Consolidated Financial Statements and notes appearing elsewhere in this report.

CRITICAL ACCOUNTING POLICIES

"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  discusses  our  consolidated  financial  statements  that have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America. The preparation of these financial statements requires
us to make estimates and  assumptions  that affect the reported amount of assets
and  liabilities  at the date of the  financial  statements,  the  disclosure of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reporting period. On an
on-going basis, we evaluate our estimates and judgments, including those related
to  revenue  recognition,   valuation  allowances  for  inventory  and  accounts
receivable, impairment of long-lived assets. We base our estimates and judgments
on  historical  experience  and on various other factors that are believed to be
reasonable under the circumstances.  The result of these estimates and judgments
form the basis for making  conclusions  about the  carrying  value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different  assumptions or conditions.  The SEC
suggests that all registrants list their most "critical  accounting policies" in
Management's  Discussion and Analysis. A critical accounting policy is one which
is both  important to the  portrayal of the  Company's  financial  condition and
results of operations and requires  management's  most difficult,  subjective or
complex  judgments,  often as a result of the need to make  estimates  about the
effect  of  matters  that are  inherently  uncertain.  Management  believes  the
following critical accounting policies affect its more significant judgments and
estimates in the preparation of its consolidated financial statements.

These  policies  include,  but are not  limited  to, the  carrying  value of the
inventory and fixed assets;  the periodic expensing of the costs relating to the
FDA licensing  activity;  and the  valuation of common stock and other  equities
related to compensation and other services.

YEAR ENDING DECEMBER 31, 2004

OPERATIONS

Registrant  commenced delivery of its PNT products to its European  distributors
in the fourth  quarter of 2004.  Total sales were $41,286,  with a cost of goods
sold of $30,015.  Registrant  expects its European  sales to increase  gradually
throughout 2005, with its gross margin on sales increasing as well.

For the year ending  December  31,  2004  Registrant  experienced  a net loss of
$2,094,936,  which was  comprised  primarily  of its general and  administrative

                                       11
<PAGE>

expenses incurred of $2,033,813 and interest expense of $72,394.  The Registrant
had a net loss from  operations of $2,022,542  for the year ending  December 31,
2003. 86.9% of Registrant's 2004 corporate  expenses  consisted of the following
four categories:  salaries and consulting wages of $913,683 (44.9%), stock bonus
compensation of $259,380 (12.8%),  professional expenses of $424,747 (20.9%) and
shareholder  services and media  promotion of $168,385  (8.3%).  In  comparison,
during  the  2003  fiscal  year  88.2%  of  Registrant's  corporate  expense  of
$1,259,510  consisted  of salaries  and wages of  $653,538 (51.9%),  stock bonus
compensation of $146,500 (11.6%), professional expenses of $227,929 (18.1%), and
shareholder  services  and media  promotion of $83,321  (6.6%).  The increase in
salaries and wages for 2004 over 2003  occurred  primarily as a result of hiring
Mr.  John  Sharkey  in the second  half of 2003 and hiring a European  marketing
consultant in the second half of 2004. The increase in professional  expenses in
2004 over 2003 occurred as a result of more  FDA-related  expenses in 2004.  The
increase in shareholder  services and media promotion in 2004 over 2003 resulted
from hiring special project public relations firms in 2004. Approximately 52% of
Registrant's  corporate  expenses  were paid with  Registrant's  common stock in
order to conserve Registrant's cash resources. Registrant expects its management
salaries to be stable in 2005.  Registrant  may  compensate  its  management and
employees with stock options and stock bonuses in 2005 when  significant  events
occur.  As  Registrant  continues  its foreign  marketing  efforts in 2005,  its
promotional expenses will likely increase.

LIQUIDITY AND CAPITAL RESOURCES

Because  of  Registrant's  current  inventory  levels,  on  a  short-term  basis
Registrant  requires only minimal  capital to sustain its  manufacturing  of the
patented  equipment,  unless a  substantial  order  is  placed.  Because  of the
Registrant's cash position at year-end and general and  administrative  expenses
totaling  approximately  $2,000,000  per year,  the  Registrant  suffered from a
liquidity  shortage during 2004. From January 1, 2004 through December 31, 2004,
Registrant  was  required  to borrow a total of $398,500  from three  Directors,
which were repaid with  restricted  common stock in September  2004 and February
2005.  Unless  substantial  product  sales  are  achieved  in the  near  future,
Registrant  will  continue to experience a liquidity  shortage.  There can be no
assurance  that  Registrant's  product  will be approved  for sale in the United
States by the FDA or when foreign sales will  commence in a substantial  number.
Registrant  will  likely  be  forced  to  borrow  additional  funding  from  its
management  throughout  the  remainder of 2005;  however,  there is no assurance
Registrant will be able to obtain any financing in the future.

On a long-term basis, Registrant anticipates,  without assurances, that the sale
of its product in the U.S. and internationally will provide sufficient liquidity
to the Registrant.

ITEM 7.  FINANCIAL STATEMENTS.

See Financial Statements starting on page F-1 for this information.

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

The Registrant has not changed  accountants  or had any  disagreements  with its
accountants during the audits of the last two fiscal years.


                                       12
<PAGE>

ITEM 8A. CONTROLS AND PROCEDURES.

The Registrant's  principal  executive officer,  G. Richard Smith, and principal
financial officer,  Gary R. Smith,  after reviewing and evaluating  Registrant's
disclosure  controls and  procedures  within 90 days prior to the filing of this
annual  report  have  concluded  that  Registrant's   disclosure   controls  and
procedures  contained no significant  deficiencies or material  weakness.  There
have been no significant  changes in internal controls that could  significantly
affect these  controls  subsequent  to the date of their  evaluation,  including
corrective actions.


                                    PART III

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

The directors and executive officers of the Registrant as of March 23, 2005 were
as follows:

             Name and Address                          Position
         ------------------------           ---------------------------------

         G. Richard Smith                   Director, Chairman and Secretary
         16857 E. Saguaro Blvd.
         Fountain Hills, AZ 85268

         Gary R. Smith                      Director, President and Treasurer
         16857 E. Saguaro Blvd.
         Fountain Hills, AZ 85268

         John T. LiVecchi                   Director
         16857 E. Saguaro Blvd.
         Fountain Hills, AZ 85268

         Mark A. Smith                      Director
         16857 E. Saguaro Blvd.
         Fountain Hills, AZ 85268

The Registrant presently has one vacancy on its Board of Directors.  Richard and
Gary Smith are brothers. Mark Smith is the son of Gary Smith.

G. RICHARD SMITH,  age 56, has been a Director of the Registrant  since November
5, 1996 and  Secretary  of the  Registrant  since  November  5, 1996.  He became
Chairman in March,  1998.  From July,  1995 to November 5, 1996 G. Richard Smith
was a joint venture partner in American Glaucoma, the company that developed the
concept of glaucoma  treatment centers  throughout the U.S which was sold to the
Registrant.  From July,  1995 to November 5, 1996 G. Richard  Smith was a member
and President of Ophthalmic  International,  L.L.C.,  the company that developed
and patented the glaucoma treatment which was sold to the Registrant.  From 1987
to June, 1995 G. Richard Smith was co-owner and President of Southern California
Medical  Distributors,  Ltd. ("SCMD") which developed a turbine powered keratome
for eye surgery. G. Richard Smith attended Oakland University in Oakland County,
Michigan from 1968 to 1970.

GARY R. SMITH,  age 60, has been a Director of the Registrant  since November 5,
1996, and President and Treasurer of the Registrant since November 5, 1996. From
July,  1995 to  November  5, 1996 Gary R. Smith was a joint  venture  partner in

                                       13
<PAGE>

American  Glaucoma,  Inc.,  the company that  developed  the concept of glaucoma
treatment  centers  throughout  the U.S which was sold to the  Registrant.  From
July,  1995 to November 5, 1996 Gary R. Smith was a member and Vice President of
Product Development and Manufacturing of Ophthalmic  International,  L.L.C., the
company that developed and patented the glaucoma treatment which was sold to the
Registrant.  From  1987 to  June,  1995  Gary R.  Smith  was  co-owner  and Vice
President of Product  Development  and  Manufacturing  for  Southern  California
Medical  Distributors,  Ltd.  ("SCMD"),  where he  developed  a turbine  powered
keratome for eye surgery. Gary R. Smith attended Detroit Institute of Technology
in Detroit, Michigan from 1961 through 1963.

JOHN T. LIVECCHI,  age 56, has been a Director of the Registrant  since December
16,  1996.  From July,  1995 to  November 5, 1996 Dr.  LiVecchi  was a member of
Ophthalmic  International,  L.L.C.,  the company that developed and patented the
glaucoma  treatment  which  was  sold to the  Registrant.  Dr.  LiVecchi  had no
relationship to American  Glaucoma.  Dr. LiVecchi received his medical degree in
1977  from the  University  of Rome,  Italy.  From  1983 to March 1,  2003,  Dr.
LiVecchi has been in private medical  practice in the field of  ophthalmology in
the Scranton,  Pennsylvania  area. In March, 2003 Dr. LiVecchi commenced private
medical  practice  in the field of  ophthalmology  in Ft.  Myers,  Florida.  Dr.
LiVecchi  has been on the  staff of  several  hospitals  and  universities.  Dr.
LiVecchi is licensed to practice  medicine in the States of New York,  Michigan,
Florida,  and  Pennsylvania.  Dr.  LiVecchi has authored  numerous  articles and
presentations.  In  1994  Dr.  LiVecchi  undertook  the  project  of  developing
equipment  and  procedures  for  treating  open angle  glaucoma,  along with the
Registrant's  other  Directors.

MARK A. SMITH,  age 34, was  appointed  to  Registrant's  Board of  Directors on
February  13,  2003.  Since  1994 Mr.  Smith has been a  mathematics  teacher at
Fountain Hills Middle School in Fountain Hills,  Arizona. He was selected as the
Fountain Hills School  District  Teacher of the Year in 2001. Mr. Smith received
his  Bachelor of Science  Degree in  Mathematics  in 1993 and his Master of Arts
Degree in Secondary  Education  and  Education  Technology in 2003 from Northern
Arizona University.

Registrant's Board of Directors serves as its Audit Committee because Registrant
is too small to have an Audit  Committee at this time.  Registrant does not have
an audit committee  financial expert because no one on the Board of Directors is
so qualified.

Registrant  has not  adopted a code of ethics for any of its  officers,  because
Registrant  has been  advised  by  counsel  that any such code of ethics  may be
materially  different  than  existing  state and  federal  law,  and, if so, may
subject Registrant's officers to personal liability in addition to and different
from liability under current state and federal law.

JOHN W. SHARKEY  became the Company's  Director of Business  Development in June
2003. Mr. Sharkey has over 15 years experience in global pharmaceutical  product
development and sales. From February 2000 to May 2003 he was the Vice President,
Business Development and Licensing,  for Novartis  Ophthalmics,  Inc. of Duluth,
Georgia.  Mr.  Sharkey was the Executive  Director of Business  Development  and
Licensing   for   Novartis   Pharmaceuticals    Corporation   (formerly   Sandoz
Pharmaceuticals) of East Hanover,  New Jersey from May 1998 to February 2000. He
received  his  Bachelor of Science  Degree in  Chemistry  from State  University
College  at  Oneonta,  New York in 1979 and his Doctor of  Philosophy  Degree in
Electroanalytical  Chemistry from State  University of New York at Buffalo,  New
York in 1986.

                                       14
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth the salaries of the Registrant's two officers for
the fiscal year ending December 31, 2004.

<TABLE>
<CAPTION>
                                   Annual Compensation               Long-Term Compensation Awards
                           -----------------------------------    -----------------------------------
                                                       Other                   Securities
                                                       Annual     Restricted   Underlying                All Other
     Name and                                         Compensa-     Stock       Options/      LTIP       Compensa-
Principal Position  Year    Salary($)    Bonus($)       tion       Awards($)     SARS($)    Payouts($)    tion($)
------------------  ----   -----------   ---------   ---------   ----------  -------------  ----------   ---------
<S>                 <C>    <C>           <C>         <C>         <C>         <C>            <C>          <C>
G. Richard Smith,   2004   $150,000(1)  $     0         $0           --       9,652,000(2)      --           --
Chairman            2003   $150,000(3)  $42,500(4)      $0           --       5,298,000(5)      --           --
                    2002   $100,000(6)  $80,000(7)      $0           --       2,000,000(8)      --           --

Gary R. Smith,      2004   $150,000(1)  $     0         $0           --       9,652,000(2)      --           --
President           2003   $150,000(3)  $42,500(4)      $0           --       5,298,000(5)      --           --
                    2002   $100,000(6)  $80,000(7)      $0           --       2,000,000(8)      --           --
</TABLE>
------------
(1)  $150,000 of annual salary was accrued for each of G. Richard Smith and Gary
     R. Smith during 2004.  All of their accrued  salary in 2004 was forgiven in
     January 2005.
(2)  5,000,000 of these  options were granted in June 2004 and  24,652,000  were
     granted in January 2005.  5,000,000 of these options have a ten-year  term,
     are immediately  exercisable and have an exercise price of $.068 per share.
     3,000,000  of  these  options  have  a  ten-year  term,   are   immediately
     exercisable  and have an exercise  price of $.055 per share.  1,652,000  of
     these  options have a five-year  term,  may not be exercised  until January
     2006 and have an exercise price of $.0605 per share.
(3)  $150,000 of annual salary was accrued for each of G. Richard Smith and Gary
     R. Smith during 2003,  with $24,123 of accrued salary being  converted into
     3,616,642  shares for G. Richard Smith in March 2003 and $33,549 of accrued
     salary being  converted  into  5,029,835  shares for Gary R. Smith in March
     2003. Their remaining accrued salary for 2003 was forgiven in January 2005.
(4)  This bonus was paid in 500,000 restricted shares on December 16, 2003.
(5)  2,000,000 of these options were granted in September  2003,  15,000,000 for
     G. Richard  Smith  (10,000,000  for Gary R. Smith) were granted in February
     2003 and  3,298,000  were  granted in  November  2003.  2,000,000  of these
     options  have a ten-year  term,  are  immediately  exercisable  and have an
     exercise  price of $.10  per  share.  2,000,000  of  these  options  have a
     ten-year term, are  immediately  exercisable  and have an exercise price of
     $.07 per share.  1,298,000  of these  options  have a five-year  term,  are
     immediately exercisable and have an exercise price of $.077 per share.
(6)  $150,000 of annual salary was accrued for each of G. Richard Smith and Gary
     R. Smith during 2002,  with $100,000 of salary paid in 2,000,000  shares of
     restricted common stock in September 2002.
(7)  A $50,000  bonus was paid to each of G. Richard  Smith and Gary R. Smith in
     1,000,000  restricted  common stock shares in September  2002 and a $30,000
     bonus was paid to each of G.  Richard  Smith and Gary R. Smith in  December
     2002, in 1,000,000 shares of restricted common stock.
(8)  All of these  options  were  awarded in January  2003.  1,650,000  of these
     options  have a ten-year  term,  are  immediately  exercisable  and have an
     exercise price of $.01 per share. 350,000 of these options have a five-year
     term, are  immediately  exercisable  and have an exercise price of $.02 per
     share.

                                       15
<PAGE>

The following table sets forth certain information  concerning the stock options
(with  stock  appreciation  rights)  granted  during the 2004 fiscal year to the
Company's chief executive officer and each other executive officer.

<TABLE>
<CAPTION>
                     Number of       % of Total
                     Securities     Options/SARs
                     Underlying      Granted to
                    Options/SARs    Employees in    Exercise or Base      Expiration
Name                Granted (#)     Fiscal Year       Price ($/Sh)           Date
----------------    ------------    ------------    ----------------    ---------------
<S>                 <C>             <C>             <C>                 <C>
G. Richard Smith       5,000,000        5.9%             $.068          June 21, 2014
                      23,000,000       27.0%             $.055          January 3, 2015
                       1,652,000        1.9%             $.0605         January 3, 2010

Gary R. Smith          5,000,000        5.9%             $.068          June 21, 2014
                      23,000,000       27.0%             $.055          January 3, 2015
                       1,652,000        1.9%             $.0605         January 3, 2010
</TABLE>

The following  table sets forth  information  concerning  each exercise of stock
options and the value of unexercised options (with stock appreciation rights) at
December  31,  2004 for the  Company's  chief  executive  officer and each other
officer.

<TABLE>
<CAPTION>
                                                              Number of Securities              Value of
                                                             Underlying Unexercised     Unexercised In-the-Money
                                                            Options/SARS At FY-End(#)   Options/SARS At FY-End($)
                   Shares Acquired                          -------------------------   -------------------------
     Name          On Exercise (#)    Value Realized ($)    Exercisable/Unexercisable   Exercisable/Unexercisable
----------------   ---------------    ------------------    -------------------------   -------------------------
<S>                <C>                <C>                   <C>                         <C>

G. Richard Smith           --                  --             54,685,833 / 1,652,000         $950,500 / $0 (1)

Gary R. Smith              --                  --             49,685,833 / 1,652,000         $705,500 / $0 (1)
</TABLE>

------------
(1) Based on a December 30, 2004 trading price of $.06 per share.


The Registrant currently has no pension, retirement, annuity, savings or similar
benefit plan which provides compensation to its executive officers or directors.

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

As of March 21, 2005, there were 186,582,438  outstanding  shares. The following
table sets forth the name, address, number of shares beneficially owned, and the
percentage of the Registrant's  total outstanding  common stock shares owned by:
(i) each of the  Registrant's  Officers  and  Directors;  (ii) the  Registrant's
Officers and Directors as a group; and (iii) other shareholders of 5% or more of
the Registrant's total outstanding common stock shares.

                                       16
<PAGE>

                    Name and Address of       Amount and Nature of    Percent
Title of Class       Beneficial Owner         Beneficial Ownership    of Class
--------------    ------------------------    --------------------    --------

Common Stock      Gary R. Smith                   25,733,105(1)         13.8%
                  16857 E. Saguaro Blvd.
                  Fountain Hills, AZ 85268

Common Stock      G. Richard Smith                33,742,019(2)         18.1%
                  16857 E. Saguaro Blvd.
                  Fountain Hills, AZ 85268

Common Stock      John T. LiVecchi                20,374,756(3)         10.9%
                  16857 E. Saguaro Blvd.
                  Fountain Hills, AZ 85268

Common Stock      Mark A. Smith                      850,000             0.5%
                  16857 E. Saguaro Blvd.
                  Fountain Hills, AZ 85268

Common Stock      Officers and Directors,         80,699,880(4)         43.3%
                  as a Group (4 People)
------------

(1)  This number includes  1,000,000 shares owned by a charitable  foundation of
     which  Mr.  Smith is the  sole  officer  and  director.  Does  not  include
     51,337,833  shares of stock which may be  purchased  by Mr. Smith under the
     Registrant's  Stock Option Plans.  In the event Mr. Smith  purchased all of
     those  shares,  Mr.  Smith  would  own  32.4%  of  the  Registrant's  total
     outstanding shares.
(2)  This number  includes  31,500  shares owned by a charitable  foundation  of
     which  Mr.  Smith is the  sole  officer  and  director.  Does  not  include
     56,337,833  shares of stock which may be  purchased  by Mr. Smith under the
     Registrant's  Stock Option Plans.  In the event Mr. Smith  purchased all of
     those  shares,  Mr.  Smith  would  own  37.1%  of  the  Registrant's  total
     outstanding shares.
(3)  Does not include  30,937,833  shares of stock which may be purchased by Dr.
     LiVecchi  under  the  Registrant's  Stock  Option  Plans.  In the event Dr.
     LiVecchi purchased all of those shares, Dr. LiVecchi would own 23.6% of the
     Registrant's total outstanding shares.
(4)  Does not  include  a total of  138,613,499  shares  of stock  which  may be
     purchased by Mr. Gary R. Smith, Mr. G. Richard Smith and Dr. LiVecchi under
     the Registrant's Stock Option Plans. In the event Messrs.  Smith, Smith and
     LiVecchi  purchased  all of those  shares,  Registrant's  management  would
     collectively own 67.2% of the Registrant's total outstanding shares.

The  following   table  sets  forth  certain   information   concerning   equity
compensation  plans approved by  Registrant's  shareholders  and not approved by
Registrant's shareholders at December 31, 2004.


                                       17
<PAGE>

                     Number of Shares                         Number of Shares
                       to be Issued      Weighted Average    to be Issued Other
 Plan Category         for Options        Exercise Price        Than Options
----------------     ----------------    ----------------    ------------------

Approved                86,407,499            $.059                  0
By Shareholders

Not Approved            66,856,000            $.055                  0
By Shareholders


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During 1999 G.  Richard  Smith loaned  Registrant  a total of $82,500,  of which
$36,800 was repaid in May, 1999.  These loans bear 15% annual  interest rate. At
December 31, 2000 G. Richard Smith was owed  $53,700.  Through March 15, 2001 G.
Richard Smith had loaned an additional $116,000 to Registrant on the same terms.
These loans were repaid in August 2001 by issuance of restricted common stock.

During 1999 Gary R. Smith loaned  Registrant a total of $35,000 of which $11,900
was repaid in May, 1999.  These loan bear 15% annual  interest rate. At December
31, 2000 Gary R. Smith was owed  $26,260.  Through  March 15, 2001 Gary R. Smith
had loaned an additional  $116,000 to Registrant on the same terms.  These loans
were repaid in August 2001 by issuance of restricted common stock.

From  September  2001 through  December 31, 2002 G. Richard Smith had loaned the
Registrant  $101,450;  Gary R. Smith had loaned Registrant $66,950; and Dr. John
T. LiVecchi had loaned Registrant  $76,500.  These loans accrued interest at 15%
per annum.  These loans plus  interest  were  repaid in  February  2003 with the
issuance of 15,209,895 shares to G. Richard Smith,  10,786,109 shares to Gary R.
Smith and 12,535,948 shares to Dr. John T. LiVecchi.

In  March  2002,  G.  Richard  Smith  loaned  Registrant  $230,000  to  repay an
outstanding  promissory  note to a third party.  Since March 2002, Mr. Smith has
loaned an additional  $70,000.  Mr.  Smith's loan is outstanding at December 31,
2004 and is accruing interest at 16% per annum.

From  February  2003 through  February 3, 2004 G.  Richard  Smith had loaned the
Registrant  $102,000;  Gary R. Smith had loaned Registrant $89,000; and Dr. John
T. LiVecchi had loaned Registrant  $98,000.  These loans accrued interest at 15%
per annum.  These loans plus  interest  were repaid on February 3, 2004 with the
issuance of 1,782,178  shares to G. Richard Smith,  1,569,231  shares to Gary R.
Smith and 1,740,851 shares to Dr. John T. LiVecchi.

From February 4, 2004 through September 30, 2004 G. Richard Smith had loaned the
Registrant $95,000; Gary R. Smith had loaned Registrant $95,000; and Dr. John T.
LiVecchi had loaned Registrant $96,500.  These loans accrued interest at 15% per
annum.  These loans plus  interest  were repaid on  September  30, 2004 with the
issuance of 1,562,327  shares to G. Richard Smith,  1,821,772  shares to Gary R.
Smith and 1,838,026 shares to Dr. John T. LiVecchi.

From September 30, 2004 through January 31, 2005 G. Richard Smith had loaned the
Registrant $45,000; Gary R. Smith had loaned Registrant $45,000; and Dr. John T.
LiVecchi had loaned Registrant $40,000.  These loans accrued interest at 15% per
annum.  $40,000 of each of these loans plus  interest were repaid on February 1,
2005 with G. Richard Smith exercising stock options for 3,721,731  shares,  Gary

                                       18
<PAGE>

R. Smith  exercising  stock  options for  3,714,632  shares and the  issuance of
1,152,119 shares to Dr. John T. LiVecchi.

ITEM 13. EXHIBITS.

Reference  is  herewith  made to the  financial  statements  and  notes  thereto
included  herein and to the cover page of this 10-KSB with  respect to documents
incorporated by reference in accordance with Rule 12b-33.

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

10.1 *      2004 Executive Bonus Stock Option Plan
10.2 *      Form of 2004 Executive Bonus Stock Option Plan Option Agreement
10.3 (1)    2004 Employee Stock Bonus Plan
10.4 (1)    Form of 2004 Employee Stock Bonus Plan Option Agreement
10.5 (2)    2004 Executive Stock Option Plan
10.6 (2)    Form of 2004 Executive Stock Option Plan Option Agreement
10.7 *      2004 Employee Stock Option Plan
10.8 *      Form of 2004 Employee Stock Option Plan Option Agreement
31.1        Certificate of Chief Executive Officer Pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002
31.2        Certificate of Chief Financial Officer Pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002
32.1        Certificate of Chief Executive Officer Pursuant to Section 906 of
            the Sarbanes-Oxley Act of 2002
32.2        Certificate of Chief Financial Officer Pursuant to Section 906 of
            the Sarbanes-Oxley Act of 2002
------------
* Filed herewith.
(1)  Incorporated  by  reference  to Form S-8  Registration  Statement  No.
     333-119532 filed with the SEC on October 5, 2004.
(2)  Incorporated  by  reference to Form 8-K filed with the SEC on March 3,
     2005.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

In the 2004 fiscal year the Company incurred $28,888 to its auditor for auditing
services;  $20,680 for audit-related  services;  and $5,665 for tax services. In
the 2003  fiscal  year the Company  paid  $17,800 to its  auditor  for  auditing
services; $22,600 for audit-related services; and $4,100 for tax services.


                                       19
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf on April 13, 2005 by the undersigned, thereunto authorized.

                                           CORONADO INDUSTRIES, INC.


                                           By: /s/ Gary R. Smith
                                               ---------------------------------
                                               Gary R. Smith, President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following  persons on behalf of the Registrant and in the
capacities on the date(s) indicated.

        Name                          Title                       Date
------------------------    ---------------------------    -------------------

/s/ G. Richard Smith        Chairman (Chief Executive        April 13, 2005
------------------------    Officer), Secretary and
G. Richard Smith            Director

/s/ Gary R. Smith           President, Treasurer             April 13, 2005
------------------------    (Chief Accounting Officer),
Gary R. Smith               Director

/s/ Mark A. Smith
------------------------    Director                         April 13, 2005
Mark A. Smith


------------------------    Director
John LiVecchi


                                       20
<PAGE>

                      SUPPLEMENTAL INFORMATION AND EXHIBITS

SUPPLEMENTAL  INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE  SECURITIES  EXCHANGE  ACT OF 1934 BY  REGISTRANTS  WHICH  HAVE NOT
REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.

The Registrant's  fiscal year ended December 31, 2004. The Registrant  currently
has not held its Annual Meeting of Stockholders.

Four copies of all  material to be mailed to  stockholders  with respect to such
meeting will be furnished to the  Securities  and Exchange  Commission  but such
documents,  when  furnished,  will not be deemed to be filed with the Securities
and Exchange Commission or otherwise subject to liabilities of Section 18 of the
Act (except to the extent that the  Registrant  specifically  incorporates  such
material by reference in any subsequent  Form 10-KSB);  it is expected that such
documents will consist of a Form of Proxy, Notice of Annual Meeting, Information
Statement with Schedules and/or Exhibits annexed thereto.


                                       21
<PAGE>

INDEX TO FINANCIAL STATEMENTS


                                                                            PAGE

Report of Independent Registered Public Accounting Firm....................  F-2

Consolidated Balance Sheets December 31, 2004 and 2003.....................  F-3

Consolidated Statements of Operations for the Years Ended,
December 31, 2004 and 2003.................................................  F-4

Consolidated Statement of Changes in Stockholders' Equity
for the Years Ended December 31, 2004 and 2003.............................  F-5

Consolidated Statements of Cash Flows for the Years Ended
December 31, 2004 and 2003.................................................  F-6

Notes to Consolidated Financial Statements.................................  F-8



                                       F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Coronado Industries, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets  of  Coronado
Industries,  Inc.  and  Subsidiaries  as of  December  31, 2004 and 2003 and the
related consolidated statements of operations,  changes in stockholders' equity,
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Coronado Industries,
Inc.  and  Subsidiaries  at December  31, 2004 and 2003,  and the results of its
operations,  changes  in  stockholders'  equity and its cash flows for the years
then ended in conformity with accounting  principles  generally  accepted in the
United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated  financial  statements,  the Company's significant operating losses
and  negative  working  capital  raise  substantial  doubt  about its ability to
continue  as a going  concern.  The  consolidated  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.

/s/  Semple & Cooper, LLP
Phoenix, Arizona
April 14, 2005


                                      F-2
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                     ASSETS

                                                                        December 31,
                                                               ----------------------------
                                                                   2004            2003
                                                               ------------    ------------
<S>                                                            <C>             <C>
Current Assets:
   Cash & Cash Equivalents                                     $         58    $     10,724
   Accounts Receivable                                               41,286              --
   Inventory                                                         15,132          24,299
   Prepaid Expenses                                                  14,966          51,662
   Deferred Compensation                                             20,833          50,000
                                                               ------------    ------------
      Total Current Assets                                           92,275         136,685

Property and equipment, net                                          10,259          18,152
Deposits                                                              4,520              --
Deferred Compensation                                                    --          20,833
                                                               ------------    ------------
      Total Assets                                             $    107,054    $    175,670
                                                               ============    ============

              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
  Notes payable - related parties                              $    383,000    $    549,000
  Notes payable                                                     100,000          83,616
  Accounts payable                                                   70,583         126,613
  Accrued salaries                                                  688,317         313,317
  Accrued interest                                                    4,802          19,510
  Accrued taxes and expenses                                        141,135          83,760
                                                               ------------    ------------
      Total Liabilities                                        $  1,387,837    $  1,175,816
                                                               ------------    ------------

Commitments                                                              --              --

Stockholders' Equity (Deficit)
  Preferred Stock - $.0001 par value; 3,000,000
    shares authorized, none issued or outstanding                        --              --
  Common Stock - $.001 par value; 400,000,000
    shares authorized, 183,291,938 and 160,502,022
    shares issued and outstanding at
    December 31, 2004 and 2003, respectively                        183,291         160,502
  Additional paid-in capital                                     12,485,478      10,693,968
  Accumulated deficit                                           (13,949,552)    (11,854,616)
                                                               ------------    ------------
     Total Stockholders' Equity (Deficit)                        (1,280,783)     (1,000,146)
                                                               ------------    ------------
     Total Liabilities and Stockholders'
       Equity (Deficit)                                        $    107,054    $    175,670
                                                               ============    ============
</TABLE>

   The Accompanying Notes are an Integral Part of These Financial Statements

                                      F-3
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


                                                 For the Year Ended December 31,
                                                 ------------------------------
                                                      2004             2003
                                                 -------------    -------------

Product Revenues                                 $      41,286    $          --
Cost of Product Revenues                                30,015               --
                                                 -------------    -------------
Gross Profit                                            11,271               --
                                                 -------------    -------------
General and Administrative Expenses
  Salaries and consulting wages                      1,071,093          800,038
  Public relations                                     168,385           83,321
  Legal and professional fees                          256,384          206,129
  FDA expense                                          270,333           21,800
  Rent expense                                          39,061           33,363
  Other                                                228,557          114,859
                                                 -------------    -------------
     Total General and Administrative Expenses       2,033,813        1,259,510
                                                 -------------    -------------
Loss from Operations                             $   2,022,542    $   1,259,510
                                                 -------------    -------------
Other Income (Expense)
  Interest expense                                     (72,394)         (64,818)
                                                 -------------    -------------
     Total Other Income (Expense)                      (72,394)         (64,818)
                                                 -------------    -------------
Net Loss                                         $  (2,094,936)   $  (1,324,328)
                                                 =============    =============

Loss per common share, basic and diluted         $       (0.01)   $       (0.01)
                                                 =============    =============
Weighted average number of shares outstanding,
  basic and diluted                                171,282,225      136,506,457
                                                 =============    =============


   The Accompanying Notes are an Integral Part of These Financial Statements

                                      F-4
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                           Common Stock           Additional                         Total
                                    --------------------------     Paid-in      Accumulated      Stockholders'
                                       Shares      Par Value       Capital        Deficit       Equity (Deficit)
                                    -----------   ------------   ------------   ------------    ---------------
<S>                                  <C>          <C>            <C>            <C>             <C>
Balance at December 31, 2002         81,236,063   $     81,236   $  9,656,112   $(10,530,288)   $      (792,940)

Stock Issued For Services             5,420,570          5,421        194,576             --            199,997
Stock Issued For Salaries, Debt
  & Interest                         71,745,389         71,745        824,380             --            896,125
Stock Options Exercised               2,100,000          2,100         18,900             --             21,000
Net loss                                     --             --             --     (1,324,328)        (1,324,328)
                                    -----------   ------------   ------------   ------------    ---------------
Balance at December 31, 2003        160,502,022        160,502     10,693,968    (11,854,616)        (1,000,146)

Stock Issued for Debt & Interest     10,746,428         10,746        611,916             --            622,662
Stock and Options Issued
  For Services                       11,543,488         11,543      1,151,094             --          1,162,637
Stock Options Exercised                 400,000            400         21,600             --             22,000
Common Stock Issued For Cash            100,000            100          6,900             --              7,000
Net Loss                                     --             --             --     (2,094,936)        (2,094,936)
                                    -----------   ------------   ------------   ------------    ---------------
Balance at December 31, 2004        183,291,938   $    183,291   $ 12,485,478   $(13,949,552)   $    (1,280,783)
                                    ===========   ============   ============   ============    ===============
</TABLE>


   The Accompanying Notes are an Integral Part of These Financial Statements

                                      F-5
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


                                                 For the Year Ended December 31,
                                                 ------------------------------
                                                      2004             2003
                                                 -------------    -------------
Cash flows from operating activities
Net Loss                                         $  (2,094,936)   $  (1,324,328)
Adjustments to reconcile net loss to
  cash (used) by operating activities:
   Depreciation                                          2,358            9,664
   Common stock and options issued for
     services                                          642,430          199,997
   Common stock issued for salaries,
     consulting & interest                             548,369          633,725
   Prepaid expenses financed through debt                   --           50,424
Changes in Assets and Liabilities:
   Accounts Receivable                                 (41,286)              --
   Prepaid Expenses                                     36,696          (51,662)
   Deposits                                             (4,520)              --
   Inventory                                             9,167             (314)
   Defered Compensation                                 50,000          (70,833)
   Accounts payable                                    (56,030)         (28,996)
   Accrued salaries                                    375,000          188,317
   Accrued interest                                    (14,708)          (4,493)
   Accrued taxes  and expenses                          57,375           35,877
                                                 -------------    -------------
Net cash used in operating activities                 (490,085)        (362,622)
                                                 -------------    -------------
Cash Flows from investing activities:

Disposition of Equipment                                 8,535               --
Acquisition of property and equipment                   (3,000)         (13,585)
                                                 -------------    -------------
Net cash provided (used) by
  investing activities                                   5,535          (13,585)
                                                 -------------    -------------
Cash flows from financing activities:

Proceeds from stock issuance                             7,000               --
Repayment of Notes Payable - Related Parties           (10,400)          (2,000)
Proceeds from borrowings - Related Parties             413,900          332,500
Proceeds from borrowings                                75,000           50,000
Repayment of Notes Payable                             (33,616)         (16,808)
Proceeds from exercise of options                       22,000           21,000
                                                 -------------    -------------
New cash provided by financing activities              473,884          384,692
                                                 -------------    -------------

Net change in cash and cash equivalents                (10,666)           8,485
Cash and cash equivalents at beginning of year          10,724            2,239
                                                 -------------    -------------

Cash and cash equivalents at end of year         $          58    $      10,724
                                                 =============    =============

   The Accompanying Notes are an Integral Part of These Financial Statements

                                      F-6
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                  (CONTINUED)


                                                 For the Year Ended December 31,
                                                 ------------------------------
                                                      2004             2003
                                                 -------------    -------------
Supplemental disclosure of cash flow
  information:

Cash paid during the year for:
  Interest                                       $      58,406    $      36,200
                                                 =============    =============
Income taxes                                     $          --    $          --
                                                 =============    =============
Non-cash Transactions:
  Issuance of common stock and options
    for salaries, bonuses, and consultants             520,207          609,200
  Issuance of common stock and options
    for services                                       642,430          199,997
  Issuance of common stock for debt                    594,500          262,400
  Issuance of common stock for interest                 28,162           24,525
  Refinancing of debt                                       --          240,000
  Prepaid expenses financed through debt                    --           50,424


   The Accompanying Notes are an Integral Part of These Financial Statements


                                      F-7
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF
         OPERATIONS AND USE OF ESTIMATES

ORGANIZATION

Coronado  Industries,  Inc. (the Company) was originally  incorporated under the
laws of the State of New York in  December  1989 as First Lloyd  Funding,  Inc.,
which  subsequently  changed its name to Logical Computer  Services of New York,
Ltd. In September  1996,  the Company  changed its name to Coronado  Industries,
Inc. The Company was a non-operating  shell  corporation with nominal net assets
prior to its merger on November 5, 1996,  when the Company  acquired one hundred
percent (100%) of the assets of Ophthalmic  International,  L.L.C.  and American
Glaucoma.

The  stockholders  of American  Glaucoma and Ophthalmic  International,  L.L.C.,
which  are the same for both  corporations,  obtained  majority  control  of the
Company in the  combination,  and  therefore,  were  considered  the  accounting
acquirer. Therefore, the transaction was accounted for as a reverse merger.

The Company was in the  development  stage from its  acquisition  of  Ophthalmic
International, L.L.C. and American Glaucoma in November, 1996 through September,
1997. In September,  1997, American Glaucoma opened its first glaucoma treatment
clinic in Scottsdale,  Arizona. Ophthalmic International,  L.L.C. has received a
patent on the method for treating  Open Angle  Glaucoma,  as well as the devices
used in the treatment, including the Vacuum Fixation Device. The Company intends
to manufacture  and market the patented  Vacuum Fixation Device and the patented
suction  rings to major  medical  supply  companies  and health  care  providers
throughout the world.

GOING CONCERN

The Company's financial statements are presented on a going concern basis, which
contemplates  the  realization of assets and the  satisfaction of liabilities in
the normal course of business.  The Company has continued to sustain  losses for
the past several years and has negative working capital and negative net worth.

During 2004 the Company received their Type 2A product  classification and began
shipping  its  product  overseas.   The  Company  recorded  product  revenue  of
approximately  $41,000 during 2004. The Company  anticipates  increased  product
revenues during 2005 as a result of the aforementioned certification.

The financial  statements do not include any adjustments to reflect the possible
future effects of the recoverability and classification of assets or the amounts
and  classifications  of liabilities that may result from the uncertainty of the
Company's ability to continue as a going concern.

PRINCIPLES OF CONSOLIDATION

The  consolidated   financial   statements  include  the  activity  of  Coronado
Industries,  Inc.,  together  with  its  wholly-owned  subsidiaries,  Ophthalmic
International,  Inc., American Glaucoma, Inc. and Ophthalmic International, LLC.
All significant  inter-company  accounts and transactions  have been eliminated.


                                      F-8
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF
         OPERATIONS AND USE OF ESTIMATES (CONTINUED)

All of the above  subsidiaries  were  inactive for the years ended  December 31,
2004 and 2003.

PERVASIVENESS OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash  equivalents  are  considered to be all highly liquid  investments
purchased with an initial maturity of three (3) months or less.

INVENTORIES

Inventories consist primarily of materials and parts and are stated at the lower
of cost, as determined on a first-in, first-out (FIFO) basis, or market.

ACCOUNTS RECEIVABLE

The Company follows the allowance method of recognizing  uncollectible  accounts
receivable.  The allowance method recognizes bad debt expense as a percentage of
accounts receivable based on a review of the individual accounts outstanding and
the Company's prior history of uncollectible accounts receivable. As of December
31,  2004,  the Company  has not  established  an  allowance  for  uncollectible
accounts receivable as they believe that all accounts are currently collectible.
The Company does not record  interest income on delinquent  accounts  receivable
balances until it is received.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost.  Maintenance and repairs that neither
materially add to the value of the property nor appreciably prolong its life are
charged to operations as incurred.  Betterments or renewals are capitalized when
incurred.  Depreciation  is  provided  using the  straight  line method over the
following useful lives:

               Office furniture & Equipment      5 - 7  Years
               Machinery                         5 - 7  Years
               Leasehold Improvements            5 - 39 Years

LONG-LIVED ASSETS

We account for long-lived  assets in accordance  with SFAS No. 144,  "Accounting
for the  Impairment  or Disposal of Long-Lived  Assets." The Statement  requires
that long-lived assets be reviewed for impairment  whenever events or changes in


                                      F-9
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF
         OPERATIONS AND USE OF ESTIMATES (CONTINUED)

circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  Assets to be  disposed  of are  reported  at the lower of carrying
amount or fair value less cost to sell.

DEFERRED INCOME TAXES

Deferred  income taxes are provided on an asset and  liability  method,  whereby
deferred tax assets are  recognized  for deductible  temporary  differences  and
operating  loss and tax credit carry forwards and deferred tax  liabilities  are
recognized for taxable  temporary  differences.  Temporary  differences  are the
differences between the reported amounts of assets and liabilities and their tax
basis.  Deferred  tax assets are  reduced by a valuation  allowance  when in the
opinion of  management,  it is more likely than not that some  portion or all of
the  deferred  tax  assets  will  not  be  realized.  Deferred  tax  assets  and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.

LOSS PER SHARE

Basic loss per share  includes no dilution  and is computed by dividing  loss to
common  stockholders by the weighted average number of common shares outstanding
for the period.  Assumed exercise of the outstanding  stock options and warrants
at December 31, 2004 and 2003 of 158,988,499 and 75,582,499,  respectively, have
been excluded from the  calculation  of basic net loss per common share as their
effect is  anti-dilutive  (decreases  the loss per share).  In addition,  as the
Company  has a net loss  available  to common  stockholders  for the years ended
December 31, 2004 and 2003 the diluted EPS  calculation  has been  excluded from
the financial statements.

INTANGIBLE ASSETS

The  Company  reviews  its  intangible  assets  at least  annually  to  evaluate
potential  impairment by comparing the carrying value of the  intangible  assets
with expected  future net operating cash flows from the related  operations.  If
the expected  future net operating cash flows are less than the carrying  value,
the  Company  recognizes  an  impairment  loss  equal to the amount by which the
carrying value exceeds the discounted  expected  future net operating cash flows
from the related operations.

REVENUE RECOGNITION

The Company  recognizes  revenues on the accrual  basis,  when the  equipment is
delivered.

STOCK BASED COMPENSATION

In December  2002,  the  Financial  Accounting  Standards  Board  "FASB"  issued
Statement of Financial  Accounting  Standards  "SFAS" No. 148,  "Accounting  for
Stock-Based  Compensation  -  Transition  and  Disclosure - an amendment of FASB
Statement No. 123." This statement  provides  alternative  methods of transition


                                      F-10
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF
         OPERATIONS AND USE OF ESTIMATES (CONTINUED)

for a voluntary  change to the fair value method of accounting  for  stock-based
compensation. The statement amends the disclosure requirements of FASB Statement
No. 123 to require  prominent  disclosure  in both annual and interim  financial
statements  about the method of accounting for stock-based  compensation and the
effect  of the  method  used on  reported  results.  The  Company  accounts  for
stock-based  compensation  arrangements  in  accordance  with the  provisions of
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees,"  and complies with the  disclosure  provisions of FASB Statement No.
123.  The  transition  provisions  are  effective  for fiscal years ending after
December 15, 2002. The disclosure  provisions are effective for interim  periods
beginning  after  December  15,  2002.  The  Company  implemented  the  required
disclosure  provisions in the year ended December 31, 2002. The adoption of this
statement did not have a material impact on the Company's consolidated financial
position, results of operations or cash flows.

The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation."
Under SFAS No. 123,  companies  can, but are not required to, elect to recognize
compensation  expense for all stock-based awards using a fair value methodology.
The Company has adopted the disclosure-only provisions, as permitted by SFAS No.
123.  The Company  applies APB  Opinion  No. 25 and related  interpretations  in
accounting  for  its  stock-based  plans.  Accordingly,   there  is  no  related
compensation  expense  recorded in the Company's  financial  statements  for the
periods  presented.  Had  compensation  cost for stock-based  compensation  been
determined  based on the fair value of the options at the grant dates consistent
with the method of SFAS No. 123, the  Company's  net loss and loss per share for
the years ended  December  31, 2004 and 2003 would have been  reduced to the pro
forma amounts presented below:

                                                       2004            2003
                                                   ------------    ------------

Net loss:
As Reported                                        $ (2,094,936)   $ (1,324,328)
Add: Stock-based employee compensation expense
   included in reported net income, net of
   related tax effects                                       --              --
Deduct: Total stock based employee compensation
   expense determined under fair value based
   method for all awards, net of related tax
   effects                                           (4,389,443)     (1,493,536)
                                                   ------------    ------------

Pro forma net loss                                 $ (6,484,379)   $ (2,817,864)
                                                   ============    ============
Loss per share:
As reported                                        $       (.01)   $       (.01)
Pro forma                                          $       (.04)   $       (.02)


                                      F-11
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF
         OPERATIONS AND USE OF ESTIMATES (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of our financial  instruments included in current assets and
current  liabilities  approximated  their respective fair values at each balance
sheet  date due to the  immediate  or  short-term  maturity  of these  financial
instruments.  The fair value of long-term notes payable and lease obligations is
based on current  rates at which we could borrow  funds with  similar  remaining
maturities.

NEW ACCOUNTING PRONOUNCEMENTS

STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS

In December  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial Accounting Standards No. 153 ("SFAS 153"),  "Exchanges of
Nonmonetary Assets." SFAS 153 amends the guidance in APB No. 29, "Accounting for
Nonmonetary  Assets." APB No. 29 was based on the  principle  that  exchanges of
nonmonetary assets should be measured on the fair value of the assets exchanged.
SFAS 153 amends APB No. 29 to eliminate the exception for nonmonetary  exchanges
of  similar  productive  assets and  replaces  it with a general  exception  for
exchanges of  nonmonetary  assets that do not have  commercial  substance if the
future cash flows of the entity are expected to change significantly as a result
of the  exchange.  SFAS 153 is effective  for  financial  statements  issued for
fiscal years  beginning  after June 15, 2005.  Management has not yet determined
the effects of adopting this  statement on the Company's  financial  position or
results of operations.

On  November  24,  2004,  the FASB  issued  Statement  of  Financial  Accounting
Standards No. 151 "Inventory Costs--an amendment of ARB No. 43, Chapter 4" (SFAS
No. 151) effective for fiscal years beginning after June 15, 2005. SFAS 151 will
become effective for us on August 1, 2005. This Statement amends the guidance in
ARB 43, Chapter 4,  "Inventory  Pricing," to clarify the accounting for abnormal
amounts of idle facility expense,  freight,  handling costs, and wasted material
(spoilage).   This  Statement   requires  that  those  items  be  recognized  as
current-period  charges. In addition, this Statement requires that allocation of
fixed  production  overheads to the costs of  conversion  be based on the normal
capacity  of  the  production   facilities.   We  are  currently  reviewing  the
requirements of SFAS 151;  however,  we do not believe that the adoption of SFAS
151 will have a  material  effect on our  results  of  operations  or  financial
position.

SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics
of both  liabilities and Equity." SFAS No. 150 establishes  standards for how an
issuer  classifies,  measures and discloses in its financial  statements certain
financial  instruments with characteristics of both liabilities and equity. SFAS
No. 150 requires that an issuer classify  financial  instruments that are within
its scope as  liabilities,  in most  circumstances.  Such financial  instruments
include (i) financial instruments that are issued in the form of shares that are
mandatorily redeemable,  (ii) financial instruments that embody an obligation to
repurchase the issuer's equity shares, or are indexed to such an obligation, and

                                      F-12
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF
         OPERATIONS AND USE OF ESTIMATES (CONTINUED)

that require the issuer to settle the obligation by transferring  assets,  (iii)
financial  instruments  that embody an obligation  that the issuer may settle by
issuing a variable  number of its equity shares if, at  inception,  the monetary
value of the obligation is predominantly based on a fixed amount,  variations in
something  other than the fair value of the issuer's equity shares or variations
inversely related to changes in the fair value of the issuer's equity shares and
(iv) certain freestanding financial instruments.  SFAS No. 150 was effective for
contracts  entered  into or  modified  after  May 31,  2003,  and was  otherwise
effective at the beginning of the first interim period  beginning after June 15,
2003, however,  in October 2003, the FASB indefinitely  deferred the application
of certain  provisions of SFAS No. 150 as they apply to  mandatorily  redeemable
minority  interests.  Adoption of SFAS No. 150 did not have a significant impact
on our financial statements.

SFAS No. 149, "Amendment of Statement 133 on Derivative  Instruments and Hedging
Activities."  SFAS  No.  149  amends  and  clarifies  financial  accounting  and
reporting for derivative  instruments,  including certain derivative instruments
embedded  in other  contracts  and for  hedging  activities  under SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities." The amendments
(i) reflect  decisions of the  Derivatives  Implementation  Group,  (ii) reflect
decisions  made by the FASB in  conjunction  with other  projects  dealing  with
financial  instruments  and (iii) address  implementation  issues related to the
application  of the  definition  of a  derivative.  SFAS No.  149 also  modifies
various other existing  pronouncements  to conform with the changes made to SFAS
No. 133. SFAS No. 149 was effective for contracts entered into or modified after
June 30, 2003,  and for hedging  relationships  designated  after June 30, 2003,
with all provisions applied prospectively. Adoption of SFAS No. 149 did not have
a significant impact on our financial statements.

In December 2004, the FASB issued SFAS No. 123R,  "Share-Based  Payment (Revised
2004)." SFAS No. 123R establishes  standards for the accounting for transactions
in which an entity (i) exchanges its equity  instruments  for goods or services,
or (ii) 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 the equity  instruments.  SFAS No. 123R  eliminates  the ability to
account  for  stock-based  compensation  using  APB 25 and  requires  that  such
transactions be recognized as compensation cost in the income statement based on
their fair values on the date of the grant.  SFAS No. 123R is effective  for the
Company in the first interim period  beginning  after December 15, 2005. We will
transition to fair value based accounting for stock-based  compensation  using a
modified   version   of   prospective    application    ("modified   prospective
application").  Under modified prospective  application,  as it is applicable to
us, SFAS No. 123R applies to new awards and to awards modified,  repurchased, or
cancelled  after  December 15,  2005.  Additionally,  compensation  cost for the
portion  of  awards  for  which  the  requisite  service  has not been  rendered
(generally  referring to non-vested  awards) that are outstanding as of December
15,  2005 must be  recognized  as the  remaining  requisite  service is rendered
during the period of and/or the periods after the adoption of SFAS No. 123R. The
attribution of compensation cost for those earlier awards will be based on the


                                      F-13
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF
         OPERATIONS AND USE OF ESTIMATES (CONTINUED)

same method and on the same grant-date fair values previously determined for the
pro forma  disclosures  required for companies that did not adopt the fair value
accounting method for stock-based  employee  compensation.  The adoption of SFAS
No. 123R is expected to have a  significant  impact on the  Company's  financial
statements.  The impact of adopting SFAS No. 123R cannot be accurately estimated
at this  time,  as it  will  depend  on the  market  value  and  the  amount  of
share-based awards granted in future periods.

Future  levels  of   compensation   cost   recognized   related  to  stock-based
compensation  awards  (including  the  aforementioned  expected costs during the
period  of  adoption)  may be  impacted  by  new  awards  and/or  modifications,
repurchases and  cancellations  of existing awards before and after the adoption
of this standard.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities,  an  Interpretation  of Accounting  Research  Bulletin No. 51 (Revised
December 2003),"  establishes  accounting guidance for consolidation of variable
interest  entities  (VIE) that function to support the activities of the primary
beneficiary.  The primary beneficiary of a VIE entity is the entity that absorbs
a majority  of the VIE's  expected  losses,  receives  a  majority  of the VIE's
expected  residual  returns,  or both,  as a result  of  ownership,  controlling
interest,  contractual  relationship or other business  relationship with a VIE.
Prior to the  implementation  of FIN 46, VIEs were generally  consolidated by an
enterprise  when the enterprise  had a controlling  financial  interest  through
ownership of a majority of voting interest in the entity.  The provisions of FIN
46 were effective  immediately for all  arrangements  entered into after January
31, 2003.  If a VIE existed  prior to February 1, 2003,  FIN 46 was effective at
the  beginning  of the first  interim  period  beginning  after  June 15,  2003.
However,  subsequent revisions to the interpretation deferred the implementation
date of FIN 46 until the first  period  ending  after  December  15,  2003.  The
adoption of this  standard did not have a  significant  impact on our  financial
statements.

FIN No. 45, "Guarantor's  Accounting and Disclosure Requirements for Guarantees,
Including Indirect  Guarantees of Indebtedness of Others -- an Interpretation of
FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34."

FIN 45  elaborates on the  disclosures  to be made by a guarantor in its interim
and annual financial  statements about its obligations under certain  guarantees
that it has issued. It also clarifies that a guarantor is required to recognize,
at the  inception  of a  guarantee,  a  liability  for  the  fair  value  of the
obligation  undertaken in issuing the  guarantee.  The initial  recognition  and
measurement  provisions  of FIN 45 were  applicable  on a  prospective  basis to
guarantees   issued  or  modified   after  December  31,  2002.  The  disclosure
requirements  of FIN 45 were  effective for  financial  statements of interim or
annual periods ending after December 15, 2002, and were adopted in our financial
statements  for the year ended  December 31, 2002. The adoption of this standard
did not have a significant impact on our financial statements.


                                      F-14
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2. PROPERTY & EQUIPMENT

At December 31, 2004 & 2003, property and equipment consists of the following:

                                                  2004            2003
                                              ------------    ------------

     Office furniture and equipment           $     58,433    $     58,433
     Machinery and equipment                        15,613          24,148
     Leasehold improvements                          3,000              --
                                              ------------    ------------
                                                    77,046          82,581
     Less: accumulated depreciation                (66,786)        (64,429)
                                              ------------    ------------
     Net property and equipment               $     10,260    $     18,152
                                              ============    ============

Depreciation  expense was $ 2,358 and $ 9,664,  for the years ended December 31,
2004 and 2003, respectively.


NOTE 3.  INVENTORY

As of December 31, 2004 and 2003, inventory consisted of the following:

                                                  2004            2003
                                              ------------    ------------

     Raw Materials                            $      9,428    $     24,299
     Finished Goods                                  5,704              --
                                              ------------    ------------
                                              $     15,132    $     24,299
                                              ============    ============
NOTE 4.  RELATED PARTY TRANSACTIONS

As of December 31, 2004 and 2003,  notes payable to related  parties  consist of
the following:

                                                       2004            2003
                                                   ------------    ------------

16% per annum note payable to stockholder,
principal and interest due March, 2005             $    300,000    $    300,000

15% per annum notes payable to stockholders,
principal and interest due at various times              83,000         239,000

18% per annum note payable to a stockholder,
principal and interest due on demand; unsecured              --          10,000
                                                   ------------    ------------
                                                        383,000         549,000
Less: Current Portion                                  (383,000)       (549,000)
                                                   ------------    ------------
                                                   $         --    $         --
                                                   ============    ============

                                      F-15
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY

On  January  4,  2005,  the  Board  of  Directors  approved  the  2004  Coronado
Industries,  Inc. Executive Stock Option Plan,  effective December 31, 2004. The
Plan  authorizes  the Company to grant  stock  options to key  employees  of the
Company.  Under the above Plan,  63,956,000 shares of common stock were reserved
for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2003                 --    $           --

     Granted                                  63,956,000             0.055
                                              ----------    --------------

     Outstanding at December 31, 2004         63,956,000    $        0.055
                                              ==========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

$ 0.055 - .0605   63,956,000       9.62        $  0.055       --       $     --


On  January  4,  2005,  the  Board  of  Directors  approved  the  2004  Coronado
Industries, Inc. Employee Stock Option Plan, effective January 4, 2005. The Plan
authorizes  the Company to grant stock  options to key employees of the Company.
Under the  above  Plan,  2,900,000  shares of common  stock  were  reserved  for
issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2003                 --    $           --

     Granted                                   2,900,000             0.055
                                              ----------    --------------

     Outstanding at December 31, 2004          2,900,000    $        0.055
                                              ==========    ==============

                                      F-16
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

    $ 0.055       2,900,000         10         $   0.06      --        $     --


On  January  4,  2005,  the  Board  of  Directors  approved  the  2004  Coronado
Industries,  Inc.  Executive  Bonus Stock Option Plan.  The Plan  authorizes the
Company to grant stock options to key employees of the Company.  Under the above
Plan, 15,000,000 shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2003                 --    $           --

     Granted                                  15,000,000              0.07
                                              ----------    --------------

     Outstanding at December 31, 2004         15,000,000    $         0.07
                                              ==========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ----------   --------

    $ 0.068       15,000,000       9.47        $   0.07   15,000,000   $   0.07


On  January  4,  2005,  the  Board  of  Directors  approved  the  2004  Coronado
Industries,  Inc.  Employee  Bonus Stock Option Plan.  The Plan  authorizes  the

                                      F-17
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

Company to grant stock options to key employees of the Company.  Under the above
Plan, 3,350,000 shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2003                 --    $           --

     Granted                                   3,000,000              0.07
                                              ----------    --------------

     Outstanding at December 31, 2004          3,000,000    $         0.07
                                              ==========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

    $ 0.068       3,000,000        9.47        $   0.07   3,000,000    $   0.07


On  September  19,  2003  the  Board of  Directors  approved  the 2003  Coronado
Industries, Inc. Executive Stock Option Plan. The Plan authorizes the Company to
grant  stock  options to key  employees  of the  Company.  Under the above Plan,
50,894,000 shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002                 --    $           --

     Granted                                  50,894,000             0.033
                                              ----------    --------------
     Outstanding at December 31, 2003         50,894,000             0.033

     Exercised                                        --                --
                                              ----------    --------------

     Outstanding at December 31, 2004         50,894,000    $        0.033
                                              ==========    ==============

                                      F-18
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ----------   --------

$ 0.011 - 0.077   50,894,000       7.97        $  0.033   50,894,000   $  0.033

On  September  30,  2003  the  Board of  Directors  approved  the 2003  Coronado
Industries,  Inc. Employee Stock Option Plan. The Plan authorizes the Company to
grant  stock  options to key  employees  of the  Company.  Under the above Plan,
2,100,000 shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002                 --    $           --

     Granted                                   2,100,000              0.07
                                              ----------    --------------
     Outstanding at December 31, 2003          2,100,000              0.07

     Exercised                                  (300,000)             0.07
                                              ----------    --------------

     Outstanding at December 31, 2004          1,800,000    $         0.07
                                              ==========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

     $ 0.07       1,800,000        8.91        $   0.07   1,800,000    $   0.07


                                      F-19
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

On  January  13,  2003  the  Board  of  Directors  approved  the  2002  Coronado
Industries,  Inc. Management Stock Option Plan,  effective December 31, 2002 The
Plan  authorizes  the Company to grant  stock  options to key  employees  of the
Company.  Under the above Plan,  90,000,000 shares of common stock were reserved
for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002         90,000,000    $        0.012

     Exercised                                        --                --
     Canceled                                (84,000,000)            0.012
                                             -----------    --------------
     Outstanding at December 31, 2003          6,000,000             0.012

     Exercised                                        --             0.012
                                             -----------    --------------

     Outstanding at December 31, 2004          6,000,000    $        0.012
                                             ===========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

 $ 0.01 - 0.02    6,000,000        6.16        $  0.012   6,000,000    $  0.012


On  January  13,  2003  the  Board  of  Directors  approved  the  2002  Coronado
Industries,  Inc.  Employee Stock Option Plan,  effective  December 31, 2002 The
Plan  authorizes  the Company to grant  stock  options to key  employees  of the
Company.  Under the above Plan,  42,000,000 shares of common stock were reserved
for issuance.

A summary of the activity of plan is as follows:

                                      F-20
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

Outstanding at December 31, 2002              42,000,000    $         0.01

Exercised                                     (2,100,000)               --
Canceled                                     (39,400,000)             0.01
                                             -----------    --------------
Outstanding at December 31, 2003                 500,000              0.01

Exercised                                       (100,000)             0.01
                                             -----------    --------------

Outstanding at December 31, 2004                 400,000    $         0.01
                                             ===========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

    $ 0.01         400,000         7.03        $   0.01    400,000     $   0.01

On  December  26,  2001  the  Board of  Directors  approved  the  2001  Coronado
Industries,  Inc.  Management Stock Option Plan. The Plan authorizes the Company
to grant stock  options to key  employees of the Company.  Under the above Plan,
2,963,500 shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002          2,963,500    $         0.16

     Exercised                                        --              0.16
                                              ----------    --------------
     Outstanding at December 31, 2003          2,963,500              0.16

     Exercised                                        --                --
                                              ----------    --------------
     Outstanding at December 31, 2004          2,963,500    $         0.16
                                              ==========    ==============

                                      F-21
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

 $ 0.10 - 0.22    2,963,500        4.68        $   0.16   2,963,500    $   0.16

On  December  26,  2001  the  Board of  Directors  approved  the  2001  Coronado
Industries,  Inc. Employee Stock Option Plan. The Plan authorizes the Company to
grant  stock  options to key  employees  of the  Company.  Under the above Plan,
750,000 shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002            750,000    $         0.20

     Exercised                                        --                --
     Canceled                                    (25,000)             0.20
                                              ----------    --------------
     Outstanding at December 31, 2003            725,000              0.20

     Exercised                                        --                --
                                              ----------    --------------

     Outstanding at December 31, 2004            725,000    $         0.20
                                              ==========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

    $ 0.20         725,000         6.98        $   0.20    725,000     $   0.20


                                      F-22
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

On January 2, 2001 the Board of Directors approved the 2000 Coronado Industries,
Inc.  Management  Bonus Stock Option Plan.  The Plan  authorizes  the Company to
grant  stock  options to key  employees  of the  Company.  Under the above Plan,
6,000,000 shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002          6,000,000    $        0.135

     Exercised                                        --                --
                                              ----------    --------------
     Outstanding at December 31, 2003          6,000,000             0.135

     Exercised                                        --                --
                                              ----------    --------------

     Outstanding at December 31, 2004          6,000,000    $        0.135
                                              ==========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

    $ 0.135       6,000,000        6.00        $  0.135   6,000,000    $  0.135

On January 2, 2001 the Board of Directors approved the 2000 Coronado Industries,
Inc.  Management  Stock Option Plan.  The Plan  authorizes  the Company to grant
stock options to key employees of the Company.  Under the above Plan,  2,599,999
shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                      F-23
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002          2,599,999    $        0.198

     Exercised                                        --                --
                                              ----------    --------------
     Outstanding at December 31, 2003          2,599,999             0.198

     Exercised                                        --                --
                                              ----------    --------------

     Outstanding at December 31, 2004          2,599,999    $        0.198
                                              ==========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

    $ 0.198       2,599,999        4.72        $  0.198   2,599,999    $  0.198

On January 2, 2001 the Board of Directors approved the 2000 Coronado Industries,
Inc.  Employee Stock Option Plan. The Plan authorizes the Company to grant stock
options to key employees of the Company. Under the above Plan, 625,000 shares of
common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002            525,000    $        0.135

     Exercised                                        --                --
     Canceled                                    (25,000)            0.135
                                              ----------    --------------
     Outstanding at December 31, 2003            500,000             0.135

     Exercised                                        --                --
                                              ----------    --------------

     Outstanding at December 31, 2004            500,000    $        0.135
                                              ==========    ==============

                                      F-24
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

    $ 0.135        500,000         6.00        $  0.135    500,000     $  0.135

On  November  3,  1999  the  Board  of  Directors  approved  the  1999  Coronado
Industries,  Inc. Employee Stock Option Plan. The Plan authorizes the Company to
grant  stock  options to key  employees  of the  Company.  Under the above Plan,
575,000 shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002            575,000    $         0.20

     Exercised                                        --                --
     Canceled                                    (25,000)             0.20
                                              ----------    --------------
     Outstanding at December 31, 2003            550,000              0.20

     Exercised                                        --                --
                                              ----------    --------------

     Outstanding at December 31, 2004            550,000    $         0.20
                                              ==========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

    $  0.20        550,000         4.84        $   0.20    550,000     $   0.20


                                      F-25
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

On  November  3,  1999  the  Board  of  Directors  approved  the  1999  Coronado
Industries,  Inc. Management Stock Option Plan,  effective December 31, 2002 The
Plan  authorizes  the Company to grant  stock  options to key  employees  of the
Company.  Under the above Plan,  1,400,000  shares of common stock were reserved
for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002          1,400,000    $         0.20

     Exercised                                        --                --
                                              ----------    --------------
     Outstanding at December 31, 2003          1,400,000              0.20

     Expired                                   1,400,000              0.20
                                              ----------    --------------
     Outstanding at December 31, 2004                 --    $           --
                                              ==========    ==============

On  December  21,  1998  the  Board of  Directors  approved  the  1998  Coronado
Industries,  Inc.  Stock Option Plan.  The Plan  authorizes the Company to grant
stock options to key employees of the Company.  Under the above Plan,  1,550,000
shares of common stock were reserved for issuance.

A summary of the activity of plan is as follows:

                                                NUMBER         AVERAGE
                                              OF OPTIONS    EXERCISE PRICE
                                              ----------    --------------

     Outstanding at December 31, 2002          1,350,000    $        0.056

     Exercised                                        --                --
                                              ----------    --------------
     Outstanding at December 31, 2003          1,350,000             0.056

     Exercised                                        --                --
                                              ----------    --------------

     Outstanding at December 31, 2004          1,350,000    $        0.056
                                              ==========    ==============

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of December 31, 2004:

                                      F-26
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  SHAREHOLDERS' EQUITY (CONTINUED)

                           OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  -------------------------------------   ---------------------
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                WEIGHTED
                                 REMAINING     AVERAGE                 AVERAGE
    EXERCISE      NUMBER OF     CONTRACTUAL    EXERCISE   NUMBER OF    EXERCISE
     PRICE         SHARES     LIFE (IN YEARS)   PRICE      SHARES       PRICE
---------------  -----------  ---------------  --------   ---------    --------

    $ 0.075       1,350,000        3.97        $  0.053   1,350,000    $  0.053

The fair value of option  grants is estimated as of the date of grant  utilizing
the  Black-Scholes  option-pricing  model with the  following  weighted  average
assumptions  for all  grants,  expected  life of options of five (5) to ten (10)
years, risk-free interest rates of five percent (5%) volatility of 104% to 122%,
and a zero percent (0%) dividend yield.  The weighted average fair value at date
of grant for options  granted  during the years ended December 31, 2004 and 2003
approximated $.046 - .063 and $.01 - .088, respectively.

During  July,  2004 the  Board  of  Directors  adopted  the  2004  Employee  and
Consultant  Compensation  Plan for its employees and marketing,  legal and other
consultants. The Board voted to make available 10,000,000 shares of common stock
of the Corporation which may be purchased by conversion of accrued  compensation
at a  negotiated  purchase  price of not less than ninety  percent of the lowest
closing bid price in the week prior to when the accrued salary or wages are due.

NOTE 6. INCOME TAXES

As of December 31, 2004, the components of deferred income taxes are as follows:

     Long-term Deferred Tax Assets (Liabilities)

     Net operating loss carryforwards      $ 5,400,000
     Less: valuation allowance              (5,400,000)
                                           -----------
     Net Long-term Deferred Tax Asset      $        --
                                           ===========

The Company has provided a full valuation allowance on its deferred tax asset as
of December 31, 2004.  The valuation  allowance  changed by $700,000  during the
year ended December 31, 2004, primarily due to the increase in the net operating
losses offset by the expiration of net operating loss carryforwards.

As of  December  31,  2004,  the  Company has net  operating  loss  carryfowards
available to offset future  federal and state  taxable  income in the amounts of
approximately  $13,786,000  and  $10,027,000,   respectively,  and  expiring  as
follows:

                                      F-27
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6. INCOME TAXES (CONTINUED)

                  NET LOSS CARRYFORWARD              YEAR OF
                    AMOUNT AVAILABLE               EXPIRATION
                 -----------------------      ---------------------
        YEAR       FEDERAL      STATE         FEDERAL      STATE
        ----     ----------  -----------      ---------   ---------

        1993        137,000           --         2008         --
        1994         65,000           --         2009         --
        1995         97,000           --         2010         --
        1996         31,000           --         2011         --
        1997        561,000           --         2012         --
        1998      1,820,000           --         2018         --
        1999      1,048,000           --         2019         --
        2000      3,206,000    3,206,000         2020       2005
        2001      2,400,000    2,400,000         2021       2006
        2002      1,315,000    1,315,000         2022       2007
        2003      1,136,000    1,136,000         2023       2008
        2004      1,970,000    1,970,000         2024       2009
                 ----------   ----------
                 13,786,000   10,027,000
                 ==========   ==========

NOTE 7. COMMITMENTS

The  Company  leased  office  space  in  Fountain   Hills,   Arizona,   under  a
non-cancelable operating lease agreement which expired in June, 2001. Subsequent
to  the  expiration,  the  Company  had  continued  to  lease  the  space  on  a
month-to-month basis.

The Company moved  operations  to new  facilities in November 2004 at which time
the Company entered into a new  non-cancelable  lease agreement for office space
in Fountain  Hills,  Arizona  commencing  December 1, 2004 through  December 15,
2009.

Future minimum lease payments under the Company's operating lease as of December
31, 2004 are as follows:

             Year Ending December 31:
             2005                            $ 54,240
             2006                              54,240
             2007                              54,240
             2008                              54,240
             2009                              54,240
                                             --------
             Future minimum lease payments   $271,200
                                             ========


For the years ended  December 31, 2004 and 2003,  rent  expense  under the lease
agreements was $ 39,061 and $33,363, respectively.


                                      F-28
<PAGE>

                    CORONADO INDUSTRIES, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8. NOTE PAYABLES

                                                       2004            2003
                                                   ------------    ------------

15% per annum note payable to Robert Suliot,
principal and interest payable on demand,
through March, 2005 and convertible into
300,000 shares of common stock at maturity         $     25,000    $     25,000

15% per annum note payable to Robert Suliot,
principal and interest payable on demand,
through September, 2005 and convertible into
300,000 shares of common stock at maturity               25,000              --

15% per annum note payable to Robert Suliot,
principal and interest payable on demand,
through, November 2005 and convertible into
300,000 shares of common stock at maturity               25,000              --

15% per annum note payable to Robert Suliot,
principal and interest payable on demand,
through December, 2005 and convertible into
300,000 shares of common stock at maturity               25,000              --

15% per annum note payable to Julius Gelber,
principal and interest payable on demand,
through March 2004                                           --          25,000

6.5% per annum note payable to Premium Financing
Specialists, Inc. with principal and interest
payments of $5,756 though June 2004;
uncollateralized                                             --          33,616
                                                   ------------    ------------
                                                        100,000          83,616
Less: current portion                                  (100,000)        (83,616)
                                                   ------------    ------------
                                                   $         --    $         --
                                                   ============    ============

NOTE 9. SUBSEQUENT EVENTS

During  January 2005,  officers of the Company  agreed to forgive  approximately
$688,000 in accrued salaries.

On February 1, 2005,  loans from three  directors  in the  aggregate of $125,000
plus  accrued  interest  were repaid upon the  exercise,  by the  directors,  of
8,588,482 options to purchase the Company's common stock.

                                      F-29