U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________

COMMISSION FILE NUMBER: 0-30448

5G WIRELESS COMMUNICATIONS, INC.
(Exact Name of Company as Specified in Its Charter)

Nevada 20-0420885
(State or Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification No.)

4136 Del Rey Avenue, Marina del Rey, California 90292
(Address of Principal Executive Offices) (Zip Code)

Company's telephone number: (310) 448-8022

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

Securities registered pursuant to Section 12(g) of the Act: Common
stock, $0.001 par value

Indicate by check mark if the Company is a well-seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes No X .

Indicate by check mark if the Company is required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act. Yes X No .

Indicate by check mark whether the Company (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Company was required to file such reports),
and (2) been subject to such filing requirements for the past 90 days.
Yes X No .

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

Indicate by check mark whether the Company is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act): Yes No X .

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

As of March 24, 2006, the Company had 4,454,403 shares of common
stock issued and outstanding. The aggregate market value of the
voting stock held by non-affiliates of the Company as of March 24,
2006: $2,675,423.

TABLE OF CONTENTS

PART I. PAGE

ITEM 1. BUSINESS 5

ITEM 1A RISK FACTORS 12

ITEM 1B UNRESOLVED STAFF COMMENTS 23

ITEM 2. PROPERTIES 23

ITEM 3. LEGAL PROCEEDINGS 23

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 24

PART II.

ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES 25

ITEM 6 SELECTED FINANCIAL DATA 26

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 27

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 37

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 37

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 37

ITEM 9A. CONTROLS AND PROCEDURES 37

ITEM 9B OTHER INFORMATION 38

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY 40

ITEM 11. EXECUTIVE COMPENSATION 46

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS 47

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 50

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 52

PART IV.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 54

SIGNATURES 54

PART I.

ITEM 1. BUSINESS.

Corporate History.

5G Wireless Communications, Inc. ("Company") was incorporated as
Tesmark, Inc. in September 1979. In November 1998, the Company
changed its state of incorporation from Idaho to Nevada and in January
2001 changed its name to 5G Wireless Communications, Inc. In March
2001, the Company acquired 5G Partners, a Canadian partnership, and
changed its business to provide wireless technology systems through
high speed Internet access and data transport systems. In April 2002,
the Company acquired Wireless Think Tank, Inc., a developer of high-
speed long distance wireless technologies. In July 2003, the Company
shifted its strategy from that of a service provider to an equipment
manufacturer, or OEM.

On January 21, 2003, the Company's articles of incorporation were
amended to do the following: (a) increase the authorized shares of
common stock of the Company to 800,000,000; (b) in the future, an
increase in the authorized capital stock of the company can be
approved by the board of directors without stockholder consent; and
(c) in the future, a decrease in the issued and outstanding common
stock of the company (a reverse split) can be approved by the board of
directors without stockholder consent. Effective on September 16,
2004, the Company amended its articles of incorporation to increase
the number of authorized shares of common stock from 800,000,000 to
5,000,000,000.

On October 19, 2004, the Company elected, by the filing of a Form
N-54A with the Securities and Exchange Commission ("SEC"), to be
regulated as a business development company ("BDC") under the
Investment Company Act of 1940 ("1940 Act"). On December 31, 2004,
the Company transferred certain assets and certain liabilities of the
Company into 5G Wireless Solutions, Inc. in exchange for 100% of the
outstanding shares of this company's common stock.

On June 3, 2005, the Company's board of directors unanimously
determined that it would be in the best interests of the Company and
its stockholders to seek stockholder approval on certain matters.
Pursuant to a definitive Schedule 14A proxy statement filed with the
SEC on September 19, 2005, the Company sought approval from the
stockholders, at the annual stockholder's meeting scheduled for
October 20, 2005, for the following (among other things): (a) to
terminate the Company's status as a BDC under the 1940 Act and to file
a Form N-54C with the SEC to terminate this status, and (b) to file a
new registration statement with the SEC.

On October 20, 2005, the Company's stockholders approved (among
other things) (a) the termination of the Company's status as a BDC
under the 1940 Act and the filing of a Form N-54C with the SEC, and
(b) the filing of a new registration statement. Based on this
approval, on October 21, 2005, the Company filed a Form N-54C with the
SEC terminating its status as a BDC. Accordingly, the accompanying
balance sheets as of December 31, 2005 and 2004 have been presented on
a consolidated basis.

On November 3, 2005, the Company's Board of Directors approved a
1 for 350 reverse stock split of the Company's common stock. Common
shares outstanding prior to and after the reverse stock split totaled
1,169,494,405 and 3,341,419 shares, respectively. The November 23,
2005 reverse stock split has been retroactively reflected in the
accompanying financial statements for all periods presented. Unless
otherwise indicated, all references to outstanding common shares,
including common shares to be issued upon the exercise of warrants and
convertible notes payable, refer to post-split shares.

On January 19, 2006, 5G Wireless Solutions, Inc. was merged with
and into the Company.

Business of the Company.

(a) Technology.

The Company is a developer and manufacturer of wireless broadband
communications equipment operating on the 802.11a/b/g frequency. The
term "Wi-Fi" is a commonly used term that has come to stand for
'Wireless Fidelity' and is based on the IEEE 802.11 standard. Wi-Fi is
an RF signal based on the IEEE 802.11 standard and is capable of
transmitting and receiving signals to most Wi-Fi enabled laptops and
other Wi-Fi enabled devices up to 800 meters. It uses spread spectrum
multiple access (SSMA) that supports high data rates with very low
latency, over a distributed all-IP wireless network that can penetrate
walls and associated structures. Wi-Fi shares the unregulated, 2.4
GHz radio spectrum along with other common wireless devices including
cordless phones and baby monitors. Wi-Fi is primarily meant for use
in a local area wireless network and for Internet access. As an
alternative to current wire line broadband, Wi-Fi offers the
opportunity of relatively inexpensive, mobile Internet access.

The Company's products (base stations) are used to transmit and
receive wireless signals to and from other wireless devices, typically
laptop computers or personal digital assistants. The base stations
conform to the predominant industry standard for wireless networks:
IEEE 802.11. The 802.11 standard, and all its associated standards
(e.g., 802.11a, 802.11b, etc.), form the "rules" by which compliant
wireless devices can communicate. In this manner, all devices that
follow these rules can communicate with each other, without the need
for interoperability testing.

There are several merchant suppliers of 802.11 compliant
semiconductor chips that form the basis of the Company's finished
products. The Company combines these semiconductor chips with off-
the-shelf electronic hardware (including amplifiers, antennas, cables,
filters and power supplies) and in-house customized software to
produce the finished products.

(b) Products

The Company's family of indoor and outdoor wireless base stations
are built on two basic building block products: a 120 degree outdoor
sector base station and an 18 degree indoor base station.

By combining the outdoor sector base stations, three separate
products emerge: a 120 degree sector base station, a 240 degree sector
base station and a 360 degree sector base station. Multiples of these
base stations in some combination are deployed from towers or the
roofs of tall buildings to provide outdoor wireless coverage to large
areas like campuses and municipalities.

By combining indoor base stations, two separate products emerge:
an 18 degree indoor base station and a 36 degree indoor base station.
These 18 degree and 36 degree indoor base stations are combined to
provide indoor wireless coverage to large buildings, as is typically
found on a college campus.

The 802.11 standards, along with FCC rules (like Title 47 of the
Code of Federal Regulations, Part 15) that specify maximum transmit
power imply a limit as to the effective wireless range of a compliant
base station. Since it is expensive to wirelessly cover a large
outdoor area like a campus or municipality, there is a strong
incentive to maximize the wireless range of a base station.

Through a proprietary combination of the industry-standard 802.11
chips, off-the-shelf electronic hardware and in-house customized
software, the Company has developed what it believes is the optimal
system design for maximizing the range of wireless networking
equipment. With this trade-secret system design, the Company has
positioned itself at the forefront of the emerging wireless wide area
network (W-WAN) marketplace for the following reasons:

- The Company believes it is the first to market this "optimal"
design for maximum range, and while others may, through extensive
research and development, ultimately develop a similarly
performing design.

- Total cost of ownership ("TCO") is or will be the driving factor
in rolling out new campus and municipal wireless networks.

- TCO depends more on operating expense than the cost of the
base stations

- Operating expense is a direct function of the number of base
stations

- Maximizing the range of the base station reduces the number
required thereby minimizing TCO

- The Company's believes its base station is better suited to
wirelessly cover campuses and municipalities compared to the
other approaches being utilized today: mesh

- Mesh networks suffer from serious bandwidth degradation problems
which limits their use to only low-bandwidth applications

- Mesh networks require many more base stations, which makes it
higher in TCO

The Company's strategy is to secure a leadership position as a
broadband wireless equipment provider to the university campus and
small to midsize citywide markets, while maximizing profits based on
superior gross margins and low overhead costs. Critical to the
Company's success in this market is its advantage over competitive Wi-
Fi equipment providers that require an excessive number of access
points to provide wireless coverage in any given area. It has been
repeatedly demonstrated that the Company's "Access Not Excess"
approach allows one of its rooftop base stations to replace up to 25
standard access points, thus offering a client considerable cost
savings. These savings occur not only on the front end, in terms of
reduced capital hardware expenses, but moreover, in terms of ongoing
operating expenses as less equipment requires less ongoing maintenance
and network administration. This formula: TCO (Total Cost of
Ownership) = CapEx (Capital Expenses) + OpEx (Operating Expenses) is
the basis of the Company's value proposition: significantly increased
performance at the lowest possible TCO. This is quickly becoming the
key consideration in the strategic deployment of the wireless experience.

(d) Market Overview

Estimated worldwide shipments of WLAN equipment products
increased 6% in 2005 to total $5.2 billion and are expected to
increase to $5.9 billion in 2006 despite a 23% average drop in selling
price (Forward Concepts, 2005).

Consumers and enterprises continue to redefine their levels of
connectivity and interactivity while elevating their expectations for
wireless Internet access. This demand is being met on university
campuses, where roughly 90% have experimented with some type of
fragmentary wireless hotspot. The campus market is now moving to a
"campus-wide" approach, and the Company's equipment offers a superior,
low-cost solution. These campuses that have used competitive
equipment usually express dissatisfaction with the number of access
points required and the difficulty maintaining them, which provides a
receptive audience for the Company's rooftop base station solution.

The municipal market is accelerating rapidly. Large cities such
as Philadelphia and San Francisco have announced plans for citywide
networks, which has driven awareness of the phenomenon nationwide, the
Company intends to focus on the small to mid-size city markets to
avoid the political complications, and long lead time, inherent in
major metro installations. This is also a logical fit with the
Company's technology approach as large campuses resemble small cities,
and small cities resemble big campuses. Other growth industries for
wireless broadband include healthcare, recreation, shipping, and
international, and the Company has proven installations in each. The
international market is particularly lucrative as many third world
nations are now rapidly progressing toward the need for citywide
network infrastructures, and can dispense with both telephone and
cable wire line networks and advance directly to a wireless approach.

The Company intends to target the following markets:

Market Solution

Universities and Corporate Campuses The solution can replace VPN lines
with direct and secure wireless
connections, which can provide
always-on roaming capabilities
around the campus, with Internet
access-control managed at the
classroom or office level. In
addition, with the Company's access
points the wireless connection can
cover multiple campuses in the same
city and allow individual end-users
to stay connected while off campus.

Municipalities The solution can provide a network
covering over six mile point-to-
point shots that meet the security
requirements critical for the
passage of government and police
documents between departments,
stations and substations.

Government & Military The solutions create a private
network designed to be able to
handle highly sensitive data
including surveillance camera, full
motion video, remote censoring, etc.

Wireless ISP The solution delivers one of the
fastest returns on investment for
the ISP's. The solution virtually
eliminates the need for multiple
towers and connectivity by covering
areas as large as 10 sq. miles
which can support a large number of
concurrent users per access point,
while servicing clients with
greater throughputs and quality of
service than traditional wireless
solutions.

(e) Distribution Channel Strategy.

Currently, the Company services clients through a two-tier
distribution model. In addition to having an OEM element, the
majority of the current sales have been through direct sales, which
are mostly from domestic sources. The Company anticipates that it
will grow its sales through its value added resellers and distribution
channels.

Select international accounts will lead the way to greater
expansion overseas as it progresses. Additionally, the Company
expects that it will have a number of VAR relationships that will
continue to grow as more value added resellers learn about its
technology.

(f) Sales and Marketing

The Company currently sells its products through a team of five
salespersons and the efforts of its corporate officers. The Company's
average sales cycle exceeds six months from the time of initial
contact to shipment of products. In an effort to improve sales, the
Company is looking to add independent sales representatives and/or
agencies that are compensated on a commission basis.

The Company markets its products to colleges, universities,
governmental entities, commercial enterprises and systems integrators
via direct mail, telemarketing, direct sales, distributors and value
added resellers throughout the United States, Canada, Africa and
several other countries.

For fiscal 2005, campus environment, such as universities and
municipalities, represented 52% of the Company's business, while 48%
was through value added resellers and wireless Internet service
providers.

As the Company is developing its platform, its technology and
field services partners will be a part of its sales and marketing
effort, as the coordination of network design, field deployment and
ongoing service support requires appropriate teaming arrangements for
high quality design, installation and ongoing service support.

As many of the Company's customers are established colleges and
universities, the Company expects its sales force to attend and
participate in industry associations and trade shows to support and
supplement its sales and marketing activity.

(g) Major Customers.

In 2004, the Company had no material customers that accounted for
more than 10% of revenues. For the year ended December 31, 2005,
there were two customers that accounted for more than 10% of revenues:
SRS (10%) and IAMA (30%). These two customers closed operations
unexpectedly in mid-2005. The Company recognized approximately
$630,000 in bad debt related to these uncollectible receivables.

(h) Research and Development.

The Company has defined a robust roadmap for the development of
additional products intended to enhance network performance, decrease
product costs, improve manufacturing, analyze outsource options, and
expand the range of customer applications. This includes refined and
completely new access point and client premise equipment (CPE) designs
that complement current products. It also includes new antenna
designs that could open up new markets for the Company.

All developed products and projects must meet a minimum return on
investment in order to be considered for development. The Company
believes this will help to ensure that it is utilizing resources
correctly, that assets are being deployed properly, and that all
projects ultimately add stockholder value. Areas of positive return on
investment development include:

- A less-expensive, yet high-performance CPE device designed for
WISP applications and other requirements for extending the range
of a PC laptop.

- Base stations that operate at various frequencies along the
spread spectrum within legal limits.

- WiMAX (IEEE 802.16) products that have a variety of applications
including backhauling and mobility, etc.

- Public safety and homeland security applications designed to
serve the needs of police, fire and other emergency vehicles and
field operators.

For the fiscal years 2005 and 2004, all internal research and
development costs were charged to expense as incurred. Third-party
research and development costs are expensed when the contracted work
has been performed or as milestone results have been achieved.
Company-sponsored research and development costs related to both
present and future products are expensed in the period incurred.
Research and development costs for the years ended December 31, 2005
and 2004 were $209,543 and $9,867, respectively.

(i) Competition.

The Company operates in the highly competitive communications
equipment market. The Company expects to compete primarily on the
basis of its fixed wireless equipment portfolio, experience and
technical skills, competitive pricing model, service quality,
reliability and deployment speed.

The Company's principal competitors are other equipment
manufacturers that utilize fixed wireless technology, including Cisco
Systems Inc. and Tropos Networks, Inc. Cisco currently possesses
approximately 60% of the wireless equipment market for colleges and
universities, while Tropos Networks, Inc. has a lead in the municipal
market with more than 150 customers and 90 value added resellers
throughout the world. Cisco Systems, Inc. and Tropos Networks, Inc.
both utilize a dense access point deployment or mesh network
architecture. There are approximately 8 other major competitors; some
of these include: Belair and Strix offering mesh network solutions
across a broad range of vertical markets, Terrabeam and Aruba
providing base station equipment approaches similar to those of the
Company, Airespace (now Cisco), Meru and Colubris all offering
integrated dense access point deployment architecture coupled with a
variety of service to comprise an enterprise solution. There is a
relatively high cost of entry into this space given the need for proof
of reliability and the long lead-time associated with establishing
brand awareness through marketing communications. To date, the Company
has not encountered any barriers to competition imposed by the
practices of any of its competitors such as, for example, exclusivity
agreements with the Company's potential customer base.

Many of the Company's competitors have longer operating
histories, long-standing relationships with customers and suppliers,
greater name recognition and greater financial, technical and
marketing resources than the Company does and, as a result, may have
substantial competitive advantages over the Company. Additionally,
market perceptions as to reliability and security for the relatively
early-stage fixed wireless networks as compared to copper or fiber
networks provide the Company with additional marketing challenges.
The Company may not be able to exploit new or emerging technologies or
adapt to changes in customer requirements more quickly than these
competitors, or devote the necessary resources to the marketing and
sale of its products.

The Company believes that the market for broadband communication
equipment is likely to remain highly competitive, and will continue to
be characterized by new and potentially disruptive technology
introduction, shrinking per-customer revenues, and fiercely
competitive pricing.

(j) Regulation.

Internet-based communication equipment makers generally are not
subject to federal fees or taxes imposed to support programs such as
universal telephone service. Changes in the rules or regulations of
the U.S. Federal Communications Commission or in applicable federal
communications laws relating to the imposition of these fees or taxes
could result in significant new operating expenses for the Company,
and could negatively impact the Company's business. Any new law or
regulation, U.S. or foreign, pertaining to Internet-based
communications products, or changes to the application or
interpretation of existing laws, could decrease the demand for the
Company's products, increase its cost of doing business or otherwise
harm its business. There are an increasing number of laws and
regulations pertaining to the Internet. These laws or regulations may
relate to taxation and the quality of products. Furthermore, the
applicability to the Internet of existing laws governing intellectual
property ownership and infringement, taxation, encryption, obscenity,
libel, employment, personal privacy, export or import matters and
other issues is uncertain and developing and the Company is not
certain how the possible application of these laws may affect the
Company. Some of these laws may not contemplate or address the unique
issues of the Internet and related technologies. Changes in laws
intended to address these issues could create uncertainty in the
Internet market, which could reduce demand for the Company's products,
increase its operating expenses or increase its litigation costs.

(k) Employees.

The Company has fifteen full-time employees, and three
contractors. The Company believes that its relationship with
employees is satisfactory. The Company has not suffered any labor
problems during the last two years.

ITEM 1A. RISK FACTORS.

Risks Related to the Business.

History of Losses May Continue, Requiring Additional Sources of
Capital, Which May Result in Curtailing of Operations and Dilution to
Existing Stockholders.

The Company incurred net losses of $4,025,012 for the year ended
December 31, 2005 and $4,989,200 for the year ended December 31, 2004.
The Company cannot assure that it can achieve or sustain profitability
on a quarterly or annual basis in the future. If revenues grow more
slowly than anticipated, or if operating expenses exceed expectations
or cannot be adjusted accordingly, the Company will continue to incur
losses. The Company's possible success is dependent upon the
successful development and marketing of its products, as to which
there is no assurance. Any future success that the Company might
enjoy will depend upon many factors, including factors out of the
Company's control or which cannot be predicted at this time. These
factors may include changes in or increased levels of competition,
including the entry of additional competitors and increased success by
existing competitors, changes in general economic conditions,
increases in operating costs, including costs of supplies, personnel
and equipment, reduced margins caused by competitive pressures and
other factors. These conditions may have a materially adverse effect
upon the Company or may force it to reduce or curtail operations. In
addition, the Company will require additional funds to sustain and
expand its sales and marketing activities, particularly if a well-
financed competitor emerges. The Company anticipates that it will
require additional funds to continue operations for the next twelve
months. There can be no assurance that financing will be available in
amounts or on terms acceptable to the Company, if at all. The
inability to obtain sufficient funds from operations or external
sources would require the Company to curtail or cease operations. Any
additional equity financing may involve substantial dilution to then
existing stockholders.

Independent Auditors Have Expressed Substantial Doubt Regarding the
Company's Ability to Continue as a Going Concern.

In their report dated March 13, 2006, the Company's independent
auditors stated that the financial statements for the years ended
December 31, 2005 and 2004 were prepared assuming that the Company
would continue as a going concern. The Company's ability to continue
as a going concern is an issue raised as a result of cash flow
constraint, an accumulated deficit of $22,784,667 at December 31, 2005
and recurring losses from operations. The Company continues to
experience net losses. The Company's ability to continue as a going
concern is subject to the ability to generate a profit and/or obtain
necessary funding from outside sources, including obtaining additional
funding from the sale of the Company's securities, increasing sales or
obtaining loans from various financial institutions where possible.
The continued net losses and stockholders' deficit increases the
difficulty in meeting such goals and there can be no assurances that
such methods will prove successful.

The Company May Not Be Able to Accommodate Rapid Growth Which Could
Decrease Revenues and Result in a Loss of Customers.

The Company is currently selling and installing Wi-Fi equipment
in universities and municipalities. To manage anticipated growth, the
Company must continue to implement and improve its operational,
financial and management information systems. The Company must also
hire, train and retain additional qualified personnel, continue to
expand and upgrade core technologies, and effectively manage its
relationships with end users, suppliers and other third parties. The
Company's expansion could place a significant strain on its current
services and support operations, sales and administrative personnel,
capital and other resources. The Company could also experience
difficulties meeting demand for its products. The Company cannot
guaranty that its systems, procedures or controls will be adequate to
support operations, or that management will be capable of fully
exploiting the market. The Company's failure to effectively manage
growth could adversely affect its business and financial results.
The Company's Customers Require a High Degree of Reliability in
Equipment and If the Company Cannot Meet Their Expectations, Demand
for Its Products May Decline.

Any failure to provide reliable equipment for the Company's
customers, whether or not caused by their own failure, could reduce
demand for the Company's products. Because the Company has only
recently begun to place customers on its Wi-Fi system, the Company
does not have substantial experience in gauging negative customer response.

Dependence on Suppliers May Affect the Ability of the Company to
Conduct Business.

The Company depends upon a number of suppliers for components of
its products. There is an inherent risk that certain components of
the Company's products will be unavailable for prompt delivery or, in
some cases, discontinued. The Company only has limited control over
any third-party manufacturer as to quality controls, timeliness of
production, deliveries and various other factors. Should the
availability of certain components be compromised, it could force the
Company to develop alternative designs using other components, which
could add to the cost of goods sold and compromise delivery
commitments. If the Company is unable to obtain components in a
timely manner, at an acceptable cost, or at all, it may need to select
new suppliers, redesign or reconstruct processes used to build its
devices. In such an instance, the Company would not be able to
manufacture any devices for a period of time, which could materially
adversely affect its business, results from operations, and financial
condition.

The Company Faces Strong Competition in Its Market, Which Could Make
It Difficult for the Company to Generate Income

The market for wireless products is highly competitive. The
Company's future success will depend on its ability to adapt to
rapidly changing technologies, evolving industry standards, product
offerings and evolving demands of the marketplace. The Company
competes for customers primarily with facilities-based carriers, as
well as with other non-facilities-based network operators. Some of
the Company's competitors have substantially greater resources, larger
customer bases, longer operating histories and greater name
recognition than the Company has.

- Some of our competitors provide functionalities that the Company
does not. Potential customers who desire these functions may
choose to obtain their equipment from the competitor that
provides these additional functions.

- Potential customers may be motivated to purchase their wireless
Internet equipment from a competitor in order to maintain or
enhance their respective business relationships with that
competitor.

In addition, the Company's competitors may also be better
positioned to address technological and market developments or may
react more favorably to technological changes. The Company competes
on the basis of a number of factors, including:

- range

- non-line of sight capabilities

- data rate

- security scheme

- simultaneous users

- implementation cost

Competitors may develop or offer products that provide
significant (technological, creative, performance, price) or other
advantages over the products offered by the Company. If the Company
fails to gain market share or loses existing market share, its
financial condition, operating results and business could be adversely
affected and the value of the investment in the Company could be
reduced significantly. The Company may not have the financial
resources, technical expertise, marketing, and distribution or support
capabilities to compete successfully.

Uncertain Demand for Equipment May Cause Revenues to Fall Short of
Expectations and Expenses to Be Higher Than Forecast If the Company
Needs to Incur More Marketing Costs

The Company is unable to forecast revenues with certainty because
of the unknown demand from consumers for its equipment and the
emerging nature of the Wi-Fi industry. The Company is in the process
of refining its marketing plan for colleges, universities and
municipalities in order to achieve the desired level of revenue, which
could result in increased marketing costs. In the event demand for
the Company's wireless equipment does not prove to be as great as
anticipated, revenues may be lower than expected and/or marketing
expenses higher than anticipated, either of which may increase the
amount of time and capital that the Company needs to achieve a
profitable level of operations.

The Company Could Fail to Develop New Products to Compete In an
Industry of Rapidly Changing Technology, Resulting In Decreased Revenue

The Company operates in an industry with rapidly changing
technology, and its success will depend on the ability to deploy new
products that keep pace with technological advances. The market for
broadband communications equipment is characterized by rapidly
changing technology and evolving industry standards in both the Wi-Fi
and Internet access industries. The Company's technology or systems
may become obsolete upon the introduction of alternative technologies.
If the Company does not develop and introduce new products in a timely
manner, it may lose opportunities to competing service providers,
which would adversely affect business and results of operations.

There is a risk to the Company that there may be delays in
initial implementation of new products. Further risks inherent in new
product introductions include the uncertainty of price-performance
relative to products of competitors, competitors' responses to its new
product introductions, and the desire by customers to evaluate new
products for longer periods of time. Also, the Company does not have
any control over the pace of technology development. There is a
significant risk that rights to a technology could be acquired or be
developed that is currently or is subsequently made obsolete by other
technological developments. There can be no assurance that any new
technology will be successfully acquired, developed, or transferred.

The Company's Ability to Grow Is Directly Tied to Its Ability to
Attract and Retain Customers, Which Could Result In Reduced Income

The Company has no way of predicting whether its marketing
efforts will be successful in attracting new locations and acquiring
substantial market share. Past efforts have been directed toward a
limited target market of colleges, universities and municipalities. If
the Company's marketing efforts fail, it may fail to attract new
customers and fail to retain existing ones, which would adversely
affect business and financial results.

Government Regulation May Affect the Ability of the Company to Conduct
Business.

The Company's technology is deployed in license-free frequency
bands and is not subject to any wireless or transmission licensing in
most jurisdictions, including the United States. Continued license-
free operation is dependent upon the continuation of existing
government policy. While the Company is not aware of any policy
changes planned or expected, there can be no assurances that
government policy will not change. License-free operation of the
Company's products in the 2.4 GHz and 5 GHz bands are subordinate to
certain licensed and unlicensed uses of the bands and its products
must not cause harmful interference to other equipment operating in
the bands and must accept interference from any of them. If the
Company is unable to eliminate any such harmful interference, or
should its products be unable to accept interference caused by others,
the Company and its customers could be required to cease operations in
the bands in the locations affected by the harmful interference.

The Company May Not Have Been in Compliance with Certain Provisions of
the 1940 Act When It Operated as a Business Development Company.

The Company previously operated as a BDC, starting on October 19,
2004. The Company's management has conducted a review of its
compliance with the 1940 Act and the following are areas that the
Company believes it may not have been in compliance with while it was
operating as a BDC:

- The Company did not maintain the proper ratio of assets to
"senior securities"; Section 61 of the 1940 Act requires that a
BDC maintain a ratio of assets to senior securities of at least 200%.

- Prior to the election to become a BDC, the Company entered
certain convertible notes and warrants agreements, dated
September 22, 2004. These agreements and those signed on March
22, 2005 which increased the convertible note by $1,000,000 and
on July 19, 2005 by an additional $300,000 contained provisions
for conversion into common stock of the Company based on the
average of the five lowest closing bid prices of the common stock
as reported by Bloomberg L.P. for the principal market for the 90
trading days preceding a conversion date. The Company believes
that the existence of the convertible notes on October 19, 2004
may not be in compliance with the capital structure rules set
forth in Section 61(a) of the 1940 Act since the shares were sold
at below market prices. The Company also believes that the
convertible notes entered into after the BDC Election Date may
not have been in compliance with Section 61(a) for the same reason.

- The Company filed a Form 1-E (Notification Under Regulation E)
with the SEC for the shares issuable to the Longview funds
pursuant to the conversion rights under debt agreements. In this
Form 1-E, it is estimated that legal costs in connection with the
offering will be $30,000. As disclosed in a Form 2-E (Report of
Sales Pursuant to Rule 609 Under Regulation E) filed with the
SEC, the Company has incurred legal and other expenses of
approximately $625,000 in cash in connection with this offering,
of which a total of $145,000 was direct legal cost associated
with the offering and approximately $480,000 in associated legal
cost relating to the organizational costs associated with
becoming a BDC. Since the Company may not have been in
compliance with certain provisions of the 1940 Act from August
19, 2004 to October 21, 2005, then the shares issued to the
Longview funds under the Form 1-E may not have been issued
pursuant to a valid exemption from the registration requirements
of Section 5 of the Securities Act of 1933.

- It is a requirement of Section 56 of the 1940 Act to have a
majority of board members be non-interested persons. From August
19, 2004 until June 27, 2005 (when two of the Company's directors
relinquished their interest in Redwood Grove Capital Management,
LLC, the management company for the Longview Equity Fund, L.P.
and the Longview International Equity Fund, L.P.), the Company
may not have had the requisite majority of non-interested persons
as directors and therefore the Company may not have complied with
this section. Therefore, the actions taken by the board of
directors for such period may not be valid under the 1940 Act.

- The Company believes that as of August 19, 2004, the Series A
preferred stock issued on October 6, 2004 may not have been in
compliance with Section 61(a) of the 1940 Act. In addition, the
Company believes that it may not be in compliance with Section 63
of the 1940 Act since it was issued for services.

- On December 31, 2004, the Company moved the assets, employees,
and all related contracts and agreements from the Company to 5G
Wireless Solutions, Inc., a portfolio company. As part of its
obligations, the Company issued restricted common shares for the
accrued portion of salaries for the fourth quarter of fiscal
2004. The Company has since received the shares, totaling
7,085,254, issued to Jerry Dix and Don Boudewyn, the Company's
chief executive officer and executive vice
president/secretary/treasurer, respectively, which have been
cancelled (the value of the shares has been reflected as a
liability so as to comply with the 1940 Act).

There is a risk that the SEC could take enforcement action against the
Company if the SEC determines that the Company has not been in
compliance with the 1940 Act.

The Company's Success Is Largely Dependent on the Abilities of Its
Management.

The Company's success is largely dependent on the personal
efforts and abilities of its senior management, none of which
currently has an employment agreement with the Company. The loss of
certain members of the Company's senior management, including its
chief executive officer, could have a material adverse effect on its
business and prospects.

The Company intends to recruit in fiscal year 2006 employees who
are skilled in its industry. The failure to recruit these key
personnel could have a material adverse effect on the Company's
business. As a result, the Company may experience increased
compensation costs that may not be offset through either improved
productivity or higher revenue. There can be no assurances that the
Company will be successful in retaining existing personnel or in
attracting and recruiting experienced qualified personnel.

Any Required Expenditures as a Result of Indemnification Will Result
in a Decrease in the Company's Net Income.

The Company's bylaws include provisions to the effect that the
Company may indemnify any director, officer, or employee. In
addition, provisions of Nevada law provide for such indemnification,
as well as for a limitation of liability of the Company's directors
and officers for monetary damages arising from a breach of their
fiduciary duties. Any limitation on the liability of any director or
officer, or indemnification of any director, officer, or employee,
could result in substantial expenditures being made by the Company in
covering any liability of such persons or in indemnifying them.

Risks Relating to the Financing Arrangements.

Conversion Price Feature of Notes May Encourage Short Sales in the
Company's Common Stock.

The convertible notes issued to the Longview Funds are
convertible into shares of the Company's common stock. The conversion
feature is subject to a floor price of $0.001 per share. The
conversion formula is at the lesser of (i) 75% of the average of the
five lowest closing bid prices of the Company's common stock as
reported by the OTC Bulletin Board for the ninety trading days
preceding the conversion date, or (ii) $17.50 or $3.50 (post reverse
split) (depending on the particular note).

The Series B preferred stock sold in February 2006 (see Item 9B,
Subsequent Events) is convertible into shares of the Company's common
stock at a conversion price equal to the lesser of: (i) if converted
without benefit of a registration statement, 75% of the lowest close
bid of the common stock as reported by the market or exchange on which
the common stock is listed or quoted for trading or quotation on the
date in question for the 20 trading days preceding the conversion date
for each full share of convertible preferred stock held; (ii) if
converted with the benefit of a registration statement, 85% of the
lowest close bid of the common stock as reported by the trading market
for the 20 trading days preceding the conversion date for each full
share of convertible preferred stock held; and (iii) the face amount
per share.

The downward pressure on the price of the common stock as the
selling stockholders under both these financings convert and sell
amounts of common stock could encourage short sales by investors. This
could place further downward pressure on the price of the common
stock. The selling stockholders could sell common stock into the
market in anticipation of covering the short sale by converting their
securities, which could cause the further downward pressure on the
stock price. In addition, not only the sale of shares issued upon
conversion or exercise of notes and warrants, and Series B preferred
stock, but also the mere perception that these sales could occur, may
adversely affect the market price of the common stock.

Issuance of Shares upon Conversion of Notes and Exercise of Warrants,
and Conversion of Series B Preferred Stock, May Cause Substantial
Dilution to Existing Stockholders.

The issuance of shares upon conversion of the convertible notes
and exercise of warrants, and Series B preferred stock, may result in
substantial dilution to the interests of other stockholders since the
selling stockholders may ultimately convert and sell the full amount
issuable on conversion. Although the selling stockholders may not
convert their convertible notes and/or exercise their warrants under
the Longview financings, if such conversion or exercise would cause
them to own more than 9.99% of the Company's outstanding common stock,
this restriction does not prevent the selling stockholders from
converting and/or exercising some of their holdings and then
converting the rest of their holdings. In this way, the selling
stockholders could sell more than this limit while never holding more
than this limit.

Repayment of Notes, If Required, Would Deplete Available Capital, or
Could Result in Legal Action if Not Repaid.

The Company anticipates that the full amount of the convertible
notes, together with accrued interest, will be converted into shares
of its common stock, in accordance with the terms of the convertible
notes. If the Company is required to repay the convertible notes, it
would be required to use its limited working capital and/or raise
additional funds. If the Company were unable to repay the notes when
required, the debenture holders could commence legal action against
the Company and foreclose on assets to recover the amounts due. Any
such action may require the Company to curtail or cease operations.

The Company is in Technical Default Under the Convertible Notes.

On October 20, 2005, the Company's stockholders approved (a) the
termination of the Company's status as a BDC under the 1940 Act and
the filing of a Form N-54C with the SEC, and (b) the filing of a new
registration statement. Based on this approval, on October 21, 2005,
the Company filed a Form N-54C with the SEC. Pursuant to the terms of
the convertible notes entered into between the Company and Longview
Fund, LP, Longview Equity Fund, LP, and Longview International Equity
Fund, LP (collectively, "Longview Funds"), the shares that serve as
collateral for the notes must be registered. The filing of the Form
N-54C terminated the Regulation E exemption from registration that
covered the shares serving as collateral for the notes. Pursuant to
the terms of the notes, the Company is in technical default on the
notes. The Company is in active negotiations with the Longview Funds
and has obtained verbal commitments from the lenders that it will not
be declared in default. The Company is liable for liquidated damages
of 2% for each thirty days or part thereof of the purchase price of
the notes remaining unconverted that are subject to such non-
registration event. As of December 31, 2005, the remaining
unconverted notes aggregated to $2,661,005. The subject registration
statement, when it becomes effective, will provide such coverage for
the securities in question. Until such time as the registration
statement has been made effective, the Company will incur $53,220 in
liquidated damage penalties per month.

Risks Relating to the Common Stock.

The Company's Common Stock Price May Be Volatile.

The trading price of the Company's common stock may fluctuate
substantially. The price of the common stock may be higher or lower
than the price you pay for your shares, depending on many factors,
some of which are beyond the Company's control and may not be directly
related to its operating performance. These factors include the
following:

- price and volume fluctuations in the overall stock market from
time to time;

- significant volatility in the market price and trading volume of
securities of companies in the same business as the Company;

- changes in regulatory policies with respect to the business of
the Company;

- actual or anticipated changes in earnings or fluctuations in
operating results;

- general economic conditions and trends;

- loss of a major funding source; or

- departures of key personnel.

Due to the continued potential volatility of the Company's common
stock price, the Company may be the target of securities litigation in
the future. Securities litigation could result in substantial costs
and divert management's attention and resources from its business.
Absence of Cash Dividends May Affect Investment Value of the Company's
Stock.

The board of directors does not anticipate paying cash dividends
on the common stock for the foreseeable future and intends to retain
any future earnings to finance the growth of the Company's business.
Payment of dividends, if any, will depend, among other factors, on
earnings, capital requirements and the general operating and financial
conditions of the Company, as well as legal limitations on the payment
of dividends out of paid-in capital.

No Assurance of Public Trading Market and Risk of Low Priced
Securities May Affect Market Value of the Company's Stock.

The SEC has adopted a number of rules to regulate "penny stocks."
Such rules include Rule 3a51-1 and Rules 15g-1 through 15g-9 under the
Securities Exchange Act of 1934, as amended ("Exchange Act"). Because
the securities of the Company may constitute "penny stocks" within the
meaning of the rules (as any equity security that has a market price
of less than $5.00 per share or with an exercise price of less than
$5.00 per share, largely traded in the Over the Counter Bulletin Board
or the Pink Sheets), the rules would apply to the Company and to its
securities.

The SEC has adopted Rule 15g-9 which established sales
practice requirements for certain low price securities. Unless the
transaction is exempt, it shall be unlawful for a broker or dealer to
sell a penny stock to, or to effect the purchase of a penny stock by,
any person unless prior to the transaction: (i) the broker or dealer
has approved the person's account for transactions in penny stock
pursuant to this rule and (ii) the broker or dealer has received from
the person a written agreement to the transaction setting forth the
identity and quantity of the penny stock to be purchased. In order to
approve a person's account for transactions in penny stock, the broker
or dealer must: (a) obtain from the person information concerning the
person's financial situation, investment experience, and investment
objectives; (b) reasonably determine that transactions in penny stock
are suitable for that person, and that the person has sufficient
knowledge and experience in financial matters that the person
reasonably may be expected to be capable of evaluating the risks of
transactions in penny stock; (c) deliver to the person a written
statement setting forth the basis on which the broker or dealer made
the determination (i) stating in a highlighted format that it is
unlawful for the broker or dealer to affect a transaction in penny
stock unless the broker or dealer has received, prior to the
transaction, a written agreement to the transaction from the person;
and (ii) stating in a highlighted format immediately preceding the
customer signature line that (iii) the broker or dealer is required to
provide the person with the written statement; and (iv) the person
should not sign and return the written statement to the broker or
dealer if it does not accurately reflect the person's financial
situation, investment experience, and investment objectives; and (d)
receive from the person a manually signed and dated copy of the
written statement. It is also required that disclosure be made as to
the risks of investing in penny stock and the commissions payable to
the broker-dealer, as well as current price quotations and the
remedies and rights available in cases of fraud in penny stock
transactions. Statements, on a monthly basis, must be sent to the
investor listing recent prices for the penny stock and information on
the limited market.

There has been only a limited public market for the common stock
of the Company. The Company's common stock is currently traded on the
Over the Counter Bulletin Board. As a result, an investor may find it
difficult to dispose of, or to obtain accurate quotations as to the
market value of the Company's securities. The regulations governing
penny stocks, as set forth above, sometimes limit the ability of
broker-dealers to sell the Company's common stock and thus,
ultimately, the ability of the investors to sell their securities in
the secondary market.

Potential stockholders of the Company should also be aware that,
according to SEC Release No. 34-29093, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such
patterns include (i) control of the market for the security by one or
a few broker-dealers that are often related to the promoter or issuer;
(ii) manipulation of prices through prearranged matching of purchases
and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differential and markups by selling broker-
dealers; and (v) the wholesale dumping of the same securities by
promoters and broker dealers after prices have been manipulated to a
desired level, along with the resulting inevitable collapse of those
prices and with consequent investor losses.

Failure to Remain Current in Reporting Requirements Could Result in
Delisting from the Over The Counter Bulletin Board.

Companies trading on the Over the Counter Bulletin Board
("OTCBB"), such as the Company, must be reporting issuers under
Section 12 of the Exchange Act, and must be current in their reports
under Section 13, in order to maintain price quotation privileges on
the OTCBB. If the Company fails to remain current in its reporting
requirements, the Company could be delisted from the Bulletin Board.

In addition, the National Association of Securities Dealers,
Inc., which operates the OTCBB, has adopted a change to its
Eligibility Rule, in a filing with the SEC. The change makes those
OTCBB issuers that are cited for filing delinquency in their Form 10-
K/Form 10-Q three times in a 24-month period and those OTCBB issuers
removed for failure to file such reports two times in a 24-month
period ineligible for quotation on the OTCBB for a period of one year.
Under this proposed rule, a company filing with the extension time set
forth in a Notice of Late Filing (Form 12b-25) is not considered late.
This rule does not apply to a company's Current Reports on Form 8-K.

As a result of these rules, the market liquidity for Company
securities could be severely adversely affected by limiting the
ability of broker-dealers to sell its securities and the ability of
stockholders to sell their securities in the secondary market.

Failure to Maintain Market Makers May Affect Value of Company's Stock.

If the Company is unable to maintain a National Association of
Securities Dealers, Inc. member broker/dealers as market makers, the
liquidity of the common stock could be impaired, not only in the
number of shares of common stock which could be bought and sold, but
also through possible delays in the timing of transactions, and lower
prices for the common stock than might otherwise prevail.
Furthermore, the lack of market makers could result in persons being
unable to buy or sell shares of the common stock on any secondary
market. There can be no assurance the Company will be able to
maintain such market makers.

Shares Eligible For Future Sale May Affect Market Price.

All the shares currently held by management have been issued in
reliance on the private placement exemption under the Securities Act
of 1933. Such shares will not be available for sale in the open
market without separate registration except in reliance upon Rule 144
under the Securities Act of 1933. In general, under Rule 144 a person
(or persons whose shares are aggregated) who has beneficially owned
shares acquired in a non-public transaction for at least one year,
including persons who may be deemed affiliates of the Company (as that
term is defined under that rule) would be entitled to sell within any
three-month period a number of shares that does not exceed 1% of the
then outstanding shares of common stock, provided that certain current
public information is then available. If a substantial number of the
shares owned by these stockholders were sold pursuant to Rule 144 or a
registered offering, the market price of the common stock at that time
could be adversely affected.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2. PROPERTIES.

The principal executive offices for the Company currently
consists of approximately 10,560 square feet of office space, which
are located at 4136 Del Rey Avenue in Marina del Rey, California. The
Company leased this property on October 30, 2003 for a 5-year term at
the current monthly rent of $11,420 as of December 31, 2005. The
total rent payments for 2005 were approximately $146,000.

The cost of property and equipment as of December 31, 2005
consisted of the following:

2005

Machinery and equipment $ 275,873
Software and computers 75,019
Building improvements 4,747
355,639
Less accumulated depreciation and amortization (274,841)

$ 80,798

ITEM 3. LEGAL PROCEEDINGS.

The Company is not party to any material pending legal
proceedings, claims or assessments and, to the best of its knowledge,
no such action by or against the Company has been threatened, except
as follows:

On June 15, 2005, the Company received a summons from third
parties seeking damages against a former employee of the Company for
breach of a residential lease and damage to a residential property in
2001. The claim against the Company filed in New York Supreme Court
(Chenango County) alleges that the former employee was a principal in
Wireless ThinkTank (a wholly owned subsidiary of the Company) and
conducted business from such residence.

Management believes the Company has meritorious claims and
defenses to the plaintiffs' claims and ultimately will prevail on the
merits. However, this matter remains in the early stages of
litigation and there can be no assurance as to the outcome of the
lawsuit. Litigation is subject to inherent uncertainties, and
unfavorable rulings could occur. Were unfavorable rulings to occur,
there exists the possibility of a material adverse impact of money
damages on the Company's financial condition, results of operations,
or liquidity of the period in which the ruling occurs, or future periods.

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

On October 20, 2005, the annual stockholders meeting of the
Company was held at its executive offices in Marina del Rey,
California. At that meeting, at which a quorum was present in person
or by proxy, the following items were submitted for approval:

Election of the Board of Directors.

The following individuals were elected to serve as directors of
the Company:

(a) Jerry Dix: 1,443,303 (post-reverse split) votes in favor and
0 votes withheld.

(b) Don Boudewyn: 1,444,160 (post reverse split) votes in favor
and 0 votes withheld.

(d) Stanley A. Hirschman: 1,443,331 (post reverse split) votes
in favor and 0 votes withheld.

(e) Murray H. Williams: 1,443,331 (post reverse split) votes in
favor and 0 votes withheld.

(f) Kirk Haney: 1,443,317 (post reverse split) votes in favor
and 0 votes withheld.

Appointment of Auditors.

The decision by the Company's Audit Committee to retain Squar,
Milner, Reehl & Williamson, LLP as the Company's independent
registered accounting firm for the fiscal year that commenced on
January 1, 2005 was approved: 1,246,866 (post reverse split) votes in
favor, 1,166 (post reverse split) votes against, and 2,365 (post
reverse split) votes abstaining.

Termination of Status as a BDC and Filing of Form N-54C.

The termination of the Company's status as a BDC under the 1940
Act, and the filing of a Form N-54C with the SEC, was approved:
1,444,379 (post reverse split) votes in favor, 945 (post reverse
split) votes against, and 1,463 (post reverse split) votes abstaining.

Filing of a New Registration Statement.

The filing by the Company with the SEC of a new registration
statement was approved: 1,444,845 (post reverse split) votes in favor,
880 votes against, and 777 votes abstaining.

PART II.

ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information.

The Company's shares of common stock are traded on the Over the
Counter Bulletin Board under the symbol "FGWI." From February 12,
2001 through November 22, 2005, the stock traded under the symbol
"FGWC;" prior to February 12, 2001 the symbol was "TSMK". The range
of closing bid prices shown below is as reported by the Over the
Counter Bulletin Board. The quotations shown reflect inter-dealer
prices, without retail mark-up, markdown or commission and may not
necessarily represent actual transactions, and are shown to reflect
the 1 for 350 reverse split of the common stock that occurred on
November 23, 2005.

Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on December 31, 2005

High Low

Quarter Ended December 31, 2005 2.69 0.59
Quarter Ended September 30, 2005 2.45 1.05
Quarter Ended June 30, 2005 4.55 1.75
Quarter Ended March 31, 2005 4.20 2.45

Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on December 31, 2004

High Low

Quarter Ended December 31, 2004 8.40 2.80
Quarter Ended September 30, 2004 10.50 3.15
Quarter Ended June 30, 2004 17.15 1.40
Quarter Ended March 31, 2004 30.10 2.80

Holders of Common Equity.

As of March 24, 2006, the Company had approximately 139 holders
of its common stock. The number of record holders was determined from
the records of the transfer agent and does not include beneficial
owners of common stock whose shares are held in the names of various
security brokers, dealers, and registered clearing agencies.

Dividend Information.

The Company has not declared or paid a cash dividend to
stockholders since it was organized. The board of directors presently
intends to retain any earnings to finance the Company operations and
does not expect to authorize cash dividends in the foreseeable future.
Any payment of cash dividends in the future will depend upon the
Company's earnings, capital requirements and other factors.

Sales of Unregistered Securities.

All sales of unregistered (restricted) securities during the
fiscal year ended on December 31, 2005 have been previously reported
either in a Form 10-Q or in a Form 8-K.

Purchases of Equity Securities.

There have been no purchases of common stock of the Company by
the Company or its affiliates during the fiscal year ended on December
31, 2005.

ITEM 6. SELECTED FINANCIAL DATA.

Fiscal Year Ended
December 31 2001 2002 2003 2004 2005

Revenues $ - $ 85,111 $ 167,302 $ 651,450 $ 1,618,932

Net Loss $(6,454,307) $(5,089,255) $(2,159,694) $(4,989,200) $(4,025,012)

Basic and diluted
loss per share (1) $ (101.50) $ (49.69) $ (6.30) $ (3.80) $ (1.38)

Total assets $ 2,053 $ 140,959 $ 395,571 $ 1,027,310 $ 632,158

Long-term obligations $ - $ - $ - $ - $ -

Cash dividends declared per
Share $ - $ - $ - $ - $ -

Stockholders' deficit $ (351,836) $ (799,246) $(1,030,630) $ (633,626) $(2,161,041)

(1) Adjusted for the 1 for 350 reverse split of the Company's common
stock on November 23, 2005.

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

The following discussion and analysis of financial condition and
results of operations is based upon, and should be read in conjunction
with, the audited financial statements and related notes included
elsewhere in this Form 10-K, which have been prepared in accordance
with accounting principles generally accepted in the United States.

Overview.

The Company is a developer and manufacturer of wireless broadband
communications equipment operating on the 802.11a/b/g frequency. The
Company's principal markets are universities and municipalities.

The Company has focused on the marketing and sales of its
innovative wireless solutions to large campus & enterprise wide-area-
networks ("WAN") and citywide WAN. In addition to manufacturing the
existing product line, the Company has focused on developing new
solutions that create larger and more efficient wireless networks.

The Company markets and sells both outdoor and indoor Wi-Fi
wireless radio systems that, because of their distance and user
capacity, can be used in both wireless LAN and WAN applications. The
outdoor products can be configured in point-to-point or point-to-
multipoint networks that can reach distances of eight miles or more in
fixed wireless configurations or up to one mile in roaming scenarios
using laptops with off-the-shelf Wi-Fi cards. The Company believes
its antenna design and wireless packet switching allows its systems to
more readily penetrate buildings and trees than competitors, and to
accommodate up to 1,000 user associations. The indoor product shares
many of the same characteristics and strengths as the outdoor product,
including user capacity and penetration of objects, but is designed to
utilize less power, at a lower cost and for indoor distances up to
1,000 feet depending upon the structure.

Both the Company's outdoor and indoor products provide strong
security at both the hardware and software levels, can transmit voice,
data, and video at multi-megabit speeds, and can work together
seamlessly in wireless networks with each other or with other common
wireless network equipment. Because of these advantages, the Company
believes its products enable customers to combine wireless networks
with fewer components that cost less, perform better and potentially
provide a faster return on invested capital. The Company has devoted
substantial resources to the build out of its networks and product
research and development with limited resources applied to its
marketing programs.

The Company has historically experienced operating losses and
negative cash flow. The Company expects that these operating losses
and negative cash flows may continue through additional periods. In
addition, the Company only has a limited record of revenue-producing
operations and there is only a limited operating history upon which to
base an assumption that it will be able to achieve its business plans.

Results of Operations.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004.

(a) Revenue.

Revenue from continuing operations increased by $967,482, or
approximately 148%, from $651,450 for the year ended December 31, 2004
to $1,618,932 for the year ended December 31, 2005. The increase in
revenue was primarily attributable to sales of wireless equipment in
the university campus market place. The Company expects these trends
to continue as more university campuses look to upgrade their network
infrastructure.

(b) Cost of Revenue.

Total cost of revenue increased by $137,392, or approximately
69%, from $199,611 for the year ended December 31, 2004 to $337,003
for the year ended December 31, 2005. The increase was principally
due to the increase in sales partially offset by economies of scale
due to greater buying power in the Company's supply chain and its
ability to maintain pricing in the marketplace. The Company believes
this trend will continue in the future

Total operating expenses decreased by $1,136,203, or
approximately 24%, from $4,704,579 for the year ended December 31,
2004 to $3,568,376 for the year ended December 31, 2005. The decrease
is principally attributable to reduced headcount, lowered use of
outside consultants and trimming the number of outside law firms from
six to two. As management continues to focus on operations by doing
more with less, these expenses are expected to decrease in 2006.

Recognized within operating expenses for the year ended December
31, 2005 is more than $775,000 of bad debt related the write-off
accounts receivable. This amount consists principally of
approximately $630,000 in uncollectible receivables from the Company's
two largest customers, SRS and IAMA, both of which closed operations
in 2005. SRS and IAMA comprised approximately 40% of the Company's
total revenue for the year 2005. The sales complied with the
Company's revenue recognition policy and at the time of sale
collectibility was highly probable.

(d) Interest Expense.

Interest expense increased by $958,887, or approximately 130%,
from $736,460 at the year ended December 31, 2004 to $1,695,347 for
the year ended December 31, 2005. Ongoing amortization of beneficial
conversion features and other debt discounts on the notes will decline
in the year 2006 and beyond as the notes reach maturity. Interest
expense for the year 2006 will be significantly higher than in prior
years as a result of the liquidated damages provisions associated with
the Longview notes that accrue at the rate of approximately $53,000
per month until such time as an effective registration statement is on
file with the SEC.

Costs recorded as interest expense primarily consist of the
amortization of the beneficial conversion feature of the convertible
notes issued by the Company in the years 2003, 2004 and 2005. Due to
the short-term nature of the convertible notes entered into with the
Longview Funds, a portion of the expense associated with the
beneficial conversion feature and other debt discount attributed to
their notes was recognized in the year 2005 and substantially all of
the remaining unamortized discounts on such notes are expected to be
fully expensed during 2006.

(e) Net loss

Net loss decreased by $964,188, or approximately 19%, from a net
loss of $4,989,200 for the year ended December 31, 2004 to a net loss
of $4,025,012 for the year ended December 31, 2005. The decreased net
loss is attributable to higher sales and lower operating expenses.
The net loss for the year 2006 and beyond is anticipated to continue
to decline as sales increase without a corresponding increase in
operating expenses and a reduction in beneficial conversion feature
amortization expense.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003.

(a) Revenue.

Revenue from continuing operations increased by $484,148, or
approximately 289%, from $167,302 for the year ended December 31, 2003
to $651,450 for the year ended December 31, 2004. The increase in
revenue was primarily due to sales of wireless solutions to customers
as a result of an increase in awareness of the Company's wireless
solutions, particularly in the university campus market place.

(b) Cost of Revenue.

Cost of revenue principally includes the cost of the components
required to produce wireless equipment sold. Total cost of revenue
increased by $62,297, or approximately 45%, from $137,314 for the year
ended December 31, 2003 to $199,611 for the year ended December 31,
2004. The increase was principally due to the increase in sales
mitigated by the cost for component parts remaining relatively stable.

Total operating expenses increased by $2,591,916, or
approximately 123%, from $2,112,663 for the year ended December 31,
2003 to $4,704,579 for the year ended December 31, 2004. The increase
was primarily attributable to an increase in professional consulting,
accounting and legal services related to financing and the conversion
to a BDC.

(d) Interest Expense.

Interest expenses increased during the year ended December 31,
2004 primarily due to an increase in the amount of debt carried by the
Company. Interest expense increased by $659,441, or approximately
856%, from $77,019 at the year ended December 31, 2003 to $736,460
for the year ended December 31, 2004.

(e) Net loss

Net loss increased by $2,829,506, or approximately 131%, from a
net loss of $2,159,694 for the year ended December 31, 2003 to a net
loss of $4,989,200 for the year ended December 31, 2004. The
increased net loss was attributed to higher operating costs during the
year.

Factors That May Affect the Company's Operating Results.

The operating results of the Company can vary significantly
depending upon a number of factors, many of which are outside its
control. General factors that may affect the Company's operating
results include:

- market acceptance of and changes in demand for products;

- a small number of customers account for, and may in future
periods account for, substantial portions of the Company's
revenue, its revenue could decline because of delays of customer
orders or the failure to retain customers;

- gain or loss of clients or strategic relationships;

- announcement or introduction of new products by the Company or by
its competitors;

- the ability to build brand recognition;

- timing of sales to customers;

- price competition;

- the ability to upgrade and develop systems and infrastructure to
accommodate growth;

- the ability to attract and integrate new personnel in a timely
and effective manner;

- the ability to introduce and market products in accordance with
market demand;

- changes in governmental regulation;

- reduction in or delay of capital spending by clients due to the
effects of terrorism, war and political instability; and

- general economic conditions.

The Company believes that its planned growth and profitability
will depend in large part on the ability to promote its products, gain
clients and expand its relationship with current clients.
Accordingly, the Company intends to invest in marketing, strategic
partnerships, and development of its customer base. If the Company is
not successful in promoting its products and expanding its customer
base, this may have a material adverse effect on its financial
condition and its ability to continue to operate its business.

Operating Activities.

The net cash used in operating activities was $2,335,904 for the
year ended December 31, 2004 compared to $415,751 for the year ended
December 31, 2003, an increase of $1,920,153 or approximately 462%.
This increase is primarily attributable to an increase of
approximately $1,300,000 of expense associated with common stock
issued for services to employees and professional service providers
associated with an increase in accounts receivable.

The net cash used in operating activities was $1,866,970 for the
year ended December 31, 2005 compared to $2,335,904 for the year ended
December 31, 2004, a decrease of $468,934 or approximately 20%. This
decrease is attributed primarily to the decrease in the Company's net
loss of approximately $800,000 partially offset by an increase of
approximately $700,000 of amortization of beneficial conversion
feature (and other debt discount) and the increase in other liabilities.

Investing Activities.

Net cash used in investing activities increased to $100,356
during the year ended December 31, 2004 as compared to $46,337 during
the year ended December 31, 2003, an increase of $54,019, or
approximately 117%. This increase was the result of the purchase of
additional equipment.

Net cash used in investing activities decreased to $45,844 during
the year ended December 31, 2005 as compared to $100,356 during the
year ended December 31, 2004, a decrease of $54,512, or approximately
54%. This decrease was the result of lower testing equipment
purchases related to research and development activities partially
offset by increased spending on software license to support sales and
finance activities.

Liquidity and Capital Resources.

The Company's current liabilities totaled $2,793,199 and
$1,760,936 at December 31, 2005 and 2004, respectively, and current
assets totaled $551,360 and $1,020,731 as of those dates,
respectively. This resulted in working capital deficits of $2,241,839
and $740,205 at December 31, 2005 and 2004, respectively. The
increase in current liabilities is primarily due to ongoing financing
of the Company through the issuance of convertible notes. The
decrease in current assets is primarily due to the use of cash to fund
ongoing product development and operations. At December 31, 2005, the
Company's assets consisted primarily of net accounts receivable
totaling $328,897, of inventory of $120,481, and cash of $85,357.

During the years ended December 31, 2005 and 2004, the Company
incurred losses of $4,025,012 and $4,989,200, respectively. The
Company has an accumulated deficit of $22,784,667 as of December 31, 2005.

The above factors raise doubt as to the Company's ability to
continue as a going concern. The Company's current cash flow from
operations will not be sufficient to maintain its capital requirements
for the next twelve months. Accordingly, the Company's implementation
of its business plan will depend upon its ability to raise additional
funds through bank borrowings and equity or debt financing. The
Company estimates that it will need to raise up to $5,000,000 over the
next twelve months for such purposes.

The accompanying financial statements have been prepared assuming
that the Company continues as a going concern that contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business assuming the Company will continue as a
going concern. However, the ability of the Company to continue as a
going concern on a longer-term basis will be dependent upon its
ability to generate sufficient cash flow from operations to meet its
obligations on a timely basis, to retain its current financing, to
obtain additional financing, and ultimately attain profitability.

The Company has been successful in obtaining the required cash
resources through private placements, convertible notes and notes
payable to service the Company's operations during 2005. Financing
activities provided cash of $1,261,267 for the year ended December 31,
2005 through the issuance of convertible notes. Management plans to
continue raising additional capital through a variety of fund raising
methods during 2006 and to pursue all available financing alternatives
in this regard. Management may also consider a variety of potential
partnership or strategic alliances to strengthen its financial
position. Whereas the Company has been successful in the past in
raising capital, no assurance can be given that these sources of
financing will continue to be available to it and/or that demand for
its equity/debt instruments will be sufficient to meet its capital
needs, or that financing will be available on terms favorable to the
Company. The financial statements do not include any adjustments
relating to the recoverability and classification of liabilities that
might be necessary should the Company be unable to continue as a going
concern.

If funding is insufficient at any time in the future, the Company
may not be able to take advantage of business opportunities or respond
to competitive pressures, or may be required to reduce the scope of
its planned product development and marketing efforts, any of which
could have a negative impact on its business and operating results.
In addition, insufficient funding may have a material adverse effect
on the Company's financial condition, which could require it to:

- curtail operations significantly;

- sell significant assets;

- seek arrangements with strategic partners or other parties that
may require the Company to relinquish significant rights to
products, technologies or markets; or

- explore other strategic alternatives including a merger or sale
of the Company.

To the extent that the Company raises additional capital through
the sale of equity or convertible debt securities, the issuance of such
securities may result in dilution to existing stockholders. If
additional funds are raised through the issuance of debt securities,
these securities may have rights, preferences and privileges senior to
holders of common stock and the terms of such debt could impose
restrictions on the Company's operations. Regardless of whether the
Company's cash assets prove to be inadequate to meet the Company's
operational needs, the Company may seek to compensate providers of
services by issuing stock in lieu of cash, which may also result in
dilution to existing stockholders.

Longview Funds.

The Company is still in negotiations with the Longview Funds and
has obtained verbal commitments from the lenders that it will not be
declared in default. The Company is liable for liquidated damages of
2% for each thirty days or part thereof of the purchase price of the
notes remaining unconverted that are subject to such non-registration
event. As of December 31, 2005, the remaining unconverted notes
payable to the Longview Funds aggregated to approximately $2,661,000.
It is the Company's intention to file a Form SB-2 registration
statement in the near future. This registration statement will
provide such coverage for the securities in question. Until such time
as the registration statement has been made effective, the Company
will incur $53,220 in liquidated damage penalties per month ($131,551
was accrued as of December 31, 2005).

Inflation.

The impact of inflation on the Company's costs and the ability to
pass on cost increases to its customers over time is dependent upon
market conditions. The Company is not aware of any inflationary
pressures that have had any significant impact on its operations over
the past quarter, and the Company does not anticipate that
inflationary factors will have a significant impact on future
operations.

Off Balance Sheet Arrangements.

The Company does not engage in any off balance sheet arrangements
that are reasonably likely to have a current or future effect on its
financial condition, revenues, results of operations, liquidity or
capital expenditures.

Contractual Obligations.

The Company has contractual obligations to repay its notes
payable and to make payments under its operating lease agreement. See
Notes 3 and 6, respectively, to the accompanying consolidated
financial statements.

Payments due by Period
Contractual Obligations Total 2006 2007-2008 2009-2010 Thereafter

Convertible debt $3,288,019 $2,001,060 $1,286,959 - -
Operating leases 430,952 153,368 277,584 - -

Total contractual cash
obligations $3,718,971 $2,154,428 $1,564,543 - -

Critical Accounting Policies.

The SEC has issued Financial Reporting release No. 60,
"Cautionary Advice Regarding Disclosure About Critical Accounting
Policies" ("FRR 60"); suggesting companies provide additional
disclosure and commentary on their most critical accounting policies.
In FRR 60, the SEC defined the most critical accounting policies as
the ones that are most important to the portrayal of a company's
financial condition and operating results, and require management to
make its most difficult and subjective judgments, often as a result of
the need to make estimates of matters that are inherently uncertain.
Based on this definition, the Company's most critical accounting
policies include: (a) the use of estimates in the preparation of
financial statements; (b) revenue recognition; (c) stock based
compensation arrangements; (d) warranty reserves; (e) inventory
reserves; (f) allowance for doubtful accounts; and (g) the deferred
tax valuation allowance. The methods, estimates and judgments the
Company uses in applying these most critical accounting policies have
a significant impact on the results reported in its financial
statements.

(a) Use of Estimates.

The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going
basis, the Company evaluates these estimates, including those related
to revenue recognition and concentration of credit risk. The Company
bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.

(b) Revenue Recognition.

Revenues result principally from the sale and installation of
wireless radio equipment to customers. Equipment sales are recognized
when products are shipped. The Company recognizes revenues in
accordance with Staff Accounting Bulleting No. 104, "Revenue
Recognition," when all of the following conditions exist: (a)
persuasive evidence of an arrangement exists in the form of an
accepted purchase order; (b) delivery has occurred, based on shipping
terms, or services have been rendered; (c) the Company's price to the
buyer is fixed or determinable, as documented on the accepted purchase
order; and (d) collectibility is reasonably assured.

Orders delivered to the Company by phone, fax, mail or
email are considered valid purchase orders and once accepted by the
Company are deemed to be the final understanding between the Company
and its customer as to the specific nature and terms of the agreed-
upon sale transaction. Products are shipped and are considered
delivered when (a) for FOB factory orders they leave the Company's
shipping dock or (b) for FOB customer dock orders upon confirmation of
delivery. The creditworthiness of customers is generally assessed
prior to the Company accepting a customer's first order.

The Company offers installation services to customers and charges
separately when such services are purchased. Installation by the
Company is not required for the functionality of the equipment.
Consequently, installation services are considered a separate unit of
accounting under Financial Accounting Standards Board's Emerging
Issues Task Force No. 00-21,"Revenue Arrangements with Multiple
Deliverables."

The Company issues shares of common stock to various individuals
and entities for certain management, legal, consulting and marketing
services. These issuances are valued at the fair market value of the
service provided and the number of shares issued is determined, based
upon the closing price of the Company's common stock on the date of
each respective transaction after the period of service. These
transactions are reflected as the appropriate component of the
Company's consolidated financial statements in conformity with
generally accepted accounting principles in the accompanying statement
of operations.

(d) Warranty.

The Company provides a warranty on all electronics sold for a
period of one year after the date of shipment. Warranty issues are
usually resolved with repair or replacement of the product. Trends of
sales returns, exchanges and warranty repairs are tracked by as a
management as a basis for the reserve that management records in the
Company's consolidated financial statements. Estimated future
warranty obligations related to certain products and services are
provided by charges to operations in the period in which the related
revenue is recognized. At December 31, 2005, warranty reserve
approximated $26,161, which is recorded under other current
liabilities on the balance sheet.

(e) Inventory.

Inventories are stated at the lower of cost (first-in, first-out)
or market. Cost is determined on a standard cost basis that
approximates the first-in, first-out method. Market is determined by
comparison with recent sales or net realizable value.

Such net realizable value is based on management's forecasts for
sales of the Company's products or services in the ensuing years. The
industry in which the Company operates is characterized by
technological advancement, change and certain regulations. Should the
demand for the Company's products prove to be significantly less than
anticipated, the ultimate realizable value of the Company's
inventories could be substantially less than amounts shown in the
accompanying balance sheet.

(f) Allowance for Doubtful Accounts.

In determining the allowance for doubtful accounts, management
evaluated the future collectibility of customer receivable balances,
on a customer by customer basis, including an individual assessment of
the customer's credit quality, financial standing, and the customer's
ability to meet current or future commitments and the industry and
general economic outlook. Based on the severity of the likely loss,
the Company provides a reserve against outstanding balances over 60
days. In the event collection efforts are unsuccessful for a
customer, the receivable is written off and charged to expense. At
December 31, 2005, the Company carries an allowance for doubtful
accounts of $33,857. In addition, during 2005, receivables totaling
$775,547 were written off and charged to expense.

The write-offs in 2005 are associated with the unexpected
bankruptcy of two of the company's customers.

(g) Deferred Tax Valuation Allowance.

Deferred taxes are provided on the 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 bases. A
deferred tax asset is reduced by a valuation allowance if, 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 in the future.
Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

A valuation allowance is provided for deferred tax assets if it
is more likely than not these items will either expire before the
Company is able to realize their benefit, or that future deductibility
is uncertain. In accordance with Statement of Financing Accounting
Standards No 109, the Company records net deferred tax assets to the
extent the Company believes these assets will more likely than not be
realized. In making such determination, the Company considers all
available positive and negative evidence, including scheduled
reversals of deferred tax liabilities, projected future taxable
income, tax planning strategies and recent financial performance.

Forward Looking Statements.

Information in this Form 10-K contains "forward looking
statements" within the meaning of Rule 175 of the Securities Act of
1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as
amended. When used in this Form 10-K, the words "expects,"
"anticipates," "believes," "plans," "will" and similar expressions are
intended to identify forward-looking statements. These are statements
that relate to future periods and include, but are not limited to,
statements regarding the Company's adequacy of cash, expectations
regarding net losses and cash flow, statements regarding its growth,
the need for future financing, the dependence on personnel, and its
operating expenses.

Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from those projected. These risks and uncertainties include, but are
not limited to, those discussed above, as well as risks related to the
Company's ability to obtain future financing, and the risks set forth
under "Factors That May Affect the Company's Operating Results." These forward-
looking statements speak only as of the date hereof. The Company
expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained
herein to reflect any change in its expectations with regard thereto
or any change in events, conditions or circumstances on which any such
statement is based.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Financial statements are presented in a separate section of this
report following Item 15.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

The Company maintains disclosure controls and procedures (as
defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act
that are designed to ensure that information required to be disclosed
in its periodic reports filed under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated
and communicated to its management, including its principal executive
officer and principal financial officer, to allow timely decisions
regarding required disclosure.

As of the end of the period covered by this report, the Company's
management carried out an evaluation, under the supervision and with
the participation of its principal executive officer and principal
financial officer, of its disclosure controls and procedures (as
defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act).
Based upon the evaluation, the Company's principal executive officer
and principal financial officer concluded that the Company's
disclosure controls and procedures were effective to ensure that
information required to be disclosed by it in the reports that the
Company files or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the
SEC's rules and forms. In addition, he concluded that the Company's
disclosure controls and procedures were effective to ensure that
information required to be disclosed in the reports that the Company
files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including its principal
executive officer and principal financial officer, to allow timely
decisions regarding required disclosure.

Because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, will be or have been
detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can
occur because of simple error or mistake. Additionally, controls can
be circumvented by the individual acts of some persons, by collusion
of two or more people, and/or by management override of the control.
The design of any system of controls also is based in part upon
certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions; over time,
controls may become inadequate because of changes in conditions,
and/or the degree of compliance with the policies and procedures may
deteriorate. Because of the inherent limitations in a cost-effective
internal control system, misstatements due to error or fraud may occur
and not be detected.

Changes in Controls and Procedures.

During the quarter ended December 31, 2005, there were no other
changes in the Company's disclosure controls and procedures, or its
internal controls over financial reporting (as defined in Rule 13a-
15(f) of the Exchange act), or in other factors that could affect
these controls during the last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, these
controls.

ITEM 9B. OTHER INFORMATION.

Subsequent Events.

(a) On January 18, 2006, the Company adopted the 2006 Stock and
Option Plan (which amended and replaced a 2006 Non-Employee Directors
and Consultants Retainer Stock Plan adopted on December 21, 2006).
The purpose of the plan is to promote the interests of the Company and
its stockholders by attracting and retaining employees and consultants
capable of furthering the future success of the Company and by
aligning their economic interests more closely with those of the
Company's stockholders; the services are to be compensated for with
stock option and stock grants. Options granted under this plan are to
be exercisable for a period of ten years from the grant date at
whatever price is established by the board of directors, in its sole
discretion, on the date of the grant. A total of 1,200,000 shares of
common stock have been registered under this plan as a result of a
Form S-8's filed with the SEC.

(b) On January 19, 2006, 5G Wireless Solutions, Inc., a
subsidiary of the Company, was merged with and into the Company.

(c) On February 17, 2006, the Company consummated a private
placement financing transaction pursuant to a Securities Purchase
Agreement with seven accredited investors obtained by the Company's
placement agent, Divine Capital Markets, LLC, whereby these investors
purchased an aggregate amount of $250,000 Series B 10% convertible
preferred stock of the Company (see Exhibit 4.23), which equated to
250,000 shares of this stock. The Company paid a commission of
$25,000 (10% of the amount of funds raised) to Divine Capital Markets,
LLC in connection with this offering.

Under the Certificate of Designation for the Series B preferred
stock, filed on January 26, 2006, there are 5,000,000 shares of
authorized. The Series B preferred stock is convertible into shares
of the Company's common stock at a conversion price equal to the
lesser of: (i) if converted without benefit of a registration
statement, 75% of the lowest close bid of the common stock as reported
by the market or exchange on which the common stock is listed or
quoted for trading or quotation on the date in question for the 20
trading days preceding the conversion date for each full share of
convertible preferred stock held; (ii) if converted with the benefit
of a registration statement, 85% of the lowest close bid of the common
stock as reported by the trading market for the 20 trading days
preceding the conversion date for each full share of convertible
preferred stock held; and (iii) the face amount per share.

Each share of Series B preferred stock entitles the holder
thereof to vote on each matter submitted to a vote of the stockholders
of the Company and to have the number of votes equal to the number
(including any fraction) of shares of common stock into which such
share of Series B preferred stock is then convertible pursuant to the
provisions hereof at the record date for the determination of
stockholders entitled to vote on such matters or, if no such record
date is established, at the date such vote is taken or any written
consent of stockholders becomes effective.

(d) Effective on March 4, 2006, the outstanding balance and
accrued interest on certain notes was converted into 145,558
restricted shares of common stock. On March 4, 2004, the Company
borrowed $250,000 under these convertible notes payable, of which
$100,000 came from management or individuals related to certain
management personnel. All notes were due on March 4, 2006, with
monthly interest payments on the outstanding balance; interest accrues
at 9% per annum. The $250,000 Convertible Notes may be converted into
common stock of the Company at the lesser of: (a) in accordance with
the terms of a subsequent financing, at the option of the holder, (b)
125% of the closing bid price on the closing date, as defined, or (c)
60% of the average of the three lowest closing bid prices during the
twenty trading days immediately prior to the conversion date. The
warrants issued in connection with these notes have not been exercised
to date.

(e) Effective on March 31, 2006, the outstanding balance and
accrued interest on certain was converted into restricted shares of
common stock. On March 31, 2004, the Company borrowed $715,000 under
these convertible notes payable. All notes were due on March 31,
2006, with monthly interest payments on the outstanding balance;
interest accrues at 9% per annum. These notes may be converted into
common stock of the Company at the lesser of: (a) in accordance with
the terms of a subsequent financing, at the option of the holder, (b)
125% of the closing bid price on the closing date, as defined, or (c)
100% of the closing bid price during the sixty trading days
immediately prior to the conversion date.

(f) On March 27, 2006, the Company's Chief Financial Officer,
Lawrence C. Early, accepted an offer of employment from another
company and intends to resign this position effective April 7, 2006.

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.

Directors and Executive Officers.

The names, ages, and respective positions of the directors and
executive officers of the Company are set forth below. The directors
named below will serve until the next annual meeting of stockholders
or until their successors are duly elected and have qualified.
Directors are elected for a term until the next annual stockholders'
meeting. Officers will hold their positions at the will of the board
of directors, absent any employment agreement, of which none currently
exist or are contemplated.

There are no family relationships between any two or more of the
directors or executive officers. There are no arrangements or
understandings between any two or more of the directors or executive
officers. There is no arrangement or understanding between any of the
directors or executive officers and any other person pursuant to which
any director or officer was or is to be selected as a director or
officer, and there is no arrangement, plan or understanding as to
whether non-management stockholders will exercise their voting rights
to continue to elect the current board of directors. There are also no
arrangements, agreements or understandings between non-management
stockholders that may directly or indirectly participate in or
influence the management of the Company's affairs. There are no other
promoters or control persons of the Company. There are no legal
proceedings involving the executive officers or directors of the
Company.

(a) Jerry Dix, President/Chief Executive Officer/Director.

Mr. Dix, age 60, has been in the wireless industry since 1994 and
was a pioneer in the pre-paid cellular industry with Globalwise
Communications and Prepaid Technologies. In 1995, Dix and his partner
launched PrePay Technologies, a wholly owned subsidiary of Globalwise
Communications. PrePay Technologies was developed with proprietary
technology that enabled PrePay Technology to deliver a prepaid
wireless platform as a re-seller for AirTouch in San Diego,
California. In 1996, Mr. Dix helped found Satellite Control
Technologies, a publicly traded company with patented one and two-way
paging technologies, where he worked until being named president and
chief executive officer of the Company in January 2002. Mr. Dix
helped develop and launch the AlphaTrak locating and control system
that utilizes this patented technology combined with GPS technology to
locate assets in North America.

(b) Don Boudewyn, Executive Vice
President/Secretary/Treasurer/Director.

Mr. Boudewyn, age 41, has held his current position with the
Company since January 2002. He has held various positions with the
Company, including president and vice president of international sales
since founding the Company in 2000. From October 1998 to October
2000, Mr. Boudewyn served as a major account executive and business
development manager for Celterra Vancouver Ltd., where he was
responsible for sales, marketing and business development strategies
for a national fiber optic network. Prior to his experience in the
communications arena, Mr. Boudewyn worked in real estate from July
1986 to October 1998. He graduated from the British Columbia
Institute of Technology with a Bachelor of Arts degree in sales and
marketing management. He is also a graduate of the UCLA Director
Training & Certification Program.

Mr. Early, age 39, was hired by the Company as its chief
financial officer and principal accounting officer on August 19, 2005.
Mr. Early joined the Company from uWink, Inc. (OTCBB: UWNK), an
entertainment software developer where he served as the chief
financial officer from May 2004 until joining the Company. For the
period of October 2003 to May 2004 he worked as a consultant for
Peoplesupport (NASD: PSPT). Mr. Early was employed as controller and
principal accounting officer of Accesspoint Corporation (OTCBB: ASAP),
an e-commerce software developer, from October 2002 to October 2003.
He took time off for family reasons from August 2002 to October
2002. Mr. Early's prior position was regional controller for the
Southwest operations of Westsun America, Inc. from November 2001 to
August 2002. He functioned as an independent accountant from August
2001 to November 2001.

From May 1999 to November 2000, Mr. Early was the chief financial
officer and principal accounting officer, of eSat, Inc., a software
developer specializing in providing Internet connectivity via
satellite in large distributed system environments; he served as a
consultant for this company from November 2000 to August 2001. Mr.
Early holds a masters of business administration degree (international
finance) from the American Graduate School of International
Management, and a bachelor of arts degree (finance) from California
State University, Fresno. Mr. Early is a member of the Institute of
Managerial Accountants and the American Institute of Certified Public
Accountants.

(d) Phil E. Pearce, Director.

Mr. Pearce, age 76, has been an independent business consultant
with Phil E. Pearce & Associates and Chairman of Financial Express
Corporation since 1990. Prior to this, Mr. Pearce was senior vice
president and a director of E.F. Hutton (a public company), and was
chairman of the board of governors of the National Association of
Securities Dealers, where he was closely involved in the formation of
the NASDAQ Stock Market. He had also been a governor of the New York
Stock Exchange and a member of the Advisory Council to the Securities
and Exchange Commission on the Institutional Study of the Stock Markets.

Mr. Pearce also serves as an independent director of the
following public companies:

- April 1997 to present: Bravo Foods International Corporation, a
beverage licensing and branding company.

- December 2003 to present: Barrington Science, an in-vitro
diagnostic company (chairman of the board).

- December 2003 to September 2005: 360 Global Wine Company, a wine
producing and distribution company.

- October 2004 to October 2005: GoldSpring, Inc., a gold mining
company.

- February 2005 to present: Bronco Energy Fund, an energy
investments company (primarily coal).

Mr. Pearce is a graduate of the University of South Carolina and
the Wharton School of Investment Banking at the University of
Pennsylvania. He was appointed to the Company's board of directors on
October 4, 2004. Mr. Pearce formerly owned a 0.5% interest in Redwood
Grove Capital Management, LLC that is the management company for the
two of the Longview Funds (which provide financing to the Company); he
relinquished this interest on June 27, 2005.

(e) Stanley A. Hirschman, Director.

Mr. Hirschman, age 58, is president of CPointe Associates, Inc.
(a private company), an executive management consulting firm that
specializes in solutions for companies with emerging technology-based
products and is well-versed in the challenges of regulated corporate
governance. During the past five years, he has also served the
following public companies: former chairman of Mustang Software and a
former director of Imaging Diagnostic Systems, Inc. and ObjectSoft
Corporation. While at Mustang Software, Mr. Hirschman took a hands-on
role in the planning and execution of the strategic initiative
resulting in the acquisition of the company by Quintus Corporation.
Prior to establishing CPointe Associates in 1996, he was vice
president of operations, Software Etc., Inc. (a public company), a
396-retail store software chain. He also held senior executive
management positions with the following public companies: T.J. Maxx,
Gap Stores and Banana Republic.

Mr. Hirschman also serves as an independent director of the
following public companies:

- September 2000 to present: Bravo Foods International Corporation
(chairman of the board).

- October 2004 to present: GoldSpring, Inc.

- February 2005 to present: Bronco Energy Fund.

- May 2005 to present: Energy & Engine Technology, Inc., an
auxiliary power unit manufacturer.

- February 2006 to present: Oxford Media, Inc., a developer of
digital entertainment systems.

- March 2006 to present: Dalrada Financial Corp, an employer
business solutions provider.

Mr. Hirschman was appointed to the Company's board of directors
on September 23, 2004. He formerly owned a 0.5% interest in Redwood
Grove Capital Management, LLC, but relinquished this interest on June
27, 2005.

(f) Murray H. Williams, Director.

Mr. Williams, age 35, is the CFO of Interactive Television
Networks, Inc. ("ITVN"). ITVN was incorporated in April 2002 and
became a publicly traded entity in June of 2003. Mr. Williams began
his employment at ITVN on June 3, 2005. ITVN is engaged in an
Internet Protocol Television subscription based business that sells an
Internet appliance that enables subscribers to view movies and
television programs on their television that are delivered via the
Internet using proprietary hardware and software. Prior to ITVN, Mr.
Williams was a consultant and investor in numerous companies from
September 2003 through June 2005. Prior to that, Mr. Williams was the
co-founder of Brand Shopping Network, Inc., a shopping service that
incorporated in 2001. Prior to Brands Shopping Network, Mr. Williams
was one of the founding members of Buy.com, Inc. Between 1998 and
2001, he developed the finance, legal, business development and HR
departments. Prior to joining Buy.com, he was employed with KPMG Peat
Marwick, LLP from 1993 through 1998, and last served as a manager in
their assurance practice. Mr. Williams managed a team of over 20
professionals specializing in financial services with an emphasis on
public offerings, private financings and mergers/acquisitions. He was
appointed to the Company's board of directors on November 8, 2004.

(g) Kirk Haney, Director.

Mr. Haney, age 34, is the founder and CEO of Cloud Break
Ventures, LLC, a private investment firm focused on early stage
private company and real estate investments. Prior to founding Cloud
Break Ventures, Mr. Haney worked in Global Business Development for
Cisco Systems, Inc. where he was instrumental in creating Cisco's
global security sales strategy. In addition to leading several of
Cisco's enterprise and advanced technology sales and engineering
teams, he has also been an advisor to Cisco's Corporate Business
Development team on various investment and acquisition candidates.
Prior to his Cisco experience, which began in 1999, Mr. Haney held
senior management positions in sales, marketing and business
development for 3Com Corporation and ArrowPoint Communications
(acquired by Cisco). He holds a Bachelor of Arts degree in political
science from California State University, Long Beach, and an MBA
degree from Pepperdine University. Mr. Haney was appointed to the
Company's board of directors on October 27, 2004.

Compliance with Section 16(a) of the Exchange Act.

Section 16(a) of the Exchange Act requires executive officers and
directors, and persons who beneficially own more than 10% of any class
of the Company's equity securities to file initial reports of
ownership and reports of changes in ownership with the SEC. Executive
officers, directors and beneficial owners of more than 10% of any
class of the Company's equity securities are required by SEC
regulations to furnish the Company with copies of all Section 16(a)
forms they file.

Based solely upon a review of Forms 3 and 4 and amendments
thereto furnished to the Company under Rule 16a-3(d) during fiscal
2005, and certain written representations from executive officers and
directors, the Company is unaware of any required reports that were
not timely filed.

Code of Ethics.

The Company has adopted a code of ethics that applies to its
board of directors, principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions (see Exhibit 14). The code of ethics in
general prohibits any officer, director or advisory person of the
Company from acquiring any interest in any security which the
Company (i) is considering a purchase or sale thereof, (ii) is being
purchased or sold by the Company, or (iii) is being sold short by the
Company. These persons are required to advise the Company in writing
of his or her acquisition or sale of any such security.

Committees of the Board of Directors.

(a) Audit Committee.

The Company has an Audit Committee. See Item 14 below for a
discussion of this committee.

(b) Nominating Committee.

The members of the Company's Nominating Committee are Messrs.
Pearce and Hirschman, both independent directors. The Nominating
Committee has responsibility to: (a) actively seek individuals
qualified to become members of the board of directors; (b) from time
to time recommend individuals for appointment as directors by the
board of directors; (c) set the number of directors that shall
constitute the whole board of directors; (d) nominate directors for
approval by stockholders at an annual meeting of stockholders or
special meeting of stockholders; (e) recommend to the full board of
directors the establishment, charter and membership of the various
committees of the board of directors; (f) annually evaluate the
performance and function of this Nominating Committee; (g) acting with
sole authority, retain and terminate any consulting or search firm to
be used to identify director candidates, including the sole authority
to approve the firm's fees and other retention terms; and (h)
annually, review and update its own charter for consideration by the
board of directors.

The Nominating Committee does not have any policy with regard to
the consideration of any director candidates recommended by security
holders. The Company's board of directors feels that it is
appropriate for the Company not to have such a policy since the
Company will consider director candidates recommended by security
holders anyway and will treat them the same as other recommendations
for the board. Security holders wishing to submit such recommendation
must put them in writing, addressed to the Company's Secretary, Don Boudewyn.

The Nominating Committee's process for identifying and evaluating
nominees for director, including any recommended by security holders,
involves reviewing recommendations among the members and interviewing
certain prospective candidates. There are no differences between in
the manner in which the committee evaluates nominees based on whether
it is recommended by security holders or not.

The Company's Compensation Committee consists of Messrs.
Williams, Pearce, Hirschman, and Haney, all independent directors.
The Compensation Committee has responsibility with respect to
reviewing and overseeing the Company's compensation to directors and
officers of the Company, including the issuance of any stock to these
individuals, reports the results of its activities to the full board
of directors.

(d) Governance Committee.

The members of the Company's Governance Committee are Messrs.
Dix, Boudewyn, Pearce, and Hirschman, two of which are independent.
The Governance Committee provides guidance and direction regarding the
governance and operation of the Company and assistance to the board of
directors in fulfilling the board of director's responsibilities
relating to good governance and management.

(e) Investment Committee.

The members of the Company's Investment Committee are Messrs.
Williams, Pearce, Hirschman, and Haney, all being independent
directors of the Company. The Investment Committee has responsibility
with respect to reviewing and overseeing the Company's contemplated
investments on behalf of the Board and reports the results of its
activities to the full board of directors. The Investment Committee
has the ultimate authority for and responsibility to evaluate and
recommend investments.

ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table

Annual compensation Long-term Compensation
Awards Payouts
Name and Other Restricted Securities
principal annual stock underlying LTIP All other
position Year Salary Bonus compensation award(s) options/SARs payouts compensation
($) ($) ($) ($) (#) ($) ($)

Jerry Dix, 2005 144,000 - - - - - -
CEO 2004 136,800 - 159,800(1) - - - -
2003 216,000 - - - - - -

Don 2005 96,000 - - - - - -
Boudewyn, 2004 91,700 - 88,200(2) - - - -
EVP 2003 144,000 - - - - - -

Brian Corty, 2005 - - 28,000(4) - - - -
former CTO 2004 63,700 - 59,200(3) - - - -
2003 168,000 - - - - - -

(1) During 2003 Mr. Dix was paid $47,300 and had an accrued balance
of $293,300 at December 31, 2003, which was paid by the
restricted shares issued for accrued salaries valued at this
amount.

(2) During 2003 Mr. Boudewyn was paid $19,350 and had an accrued
balance of $262,650 at December 31, 2003, which was paid by the
restricted shares issued for accrued salaries valued at this
amount.

(3) Mr. Corty joined the Company in January 2002 and resigned as
chief technology officer on September 23, 2004. During 2003 Mr.
Corty was paid $83,590 and had an accrued balance of $156,322 at
December 31, 2003, which was paid by the restricted shares issued
for accrued salaries valued at this amount.

(4) Pursuant to the terms of Mr. Corty's separation agreement, the
Company retained Mr. Corty as an independent consultant for the
period of January 1 - June 30, 2005. Mr. Corty was paid $4,000
per month under the terms of that certain agreement.

None of the other current or former officers or directors of the
Company have received compensation exceeding $100,000 over the past
three fiscal years.

Employment Agreements.

All prior employment agreements between Mr. Dix and Mr. Boudewyn
expired on February 1, 2005. The Company intends in the future enter
into new employment agreements with these individuals.

Other Compensation.

(a) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
Company in the event of retirement at normal retirement date as there
was no existing plan as of December 31, 2005 provided for or
contributed to by the Company.

(b) With the exception of director compensation, no remuneration is
proposed to be paid in the future directly or indirectly by the
Company to any officer or director. The Company's independent
directors, under their agreements with the Company (see Exhibit 10.6),
receive $3,000 per month ($36,000 per year). All directors may be
reimbursed for their reasonable expenses incurred in connection with
attending meetings of the board of directors or management committees.

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

The following table sets forth information regarding the beneficial
ownership of the Company's common stock as of March 24, 2006 (4,454,403 shares
issued and outstanding (1)) (there is also outstanding as of that date: (a)
3,000,000 shares of Series A preferred stock, none of which is convertible
before October 7, 2007; and (b) 250,000 shares of Series B preferred stock,
all of which is currently convertible into shares of common stock (7)) by: (i)
all stockholders known to the Company to be owners of more than 5% of the
outstanding common stock of the Company; and (ii) all officers and directors
of the Company, individually and as a group:

Title of Class Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Class
Owner(2) (3)

Common Stock Jerry Dix 120,787 (4) 2.71%
4136 Del Rey Avenue
Marina del Rey, California
90292

Common Stock Don Boudewyn 86,912 (5) 1.95%
4136 Del Rey Avenue
Marina del Rey, California
90292

Common Stock Lawrence C. Early 0 0.00%
4136 Del Rey Avenue
Marina del Rey, California
90292

Common Stock Phil E. Pearce 0 0.00%
4136 Del Rey Avenue
Marina del Rey, California
90292

Common Stock Stanley A. Hirschman 0 0.00%
4136 Del Rey Avenue
Marina del Rey, California
90292

Common Stock Murray H. Williams 0 0.00%
4136 Del Rey Avenue
Marina del Rey, California
90292

Common Stock Kirk Haney 0 0.00%
4136 Del Rey Avenue
Marina del Rey, California
90292

Common Stock All Directors and 207,699 4.66%
Executive Officers as a
Group (7 persons)

Series A
Preferred
Stock Jerry Dix 1,800,000 60.00%
4136 Del Rey Avenue
Marina del Rey, California
90292

Series A
Preferred
Stock Don Boudewyn 1,200,000 40.00%
4136 Del Rey Avenue
Marina del Rey, California
90292

Series A
Preferred
Stock All Directors and 3,000,000 (6) 100.00%
Executive Officers as a
Group (2 persons)

(1) Reflects the 1 for 350 reverse split of the Company's common
stock that was effective on November 23, 2005.

(2) None of these security holders has the right to acquire any
amount of the shares within sixty days from options, warrants, rights,
conversion privilege, or similar obligations. Each person has sole
voting power and sole dispositive power as to all of the shares shown
as beneficially owned by them.

(3) Applicable percentage ownership of common stock is based on
4,454,403 shares issued and outstanding as of March 24, 2006 divided
by the total common stock for each beneficial owner. Beneficial
ownership is determined in accordance with the rules and regulations
of the SEC. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of common
stock subject to options or convertible or exchangeable into such
shares of common stock held by that person that are currently
exercisable, or exercisable within 60 days, are included.

(4) All shares held by Jerry and Karen Dix, joint tenants with right
of survivorship, except for 305 (post reverse split) shares held by
Market Force, Inc. of which Mr. Dix and Steven Lipman have shared
voting and investment control. The Company previously issued 10,270
(post reverse split) restricted shares of common stock to Mr. Dix for
the accrued portion of salaries for the fourth quarter of fiscal 2004.
The Company requested the return of the shares issued so as to comply
with the requirements of Section 63 of the 1940 Act, and they have
been cancelled.

(5) Of the total, 3,384 (post-reverse split) shares are held by
Wireless Xstream Technologies Ltd., which is controlled by Mr.
Boudewyn. The Company previously issued 5,530 (post reverse split)
restricted shares of common stock to Mr. Boudewyn for the accrued
portion of salaries for the fourth quarter of fiscal 2004. The
Company requested the return of the shares issued so as to comply with
the requirements of Section 63 of the 1940 Act, and they have been cancelled.

(6) The Series A preferred stock, issued on October 7, 2004, is
convertible after three years following its issuance, providing the
holder is still employed by the Company. Each share of Series A
Preferred Stock is convertible at the rate of 800 shares of common
stock for each full share of convertible preferred stock. Under the
terms of the certificate of designation governing these shares, the
conversion ratio was not changed upon the reverse split of the
Company's common stock on November 23, 2005. There are no other plans
or arrangements to issue any additional Series A Preferred Stock at
this time.

(7) The Series B preferred stock is convertible into shares of the
Company's common stock at a conversion price equal to the lesser of:
(i) if converted without benefit of a registration statement, 75% of
the lowest close bid of the common stock as reported by the market or
exchange on which the common stock is listed or quoted for trading or
quotation on the date in question for the 20 trading days preceding
the conversion date for each full share of convertible preferred stock
held; (ii) if converted with the benefit of a registration statement,
85% of the lowest close bid of the common stock as reported by the
trading market for the 20 trading days preceding the conversion date
for each full share of convertible preferred stock held; and (iii) the
face amount per share.

Securities Authorized for Issuance under Equity Compensation Plans.

The Company has previously adopted three equity compensation
plans (none of which has been approved by the Company's stockholders):
the 2004 Non-Employee Directors and Consultants Retainer Stock Plan,
the Non-Employee Directors and Consultants Retainer Stock Plan, and
the Stock Incentive Plan. Since the Company converted to a BDC in
2004, and under the 1940 Act it was prohibited from issuing stock or
options for services, management made the decision after such
conversion not to issue any further shares under these three plans and
to deregister all of the remaining registered shares under each of
these plans by a Form S-8 POS (filed on March 28, 2006).

(a) Stock and Option Plan.

On December 21, 2005, the Company adopted a 2006 Stock and Option
Plan (amended and restated in January 2006), since it is no longer
subject to the provisions of the 1940 Act, and registered shares under
this plan with the filing of a Form S-8. This plan replaces one
adopted by the company in December 2005. The purpose of the Plan is
to promote the interests of the Company and its stockholders by
attracting and retaining Employees capable of furthering the future
success of the Company and by aligning their economic interests more
closely with those of the Company's stockholders. A total of
1,200,000 shares have been registered under this plan under Form S-8's
filed with the SEC (1,000,000 as of December 31, 2005). As of
December 31, 2005, no shares had been issued.

Equity Compensation Plan Information
as of December 31, 2005
Number of
securities
remaining
Number of available for future
securities to be issuance under
issued upon Weighted-average equity
exercise of exercise price of compensation
outstanding outstanding plans (excluding)
options, warrants options, warrants securities reflected
and rights and rights in column (a)
Plan category (a) (b) (c)

Equity compensation
plans approved by
security holders 0 0 0

Equity compensation
plans not approved by
security holders 0 0 Stock and Option Plan:
1,000,000

Total 0 0 Stock and Option Plan:
1,000,000

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During the last two fiscal years there have not been any
relationships, transactions, or proposed transactions to which the
Company was or is to be a party, in which any of the directors,
officers, or 5% or greater stockholders (or any immediate family
thereof) had or is to have a direct or indirect material interest,
other than as set forth below.

It has been represented to the Company that the Longview Funds
have made investments into GoldSpring, Inc.. There are no
transactions between the Company and GoldSpring, Inc. (on which Mr.
Hirschman serves on the board of directors, and Mr. Pearce served on
the board of directors from October 2004 to October 2005).

(a) In March 2004, the Company borrowed $250,000 under
convertible notes payable, of which $100,000 came from management or
individuals related to certain management personnel ($50,000 came from
Mr. & Mrs. Trepp, Mr. Trepp being the former president, $25,000 from
Paul Zygielbaum, a former employee of the Company, and $25,000 from
Thomas Janes, who is the father in law of Donald Boudewyn, the
Company's executive vice president).

(b) In March 2004, the Company issued 2,857 (post reverse split)
restricted shares of common stock to Mr. Corty, a former director, for
expenses incurred on behalf of the Company in the amount of $23,950.

(c) On June 30, 2004 and September 30, 2004, the Company issued
a total of 6,443 (post reverse split) shares of common stock to Mr.
Corty for accrued salaries for 2002, 2003 and 2004.

(d) On September 29, 2004, the Company's board of directors
appointed Stanley A. Hirschman as an independent board member. Mr.
Hirschman formerly owned a 0.5% interest in Redwood Grove Capital
Management, LLC that is the management company for the Longview Equity
Fund, L.P. and the Longview International Equity Fund, L.P. (which
provided funds to the Company under convertible notes); he
relinquished this interest on June 27, 2005.

(e) On October 4, 2004, the Company's board of directors
appointed Phil E. Pearce as an independent board member. Mr. Pearce
formerly owned a 0.5% interest in Redwood Grove Capital Management,
LLC; he relinquished this interest on June 27, 2005.

(f) On October 6, 2004, the Company's Compensation Committee
granted and the Company issued Series A preferred stock to Mr. Dix and
Mr. Boudewyn totaling 3,000,000 shares. Each share of Series A
preferred stock is convertible initially at the rate of 800 shares of
common stock for each full share of preferred stock (under the terms
of the certificate of designation governing these shares, the
conversion ratio was not changed upon the reverse split of the
Company's common stock on November 23, 2005).

Each share of outstanding Series A preferred stock entitles the
holder thereof to vote on each matter submitted to a vote of the
stockholders of the Company and to have the number of votes equal to
the number (including any fraction) of shares of common stock into
which such share of Series A preferred stock is then convertible
pursuant to the provisions hereof at the record date for the
determination of stockholders entitled to vote on such matters or, if
no such record date is established, at the date such vote is taken or
any written consent of stockholders becomes effective. The preferred
shares are convertible after three years from issuance. See Exhibit 4.17.

A third party conducted an evaluation prior to the issuance and
concluded that the value of the preferred shares was $200,000, $33,334
and $50,000 of which was expensed for the years ended December 31,
2005 and 2004. The difference of $116,666 is carried as unearned
compensation in the Consolidated Statement of Stockholders' Deficit.

(g) During the year ended December 31, 2004, the Company issued
a total of 96,171 (post reverse split) restricted shares of common
stock to Mr. Dix for accrued salaries for 2002, 2003 and 2004. During
the year ended December 31, 2004, the Company issued a total of 80,670
(post reverse split) restricted shares of common stock to Mr. Boudewyn
for accrued salaries for 2002, 2003 and 2004. The Company has since
requested the return of the shares issued so as to comply with the
requirements of the 1940 Act. The Company has since received the
shares issued to Mr. Dix and Mr. Boudewyn, which have been cancelled
(the value of the shares has been reflected as a liability so as to
comply with the 1940 Act).

(h) On December 31, 2004, the Company moved the assets,
employees, and all related contracts and agreements from the Company
to 5G Wireless Solutions, Inc., the portfolio company. As part of its
obligations, the Company issued restricted common shares for the
accrued portion of salaries for the fourth quarter of fiscal 2004.
The Company has since requested the return of the shares issued so as
to comply with the requirements of the 1940 Act. The Company has
since received the shares issued to Mr. Dix and Mr. Boudewyn, which
have been cancelled.

(i) During 2005 and 2004, the Company used the credit lines of
Service Group, which is a company controlled by Mr. Dix, to help the
Company purchase equipment, travel and related consumables throughout
the year as a means of managing cash flows.

For each of the transactions noted above, the transaction was
negotiated, on the part of the Company, on the basis of what is in the
best interests of the Company and its stockholders. In addition, in
each case the interested affiliate did vote in favor of the
transaction; however, the full board of directors did make the
determination that the terms in each case were as favorable as could
have been obtained from non-affiliated parties.

Certain of the Company's directors are engaged in other
businesses, either individually or through corporations in which they
have an interest, hold an office, or serve on a board of directors.
As a result, certain conflicts of interest may arise between the
Company and such directors. The Company will attempt to resolve such
conflicts of interest in the Company's favor.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees.

The aggregate fees billed for each of the last two fiscal years
for professional services rendered by Squar, Milner, Reehl &
Williamson, LLP ("Accountant") for the audit of the Company's annual
financial statements, and review of financial statements included in
the company's Form 10-Q's: 2005: $125,200; and 2004: $67,000.

Audit-Related Fees.

The aggregate fees billed in each of the last two fiscal years
for assurance and related services by the Accountant that are
reasonably related to the performance of the audit or review of the
Company's financial statements and are not reported under Audit Fees
above: 2005: $22,500; and 2004: $0.

Tax Fees.

The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the Accountant for tax compliance,
tax advice, and tax planning: 2005: $5,000; and 2004: $9,000.

All Other Fees.

The aggregate fees billed in each of the last two fiscal years
for products and services provided by the Accountant, other than the
services reported above: $0.

Audit Committee.

The Company's audit committee consists of Messrs. Williams,
Pearce, Hirschman, and Haney, all being independent directors. The
audit committee has adopted a written charter. Mr. Williams has been
designated the Audit Committee's "financial expert" in compliance with
Item 401(h) of Regulation S-K.

The primary responsibility of the Audit Committee is to oversee
the Company's financial reporting process on behalf of the Company's
board of directors and report the result of their activities to the
board. Such responsibilities include, but are limited to, the
selection, and if necessary the replacement, of the Company's
independent auditors, review and discuss with such independent
auditors (i) the overall scope and plans for the audit, (ii) the
adequacy and effectiveness of the accounting and financial controls,
including the Company's system to monitor and manage business risks,
and legal and ethical programs, and (iii) the results of the annual
audit, including the financial statements to be included in the
Company's annual report on Form 10-K.

The Company's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors. These
services may include audit services, audit-related services, tax
services and other services. Pre-approval is generally provided for
up to one year and any pre-approval is detailed as to the particular
service or category of services and is generally subject to a specific
budget. The independent auditors and management are required to
periodically report to the audit committee regarding the extent of
services provided by the independent auditors in accordance with this
pre-approval, and the fees for the services performed to date. The
audit committee may also pre-approve particular services on a case-by-
case basis.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Exhibits included or incorporated by reference herein are set
forth under the Exhibit Index.

SIGNATURES

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

5G Wireless Communications, Inc.

Dated: April 5, 2006 By: /s/ Jerry Dix
Jerry Dix, Chief Executive Officer

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

Signature Title Date

/s/ Jerry Dix Chief Executive Officer/Director April 5, 2006
Jerry Dix

/s/ Don Boudewyn Executive Vice April 5, 2006
Don Boudewyn President/Secretary/Treasurer
Director

/s/ Lawrence C. Early Chief Financial Officer April 5, 2006
Lawrence C. Early

/s/ Phil E Pearce Director April 5, 2006
Phil E Pearce

/s/ Stanley A. Hirschman Director April 5, 2006
Stanley A. Hirschman

/s/ Murray H. Williams Director April 5, 2006
Murray H. Williams

/s/ Kirk Haney Director April 5, 2006
Kirk Haney

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
5G Wireless Communications, Inc.

We have audited the accompanying consolidated balance sheets of 5G
Wireless Communications, Inc. (the "Company"), as of December 31,
2005 and 2004 and the related consolidated statements of operations,
stockholders' deficit, and cash flows for each of the two years in the
period ended December 31, 2005. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of the Company as of December 31, 2005 and 2004, and the consolidated
results of its operations and its cash flows for each of the two years
in the period ended December 31, 2005 in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As disclosed in Note 1,
the Company incurred net losses of approximately $4,025,000 and
$4,989,000 during the years ended December 31, 2005 and 2004,
respectively, and has an accumulated deficit of approximately
$22,785,000 as of December 31, 2005. These factors raise substantial
doubt as to the Company's ability to continue as a going concern. If
the Company is unable to generate sufficient cash flow from operations
and/or continue to obtain financing to meet its working capital
requirements, it may have to curtail its business sharply or cease
business altogether. Management's plans in regard to these matters
are also described in Note 1. The financial statements do not include
any adjustments relating to the recoverability and classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern.

/s/ Squar, Milner, Reehl & Williamson, LLP
Newport Beach, California
March 13, 2006

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
5G Wireless Communications, Inc.

We have audited the consolidated statements of operations,
stockholders' deficit, and cash flows of 5G Wireless Communications,
Inc. (the "Company") for the year ended December 31, 2003. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public
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 audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the results of the
Company's operations and its cash flows for the year ended December
31, 2003, in conformity with accounting principles generally accepted
in the United States of America.

The consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 1 to the consolidated financial statements, the Company has
suffered recurring losses from operations and has a net capital
deficit that raise substantial doubt about its ability to continue as
a going concern. Management's plans in regard to these matters are
also described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.

/s/ Carter & Balsam
Sherman Oaks, California
May 13, 2004

5G WIRELESS COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2005 and 2004

ASSETS
2005 2004

Cash $ 85,357 $ 736,904
Accounts receivable, net of allowance for
doubtful accounts of $33,857 and $29,794,
respectively 328,897 243,884
Inventory 120,481 33,809
Other current assets 16,625 6,134
Total current assets 551,360 1,020,731
Property and equipment, net of accumulated
depreciation and
amortization of $274,841 and $203,216,
respectively 80,798 106,579

Total assets $ 632,158 $ 1,127,310

LIABILITIES AND STOCKHOLDERS' DEFICIT

Liabilities:
Accounts payable and accrued liabilities $ 616,553 $ 427,919
Notes payable 10,000 48,733
Accrued interest on convertible notes and
notes payable 191,774 92,368
Other liabilities 424,769 -
Convertible notes, net of discounts (including
related party amounts totaling $75,000 and $100,000
at December 31, 2005 and 2004, respectively) 1,550,103 1,191,916
Total current liabilities 2,793,199 1,760,936

Stockholders' deficit:
Preferred series "A" convertible stock,
$0.001 par value; 3,000,000 shares
authorized; 3,000,000 shares outstanding 3,000 3,000
Common stock, $0.001 par value;
5,000,000,000 shares authorized; 3,697,597 (1)
and 2,488,678 (1) shares outstanding,
respectively. 3,698 2,489
Additional paid in capital 20,734,610 18,271,556
Common stock held in escrow (1,016) (1,016)
Unearned compensation (116,666) (150,000)
Accumulated deficit (22,784,667) (18,759,655)
Total stockholders' deficit (2,161,041) (633,626)
Total liabilities and stockholders' deficit $ 632,158 $1,127,310

(1) Adjusted for a 1 for 350 reverse split of the common stock
effective on November 23, 2005.

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

5G WIRELESS COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

2005 2004 2003

Revenues $1,618,932 $ 651,450 $167,302
Cost of revenues 337,003 199,611 137,314
Gross profit 1,281,929 451,839 29,988

Operating expenses:
General and administrative 1,464,945 553,453 238,690
Salaries and related 627,385 835,999 657,042
Research and development 209,543 9,837 -
Professional/consulting services 1,194,878 3,217,407 1,145,653
Depreciation 71,625 87,883 71,278
Total operating expenses 3,568,376 4,704,579 2,112,663

Operating loss (2,286,447) (4,252,740)(2,082,675)

Interest expense (including amortization of financing
costs and debt discounts) (1,695,347) (736,460) (77,019)

Derivative expense (43,218) - -

Net loss $(4,025,012) $(4,989,200)$(2,159,694)

Loss per common share:
Basic and diluted (1) $ (1.38) $ (3.80)$ (6.30)

Weighted average shares outstanding (1): 2,910,748 1,313,272 342,981

(1) Adjusted for a 1 for 350 reverse split of the common stock
effective on November 23, 2005.

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

5G WIRELESS COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

Series A Preferred Stock Common Stock (1) Additional Common
($0.001 Par Value) ($0.001 Par Value) Paid In Stock Held In Unearned Accumulated
Shares Amount Shares Amount Capital Escrow Comp Deficit Total

Balance,
December 31,
2002 - $ - 471,207 $ 471 $10,811,044 $ - $ - $(11,610,761) $(799,246)

Shares issued for:
Services - - 176,265 176 1,158,709 - - - 1,158,885
Debt conversion - - 177,683 178 415,747 - - - 415,925
Cash for common - - 21,963 22 353,478 - - - 353,500

Net loss - - - - - - - (2,159,694)(2,159,694)

Balance,
December 31,
2003 - - 847,118 847 12,738,978 - - (13,770,455)(1,030,630)

Shares issued for:
Services - - 440,585 441 2,428,505 - - - 2,428,946
Debt conversion - - 181,287 181 587,207 - - - 587,388
Cash for common - - 3,815 4 21,624 - - - 21,628
Shares held in
Escrow 1,015,873 1,016 - (1,016) - - -

Services for
preferred stock 3,000,000 3,000 - - 197,000 - (200,000) - -

Debt discount
related to
beneficial
conversion
features - - - - 2,298,242 - - 2,298,242

Amortization of
preferred stock
unearned
compensation - - - - - - 50,000 - 50,000

Net Loss - - - - - - - (4,989,200) (4,989,200)

Balance,
December 31,
2004 3,000,000 3,000 2,488,678 2,489 18,271,556 (1,016) (150,000) (18,759,655) (633,626)

Shares issued for:
Services - - 147,325 147 130,098 - - - 130,245
Debt conversion - - 1,081,838 1,082 1,110,936 - - - 1,112,018

Amortization of
preferred stock
unearned
compensation - - - - - - 33,334 - 33,334

Shares returned by
Shareholders - - (20,244) (20) (77,980) - - - (78,000)

Debt discount
related to
beneficial
conversion
features - - - - 1,300,000 - - - 1,300,000

Net Loss - - - - - - - (4,025,012)(4,025,012)

Balance,
December
31, 2005 3,000,000 $ 3,000 3,697,597 $3,698 $20,734,610 $ (1,016) $ (116,666)$(22,784,667)$(2,161,041)

(1) Number of shares adjusted for a 1 for 350 reverse split of the
common stock effective on November 23, 2005.

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

5G WIRELESS COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

2005 2004 2003

Cash flows from operating activities:
Net loss $ (4,025,012) $ (4,989,200) $(2,159,694)
Adjustments to reconcile net loss
to net cash used in operating activities:
Deprecation and amortization 71,625 87,883 71,278
Bad debt expense 775,547 - -
Common stock for services 130,245 2,428,946 1,158,884
Amortization of unearned compensation 33,334 50,000 -
Derivative liability expense 43,218 - -
Amortization of BCF/discount on convertible notes 1,309,171 627,067 -
Changes in operating assets/liabilities:
Accounts receivable (860,560) (236,779) (6,301)
Inventories (86,672) (29,309) (4,500)
Other current assets (10,491) - -
Prepaid expenses - 72,056 -
Other assets - - (62,340)
Accounts payable and accrued liabilities 110,634 (579,046) 586,922
Accrued interest 260,440 232,478 -
Other liabilities 381,551 - -
Net cash flows used in operating activities (1,866,970) (2,335,904) (415,751)

Cash flows from investing activities:
Purchase of property and equipment (45,844) (100,356) (46,337)
Net cash flows used in investing activities (45,844) (100,356) (46,337)

Net cash flows from financing activities:
Proceeds from notes payable - 85,000 80,000
Repayments on notes payable (38,733) (125,634) -
Net proceeds from convertible notes payable 1,300,000 2,980,500 235,000

Net cash received for common stock - 21,628 353,500
Net cash flows provided by financing activities 1,261,267 2,961,494 668,500
Net increase (decrease) in cash (651,547) 525,234 206,412

Cash, beginning of year 736,904 211,670 5,258

Cash, end of year $ 85,357 $ 736,904 $ 211,670

Supplemental disclosure of cash flow information:
Cash paid for income taxes: $ 1,723 $ 800 $ 800
Cash paid for interest $ - $ - $ 77,019

Supplemental disclosure of noncash investing and
financial activities:
Conversion of debt to common stock $ 1,112,018 $ 587,388 $ -
Common stock issued and held in escrow $ - $ 355,556 $ -
Preferred stock issued for unearned compensation $ - $ 200,000 $ -
BCF/discount on convertible notes payable $ 1,300,000 $2,298,242 $ -

See accompanying notes to consolidated financial statements for
additional disclosures of non-cash investing and financing activities

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

5G WIRELESS COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business.

5G Wireless Communications, Inc. ("5G Wireless"), through its wholly-
owned subsidiary, 5G Wireless Solutions, is a developer and
manufacturer of wireless telecommunications equipment operating on the
802.11a/b/g frequency. 5G Wireless and its wholly owned subsidiary are
collectively referred to as the "Company".

5G Wireless was incorporated as Tesmark, Inc. in September 1979. In
November 1998, it changed its state of incorporation from Idaho to
Nevada and in January 2001 changed the name to 5G Wireless
Communications, Inc. In March 2001, 5G Wireless acquired 5G Partners,
a Canadian partnership, and changed its business to provide wireless
technology systems through high speed Internet access and data
transport systems. In April 2002, it acquired Wireless Think Tank,
Inc., a developer of high-speed long distance wireless technologies.
In July 2003, it shifted its strategy from that of a service provider
to an equipment manufacturer, or OEM.

On October 19, 2004, 5G Wireless elected, by the filing of a Form N-
54A with the Securities and Exchange Commission ("SEC") to be
regulated as a business development company ("BDC") under the
Investment Company Act of 1940 ("1940 Act"). On December 31, 2004,
certain assets and certain liabilities of 5G Wireless were transferred
into 5G Wireless Solutions, Inc. in exchange for 100% of its
outstanding common shares.

On June 3, 2005, 5G Wireless' board of directors unanimously
determined that it would be in the best interests of 5G Wireless and
its stockholders to seek stockholder approval on certain matters.
Pursuant to a definitive Schedule 14A proxy statement filed with the
Securities and Exchange Commission on September 19, 2005, 5G Wireless
sought approval from the stockholders, at the annual stockholder's
meeting on October 20, 2005, for the following (among other things):
(a) to terminate 5G Wireless' status as a BDC under the 1940 Act and
to file a Form N-54C with the SEC to terminate this status, and (b) to
file a new registration statement with the SEC.

On October 20, 2005, 5G Wireless' stockholders approved (among other
things) (a) the termination of 5G Wireless' status as a business
development company under the 1940 Act and the filing of a Form N-54C
with the SEC, and (b) the filing of a new registration statement.
Based on this approval, on October 21, 2005, 5G Wireless filed a Form
N-54C with the SEC terminating its status as a BDC. Accordingly, the
accompanying balance sheets as of December 31, 2005 and 2004 have been
presented on a consolidate basis. The balance sheet included in the
Company's financial statements for the year ended December 31, 2004,
previously included in its annual report on Form 10-KSB for the year
ended December 31, 2004, was presented on a non-consolidated basis in
accordance with Regulation S-X, Rule 6-03.

On November 3, 2005, the Company's Board of Directors approved a 1 for
350 reverse stock split of the Company's common stock. Common shares
outstanding prior to and after the reverse stock split totaled
1,169,494,405 and 3,341,419 shares, respectively. The November 23,
2005 reverse stock split has been retroactively reflected in the
accompanying financial statements for all periods presented. Unless
otherwise indicated, all references to outstanding common shares,
including common shares to be issued upon the exercise of warrants and
convertible notes payable, refer to post-split shares.

On January 19, 2006, 5G Wireless Solutions, Inc. was merged with and
into 5G Wireless Communications, Inc.

Going Concern Basis of Presentation.

The accompanying consolidated financial statements have been prepared
assuming that the Company continues as a going concern that
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. However, the ability of
the Company to continue as a going concern on a longer-term basis will
be dependent upon its ability to generate sufficient cash flow from
operations, to meet its obligations on a timely basis, to retain its
current financing, to obtain additional financing, and ultimately
attain profitability.

During the years ended December 31, 2005 and 2004, the Company
incurred losses of approximately $4,025,000 and $4,989,000,
respectively, and the Company has an accumulated deficit of
approximately $22,785,000 as of December 31, 2005. These factors raise
substantial doubt as to the Company's ability to continue as a going
concern. If the Company is unable to generate sufficient cash flow
from operations and/or continue to obtain financing to meet its
working capital requirements, it may have to curtail its business
sharply or cease business altogether.

Management plans to continue raising additional capital through a
variety of fund raising methods during 2006 and to pursue all
available fundraising alternatives in this regard. Management may also
consider a variety of potential partnership or strategic alliances to
strengthen its financial position. In addition, the Company will
continue to seek additional funds to ensure its successful growth
strategy and to, when appropriate, allow for potential investments
into a diverse portfolio of companies with strategic information and
communications technologies or applications. Whereas the Company has
been successful in the past in raising capital, no assurance can be
given that these sources of financing will continue to be available to
the Company and/or that demand for the Company's equity/debt
instruments will be sufficient to meet its capital needs. The
financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.

If funding is insufficient at any time in the future, the Company may
not be able to take advantage of business opportunities or respond to
competitive pressures, or may be required to reduce the scope of its
planned product development and marketing efforts, any of which could
have a negative impact on its business and operating results. In
addition, insufficient funding may have a material adverse effect on
the Company's financial condition, which could require it to:

- curtail operations significantly;

- sell significant assets;

- seek arrangements with strategic partners or other parties that
may require it to relinquish significant rights to products,
technologies or markets; or

- explore other strategic alternatives including a merger or sale
of the Company.

To the extent that the Company raises additional capital through the
sale of equity or convertible debt securities, the issuance of such
securities may result in dilution to existing stockholders. If
additional funds are raised through the issuance of debt securities,
these securities may have rights, preferences and privileges senior to
holders of common stock and the terms of such debt could impose
restrictions on the Company's operations. Regardless of whether the
Company's cash assets prove to be inadequate to meet its operational
needs, the Company may seek to compensate providers of services by
issuing stock in lieu of cash, which will help it manage its liquidity
but may also result in dilution to existing stockholders.

Use of Estimates.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
periods. Significant estimates include the allowance for doubtful
accounts, inventory and warranty reserves, realization of long-lived
assets and deferred tax asset valuation allowance. Actual results
could differ from those estimates.

Principles of Consolidation.

The consolidated financial statements as of and for the years ended
December 31, 2005 and 2004 include the accounts of 5G Wireless and its
wholly owned subsidiary, 5G Wireless Solutions, Inc. All significant
intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents.

The Company considers all highly liquid fixed income investments with
maturities of three months or less at the time of acquisition, to be
cash equivalents. At December 31, 2005, the Company had cash of
$85,357.

Inventory.

Inventories are stated at the lower of cost (first-in, first-out) or
market. Cost is determined on a standard cost basis that approximates
the first-in, first-out method. Market is determined by comparison
with recent sales or net realizable value.

Such net realizable value is based on management's forecasts for sales
of the Company's products or services in the ensuing years. The
industry in which the Company operates is characterized by
technological advancement, change and certain regulations. Should the
demand for the Company's products prove to be significantly less than
anticipated, the ultimate realizable value of the Company's
inventories could be substantially less than amounts shown in the
accompanying consolidated balance sheets.

Property and Equipment.

Property and equipment are stated at cost and are depreciated using
the straight-line method over their estimated useful lives of 5-10
years for machinery and equipment and 3-5 years for office furniture
and equipment. Leasehold improvements are amortized over the shorter
of their estimated useful lives or the term of the lease.

Concentrations of Credit Risk.

Financial instruments that potentially subject the Company to
concentrations of credit risk include cash and accounts receivable.
The Company maintains its cash funds in bank deposits in highly rated
financial institutions. At times, such investments may be in excess of
the Federal Deposit Insurance Corporation insurance limit. At December
31, 2005, there were no uninsured funds.

The Company's customers are located in many parts of the world. The
Company provides an allowance for losses on trade receivables based on
a review of the current status of existing receivables and
management's evaluation of periodic aging of accounts. The Company
charges off accounts receivable against the allowance for losses when
an account is deemed to be uncollectible. It is not the Company's
policy to accrue interest on past due receivables. At December 31,
2005, an allowance for doubtful accounts of $33,857 is maintained to
address such losses, if any.

In 2004, the Company had no material customers due to a lack of
product sales. For the year ended December 31, 2005, there were two
customers that accounted for more than 10% of the Company's revenues:
SRS (10%) and IAMA (30%). Both major customers closed operations in
the year 2005, and the Company recognized approximately $630,500 in
bad debt related to these uncollectible receivables.

The Company operates in a highly competitive industry that is subject
to intense competition, government regulation and rapid technological
change. The Company's operations are subject to significant risks and
uncertainties including financial, operational, technological,
regulatory and other business risks associated with such a company.

Income Taxes.

Deferred taxes are provided on the 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 bases. A deferred tax asset
is reduced by a valuation allowance if, 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 in the future. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.

In accordance with Statement of Financial Accounting Standards
("SFAS") No. 109, the Company records net deferred tax assets to the
extent the Company believes these assets will more likely than not be
realized. In making such determination, the Company considers all
available positive and negative evidence, including scheduled
reversals of deferred tax liabilities, projected future taxable
income, tax planning strategies and recent financial performance.

Revenue Recognition.

Revenues result principally from the sale and installation of wireless
radio equipment to customers. Equipment sales are recognized when
products are shipped. The Company recognizes revenues in accordance
with Staff Accounting Bulleting ("SAB") No. 104, "Revenue
Recognition," when all of the following conditions exist: (a)
persuasive evidence of an arrangement exists in the form of an
accepted purchase order; (b) delivery has occurred, based on shipping
terms, or services have been rendered; (c) the Company's price to the
buyer is fixed or determinable, as documented on the accepted purchase
order; and (d) collectibility is reasonably assured.

The Company offers installation services to customers and charges
separately when such services are purchased. Installation by the
Company is not required for the functionality of the equipment.
Consequently, installation services are considered a separate unit of
accounting under Financial Accounting Standards Board's ("FASB")
Emerging Issues Task Force ("EITF") No. 00-21,"Revenue Arrangements
with Multiple Deliverables."

Basic and Diluted Loss Per Common Share.

Under SFAS No. 128, "Earnings Per Share," basic earnings per common
share is computed by dividing income available to common stockholders
by the weighted-average number of common shares outstanding during the
period of computation. Diluted earnings per share is computed similar
to basic earnings per share except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. Because the Company has
incurred net losses, basic and diluted loss per share are the same
since additional potential common shares would be anti-dilutive. The
calculated diluted loss per share does not take into account the
effect 1,191,095 and 880,381 for 2005 and 2004, respectively aggregate
shares such as restricted shares, convertible securities and warrants,
which could be considered to be potentially dilutive.

Fair Value of Financial Instruments.

The carrying value of cash and cash equivalents, accounts receivables,
accounts payable and accrued expenses approximate their fair value due
to their short-term maturities. The fair value of the convertible
notes amounts to $1,608,097, based on the Company's incremental
borrowing rate. The carrying value of the derivative liability
associated with the convertible notes approximates its fair value
based on assumptions using the Black-Scholes model.

Management has concluded that it is not practical to determine the
estimated fair value of amounts due to related parties. SFAS No. 107
requires that for instruments for which it is not practicable to
estimate their fair value, information pertinent to those instruments
be disclosed, such as the carrying amount, interest rate, and
maturity, as well as the reasons why it is not practicable to estimate
fair value. Information related to these related party instruments is
included in Notes 4 and 8. Management believes it is not practical to
estimate the fair value of these related-party instruments because the
transactions cannot be assumed to have been consummated at arm's
length, the terms are not deemed to be market terms, there are no
quoted values available for these instruments, and an independent
valuation would not be practicable due to the lack of data regarding
similar instruments, if any, and the associated potential costs.

Stock-Based Compensation Arrangements.

The Company accounts for stock issued to non-employees for services
under SFAS No. 123, "Accounting for Stock Based Compensation. Under
SFAS No. 123, stock compensation expense is recorded based on the fair
value of equity instruments, or the fair value of the services,
whichever is more clearly determinable. Accordingly, the Company
incurred total stock based compensation expense of $130,245 in 2005
and $2,478,946 in 2004. Of this amount $1,100,587 related to employees
and directors and $1,378,359 related to third parties in 2004. As of
December 31, 2005, there were no options outstanding to employees,
directors or others.

Warranty.

The Company provides a warranty on all electronics sold for a period
of two years after the date of shipment. Warranty issues are usually
resolved with repair or replacement of the product. Trends of sales
returns, exchanges and warranty repairs are tracked by as a
management as a basis for the reserve that management records in the
Company's financial statements. Estimated future warranty obligations
related to certain products and services are provided by charges to
operations in the period in which the related revenue is recognized.
At December 31, 2005, warranty reserve approximated $26,161, which is
recorded under other current liabilities on the consolidated balance
sheet.

Shipping and Handling Costs.

Shipping and handling costs are included in cost of goods sold in the
accompanying statements of operations in accordance with EITF No. 00-
10, "Accounting for Shipping and Handling Fees and Costs."

Research and Development.

In accordance with SFAS No. 2, "Accounting for Research and
Development Costs," all research and development costs must be charged
to expense as incurred. Accordingly, internal research and
development costs are expensed as incurred. Third-party research and
developments costs are expensed when the contracted work has been
performed or as milestone results have been achieved. Company-
sponsored research and development costs related to both present and
future products are expensed in the period incurred. Research and
development costs for the years ended December 31, 2005 and 2004 were
$209,543 and $9,837, respectively.

Segment Disclosures.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," changed the way public companies report information
about segments of their business in their annual financial statements
and requires them to report selected segment information in their
quarterly reports issued to stockholders. It also requires entity-wide
disclosures about the products and services an entity provides, the
foreign countries in which it holds significant assets and its major
customers. At December 31, 2005, 2004, and 2003, the Company operates
in one segment.

The Company's chief operating decision-maker evaluates the performance
of the Company based upon revenues and expenses by functional areas as
disclosed in the Company's consolidated statements of operations.
Geographical information follows:

Years Ended December 31,
2005 2004 2003

Sales to external customers:
United States $1,529,686 $ 636,950 $ 167,302
Asia 14,246 - -
Africa 75,000 14,500 -

Total sales to external customers $1,618,932 $ 651,450 $ 167,302

Tangible assets by area:
United States $ 80,797 $ 66,495 $ 6,062
All other geographic regions - - -

Total tangible assets $ 80,797 $ 66,495 $ 6,062

Reclassifications.

Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation.

Discount on Convertible Notes and Preferred Stock.

Discounts on convertible notes and preferred stock are principally
attributable to the value of the beneficial conversion feature of the
notes due to the provision that allows for the exercise of the
debenture prices materially lower than the market value. These
discounts are accounted for in accordance with EITF No. 00-27 issued
by the American Institute of Certified Public Accountants.

Derivative Liabilities.

The Company evaluates free-standing instruments indexed to its common
stock to properly classify such instruments within equity or as
liabilities in its financial statements, pursuant to the requirements
of the EITF No. 00-19 "Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company's Own Stock", EITF
No. 01-06, "The Meaning of Indexed to a Company's Own Stock", EITF No.
05-04, "The Effect of a Liquidated Damages Clause on a Freestanding
Financial Instrument Subject to EITF Issue No. 00-19", and SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities," as
amended. The Company's policy is to settle instruments indexed to its
common shares on a first-in-first-out basis.

The Company accounts for the effects of registration rights and
related liquidated damages pursuant to EITF No. 05-04, View C, "The
Effect of a Liquidated Damages Clause on a Freestanding Financial
Instrument," subject to EITF No. 00-19. Pursuant to EITF No. 05-04,
View C, liquidated damages payable in cash or stock are accounted for
as a separate derivative, which requires a periodical valuation of its
fair value and a corresponding recognition of liabilities associated
with such derivative. The Company accounts for its embedded
conversion features and free-standing warrants pursuant to SFAS No.
133 and EITF No. 00-19, which require corresponding recognition of
liabilities associated with such derivatives at their fair values and
changes in fair values to be charged to earnings.

Significant Recent Accounting Pronouncements.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an
amendment of ARB No. 43, Chapter 4," which clarifies the accounting
for abnormal amounts of idle facility expense, freight, handling costs
and wasted material. In Chapter 4 of Accounting Resources Board
("ARB") No. 43, paragraph 5 previously stated that ".under some
circumstances, items such as idle facility expense, excessive
spoilage, double freight, and re-handling costs may be so abnormal as
to require treatment as current period charges." SFAS No. 151
requires that such items be recognized as current-period charges,
regardless of whether they meet the criterion of so abnormal (an
undefined term). This pronouncement also requires that allocation of
fixed production overhead to the costs of conversion be based on the
normal capacity of the production facilities. SFAS No. 151 is
effective for inventory costs incurred in years beginning after June
15, 2005. Management does not believe this pronouncement will have a
significant impact on its future financial statements.

In December 2004, the FASB issued SFAS No. 123-R, "Share-Based
Payment," which requires that the compensation cost relating to share-
based payment transactions (including the cost of all employee stock
options) be recognized in the financial statements. That cost will be
measured based on the estimated fair value of the equity or liability
instruments issued. SFAS No. 123-R covers a wide range of share-based
compensation arrangements including share options, restricted share
plans, performance-based awards, share appreciation rights, and
employee share purchase plans. SFAS No. 123-R replaces SFAS No. 123,
"Accounting for Stock-Based Compensation," and supersedes APB Opinion
No. 25, "Accounting for Stock Issued to Employees." As originally
issued, SFAS No. 123 established as preferable a fair-value-based
method of accounting for share-based payment transactions with
employees. However, that pronouncement permitted entities to continue
applying the intrinsic-value model of APB Opinion No. 25, provided
that the financial statements disclosed the pro forma net income or
loss based on the preferable fair-value method. Small business
issuers, as defined in Item 10 of Regulation S-B are required to apply
SFAS No. 123-R in the first interim or annual reporting period that
begins after December 15, 2005 (the Company became a small business
issuer upon its de-election as a BDC, but must complete the fiscal
year as a regular filer under Form 10-K). Thus, the Company's
financial statements will reflect an expense for (a) all share-based
compensation arrangements granted after December 31, 2005 and for any
such arrangements that are modified, cancelled, or repurchased after
that date, and (b) the portion of previous share-based awards for
which the requisite service has not been rendered as of that date,
based on the grant-date estimated fair value. Management has not
determined the future effect of this pronouncement on its future
financial statements.

The FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets, an
amendment of APB Opinion 29, Accounting for Nonmonetary
Transactions." The amendments made by SFAS No. 153 are based on the
principle that exchanges of nonmonetary assets should be measured
using the estimated fair value of the assets exchanged. SFAS No. 153
eliminates the narrow exception for nonmonetary exchanges of similar
productive assets, and replaces it with a broader exception for
exchanges of nonmonetary assets that do not have commercial substance.
A nonmonetary exchange has "commercial substance" if the future cash
flows of the entity are expected to change significantly as a result
of the transaction. This pronouncement is effective for nonmonetary
exchanges in fiscal periods beginning after June 15, 2005. Management
does not believe that this pronouncement will have a significant
effect on its future financial statements.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Error Corrections," which replaces APB Opinion No. 20 and FASB
Statement No. 3. This pronouncement applies to all voluntary changes
in accounting principle, and revises the requirements for accounting
for and reporting a change in accounting principle. SFAS No. 154
requires retrospective application to prior periods' financial
statements of a voluntary change in accounting principle, unless it is
impracticable to do so. This pronouncement also requires that a change
in the method of depreciation, amortization, or depletion for long-
lived, non-financial assets be accounted for as a change in accounting
estimate that is effected by a change in accounting principle. SFAS No.
154 retains many provisions of APB Opinion 20 without change, including
those related to reporting a change in accounting estimate, a change in
the reporting entity, and correction of an error. The pronouncement
also carries forward the provisions of SFAS No. 3 which govern
reporting accounting changes in interim financial statements. SFAS No.
154 is effective for accounting changes and corrections of errors made
in fiscal years beginning after December 15, 2005. The Statement does
not change the transition provisions of any existing accounting
pronouncements, including those that are in a transition phase as of
the effective date of SFAS No. 154.

In February 2006, the FASB issued SFAS No. 155, "Accounting for
Certain Hybrid Financial Instruments," an amendment of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities"), and
SFAS No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities". In this context, a hybrid
financial instrument refers to certain derivatives embedded in other
financial instruments. Among other things, SFAS No. 155 permits fair
value re-measurement of any hybrid financial instrument that contains
an embedded derivative that otherwise would require bifurcation under
SFAS No. 133. In addition, SFAS No. 155 establishes a requirement to
evaluate interests in securitized financial assets in order to
identify interests that are either freestanding derivatives or
"hybrids" which contain an embedded derivative requiring bifurcation.
SFAS No. 155 also clarifies which interest/principal strips are
subject to SFAS No. 133, and provides that concentrations of credit
risk in the form of subordination are not embedded derivatives.
Lastly, SFAS No. 155 amends SFAS No. 140 to eliminate the prohibition
on a qualifying special-purpose entity from holding a derivative
financial instrument that pertains to a beneficial interest other than
another derivative. When SFAS No. 155 is adopted, any difference
between the total carrying amount of the components of a bifurcated
hybrid financial instrument and the fair value of the combined
"hybrid" must be recognized as a cumulative-effect adjustment of
beginning deficit/retained earnings. SFAS No. 155 is effective for
all financial instruments acquired or issued after the beginning of an
entity's first fiscal year that begins after September 15, 2006.
Earlier adoption is permitted only as of the beginning of a fiscal
year, provided that the entity has not yet issued any annual or
interim financial statements for such year. Restatement of prior
periods is prohibited. Management does not believe this pronouncement
will have a significant impact on its future financial statements.

Other recent accounting pronouncements issued by the FASB (including
its EITF), the American Institute of Certified Public Accountants, and
the SEC did not or are not believed by management to have a material
impact on the Company's present or future consolidated financial
statements.

2. INVENTORY

Inventory at December 31, 2005 and 2004 consisted entirely of raw
materials.

3. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2005 and 2004 consisted of the
following:

2005 2004

Machinery and equipment $275,872 $ 37,280
Software and computers 75,019 267,768
Building improvements 4,747 4,747
355,638 309,795

Less accumulated depreciation and amortization (274,841) (203,216)

$ 80,798 $106,579

4. NOTES PAYABLE

Notes payable and convertible notes payable consist of the following
at December 31, 2005 and 2004:

2005 2004
Note payable, interest bearing at 10%
per annum with principal and interest
payment of $2,500 monthly, maturing
in July, 2006 $ 10,000 $ 48,733

$135,000 convertible note, bearing
interest at 8% per annum, repaid in
July, 2005 - 50,000

$250,000 convertible note, bearing
interest at 9% per annum, net of
discounts of $4,411 and $103,458
respectively, maturing in March, 2006 75,000 146,542

$805,000 convertible note, bearing
interest at 9% per annum, net of
discounts of $9,310 and $46,562
respectively due through April, 2006 541,290 758,438

$2,000,000 convertible note, bearing
interest 5%, net of discount of
$871,520 and $625,953 of principal
converted, maturing in September,
2007 502,525 236,936

$1,000,000 convertible note, bearing
interest at prime plus 4%, net of
discount of $621,800 and $13,040 of
principal converted, maturing in
March, 2007 365,160 -

$300,000 convertible note, bearing
interest at prime plus 4%, net of
discount of $233,872 maturing in
July, 2007 66,128 -

Total $1,560,103 $1,240,649

$250,000 Convertible Notes.

In March 2004, the Company borrowed $250,000 under convertible notes
payable ("$250,000 Convertible Notes"), of which $100,000 came from
management or individuals related to certain management personnel.
All borrowings are due in March 2006, with monthly interest payments
on the outstanding balance; interest accrues at 9% per annum. The
$250,000 Convertible Notes may be converted into common stock of the
Company based on a formula subject to a floor of $0.001 per share.

In connection with the $250,000 Convertible Notes, the Company granted
warrants to purchase 1,904 (post reverse split) shares of the
Company's restricted common stock based on a formula subject to a
floor of $0.001 per share. The warrants vested upon grant and expire
in March 2006. The conversion feature embedded in the notes and the
warrants can be settled in unregistered shares pursuant to EITF No.
00-19.

The convertible feature of the $250,000 Convertible Notes provides for
a rate of conversion that is below market value. Such feature is
normally characterized as a "beneficial conversion feature" ("BCF").
Pursuant to EITF No. 98-5, "Accounting For Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion
Ratio," and EITF No. 00-27, "Application of EITF No. 98-5 To Certain
Convertible Instruments," the Company has estimated the fair value of
such BCF to be approximately $176,000 related to these notes and
recorded such amount as a debt discount. Such discount is being
amortized to interest expense over the term of the notes. Amortization
expense during the years ended December 31, 2005 and 2004 approximated
$100,000 and $73,000, respectively. There was no amortization expense
in 2003. Of the $250,000 in proceeds, $100,000 came from related
parties, including officers. The note holders are eligible to receive
a warrant for 40% of the vested amount for two years.

$805,000 Convertible Notes.

In March 2004, the Company borrowed $715,000 under convertible notes
payable ("$715,000 Convertible Notes"). All borrowings are due in
March 2006, with monthly interest payments on the outstanding balance;
interest accrues at 9% per annum. The $715,000 Convertible Notes may
be converted into common stock of the Company based on a formula
subject to a floor of $0.001 per share.

The conversion feature embedded in the notes can be settled in
unregistered shares pursuant to EITF No. 00-19 and meets the scope
exception of paragraph 1(a) of SFAS No. 133.

In connection with the issuance of the $715,000 Convertible Notes, the
Company paid issuance costs of $74,500, which has been recorded as a
debt discount and is being amortized to interest expense over the life
of notes. During the years ended December 31, 2005 and 2004, the
Company amortized approximately $37,190 and $28,000 of such amount,
respectively. In July 2004, the Company borrowed an additional
$90,000 under terms identical to those of the $715,000 Convertible
Notes.

$2,000,000 Convertible Notes.

On September 22, 2004, the Company entered into a subscription
agreement with Longview Fund, LP, Longview Equity Fund, LP, and
Longview International Equity Fund, LP whereby these investors
purchased up to $2,000,000 of principal amount of promissory notes,
bearing interest at 5% per annum, of the Company convertible into
shares of the Company's common stock. The conversion formula is
subject to a floor of $0.001 per share. The conversion prices is
equal to the lesser of (i) 75% of the average of the five lowest
closing bid prices of the Company's common stock as reported by the
OTC Bulletin Board for the ninety trading days preceding the
conversion date, or (ii) $17.50 (post reverse split). Under the terms
of the notes, they cannot be converted if such conversion would result
in beneficial ownership by the subscriber and its affiliates of more than
4.99% of the outstanding shares of the Company's common stock on the
conversion date. In addition, the convertible note holders received Class A
and Class B share warrants to purchase shares of common stock, as described
below. See also "Registration Rights," "Classification of Conversion Feature
and Warrants" and "Liquidated Damages," below.

$1,000,000 of promissory notes was purchased on the initial closing
date ("Initial Closing Purchase Price") and the second $1,000,000 of
the purchase price ("Second Closing Purchase Price") was paid within
five business days after the date upon which the Company was able to
issue to the subscribers free trading unrestricted common stock as a
"business development company" as defined in Rule 602(a) of Regulation
E under the Securities Act of 1933 which took effect on November 6,
2004. On November 9, 2004, the Company received the $1,000,000 that
was the balance of the $2,000,000 convertible note.

The convertible note holders received Class A and Class B share
warrants to purchase shares of common stock based on the following
formulas:

(1) Class A Warrants

30 Class A Warrants will be issued for each 100 shares which
would be issued on each closing, assuming the complete conversion
of the notes issued on each such closing date at the conversion
price in effect on each such closing date. The per warrant share
exercise price to acquire a share upon exercise of a Class A
Warrant is $7.14 (post reverse split) and is exercisable until
five years after the issue date of the Class A Warrants.

(2) Class B Warrants

The Company will issue and deliver 125 Class B Warrants to the
subscribers for each $1.00 of purchase price invested on each
closing date. The per warrant share exercise price to acquire
a share upon exercise of a Class B Warrant is $7.00 (post reverse
split) and is exercisable until three years after the issue date
of the Class B Warrant.

As part of this funding arrangement, Jerry Dix and Don Boudewyn, the
Company's chief executive officer and executive vice president,
respectively, have agreed that for the period of 180 days after the
Second Closing Date during which such registration statement shall
have been current and available for use in connection with the public
resale of the shares and warrant shares, they will not sell or
otherwise dispose of any shares of common stock or any options,
warrants or other rights to purchase shares of common stock or any
other security of the Company which they own or have a right to
acquire, other than (i) in connection with an offer made to all
stockholders of the Company or any merger, consolidation or similar
transaction involving the Company, or (ii) with the prior written
consent of the investors and the Company, which shall not be
unreasonably withheld.

The convertible feature of the $2,000,000 Convertible Notes provides
for a rate of conversion that is below market value. Pursuant to EITF
No. 98-5 and EITF No. 00-27, the Company has estimated the fair value
of such BCF to be approximately $2,000,000 related to these notes and
recorded such amount as a debt discount. Such discount is being
amortized to interest expense over the two-year term of the notes.
Amortization expense on these notes during the year ended December 31,
2005 and 2004 approximated $1,300,000 and $404,000, respectively.
There was no amortization expense in 2003.

$1,000,000 Convertible Notes.

On March 22, 2005, the Company entered into a subscription agreement
with Longview Fund, LP, Longview Equity Fund, LP, and Longview
International Equity Fund, LP whereby these investors purchased
up to $1,000,000 of principal amount of promissory notes, bearing
interest at prime plus 4% per annum, of the Company convertible into
shares of the Company's common stock. The conversion formula is
subject to a floor of $0.001 per share. The conversion price is equal
to the lesser of (i) 75% of the average of the five lowest closing bid
prices of the Company's common stock as reported by the OTC Bulletin
Board for the ninety trading days preceding the conversion date, or
(ii) $17.50 (post reverse split). Under the terms of the notes, they cannot
be converted if such conversion would result in beneficial ownership by the
subscriber and its affiliates of more than 4.99% of the outstanding shares of
the Company's common stock on the conversion date. In addition, the
convertible note holders received Class A share warrants to purchase shares of
common stock, as described below. See also "Registration Rights,"
"Classification of Conversion Feature and Warrants" and "Liquidated
Damages," below.

The convertible note holders will receive Class A share warrants to
purchase shares of common stock based on the following formulas:

30 Class A Warrants will be issued for each 100 shares which
would be issued on each closing, assuming the complete conversion
of the notes issued on each such closing sate at the conversion
price in effect on each such closing date. The per warrant share
exercise price to acquire a share upon exercise of a Class A
Warrant is $3.50 (post reverse split) and is exercisable until
five years after the issue date of the Class A Warrants.

The convertible feature of the $1,000,000 Convertible Notes provides
for a rate of conversion that is below market value. Pursuant to EITF
No. 98-5 and EITF No. 00-27, the Company has estimated the fair value
of such BCF to be approximately $1,000,000 related to these notes and
recorded such amount as a debt discount. Such discount is being
amortized to interest expense over the two-year term of the notes.
Amortization expense on this note during the year ended December 31,
2005 approximated $378,200.

$300,000 Convertible Notes.

On July 22, 2005, the Company entered into a subscription agreement
with Longview Fund, LP, Longview Equity Fund, LP, and Longview
International Equity Fund, LP whereby these investors purchased
up to $300,000 of principal amount of promissory notes, bearing
interest at prime plus 4% per annum, of the Company convertible into
shares of the Company's common stock. The conversion formula is
subject to a floor of $.001 per share. The conversion price is equal
to the lesser of (i) 75% of the average of the five lowest closing bid
prices of the Company's common stock as reported by the OTC Bulletin
Board for the ninety trading days preceding the conversion date, or
(ii) $17.50 (post reverse split). Under the terms of the notes, they cannot
be converted if such conversion would result in beneficial ownership by the
subscriber and its affiliates of more than 4.99% of the outstanding shares of
the Company's common stock on the conversion date. In addition, the
convertible note holders received Class A share warrants to purchase shares of
common stock, as described below. See also "Registration Rights,"
"Classification of Conversion Feature and Warrants" and "Liquidated
Damages," below.

The convertible note holders will receive Class A share warrants to
purchase shares of common stock based on the following formulas:

30 Class A Warrants will be issued for each 100 shares which
would be issued on each closing, assuming the complete conversion
of the notes issued on each such closing sate at the conversion
price in effect on each such closing date. The per warrant share
exercise price to acquire a share upon exercise of a Class A
Warrant is 120% of the closing bid price of the common stock on
the trading day immediately preceding the Initial Closing Date
and is exercisable until five years after the issue date of the
Class A Warrants.

The convertible feature of the $300,000 Convertible Notes provides for
a rate of conversion that is below market value. Pursuant to EITF 98-
5 and EITF 00-27, the Company has estimated the fair value of such BCF
to be approximately $300,000 related to these notes and recorded such
amount as a debt discount. Such discount is being amortized to
interest expense over the two-year term of the notes. Amortization
expense on this note during the year ended December 31, 2005
approximated $66,128.

During 2005 and 2004, approximately $1,100,000 and $407,000,
respectively, of principal balance of convertible notes payable were
converted into common stock (see Note 4), including $75,000 and
$100,000, respectively, from debt agreements entered into during 2003.

Registration Rights.

The Longview notes and related warrant agreements contain provisions
whereby the holders of notes and warrants are entitled to registration
rights in the event the Company's Regulation E exemption from
registration ceases to be effective. This exemption (evidence by a
Form 1-E filed when the Company operated as a BDC), ceased to be
effective on October 22, 2005. Specifically, the Company must
register with the SEC the shares issuable pursuant to the notes'
conversion feature and warrants. In the event the Regulation E
exemption ceases to be effective, within 60 days of ceasing
effectiveness, the Company must file a registration statement with the
SEC and within 90 days, it must have such registration statement be
effective.

The Company is required to pay liquidated damages at the rate of 2%
per month (based on the notes' principal balance) until such time as a
registration statement is effective.

Classification of Conversion Feature and Warrants.

Pursuant to EITF No. 00-19, the Company evaluated the Longview
conversion feature and warrants at October 22, 2005. Management
determined that due to the nature of the liquidated damages the
Company must pay (with no maximum prescribed in the agreements), the
Company must pursue registration as its most "economic alternative"
and settle the Longview conversion feature and warrants with
registered shares; and as a result, it must treat the conversion
feature and warrants as derivative liabilities. In addition, under
View C of EITF No. 05-04, the Company accounts for the liquidated
damages separately from these two other derivative liabilities.
Management estimated the value of the warrants using a Black-Scholes
model. Because the warrants have an exercise price greater than the
trading price of the Company's stock on October 22, 2005, the warrants
value was calculated to be insignificant. Management estimated the
value of the conversion feature, after consultation with a valuation
expert, taking into consideration limitations on ownership (Longview
cannot own in excess of 4.99% of the Company's outstanding shares at
any time), estimated conversions during the term of the notes and
discounting the cash flows using discount rates of 75%. Management
has established a liability and has estimated the change in the fair
value of the conversion feature between October 2005 and December 31,
2005 to be $43,218, which is reflected as derivative expense.

Liquidated Damages.

The Company is required to pay liquidated damages at the rate of 2%
per month (based on the Longview notes' principal balance) until such
time as a Form SB-2 registration statement is effective. The Company
has accrued $131,551 in liquidated damages, which is included in Other
Liabilities in the accompanying consolidated balance sheet at December
31, 2005.

Maturities

Principal maturities of notes and convertible notes (assuming no
conversion) are as follows for the years ending December 31:

2006 $2,009,647
2007 1,286,960
2008 -
2008 -
2009 -
thereafter -

$3,296,607

5. STOCKHOLDERS EQUITY (DEFICIT)

Preferred Stock.

Series A.

The Company has 3,000,000 shares of Series A preferred stock
authorized. On October 6, 2004, the Company's Compensation Committee
granted and the Company issued Series A preferred stock to Mr. Dix and
Mr. Boudewyn totaling 3,000,000 shares. Each share of Series A
preferred stock is convertible at the rate of 800 shares of common
stock for each full share of preferred stock (under the terms of the
certificate of designation governing these shares, the conversion
ratio was not changed upon the reverse split of the Company's common
stock on November 23, 2005).

Each share of outstanding Series A preferred stock entitles the holder
thereof to vote on each matter submitted to a vote of the stockholders
of the Company and to have the number of votes equal to the number
(including any fraction) of shares of common stock into which such
share of Series A preferred stock is then convertible pursuant to the
provisions hereof at the record date for the determination of
stockholders entitled to vote on such matters or, if no such record
date is established, at the date such vote is taken or any written
consent of stockholders becomes effective. The preferred shares are
convertible after three years from issuance.

A third party conducted an evaluation prior to the issuance and
concluded that the value of the preferred shares was $200,000, $33,334
of which was expensed for the year ended December 31, 2005. The
difference of $116,666 is carried as unearned compensation in the
Consolidated Statement of Stockholders' Deficit.

Series B.

During November and December 2005 , the Company received an
aggregate $250,000 in cash as an investment in Series B preferred
stock, which was approved by the Company's board of directors and
designated in January 2006. At December 31, 2005, such amount is
included in Other Liabilities in the accompanying consolidated balance
sheet. See Note 9 for a description of the Series B preferred stock.

Common Stock

During the year ended December 31, 2005, the Company issued 147,325
(post reverse split) shares of common stock on exchange for services
valued at approximately $130,000. Additionally, during the year 2005,
the Company issued a total of 1,081,838 (post reverse split) shares of
common stock due to the conversion of notes and accrued interest
having a total value of $1,112,018. Value was based on the terms of
an agreement or if no value is given for the shares, the closing
market price on the dates of grant.

On November 16, 2004, the Company issued 985,221 restricted shares of
common stock valued at approximately $10,000 ($0.01015 per share) to
an investor. In addition, the investor received four warrants to
purchase a minimum of $10,000, but not greater than $250,000, in
shares of common stock during each quarterly period during the 2005
calendar year. This purchase of shares is in connection with a
license agreement entered into by the parties, dated February 19,
2004.

On September 16, 2004, the Company filed a Certificate of Amendment to
Articles of Incorporation. This document amended Article III of the
Articles of Incorporation to increase the number of authorized shares
of common stock from 800,000,000 to 5,000,000,000. Under the
provisions of the Company's Articles of Incorporation, as amended,
this action does not require a vote of stockholders.

During the year ended December 31, 2004, the Company issued 440,585
(post reverse split) shares of common stock for services, which were
valued at approximately $2,429,000. Value is based on the terms of an
agreement or if no value is given for the shares, the closing market
price on the dates of granting will be used. Included in such
issuances, were approximately 255,036 (post reverse split) shares
issued to certain consultants, employees and directors of the Company
in accordance with the related employment agreements valued at
approximately $1,100,587 (based on the closing market price on the
dates of grant). Approximately 196,880 (post reverse split) shares
(valued at approximately $661,000) of the shares issued to certain
officers, directors and employees during the year ended December 31,
2004 were issued to settle prior years obligations.

During the year ended December 31, 2004, in accordance with the terms
of the applicable convertible notes payable agreements, the Company
issued approximately 181,287 (post reverse split) shares of common
stock in connection with the conversion of notes payable and accrued
expenses totaling approximately $587,000.

On November 3, 2004, the Company placed 1,015,873 (post reverse split)
shares in an escrow account pursuant to terms of $2,000,000
convertible notes, described above.

Warrants

From time to time, the Company may grant warrants in conjunction with
the issuance of certain financial instruments.

During the years ended December 31, 2005 and 2004, the Company granted
warrants to certain convertible note holders to purchase a total of
310,714 (post reverse split) and 866,667 (post reverse split) shares,
respectively, of the Company's common stock at exercise prices ranging
from $3.50 per share to $11.55 per share (post reverse split).

Number of Weighted-
Shares Average
(post reverse Exercise Price
split) (post reverse
split)

Warrants outstanding and exercisable
at December 31, 2003 13,714 $3.94

Granted 866,667 $7.02

Exercised - -

Expired - -

Warrants outstanding and exercisable
at December 31, 2004 880,381 $6.97

Granted 310,714 $3.50

Exercised - -

Expired - -

Warrants outstanding and exercisable
at December 31, 2005 1,191,095 $6.07

The number of outstanding and exercisable warrants as of December 31,
2005 is provided below:

Outstanding and Exercisable
Number of Weighted- Weighted-
Shares Average Average
(post reverse Exercise Remaining
Range of Exercise Prices split Price Life (years)
(post reverse split) (post reverse
split

$3.50 310,714 $3.50 4.25

$3.94 13,714 $3.94 2.5

$ 7.00-7.14 858,008 $7.02 3.25

$11.55 8,659 $11.55 4.25

1,191,095

Fair Value Disclosure.

The fair value of warrants was estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions:

Years Ended December 31,
2005 2004

Weighted-average expected life (years) 1.94 0.083
Annual dividend per share - -
Risk-free interest rate 4.5% 4.5%
Volatility 450% 225%
Weighted-average fair value of
options and warrants granted (post
reverse split) $6.07 $7.02

Because the determination of the fair value of all warrants and
options granted includes the factors described in the preceding
paragraph, and because additional warrants and option grants are
expected to be made each year, the pro forma disclosures included in
Note 1 are not likely to be representative of the pro forma effect on
reported net income for future years.

6. INCOME TAXES

The components of income tax benefits consist of the following:

2005 2004

Current:
Federal $ - $ -
State - -

Total current - -

Deferred:
Federal - -
State - -

Total deferred - -

$ - $ -

At December 31, 2005, the Company has federal net operating loss
carryforwards of approximately $19.6 million and state tax net
operating loss carryforwards of approximately $9.1 million,
respectively. The carryforwards begin to expire in 2011 and 2013,
respectively.

The benefit for income tax differs from the amounts computed by
applying the statutory federal income tax rate of 34% as follows:

2005 2004

Computed tax (benefit) expense $(1,368,504) $(1,696,328)
State taxes, net of federal benefit (241,501) (299,352)
Non-Deductible Expenses 59,636 -
Valuation allowance (1,550,369) 1,995,680

$ - $ -

The tax effects of temporary differences that gave rise to significant
portions of deferred tax assets at December 31, 2005 and 2004 are as
follows:

2005 2004

Federal and state net operating losses $7,224,388 $5,236,874
Accruals for financial statement purposes
not currently deductible 69,042 506,187
Total deferred tax assets $7,293,430 $5,743,061
Valuation allowance (7,293,430) (5,743,061)

$ - $ -

In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which temporary
differences become deductible. Management considers projected future
taxable income and tax planning strategies in making this assessment.
Based upon the history of operating losses, management believes it is
more likely than not the Company will not realize the benefits of
these deductible differences. A full reduction allowance has been
recorded to offset 100% of the deferred tax asset.

7. COMMITMENTS AND CONTINGENCIES

Lease Commitments.

In October 2003, the Company negotiated an operating lease agreement
for its office and research and development space of approximately
10,560 square feet in Marina Del Rey, California for a five-year term,
ending in 2008.

The Company is committed to make future aggregate rental payments
under the terms of the lease agreement as noted below.

Year Ending
December 31,

2006 $ 153,368
2007 152,814
2008 124,770

Total commitment $ 430,952

Rent expense approximated $146,000 and $148,000 for the years ended
December 31, 2005 and 2004, respectively.

Litigation.

Other than as set forth below, the Company is not a party to any
material pending legal proceedings, claims or assessments and,
to the best of its knowledge, no such action by or against the
Company has been threatened.

On June 15, 2005, the Company received a summons from third parties
seeking damages against a former employee of the Company for breach of
a residential lease and damage to a residential property in 2001. The
claim against the Company filed in New York Supreme Court (Chenango
County) alleges that the former employee was a principal in Wireless
ThinkTank (a wholly owned subsidiary of Company Communications, Inc.)
and conducted business from such residence.

Management believes the Company has meritorious claims and defenses to
the plaintiffs' claims and ultimately will prevail on the merits.
However, this matter remains in the early stages of litigation and
there can be no assurance as to the outcome of the lawsuit.
Litigation is subject to inherent uncertainties, and unfavorable
rulings could occur. Consequently, No accrual has been made in the
accompanying financial statements.

Consulting Agreements.

In connection with the Longview subscription agreement, the Company
entered into a consulting agreement with Ghillie Fanaz AG. Under
this agreement, the consultant was paid a "commencement bonus" of
$100,000. Under this agreement, this consultant helped in:

- developing and implementing appropriate plans and means for
presenting the Company and its business plans, strategy and
personnel to the financial community, establishing an image
for the company in the financial community, and creating
the foundation for subsequent financial public relations
efforts;

- maintain an awareness of the Company's plans, strategy and
personnel, as they may evolve, and consult with the company
regarding communicating appropriate information regarding such
plans, strategy and personnel to the financial community;

- introduce to the Company investors who the consultant reasonably
believes to be "accredited investors" with whom the consultant
has a pre-existing substantive relationship; and

- at the Company's request, review business plans, strategies,
mission statements, budgets, proposed transactions and other
plans for the purpose of advising the company of the economic
implications thereof.

8. RELATED PARTY TRANSACTIONS

In March 2004, the Company borrowed $250,000 under convertible notes
payable, of which $100,000 came from management or individuals related
to certain management personnel ($50,000 came from Mr. & Mrs. Trepp,
Mr. Trepp being the former president, $25,000 from Paul Zygielbaum, a
former employee of the Company, and $25,000 from Thomas Janes, who is
the father in law of Donald Boudewyn, the Company's executive vice
president). For further details on these loans, please see Note 4,
$250,000 Convertible Notes.

In 2004, the Company issued 9,300 restricted shares of common stock to
Mr. Corty, a former director, for expenses and accrued salaries for
2002, 2003 and 2004.

On September 29, 2004, the Company's board of directors appointed
Stanley A. Hirschman as an independent board member. Mr. Hirschman
formerly owned a 0.5% interest in Redwood Grove Capital Management,
which is the management company for the Longview funds (which provided
$2,000,000 convertible notes described below); he relinquished this
interest on June 27, 2005.

On October 4, 2004, the Company's board of directors appointed Phil E.
Pearce as an independent board member. Mr. Pearce formerly owned a
0.5% interest in Redwood Grove Capital Management; he relinquished
this interest on June 27, 2005.

On October 6, 2004 the Company's Compensation Committee granted and
the Company issued 3,000,000 shares of Series A preferred stock to Mr.
Dix and Mr. Boudewyn totaling 3,000,000 (prior to the election to be a
BDC). See Note 5 for a further discussion.

During the year ended December 31, 2004, the Company issued a total of
96,171 (post reverse split) restricted shares of common stock to Mr.
Dix for accrued salaries for 2002, 2003 and 2004. During the year
ended December 31, 2004, the Company issued a total of 80,670 (post
reverse split) restricted shares of common stock to Mr. Boudewyn for
accrued salaries for 2002, 2003 and 2004. The Company has since
requested the return of the shares issued so as to comply with the
requirements of the 1940 Act. The Company has since received the
shares issued to Mr. Dix and Mr. Boudewyn, which have been cancelled.
On December 31, 2004, the Company moved the assets, employees, and all
related contracts and agreements from the Company to the 5G Wireless
Solutions, Inc. As part of its obligations, the Company issued
restricted common shares for the accrued portion of salaries for the
fourth quarter of fiscal 2004.

During 2005 and 2004, the Company used the credit lines of Service
Group, which is a company controlled by Mr. Dix, chief executive
officer of the Company, to help the Company purchase equipment, travel
and related consumables throughout the year as a means of managing
cash flows.

9. SUBSEQUENT EVENTS (UNAUDITED)

On January 18, 2006, 5G Wireless adopted the 2006 Stock and Option
Plan (which amended and replaced a 2006 Non-Employee Directors and
Consultants Retainer Stock Plan adopted on December 21, 2006). The
purpose of the plan is to promote the interests of 5G Wireless and its
stockholders by attracting and retaining employees and consultants
capable of furthering the future success of 5G Wireless and by
aligning their economic interests more closely with those of 5G
Wireless's stockholders; the services are to be compensated for with
stock option and stock grants. Options granted under this plan are to
be exercisable for a period of ten years from the grant date at
whatever price is established by the board of directors, in its sole
discretion, on the date of the grant. A total of 1,200,000 shares of
common stock have been registered under this plan as a result of a
Form S-8's filed with the SEC.

On January 19, 2006, 5G Wireless Solutions, Inc., a wholly owned
subsidiary, was merged with and into 5G Wireless.

On February 17, 2006, 5G Wireless consummated a private placement
financing transaction pursuant to a Securities Purchase Agreement with
seven accredited investors obtained by the 5G Wireless's placement
agent, Divine Capital Markets, LLC, whereby these investors purchased
an aggregate amount of $250,000 Series B 10% convertible preferred
stock of 5G Wireless, which equated to 250,000 shares of this stock.
5G Wireless paid a commission of $25,000 (10% of the amount of funds
raised) to Divine Capital in connection with this offering. Each
share of Series B preferred stock is convertible into shares of the
Company's common stock at a conversion price equal to the lesser of:
(i) if converted without benefit of a registration statement, 75% of
the lowest close bid of the common stock as reported by the market or
exchange on which the common stock is listed or quoted for trading or
quotation on the date in question for the 20 trading days preceding
the conversion date for each full share of convertible preferred stock
held; (ii) if converted with the benefit of a registration statement,
85% of the lowest close bid of the common stock as reported by the
trading market for the 20 trading days preceding the conversion date
for each full share of convertible preferred stock held; and (iii) the
face amount per share.

There are 5,000,000 shares of Series B preferred stock authorized.
Each share of Series B preferred stock entitles the holder thereof to
vote on each matter submitted to a vote of the stockholders of the
Company and to have the number of votes equal to the number (including
any fraction) of shares of common stock into which such share of
Series B preferred stock is then convertible pursuant to the
provisions hereof at the record date for the determination of
stockholders entitled to vote on such matters or, if no such record
date is established, at the date such vote is taken or any written
consent of stockholders becomes effective.

Effective on March 4, 2006, the outstanding balance and accrued
interest on certain notes was converted into 145,558 restricted shares
of common stock. On March 4, 2004, the Company borrowed $250,000
under these convertible notes payable, of which $100,000 came from
management or individuals related to certain management personnel.
All notes were due on March 4, 2006, with monthly interest payments on
the outstanding balance; interest accrues at 9% per annum. The
$250,000 Convertible Notes may be converted into common stock of the
Company at the lesser of: (a) in accordance with the terms of a
subsequent financing, at the option of the holder, (b) 125% of the
closing bid price on the closing date, as defined, or (c) 60% of the
average of the three lowest closing bid prices during the twenty
trading days immediately prior to the conversion date. The warrants
issued in connection with these notes have not been exercised to date.

Effective on March 31, 2006, the outstanding balance and accrued
interest on certain was converted into restricted shares of common
stock. On March 31, 2004, the Company borrowed $715,000 under these
convertible notes payable. All notes were due on March 31, 2006, with
monthly interest payments on the outstanding balance; interest accrues
at 9% per annum. These notes may be converted into common stock of the
Company at the lesser of: (a) in accordance with the terms of a
subsequent financing, at the option of the holder, (b) 125% of the
closing bid price on the closing date, as defined, or (c) 100% of the
closing bid price during the sixty trading days immediately prior to
the conversion date.

On March 27, 2006, the Company's Chief Financial Officer, Lawrence C.
Early, accepted an offer of employment from another company and
intends to resign this position effective April 7, 2006.

EXHIBIT INDEX

Number Description

1 Agency Agreement between the Company and May Davis Group,
Inc., dated April 1, 2003 (incorporated by reference to
Exhibit 1 of the Form 10-QSB/A filed on November 17, 2003).

2.1 Agreement and Plan of Reorganization and Merger between
Tesmark, Inc., an Idaho corporation, and the Company
(formerly know as Tesmark, Inc.), a Nevada corporation,
dated November 10, 1998 (incorporated by reference to
Exhibit 2 of the Form 10-SB filed on December 15, 1999).

2.2 Acquisition Agreement between the Company, and Richard
Lejeunesse, Curtis Mearns, and Don Boudewyn, a partnership
(known as 5G Partners), dated December 15, 2000, as amended
(incorporated by reference to Exhibit 10 of the Form 8-K
filed on February 14, 2001).

2.3 Share Purchase Agreement between the Company, and Sea Union
Industries Pte. Ltd., Richard Lajeunesse, Rita Chou, Peter
Chen, Yeo Lai Ann, Tan Lam Im, Choa So Chin, Tan Ching
Khoon, Tan Sek Toh, and the Company Communication Pte. Inc.
(formerly known as Peteson Investment Pte Ltd.), dated May
5, 2001 (incorporated by reference to Exhibit 2 of the Form
8-K filed on June 5, 2001).

2.4 Purchase Agreement between the Company and Skyhub Asia
Holdings Limited, eVision USA.com, and eBanker USA.com,
dated May 19, 2001 (incorporated by reference to Exhibit 2.4
of the Form 10-KSB filed on April 18, 2002).

2.5 Definitive Acquisition Agreement between the Company and
Wireless Think Tank, dated April 30, 2002 (incorporated by
reference to Exhibit 2 of the Form 8-K filed on August 13, 2002).

2.6 Agreement and Plan of Merger between the Company and 5G
Wireless Solutions, Inc., dated January 18, 2006 (filed herewith).

3.1 Articles of Incorporation, dated September 24, 1998
(incorporated by reference to Exhibit 3 of the Form 10-SB
filed on December 15, 1999).

3.2 Certificate of Amendment to Articles of Incorporation, dated
May 5, 2000 (incorporated by reference to Exhibit 3.3 of the
Form SB-2 filed on January 10, 2002).

3.3 Certificate of Amendment to Articles of Incorporation, dated
January 19, 2001 (incorporated by reference to Exhibit 3.1
of the Form 8-K filed on February 14, 2001).

3.4 Certificate of Amendment to Articles of Incorporation, dated
January 21, 2003 (incorporated by reference to Exhibit 3.4
of the Form 10-KSB filed on May 8, 2003).

3.5 Certificate of Amendment to Articles of Incorporation, dated
September 16, 2004 (incorporated by reference to Exhibit 3.1
of the Form 8-K filed on September 22, 2004).

3.6 Certificate of Correction, dated September 20, 2004
(incorporated by reference to Exhibit 3.2 of the Form 8-K
filed on September 22, 2004).

3.7 Bylaws, dated September 25, 2002 (incorporated by reference
to Exhibit 3.5 of the Form 10-KSB filed on May 8, 2003).

4.1 2001 Stock Incentive Plan, dated November 1, 2001
(incorporated by reference to Exhibit 10 of the Form S-8
filed on December 10, 2001).

4.2 Non-Employee Directors and Consultants Retainer Stock Plan,
dated January 30, 2002 (incorporated by reference to Exhibit
4.1 of the Form S-8 filed on January 31, 2002).

4.3 Amended and Restated Stock Incentive Plan, dated January 30,
2002 (incorporated by reference to Exhibit 4.2 of the Form
S-8 filed on January 31, 2002).

4.4 Form of Subscription Agreement Between the Company and
investors, dated February 12, 2002 (including the following
exhibits: Exhibit A: Form of Notice of Conversion; Exhibit
B: Form of Registration Rights Agreement; Exhibit C: Form of
Debenture; and Exhibit D: Form of Opinion of Company's
Counsel) (the following to this agreement have been omitted:
Exhibit E: Board Resolution; Schedule 3(A): Subsidiaries;
Schedule 3(C): Capitalization; Schedule 3(E): Conflicts;
Schedule 3(G): Material Changes; Schedule 3(H): Litigation;
Schedule 3(L): Intellectual Property; Schedule 3(N): Liens;
and Schedule 3(T): Certain Transactions) (incorporated by
reference to Exhibit 4.4 of the Form 10-QSB filed on May 20, 2002).

4.5 Escrow Agreement between the Company, First Union Bank, and
May Davis Group, Inc., dated February 12, 2002 (incorporated
by reference to Exhibit 4.5 of the Form 10-QSB filed on May 20, 2002).

4.6 Form of Escrow Agreement between the Company, Joseph B.
LaRocco, Esq., and investors, dated February 12, 2002
(incorporated by reference to Exhibit 4.6 of the Form 10-QSB
filed on May 20, 2002).

4.7 Security Agreement (Stock Pledge) between the Company and
investors, dated February 12, 2002 (incorporated by
reference to Exhibit 4.7 of the Form 10-QSB filed on May 20, 2002).

4.8 Amended and Restated Non-Employee Directors and Consultants
Retainer Stock Plan, dated June 1, 2003 (incorporated by
reference to Exhibit 4 of the Form S-8 POS filed on June 26, 2003).

4.9 Form of Subscription Agreement Between the Company and
investors (including the following exhibits: Exhibit A: Form
of Debenture ; Exhibit B: Form of Notice of Conversion;
Exhibit C: Form of Opinion; and Exhibit D: Subscription
Procedures) (the following schedules have been omitted:
Schedule 3(a): Subsidiaries; Schedule 3(c): Capitalization;
Schedule 3(e): Conflicts; Schedule 3(g): Material Changes;
Schedule 3(h): Litigation; Schedule 3(l): Intellectual
Property; Schedule 3(n): Liens; and Schedule 3(t): Certain
Transactions) (incorporated by reference to Exhibit 4.9 of
the Form 10-QSB/A filed on November 17, 2003).

4.10 Form of Subordinated, Convertible Note and Warrants
Agreement between the Company and investors (including the
following exhibits: Exhibit A: Form of Convertible
Subordinated Promissory Note; and Exhibit B: Form of Warrant
Agreement) (incorporated by reference to Exhibit 4.10 of the
Form 10-QSB filed on November 24, 2003)

4.11 Form of Promissory Note issued by the Company to
investors, dated March 4, 2004 (incorporated by reference to
Exhibit 4.1 of the Form 10-QSB/A filed on May 28, 2004).

4.12 Form of Note Purchase Agreement between the Company and
investors, dated March 4, 2004 (incorporated by reference to
Exhibit 4.2 of the Form 10-QSB/A filed on May 28, 2004).

4.13 Form of Warrant issued by the Company to investors,
dated March 4, 2004 (incorporated by reference to Exhibit
4.3 of the Form 10-QSB/A filed on May 28, 2004).

4.14 2004 Non-Employee Directors and Consultants Retainer Stock
Plan, dated June 8, 2004 (incorporated by reference to
Exhibit 4 of the Form S-8 filed on June 21, 2004).

4.15 Subscription Agreement between the Company, on the one
hand, and Longview Fund, LP, Longview Equity Fund, LP, and
Longview International Equity Fund, LP, on the other hand,
dated September 22, 2004, and Form of Convertible Note
(including the following items: Exhibit A1: Form of Class A
Warrant; Exhibit A2: Form of Class B Warrant; Exhibit B:
Funds Escrow Agreement; Exhibit E: Shares Escrow Agreement;
Exhibit F: Form of Limited Standstill Agreement; Exhibit G:
Security Agreement; and Exhibit H: Collateral Agent
Agreement) (not including the following items: Attachment 1:
Disclosure Schedule; Exhibit C: Form of Legal Opinion;
Exhibit D: Form of Public Announcement on Form 8-K; Schedule
5(d): Additional Issuances; Schedule 5(q): Undisclosed
Liabilities; Schedule 5(s): Capitalization; Schedule 9(e)
Use of Proceeds; Schedule 9(q): Limited Standstill
Providers; and Schedule 11.1: Other Securities to be
Registered) (incorporated by reference to Exhibit 4 of the
Form 8-K filed on September 30, 2004).

4.16 Form of Common Stock Purchase Warrant issued by the Company
in favor of Pole Star Communications, Inc., dated November
1, 2004 (incorporated by reference to Exhibit 4 of the Form
8-K filed on November 12, 2004).

4.17 Certificate of Designation of Series A Convertible Preferred
Stock, dated October 5, 2004 (incorporated by reference to
Exhibit 4.17 of the Form 10-KSB filed on March 31, 2005).

4.18 Subscription Agreement between the Company, on the one hand,
and Longview Fund, LP, Longview Equity Fund, LP, and
Longview International Equity Fund, LP, on the other hand,
dated March 22, 2005 (including the following items: Exhibit
A: Form of Class A Warrant; Exhibit B: Funds Escrow
Agreement; Exhibit C: Security Agreement; Exhibit D:
Collateral Agent Agreement; and Exhibit G: Form of Limited
Standstill Agreement) (not including the following items:
Attachment 1: Disclosure Schedule; Exhibit E: Legal Opinion;
Exhibit F: Form of Public Announcement or Form 8-K; Schedule
5(d): Additional Issuances/Capitalization; Schedule 5(q):
Undisclosed Liabilities; Schedule 5(x): Subsidiaries;
Schedule 9(e) Use of Proceeds; and Schedule 9(p): Limited
Standstill Providers) (incorporated by reference to Exhibit
4.1 of the Form 8-K filed on March 31, 2005).

4.19 Form of Secured Convertible Note between the Company, on the
one hand, and Holders on the other hand, dated March 22,
2005 (incorporated by reference to Exhibit 4.3 of the Form
8-K filed on March 31, 2005).

4.20 Subscription Agreement between the Company, on the one hand,
and Longview Fund, LP, Longview Equity Fund, LP, and
Longview International Equity Fund, LP, on the other hand,
dated July 20, 2005 (including the following items: Exhibit
A1: Form of Note; Exhibit A2: Form of Class A Warrant;
Exhibit B: Funds Escrow Agreement; Exhibit D: Transfer Agent
Instructions; Exhibit F: Form of Limited Standstill
Agreement) (not including the following items: Exhibit C:
Form of Legal Opinion; Exhibit E Form of Public
Announcement; Schedule 4(a): Subsidiaries; Schedule 4(d):
Additional Issuances/Capitalization; Schedule 4(q):
Undisclosed Liabilities; Schedule 4(u): Disagreements of
Accountants and Lawyers; Schedule 8(e) Use of Proceeds; and
Schedule 8(q): Providers of Limited Standstill Agreements)
(incorporated by reference to Exhibit 4 of the Form 8-K
filed on July 25, 2005).

4.21 Modification and Amendment Agreement, dated July 26, 2005
(incorporated by reference to Exhibit 4.2 of the Form 8-K/A
filed on August 3, 2005).

4.22 2006 Stock and Option Plan, dated January 18, 2006
(incorporated by reference to Exhibit 4 of the Form S-8 POS
filed on January 25, 2006).

4.23 Form of Stock Purchase Agreement between the Company and
certain investors, dated February 17, 2006 (including the
following items: Exhibit A: Certificate of Designation, and
Exhibit C: Form of Registration Rights Agreement. Not
including the following items: Exhibit B: Investor
Questionnaire; Exhibit D: Form of Opinion of Counsel;
Schedule 3(c): outstanding shares; Schedule: 3(g): list of
untimely filed reports; and Schedule I: list of investors)
(incorporated by reference to Exhibit 4 of the Form 8-K
filed on February 21, 2006).

4.24 Certificate of Designation of Series B Convertible Preferred
Stock, dated January 25, 2006 (incorporated by reference to
Exhibit 4 of the Form 8-K filed on February 21, 2006).

10.1 Employment Agreement between the Company and Jerry Dix,
dated February 1, 2002 (incorporated by reference to Exhibit
10.12 of the Form 10-KSB filed on April 18, 2002).

10.2 Employment Agreement between the Company and Don Boudewyn,
dated February 1, 2002 (incorporated by reference to Exhibit
10.13 of the Form 10-KSB filed on April 18, 2002).

10.3 Employment Agreement Amendment between the Company and Don
Boudewyn, dated April 1, 2002 (incorporated by reference to
Exhibit 10.17 of the Form 10-KSB filed on April 18, 2002).

10.4 Executive Employment Agreement between the Company and Peter
Trepp, dated July 4, 2003 (including Exhibit A: Employee
Proprietary Information and Inventions Agreement) (the
following exhibits have been omitted: Exhibit A - Schedule
A: Employee's Disclosure; and Exhibit A - Schedule B:
Termination Certificate Concerning 5G Wireless
Communications, Inc. Proprietary Information (incorporated
by reference to Exhibit 10 of the Form 10-QSB filed on
November 24, 2003).

10.5 Independent Consulting Agreement between the Company and
Ghillie Finaz, AG, dated September 22, 2004 (incorporated by
reference to Exhibit 10 of the Form 8-K filed on September
30, 2004).

10.6 Form of agreement between the Company and its independent
directors (incorporated by reference to Exhibit 10.2 of the
Form 10-QSB filed on November 17, 2004).

10.7 Contribution Agreement between the Company and the Company
Solutions, Inc. (the following to this agreement have been
omitted: Schedule 1: List of Assets; and Schedule 2: List of
Liabilities), dated December 31, 2004 (incorporated by
reference to Exhibit 10 of the Form 8-K filed on January 7, 2005).

14 Code of Ethics, dated October 5, 2004 (incorporated by
reference to Exhibit 14 of the Form 10-KSB filed on March
31, 2005).

16.1 Letter on Change in Certifying Accountant (incorporated by
reference to Exhibit 16 of the Form 8-K/A filed on August
28, 2003).

16.2 Letter on Change in Certifying Accountant (incorporated by
reference to Exhibit 16 of the Form 8-K/A filed on September
30, 2004).

21 Subsidiaries of the Company (incorporated by reference to
Exhibit 21 of the Form 10-QSB filed on August 27, 2002).

23 Consent of Independent Registered Public Accounting Firm
(filed herewith).

31.1 Rule 13a-14(a)/15d-14(a) Certification of Jerry Dix (filed herewith).

31.2 Rule 13a-14(a)/15d-14(a) Certification of Lawrence C. Early
(filed herewith).

32 Section 1350 Certification of Jerry Dix and Lawrence C.
Early (filed herewith).