As filed with the Securities and Exchange Commission on November 4, 2003
Registration No.333-109370

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

PRE-EFFECTIVE AMENDMENT NO. 1
TO

FORM SB-2REGISTRATION STATEMENT
UNDERTHE SECURITIES ACT OF 1933

QT 5, INC.

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE 72-7148906
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
Incorporation or Organization) Classification Code Number)

5655 LINDERO CANYON ROAD, SUITE 120
WESTLAKE VILLAGE, CALIFORNIA 91362
TELEPHONE: (818) 338-1500
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

STEVEN REDER
PRESIDENT
QT 5, INC.
5655 LINDERO CANYON ROAD, SUITE 120
WESTLAKE VILLAGE, CALIFORNIA 91362
TELEPHONE: (818) 338-1500
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)

COPIES OF COMMUNICATIONS TO:
MARY ANN SAPONE, ESQ.
Richardson & Patel LLP
10900 Wilshire Boulevard, Suite 500
Los Angeles, California 90024
Telephone: (310) 208-1182
Telecopier: (310) 208-1154

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement. If any of
the securities being registered on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. |X|

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|

If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. |_|

CALCULATION OF REGISTRATION FEE
===================================================================================================================
PROPOSED MAXIMUM PROPOSED
OFFERING PRICE MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PER UNIT AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE REGISTRATION FEE
(1)
-------------------------------------------------------------------------------------------------------------------

Common stock, $0.15 par value(1) 5,270,854 $0.16 $842,336 $68.23
-------------------------------------------------------------------------------------------------------------------
Common stock, $0.15 par value, issuable
upon conversion of warrants at $0.40 per 750,000 $0.40 $300,000 $24.27
share(2)
-------------------------------------------------------------------------------------------------------------------
Common stock, $0.15 par value, issuable
upon conversion of warrants at $0.75 per 750,000 $0.75 $562,500 $45.51
share(2)
-------------------------------------------------------------------------------------------------------------------
Common stock, $0.15 par value, issuable
upon conversion of warrants at $0.075 12,500,000 $0.16 $2,000,000 $161.80
per share(2)
-------------------------------------------------------------------------------------------------------------------
Common stock, $0.15 par value, issuable
upon conversion of debentures(2) 34,666,666 $0.16 $5,546,667 $448.73
-------------------------------------------------------------------------------------------------------------------

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

TOTAL 53,937,520 $13,650,767 $748,54

===================================================================================================================
(1) Calculated pursuant to Rule 457(c) under the Securities Act of 1933, as amended.
(2) Calculated pursuant to Rule 457(g) under the Securities Act of 1933, as amended.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS
PROSPECTUS MAY BE USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES.
INFORMATION MAY HAVE CHANGED SINCE THAT DATE.

QT 5, INC.

53,937,520 SHARES OF COMMON STOCK

This prospectus covers the resale by selling shareholders of up to 53,937,520
shares of our common stock, $0.15 par value. The selling shareholders are
offering

5,270,854 shares of common stock,

47,166,666 shares of common stock underlying our 6% Convertible Debentures and
the warrants issued in conjunction with them, and

1,500,000 shares of common stock underlying warrants that were not granted in
conjunction with our 6% Convertible Debentures.

These securities are more fully described in the section of this prospectus
titled "Description of Securities to be Registered".

The selling shareholders will sell in accordance with the terms described in the
section of this prospectus titled "Plan of Distribution". We will not receive
any of the proceeds from the sale of the shares by the selling shareholders.

Our common stock is listed on the Over-The-Counter Bulletin Board. Our trading
symbol is "QTFV."

AN INVESTMENT IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
PURCHASE OUR SECURITIES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR
INVESTMENT. SEE "RISK FACTORS" BEGINNING AT PAGE 2.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this prospectus is November 4, 2003.

QT 5, INC.
TABLE OF CONTENTS

Page No.

Prospectus Summary 1

Risk Factors 2

Forward Looking Statements 8

Description of Securities to be Registered 8

Selling Shareholders 10

Plan of Distribution 11

Use of Proceeds 13

Directors, Executive Officers, Promoters and Control Persons 13

Security Ownership of Certain Beneficial Owners and Management 14

Disclosure of Commission Position on Indemnification for
Securities Act Liabilities 16

Organization 18

Our Business 18

Description of Property 22

Legal Proceedings 22

Management's Discussion and Analysis of Financial Condition
and Results of Operations 22

Financial Statements F-1 through F-27

Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 29

Certain Relationship and Related Transactions 29

Market for Common Equity and Related Shareholder Matters 31

Executive Compensation 34

Experts 37

PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS IMPORTANT INFORMATION ABOUT OUR BUSINESS AND ABOUT THIS
OFFERING. BECAUSE IT IS A SUMMARY, IT DOES NOT CONTAIN ALL THE INFORMATION YOU
SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES. PLEASE READ THE ENTIRE
PROSPECTUS.

QT 5, INC.

On April 7, 2002 we entered into an Agreement for the Assignment of Patent
Rights to U.S. Patent No. 6,268,386 relating to the formulation of nicotine
water-based products. We refer to this patent throughout this prospectus as the
"NICO Patent". The agreement was effective upon the execution and delivery of
the assignment of patent. The assignment of the patent was executed and
delivered to us on June 26, 2002. Our first water-based homeopathic nicotinum
(nicotine) product is NICOWater(TM), an odorless and tasteless water-based
product that is designed to relieve the self-diagnosed symptoms of tobacco
cravings. In May 2003 we began shipping NICOWater(TM). We recently launched a
nationwide rollout of NICOWater(TM), which can now be purchased from major
retail locations as well as from certain independent pharmacies.

HOW TO CONTACT US

We maintain our principal offices at 5655 Lindero Canyon Road, Suite 120,
Westlake Village, California 91362. Our telephone number at that address is
(818) 338-1500 and our facsimile number is (818) 338-1551.

THE OFFERING

We are registering 53,937,520 shares of our common stock for sale by the
shareholders identified in the section of this prospectus titled "Selling
Shareholders". The shares included in the table identifying the selling
shareholders include 5,270,854 shares of our common stock plus an additional
47,166,666 shares of common stock that have not yet been, but that may be,
issued to designated selling shareholders upon the conversion of our 6%
Convertible Debentures or the exercise of warrants. Of that amount, 34,666,666
shares are being registered for conversion of the 6% Convertible Debentures,
12,500,000 shares are being registered to cover the common stock underlying the
warrants that were issued in conjunction with the 6% Convertible Debentures, and
1,500,000 shares are being registered to cover the common stock underlying other
warrants that were not issued in conjunction with our 6% Convertible Debentures.
Information regarding the debentures and the warrants is included in the section
of this prospectus titled "Description of Securities to be Registered".

RISK FACTORS

AN INVESTMENT IN OUR SECURITIES IS VERY SPECULATIVE AND INVOLVES A HIGH DEGREE
OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, ALONG WITH
THE OTHER MATTERS REFERRED TO IN THIS PROSPECTUS, BEFORE YOU DECIDE TO BUY OUR
SECURITIES. IF YOU DECIDE TO BUY OUR SECURITIES, YOU SHOULD BE ABLE TO AFFORD A
COMPLETE LOSS OF YOUR INVESTMENT.

RISKS ASSOCIATED WITH OUR BUSINESS

WE ARE CURRENTLY IN A DISPUTE WITH THE FORMER OWNER OF THE NICO PATENT. IF WE
WERE TO LOSE OUR RIGHTS TO THIS PATENT, IT WOULD MATERIALLY ADVERSELY EFFECT OUR
BUSINESS, REVENUES AND RESULTS OF OPERATIONS.

We are currently focusing all of our efforts and capital toward the advertising,
distribution and marketing of NICOWater(TM). In May 2003 we received notice from
Marshall Anlauf Thompson, the inventor of the process by which we make
NICOWater(TM) and the assignor of the rights to the NICO Patent, that he
believed that we were in breach of the agreement by which we acquired the NICO
Patent. Specifically, he alleges that we have failed to meet certain performance
requirements included in that agreement and that he has a right to terminate the
agreement and obtain a return of the NICO Patent. We have commenced an
arbitration proceeding, as required by the agreement, to resolve this dispute.
If the arbitrators were to rule against us and we lost the NICO Patent, it would
have a material adverse effect on our business, revenues and results of
operations.

WE ARE A RECENTLY FORMED BUSINESS WITH VERY LITTLE OPERATING HISTORY, THEREFORE
YOU HAVE NO BASIS ON WHICH TO DETERMINE IF WE CAN BE SUCCESSFUL.

In January 2003 we merged with Moneyzone.com, Inc. in a reverse acquisition. We
have a very short history of operations, and we only began the marketing of our
first product, NICOWater(TM), in May 2003. We are not certain that our products
will generate significant revenues. During the year ended June 30, 2003, we
incurred a net loss of $6,410,216 and had only $9,042 of revenues. Because we
have a short operating history, you will have no basis upon which to accurately
forecast our future operations, including sales, or to judge our ability to
develop our business. If you purchase our securities, you may lose your entire
investment.

BECAUSE WE HAVE EARNED VERY LITTLE IN REVENUES, THE SUCCESS OF OUR BUSINESS
REQUIRES CONTINUED FUNDING. IF WE CANNOT RAISE THE MONEY WE NEED TO SUPPORT OUR
OPERATIONS UNTIL WE EARN SIGNIFICANT REVENUES, WE MAY BE REQUIRED TO CURTAIL OR
TO CEASE OUR OPERATIONS AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.

Our ability to develop our business depends upon our receipt of money to
continue our operations while we introduce our product and a market for it
develops. If this funding is not received as needed, it is unlikely that we
could continue our business, in which case you would lose your entire
investment.

In August 2003 we received gross proceeds of $1,000,000 in financing with a
commitment for an additional $1,000,000 in gross proceeds to be received
following the effective date of this registration statement, which we are
required to file in conjunction with receipt of the financing. We believe that
the proceeds from this financing, in conjunction with the financing of our
accounts receivable which we are currently negotiating, will allow us to
continue our operations for a period of approximately 12 months. However, we
cannot assure you that we will be successful in obtaining accounts receivable
financing.

To the extent that we need more money than has been committed to us, we cannot
assure you that additional financing will be available to us when needed, on
commercially reasonable terms, or at all. If we are unable to obtain additional
financing as needed, we may be required to curtail the manufacturing and
marketing of our product and possibly cease our operations.

Our independent accountants have included an explanatory paragraph in their
report on our financial statements set forth in this prospectus stating that
because of our significant losses and our working capital deficit there is
substantial doubt that we can continue as a going concern.

WE ARE SUBJECT TO THE RISKS AND UNCERTAINTIES INHERENT IN NEW BUSINESSES. IF WE
FAIL TO ACCURATELY FORECAST OUR CAPITAL NEEDS OR IF OUR PRODUCT DOES NOT EARN
SIGNIFICANT REVENUES OUR BUSINESS COULD FAIL AND YOU COULD LOSE YOUR ENTIRE
INVESTMENT.

We are subject to the risks and uncertainties inherent in new businesses,
including the following:

o Our projected capital needs may be inaccurate, and we may not have enough
money to develop our business and bring our products to market as we planned;

o We may experience unanticipated development or marketing expenses, which may
make it more difficult to develop our business and bring our products to market;

o Even if we are able to develop our products and bring them to market, we may
not earn enough revenues from the sales of our products to cover the costs of
operating our business.

If we are unsuccessful in our efforts to develop our business and if the product
we provide does not produce revenues as we project, we are not likely to ever
become profitable and we may be required to curtail some or all of our
operations. If that happened you could lose your entire investment.

WE ARE DEPENDENT FOR OUR SUCCESS ON A FEW EMPLOYEES. THE LOSS OF ONE OR MORE OF
THESE EMPLOYEES COULD HAVE AN ADVERSE EFFECT ON OUR OPERATIONS.

Our future success will depend, to a significant degree, on the continued
services of our Chief Executive Officer, Timothy J. Owens, our

President, Steven Reder, and our Chief Financial Officer, Norman A. Kunin. Loss
of the services of Messrs. Owens, Reder and Kunin would have a material adverse
effect on our business and operations.

WE CANNOT GUARANTEE YOU THAT A MARKET WILL DEVELOP FOR OUR PRODUCT. IF A MARKET
FOR OUR PRODUCT DOES NOT DEVELOP, YOU MAY LOSE YOUR ENTIRE INVESTMENT.

To our knowledge, there are no other water-based products available that are
used to satisfy a self-diagnosed craving for tobacco. We must be able to
successfully differentiate our product from other products that contain
nicotine, so that smokers become aware of its benefits. We cannot assure you
that we can develop a market for our product. Our inability to successfully
develop a market for our product will have a material adverse effect on our
business, operating results and financial condition and would render your
investment worthless.

WE CURRENTLY HAVE ONLY ONE PRODUCT FOR SALE AND IT IS MARKETED TO SMOKERS. A
NUMBER OF DIFFERENT ORGANIZATIONS, INCLUDING GOVERNMENT AND MEDICAL
ORGANIZATIONS, ARE TRYING TO CURTAIL THE USE OF CIGARETTES, PARTICULARLY BY
CHILDREN. IF THE NUMBER OF SMOKERS DECLINES, THE MARKET FOR OUR PRODUCT WILL
ALSO DECLINE. THIS WILL HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

Our NICOWater(TM) product is marketed to smokers. In recent years campaigns to
stop cigarette smoking, particularly among children, have increased. Currently,
many state governments provide funds for programs designed to educate the public
to the dangers of smoking. Schools and medical organizations are also active in
alerting students and patients to the health risks associated with smoking. If
these campaigns are successful and the number of smokers declines significantly,
the need for our product will also decline. A significant decline in the number
of smokers will have a material adverse effect on our business.

WE CANNOT ASSURE YOU THAT WE WILL BE SUCCESSFUL IN DEVELOPING AND
COMMERCIALIZING OTHER PRODUCTS. IF WE DO NOT DEVELOP AND COMMERCIALIZE OTHER
PRODUCTS, AND IF NICOWATER(TM) CANNOT BE SUCCESSFULLY MARKETED, YOU MAY LOSE
YOUR ENTIRE INVESTMENT.

Our ability to successfully develop any additional products is uncertain. Our
research and development programs with respect to certain of our potential
products are at an early stage. Potential new products may require additional
research, development, testing, regulatory approval and additional investment
prior to their commercialization, which may not be successful. There can be no
assurance that we can develop commercially successful products. This means that
the value of your investment would be dependent upon whether or not
NICOWater(TM) is commercially successful and generates substantial revenues. We
cannot assure you this will happen. If NICOWater(TM) is not commercially
successful and we have no other products to market, you could lose your entire
investment.

WE COULD BE SUBJECT TO PRODUCT LIABILITY CLAIMS. OUR INSURANCE MAY NOT BE
ADEQUATE TO PAY SUCH CLAIMS. IF WE WERE REQUIRED TO PAY A CLAIM, OUR BUSINESS
AND FINANCIAL CONDITION COULD BE ADVERSELY EFFECTED AND YOUR INVESTMENT MAY
DECLINE IN VALUE.

Liability might result from claims made by consumers who purchase NICOWater(TM).
We presently carry product liability insurance in amounts that we believe to be
adequate, but we can give no assurance that such insurance will remain available
at a reasonable cost or that any insurance policy would offer coverage
sufficient to meet any liability arising as a result of a claim. The obligation
to pay any product liability claim could have a material adverse effect on our
business and financial condition and could cause the value of your investment to
decline.

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR PATENTS OR OTHER INTELLECTUAL
PROPERTY OR WE COULD BECOME INVOLVED IN LITIGATION WITH OTHERS REGARDING OUR
INTELLECTUAL PROPERTY. EITHER OF THESE EVENTS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS.

We rely on a combination of patent laws, nondisclosure, trade secret and other
contractual and technical measures to protect our proprietary rights in our
product. However, we cannot assure you that these provisions will be adequate to
protect our proprietary rights. In addition, the laws of certain foreign
countries do not protect intellectual property rights to the same extent as the
laws of the United States.

Although we believe that our intellectual property does not infringe upon the
proprietary rights of third parties, others may claim that we have infringed on
their products.

If we were to become involved in disputes regarding the use or ownership of
intellectual property rights, we could incur substantial costs in defending or
prosecuting any such action and the defense or prosecution of the action would
likely result in a diversion of management resources. In addition, in order to
settle such an action we could be required to acquire licenses from others or to
give licenses to others on terms that are not beneficial to us. Any dispute
relating to our intellectual property, including our dispute with Marshall
Anlauf Thompson relating to our right to use the NICO Patent, could have a
material adverse effect on our business.

OUR PRODUCTS ARE REGULATED BY THE FDA AND, IN THE WORLDWIDE MARKET, GOVERNMENT
AGENCIES LIKE THE FDA. WE MAY BE UNSUCCESSFUL IN OBTAINING REGULATORY APPROVALS
FOR OUR PRODUCTS, EVEN THOUGH WE MAY INVEST A SIGNIFICANT AMOUNT OF TIME AND
MONEY INTO SEEKING SUCH APPROVALS. IF OUR PRODUCTS DO NOT RECEIVE THE REGULATORY
APPROVALS WE NEED TO SELL THEM, OUR REVENUES AND OPERATING RESULTS COULD BE
ADVERSELY EFFECTED AND THE VALUE OF YOUR INVESTMENT MAY DECLINE.

The manufacture, sale, promotion and marketing of our current product,
NICOWater(TM), and of some of our future products, are subject to regulation by
the FDA and similar government regulatory bodies in other countries.

As we develop or obtain new products, we will be required to determine what
regulatory requirements, if any, are required to market and sell our products in
the United States and worldwide. The process of obtaining regulatory

approval could take years and be very costly, if approval can be obtained at
all. If we failed to comply with such a requirement, we could be subjected to an
FDA enforcement action. Such an action could take the form of a warning letter,
an injunction to stop us from marketing the product at issue or a possible
seizure of our assets.

We intend to work diligently to assure compliance with all applicable
regulations that impact our business. We cannot assure you, however, that we
will be able to obtain regulatory approval for all of our products or that, in
the future, additional regulations will not be enacted which might adversely
impact our operations. In either case, our revenues and operating results could
be adversely effected and the value of your investment may decline.

RISKS ASSOCIATED WITH OWNERSHIP OF OUR SECURITIES

WE HAVE NOT PAID CASH DIVIDENDS AND IT IS UNLIKELY THAT WE WILL PAY CASH
DIVIDENDS IN THE FORESEEABLE FUTURE.

We plan to use all of our earnings, to the extent we have earnings, to fund our
operations. We do not plan to pay any cash dividends in the foreseeable future.
We cannot guarantee that we will, at any time, generate sufficient surplus cash
that would be available for distribution as a dividend to the holders of our
common stock. You should not expect to receive cash dividends on our common
stock.

WE HAVE THE ABILITY TO ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK WITHOUT
ASKING FOR SHAREHOLDER APPROVAL, WHICH COULD CAUSE YOUR INVESTMENT TO BE
DILUTED.

Our Certificate of Incorporation currently authorizes the Board of Directors to
issue up to 100,000,000 shares of common stock. Shareholders owning a majority
of our common stock have approved an amendment to our Certificate of
Incorporation that will increase the number of shares of authorized common stock
to 300,000,000. After the amendment is filed with the Delaware Secretary of
State, the Board of Directors may generally issue shares of common stock or
warrants or options to purchase shares of common stock without further approval
by our shareholders. Accordingly, any additional issuance of our common stock
may have the effect of further diluting your investment.

WE MAY RAISE ADDITIONAL CAPITAL THROUGH A SECURITIES OFFERING THAT COULD DILUTE
YOUR OWNERSHIP INTEREST.

We require substantial working capital to fund our business. If we raise
additional money through the issuance of equity, equity-related or convertible
debt securities, those securities may have rights, preferences or privileges
senior to those of the holders of our common stock. The issuance of additional
common stock or securities convertible into common stock by our management will
also have the effect of further diluting the proportionate equity interest and
voting power of holders of our common stock.

OUR SECURITIES ARE THINLY TRADED, SO YOU MAY BE UNABLE TO LIQUIDATE THEM IF YOU
NEED MONEY.

Our common stock trades sporadically on the Over-The-Counter Bulletin Board. In
the past, there have been periods of several days or more when there were no
trades of our common stock. It is not likely that an active market for our
common stock will develop or be sustained in the foreseeable future. If you

needed to liquidate your common stock because you needed money, it may be
difficult or impossible to do so.

WE ARE SUBJECT TO THE PENNY STOCK RULES AND THESE RULES MAY ADVERSELY EFFECT
TRADING IN OUR COMMON STOCK.

Our common stock is considered a "low-priced" security under rules promulgated
under the Securities Exchange Act of 1934. In accordance with these rules,
broker-dealers participating in transactions in low-priced securities must first
deliver a risk disclosure document which describes the risks associated with
such stocks, the broker-dealer's duties in selling the stock, the customer's
rights and remedies and certain market and other information. Furthermore, the
broker-dealer must make a suitability determination approving the customer for
low-priced stock transactions based on the customer's financial situation,
investment experience and objectives. Broker-dealers must also disclose these
restrictions in writing to the customer, obtain specific written consent from
the customer, and provide monthly account statements to the customer. The effect
of these restrictions will likely be a decrease in the willingness of
broker-dealers to make a market in our common stock, decreased liquidity of our
common stock and increased transaction costs for sales and purchases of our
common stock as compared to other securities.

FORWARD LOOKING STATEMENTS

The federal securities laws provide a safe harbor for certain forward-looking
statements. This safe harbor protects us from liability in a private action
arising under either the Securities Act of 1933 or the Securities Exchange Act
of 1934 for forward-looking statements that are identified as such and
accompanied by meaningful cautionary statements, or are immaterial.

This prospectus contains forward-looking statements that involve risks and
uncertainties, such as statements about our plans, objectives, expectations,
assumptions, or future events. In some cases, you can identify forward-looking
statements by terminology such as "anticipate," "estimate," "plan," "project,"
"predict," "potential," "continue," "ongoing," "expect," "believe," "intend,"
"may," "will," "should," "could," or the negative of these terms or other
comparable terminology. These statements involve estimates, assumptions, known
and unknown risks, uncertainties and other factors that could cause our actual
results to differ materially from any future results, performances, or
achievements expressed or implied by the forward-looking statements. Actual
future results and trends may differ materially from those made in or suggested
by any forward-looking statements due to a variety of factors, including for
example, our inability to successfully market NICOWater(TM), the passage of
unfavorable federal or state regulations governing NICOWater(TM) with which it
may be difficult to comply, the loss of our ability to use the patent for
NICOWater(TM), whether or not we will be successful in obtaining other products
and marketing them, our inability to obtain financing when and if we need it and
other factors, many of which may be outside our control. Consequently, you
should not place undue reliance on these forward-looking statements. We discuss
many of these and other risks and uncertainties in greater detail under the
sections titled, "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in this prospectus.

The forward-looking statements speak only as of the date on which they are made
and, except as required by law, we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of unanticipated
events. In addition, we cannot assess the impact of each factor on our business
or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking
statements.

DESCRIPTION OF SECURITIES TO BE REGISTERED

COMMON STOCK AND RIGHTS OF COMMON SHAREHOLDERS

The securities being offered by the selling shareholders are shares of our
common stock. We are authorized by our Articles of Incorporation to issue
100,000,000 shares of common stock, $0.15 par value. Our common stock is traded
on the Over-The-Counter Bulletin Board.

Holders of our common stock are entitled to one vote per share on all matters
subject to shareholder vote. If the Board of Directors were to declare a
dividend out of funds legally available therefore, all of the outstanding shares
of common stock would be entitled to receive such dividend. We have never
declared dividends and we do not intend to declare dividends in the foreseeable

future. If we were liquidated or dissolved, holders of shares of our common
stock would be entitled to share ratably in assets remaining after satisfaction
of our liabilities. Holders of our common stock do not have cumulative voting
rights.

6% CONVERTIBLE DEBENTURES

On August 22, 2003 we obtained gross proceeds of $2,000,000 in financing upon
the issuance of 6% Convertible Debentures to six investors who participated in a
private offering of our securities. The funds will be received and the
debentures will be issued in two closings. The first closing, pursuant to which
we received gross proceeds of $1,000,000 in financing, took place on August 22,
2003. The second closing, pursuant to which we will receive an additional
$1,000,000 in gross proceeds, will take place immediately after this
registration statement is declared effective. The debentures have a term of
three years. Interest is payable quarterly. We may choose to pay the interest
with shares of our common stock, so long as there is an effective registration
statement covering the sale of the common stock issued for the interest payment
(which are not being registered herein), our common stock is listed on a
Principal Market, as defined in the debenture, and we have enough authorized but
unissued shares of common stock available to issue all the shares that could be
issued in conjunction with the placement of the debentures. At any time after
the original issue date, the debenture may be convertible into shares of our
common stock at the option of the holder. The number of shares of common stock
issuable upon a conversion is determined by the quotient obtained by dividing
the outstanding principal amount of the debenture to be converted by the Set
Price. The Set Price is defined as $0.075 for those debentures that were issued
at the first closing and the lesser of $0.075 and the average of the five
closing prices of our common stock immediately prior to the second closing for
those debentures that will be issued at the second closing. We have reserved
34,666,666 shares of our common stock to cover the conversion of the debentures.

We have no other debentures outstanding.

WARRANTS CONVERTIBLE INTO COMMON STOCK

In conjunction with the 6% Convertible Debentures that were offered in the
private offering dated August 22, 2003 we also issued warrants, which we will
refer to in this prospectus as the "Debenture Warrants". The Debenture Warrants
were issued at the first closing and were immediately exercisable following the
first closing at a price of $0.075 per share. The Debenture Warrants expire five
years from the date of issuance. By exercising the Debenture Warrants, each
holder of the 6% Convertible Debentures is entitled to purchase a number of
shares of common stock equal to one-half of the number of shares of common stock
into which the shareholder may convert the debenture. Including the warrant
issued to HPC Capital Management, which arranged the financing, up to 20,000,000
shares of our common stock may be purchased through the exercise of the
Debenture Warrants. Of that amount, we are currently registering 12,500,000
shares.

On October 15, 2003 we and the investors agreed that the investors would advance
$200,000 of the remaining $1 million in gross proceeds prior to the effective
date of this registration statement. In exchange for the advance, we agreed to
reduce the exercise price of the Debenture Warrants (including the warrant
issued to HPC Capital Management) from $0.075 to $0.01 and, for a period of 12
months, to refrain from issuing to employees, officers or directors, from any
stock option plan or employee incentive plan or agreement, stock or options in
excess of 50,000 shares per month without the prior written consent of the
investors.

On June 9, 2003 we issued a common stock purchase warrant to Platinum Partners
Global Macro Fund L.P., which we will refer to in this prospectus as the
"Platinum Partners Warrant". The term of the Platinum Partners Warrant is five
years. Pursuant to the Platinum Partners Warrant, the warrant holder may
purchase, during the term, 750,000 shares of our common stock at $0.40 per share
and 750,000 shares of our common stock at $0.75 per share. If the fair market
value of our common stock is greater than the exercise price on the date the
warrant holder chooses to exercise, in lieu of exercising the Platinum Partners
Warrant, the warrant holder may elect to receive shares of common stock equal to
the value of the Platinum Partners Warrant.

SELLING SHAREHOLDERS

The following table sets forth the names of the selling shareholders who may
sell their shares using this prospectus.

The following table also sets forth certain information as of the date of this
prospectus regarding the ownership of our common stock by the selling
shareholders. Because the selling shareholders can offer all, some or none of
their shares of our common stock, we have no way of determining the number they
will hold after this offering. Therefore, we have prepared the table below on
the assumption that the selling shareholders will sell all shares covered by
this prospectus.

- ----------------------------------- ------------------- --------------------- --------------------- ------------------
SHARES HELD SHARES HELD AFTER PERCENTAGE OWNED
SELLING BEFORE THE SHARES BEING OFFERED THE OFFERING AFTER THE
SHAREHOLDER OFFERING OFFERING
- ----------------------------------- ------------------- --------------------- --------------------- ------------------

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

Jerry Cox 34,188 34,188 0 0
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Platinum Partners Global Macro
Fund LP(1) 3,166,666 3,166,666 0 0
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Michael H. Weiss 400,000 400,000 0 0
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Ted L. Collins 100,000 100,000 0 0
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
William Ritger 1,000,000 1,000,000 0 0
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
SBI USA, LLC 3,347,171 1,720,000 1,627,171 3.5%
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Shai Stern 250,000 250,000 0 0
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Stern & Co. 100,000 100,000 0 0
- ----------------------------------- ------------------- --------------------- --------------------- ------------------

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

Palisades Master Fund L.P(2). 12,999,999 11,437,499 1,562,500 3.4%
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Crescent International Ltd(2). 12,999,999 11,437,499 1,562,500 3.4%
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Alpha Capital AG(3) 10,400,001 9,150,001 1,250,000 2.7%
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Bristol Investment Fund Ltd.(4) 7,800,000 6,862,500 937,500 2.1%
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Ellis International Ltd.(5) 5,199,999 4,574,999 625,000 1.4%
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
Zenny Trading Limited(6) 2,600,001 2,287,501 312,500 *
- ----------------------------------- ------------------- --------------------- --------------------- ------------------
HPC Capital Management(7) 2,666,667 1,416,667 1,250,000 2.7%
- ----------------------------------- ------------------- --------------------- --------------------- ------------------

(1) Includes 1,500,000 shares of common stock to be issued upon the exercise of
the Platinum Partners Warrant. The exercise price is $0.40 per share as to
750,000 shares of common stock and $0.75 per share as to 750,000 shares of
common stock.

(2) Includes 8,666,666 shares of common stock to be issued upon the conversion
of a debenture and 4,333,333 shares of common stock to be issued upon the
exercise of a Debenture Warrant. The Debenture Warrant exercise price is $0.01
per share.

(3) Includes 6,933,334 shares of common stock to be issued upon the conversion
of a debenture and 3,466,667 shares of common stock to be issued upon the
exercise of a Debenture Warrant. The Debenture Warrant exercise price is $0.01
per share.

(4) Includes 5,200,000 shares of common stock to be issued upon the conversion
of a debenture and 2,600,000 shares of common stock to be issued upon the
exercise of a Debenture Warrant. The Debenture Warrant exercise price is $0.01
per share.

(5) Includes 3,466,666 shares of common stock to be issued upon the conversion
of a debenture and 1,733,333 shares of common stock to be issued upon the
exercise of a Debenture Warrant. The Debenture Warrant exercise price is $0.01
per share.

(6) Includes 1,733,334 shares of common stock to be issued upon the conversion
of a debenture and 866,667 shares of common stock to be issued upon the exercise
of a Debenture Warrant. The Debenture Warrant exercise price is $0.01 per share.

(7) Includes 2,666,667 shares of common stock to be issued upon the exercise of
a warrant. The warrant exercise price is $0.075 per share. The warrant was
issued to HPC Capital Management in connection with the placement of our
debentures.

* Less than 1%.

We will pay all expenses to register the shares. The selling shareholders will
pay any underwriting and brokerage discounts, fees and commissions.

PLAN OF DISTRIBUTION

We are registering a total of 53,937,520 shares of our common stock that are
being offered by the selling shareholders. As used in this prospectus, "selling
shareholders" includes the pledgees, donees, transferees or others who may later
hold the selling shareholders' interests in the common stock. We will pay the
costs and fees of registering the common shares, but the selling shareholders
will pay any brokerage commissions, discounts or other expenses relating to the
sale of the common shares. We will not receive the proceeds from the sale of the
shares by the selling shareholders. However, some of the shares we are
registering will be issued upon the exercise of warrants held by the selling
shareholders. Although the selling shareholders are not required to exercise the
warrants, if they do so we will receive the proceeds from the exercise.

The selling shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares:

o ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;

o purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

o an exchange distribution in accordance with the rules of the applicable
exchange;

o privately negotiated transactions;

o broker-dealers may agree with the selling shareholders to sell a specified
number of such shares at a stipulated price per share;

o a combination of any such methods of sale; and

o any other method permitted pursuant to applicable law.

The selling shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. Broker-dealers
engaged by the selling shareholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling shareholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling shareholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.

The selling shareholders may from time to time pledge or grant a security
interest in some or all of the shares or common stock or warrants owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of
1933, amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.

The selling shareholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.

The selling shareholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. The selling shareholders have informed us
that none of them have any agreement or understanding, directly or indirectly,
with any person to distribute the common stock.

We are required to pay all fees and expenses incurred by us incident to the
registration of the shares. We have agreed to indemnify the selling shareholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the common stock offered by
the selling shareholders.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The name, age and a description of the positions held by our directors,
executive officers and key employees are as follows:

NAME AGE POSITION(S)

Timothy J. Owens 48 Chief Executive Officer and Director

Steven H. Reder 45 President and Director

Norman A. Kunin 65 Chief Financial Officer

There are no family relationships between any directors and executive officers.

The size of our Board of Directors is currently fixed at two members. Members of
the Board serve until the next annual meeting of shareholders and until their
successors are elected and qualified. Officers are appointed by and serve at the
discretion of the Board.

None of our directors or executive officers has, during the past five years,

o had any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer, either at the time of the
bankruptcy or within two years prior to that time,

o been convicted in a criminal proceeding and none of our directors or executive
officers is subject to a pending criminal proceeding,

o been subject to any order, judgment, or decree not subsequently reversed,
suspended or vacated of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities, futures, commodities or banking activities,
or

o been found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state

securities or commodities law, and the judgment has not been reversed,
suspended, or vacated.

TIMOTHY J. OWENS. Chief Executive Officer and Director. Mr. Owens is our founder
and has been Chief Executive Officer since our inception. From March 1994 to
January 1999, Mr. Owens served as Chief Executive Officer of Job Services, Inc.,
a privately held company. Mr. Owens received his Masters of Science Degree in
Finance from LaSalle University in Louisiana. Mr. Owens also received letters of
academic excellence in engineering from President Gerald R. Ford and President
James Carter in 1976 and 1978.

STEVEN H. REDER. President and Director. Mr. Reder has been President and a
member of our Board of Directors since January 2002. Mr. Reder also acted as our
Chief Financial Officer from January 2002 until the appointment of Norman A.
Kunin on August 8, 2003. From February 1994 to January 2002, Mr. Reder was
President, Chief Executive Officer and majority stockholder of Friends Industry,
Inc. (dba Graphix Press), a specialty printer, packaging and point of purchase
display company. Prior to his employment with Graphix Press, Mr. Reder was the
Chief Financial Officer for Delta Lithograph Company, a Bertelsmann company.

NORMAN A. KUNIN. Chief Financial Officer. Norman A. Kunin joined us in August
2003 as Chief Financial Officer after having been a consultant since May 2003.
Mr. Kunin's professional career encompasses over thirty years of diversified
financial management expertise, beginning as a certified public accountant.
Approximately 30 years ago Mr. Kunin and his partners sold their accounting firm
to a predecessor to Deloitte and Touche. Thereafter, Mr. Kunin continued his
career as a financial executive and consultant for a variety of private and
publicly held companies. From September 1998 to August 2003, Mr. Kunin was
employed by Kunin Business Consulting, a division of Ace Investors, LLC located
in Santa Maria, California. His consulting engagements included financial
forecasting, business planning and providing temporary services as a chief
financial officer and/or financial executive. Mr. Kunin earned his Bachelor of
Business degree with major in Accounting at New York's City College and is a
member of the American Institute of Certified Public Accountants.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of the date of this prospectus, information
regarding the beneficial ownership of our common stock before the offering with
respect to each of our executive officers, each of our directors, each person
known by us to own beneficially more than 5% of our common stock, and all of our
directors and executive officers as a group. The term "executive officer" is
defined as the Chief Executive Officer, President and the Chief Financial
Officer. Each individual or entity named has sole investment and voting power
with respect to shares of common stock indicated as beneficially owned by them,
subject to community property laws, where applicable, except where otherwise
noted.

- ----------------------- ----------------------------------------- ----------------- ---------------
Number of Percentage
Shares Ownership
Title of Class of Beneficially
Security Name and Address(1) Owned(2)
- ----------------------- ----------------------------------------- ----------------- ---------------

Common Stock Timothy J. Owens(2)(3)(4)(5) 6,749,520(8) 15.2%
Common Stock Steven H. Reder(2)(3)(4)(5) 5,096,780(9) 11.5%
Common Stock Norman Kunin(2)(3) 1,045,000 2.4%
Common Stock Fred DeLuca(5) 3,399,480 7.7%
Common Stock Federico Cabo(5) 3,491,250(10) 7.9%
Common Stock Platinum Partners Global Macro Fund LP(6) 3,166,666 7.1%
Common Stock Shelly Singhal(5)(7) 2,528,421 5.7%
Common Stock VMM, LLC 3,260,760 7.3%
Common Stock Palisades Master Fund L.P.(12) 12,999,999(11)(13) 22.7%
Common Stock Crescent International Ltd.(12) 12,999,999(11)(13) 22.7%
Common Stock Alpha Capital AG(12) 10,400,001(11)(13) 19.0%
Common Stock Bristol Investment Fund Ltd.(12) 7,800,000(11)(13) 14.9%
Common Stock Ellis International Ltd.(12) 5,199,999(11)(13) 10.5%
Common Stock HPC Capital Management 2,666,667 5.6%
Common Stock Zenny Trading Limited 2,600,001 5.5%

All Officers and Directors (3 persons) 12,916,300 29.1%
- ----------------------- ----------------------------------------- ----------------- ---------------

(1) The address for Mr. Owens, Mr. Reder, Mr. Kunin and Mr. DeLuca is c/o QT 5,
Inc., 5655 Lindero Canyon Road, Suite 120, Westlake Village, California 91362;
the address for Federico Cabo is P. O. Box 10007, Newport Beach, California
92658; and the address for Shelly Singhal is c/o SBI, USA, 2361 Campus Drive,
Suite 210, Irvine, California 92612.

(2) As required by Rule 13d-3 of the Securities Exchange Act of 1934, included
in this calculation are 1,280,000 shares deemed beneficially owned by Timothy J.
Owens, 1,280,000 shares deemed beneficially owned by Steven H. Reder and 750,000
shares deemed beneficially owned by Norman A. Kunin by virtue of their right to
acquire them within 60 days of the date of this prospectus. These shares
represent warrants granted to Messrs. Owens, Reder and Kunin in conjunction with
their employment.

(3) Executive Officer.

(4) Director.

(5) 5% Shareholder.

(6) As required by Rule 13d-3 of the Securities Exchange Act of 1934, included
in this calculation are 1,500,000 shares represented by a warrant that are
deemed beneficially owned by the shareholder by virtue of its right to acquire
them within 60 days of the date of this prospectus.

(7) This information was acquired from a filing made with the Securities and
Exchange Commission.

(8) Includes 52,750 shares of common stock registered to Melissa Owens, 171,250
shares of common stock registered to Zach Owens and 2,399,320 shares of common
stock registered to TMZ Group LLC.

(9) Includes 59,530 shares owned by Bill Reder, 99,750 shares owned by Geoffrey
Reder, 86,450 shares owned by Michael Reder and 66,500 shares owned by Anne
Reder.

(10) Includes 2,660,000 shares issued to OCIF-OBAC-SA de CV that are currently
held in escrow. This transaction is described in the section of this prospectus
titled "Certain Relationships and Related Transactions."

(11) As required by Rule 13d-3 of the Securities Exchange Act of 1934, all of
the common stock shown is deemed to be beneficially owned by this shareholder by
virtue of its right to acquire the common stock reported within 60 days of the
date of this prospectus as a result of the conversion of our 6% Convertible
Debentures or the exercise of the Debenture Warrants issued in conjunction
therewith.

(12) The address for this shareholder is c/o HPC Capital Management, 200 Mansell
Court East, Suite 550, Roswell, Georgia 30076.

(13) The shareholder may not exercise the right to convert the 6% Convertible
Debentures or to exercise the Debenture Warrant to the extent that such
conversion or exercise would result in the shareholder beneficially owning more
than 4.9% of the common stock outstanding at the time of the conversion or
exercise.

DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

As permitted by Section 102(b)(7) of the General Corporation Law of the State of
Delaware, Article Ninth of our Certificate of Incorporation includes a provision
that eliminates the personal liability of each of our directors for monetary
damages for breach of such director's fiduciary duty as a director, except for
liability: (i) for any breach of the director's duty of loyalty to us or our
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (iii) under Section
174 of the General Corporation Law; or (iv) for any transaction from which the
director derived an improper personal benefit. If the General Corporation Law is
amended to authorize the further elimination or limitation of the liability of
directors, then the liability of a director shall be limited to the fullest
extent allowed by the amendment. However, any repeal or modification of the
indemnity provided by the General Corporation Law shall not adversely affect any
limitation on the personal liability of our directors.

Our Certificate of Incorporation requires us, to the extent and in the manner
provided by the General Corporation Law, to indemnify any person against
expenses, (including attorneys' fees), judgments, fines and amounts paid in
settlement, that are actually and reasonably incurred in connection with any
threatened, pending or completed action, suit or proceeding to which such person
was or is a party or is threatened to be made a party by reason of the fact that
such person is or was one of our directors or officers.

Our Bylaws provide that we must, to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law, indemnify our directors and
officers for actions they took in good faith and in a manner reasonably believed
to be in, or not opposed to, our best interests. With respect to any criminal
action or proceeding, the officer or director must have had no reasonable cause
to believe that his conduct was unlawful. We are required by our Bylaws to
advance, prior to the final disposition of any proceeding, promptly following
request therefore, all expenses incurred by any officer or director in
connection with such proceeding. If the General Corporation Law is amended to
provide narrower rights to indemnification than are available under our Bylaws,
such amendment shall not apply to alleged actions or omissions that precede the
effective date of such amendment. Our Bylaws permit us to indemnify our
employees and agents to the fullest extent permitted by the General Corporation
Law.

Section 145 of the General Corporation Law of the State of Delaware permits
indemnification of a corporation's agents (which includes officers and
directors) because he is a party (or he is threatened to be made a party) to any
action or proceeding by reason of the fact that the person is or was an agent of
the corporation or because he is a party (or he is threatened to be made a
party) to any action or proceeding brought by or on behalf of a corporation. If
the agent is successful on the merits in defense of any action or proceeding,
the corporation must indemnify the agent against expenses actually and
reasonably incurred by the agent in such defense. Indemnification must be
authorized in the specific case upon a determination that indemnification is
proper because the person has met the applicable standard of conduct to require
indemnification. This provision of the General Corporation Law of the State of

Delaware is not exclusive of any other rights to which persons seeking
indemnification may be entitled under any bylaw, agreement, vote of shareholders
or disinterested directors or otherwise.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.

ORGANIZATION

QT 5, Inc. (referred to in this prospectus as "we", "us", or "our") was formed
on April 4, 1989 under the name Chelsea Atwater, Inc. On March 19, 1997 we
changed our name to Cerx Entertainment Corporation, and on March 23, 1998 we
changed our name to Cerx Venture Corporation. Prior to 1999 we had limited
operations while we were seeking a business to acquire. On July 15, 1999, we
effected a merger with EBonlineinc.com, Inc., a Delaware corporation, and
changed our name to MoneyZone.com, Inc. (referred to in this prospectus as
"MoneyZone"). On July 18, 2002, we announced that we had entered into a Merger
Agreement with QuickTest 5, Inc., a Delaware corporation.

Effective January 9, 2003, pursuant to the terms of the Merger and Plan of
Reorganization between MoneyZone.com, Inc. and QuickTest 5, Inc., Quicktest
merged with and into MoneyZone, the separate corporate existence of Quicktest
ceased, and MoneyZone continued as the surviving entity and changed its name to
"QT 5, Inc." and its symbol on the Over The Counter Bulletin Board to "QTFV".

Prior to the merger, our Board of Directors and the holders of a majority of the
outstanding shares of common stock authorized and approved by written consent an
amendment to our Certificate of Incorporation increasing the total number of
shares of our authorized common stock from 25,000,000 shares to 100,000,000
shares. Prior to the merger but also effective on January 9, 2003, we
effectuated a 5 for 1 forward split of our outstanding shares of common stock.
All shares reported in this prospectus reflect the forward stock split unless
otherwise noted.

On February 7, 2003 we formed Nico International, Inc., our wholly owned
subsidiary.

OUR BUSINESS

On April 7, 2002 we entered into an Agreement for the Assignment of Patent
Rights to U.S. Patent No. 6,268,386 (the Patent "Agreement") relating to the
formulation of nicotine beverages, referred to in this prospectus as the "NICO
Patent". The Patent Agreement was effective only upon the execution and delivery
of the assignment of patent. The assignment of patent was executed and delivered
on June 26, 2002. Our first nicotine beverage product is NICOWater(TM) which, as
the name implies, is a water based nicotine product. Currently, we are using our
resources to introduce and market NICOWater(TM). NICOWater(TM) is used by
individuals who are unable, temporarily, to smoke because of short-term
impediments, such as being present in a non-smoking facility or in social
gatherings where smoking may be discouraged, such as in the presence of
children.

NICOWater(TM) is a homeopathic formula that may be used by adult smokers to
relieve the symptoms of tobacco cravings.

NICOWATER(TM)

According to the United States Food and Drug Administration (referred to in this
discussion as the "FDA"), homeopathy is a medical theory and practice that
developed in reaction to the harsh procedures used in conventional medicine as
it was practiced more than 200 years ago. Homeopathic products are normally
based on natural ingredients. Because they are diluted into minuscule doses,
they are generally without side effects. The FDA regulates homeopathic remedies
differently from drugs, because homeopathic products contain little or no active
ingredients.

NICOWater(TM) is a homeopathic formula developed for adult smokers who suffer
from the self-diagnosed symptoms of tobacco cravings. It is made from purified
water, purchased from bottlers registered as drug manufacturers with the FDA,
and nicotinum (nicotine), which is prepared by a licensed homeopathic
manufacturer. Both purified water and nicotinum are readily available from
numerous suppliers.

NICOWater(TM) is colorless, odorless and tasteless. NICOWater(TM) is available
in 16.9 oz (500 ml) bottles that can be conveniently carried or packed in
purses, briefcases or other small totes. NICOWater(TM) has been formulated to be
used by adult smokers who find themselves in environments where smoking is
prohibited or unwelcome, such as in airplanes or in the presence of children. In
order to relieve the symptoms of tobacco cravings, the user sips NICOWater(TM).
The directions on the bottle state that no more than one bottle of NICOWater(TM)
should be consumed in an hour and no more than eight bottles of NICOWater(TM)
should be consumed in a day. Although NICOWater(TM) is a highly diluted form of
nicotinum (nicotine) and is marketed to adult smokers who possess a tolerance to
nicotine, it is possible to overdose on nicotine and to suffer symptoms such as
nausea, vomiting, dizziness, diarrhea, weakness, palpitations and rapid
heartbeat. To our knowledge no one who has used NICOWater(TM) as directed has
experienced nicotine overdose.

Presently, NICOWater(TM) is the only product we sell.

PRODUCTS IN DEVELOPMENT

In October 2003 we entered into a License Agreement of Intellectual Property
with VMM, LLC. Under this agreement, we licensed the exclusive right, worldwide,
to sell and distribute, under our brand name, a retail and professional
drug-screening test, as well as the exclusive right, worldwide, to sell and
distribute certain other products, including an HIV 1 and 2 professional use
test kit, a retail pregnancy test kit and a mobile professional cardiac
pulmonary test kit. The drug screening test uses a urine sample to detect and
identify the presence of cocaine, marijuana, morphine, heroin and other opiates,
amphetamines and angel dust. The United States Food and Drug Administration has
approved the device for over-the-counter marketing. The term of the agreement is
one year, although so long as we meet certain proposed sales projections, the
agreement will be extended for four additional one year terms. After this
period, if neither party terminates the agreement, it will be extended for an
additional five year term. The term of the agreement will become effective four
months after all required regulatory clearances have been obtained for certain
of the licensed products and after VMM, LLC has obtained a manufacturer to
manufacture the products in accordance with the terms of the agreement, which
requires the manufacturing to be at or below a certain price for the various
products. We are not certain that VMM, LLC will be able to obtain the required
regulatory clearances or if it will be able to find a manufacturer who can
manufacture the products within the parameters of the terms included in the
agreement. We released 3,260,760 shares of our common stock, which had been
placed in escrow, to the licensor in consideration for this agreement.

OUR MARKET

NICOWater(TM) has been developed for adult smokers who suffer from the symptoms
of tobacco cravings and find themselves in situations or environments where
smoking is prohibited or discouraged. Public smoking has been increasingly
restricted by government regulation due to the health risks associated with
second hand smoke. In the United States alone, we believe there are over 47
million smokers, many of whom will be impacted by these regulations or will find
themselves in social situations where they'd like to smoke, but can't.

Although it is our belief that we are not required to do so, we have decided to
limit the marketing of NICOWater(TM) solely to individuals who are 18 years or
older. We require our retailers to verify proof of age. For this reason,
NICOWater(TM) is not sold in vending machines or in any other location where
proof of age is not required.

DISTRIBUTION METHODS

Currently we sell NICOWater(TM) to national pharmacy chains and through major
distributors. We are also promoting NICOWater(TM) to retail chain pharmacies. In
July 2003 we entered into an agreement with Eckerd Drug Stores to sell
NICOWater(TM). Eckerd Drug Stores is a chain of approximately 2,600 stores in 21
states along the eastern seaboard and in the southern portion of the United
States. We anticipate that, in the future, we will also place NICOWater(TM) in
convenience stores. Sales of NICOWater(TM) have begun just recently and, as of
June 30, 2003 we earned only $9,042 in revenues. Since we are in the early
stages of developing our sales, we are not currently dependent on one or a few
major customers.

We advertise NICOWater(TM) in newspapers and on the radio. The product, upon
completion of its manufacture, is shipped in cases containing six 4-pack
carriers to its destination via trucks.

THE EFFECT OF GOVERNMENT REGULATION ON OUR BUSINESS

The FDA regulates homeopathic drugs, however the regulation is significantly
different from non-homeopathic drugs. Because homeopathic products contain
little or no active ingredients, manufacturers are deferred from submitting new
drug applications and their products are exempt from good manufacturing practice
requirements related to expiration dating and from finished product testing for
identity and strength.

However, in order to comply with FDA regulations, homeopathic drugs generally
must satisfy standards of strength, quality and purity that are articulated in
the Homeopathic Pharmacopoeia of the United States. They must also conform with
the FDA's good manufacturing practices for drug products (with the exception of
expiration dating and testing for identity and strength).

We believe that we are currently in compliance with applicable FDA regulations
and we intend to work diligently to assure compliance with current and future
regulations that impact our business. We cannot assure you, however, that future
regulations relating to homeopathic products will not be enacted which might
adversely impact our operations.

LICENSES AND OTHER INTELLECTUAL PROPERTY

On April 7, 2002 we entered into the Agreement for the Assignment of Patent
Rights to U.S. Patent No. 6,268,386 relating to the formulation of nicotine
beverages. The Patent Agreement was effective only upon the execution and
delivery of the assignment of patent. The assignment of patent was executed and
delivered on June 26, 2002. The patent will expire in 17 years. In exchange for
the patent, we issued to Marshall Anlauf Thompson, the inventor and the holder
of the NICO Patent, 133,000 shares of our common stock and agreed to pay a
royalty to the patent holder and related third parties in the amount of $1.20
per case for every case of NICOWater(TM) sold. We agreed to sell a minimum of
500,000 cases of NICOWater(TM) during the first year following the first
distribution of the nicotine based products that utilize Mr. Thompson's patent,
and a minimum of 1,000,000 cases of NICOWater(TM) during each of the following
years. We also agreed to provide sufficient funds and adequate personnel to

market NICOWater(TM), in order to meet the performance goals. If we fail to meet
the performance goals, we could lose the patent. In June 2002, Mr. Thompson
agreed to accept a prepayment of royalties in the amount of $150,000, which we
paid by issuing 399,000 shares of our common stock. We are currently involved in
a dispute with Mr. Thompson as to whether or not we are still entitled to
develop and sell products based on the NICO Patent. This dispute is described in
the section of this prospectus titled "Legal Proceedings".

We are in the process of reviving our application to register the mark, "NICO"
with the United States Patent and Trademark Office. We believe that, as we grow,
the name recognition and image that we develop in our market will significantly
enhance customer response to our product. Accordingly, our trademark is
important to our business.

Other than the foregoing, we have no licenses, franchises or concessions and we
have not entered into labor contracts.

COMPETITION

To our knowledge, NICOWater(TM) is the only product that is manufactured solely
for the purpose of providing nicotine to smokers who are temporarily unable to
smoke. Although we believe that there are 47 million smokers in the United
States, we do not know if they will find our product helpful if they are unable
to smoke, if they will decline to use our product because of the price, or if
our advertising and promotion will be successful in reaching our target market.

COMPLIANCE WITH ENVIRONMENTAL LAWS

Our manufacturing and distribution is outsourced to third parties. To our
knowledge, federal, state or local environmental laws do not effect our
operations and we have not spent any funds to comply with any such laws.

STATUS OF THE LAUNCH OF NICOWATER(TM)

Notwithstanding positive market response to the launch of NICOWater(TM), our
initial product, we have experienced some formidable challenges to our national
product rollout resulting in slower than expected product placement.

Shortly after NICOWater(TM) was first made available in a major retail chain
(Brooks Pharmacy), legislation was introduced in the State of Maine that would
have immediately banned the sale of NICOWater(TM) there. The proposed
legislation has been tabled until the 2004 legislative session, however the
negative publicity which surrounded this event caused Brooks Pharmacy to suspend
its sale of NICOWater(TM) until we make further progress in securing broad
distribution.

the terms of the Patent Agreement. We intend to aggressively defend and assert
our rights under the Patent Agreement.

These issues have slowed certain aspects of the national rollout of our product.
Although we have been successful in opening major regional and national
accounts, we are currently assessing the impact of above mentioned events and
delays in terms of the effect on our initial business plan.

EMPLOYEES

We have 8 full-time employees.

ITEM 2. DESCRIPTION OF PROPERTY

Our office facilities are located at 5655 Lindero Canyon Road, Suite 120,
Westlake Village, California 91362. We lease this 7,200 square foot facility at
market rates. Our current rent is $7,888 per month. The lease provides for a
rent increase in the amount of $0.05 per square foot for the second and third
year of the term. The lease expires on April 30, 2005. We have an option to
renew the lease for an additional three year term. We believe that this space is
sufficient for our needs for the foreseeable future.

LEGAL PROCEEDINGS

On November 15, 2002, Fidelity Mortgage, Inc. filed a lawsuit against us in the
Supreme Court of the State of New York alleging that we breached a sublease.
Fidelity is seeking $156,400 in damages plus interest, costs and attorneys'
fees. We are defending this litigation.

We are currently involved in a dispute with Marshall Anlauf Thompson, the former
owner of the NICO Patent, and Platinum Products, LLC regarding our rights to the
NICO Patent. In May 2003 Mr. Thompson notified us of our alleged failure to meet
the performance goals required by the Patent Agreement. Platinum Products, LLC
alleges that it has obtained the rights to use the NICO Patent. On June 4, 2003
we initiated an arbitration proceeding with the American Arbitration
Association, as required by the Patent Agreement, to seek a finding that no
breach has occurred and that we have retained our rights to the NICO Patent.

In October 2003 Thomas A. Slamecka and Michael T. Pieniazek filed a lawsuit
against us for specific performance in the Circuit Court of Cook County,
Illinois. The plaintiffs allege that we asked them to provide management
consulting and advisory services to us in exchange for warrants to purchase
2,000,000 shares of our common stock. The plaintiffs allege that the services
were provided, and have asked the Court to order us to issue the common stock.
Other than attorneys fees and costs, the plaintiffs have not asked for monetary
damages. We are defending this action.

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

Effective January 9, 2003, we completed a merger with Quicktest 5, Inc. In
conjunction with the merger, our Board of Directors changed our fiscal year from
December 31st to June 30th.

In May 2003 we began the distribution and sale of our first product,
NICOWater(TM). NICOWater(TM) is an odorless and tasteless water based
homeopathic nicotinum (nicotine) adult product designed to relieve the symptoms
of self-diagnosed tobacco cravings. NICOWater(TM) is marketed and sold to adults
over the age of 18.

Since our acquisition of the NICO Patent, we have focused our efforts on
manufacturing, marketing and selling this product. We have recently acquired
licenses for certain intellectual property rights and the associated research
and development efforts and FDA approvals relating to an HIV 1 and 2
professional use test kit, a retail and professional "in vitro" drug test kit
and a mobile professional cardiac pulmonary test kit.

In addition, an allegation was made by the original patent inventor, Marshall
Anlauf Thompson, and his associates that we are in default of the Patent
Agreement. In response we initiated an arbitration proceeding in accordance with
the terms of the Patent Agreement. We intend to aggressively defend and assert
our rights under the Patent Agreement.

GENERAL OVERVIEW

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our audited balance sheet as of
June 30, 2003 and the audited statements of operations and cash flows for the
fiscal years ended June 30, 2003 and 2002, and the related notes thereto. These
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America. These principles require management to
make certain estimates, judgments and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates based on historical experience and 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.

The important facts and factors described in this discussion and elsewhere in
this document sometimes have effected, and in the future could effect, our
actual results, and could cause our actual results to differ materially from
those expressed in any forward-looking statements made by us or on our behalf.

As reported in the Independent Auditors' Report on our June 30, 2003 financial
statements, we have incurred losses from operations and we have not generated
significant net sales revenue.

Our success is dependent upon numerous factors, including the successful outcome
of the arbitration proceeding relating to our ownership of the NICO Patent,
successful development of effective marketing strategies so that customers
understand our product and its uses, the availability of cash when and as we
need it until the revenues we earn sustain our operations, and the agreement of
our executive officers to continue providing services to us. In August 2003 we
obtained additional capital to launch our product by issuing 6% convertible
debentures with a face value of $2 million. We received $1 million in gross
proceeds from this financing in August 2003, in October 2003 we received an
advance of $200,000 against the additional $1 million in gross proceeds and we
will receive the remaining balance in gross proceeds, $800,000, following the
effective date of this registration statement. In addition, we are currently
negotiating a credit facility for accounts receivable financing. However, we
cannot assure you that we will obtain the credit facility. Furthermore, even if
we received all of these proceeds, we cannot assure you that the proceeds will
generate sufficient cash to satisfy our need for all the additional capital
necessary for us to become profitable. If we require more financing, we cannot
assure you that it will be available to us on satisfactory terms or at all.

These factors, among others, raise substantial doubt about our ability to
continue as a going concern. The accompanying consolidated financial statements
do not include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of these uncertainties.

CRITICAL ACCOUNTING POLICIES

In preparing our financial statements, we make estimates, assumptions and
judgments that can have a significant effect on our revenues, income or loss
from operations, and net income or net loss, as well as on the value of certain
assets on our balance sheet. We believe that there are several accounting
policies that are critical to an understanding of our historical and future
performance as these policies affect the reported amounts of revenues, expenses,
and significant estimates and judgments applied by management. While there are a
number of accounting policies, methods and estimates affecting our financial
statements, the following policies are considered critical. In addition, you
should refer to Note 1 to the accompanying consolidated financial statements for
further discussion of our accounting policies.

STOCK-BASED COMPENSATION. We account for non-employee stock-based compensation
under Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
For Stock-Based Compensation." SFAS No. 123 defines a fair value based method of
accounting for stock-based compensation. However, SFAS No. 123 allows an entity
to continue to measure compensation cost related to stock and stock options
issued to employees using the intrinsic method of accounting prescribed by
Accounting Principles Board Opinion No. 25, as amended ("APB 25"), "Accounting
for Stock Issued to Employees." Under APB 25, compensation cost, if any, is
recognized over the respective vesting period based on the difference, on the
date of grant, between the fair value of our common stock and the grant price.
Entities electing to remain with the accounting method of APB 25 must make pro
forma disclosures of net income and earnings per share, as if the fair value
method of accounting defined in SFAS No. 123 had been applied. We have elected
to account for its stock-based compensation to employees under APB 25.

REVENUE RECOGNITION. We recognize revenue at the time of shipment of our
products to customers. We were in our initial stage of selling our new product
line to customers or distributors as of June 30, 2003. Pursuant to Staff
Accounting Bulletin No. 101, we deferred sales and the related costs to certain
distributors as the payment terms are contingent upon customer sell-through of
product, and therefore collectibility is not reasonably assured.

RESULTS OF OPERATIONS

During the fiscal year ended June 30, 2003 we had revenues of $9,042 as compared
to no revenues during the fiscal year ended June 30, 2002. Revenues were earned
during the fiscal year ended June 30, 2003 due to the introduction to the market
of our product, NICOWater(TM). Cost of sales for the fiscal year ended June 30,
2003 was $3,708 as compared to no cost of sales for the fiscal year ended June
30, 2002. Cost of sales included the purchase of nicotinum, four pack carriers,
labels, costs related to bottling the product and costs related to repacking.
General and administrative expenses for the fiscal year ended June 30, 2003
totaled $6,138,072 as compared to general and administrative expenses of
$3,775,560 for the fiscal year ended June 30, 2002. The increase in general and
administrative expense for the fiscal year ended June 30, 2003 was due primarily
to

o the increase in consulting fees totaling approximately $1,382,000, which
included establishing protocols for developing and marketing our current
homeopathic liquid nicotine produce and future products that may be derived
therefrom;

o the increase in legal and professional fees totaling approximately $417,000
which were associated with completing the merger and making the appropriate
filings under the Securities Act of 1934;

o the increase in salaries totaling approximately $328,000 resulting from the
start-up of our operations; and

o an increase of approximately $137,800 attributable to increases in expenses
related to investor relations support, insurance and rent expenses.

Other income (expense) for the fiscal year ended June 30, 2003 was made up of
$106,407 in amortization of debt discount, $151,382 of interest and $19,689 of
other expense representing losses on settlement of accounts payable.

As a result of the above, we incurred a net loss of $6,410,216 for the fiscal
year ended June 30, 2003 as compared to a net loss of $3,775,560 for the fiscal
year ended June 30, 2002. Our net loss for the fiscal year ended June 30, 2002
was attributable to our development stage activities.

LIQUIDITY AND CAPITAL RESOURCES

Our capital requirements, particularly as they relate to the introduction and
launch of our product and our continued testing and improvement of our product,
have been and will continue to be significant. Our future cash requirements and
the adequacy of available funds will depend on many factors, including the pace
at which we are able to launch NICOWater(TM), whether or not a market develops
for NICOWater(TM) and, if a market develops, the pace at which it develops.

While we have recently begun to earn revenues from the sale of NICOWater(TM),
the revenues we have generated to date are not sufficient to fund our
operations. In August 2003 we obtained additional capital to roll-out our
product by issuing 6% convertible debentures with a face value of $2 million. We
received gross proceeds of $1 million from this financing in August 2003, in
October 2003 we received an advance of $200,000 from the additional $1 million
in gross proceeds and we will receive the remaining $800,000 in gross proceeds
following the effective date of this registration statement. In order to obtain
the advance of $200,000 in October 2003, we reduced the price of the Debenture
Warrants from $0.075 to $0.01 and we executed a Security Agreement in favor of
the holders of our 6% Convertible Debentures. Pursuant to the Security
Agreement, all of our assets have been pledged to these security holders. We are
currently negotiating a credit facility for accounts receivable financing.
However, we cannot assure you that we will obtain the credit facility.
Furthermore, even if we received all of these proceeds, we cannot assure you
that they will provide all the additional capital necessary for us to become
profitable. During the next 12 months, if we fail to earn revenues in an amount
sufficient to fund our operations and we do not obtain the credit facility, we
intend to raise capital through an offering of our securities or from additional
loans. We cannot guarantee that financing will be available to us, on acceptable
terms or at all. If we do not earn revenues sufficient to support our business
and we fail to obtain other financing, either through an offering of our
securities or by obtaining additional loans, we may be unable to maintain our
operations.

As of June 30, 2003 we had $67,316 in cash, $95,226 in accounts receivable (or
$9,042 after considering deferred revenue), and inventory valued at $88,563
consisting primarily of finished products. During the fiscal year ended June 30,
2003 we incurred $428,957 in non-cash prepaid expense related to the issuance of
shares of our common stock for consulting services that will be rendered in
subsequent periods and $3,580,022 in non-cash expense related to the issuance of
shares of our common stock for medical, administrative, executive, marketing and
product development consulting services. During the fiscal year ended June 30,
2003, we paid our consultants with our common stock in order to conserve cash.
Our liabilities at June 30, 2003 included accounts payable and

accrued expenses of $770,333, a liability in the amount of $156,400 for unpaid
lease payments on a lease we assumed from Moneyzone, and notes payable of
$282,500. The amount of $67,500 in notes payable was due to parties related to
us.

We had an operating loss of $6,132,738 for the fiscal year ended June 30, 2003
as opposed to an operating loss of $3,775,560 for the fiscal year ended June 30,
2002. The increase in operating loss is attributable to the costs associated
with the development of our business following the merger. We had a net loss of
$6,410,216 for the fiscal year ended June 30, 2003.

Net cash used in operating activities was $1,386,824. The primary use of cash
for the fiscal year ended June 30, 2003 was to fund our net loss, offset by
$106,407 for amortization of debt discount and non-cash interest expense,
$572,352 representing the fair market value of options and warrants issued
during the fiscal year and $3,580,022 for common stock and options issued to
consultants and employees for services rendered. At this time, to conserve cash,
we outsource the manufacture and distribution of our product and, during the
last fiscal year, we paid some consultant and employee salaries with our common
stock. During the next 12 months, if we cannot generate sufficient funds to
operate our business from product sales, we may be required to sell additional
debt or equity securities or borrow funds from related parties. We cannot be
certain that we will be successful in obtaining financing if we need it.

Cash flows from investing activities for the fiscal year ended June 30, 2003
consisted of $60,000 representing the collection of a note receivable while
$8,451 was used in the purchase of property and equipment for net cash provided
by investing activities of $51,549. Cash flows from investing activities for the
year ended June 30, 2002 consisted of $9,427 spent on the purchase of property
and equipment.

Net cash provided by financing activities for the fiscal year ended June 30,
2003 included proceeds from the sale of common stock in the amount of $331,000,
proceeds from notes payable to related parties in the amount of $100,000,
proceeds from notes payable to unrelated parties in the amount of $385,000, a
capital contribution in the amount of $300,000 from Moneyzone which was made on
the effective date of the merger, and proceeds from the exercise of options in
the amount of $270,200. We also made payments on notes payable in the amount of
$46,000, resulting in net cash provided by financing activities for the fiscal
year ended June 30, 2003 in the amount of $1,340,200. During the fiscal year
ended June 30, 2002, net cash provided by financing activities totaled $199,750
and resulted from proceeds from the sale of our common stock.

Due to the very specific and unusual nature of NICOWater(TM), its manufacture
and sale is an unproven business model that may not be successful and will
ultimately depend on demand for the product. At this time it is impossible for
us to predict the degree to which demand for our product will evolve or whether
any potential market will be large enough to provide any meaningful revenue or
profit for us.

NEW ACCOUNTING STANDARDS

In November 2002, the Financial Accounting Standards Board issued Interpretation
No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Guarantees of Indebtedness of Others," ("FIN 45"). FIN 45 requires us
to recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in the issuance of the guarantee. FIN 45 is effective
for guarantees issued or modified after December 31, 2002. The disclosure
requirements effective for the year ending December 31, 2002 expand the
disclosures required by a guarantor about its obligations under a guarantee. The
adoption of the disclosure requirements of this statement did not impact our
financial position, results of operations or cash flows.

In December 2002, Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure," ("SFAS
148") was issued. SFAS 148 amends Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123") to provide
alternative methods of transition for a voluntary change to the fair value
method of accounting for stock-based employee compensation. In addition, SFAS
148 amends the disclosure requirements of SFAS 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on the reported results. The provisions of SFAS 148 are effective for
financial statements for fiscal years ending after December 15, 2002 and interim
periods beginning after December 15, 2002. The adoption of the disclosure
requirements of this statement did not impact our financial position, results of
operations or cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). SFAS No. 150 is effective
for financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. It is to be implemented by reporting the cumulative effect
of a change in an accounting principle for financial instruments created before
the issuance date of SFAS No. 150 and still existing at the beginning of the
interim period of adoption. Restatement is not permitted. We do not expect the
adoption of SFAS No. 150 to have a material impact upon our financial position,
cash flows or results of operations.

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
QT 5, Inc.

We have audited the accompanying consolidated balance sheet of QT 5, Inc. (the
"Company") as of June 30, 2003, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for each of the years
in the two-year period then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
June 30, 2003, and the results of its operations and its cash flows for each of
the years in the two-year period then ended, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. During the year ended June 30,
2003, the Company incurred a net loss of $6,410,216, with only $9,042 of
revenue. The Company also had an accumulated deficit of $10,185,776 and negative
working capital of $736,273, with only $67,316 of cash at June 30, 2003. In
addition, the Company is in arbitration with the patent holder of its only
actively marketed product to resolve various allegations made by the patent
holder against the Company. These factors, among others, as discussed in Note 1
to the consolidated financial statements, raise substantial doubt about the
Company's ability to continue as a going concern. Successful completion of the
Company's transition to the attainment of profitable operations is dependent
upon its obtaining adequate financing to fulfill its development activities and
achieving a level of sales adequate to support the Company's cost structure.
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.

CORBIN & COMPANY, LLP
Irvine, California
August 19, 2003, except for Note 11, as to which the date is September 5, 2003

QT 5, INC.

CONSOLIDATED BALANCE SHEET

ASSETS JUNE 30, 2003
----------------

Current assets:
Cash $ 67,316
Accounts receivable 95,226
Inventories 88,563
Deferred costs 21,551
Prepaid expenses 157,888
Notes receivable 139,500
----------------

Total current assets 570,044

Property and equipment, net of accumulated depreciation of $5,507 29,871
Patent, net of accumulated amortization of $3,676 46,324
Other assets 8,107
----------------

$ 654,346

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable and accrued expenses $ 770,333
Lease liability 156,400
Notes payable 215,000
Notes payable to related parties 67,500
Deferred revenue 86,184
Deferred rent expense 10,900
----------------

Total current liabilities 1,306,317
----------------

Commitments and contingencies

Stockholders' deficit:
Common stock, $0.15 par value; 100,000,000 shares authorized;
40,821,552 shares issued and outstanding 6,123,233
Additional paid-in capital 3,839,529
Prepaid consulting expense (428,957)
Accumulated deficit (10,185,776)
----------------

Total stockholders' deficit (651,971)
----------------

$ 654,346

See independent auditors' report and accompanying notes to financial statements

F-2

QT 5, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED FOR THE YEAR ENDED
JUNE 30, 2003 JUNE 30, 2002
-------------------- ---------------------

Revenue $ 9,042 $ -

Costs and expenses:
Cost of sales 3,708 -
General and administrative 6,138,072 3,775,560
--------------- ----------------

Operating loss (6,132,738) (3,775,560)

Other income (expense):
Amortization of debt discount (106,407) -
Interest (151,382) -
Other, net (19,689) -
---------------- ----------------

Net loss $ (6,410,216) $ (3,775,560)
=============== ================

Net loss available to common stockholders per common share:
Basic and diluted $ (0.26) $ (0.60)
============== ===============

Weighted average shares outstanding:
Basic and diluted 24,828,564 6,257,985
=============== ================

See independent auditors' report and accompanying notes to financial statements

F-3

QT 5, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2003 AND 2002

Additional Pre-paid
Common Stock Paid-in Consulting Accumulated
Shares Amount Capital Expense Deficit Total
------ ------ ------- ------- ------- -----

Balance July 1, 2001 7,847,000 $1,177,050 $(1,177,050) $ --- $ --- $ ---

Issuance of common stock to founders for no
consideration 133,000 19,950 (19,950) --- --- ---

Issuance of common stock for cash 531,335 79,700 120,050 --- --- 199,750

Issuance of common stock for services 9,312,660 1,396,899 2,104,101 --- --- 3,501,000

Issuance of common stock for patent 133,000 19,950 30,050 --- --- 50,000

Issuance of common stock for pre-paid royalties 399,000 59,850 90,150 --- --- 150,000

Net loss --- --- --- --- (3,775,560) (3,775,560)
---------- -------- ---------- ---------- ------------ ------------

Balance at June 30, 2002 18,355,995 2,753,399 1,147,351 --- (3,775,560) 125,190

Issuance of shares to Moneyzone in
recapitalization of the Company 3,000,000 450,000 (150,000) --- --- 300,000

Issuance of common stock for services 7,201,085 1,080,163 2,853,690 (428,957) --- 3,504,896

Issuance of common stock as additional
interest expense on notes payable 308,116 46,217 60,190 --- --- 106,407

Shares issued but held in escrow pending
negotiation of transaction 3,660,160 549,024 (549,024) --- --- ---

Issuance of common stock for exercise of
options 3,394,731 509,210 (224,010) --- --- 285,200

Issuance of common stock for cash 2,200,854 330,128 872 --- --- 331,000

Shares committed to be issued to employees for
services 300,000 45,000 30,126 --- --- 75,126

Issuance of common stock for conversion of
convertible promissory note 1,720,000 258,000 (86,000) --- --- 172,000

Issuance of common stock for settlement of
accounts payable 680,610 102,092 34,342 --- --- 136,434

Estimated fair market value of options and warrants
Granted to consultants for services --- --- 572,352 --- --- 572,352

Estimated value of beneficial conversion
feature on convertible promissory note --- --- 149,640 --- --- 149,640

Net loss --- --- --- --- (6,410,216) (6,410,216)
---------- ---------- ---------- ---------- ------------ ------------

Balance June 30, 2003 40,821,551 6,123,233 $3,839,529 $ (428,957) $(10,185,776) $ (651,971)
========== ========== ========== ========== ============ ============

See independent auditors' report and accompanying notes to financial statements

F-4

QT 5, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED FOR THE YEAR ENDED
JUNE 30, 2003 JUNE 30, 2002
-------------------- ---------------------

Cash flows from operating activities:
Net loss $ (6,410,216) $ (3,775,560)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 7,779 1,404
Amortization of debt discount and non-cash interest
expense 106,407 -
Loss on issuance of shares for settlement of accounts
payable 23,689 -
Fair market value of options and warrants issued 572,352 -
Gain on extinguishment of debt (2,000) -
Stocks and options issued for services 3,580,022 3,501,000
Imputed interest expense on convertible debentures 149,640 -
Changes in operating assets and liabilities:
Accounts receivable (95,226) -
Inventories (88,563) -
Deferred costs (21,551) -
Prepaid expenses (7,888) -
Other assets - (8,107)
Accounts payable and accrued expenses 712,848 142,130
Deferred revenue 86,184 -
Deferred rent expense (301) 11,201
--------------- ----------------

Net cash used in operating activities (1,386,824) (127,932)
--------------- ----------------

Cash flows from investing activities:
Collection on notes receivable 60,000 -
Purchases of property and equipment (8,451) (9,427)
--------------- ----------------

Net cash provided by (used in) investing activities 51,549 (9,427)
--------------- ----------------

Cash flows from financing activities:
Proceeds from sale of stock 331,000 199,750
Proceeds from notes payable to related parties 100,000 -
Proceeds from notes payable 385,000 -
Payments on notes payable (46,000) -
Capital contribution 300,000 -
Proceeds from exercise of options 270,200 -
--------------- ----------------

Net cash provided by financing activities 1,340,200 199,750
--------------- ----------------

F-5

QT 5, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued

FOR THE YEAR ENDED FOR THE YEAR ENDED
JUNE 30, 2003 JUNE 30, 2002
-------------------- ---------------------

Net increase in cash 4,925 62,391

Cash, beginning of year 62,391 -
--------------- ----------------

Cash, end of year $ 67,316 $ 62,391
=============== ================

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Interest $ - $ -
=============== ================
Income taxes $ - $ -
=============== ================

Promissory notes receivable entered into as a
consideration for the assumption of lease liability
and other accounts payable $ 199,500 $ -
=============== ===============

Common stock issued for prepaid consulting services $ 428,957 $ -
=============== ===============

Furniture purchased under a note payable to related
party $ 17,500 $ -
=============== ===============

Common stock issued to third parties for patent and
prepaid royalties valued at $50,000 and $150,000,
respectively $ - $ 200,000
=============== ===============

Common stock issued for settlement of accounts
payable $ 112,745 $ -
=============== ================

Exercise of options for reduction of accounts payable $ 15,000 $ -
=============== ===============

Conversion of related party convertible
promissory note to 1,720,000 shares of common stock $ 172,000 $ -
=============== ===============

Notes payable directly refinanced by related party
lender $ 122,000 $ -
=============== ===============

See independent auditors' report and accompanying notes to financial statements

F-6

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

BACKGROUND AND ORGANIZATION

On April 7, 2002, the Company entered into an Agreement for the Assignment of
Patent Rights to U.S. Patent No. 6,268,386 (the "Agreement") relating to the
formulation of nicotine beverages (the "Nico Patent"). The Agreement was
effective only upon the execution and delivery of the assignment of patent. The
assignment of patent was executed and delivered on June 26, 2002. The Company's
first nicotine water-based product is NICOWater(TM). In acquiring the patent,
the Company re-allocated its resources from focusing on the licensing and joint
developing of medical testing devices and other pharmaceutical products to
successfully launching its nicotine product line. In May 2003, the Company
commenced shipping NICOWater(TM), its water-based Homeopathic Nicotinum
(nicotine) product, designed to relieve the symptoms of tobacco cravings. As a
result, the Company is no longer considered a development stage enterprise as
defined in Statement of Financial Accounting Standards ("SFAS") No. 7,
"Accounting and Reporting by Development Stage Enterprises."

The Company's future plans include continuing its efforts to license small
medical device(s) and pharmaceutical products together with its continued
development for the professional and retail consumer markets. Other than its
nicotine-based line of products, the Company has not currently developed nor
does it have the definitive rights to market any other products; however, the
Company is in negotiations to acquire a license for certain intellectual
property rights and related associated research and development efforts and FDA
approvals on an H.I.V. test kit, in-vitro drug test kit and a cardiac pulmonary
test kit.

Effective January 9, 2003, pursuant to the terms of the Agreement and Plan of
Reorganization (the "Merger Agreement") between Moneyzone.com, Inc.
("Moneyzone"), and QuickTest 5, Inc. ("Quicktest") (the "Merger"), Quicktest
merged with and into Moneyzone, the separate corporate existence of Quicktest
ceased, and Moneyzone continued as the surviving entity and changed its name to
"QT 5, Inc." and its symbol on the Over the Counter Bulletin Board to "QTFV."

The original stockholders of Moneyzone retained 3,000,000 shares of common
stock. In connection with the Merger, the Company issued an aggregate 25,000,000
shares of its common stock to Quicktest stockholders resulting in the Company
having 28,000,000 shares of common stock issued and outstanding immediately
following the Merger.

F-7

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, CONTINUED

As the Quicktest shareholders retained control of the combined entity after the
Merger was completed, this transaction was accounted for as a "reverse
acquisition." Under reverse acquisition accounting, Quicktest is considered the
accounting acquirer and Moneyzone is considered the accounting acquiree; thus,
the 3,000,000 shares of previously outstanding common stock of Moneyzone was
accounted for as an issuance of shares in a recapitalization of the Company and
valued at $300,000, representing monies advanced to Quicktest by Moneyzone prior
to the Merger that were contributed to the Company upon consummation of the
merger. In addition, the historical financial statements of Quicktest became
those of the Company. The source of consideration used by the stockholders of
Quicktest for the Merger were shares of common stock of Quicktest owned or held
beneficially prior to the Merger that were acquired by the Company upon
consummation of the Merger in exchange for the same number of similar securities
issued by the Company.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of QT 5,
Inc. and its wholly owned subsidiary. All significant intercompany transactions
and balances have been eliminated in consolidation.

GOING CONCERN

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The
Company incurred a net loss of $6,410,216, with only $9,042 of revenue during
the year ended June 30, 2003. The Company also had an accumulated deficit of
$10,185,776 and negative working capital of $736,273, with only $67,316 in cash
at June 30, 2003. In addition, the Company is in arbitration with the patent
holder of its only actively marketed product to resolve various allegations made
by the patent holder against the Company (see Note 7). Management recognizes
that the Company must obtain additional funding for the eventual achievement of
sustained profitable operations. The Company's success is dependent upon
numerous items, including the successful development of effective marketing
strategies to customers in a competitive market coupled with faster service and
a variety of options. The Company's new product line entered the market in May
2003 and management believes that this product will have a significant effect on
future profitability. In August 2003, management successfully obtained
additional capital through a $2 million sale and issuance of 6% convertible
debentures, from which the Company received initial gross proceeds of $1 million
with receipt of the second $1 million scheduled to occur following the effective
date of a registration statement to be filed with the Securities and Exchange
Commission

F-8

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

covering the common stock underlying the debentures (see Note 11). In addition,
the Company has received a proposal for a credit facility for accounts
receivable financing and anticipates a definitive agreement in the near term.
However, no assurance can be given that the above mentioned credit facility and
additional $1 million convertible debenture funding will be consummated as
contemplated or will generate sufficient cash to satisfy the Company's need for
additional capital or that other debt or equity financing will be available to
the Company on satisfactory terms.

These factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern. The accompanying consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result from the outcome of these uncertainties.

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 respective reporting period. Actual results could differ from those
estimates. Significant estimates made by management are, among others, the
realization of prepaid royalties and long-lived assets, collectibility of
receivables, and the valuation allowance on deferred tax assets.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of the Company's financial instruments as of June 30, 2003,
including cash, accounts receivable, notes receivable, accounts payable and
accrued expenses, and notes payable, approximate their respective fair values
due to their short maturities. The fair value of notes payable to related
parties is not determinable as these transactions are with related parties.

CONCENTRATION OF CREDIT RISK

The financial instrument which potentially subjects the Company to concentration
of credit risk is cash. The Company maintains cash balances at certain high
quality financial institutions, and at times such balances may exceed the
Federal Deposit Insurance Corporation $100,000 insurance limit. As of June 30,
2003, there was approximately $1,000 of uninsured cash balances.

F-9

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, CONTINUED

ACCOUNTS RECEIVABLE

The Company extends credit to its customers and performs ongoing credit
evaluations of such customers. The Company does not obtain collateral to secure
its accounts receivable. At June 30, 2003, the Company recorded $86,184 of
accounts receivable as deferred revenue, as the payment terms are contingent
upon customer sell-through of product and therefore collectibility is not
reasonably assured.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the related assets,
which range from three to seven years. Repairs and maintenance are charged to
expense as incurred while significant improvements are capitalized. Upon
retirement or other disposition of property and equipment, the accounts are
relieved of the cost and the related accumulated depreciation, with any
resulting gain or loss included in the consolidated statements of operations.

PATENT

Patent is recorded at the fair value of the stock issued to acquire the patent
(see Note 6) and is amortized using the straight-line method over its estimated
remaining useful life of 17 years. Amortization expense for the years ended June
30, 2003 and 2002 was $2,941 and $735, respectively. Legal fees and other costs
incurred in protecting patents are expensed as incurred.

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets and certain identifiable intangibles to be held and used by an
entity are reviewed by the management of the Company for impairment whenever
events or changes in circumstances indicate that the carrying value of an asset
may not be recoverable. As of June 30, 2003, management of the Company believes
that no impairment has been indicated. There can be no assurances, however, that
market conditions will not change or demand for the Company's products will
develop which could result in impairment of long-lived assets in the future.

CONVERSION AND STOCK SPLIT

On January 9, 2003, the Company's stockholders approved an increase in the
number of authorized common stock shares to 100,000,000. Also, pursuant to the
terms of the Merger, the shares of Quicktest's common stock were converted into
1.33 shares of Moneyzone's common stock.

F-10

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, CONTINUED

All references in the consolidated financial statements and the accompanying
notes referring to common shares, share prices, per share amounts, and stock
plans have been adjusted to give retroactive effect to a conversion into 1.33
shares of Moneyzone's common stock.

REVENUE RECOGNITION

The Company recognizes revenue at the time of shipment of its products to
customers. The Company was in its initial stage of selling the new product line
to customers or distributors as of June 30, 2003. Pursuant to Staff Accounting
Bulletin No. 101, the Company deferred $86,184 of its sales and the related
costs of $21,551 to certain distributors as the payment terms are contingent
upon customer sell-through of product and therefore collectibility is not
reasonably assured.

ADVERTISING

The Company expenses the cost of advertising when incurred as general and
administrative expense. Advertising expense was approximately $72,000 and
$70,000 for the years ended June 30, 2003 and 2002, respectively, and is
included in general and administrative expenses in the accompanying consolidated
statements of operations.

STOCK-BASED COMPENSATION

The Company uses the intrinsic value method of accounting for stock-based
compensation to employees in accordance with Accounting Principles Board Opinion
("APB") No. 25, "Accounting for Stock Issued to Employees." The Company accounts
for non-employee stock-based compensation under SFAS No. 123, "Accounting for
Stock-Based Compensation." At June 30, 2003, the Company has two stock-based
employee compensation plans, which are described more fully in Note 6. During
the year ended June 30, 2003 and 2002, $0 and $0, respectively, of compensation
expense was recognized in the accompanying consolidated statements of operations
for options issued to employees pursuant to APB 25, as all options granted in
fiscal 2003 under those plans had exercise prices equal to the market value of
the underlying common stock on the date of grant. The following table
illustrates the effect on net loss and loss per share if the Company had applied
the fair value recognition provisions of SFAS No. 123, to stock-based
compensation:

F-11

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, CONTINUED

YEAR ENDED JUNE 30,
----------------------------------------
2003 2002
---------------- ----------------

Net loss as reported $ (6,410,216) $ (3,775,560)

Deduct:
Total stock-based employee compensation
expense under APB 25 0 0

Add:
Total stock-based employee compensation
under fair value based method for all
awards, net of related tax effects (268,820) 0
---------------- ----------------

Pro forma net loss $ (6,679,036) $ (3,775,560)
=============== ================

Basic and diluted loss per share - as reported $ (0.26) $ (0.60)
=============== ===============
Basic and diluted loss per share - pro forma $ (0.27) $ (0.60)
=============== ===============

INCOME TAXES

The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement carrying amounts and tax bases of assets and liabilities at each
period end based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable income. A
valuation allowance is provided for significant deferred tax assets when it is
more likely than not that such assets will not be recovered.

LOSS PER SHARE

Basic loss per share is computed by dividing loss available to common
stockholders by the weighted-average number of common shares outstanding.
Diluted loss per share is computed similar to basic loss 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. All potentially dilutive
shares, 56,471 and 0 as of June 30, 2003 and 2002, respectively, have been
excluded from dilutive loss per share, as their effect would be anti-dilutive
for fiscal 2003 and 2002.

F-12

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, CONTINUED

COMPREHENSIVE INCOME

Comprehensive income is not presented in the Company's consolidated financial
statements since the Company did not have any items of comprehensive income in
any period presented.

SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

As the Company operates in one segment, the Company has not made segment
disclosures in the accompanying consolidated financial statements.

NEW ACCOUNTING PRONOUNCEMENTS

In November 2002, the Financial Accountings Standards Board ("FASB") issued
Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others." FIN 45 elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under certain
guarantees that it has issued. It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The initial recognition and
initial measurement provisions of FIN 45 are effective for financial statements
of interim or annual periods ending after December 15, 2002. The Company adopted
FIN 45 in fiscal 2003 and there was no effect on its financial statements.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123 to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The transition guidance and annual disclosure provisions of SFAS No.
148 are effective for financial statements issued for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial
reports containing financial statements for interim periods beginning after
December 15, 2002. The Company has applied the disclosure provisions in SFAS No.
148 in its consolidated financial statements and the accompanying notes.

F-13

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, CONTINUED

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). SFAS No. 150 is effective
for financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. It is to be implemented by reporting the cumulative effect
of a change in an accounting principle for financial instruments created before
the issuance date of SFAS No. 150 and still existing at the beginning of the
interim period of adoption. Restatement is not permitted. The Company does not
expect the adoption of SFAS No. 150 to have a material impact upon its financial
position, cash flows or results of operations.

NOTE 2 - NOTES RECEIVABLE

On January 1, 2003, the Company entered into promissory notes receivable in the
total amount of $199,500 with two former stockholders of Moneyzone. These notes
accrue interest at a rate of 4% per annum and are payable on January 1, 2004.
The notes were entered into as consideration for a contingent liability and
assumed defense costs relating to Moneyzone's lease liability resulting from
abandoned office space (see Note 7) and other remaining accounts payable of
Moneyzone assumed in the Merger (see Note 1). Pursuant to the terms of the
notes, the amount of the notes shall be automatically adjusted to the amount of
actual liability and defense costs incurred by the Company related to the
litigation, and shall also be reduced by any amounts of Moneyzone's outstanding
accounts payable which the Company does not actually pay within one year or
which are forgiven or negotiated to lower amounts. These notes are secured by
399,000 shares of the Company's common stock owned by former stockholders.
During the year ended June 30, 2003, the Company received $60,000 advance
payment on the promissory notes receivable, resulting in the remaining notes
receivable balance of $139,500 as of June 30, 2003.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following at June 30, 2003:

Furniture and fixtures $ 19,307
Computer equipment and software 16,071
Less: accumulated depreciation (5,507)
---------------

$ 29,871
===============

F-14

NOTE 4 - PATENT AND ROYALTY FEE

On April 7, 2002, the Company entered into the Agreement relating to the
formulation of nicotine beverages (see Note 1). The Agreement was effective only
upon the execution and delivery of the assignment of patent. The assignment of
patent was executed and delivered on June 26, 2002. In consideration thereof,
the Company issued 133,000 shares of its common stock valued at $50,000 (or
$0.376 per share, which was management's estimate of the fair market value of
its common stock on the date the patent was assigned). The cost of the patent is
being amortized over the patent's remaining useful life of 17 years. In
addition, the Company agreed to pay the original patent holder royalties of
$1.20 per case, quarterly, for every case sold (consisting of 24 bottles per
case) of the Company's products which utilize the patent, for the remaining life
of the patent. The royalty payments will begin on the first day of the calendar
quarter commencing at such time as the Company makes a first distribution. The
Company has agreed to the following performance goals: (1) during the first year
following the first distribution, the Company will sell a minimum of 500,000
cases of the patented product, and (2) during any year thereafter for the
duration of this Agreement, the Company will sell a minimum of 1,000,000 cases
of the patented product each year. In June 2002, the Company prepaid royalties
through the issuance of 399,000 shares of its stock valued at $150,000 (or
$0.376 per share which was management's estimate of the fair market value of its
common stock on the date the shares were issued) in lieu of meeting the minimum
performance requirement of the first year. This amount will be amortized to
expense at the rate of $1.20 per case sold.

The Company has filed for arbitration to resolve a dispute with the parties of
this Agreement (see Note 7). During the year ended June 30, 2003, the Company
recorded approximately $5,400 of royalty expense in the accompanying
consolidated statements of operations related to this Agreement.

NOTE 5 - NOTES PAYABLE

In October 2002, the Company entered into a non-interest bearing convertible
promissory note with a third party for $150,000. Unless earlier converted by the
lender, the principal was due at the earlier of (1) four months from the
effective date of the Schedule 14C of Moneyzone (but in no event later than
March 31, 2003), or (2) a financing in which the Company receives net proceeds
of $1 million. At the election of the holder, the outstanding principal of the
note was convertible into shares of the Company's common stock at $0.75 per
share (subject to standard adjustments on recapitalization, stock split, etc.).
Pursuant to the terms of the promissory note, the Company issued 99,750 shares
of the common stock valued at $30,000 (which was management's estimate of the
fair market value of its common stock on the date the shares were issued) to the
lender as additional consideration, which was recorded as a discount on the note

F-15

NOTE 5 - NOTES PAYABLE, CONTINUED

and amortized to interest expense ratably through the earliest estimated due
date of the note. In February 2003, the note was amended to extend the maturity
date, unless earlier converted by the lender, to the earlier of (1) April 30,
2003, or (2) a financing in which the Company receives net proceeds of $1
million.

In December 2002 and January 2003, the Company entered into three non-interest
bearing convertible promissory notes with third parties totaling $235,000.
Unless earlier converted by the lenders, the principal was due at the earlier of
(1) April 30, 2003, or (2) a financing in which the Company receives net
proceeds of either $1.5 or $2 million, as defined in the individual notes. At
the election of the holder, the outstanding principal of the note was
convertible into shares of the Company's common stock at $0.75 per share
(subject to standard adjustments on recapitalization, stock split, etc.).
Pursuant to the terms of the promissory note, the Company issued a total of
208,366 shares of the common stock valued at $76,407 (which was management's
estimate of the fair market value of its common stock on the date the shares
were issued) to one of its lenders as additional consideration, which was
recorded as a discount on the notes and amortized to interest expense ratably
through the earliest estimated due date of the note.

During the year ended June 30, 2003 and 2002, the Company recorded interest
expense of $106,407 and $0, respectively, from the amortization of discount on
the above convertible promissory notes. During June 2003, the Company reduced
the principal balance on these convertible promissory notes by a cash payment of
$46,000, a direct refinancing payment from related party lender of $122,000 and
by recording of a gain on extinguishment of debt of $2,000.

All of these convertible promissory notes also contained certain penalty
provisions under a default. In June 2003 the Company entered into a Settlement
Agreement and Mutual General Releases with each of the above referenced note
holders and with the related parties holding a total of $50,000 bridge loan
promissory notes (see Note 8), mutually releasing all parties from any and all
claims arising out of or related to the above referenced notes (the "Previous
Notes"), and executed and delivered new Secured Notes and Security Agreements
(the "New Notes") in the aggregate principal amount of $265,000. The New Notes
supersede the Previous Notes, bearing interest at the rate of 12% per annum with
the entire amount, including principal and accrued interest, due and payable on
December 1, 2003. The New Notes were secured by a pledge and first and second
priority security interest in all of the tangible and intangible assets of the
Company, and included certain non-financial covenants and events of default,
among other items, such as the Company's failure to ship in any calendar month
at least 10,000 cases of NICOWater(TM) and generate gross sales of at least
$280,000 from the sale of NICOWater(TM) in any month.

F-16

NOTE 5 - NOTES PAYABLE, CONTINUED

In August 2003, the Company prepaid the entire principal and accrued interest
due and payable under all the New Notes in the aggregate amount of $270,760 and
has received full collateral releases from the noteholders.

NOTE 6 - STOCKHOLDERS' DEFICIT

common stock

In October 2001, the Company issued 133,000 shares of common stock to various
founders, which were recorded at $0 value as the Company had not commenced
operations.

During the fiscal year ended June 30, 2002, the Company:

(i) sold 531,335 shares of common stock at $0.376 per share for $199,750 in
cash;

(ii) issued 9,312,660 shares of common stock valued at $3,501,000 (or $0.376 per
share, which was the estimated fair market value of the common stock on the date
the services were performed) as payment for consulting services to related
parties and other third parties (see Note 8); and

(iii) issued 133,000 and 399,000 shares of common stock to third parties for
patent and prepaid royalties, respectively, valued at $50,000 and $150,000 (or
$0.376 per share, which was the estimated fair market value of the common stock
on the date the shares were issued), respectively (see Note 4).

On January 9, 2003, the 3,000,000 shares of previously outstanding common stock
of Moneyzone were accounted for as an issuance of shares in a recapitalization
of the Company for $300,000 as part of the Merger (see Note 1).

During the fiscal year ended June 30, 2003, the Company:

(i) issued 2,751,093 shares of common stock for consulting services valued at
$1,034,247 (or $0.376 per share, which was the estimated fair market value of
the common stock on the date the shares were issued) and 2,200,000 restricted
shares of common stock for consulting services valued at $1,571,728 (or $0.71
per share, which was the weighted average fair market value of its common stock
on the dates of issuance), of which $60,959 was recorded as prepaid consulting
expense to be amortized over the respective service periods and $2,545,016 was
recorded as general and administrative expense in the accompanying consolidated
statements of operations;

(ii) issued 308,116 shares as additional interest expense pursuant to the terms
of the convertible promissory notes payable valued at $106,407 as discussed in
Note 5;

F-17

NOTE 6 - STOCKHOLDERS' DEFICIT, CONTINUED

(iii) issued 3,660,160 shares valued at $0 as the shares were issued but held in
escrow pending negotiation of certain transactions;

(iv) issued 1,100,000 shares for consulting services under the 2000 Plan, valued
at $1,118,213, (or $1.02 per share, which was the weighted average fair market
value on the dates of issuance), of which $259,650 was recorded as prepaid
consulting expense to be amortized over the respective service periods and
$858,563 was recorded as general and administrative expense in the accompanying
consolidated statements of operations;

(v) issued 1,149,992 shares for consulting services under the 2003 Plan, valued
at $209,665, (or $0.18 per share, which was the weighted average fair market
value on the dates of issuance), of which $108,348 was recorded as prepaid
consulting expense to be amortized over the respective service periods, and
$214,063 was recorded as general and administrative expense in the accompanying
consolidated statements of operations. In addition, the Company issued 680,610
shares under the 2003 Plan valued at $136,434 (or $0.20 per share, which was the
weighted average fair market value on the dates of issuance) for the settlement
of certain accounts payable totaling $112,745, recording a loss of $23,689 on
the settlement of this accounts payable balance in other income (expense) in the
accompanying consolidated statement of operations;

(vi) issued 3,394,731 shares in connection with the exercise of options for
$270,200 cash and $15,000 as a reduction of accounts payable;

(vii) sold 2,200,854 shares of restricted common stock at a weighted average
price of $0.15 per share and warrants to purchase 1,900,000 shares of common
stock at a weighted average exercise price of $0.58 per share for which the
Company received aggregate net cash proceeds of $331,000;

(viii) committed to issue 300,000 shares of restricted common stock to employees
in connection with their initial employment. The Company recorded salary expense
of $75,126 (or $0.25 per share, which was the weighted average fair market value
of its common stock on the employment agreement dates) in general and
administrative expense in the accompanying consolidated statement of operations;
and

(ix) issued 1,720,000 shares of common stock for the conversion of a $172,000
related party note payable (see Note 8) (or $0.10 per share, which was the
stated conversion price).

Certain common stock purchase agreements with certain investors include a
provision in which if for a period of six months from the purchase of shares the
Company's common stock closing price for 5 consecutive trading days will be
below $0.15 per share, the Company will issue to the investors additional
shares, whereby the number of shares purchased and the additional shares,
multiplied by $0.10 would be equal to the aggregate purchase price paid. For the
year ended June 30, 2003, the aggregate purchase price paid by these investors
totaled $310,000 and no additional shares were required to be issued.

F-18

NOTE 6 - STOCKHOLDERS' DEFICIT, CONTINUED

Stock Options

The Company has a stock option plan (the "2000 Plan"), as amended, that
authorized the issuance of options and shares to acquire up to 2,533,330
registered shares of common stock to officers, employees, directors and
consultants. On February 12, 2003, the Company increased the number of
registered shares reserved for issuance pursuant to the Plan Amendment to
4,233,330 shares. The Plan allows for the issuance of either incentive stock
options (which can only be granted to employees) and non-qualified stock
options, pursuant to Section 422 of the Internal Revenue Code. Options vest at
the discretion of the Board of Directors as determined at the grant date, but no
longer than a ten-year term. Under the Plan, the exercise price shall not be
less than fair market value on the date of grant for the incentive stock
options, and not less than 50% of the fair market value on the date of grant for
non-qualified stock options. The number of options under the Plan available for
grant at June 30, 2003 was 2,655,830.

On April 21, 2003, the Company adopted an incentive equity stock plan (the "2003
Plan") that authorized the issuance of options, right to purchase common stock
and stock bonuses up to 10,000,000 shares, of which 5,000,000 shares were
registered on April 25, 2003. The Plan allows for the issuance of incentive
stock options (which can only be granted to employees), non-qualified stock
options, stock awards, or stock bonuses pursuant to Section 422 of the Internal
Revenue Code. Options vest at the discretion of the Board of Directors as
determined at the grant date, but no longer than a ten-year term. Under the
Plan, the exercise price shall not be less than fair market value on the date of
grant for the incentive stock options, and not less than 85% of the fair market
value on the date of grant for non-qualified stock options. The number of
options under the 2003 Plan available for grant at June 30, 2003 was 5,252,167.

Options to purchase 477,500 shares of the Company's common stock under the 2000
Plan at prices ranging from $0.13 per share to $0.30 per share (below the fair
market value on the date of grant) were issued to consultants during the year
ended June 30, 2003. All of these options were exercised during the year ended
June 30, 2003 for cash of $90,200.

Options to purchase 2,917,231 shares of the Company's common stock under the
2003 Plan at prices ranging from $0.03 per share to $0.22 per share (below the
fair market value on the date of grant) were issued to consultants during the
year ended June 30, 2003. All of these options were exercised during the year
ended June 30, 2003 for cash of $180,000 and reduction of an accounts payable of
$15,000.

The Company has no options outstanding as of June 30, 2003. The general and
administrative expense recognized in the accompanying consolidated statements of
operations pursuant to SFAS No. 123 for the options issued to non-employees was
$362,337 during the year ended June 30, 2003. No options were issued or
outstanding during the year ended June 30, 2002.

F-19

NOTE 6 - STOCKHOLDERS' DEFICIT, CONTINUED

The fair value of each option granted during the year ended June 30, 2003 was
estimated using the Black-Scholes option pricing model on the date of grant
using the following assumptions: (i) no dividend yield, (ii) average volatility
of 167.80 percent (iii) weighted average risk free interest rate of
approximately 1.23 percent, and (iv) average expected life of 1 year.

The Black-Scholes option valuation method was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options.

Warrants

From time to time, the Company issues warrants pursuant to various employment,
consulting and third party agreements.

During the fiscal year ended June 30, 2003, the Company:

(i) issued warrants to purchase 2,560,000 shares of the Company's common stock
at $0.17 per share (the fair market value on the date of grant) to two of its
officers in connection with their employment agreements and recorded $0 of
compensation expense as the warrants had exercise prices equal to the market
value of the underlying common stock on the date of grant;

(ii) issued warrants to purchase 2,060,000 shares of the Company's common stock
at prices ranging from $0.01 per share to $0.17 per share (at or below the fair
market value on the dates of grant) to consultants. 2,000,000 of these warrants
vest immediately and 60,000 of these warrants vest upon the Company's share
price reaching certain fair market values. The Company recorded general and
administrative expense of $210,015 during the year ended June 30, 2003 for these
warrants; and

(iii) issued warrants to purchase 1,900,000 shares of the Company's common stock
to certain third-party investors for $0.58 per share (see "common stock" section
above).

Certain common stock purchase warrant agreements with certain investors include
a right by the Company to call any or all shares of the common stock issued
under warrant agreement from the warrant holder for (i) $2.00 per share for the
first 950,000 shares and (ii) $3.00 per share for the remaining 950,000 shares
through June 9, 2004. This call right can by exercised by the Company only if
the Company's common stock has a closing price above the call price for 7
consecutive trading days prior to execution of the call right.

F-20

NOTE 6 - STOCKHOLDERS' DEFICIT, CONTINUED

No warrants were issued or outstanding during the year ended June 30, 2002.

The following represents a summary of the warrants outstanding for the year
ended June 30, 2003:

WEIGHTED AVERAGE
EXERCISE PRICE
NUMBER OF WARRANTS PER SHARE
-------------------- -----------------

Outstanding at July 1, 2002 - $ -
Granted 6,520,000 0.29
Exercised - -
Canceled - -
--------------- -----------------

Outstanding at June 30, 2003 6,520,000 $ 0.29
=============== =================
Exercisable at June 30, 2003 6,460,000
===============

The following summarizes information about warrants outstanding at June 30,
2003:

Warrants Outstanding Warrants Exercisable
------------------------------------------------------ -------------------------------
Weighted
Average Weighted Weighted
Number of Remaining Average Number of Average
Range of Shares Contractual Exercise Shares Exercise
Exercise Prices Outstanding Life (Years) Price Exercisable Price
- ------------------- --------------- ---------------- --------------- ------------- --------------

$0.01 60,000 4.8 $ 0.01 - $ -
$0.17 4,560,000 4.9 $ 0.17 4,560,000 $ 0.17
$0.40-$0.75 1,900,000 4.9 $ 0.57 1,900,000 $ 0.57
------------ ---------- ----------- -----------

6,520,000 $ 0.29 6,460,000 $ 0.29
============ ========== =========== ===========

The fair value of each warrant granted during the year ended June 30, 2003 to
consultants and employees is estimated using the Black-Scholes option pricing
model on the date of grant using the following assumptions: (i) no dividend
yield, (ii) average volatility of 173.90 percent (iii) weighted average risk
free interest rate of approximately 1.23 percent, and (iv) average expected life
of 1 year.

F-21

NOTE 7 - COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENT

The Company leases its facility under an operating lease agreement expiring
April 30, 2005. Under the lease, the Company pays $7,669 per month through March
31, 2003, $7,888 per month through March 31, 2004, and $8,107 per month
thereafter. The total amount of rent paid during the year ended June 30, 2003
and 2002 was $96,161 and $28,828, respectively. The Company records rent expense
on a straight-line basis, resulting in deferred rent and additional rent expense
(income) of $(301) and $11,201 as of June 30, 2003 and 2002, respectively.

The future minimum annual lease payments under this lease agreement at June 30,
2003 are as follows:

YEARS ENDING
JUNE 30,
---------------

2004 $ 95,000
2005 73,000
---------------

$ 168,000
===============

EMPLOYMENT AGREEMENTS

In June 2003, the Company entered into employment agreements with two of its
officers. The agreements are for a five-year term through June 2008 and provide
for a combined base salary of $600,000 per annum through October 2003, $720,000
per annum through October 2004, and an annual increase of at least 10%
thereafter until the termination date. The agreements also provide for a
combined sign-up bonus of $200,000, annual combined net profit bonus of 4% of
the Company's net income, issuance of incentive stock options, and warrants to
acquire a total of 2,560,000 shares of the Company's common stock (see Note 6).
Additionally, the agreements provide for a combined payment of $1,440,000 upon
sale or merger of the Company, and severance payment of one year of base salary,
as defined.

LITIGATION

On November 15, 2002, Fidelity Mortgage, Inc. ("Fidelity") filed a lawsuit
against the Company in the Supreme Court of the State of New York alleging that
the Company breached a sublease with Fidelity. Fidelity is seeking $156,400 in
damages plus interest, costs and attorneys' fees. The Company is in the process
defending this litigation and has recorded a liability of $156,400 in the
accompanying consolidated balance sheet.

F-22

NOTE 7 - COMMITMENTS AND CONTINGENCIES, CONTINUED

As of May 6, 2003, the Company responded to what it believes are unfounded
allegations regarding the assignment of patent rights agreement between the
patent inventor and the Company. The Company filed for arbitration on June 6,
2003. The Company believes that the patent inventor's claims lack any merit. The
Company intends to vigorously pursue its claims in the arbitration.
Nevertheless, arbitration is uncertain, and the Company may not prevail in the
arbitration and can express no opinion as to its ultimate outcome. The Company
is, from time to time, involved in various legal and other proceedings which
arise in the ordinary course of operating its business. In the opinion of
management, the amount of ultimate liability, if any, with respect to these
actions will not materially affect the consolidated financial position or
results of operations of the Company.

INDEMNITIES AND GUARANTEES

During the normal course of business, the Company has made certain indemnities
and guarantees under which it may be required to make payments in relation to
certain transactions. These indemnities include certain agreements with the
Company's officers, under which the Company may be required to indemnify such
person for liabilities arising out of their employment relationship. The
duration of these indemnities and guarantees varies and, in certain cases, is
indefinite. The majority of these indemnities and guarantees do not provide for
any limitation of the maximum potential future payments the Company could be
obligated to make. Historically, the Company has not been obligated to make
significant payments for these obligations and no liabilities have been recorded
for these indemnities and guarantees in the accompanying consolidated balance
sheet.

NOTE 8 - RELATED PARTY TRANSACTIONS

During the years ended June 30, 2003 and 2002, the Company paid or accrued
approximately $571,250 and $235,500, respectively, and issued shares valued at
approximately $712,425 and $3,409,000, respectively, to various related parties,
including officers and/or stockholders of the Company for consulting and other
administrative services.

During the year ended June 30, 2003, the Company issued options to a related
party to purchase 3,344,731 shares. Pursuant to SFAS No. 123, the Company
recorded general and administrative expense of $347,514 in the accompanying
consolidated statements of operations. During the year ended June 30, 2003, all
of these options were exercised for cash of $270,200.

F-23

NOTE 8 - RELATED PARTY TRANSACTIONS, CONTINUED

Moneyzone advanced cash of $300,000 in July 2002 to the Company. Upon
consummation of the Merger, the inter-company advance was eliminated in
consolidation and recorded as a capital contribution (see Notes 1 and 6).

In September 2002, the Company entered into bridge loan promissory notes
("Notes") with two majority stockholders of Moneyzone for a total of $50,000
with interest at 10% per annum. The principal and interest were due on the
closing of collective funding by the Company of not less than $250,000. Pursuant
to the terms of the Notes, the Company could not be sold or otherwise merged
into any other entity except Moneyzone, unless the Notes holders were repaid.
These Notes were conditionally guaranteed by the CEO of the Company if the
Company would not meet its covenants. In June 2003 the Company entered into a
Settlement Agreement and Mutual General Releases with each of these Notes
holders, mutually releasing all parties from any and all claims arising out of
or related to the above referenced notes (the "Previous Notes"), and executed
and delivered new Secured Notes and Security Agreements (the "New Notes") in the
aggregate principal amount of these notes of $50,000 (see Note 5). The notes
were paid in full subsequent to June 30, 2003 (see Note 5).

In November 2002, the Company entered into a non-interest bearing note, due on
demand, for a purchase of certain office furniture from one of its officers for
$17,500. This note was repaid subsequent to June 30, 2003.

On June 11, 2003, the Company entered into a convertible promissory note
agreement with one of its shareholders for $172,000 with 1% interest per annum,
convertible at $0.10 per share to shares of the Company's common stock. On June
23, 2003, the note was converted to 1,720,000 shares of the Company's common
stock. The Company recorded interest expense of $120,400 in the accompanying
consolidated financial statements related to the beneficial conversion feature
in the convertible promissory note.

F-24

NOTE 9 - INCOME TAXES

No current provision for federal income taxes is required for the year ended
June 30, 2003 and 2002, since the Company incurred net operating losses through
June 30, 2003.

The tax effect of temporary differences that give rise to significant portions
of the deferred tax asset at June 30, 2003 are presented below:

Deferred tax asset:
Net operating loss carryforward $3,840,000
Stock options and warrants 230,000
Reserves and accruals 26,000
---------------
4,096,000
Deferred tax liability:
Deferred income (34,000)
---------------
4,062,000

Less valuation allowance (4,062,000)
----------------

Net deferred tax assets $ -
===============

The valuation allowance increased by $2,552,000 and $1,510,000 during the years
ended June 30, 2003 and 2002, respectively.

The provision for income taxes for the years ended June 30, 2003 and 2002
differs from the amount computed by applying the U.S. Federal income tax rate of
34% to income before income taxes primarily as a result of state income taxes
and changes in the valuation allowance.

As of June 30, 2003, the Company had net operating loss carryforwards of
approximately $9,600,000 available to offset future taxable federal and state
income. The federal and state carryforward amounts expire in varying amounts
through 2023 and 2010, respectively.

F-25

NOTE 10 - BASIC AND DILUTED LOSS PER COMMON SHARE

The following is a reconciliation of the numerators and denominators of the
basic and diluted loss per common share computations for the years ended June
30, 2003 and 2002:

2003 2002
------------- -----------

Numerator for basic and diluted loss per
common share - net income (loss) $ (6,410,216) $ (3,775,560)
============= ============

Denominator for basic and diluted loss per
common share - weighted average shares 24,828,564 6,257,985
============= ============

Basic and diluted income (loss) per common share $ (0.26) $ (0.60)
============= ============

NOTE 11 - SUBSEQUENT EVENTS

In July 2003, the Company issued 1,000,000 shares of common stock for cash of
$150,000 and a warrant to purchase 1,000,000 shares of the Company's common
stock at $0.50 per share to a third party. The warrant expires in 5 years and
vests immediately. The warrant agreement also includes a right by the Company to
call any or all shares of the common stock issued under the warrant agreement
from the warrant holder for (i) $2.00 per share for the first 500,000 shares and
(ii) $3.00 per share for the remaining 500,000 shares through July 9, 2004. This
call right can by exercised by the Company only if the Company's common stock
has a closing price above the call price for 5 consecutive trading days prior to
execution of the call right.

On August 22, 2003, the Company entered into a Securities Purchase Agreement
with certain investors pursuant to which the Company issued 6% convertible
debentures in the total principal amount of $2,000,000. The first payment of
$1,000,000 in gross proceeds was provided at the first closing, as defined, and
up to $1,000,000 at the second closing, as defined. The debenture is payable on
August 22, 2006. The interest of 6% per annum is payable quarterly, plus an
additional interest of 15% per annum will accrue daily if all accrued interest
is not paid in full when due. The debenture is convertible at the option of the
holder into shares of the Company's common stock at $0.075 with a forced
conversion option by the Company if certain closing prices are attained, as
defined. The Company is required to register the shares that might be issued
under the agreement and is subject to liquidated damages if agreed upon
timetables are not met, as defined. In connection with the Securities Purchase
Agreement, the Company also issued warrants to purchase 13,333,333 shares of the
Company's common stock at an exercise price of $0.075 per share. In connection
with the issuance of detachable warrants and the beneficial conversion feature
of the debentures, the Company will record a debt discount of $1,000,000 and
amortize the discount using the effective interest method through August 2006.

F-26

NOTE 11 - SUBSEQUENT EVENTS, CONTINUED

In July 2003, the Company issued 270,430 shares of the Company's common stock,
valued at $79,629 (or $0.29 per share, which is the fair market value of the
stock on the date of issuance), to a consultant for services to be performed in
the future.

In August 2003, the Company issued 206,000 shares of the Company's common stock
valued at $48,320 (or $0.23 per share, which is the fair market value of the
stock on the dates of issuance), to two consultants for services to be performed
in the future.

In August 2003, the Company issued 283,590 shares of the Company's common stock,
valued at $79,405 (or $0.28 per share, which is the fair market value of the
stock on the date of issuance), for settlement of accounts payable.

In September 2003, the Company issued 170,773 shares of the Company's common
stock for consulting services rendered, valued at $32,447 (or $0.19 per share,
which is the fair market value of the stock on the date of issuance).

In August 2003, the Company prepaid notes payable and notes payable to related
parties with maturity dates of December 1, 2003 in the principal amounts of
$215,000 and $50,000, respectively, plus interest of $5,760 for an aggregate
payment of $270,760, and has received full collateral releases from the
noteholders (see Note 5).

In August 2003, the Company entered into employment agreement with one of its
officers. The agreement is for a five-year term through July 31, 2008 and
provides for a base salary of $250,000 per annum through October 1, 2003,
$300,000 per annum through October 1, 2004, and an increase of at least 10%
annually until the termination date. The agreement also provides for a sign-up
bonus of $75,000 payable over a seven month period, annual net profit bonus of
1.25% of the Company's net income, issuance of incentive stock options, and
warrant to issue 750,000 shares of the Company's common stock at $0.24 per share
(fair market value of the stock on the date of issuance). Additionally, the
agreement provides for a payment of $500,000 upon sale or merger of the Company,
and severance payment of one year of base salary.

In August 2003, the Company issued 1,500,000 shares of its restricted common
stock to one of its shareholders in full payment of a non-interest bearing
demand promissory note of $112,500 dated July 25, 2003. Based on the estimated
fair value of the stock issued, the Company will recognize a loss on debt
settlement of $155,250 in its quarter ended September 30, 2003.

F-27

NOTE 11 - SUBSEQUENT EVENTS, CONTINUED

In August 2003, the Company issued 127,171 shares of its restricted common stock
to one of its shareholders valued at $25,452 (or $0.20 per share, which was the
weighted average fair market value on the dates the services were performed) for
settlement of consulting fees payable totaling $22,500. The Company will record
a loss of $2,952 on the settlement of this accounts payable balance in its
quarter ended September 30, 2003.

F-28

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

Effective January 1, 2003, certain principals of Corbin & Wertz ("C&W"), our
independent auditors, formed Corbin & Company LLP ("C&C"), as a successor public
accounting firm and transferred substantially all of C&W's audit and attest
clients to C&C. As a result, on February 7, 2003, the Board of Directors
approved the engagement of C&C as our independent auditors for the fiscal year
ending June 30, 2003.

C&W did not resign or decline to stand for reelection, but were dismissed on
February 7, 2003 to allow the appointment of C&C.

During the past two fiscal years ending June 30, 2002, C&W's audit opinion on
our financial statements did not contain an adverse opinion or a disclaimer of
opinion, nor was it modified as to audit scope or accounting principles. C&W's
report was modified to include an explanatory paragraph where they expressed
substantial doubt about our ability to continue as a going concern.

There were no disagreements with C&W during the past two most recent fiscal
years and through the date of their dismissal on any matter of accounting
principals or practices, financial statement disclosure or auditing scope or
procedure. Additionally, there were no other reportable matters as defined in
Item 304(a)(1)(iv) of Regulation S-B for small business issuers, during that
period of time.

CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS

Moneyzone advanced cash of $300,000 to us in July 2002. Upon consummation of our
merger with Moneyzone, the inter-company advance was eliminated in consolidation
and recorded as a capital contribution.

In September 2002, we entered into bridge loan promissory notes ("Notes") with
two majority stockholders of Moneyzone for a total of $50,000 with interest at
10% per annum. The principal and interest were due to be paid on the closing of
collective funding of not less than $250,000. These Notes were conditionally
guaranteed by Timothy J. Owens, our Chief Executive Officer, in the event that
we did not pay the Notes in accordance with their terms. In June 2003 we entered
into a Settlement Agreement and Mutual General Releases with each of the holders
of the Notes, mutually releasing all parties from any and all claims arising out
of or related to the Notes, and executed and delivered new Secured Notes and
Security Agreements (the "New Notes") in the aggregate principal amount of
$50,000. The New Notes were paid in full subsequent to the fiscal year ended
June 30, 2003.

In November 2002, we executed a non-interest bearing note, due on demand, for a
purchase of certain office furniture from Steven H. Reder for $17,500. This note
was repaid subsequent to June 30, 2003, the end of our last fiscal year.

During the 2003 and 2002 fiscal years and prior to their employment with us, we
retained the services of Timothy J. Owens and Steven H. Reder as consultants.
During these periods, we paid or accrued consulting fees of $177,500 and
$113,500 to Mr. Owens and consulting fees of $177,500 and $105,000 to Mr. Reder.

During the 2003 and 2002 fiscal years, we retained the consulting services of
Federico Cabo, a 5% shareholder, and we paid or accrued consulting fees of
$122,500 and $3,000 during these periods, respectively. We also retained
consulting services of other parties related to the officers and we paid or
accrued consulting fees of $93,750 and $14,000 during these periods,
respectively.

In January and February 2003, we issued to the following parties an aggregate of
1,351,650 shares of our common stock in connection with consulting services
having a total value of $685,425:

NAME DESCRIPTION NO. OF SHARES $ VALUE
- --------------------------------------------------------------------------------

Federico Cabo 5% shareholder 399,000 $ 199,500
Timothy Owens Officer/Director/5% shareholder 186,200 $ 93,100
Zachariah Owens Related to Officer/Director 104,750 $ 56,125
Melissa Owens Related to Officer/Director 104,750 $ 56,125
Geoffrey Reder Related to Officer/Director 99,750 $ 48,225
Richard Cabo Related to 5% shareholder 99,750 $ 49,875
Gregory Cabo Related to 5% shareholder 66,500 $ 33,250
Diane Cabo Related to 5% shareholder 66,500 $ 33,250
Federico Cabo, Jr. Related to 5% shareholder 66,500 $ 33,250
Michael Reder Related to Officer/Director 86,450 $ 43,225
Anne Reder Related to Officer/Director 66,500 $ 33,250
Willie Reder Related to Officer/Director 5,000 $ 6,250

As part of the negotiations to purchase a non-controlling interest in a bottling
facility in Mexico from OCIF-OBAC-SA de CV, an entity owned and controlled by
Federico Cabo, a 5% shareholder, we authorized and issued to escrow 2,660,000
shares of our common stock until a definitive agreement could be reached. At
present, a definitive agreement has not been reached. The shares are still
issued and held subject to a cancellation fee equal to 15% of the shares of
stock held in escrow unless a definitive agreement can be reached.

In March 2003, we issued to Shelly Singhal, a 5% stockholder, 50,000 shares of
our common stock in exchange for $14,500.

In April 2003, we issued to Shelly Singhal, a 5% stockholder, 890,893 shares of
our common stock in exchange for $118,200.

In May 2003, we issued to Shelly Singhal, a 5% stockholder, 2,403,838 shares of
our common stock in exchange for $137,500.

In May 2003, before he was retained as our Chief Financial Officer, we issued to
Norman A. Kunin 320,000 shares of our common stock as payment for consulting
services provided by Kunin Business Consulting, a division of Ace Investors LLC,
valued at $32,000.

In June 2003 we issued to SBI USA, LLC, an affiliate of Shelly Singhal,
1,720,000 shares of our common stock pursuant to the terms of a convertible
promissory note in the principal amount of $172,000.

On August 29, 2003 we issued a total of 1,627,171 shares of our common stock to
SBI-USA, LLC, an affiliate of Shelly Singhal. Of this amount, 1,500,000 shares
were issued in settlement of a demand promissory note for a loan in the amount
of $112,500 and 127,171 shares were issued in payment of amounts due in
connection with the termination of a financial advisory agreement dated June 2,
2003.

MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

MARKET INFORMATION

Our common stock trades on the NASD OTC Bulletin Board. Since January 9, 2003,
it has traded under the symbol QTFV. Prior to that date, our common stock traded
on the NASD OTC Bulletin Board under the symbol MOZN.

The table below sets forth the range of high and low bid quotes of our common
stock for each quarter for the last two fiscal years as reported by Yahoo
Finance. The bid prices represent inter-dealer quotations, without adjustments
for retail mark-ups, markdowns or commissions and may not necessarily represent
actual transactions. The following prices reflect the 5 for 1 stock split that
was effected on January 9, 2003.

- ------------------------------ --------------------------------------
QUARTER ENDED 2003

- ------------------------------ ------------------- ------------------
High Low
- ------------------------------ ------------------- ------------------
September 30, 2002 $1.20 $0.20
- ------------------------------ ------------------- ------------------
December 31, 2002 $1.20 $0.21
- ------------------------------ ------------------- ------------------
March 31, 2003 $2.00 $0.40
- ------------------------------ ------------------- ------------------
June 30, 2003 $2.00 $0.65
- ------------------------------ ------------------- ------------------
$0.50 $0.08
- ------------------------------ --------------------------------------
2002
- ------------------------------ ------------------- ------------------
High Low
- ------------------------------ ------------------- ------------------
September 30, 2001 $0.60 $0.40
- ------------------------------ ------------------- ------------------
December 31, 2001 $1.00 $0.20
- ------------------------------ ------------------- ------------------
March 31, 2002 * *
- ------------------------------ ------------------- ------------------
June 30, 2002 * *
- ------------------------------ ------------------- ------------------

*No trades of our common stock were made during the third and fourth quarters of
the June 30, 2002 fiscal year.

There were approximately 371 holders of our common stock of record as of
September 10, 2003.

DIVIDENDS

We have never declared or paid cash dividends on our common stock, and our
present policy is not to pay cash dividends on our common stock. Any payment of
cash dividends in the future will be wholly dependent upon our earnings,
financial condition, capital requirements and other factors deemed relevant by
our board of directors. It is not likely that cash dividends will be paid in the
foreseeable future.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY INCENTIVE PLANS

Set forth in the table below is information regarding awards made through
compensation plans or arrangements through June 30, 2003, the most recently
completed fiscal year.

- ----------------------------- -------------------------- -------------------------- --------------------------
Number of securities
remaining available for
future issuance under
Number of securities to Weighted average equity compensation
be issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options, securities reflected in
Plan Category warrants and rights warrants and rights column 2)
- ----------------------------- -------------------------- -------------------------- --------------------------

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

Equity Compensation Plans
Approved by Security Holders N/A N/A N/A
- ----------------------------- -------------------------- -------------------------- --------------------------

- ----------------------------- -------------------------- -------------------------- --------------------------
Equity Compensation Plans
Not Approved by Security
Holders 6,520,000 $0.29 7,907,997
- ----------------------------- -------------------------- -------------------------- --------------------------

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

Our 2000 Stock Option Plan (the "2000 Plan"), as amended, authorizes the
issuance of options and common stock to officers, employees, directors and
consultants. We initially reserved 2,533,330 shares of our common stock for
awards to be made under the 2000 Plan. On February 12, 2003, we increased the
number of shares of common stock reserved for issuance to 4,233,330 shares,
pursuant to a Plan Amendment. The common stock reserved for issuance pursuant to
the 2000 Plan has been registered on an S-8 Registration Statement. The 2000
Plan allows for the issuance of either incentive stock options (which, pursuant
to Section 422 of the Internal Revenue Code, can only be granted to employees)
or non-qualified stock options. The 2000 Plan is administered by a committee of
two or more members of the Board of Directors or, if no committee is appointed,
then by the Board of Directors. The committee, or the Board of Directors if
there is no committee, determines the type of option granted, the exercise
price, the option term, which may be no more than ten years, terms and
conditions of exercisability and methods of exercise. Options must vest within
ten-years. Under the 2000 Plan, the exercise price may not be less than fair
market value on the date of grant for incentive stock options, and not less than
50% of the fair market value on the date of grant for non-qualified stock
options. The 2000 Plan also allows for the granting of Stock Appreciation Rights

in conjunction with all or part of any stock option granted. No Stock
Appreciation Rights have been granted. The number of options under the Plan
available for grant at June 30, 2003 was 2,655,830.

On April 21, 2003 our Board of Directors adopted the 2003 Incentive Equity Stock
Plan (the "2003 Plan"). The 2003 Plan authorizes the issuance of options, right
to purchase common stock and stock bonuses to officers, employees, directors and
consultants. We reserved 10,000,000 shares of our common stock for awards to be
made under the 2003 Plan. On April 25, 2003 we filed a registration statement on
Form S-8 to register 5,000,000 of these shares. The 2003 Plan is administered by
a committee of two or more members of the Board of Directors or, if no committee
is appointed, then by the Board of Directors. The 2003 Plan allows for the
issuance of incentive stock options (which can only be granted to employees),
non-qualified stock options, stock awards, or stock bonuses. The committee, or
the Board of Directors if there is no committee, determines the type of option
granted, the exercise price, the option term, which may be no more than ten
years, terms and conditions of exercisability and methods of exercise. Options
must vest within ten-years. Under the 2003 Plan, the exercise price may not be
less than fair market value on the date of grant for the incentive stock
options, and not less than 85% of the fair market value on the date of grant for
non-qualified stock options. The number of options under the 2003 Plan available
for grant at June 30, 2003 was 5,252,167.

DIVIDENDS

We have not paid any cash dividends and we currently intend to retain any future
earnings, to the extent we have such earnings, to fund the development and
growth of our business. Any future determination to pay dividends on our common
stock will depend upon our results of operations, financial condition and
capital requirements, applicable restrictions under any credit facilities or
other contractual arrangements and such other factors deemed relevant by our
Board of Directors.

WHERE YOU CAN FIND FURTHER INFORMATION ABOUT US

We are subject to the informational requirements of the Securities Exchange Act
of 1934 and must file reports, proxy statements and other information with the
Securities and Exchange Commission. The reports, information statements and
other information we file with the Commission can be inspected and copied at the
Commission at the Public Reference Room, 450 Fifth Street, N.W. Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at (800) SEC-0330. The Commission also maintains a Web site
(http://www.sec.gov) that contains reports, proxy, and information statements
and other information regarding registrants, like us, which file electronically
with the Commission.

This prospectus constitutes a part of a registration statement on Form SB-2
filed by us with the Commission under the Securities Act of 1933. As permitted
by the rules and regulations of the Commission, this prospectus omits certain
information that is contained in the registration statement. We refer you to the
registration statement and related exhibits for further information with respect
to us and the securities offered. Statements contained in the

prospectus concerning the content of any documents filed as an exhibit to the
registration statement (or otherwise filed with the Commission) are not
necessarily complete. In each instance you may refer to the copy of the filed
document. Each statement is qualified in its entirety by such reference.

No person is authorized to give you any information or make any representation
other than those contained or incorporated by reference in this prospectus. Any
such information or representation must not be relied upon as having been
authorized. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in our affairs since the date of the prospectus.

EXECUTIVE COMPENSATION
REMUNERATION OF DIRECTORS AND OFFICERS

The following tables and discussion set forth information with respect to all
compensation, including incentive stock option plan and non-plan compensation
awarded to, earned by or paid to the President and Chief Executive Officer for
all services rendered in all capacities to us for each of our last three
completed fiscal years. No disclosure has been made for any executive officer,
other than the Chief Executive Officer and President, because, during the last
three completed fiscal years, there were no other executive officers.

SUMMARY COMPENSATION TABLE

LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------------------------------------------------------
Other Restricted All Other
Annual Stock Securities LTIP Compen-
Name and Salary Bonus Compensation Awards Underlying Payout sation
Principal Position Year (Note 1) (Note 2) (Note 3) ($) Options/SARs ($) ($)
($) ($) ($)

Timothy J. Owens, 2003 16,750 100,000 177,500 0 1,280,000 0 0
Chief Executive 2002 0 0 113,500 0 0 0 0
Officer 2001 0 0 0 0 0 0 0

Steven H. Reder 2003 16,750 100,000 177,500 0 1,280,000 0 0
President 2002 0 0 105,000 0 0 0 0
2001 0 0 0 0 0 0 0

Note 1 - These salaries are accrued and unpaid for the period June 9 through
June 30, 2003.
Note 2 - These bonuses are accrued pursuant to employment agreements dated June
9, 2003, but have not been paid. Note 3 - Represent total amounts due to these
executive officers pursuant to consulting agreements that pre-dated their
employment. Cash payments made to Timothy J. Owens for the years 2003 and 2002
were $177,500 and $113,500, respectively. Cash payments made to Steven Reder for
the years 2003 and 2002 were $177,500 and $105,000, respectively.

STOCK OPTIONS

The following tables set forth certain information concerning the granting and
exercise of stock options during the last completed fiscal year by each of the
named executive officers and the fiscal year-end value of unexercised options on
an aggregated basis:

OPTION/SAR GRANTS FOR LAST
FISCAL YEAR-INDIVIDUAL GRANTS(1)

Number of % of Total
Securities Options/SARs Granted
Underlying to Employees in
Options/SARs Fiscal Year Exercise Price ($/sh)
Name Granted (#) Expiration Date
- -------------------------- -------------------- ---------------------- ---------------------- ----------------------

Timothy J. Owens 1,280,000 50% $0.17/share June 9, 2008

Steven H. Reder 1,280,000 50% $0.17/share June 9, 2008

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

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES(1)
---------------------------------------------------

Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)(2)

Shares Acquired Value Realized(1) Unexercisable/ Unexercisable/
Name on Exercise (#) ($) Exercisable Exercisable
- -------------------------- -------------------- ---------------------- ---------------------- ----------------------

Timothy J. Owens -0- -0- 0/1,280,000 $0/$0

Steven H. Reder -0- -0- 0/1,280,000 $0/$0

(1) Value realized is determined by calculating the difference between the
aggregate exercise price of the options and the aggregate fair market value of
the common stock on the date the options are exercised.
(2) The value of unexercised options is determined by calculating the difference
between the fair market value of the securities underlying the options at fiscal
year end and the exercise price of the options.

DIRECTOR COMPENSATION

There is no standard or individual compensation package for any of the
directors.

EMPLOYMENT CONTRACTS

In June 2003 we entered into an employment agreement with Timothy J. Owens to
employ him as Chief Executive Officer. The agreement is for a five year term,
through June 8, 2008, and provides for a base salary of $300,000 per year
through October 1, 2003, $360,000 per year through October 1, 2004, and an
increase of at least 10% annually until the termination date. The agreement also
provides for a one-time signing bonus of $100,000, payable in four equal
payments of $25,000 each on July 1 and October 1, 2003 and January 1 and April
1, 2004, a bonus computed annually totaling 2.00% of net income, issuance of
incentive stock options and a warrant to purchase 1,280,000 shares of our common
stock at an exercise price of $0.17 per share, the fair market value of the
common stock on the date of issuance. Additionally, the agreement provides for a
payment of $720,000 upon certain transactions, such as a sale of substantially
all of our assets or a merger, and a severance benefit of one year's base
salary. As of the date of filing this prospectus, Mr. Owens has not been paid
any of the signing bonus and has received partial advances against his base
salary in the aggregate amount of $30,000.

In June 2003 we entered into an employment agreement with Steven H. Reder to
employ him as President. The agreement is for a five year term, through June 8,
2008, and provides for a base salary of $300,000 per year through October 1,
2003, $360,000 per year through October 1, 2004, and an increase of at least 10%
annually until the termination date. The agreement also provides for a one-time
signing bonus of $100,000, payable in four equal payments of $25,000 each on
July 1 and October 1, 2003 and January 1 and April 1, 2004, a bonus computed
annually totaling 2.00% of net income, issuance of incentive stock options and a
warrant to purchase 1,280,000 shares of our common stock at an exercise price of
$0.17 per share, the fair market value of the common stock on the date of
issuance. Additionally, the agreement provides for a payment of $720,000 upon
certain transactions, such as a sale of substantially all of our assets or a
merger, and a severance benefit of one year's base salary. As of the date of
filing this prospectus, Mr. Reder has not been paid any of his signing bonus and
has received partial advances against his base salary in the aggregate amount of
$12,500.

In August 2003 we entered into an employment agreement with Norman A. Kunin. The
agreement is for a five year term, through July 31, 2008, and provides for a
base salary of $250,000 per year through October 1, 2003, $300,000 per year
through October 1, 2004, and an increase of at least 10% annually until the
termination date. The agreement also provides for a one-time signing bonus of
$75,000, payable in three equal payments of $25,000 each on August 4 and
November 1, 2003 and February 1, 2004, a bonus computed annually totaling 1.25%
of net income, issuance of incentive stock options and a warrant to purchase
750,000 shares of our common stock at an exercise price of $0.24 per share, the
fair market value of the common stock on the date of issuance. Additionally, the
agreement provides for a payment of $500,000 upon certain corporation
transactions, such as a sale of substantially all of our assets or a merger, and
a severance benefit of one year's base salary. As of the date of filing this
prospectus, Mr. Kunin has received his salary when due and a partial advance
against his signing bonus in the amount of $17,500.

EXPERTS

Corbin & Company, LLP audited our financial statements at June 30, 2003 and June
30, 2002, as set forth in their report which includes an emphasis paragraph
relating to our ability to continue as a going concern. We have included our
financial statements in the prospectus and elsewhere in the registration
statements in reliance on the report of Corbin & Company, LLP, given on their
authority as experts in accounting and auditing.

Richardson & Patel LLP has given us an opinion relating to the due issuance of
the common stock being registered.

QT 5, INC.

PROSPECTUS

53,937,520 Shares of Common Stock

November 4, 2003

No person is authorized to give any information or to make any representation
other than those contained in this prospectus, and if made such information or
representation must not be relied upon as having been given or authorized. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any securities other than the securities offered by this prospectus or an
offer to sell or a solicitation of an offer to buy the securities in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.

The delivery of this prospectus shall not, under any circumstances, create any
implication that there has been no changes in the affairs of QT 5, Inc. since
the date of this prospectus. However, in the event of a material change, this
prospectus will be amended or supplemented accordingly.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by Section 102(b)(7) of the General Corporation Law of the State of
Delaware, Article Ninth of the registrant's Certificate of Incorporation
includes a provision that eliminates the personal liability of each of its
directors for monetary damages for breach of such director's fiduciary duty as a
director, except for liability: (i) for any breach of the director's duty of
loyalty to the registrant or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of the
law; (iii) under Section 174 of the General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit. If the
General Corporation Law is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director shall
be limited to the fullest extent allowed by the amendment. However, any repeal
or modification of the indemnity provided by the General Corporation Law shall
not adversely affect any limitation on the personal liability of the
registrant's directors.

The registrant's Certificate of Incorporation requires it, to the extent and in
the manner provided by the General Corporation Law, to indemnify any person
against expenses, (including attorneys' fees), judgments, fines and amounts paid
in settlement, that are actually and reasonably incurred in connection with any
threatened, pending or completed action, suit or proceeding to which such person
was or is a party or is threatened to be made a party by reason of the fact that
such person is or was one of the registrant's directors or officers.

The registrant's Bylaws provide that it must, to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law, indemnify its directors and
officers for actions they took in good faith and in a manner reasonably believed
to be in, or not opposed to, the registrant's best interests. With respect to
any criminal action or proceeding, the officer or director must have had no
reasonable cause to believe that his conduct was unlawful. The registrant is
required by its Bylaws to advance, prior to the final disposition of any
proceeding, promptly following request therefore, all expenses incurred by any
officer or director in connection with such proceeding. If the General
Corporation Law is amended to provide narrower rights to indemnification than
are available under the registrant's Bylaws, such amendment shall not apply to
alleged actions or omissions that precede the effective date of such amendment.
The registrant's Bylaws permit it to indemnify its employees and agents to the
fullest extent permitted by the General Corporation Law.

reasonably incurred by the agent in such defense. Indemnification must be
authorized in the specific case upon a determination that indemnification is
proper because the person has met the applicable standard of conduct to require
indemnification. This provision of the General Corporation Law of the State of
Delaware is not exclusive of any other rights to which persons seeking
indemnification may be entitled under any bylaw, agreement, vote of shareholders
or disinterested directors or otherwise.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses of the offering, all of which are to be borne by the
registrant, are as follows:

SEC Filing Fee $ 781.69
Printing Expenses* $ 1,000.00
Registrar and Transfer Agent Fee* $ 350.00
Legal Fees $ 35,000.00
Accounting Fees* $ 12,500.00
Miscellaneous* $ 100.00
- -------------------------------------------------

Total* $ 49,731.69

* Estimated

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

During the last three years the registrant sold securities that were not
registered under the Securities Act of 1933. The transactions are as follows:

On August 22, 2003 the registrant received $1,000,000 in gross proceeds at the
first closing from an aggregate $2 million sale and issuance of 6% convertible
debentures convertible into the registrant's common stock. This offer and sale
was made solely to accredited investors. The debentures sold at the first
closing are due and payable on August 22, 2006. Related to the financing was the
issuance of warrants to purchase one share of common stock for every two shares
underlying the debentures. The exercise price for the warrant stock is $0.075
per share and the term of the warrants is five years. The second $1,000,000
closing is scheduled to occur following the effective date of this registration
statement. This transaction was exempt from registration pursuant to Regulation
D of the Securities Act of 1933.

As part of the negotiations to purchase a non-controlling interest in a bottling
facility in Mexico from OCIF-OBAC-SA de CV, the registrant authorized and issued
to escrow 2,660,000 shares of its common stock until a definitive agreement
could be reached. At present, a definitive agreement has not been reached. The
shares are still issued and held in escrow subject to a cancellation fee equal
to 15% of the shares of the escrowed common stock, unless a definitive agreement
can be reached. The registrant also entered into negotiations with the
developers and patent holders of certain rapid test medical devises for an
exclusive right to market these devices, at the registrant's option. At present
1,000,160 shares of the registrant's common stock have been authorized and
issued into escrow as a partial payment for the right to market, if a definitive
agreement is reached. At present, a definitive agreement has not been reached.
If the registrant does not complete these acquisitions, it will return the
common stock to treasury. If the common stock is transferred to OCIF-OBAC-SA de
CV and the developers and patent holders of the rapid test medical devices, the
transactions will be exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933.

During the month of June 2003 the registrant sold 2,200,854 shares of common
stock at a price of $0.15 per share (which was the weighted average price paid
by the investors for the stock issuance) in five separate sales transactions to
accredited investors. The sales included, in the aggregate, warrants to purchase
1,900,000 shares of common stock for a weighted average exercise price of $0.58
per share. The warrants have a term of five years. The registrant received
aggregate net cash proceeds of $331,000 in these offerings. These transactions
were exempt from registration pursuant to Regulation D promulgated under the
Securities Act of 1933. These purchase agreements included a provision in which,
if for a period of six months from the date of purchase, the closing price of
the registrant's common stock falls below $0.15 per share for a period of five
consecutive trading days, the registrant must issue to these investors
additional shares. The registrant's common stock closing price fell below $0.15
per share for five consecutive trading days ended October 3, 2003. Therefore,
the registrant is required to issue an additional 1,033,334 shares of common
stock to these investors. The common stock will be issued after the registrant
files a Certificate of Amendment of Certificate of Incorporation increasing its
authorized common stock to 300,000,000. This issuance will be exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.

In April and June 2003 the registrant committed to issue 300,000 shares of its
common stock to employees in connection with their initial employment. The
weighted average fair market value of this common stock was $75,126 or $0.25 per
share. These transactions were exempt from registration pursuant to Section 4(2)
of the Securities Act of 1933.

On June 23, 2003 the registrant issued 1,720,000 shares of its common stock at a
price of $0.10 per share for total proceeds of $172,000 to SBI-USA LLC pursuant
to the terms of a convertible promissory note. This transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.

In April, May and June 2003 the registrant issued 690,000 shares of its common
stock to various consultants for services provided to the registrant. These
transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933.

On January 9, 2003, the registrant consummated a reverse merger with
MoneyZone.com, Inc., wherein the registrant issued to stockholders of Quicktest
5, Inc. 25,000,000 shares of common stock in exchange for all the issued and
outstanding shares of Quicktest 5, Inc. This transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.

ITEM 27. EXHIBITS.

a. The following Exhibits are filed as part of this Registration Statement
pursuant to Item 601 of Regulation S-B:

2.1 Agreement and Plan of Merger, dated as of June 28, 1999, by and among the
registrant, EBonlineinc.com, Inc., and John D. Brasher, Jr., incorporated by
reference to our Current Report on Form 8-K (File No. 000-25022), dated as of
July 15, 1999.

2.2 Amendment No. 1 to the Agreement and Plan of Merger, dated as of June 28,
1999, by and among the registrant, EBonlineinc.com, Inc., and John D. Brasher,
Jr., incorporated by reference to our Current Report on Form 8-K (File No.
000-25022), dated as of July 15, 1999.

2.3 Letter Agreement between MoneyZone.com and Global Capital Partners Inc.
dated as of March 7, 2001, incorporated by reference to our Current Report on
Form 8-K (File No. 000-25022), dated as of March 7, 2001.

2.4 Agreement and Plan of Merger, dated as of July 15, 2002, by and among the
registrant and QuickTest 5, Inc., incorporated by reference to Exhibit 10.2 of
our Schedule 14C (File No. 000-25022), filed with the Commission on December 11,
2002 (the "Schedule 14C").

2.5 Certificate of Merger, dated as of January 9, 2003, between the registrant
and Quicktest 5, Inc., incorporated by reference to Exhibit 10.1 of the Schedule
14C.

3.1 Certificate of Incorporation, dated as of April 4, 1989, incorporated by
reference to Registration Statement on Form 10-SB (File No. 0-25022), dated as
of October 27, 1994.

3.2 Certificate of Amendment to Certificate of Incorporation, dated as of
November 8, 1990, incorporated by reference to Registration Statement on Form
10-SB (File No. 0-25022), dated as of October 27, 1994.

3.3 Certificate of Amendment to Certificate of Incorporation, dated as of
October 26, 1994, incorporated by reference to Registration Statement on Form
10-SB (File No. 0-25022), dated as of October 27, 1994.

3.4 Certificate of Increase in Number of Authorized Shares of Common Stock,
dated as of July 8, 1996, amending the Certificate of Incorporation,
incorporated by reference to our Annual Report on Form 10-KSB (File No.
000-25022), dated as of March 30, 2000.

3.5 Certificate of Amendment to Certificate of Incorporation, dated as of March
12, 1997, incorporated by reference to our Annual Report on Form 10-KSB (File
No. 000-25022), dated as of March 30, 2000.

3.6 Certificate of Amendment to Certificate of Incorporation, dated as of March
20, 1998, incorporated by reference to our Annual Report on Form 10-KSB (File
No. 000-25022), dated as of April 14, 1998.

3.7 Certificate of Amendment to Certificate of Incorporation, dated as of March
31, 1998, incorporated by reference to our Annual Report on Form 10-KSB (File
No. 000-25022), dated as of April 14, 1998.

3.8 Certificate of Amendment to Certificate of Incorporation, dated as of July
8, 1999, incorporated by reference to our Annual Report on Form 10-KSB (File No.
000-25022), dated as of March 30, 2000.

3.9 Certificate of Amendment to Certificate of Incorporation, dated as of July
22, 1999, incorporated by reference to our Annual Report on Form 10-KSB (File
No. 000-25022), dated as of March 30, 2000.

3.10 Certificate of Amendment to Certificate of Incorporation, dated as of
December 17, 1999, incorporated by reference to our Annual Report on Form 10-KSB
(File No. 000-25022), dated as of March 30, 2000.

3.11 By-Laws of MoneyZone.com, Inc., incorporated by reference to Registration
Statement on Form 10-SB (File No. 0-25022), dated as of October 27, 1994.

4.1 Form of Registration Rights Agreement, dated as of October 1, 1999, by and
among EBonlineinc.com, and each of the investors listed on Exhibit A thereto,
incorporated by reference to our Annual Report on Form 10-KSB (File No.
000-25022), dated as of March 30, 2000.

4.2 Convertible Debenture Purchase and Exchange Agreement dated as of September
15, 2000, incorporated by reference to our Current Report on Form 8-K (File No.
000-25022), dated as of September 15, 2000.

4.3 6% Convertible and Exchangeable Debenture, incorporated by reference to our
Current Report on Form 8-K (File No. 000-25022), dated as of September 15, 2000.

4.4 Common Stock Purchase Warrant, incorporated by reference to our Current
Report on Form 8-K (File No. 000-25022), dated as of September 15, 2000.

4.5 Registration Rights Agreement, incorporated by reference to our Current
Report on Form 8-K (File No. 000-25022), dated as of September 15, 2000.

4.6 Registration Rights Agreement by and among registrant and NDMS Investments,
L.P. and NDMS Investments, L.P. assignees incorporated by reference to our
Annual Report on Form 10-KSB (File No. 000-25022) dated as of April 15, 2003.

4.7 $150,000 Promissory Note dated September 30, 2002, between the registrant
and NDMS Investments, L.P. incorporated by reference to our Annual Report on
Form 10-KSB (File No. 000-25022) dated as of April 15, 2003.

4.8 Amendment No. 1 to $150,000 Promissory Note dated February 28, 2003
incorporated by reference to our Annual Report on Form 10-KSB (File No.
000-25022) dated as of April 15, 2003.

4.9 Registration Rights Agreement dated September 30, 2002, between the
registrant and NDMS Investments, L.P. incorporated by reference to our Annual
Report on Form 10-KSB (File No. 000-25022) dated as of April 15, 2003.

5. Opinion on legality from Richardson & Patel LLC, filed herewith.

10.1 Office Building Lease dated March 15, 2002 between the registrant and
Village Green Officer Park incorporated by reference to our Annual Report on
Form 10-KSB (File No. 000-25022) dated as of April 15, 2003.

10.2 Agreement for the Assignment of Patent Rights, dated April 7, 2002, by and
between the registrant and Marshall Anlauf Thompson, incorporated by reference
to Exhibit 99.1 of the registrant's Form 8-K as filed with the Commission on
January 24, 2003.

10.3 2000 Stock Option Plan, incorporated by reference to Exhibit 10.1 of the
registrant's Form S-8 (File No. 333-92236) filed with the Commission on July 11,
2002 (the "Form S-8").

10.4 Amendment No. 1 to the 2000 Stock Option Plan, incorporated by reference to
Exhibit 10.2 of the Form S-8.

10.5 Amendment No. 2 to the 2000 Stock Option Plan, incorporated by reference to
Exhibit 10.3 of the registrant's Form S-8 (File No. 333-103208) filed with the
Commission on February 14, 2003.

10.6 Issuance Agreement dated September 30, 2002, by and between the registrant
and NDMS Investments, L.P. incorporated by reference to our Annual Report on
Form 10-KSB (File No. 000-25022) dated as of April 15, 2003.

10.7 Issuance Agreement, dated December 31, 2002, by and between the registrant
and NDMS Investments, L.P. incorporated by reference to our Annual Report on
Form 10-KSB (File No. 000-25022) dated as of April 15, 2003.

10.8 2003 Incentive Equity Stock Plan, incorporated by reference to Exhibit 10.1
of the registrant's Form S-8 (File No. 333-104740) filed with the Commission on
April 25, 2003.

10.9 Employment Agreement dated June 9, 2003 between the registrant and Timothy
J. Owens, incorporated by reference to our Annual Report on Form 10-KSB (File
No. 000-25022) dated as of September 19, 2003.

10.10 Employment Agreement dated June 9, 2003 between the registrant and Steven
H. Reder, incorporated by reference to our Annual Report on Form 10-KSB (File
No. 000-25022) dated as of September 19, 2003.

10.11 Employment Agreement dated August 4, 2003 between the registrant and
Norman Kunin, incorporated by reference to our Annual Report on Form 10-KSB
(File No. 000-25022) dated as of September 19, 2003.

10.12 Common Stock Purchase Warrant dated June 9, 2003 issued to Timothy J.
Owens, incorporated by reference to our Annual Report on Form 10-KSB (File No.
000-25022) dated as of September 19, 2003.

10.13 Common Stock Purchase Warrant dated June 9, 2003 issued to Steven Reder,
incorporated by reference to our Annual Report on Form 10-KSB (File No.
000-25022) dated as of September 19, 2003.

10.14 Common Stock Purchase Warrant dated August 4, 2003 issued to Norman A.
Kunin, incorporated by reference to our Annual Report on Form 10-KSB (File No.
000-25022) dated as of September 19, 2003.

10.15 Securities Purchase Agreement dated August 19, 2003 between the registrant
and various holders of the registrant's convertible debentures, incorporated by
reference to our Annual Report on Form 10-KSB (File No. 000-25022) dated as of
September 19, 2003.

10.16 Registration Rights Agreement dated August 19, 2003 between the registrant
and various holders of the registrant's convertible debentures, incorporated by
reference to our Annual Report on Form 10-KSB (File No. 000-25022) dated as of
September 19, 2003.

10.17 Warrant dated August 19, 2003 between the registrant and various holders
of the registrant's convertible debentures, incorporated by reference to our
Annual Report on Form 10-KSB (File No. 000-25022) dated as of September 19,
2003.

10.18 6% Convertible Debenture entered into by the registrant and various
holders on August 22, 2003, incorporated by reference to our Annual Report on
Form 10-KSB (File No. 000-25022) dated as of September 19, 2003.

10.19 Letter to holders of 6% Convertible Debentures regarding advance,
incorporated by reference to our Form 8-K (File No. 000-25022) filed with the
Securities and Exchange Commission on October 31, 2003.

10.20 Security Agreement executed by the registrant in favor of the holders of
the 6% Convertible Debentures, incorporated by reference to our Form 8-K (File
No. 000-25022) filed with the Securities and Exchange Commission on October 31,
2003.

10.21 License Agreement of Intellectual Property entered into by the registrant
and VMM, LLC in October 2003, filed herewith.

16. Letter on change in certifying accountant, incorporated by reference to the
Current Report on Form 8-K (File No. 000-25022) dated February 12, 2003.

21 Subsidiaries of the registrant, incorporated by reference to our Annual
Report on Form 10-KSB (File No. 000-25022) dated as of September 19, 2003.

22.1 Information Statement on Schedule 14C, incorporated by reference to
Schedule 14C (File No. 000-25022), dated as of March 20, 2000.

22.2 Information Statement on Schedule 14C, incorporated by reference to
Schedule 14C (File No. 000-25022), dated as of December 11, 2002.

23 Consent of Corbin & Company LLC, dated November 4, 2003, filed herewith.

ITEM 28. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes:

1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;

(ii) To reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement;

(iii) To include any additional or changed material information on the plan of
distribution.

2. That, for the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

3. To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.

4. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the 1933 Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused this Pre-Effective
Amendment No. 1 to Registration Statement on Form SB-2 to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Los Angeles,
State of California on the 4th day of November 2003.

QT 5, Inc.
a Delaware corporation

By: /s/ Timothy J. Owens
-------------------------------------------
Timothy J. Owens, Chief Executive Officer

/s/ Norman A. Kunin
-------------------------------------------
Norman A. Kunin, Chief Financial Officer

Pursuant to the requirements of the 1933 Securities Act, this Pre-Effective
Amendment No. 1 to Form SB-2 Registration Statement has been signed by the
following persons in the capacities with QT 5, Inc. and on the dates indicated.

Dated:November 4, 2003

/s/ Timothy J. Owens
- -------------------------------------------
Timothy J. Owens, Chief Executive Officer
and Director

Dated:November 4, 2003

/s/ Steven Reder
- -------------------------------------------
Steven Reder, President and Director

Dated:November 4, 2003

/s/ Norman A. Kunin
- -------------------------------------------
Norman A. Kunin, Chief Financial Officer