Edgar Filing: TECHLABS INC

U.S. Securities and Exchange Commission
Washington, D.C. 20549

Form 10-KSB
(Mark One)

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

For the fiscal year ended December 31, 2004

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

For the transition period from _______ to _______

Commission file number 000-26233

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

Florida 65-0843965
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)

8905 Kingston Pike
Suite 307
Knoxville, Tennessee 37923
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(Address of principal executive offices) (Zip Code)

Issuer's telephone number 215-243-8044
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Securities registered under Section 12(b) of the Exchange Act:

Title of each class Name of each exchange on which registered

None not applicable
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(Title of each class)

Securities registered under Section 12(g) of the Exchange Act:

common stock
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(Title of class)

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

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

State issuer's revenues for its most recent fiscal year. $30,718 for the 12
months ended December 31, 2004.

State the aggregate market value of the voting and non-voting common equity held
by non- affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked prices of such common equity, as of a
specified date within the past 60 days. The aggregate market value of the voting
stock held by non-affiliates computed at the closing price of Techlabs's common
stock on April 8, 2005 is approximately $230,060.

State the number of shares outstanding of each of the issuer's class of common
equity, as of the latest practicable date. As of April 8, 2005, 725,964 shares
of common stock are issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) of the Securities Act of 1933 ("Securities Act"). Not Applicable.

Transitional Small Business Disclosure Form (check one): Yes No X
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When used in this annual report, the terms "Techlabs," "we," and "us" refers to
Techlabs, Inc., a Florida corporation, and its subsidiaries.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

CERTAIN STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-KSB CONTAIN OR MAY
CONTAIN FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS WERE BASED ON VARIOUS FACTORS AND WERE DERIVED
UTILIZING NUMEROUS ASSUMPTIONS AND OTHER FACTORS THAT COULD CAUSE OUR ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. THESE
FACTORS INCLUDE, BUT ARE NOT LIMITED TO, OUR ABILITY TO CONSUMMATE A MERGER OR
BUSINESS COMBINATION, ECONOMIC, POLITICAL AND MARKET CONDITIONS AND
FLUCTUATIONS, GOVERNMENT AND INDUSTRY REGULATION, INTEREST RATE RISK, U.S. AND
GLOBAL COMPETITION, AND OTHER FACTORS. MOST OF THESE FACTORS ARE DIFFICULT TO
PREDICT ACCURATELY AND ARE GENERALLY BEYOND OUR CONTROL. YOU SHOULD CONSIDER THE
AREAS OF RISK DESCRIBED IN CONNECTION WITH ANY FORWARD-LOOKING STATEMENTS THAT
MAY BE MADE HEREIN. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE OF THIS REPORT.
READERS SHOULD CAREFULLY REVIEW THIS ANNUAL REPORT IN ITS ENTIRETY, INCLUDING
BUT NOT LIMITED TO OUR FINANCIAL STATEMENTS AND THE NOTES THERETO AND THE RISKS
DESCRIBED IN "ITEM 1. DESCRIPTION OF BUSINESS--RISK FACTORS." EXCEPT FOR OUR
ONGOING OBLIGATIONS TO DISCLOSE MATERIAL INFORMATION UNDER THE FEDERAL
SECURITIES LAWS, WE UNDERTAKE NO OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO
ANY FORWARD-LOOKING STATEMENTS, TO REPORT EVENTS OR TO REPORT THE OCCURRENCE OF
UNANTICIPATED EVENTS. FOR ANY FORWARD-LOOKING STATEMENTS CONTAINED IN ANY
DOCUMENT, WE CLAIM THE PROTECTION OF THE SAFE HARBOR FOR FORWARD-LOOKING
STATEMENTS CONTAINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

We generate our revenues from fees earned by us from the rental of our
Starting Point.com email list, and from fees paid directly by customers of our
Florida Fountain of Youth Spa, an anti-aging day spa located in Stuart, Florida,
which began operations in November 2004.

STARTING POINT.COM

The Starting Point.com email list is derived from opt-ins to our
Starting Point web site located at www.stpt.com. This web site was designed to
offer a variety of web searching tools. Users can also perform targeted searches
utilizing Starting Point.com's database of directories and web sites that
include 13 distinct sections covering topics from investments to entertainment
to sports to weather and more, with each section having its own easy-to-use,
organized format. Starting Point was previously managed for us by a third party.

For the year ended December 31, 2003 our sole customer was
ResponseBase, a third party direct marketing company. In 2003 we advised by
ResponseBase that they were exiting that segment of their business. As a result,
in 2004 we had no customers for our Starting Point.com email list and did not
generate any revenue from this line of business. We are therefore continuing to
seek a replacement for ResponseBase.

In addition to our Starting Point web site property, we also own
Interplanner.com and InternetChic Marketing. Neither of these web site
properties is generating revenues at this time. Interplanner.com was designed as
a free online calendar and personal information management (PIM) service that
offered a comprehensive set of features, including a personal calendar, group
calendars, contact lists, appointment entry and tracking, and task lists, as
well as a variety of content. Interplanner's original source code and
documentation was developed for us by a third party. We own all intellectual
property rights associated with Interplanner. InternetChic Marketing was a
business-to-business marketing solution provider focused on developing and
implementing Internet marketing and web site traffic building programs for
Internet businesses and traditional brick and mortar companies.

COMPETITION

We compete with a vast number of companies in the collection and rental
of targeted opt-in email addresses. This business segment is intensely
competitive and rapidly changing and has proven to be a very difficult business
model. Many of our current and potential competitors have greater name
recognition, longer operating histories, larger customer bases and significantly
greater financial, technical, marketing, public relations, sales, distribution
and other resources. Some of our potential competitors are among the largest and
most well-capitalized companies in the world. Because of our small size, we
cannot assure you that we will ever compete effectively in our market segment.

GOVERNMENT REGULATION

We are subject to general business regulations and laws, as well as
regulations and laws specifically governing the Internet and eCommerce. Existing
and future laws and regulations may impede the growth of the Internet or other
online services. These regulations and laws may cover user privacy, email
distribution, data protection, content, copyrights, and consumer protection. It
is not clear how existing laws governing issues such as personal privacy apply
to the Internet and eCommerce. Unfavorable resolution of these issues may harm
our business.

INTELLECTUAL PROPERTY

We rely upon a combination of trade secret, copyright and trademark
laws to protect our intellectual property. Except where we have granted third
parties contractual rights to use our intellectual property, we limit access to,
and distribution of, and other proprietary information. However, the steps we
take to

protect our intellectual property may not be adequate to deter misappropriation
of our proprietary information. In general, there can be no assurance that our
efforts to protect our intellectual property rights through copyright, trademark
and trade secret laws will be effective to prevent misappropriation of our
intellectual property. Our failure or inability to protect our proprietary
rights could materially adversely affect our business, financial condition and
results of operations. We have also obtained the right to the Internet addresses
www.stpt.com. As with phone numbers, we do not have and cannot acquire any
property rights in an Internet address. We do not expect to lose the ability to
use the Internet address; however, there can be no assurance in this regard and
the loss of these addresses may have a material adverse affect on our ability to
license the related products and services.

SIREN FOUNTAIN OF YOUTH SPA

In November 2004, we opened the Florida Fountain of Youth Spa, a
3,000-s.f. anti-aging day spa located on the St. Lucie River in Stuart, Florida.
Our facility offers, on a day-use basis, hormone replacement therapies,
electro-magnetic therapy, and sexual enhancement therapies under medical
supervision. Additionally, the center's facility has a complete cosmetic and
therapeutic day spa specializing in body wraps and facials, with plans to add
massage therapy and manicure and pedicure. In addition to the aforementioned spa
treatments and services, the facility also sells a variety of over-the-counter
diet supplements and vitamins, as well as skin care products, including the Skin
Fitness line of products.

COMPETITION

We compete with a significant number of competitors in the day spa
business segment in the South Florida marketplace, including several located
within close proximity to the Stuart, Florida area. Such locations include
stand-alone day spas, as well as day spas located within health, beauty and
fitness facilities, and within resorts and hotels. This business segment is
becoming highly competitive with other local facilities offering substantially
all, if not a greater number of the treatments and services that are offered at
our facility. Given that our facility is relatively new in the marketplace, many
of our current and potential competitors may have greater name recognition,
longer operating histories, larger customer bases and significantly greater
financial, technical, marketing, public relations, sales, distribution and other
resources. Because of our small size and status as a recent start-up, we cannot
assure you that we will ever compete effectively in our market segment.

EMPLOYEES

As of December 31, 2004 we had one part-time employee, Jayme Dorrough
our sole officer and director. As of December 31, 2004, our day spa operation
had 3 full-time employees.

OUR HISTORY

We were formed in the State of Florida in May 1998 under the name
Coordinated Physician Services, Inc. to organize and operate primary care
physician networks for managed medical care organizations. In February 1999 we
abandoned this business due to excessive competition, changed our name to
Techlabs, Inc. and embarked on a business strategy of a developer and incubator
of start-up and emerging Internet companies and businesses.

PENDING NAME CHANGE

On July 28, 2004 Techlabs issued a press release stating its Board of
Directors approved changing the corporate name to Siren International Corp.
Techlabs anticipates filing an information statement with the SEC regarding this
pending name change during 2005.

RISK FACTORS

An investment in our common stock involves a significant degree of
risk. You should not invest in our common stock unless you can afford to lose
your entire investment. You should consider carefully the following risk factors
and other information in this prospectus before deciding to invest in our common
stock.

WE HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT. WE DO NOT ANTICIPATE
THAT WE WILL REPORT A PROFIT IN THE FORESEEABLE FUTURE.

For the year ended December 31, 2004, we reported a net loss of
$438,429 and at December 31, 2004 we had an accumulated deficit of $8,426,831.
Though for the first nine months of fiscal 2004 we had no revenues, subsequent
to September 30, 2004 we expanded our operations to include day spa services,
resulting in total revenues for fiscal 2004 of $30,718. While a significant
portion of our accumulated losses from inception through September 30, 2004 are
non-cash, we have never generated sufficient revenues to offset our operating
costs. We are dependent upon our recently commenced day spa operations for our
revenues and to provide sufficient working capital. These operations are subject
to all the risks inherent in a new business and we are unable to predict if
these operations will generate sufficient revenue to meet our operating expenses
in future periods. Our principal stockholder has historically advanced certain
funds to us to pay our expenses, and we believe that it will continue to pay
these expenses for us until such time as we are able to generate sufficient
revenues from our own operations. As a result of the uncertainty surrounding our
revenues in the near future, you should not purchase shares of our common stock
based upon our historical operations or financial results.

THE DAY SPA MARKET SEGMENT IS HIGHLY COMPETITIVE, AND IF WE ARE UNABLE TO
COMPETE EFFECTIVELY IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS,
PROSPECTS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

We believe the day spa market segment is highly competitive and at
times changes rapidly due to consumer preferences and industry trends. We
compete primarily with local companies, some of whom have significantly greater
resources than we have.

CONSUMERS MAY REDUCE DISCRETIONARY PURCHASES OF OUR SPA TREATMENTS AND SERVICES
AS A RESULT OF A GENERAL ECONOMIC DOWNTURN.

We believe that consumer spending on day-spa treatments and services is
influenced by general economic conditions and the availability of discretionary
income. Accordingly, we may experience sustained periods of declines in sales
during economic downturns, or in the event of terrorism or diseases affecting
customers purchasing patterns. In addition, a general economic downturn may
result in reduced traffic in our day-spa, which may, in turn, result in reduced
net sales of over-the counter products to our customers. Any resulting material
reduction in our sales could have a material adverse effect on our business,
prospects, results of operations and financial condition.

WE DEPEND ON THIRD PARTIES FOR THE MANUFACTURE AND DELIVERY OF PRODUCTS SOLD AT
OUR DAY SPA.

We do not own or operate any significant manufacturing facilities with
respect to over-the counter diet supplements and vitamins or skin care products.
We currently obtain these products from a limited number of manufacturers and
other suppliers. If we were to experience delays in the delivery of the products
or if these suppliers were unable to supply product, our customer relationships,
revenues and earnings could suffer.

WE DEPEND ON OUR ABILITY TO HIRE AND RETAIN QUALIFIED PERSONNEL AT OUR DAY SPAS.

We believe the success of our day spa businesses also depends on our
ability to hire and retain the services of qualified personnel. We cannot assure
you that a sufficient number of highly qualified personnel will be available to
us.

OUR DAY SPA BUSINESS OPERATIONS MAY BE SUBJECT TO APPLICABLE LOCAL AND STATE
REGULATIONS, INCLUDING LICENSING OF CERTAIN PERSONNEL.

Our day spa operations may be subject to applicable regulations in the
locations where such operations are conducted. These regulations could adversely
affect our ability to sell, or could increase the cost of, our services and
products. Among other things, local and state licensing requirements for certain
personnel could impede our ability to provide certain services.

PRODUCT LIABILITY AND OTHER POTENTIAL CLAIMS COULD ADVERSELY AFFECT US.

The nature and use of our day spa products and services could give rise
to product liability or other claims if a customer were injured while receiving
one of our services or suffered adverse reactions following the use of our
products. Adverse reactions could be caused by various factors beyond our
control, including hypoallergenic sensitivity and the possibility of malicious
tampering with our products. If any of these events occurred, we could incur
substantial litigation expense, receive adverse publicity and suffer a loss of
sales, and, therefore, our business, results of operations and financial
condition could be materially, adversely

WE ARE DEPENDENT UPON OUR PRINCIPAL STOCKHOLDER FOR INTERIM CAPITAL.

We have no working capital with which to meet our cash needs, including
the costs of compliance with the continuing reporting requirements of the
Securities Exchange Act of 1934, as amended. Our principal stockholder has
agreed to advance any funds necessary to insure that we are able to meet our
reporting obligations under the Securities Exchange Act of 1934. However,
Yucatan has not agreed in writing to provide these funds and can only do so to
the extent that it has available funds. No commitments to provide additional
funds have been made by other stockholders or third parties. Accordingly, there
can be no assurances that any funds will be available to us to allow it to cover
our expenses. If we were unable to continue to meet our reporting requirements
under the Securities Exchange Act of 1934, our common stock would be delisted
from the OTCBB and there would be no market for our securities.

WE WILL NEED TO RAISE ADDITIONAL CAPITAL.

We will be required to raise additional working capital to fund the
operations of our day spa business. It has been very difficult for small
companies to raise working capital in the past few years, and we cannot
anticipate if the funding environment in the U.S. or aboard will improve during
2005 and beyond. Accordingly, we cannot offer any assurances that if we should
need additional capital that it will be available to us on terms and conditions
which are reasonably acceptable, if at all. Depending upon the financial
condition of our ultimate merger or business combination partner, the lack of
sufficient working capital could materially and adversely affect any revenues we
may be able to generate in future periods.

OUR COMMON STOCK IS CURRENTLY QUOTED ON THE OTCBB, BUT TRADING IN OUR STOCK IS
LIMITED.

The market for our common stock is extremely limited, and we do not
anticipate that it there will be any increased liquidity in our common stock
until such time as we consummate a merger or business combination. Even if we
are successful in completing such a transaction, there are no assurances an
active market for our common stock will ever develop. Accordingly, purchasers of
our common stock cannot be assured any liquidity in their investment.

BECAUSE OUR STOCK CURRENTLY TRADES BELOW $5.00 PER SHARE, AND IS QUOTED ON THE
OTC BULLETIN BOARD, OUR STOCK IS CONSIDERED A "PENNY STOCK" WHICH CAN ADVERSELY
EFFECT ITS LIQUIDITY.

If the trading price of our common stock remains less than $5.00 per
share, our common stock is considered a "penny stock," and trading in our common
stock is subject to the requirements of Rule 15g-9 under the Securities Exchange
Act of 1934. Under this rule, broker/dealers who recommend low-priced securities
to persons other than established customers and accredited investors must
satisfy special sales practice requirements. The broker/dealer must make an
individualized written suitability determination for the purchaser and receive
the purchaser's written consent prior to the transaction.

SEC regulations also require additional disclosure in connection with
any trades involving a "penny stock," including the delivery, prior to any penny
stock transaction, of a disclosure schedule explaining the penny stock market
and its associated risks. These requirements severely limit the liquidity of
securities in the secondary market because few broker or dealers are likely to
undertake these compliance activities. In addition to the applicability of the
penny stock rules, other risks associated with trading in penny stocks could
also be price fluctuations and the lack of a liquid market.

It is unlikely that our common stock will trade above $5.00 per share
in the foreseeable future, accordingly, any liquidity in the market will be
further hampered by the applicability of the Penny Stock Rules to trading in our
common stock.

PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS MAY DELAY OR PREVENT A
TAKE-OVER WHICH MAY NOT BE IN THE BEST INTERESTS OF OUR STOCKHOLDERS.

Provisions of our articles of incorporation and bylaws may be deemed to
have anti-takeover effects, which include when and by whom special meetings of
our stockholders may be called, and may delay, defer or prevent a takeover
attempt. In addition, certain provisions of the Florida Business Corporations
Act also may be deemed to have certain anti-takeover effects which include that
control of shares acquired in excess of certain specified thresholds will not
possess any voting rights unless these voting rights are approved by a majority
of a corporation's disinterested stockholders.

In addition, our articles of incorporation authorize the issuance of
shares of preferred stock with such rights and preferences as may be determined
from time to time by our board of directors. Our board of directors may, without
stockholder approval, issue preferred stock with dividends, liquidation,
conversion, voting or other rights that could adversely affect the voting power
or other rights of the holders of our common stock.

ITEM 2. DESCRIPTION OF PROPERTY.

The business and operations of our Siren Fountain of Youth Spa are
conducted from a 3,033 square foot facility located in Stuart Florida, under a
lease agreement expiring on April 30, 2006, which has current base rent of
$39,429 per annum.

ITEM 3. LEGAL PROCEEDINGS.

In July 2004 Techlabs was named as a defendant in the matter Donald
Kurth, Rosaly Kurth and Kristine Kurth v. Feingold & Kam, LLC, Feingold & Kam,
David Feingold et al, filed in the Circuit Court for the 15th District in and
for Palm Beach County, Florida. The portion of the suit which relates to
Techlabs involves the purported actions by the unaffiliated third parties in the
October 1999 private sales of shares of Techlabs in transactions in which
Techlabs was neither a party nor received any proceeds therefrom. The plaintiffs
are alleging that the shares of Techlabs' stock which were the subject of these
purported private sales failed to bear the appropriate restrictive legends as
required under the Securities Act of 1933, and the plaintiff's are further
alleging conversion and civil theft against David Feingold and Feingold & Kam.
Techlabs' does not believe that it violated any provisions of the Securities Act
of 1933 as it relates to the shares of its common stock which are the subject of
this complaint and is seeking to have Techlabs' dismissed as a defendant. During
the fourth quarter of fiscal 2004, the suit was dismissed.

On August 23, 2004 Techlabs filed a complaint against Addante and
Associates, a Delaware corporation, in the U.S. District Court for the Eastern
District of Tennessee, styled Techlabs, Inc. and Starting Point, Inc. v. Addante
and Associates, Case No. 3:04-CV-385. Techlabs had previously engaged Addante
and Associates to perform certain services for it in connection with its
Starting Point.com web site. In this complaint Techlabs alleges a breach of
contract by Addante and Associates and it is seeking $500,000 in damages.

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

There were no submissions of matters to security holders in the period
ended December 31, 2004.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common stock is quoted on the OTCBB under the symbol TELA. The reported high
and low bid prices for the common stock as reported on the OTCBB are shown below
for the periods indicated. The quotations reflect inter-dealer prices, without
retail mark-up, markdown or commission, and may not represent actual
transactions.

High Low
FISCAL 2003

First Quarter ended March 31, 2003 ............. $0.59 $0.51
Second Quarter ended June 30, 2003 ............. $2.75 $0.51
Third Quarter ended September 30, 2003 ......... $4.15 $2.75
Fourth Quarter ended December 31, 2003 ......... $3.75 $1.30

FISCAL 2004

First Quarter ended March 31, 2004 ............. $3.75 $1.01
Second Quarter ended June 30, 2004 ............. $3.60 $1.25
Third Quarter ended September 30, 2004 ......... $4.20 $1.50
Fourth Quarter ended December 31, 2004 ......... $1.95 $0.75

On April 8, 2005 the last sale price of our common stock as reported on
the OTCBB was $0.60. As of April 8, 2005 there were approximately 35 record
owners of our common stock.

DIVIDEND POLICY

We have never paid cash dividends on our common stock. We intend to
keep future earnings, if any, to finance the expansion of our business. We do
not anticipate that any cash dividends will be paid in the foreseeable future.

EQUITY COMPENSATION PLAN INFORMATION AS OF DECEMBER 31, 2004

The following table sets forth securities authorized for issuance under
equity compensation plans, including individual compensation arrangements, by us
under our 1999 Stock Incentive Plan and any compensation plans not previously
approved by our stockholders as of December 31, 2004.

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

1999 Stock Incentive Plan 0 - 455,362

Equity compensation plans
not approved by stockholders none none none

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

We reported revenues of $30,718 and $14,969 for the fiscal years 2004
and 2003, respectively, and net income (loss) of $(438,429) and $132,586 for
those respective periods. Revenues in fiscal 2004 represent fees paid by
customers of our day spa operations, while revenues in fiscal 2003 represented
fees earned by us from the rental of our StartingPoint.com email list to
ResponseBase, a third party direct marketing company. ResponseBase was our sole
source of revenues during fiscal 2003 and we were materially reliant on revenues
from this customer. Subsequent to fiscal 2003 ResponseBase exited that segment
of their business and consequently we did not generate any revenues from the
rental of our email list during fiscal 2004. We continue to source replacements
for ResponseBase.

Cost of goods sold in fiscal 2004 totaled $41,874, resulting in gross
margin (loss) of ($11,156), as compared to cost of goods sold in fiscal 2003 of
$0 and a resulting gross margin of $14,969.

Selling, general and administrative expenses increased to $59,749 in
fiscal 2004, from $14,275 in fiscal 2003 primarily as a result of costs
associated with the opening of our day spa operations. For fiscal 2004 and 2003
we also recorded depreciation and amortization of $70,404 and $125,543,
respectively. For fiscal 2003 we recognized an impairment of $32,000 on the
value of certain intangible assets which represent the opt-in email list we
market, and an impairment of fixed assets of $55,904, which represented fixed
assets related to our Interplanner.com website.

Total operating expenses in fiscal 2004 also includes a non-cash stock
compensation expense of $293,000, representing the value of common stock issued
as compensation to our President (as described elsewhere herein) as well as the
value of common stock issued as compensation consulting services. There was no
comparable expense recorded for fiscal 2003.

Other income (expense) for fiscal 2004 and 2003 was ($4,120) and
$345,339, respectively, which amount for fiscal 2004 represented interest
expense, and for fiscal 2003 represents a one-time gain on foregiveness of
indebtedness.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2004, we had a working capital deficit of $133,013 as
compared to a deficit of $37,015 at December 31, 2003. Net cash used by
operating activities was $69,663 for fiscal 2004, as compared to net cash
provided by operating activities of $23,383 for fiscal 2003. This change is
primarily attributable a stock compensation expense of $293,000 recorded in
fiscal 2004, for which there was no comparable expense in fiscal 2003, as
compared to a one-time gain of $345,339 on forgiveness of indebtedness in fiscal
2003, for which there was no comparable gain in fiscal 2004. Net cash used in
investing activities in fiscal 2004 was $25,093, as compared to $0 during fiscal
2003. Net cash provided by financing activities in fiscal 2004 was $94,500,
compared to net cash used in financing activities in fiscal 2003 of $23,141.

We have an accumulated deficit of $8,426,831 at December 31, 2004, and
the report from of our independent auditor on our audited financial statements
at December 31, 2004 contains a going concern modification. We will continue to
incur losses during the foreseeable future. Our principal shareholder has agreed
to provide us sufficient funds to pay our direct expenses and corporate overhead
until such time as we generate sufficient revenues to fund these costs.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The SEC's Financial Reporting Release No. 60, "Cautionary Advice
Regarding Disclosure About Critical Accounting Policies" ("FRR 60"), suggests
companies provide additional disclosure and commentary on those accounting
policies considered most critical. A critical accounting policy is one that is
both very important to the portrayal of our financial condition and results, and
requires management's most difficult, subjective or complex judgments.
Typically, the circumstances that make these judgments difficult, subjective
and/or complex have to do with the need to make estimates about the effect of
matters that are inherently uncertain. We believe the accounting policies below
represent our critical accounting policies as contemplated by FRR 60.

Allowances for refunds and product returns. We may grant our customers
the right to return products which they do not find satisfactory. Upon sale, we
evaluate the need to record a provision for product returns based on our
historical experience, economic trends and changes in customer demand.

Provisions for inventory obsolescence. We may need to record a
provision for estimated obsolescence of inventory. Our estimates would consider
the cost of inventory, the estimated market value and our historical experience.
If there are changes to these estimates, provisions for inventory obsolescence
may be necessary.

Statement of Financial Accounting Standards ("SFAS") No. 151,
"Inventory Costs - an amendment of ARB No. 43, Chapter 4"" SFAS No. 152,
"Accounting for Real Estate Time-Sharing Transactions - an amendment of FASB
Statements No. 66 and 67," SFAS No. 153, "Exchanges of Non-monetary Assets - an
amendment of APB Opinion No. 29," and SFAS No. 123 (revised 2004), "Share-Based
Payment," were recently issued. SFAS No. 151, 152, 153 and 123 (revised 2004)
have no current applicability to the Company and have no effect on the financial
statements.

In May 2003, SFAS No. 150 "Accounting for Certain Financial Instruments
with characteristics of both liabilities and equity" was issued. This Statement
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). Many of those instruments
were previously classified as equity. Some of the provisions of this Statement
are consistent with the current definition of liabilities in FASB Concepts
Statement No. 6, Elements of Financial Statements. The remaining provisions of
this Statement are consistent with the Board's proposal to revise that
definition to encompass certain obligations that a reporting entity can or must
settle by issuing its own equity shares, depending on the nature of the
relationship established between the holder and the issuer. While the Board
still plans to revise that definition through an amendment to Concepts Statement
6, the Board decided to defer issuing that amendment until it has concluded its
deliberations on the next phase of this project. That next phase will deal with
certain compound financial instruments including puttable shares, convertible
bonds, and dual-indexed financial instruments.

This statement was adopted effective January 1, 2004. The adoption of
this pronouncement did not have a material effect on our financial position or
results of operations.

OBLIGATIONS AND COMMITMENTS

The following table reflects our obligation to make future payments
under contractual obligations and other commercial commitments as of December
31, 2004. This table does not include trade payables and other operating
expenses not subject to written commitments such as salaries.

Payments Due By Period as of December 31, 2004
----------------------------------------------

Less Than
Total 1 Year 1-3 Years 4-5 Years
----------------------------------------------------------------------------

Facility lease $137,121 $58,766 $78,355 $0

ITEM 7. FINANCIAL STATEMENTS

The financial statements required by this report are included,
commencing on page F-1.

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

On March 9, 2004 we notified Dempsey Vantrease & Follis PLLC, our
principal independent accountant, that we were terminating their services. Our
decision to terminate their services was based upon their notification to us
that such firm had decided not to register with the Public Company Accounting
Oversight Board. The report of Dempsey Vantrease & Follis PLLC on our financial
statements for the fiscal year ended December 31, 2002 contained an explanatory
paragraph as to our ability to continue as a going concern. Other than such
going concern modification, such report did not contain an adverse opinion or
disclaimer of opinion, nor was it modified as to uncertainty, audit scope, or
accounting principles. There were no disagreements between our company and
Dempsey Vantrease & Follis PLLC on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to Dempsey Vantrease & Follis PLLC's satisfaction, would have
caused it to make reference to the subject matter of the disagreement(s) in
connection with its report.

In accordance with the requirements of Item 304 of Regulation S-B of
the Securities Act of 1933, we provided Dempsey Vantrease & Follis PLLC with a
copy of Item 4 of our Report on Form 8-K as filed on March 31, 2004 and they
furnished us a letter addressed to the SEC stating that such firm agreed with
the statements made by us in that Report. A copy of such letter was filed as an
exhibit to our Report on Form 8-K filed on March 31, 2004.

On March 9, 2004 we engaged Webb & Company, P.A. to act as our
principal independent accountant. Prior to such engagement, during the two most
recent fiscal years and any subsequent interim period prior to engaging Webb &
Company, P.A. we did not consult with such firm regarding the application of
accounting principles to a specific completed or contemplated transaction, or
the type of audit opinion that might be rendered on our financial statements.
The change in our principal independent accountants was approved by our board of
directors.

ITEM 8A. CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Securities Exchange Act of 1934,
as of the end of the period covered by the annual report, being October 31,
2004, we have carried out an evaluation of the effectiveness of the design and
operation of our company's disclosure controls and procedures. This evaluation
was carried out under the supervision and with the participation of our
company's management, including our company's President. Based upon that
evaluation, our company's President concluded that our company's disclosure
controls and procedures are effective. There have been no significant changes in
our company's internal controls or in other factors, which could significantly
affect internal control subsequent to the date we carried out our evaluation.

Disclosure controls and procedures and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time period specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under the
Securities Exchange Act of 1934 is accumulated and communicated to management
including our President as appropriate, to allow timely decisions regarding
required disclosure.

ITEM 8B. OTHER INFORMATION

None.

PART III

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

The following individuals are our executive officers and directors:

Name Age Position
---- --- --------
Jayme Dorrough 36 Director, President
and Secretary

JAYME DORROUGH. Mrs. Dorrough has been a member of our board of
directors since December 2000 and has served as our president and secretary
since February 2001. Since 1994 Mrs. Dorrough has been president and the
principal of Yucatan Holding Company, a privately-held investment company with
interests in various companies. Yucatan Holding Company is our principal
shareholder. Mrs. Dorrough has been a member of the board of directors of Eline
Entertainment Group, Inc. (OTCBB: EEGI) since September 2002.

There are no family relationship between any of the executive officers
and directors. Each director is elected at our annual meeting of stockholders
and holds office until the next annual meeting of stockholders, or until his
successor is elected and qualified. There are no committees of our board of
directors.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to us under Rule 16a-3(d) of the Securities Exchange Act of 1934
("Exchange Act") during the fiscal year ended December 31, 2004, we are not
aware of any person that failed to file on a timely basis, as disclosed in the
aforementioned Forms, reports required by Section 16(a) of the Exchange Act
during the fiscal year ended December 31, 2004.

CODE OF ETHICS

Effective December 31, 2003, our board of directors adopted a Code of
Business Conduct and Ethics that applies to, among other persons, our company's
President, as well as persons performing similar functions. As adopted, our Code
of Business Conduct and Ethics sets forth written standards that are designed to
deter wrongdoing and to promote:

* honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;

* full, fair, accurate, timely, and understandable disclosure in
reports and documents that we file with, or submit to, the
Securities and Exchange Commission and in other public
communications made by us;

* compliance with applicable governmental laws, rules and regulations;

* the prompt internal reporting of violations of the Code of Business
Conduct and Ethics to an appropriate person or persons identified in
the Code of Business Conduct and Ethics; and

* accountability for adherence to the Code of Business Conduct and
Ethics.

Our Code of Business Conduct and Ethics requires, among other things,
that all of our company's personnel shall be accorded full access to our
President with respect to any matter that may arise relating to the Code of
Business Conduct and Ethics. Further, all of our company's personnel are to be
accorded full access to our company's board of directors if any such matter
involves an alleged breach of the Code of Business Conduct and Ethics by our
President.

In addition, our Code of Business Conduct and Ethics emphasizes that
all employees, and particularly managers and/or supervisors, have a
responsibility for maintaining financial integrity within our company,
consistent with generally accepted accounting principles, and federal,
provincial and state securities laws. Any employee who becomes aware of any
incidents involving financial or accounting manipulation or other
irregularities, whether by witnessing the incident or being told of it, must
report it to his or her immediate supervisor or to our company's President. If
the incident involves an alleged breach of the Code of Business Conduct and
Ethics by the President, the incident must be reported to any member of our
board of directors. Any failure to report such inappropriate or irregular
conduct of others is to be treated as a severe disciplinary matter. It is
against our company policy to retaliate against any individual who reports in
good faith the violation or potential violation of our company's Code of
Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics is filed herewith with the
Securities and Exchange Commission as Exhibit 14 to this report. We will provide
a copy of the Code of Business Conduct and Ethics to any person without charge,
upon request. Requests can be sent to: Techlabs, Inc., 8905 Kingston Pike, Suite
307, Knoxville, Tennessee 37923.

Audit Committee Financial Expert

The Board has determined that Mrs. Dorrough is not an audit committee
financial expert as defined by Item 401(e)(2) of Regulation S-B of the
Securities exchange Act of 1934.

Director Independence

The Board has determined that Mrs. Dorrough is not independent within
the NASDAQ Stock Market's director independence rules.

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The table below sets forth information relating to the compensation
paid by us during the past three fiscal years to: (i) the president and Chief
Executive Officer; and (ii) each other executive officer who earned more than
$100,000 during last three completed fiscal years (the "Named Executive
Officers").

Annual Long-Term
Compensation Compensation
--------------------------------------- --------------------------------------
Restricted Securities
Other Annual Stock Underlying All
Name and Principal Fiscal Salary Bonus Compensation Awards Options Other
Position Year ($) ($) ($) ($) SAR (#) Compensation
-------------------------------------------------------------------------------------------------------

Jayme Dorrough 2004 $15,000 $0 $168,000 $0 0 $0
President and 2003 $12,000 $0 $0 $0 0 $0
Director (1)

(1) Mrs. Dorrough has served as our president since February 2002. Mrs. Dorrough
is not a party to an employment agreement with us. While we do not pay Mrs.
Dorrough a salary, we have recognized an expense of $12,000 for the year ended
December 31, 2003, and $15,000 for the year ended December 31, 2004, which we
believe equals the fair value of her services during this period. This
compensation has been treated as imputed compensation. In September 2004, the
Company issued Mrs. Dorrough 60,000 shares of its common stock valued at
$168,000 in full satisfaction of $12,984 of accrued unpaid compensation and for
additional compensation for the remaining fiscal 2004 as well as for past
services.

STOCK OPTIONS

There were no stock options or stock appreciated rights granted to the
named executive officers in the fiscal year ended December 31, 2004.

There were no stock options exercised by the named executive officers
during the fiscal year ended December 31, 2004. There were no stock options or
stock appreciation rights held or exercised by the named executive officers
during the fiscal year ended December 31, 2004.

DIRECTOR COMPENSATION

We do not pay directors for attending meeting of the Board of
Directors.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

As of April 11, 2005, there were 725,964 of our common stock,
12,500,000 shares of our Class A Special Preferred Stock and 225,000 shares of
our Class C Preferred Stock issued and outstanding. These securities represent
all of our issued and outstanding voting securities. Each share of common stock
is entitled to one vote, each share of Class A Special Preferred Stock is
entitled to three votes and each share of Class C Preferred Stock is entitled to
150 votes on all matters submitted to our shareholders for a vote, and all three
classes of these securities vote together as one class. The following table
contains information regarding beneficial ownership of our common stock as of
April 11, 2005 held by:

* persons who own beneficially more than 5% of our outstanding voting
securities,

* our directors,

* named executive officers, and

* all of our directors and officers as a group.

A person is deemed to be the beneficial owner of securities that can be
acquired by such a person within 60 days from March 31, 2005 upon exercise of
options, warrants or convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that options, warrants and convertible
securities that are held by such a person (but not those held by any other
person) and are exercisable within 60 days from that date have been exercised.
Unless otherwise indicated, the address of each of the listed beneficial owners
identified is 8905 Kingston Pike, Suite 307, Knoxville, Tennessee 37923. Unless
otherwise noted, we believe that all persons named in the table have sole voting
and investment power with respect to all shares of our voting securities
beneficially owned by them.

Name of Amount and Nature of Percentage Percentage of
Beneficial Owner Beneficial Ownership of Class Voting Control(1)
---------------- -------------------- ---------- -----------------

Common Stock
------------
Jayme Dorrough (2) ............ 342,530 47.2% 82.4%
All executive officers
and directors as a
group (one person)(2) ....... 342,530 47.2% 82.4%
Yucatan Holding Company (2) ... 342,530 47.2% 82.4%

Class A Special Preferred Stock
-------------------------------
Jayme Dorrough (2) ............ 8,330,000 66.6% 82.4%
All executive officers
and directors as a
group (one person)(2) ....... 8,330,000 66.6% 82.4%
Thomas J. Taule (3) ........... 4,170,000 33.3% 5.8%
Yucatan Holding Company (2) ... 8,330,000 66.6% 82.4%

Class C Preferred Stock (4)
---------------------------
Jayme Dorrough (2) ............ 225,000 100% 82.4%
All executive officers
and directors as a
group (one person)(2) ....... 225,000 100% 82.4%
Yucatan Holding Company (2) ... 225,000 100% 82.4%
_________

* represents less than 1%

(1) Percentage of Voting Control is based upon the number of issued and
outstanding shares of our common stock, shares of our Class A Special
Preferred Stock and Class C Preferred Stock at March 31, 2004. At March 31,
2004 the holders of our outstanding shares of common stock, Class A Special
Preferred Stock and Class C Preferred Stock were entitled to an aggregate of
71,742,964 votes at any meeting of our shareholders, which includes 492,964
votes attributable to the outstanding shares of common stock, 37,500,000
votes attributable to the outstanding shares of Class A Special Preferred
Stock and 33,750,000 votes attributable to the Class C Preferred Stock.

(2) Mrs. Dorrough, our sole officer and director, is the sole officer and
director of Yucatan Holding Company. All shares owned beneficially by Mrs.
Dorrough are owned of record by Yucatan Holding Company. The 342,530 shares
of common stock, 8,330,000 shares of Class A Special Preferred Stock (which
is entitled to 24,990,000 votes) and 225,000 shares of Class C Preferred
Stock (which is equal to 33,750,000 votes) are aggregated together in
determining the Percent of Voting Control held by Mrs. Dorrough through
Yucatan Holding Company.

(3) Mr. Taule served as our president and CEO from April 2000 until February
2002. His address is 1861 North Federal Highway, #146,, Hollywood, Florida
33020. The Percentage of Voting Control includes 5,500 shares of common
stock and 4,170,000 shares of Class A Special Preferred Stock (which is
entitled to 12,510,000 votes) held by Mr. Taule.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

From time to time Yucatan Holding Company, the Company's principal
shareholder, has advanced funds for working capital. In addition, effective
January 1, 2004 the Company began accruing compensation of $15,000 annually for
Mrs. Jayme Dorrough, the Company's sole officer and director and the principal
of Yucatan Holding Company, Inc. In September 2004, the Company issued Mrs.
Dorrough 60,000 shares of its common stock valued at $168,000 in full
satisfaction of $12,984 of accrued unpaid compensation and for additional
compensation for the remaining fiscal 2004 as well as for past services.

At December 31, 2004, we owed Yucatan Holding Company $27,410, net of
repayments. This amount will be paid by the Company working capital permits

During the nine months ended September 30, 2004 a third party loaned us
under an oral agreement $6,500 on a non-interest bearing, on demand basis.

During the year ended December 31, 2004, the president of Florida
Fountain of Youth Spa loaned us under an oral agreement $69,631 on a
non-interest bearing, on demand basis.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

3(i)(a) Articles of Incorporation (1)
3(i)(b) Articles of Amendment to the Articles of Incorporation (1)
3(i)(c) Articles of Amendment to the Articles of Incorporation (1)
3(i)(d) Articles of Amendment to the Articles of Incorporation (1)
3(i)(e) Articles of Amendment to the Articles of Incorporation (1)
3(i)(f) Articles of Amendment to the Articles of Incorporation (1)
3(i)(g) Articles of Amendment to the Articles of Incorporation (2)
3(ii) Bylaws (1) 10 1999 Stock Incentive Plan (3)
14 Code of Ethics (7)
16.1 Letter from Dempsey Vantrease & Follis PLLC regarding change in
certifying accountants (6)
21 Subsidiaries of the registrant
31.1 Rule 13a-14a/5d-14(a) Certificate of Chief Executive and Financial
Officer
32.1 Section 1350 Certificate of Chief Executive and Financial Officer

(1) Incorporated by reference to the registrant's registration statement on
Form 10-SB, file number 000-26233, as filed with the SEC on June 1,
1999, as amended.

(2) Incorporated by reference to the registrant's preliminary Information
Statement on Schedule 14C as filed with the SEC on May 23, 2002.

(3) Incorporated by reference to the registrant's registration statement on
Form S-8, file number 333-30124, as filed with the SEC on February 11,
2000.

(4) Incorporated by reference to the registrant's Report on Form 8-K/A as
filed with the SEC on October 7, 2002.

(5) Incorporated by reference to the registrant's Report on Form 8-K/A as
filed with the SEC on October 23, 2002.

(6) Incorporated by reference to the registrant's Report on Form 8-K as
filed with the SEC on March 31, 2004.

(7) Incorporated by reference to the registrant's Report on Form 10-KSB as
filed with the SEC on April 22, 2004.

(b) Reports on 8-K

(1) Incorporated by reference to the registrant's Report on Form 8-K, file
number 000-26233, as filed with the SEC on December 7, 2004

(2) Incorporated by reference to the registrant's Report on Form 8-K, file
number 000-26233, as filed with the SEC on February 22, 2005

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Webb & Company audited the Company's financial statements for the
fiscal years ended December 31, 2004 and December 31, 2003.

Fees related to services performed by such firms in fiscal 2004 and
2003 were as follows:

2004 2003
---- ----

Audit Fees (1) $ 7,640 $ 3,500
Audit-Related Fees 0 0
Tax Fees (2) 0 0
All Other Fees 0 0
-----------------------------------------------

Total $ 7,640 $3,500

(1) Audit fees represent fees for professional services provided in
connection with the audit of our financial statements and review of our
quarterly financial statements.

(2) Tax fees principally included tax advice, tax planning and tax
return preparation.

The Board of Directors has reviewed and discussed with the Company's
management and Webb & Company the audited financial statements of the Company
contained in the Company's Annual Report on Form 10-KSB for the Company's 2004
fiscal year. The Board has also discussed with Webb & Company the matters
required to be discussed pursuant to SAS No. 61 (Codification of Statements on
Auditing Standards, AU Section 380), which includes, among other items, matters
related to the conduct of the audit of the Company's financial statements.

The Board has received and reviewed the written disclosures and the
letter from Webb and Company required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), and has discussed with
Webb and Company its independence from the Company.

The Board has considered whether the provision of services other than
audit services is compatible with maintaining auditor independence.

Based on the review and discussions referred to above, the Board
approved the inclusion of the audited financial statements be included in the
Company's Annual Report on Form 10-KSB for its 2004 fiscal year for filing with
the SEC.

Audit Committee's Pre-Approval Policies

The Board's policy is now to pre-approve all audit services and all
permitted non-audit services (including the fees and terms thereof) to be
provided by the Company's independent auditor; provided, however, pre-approval
requirements for non-audit services are not required if all such services (1) do
not aggregate to more than five percent of total revenues paid by the Company to
its accountant in the fiscal year when services are provided; (2) were not
recognized as non-audit services at the time of the engagement; and (3) are
promptly brought to the attention of the Board and approved prior to the
completion of the audit.

The Board pre-approved all of Webb and Company's fees described above.

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, the registrant caused this report to be signed on its
behalf by the undersigned and duly authorized.

Dated: April 21, 2005 Techlabs, Inc.

By: /s/ Jayme Dorrough
------------------
Jayme Dorrough
President, principal executive and
principal accounting officer

In accordance with the Exchange Act, this report has been signed by the
following persons in the capacities and on the dates indicated.

SIGNATURE TITLE DATE

/s/ Jayme Dorrough Director, President April 21, 2005
------------------ and Secretary
Jayme Dorrough

TECHLABS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page No.
--------

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

Consolidated Balance Sheet -
December 31, 2004................................................F-3

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

Statements of Changes in Stockholders' Deficiency -
For the Years Ended December 31, 2004 and 2003...................F-5

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

Notes to Consolidated Financial Statements................................F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:
Techlabs, Inc.

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

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

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

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company had a net loss of $438,429, a
working capital deficiency of $133,013, has an accumulated deficit of
$8,426,831, a stockholders' deficiency of $108,546 and used cash in operations
of $69,663. This raises substantial doubt about its ability to continue as a
going concern. Management's plans concerning this matter are also described in
Note 2. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

WEBB & COMPANY, P.A.

Boynton Beach, Florida
April 20, 2005

F-2

Techlabs, Inc. and Subsidiaries
Consolidated Balance Sheet
December 31, 2004

ASSETS
Current Asset
Cash and cash equivalents ..................................... $ -
-----------

Total current assets ........................................ -

Property, Plant & equipment, net .............................. 20,406

Other Assets
Security deposits ............................................. 4,061
-----------

$ 24,467
===========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Bank overdraft ................................................ $ 2,699
Accounts payable & accrued expenses ........................... 26,773
Advances from related party ................................... 69,631
Due to stockholders ........................................... 27,410
Loan - related party .......................................... 6,500
-----------

Total Current Liabilities ................................... 133,013

STOCKHOLDERS' DEFICIENCY
Preferred stock, $.001 par value; 25,000,000 shares
authorized; 12,500,000 shares Class A Special Preferred
issued and outstanding ...................................... 12,500
Preferred stock, $.001 par value; 10,000,000 shares Class B
authorized; no shares issued and outstanding ................ -
Preferred stock, $.001 par value; 10,000,000 shares
authorized; 225,000 shares Class C Preferred issued and
outstanding ................................................. 225
Common stock, $.001 par value; 200,000,000 shares
authorized, 652,964 issued and outstanding ................. 653
Additional paid-in capital .................................... 8,304,907
Accumulated deficit ........................................... (8,426,831)
-----------

Total Stockholders' Deficiency .............................. (108,546)
-----------

$ 24,467
===========

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

F-3

Techlabs, Inc. and Subsidiaries
Consolidated Statements of Operations
For the years ended December 31, 2004 and 2003

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

Revenues ............................................. $ 30,718 $ 14,969

Cost of sales ........................................ 41,874 -
--------- ---------

Gross profit ....................................... (11,156) 14,969

Operating expenses
General and administrative ......................... 59,749 14,275
Depreciation & amortization ........................ 70,404 125,543
Impairment of intangible assets .................... - 32,000
Impairment of fixed assets ......................... - 55,904
Stock compensation ................................. 293,000 -
--------- ---------

Total operating expenses ............................. 423,153 227,722
--------- ---------

Operating loss ....................................... (434,309) (212,753)

Other expense
Interest expense ................................... 4,120 -
Gain on forgiveness of indebtedness ................ - 345,339
--------- ---------

Net (loss) income .................................... $(438,429) $ 132,586
========= =========

Earnings per share:
Basic and diluted (loss) income per common share ... $ (0.77) $ 0.27

Basic weighted average
shares outstanding ................................. 571,813 492,964
========= =========

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

F-4

Techlabs, Inc. and Subsidiaries
Statements of Changes in Stockholders' Deficiency
For the Years Ending December 31, 2004 and 2003

Preferred Stock Common Stock
---------------------------------------------------- ---------------
Class A Class B Class C Additional
------------------- -------------- --------------- --------------- Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Total
---------- ------- ------ ------ ------- ------ ------- ------ ---------- ----------- ---------

Balance,
January 1, 2003 . 12,500,000 $12,500 - $ - 225,000 $ 225 492,964 $ 493 $7,983,947 $(8,120,988) $(123,823)

Capital
contribution of
accrued salary .. - - - - - - - - 12,000 - 12,000

Imputed salary .. - - - - - - - - 12,000 - 12,000

Net income ...... - - - - - - - - - 132,586 132,586
---------- ------- ------ ------ ------- ------ ------- ------ ---------- ----------- ---------

Balance,
December 31, 2003 12,500,000 12,500 0 0 225,000 225 492,964 493 8,007,947 (7,988,402) 32,763

In kind
contribution of
interest expense - - - - - - - - 4,120 - 4,120

Shares issued to
consultants -
related party.... - - - - - - 100,000 100 124,900 - 125,000

Shares issued to
officer ......... - - - - - - 60,000 60 167,940 - 168,000

Net loss ........ - - - - - - - - - (438,429) (438,429)
---------- ------- ------ ------ ------- ------ ------- ------ ---------- ----------- ---------

Balance,
December 31, 2004 12,500,000 $12,500 0 $ 0 225,000 $ 225 652,964 $ 653 $8,304,907 $(8,426,831) $(108,546)
========== ======= ====== ====== ======= ====== ======= ====== ========== =========== =========

The accompanying notes are an integral part of these financial statements

F-5

Techlabs, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31, 2004 and 2003

2004 2003
--------- ---------
Operating Activities:
Net (loss) income .................................... $(438,429) $ 132,586
Adjustments to reconcile net (loss) income to
net cash provoded by (used in) operating activities:
Depreciation and amortization ....................... 70,404 125,543
Stock compensation .................................. 293,000 -
In kind interest expense ............................ 4,120 -
Imputed salary ...................................... - 12,000
Loss on impairment of fixed asset ................... - 87,904
Gain on foregiveness of indebtness .................. - (345,339)
Changes in operating assets and liabilities:
Increase in accounts receivable .................... 966 8,463
Increase in accounts payable ....................... 276 2,226
--------- ---------

Net Cash (Used in) Provided by Operating Activities (69,663) 23,383
--------- ---------

Investing Activities:
Deposits ............................................. (4,061) -
Purchase of property and equipment ................... (21,032) -
--------- ---------

Net Cash (Used in) Provided by Investing Activities (25,093) -
--------- ---------

Financing Activities:
Bank overdraft ....................................... 2,699 -
Advance from stockholder ............................. 15,670 -
Proceeds from demand notes ........................... 69,631 -
Advance from related party ........................... 6,500 -
Repayment on advances from stockholders .............. - (23,141)
--------- ---------

Net Cash Provided by (Used in) Financing Activities 94,500 (23,141)
--------- ---------

(Decrease) increase in Cash and Cash Equivalents ....... (256) 242

Cash, beginning of period .............................. 256 14
--------- ---------

Cash, end of period .................................... $ - $ 256
========= =========

The accompanying notes are an integral part of these financial statements

F-6

TECHLABS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2004

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) Nature of Operations

Techlabs, Inc. ("Techlabs") was incorporated in the State of Florida in May 1998
under the name Coordinated Physician Services, Inc. to organize and operate
primary care physician networks for managed medical care organizations. In
February 1999 the Company abandoned this business due to excessive competition
and changed its name to Techlabs, Inc. Prior to January 2004, the Company
generated revenues through the rental of its list of targeted, opt-in email
addresses which were generated from their website. During November 2004, the
Company formed and opened Florida Fountain of Youth Spas, Inc. Florida Fountain
of Youth Spa is a full service spa located in South Florida.

(B) Basis of Consolidation

The accompanying consolidated financial statements for fiscal 2004 include the
accounts of Techlabs and its wholly-owned subsidiary Florida Fountain of Youth
Spas from inception November 2004 to December 31, 2004. During 2004, Starting
Point.com, Inc. and Interplanner.com were disolved. The consolidated financial
statements for 2003 include the accounts of Techlabs and its wholly-owned
subsidiaries StartingPoint.com, Inc. and Interplanner.com, Inc. All significant
intercompany accounts and transactions have been eliminated in the
consolidation.

In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities as the date of the financial statements and
revenues and expenses during the reported period. Actual results could differ
from those estimates.

(D) Cash Equivalents

Cash and cash equivalents consist of all highly liquid investments with original
maturities of three months or less.

(E) Concentration of Credit Risk

Revenue from one customer represented 100% of the Company's consolidated revenue
for the year ended December 31, 2003. In 2004, the Company did not rely on any
one significant customer for more than 10% of its revenues.

(F) Revenue Recognition

Prior to January 2004, the Company's revenue was derived from rentals of its
opt-in email lists to third party list management companies. Revenue from email
lists is recognized when billed by the company that manages the list, and is
recognized on a net basis in that the Company does not act as the principal in
the transaction and the amount the Company earns is fixed. The Company has not
had any revenue from rentals of its opt-in email lists since 2003. The Company
is currently seeking a third party management company to manage its list.

F-7

Revenue from Florida Fountain of Youth Spas is recognized upon delivery of
is currently seeking a third party management company to manage its list.
Revenue from Florida Fountain of Youth Spas is recognized upon delivery of
services. The Company does not offer gift certificates nor does it sale spa
packages.

(G) Inventories

Inventories are valued at the lower of cost or market. Cost is determined using
the first-in, first-out (FIFO) method. Provision for potentially obsolete
inventory is made based on management's analysis of inventory levels.

(H) Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation.
Depreciation on assets placed in service is determined using the straight-line
method over the estimated useful lives of the related assets which range from
three to seven years. Significant improvements are capitalized while maintenance
and repairs are expensed as incurred.

(I) Web Site Development Costs

The Company accounts for costs incurred in connection with the development of
its web sites in accordance with Statement of Position SOP98-1, "Accounting for
Costs of Computer Software Developed or Obtained for Internal Use" and Emerging
Issues Task Force Issue No. 00-2, "Accounting for Web Site Development Costs."
Accordingly, all costs incurred in planning the development of a web site are
expensed as incurred. Costs, other than general and administrative and overhead
costs, incurred in the web site application and infrastructure development
stage, which involve acquiring hardware and/or developing software to operate
the web site are capitalized. Fees paid to an Internet service provider for
hosting the web site on its servers connected to the Internet are expensed.
Other costs incurred during the operating stage, such as training administration
costs, are expensed as incurred. Costs incurred during the operating stage for
upgrades and enhancements of the web site are capitalized if it is probable that
they will result in added functionality.

Capitalized web site development costs are amortized on a straight-line basis
over their estimated useful life of five years. At December 31, 2004, all
capitalized web site development costs had been fully amortized and or impaired.

(J) Intangibles

Intangible assets consist of domain names, trade names and contracts related to
a purchased Internet web portal site and meta-search technology. Amortization
for intangibles is determined using the straight-line method over the estimated
useful life of five years.

(K) Long-Lived Assets

Long-lived assets and certain identifiable intangible assets (other than
goodwill and intangible assets with indefinite lives) held and used by the
Company are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. For
purposes of evaluating the recoverability of long-lived assets (other than
goodwill and intangible assets with indefinite lives), the recoverability test
is performed using undiscounted net cash flows related to the long-lived assets.
The Company reviews such long-lived assets to determine that carrying values are

F-8

not impaired. Under Statement of Financial Accounting Standards ("SFAS") No.
142, goodwill and intangible assets with indefinite lives are no longer
amortized but are reviewed for impairment. Intangible assets that are not deemed
to have indefinite lives will continue to be amortized over their useful lives;
however, no maximum life applied.

(L) Reclassification

Certain amounts from prior periods have been reclassified to conform to the
current year presentation.

(M) Fair Value of Financial Instruments

SFAS No. 107, "Disclosure About Fair Value of Financial Instruments," requires
certain disclosures regarding the fair value of financial instruments. Trade
accounts receivable, accounts payable, and loans from stockholders are reflected
in the financial statements at fair value because of the short-term maturity of
the instruments.

(N) Income Taxes

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes". Under SFAS No. 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carry-forwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

(O) Income (Loss) Per Share

Basic and diluted income (loss) per share is calculated by dividing net income
(loss) for the period by the weighted average number of shares of common stock
outstanding during the period. The assumed exercise of stock options is only
included in the calculation of diluted earnings per share, if dilutive. As of
December 31, 2004 and 2003, the Company did not have any outstanding common
stock equivalents.

(P) Business Segments

The Company currently operates in one segment and therefore segment information
is not presented.

(Q) Stock-Based Compensation

In accordance with the Statement of Financial Accounting Standards ("SFAS") No.
123, Accounting for Stock Based Compensation, the Company has elected to account
for stock options issued to employees under Accounting Principles Board Opinion
No. 25 ("APB Opinion No. 25") and related interpretations. The Company accounts
for stock options issued to consultants and for other services in accordance
with SFAS No. 123.

F-9

(R) Advertising Costs

Advertising costs are expensed as incurred. Advertising expense totaled $1,395
and $0 for the years ended December 31, 2004 and 2003, respectively.

(S) New Accounting Pronouncements

Statement of Financial Accounting Standards ("SFAS") No. 151, "Inventory Costs -
an amendment of ARB No. 43, Chapter 4"" SFAS No. 152, "Accounting for Real
Estate Time-Sharing Transactions - an amendment of FASB Statements No. 66 and
67," SFAS No. 153, "Exchanges of Non-monetary Assets - an amendment of APB
Opinion No. 29," and SFAS No. 123 (revised 2004), "Share-Based Payment," were
recently issued. SFAS No. 151, 152, 153 and 123 (revised 2004) have no current
applicability to the Company and have no effect on the financial statements.

In May 2003, SFAS No. 150 "Accounting for Certain Financial Instruments with
characteristics of both liabilities and equity" was issued. This Statement
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). Many of those instruments
were previously classified as equity. Some of the provisions of this Statement
are consistent with the current definition of liabilities in FASB Concepts
Statement No. 6, Elements of Financial Statements. The remaining provisions of
this Statement are consistent with the Board's proposal to revise that
definition to encompass certain obligations that a reporting entity can or must
settle by issuing its own equity shares, depending on the nature of the
relationship established between the holder and the issuer. While the Board
still plans to revise that definition through an amendment to Concepts Statement
6, the Board decided to defer issuing that amendment until it has concluded its
deliberations on the next phase of this project. That next phase will deal with
certain compound financial instruments including puttable shares, convertible
bonds, and dual-indexed financial instruments.

This statement was adopted effective January 1, 2004. The adoption of this
pronouncement did not have a material effect on our financial position or
results of operations.

NOTE 2 GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company had a net loss of
$438,429, a working capital deficiency of $133,013, an accumulated deficit of
$8,426,831, a stockholders' deficiency of $108,546 and used cash in operations
of $69,663. This raises substantial doubt about our ability to continue as a
going concern. The accompanying financial statements do not include any
adjustments related to the recoverability and classification of assets or the
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.

Although there are no assurances, the Company believes that with increased
sales, the success of the Florida Fountain of Youth Spa, raising additional
capital and borrowings from its principal shareholder it will be able to
continue as a going concern.

F-10

NOTE 3 INVENTORY

Inventory consisted of the following at December 31, 2004:

Inventory of vitamins and supplements ....... $ 9,272
Reserve for impaired inventory .............. (9,272)
---------
$ -
=========

It is the Company's intention as new products come in fiscal 2005 to scrap and
or giveaway products as promotions and has thus recorded an impairment charge of
$9,272 during the year ended December 31, 2004, which is included in cost of
sales.

NOTE 4 PROPERTY AND EQUIPMENT

Included in property, plant & equipment at December 31, 2004 are:

Hardware & computer equipment ............... $ 223,618
Furniture & fixtures ........................ 5,213
Leasehold improvements ...................... 848
Spa Equipment ............................... 14,971
Less reserve for impairment ................. (55,904)
---------
188,746
Less: accumulated depreciation .............. (168,340)
---------
$ 20,406
=========

Depreciation expense was $626 and $0 for the years ended December 31, 2004 and
2003, respectively. Amortization of intangibles was $69,778 and $125,543 for the
years ended December 31, 2004 and 2003, respectively.

During the year ended December 31, 2003 the Company determined that certain
recorded property, equipment and intangible assets were impaired, resulting in
an impairment loss of $55,904, which is included in selling, general and
administrative expenses.

The Hardware & computer equipment, reflected above is not currently in use by
the Company. The net book value of the equipment is $0 at December 31, 2004 and
2003.

NOTE 5 RELATED PARTY TRANSACTIONS

From time to time Yucatan Holding Company, the Company's principal shareholder,
has advanced funds for working capital. In addition, effective January 1, 2004
the Company began accruing compensation of $15,000 annually for Mrs. Jayme
Dorrough, the Company's sole officer and director and the principal of Yucatan
Holding Company, Inc. In September 2004, the Company issued Mrs. Dorrough 60,000
shares of its common stock valued at $168,000 in full satisfaction of $12,984 of
accrued unpaid compensation and for additional compensation for the remaining
fiscal 2004 as well as for past services.

F-11

Mrs. Dorrough has served as the Company's president since February 2002. Mrs.
Dorrough is not a party to an employment agreement with the Company. While the
Company does not pay Mrs. Dorrough a salary, it has recognized an expense of
$12,000 for the year ended December 31, 2003 which it believes equals the fair
value of her services during these periods. This compensation has been treated
as imputed compensation.

At December 31, 2004, the Company owed Yucatan Holding Company $27,410, net of
repayments. This amount will be paid by the Company when working capital permits

During the year ended December 31, 2004 a third party loaned us under an oral
agreement $6,500 on a non-interest bearing, unsecured, due on demand basis.

During the year ended December 31, 2004, various entities owned by the president
of Florida Fountain of Youth Spa made advances totaling $69,631 to the Company
under an oral agreement. These advances are non-interest bearing, unsecured, and
due on a demand basis.

In conjunction with the advances and or loans noted above, the Company recorded
an in kind contribution of interest totaling $4,120, representing interest at 8%
on the advances, during the year ended December 31, 2004

NOTE 6 GAINS ON FORGIVENESS OF INDEBTEDNESS

During the fiscal year ended December 31, 2003 the Company adjusted certain
liabilities as set forth below which had been reflected on the Company's balance
sheet at January 1, 2003. These one-time extinguishments resulted in a gain of
$345,339 as reflected on the Company's Consolidated Statements of Operations for
the fiscal year ended December 31, 2003.

Liability
at 2002 Adjustment Gain
--------- ---------- --------
Accounts payable and
accrued expenses ................ $ 329,491 $(255,339) $255,339
Due from stockholders ............ $ (90,000) $ 90,000 $ 90,000
--------- --------- --------
$345,339
========

NOTE 7 COMMITMENTS AND CONTIGINCIES

OPERATING LEASE

The Company leases office and retail spa space under an operating lease that
expires in April 2006. The lease calls for monthly rental of $4,897. In
addition, the lease requires monthly contributions to common area maintenance.
Rental expense under the operating leases for the years ended December 31, 2004
and 2003, was approximately $19,063 and $0, respectively.

Approximate minimum future lease payments under this operating lease at December
31, 2004, are as follows:

2005 ............. $58,766
2006 ............. 19,589
-------
$78,355
=======

F-12

LITIGATION

In July 2004 Techlabs was named as a defendant in the matter Donald Kurth,
Rosaly Kurth and Kristine Kurth v. Feingold & Kam, LLC, Feingold & Kam, David
Feingold et al, filed in the Circuit Court for the 15th District in and for Palm
Beach County, Florida. The portion of the suit which relates to Techlabs
involves the purported actions by the unaffiliated third parties in the October
1999 private sales of shares of Techlabs in transactions in which Techlabs was
neither a party nor received any proceeds therefrom. The plaintiffs are alleging
that the shares of Techlabs' stock which were the subject of these purported
private sales failed to bear the appropriate restrictive legends as required
under the Securities Act of 1933, and the plaintiff's are further alleging
conversion and civil theft against David Feingold and Feingold & Kam. Techlabs'
does not believe that it violated any provisions of the Securities Act of 1933
as it relates to the shares of its common stock which are the subject of this
complaint and is seeking to have Techlabs' dismissed as a defendant. During the
fourth quarter of fiscal 2004, the suit was dismissed.

On August 23, 2004 Techlabs filed a complaint against Addante and Associates, a
Delaware corporation, in the U.S. District Court for the Eastern District of
Tennessee, styled Techlabs, Inc. and Starting Point, Inc. v. Addante and
Associates, Case No. 3:04-CV-385. Techlabs had previously engaged Addante and
Associates to perform certain services for it in connection with its Starting
Point.com web site. In this complaint Techlabs alleges a breach of contract by
Addante and Associates and it is seeking $500,000 in damages. The Company
believes this litigation to be meritorious and is pursuing its claims
vigorously.

NOTE 8 CAPITAL STOCK

The Company's authorized capital consists of:

a. 200,000,000 shares of common stock, par value $.001 per share, of
which 652,964 and 492,964 shares were issued and outstanding at December 31,
2004 and 2003, respectively.

b. 10,000,000 of preferred stock, par value $.001 per share, of which
no shares are issued and outstanding;

c. 25,000,000 shares of special preferred stock, par value $.001 per
share, of which 12,500,000 shares have been designated Special Class A Preferred
Stock, all of which are outstanding. Of these shares, 8,330,000 shares are held
by the Company's principal shareholder, Yucatan Holding Company, and the
remaining 4,170,000 shares are held by Thomas J. Taule, the Company's former CEO
and member of its board of directors. The designations, rights and preferences
of the Special Class A Preferred Stock provide:

* the holders are not entitled to receive any assets in the event of
the liquidation or wrap of the Company;

* each share of Special Class A Preferred Stock entitles the holder to
three votes on all matters submitted to the Company's shareholders for a vote,
and the Special Class A Preferred Stock votes together with the Company's common
stock and its Class C Preferred Stock as one class; and

* the shares of Special Class A Preferred Stock are redeemable at the
sole option of the Company, with the manner of redemption, the redemption price
or prices and the terms and conditions of the redemption being determined by the
Company's board of directors; and

F-13

d. 10,000,000 shares of blank check preferred stock, par value $.001
per share (the "Blank Check Preferred Stock"). Series of the Blank Check
Preferred Stock may be created and issued from time to time, with such
designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the creation and
issuance of such series of Blank Check Preferred Stock as adopted by the Board
of Directors in its sole discretion. The Board has designated 225,000 shares of
Blank Check Preferred Stock as Class C Preferred Stock, all of which such shares
are issued and outstanding and held by the Company's principal shareholder,
Yucatan Holding Company. The designations, rights and preferences of the Class C
Preferred Stock include:

* the stated value of each share is $ 0.001,

* the shares are not redeemable without the consent of the holders of a
majority of the issued and outstanding shares of Class C Preferred Stock,

* each share of Class C Preferred Stock is convertible into shares of
the Company's common stock at the option of the Company at a conversion price to
be established by the holder and the Company at the time of conversion,

* the shares of Class C Preferred Stock do not pay any dividends,

* each share of Class C Preferred Stock entitles the holder to 150
votes on all matters submitted to the Company's shareholders for a vote, and the
Class C Preferred Stock votes together with the Company's common stock and its
Special Class A Preferred Stock as one class, and

* so long as the shares of Class C Preferred Stock are outstanding, the
Company will not be able to take certain actions without the approval of the
holders of a majority of the issued and outstanding shares, including:

- sell, convey, or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly-owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than 50%
of the voting power of the Company is transferred or disposed of;

- alter or change the rights, preferences or privileges of shares of
Class C Preferred Stock;

- increase or decrease the total number of authorized shares of Class C
Preferred Stock;

- authorize or issue, or obligate the Company to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security having rights, preferences or privileges over, or being
on a parity with or sto, the Class C Preferred Stock;

- redeem, purchase or otherwise acquire (or pay into or set aside for a
sinking fund for such purpose) any of the Company's securities;

- amend its articles of incorporation or bylaws;

- change the authorized number of its directors; or

- declare, order or pay any dividends on any class of its securities.

F-14

During the year ended December 31, 2004, the Company issued 60,000 shares of
restricted common stock to the Company's president having a fair value of
$168,000 on the date of grant and 100,000 shares of restricted common stock to a
related party for services having a fair value of $125,000 on the date of grant.

NOTE 9 STOCK INCENTIVE PLAN

In October 1999, the Company adopted its 1999 Stock Incentive Plan (the "Plan").
The purpose of the Plan is to promote our long-term success and the creation of
shareholder value by encouraging employees, directors and consultants to focus
on critical long-range objectives, encouraging the attraction and retention of
employees, outside directors and consultants and linking those individuals
directly to shareholder interests through increased stock ownership. Under the
Plan the Company can make awards either in the form of restricted shares or
options, which may be either incentive stock options or non-statutory stock
options.

Initially the maximum number of shares of common stock issuable upon the
exercise of restricted stock awards or stock options granted under the Plan was
1,500,000 shares. This amount is subject to increase on January 1 of each year
beginning on January 1, 2000 by the lesser of 1.5% of the total number of shares
of common stock then outstanding on a fully-diluted basis or 300,000 shares. As
of December 31, 2004 the maximum number of shares of the Company's common stock
available for issuance upon grants of restricted stock awards or stock options
was 1,977,024 shares. To date, the Company has granted restricted stock awards
or stock options which have been exercised for an aggregate of 1,521,662 shares
of our common stock. Accordingly, the Company currently has 455,362 shares
available under the Plan.

The Plan is to be administered by a committee consisting of two or more outside
directors who review management's recommendation as to the employees, outside
directors and consultants who are to receive awards under the Plan, determine
the type, number, vesting requirements and other features and conditions of the
awards, interpret the Plan and make all other decisions related to the Plan. The
Company's Board of Directors may also appoint a secondary committee of the
Board, composed of one or more directors who need not be independent, who may
administer the Plan with respect to employees and consultants who are not
considered officers or directors of Techlabs. This secondary committee may grant
awards under the Plan to such employees and consultants, and may determine all
features and conditions of those awards.

Options granted under the Plan may either be options qualifying as incentive
stock options under Section 422 of the Internal Revenue Code of 1986, as
amended, or non-statutory options. Incentive options can only be granted to our
a recipient who is our employee, and non-statutory options and restricted stock
awards can be granted to employees, outside directors and consultants. Options
granted to any optionee in a single fiscal year cannot exceed 1,000,000 shares,
except that options granted to a new employee in his or her first year of
employment cannot exceed 500,000 shares. Any incentive option granted under the
Plan must provide for an exercise price of not less than 100% of the fair market
value of the underlying shares on the date of such grant, but the exercise price

F-15

of any incentive option granted to an eligible employee owning more than 10% of
our common stock must be at least 110% of such fair market value as determined
on the date of the grant. The exercise price of non-statutory options cannot be
less than 85% of the fair market value of the underlying shares on the date of
the grant; however, the option agreement can provide that the exercise price
varies in accordance with a pre-determined formula while the option is
outstanding. The term of each Plan Option and the manner in which it may be
exercised is determined by the board of the directors, provided that no Plan
Option may be exercisable more than 10 years after the date of its grant.

Payment for incentive options can only be made as specified in the option
agreement and the form of payment for non-statutory options may be accepted by
the Board from time to time. The Plan permits cashless exercise of options, and
the payment of the exercise price of options through a full-recourse promissory
note and other forms which are consistent with applicable laws. Restricted stock
awards may be sold or awarded under the Plan for such consideration as our board
may determine, including cash, cash equivalents, full-recourse promissory notes,
past services and future services. In the event of a recapitalization of our
company, a spin-off or similar occurrence, or the declaration of a dividend
payable in shares of our common stock, in the Board's sole discretion it will
determine if any adjustments are to be made in the number of options and
restricted shares available for future awards and certain other matters. The
Plan will terminate on its tenth anniversary, unless earlier terminated by our
Board of Directors.

There were no issues under the plan during 2004 and 2003.

NOTE 10 INCOME TAXES

As of December 31, 2004 and 2003, the Company had net operating loss ("NOL")
carryforwards of approximately $5,005,700 and $4,880,500, respectively,
available to reduce future federal and state taxable income. These NOL
carryforwards will expire from 2021 through 2024. The Company had no other
material temporary differences. Due to uncertainties related to the extent and
timing of its future taxable income, the Company offset deferred tax assets of
approximately $1,325,000 and $1,660,000 as of December 31, 2004 and 2003,
respectively, by an equivalent valuation allowance as of December 31, 2004 and
2003.

NOTE 11 SUBSEQUENT EVENT

On July 28, 2004 Techlabs Board of Directors approved changing the corporate
name to Siren International Corp. Techlabs anticipates filing an information
statement with the SEC regarding this pending name change during the second
quarter of fiscal 2005.

In January 2005, the Company issued 60,000 shares of restricted common stock to
a related party for services having a fair value of $63,000 on the date of
grant.

F-16