As filed with the Securities and Exchange Commission on January 14, 2005

                                                     Registration No. 333-119947

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   -----------

                          AMENDMENT NO. 1 TO FORM SB-2
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                                   -----------

                                   PENGE CORP.
              (Exact Name of Small Business Issuer in its Charter)

           NEVADA                                                71-0895709
  (State or Jurisdiction of                                  (I.R.S. Employer
Incorporation or Organization)                              Identification No.)

                                       100
                          (Primary Standard Industrial
                           Classification Code Number)


                           11231 WINTER COTTAGE PLACE
                             LAS VEGAS, NEVADA 89135
                            TELEPHONE: (702) 562-3176

   (Address and telephone number of principal executive offices and principal
                               place of business)
                                   -----------

                                  KIRK FISCHER
                           11231 WINTER COTTAGE PLACE
                             LAS VEGAS, NEVADA 89135
                            TELEPHONE: (702) 562-3176

            (Name, address and telephone number of agent for service)
                                   -----------

                                   COPIES TO:
                                 BRYAN T. ALLEN
                                 SCOTT F. YOUNG
                                 P. JUSTIN JUDD
                                 STOEL RIVES LLP
                        201 SOUTH MAIN STREET, SUITE 1100
                           SALT LAKE CITY, UTAH 84111
                            TELEPHONE: (801) 328-3131
                            FACSIMILE: (801) 578-6999
                                   -----------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
                                   -----------





         If any of the securities being registered on this form are to be
offered on a delayed or continued basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. |X|

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

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

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

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

                                 CALCULATION OF REGISTRATION FEE

                                                                         PROPOSED
                                                         PROPOSED        MAXIMUM
                                                         MAXIMUM         AGGREGATE       AMOUNT OF
TITLE OF EACH CLASS OF                AMOUNT TO BE       OFFERING PRICE  OFFERING        REGISTRATION FEE
SECURITIES TO BE REGISTERED           REGISTERED(1)      PER UNIT(2)     PRICE
----------------------------------------------------------------------------------------------------------
                                                                             
Common Stock                          5,794,104(3)       $0.30           $1,738,231      $205(4)
----------------------------------------------------------------------------------------------------------


(1)      In addition, pursuant to Rule 416 of the Securities Act, this
         Registration Statement covers a presently indeterminate number of
         shares of common stock issuable upon the occurrence of a stock split,
         stock dividend or other similar transaction.
(2)      Estimated for the purpose of calculating the registration fee based
         upon the most recent price at which shares of common stock were sold in
         private placements by the Registrant.
(3)      Reduced from 14,925,978 shares in initial Registration Statement.
(4)      Previously paid.

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






                  SUBJECT TO COMPLETION DATED JANUARY 14, 2005

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

                                   PENGE CORP.

                        5,794,104 SHARES OF COMMON STOCK

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

         This prospectus relates to the offering and sale of 5,794,104 shares of
common stock, $.001 par value, of Penge Corp. Of the shares of Common Stock
being offered hereby, 3,861,466 shares of common stock are currently owned by
the selling stockholders and 1,932,638 shares are issuable upon the conversion
of convertible notes payable owned by the selling stockholders. All of the
offered shares are to be sold by persons who are existing security holders and
identified in the section of this prospectus entitled "SELLING STOCKHOLDERS."

         We will not receive any of the proceeds from the sale of the shares
offered pursuant to this prospectus. There is no established public market for
our common stock. There can be no assurance that our common stock will ever be
quoted on any quotation service or that any market for our common stock will
ever develop. The selling stockholders may sell the offered shares in privately
negotiated transactions or otherwise at negotiated or market prices. If our
shares of common stock are quoted on any quotation service or traded on any
market in the future, the selling stockholders may sell the offered shares
through such quotation service or market at market prices or negotiated prices.

         Our principal office is located at 11231 Winter Cottage Place, Las
Vegas, Nevada 89135, and our telephone number is (702) 562-3176.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.


                             Dated January 14, 2005






                                TABLE OF CONTENTS

                                                                            PAGE

PROSPECTUS SUMMARY.............................................................2

RISK FACTORS...................................................................5

FORWARD-LOOKING STATEMENTS....................................................12

SELLING STOCKHOLDERS..........................................................12

PLAN OF DISTRIBUTION..........................................................18

USE OF PROCEEDS...............................................................22

DILUTION......................................................................22

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS....................................................23

OUR BUSINESS..................................................................38

MANAGEMENT....................................................................45

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................50

DESCRIPTION OF OUR CAPITAL STOCK..............................................52

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS......................54

LEGAL MATTERS.................................................................55

EXPERTS.......................................................................55

INDEMNIFICATION OF OUR OFFICERS AND DIRECTORS.................................56

WHERE YOU CAN FIND MORE INFORMATION...........................................57

INDEX TO FINANCIAL STATEMENTS.................................................58







                               PROSPECTUS SUMMARY

         In addition to the following summary, you should read the more detailed
information about us, our common stock and our financial statements appearing
elsewhere in this prospectus.

OUR COMPANY

         Penge Corp. was incorporated in August 2002 as a Nevada corporation and
maintains its principal offices at 11231 Winter Cottage Place, Las Vegas, Nevada
89135. Our telephone number is (702) 562-3176.

         We began operations in September 2002 through the purchase of the Major
Trees Farm, a 272-acre tree and shrub farm near Tucson, Arizona. In May 2004, we
acquired the 17-acre Sampres Farm near Houston, Texas. In the two and one-half
years since our incorporation, we have invested all available capital into
expanding and improving the Major Trees Farm, acquiring the Sampres Farm, and
otherwise attempting to improve our tree production and nursery business. In
that process, we have significantly expanded the number of trees and shrubs
planted on, and harvested from, the Major Trees Farm and have been able to sell
all of our products at prices consistent with our budgets and projections.

         In the foreseeable future, we plan to continue to expand our operations
through the planting of additional trees and shrubs on our existing farms and
the purchase of additional nursery properties and businesses. We will continue
to look for nursery businesses or properties with annual revenues of between
$100,000 and $10 million. In the past, we have been able to negotiate favorable
terms with owners of small nursery businesses who are hoping to exit the market.
We attribute this success to the limited liquidity opportunities available to
small nursery businesses and hope to be able to exploit this situation to
negotiate favorable terms in the future.

         Our goal is to expand the number of farms we manage and the number of
trees and shrubs planted on those farms in the next few years while holding down
increases in our administrative and other general operating expenses. As we
spread our production costs over a larger inventory, we also hope to experience
a decline in our per-unit production and sales costs. Over time, we believe that
the increases in revenue from our expanded operations will outpace increases in
our administrative, operational and other expenses.

THE OFFERING
                                                    
------------------------------------------------------ -----------------------------------------------------------
Securities offered by the selling stockholders         5,794,104 shares of common stock
------------------------------------------------------ -----------------------------------------------------------
Shares of our common stock outstanding prior           12,952,332(1)
to this offering
------------------------------------------------------ -----------------------------------------------------------
Use of Proceeds                                        All proceeds of the offering will be received by the Selling
                                                       Stockholders. None of the proceeds will be received by Penge.
------------------------------------------------------ -----------------------------------------------------------
Risk Factors                                           You should read the "Risk Factors" beginning on page 5 as
                                                       well as other cautionary statements throughout this
                                                       prospectus before investing in any shares offered
                                                       hereunder.
------------------------------------------------------ -----------------------------------------------------------


                                       2




(1) Excludes up to 4,500,000 shares of common stock authorized for issuance upon
exercise of outstanding options granted pursuant to our stock option plans,
3,500,000 shares of our common stock reserved for the future grant of stock
options under those plans, 50,000 shares of our common stock issuable upon the
exercise of outstanding options and 1,932,638 shares issuable upon conversion of
convertible notes payable.

SUMMARY FINANCIAL INFORMATION


                                          FOR THE YEARS ENDED           FOR THE THREE MONTHS ENDED
                                                 JUNE 30,                     SEPTEMBER 30,
                                       -----------------------------   -----------------------------
                                           2004            2003            2004            2003
                                       -------------   -------------   -------------   -------------
                                                                           
STATEMENT OF OPERATIONS DATA:
Sales ..............................   $    806,977    $    669,721    $      2,652    $      9,161
Cost of goods sold .................        428,004         402,980           1,640           3,247
Gross profit (loss) ................        378,973         266,741           1,012           5,914
                                       -------------   -------------   -------------   -------------
Operating expenses .................        654,287         579,361         225,004         218,642
                                       -------------   -------------   -------------   -------------
Income (loss) from operations ......       (275,314)       (312,620)       (223,992)       (212,728)
Other income (expense):
  Interest income (expense) ........       (116,163)        (68,057)        (53,925)        (24,937)
  Loss on sale of available-for-sale
  securities .......................        (13,456)         (8,997)             --              --
                                       -------------   -------------   -------------   -------------
Other income (expense) .............       (129,619)        (77,054)        (53,925)        (24,937)
                                       -------------   -------------   -------------   -------------
Net income (loss) ..................   $   (400,005)   $   (337,586)   $   (277,917)   $   (233,883)
                                       -------------   -------------   -------------   -------------
Net loss per share .................   $       (.03)   $       (.04)   $       (.02)   $       (.02)
Weighted average shares used in
  computing net loss per share .....     12,179,860       9,653,338      12,922,984      11,839,203


                                       3




                                              SEPTEMBER 30, 2004   JUNE 30, 2004
                                              ------------------   -------------
BALANCE SHEET DATA:
Cash and cash equivalents ................            24,980        $     2,237
Working capital (deficit) ................          (191,890)          (303,333)
Total assets .............................         2,164,704          2,020,827
Retained deficit .........................        (1,015,508)          (737,591)
Stockholders' equity .....................           209,370            335,749



                                       4







                                  RISK FACTORS

         An investment in our common stock involves a high degree of risk. You
should consider the following discussion of risks in addition to the other
information in this prospectus before purchasing any shares of our common stock.
In addition to historical information, the information in this prospectus
contains "forward-looking" statements about our future business and performance.
Our actual operating results and financial performance may be very different
from what we expect as of the date of this prospectus. The risks described in
this prospectus represent all of the risks that management has identified and
determined to be material to our company. Additional risks and uncertainties not
currently known unto us or that we currently deem to be immaterial may also
materially and adversely affect our business operations. Any of these risks
could materially and adversely affect our business, results of operations and
financial condition.

                  Risks Regarding Our Company and Our Business
                  --------------------------------------------

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT FOR YOU TO EVALUATE OUR
PERFORMANCE AND FORECAST OUR FUTURE.

         We were formed and began operations in 2002. Our limited operating
history makes it difficult for you to evaluate our ability to generate revenues,
manage costs, create profits and generate cash from operations. Our limited
operating history also makes it difficult to analyze our ability to compete in
the marketplace. Before investing in our common stock, you should consider the
risks and difficulties we may encounter as a relatively new business, including
risks related to our ability to

         o    implement our business plan;

         o    obtain capital necessary to continue operations and implement our
              business plan;

         o    anticipate and adapt to changes in the market;

         o    find and acquire new businesses; and

         o    administer and manage our operations.

         If we fail to successfully manage these risks, our business will suffer
or fail. We cannot assure you that we will successfully address these risks or
that our business strategy will be successful.

IF WE CANNOT RAISE SUFFICIENT CAPITAL AT REASONABLE PRICES, WE MAY BE UNABLE TO
MEET EXISTING OBLIGATIONS OR ADEQUATELY EXPLOIT EXISTING OR FUTURE
OPPORTUNITIES.

         As of [date within 45 days of effective date], we had $[to be
completed] in cash and cash equivalents. As of September 30, 2004, we had a
working capital deficit of $(191,890). We need to obtain significant additional
working capital to implement our business plan of expanding our nursery


                                       5




operations and to be able to meet our financial obligations as they become due.
We will receive no proceeds from the sale of the common stock pursuant to this
prospectus, so we must find other sources of financing. We may not be able to
raise the additional capital needed, or we may be forced to pay an extremely
high price for capital. Factors affecting the availability and price of capital
may include the following:

         o    the availability and cost of capital generally;

         o    our financial results;

         o    market interest, or lack of interest, in our industry and business
              plan;

         o    the success of our business;

         o    the amount of our capital needs; and

         o    the amount of debt, options, warrants and convertible securities
              we have outstanding.

         If we cannot raise sufficient capital or are forced to pay a high price
for capital, we may be unable to meet current or future obligations or
adequately exploit existing or future opportunities. If we are unable to obtain
capital for an extended period of time, we may be forced to discontinue
operations.

WE HAVE PLEDGED A SIGNIFICANT PORTION OF OUR ASSETS TO SECURE FINANCING
AGREEMENTS, AND IF WE DEFAULT UNDER SUCH ARRANGEMENTS, OUR CREDITORS MAY
FORECLOSE ON OUR PLEDGED ASSETS.

         We have pledged substantially all of our assets to secure notes payable
funding our purchase of the Major Trees Farm and the Sampres Farm and to secure
other short-term financing. Governing security agreements grant our creditors
the rights and remedies that are commonly provided a secured creditor. If we
default under such arrangements, such creditors may foreclose on, seize and
dispose of, all pledged assets.

WE ARE REQUIRED TO MAKE PAYMENTS UNDER OUTSTANDING NOTES IN AMOUNTS EXCEEDING
OUR EXISTING CASH AND CASH EQUIVALENTS BEGINNING IN MARCH 2005.

         We have issued $555,000 of convertible notes payable to fund our
operations, $300,000 of which is secured by certain of the assets of the Major
Trees Farm and the Sampres Farm and $200,000 of which is secured by 50,000 trees
contained in our inventory. A payment of $276,572 in principal plus accrued
interest under these notes is due on March 31, 2005.

         In addition, as of September 30, 2004, we owed $815,561 under notes
issued in connection with our acquisitions of the Major Trees Farm and the
Sampres Farm, substantially all of which is secured by certain of the assets
associated with such farms. Payments totaling $309,905 are due by June 30, 2005.


                                       6




         The amounts payable under our outstanding notes in the current fiscal
year exceed our current cash and cash equivalents. If we default on payments
under these notes, the holders will have the right to accelerate principal and
interest payments and pursue remedies available at law and under governing
documents. The exercise of such remedies would likely result in our insolvency.

WE MAY BE UNABLE TO CONTINUE TO IDENTIFY APPROPRIATE ACQUISITION TARGETS OR
CONSUMMATE ACQUISITIONS OF THOSE TARGETS, AND IF WE ARE UNABLE TO DO SO OUR
BUSINESS WILL NOT CONTINUE TO GROW AS PLANNED.

         Our business plan anticipates growth primarily through the acquisition
of small businesses in the tree production and nursery industry. We may be
unable to implement that acquisition strategy for several reasons, including the
following:

         o    We may be unable to continue to locate suitable nursery businesses
              for acquisition for various reasons, including:

              o    the absence of such businesses;

              o    our lack of knowledge of such businesses or the fact that
                   they are for sale;

              o    our lack of sufficient working capital to conduct an adequate
                   search for potential acquisition targets and to conduct the
                   due diligence necessary to evaluate the appropriateness of a
                   potential target; and

              o    our lack of expertise or experience in evaluating or
                   operating the types of businesses that are for sale.

         o    Businesses that we are interested in acquiring may be unwilling to
              sell to us for various reasons, including:


              o    an unwillingness to accept our equity securities or a
                   promissory note as consideration;


              o    a desire to receive cash and a lack of confidence in our
                   ability to obtain the cash necessary to close;


              o    concerns with our ability to operate the business profitably
                   or appropriately, particularly if any targets are not
                   agricultural companies; and


              o    a desire to be acquired by a larger company for strategic or
                   personal reasons (including the desire to be employed by a
                   larger, more stable acquirer).

                                       7




              o    We may be unable to raise the capital necessary to purchase
                   those businesses that we identify as potential acquisition
                   targets quickly enough or at all in order to be able to
                   consummate desired acquisitions.

         If we cannot continue to identify appropriate acquisition targets and
consummate acquisitions, our business will not continue to grow as planned.

WE HAVE INCURRED SUBSTANTIAL LOSSES SINCE OUR INCEPTION AND MAY CONTINUE TO
INCUR LOSSES IN THE FUTURE.

         We have experienced net losses in each twelve-month period since
inception, with a retained deficit of approximately $(1,015,508) as of September
30, 2004. We may never generate a net profit. Even if we do become profitable,
we may not be able to maintain profitability or to increase profitability in the
future.

OUR ACCOUNTANTS HAVE INCLUDED AN EXPLANATORY PARAGRAPH IN OUR FINANCIAL
STATEMENTS REGARDING OUR STATUS AS A "GOING CONCERN."

         Our consolidated financial statements included in this prospectus have
been prepared on the assumption that we will continue as a going concern. Our
independent registered public accounting firm has issued its report dated July
9, 2004 that includes an explanatory paragraph stating that our having only
recently been formed, our lack of success in establishing profitable operations
and the fact that our current liabilities exceed our current assets raise
substantial doubt about our ability to continue as a going concern.

WE MAY BE UNABLE TO MANAGE SIGNIFICANT GROWTH.

         To successfully implement our business strategy, we must establish and
achieve substantial growth in our customer base through expansion of production
and sales from existing properties and through business acquisitions. If
achieved, significant growth would place significant demands on our management
and systems of financial and internal controls, and will almost certainly
require an increase in the capacity, efficiency and accuracy of our management
and distribution support systems. Moreover, significant growth would require an
increase in the number of our personnel, particularly within sales, accounting,
production and management. The market for such personnel remains highly
competitive, and we may not be able to attract and retain the qualified
personnel required by our business strategy. If successful in expanding our
business, we may outgrow our present facilities and/or management capacity,
placing additional strains on our human resources in trying to locate, manage
and staff multiple locations.

OUR DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS HAVE EFFECTIVE
CONTROL OF PENGE.

         Our directors, officers, and 5% stockholders and their affiliates
control approximately 48% of the outstanding shares of our common stock (62% on
a fully diluted basis). Even if such persons sell all shares registered on their
behalf in the offering, they will continue to control 40% of the outstanding
shares of our common stock (52% on a fully diluted basis). These directors,



                                       8


officers and affiliates effectively control all matters requiring approval by
the stockholders of Penge, including any determination with respect to the
acquisition or disposition of assets, future issuances of securities,
declarations of dividends and the election of directors. This concentration of
ownership may also delay, defer or prevent a change in control of Penge and
otherwise prevent you and stockholders other than our affiliates from
influencing the direction and future of Penge.

WE ARE DEPENDENT UPON KEY PERSONNEL, AND THE LOSS OF SUCH PERSONNEL COULD
SIGNIFICANTLY IMPAIR OUR ABILITY TO IMPLEMENT OUR BUSINESS PLAN.

         We are highly dependent upon the efforts of management, particularly
Kirk Fischer, our Chief Executive Officer and Chief Financial Officer, and Jim
Fischer, our Vice President of Operations. Competition for management personnel
is intense, and the number of qualified managers knowledgeable about, and
interested in, the tree and shrub nursery industry is limited. As a result, we
may be unable to retain our key management employees or attract other highly
qualified employees in the future. In addition, the large number of shares of
common stock issued to our officers and directors at inception are not subject
to repurchase rights if such persons terminate employment with us, decreasing
our ability to provide equity-based incentive for new management. We may be
required to offer significant salaries and equity-based compensation in order to
retain or attract qualified management personnel and key employees. If we are
unsuccessful in retaining or attracting such employees, the reduction in the
quantity or quality of personnel may lead to a decline in our production, sales
or service capacity.

OUR FARMS ARE CURRENTLY OUR PRIMARY SOURCE OF REVENUE AND ARE VULNERABLE TO
INSECTS, DISEASE, WEATHER, DROUGHT, FIRE AND OTHER NATURAL HAZARDS.

         Our tree and shrub farms are our main assets and currently our primary
source of revenue. The Eldarica Pine and the other plant varieties that we grow
on the farms are subject to risks associated with disease, insects, weather,
drought, fire and other natural hazards. We cannot prevent or predict the impact
of disease, insects, weather, drought, fire or other natural hazards on the
trees and other shrubs. If the trees and other shrubs we grow are damaged or
destroyed by any of those elements, we could suffer a significant loss of
revenue and assets. The loss would be particularly significant if the affected
plants were the Eldarica Pine, which accounted for approximately 91% of our
revenue in our prior fiscal year and will continue to be a significant portion
of our revenue in the foreseeable future.

OUR TREE AND NURSERY BUSINESS IS LARGELY DEPENDENT ON A SINGLE CUSTOMER.

         During the fiscal year ended June 30, 2004, a single customer, Home
Depot, accounted for approximately 75% of our revenue. We have no long-term
contract with Home Depot, and Home Depot could discontinue purchasing from the
Major Trees Farm at any time. The loss of Home Depot as a customer, or a
decrease in the number of trees and shrubs purchased by Home Depot, would likely
lead to a material reduction in our revenues.



                                       9




         Risks Specific to the Purchase of Common Stock in This Offering
         ---------------------------------------------------------------

THERE IS NO PUBLIC MARKET FOR OUR STOCK, AND EVEN IF A MARKET DEVELOPS, IT WILL
LIKELY BE THIN AND SUBJECT TO MANIPULATION.

         There is no public market for our common stock, and we can provide no
assurance that a public market for our common stock will develop in the future.
Even if a public market does develop, the volume of trading in our common stock
will likely be limited and likely dominated by a few individuals. The limited
volume, if any, will make the price of our common stock subject to manipulation
by one or more stockholders and will significantly limit the number of shares
that one can purchase or sell in a short period of time. An investor may find it
difficult to dispose of shares of our common stock or obtain a fair price for
our common stock in the market.

IF A MARKET FOR OUR COMMON STOCK DEVELOPS, THE MARKET PRICE FOR OUR COMMON STOCK
WILL LIKELY BE VOLATILE AND MAY CHANGE DRAMATICALLY AT ANY TIME.

         If a market for our common stock develops, the market price of our
common stock, like that of the securities of other early-stage companies, may be
highly volatile. Our stock price may change dramatically as the result of
announcements of our quarterly results, the execution or termination of
significant customer contracts, significant litigation or other factors or
events that would be expected to affect our business or financial condition,
results of operations and other factors specific to our business and future
prospects. In addition, the market price for our common stock may be affected by
various factors not directly related to our business, including the following:

         o    intentional manipulation of our stock price by existing or future
              stockholders;

         o    short selling of our common stock or related derivative
              securities;

         o    a single acquisition or disposition, or several related
              acquisitions or dispositions, of a large number of our shares;

         o    the interest, or lack of interest, of the market in our business
              sector, without regard to our financial condition or results of
              operations;

         o    the adoption of governmental regulations and similar developments
              in the United States or abroad that may affect our ability to
              offer our products and services or affect our cost structure;

         o    developments in the businesses of companies that purchase our
              products (such as Home Depot); and

         o    economic and other external market factors, such as a general
              decline in market prices due to poor economic indicators or
              investor distrust.


                                       10




OBTAINING ADDITIONAL CAPITAL THROUGH THE FUTURE SALE OF COMMON STOCK AND
DERIVATIVE SECURITIES WILL RESULT IN DILUTION OF STOCKHOLDER INTERESTS.

         We plan to raise additional funds in the future by issuing additional
shares of common stock, or securities such as convertible notes, options,
warrants or preferred stock that are convertible into common stock. Any such
sale of common stock or other derivative securities will lead to further
dilution of the equity ownership of existing holders of our common stock.

OUR COMMON STOCK IS A "LOW-PRICED STOCK" AND SUBJECT TO REGULATION THAT LIMITS
OR RESTRICTS THE POTENTIAL MARKET FOR OUR STOCK.

         Shares of our common stock may be deemed to be "penny stock," resulting
in increased risks to our investors and certain requirements being imposed on
some brokers who execute transactions in our common stock. In general, a penny
stock is an equity security that:

         o    Is priced under five dollars;

         o    Is not traded on a national stock exchange, the Nasdaq National
              Market or the Nasdaq SmallCap Market;

         o    May be listed in the "pink sheets" or the OTC Bulletin Board;

         o    Is issued by a company that has less than $5 million in net
              tangible assets (if it has been in business less than three years)
              or has less than $2 million in net tangible assets (if it has been
              in business for at least three years); and

         o    Is issued by a company that has average revenues of less than $6
              million for the past three years.

         We believe that our common stock is presently a "penny stock." At any
time the common stock qualifies as a penny stock, the following requirements,
among others, will generally apply:

         o    Certain broker-dealers who recommend penny stock to persons other
              than established customers and accredited investors must make a
              special written suitability determination for the purchaser and
              receive the purchaser's written agreement to a transaction prior
              to sale.

         o    Prior to executing any transaction involving a penny stock,
              certain broker-dealers must deliver to certain purchasers a
              disclosure schedule explaining the risks involved in owning penny
              stock, the broker-dealer's duties to the customer, a toll-free
              telephone number for inquiries about the broker-dealer's
              disciplinary history and the customer's rights and remedies in
              case of fraud or abuse in the sale.

         o    In connection with the execution of any transaction involving a
              penny stock, certain broker-dealers must deliver to certain
              purchasers the following:



                                       11




              o    bid and offer price quotes and volume information;

              o    the broker-dealer's compensation for the trade;

              o    the compensation received by certain salespersons for the
                   trade;

              o    monthly accounts statements; and

              o    a written statement of the customer's financial situation and
                   investment goals.

         These requirements significantly add to the burden of the broker-dealer
and limit the market for penny stocks. These regulatory burdens may severely
affect our ability to create a market for our stock and the liquidity and market
price for our common stock.

                           FORWARD-LOOKING STATEMENTS


         This prospectus, including, without limitation, "Prospectus Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Our Business," contains statements that constitute
"forward-looking statements." Such statements can be identified by the use of
the forward-looking words "anticipate," "estimate," "project," "likely,"
"believe," "intend" or "expect" or similar words. When considering such
forward-looking statements, you should keep in mind the risk factors noted above
and other cautionary statements throughout this prospectus. You should also keep
in mind that all forward-looking statements are based on management's existing
beliefs about present and future events outside of management's control and on
assumptions that may prove to be incorrect.


                              SELLING STOCKHOLDERS

         All of the offered shares are to be offered and sold by our existing
security holders. Of the shares of our common stock offered hereby, 3,861,466
shares of common stock are currently owned by the selling stockholders and
1,932,638 shares are issuable upon the conversion of convertible notes payable.

         In addition, pursuant to Rule 416 of the Securities Act, this
prospectus, and the registration statement of which it is a part, covers a
presently indeterminate number of shares of common stock issuable upon the
occurrence of a stock split, stock dividend or other similar transaction.

BENEFICIAL OWNERSHIP OF SELLING STOCKHOLDERS

         The table that follows sets forth, as of January 1, 2005:

         o    the name of each selling stockholder;



                                       12




         o    certain beneficial ownership information with respect to the
              selling stockholders;

         o    the number of shares that may be sold from time to time by each
              selling stockholder pursuant to this prospectus; and

         o    the amount (and, if one percent or more, the percentage) of common
              shares to be owned by each selling stockholder if all offered
              shares are sold.

         Beneficial ownership is determined in accordance with SEC rules and
generally includes voting or investment power with respect to securities. Common
shares that are issuable upon the exercise of outstanding options, warrants or
other purchase or conversion rights, to the extent exercisable within 60 days of
the date of this table, are treated as outstanding for purposes of computing
each selling stockholder's percentage ownership of outstanding common shares.


                                                                                                      BENEFICIAL OWNERSHIP
                                           BENEFICIAL OWNERSHIP                                      UPON COMPLETION OF THE
                                             BEFORE OFFERING                                               OFFERING(1)
                                    ---------------------------------         NUMBER OF           ----------------------------
                                                                            SHARES BEING          NUMBER OF
BENEFICIAL OWNER                    NUMBER OF SHARES       PERCENT(2)          OFFERED              SHARES          PERCENT(2)
----------------                    ----------------       ----------          -------              ------          ----------
                                                                                                       
John T. Alexander                             83,333  (3)       *                  83,333  (3)       Nil                 *

Gary Allen & Sheila Allen                    340,000          2.63%               340,000            Nil                 *

Aaron R. Boone                                85,000            *                  85,000            Nil                 *

Erron Scott Brady                             20,000            *                  20,000            Nil                 *

Eugene H. Bramhall                           116,666            *                  16,666          100,000               *

Larry L. Bramhall & Lois                      80,000  (4)       *                  80,000  (4)       Nil                 *
T. Bramhall

Scott & Chieko Bramhall                      100,000            *                 100,000            Nil                 *

Donna Brown                                   33,000            *                  33,000            Nil                 *

Pete Chandler                                100,000            *                 100,000            Nil                 *

Thomas L. & Ruby Chandler                    300,000          2.32%                50,000          250,000             1.93%

Wendy Davis                                   10,000            *                  10,000            Nil                 *

Dennis Dayley                                400,000  (5)     3.09%               400,000  (5)       Nil                 *

Angie Fisher                                  33,000            *                  33,000            Nil                 *



                                       13



                                                                                                      BENEFICIAL OWNERSHIP
                                           BENEFICIAL OWNERSHIP                                      UPON COMPLETION OF THE
                                             BEFORE OFFERING                                               OFFERING(1)
                                    ---------------------------------         NUMBER OF           ----------------------------
                                                                            SHARES BEING          NUMBER OF
BENEFICIAL OWNER                    NUMBER OF SHARES       PERCENT(2)          OFFERED              SHARES          PERCENT(2)
----------------                    ----------------       ----------          -------              ------          ----------

Kirk J. & Lori L. Fischer                  4,000,000  (6)    28.67%               200,000  (7)    3,800,000    (8)    27.24%
     Quinn J. Fischer
     London C. Fischer
     Britton K. Fischer

Jim & Ellen Fischer                        1,190,000  (9)     8.53%               190,000  (10)   1,000,000    (11)    7.17%

Rocky & Janalen Fischer and                1,399,000  (12)    9.96%               299,000  (13)   1,100,000    (14)    7.83%
Affiliated Entities
     Abby Nursery LLC
     Abigail Paige Fischer

Richard Fritzler                             100,000  (15)      *                 100,000  (15)      Nil                 *

Don R. Geyer                                  20,000            *                  20,000            Nil                 *

Stanford and Barbara Goulding                277,273  (16)    2.13%               227,273  (17)     50,000     (18)      *

Donald R. & Laurie A. Groth                   66,666            *                  66,666            Nil                 *

John I. Hall                                  40,000            *                  40,000            Nil                 *

Katrina O. Hall                               40,000            *                  40,000            Nil                 *

KC & Michelle Holmes and                   2,748,727  (19)   19.70%               200,000  (20)   2,548,727    (21)   18.27%
Affiliated Entities
     5th Genki LLC
     Alecia Monet Holmes
     Chance Jaxon Holmes
     Brooklyn Elaine Holmes
     Rian Michelle Holmes

Steve Holmes                                   5,000            *                   5,000            Nil                 *

Morris Howell                                 33,334            *                  33,334            Nil                 *

Dodd Hyer                                     33,333            *                  33,333            Nil                 *

William W. Jacobsen Sr.                       20,000            *                  20,000            Nil                 *

Marla Kamerath                                10,000            *                  10,000            Nil                 *



                                       14



                                                                                                      BENEFICIAL OWNERSHIP
                                           BENEFICIAL OWNERSHIP                                      UPON COMPLETION OF THE
                                             BEFORE OFFERING                                               OFFERING(1)
                                    ---------------------------------         NUMBER OF           ----------------------------
                                                                            SHARES BEING          NUMBER OF
BENEFICIAL OWNER                    NUMBER OF SHARES       PERCENT(2)          OFFERED              SHARES          PERCENT(2)
----------------                    ----------------       ----------          -------              ------          ----------

Roger and Barbara Major and                1,020,000  (22)    7.88%               200,000          820,000     (23)    6.33%
Affiliated Entities
     Robert Major
     Brett Major
     Ryan Major

Cheri Marx                                    33,000            *                  33,000            Nil                 *

Edward F. May                                166,667          1.29%               166,667            Nil                 *

Linda Olinyk                                  50,000            *                  50,000            Nil                 *

Joe Ollivier & Affiliated                    541,663  (24)    4.03%               473,329  (24)     68,334     (24)      *
Entities
     First Capital Funding LC
     A&J Investments
     Aaron Ollivier


Trevor Olsen                                  20,000            *                  20,000            Nil                 *

Luis G. N. Panuncialman                      100,000            *                 100,000            Nil                 *

Kathleen B. Pigott                            16,667            *                  16,667            Nil                 *

Miles C. Pitcher                             523,329  (25)    3.90%               473,329  (25)     50,000               *
     Monitor Finance LC

Robert G. and Juanita C.                     854,167  (26)    6.19%               854,167  (26)      Nil                 *
Purcell

Johanna B. & Britta B.                        83,333            *                  83,333            Nil                 *
Quisumbing

Shawn & Andrea Rowbotham                     116,667  (27)      *                 100,000  (27)     16,667               *

Lon or LaRae Saxton                           16,666            *                  16,666            Nil                 *

Glen K. Stephenson                            25,000            *                  25,000            Nil                 *

Sylvia Surrett                                15,000            *                  15,000            Nil                 *

Matt Swan                                     33,334            *                  33,334            Nil                 *


                                       15



                                                                                                      BENEFICIAL OWNERSHIP
                                           BENEFICIAL OWNERSHIP                                      UPON COMPLETION OF THE
                                             BEFORE OFFERING                                               OFFERING(1)
                                    ---------------------------------         NUMBER OF           ----------------------------
                                                                            SHARES BEING          NUMBER OF
BENEFICIAL OWNER                    NUMBER OF SHARES       PERCENT(2)          OFFERED              SHARES          PERCENT(2)
----------------                    ----------------       ----------          -------              ------          ----------

Michael Tempest                              102,521  (28)      *                 102,521  (28)      Nil                 *
     High Desert Value LP

Matthew J. & Ann Thomas                       50,000            *                  50,000            Nil                 *

Peter Vanderhooft                             29,292  (29)      *                  29,292  (29)      Nil                 *

Mandy Weider                                  10,000            *                  10,000            Nil                 *

Darla Wenger                                  33,000            *                  33,000            Nil                 *

Richard L. Wenger                             31,284            *                  31,284            Nil                 *

Richard Wenger                                33,000            *                  33,000            Nil                 *

Richard A. Westin                             59,000  (30)      *                  59,000  (30)      Nil                 *


---------------------
* Represents less than one percent of the outstanding shares of common stock.

(1)      Assuming the sale by each selling stockholder of all of the shares
         offered hereunder by such selling stockholder. There can be no
         assurance that any of the shares offered hereby will be sold.
(2)      The percentages set forth above have been computed assuming the number
         of shares of common stock outstanding equals the sum of (a) 12,952,332,
         which is the number of shares of common stock actually outstanding on
         January 1, 2005, and (b) shares of common stock subject to options,
         convertible notes and similar securities exercisable to purchase common
         stock within 60 days of such date by the selling stockholder with
         respect to which such percentage is calculated.
(3)      Shares held of record by First Regional Bank FBO John T. Alexander II
         Roth #002227.
(4)      Shares held of record by Larry L. Bramhall & Lois T. Bramhall Living
         Trust.
(5)      Shares held of record by Dayley Family Trust.
(6)      Includes 1,000,000 shares of common stock issuable by us upon the
         exercise of options held by Kirk J. Fischer, our Chief Executive
         Officer, Chief Financial Officer and Chairman of the Board. Also
         includes 1,200,000 shares held of record by Lori L. Fischer, our
         Controller and a director, 250,000 shares held of record by Quinn J.
         Fischer, 250,000 shares held of record by London C. Fischer and 250,000
         shares held of record by Britton K. Fischer, each a dependent son of
         Kirk and Lori Fischer.
(7)      Includes 200,000 shares held of record by Lori L. Fischer, our
         Controller and a director.
(8)      Includes 1,000,000 shares of common stock issuable by us upon the
         exercise of options held by Kirk J. Fischer, our Chief Executive
         Officer, Chief Financial Officer and Chairman of the Board. Also
         includes 1,000,000 shares held of record by Lori L. Fischer, our
         Controller and a director, 250,000 shares held of record by Quinn J.
         Fischer, 250,000 shares held of record by London C. Fischer and 250,000
         shares held of record by Britton K. Fischer, each a dependent son of
         Kirk and Lori Fischer.
(9)      Includes 1,000,000 shares of common stock issuable by us upon the
         exercise of options held by Jim Fischer, our Vice President of
         Operations and a director. Also includes 75,000 shares held of record
         by Jim Fischer and 115,000 shares held of record by Ellen Fischer, Jim
         Fischer's wife.
(10)     Includes 75,000 shares held of record by Jim Fischer and 115,000 shares
         held of record by Ellen Fischer, Jim Fischer's wife.


                                       16




(11)     Includes 1,000,000 shares of common stock issuable by us upon the
         exercise of options held by Jim Fischer, our Vice President of
         Operations and a director.
(12)     Includes 1,100,000 shares of common stock issuable by us upon the
         exercise of options held by Rocky Fischer. Also includes 200,000 shares
         held of record by Rocky Fischer, 33,000 shares held of record by
         Janalen Fischer, the wife of Rocky Fischer, 33,000 shares held of
         record by Abigail Paige Fischer, a dependent daughter of Rocky and
         Janalen Fischer, and 33,000 shares held of record by Abby Nursery LLC,
         an entity over which Rocky and Janalen Fischer exercise voting and
         investment control.
(13)     Includes 200,000 shares held of record by Rocky Fischer, 33,000 shares
         held of record by Janalen Fischer, the wife of Rocky Fischer, 33,000
         shares held of record by Abigail Paige Fischer, a dependent daughter of
         Rocky and Janalen Fischer, and 33,000 shares held of record by Abby
         Nursery LLC, an entity over which Rocky and Janalen Fischer exercise
         voting and investment control.
(14)     Includes 1,100,000 shares of common stock issuable by us upon the
         exercise of options held by Rocky Fischer.
(15)     Shares held of record by Bradford Marketing Services.
(16)     Includes 50,000 shares of common stock issuable by us upon the exercise
         of options held of record by Stanford and Barbara Goulding as Joint
         Tenants with Rights of Survivorship. Also includes 227,273 shares of
         common stock held of record by Stanford and Barbara Goulding as Joint
         Tenants with Rights of Survivorship.
(17)     Includes 227,273 shares of common stock held of record by Stanford and
         Barbara Goulding as Joint Tenants with Rights of Survivorship.
(18)     Includes 50,000 shares of common stock issuable by us upon the exercise
         of options held of record by Stanford and Barbara Goulding as Joint
         Tenants with Rights of Survivorship.
(19)     Includes 1,000,000 shares of common stock issuable by us upon the
         exercise of options held by KC Holmes, our Manager of Mergers &
         Acquisitions. Also includes 148,727 shares held of record by 5th Genki
         LLC, an entity over which Michelle Holmes, wife of KC Holmes, exercises
         voting and investment control, 400,000 shares held of record by Alecia
         Monet Holmes, a dependent daughter of KC and Michelle Holmes, 400,000
         shares held of record by Chance Jaxon Holmes, a dependent son of KC and
         Michelle Holmes, 400,000 shares held of record by Brooklyn Elaine
         Holmes, a dependent daughter of KC and Michelle Holmes and 400,000
         shares held of record by Rian Michelle Holmes, a dependent daughter of
         KC and Michelle Holmes.
(20)     Includes 148,727 shares held of record by 5th Genki LLC, an entity over
         which KC and Michelle Holmes exercises voting and investment control,
         12,418 shares held of record by Alecia Monet Holmes, a dependent
         daughter of KC and Michelle Holmes, 12,418 shares held of record by
         Chance Jaxon Holmes, a dependent son of KC and Michelle Holmes, 12,418
         shares held of record by Brooklyn Elaine Holmes, a dependent daughter
         of KC and Michelle Holmes and 12,419 shares held of record by Rian
         Michelle Holmes, a dependent daughter of KC and Michelle Holmes.
(21)     Includes 387,582 shares held of record by Alecia Monet Holmes, a
         dependent daughter of KC and Michelle Holmes, 387,582 shares held of
         record by Chance Jaxon Holmes, a dependent son of KC and Michelle
         Holmes, 387,582 shares held of record by Brooklyn Elaine Holmes, a
         dependent daughter of KC and Michelle Holmes and 387,581 shares held of
         record by Rian Michelle Holmes, a dependent daughter of KC and Michelle
         Holmes.
(22)     Includes 15,000 shares held of record by Robert Major, a dependent son
         of Roger and Barbara Major, 15,000 shares held of record by Brett
         Major, a dependent son of Roger and Barbara Major and 40,000 shares
         held of record by Ryan Major, a dependent son of Roger and Barbara
         Major.
(23)     Includes 15,000 shares held of record by Robert Major, a dependent son
         of Roger and Barbara Major, 15,000 shares held of record by Brett
         Major, a dependent son of Roger and Barbara Major and 40,000 shares
         held of record by Ryan Major, a dependent son of Roger and Barbara
         Major.
(24)     Includes 473,329 shares of common stock issuable by us upon the
         conversion of convertible notes held by First Capital Funding LC, an
         entity over which Joe Ollivier exercises voting and investment control,
         56,668 shares held of record by A&J Investments, an entity over which
         Joe Ollivier exercises voting and investment control and 6,666 shares
         held by Aaron Ollivier, a dependent son of Joe Ollivier. Shares held by
         A&J investments and Aaron Ollivier are not included in the offering.
(25)     Includes 473,329 shares of common stock issuable by us upon the
         conversion of convertible notes held by Monitor Finance LC, an entity
         over which Miles Pitcher exercises voting and investment control.


                                       17




(26)     Includes 854,167 shares of common stock issuable by us upon the
         conversion of convertible notes held by the Robert G. Purcell Revocable
         Trust and the Juanita C. Purcell Revocable Trust as Tenants in Common.
(27)     Includes 100,000 shares held of record by APS Inc., FUB Custodian for
         Shawn A. Rowbotham IRA.
(28)     Includes 73,229 shares of common stock issuable by us upon the
         conversion of convertible notes held by High Desert Value LP, an entity
         over which Michael Tempest exercises voting and investment control, and
         29,292 shares of common stock issuable by us upon the conversion of
         convertible notes held by Michael Tempest.
(29)     Includes 29,292 shares of common stock issuable by us upon the
         conversion of convertible notes held by the selling stockholder.
(30)     Shares held of record by Richard Westin Consulting, Inc.

         We believe that the selling stockholders who are individuals have sole
voting and investment power with respect to all shares shown as beneficially
owned by them. We believe that voting and investment power with respect to
shares shown as beneficially owned by selling stockholders who are entities
resides with the individuals identified in the preceding table or the notes
thereto. There can be no assurance that any of the shares offered pursuant to
this prospectus will be sold.

RELATIONSHIPS WITH SELLING STOCKHOLDERS

         Certain of the selling stockholders are officers, directors or
affiliates of our company. Kirk Fischer is the Chairman of the Board, Chief
Executive Officer and Chief Financial Officer. Jim Fischer is our Vice President
of Operations and a director, and is the father of Kirk Fischer. Lori Fischer is
our Controller and a director, is the wife of Kirk Fischer. Rocky Fischer has
been a consultant for us and is the brother of Kirk Fischer (and son of Jim
Fischer). KC Holmes is our former President and Chief Financial Officer, the
current Manager of Mergers & Acquisitions and a significant stockholder of our
company. KC Holmes is the cousin of Kirk Fischer and Rocky Fischer and the
nephew of Jim Fischer. The following persons have the following relationship
with KC Holmes: Steve Homes (brother), Angie Fisher (sister-in-law), Darla
Wenger (sister-in-law), Richard L. Wenger (father-in-law), Richard Wenger
(brother-in-law), Cheri Marx (sister-in-law) and Donna Brown (sister-in-law). We
purchased certain assets of the Major Trees Farm from Roger and Barbara Major in
August 2002 and engage Roger Major as a consultant to our company.

BROKER-DEALERS

         None of the selling stockholders are broker-dealers or affiliates of
broker-dealers.

                              PLAN OF DISTRIBUTION

METHODS OF DISTRIBUTION

         The selling stockholders, which as used herein includes donees,
pledgees, transferees or other successors-in-interest selling shares of common
stock or interests in shares of common stock received after the date of this
prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of common stock or interests in
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale or at negotiated prices.


                                       18




         The selling stockholders may use any one or more of the following
methods when disposing of shares or interests therein:

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

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

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

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

         o    privately negotiated transactions;

         o    through the writing or settlement of options or other hedging
              transactions, whether through an options exchange or otherwise;

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

         o    a combination of any such methods of sale; and

         o    any other method permitted pursuant to applicable law.

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

         The selling stockholders may also sell shares by means of short sales
to the extent permitted by United States securities laws. Short sales involve
the sale by a selling stockholder, usually with a future delivery date, of
shares of common stock that the seller does not own. Covered short sales are
sales made in an amount not greater than the number of shares subject to the
short seller's warrant, exchange right or other right to acquire shares of


                                       19




common stock. A selling stockholder may close out any covered short position by
either exercising its warrants or exchange rights to acquire shares of common
stock or purchasing shares in the open market. In determining the source of
shares to close out the covered short position, a selling stockholder will
likely consider, among other things, the price of shares of common stock
available for purchase in the open market as compared to the price at which it
may purchase shares of common stock pursuant to its warrants or exchange rights.

         Naked short sales are any sales in excess of the number of shares
subject to the short seller's warrant, exchange right or other right to acquire
shares of common stock. A selling stockholder must close out any naked position
by purchasing shares. A naked short position is more likely to be created if a
selling stockholder is concerned that there may be downward pressure on the
price of the shares of common stock in the open market.

         The existence of a significant number of short sales generally causes
the price of the shares of common stock to decline, in part because it indicates
that a number of market participants are taking a position that will be
profitable only if the price of the shares of common stock declines. Purchases
to cover naked short sales may, however, increase the demand for the shares of
common stock and have the effect of raising or maintaining the price of the
shares of common stock.

         The selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities that require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

         The selling stockholders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
provided that they meet the criteria and conform to the requirements of that
rule.

         The selling stockholders and any underwriters, broker-dealers or agents
that participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.

         To the extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealers or underwriters, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this
prospectus.


                                       20




DETERMINATION OF OFFERING PRICE

         The offering price of the shares of common stock offered by this
prospectus is being determined by each of the selling stockholders on a
transaction-by-transaction basis based upon factors that the selling stockholder
considers appropriate. The offering prices determined by the selling
stockholders may, or may not, relate to a current market price but should not,
in any case, be considered an indication of the actual value of the common
stock. We do not have any influence over the price at which any selling
stockholders offer or sell the common stock offered by this prospectus.

PASSIVE MARKET MAKING

         We have advised the selling stockholders that, while they are engaged
in a distribution of the shares offered pursuant to this prospectus, they are
required to comply with Regulation M promulgated under the Securities Exchange
Act. With certain exceptions, Regulation M precludes the selling stockholders,
any affiliate purchasers and any broker-dealer or other person who participates
in the distribution from bidding for or purchasing, or attempting to induce any
person to bid for or purchase, any security that is subject to the distribution
until the entire distribution is complete. Regulation M also restricts bids or
purchases made in order to stabilize the price of a security in connection with
the distribution of that security. We do not intend to engage in any passive
market making or stabilization transactions during the course of the
distribution described in this prospectus. All of the foregoing may affect the
marketability of the shares offered pursuant to this prospectus.

LIMITATIONS

         We have advised the selling stockholders that, to the extent necessary
to comply with governing state securities laws, the offered securities should be
offered and sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, we have advised the selling stockholders that
the offered securities may not be offered or sold in any state unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available with respect to
such offers or sales.

         Additionally, we have advised the selling stockholders that the
registration statement of which this prospectus is a part may not be used in
connection with share exchanges or business combination transactions.

GENERAL

         We are paying the expenses incurred in connection with preparing and
filing this prospectus and the registration statement to which it relates, other
than selling commissions. We estimate that these expenses will total
approximately $90,000 and plan to pay for such expenses out of our cash flow
from operations.


                                       21




         We have not retained any underwriter, broker or dealer to facilitate
the offer or sale of the offered shares offered pursuant to this prospectus. We
will pay no underwriting commissions or discounts in connection with this
offering, and we will not receive any proceeds from the sale of the offered
shares.

                                 USE OF PROCEEDS

         All proceeds from any sale of offered shares, less commissions and
other customary fees and expenses, will be paid directly to the selling
stockholders selling the offered shares. We will not receive any proceeds from
the sale of any of the offered shares.

                                    DILUTION

         Our net tangible book value (tangible assets less total liabilities) at
September 30, 2004 was $149,311 or approximately $0.01 per each of the
12,952,332 shares of common stock then outstanding. Accordingly, new investors
who purchase shares may suffer an immediate dilution of the difference between
the purchase price per share and approximately $0.01 per share.

         As of January 1, 2005, there were outstanding options to purchase up to
4,550,000 shares of our common stock as well as notes payable convertible into
1,932,638 shares of our common stock. The existence of those options and
conversion rights may hinder future equity offerings by us, and the exercise of
those options and conversion rights may have an adverse effect on the value of
shares of our common stock. Furthermore, the holders of those options and
conversion rights may exercise them at a time when we would otherwise be able to
obtain additional equity capital on terms more favorable to us.



                                       22




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

         This section includes many projections and other forward-looking
statements regarding management's expectations regarding performance of the
Company. You should not place undue reliance on such projections and forward
looking statements, and, when considering such projections and forward-looking
statements, you should keep in mind the risk factors noted throughout this
prospectus. You should also keep in mind that all projections and
forward-looking statements are based on management's existing beliefs about
present and future events outside of management's control and on assumptions
that may prove to be incorrect.

OVERVIEW

         OUR BUSINESS AND STRATEGY. We began operations in September 2002
through the purchase of the Major Trees Farm, a 272-acre tree and shrub farm
near Tucson, Arizona. In May 2004, we acquired the 17-acre Sampres Farm near
Houston, Texas. We now have more than 200,000 trees and large shrubs planted on
the two farms. Unless otherwise specified or evident from the context, "we,"
"us," the "Company" and similar terms refer to Penge Corp. and its consolidated
subsidiaries.

         In the two and one-half years since our incorporation, we have invested
all available capital into expanding and improving the Major Trees Farm,
acquiring the Sampres Farm, and otherwise attempting to improve our tree
production and nursery business. In that process, we have significantly expanded
the number of trees and shrubs planted on, and harvested from, the Major Trees
Farm and have been able to sell all of our products at prices consistent with
our budgets and projections.

         In the foreseeable future, we plan to continue to expand our operations
through the planting of additional trees and shrubs on our existing farms and
the purchase of additional nursery properties and businesses. We will continue
to look for nursery businesses or properties with annual revenues of between
$100,000 and $10 million. In the past, we have been able to negotiate favorable
terms with owners of small nursery businesses who are hoping to exit the market.
We attribute this success to the limited liquidity opportunities available to
small nursery businesses and hope to be able to exploit this situation to
negotiate favorable terms in the future.

         Our goal is to expand the number of farms we manage and the number of
trees and shrubs planted on those farms in the next few years while holding down
increases in our administrative and other general operating expenses. As we
spread our production costs over a larger inventory, we also hope to experience
a decline in our per-unit production and sales costs. Over time, we believe that
the increases in revenue from our expanded operations will outpace increases in
our administrative, operational and other expenses.

         We also offer business structure consulting services on a limited
basis. Our total revenue from these consulting services has been less than
$40,000 since inception. We do not plan to actively market such consulting
services in the future but remain open to accepting consulting engagements as
they arise. Consulting services have been an insignificant part of our business
in the past, and we do not expect consulting services to be a significant part
of our business in the future.


                                       23




         OUR ACQUISITIONS.

         THE MAJOR TREES FARM. In September 2002, we purchased the Major Trees
Farm, a 272-acre tree farm near Tucson, Arizona. (Information regarding the
structure of the transaction and our acquisition costs is set forth beginning on
page 38). The Major Trees Farm is located in an area with a moderate climate and
an abundant migrant labor source. The Major Trees Farm is relatively large,
includes abundant water rights and contains many of the necessary buildings,
equipment, pivots and wells to substantially expand operations. We primarily
grow Eldarica Pine Trees on the Major Trees Farm, substantially all of which are
harvested in the fall and sold to Home Depot and other retailers. The previous
owners of the Major Trees Farm had a 15-year sales relationship with Home Depot,
which we have been able to continue notwithstanding the absence of any purchase
commitment by Home Depot. We have sold approximately 30,000 trees from the Major
Trees Farm in our 2004-05 winter sales season at an approximate average cost of
$26 per tree and may sell an additional 3,000 - 5,000 trees over the next few
months.

         In the two and one-half years since our purchase of the Major Trees
Farm, we have been able to expand the number of trees growing on the farm from
61,000 trees immediately prior to the 2002 fall harvest to approximately 180,000
trees immediately prior to our 2004 fall harvest and replanting. In general, we
are able to harvest a tree 36 months after it is planted. Assuming demand and
pricing remain stable in the future, the inventory we have growing on the Major
Trees Farm is expected to generate approximately $4.7 million in revenue over
the next three years. In addition, our business plan calls for continued
expansion of inventory for the next several years and, accordingly, we expect
our inventory to grow for harvests in 2007-08 and thereafter.

         SAMPRES FARM. In May 2004, we acquired the 17-acre Sampres Farm near
Houston, Texas. (Information regarding the structure of the transaction and our
acquisition costs is set forth on page 39). The purchase of this farm is
strategic to us. Texas is one of the largest nursery markets in the country with
over 20 million people in a localized selling area. Tree prices are high
relative to other parts of the Southwest, and competition is localized, giving
us an opportunity for growth in this region. Many of our best customers
currently are located in State of Texas and immediate surrounding areas. We hope
that, by moving our site of production closer to our key sales markets, we can
decrease our shipping expenses and increase our gross margins.

         The Sampres Farm includes trees, shrubs and other nursery products and
is much smaller than the Major Trees Farm, with an existing inventory of
approximately 37,000 trees and shrubs on the date of acquisition. The primary
harvest and sales season for the Sampres Farm is spring/summer, and we
anticipate harvesting and selling the approximately 37,000 trees we purchased in
the acquisition from the Sampres Farm over the next three years. We are
expanding the number of trees and shrubs planted on the Sampres Farm, with over
20,000 additional trees and shrubs planted in the six months following our
acquisition of the farm, and expect to be able to begin harvesting an expanded
inventory in the spring of 2007.


                                       24




         PLANNED ACQUISITIONS. We anticipate buying additional assets in the
nursery industry again in 2005, with a focus on growing our core business lines
and increasing our position in Texas. We are presently in negotiations with the
owner of a tree, shrub and plant farm in the State of Texas but have not
executed definitive documents and can provide no assurance that we will be able
to execute definitive documents or consummate the transaction. To the extent we
are successful in reaching agreements with respect to future acquisitions, we
plan to finance the cash portion of these acquisitions through cash flow
generated from operations and the issuance of promissory notes and equity
securities. We anticipate that a majority of the purchase price of any
acquisition will be paid for through the issuance of debt or equity securities
to the sellers.

         SEASONALITY.

         Our primary business is the production and sale of trees and shrubs to
retailers and landscape companies. As with other agricultural business, our
business is seasonal in nature. Most of our revenues come from the Major Trees
Farm on which we grow primarily Eldarica Pine Trees. We generally harvest such
trees in the fall and generate substantially all revenues from such trees
between November and January. Revenues from the Major Trees Farm during other
months of the year are negligible. Although we experience administrative and
other expenses throughout the year, costs associated with the Major Trees Farm
also increase significantly during the October - January period as we harvest
the trees, transport them to market and conduct most of our planting activities.

         The primary harvest and sales season for the Sampres Farm is between
March and September of each year, and we expect to incur related transportation,
sales and planting expenses during that period. Revenues from the Sampres Farm
are expected to be less than 30% of our overall revenue, but the acquisition of
this farm should help balance the seasonality of our business.

         Even with the purchase of the Sampres Farm, we will continue to
experience dramatic increases and decreases in revenue and expenses throughout
the year. As a result, our quarterly results will generally not be indicative of
our annual results. In addition, this seasonality presents a serious challenge
in managing our cash flow, as we continue to experience many administrative and
other expenses throughout the calendar year. As was the case in late 2004, we
may experience a shortage of cash and an increase in accounts payable and
long-term debt during the late summer and fall months as we incur
administrative, harvesting and other expenses prior to our generation of cash
from operations in the winter months.

         GENERAL OUTLOOK.

         OPERATIONS: We experienced a net loss of $(337,586) in the partial
fiscal year ended June 30, 2003 ("Fiscal 2003") and a net loss of $(400,005) in
the fiscal year ended June 30, 2004 ("Fiscal 2004"). Detailed information
regarding our revenue and major expense line items is set forth in "Results of
Operations" below. We experienced a 20% increase in revenue between Fiscal 2003


                                       25




and Fiscal 2004, from $669,721 in Fiscal 2003 to $806,977 in Fiscal 2004 with
substantially all revenue in both years coming from the Major Trees Farm. We
expect revenue from the Major Trees Farm to increase only modestly in the fiscal
year ended June 30, 2005 ("Fiscal 2005") but expect to begin harvesting trees
from the Sampres Farm in Fiscal 2005, generating additional revenue of between
$200,000 and $400,000.

         Operating expenses increased from $579,361 in Fiscal 2003 to $654,287
in Fiscal 2004. This increase in operating expenses is attributable primarily to
an increase in salaries, wages and related taxes from $148,866 in Fiscal 2003 to
$387,077 in Fiscal 2004. During Fiscal 2003, the executives and key employees of
the Company accepted temporary reductions in pay in order to conserve capital.
During Fiscal 2004, such voluntary reductions were eliminated and the salaries
of most of the executives and key employees were increased in order to bring
them closer to market wages. We do not expect any similar increase in Fiscal
2005. General and administrative expenses are expected to increase overall as we
experience increased legal, accounting and other fees associated with our
preparation and filing of the registration statement of which this prospectus is
a part and our ongoing filing requirements. We expect that cost of goods sold
will increase in absolute terms as our revenues increase but expect a decrease
in cost of goods sold as a percentage of revenue. We expect interest expense to
increase as a result of the increase in our long term debt.

         Overall, we expect our revenue in Fiscal 2005 to grow faster than our
expenses and believe our financial performance in Fiscal 2005 will represent an
improvement over that in Fiscal 2004. Any projections related to Fiscal 2005 are
subject to the risks identified in "Risk Factors" and throughout this
prospectus. In addition, we hope to close the acquisition of one nursery
business during Fiscal 2005. If we are successful in closing such an
acquisition, of which we can provide no assurance, we would expect to incur
additional costs associated with the acquisition itself and may recognize
additional revenues since most of the farms we are looking at harvest and sell
during the spring and summer months.

         LIQUIDITY AND CAPITAL RESOURCES: As of September 30, 2004, we had
$24,890 in cash and cash equivalents, total current assets of $940,738 and
currently liabilities of $1,132,628, representing a current working capital
deficit of $(191,890). Our current liabilities as of that date include a
$276,572 principal balance on a secured convertible note due March 31, 2005 and
a $525,978 principal balance on non-convertible notes due within one year. We
generate a majority of our revenues between November and January of each fiscal
year. As a result of revenue collected between September 30, 2004 and [date
within 45 days of effective date], we have increased our cash and cash
equivalents balance to $[to be completed] as of [date within 45 days of
effective date].

         We anticipate making additional capital expenditures during the
remainder of Fiscal 2005. Specifically, resources permitting, we plan to spend
at least $200,000 to replace inventory sold during Fiscal 2005 and to expand our
inventory of trees and shrubs. We are also budgeting approximately $300,000 for
the cash portion of the purchase price of an acquisition (which amount may or
may not be sufficient) and expect to spend between $50,000 and $100,000 to
replace equipment and other items on the Major Trees Farm and the Sampres Farm.


                                       26




         We plan to use cash on hand and that collected in the coming months to
pay a portion of our accounts payable and establish a reserve to cover most of
our planned capital expenditures and basic operating expenses until we again
start generating revenue in March 2005. With respect to the current portion of
our notes payable, we believe that most of the holders of the convertible and
non-convertible notes coming due in the next year will either convert such debt
to equity or replace existing notes with notes with deferred payment dates. To
the extent that does not occur, we believe that we can raise capital sufficient
to repay the current portion of our long term debt through the issuance of
additional notes and the sale of equity securities and warrants.

         In addition, members of our management have informally agreed to
provide up to $200,000 of short-term financing to us. Such financing bears
interest at the rate of 8% per annum. Management may demand payment on 30 days
written notice, so long as 180 days have passed since the Company and management
entered into the financing arrangement.

         Other than the informal and nonbinding commitments from management, we
do not have any specific commitments from third parties to provide financing
needed to cover any capital shortfalls with respect to our operations, planned
capital expenditures or near-term debt obligations. We caution that,
particularly in light of the early stage of our business, such financing may not
be available on favorable terms, or at all. We may be compelled to divert
substantial portions of our existing cash and future cash flow to the repayment
of debt, which would limit our ability to replace or expand inventory and
acquire additional farms. This would have an adverse affect on revenues in the
coming years. Certain of such debt is secured by our real property, and holders
of the unsecured debt have standard remedies available to debtholders. If we
were to default on such notes and the holders were to exercise their remedies,
we would incur substantial legal expenses, penalties and related costs and could
be forced to seek bankruptcy protection or to discontinue operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Management is basing this discussion and analysis of our financial
condition and results of operations on our consolidated financial statements.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, we evaluate our critical accounting policies and estimates,
including those related to revenue recognition, valuation of accounts
receivable, property, plant and equipment, long-lived assets, intangible assets
and contingencies. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions.


                                       27




         We believe the following critical accounting policies affect the more
significant judgments and estimates used in the preparation of our consolidated
financial statements. These judgments and estimates affect the reported amounts
of assets and liabilities and the reported amounts of revenues and expenses
during the reporting periods. Changes to these judgments and estimates could
adversely affect our future results of operations and cash flows.

         o    Inventory Valuation. We record inventories at the lower of cost or
              the market value of such inventory. For inventory acquired as part
              of a business combination, cost is the estimated selling price,
              less the estimated costs associated with selling such inventory.
              Our average production cost for inventory is generally lower than
              the average wholesale price for our trees, so the cost of acquired
              inventory is typically greater than the cost of inventory grown
              from seed. A majority of the inventory that was sold in Fiscal
              2003 and Fiscal 2004 was inventory acquired as part of our
              acquisition of the Major Trees Farm.

         o    Cost of Goods Sold. As explained in "Inventory Valuation" above,
              we record inventories at the lower of cost or market value of such
              inventory, and our average production cost for inventory is
              generally lower than its market value. For inventories acquired in
              connection with our acquisition of a business or farm, we record
              inventory at the estimated selling price, less the estimated costs
              of selling such inventory. A majority of the inventory that we
              sold in Fiscal 2003 and Fiscal 2004 was inventory acquired as part
              of our acquisition of the Major Trees Farm. In Fiscal 2005 and
              afterwards, a portion of our sales will include trees acquired as
              part of our acquisitions of the Major Trees Farm and the Sampres
              Farm (and possible future acquisitions); however, our operation of
              the Major Trees Farm is much larger than our operation of the
              Sampres Farm, and in Fiscal 2005 and the following years, we
              expect a majority of our goods sold to be trees or shrubs that we
              have planted and grown. As a result, we expect cost of good sold
              as a percentage of sales to decline in future years.

         o    Revenue Recognition. Our revenue comes primarily from the sale of
              agricultural products. We recognize revenue from the sale of
              agricultural products when rights and risk of ownership have
              passed to the customer, there is persuasive evidence of a sales
              arrangement, product has been shipped or delivered to the
              customer, the price and terms are finalized and collection of the
              resulting receivable is reasonably assured. We recognize revenue
              from business consulting services over the term of the underlying
              consulting agreement.

         o    Property, Plant and Equipment. A significant portion of our assets
              consists of property and equipment, including real property, farm
              buildings and farming equipment. We record property and equipment
              at cost (and capitalize expenditures for major renewals and
              betterments that extend the useful life of property and
              equipment). The appraised value of real property and buildings in
              the regions in which our farms are located has increased steadily
              over the last decade; however, the market for agricultural
              property is thin, especially in areas remote from large cities.
              Our properties are remote from any large cities. As a result,
              there is no certainty that we would be able to sell any property
              or building at its book value, or at all. The absence of an active
              market for agricultural properties in the region may inhibit our
              ability to determine accurately the fair market value of our real
              property and building assets.


                                       28




RESULTS OF OPERATIONS

QUARTER ENDED SEPTEMBER 30, 2004 COMPARED WITH QUARTER ENDED SEPTEMBER 30, 2003

         The following table reflects selected operational results for fiscal
quarters ended September 30, 2004 and September 30, 2003, which represent the
first quarters of Fiscal 2005 and Fiscal 2004:

                                                            YEARS ENDED
                                                            SEPTEMBER 30,
                                                        2004             2003
                                                     ----------       ----------
STATEMENT OF OPERATIONS DATA:
REVENUE                                              $   2,652        $   9,161
COST OF GOODS SOLD                                       1,640            3,247
GROSS PROFIT (LOSS)                                      1,012            5,914
                                                     ----------       ----------
OPERATING EXPENSES                                     225,004          218,642
INCOME (LOSS) FROM OPERATIONS                         (223,992)        (212,728)
OTHER INCOME (EXPENSE):
  Interest income (expense), net                       (53,925)         (24,937)
                                                     ----------       ----------
NET INCOME (LOSS)                                    $(277,917)       $(233,883)
                                                     ----------       ----------
LOSS PER COMMON SHARE                                     (.02)            (.02)
                                                     ----------       ----------

         Our results of operations for the quarter ended September 30, 2004
included the operations of our Major Trees Farm and the Sampres Farm. Results of
operations for the quarter ended September 30, 2003 do not include the Sampres
Farm, which was acquired in May 2004. Revenue from, and expenses associated
with, the Sampres Farm were nominal for the quarter ended September 30, 2004 and
do not materially affect the comparability of results.


                                       29




         REVENUE AND COSTS OF GOOD SOLD. Our revenues are derived primarily from
the sale of trees and other nursery products. Revenues decreased from $9,161 for
the quarter ended September 30, 2003 to $2,652 for the quarter ended September
30, 2004. Costs of Good Sold decreased from $3,247 for the quarter ended
September 30, 2003 to $1,640 for the quarter ended September 30, 2004. Our
revenue and certain of our expenses (particularly our cost of goods sold) are
seasonal, with a majority of our revenue and costs of good sold being recognized
between November and January of each year. As a result, revenues, and related
costs of good sold, for the quarters ended September 30, 2003 and September 30,
2004 are not representative of revenues or costs of good sold for the respective
fiscal years. Such results primarily illustrate the seasonality of our business.
We expect both revenue and costs of good sold to increase significantly for the
quarter ended December 31, 2004 as we enter into our harvest and sales season
for the Major Trees Farm.

         OPERATING EXPENSES. Operating expenses consist primarily of personnel
expense associated with management, consulting fees, travel expenses,
professional fees, general overhead and depreciation. Operating expenses
increased from $218,642 for the quarter ended September 30, 2003 to $225,004 for
the quarter ended September 30, 2004. This increase is attributable to an
increase in consulting fees from $46,267 for the quarter ended September 30,
2003 to $60,000 for the quarter ended September 30, 2004 as a result of expenses
incurred in connection our grant of stock options to pay consulting expenses.
Our other general and administrative expenses also increased from $39,063 for
the quarter ended September 30, 2003 to $65,180 for the quarter ended September
30, 2004 primarily as a result of expenses associated with our audit. These
increases were partially offset by a decrease in salaries, wages and related
taxes from $123,167 for the quarter ended September 30, 2003 to $89,082 for the
quarter ended September 30, 2004 as a result of fixed annual salaries in the
current year that are less than the pay rates initially used in the prior year.
We expect general and administrative expense to increase in quarter ended
December 31, 2004 as we experience increased legal, accounting and other costs
associated with becoming a public company.

         INTEREST EXPENSE. Interest expense consists primarily of interest paid
on outstanding notes payable and amortization of deferred loan costs. Interest
expense increased from $24,937 for the quarter ended September 30, 2003 to
$53,931 for the quarter ended September 30, 2004. This increase is a result of
an increase in indebtedness primarily in order to fund our expansion of
inventory and our acquisition costs. We expect interest expense to increase in
quarter ended December 31, 2004 as a result of a $100,000 increase in
indebtedness.

         NET LOSS. Our net loss increased from $233,883 for the quarter ended
September 30, 2003 to $277,917 for the quarter ended September 30, 2004. The
increase in net loss is the result of incremental increases in our operating
expenses and is primarily attributable to an increase in interest expense
associated with our increased debt and an increase in general and administrative
expenses, particular legal, accounting and other expenses preparatory to the
registration process. The amount of our net loss for the quarter ended September
30, 2004 is not representative of our expected operating results for Fiscal
2005. Our revenue and certain of our costs are seasonal. We expect seasonal
increases in revenue to outpace seasonal increases in our expenses and to
experience a decline in net loss during the quarter ended December 31, 2004.


                                       30




YEAR ENDED JUNE 30, 2004 COMPARED WITH YEAR ENDED JUNE 30, 2003

         The following table reflects selected operational results for the
fiscal years ended June 30, 2004 and June 30, 2003:

                                                             YEARS ENDED
                                                               JUNE 30,
                                                        2004             2003
                                                     ----------       ----------
STATEMENT OF OPERATIONS DATA:
REVENUE                                              $ 806,977        $ 669,721
COST OF GOODS SOLD                                     428,004          402,980
GROSS PROFIT (LOSS)                                    378,973          266,741
                                                     ----------       ----------
OPERATING EXPENSES
Salaries, wages and related taxes                      387,077          148,866
Consulting                                              63,287          235,146
Travel                                                  38,050           21,203
Loss on unsuccessful acquisitions                       10,000            5,000
Other general and administrative                       155,873          169,146
                                                     ----------       ----------
Total operating expenses                               654,287          579,361
                                                     ----------       ----------
INCOME (LOSS) FROM OPERATIONS                         (275,314)        (312,620)
OTHER INCOME (EXPENSE):
  Interest income (expense), net                      (116,163)         (68,057)
  Loss on sale of available-for-sale
  securities                                           (13,456)          (8,997)
                                                     ----------       ----------
Other income (expense), net                           (129,619)         (77,054)
                                                     ----------       ----------
NET INCOME (LOSS) BEFORE TAXES                        (404,933)        (389,674)
                                                     ----------       ----------
DEFERRED TAX EXPENSE (BENEFIT)                          (4,928)         (52,088)
                                                     ----------       ----------
NET INCOME (LOSS)                                     (400,005)        (337,586)
                                                     ----------       ----------
NET INCOME (LOSS) PER COMMON SHARE                        (.03)            (.04)
                                                     ----------       ----------

         Penge Corp. was organized on August 6, 2002 under the laws of the state
of Nevada. Penge acquired the Major Trees Farm on September 27, 2002. Our
results of operations reflect the operations of the Major Trees Farm from that
date. On January 27, 2003, Penge organized Anglewood Advisors, Inc., an advisory
firm, which was abandoned on October 2, 2003. Our results of operations reflect
the operations of Anglewood Advisors during that time period. In May 2004, Penge
acquired the assets of the Sampres Farm. Our results of operations for Fiscal
2004 reflect minimal revenue from the Sampres Farm.

         REVENUE. Our revenues are derived primarily from the sale of trees and
other nursery products, but also include limited consulting fees. Revenues
increased from $669,721 for Fiscal 2003 to $806,977 for Fiscal 2004, an increase
of approximately 20%. This increase is primarily the result of our increasing
the number of trees sold by the Major Trees Farm from approximately 22,100 trees
in Fiscal 2003, generating approximately $655,000 in revenue, to approximately
28,600 in Fiscal 2004, generating approximately $758,000 in revenue. Most of the


                                       31




trees we grow can be sold within three years of being planted. During the last
24 months, we have significantly increased our tree inventory by planting or
acquiring additional trees. In addition, we recently acquired the Sampres Farm.
We expect annual revenue growth to accelerate in Fiscal 2005, primarily as a
result of new revenue associated with the Sampres Farm, but in small part
because we expect to begin selling a small part of the additional inventory we
planted at the Major Trees Farm.

         COST OF GOODS SOLD. Cost of goods sold includes all operational
expenses associated with the operation of our two farms, including all
farm-related salaries, planting, maintenance and harvesting costs, equipment and
any depreciation related to the foregoing. Cost of goods sold increased from
$402,980 for Fiscal 2003 to $428,004 for Fiscal 2004. This increase is primarily
the result of inventory costs associated with increased sales. Cost of goods
sold as a percentage of revenue decreased, from approximately 60% in Fiscal 2003
to approximately 53% in Fiscal 2004. This decrease in cost of goods sold as a
percentage of revenue is a result of the spreading of certain fixed (or
relatively fixed) costs included in cost of goods sold, such as depreciation of
equipment and agricultural buildings, salaries of full time farm employees and
farm equipment costs, across increasing revenue. During Fiscal 2003 and Fiscal
2004, we primarily sold acquired inventory, for which we generally record a
higher expense in cost of goods sold than we do with respect to inventory we
have produced. In the coming year, we expect to decrease the percentage of
acquired inventory we sell and, as a result, expect our cost of goods sold to
decrease as a percentage of revenue.

         OPERATING EXPENSES. Operating expenses consist primarily of personnel
expense associated with management, consulting fees, travel expenses,
professional fees, general overhead and depreciation. Operating expenses
increased from $579,361 for Fiscal 2003 to $654,287 for Fiscal 2004, an increase
of approximately 13%. Operating expenses as a percentage of revenue decreased
slightly, from approximately 86% in Fiscal 2003 to approximately 81% in Fiscal
2004. This decrease in operating expenses as a percentage of revenue is a result
of spreading increasing costs over more rapidly increasing revenue.

         The absolute increase in operating expenses is primarily a result of
increases in salaries, wages and related taxes, which increased from $148,866
for Fiscal 2003 to $387,077 for Fiscal 2004. During Fiscal 2003, the executives
and key employees of the Company accepted temporary reductions in pay in order
to conserve capital. During Fiscal 2004, such voluntary reductions were
eliminated and the salaries of most of the executives and key employees were
increased in order to bring them closer to market wages. We do not expect any
similar increase in Fiscal 2005. Consulting expenses decreased from $235,146 in
Fiscal 2003 to $63,287 in Fiscal 2004, primarily as a result of the $120,000 we
expensed in Fiscal 2003, compared to the $30,000 we expensed in Fiscal 2004, for
equity-based compensation. We expect equity-based consulting expenses to
increase in Fiscal 2005 but not to the $120,000 level in Fiscal 2003. We
experienced a slight decrease, from $169,146 in Fiscal 2003 to $155,873 in
Fiscal 2004, in other general and administrative expenses. In light of expenses
preparatory to, and associated with, the registration statement of which this
prospectus is a part and anticipated ongoing compliance expenses, we expect
other general and administrative expenses to increase in Fiscal 2005.


                                       32




         LOSS ON UNSUCCESSFUL ACQUISITIONS. Loss on unsuccessful acquisitions
consists of non-refundable deposits or due-diligence expenses associated with
acquisitions contemplated by us but abandoned after due diligence. As we
continue to look for acquisition opportunities in Fiscal 2005, we may, but do
not plan to, incur similar expenses.

         INTEREST EXPENSE. Interest expense consists primarily of interest paid
on outstanding notes payable and amortization of deferred loan costs. Interest
expense increased from $68,057 for Fiscal 2003 to $116,163 for Fiscal 2004, an
increase of approximately 71%. This increase is a result of an increase in
indebtedness primarily in order to fund our expansion of inventory and our
acquisition costs. Interest expense also increased as a percentage of revenue,
from approximately 10% in Fiscal 2003 to approximately 14% in Fiscal 2004. We
expect interest expense to increase in Fiscal 2005 as a result of additional
debt incurred in order to fund operations and harvesting in early Fiscal 2005,
but expect our debt to grow slower than our revenue and, as a result, to
decrease as a percentage of revenue.

         NET LOSS. Our net loss increased from $337,586 for Fiscal 2003 to
$400,005 for Fiscal 2004. Information about our expectations with respect to
Fiscal 2005 is set forth in the "General Outlook" subsection of this discussion
above.

LIQUIDITY AND CAPITAL RESOURCES

         Capital Commitments and Expenditures. The following table discloses
aggregate information about our contractual obligations including long-term
debt, operating and capital lease payments, office lease payments, contractual
service agreements and the periods in which payments are due as of September 30,
2004:


                                                      LESS THAN
                                                        1 YEAR        2-3 YEARS       4-5 YEARS      AFTER 5 YEARS
                                                     (10/1/04 TO     (10/1/05 TO     (10/1/07 TO        (AFTER
CONTRACTUAL OBLIGATIONS                 TOTAL          9/30/05)        9/30/07)        9/30/09)         10/1/09)
                                     -------------   -------------   -------------   -------------   -------------
                                  
Operating leases                                --              --              --              --              --
Capital leases                                  --              --              --              --              --
Office lease                                    --              --              --              --              --
Contractual service agreements                  --              --              --              --              --
Notes payable                            1,846,063         919,806         611,676         314,581              --
                                     -------------   -------------   -------------   -------------   -------------
Total contractual cash obligations       1,846,063         919,806         611,676         314,581              --
                                     -------------   -------------   -------------   -------------   -------------


         The following table summarizes the material terms of our convertible
and non-convertible notes (listed in order of ultimate maturity date); except as
set forth in the notes to the table below, we are current with all required
payments, and in compliance with all material covenants with respect to such
note:

                                       33





               BALANCE AS OF                                                      CONVERSION
  PRINCIPAL    SEPTEMBER 30,                       MATURITY DATE;    INTEREST     AND OTHER
   AMOUNT           2004       ORIGINATION DATE  REQUIRED PAYMENTS     RATE         TERMS             SECURITY
   ------           ----       ----------------  -----------------     ----         -----       ----------------------
                                                                              
  $250,000        $250,000         3/1/2004      3/1/2005; payment      14%           NA        Unsecured
                                                  of $125,000 was
                                                 due on January 5,
                                                       2005*

  $300,000        $276,572        3/31/2004      3/31/2005; $4,125      10%         (1)**       Second lien on
                                                      monthly                                   Major Trees; second
                                                                                                lien on Sampres
                                                                                                Farm

   $50,000        $50,000         8/16/2004         08/15/2006;         12%           NA        Lien against 7,500
                                                  monthly interest                              trees on the Major
                                                  plus additional                               Trees Farm
                                                  3% of principal
                                                  due at maturity

   $50,000        $50,000         8/16/2004          8/15/2006;         10%           NA        Lien against 7,500
                                                  monthly interest                              trees on the Major
                                                                                                Trees Farm

   $45,000        $45,000         3/31/2004          9/30/2006;         10%          (2)        Unsecured
                                                 quarterly interest

  $200,000        $200,000        7/21/2004          1/21/2007;         10%          (3)        Lien against 50,000
                                                     quarterly                                  trees on the Major
                                                      interest                                  Trees Farm

  $600,000        $314,884        9/27/2002          3/1/2007;          7%           N/A        First lien on all
                                                 $150,000 annually                              assets acquired
                                                     on March 1                                 from M7 Farms

  $200,000        $117,899        9/27/2002      3/1/2007; $50,000      7%            NA        First lien on
                                                   annually on                                  outstanding shares
                                                      March 1                                   of Major Trees, Inc.

  $400,000        $382,778        5/26/2004       5/1/2009; $2,500      (4)           NA        First lien on all
                                                      monthly                                   assets acquired
                                                                                                from Sampres Tree
                                                                                                Farm LLC


*        Under the terms of the governing documents, we may request an extension
         in exchange for a minimum penalty of $12,500; we have requested such an
         extension and are negotiating specific terms.
**       Under the terms of the governing documents, we agreed to provide a term
         life insurance policy in the amount of $550,000 on each of Kirk and Jim
         Fischer and to name the lenders as a beneficiary; we have acquired the
         insurance policies but have not named the lenders as a beneficiary.
(1)      Convertible with accrued interest into common stock at $0.30 per share
         anytime through March 2005; holders have option to require us to buy
         back some or all of the shares of common stock received upon the
         conversion at $0.345 per share upon certain terms; we agreed to
         register the shares of common stock issuable upon conversion.
(2)      Convertible with accrued interest into common stock at $0.25 per share
         during the first six months, at $0.35 per share during the second six
         months and at $0.50 per share thereafter; we have agreed to register
         the shares of common stock issuable upon conversion.


                                       34




(3)      Convertible with accrued interest into common stock at $0.24 per share
         during the first twelve months, at $0.30 per share during the second
         twelve months and at $0.35 per share thereafter; we have agreed to
         register the shares of common stock received upon conversion upon
         registration of any of our shares of common stock.
(4)      Accruing interest at 7% until May 2005, at 8% from May 2005 until May
         2007 and at 9% from May 2007 until May 2009.

         As of June 30, 2004, we had $2,237 in cash and cash equivalents. This
represents an increase of $2,237 compared to June 30, 2003. Cash used during the
year ended June 30, 2004 includes approximately $453,068 used in operations as
well as $167,340 used in investing activities. Sources of cash during the year
ended June 30, 2004 included a net amount of $622,645 from financing activities.
Of the $622,645 of net cash provided by financing activities, $335,019
represents net cash received less payments made on non-convertible promissory
notes issued to multiple parties from March 2004 - June 2004, $11,264 represents
net cash received less payments made on nonconvertible notes, $312,700
represents the proceeds from issuance of common stock less offering costs. The
$36,338 difference between the $622,645 of net cash provided by financing
activities and the $658,983 of cash itemized above represents payments on
advances and loan costs and proceeds allocated to beneficial conversion
features.

         As of September 30, 2004, we had $24,890 in cash and cash equivalents.
This represents an increase of $22,653 compared to June 30, 2004. Cash used
during the quarter ended September 30, 2004 includes approximately $337,872 used
in operations as well as $1,000 provided by investing activities. Sources of
cash during the quarter ended September 30, 2004 included a net amount of
$359,525 from financing activities. Of this net amount, $192,948 represents net
cash received less payments made on notes payable, $30,000 represents the
proceeds from issuance of common stock less offering costs, $11,538 represents
proceeds from the sale of options to purchase common stock, $50,000 represents
proceeds allocated to beneficial conversion features, $91,539 represents net
cash received less payments made on related party advances and $(16,500)
represents payment of loan costs.

         Our material capital expenditures for Fiscal 2003 and Fiscal 2004
included direct costs of approximately $291,000 to plant approximately 180,000
trees and shrubs, $65,000 to purchase farming equipment and $150,000 to pay the
cash portion of the purchase price for the Sampres Farm. We made no material
capital expenditures during the quarter ended September 30, 2004.

         We anticipate making capital expenditures during the remainder of
Fiscal 2005. Specifically, resources permitting, we plan to spend at least
$200,000 to replace inventory sold during Fiscal 2005 and to expand our
inventory. We are also budgeting approximately $300,000 for the cash portion of
the purchase price of an acquisition (which amount may or may not be sufficient)
and expect to spend between $50,000 and $100,000 to replace equipment and other
items on the Major Trees Farm and the Sampres Farm.

         LIQUIDITY. The following table reflects selected balance sheet data as
of September 30, 2004 and June 30, 2004:


                                       35




                                              SEPTEMBER 30, 2004   JUNE 30, 2004
                                              ------------------   -------------
BALANCE SHEET DATA:
Cash and cash equivalents ................       $    24,980        $     2,237
Working capital (deficit) ................          (191,890)          (303,333)
Total assets .............................         2,164,704          2,020,827
Retained deficit .........................        (1,015,508)          (737,591)
Stockholders' equity .....................           209,370            335,749


         As of September 30, 2004, we had $24,890 in cash and cash equivalents,
total current assets of $940,738 and currently liabilities of $1,132,628,
representing a current working capital deficit of $(191,890). Our current
liabilities as of that date include a $276,572 balance on a secured convertible
note due March 31, 2005 and a $525,978 principal balance on non-convertible
notes payable due within one year. We generate a majority of our revenues
between November and January of each fiscal year. As a result of revenue
collected between September 30, 2004 and [date within 45 days of effective
date], we have increased our cash and cash equivalents balance to $[to be
completed] as of [date within 45 days of effective date].

         We plan to use cash on hand and that collected in the coming months to
pay a portion of our accounts payable and establish a reserve to cover most of
our planned capital expenditures and basic operating expenses until we again
start generating revenue in March 2005. With respect to the current portion of
our notes payable, we believe that most of the holders of the convertible and
non-convertible notes coming due in the next year will either convert such debt
to equity or replace existing notes with notes with deferred payment dates. To
the extent that does not occur, we believe that we can raise capital sufficient
to repay the current portion of our long term debt through the issuance of
additional notes and the sale of equity securities and warrants.

         In addition, members of our management have informally agreed to
provide up to $200,000 of short-term financing to us. Such financing bears
interest at 8% per annum. Management may demand payment on 30 days written
notice, so long as 180 days have passed since the Company and management entered
into the financing arrangement.

         Other than the informal and nonbinding commitments from management, we
do not have any specific commitments from third parties to provide financing
needed to cover any capital shortfalls with respect to our operations, planned
capital expenditures or near-term debt obligations. We caution that,
particularly in light of the early stage of our business, such financing may not
be available on favorable terms, or at all. We may be compelled to divert
substantial portions of our existing cash and future cash flow to the repayment
of debt, which would limit our ability to replace or expand inventory and
acquire additional farms. This would have an adverse affect on revenues in the
coming years. Certain of such debt is secured by our real property, and holders
of the unsecured debt have standard remedies available to debtholders. If we
were to default on such notes and the holders were to exercise their remedies,
we would incur substantial legal expenses, penalties and related costs and could
be forced to seek bankruptcy protection or to discontinue operations.


                                       36




         Our consolidated financial statements have been prepared on the
assumption that our Company will continue as a going concern. Our independent
registered public accounting firm has issued its report dated July 9, 2004 that
includes an explanatory paragraph stating that our having only recently been
formed, our lack of success in establishing profitable operations and the fact
that our current liabilities exceed our current assets raise substantial doubt
about our ability to continue as a going concern. Our product line is limited,
and it has been necessary to rely upon financing from the issuance of promissory
notes and the sale of our equity securities to sustain operations in the past.
Additional financing will be required if we are to continue as a going concern.



                                       37




                                  OUR BUSINESS

OVERVIEW

         Penge Corp. was incorporated in August 2002 as a Nevada corporation and
maintains its principal offices at 11231 Winter Cottage Place, Las Vegas, Nevada
89135. Our telephone number is (702) 562-3176. We own and operate a tree
production and nursery business. Unless otherwise specified or evident from the
context, "we," "us," the "Company" and similar terms refer to Penge Corp. and
its consolidated subsidiaries.

         In the two and one-half years since our incorporation, we have invested
all available capital into expanding and improving the Major Trees Farm,
acquiring the Sampres Farm, and otherwise attempting to improve our tree
production and nursery business. In that process, we have significantly expanded
the number of trees and shrubs planted on, and harvested from, the Major Trees
Farm and have been able to sell all of our products at prices consistent with
our budgets and projections.

         In the foreseeable future, we plan to continue to expand our operations
through the planting of additional trees and shrubs on our existing farms and
the purchase of additional nursery properties and businesses. We will continue
to look for nursery businesses or properties with annual revenues of between
$100,000 and $10 million. In the past, we have been able to negotiate favorable
terms with owners of small nursery businesses who are hoping to exit the market.
We attribute this success to the limited liquidity opportunities available to
small nursery businesses and hope to be able to exploit this situation to
negotiate favorable terms in the future.

         Our goal is to expand the number of farms we manage, and the number of
trees and shrubs planted on those farms, in the next few years while holding
down increases in our administrative and other general operating expenses. As we
spread our production costs over a larger inventory, we also hope to experience
a decline in our per-unit production and sales costs. Over time, we expect that
the increases in revenue from our expanded operations will outpace increases in
our administrative, operational and other expenses.

         We also offer business structure consulting services on a limited
basis. Our total revenue from these consulting services has been less than
$40,000 since inception. We do not plan to actively market such consulting
services in the future but remain open to accepting consulting engagements as
they arise. Consulting services have been an insignificant part of our business
in the past, and we do not expect consulting services to be a significant part
of our business in the future.

The Major Trees Farm
--------------------

         In September 2002, pursuant to a Purchase Agreement signed in August
2002 and for a total purchase price of $957,429, consisting of $800,000 of notes
payable and $157,429 in cash, we acquired a tree and shrub farm in southern
Arizona, 90 minutes southeast of Tucson and a wholesale tree and shrub business
consisting of all of the stock of Major Trees, Inc., an Arizona corporation
incorporated on December 29, 1993, and certain assets of Roger and Barbara
Major, dba M7 Farms. Prior to this acquisition, we had no relationships with
Major Trees, Inc. or Roger and Barbara Major. The farm is a 25-year-old tree and


                                       38




shrub farm on 272 acres that grows trees and shrubs that are then sold wholesale
to retail outlets, such as Home Depot, and to retail nurseries and landscape
companies primarily in Arizona, New Mexico, Texas, and Nevada. Prior to our
acquisition of the Major Trees Farm in September 2002, M7 Farms, Major Trees,
Inc. and their predecessors and affiliates had engaged in this business for the
previous approximately 25 years. We now conduct the business previously
conducted jointly by M7 Farms and Major Trees, Inc.

         The Major Trees Farm sells a variety of trees and shrubs and is the
largest supplier of Eldarica Pine trees in the Southwest, selling these pine
trees as, among other things, living, potted Christmas trees. The Major Trees
Farm sold approximately 22,100 trees in Fiscal 2003 and generated approximately
$655,000 in revenue for Fiscal 2003. The Major Trees Farm sold approximately
28,600 trees in Fiscal 2004 and generated approximately $758,000 in revenue for
Fiscal 2004. We have approximately 180,000 trees growing on the Major Trees
Farm, 30,000 of which we harvested and sold at the end of calendar 2004, with
the possibility of selling up to an additional 5,000 trees this fiscal year.

Sampres Farm
------------

         In May 2004, pursuant to an Asset Purchase Agreement and for a total
purchase price of $670,151, including 400,000 shares of our common stock valued
at $120,000, a $400,000 promissory note and $150,151 in cash, we acquired
certain assets, including a 17-acre tree and shrub farm near Houston, Texas and
other assets related to its operation, from Sampres Tree Farms, L.L.C. and H.
Preston and Shirley M. Franks. Prior to our acquisition of these assets, we had
no relationships with Sampres Tree Farms, L.L.C. or H. Preston and Shirley M.
Franks. In the two years prior to our acquisition of these assets, Sampres Tree
Farms, L.L.C., which was organized in 2002, operated the 17-acre tree and shrub
farm and sold a variety of landscape trees and shrubs primarily at retail, but
also to retail nurseries, in Texas. We are now operating the acquired assets and
are growing a variety of landscape trees and shrubs, which we sell to retail
nurseries and landscape companies in Arizona, New Mexico, Texas and Nevada. We
presently have an inventory of approximately 40,000 - 50,000 trees, which we
plan on harvesting and selling over the next three years. We are expanding the
number of trees and shrubs planted on the Sampres Farm, with over 20,000
additional trees and shrubs planted in the first six months following the
acquisition, and expect to be able to begin harvesting an expanded inventory in
the spring of 2007.

INDUSTRY BACKGROUND

Nursery and Landscape
---------------------

         The market for landscape trees and shrubs is large and very diverse.
Major customer groups include retail nurseries, major retail outlets and
landscape companies. Due to the significant transportation and shipping costs as
well as varying local growing conditions and landscaping needs, the markets for
landscape trees and shrubs are very localized and highly specific to particular
geographic and climatological regions with the majority of landscape trees grown
in particular areas also ultimately being sold and planted in the same
geographic area. However, due to the existence of such a wide variety of
growers, growers are subject to price pressures.


                                       39




Living Christmas Trees
----------------------

         The market for Christmas trees is very large and diverse. According to
the National Christmas Tree Association, Christmas trees are displayed in
between 80 and 90 million homes in the United States each year. Of that number,
roughly 30 to 35 million are real Christmas trees, with the remainder being
artificial.

         We compete in a very small niche of the larger Christmas tree market -
potted, living trees. In the American Southwest, unlike other regions of our
country, it is warm enough in the winter that consumers can buy living trees,
rather than cut trees, keep them indoors during the Christmas season and then
plant them out of doors later that season. Our Eldarica Pine trees are uniquely
suited for sale as a potted, living tree in the Southwest because they are
robust enough to withstand Christmas-season abuse, need little water and are
able to withstand replanting in a warm, dry environment. Of our trees sold to
Home Depot and similar retailers, we believe that many are sold and used as
potted, living Christmas trees and then planted as landscaping trees.

TARGET MARKET, SALES AND MARKETING

Major Retailers
---------------

         We market and sell our trees and shrubs to Home Depot and similar major
retailers. Our marketing efforts consist solely of personal contacts with, and
referrals to, purchasing retailers.

         The trees sold to the major retailers are primarily Eldarica Pine
trees, which are typically re-sold as potted living Christmas trees. In Fiscal
2004, we generated approximately 75% of our revenues through sales of Eldarica
Pine trees to Home Depot (and 17% of our revenues through sales of Eldarica Pine
trees to other retailers). We do not have any written agreement with, or
purchase commitment from, Home Depot or any other retailer. We anticipate sales
of Eldarica Pine trees decreasing as a percentage of our total sales in the
future as we increase our planting and sales of landscape trees and shrubs.

Nurseries and Landscape Companies
---------------------------------

         We have significantly increased our planting of landscape trees and
shrubs other than the Eldarica Pine in an attempt to increase our sales in the
retail nursery and landscape markets. We plan to market such landscape trees and
shrubs primarily through personal contacts with, and referrals to, retail
nurseries and landscaping companies.

         In Fiscal 2004, we generated approximately 17% of our revenues through
sales to retail nurseries and landscaping companies in Arizona, New Mexico,
Nevada and Texas.


                                       40




         We plan to increase our production of trees through additional
acquisitions of farms such as the Sampres Farm, which added only landscaping
trees, and by planting additional landscape trees on our current properties. We
believe that this will permit us to increase our sales to landscape and nursery
customers and to generate additional revenues during the spring and summer
months. In the long run, we anticipate most of our revenue growth to come from
sales of landscaping trees and shrubs to retail nurseries and landscape
companies.

OUR PRODUCTS

         Our farms grow dozens of trees and shrubs native to the Southwest
region. These trees are primarily desert trees and shrubs that thrive in the dry
and arid regions common throughout the southwestern United States and are those
varieties most commonly sold by nurseries and utilized by landscape companies in
that area. The primary tree grown by the Major Trees Farm is the Eldarica Pine.
The Eldarica Pine is from the Middle East and Russia and is a desert tree with
growth of 1-6 feet a year depending on climate, water, and fertilizer. The tree
is highly disease resistant and hardy in warm climates.

         The Eldarica Pine has been sold in the United States for decades and is
a proven commodity in both hardiness and marketability to the Christmas,
landscape and nursery markets in the southern United States and the region from
Texas to California in particular. The Eldarica Pine represented approximately
91% of our Fiscal 2004 sales. We anticipate this decreasing as a percentage of
our total sales in the future as we increase our production and sales of other
trees and shrubs to the retail nursery and landscape markets.

         We grow our trees from seed to harvest in 1-gallon to 100-gallon
plastic pots. The Eldarica Pine trees are sold at an average age of 3 years old,
with heights ranging from 3 feet to 11 feet, with the best selling trees being
6-7 feet tall.

COMPETITION

         The market for landscape, living Christmas and nursery trees is very
large and diverse, and therefore, a grower must possess some form of sustainable
competitive advantage in order to be successful. This could take the form of
geographic proximity to a large number of purchasers, cultivation of a unique
species or variety of trees or access to affordable labor, natural resources or
capital. The large number of growers also results in highly competitive pricing
and pressures on profitability. In order to be competitive in this market, we
must effectively anticipate and respond to market demands and developments.


                                       41




         We have not experienced a reduction in orders or significant demands
for price reduction from Home Depot and other cost sensitive retailers. As a
result, we believe that our prices (at least for our Eldarica Pine) are as low
or lower than those of our competitors. We also believe that the size of our
Eldarica Pine operation, which is the largest in the Southwest, gives us a
competitive advantage with larger retailers because of our perceived ability to
meet their growing demand more easily than smaller growers. With respect to
variety of species, geographic location, access to labor and other factors, we
do not have a significant advantage or disadvantage overall, and may be
perceived as having a competitive advantage or disadvantage, depending upon
which competitor we are being compared with.

SUBSIDIARY

         Penge owns 100% of the outstanding shares of common stock of Major
Trees, Inc., an Arizona corporation.

INTELLECTUAL PROPERTY

         We do not presently regard our intellectual property as critical to our
success. If we acquire any proprietary intellectual property rights that we
believe would benefit from patent, copyright, trademark or trade secret
protection, we intend to take appropriate steps in order to protect those
rights. This would likely include the filing of applications for appropriate
state and federal registrations of our intellectual property rights and
requiring any employees involved with the intellectual property to sign
confidentiality and invention agreements.

EMPLOYEES

         In addition to our four full-time management team members, we currently
have a full-time foreman, two additional full-time employees and between ten and
fifteen seasonal employees at each of our two farms. None of our employees is
represented by a collective bargaining organization, and we consider our
relationship with all our employees to be satisfactory. We plan to hire
additional management and operational expertise as cash flow and business
execution dictate.

GOVERNMENT REGULATION

         The nursery industry as a whole is not regulated by state, federal or
local governments. As a result, our expenses associated with compliance with
government regulations are minimal. Because of the proximity of our properties
to the Mexican border and our use of temporary laborers, we do experience some
administrative expense in connection with our compliance with immigration and
employment laws, including laws requiring that we verify the immigration status
of our employees, limiting our ability to employ legal and illegal aliens,
granting certain minimum wage and other rights to employees and laws designed to
facilitate the organization of labor. If we were to fail to comply with any such
laws or regulations, we may incur significant expenses in connection with any
government investigation or litigation and could be forced to pay fines and/or
take costly measures to ensure compliance. At such point, costs associated with
government regulations could become material.


                                       42




ENVIRONMENTAL REGULATION

         We are not required to obtain any environmental permits, and do not use
any hazardous materials, in connection with the operation of our nursery
business. Accordingly, we have incurred no material expenses associated with
environmental compliance. We do, however, use fertilizers and pesticides that
may contain chemicals that have been, or may be, determined to be harmful to the
environment, which chemicals could enter the air, surface water or ground water
in and around our farms or affect animals and plants in the area. If that were
to occur (or has occurred in the past), we may be subject to fines, penalties
and remediation obligations under the environmental laws; such include, without
limitation, the Clean Air Act, the Clean Water Act, the Resource Conservation
and Recovery Act and the Comprehensive Environmental Response, Compensation, and
Liability Act. At such point, costs associated with environmental compliance and
remediation could become material.

PROPERTY

         We own a 272-acre tree and shrub farm called the Major Trees Farm that
is located at 14660 South Highway 191 in Elfrida, Arizona, which is an
approximately 90 minute drive from Tucson, Arizona. The farm is flat, desert
landscape and is surrounded by other agricultural land. Water for the farm is
drawn from deep wells.

         This farm secures a $600,000 note maturing in March 2007. The note
accrues interest at 7% and had an outstanding balance of $314,884 as of
September 30, 2004. Principal payments of $150,000 are due on March 1, 2005 and
March 1, 2007 on the note. We are permitted to prepay the note without penalty
at any time and a final payment of $40,894 will be due on the note upon maturity
in March 2007 assuming we do not make any prepayments and make all other
payments due under the note in a timely manner. In addition, the farm also
secures a $300,000 convertible note maturing in March 2005. This convertible
note had an outstanding balance of $276,572 as of September 30, 2004. This
convertible note requires monthly payments of $4,125. We may prepay the
convertible note and a final payment of $267,493 will be due on the note upon
maturity in March 2005 assuming we do not make any prepayments and make all
other payments due under the convertible note in a timely manner. Although we
plan on increasing the amount of inventory planted on this farm, we do not
otherwise anticipate renovating, improving, or developing this property. In the
opinion of our management, this farm is adequately covered by insurance.

         We also own a 17-acre tree and shrub farm called the Sampres Tree Farm
that is located at 19461 Mt. Pleasant Road in Montgomery, Texas, which is an
approximately 30 minute drive from Houston, Texas. The farm is sloped and is
surrounded by rolling hills. The farm is surrounded by national forest, other
agricultural land and residential development. It is very wet and watered by
both rainwater and wells. This farm secures a $400,000 note payable maturing in
May 2009. The note accrues interest at the rate of 7% during the first year of
the note (until May 2005), 8% during the second and third years of the note (May
2005-May 2007) and 9% during the fourth and fifth years of the note (May
2007-May 2009). This note had an outstanding balance of $382,778 at September
30, 2004. The note requires monthly payments of $3,101.20 until January 2005,


                                       43




after which it requires monthly payments of $2,500; in addition, principal
payments of $50,000 were required on September 1, 2004 and January 1, 2005. We
are permitted to prepay the note without penalty at any time, and a final
payment of $267,416 will be due on this note upon maturity in May 2009 assuming
we do not make any prepayments and make all other payments due under the note in
a timely manner. In addition, this farm also secures the same $300,000
convertible note, payable maturing in March 2005 that is also secured by the
Major Trees Farm. As discussed above, this convertible note had an outstanding
balance of $276,572 as of September 30, 2004. This convertible note requires
monthly payments of $4,125. We may prepay the convertible note, and a final
payment of $267,493 will be due on the note upon maturity in March 2005 assuming
we do not make any prepayments and make all other payments due under the
convertible note in a timely manner. Although we plan on increasing the amount
of inventory planted on this farm, we do not otherwise anticipate renovating,
improving, or developing this property. In the opinion of our management, this
farm is adequately covered by insurance.

         We maintain our corporate records in the home office of Kirk Fischer,
our Chief Executive and Chief Financial Officer, and our executive officers use
such office on occasion for business purposes. We do not have any lease with
respect to such home office. Should we be required to obtain a separate
executive office in the Las Vegas, Nevada area, comparable space is available in
the area at a reasonable rate.

RESEARCH AND DEVELOPMENT

         We have not incurred any research and development expenses in the past
and do not anticipate incurring any such expenses in the foreseeable future. All
research and development seeds, seedlings and trees have generated revenues in
excess of the expense of cultivating them, resulting in no research and
development net cost.

LEGAL PROCEEDINGS

         We are not engaged in any legal proceedings, nor are we aware of any
pending or threatened legal proceedings that, singly or in the aggregate, will
have a material adverse effect on our business, financial condition or results
of operations.


                                       44




                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

         Certain information regarding our executive officers and directors is
set forth below. Our executive officers are appointed by, and continue to serve
at the will of, our board of directors. Our directors are elected or appointed
for terms that continue, absent resignation, death or removal by our
stockholders, until the later of the next annual meeting of stockholders or
until a replacement is duly appointed or elected and qualified.

         NAME               AGE        POSITION
         ----               ---        --------
         Kirk Fischer       37         Chief Executive Officer, Chief Financial
                                        Officer and Chairman of the Board
         Jim Fischer        58         Vice President of Operations and Director
         Lori Fischer       35         Controller and Director

         KIRK FISCHER, CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER AND
CHAIRMAN OF THE BOARD. Mr. Fischer has served as Chief Executive Officer and
Chairman of the Board of Penge since it was founded in August 2002 and as Chief
Financial Officer since September 2004. Mr. Fischer's background covers a
variety of different businesses, serving primarily in senior management
positions. Between 1999 and 2002, Mr. Fischer started, and served as chairman
and chief executive officer of, Microcap Financial Services, a company
specializing in investor relations, corporate strategy and consulting services
for newer public companies, and Microcap Financial Group, a finance and
investment company. From 1996 to 1999, Mr. Fischer served as chief executive
officer of a fast-food holding company called FFG, Inc., with six locations and
over 100 employees. From 1990 to 1996, Mr. Fischer served in management
positions at Hart Scientific, Inc., as its assistant controller, and at its
subsidiary CSC, as its controller. Mr. Fischer earned a bachelor's degree in
accounting from Brigham Young University. Mr. Fischer is the husband of Lori
Fischer, our Controller and a director, and the son of Jim Fischer, our Vice
President of Operations and a director.

         JIM FISCHER, VICE PRESIDENT OF OPERATIONS AND DIRECTOR. Mr. Fischer has
served as Vice President of Operations and a director of Penge since it was
founded in August 2002. Mr. Fischer has over 30 years' experience working with
Cenex-affiliated farm cooperatives and businesses. Starting as general manager
of the Wendell Grange Supply operation in 1978, Mr. Fischer grew the business
from one location to five locations and over 100 employees. Following his
departure from Cenex, from 1996 to 1999, Mr. Fischer served as president of a
fast-food holding company called FFG, Inc. with six locations and over 100
employees. Between 1999 and 2002, Mr. Fischer was employed by Microcap Financial
Services, a company specializing in investor relations, corporate strategy and
consulting services for newer public companies, and Microcap Financial Group, a
finance and investment company. Mr. Fischer is the father of Kirk Fischer, our
Chief Executive Officer, Chief Financial Officer and Chairman of the Board, and
father-in-law of Lori Fischer, our Controller and a director.


                                       45




         LORI FISCHER, CONTROLLER AND DIRECTOR. Ms. Fischer has served as
Controller of Penge since it was founded in August 2002 and as a director of
Penge since September 2004. Between 1999 and 2002, Ms. Fischer served as
controller of Microcap Financial Services, a company specializing in investor
relations, corporate strategy and consulting services for newer public
companies, and Microcap Financial Group, a finance and investment company. From
1996 to 1999, Ms. Fischer served as controller of a fast-food holding company
called FFG, Inc. Ms. Fischer earned a bachelor's degree in accounting from
Brigham Young University. Ms. Fischer is the wife of Kirk Fischer, our Chief
Executive Officer, Chief Financial Officer and Chairman of the Board, and the
daughter-in-law of Jim Fischer, our Vice President of Operations and a director.

KEY EMPLOYEE

         Certain information regarding a key employee is set forth below.

         KC HOLMES, MANAGER OF MERGERS & ACQUISITIONS. Mr. Holmes has served as
Manager of Mergers & Acquisitions of Penge since September 1, 2004. From its
founding in August 2002 until September 1, 2004, Mr. Holmes served as President,
Chief Financial Officer and as a director of Penge. From 1996 to 2002, Mr.
Holmes served in various capacities with The Murdock Group as an executive and
board member and with Q Comm International (QMM) as a board member and
consultant. He also served as an executive of NEBO Products, an import/export
wholesale business selling hardware and sporting goods, from 1996 to 1999. Mr.
Holmes graduated from Brigham Young University with a degree in Psychology.
Mr. Homes is the cousin of Kirk Fischer, our Chief Executive Officer, Chief
Financial Officer and Chairman of the Board, and the nephew of Jim Fischer,
our Vice President of Operations and a director.

BOARD COMMITTEES

         Our entire Board of Directors presently serves as our audit committee.
None of the members of the audit committee satisfy the independence requirements
applicable to audit committees of listed companies. In addition, the Board of
Directors has determined that the audit committee does not have a member
qualifying as an audit committee financial expert, as defined in Item 401(h) of
Regulation S-B. To save limited capital over the last several years, we have
chosen not to expand the size of our Board of Directors or offer cash
compensation to our directors. The absence of cash compensation makes recruiting
persons who are not otherwise interested in our company more difficult. For
these reasons, we do not have on our Board of Directors a person who would
qualify as an audit committee financial expert.

         We do not presently have a standing nominating committee or
compensation committee, and we do not have a nominating committee charter or a
compensation committee charter.

EXECUTIVE COMPENSATION

         SUMMARY COMPENSATION TABLE. The following table sets forth the
aggregate compensation earned during the fiscal years ended June 30, 2004 and
June 30, 2003 by each person who served as our Chief Executive Officer during
the fiscal years ended June 30, 2004 and June 30, 2003 and each other executive
officer if that person received aggregate compensation in excess of $100,000
during the fiscal years ended June 30, 2004 or June 30, 2003 or is expected to
receive aggregate compensation in excess of $100,000 during fiscal year 2005
(the "named executive officers").


                                       46





                                                                                       LONG-TERM COMPENSATION
                                                ANNUAL COMPENSATION                   AWARDS               PAYOUTS
                                           ------------------------------     ------------------------     --------
                                                                  OTHER                     SECURITIES
                                                                  ANNUAL      RESTRICTED    UNDERLYING                  ALL OTHER
                                                                  COMPEN-     STOCK         OPTIONS/       LTIP         COMPEN-
NAME AND                                   SALARY      BONUS      SATION      AWARD(S)      SARS           PAYOUTS      SATION
PRINCIPAL POSITION             YEAR        ($)         ($)        ($)         ($)           (#)            ($)          ($)
------------------------------ ----------- ----------- ---------- ----------- ------------- -------------- ------------ ------------
                            
Kirk Fischer,                  6/30/04     60,000      -          -           -             -              -            -
Chief Executive Officer        6/30/03     5,500       -          -           -             1,000,000      -            -

Lori Fischer,                  6/30/04     106,075     -          -           -             -              -            -
Controller                     6/30/03     72,000      -          -           -             -              -            -

KC Holmes,                     6/30/04     112,250     -          -           -             -              -            -
Manager of Mergers &           6/30/03     28,850      -          -           -             1,000,000      -            -
Acquisitions


         OPTION/SAR GRANTS IN LAST FISCAL YEAR. No options to purchase common
stock were granted to the named executive officers during the fiscal year ended
June 30, 2004. We have never granted any stock appreciation rights. None of the
named executive officers exercised any options during the fiscal year ended June
30, 2004.

         AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES. The following table sets forth the information concerning the
options to purchase capital stock of the named executive officers exercised
during the fiscal year ended June 30, 2004, and the value of unexercised options
held by the named executive officers as of June 30, 2004.


                                                                            NUMBER OF
                                                                            SECURITIES                  VALUE OF
                                                                            UNDERLYING                 UNEXERCISED
                                                                           UNEXERCISED                IN-THE-MONEY
                                                                         OPTIONS/SARS AT             OPTIONS/SARS AT
                              SHARES ACQUIRED                             JUNE 30, 2004               JUNE 30, 2004
                                ON EXERCISE                                EXERCISABLE/               EXERCISABLE/
            NAME                 (NUMBER)      VALUE REALIZED ($)         UNEXERCISABLE             UNEXERCISABLE (1)
----------------------------- ---------------- -------------------- --------------------------- --------------------------
                           
Kirk Fischer, Chief                  -                  -                  1,000,000/0                 $190,000/$0
Executive Officer

Lori Fischer, Controller             -                  -                       -                           -

KC Holmes, Manager of                -                  -                  1,000,000/0                 $190,000/$0
Mergers & Acquisitions



                                       47




(1) The price of a share of common stock issuable upon the exercise of an option
to purchase a share of common stock was assumed to be $0.30, the most recent
price at which shares of common stock were sold in private placements by Penge.
The value of the unexercised in-the-money options was then calculated as the
difference between that market price and the exercise price of the options,
which is $0.11.

         COMPENSATION OF DIRECTORS. Directors are reimbursed for the expenses
they actually incur in attending board meetings. Directors are not paid a fee
for their service or attendance at board meetings. In the fiscal year ended June
30, 2004, we granted no options to directors. Directors, whether or not
employees, are permitted to participate in our stock incentive plan.

         EXECUTIVE EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE
OF CONTROL ARRANGEMENTS. Each of our executive officers has previously entered
into an engagement agreement based upon our standard form executive employment
agreement, which generally provides for the payment of fair and reasonable
salary, bonuses as determined by the Board of Directors, participation in all
our benefits plans and requires the execution of a confidentiality agreement. In
addition, the form agreement provides that the officer may be terminated with or
without cause, but that, upon termination, the officer shall be paid through the
end of the term of the agreement. The terms of the agreements entered into by
each of the officers have expired; however, KC Holmes, a significant stockholder
and our Manager of Mergers & Acquisitions has also entered into an engagement
agreement based upon our standard form agreement with a term ending September 1,
2006.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The table below sets forth information, as of January 1, 2005 and as of
the closing of the offering, assuming all shares are sold, regarding the
ownership of our common stock by each person who beneficially owns of record
more than 5% of our outstanding common stock, by each person serving as a
director or executive officer and by all of our directors, director nominees and
executive officers as a group. Except as otherwise indicated in the footnotes to
this table, all shares will be owned directly, and the persons named in the
table will have sole voting and investment power with respect to shares shown as
being beneficially owned by them.


                                       PRIOR TO OFFERING                        FOLLOWING OFFERING
                                     AS OF JANUARY 1, 2005                      AS OF JANUARY 1, 2005
                             --------------------------------------   ----------------------------------------
                                                     PERCENTAGE                                 PERCENTAGE
                               OWNERSHIP OF     OWNERSHIP OF COMMON      OWNERSHIP OF      OWNERSHIP OF COMMON
     NAME AND ADDRESS        COMMON STOCK(1)          STOCK(2)        COMMON STOCK(1) (3)      STOCK(2) (3)
     ----------------        ---------------          --------        -------------------      ------------
                          
  EXECUTIVE OFFICERS AND
        DIRECTORS
--------------------------

Kirk Fischer and               4,000,000(4)            28.67%            3,800,000(5)             27.24%
Lori Fischer

11231 Winter Cottage
Place, Las Vegas, NV 89135


                                       48




                                       PRIOR TO OFFERING                        FOLLOWING OFFERING
                                     AS OF JANUARY 1, 2005                      AS OF JANUARY 1, 2005
                             --------------------------------------   ----------------------------------------
                                                     PERCENTAGE                                 PERCENTAGE
                               OWNERSHIP OF     OWNERSHIP OF COMMON      OWNERSHIP OF      OWNERSHIP OF COMMON
     NAME AND ADDRESS        COMMON STOCK(1)          STOCK(2)        COMMON STOCK(1) (3)      STOCK(2) (3)
     ----------------        ---------------          --------        -------------------      ------------

Jim Fischer                    1,190,000(6)             8.53%             1,000,000(7)             7.17%

11231 Winter Cottage
Place, Las Vegas, NV 89135

All Executive Officers         5,190,000               34.71%             4,800,000               32.10%
and Directors as a Group
(3 Persons)

5% STOCKHOLDERS
(WHO ARE NOT EXECUTIVE
OFFICERS OR DIRECTORS)

Rocky Fischer                  1,399,000(8)             9.96%             1,100,000(9)             7.83%

1400 Graham, STE B401,
Tomball, TX 77375

KC Holmes                      2,748,727(10)           19.70%             2,548,727(11)           18.27%

11231 Winter Cottage
Place, Las Vegas, NV 89135

Roger Major                    1,020,000                7.88%               820,000                6.33%

806 W. Knox, Cochise, AZ
85606

Robert G. and Juanita
Purcell(12)                      854,167                6.19%                  Nil                    -

301 N. Hall St.
P.O. Box 100
Potosi, MO 63664


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

(1)      Ownership numbers include shares of our common stock subject to options
         and warrants that are exercisable within 60 days of January 1, 2005.
(2)      The percentages set forth above have been computed assuming the number
         of shares of common stock outstanding equals the sum of (a) 12,952,332,
         which is the number of shares of common stock actually outstanding on
         January 1, 2005, and (b) shares of common stock subject to options,
         convertible notes and similar securities exercisable to purchase common
         stock within 60 days of such date by the selling stockholder with
         respect to which such percentage is calculated.


                                       49




(3)      Assuming the sale by each officer, director or 5% stockholder that is a
         selling stockholder of all of the shares offered hereunder by such
         person. There can be no assurance that any of the shares offered hereby
         will be sold.
(4)      Includes 1,000,000 shares of common stock issuable by us upon the
         exercise of options held by Kirk J. Fischer, our Chief Executive
         Officer, Chief Financial Officer and Chairman of the Board. Also
         includes 1,200,000 shares held of record by Lori L. Fischer, our
         Controller and a director, 250,000 shares held of record by Quinn J.
         Fischer, 250,000 shares held of record by London C. Fischer and 250,000
         shares held of record by Britton K. Fischer, each a dependent son of
         Kirk and Lori Fischer.
(5)      Includes 1,000,000 shares of common stock issuable by us upon the
         exercise of options held by Kirk J. Fischer, our Chief Executive
         Officer, Chief Financial Officer and Chairman of the Board. Also
         includes 1,000,000 shares held of record by Lori L. Fischer, our
         Controller and a director, 250,000 shares held of record by Quinn J.
         Fischer, 250,000 shares held of record by London C. Fischer and 250,000
         shares held of record by Britton K. Fischer, each a dependent son of
         Kirk and Lori Fischer.
(6)      Includes 1,000,000 shares of common stock issuable by us upon the
         exercise of options held by Jim Fischer, our Vice President of
         Operations and a director. Also includes 115,000 shares held of record
         by Ellen Fischer, Jim Fischer's wife.
(7)      Includes 1,000,000 shares of our common stock issuable upon exercise of
         options held by Jim Fischer, our Vice President of Operations and a
         director.
(8)      Includes 1,100,000 shares of common stock issuable upon exercise of
         options held by Rocky Fischer. Also includes 200,000 shares of common
         stock held of record by Rocky Fisher, 33,000 shares held of record by
         Janalen Fischer, the wife of Rocky Fischer, 33,000 shares held of
         record by Abigail Paige Fischer, a dependent daughter of Rocky and
         Janalen Fischer, and 33,000 shares held of record by Abby Nursery LLC,
         an entity over which Rocky and Janalen Fischer exercise voting and
         investment control.
(9)      Includes 1,100,000 shares of common stock issuable upon exercise of
         options held by Rocky Fischer.
(10)     Includes 1,000,000 shares of common stock issuable by us upon the
         exercise of options held by KC Holmes, our Manager of Mergers &
         Acquisitions. Also includes 148,727 shares held of record by 5th Genki
         LLC, an entity over which Michelle Holmes exercised voting and
         investment control, 400,000 shares held of record by Alecia Monet
         Holmes, a dependent daughter of KC and Michelle Holmes, 400,000 shares
         held of record by Chance Jaxon Holmes, a dependent son of KC and
         Michelle Holmes, 400,000 shares held of record by Brooklyn Elaine
         Holmes, a dependent daughter of KC and Michelle Holmes and 400,000
         shares held of record by Rian Michelle Holmes, a dependent daughter of
         KC and Michelle Holmes.
(11)     Includes 148,727 shares held of record by 5th Genki LLC, an entity over
         which Michelle Holmes exercises voting and investment control, 12,418
         shares held of record by Alecia Monet Holmes, a dependent daughter of
         KC and Michelle Holmes, 12,418 shares held of record by Chance Jaxon
         Holmes, a dependent son of KC and Michelle Holmes, 12,418 shares held
         of record by Brooklyn Elaine Holmes, a dependent daughter of KC and
         Michelle Holmes and 12,419 shares held of record by Rian Michelle
         Holmes, a dependent daughter of KC and Michelle Holmes.
(12)     Includes convertible notes convertible into 854,167 shares of our
         common stock within 60 days of January 1, 2005.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The following discusses certain transactions between us and our
officers, directors, beneficial holders of 5% or more of our common stock and
certain others that may be deemed to be affiliates.

         In connection with our founding, we issued the following number of
shares of our common stock to the following persons that may be deemed to be
affiliates or to their designees, among others, in August 2002 in exchange for
$0.00004 per share in cash:

            NAME OF PERSON                   NUMBER OF SHARES OF COMMON STOCK
---------------------------------------    -------------------------------------
Kirk Fischer                                                        1,500,000
Jim Fischer                                                           250,000
KC Holmes                                                             500,000*
Rocky Fischer                                                         250,000
Lorien Investments, LLC (Lori Fischer)                              2,000,000
5th Genki, LLC (KC Holmes)                                          2,500,000


                                       50




         *    265,000 of such shares were transferred to persons designated by
              Mr. Holmes.

Each of the persons named in the table above may be deemed to be promoters of
Penge.

         In June 2003, we purchased office furniture and equipment with a value
of $15,130 from KC Holmes, Manager of Mergers & Acquisitions, for $15,130. The
determination of value was made by Kirk Fischer and Jim Fischer, directors of
the Company without a direct financial interest in the transaction. Kirk Fischer
is a cousin of KC Holmes, and Jim Fischer is an uncle of KC Holmes.

         During fiscal year 2003, Rocky Fischer, the brother of Kirk Fischer,
our Chief Executive Officer, Chief Financial Officer and Chairman of the Board,
provided consulting services valued at $14,500 to Penge, which amount we paid in
July 2003.

         We issued 100,000 shares of common stock to Rocky Fischer, the brother
of Kirk Fischer, our Chief Executive Officer, Chief Financial Officer and
Chairman of the Board, for $10,000 cash in October 2002.

         In September 2003, we granted options to purchase 100,000 shares of our
common stock to Rocky Fischer, the brother of Kirk Fischer, our Chief Executive
Officer, Chief Financial Officer and Chairman of the Board, for consulting
services.

         In November 2002, we granted options to purchase the following number
of shares of our common stock to the following persons that may be deemed to be
affiliates, among others, under our 2002 Stock Incentive Plan:

            NAME OF PERSON                 NUMBER OF OPTIONS TO PURCHASE SHARES
                                                     OF COMMON STOCK
-------------------------------------     --------------------------------------
Kirk Fischer                                                         1,000,000
Jim Fischer                                                          1,000,000
KC Holmes                                                            1,000,000
Rocky Fischer                                                        1,000,000

         During fiscal years 2003 and 2004 respectively, we paid Rocky Fischer,
the brother of Kirk Fischer, our Chief Executive Officer, Chief Financial
Officer and Chairman of the Board, $24,020 and $25,875 for consulting services.

         During fiscal years 2003 and 2004, we provided the compensation
described in the section entitled "Executive Compensation" to Kirk Fischer,
Chief Executive Officer, Chief Financial Officer and a director; Lori Fischer,
Controller and a director; and KC Holmes, Manager of Mergers & Acquisitions. In
addition, in fiscal years 2003 and 2004 respectively, we paid salary of $29,500
and $77,000 to Jim Fischer, Vice President of Operations and a director.


                                       51




         The table below summarizes advances made to us by management and other
related parties during fiscal years 2003 and 2004 and the balance owed by Penge
to such individuals as of June 30, 2004:


                            BALANCE       2003         2003      BALANCE       2004        2004       BALANCE
       INDIVIDUAL           8/6/02      ADVANCES     PAYMENTS    6/30/03     ADVANCES    PAYMENTS     6/30/04
--------------------      ------------ ------------ ----------- ----------- ----------- ------------ ----------
                           
Jim Fischer                   --            22,433    (22,433)      --          25,411     (25,411)     --
KC Holmes                     --            18,079     (5,870)      12,209      51,300     (63,509)     --
Kirk Fischer                  --             5,000     (4,489)         511      36,700     (37,211)     --
Lori Fischer                  --            53,664    (50,140)       3,524     127,388    (120,678)     10,234
                          ------------ ------------ ----------- ----------- ----------- ------------ ----------
                                            99,176    (82,932)      16,244     240,799  (246,809)       10,234



The table below summarizes advances made to us by management and other related
parties during the period between June 30, 2004 and December 31, 2004, and the
balance owed by Penge to such individuals as of December 31, 2004:

                    Balance                                      Balance
Individual          06/30/04       Advances       Payments       12/31/04
----------          --------       --------       --------       --------
Jim Fischer            --            [*]            [*]             [*]
KC Holmes              --            [*]            [*]             [*]
Kirk Fischer           --            [*]            [*]             [*]
Lori Fischer        10,234           [*]            [*]             [*]
                    --------       --------       --------       --------
                    10,234           [*]            [*]             [*]

[*] To be completed in pre-effective amendment when reviewed information is
    available.


                        DESCRIPTION OF OUR CAPITAL STOCK

         Our authorized capital stock consists of 50,000,000 shares of common
stock, $.001 par value, and 10,000,000 shares of preferred stock, $.001 par
value. As of January 1, 2005, there were 12,952,332 shares of our common stock
outstanding, held of record by and beneficially owned by approximately 110
stockholders. As of January 1, 2005, there were no shares of preferred stock
issued or outstanding.

OUR COMMON STOCK

         Holders of our common stock are entitled to receive any dividends
properly declared by our board. Holders of our common stock are entitled to one
vote per share on all matters on which the holders of our common stock are
entitled to vote. Holders of our common stock do not have any cumulative voting,
preemptive, conversion, redemption or sinking fund rights. If we are liquidated,
dissolved or wound up, holders of our common stock are entitled to share equally
and ratably in our remaining assets after the payment of all our liabilities and
the liquidation preference of any outstanding class or series of our preferred
stock. The outstanding shares of our common stock are fully paid and
nonassessable. The rights, preferences and privileges of our common stock are
subject to any series of our preferred stock that we may issue in the future, as
described below.

OUR PREFERRED STOCK

         Our board of directors has the authority to issue preferred stock in
one or more series and to fix the number, designation, power, preferences and
relative, participating, optional and other rights, and the qualifications,
limitations and restrictions thereof, if any, of any series of preferred stock,
including, without limitation, the following, without any further vote or action
by our stockholders:

         o    the distinctive designation of, and the number of shares of
              preferred stock that shall constitute the series, which number may
              be increased (except as otherwise fixed by the board of directors)
              or decreased (but not below the number of shares thereof then
              outstanding) from time to time by action of the board of
              directors;


                                       52




         o    the rate and times at which, and the terms and conditions upon
              which, dividends, if any, on shares of the series shall be paid,
              the extent of preferences or relation, if any, of such dividends
              to the dividends payable on any other class or classes of our
              stock, or on any series of preferred stock or of any other class
              or classes of our stock, and whether such dividends shall be
              cumulative or non-cumulative;
         o    the right, if any, of the holders of shares of the series to
              convert the same into, or exchange the same for, shares of any
              other class or classes of our stock, or of any series of preferred
              stock or of any other class or classes of our stock, and the terms
              and conditions of such conversion or exchange;
         o    whether shares of the series shall be subject to redemption, and
              the redemption price or prices including, without limitation, a
              redemption price or prices payable in shares of the common stock
              and the time or times at which, and the terms and conditions upon
              which, shares of the series may be redeemed;
         o    the rights, if any, of the holders of shares of the series upon
              voluntary or involuntary liquidation, merger, consolidation,
              distribution or sale of assets, dissolution or winding-up of the
              company;
         o    the terms of the sinking fund or redemption or purchase account,
              if any, to be provided for shares of the series; and
         o    the voting power, if any, of the holders of shares of the series
              that may, without limiting the generality of the foregoing,
              include the right to more or less than one vote per share on any
              or all matters voted upon by the stockholders and the right to
              vote, as a series by itself or together with other series of
              preferred stock as a class, upon such matters, under such
              circumstances and upon such conditions as the board of directors
              may fix, including, without limitation, the right, voting as a
              series by itself or together with other series of preferred stock
              or together with all series of preferred stock as a class, to
              elect one or more of our directors in the event there shall have
              been a default in the payment of dividends on any one or more
              series of preferred stock or under such other circumstances and
              upon such condition as the board of directors may determine.

         The issuance of preferred stock by our board of directors could
adversely affect the rights of holders of our common stock. The potential
issuance of our preferred stock may:

         o    have the effect of delaying or preventing a change in control of
              the company;
         o    discourage bids for our common stock at a premium over the market
              price of our common stock; and
         o    adversely affect the market price of, and the voting, dividend,
              liquidation and other rights of the holders of our common stock.


                                       53




            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

ABSENCE OF MARKET FOR COMMON STOCK

         Our common stock is not listed on any exchange or quoted on any similar
quotation service, and there is currently no market for our common stock. We are
taking steps to enable our common stock to be quoted on the OTC Bulletin Board
but can provide no assurance that our common stock will ever be quoted on any
quotation service or that any market for our common stock will ever develop.

COMMON STOCK OUTSTANDING AND AVAILABLE FOR FUTURE SALE

         Future sales of substantial amounts of common stock in the public
market or the prospect of such sales could adversely affect market prices for
our common stock (to the extent that any such market develops).

         As of January 1, 2005, there were 12,952,332 shares of our common stock
outstanding held by approximately 110 holders of record. In addition, there were
4,500,000 shares of common stock authorized for issuance upon exercise of
outstanding options granted pursuant to our stock option plan, 3,500,000 shares
of common stock reserved for the future grant of stock options under that plan,
50,000 shares of our common stock issuable upon the exercise of outstanding
options, 1,932,638 shares of common stock issuable upon the conversion of
convertible notes payable and no shares of common stock subject to outstanding
warrants to purchase common stock.

         All outstanding shares of our common stock are "restricted securities,"
as defined in Rule 144 promulgated under the Securities Act, and may be sold in
the public market only if registered under the Securities Act or if they qualify
for an exemption from registration, including an exemption under Rule 144. The
resale of 3,861,466 of such shares has been registered under the registration
statement of which this prospectus is a part and, subject to compliance with
state securities laws and the prospectus delivery requirements under the
Securities Act, may be sold pursuant to this prospectus at any time the
registration statement is effective.

         In general under Rule 144, a person, including an "affiliate" of our
company, who has beneficially owned restricted shares for at least one year is
entitled to sell within any three-month period a number of shares that does not
exceed the greater of one percent of the then outstanding shares of common stock
(approximately 129,523 shares of common stock as of the date hereof) or the
average weekly trading volume of the common stock during the four calendar weeks
preceding the sale. Sales under Rule 144 are subject to manner-of-sale
restrictions, notice requirements and the availability of current public
information about us. Rule 144(k) provides that a person who is not an
"affiliate" of the issuer at any time during the three months preceding a sale
and who has beneficially owned shares for at least two years is entitled to sell
those shares at any time without compliance with the public information, volume
limitation, manner of sale and notice provisions of Rule 144.


                                       54




DIVIDENDS

         We have never declared or paid cash dividends on our shares of common
stock. We currently intend to retain future earnings for use in our business
and, therefore, do not anticipate paying any dividends on our shares of common
stock in the foreseeable future.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         Set forth below is certain information about the number of shares of
our common stock subject to options, warrants and other rights granted, or that
may be granted, under our compensation plans as of June 30, 2004. The equity
compensation plan that has been approved by security holders is the 2002 Stock
Incentive Plan. We have no equity compensation plans that have not been approved
by security holders.


                                           EQUITY COMPENSATION PLAN INFORMATION

                                                                                     Number of securities
                              Number of securities                               remaining available for future
                                  to be issued             Weighted-average         issuance under equity
                                upon exercise of           exercise price of     compensation plans (excluding)
                               outstanding options,       outstanding options,      securities reflected
       Plan category           warrants and rights        warrants and rights           in column (a))
-------------------------------------------------------------------------------------------------------------
                                
                                       (a)                        (b)                       (c)
Equity compensation plans
approved by security
holders                             4,300,000                    $0.11                    3,700,000
-------------------------------------------------------------------------------------------------------------
Equity compensation plans              None                       None                       None
not approved by security
holders
-------------------------------------------------------------------------------------------------------------
                                    4,300,000                    $0.11                    3,700,000
Total
-------------------------------------------------------------------------------------------------------------


                                  LEGAL MATTERS

         The validity of the securities offered pursuant to this prospectus is
being passed upon for us by Stoel Rives LLP.

                                     EXPERTS

         Our financial statements included in this prospectus as of June 30,
2004 and 2003 and for each of the two years then ended have been audited by
Pritchett, Siler & Hardy, P.C., independent registered public accounting firm,
as stated in its report appearing elsewhere in this prospectus and in the
registration statement, and are included in reliance upon that report given upon
the authority of that firm as experts in accounting and auditing.


                                       55




                  INDEMNIFICATION OF OUR OFFICERS AND DIRECTORS

         Our articles of incorporation provide that we shall indemnify and
advance expenses to our directors, officers, employees, fiduciaries or agents
and to any person who is or was serving at our request as a director, officer,
partner, trustee, employee, fiduciary or agent of another domestic or foreign
corporation or other person or of an employee benefit plan (and their respective
estates or personal representatives) to the fullest extent as from time to time
permitted by Nevada law.

         Our bylaws provide that we shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of our company, by reason of
the fact that he or she is or was a director, officer, employee or agent of our
company, or is or was serving at the request of our company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in connection with the action, suit or proceeding if he or she
acted in good faith and in a manner that he or she reasonably believed to be in
or not opposed to the best interests of our company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.

         With respect to derivative actions, our bylaws provide that we shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of our
company to procure a judgment in its favor by reason of the fact that he or she
is or was a director, officer, employee or agent of our company, or is or was
serving at the request of our company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against expenses, including amounts paid in settlement and attorneys' fees
actually and reasonably incurred by him or her in connection with the defense or
settlement of the action or suit if he or she acted in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of our company. We may not indemnify any such person for any claim,
issue or matter as to which such person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
to our company or for amounts paid in settlement to our company, unless and only
to the extent that the court in which the action or suit was brought or other
court of competent jurisdiction determines upon application that in view of all
the circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.

         Any indemnification under the provisions described above, unless
ordered by a court, may be made by our company only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances. The determination
must be made:

         o    By the stockholders;


                                       56




         o    By the board of directors by majority vote of a quorum consisting
              of directors who were not parties to the act, suit or proceeding;

         o    If a majority vote of a quorum consisting of directors who were
              not parties to the act, suit or proceeding so orders, by
              independent legal counsel in a written opinion; or

         o    If a quorum consisting of directors who were not parties to the
              act, suit or proceeding cannot be obtained, by independent legal
              counsel in a written opinion.

         Our bylaws further provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be
paid by our company as they are incurred and in advance of the final disposition
of the action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he or she is not entitled
to be indemnified by our company.

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

                       WHERE YOU CAN FIND MORE INFORMATION

         We have filed with the SEC a registration statement on Form SB-2 under
the Securities Act with respect to shares of common stock offered pursuant to
this prospectus. This prospectus, which forms a part of the registration
statement, does not contain all of the information included in the registration
statement and its exhibits, as permitted by the rules and regulations of the SEC
and you should refer to the registration statement and its exhibits. Statements
in this prospectus as to the contents of any contract or other document referred
to in this prospectus are not necessarily complete and, in each instance,
reference is made to the copy of that contract or other document filed as an
exhibit to the registration statement, each statement being qualified in all
respects by that reference. You may read and copy the registration statement,
including exhibits and schedules filed with it, at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains a website (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants, such as us, that file electronically with the SEC.

         Upon completion of this offering, we will become subject to the
information and periodic reporting requirements under the Exchange Act and, in
accordance with this law, will file periodic reports, proxy statements and other
information with the SEC. These periodic reports, proxy statements and other
information will be available for inspection and copying at the SEC's Public
Reference Room and the website of the SEC referred to above.




                                       57




                          INDEX TO FINANCIAL STATEMENTS


                                                                            PAGE
                                                                            ----
Unaudited Condensed Consolidated Balance Sheets,
      September 30, 2004 and June 30, 2004                                   F-1


Unaudited Condensed Consolidated Statements of
      Operations, for the three months ended
      September 30, 2004 and 2003                                            F-3


Unaudited Condensed Consolidated Statements of
      Comprehensive Income (Loss), for the three
      months ended September 30, 2004 and 2003                               F-4


Unaudited Condensed Consolidated Statements of
      Cash Flows, for the three months ended
      September 30, 2004 and 2003                                            F-5


Notes to Unaudited Condensed Consolidated
      Financial Statements                                                   F-7


Report of Independent Registered Public Accounting Firm                     F-23


Consolidated Balance Sheets, June 30, 2004 and 2003                         F-24


Consolidated Statements of Operations, for the year
          ended June 30, 2004 and for the period from
          inception on August 6, 2002 through June 30, 2003                 F-26


Consolidated Statements of Comprehensive Income (Loss), for the
          year ended June 30, 2004 and for the period from
          inception on August 6, 2002 through
          June 30, 2003                                                     F-27


Consolidated Statement of Stockholders' Equity, from
          inception on August 6, 2002 through June 30, 2004                 F-28


Consolidated Statements of Cash Flows, for the year
      ended June 30, 2004 and for the period from
      inception on August 6, 2002 through June 30, 2003                     F-31


Notes to Consolidated Financial Statements                                  F-33



                                       58




                           PENGE CORP. AND SUBSIDIARY

                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                     ASSETS

                                                        September 30,  June 30,
                                                            2004         2004
                                                         ----------   ----------
CURRENT ASSETS:
    Cash                                                 $   24,890   $    2,237
    Accounts receivable, net of allowance for doubtful
      accounts of $171 and $169, respectively                11,251       13,793
    Employee advances                                           400           --
    Inventories                                             903,042      761,802
    Prepaid expenses                                          1,155        2,322
                                                         ----------   ----------
              Total Current Assets                          940,738      780,154
                                                         ----------   ----------

PROPERTY AND EQUIPMENT, net                               1,163,347    1,185,366
                                                         ----------   ----------

OTHER ASSETS:
    Definite-life intangible assets, net                     33,725       36,616
    Deferred loan costs                                      26,334       18,171
    Refundable deposits                                         560          520
                                                         ----------   ----------
              Total Other Assets                             60,619       55,307
                                                         ----------   ----------

                                                         $2,164,704   $2,020,827
                                                         ==========   ==========



                                   [CONTINUED]


                                      F-1






                               PENGE CORP. AND SUBSIDIARY

                    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                      [CONTINUED]

                          LIABILITIES AND STOCKHOLDERS' EQUITY

                                                            September 30,    June 30,
                                                                2004           2004
                                                            ------------   ------------
                                                                     
CURRENT LIABILITIES:
     Current portion of convertible notes payable           $   276,572    $   291,019
     Current portion of notes payable                           525,978        530,003
     Accounts payable                                           156,323        177,440
     Related party advances                                     101,773         10,234
     Accrued payroll and payroll taxes                           37,000         50,134
     Sales taxes payable                                             27             27
     Warranty reserve                                                12             31
     Accrued interest                                            34,943         24,599
                                                            ------------   ------------
               Total Current Liabilities                      1,132,628      1,083,487
                                                            ------------   ------------
LONG-TERM DEBT:
     Convertible notes payable, net of discounts of
       $10,033 and $0, respectively, less current portion       193,700         44,967
     Notes payable, less current portion                        629,006        556,624
                                                            ------------   ------------
               Total Long-Term Debt                             822,706        601,591
                                                            ------------   ------------
               Total Liabilities                              1,955,334      1,685,078
                                                            ------------   ------------

STOCKHOLDERS' EQUITY:
     Preferred stock, $.001 par value,
       10,000,000 shares authorized,
       no shares issued and outstanding                              --             --
     Common stock, $.001 par value,
       50,000,000 shares authorized,
       12,952,332 and 12,852,331 shares
       issued and outstanding, respectively                      12,952         12,852
     Additional paid-in capital                               1,261,926      1,110,488
     Retained earnings (deficit)                             (1,015,508)      (737,591)
                                                            ------------   ------------
                                                                259,370        385,749
     Less stock subscription receivable                         (50,000)       (50,000)
                                                            ------------   ------------
               Total Stockholders' Equity                       209,370        335,749
                                                            ------------   ------------

                                                            $ 2,164,704    $ 2,020,827
                                                            ============   ============



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


                                          F-2




                           PENGE CORP. AND SUBSIDIARY

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                         For the Three Months
                                                          Ended September 30,
                                                       -------------------------
                                                          2004           2003
                                                       ----------     ----------
REVENUES:
     Farm crop sales                                   $   2,652      $   9,161

COST OF GOODS SOLD                                         1,640          3,247
                                                       ----------     ----------
GROSS PROFIT                                               1,012          5,914
                                                       ----------     ----------

EXPENSES:
     Salaries, wages and related taxes                    89,082        123,167
     Consulting                                           60,000         46,267
     Travel                                               10,742         10,145
     Other general and administrative                     65,180         39,063
                                                       ----------     ----------
               Total Expenses                            225,004        218,642
                                                       ----------     ----------

LOSS FROM OPERATIONS                                    (223,992)      (212,728)
                                                       ----------     ----------

OTHER INCOME (EXPENSE):
     Interest income                                           6             --
     Interest expense                                    (53,931)       (24,937)
                                                       ----------     ----------
               Total Other Income (Expense)              (53,925)       (24,937)
                                                       ----------     ----------

LOSS BEFORE INCOME TAXES                                (277,917)      (237,665)

CURRENT TAX EXPENSE (BENEFIT)                                 --             --

DEFERRED TAX EXPENSE (BENEFIT)                                --         (3,782)
                                                       ----------     ----------

NET LOSS                                               $(277,917)     $(233,883)
                                                       ==========     ==========

LOSS PER COMMON SHARE                                  $    (.02)     $    (.02)
                                                       ==========     ==========



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



                                      F-3





                             PENGE CORP. AND SUBSIDIARY

                   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

                            COMPREHENSIVE INCOME (LOSS)


                                                             For the Three Months
                                                              Ended September 30,
                                                            -----------------------
                                                               2004         2003
                                                            ----------   ----------
                                                                   

NET LOSS                                                    $(277,917)   $(233,883)

OTHER COMPREHENSIVE INCOME (LOSS):
     Gain (loss) on available-for-sale securities arising
       during the period (net of income taxes (benefit)
       of $0 and $(4), respectively)                               --        1,128
     Plus reclassification adjustment for (gains)
       losses included in net income                               --           --
                                                            ----------   ----------

COMPREHENSIVE INCOME (LOSS)                                 $(277,917)   $(232,755)
                                                            ==========   ==========




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



                                        F-4






                                PENGE CORP. AND SUBSIDIARY

                UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                    For the Three Months
                                                                    Ended September 30,
                                                                  -----------------------
                                                                     2004         2003
                                                                  ----------   ----------
                                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                       $(277,917)   $(233,883)
   Adjustments to reconcile net loss to net cash used by
     operating activities:
     Amortization of deferred loan costs                              8,337        7,505
     Amortization of discounts on notes payable                       9,695           --
     Bad debt expense                                                     2          100
     Depreciation and amortization                                   23,910       15,302
     Non-cash expenses                                               60,000       30,000
     Changes in assets and liabilities:
       Decrease in accounts receivable                                2,540        8,800
       (Increase) in employee advances                                 (400)          --
       (Increase) in inventories                                   (141,240)     (45,017)
       Decrease in prepaid expenses                                   1,167       11,749
       Decrease in deferred tax asset                                    --        4,090
       (Increase) in refundable deposits                                (40)          --
       (Decrease) in accounts payable                               (21,117)     (95,438)
       Increase (decrease) in accrued payroll and payroll taxes     (13,134)       2,922
       (Decrease) in warranty reserve                                   (19)        (244)
       Increase in accrued interest                                  10,344        1,342
       (Decrease) in deferred tax liability                              --       (7,872)
                                                                  ----------   ----------
               Net Cash (Used) by Operating Activities             (337,872)    (300,644)
                                                                  ----------   ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Payments to purchase available-for-sale securities                    --       (2,457)
   Payments to purchase property and equipment                           --      (40,083)
   Proceeds from sale of property and equipment                       1,000           --
                                                                  ----------   ----------
               Net Cash Provided (Used) by Investing Activities       1,000      (42,540)
                                                                  ----------   ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from bank overdraft                                      --       84,178
   Related party advances                                           151,978      144,412
   Payments on related party advances                               (60,439)    (160,656)
   Payments of loan costs                                           (16,500)     (12,178)
   Proceeds from convertible notes payable                          150,000           --
   Payments on convertible notes payable                            (24,447)          --
   Proceeds from notes payable                                       88,462      226,469
   Payments on notes payable                                        (21,067)    (170,541)
   Proceeds from sale of options to purchase common stock            11,538           --
   Proceeds allocated to beneficial conversion feature of
     convertible notes payable                                       50,000           --
   Proceeds from issuance of common stock                            30,000      255,000
   Payment of stock offering costs                                       --      (23,500)
                                                                  ----------   ----------
               Net Cash Provided by Financing Activities            359,525      343,184
                                                                  ----------   ----------
NET INCREASE (DECREASE) IN CASH                                      22,653           --

CASH AT BEGINNING OF PERIOD                                           2,237           --
                                                                  ----------   ----------

CASH AT END OF PERIOD                                             $  24,890    $      --
                                                                  ==========   ==========


                                       [CONTINUED]




                                           F-5




                           PENGE CORP. AND SUBSIDIARY

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   [CONTINUED]

                                                          For the Three Months
                                                           Ended September 30,
                                                         -----------------------
                                                            2004         2003
                                                         ----------   ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the period for:
     Interest                                            $   25,555   $   16,090
     Income taxes                                        $       --   $       --

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
   For the three months ended September 30, 2004:

     The Company amortized $9,695 in discounts on notes payable.

     In July 2004, the Company issued a $200,000 convertible note payable and
     recorded a discount of $50,000 for the beneficial conversion feature of the
     convertible note payable.

     In August 2004, the Company granted options to purchase 200,000 shares of
     common stock for consulting services rendered valued at $60,000.

   For the three months ended September 30, 2003:
     In September 2003, the Company granted options to purchase 100,000 shares
     of common stock for consulting services rendered valued at $30,000.

     In September 2003, the Company issued 100,000 shares of common stock for a
     subscription receivable of $30,000.







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



                                      F-6




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION - Penge Corp. ("Parent") was organized under the laws of the
     State of Nevada on August 6, 2002.

     Major Trees, Inc. ("MT Subsidiary") was organized under the laws of the
     State of Arizona on December 29, 1993.

     Anglewood Advisors, Inc. ("AA Subsidiary") was organized under the laws of
     the State of Nevada on January 27, 2003 as a wholly-owned subsidiary of
     Parent. AA Subsidiary offered business structure consulting. On October 2,
     2003, the Company's Board of Directors determined to abandon AA Subsidiary.
     AA Subsidiary has been dissolved by the State of Nevada. At the time of
     abandonment, AA Subsidiary had no assets and no liabilities. The financial
     statements reflect the operations of AA Subsidiary from January 27, 2003
     through October 2, 2003. The Company continues to offer business structure
     consulting through Parent.

     Parent and MT Subsidiary ("the Company") grows trees and other agricultural
     products. Also, the Company has occasionally provided business consulting
     services. The Company has, at the present time, not paid any dividends and
     any dividends that may be paid in the future will depend upon the financial
     requirements of the Company and other relevant factors.

     CONDENSED FINANCIAL STATEMENTS - The accompanying financial statements have
     been prepared by the Company without audit. In the opinion of management,
     all adjustments (which include only normal recurring adjustments) necessary
     to present fairly the financial position, results of operations and cash
     flows at September 30, 2004 and 2003 and for the periods then ended have
     been made.

     Certain information and footnote disclosures normally included in financial
     statements prepared in accordance with generally accepted accounting
     principles in the United States of America have been condensed or omitted.
     It is suggested that these condensed financial statements be read in
     conjunction with the financial statements and notes thereto included in the
     Company's June 30, 2004 audited financial statements. The results of
     operations for the periods ended September 30, 2004 and 2003 are not
     necessarily indicative of the operating results for the full year.

     CONSOLIDATION - The consolidated financial statements include the accounts
     of Parent and Parent's wholly-owned MT Subsidiary. The consolidated
     financial statements also include the accounts of Parent's formerly
     wholly-owned AA Subsidiary for the period from January 27, 2003 through
     October 2, 2003. All significant intercompany transactions have been
     eliminated in consolidation.

     FISCAL YEAR - The Company's fiscal year-end is June 30th.

     AGRICULTURAL PRODUCTION - The Company accounts for their agricultural
     activities in accordance with Statement of Position 85-3, "Accounting by
     Agricultural Producers and Agricultural Cooperatives". All direct and
     indirect costs of growing crops are either accumulated as inventory or
     expensed as cost of goods sold. Permanent land development costs are
     capitalized and not depreciated. Limited-life land development costs and
     the development costs to bring long-life and intermediate-life plants into
     production are capitalized and depreciated using the straight-line method
     over the estimated useful lives of the assets.


                                      F-7




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

     CASH AND CASH EQUIVALENTS - The Company considers all highly-liquid debt
     investments purchased with a maturity of three months or less to be cash
     equivalents.

     INVESTMENTS - The Company's investments which are bought and held
     principally for the purpose of selling them in the near term are classified
     as trading securities. Trading securities are recorded at fair value with
     changes in fair value being included in earnings. Investments for which the
     Company has the positive intent and ability to hold to maturity are
     classified as held-to-maturity and are recorded at amortized cost.
     Investments not classified as either held-to-maturity or trading securities
     are classified as available-for-sale. Available-for-sale securities are
     recorded at fair value with changes in fair value being excluded from
     earnings and recorded net of tax as a separate component of equity in
     accordance with Statement of Financial Accounting Standards No. 115,
     "Accounting for Certain Investments in Debt and Equity Securities". The
     cost of a security is determined using the average cost method.

     ACCOUNTS RECEIVABLE - The Company records accounts receivable at the lower
     of cost or fair value. The Company recognizes interest income on an account
     receivable based on the stated interest rate for past-due accounts over the
     period that the account is past due. The Company accumulates and defers
     fees and costs associated with establishing a receivable to be amortized
     over the estimated life of the related receivable. The Company estimates
     allowances for doubtful accounts based on the aged receivable balances and
     historical losses. The Company records interest income on delinquent
     accounts receivable only when payment is received. The Company first
     applies payments received on delinquent accounts receivable to eliminate
     the outstanding principal. The Company charges off uncollectible accounts
     receivable when management estimates no possibility of collecting the
     related receivable. The Company considers accounts receivable to be past
     due or delinquent based on contractual terms.

     INVENTORIES - Growing crop inventory is stated at the lower of market or
     cost using the retail method. Under the retail method, the Company counts
     and extends their inventory at sales prices. This inventory at sales prices
     is then multiplied by a cost ratio to determine inventory at cost. The cost
     ratio is determined by taking the total of the beginning inventory at cost
     plus all direct and indirect costs of growing crops divided by the total of
     the ending inventory at sales prices plus sales revenues. Raw material
     inventory is stated at the lower of market or cost using the first-in
     first-out (FIFO) method.

     PROPERTY AND EQUIPMENT - Property and equipment are stated at cost or
     carryover basis. Expenditures for major renewals and betterments that
     extend the useful lives of property and equipment are capitalized upon
     being placed in service. Expenditures for maintenance and repairs are
     charged to expense as incurred. Depreciation is computed using the
     straight-line method over the estimated useful lives of the assets. In
     accordance with Statement of Financial Accounting Standards No. 144,
     "Accounting for the Impairment or Disposal of Long-Lived Assets", the
     Company periodically reviews their property and equipment for impairment.

     ACQUISITION COSTS - Costs related to proposed acquisitions are deferred and
     will be included in the acquisition price upon completion of the related
     acquisition. In the event an acquisition is unsuccessful, the costs related
     to the acquisition are written off to expense.


                                      F-8




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

     INTANGIBLE ASSETS - The Company accounts for their intangible assets in
     accordance with Statement of Financial Accounting Standards No. 142,
     "Goodwill and Other Intangible Assets". SFAS No. 142 establishes three
     classifications for intangible assets including definite-life intangible
     assets, indefinite-life intangible assets and goodwill and requires
     different accounting treatment and disclosures for each classification. In
     accordance with SFAS No. 142, the Company periodically reviews their
     intangible assets for impairment. No impairment was recorded during the
     three months ended September 30, 2004 and 2003.

     STOCK OFFERING COSTS - Costs related to proposed stock offerings are
     deferred and will be offset against the proceeds of the offering. In the
     event a stock offering is unsuccessful, the costs related to the offering
     are written off to expense.

     PRODUCT WARRANTY - The Company warrants their agricultural products against
     damage that may occur prior to delivery to the customer. At September 30,
     2004 and June 30, 2004, the Company has established a reserve for future
     warranty expense of $12 and $31, respectively.

     REVENUE RECOGNITION - The Company's revenue comes primarily from the sale
     of agricultural products. The Company recognizes revenue from the sale of
     agricultural products when rights and risk of ownership have passed to the
     customer, there is persuasive evidence of a sales arrangement, product has
     been shipped or delivered to the customer, the price and terms are
     finalized and collection of the resulting receivable is reasonably assured.
     The Company also generates revenue from business consulting services. The
     Company recognizes revenue from business consulting services over the term
     of the underlying consulting agreement.

     STOCK-BASED COMPENSATION - The Company has one stock-based employee
     compensation plan [SEE NOTE 8]. The Company accounts for their plan under
     the recognition and measurement principles of Accounting Principles Board
     Opinion No. 25, "Accounting for Stock Issued to Employees", and related
     Interpretations. During the three months ended September 30, 2004 and 2003,
     the Company did not have any stock-based employee compensation.

     INCOME TAXES - The Company accounts for income taxes in accordance with
     Statement of Financial Accounting Standards No. 109, "Accounting for Income
     Taxes" [SEE NOTE 9].

     LOSS PER SHARE - The computation of loss per share is based on the weighted
     average number of common shares outstanding during the period presented, in
     accordance with Statement of Financial Accounting Standards No. 128,
     "Earnings Per Share" [SEE NOTE 10].

     ACCOUNTING ESTIMATES - The preparation of financial statements in
     conformity with generally accepted accounting principles in the United
     States of America requires management to make estimates and assumptions
     that affect the reported amounts of assets and liabilities, the disclosures
     of contingent assets and liabilities at the date of the financial
     statements and the reported amount of revenues and expenses during the
     reported period. Actual results could differ from those estimated.


                                      F-9




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

     RECENTLY ENACTED ACCOUNTING STANDARDS - Statement of Financial Accounting
     Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative
     Instruments and Hedging Activities", and SFAS No. 150, "Accounting for
     Certain Financial Instruments with Characteristics of both Liabilities and
     Equity", were recently issued. SFAS No. 149 and 150 have no current
     applicability to the Company or their effect on the financial statements
     would not have been significant.

     RESTATEMENT - The financial statements have been restated for all periods
     presented to reflect Parent's amended articles of incorporation which were
     filed with the State of Nevada in October 2004 [SEE NOTES 8 AND 15].

NOTE 2 - ACQUISITION OF CERTAIN ASSETS OF SAMPRES TREE FARMS, L.L.C.

     On May 26, 2004, Parent acquired certain assets of Sampres Tree Farms,
     L.L.C. pursuant to an Asset Purchase Agreement signed May 20, 2004. Parent
     issued 400,000 shares of common stock, issued a $400,000 note payable and
     paid $150,151 in cash to acquire the assets from Sampres Tree Farms, L.L.C.
     The Company has accounted for the acquisition as an asset purchase.

     The following shows how the acquisition purchase price was allocated to the
     assets acquired from Sampres Tree Farms, L.L.C. at May 26, 2004, the date
     the acquisition closed.
                                                                       May 26,
                                                                         2004
                                                                     -----------
         Inventory                                                   $   133,051
         Property and equipment                                          537,100
                                                                     -----------
                                                                     $   670,151
                                                                     ===========

NOTE 3 - INVENTORIES

     Inventories consist of the following at:

                                                   September 30,     June 30,
                                                       2004            2004
                                                   -------------   -------------
         Raw materials                             $    171,910    $    177,390
         Growing crops                                  731,132         584,412
                                                   -------------   -------------
         Total Inventories                         $    903,042    $    761,802
                                                   =============   =============

     The Company has estimated that no allowance for slow moving or obsolete
     inventory was necessary at September 30, 2004 and June 30, 2004. The
     Company's inventories are collateral for certain notes payable [See Notes 6
     and 7].




                                      F-10




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - PROPERTY AND EQUIPMENT

     Property and equipment consist of the following at:

                                                   September 30,     June 30,
                                                       2004            2004
                                                   -------------   -------------
         Office furniture and equipment            $     23,402    $     23,402
         Farm equipment                                 348,741         349,741
         Buildings                                      540,234         540,234
         Land                                           367,753         367,753
                                                   -------------   -------------
                                                      1,280,130       1,281,130

         Less accumulated depreciation                 (116,783)        (95,764)
                                                   -------------   -------------
         Net Property and Equipment                $  1,163,347    $  1,185,366
                                                   =============   =============

                                                     Estimated
                                                  Useful Lives of
                                                   Assets (Years)
                                                  ---------------
         Office furniture and equipment               3 - 10
         Farm equipment                               2 - 10
         Buildings                                   20 - 30
         Land                                     Not applicable

     For the three months ended September 30, 2004 and 2003, the Company had
     depreciation of $3,109 and $581, respectively, which was expensed as
     general and administrative expense. For the three months ended September
     30, 2004 and 2003, the Company had depreciation of $17,910 and $11,831,
     respectively, which was included in the costs of producing inventory. The
     Company's property and equipment are collateral for certain notes payable
     [See Notes 6 and 7].

NOTE 5 - DEFINITE-LIFE INTANGIBLE ASSETS

     Definite-life intangible assets consist of the following at:

                                                   September 30,     June 30,
                                                       2004            2004
                                                   -------------   -------------
         5-year non-compete agreement with
           Steven Sutherland                       $     28,907    $     28,907
         5-year non-compete agreement with
           Roger and Barbara Major                       28,907          28,907
                                                   -------------   -------------
                                                         57,814          57,814

         Less accumulated amortization                  (24,089)        (21,198)
                                                   -------------   -------------
         Net Definite-Life Intangible Assets       $     33,725    $     36,616
                                                   =============   =============



                                      F-11




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - DEFINITE-LIFE INTANGIBLE ASSETS [CONTINUED]

     The Company's definite-life intangible assets are being amortized over 5
     years with no residual value. Amortization expense for the three months
     ended September 30, 2004 and 2003 was $2,891 and $2,890, respectively. The
     Company estimates that their amortization expense will be approximately as
     follows for the twelve-month periods ended:

                                                  Amortization
               September 30,                        Expense
                  -----------                     ------------
                   2005                           $     11,563
                   2006                                 11,563
                   2007                                 10,599
                   2008                                     --
                   2009                                     --
                                                  ------------
                                                  $     33,725
                                                  ============


NOTE 6 - CONVERTIBLE NOTES PAYABLE

     The Company has sold convertible notes payable totaling $555,000 and
     recorded discounts totaling $61,000 due to the beneficial conversion
     feature of the notes. The discounts are being amortized over the term of
     the respective notes. For the three months ended September 30, 2004 and
     2003, respectively, the Company amortized $8,733 and $0 of the discounts on
     notes payable as interest expense.

     The Company has paid a total of $12,655 in loan fees and costs in order to
     establish these convertible notes payable. These costs have been deferred
     and are being amortized over the term of the respective notes. For the
     three months ended September 30, 2004 and 2003, respectively, the Company
     amortized $1,478 and $0 of the deferred loan costs as interest expense.

     In June 2004, the Company issued a $10,000 note payable. The note accrued
     interest at 10%, was due in December 2006 and was convertible with accrued
     interest into common stock at $.25 per share during the first 6 months, at
     $.35 per share during the second 6 months and at $.50 per share thereafter.
     In August 2004, the Company repaid the note and accrued interest.



                                      F-12




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - CONVERTIBLE NOTES PAYABLE [CONTINUED]


     The Company has the following convertible notes payable at:

                                                                 September 30,     June 30,
                                                                     2004            2004
                                                                 -------------   -------------
                                                                           
$300,000 10% note payable maturing in March 2005, secured by
all of the Company's land, convertible with accrued interest
into common stock at $.30 per share anytime through March
2005 (At the time of conversion, the creditor can require
the Company to redeem any amount of the shares issued in the
conversion at $.345 per share). As required by a covenant in
this note, the Company has purchased key man insurance but has
failed to name the creditor as beneficiary.                      $     276,572   $     291,019

$200,000 10% note payable maturing in January 2007, secured
by 50,000 trees which are part of the Company's inventory,
convertible with accrued interest into common stock at $.24
per share during the first 12 months, at $.30 per share
during the second 12 months and at $.35 per share
thereafter, net of discounts of $45,000 and $0, respectively           155,000             --

$10,000 10% unsecured note payable maturing in September
2006, convertible with accrued interest into common stock at
$.25 per share during the first 6 months, at $.35 per share
during the second 6 months and at $.50 per share thereafter,
net of discounts of $1,400 and $1,800, respectively                     8,600           8,200

$10,000 10% unsecured note payable maturing in September
2006, convertible with accrued interest into common stock at
$.25 per share during the first 6 months, at $.35 per share
during the second 6 months and at $.50 per share thereafter,
net of discounts of $1,400 and $1,800, respectively                     8,600           8,200

$25,000 10% unsecured note payable maturing in September
2006, convertible with accrued interest into common stock at
$.25 per share during the first 6 months, at $.35 per share
during the second 6 months and at $.50 per share thereafter,
net of discounts of $3,500 and $4,500, respectively                    21,500          20,500

$10,000 10% unsecured note payable maturing in December
2006, convertible with accrued interest into common stock at
$.25 per share during the first 6 months, at $.35 per share
during the second 6 months and at $.50 per share thereafter,
net of discounts of $0 and $1,933, respectively                            --           8,067
                                                                 -------------   -------------
                                                                      470,272         335,986
         Less current portion                                        (276,572)       (291,019)
                                                                 -------------   -------------
                                                                 $    193,700    $     44,967
                                                                 =============   =============


                                      F-13





                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - CONVERTIBLE NOTES PAYABLE [CONTINUED]

     The convertible notes payable mature as follows for the twelve-month
periods ended:

               September 30,                             Principal Due
                  -----------                            -------------
                   2005                                  $     276,572
                   2006                                         45,000
                   2007                                        200,000
                   2008                                             --
                   2009                                             --
                                                         -------------
                                                         $     521,572
                                                         =============

     For the three months ended September 30, 2004 and 2003, respectively,
     interest expense on the convertible notes payable amounted to $22,489 and
     $0.

NOTE 7 - NOTES PAYABLE


     The Company has the following notes payable at:
                                                                 September 30,     June 30,
                                                                     2004            2004
                                                                 -------------   -------------
                                                                           
     $600,000 7% note payable maturing in March 2007,
     secured by all of the assets acquired from M7 Farms         $    314,884    $    318,728

     $200,000 7% note payable maturing in March 2007,
     secured by all of the outstanding shares of
     MT Subsidiary                                                    117,899         117,899

     $400,000 note payable maturing in May 2009, accruing
     interest at 7% during the first year, at 8% during the
     second and third years and at 9% during the fourth and
     fifth years, secured by all of the assets acquired
     from Sampres Tree Farms, L.L.C.                                  382,778         400,000

     $250,000 14% note payable maturing in March 2005                 250,000         250,000

     $50,000 12% note payable maturing in August 2006,
     with an additional payment of 3% of the principal
     due on the date of maturity, secured by 7,500 trees
     which are part of the Company's inventory                         50,000              --

     $50,000 10% note payable maturing in August 2006,
     secured by 7,500 trees which are part of the
     Company's inventory, net of discounts of $10,577
     and $0, respectively                                              39,423              --
                                                                 -------------   -------------
                                                                    1,154,984       1,086,627
         Less current portion                                        (525,978)       (530,003)
                                                                 -------------   -------------
                                                                 $    629,006    $    556,624
                                                                 =============   =============


                                      F-14





                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - NOTES PAYABLE [CONTINUED]

     The notes payable mature as follows for the twelve-month periods ended:

                 September 30,                       Principal Due
                    -----------                      -------------
                     2005                            $     525,978
                     2006                                  289,611
                     2007                                   75,833
                     2008                                    5,486
                     2009                                  268,653
                                                     -------------
                                                     $   1,165,561
                                                     =============

     In November 2003, the Company issued a $50,000 note payable. The note
     accrued interest at 120% and was due in December 2003. In December 2003,
     the Company repaid the note.

     In August 2003, the Company issued a $226,469 note payable. The note
     accrued interest at 18% and was due in March 2004. In March 2004, the
     Company repaid the note.

     In March 2003, the Company issued a $112,250 note payable. The note accrued
     interest at 18% and was due in August 2003. In August 2003, the Company
     repaid the note.

     The Company issued a $50,000 note payable for cash of $38,461 and recorded
     a discount of $11,539. The discount is being amortized over the term of the
     note. For the three months ended September 30, 2004 and 2003, respectively,
     the Company amortized $962 and $0 of the discounts on notes payable as
     interest expense.

     The Company has paid a total of $66,599 in loan fees and costs in order to
     establish the notes payable. These costs have been deferred and are being
     amortized over the term of the respective notes. For the three months ended
     September 30, 2004 and 2003, respectively, the Company amortized $6,859 and
     $7,505 of the deferred loan costs as interest expense.

     For the three months ended September 30, 2004 and 2003, respectively,
     interest expense on the notes payable amounted to $31,442 and $24,937.

NOTE 8 - CAPITAL STOCK AND OPTIONS

     PREFERRED STOCK - In October 2004, Parent amended its articles of
     incorporation to authorize 10,000,000 shares of preferred stock, $.001 par
     value, with such rights, preferences and designations and to be issued in
     such series as determined by the Board of Directors [SEE NOTE 15]. No
     shares are issued and outstanding at September 30, 2004 and June 30, 2004.

     COMMON STOCK - In October 2004, Parent amended its articles of
     incorporation to authorize 50,000,000 shares of common stock with $.001 par
     value [SEE NOTE 15]. Previously, Parent had authorized 50,000,000 shares of
     common stock with no par value. The financial statements have been restated
     for all periods presented to reflect the change in par value.


                                      F-15




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - CAPITAL STOCK AND OPTIONS [CONTINUED]

     From July through September 2004, the Company issued 100,001 shares of
     their previously authorized but unissued common stock for cash of $30,000,
     or $.30 per share.

     In June 2004, the Company issued 166,667 shares of their previously
     authorized but unissued common stock for a subscription receivable of
     $50,000, or $.30 per share.

     In May 2004, the Company issued 400,000 shares of their previously
     authorized but unissued common stock as part of an asset acquisition [SEE
     NOTE 2] valued at $120,000, or $.30 per share.

     From August 2003 through June 2004, the Company issued 450,664 shares of
     their previously authorized but unissued common stock for cash of $135,200,
     or $.30 per share. Stock offering costs of $27,500 were netted against the
     proceeds.

     From July through September 2003, the Company issued 220,000 shares of
     their previously authorized but unissued common stock for cash of $55,000,
     or $.25 per share.

     In June 2003, the Company issued 420,000 shares of their previously
     authorized but unissued common stock for a subscription receivable of
     $105,000, or $.25 per share. The Company received the $105,000 subscription
     receivable in July 2003.

     SALE OF STOCK OPTIONS - In August 2004, the Company sold options to
     purchase 50,000 shares of common stock for cash of $11,538. The options are
     exercisable at $.30 per share for 10 years. At September 30, 2004, none of
     these options had been exercised, forfeited or cancelled.

     STOCK OPTION PLAN - In October 2002, the Company's Board of Directors
     approved and adopted the "2002 Stock Incentive Plan" ("the Plan") with a
     maximum of 8,000,000 shares of common stock reserved for issuance under the
     Plan. The Plan provides for both the direct award of shares and for the
     grant of options to purchase shares to employees, officers, directors,
     agents, consultants, advisors and independent contractors. Awards under the
     Plan will be granted as determined by the Board of Directors and the Board
     of Directors shall determine which eligible persons are to receive
     Incentive Stock Options, Non-Statutory Stock Options or stock issuances.
     The Board of Directors also sets the number of shares, the exercise price
     and the exercise terms for grants. Options granted to non-exempt employees
     are required to have an exercise price of at least 85% of the fair market
     value of the common stock at the time of grant. Incentive Stock Options
     must be granted with an exercise price of at least 100% (110% for
     shareholders who own at least 10% of the Company's outstanding stock) of
     the fair market value of the common stock at the time of grant. Incentive
     Stock Options are required to expire within 10 years. There are no vesting
     requirements, so all awards vest immediately. At September 30, 2004, total
     awards available to be granted from the Plan amounted to 3,500,000.

     In July 2004, the Company's Board of Directors granted options to purchase
     200,000 shares of common stock from the 2002 Stock Incentive Plan to a
     consultant for services rendered valued at $60,000. The options vested
     immediately and are exercisable at $.30 per share for 10 years. At
     September 30, 2004, none of these options had been exercised, forfeited or
     cancelled.


                                      F-16





                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - CAPITAL STOCK AND OPTIONS [CONTINUED]

     In September 2003, the Company's Board of Directors granted options to
     purchase 100,000 shares of common stock from the 2002 Stock Incentive Plan
     to a consultant for services rendered valued at $30,000. The options vested
     immediately and are exercisable at $.30 per share for 10 years. At
     September 30, 2004, none of these options had been exercised, forfeited or
     cancelled.

     A summary of the status of the options granted under the Company's 2002
Stock Incentive Plan is presented below.


                                                 For the Three Months Ended September 30,
                                             ---------------------------------------------
                                                    2004                    2003
                                             --------------------    ---------------------
                                                         Weighted              Weighted
                                                         Average               Average
                                                         Exercise              Exercise
                                              Shares       Price      Shares      Price
                                             ---------   ---------   ---------   ---------
                                                                     
       Outstanding at beginning of period    4,300,000   $     .11   4,200,000   $    .10
       Granted                                 200,000         .30     100,000        .30
       Exercised                                    --          --          --          --
       Forfeited                                    --          --          --          --
       Expired                                      --          --          --          --
                                             ---------   ---------   ---------   ---------
       Outstanding at end of period          4,500,000   $     .12   4,300,000   $     .11
                                             ---------   ---------   ---------   ---------
       Weighted average fair value of
         options granted during the period     200,000   $    .30      100,000   $     .30
                                             ---------   ---------   ---------   ---------


     The fair value of each option granted is estimated on the date granted
     using the Black-Scholes option pricing model, with the following
     assumptions used for the grants on August 1, 2004: risk-free interest rate
     of 4.50%, expected dividend yield of zero, expected lives of 10 years and
     expected volatility of 558%. The following assumptions were used for
     options granted on September 1, 2003: risk-free interest rate of 4.45%,
     expected dividend yield of zero, expected lives of 10 years and expected
     volatility of 760%.

     A summary of the status of the options outstanding under the Company's 2002
     Stock Incentive Plan at September 30, 2004 is presented below:


                                            Options Outstanding                           Options Exercisable
                                     -------------------------------------------          -------------------------
            Range of                       Weighted-Average    Weighted-Average                   Weighted-Average
            Exercise          Number           Remaining           Exercise           Number          Exercise
             Prices         Outstanding    Contractual Life          Price          Exercisable         Price
             ------         -----------    ----------------          -----          -----------         -----
        
           $       .10        2,200,000       8.1 years        $           .10       2,200,000    $           .10
                   .11        2,000,000       3.1 years                    .11       2,000,000                .11
                   .30          300,000       9.5 years                    .30         300,000                .30
           -----------      -----------    ----------------    ---------------      ----------    ---------------
           $ .10 - .30        4,500,000       6.0 years        $           .12       4,500,000    $           .12
           -----------      -----------    ----------------    ---------------      ----------    ---------------




                                      F-17




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - INCOME TAXES

     The Company accounts for income taxes in accordance with Statement of
     Financial Accounting Standards No. 109, "Accounting for Income Taxes". SFAS
     No. 109 requires the Company to provide a net deferred tax asset or
     liability equal to the expected future tax benefit or expense of temporary
     reporting differences between book and tax accounting methods and any
     available operating loss or tax credit carryforwards. At September 30, 2004
     and June 30, 2004, the Company has available unused net operating loss
     carryforwards of approximately $746,000 and $540,000, respectively, which
     may be applied against future taxable income and which expire in various
     years through 2025. Also, the Company has unused capital loss carryovers at
     September 30, 2004 and June 30, 2004 of approximately $23,000 which expire
     in various years through 2009.

     At September 30, 2004 and June 30, 2004, respectively, the total of all
     deferred tax assets is approximately $157,000 and $118,000 and the total of
     all deferred tax liabilities is $49,000, and $50,000. The amount of and
     ultimate realization of the benefits from the deferred tax assets for
     income tax purposes is dependent, in part, upon the tax laws in effect, the
     future earnings of the Company, and other future events, the effects of
     which cannot be determined. Because of the uncertainty surrounding the
     realization of the loss carryforwards, the Company has established a
     valuation allowance of approximately $108,000 and $68,000 at September 30,
     2004 and June 30, 2004, respectively. The change in the valuation allowance
     for the three months ended September 30, 2004 is approximately $40,000.

     The temporary differences, tax credits and carryforwards gave rise to the
following deferred tax asset (liability) at:

                                                   September 30,     June 30,
                                                       2004            2004
                                                   -------------   -------------
         Net operating loss carryover              $    146,687    $    106,282
         Capital loss carryover                           4,557           4,557
         Excess of book over tax basis of fixed
           assets                                       (48,133)        (48,860)
         Warranty reserve                                     2               6
         Reserve for bad debts                               34              33
         Accrued compensation                             5,409           5,950
                                                   -------------   -------------
         Total deferred tax asset                  $    108,556    $     67,968
                                                   =============   =============

                                      F-18





                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 - INCOME TAXES [CONTINUED]

     The components of income tax expense from continuing operations consisted
of the following for:

                                                        For the Three Months
                                                        Ended September 30,
                                                   -----------------------------
                                                       2004             2003
                                                   -------------   -------------
         Current income tax expense:
             Federal                               $         --    $         --
             State                                           --              --
                                                   -------------   -------------
         Current tax expense                       $         --    $         --
                                                   =============   =============

         Deferred tax expense (benefit) arising from:
             Excess of tax over financial
               accounting depreciation             $       (726)   $       (967)
             Warranty reserve                                 4              48
             Accrued compensation                           541           2,852
             Net operating loss carryover               (40,405)        (42,547)
             Valuation allowance                         40,586          36,832
                                                   -------------   -------------
         Net deferred tax expense                  $         --    $     (3,782)
                                                   =============   =============

     Deferred income tax expense results primarily from the reversal of
     temporary timing differences between tax and financial statement income.

     The reconciliation of income tax expense from continuing operations
     computed at the U.S. federal statutory tax rate to the Company's effective
     rate is as follows for:

                                                      For the Three Months
                                                       Ended September 30,
                                                   -----------------------------
                                                       2004             2003
                                                   -------------   -------------
         Computed tax at the expected
           federal statutory rate                         15.00%          15.00%
         State income taxes, net of federal benefit        4.67            4.67
         Compensation due to options                      (4.25)          (2.48)
         Other                                             (.82)           (.10)
         Valuation allowance                             (14.60)         (15.50)
                                                   -------------   -------------
         Effective income tax rates                        0.00%           1.59%
                                                   =============   =============


                                      F-19




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - LOSS PER SHARE

     The following data shows the amounts used in computing loss per share:


                                                       For the Three Months
                                                        Ended September 30,
                                                   -----------------------------
                                                       2004             2003
                                                   -------------   -------------
         Loss from operations available to
         common shareholders (numerator)           $   (277,917)   $   (233,883)
                                                   -------------   -------------
         Weighted average number of common
         shares outstanding used in loss per
         share for the period (denominator)          12,922,984      11,839,203
                                                   -------------   -------------

     At September 30, 2004, the Company had outstanding options to purchase
     4,550,000 shares and notes payable convertible into 1,914,048 shares which
     were not used in the computation of loss per share because their effect
     would be anti-dilutive. At September 30, 2003, the Company had outstanding
     options to purchase 4,300,000 shares which were not used in the computation
     of loss per share because their effect would be anti-dilutive. Dilutive
     loss per share was not presented, as the Company had no common stock
     equivalent shares for all periods presented that would affect the
     computation of diluted loss per share.

NOTE 11 - GOING CONCERN

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles in the United States of America,
     which contemplate continuation of the Company as a going concern. However,
     the Company was only recently formed and has not yet been successful in
     establishing profitable operations. Further, the Company has current
     liabilities in excess of current assets. These factors raise substantial
     doubt about the ability of the Company to continue as a going concern. In
     this regard, management is proposing to raise any necessary additional
     funds not provided by operations through loans or through additional sales
     of their common stock or through possible business combinations. There is
     no assurance that the Company will be successful in raising this additional
     capital or in achieving profitable operations. The financial statements do
     not include any adjustments that might result from the outcome of these
     uncertainties.

NOTE 12 - RELATED PARTY TRANSACTIONS

     ACCOUNTS PAYABLE - At June 30, 2003, the Company had accrued consulting
     fees of $14,500 payable to a relative of an officer/shareholder of the
     Company for consulting services rendered during the year ended June 30,
     2003. In July 2003, the Company paid the accrued fees.



                                      F-20




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - RELATED PARTY TRANSACTIONS [CONTINUED]

     RELATED PARTY ADVANCES - During the three months ended September 30, 2004,
     officers/shareholders of the Company and their relatives have made advances
     to the Company and the Company has repaid the advances as funds have been
     available. During the three months ended September 30, 2004,
     officers/shareholders of the Company and their relatives made advances
     totaling $151,978 and the Company repaid advances totaling $60,439. Since
     the Company owed $10,234 from prior-year advances, the balance owed to the
     officers/shareholders of the Company and their relatives at September 30,
     2004 is $101,773.

     OPTIONS - In September 2003, the Company granted options to purchase
     100,000 shares of common stock to a relative of an officer/shareholder of
     the Company for consulting services [SEE NOTE 8].

     SALES - During the three months ended September 30, 2004 and 2003,
     respectively, the Company had sales of $0 and $0 to an entity controlled by
     a relative of an officer/shareholder of the Company.

     CONSULTING SERVICES - During the three months ended September 30, 2004 and
     2003, respectively, the Company paid a relative of an officer/shareholder
     of the Company $0 and $4,500 for consulting services.

     MANAGEMENT COMPENSATION - For the three months ended September 30, 2004 and
     2003, respectively, the Company expensed $30,000 and $38,000 as salary to
     the Company's Chief Executive Officer. At September 30, 2004 and June 30,
     2004, respectively, the Company owed $21,000 and $22,000 to the Chief
     Executive Officer for accrued salary.

     For the three months ended September 30, 2004 and 2003, respectively, the
     Company expensed $30,000 and $0 as salary to the Company's former Chief
     Financial Officer. At September 30, 2004 and June 30, 2004, respectively,
     the Company owed $15,000 and $8,500 to the former Chief Financial Officer
     for accrued salary.

     EMPLOYEES - For the three months ended September 30, 2004 and 2003,
     respectively, the Company expensed $12,000 and $3,500 as salary to an
     employee of the Company who is the spouse of an officer/shareholder of the
     Company. At September 30, 2004 and June 30, 2004, respectively, the Company
     owed $0 and $6,000 to this employee for accrued salary.

     For the three months ended September 30, 2004 and 2003, respectively, the
     Company expensed $18,000 and $24,250 as salary to an employee of the
     Company who is a relative of an officer/shareholder of the Company. At
     September 30, 2004 and June 30, 2004, respectively, the Company owed $0 and
     $0 to this employee for accrued salary.



                                      F-21




                           PENGE CORP. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - CONCENTRATIONS

     ACCOUNTS RECEIVABLE - A significant percent of the Company's accounts
     receivable at September 30, 2004 was owed by only three customers. The
     following table lists the percent of the receivables owed by those
     customers that accounted for 10% or more of the total accounts receivable
     at September 30, 2004:

                Customer A                                33%
                Customer B                                19%
                Customer C                                10%

     REVENUES - During the three months ended September 30, 2004, a significant
     percent of the Company's total sales were made to only two customers. The
     following table lists the percent of the sales made to those customers that
     accounted for 10% or more of the total revenues for the three months ended
     September 30, 2004:

                Customer A                                47%
                Customer B                                28%

NOTE 14 - COMMITMENTS AND CONTINGENCIES

     REDEMPTION OF COMMON STOCK - The Company has a convertible note payable
     which is convertible into common stock at $.30 per share. At the time of
     conversion, the creditor can require the Company to redeem any amount of
     the shares issued in the conversion at $.345 per share. At September 30,
     2004, the Company owed $276,572 in principal and $2,247 in accrued interest
     on the note. If the note had been converted into stock on September 30,
     2004, then the Company would have issued 929,486 shares of common stock
     which would have been redeemable at the creditor's option for $320,673.

NOTE 15 - SUBSEQUENT EVENTS

     AMENDED ARTICLES OF INCORPORATION - In October 2004, Parent filed amended
     articles of incorporation with the State of Nevada. The amended articles of
     incorporation authorized 10,000,000 shares of preferred stock with $.001
     par value and changed the common stock par value from no par value to $.001
     [SEE NOTE 8]. The financial statements have been restated for all periods
     presented to reflect the amended articles of incorporation.

     RELATED PARTY NOTES PAYABLE - In October 2004, the Company issued two notes
     payable - one to the Company's Manager of Mergers and Acquisitions and one
     to a director/shareholder of the Company. Each note is due on demand and
     each provides for the Company to borrow up to $200,000 at 8% per annum.

     NOTE PAYABLE - In November 2004, the Company issued a $25,000 note payable.
     The note accrues interest at 12% per annum and is due in December 2004.

     SECURED NOTES PAYABLE - In November 2004, the Company issued a $25,000 note
     payable. The note is secured by 10,000 trees which are part of the
     Company's inventory. The note accrues interest at 12% per annum and is due
     in December 2004.

     In November 2004, the Company issued a $35,000 note payable. The note is
     secured by 10,000 trees which are part of the Company's inventory. The note
     accrues interest at 12% per annum and is due in December 2004.


                                      F-22




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
PENGE CORP. AND SUBSIDIARY
Las Vegas, Nevada

We have audited the accompanying consolidated balance sheets of Penge Corp. and
Subsidiary as of June 30, 2004 and 2003 and the related consolidated statements
of operations, stockholders' equity and cash flows for the year ended June 30,
2004 and for the period from inception on August 6, 2002 through June 30, 2003.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Penge Corp. and
Subsidiary as of June 30, 2004 and 2003 and the consolidated results of their
operations and their cash flows for the year ended June 30, 2004 and for the
period from inception on August 6, 2002 through June 30, 2003, in conformity
with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 14 to the financial
statements, the Company was only recently formed and has not yet been successful
in establishing profitable operations. Further, the Company has current
liabilities in excess of current assets. These factors raise substantial doubt
about the ability of the Company to continue as a going concern. Management's
plans in regards to these matters are also described in Note 14. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.



/s/ PRITCHETT, SILER & HARDY, P.C.

Salt Lake City, Utah July 9, 2004, except for Note 18, as to which the date is
October 21, 2004



                                      F-23





                            PENGE CORP. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                      ASSETS

                                                                  June 30,
                                                          -----------------------
                                                             2004         2003
                                                          ----------   ----------
                                                                 
CURRENT ASSETS:
     Cash                                                 $    2,237   $       --
     Available-for-sale securities                                --        9,964
     Accounts receivable, net of allowance for doubtful
       accounts of $169 and $169, respectively                13,793       16,957
     Inventories                                             761,802      337,170
     Prepaid expenses                                          2,322       14,244
     Deferred tax asset                                           --        4,086
                                                          ----------   ----------
               Total Current Assets                          780,154      382,421
                                                          ----------   ----------

PROPERTY AND EQUIPMENT, net                                1,185,366      657,992
                                                          ----------   ----------

OTHER ASSETS:
     Definite-life intangible assets, net                     36,616       48,178
     Deferred loan costs                                      18,171        4,025
     Refundable deposits                                         520           --
                                                          ----------   ----------
               Total Other Assets                             55,307       52,203
                                                          ----------   ----------

                                                          $2,020,827   $1,092,616
                                                          ==========   ==========



                                   [CONTINUED]


                                      F-24







                                PENGE CORP. AND SUBSIDIARY

                                CONSOLIDATED BALANCE SHEETS

                                        [CONTINUED]

                           LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                        June 30,
                                                               ---------------------------
                                                                   2004           2003
                                                               ------------   ------------
                                                                        
CURRENT LIABILITIES:
     Bank overdraft                                            $        --    $     1,894
     Current portion of convertible notes payable                  291,019             --
     Current portion of notes payable                              530,003        238,735
     Accounts payable                                              177,440        121,332
     Related party advances                                         10,234         16,244
     Accrued payroll and payroll taxes                              50,134          1,298
     Sales taxes payable                                                27             --
     Warranty reserve                                                   31            300
     Accrued interest                                               24,599         10,923
                                                               ------------   ------------
               Total Current Liabilities                         1,083,487        390,726
                                                               ------------   ------------
LONG-TERM DEBT:
     Convertible notes payable, net of discounts of
       $10,033 and $0, respectively, less current portion           44,967             --
     Notes payable, less current portion                           556,624        436,628
     Deferred tax liability                                             --          7,872
                                                               ------------   ------------
               Total Long-Term Debt                                601,591        444,500
                                                               ------------   ------------
               Total Liabilities                                 1,685,078        835,226
                                                               ------------   ------------
STOCKHOLDERS' EQUITY:
     Preferred stock, $.001 par value, 10,000,000 shares
       authorized, no shares issued and outstanding                     --             --
     Common stock, $.001 par value, 50,000,000 shares
       authorized, 12,852,331 and 11,615,000 shares
       issued and outstanding, respectively                         12,852         11,615
     Additional paid-in capital                                  1,110,488        738,025
     Unrealized gain (loss) on available-for-sale securities            --         (4,664)
     Retained earnings (deficit)                                  (737,591)      (337,586)
                                                               ------------   ------------
                                                                   385,749        407,390
     Less stock subscription receivable                            (50,000)      (150,000)
                                                               ------------   ------------
               Total Stockholders' Equity                          335,749        257,390
                                                               ------------   ------------
                                                               $ 2,020,827    $ 1,092,616
                                                               ============   ============


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


                                           F-25






                             PENGE CORP. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                      >From Inception
                                                        For the        on August 6,
                                                       Year Ended      2002 Through
                                                     June 30, 2004    June 30, 2003
                                                     --------------   --------------
                                                                
REVENUES:
     Farm crop sales                                 $     777,559    $     659,721
     Consulting revenues                                    29,418           10,000
                                                     --------------   --------------
               Total Revenues                              806,977          669,721

COST OF GOODS SOLD                                         428,004          402,980
                                                     --------------   --------------
GROSS PROFIT                                               378,973          266,741
                                                     --------------   --------------

EXPENSES:
     Salaries, wages and related taxes                     387,077          148,866
     Consulting                                             63,287          235,146
     Travel                                                 38,050           21,203
     Loss on unsuccessful acquisitions                      10,000            5,000
     Other general and administrative                      155,873          169,146
                                                     --------------   --------------
               Total Expenses                              654,287          579,361
                                                     --------------   --------------

LOSS FROM OPERATIONS                                      (275,314)        (312,620)
                                                     --------------   --------------

OTHER INCOME (EXPENSE):
     Interest expense                                     (116,163)         (68,057)
     Loss on sale of available-for-sale securities         (13,456)          (8,997)
                                                     --------------   --------------
               Total Other Income (Expense)               (129,619)         (77,054)
                                                     --------------   --------------

LOSS BEFORE INCOME TAXES                                  (404,933)        (389,674)

CURRENT TAX EXPENSE (BENEFIT)                                   --               --

DEFERRED TAX EXPENSE (BENEFIT)                              (4,928)         (52,088)
                                                     --------------   --------------
NET LOSS                                             $    (400,005)   $    (337,586)
                                                     ==============   ==============
LOSS PER COMMON SHARE                                $        (.03)   $        (.04)
                                                     ==============   ==============



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


                                        F-26







                               PENGE CORP. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


                                                                          From Inception
                                                              For the      on August 6,
                                                             Year Ended    2002 Through
                                                           June 30, 2004   June 30, 2003
                                                            ------------   ------------
                                                                     
NET LOSS                                                    $  (400,005)   $  (337,586)

OTHER COMPREHENSIVE INCOME (LOSS):
     Gain (loss) on available-for-sale securities arising
       during the period (net of income taxes (benefit)
       of $1,142 and $(1,142), respectively)                     (8,792)       (13,661)
     Plus reclassification adjustment for (gains)
       losses included in net income                             13,456          8,997
                                                            ------------   ------------

COMPREHENSIVE INCOME (LOSS)                                 $  (395,341)   $  (342,250)
                                                            ============   ============








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



                                         F-27






                                                     PENGE CORP. AND SUBSIDIARY

                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                            FROM THE DATE OF INCEPTION ON AUGUST 6, 2002

                                                        THROUGH JUNE 30, 2004

                                                                                                 Unrealized
                                                                                                    Gain
                                                                                                  (Loss) on
                                          Preferred Stock          Common Stock       Additional  Available-   Retained     Sub-
                                       ---------------------   ---------------------    Paid-in    for-sale    Earnings   scription
                                        Shares      Amount      Shares      Amount      Capital   Securities   (Deficit)  Receivable
                                       ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
                                    
BALANCE, August 6, 2002                       --   $      --          --   $      --   $      --   $      --   $      --   $     --

Issuance of 7,340,000 shares
  of common stock for cash of
  $294, or $.00004 per share,
  August 2002                                 --          --   7,340,000       7,340      (7,046)         --          --         --

Issuance of 1,570,000 shares of
  common stock for cash of
  $157,000, or $.10 per share,
  September and October 2002                  --          --   1,570,000       1,570     155,430          --          --         --

Issuance of 150,000 shares of
  common stock for services valued
  at $15,000, or $.10 per share,
  September 2002                              --          --     150,000         150      14,850          --          --         --

Issuance of 450,000 shares of
  common stock for subscription
  receivable of $45,000, or $.10 per
  share, October 2002                         --          --     450,000         450      44,550          --          --    (45,000)

Issuance of 125,000 shares of
  common stock for available-for-
  sale securities valued at $12,500,
  or $.10 per share, October 2002             --          --     125,000         125      12,375          --          --         --

Grant of options to purchase
  1,200,000 shares of common stock
  for consulting services rendered
  valued at $120,000, November 2002           --          --          --          --     120,000          --          --         --

Issuance of 20,000 shares of
  common stock for services valued
  at $4,000, or $.20 per share,
  January 2003                                --          --      20,000          20       3,980          --          --         --

Issuance of 800,000 shares of
  common stock to pay debt of
  $160,000, or $.20 per share,
  January 2003                                --          --     800,000         800     159,200          --          --         --

Issuance of 200,000 shares of
  common stock to pay rent of
  $40,000, or $.20 per share,
  January 2003                                --          --     200,000         200      39,800          --          --         --




                                                             [CONTINUED]



                                                                F-28




                                                     PENGE CORP. AND SUBSIDIARY

                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                            FROM THE DATE OF INCEPTION ON AUGUST 6, 2002

                                                        THROUGH JUNE 30, 2004

                                                             [CONTINUED]

                                                                                                 Unrealized
                                                                                                    Gain
                                                                                                  (Loss) on
                                          Preferred Stock          Common Stock       Additional  Available-   Retained     Sub-
                                       ---------------------   ---------------------    Paid-in    for-sale    Earnings   scription
                                        Shares      Amount      Shares      Amount      Capital   Securities   (Deficit)  Receivable
                                       ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------

Issuance of 500,000 shares of
  common stock for cash of $100,000,
  or $.20 per share, less offering
  costs of $7,000, March through
  June 2003                                   --          --     500,000         500      92,500          --          --         --

Issuance of 40,000 shares of
  common stock for cash of
  $10,000, or $.25 per share,
  June 2003                                   --          --      40,000          40       9,960          --          --         --

Issuance of 420,000 shares of
  common stock for subscription
  receivable of $105,000, or $.25
  per share, June 2003                        --          --     420,000         420     104,580          --          --   (105,000)

Purchase of property and equipment
  for $15,130 from an
  officer/shareholder of the
  Company with a carryover basis
  of zero, accounted for as a capital
  distribution, net of income taxes
  (benefit) of $(2,976), June 2003            --          --          --          --     (12,154)         --          --         --

Gain (loss) on available-for-sale
  securities arising during the period        --          --          --          --          --     (13,661)         --         --

Net loss for the period ended
  June 30, 2003                               --          --          --          --          --       8,997    (337,586)        --
                                       ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
BALANCE, June 30, 2003                        --          --  11,615,000      11,615     738,025      (4,664)   (337,586)  (150,000)

Issuance of 220,000 shares of
  common stock for cash of
  $55,000, or $.25 per share, July
  through September 2003                      --          --     220,000         220      54,780          --          --         --

Collected stock subscription
  receivable, July 2003                       --          --          --          --          --          --          --    150,000

Issuance of 450,664 shares of common
  stock for cash of $135,200, or $.30
  per share, less offering costs of
  $27,500, August 2003 through
  June 2004                                   --          --     450,664         451     107,249          --          --         --


                                                             [CONTINUED]

                                                                F-29




                                                     PENGE CORP. AND SUBSIDIARY

                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                            FROM THE DATE OF INCEPTION ON AUGUST 6, 2002

                                                        THROUGH JUNE 30, 2004

                                                             [CONTINUED]

                                                                                                 Unrealized
                                                                                                    Gain
                                                                                                  (Loss) on
                                          Preferred Stock          Common Stock       Additional  Available-   Retained     Sub-
                                       ---------------------   ---------------------    Paid-in    for-sale    Earnings   scription
                                        Shares      Amount      Shares      Amount      Capital   Securities   (Deficit)  Receivable
                                       ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------

Grant of options to purchase
  100,000 shares of common stock
  for consulting services rendered
  valued at $30,000, September 2003           --          --          --          --      30,000          --          --         --

Convertible note payable proceeds
  of $9,000 allocated to beneficial
  conversion feature, March 2004              --          --          --          --       9,000          --          --         --

Issuance of 400,000 shares of
  common stock as part of an asset
  acquisition valued at $120,000,
  or $.30 per share, May 2004                 --          --     400,000         400     119,600          --          --         --

Issuance of 166,667 shares of
  common stock for subscription
  receivable of $50,000, or $.30
  per share, June 2004                        --          --     166,667         166      49,834          --          --    (50,000)

Convertible note payable proceeds
  of $2,000 allocated to beneficial
  conversion feature, June 2004               --          --          --          --       2,000          --          --         --

Gain (loss) on available-for-sale
  securities arising during the
  period                                      --          --          --          --          --      (8,792)         --         --

Net loss for the year ended
  June 30, 2004                               --          --          --          --          --      13,456    (400,005)        --
                                       ---------   ---------  ----------   ---------  ----------   ---------  -----------  ---------
BALANCE, June 30, 2004                        --   $      --  12,852,331   $  12,852  $1,110,488   $      --  $ (737,591)  $(50,000)
                                       =========   =========  ==========   =========  ==========   =========  ===========  =========





                                         The accompanying notes are an integral part of this
                                                 consolidated financial statement.



                                                                F-30





                                 PENGE CORP. AND SUBSIDIARY

                           CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                             From Inception
                                                                 For the      on August 6,
                                                               Year Ended     2002 Through
                                                              June 30, 2004   June 30, 2003
                                                              -------------   -------------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                   $   (400,005)   $   (337,586)
   Adjustments to reconcile net loss to net cash used by
     operating activities:
     Amortization of deferred loan costs                            25,288          19,295
     Amortization of discounts on convertible notes payable            967              --
     Bad debt expense                                                  100           6,636
     Depreciation and amortization                                  70,209          46,753
     Loss on sale of available-for-sale securities                  13,456           8,997
     Non-cash expenses                                              30,000         179,000
     Changes in assets and liabilities:
       (Increase) in accounts receivable                           (26,354)        (23,593)
       (Increase) in inventories                                  (291,581)        (95,364)
       Decrease in prepaid expenses                                 11,922          35,756
       Decrease in deferred tax asset                                2,944              32
       (Increase) in refundable deposits                              (520)             --
       Increase in accounts payable                                 56,108         121,332
       Increase in accrued payroll and payroll taxes                48,836           1,298
       Increase in sales taxes payable                                  27              --
       Increase (decrease) in warranty reserve                        (269)            300
       Increase in accrued interest                                 13,676          10,923
       (Decrease) in deferred tax liability                         (7,872)        (52,120)
                                                              -------------   -------------
               Net Cash (Used) by Operating Activities            (453,068)        (78,341)
                                                              -------------   -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Payments to purchase available-for-sale securities               (2,456)        (73,303)
   Proceeds from sale of available-for-sale securities              34,188          61,036
   Payments to purchase property and equipment                     (48,921)        (27,308)
   Acquisitions, net of cash acquired                             (150,151)       (157,429)
                                                              -------------   -------------
               Net Cash (Used) by Investing Activities            (167,340)       (197,004)
                                                              -------------   -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from (payments on) bank overdraft                   (1,894)          1,894
   Related party advances                                          240,799          99,176
   Payments on related party advances                             (246,809)        (82,932)
   Payments of loan costs                                          (39,434)        (23,320)
   Proceeds from convertible notes payable                         344,000              --
   Payments on convertible notes payable                            (8,981)             --
   Proceeds from notes payable                                     526,468         224,520
   Payments on notes payable                                      (515,204)       (189,157)
   Purchase of property and equipment accounted for as
     a capital distribution                                             --         (15,130)
   Proceeds allocated to beneficial conversion feature of
     convertible notes payable                                      11,000              --
   Proceeds from issuance of common stock                          340,200         267,294
   Payment of stock offering costs                                 (27,500)         (7,000)
                                                              -------------   -------------
               Net Cash Provided by Financing Activities           622,645         275,345
                                                              -------------   -------------

NET INCREASE (DECREASE) IN CASH                                      2,237              --

CASH AT BEGINNING OF PERIOD                                             --              --
                                                              -------------   -------------
CASH AT END OF PERIOD                                         $      2,237    $         --
                                                              =============   =============



                                        [CONTINUED]


                                           F-31






                           PENGE CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   [CONTINUED]
                                                                  From Inception
                                                     For the       on August 6,
                                                    Year Ended     2002 Through
                                                   June 30, 2004   June 30, 2003
                                                   -------------   -------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the period for:
     Interest                                      $      76,232   $      37,839
     Income taxes                                  $          --   $          --

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
   For the year ended June 30, 2004:
     In September 2003, the Company granted options to purchase 100,000 shares
     of common stock for consulting services rendered valued at $30,000.

     In March 2004, the Company issued $45,000 of convertible notes payable and
     recorded a discount of $9,000 for the beneficial conversion feature of the
     convertible notes payable. Through June 30, 2004, the Company has amortized
     $900 of the discounts on these convertible notes payable.

     In April 2004, the Company received marketable securities as collection of
     accounts receivable totaling $29,418.

     In May 2004, the Company issued 400,000 shares of common stock valued at
     $120,000, issued a $400,000 note payable and paid $150,151 in cash to
     acquire certain assets from Sampres Tree Farms L.L.C. Through the
     acquisition, the Company acquired inventory of $133,051, property and
     equipment of $457,691 and goodwill of $79,409.

     In June 2004, the Company issued 166,667 shares of common stock for a
     subscription receivable of $50,000.

     In June 2004, the Company issued a $10,000 convertible note payable and
     recorded a discount of $2,000 for the beneficial conversion feature of the
     convertible note payable. Through June 30, 2004, the Company has amortized
     $67 of the discount on this convertible note payable.

     For the period from inception on August 6, 2002 through June 30, 2003:
     In September 2002, the Company issued $800,000 of notes payable and paid
     $157,429 in cash to acquire Major Trees, Inc. and certain assets from M7
     Farms. Through the acquisition, the Company assumed a deferred tax
     liability of $59,992 and the Company acquired inventory of $241,806,
     prepaid expense of $50,000, property and equipment of $667,801 and
     definite-life intangible assets of $57,814.

     In September 2002, the Company issued 150,000 shares of common stock for
     consulting services rendered valued at $15,000.

     In October 2002, the Company issued 450,000 shares of common stock for a
     subscription receivable of $45,000. The Company collected all of this
     subscription receivable in July 2003.

     In October 2002, the Company issued 125,000 shares of common stock for
     available-for-sale securities valued at $12,500.

     In November 2002, the Company granted options to purchase 1,200,000 shares
     of common stock for consulting services rendered valued at $120,000.

     In January 2003, the Company issued 20,000 shares of common stock for
     consulting services rendered valued at $4,000.

     In January 2003, the Company issued 800,000 shares of common stock to pay
     debt of $160,000.

     In January 2003, the Company issued 200,000 shares of common stock to pay
     rent of $40,000.

     In June 2003, the Company issued 420,000 shares of common stock for a
     subscription receivable of $105,000. The Company collected all of this
     subscription receivable in July 2003.

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



                                      F-32





                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION - Penge Corp. ("Parent") was organized under the laws of the
     State of Nevada on August 6, 2002.

     Major Trees, Inc. ("MT Subsidiary") was organized under the laws of the
     State of Arizona on December 29, 1993. On September 27, 2002, Parent
     acquired MT Subsidiary and certain assets of M7 Farms pursuant to a
     Purchase Agreement signed August 14, 2002. Parent issued $800,000 of notes
     payable and paid $157,429 in cash to acquire certain assets from M7 Farms
     and 100% of the outstanding shares of MT Subsidiary's common stock wherein
     MT Subsidiary became a wholly-owned subsidiary of Parent [SEE NOTE 2]. The
     acquisition of MT Subsidiary has been accounted for as a purchase of MT
     Subsidiary. The financial statements reflect the operations of MT
     Subsidiary from September 27, 2002.

     Anglewood Advisors, Inc. ("AA Subsidiary") was organized under the laws of
     the State of Nevada on January 27, 2003 as a wholly-owned subsidiary of
     Parent. AA Subsidiary offered business structure consulting. On October 2,
     2003, the Company's Board of Directors determined to abandon AA Subsidiary.
     AA Subsidiary has been dissolved by the State of Nevada. At the time of
     abandonment, AA Subsidiary had no assets and no liabilities. The financial
     statements reflect the operations of AA Subsidiary from January 27, 2003
     through October 2, 2003. The Company continues to offer business structure
     consulting through Parent.

     Parent and MT Subsidiary ("the Company") grow trees and other agricultural
     products. Also, the Company has occasionally provided business consulting
     services. The Company has, at the present time, not paid any dividends and
     any dividends that may be paid in the future will depend upon the financial
     requirements of the Company and other relevant factors.

     CONSOLIDATION - The consolidated financial statements include the accounts
     of Parent and Parent's wholly-owned MT Subsidiary. The consolidated
     financial statements also include the accounts of Parent's formerly
     wholly-owned AA Subsidiary for the period from January 27, 2003 through
     October 2, 2003. All significant intercompany transactions have been
     eliminated in consolidation.

     FISCAL YEAR - The Company's fiscal year-end is June 30th.

     AGRICULTURAL PRODUCTION - The Company accounts for their agricultural
     activities in accordance with Statement of Position 85-3, "Accounting by
     Agricultural Producers and Agricultural Cooperatives". All direct and
     indirect costs of growing crops are either accumulated as inventory or
     expensed as cost of goods sold. Permanent land development costs are
     capitalized and not depreciated. Limited-life land development costs and
     the development costs to bring long-life and intermediate-life plants into
     production are capitalized and depreciated using the straight-line method
     over the estimated useful lives of the assets.

     CASH AND CASH EQUIVALENTS - The Company considers all highly-liquid debt
     investments purchased with a maturity of three months or less to be cash
     equivalents.



                                      F-33




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

     INVESTMENTS - The Company's investments which are bought and held
     principally for the purpose of selling them in the near term are classified
     as trading securities. Trading securities are recorded at fair value with
     changes in fair value being included in earnings. Investments for which the
     Company has the positive intent and ability to hold to maturity are
     classified as held-to-maturity and are recorded at amortized cost.
     Investments not classified as either held-to-maturity or trading securities
     are classified as available-for-sale. Available-for-sale securities are
     recorded at fair value with changes in fair value being excluded from
     earnings and recorded net of tax as a separate component of equity in
     accordance with Statement of Financial Accounting Standards No. 115,
     "Accounting for Certain Investments in Debt and Equity Securities". The
     cost of a security is determined using the average cost method.

     ACCOUNTS RECEIVABLE - The Company records accounts receivable at the lower
     of cost or fair value. The Company recognizes interest income on an account
     receivable based on the stated interest rate for past-due accounts over the
     period that the account is past due. The Company accumulates and defers
     fees and costs associated with establishing a receivable to be amortized
     over the estimated life of the related receivable. The Company estimates
     allowances for doubtful accounts based on the aged receivable balances and
     historical losses. The Company records interest income on delinquent
     accounts receivable only when payment is received. The Company first
     applies payments received on delinquent accounts receivable to eliminate
     the outstanding principal. The Company charges off uncollectible accounts
     receivable when management estimates no possibility of collecting the
     related receivable. The Company considers accounts receivable to be past
     due or delinquent based on contractual terms.

     INVENTORIES - Growing crop inventory is stated at the lower of market or
     cost using the retail method. Under the retail method, the Company counts
     and extends their inventory at sales prices. This inventory at sales prices
     is then multiplied by a cost ratio to determine inventory at cost. The cost
     ratio is determined by taking the total of the beginning inventory at cost
     plus all direct and indirect costs of growing crops divided by the total of
     the ending inventory at sales prices plus sales revenues. Raw material
     inventory is stated at the lower of market or cost using the first-in
     first-out (FIFO) method.

     PROPERTY AND EQUIPMENT - Property and equipment are stated at cost or
     carryover basis. Expenditures for major renewals and betterments that
     extend the useful lives of property and equipment are capitalized upon
     being placed in service. Expenditures for maintenance and repairs are
     charged to expense as incurred. Depreciation is computed using the
     straight-line method over the estimated useful lives of the assets. In
     accordance with Statement of Financial Accounting Standards No. 144,
     "Accounting for the Impairment or Disposal of Long-Lived Assets", the
     Company periodically reviews their property and equipment for impairment.




                                      F-34




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]


     INTANGIBLE ASSETS - The Company accounts for their intangible assets in
     accordance with Statement of Financial Accounting Standards No. 142,
     "Goodwill and Other Intangible Assets". SFAS No. 142 establishes three
     classifications for intangible assets including definite-life intangible
     assets, indefinite-life intangible assets and goodwill and requires
     different accounting treatment and disclosures for each classification. In
     accordance with SFAS No. 142, the Company periodically reviews their
     intangible assets for impairment. No impairment was recorded during the
     year ended June 30, 2004 and the period from inception on August 6, 2002
     through June 30, 2003.

     ACQUISITION COSTS - Costs related to proposed acquisitions are deferred and
     will be included in the acquisition price upon completion of the related
     acquisition. In the event an acquisition is unsuccessful, the costs related
     to the acquisition are written off to expense.

     STOCK OFFERING COSTS - Costs related to proposed stock offerings are
     deferred and will be offset against the proceeds of the offering. In the
     event a stock offering is unsuccessful, the costs related to the offering
     are written off to expense.

     PRODUCT WARRANTY - The Company warrants their agricultural products against
     damage that may occur prior to delivery to the customer. At June 30, 2004
     and 2003, the Company has established a reserve for future warranty expense
     of $31 and $300, respectively.

     REVENUE RECOGNITION - The Company's revenue comes primarily from the sale
     of agricultural products. The Company recognizes revenue from the sale of
     agricultural products when rights and risk of ownership have passed to the
     customer, there is persuasive evidence of a sales arrangement, product has
     been shipped or delivered to the customer, the price and terms are
     finalized and collection of the resulting receivable is reasonably assured.
     The Company also generates revenue from business consulting services. The
     Company recognizes revenue from business consulting services over the term
     of the underlying consulting agreement.

     STOCK-BASED COMPENSATION - The Company has one stock-based employee
     compensation plan [SEE NOTE 10]. The Company accounts for their plan under
     the recognition and measurement principles of Accounting Principles Board
     Opinion No. 25, "Accounting for Stock Issued to Employees", and related
     Interpretations. The following table illustrates the effect on net income
     and loss per share if the Company had applied the fair value recognition
     provisions of Statement of Financial Accounting Standards No. 123,
     "Accounting for Stock-Based Compensation", to the Company's stock-based
     employee compensation.



                                      F-35




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

                                                                  From Inception
                                                     For the       on August 6,
                                                    Year Ended     2002 Through
                                                   June 30, 2004   June 30, 2003
                                                   -------------   -------------
         Net loss, as reported                     $   (400,005)   $   (337,586)
         Add: Stock-based employee compensation
           expense included in reported net income           --              --
         Deduct: Total stock-based employee
           compensation expense determined under
           fair value based method                           --        (300,000)
                                                   -------------   -------------
         Pro forma net loss                        $   (400,005)   $   (637,586)
                                                   -------------   -------------

         Loss per common share, as reported        $       (.03)   $       (.04)
         Loss per common share, pro forma          $       (.03)   $       (.07)

     INCOME TAXES - The Company accounts for income taxes in accordance with
     Statement of Financial Accounting Standards No. 109, "Accounting for Income
     Taxes" [SEE NOTE 12].

     LOSS PER SHARE - The computation of loss per share is based on the weighted
     average number of common shares outstanding during the period presented, in
     accordance with Statement of Financial Accounting Standards No. 128,
     "Earnings Per Share" [SEE NOTE 13].

     ACCOUNTING ESTIMATES - The preparation of financial statements in
     conformity with generally accepted accounting principles in the United
     States of America requires management to make estimates and assumptions
     that affect the reported amounts of assets and liabilities, the disclosures
     of contingent assets and liabilities at the date of the financial
     statements and the reported amount of revenues and expenses during the
     reported period. Actual results could differ from those estimated.

     RECENTLY ENACTED ACCOUNTING STANDARDS - Statement of Financial Accounting
     Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative
     Instruments and Hedging Activities", and SFAS No. 150, "Accounting for
     Certain Financial Instruments with Characteristics of both Liabilities and
     Equity", were recently issued. SFAS No. 149 and 150 have no current
     applicability to the Company or their effect on the financial statements
     would not have been significant.

     RESTATEMENT - The financial statements have been restated for all periods
     presented to reflect Parent's amended articles of incorporation which were
     filed with the State of Nevada in October 2004 [SEE NOTES 10 AND 18].



                                      F-36




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - ACQUISITION OF MT SUBSIDIARY AND CERTAIN ASSETS OF M7 FARMS

     On September 27, 2002, Parent acquired MT Subsidiary and certain assets of
     M7 Farms pursuant to a Purchase Agreement signed August 14, 2002. Parent
     issued $800,000 of notes payable and paid $157,429 in cash to acquire
     certain assets from M7 Farms and 100% of the outstanding shares of MT
     Subsidiary's common stock wherein MT Subsidiary became a wholly-owned
     subsidiary of Parent. The Company has accounted for the acquisition as a
     purchase of MT Subsidiary. The financial statements reflect the operations
     of MT Subsidiary from September 27, 2002.


     The following is the unaudited condensed balance sheet of MT Subsidiary
     including the assets acquired from M7 Farms at September 27, 2002, the date
     the acquisition closed.


                                                                   September 27,
                                                                       2002
                                                                   -------------
         Assets:
              Inventory                                            $    241,806
              Prepaid expense                                            50,000
              Property and equipment                                    667,801
              Definite-life intangible assets                            57,814
                                                                   -------------
                                                                   $  1,017,421
                                                                   -------------
         Liabilities and Stockholders' Equity:
              Due to Parent                                        $    957,429
              Deferred tax liability                                     59,992
              Common stock                                                1,000
              Additional paid-in capital                                 (1,000)
                                                                   -------------
                                                                   $  1,017,421
                                                                   -------------
     The acquired definite-life intangible assets, which are two 5-year
     non-compete agreements with the former owners of MT Subsidiary and the M7
     Farms assets [SEE NOTE 7], are being amortized over 5 years with no
     residual value.

NOTE 3 - ACQUISITION OF CERTAIN ASSETS OF SAMPRES TREE FARMS, L.L.C.

     On May 26, 2004, Parent acquired certain assets of Sampres Tree Farms
     L.L.C. pursuant to an Asset Purchase Agreement signed May 20, 2004. Parent
     issued 400,000 shares of common stock, issued a $400,000 note payable and
     paid $150,151 in cash to acquire the assets from Sampres Tree Farms, L.L.C.
     The Company has accounted for the acquisition as an asset purchase.




                                      F-37




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - ACQUISITION OF CERTAIN ASSETS OF SAMPRES TREE FARMS, L.L.C.
[CONTINUED]



     The following shows how the acquisition purchase price was allocated to the
     assets acquired from Sampres Tree Farms, L.L.C. at May 26, 2004, the date
     the acquisition closed.

                                                                      May 26,
                                                                       2004
                                                                   -------------
         Inventory                                                 $    133,051
         Property and equipment                                         537,100
                                                                   -------------
                                                                   $    670,151
                                                                   -------------

NOTE 4 - AVAILABLE-FOR-SALE SECURITIES

     The amortized cost, net of unrealized gains and losses, and estimated fair
     value of available-for-sale securities by major security type are as
     follows at:

                                                             June 30,
                                                   -----------------------------
                                                       2004            2003
                                                   -------------   -------------
         Publicly-traded corporations:
              Amortized cost                       $         --    $     15,770
              Unrealized gains                               --              --
              Unrealized losses                              --          (5,806)
                                                   -------------   -------------
              Estimated Fair Value                 $         --    $      9,964
                                                   -------------   -------------

NOTE 5 - INVENTORIES

     Inventories consist of the following at:
                                                              June 30,
                                                   -----------------------------
                                                       2004             2003
                                                   -------------   -------------
         Raw materials                             $    177,390    $     57,219
         Growing crops                                  584,412         279,951
                                                   -------------   -------------
         Total Inventories                         $    761,802    $    337,170
                                                   -------------   -------------

     The Company has estimated that no allowance for slow moving or obsolete
     inventory was necessary at June 30, 2004 and 2003. The Company's
     inventories are collateral for certain notes payable [SEE NOTE 9].




                                      F-38




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - PROPERTY AND EQUIPMENT

     Property and equipment consist of the following at:

                                                             June 30,
                                                   -----------------------------
                                                       2004             2003
                                                   -------------   -------------
         Office furniture and equipment            $     23,402    $      7,522
         Farm equipment                                 349,741         154,532
         Buildings                                      540,234         311,047
         Land                                           367,753         222,008
                                                   -------------   -------------
                                                      1,281,130         695,109

         Less accumulated depreciation                  (95,764)        (37,117)
                                                   -------------   -------------
         Net Property and Equipment                $  1,185,366    $    657,992
                                                   -------------   -------------

                                                                    Estimated
                                                                 Useful Lives of
                                                                  Assets (Years)
                                                                 ---------------
         Office furniture and equipment                              3 - 10
         Farm equipment                                              2 - 10
         Buildings                                                  20 - 30
         Land                                                    Not applicable

For the year ended June 30, 2004 and the period from inception on August 6, 2002
through June 30, 2003, the Company had depreciation of $4,586 and $1,276,
respectively, which was expensed as general and administrative expense. For the
year ended June 30, 2004 and the period from inception on August 6, 2002 through
June 30, 2003, the Company had depreciation of $54,061 and $35,841,
respectively, which was included in the costs of producing inventory. The
Company's property and equipment are collateral for certain notes payable [SEE
NOTES 8 AND 9].



                                      F-39




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - DEFINITE-LIFE INTANGIBLE ASSETS

     Definite-life intangible assets consist of the following at:

                                                              June 30,
                                                   -----------------------------
                                                       2004            2003
                                                   -------------   -------------
         5-year non-compete agreement with
           Steven Sutherland                       $     28,907    $     28,907
         5-year non-compete agreement with
           Roger and Barbara Major                       28,907          28,907
                                                   -------------   -------------
                                                         57,814          57,814
         Less accumulated amortization                  (21,198)         (9,636)
                                                   -------------   -------------
         Net Definite-Life Intangible Assets       $     36,616    $     48,178
                                                   =============   =============

     The Company's definite-life intangible assets are being amortized over 5
     years with no residual value. Amortization expense for the year ended June
     30, 2004 and the period from inception on August 6, 2002 through June 30,
     2003 was $11,562 and $9,636, respectively. The Company estimates that their
     amortization expense will be approximately as follows for the twelve-month
     periods ended:
                                              Amortization
                  June 30,                      Expense
                 -----------                  ------------
                    2005                      $     11,563
                    2006                            11,563
                    2007                            11,563
                    2008                             1,927
                    2009                                --
                                              ------------
                                              $     36,616
                                              ============


NOTE 8- CONVERTIBLE NOTES PAYABLE


     The Company has sold convertible notes payable totaling $355,000 and
     recorded discounts totaling $11,000 due to the beneficial conversion
     feature of the notes. The discounts are being amortized over the term of
     the respective notes. For the year ended June 30, 2004 and the period from
     inception on August 6, 2002 through June 30, 2003, respectively, the
     Company amortized $967 and $0 of the discounts on notes payable as interest
     expense.

     The Company has paid a total of $1,655 in loan fees and costs in order to
     establish these convertible notes payable. These costs have been deferred
     and are being amortized over the term of the respective notes. For the year
     ended June 30, 2004 and the period from inception on August 6, 2002 through
     June 30, 2003, respectively, the Company amortized $551 and $0 of the
     deferred loan costs as interest expense.



                                      F-40




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8- CONVERTIBLE NOTES PAYABLE  [CONTINUED]



     The Company has the following convertible notes payable at:

                                                             June 30,
                                                   -----------------------------
                                                       2004             2003
                                                   -------------   -------------

$300,000 10% note payable maturing in March
2005, secured by all of the Company's land,
convertible with accrued interest into
common stock at $.30 per share anytime
through March 2005 (At the time of
conversion, the creditor can require the
Company to redeem any amount of the shares
issued in the conversion at $.345 per
share). As required by a covenant in this
note, the Company has purchased key man
insurance, but has failed to name the
creditor as beneficiary.                           $    291,019    $         --

$10,000 10% unsecured note payable maturing
in September 2006, convertible with accrued
interest into common stock at $.25 per share
during the first 6 months, at $.35 per share
during the second 6 months and at $.50 per
share thereafter, net of discounts of $1,800
and $0, respectively                                      8,200              --

$10,000 10% unsecured note payable maturing
in September 2006, convertible with accrued
interest into common stock at $.25 per share
during the first 6 months, at $.35 per share
during the second 6 months and at $.50 per
share thereafter, net of discounts of $1,800
and $0, respectively                                      8,200              --

$25,000 10% unsecured note payable maturing
in September 2006, convertible with accrued
interest into common stock at $.25 per share
during the first 6 months, at $.35 per share
during the second 6 months and at $.50 per
share thereafter, net of discounts of $4,500
and $0, respectively                                     20,500              --

$10,000 10% unsecured note payable maturing
in December 2006, convertible with accrued
interest into common stock at $.25 per share
during the first 6 months, at $.35 per share
during the second 6 months and at $.50 per
share thereafter, net of discounts of $1,933
and $0, respectively                                      8,067              --
                                                   -------------   -------------
                                                        335,986              --
         Less current portion                          (291,019)             --
                                                   -------------   -------------
                                                   $     44,967    $         --
                                                   =============   =============



                                      F-41




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8- CONVERTIBLE NOTES PAYABLE  [CONTINUED]


     The convertible notes payable mature as follows for the twelve-month
periods ended:

                   June 30,                         Principal Due
                 -----------                        -------------
                    2005                            $     291,019
                    2006                                       --
                    2007                                   55,000
                    2008                                       --
                    2009                                       --
                                                    -------------
                                                    $     346,019
                                                    =============

     For the year ended June 30, 2004 and the period from inception on August 6,
     2002 through June 30, 2003, respectively, interest expense on the
     convertible notes payable amounted to $10,114 and $0.


NOTE 9 - NOTES PAYABLE

The Company has the following notes payable at:

                                                              June 30,
                                                      --------------------------
                                                         2004           2003
                                                      ------------  ------------

$600,000 7% note payable maturing in March 2007,
secured by all of the assets acquired from M7 Farms   $   318,728   $   410,405

$200,000 7% note payable maturing in March 2007,
secured by all of the outstanding shares of
MT Subsidiary                                             117,899       153,159

$400,000 note payable maturing in May 2009,
accruing interest at 7% during the first year, at 8%
during the second and third years and at 9% during
the fourth and fifth years, secured by all of the
assets acquired from Sampres Tree Farms, L.L.C.           400,000            --

$250,000 14% note payable maturing in March 2005          250,000            --

$112,250 18% note payable repaid in August 2003                --       111,799
                                                      ------------  ------------
                                                        1,086,627       675,363

         Less current portion                            (530,003)     (238,735)
                                                      ------------  ------------
                                                      $   556,624   $   436,628
                                                      ============  ============



                                      F-42




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 - NOTES PAYABLE [CONTINUED]

     The notes payable mature as follows for the twelve-month periods ended:

                  June 30,                   Principal Due
                  --------                   -------------
                    2005                     $     530,003
                    2006                           188,388
                    2007                            92,552
                    2008                             5,337
                    2009                           270,347
                                             -------------
                                             $   1,086,627
                                             -------------

     In November 2003, the Company issued a $50,000 note payable. The note
     accrued interest at 120% and was due in December 2003. In December 2003,
     the Company repaid the note.

     In August 2003, the Company issued a $226,469 note payable. The note
     accrued interest at 18% and was due in March 2004. In March 2004, the
     Company repaid the note.

     In September 2002, the Company issued a $112,270 note payable. The note
     accrued interest at 18% and was due in January 2003. In January 2003, the
     Company repaid the note.

     The Company has paid a total of $61,099 in loan fees and costs in order to
     establish the notes payable. These costs have been deferred and are being
     amortized over the term of the respective notes. For the year ended June
     30, 2004 and the period from inception on August 6, 2002 through June 30,
     2003, respectively, the Company amortized $24,737 and $19,295 of the
     deferred loan costs as interest expense.

     For the year ended June 30, 2004 and the period from inception on August 6,
     2002 through June 30, 2003, respectively, interest expense on the notes
     payable amounted to $103,301 and $68,057.

NOTE 10 - CAPITAL STOCK AND OPTIONS

     PREFERRED STOCK - In October 2004, Parent amended its articles of
     incorporation to authorize 10,000,000 shares of preferred stock, $.001 par
     value, with such rights, preferences and designations and to be issued in
     such series as determined by the Board of Directors [SEE NOTE 18]. No
     shares are issued and outstanding at June 30, 2004 and 2003.

     COMMON STOCK - In October 2004, Parent amended its articles of
     incorporation to authorize 50,000,000 shares of common stock with $.001 par
     value [SEE NOTE 18]. Previously, Parent had authorized 50,000,000 shares of
     common stock with no par value. The financial statements have been restated
     for all periods presented to reflect the change in par value.

     In June 2004, the Company issued 166,667 shares of their previously
     authorized but unissued common stock for a subscription receivable of
     $50,000, or $.30 per share.



                                      F-43




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - CAPITAL STOCK AND OPTIONS [CONTINUED]

     In May 2004, the Company issued 400,000 shares of their previously
     authorized but unissued common stock as part of an asset acquisition [SEE
     NOTE 3] valued at $120,000, or $.30 per share.

     From August 2003 through June 2004, the Company issued 450,664 shares of
     their previously authorized but unissued common stock for cash of $135,200,
     or $.30 per share. Stock offering costs of $27,500 were netted against the
     proceeds.

     From July through September 2003, the Company issued 220,000 shares of
     their previously authorized but unissued common stock for cash of $55,000,
     or $.25 per share.

     In June 2003, the Company issued 420,000 shares of their previously
     authorized but unissued common stock for a subscription receivable of
     $105,000, or $.25 per share. The Company received the $105,000 subscription
     receivable in July 2003.

     In June 2003, the Company issued 40,000 shares of their previously
     authorized but unissued common stock for cash of $10,000, or $.25 per
     share.

     From March through June 2003, the Company issued 500,000 shares of their
     previously authorized but unissued common stock for cash of $100,000, or
     $.20 per share. Stock offering costs of $7,000 were netted against the
     proceeds.

     In January 2003, the Company issued 200,000 shares of their previously
     authorized but unissued common stock to pay rent of $40,000, or $.20 per
     share.

     In January 2003, the Company issued 800,000 shares of their previously
     authorized but unissued common stock to pay debt of $160,000, or $.20 per
     share.

     In January 2003, the Company issued 20,000 shares of their previously
     authorized but unissued common stock for consulting services rendered
     valued at $4,000, or $.20 per share.

     In October 2002, the Company issued 125,000 shares of their previously
     authorized but unissued common stock for available-for-sale securities
     valued at $12,500, or $.10 per share.

     In October 2002, the Company issued 450,000 shares of their previously
     authorized but unissued common stock for a subscription receivable of
     $45,000, or $.10 per share. The Company received the $45,000 subscription
     receivable in July 2003.

     In September 2002, the Company issued 150,000 shares of their previously
     authorized but unissued common stock for consulting services rendered
     valued at $15,000, or $.10 per share.

     In September and October 2002, the Company issued 1,570,000 shares of their
     previously authorized but unissued common stock (100,000 shares of which
     were issued to a relative of an officer/shareholder of the Company) for
     cash of $157,000, or $.10 per share.


                                      F-44




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - CAPITAL STOCK AND OPTIONS [CONTINUED]

     In August 2002, in connection with their organization, the Company issued
     7,340,000 shares of their previously authorized but unissued common stock
     for cash of $294, or $.00004 per share.

     CAPITAL DISTRIBUTION - In June 2003, the Company paid $15,130 to an
     officer/shareholder of the Company to purchase property and equipment.
     Since the carryover basis in the property and equipment was zero, the
     Company recorded a capital distribution of $12,154, net of income taxes
     (benefit) of $(2,976).

     STOCK OPTION PLAN - In October 2002, the Company's Board of Directors
     approved and adopted the "2002 Stock Incentive Plan" ("the Plan") with a
     maximum of 8,000,000 shares of common stock reserved for issuance under the
     Plan. The Plan provides for both the direct award of shares and for the
     grant of options to purchase shares to employees, officers, directors,
     agents, consultants, advisors and independent contractors. Awards under the
     Plan will be granted as determined by the Board of Directors and the Board
     of Directors shall determine which eligible persons are to receive
     Incentive Stock Options, Non-Statutory Stock Options or stock issuances.
     The Board of Directors also sets the number of shares, the exercise price
     and the exercise terms for grants. Options granted to non-exempt employees
     are required to have an exercise price of at least 85% of the fair market
     value of the common stock at the time of grant. Incentive Stock Options
     must be granted with an exercise price of at least 100% (110% for
     shareholders who own at least 10% of the Company's outstanding stock) of
     the fair market value of the common stock at the time of grant. Incentive
     Stock Options are required to expire within 10 years. There are no vesting
     requirements, so all awards vest immediately. At June 30, 2004, total
     awards available to be granted from the Plan amounted to 3,700,000.

     In September 2003, the Company's Board of Directors granted options to
     purchase 100,000 shares of common stock from the 2002 Stock Incentive Plan
     to a consultant for services rendered valued at $30,000. The options vested
     immediately and are exercisable at $.30 per share for 10 years. At June 30,
     2004, none of these options had been exercised, forfeited or cancelled.

     In November 2002, the Company's Board of Directors granted options to
     purchase 2,000,000 shares of common stock from the 2002 Stock Incentive
     Plan to officers of the Company for services rendered. The options vested
     immediately and are exercisable at $.11 per share for 5 years. The Company
     did not record any amount for the options since there was no intrinsic
     value for the options. At June 30, 2004, none of these options had been
     exercised, forfeited or cancelled.

     In November 2002, the Company's Board of Directors granted options to
     purchase 1,000,000 shares of common stock from the 2002 Stock Incentive
     Plan to an employee of the Company for services rendered. The options
     vested immediately and are exercisable at $.10 per share for 10 years. The
     Company did not record any amount for the options since there was no
     intrinsic value for the options. At June 30, 2004, none of these options
     had been exercised, forfeited or cancelled.


                                      F-45




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - CAPITAL STOCK AND OPTIONS [CONTINUED]

     In November 2002, the Company's Board of Directors granted options to
     purchase 1,200,000 shares of common stock from the 2002 Stock Incentive
     Plan (1,000,000 options of which were granted to a relative of an
     officer/shareholder of the Company) to consultants for services rendered
     valued at $120,000. The options vested immediately and are exercisable at
     $.10 per share for 10 years. At June 30, 2004, none of these options had
     been exercised, forfeited or cancelled.

     A summary of the status of the options granted under the Company's 2002
     Stock Incentive Plan is presented below.


                                                                         >From Inception on
                                                For the Year Ended        August 6, 2002
                                                   June 30, 2004       Through June 30, 2003
                                               ---------------------   ---------------------
                                                            Weighted                Weighted
                                                            Average                 Average
                                                            Exercise                Exercise
                                                Shares       Price      Shares       Price
                                               ---------   ---------   ---------   ---------
                                                                       
     Outstanding at beginning of period        4,200,000   $     .10          --   $      --
     Granted                                     100,000         .30   4,200,000         .10
     Exercised                                        --          --          --          --
     Forfeited                                        --          --          --          --
     Expired                                          --          --          --          --
                                               ---------   ---------   ---------   ---------
     Outstanding at end of period              4,300,000   $     .11   4,200,000   $     .10
                                               ---------   ---------   ---------   ---------
     Weighted average fair value of
       options granted during the period         100,000   $     .30   4,200,000   $     .10
                                               ---------   ---------   ---------   ---------


     The fair value of each option granted is estimated on the date granted
     using the Black-Scholes option pricing model, with the following
     assumptions used for the grants on September 1, 2003: risk-free interest
     rate of 4.45%, expected dividend yield of zero, expected lives of 10 years
     and expected volatility of 760%. The following assumptions were used for
     options granted on November 5, 2002: risk-free interest rates of 3.00% and
     4.10%, expected dividend yield of zero, expected lives of 5 and 10 years
     and expected volatility of 1,506%.

     A summary of the status of the options outstanding under the Company's 2002
     Stock Incentive Plan at June 30, 2004 is presented below:


                                    Options Outstanding                          Options Exercisable
                     ----------------------------------------------------   -------------------------------
      Range of                      Weighted-Average     Weighted-Average                  Weighted-Average
      Exercise          Number         Remaining            Exercise          Number          Exercise
       Prices        Outstanding    Contractual Life          Price         Exercisable         Price
     -----------     -----------    ----------------     ---------------    -----------    ----------------
                                                                             
     $       .10       2,200,000       8.4 years          $         .10      2,200,000      $         .10
             .11       2,000,000       3.3 years                    .11      2,000,000                .11
             .30         100,000       9.2 years                    .30        100,000                .30
     -----------     -----------    ----------------     ---------------    -----------    ----------------
     $ .10 - .30       4,300,000       6.0 years          $         .11      4,300,000      $         .11
     -----------     -----------    ----------------     ---------------    -----------    ----------------



                                      F-46




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - UNSUCCESSFUL ACQUISITIONS

     In May 2004, the Company was negotiating a possible acquisition of another
     company. However, the negotiations were called off and no acquisition
     occurred. All expenses associated with the unsuccessful acquisition have
     been classified as a loss on unsuccessful acquisition.

     In April 2003, the Company was negotiating a possible acquisition of
     another company. However, the negotiations were called off and no
     acquisition occurred. All expenses associated with the unsuccessful
     acquisition have been classified as a loss on unsuccessful acquisition.

NOTE 12 - INCOME TAXES

     The Company accounts for income taxes in accordance with Statement of
     Financial Accounting Standards No. 109, "Accounting for Income Taxes". SFAS
     No. 109 requires the Company to provide a net deferred tax asset or
     liability equal to the expected future tax benefit or expense of temporary
     reporting differences between book and tax accounting methods and any
     available operating loss or tax credit carryforwards. At June 30, 2004 and
     2003, the Company has available unused net operating loss carryforwards of
     approximately $540,000 and $217,000, respectively, which may be applied
     against future taxable income and which expire in various years through
     2024. Also, the Company has unused capital loss carryovers at June 30, 2004
     and 2003 of approximately $23,000 and $9,000, respectively, which expire in
     various years through 2009.

     At June 30, 2004 and 2003, respectively, the total of all deferred tax
     assets is approximately $118,000 and $51,000 and the total of all deferred
     tax liabilities is $50,000, and $55,000. The amount of and ultimate
     realization of the benefits from the deferred tax assets for income tax
     purposes is dependent, in part, upon the tax laws in effect, the future
     earnings of the Company, and other future events, the effects of which
     cannot be determined. Because of the uncertainty surrounding the
     realization of the loss carryforwards, the Company has established a
     valuation allowance of approximately $68,000 and $0 at June 30, 2004 and
     2003, respectively. The change in the valuation allowance for the year
     ended June 30, 2004 and for the period from inception on August 6, 2002
     through June 30, 2003 is approximately $68,000 and $0, respectively.



                                      F-47




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - INCOME TAXES [CONTINUED]

     The temporary differences, tax credits and carryforwards gave rise to the
     following deferred tax asset (liability) at:

                                                             June 30,
                                                    --------------------------
                                                       2004           2003
                                                    -----------    -----------
     Net operating loss carryover                   $   106,282    $    42,774
     Capital loss carryover                               4,557          1,770
     Excess of book over tax basis of fixed
       assets                                           (48,860)       (52,416)
     Warranty reserve                                         6             59
     Reserve for bad debts                                   33             33
     Unrealized loss on marketable securities                --          1,142
     Accrued compensation                                 5,950          2,852
                                                    -----------    -----------
     Total deferred tax asset                       $    67,968    $    (3,786)
                                                    -----------    -----------

     The components of income tax expense from continuing operations consisted
     of the following for:

                                                                  From Inception
                                                       For the     on August 6,
                                                     Year Ended    2002 Through
                                                   June 30, 2004  June 30, 2003
                                                   -------------  --------------
     Current income tax expense:
         Federal                                    $        --    $        --
         State                                               --             --
                                                    -----------    -----------
     Current tax expense                            $        --    $        --
                                                    -----------    -----------

     Deferred tax expense (benefit) arising from:
         Excess of tax over financial
           accounting depreciation                  $    (3,556)   $    (4,600)
         Bad debt allowance                                  --            (33)
         Capital loss carryover                          (2,787)        (1,770)
         Warranty reserve                                    53            (59)
         Accrued compensation                            (3,098)        (2,852)
         Net operating loss carryover                   (63,508)       (42,774)
         Valuation allowance                             67,968             --
                                                    -----------    -----------
     Net deferred tax expense                       $    (4,928)   $   (52,088)
                                                    -----------    -----------

     Deferred income tax expense results primarily from the reversal of
     temporary timing differences between tax and financial statement income.


                                      F-48




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - INCOME TAXES [CONTINUED]

     The reconciliation of income tax expense from continuing operations
     computed at the U.S. federal statutory tax rate to the Company's effective
     rate is as follows for:

                                                                  From Inception
                                                   For the         on August 6,
                                                  Year Ended       2002 Through
                                                 June 30, 2004    June 30, 2003
                                                 -------------    -------------
     Computed tax at the expected
       federal statutory rate                            15.00%           15.00%
     State income taxes, net of federal benefit           4.67             4.67
     Compensation due to options                         (1.46)           (6.06)
     Other                                                (.20)            (.24)
     Valuation allowance                                (16.79)              --
                                                 -------------    -------------
     Effective income tax rates                           1.22%           13.37%
                                                 -------------    -------------

NOTE 13 - LOSS PER SHARE

     The following data shows the amounts used in computing loss per share:

                                                                  From Inception
                                                   For the         on August 6,
                                                  Year Ended       2002 Through
                                                 June 30, 2004    June 30, 2003
                                                 -------------    -------------
     Loss from operations available to
     common shareholders (numerator)             $    (400,005)   $    (337,586)
                                                 -------------    -------------
     Weighted average number of common
     shares outstanding used in loss per
     share for the period (denominator)             12,179,860        9,653,338
                                                 -------------    -------------

     At June 30, 2004, the Company had outstanding options to purchase 4,300,000
     shares and notes payable convertible into 1,202,084 shares which were not
     used in the computation of loss per share because their effect would be
     anti-dilutive. At June 30, 2003, the Company had outstanding options to
     purchase 4,200,000 shares which were not used in the computation of loss
     per share because their effect would be anti-dilutive. Dilutive loss per
     share was not presented, as the Company had no common stock equivalent
     shares for all periods presented that would affect the computation of
     diluted loss per share.


                                      F-49




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - GOING CONCERN

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles in the United States of America,
     which contemplate continuation of the Company as a going concern. However,
     the Company was only recently formed and has not yet been successful in
     establishing profitable operations. Further, the Company has current
     liabilities in excess of current assets. These factors raise substantial
     doubt about the ability of the Company to continue as a going concern. In
     this regard, management is proposing to raise any necessary additional
     funds not provided by operations through loans or through additional sales
     of their common stock or through possible business combinations. There is
     no assurance that the Company will be successful in raising this additional
     capital or in achieving profitable operations. The financial statements do
     not include any adjustments that might result from the outcome of these
     uncertainties.

NOTE 15 - RELATED PARTY TRANSACTIONS

     ACCOUNTS RECEIVABLE - At June 30, 2004, an entity controlled by a relative
     of an officer/shareholder of the Company owed $630 in accounts receivable
     to the Company.

     ASSET ACQUISITION - In June 2003, the Company purchased $15,130 of property
     and equipment from an officer/shareholder of the Company with a carryover
     basis of zero. This has been accounted for as a capital distribution [SEE
     NOTE 10].

     ACCOUNTS PAYABLE - At June 30, 2003, the Company had accrued consulting
     fees of $14,500 payable to a relative of an officer/shareholder of the
     Company for consulting services rendered during the year ended June 30,
     2003. In July 2003, the Company paid the accrued fees.

     RELATED PARTY ADVANCES - During the year ended June 30, 2004 and the period
     from inception on August 6, 2002 through June 30, 2003,
     officers/shareholders of the Company and their relatives have made advances
     to the Company and the Company has repaid the advances as funds have been
     available. During the year ended June 30, 2004, officers/shareholders of
     the Company and their relatives made advances totaling $240,799 and the
     Company repaid advances totaling $246,809. Since the Company owed $16,244
     from prior-year advances, the remaining balance owed to the
     officers/shareholders of the Company and their relatives at June 30, 2004
     is $10,234. During the period from inception on August 6, 2002 through June
     30, 2003, officers/shareholders of the Company and their relatives made
     advances totaling $99,176 and the Company repaid advances totaling $82,932,
     leaving a balance of $16,244 owed to the officers/shareholders of the
     Company and their relatives at June 30, 2003.

     STOCK ISSUANCE - In October 2002, the Company issued 100,000 shares of
     their previously authorized but unissued common stock to a relative of an
     officer/shareholder of the Company for cash of $10,000 [SEE NOTE 10].

     OPTIONS - In September 2003, the Company granted options to purchase
     100,000 shares of common stock to a relative of an officer/shareholder of
     the Company for consulting services [SEE NOTE 10].


                                      F-50




                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - RELATED PARTY TRANSACTIONS [CONTINUED]

     In November 2002, the Company granted options to purchase 2,000,000 shares
     of common stock to officers/shareholders of the Company for employee
     services [SEE NOTE 10].

     In November 2002, the Company granted options to purchase 1,000,000 shares
     of common stock to a relative of an officer/shareholder of the Company for
     employee services [SEE NOTE 10].

     In November 2002, the Company granted options to purchase 1,000,000 shares
     of common stock to a relative of an officer/shareholder of the Company for
     consulting services [SEE NOTE 10].

     SALES - For the year ended June 30, 2004 and the period from inception on
     August 6, 2002 through June 30, 2003, respectively, the Company had sales
     of $630 and $0 to an entity controlled by a relative of an
     officer/shareholder of the Company.

     CONSULTING SERVICES - During the year ended June 30, 2004 and the period
     from inception on August 6, 2002 through June 30, 2003, respectively, the
     Company paid a relative of an officer/shareholder of the Company $24,020
     and $25,875 for consulting services.

     MANAGEMENT COMPENSATION - For the year ended June 30, 2004 and the period
     from inception on August 6, 2002 through June 30, 2003, respectively, the
     Company expensed $60,000 and $5,500 as salary to the Company's Chief
     Executive Officer. At June 30, 2004 and 2003, respectively, the Company
     owed $22,000 and $0 to the Chief Executive Officer for accrued salary.

     For the year ended June 30, 2004 and the period from inception on August 6,
     2002 through June 30, 2003, respectively, the Company expensed $112,250 and
     $28,500 as salary to the Company's former Chief Financial Officer. At June
     30, 2004 and 2003, respectively, the Company owed $8,500 and $0 to the
     former Chief Financial Officer for accrued salary.

     EMPLOYEES - For the year ended June 30, 2004 and the period from inception
     on August 6, 2002 through June 30, 2003, respectively, the Company expensed
     $106,075 and $72,000 as salary to an employee of the Company who is the
     spouse of an officer/shareholder of the Company. At June 30, 2004 and 2003,
     respectively, the Company owed $6,000 and $0 to this employee for accrued
     salary.

     For the year ended June 30, 2004 and the period from inception on August 6,
     2002 through June 30, 2003, respectively, the Company expensed $77,000 and
     $29,500 as salary to an employee of the Company who is a relative of an
     officer/shareholder of the Company. At June 30, 2004 and 2003,
     respectively, the Company owed $0 and $0 to this employee for accrued
     salary.


                                      F-51





                           PENGE CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16 - CONCENTRATIONS

     ACCOUNTS RECEIVABLE - A significant percent of the Company's accounts
     receivable at June 30, 2004 was owed by only four customers. The following
     table lists the percent of the receivables owed by those customers that
     accounted for 10% or more of the total accounts receivable at June 30,
     2004:

                   Customer A              29%
                   Customer B              16%
                   Customer C              11%
                   Customer D              11%

     REVENUES - During the year ended June 30, 2004 and the period from
     inception on August 6, 2002 through June 30, 2003, respectively, the
     Company had a significant customer which accounted for 77% and 69% of the
     Company's total sales. The loss of this significant customer could
     adversely affect the Company's business and financial condition.

NOTE 17 - COMMITMENTS AND CONTINGENCIES

     REDEMPTION OF COMMON STOCK - The Company has a convertible note payable
     which is convertible into common stock at $.30 per share. At the time of
     conversion, the creditor can require the Company to redeem any amount of
     the shares issued in the conversion at $.345 per share. At June 30, 2004,
     the Company owed $291,019 in principal and $2,233 in accrued interest on
     the note. If the note had been converted into stock on June 30, 2004, then
     the Company would have issued 977,506 shares of common stock which would
     have been redeemable at the creditor's option for $337,240.

NOTE 18 - SUBSEQUENT EVENTS

     AMENDED ARTICLES OF INCORPORATION - In October 2004, Parent filed amended
     articles of incorporation with the State of Nevada. The amended articles of
     incorporation authorized 10,000,000 shares of preferred stock with $.001
     par value and changed the common stock par value from no par value to $.001
     [SEE NOTE 10]. The financial statements have been restated for all periods
     presented to reflect the amended articles of incorporation.

     COMMON STOCK ISSUANCE - In July and August 2004, the Company issued 100,001
     shares of their previously authorized but unissued common stock for cash of
     $30,000, or $.30 per share.

     GRANT OF STOCK OPTIONS - In August 2004, the Company's Board of Directors
     granted options to purchase 200,000 shares of common stock from the 2002
     Stock Incentive Plan to a consultant for services rendered. The options
     vested immediately and are exercisable at $.30 per share for 10 years.

     SALE OF STOCK OPTIONS - In August 2004, the Company sold options to
     purchase 50,000 shares of common stock. The options are exercisable at $.30
     per share for 10 years.

     SECURED CONVERTIBLE NOTE PAYABLE - In July 2004, the Company issued a
     $200,000 note payable. The note is secured by 50,000 trees which are part
     of the Company's inventory. The note accrues interest at 10% per annum and
     is due January 2007. The unpaid principal and interest are convertible into
     common stock at $.24 per share during the first year, at $.30 per share
     during the second year and at $.35 per share thereafter.


                                      F-52




     SECURED NOTES PAYABLE - In August 2004, the Company issued a $50,000 note
     payable. The note is secured by 7,500 trees which are part of the Company's
     inventory. The note accrues interest at 12% per annum and is due August
     2006. The note also calls for an additional payment of 3% of the principal
     due on the date of maturity.

     RELATED PARTY NOTES PAYABLE - In October 2004, the Company issued two notes
     payable - one to the Company's Manager of Mergers and Acquisitions and one
     to a director/shareholder of the Company. Each note is due on demand and
     each provides for the Company to borrow up to $200,000 at 8% per annum.

     In August 2004, the Company issued a $50,000 note payable. The note is
     secured by 7,500 trees which are part of the Company's inventory. The note
     accrues interest at 10% per annum and is due August 2006.



                                      F-53






=======================================    =====================================

NO DEALER, SALESMAN OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE HEREBY,       5,794,104 SHARES OF COMMON STOCK
AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN MADE
BY US.

THIS PROSPECTUS DOES NOT OFFER TO SELL                 PENGE CORP.
OR BUY ANY SECURITIES IN ANY
JURISDICTION WHERE IT IS UNLAWFUL.

THE INFORMATION IN THIS PROSPECTUS IS
CURRENT AS OF THE DATE HEREOF. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR                  ---------------
ANY SALE MADE HEREUNDER SHALL CREATE
ANY IMPLICATION THAT THE INFORMATION                   Prospectus
CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.                  ---------------

UNTIL [______________] ALL DEALERS
THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS
IS IN ADDITION TO THE DEALER'S
OBLIGATION TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH                January 14, 2005
RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.



=======================================    =====================================





                                     PART II
                   INFORMATION NOT REQUIRED IN THE PROSPECTUS


ITEM 24.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Our articles of incorporation provide that we shall indemnify and advance
expenses to our directors, officers, employees, fiduciaries or agents and to any
person who is or was serving at our request as a director, officer, partner,
trustee, employee, fiduciary or agent of another domestic or foreign corporation
or other person or of an employee benefit plan (and their respective estates or
personal representatives) to the fullest extent as from time to time permitted
by Nevada law.

     Our bylaws provide that we shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of our company, by reason of
the fact that he or she is or was a director, officer, employee or agent of our
company, or is or was serving at the request of our company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in connection with the action, suit or proceeding if he or she
acted in good faith and in a manner that he or she reasonably believed to be in
or not opposed to the best interests of our company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.

     With respect to derivative actions, our bylaws provide that we shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of our
company to procure a judgment in its favor by reason of the fact that he or she
is or was a director, officer, employee or agent of our company, or is or was
serving at the request of our company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against expenses, including amounts paid in settlement and attorneys' fees
actually and reasonably incurred by him or her in connection with the defense or
settlement of the action or suit if he or she acted in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of our company. We may not indemnify any such person for any claim,
issue or matter as to which such person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
to our company or for amounts paid in settlement to our company, unless and only
to the extent that the court in which the action or suit was brought or other
court of competent jurisdiction determines upon application that in view of all
the circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.

     Any indemnification under the provisions described above, unless ordered by
a court, may be made by our company only as authorized in the specific case upon
a determination that indemnification of the director, officer, employee or agent
is proper in the circumstances. The determination must be made:

     o    By the stockholders;


                                      II-1




     o    By the board of directors by majority vote of a quorum consisting of
          directors who were not parties to the act, suit or proceeding;

     o    If a majority vote of a quorum consisting of directors who were not
          parties to the act, suit or proceeding so orders, by independent legal
          counsel in a written opinion; or

     o    If a quorum consisting of directors who were not parties to the act,
          suit or proceeding cannot be obtained, by independent legal counsel in
          a written opinion.

     Our bylaws further provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be
paid by our company as they are incurred and in advance of the final disposition
of the action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he or she is not entitled
to be indemnified by our company.

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

ITEM 25.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the various expenses of the offering, sale
and distribution of the offered securities being registered pursuant to this
registration statement (the "Registration Statement"). We will bear all of the
expenses listed below. All of the amounts shown are estimates except the SEC
registration fees.

              ITEM                                         AMOUNT
              ----                                         ------

              SEC registration fees                          $205

              Accounting and legal fees and expenses      $75,000

              Printing expenses                            $5,000

              Miscellaneous expenses                      $10,000
                                                       ----------

                                              TOTAL:      $90,205
                                                       ==========

ITEM 26.  RECENT SALES OF UNREGISTERED SECURITIES

     Within the last three years, Penge has issued and sold the following
unregistered securities on the dates and for the consideration indicated:


                                      II-2




SHARES OF COMMON STOCK

     In connection with our organization, during August 2002, we offered and
sold an aggregate of 7,340,000 shares of our common stock at a per share price
of $0.00004 per share for aggregate proceeds of $294. The offer and sale of such
shares of our common stock were effected in reliance upon the exemptions for
sales of securities not involving a public offering, as set forth in Rule 504
promulgated under the Securities Act and in Section 4(2) of the Securities Act,
based upon the following: (a) the investors confirmed to us that they had such
background, education and experience in financial and business matters as to be
able to evaluate the merits and risks of an investment in the securities; (b)
there was no public offering or general solicitation with respect to the
offering; (c) the investors had access to all relevant and available information
regarding, and/or were involved in the planning and founding of, our company,
(d) the investors acknowledged that all securities being purchased were
"restricted securities" for purposes of the Securities Act, and agreed to
transfer such securities only in a transaction registered under the Securities
Act or exempt from registration under the Securities Act; (e) a legend was
placed on the certificates representing each such security stating that it was
restricted and could only be transferred if subsequently registered under the
Securities Act or transferred in a transaction exempt from registration under
the Securities Act; (f) the aggregate offering price for the offering (combined
with the offering price of all prior offerings of securities under Rule 504, any
exemption under Section 3(b) of the Securities Act or in violation of Section
5(a) of the Securities Act) did not exceed $1 million; and (g) the Company was
not at the time of the offering subject to the reporting requirements of the
Securities Exchange Act, an investment company, or a development stage company
with no specific business plan or a business plan involving engaging in
a merger or acquisition with an unidentified company.

     During September 2002 and October 2002, we offered and sold 2,295,000
shares of our common stock at $0.10 per share to 26 investors. Of those
2,295,000 shares, 1,570,000 shares were sold for cash totaling $157,000; 150,000
shares were sold for services valued at $15,000; 450,000 shares were sold for a
subscription receivable of $45,000, which was subsequently paid in full; and
125,000 shares were sold for available-for-sale securities valued at $12,500.
The offer and sale of such shares of our common stock were effected in reliance
upon the exemptions for sales of securities not involving a public offering, as
set forth in Rule 504 promulgated under the Securities Act and in Section 4(2)
of the Securities Act, based upon the following: (a) the investors confirmed to
us that they had such background, education and experience in financial and
business matters as to be able to evaluate the merits and risks of an investment
in the securities; (b) there was no public offering or general solicitation with
respect to the offering; (c) the investors were provided with certain disclosure
materials and all other information requested with respect to our company; (d)
the investors acknowledged that all securities being purchased were "restricted
securities" for purposes of the Securities Act, and agreed to transfer such
securities only in a transaction registered under the Securities Act or exempt
from registration under the Securities Act; (e) a legend was placed on the
certificates representing each such security stating that it was restricted and
could only be transferred if subsequently registered under the Securities Act or
transferred in a transaction exempt from registration under the Securities Act;
(f) the aggregate offering price for the offering (combined with the offering
price of all prior offerings of securities under Rule 504, any exemption under
Section 3(b) of the Securities Act or in violation of Section 5(a) of the
Securities Act) did not exceed $1 million; and (g) the Company was not at the
time of the offering subject to the reporting requirements of the Securities
Exchange Act, an investment company, or a development stage company with no
specific business plan or a business plan involving engaging in a merger or
acquisition with an unidentified company.


                                      II-3




     Between January 2003 and June 2003, we offered and sold 720,000 shares of
our common stock at $0.20 per share to 10 investors. Of those 720,000 shares,
500,000 shares were sold for cash totaling $100,000; 20,000 shares were sold for
services valued at $4,000 and 200,000 shares were sold to pay rent of $40,000.
The offer and sale of such shares of our common stock were effected in reliance
upon the exemptions for sales of securities not involving a public offering, as
set forth in Rule 506 promulgated under the Securities Act and in Section 4(2)
of the Securities Act, based upon the following: (a) the investors confirmed to
us that they were "accredited investors," as defined in Rule 501 of Regulation D
promulgated under the Securities Act and had such background, education and
experience in financial and business matters as to be able to evaluate the
merits and risks of an investment in the securities; (b) there was no public
offering or general solicitation with respect to each offering; (c) the
investors were provided with certain disclosure materials and all other
information requested with respect to our company; (d) the investors
acknowledged that all securities being purchased were "restricted securities"
for purposes of the Securities Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the Securities Act; and (e) a legend was placed on the certificates
representing each such security stating that it was restricted and could only be
transferred if subsequently registered under the Securities Act or transferred
in a transaction exempt from registration under the Securities Act.

     In January 2003, Roger Major accepted 750,000 shares of our common stock as
partial payment of $150,000 on a note payable received in connection with our
purchase of the Major Trees Farm and certain assets of M7 Farms on September 27,
2002 and Thomas L. Chandler, accepted 50,000 shares of our common stock valued
at $10,000 as repayment of a short-term loan. The offer and sale of these shares
of common stock were effected in reliance upon the exemptions for sales of
securities not involving a public offering as set forth in Rule 506 promulgated
under the Securities Act and in Section 4(2) of the Securities Act, based upon
the following: (a) Major confirmed to us that he was an "accredited investor" as
defined in Rule 501 of Regulation D promulgated under the Securities Act; (b)
there was no public offering or general solicitation with respect to such
offering; (c) Major was provided with certain disclosure materials and all other
information requested with respect to our company; (d) Major acknowledged that
all securities being acquired were "restricted securities" for purposes of the
Securities Act, and agreed to transfer such securities only in a transaction
registered under the Securities Act or exempt from registration under the
Securities Act; and (e) a legend was placed on the certificates representing
each such security that it was restricted and could only be transferred if
subsequently registered under the Securities Act or transferred in a transaction
exempt from registration under the Securities Act.

     Between July 2003 and September 2003, we offered and sold 680,000 shares of
our common stock at $0.25 per share to seven investors. Of those 680,000 shares,
260,000 shares were sold for cash totaling $65,000 and 420,000 shares were sold
for a subscription receivable of $105,000, which was subsequently paid in full.
The offer and sale of such shares of our common stock were effected in reliance
upon the exemptions for sales of securities not involving a public offering, as
set forth in Rule 506 promulgated under the Securities Act and in Section 4(2)


                                      II-4




of the Securities Act, based upon the following: (a) the investors confirmed to
us that they were "accredited investors," as defined in Rule 501 of Regulation D
promulgated under the Securities Act and had such background, education and
experience in financial and business matters as to be able to evaluate the
merits and risks of an investment in the securities; (b) there was no public
offering or general solicitation with respect to each offering; (c) the
investors were provided with certain disclosure materials and all other
information requested with respect to our company; (d) the investors
acknowledged that all securities being purchased were "restricted securities"
for purposes of the Securities Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the Securities Act; and (e) a legend was placed on the certificates
representing each such security stating that it was restricted and could only be
transferred if subsequently registered under the Securities Act or transferred
in a transaction exempt from registration under the Securities Act.

     Between August 2003 and September 2004, we offered and sold 717,332 shares
of our common stock at $0.30 per share to 13 investors. Of these shares, 550,665
were sold for cash totaling $165,200 and 166,667 shares were sold for a
subscription receivable of $50,000, which is still outstanding. The offer and
sale of such shares of our common stock were effected in reliance upon the
exemptions for sales of securities not involving a public offering, as set forth
in Rule 506 promulgated under the Securities Act and in Section 4(2) of the
Securities Act, based upon the following: (a) the investors confirmed to us that
they were "accredited investors," as defined in Rule 501 of Regulation D
promulgated under the Securities Act and had such background, education and
experience in financial and business matters as to be able to evaluate the
merits and risks of an investment in the securities; (b) there was no public
offering or general solicitation with respect to each offering; (c) the
investors were provided with certain disclosure materials and all other
information requested with respect to our company; (d) the investors
acknowledged that all securities being purchased were "restricted securities"
for purposes of the Securities Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the Securities Act; and (e) a legend was placed on the certificates
representing each such security stating that it was restricted and could only be
transferred if subsequently registered under the Securities Act or transferred
in a transaction exempt from registration under the Securities Act.

     In May 2004, we issued 400,000 shares of our common stock valued at
$120,000, or $0.30 per share, to H. Preston and Shirley Franks in connection
with our acquisition of certain assets of Sampres Tree Farms, L.L.C. The offer
and sale of such shares of our common stock were effected in reliance upon the
exemptions for sales of securities not involving a public offering, as set forth
in Rule 506 promulgated under the Securities Act and in Section 4(2) of the
Securities Act, based upon the following: (a) the investors confirmed to us that
they were "accredited investors," as defined in Rule 501 of Regulation D
promulgated under the Securities Act and had such background, education and
experience in financial and business matters as to be able to evaluate the
merits and risks of an investment in the securities; (b) there was no public
offering or general solicitation with respect to each offering; (c) the
investors were provided with certain disclosure materials and all other
information requested with respect to our company; (d) the investors
acknowledged that all securities being purchased were "restricted securities"


                                      II-5




for purposes of the Securities Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the Securities Act; and (e) a legend was placed on the certificates
representing each such security stating that it was restricted and could only be
transferred if subsequently registered under the Securities Act or transferred
in a transaction exempt from registration under the Securities Act.

CONVERTIBLE NOTES PAYABLE

     In March 2004, we issued a convertible note payable secured by both of our
farms totaling $300,000 to two investors. This note bears interest at 10% per
annum with unpaid principal and accrued interest convertible into shares of our
common stock at $0.30 per share. The offer and sale of such convertible note
payable were effected in reliance upon the exemptions for sales of securities
not involving a public offering, as set forth in Rule 506 promulgated under the
Securities Act and in Section 4(2) of the Securities Act, based upon the
following: (a) the investors confirmed to us that they were "accredited
investors," as defined in Rule 501 of Regulation D promulgated under the
Securities Act and had such background, education and experience in financial
and business matters as to be able to evaluate the merits and risks of an
investment in the securities; (b) there was no public offering or general
solicitation with respect to each offering; (c) the investors were provided with
certain disclosure materials and all other information requested with respect to
our company; (d) the investors acknowledged that all securities being purchased
were "restricted securities" for purposes of the Securities Act, and agreed to
transfer such securities only in a transaction registered under the Securities
Act or exempt from registration under the Securities Act; and (e) a legend was
placed on the certificates representing each such security stating that it was
restricted and could only be transferred if subsequently registered under the
Securities Act or transferred in a transaction exempt from registration under
the Securities Act.

     Between March and June 2004, we issued unsecured convertible notes payable
totaling $55,000 to four investors. These notes bear interest at 10% per annum,
mature between September and December 2006 and are convertible into shares of
our common stock at $0.25 per share during the first six months, at $0.35 per
share during the second six months and at $0.50 per share thereafter. The offer
and sale of such convertible notes payable were effected in reliance upon the
exemptions for sales of securities not involving a public offering, as set forth
in Section 4(2) of the Securities Act, based upon the following: (a) the
investors confirmed to us that they were "accredited investors," as defined in
Rule 501 of Regulation D promulgated under the Securities Act and had such
background, education and experience in financial and business matters as to be
able to evaluate the merits and risks of an investment in the securities; (b)
there was no public offering or general solicitation with respect to each
offering; (c) the investors were provided with certain disclosure materials and
all other information requested with respect to our company; (d) the investors
acknowledged that all securities being purchased were "restricted securities"
for purposes of the Securities Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the Securities Act; and (e) a legend was placed on the certificates
representing each such security stating that it was restricted and could only be
transferred if subsequently registered under the Securities Act or transferred
in a transaction exempt from registration under the Securities Act.


                                      II-6




     In July 2004, we issued a convertible note payable for $200,000 to two
investors, secured by 50,000 trees from our inventory, bearing interest at 10%
per annum and maturing in January 2007. The unpaid principal and interest on the
note is convertible into shares of our common stock at $0.24 per share during
the first year, at $0.30 per share during the second year and at $0.35 per share
thereafter. The offer and sale of such note were effected in reliance upon the
exemptions for sales of securities not involving a public offering, as set forth
in Rule 506 promulgated under the Securities Act and in Section 4(2) of the
Securities Act, based upon the following: (a) the investors confirmed to us that
they were "accredited investors," as defined in Rule 501 of Regulation D
promulgated under the Securities Act and had such background, education and
experience in financial and business matters as to be able to evaluate the
merits and risks of an investment in the securities; (b) there was no public
offering or general solicitation with respect to the offering; (c) the investors
were provided with certain disclosure materials and all other information
requested with respect to our company; (d) the investors acknowledged that all
securities being purchased were "restricted securities" for purposes of the
Securities Act, and agreed to transfer such securities only in a transaction
registered under the Securities Act or exempt from registration under the
Securities Act; and (e) a legend was placed on the certificates representing
each such security stating that it was restricted and could only be transferred
if subsequently registered under the Securities Act or transferred in a
transaction exempt from registration under the Securities Act.

OPTIONS TO PURCHASE SHARES OF COMMON STOCK

     In November 2002, we granted options to purchase the following number of
shares of our common stock to the following individuals under our 2002 Stock
Incentive Plan:

           NAME OF INDIVIDUAL             NUMBER OF OPTIONS TO
                                           PURCHASE SHARES OF
                                              COMMON STOCK
         ----------------------------   -----------------------
         Kirk Fischer                           1,000,000
         Jim Fischer                            1,000,000
         KC Holmes                              1,000,000
         Rocky Fischer                          1,000,000
         Doug Bean                                200,000

In September 2003, we granted Rocky Fischer 100,000 options to purchase shares
of our common stock under our 2002 Stock Incentive Plan. In August 2004, we
granted Doug Bean 200,000 options to purchase shares of our common stock under
our 2002 Stock Incentive Plan. No such options have been exercised.

     The offers and issuances of the options to purchase shares of our common
stock described in the preceding paragraph were effected in reliance upon the
exemption for offers and sales pursuant to certain compensatory benefit plans as
set forth in Rule 701 promulgated under the Securities Act, based upon the
following: (a) the offers and issuances were made pursuant to a written
compensatory benefit plan established by us for the compensation of our
officers, employees, directors, consultants and other permitted persons; (b) the
recipients of such options were officers, employees, directors, consultants or
other permitted persons at the time of the issuance of the options (and any
recipients that were consultants provided bona fide services unrelated to a
capital-raising transaction or the promotion of a market for our stock in
exchange for such options); (c) we were not subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as


                                      II-7




amended, at the time of issuance of the options; (d) the aggregate sale price,
calculated in accordance with Rule 701, of the options issued in reliance on
Rule 701 during any 12-month period did not exceed $1 million; (e) all
recipients were provided with certain disclosure materials and all other
information requested with respect to our company, including a copy of the
governing compensatory benefit document; (f) the option recipients acknowledged
that all securities being purchased were "restricted securities" for purposes of
the Securities Act, and agreed to transfer such securities only in a transaction
registered under the Securities Act or exempt from registration under the
Securities Act; and (g) the governing option agreement requires that, unless
otherwise permitted by law, a legend be placed on the certificates representing
each such security stating that it was restricted and could only be transferred
if subsequently registered under the Securities Act or transferred in a
transaction exempt from registration under the Securities Act.

     In August 2004, we offered and sold options to purchase 50,000 shares of
our common stock to a single investor in connection with a $50,000 secured note
payable. The offer and sale of such options to purchase shares of our common
stock were effected in reliance upon the exemptions for sales of securities not
involving a public offering, as set forth in Rule 506 promulgated under the
Securities Act and in Section 4(2) of the Securities Act, based upon the
following: (a) the investors confirmed to us that they were "accredited
investors," as defined in Rule 501 of Regulation D promulgated under the
Securities Act and had such background, education and experience in financial
and business matters as to be able to evaluate the merits and risks of an
investment in the securities; (b) there was no public offering or general
solicitation with respect to each offering; (c) the investors were provided with
certain disclosure materials and all other information requested with respect to
our company; (d) the investors acknowledged that all securities being purchased
were "restricted securities" for purposes of the Securities Act, and agreed to
transfer such securities only in a transaction registered under the Securities
Act or exempt from registration under the Securities Act; and (e) a legend was
placed on the certificates representing each such security stating that it was
restricted and could only be transferred if subsequently registered under the
Securities Act or transferred in a transaction exempt from registration under
the Securities Act.

ITEM 27.  EXHIBITS

The following exhibits required by Item 601 of Regulation S-K promulgated under
the Securities Act have been included with the Registration Statement as
indicated below.



                                      II-8




                                                            INCORPORATED BY
EXHIBIT                                                     REFERENCE/FILED
  NO.                      EXHIBIT                             HEREWITH
-------   ------------------------------------------   -------------------------

  2.1     Asset Purchase Agreement by and Among        Incorporated by reference
          Penge Corp., Kirk Fischer and H. Preston     to the Company's
          and Shirley M. Franks along with Sampres     Registration Statement on
          Tree Farm L.L.C. dated as of May 20, 2004    Form SB-2 dated October
          and exhibits                                 25, 2004, File No.
                                                       333-119947.

  2.2     Purchase Agreement, Receipts and Escrow      Incorporated by reference
          Instructions dated August 14, 2002 and       to the Company's
          exhibits (re Penge and Major Trees)          Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  4.1     Articles of Incorporation, as amended to     Incorporated by reference
          date                                         to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  4.2     Bylaws, as amended to date                   Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  4.3     Form of Common Stock Certificate             Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  5       Opinion of Stoel Rives LLP                   To be filed by amendment

  10.1    2002 Stock Incentive Plan                    Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.


                                      II-9




  10.2    Form of Incentive Stock Option Agreement     Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.3    Form of Non Statutory Option Agreement       Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.4    Form of Executive Employment Agreement       Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.5    Consulting Agreement between Roger Major     Incorporated by reference
          and Penge Corp. dated March 5, 2003          to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.6    Form of Convertible Note Purchase            Incorporated by reference
          Agreement                                    to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.7    Form of Convertible Promissory Note          Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.8    $50,000 Promissory Note between Major        Incorporated by reference
          Trees Corp. and Stanford Goulding as         to the Company's
          Trustee for Survivors Trust dated August     Registration Statement on
          16, 2004                                     Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.


                                     II-10




  10.9    $50,000 Promissory Note between Major        Incorporated by reference
          Trees Corp. and Stanford Goulding as         to the Company's
          Trustee for Marital Trust dated August       Registration Statement on
          16, 2004                                     Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.10   $400,000 Real Estate Lien Note and Deed      Incorporated by reference
          of Trust between Penge Corp., Kirk           to the Company's
          Fischer and Sampres Tree Farm, L.L.C. and    Registration Statement on
          H. Preston Franks and Shirley M. Franks      Form SB-2 dated October
          dated May 26, 2004                           25, 2004, File No.
                                                       333-119947.

  10.11   $300,000 Convertible Promissory Note         Incorporated by reference
          dated March 31, 2004 between Penge Corp.     to the Company's
          and Monitor Finance LC and First Capital     Registration Statement on
          Funding LC                                   Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.12   $226,469 Note and Trust Deed between         Incorporated by reference
          Penge Corp., Kirk Fischer and Monitor        to the Company's
          Finance, L.C. dated August 22, 2003 and      Registration Statement on
          Modification and Extension of Trust Deed     Form SB-2 dated October
          Note dated March 1, 2004                     25, 2004, File No.
                                                       333-119947.

  10.13   $200,000 Promissory Note between Penge       Incorporated by reference
          Corporation and Steven Sutherland dated      to the Company's
          September 27, 2002                           Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.14   $600,000 Promissory Note between Penge       Incorporated by reference
          Corporation and Roger Major and Barbara      to the Company's
          Major dated September 27, 2002               Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.15   Engagement Agreement between Penge Corp      Filed herewith
          and KC Holmes dated September 1, 2004

  10.16   Convertible Note Purchase Agreement among    Filed herewith
          Penge Corp., First Capital Funding LC and
          Monitor Finance LC dated March 31, 2004

  10.17   Form of Promissory Note between Penge        Filed herewith
          Corp. and Related Parties


                                     II-11




  10.18   Deed of Trust dated April 5, 2004 between    Filed herewith
          Penge Corporation and Monitor Finance,
          L.C. and First Capital Funding, L.C.

  10.19   Deed of Trust dated July 25, 2004 between    Filed herewith
          Penge Corp. and Kirk J. Fischer and
          Monitor Finance, L.C. and First Capital
          Funding, L.C.

  21.1    Subsidiary List                              Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  23.1    Consent of Independent Registered Public     Filed herewith
          Accounting Firm

  23.2    Consent of Stoel Rives LLP                   Included in Item 5

  24.1    Power of Attorney                            Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.





                                     II-12




ITEM 28.  UNDERTAKINGS

The Registrant hereby undertakes:

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

               (i) Include any prospectus required by Section 10(a)(3) of the
          Securities Act.

               (ii) Reflect in the prospectus any facts or events that,
          individually or together, represent a fundamental change in the
          information. Notwithstanding the foregoing, any increase or decrease
          in volume of securities offered (if the total dollar value of
          securities offered would not exceed that which was registered) and any
          deviation from the low or high end of the estimated maximum offering
          range may be reflected in the form of prospectus filed with the
          Commission pursuant to Rule 424(b) if, in the aggregate, the changes
          in volume and price represent no more than a 20% change in the maximum
          aggregate offering price set forth in the "Calculation of Registration
          Fee" table in the effective registration statement.

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

          (2) That for determining liability under the Securities Act, to treat
     each post-effective amendment as a new registration statement of the
     securities offered, and the offering of the securities at that time to be
     the initial bona fide offering.

          (3) To file a post-effective amendment to remove from registration any
     of the securities that remain unsold at the end of the offering.

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

     In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.


                                     II-13




                                   SIGNATURES

     In accordance with the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and authorized this registration statement
to be signed on its behalf by the undersigned, in the City of Las Vegas, Nevada,
on January 14, 2005.

                                   PENGE CORP.


                                   By: /s/ Kirk Fischer
                                       -------------------------------------
                                       Kirk Fischer, Chief Executive Officer

     In accordance with the requirements of the Securities Act, this
registration Statement was signed by the following persons in the capacities and
on the dates stated:


/s/ Kirk Fischer            Chief Executive Officer, Chief      January 14, 2005
-----------------------     Financial Officer, Chairman of
Kirk Fischer                the Board (Principal Executive
                            Officer and Principal Financial
                            Officer)

           *                Director                            January 14, 2005
-----------------------
Jim Fischer

           *                Controller and Director             January 14, 2005
-----------------------
Lori Fischer

* By: /s/ Kirk Fischer
      --------------------------
          Kirk Fischer
          Attorney-in-Fact



                                     II-14




                                                            INCORPORATED BY
EXHIBIT                                                     REFERENCE/FILED
  NO.                      EXHIBIT                             HEREWITH
-------   ------------------------------------------   -------------------------

  2.1     Asset Purchase Agreement by and Among        Incorporated by reference
          Penge Corp., Kirk Fischer and H. Preston     to the Company's
          and Shirley M. Franks along with Sampres     Registration Statement on
          Tree Farm L.L.C. dated as of May 20, 2004    Form SB-2 dated October
          and exhibits                                 25, 2004, File No.
                                                       333-119947.

  2.2     Purchase Agreement, Receipts and Escrow      Incorporated by reference
          Instructions dated August 14, 2002 and       to the Company's
          exhibits (re Penge and Major Trees)          Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  4.1     Articles of Incorporation, as amended to     Incorporated by reference
          date                                         to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  4.2     Bylaws, as amended to date                   Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  4.3     Form of Common Stock Certificate             Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  5       Opinion of Stoel Rives LLP                   To be filed by amendment

  10.1    2002 Stock Incentive Plan                    Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.


                                     II-15




  10.2    Form of Incentive Stock Option Agreement     Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.3    Form of Non Statutory Option Agreement       Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.4    Form of Executive Employment Agreement       Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.5    Consulting Agreement between Roger Major     Incorporated by reference
          and Penge Corp. dated March 5, 2003          to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.6    Form of Convertible Note Purchase            Incorporated by reference
          Agreement                                    to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.7    Form of Convertible Promissory Note          Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.8    $50,000 Promissory Note between Major        Incorporated by reference
          Trees Corp. and Stanford Goulding as         to the Company's
          Trustee for Survivors Trust dated August     Registration Statement on
          16, 2004                                     Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.


                                     II-16




  10.9    $50,000 Promissory Note between Major        Incorporated by reference
          Trees Corp. and Stanford Goulding as         to the Company's
          Trustee for Marital Trust dated August       Registration Statement on
          16, 2004                                     Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.10   $400,000 Real Estate Lien Note and Deed      Incorporated by reference
          of Trust between Penge Corp., Kirk           to the Company's
          Fischer and Sampres Tree Farm, L.L.C. and    Registration Statement on
          H. Preston Franks and Shirley M. Franks      Form SB-2 dated October
          dated May 26, 2004                           25, 2004, File No.
                                                       333-119947.

  10.11   $300,000 Convertible Promissory Note         Incorporated by reference
          dated March 31, 2004 between Penge Corp.     to the Company's
          and Monitor Finance LC and First Capital     Registration Statement on
          Funding LC                                   Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.12   $226,469 Note and Trust Deed between         Incorporated by reference
          Penge Corp., Kirk Fischer and Monitor        to the Company's
          Finance, L.C. dated August 22, 2003 and      Registration Statement on
          Modification and Extension of Trust Deed     Form SB-2 dated October
          Note dated March 1, 2004                     25, 2004, File No.
                                                       333-119947.

  10.13   $200,000 Promissory Note between Penge       Incorporated by reference
          Corporation and Steven Sutherland dated      to the Company's
          September 27, 2002                           Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.14   $600,000 Promissory Note between Penge       Incorporated by reference
          Corporation and Roger Major and Barbara      to the Company's
          Major dated September 27, 2002               Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  10.15   Engagement Agreement between Penge Corp      Filed herewith
          and KC Holmes dated September 1, 2004

  10.16   Convertible Note Purchase Agreement among    Filed herewith
          Penge Corp., First Capital Funding LC and
          Monitor Finance LC dated March 31, 2004

  10.17   Form of Promissory Note between Penge        Filed herewith
          Corp. and Related Parties


                                     II-17




  10.18   Deed of Trust dated April 5, 2004 between    Filed herewith
          Penge Corporation and Monitor Finance,
          L.C. and First Capital Funding, L.C.

  10.19   Deed of Trust dated July 25, 2004 between    Filed herewith
          Penge Corp. and Kirk J. Fischer and
          Monitor Finance, L.C. and First Capital
          Funding, L.C.

  21.1    Subsidiary List                              Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.

  23.1    Consent of Independent Registered Public     Filed herewith
          Accounting Firm

  23.2    Consent of Stoel Rives LLP                   Included in Item 5

  24.1    Power of Attorney                            Incorporated by reference
                                                       to the Company's
                                                       Registration Statement on
                                                       Form SB-2 dated October
                                                       25, 2004, File No.
                                                       333-119947.





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