Sequiam Corporation and Subsidiaries

Notes to Consolidated Financial Statements

For the years ended December 31, 2005 and 2004

1. Summary of Business and Significant Accounting Policies

Description of Business and Acquisition

Sequiam Corporation (“Sequiam” or the “Company”) through its wholly owned subsidiaries, primarily develops, markets, and supports a portfolio of biometric fingerprint unlocking devices that enable users to gain access using their personal identity. The Company also develops, markets and supports Internet and print enterprise-wide software products that enable users to acquire, manage, personalize, and present information. In addition, the Company provides application service provider hosting of internet-enabled solutions, internet service provider services including internet access and hosting, consulting, application integration, custom web development and software development services.

The Company's operations are divided into two distinct operating segments: Safety and Security and Information Management. The Safety and Security segment includes the Company’s biometric technology products. The Information Management segment includes all non-biometric technology products.

On June 7, 2005, Sequiam acquired 100% of Constellation Biometrics Corporation (“Constellation”), a Florida corporation, effective May 31, 2005, pursuant to a stock purchase agreement. Constellation is the parent company of a wholly owned subsidiary, Biometric Security (PTY) LTD (“Biometric Security”), a South African company, engaged in the development, marketing and sale of biometric technology products. The purchase method of accounting was used to account for the acquisition. Constellation was formed in December 2004 by certain principal equity holders of Sequiam for the specific purpose of acquiring, for the benefit of Sequiam, all of the assets of Biometric Security. Constellation acquired the assets of Biometric Security in February 2005. Sequiam acquired Constellation for the technology it owns and its listing of existing products. Sequiam issued 1,635,513 shares of Sequiam common stock in exchange for all of the issued and outstanding shares of Constellation. The number of shares of Sequiam common stock issued was determined by dividing the purchase price of $175,000 by $0.107, the closing sale price of Sequiam common stock on May 31, 2005. Sequiam’s results of operations for the year ended December 31, 2005 include seven months of operations for Constellation.

The following table summarizes the estimated carrying values of the assets acquired and liabilities assumed at the date of acquisition.

Current assets	$	338,560
Property and equipment		11,463
Goodwill		79,188
Intellectual property		546,250
Total assets acquired		975,461
Current liabilities		160,461
Long-term debt		640,000
Total liabilities assumed		800,461
Net assets acquired	$	175,000

During the year ended December 31, 2005, Sequiam wrote-off $79,188 of goodwill related to the acquisition of Constellation. This amount is included as Loss on impairment of goodwill in the accompanying consolidated statements of operations.

F-7

The following unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2005 assumes the acquisition of Constellation occurred as of January 1, 2005:

Revenues	$	761,150
Net loss		(5,512,785	)
Basic and diluted net loss per common share	$	(0.09	)

A pro forma condensed consolidated statement of operations for the year ended December 31, 2004 has not been presented since Constellation was formed in December 2004 and had no activity during 2004.

Principles of Consolidation

The consolidated financial statements include the accounts of Sequiam Corporation and its subsidiaries. All intercompany transactions and accounts have been eliminated.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts based on specifically identified amounts that it believes to be uncollectible. The Company also records additional allowance based on certain percentages of its aged receivables, which are determined based on historical experience and our assessment of the general financial conditions affecting our customer base. If the Company’s actual collections experience changes, revisions to its allowance may be required. The Company has a limited number of customers with individually large amounts due at any given balance sheet date. Any unanticipated change in one of those customer's credit worthiness or other matters affecting the collectibility of amounts due from such customers, could have a material affect on the Company’s results of operations in the period in which such changes or events occur. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

Inventory

Inventory consists of raw materials and is stated at the lower of cost or market. The Company uses the first-in, first-out cost method of determining cost for its inventory. The Company evaluates its inventory balances at the end of each quarter to ensure that they are carried at the lower of cost or market.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, ranging from three to five years. Expenditures for maintenance and repairs are charged to expense as incurred. Leasehold improvements are recorded at cost. Depreciation on leasehold improvements is computed using the straight-line method over the original term of the lease.

Intangible Assets

Intangible assets determined to have a finite useful life are amortized over their respectful estimated useful lives and reviewed for impairment annually. Any recognized intangible asset determined to have an indefinite useful life will not be amortized, but instead will be tested for impairment annually.

Intangible assets are stated at cost and consist of acquired software and intellectual properties and are being amortized over their estimated useful lives of five years.

Intellectual Properties

In connection with the acquisitions of other companies, including the acquisition during 2005 of Constellation Biometrics Corporation, the Company acquired intellectual properties including patents, trademarks, technical drawings, proprietary software and other knowledge based assets that were assigned values representing the excess of the purchase price over the fair value of the tangible assets acquired. The acquired intellectual properties are being amortized over their estimated useful lives of five years. Amortization expense was $227,499 and $231,423 for the years ended December 31, 2005 and 2004, respectively. The unamortized balance of $124,400 of the intellectual property related to a 2003 acquisition was written off as an impairment loss during 2004. The unamortized balance of $154,469 related to a 2003 acquisition was writtenoff as an impairment loss during 2005.

F-8

Mandatorily Redeemable Cumulative Convertible Preferred Stock

The Company adopted the classification provisions of SFAS No. 150, Accounting for Certain Liabilities with Characteristics of both Liabilities and Equity, as of July 1, 2003. Those provisions require the Company to include the mandatorily redeemable cumulative convertible preferred stock as a liability in its balance sheet and to include the dividends on the preferred stock as a component of interest expense in its statement of operations. Accordingly, total preferred stock dividends was reported as interest expense in the statement of operations for the year ended December 31, 2005.

Product Development Costs

The Company capitalizes product development costs when the projects under development reach technological feasibility. Capitalization ends when the product is available for general release to our customers, at which time the amortization of the capitalized cost begins. Product development costs are amortized using the straight-line method over the estimated useful life of the product.

During 2005, the Company elected to cease all development efforts related to two of its Information Management segment products. All costs related to the development of these products have been expensed.

Revenue Recognition

We derive or plan to derive our revenues from five sources: (i) the sale and licensing of our biometric and software products; (ii) user fees for online Application Service Provider (“ASP”) services; (iii) consulting, custom software and web development services; (iv) maintenance agreements in connection with the sale and licensing of software products; and (v) Internet access and web hosting services. Biometric and Software license revenue will be recognized when all of the following criteria have been met: (a) there is an executed license agreement and the technology or the software has been delivered to the customer, (b) the license fee is fixed and payable within twelve months, (c) collection is deemed probable, and (d) product returns are deemed reasonably estimable. Revenues from ASP services will be recognized as the transactions are processed by the system. Maintenance revenues are recognized ratably over the term of the maintenance contract, typically 12 months. Custom software development and web development services are typically performed over a period ranging from a few days to a few weeks and revenue is recognized upon completion of the project. Consulting service revenues are recognized when services are performed. Internet access and web-hosting services are recognized over the period the services are provided, typically month-to-month. Cash received from the customers in advance of amounts earned will be deferred and recorded as a liability.

Accounting for Stock Compensation Plan

The Company has elected to account for stock-based compensation plans under an intrinsic value method that requires compensation expense to be recorded only if, on the grant date, the current market price of the Company’s common stock exceeds the exercise price the employee must pay for the stock. The Company’s policy is to grant stock options at the fair market value of the underlying stock at the date of grant.

No compensation cost has been recognized for the employee stock option plans. The following table illustrates the effect on net loss and loss per share if the fair value based method had been applied to all outstanding awards for the years ended December 31:

	2005			2004
Net loss, as reported	$	(5,430,660	)	$	(5,847,017	)
Add: stock-based employee compensation expense included in reported net loss net of related tax effects		-			-
Deduct: total stock-based employee compensation expense determined under the fair value method for all awards, net of related tax effects		-		$	(360,150	)
Pro forma net loss	$	(5,430,660	)	$	(6,207,167	)
Basic and diluted loss per common share, as reported	$	(.09	)	$	(.13	)
Basic and diluted loss per common share, pro forma	$	(.09	)	$	(.13	)

F-9

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not expected to be realized.

Net Loss Per Common Share

Basic income (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted income (loss) per common share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options, adjusted for the assumed repurchase of the Company’s common stock, at the average market price, from the exercise proceeds and also may include incremental shares issuable in connection with convertible securities. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. As of December 31, 2005 and 2004, the Company had respectively, 47,074,423 and 30,338,867 potentially dilutive common shares as a result of warrants and options granted and convertible preferred stock issued.

Comprehensive Loss

Comprehensive loss includes net loss adjusted for gains and losses from foreign currency translation adjustments.

Foreign Currency Translation

Assets and liabilities of the Company’s foreign subsidiary are translated into U.S. dollars at the applicable rate of exchange in effect at the end of the fiscal year. Revenue and expense accounts are translated at the average rate of exchange during the period and equity accounts are translated at the rate in effect when the transactions giving rise to the balances took place. Gains and losses resulting from translation are included in “Accumulated Other Comprehensive Loss.” Foreign currency transaction gains and losses are included in income.

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2005 and 2004. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, receivables, accounts payable, accrued expenses and loans from shareholders. The fair value of our long-term debt and notes payable is estimated based on the current rates offered to us for debt of similar terms, credit risk and maturities. Under this method the fair value of long-term debt was not significantly different from the stated value at December 31, 2005 and 2004.

Use of Estimates

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

F-10

Management’s Plans

As of December 31, 2005, the Company has a working capital deficit and has incurred significant losses from operations since its inception. Senior management together with other shareholders of the Company, owning approximately 74% of the outstanding shares of common stock of the Company as of December 31, 2005, has represented its positive intent and ability to fund the operations, including debt service payments, of Sequiam Corporation and Subsidiaries on an as needed basis through January 1, 2007. Furthermore, management expects a $3.1 million private placement of its series B preferred stock offering to close during April 2006. Management also expects that sales from four of its new biometric products that will begin to ship to customers in late April and May will allow the company to sustain its operations throughout 2006 and beyond.

The Company’s lack of sufficient financing to implement the Company’s business plan, and the Company’s expectation of continued operating losses for the foreseeable future raises doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is heavily dependant upon the Company’s ability to obtain additional capital to sustain operations. Although the Company is presently attempting to secure additional financing to continue the Company’s operations, there is no assurance additional capital will be available on acceptable terms, if at all.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) revised Statement of Financial Accounting Standard No. 123 “Share-Based Payment” (SFAS 123R). SFAS 123R requires Companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost will be recognized over the period during which an employee is required to provide service in exchange for the award (usually the vesting period). The grant date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available). If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification This statement is effective for the first reporting period beginning after December 15, 2005. In the opinion of management, the adoption of this statement will not have a significant impact on the Company's consolidated financial statements.

2. Property and Equipment

Property and equipment consist of the following at December 31:

	2005		2004
Leasehold improvements	$	1,465,270	$	1,465,270
Office furniture and fixtures		492,006		451,984
Computer equipment		150,749		150,749
Purchased software		213,845		192,212
		2,321,870		2,260,215
Less accumulated depreciation		1,213,615		956,458
	$	1,108,255	$	1,303,757

Depreciation expense totaled $256,170 and $234,798 during 2005 and 2004, respectively. An impairment loss of $40,706 was recognized in 2004 on this equipment held for sale. The equipment was written down to its estimated liquidation value based upon information obtained from dealers.

3. Intangible Assets

Intangible assets consist of the following as of December 31, 2005:

Amortized Intangible Assets	Weighted-average Amortization period		Gross Carrying Amount		Accumulated Amortization & Impairment Allowance		Net Carrying Amount

Intellectual properties		5	$	1,246,250	$	437,073	$	809,177

F-11

Intangible assets consist of the following as of December 31, 2004:

Amortized Intangible Assets	Weighted-average Amortization period		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Acquired software		5		288,000		124,800		163,200
Intellectual properties		5		1,112,718		467,822		644,896
			$	1,400,718	$	592,622	$	808,096

Amortization expense related to software development costs was $27,228 for the year ended December 31, 2004. The unamortized balance of $81,682 was written-off as an impairment loss during 2004.

In connection with the acquisition of Access Orlando, the Company acquired Internet Remote Print software that was assigned a value of $288,000, representing the excess of the purchase price over the fair value of the tangible assets acquired. The acquired software was being amortized over its estimated useful life of five years. Amortization expense was $57,600 and $67,200 for the years ended December 31, 2005 and 2004, respectively. The unamortized balance of $105,600 was written off as an impairment loss during 2005.

Amortization expense totaled $285,099 and $325,851 during 2005 and 2004, respectively.

The estimated future amortization expense for each of the five succeeding years is as follows:

	Year ending December 31,
2006	$	249,250
2007		249,250
2008		155,906
2009		109,250
2010		45,521
	$	809,177

4. Notes Payable and Long-Term Debt

On March 5, 2003 Sequiam issued to La Jolla Cove Investors, Inc. (“LJCI”), an 8% Convertible Debenture in the principal amount of $300,000 and a warrant to purchase 2,000,000 shares of our common stock at $1.50 per share (the “Initial Financing”). Sequiam received a total of $150,000 of the principal amount of the debenture, representing the balance due at December 31, 2003.

In connection with the debenture and the warrant, Sequiam was required to register the resale of common stock to be issued to LJCI upon conversion of the debenture and exercise of the warrant. To meet this obligation, Sequiam filed a registration statement on April 27, 2003, an amended registration statement on May 7, 2003, and a second amended registration statement on June 23, 2003, all of which were withdrawn on September 5, 2003, prior to being declared effective.

Effective as of January 29, 2004, the Company entered into an Agreement of Accord and Satisfaction with LJCI pursuant to which LJCI agreed to accept $200,000 plus 100,000 shares of restricted common stock in accord and satisfaction of the debenture and warrant and other documents related to the Initial Financing. As a result, all of our obligations under the Initial Financing, including the obligation to file a new registration statement, have been terminated.

Pursuant to the accord and satisfaction, Sequiam issued 100,000 shares of restricted common stock to LJCI, which, had a fair market value of $51,000, based on a closing trading price of $0.51 per share on January 29, 2004. In addition, the Company delivered to LJCI a promissory note in the principal amount of $200,000 with interest in the amount of 8% per year, plus principal, due in six installments of $34,017 per month beginning February 1, 2004. The Company has paid the note in full.

F-12

Under the new agreement, LJCI has “piggy-back” registration rights, meaning Sequiam is obligated to include the resale of the 100,000 shares of restricted common stock by LJCI in any registered offering of securities the Company may make during any time that LJCI still holds such 100,000 shares. Unless the Company makes a registered offering, it has no obligation to register the resale of the 100,000 shares of restricted common stock.

On May 13, 2003, Sequiam entered into a loan agreement with Lee Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John Svenningsen, for a principal loan amount of $400,000 under a promissory note bearing interest at five percent (5%). In connection with this loan, Sequiam Corporation issued two warrants to the holder to purchase 625,000 shares of its common stock at an exercise price of $0.01 per share and 350,000 shares of its common stock at $1.00 per share. The Warrants for 625,000 shares were exercised on September 25, 2003 and the warrants for 350,000 remain outstanding and expire in May 2008. The fair value of the attached warrants exceeded the value of the proceeds received from the Note and has been recorded as a debt discount of $400,000. The payment schedule was originally tied to that of the LJCI Convertible Debenture described above. However, on January 30, 2004 the Company amended the loan agreement such that all principal and interest became due on January 30, 2005. The debt discount was originally amortized over the original estimated life of the Note of 36 months. Beginning in January 2004, the remaining unamortized debt discount was amortized over twelve months. The principal and interest were settled as part of the May 18, 2005 debt transaction discussed below.

On December 18, 2003, Sequiam entered into a loan agreement with Lee Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John Svenningsen, for a principal loan amount of $100,000 under a promissory note bearing interest at five percent (5%). In connection with this loan, Sequiam Corporation issued one warrant to the holder to purchase 200,000 shares of its common stock at an exercise price of $0.25 per share. The principal and accrued interest were paid in full during 2004.

On December 18, 2003, Sequiam entered into a loan agreement with Lee Harrison Corbin, for a principal loan amount of $50,000 under a promissory note bearing interest at five percent (5%). In connection with this loan, Sequiam Corporation issued one warrant to the holder to purchase 100,000 shares of its common stock at an exercise price of $0.25 per share. The principal and accrued interest were paid in full during 2004.

On December 26, 2003, Sequiam entered into a debenture agreement (“Debenture”) with Eagle Financial, LLC, for a principal loan amount of $150,000 under a debenture bearing interest at ten percent (10%). The principal and accrued interest were paid in full during 2004. The Debenture also provided for an unconditional equity provision whereby the Corporation issued seventy five thousand (75,000) restricted shares to the Holder as an incentive to lend. The fair value of the shares was recorded as a debt discount of $30,000.

On or about October 3, 2002, General Electric Capital Corporation (“GE”) filed a lawsuit against Brekel Group, Inc. (“Brekel”), who the Company acquired during 2002, in the Circuit Court of the 9^th Judicial Circuit in and for Orange County, located in Orlando, Florida. GE claimed that Brekel owed a deficiency balance in the amount of $93,833 for three digital copiers rented under a lease agreement. Brekel had returned possession of the copiers to GE, but Brekel disputed the claim for damages. On January 30, 2004 Brekel entered into a settlement agreement with GE by agreeing to pay $70,000 in 36 monthly installments of $1,945 without interest. The balance of the note as of December 31, 2005 is $33,055.

On February 1, 2004 Brekel entered into a settlement agreement with Precision Partners, LTD for disputed rents on a facility formerly occupied by Brekel by agreeing to pay $80,000 in 24 monthly installments of $3,510 including interest at 5%. The principal and accrued interest were paid in full during 2005.

On January 30, 2004, the Company entered into a loan agreement with Lee Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John Svenningsen, for a principal loan amount of $400,000 under a promissory note bearing interest at five percent (5%). In connection with this loan, the Company issued one warrant to the holder to purchase 800,000 shares of its common stock at an exercise price of $0.225 per share. The Warrant was exercised on January 30, 2004. The principal and interest became due on January 30, 2005. The principal and interest were settled as part of the May 18, 2005 debt transaction discussed below.

F-13

On September 7, 2004, the Company entered into an unsecured loan agreement with Eagle Funding, LLC, for a principal loan amount of $200,000 under a promissory note bearing interest at eight percent (8%). The principal became due on March 7, 2005 and the interest was due monthly. Eagle extended the term of their loan to November 7, 2005. In connection with this loan, the Company issued one warrant to the holder to purchase 400,000 shares of its common stock at an exercise price of $0.66 per share. The principal and accrued interest were paid in full during 2005.

On September 30, 2004, the Company entered into an unsecured loan agreement with Lee Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John Svenningsen, for a principal loan amount of $500,000 under a promissory note bearing interest at five percent (5%). In connection with this loan, the Company issued one warrant to the holder to purchase 1,300,000 shares of its common stock at an exercise price of $0.66 per share. The principal and interest became due on March 30, 2005. The principal and interest were settled as part of the May 18, 2005 debt transaction discussed below.

On September 30, 2004, the Company entered into an unsecured loan agreement with Lee Harrison Corbin for a principal loan amount of $75,000 under a promissory note bearing interest at five percent (5%). In connection with this loan, the Company issued one warrant to the holder to purchase 195,000 shares of its common stock at an exercise price of $0.66 per share. The principal and interest became due on March 30, 2005. On May 18, 2005 the principal of $75,000 and accrued interest of $2,363 were converted into 552,593 common shares of Sequiam Corporation at $0.14 per share. The agreement incuded piggyback registration rights for all shares and warrants owned by Mr. Corbin.

On November 19, 2004, the Company entered into an unsecured loan agreement with Walter H. Sullivan III, for a principal loan amount of $100,000 under a promissory note bearing interest at five percent (5%). In connection with this loan, the Company issued one warrant to the holder to purchase 260,000 shares of its common stock at an exercise price of $0.66 per share. The principal and interest became due on February 19, 2005. On May 11, 2005 the principal of $100,000 and accrued interest of $2,375 were converted into 731,252 common shares of Sequiam Corporation at $0.14 per share.

On December 16, 2004, the Company entered into an unsecured loan agreement with Lee Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John Svenningsen, for a principal loan amount of $50,000 under a promissory note bearing interest at five percent (5%). In connection with this loan, the Company issued one warrant to the holder to purchase 150,000 shares of its common stock at an exercise price of $0.33 per share. The principal and interest became due on January 31, 2005. The principal and interest were settled as part of the May 18, 2005 debt transaction discussed below.

On May 18, 2005, Sequiam Corporation (the “Company”) closed a debt transaction with Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen, now known as Stephen A. Ross, Attorney in-Fact for the Trust Under the Will of John Svenningsen, (the “Trust”) pursuant to which the Trust consolidated $1.35 million in existing unsecured debt owed by the Company to the Trust and provided $2.1 million in additional financing (the “Additional Financing”) for a total of $3,450,000 (the “Loan”). The Company also issued to the Trust a warrant exercisable into 6,000,000 shares of the Company’s common stock (the “Trust Warrant”). Subsequently, after the Company’s acquisition of Constellation, it consolidated into this loan a $200,000 loan from the Trust to Constellation, bringing the total Loan to $3,650,000.

In connection with the Loan: (a) the Trust delivered $1,000,000 of the Additional Financing to Laurus Master Fund, Ltd., a Cayman Islands company (“Laurus”); and (b) the Company (i) reduced the conversion price of that certain secured convertible term note, dated as of April 27, 2004, made by the Company in favor of Laurus to $0.15 per share pursuant to Rule 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”) (the “Laurus Note”), and (ii) issued a warrant to Laurus exercisable into 1,500,000 shares of the Company’s common stock at an exercise price of $0.23 per share (the “Laurus Warrant”) (the “Payoff Consideration”). In return for receiving the Payoff Consideration, Laurus, the Trust and the Borrower entered into that certain Assignment, Assumption and Release, dated as of May 18, 2005, pursuant to which, Laurus assigned (the “Assignment”) all of its rights, liabilities and obligations under the Laurus Note, and all documents related thereto (collectively with the Laurus Note, the “Laurus Loan Documents”), to the Trust. In addition, Laurus released the Company from all liability whatsoever under the Laurus Loan Documents, except for any terms therein which may survive the assignment.

F-14

In the 2005 consolidated statements of operations, the fair value of the Laurus Warrant of $277,000 has been netted against the write-off of accounts payable of $315,428 to arrive at a net gain on extinguishment of debt of $38,428.

The $3,650,000 promissory note issued to the Trust (the “Trust Note”) has a term of two years. Eight percent (8%) interest is payable monthly in arrears commencing on November 10, 2005, and on the first day of each consecutive calendar month thereafter. Monthly amortization payments shall commence on May 10, 2006, at the rate of $75,000. The trust Note is collateralized by all of the Company’s assets and contains certain non-financial covenants.

In connection with the Loan, the Trust received the Trust Warrant to purchase up to 6,000,000 shares of the Company’s common stock at prices ranging from $0.20 per share to $0.30 per share. All stock conversion prices and exercise prices are subject to adjustment for stock splits, stock dividends or similar events. The Company also agreed to file a registration statement with the U.S. Securities and Exchange Commission covering the shares issuable upon the exercise of the Trust Warrant and the Laurus Warrant.

As of December 31, 2005, the Trust holds 2,028,388 common shares of the Company, or 3.1% of the total outstanding common shares. As of December 31, 2005, on a fully diluted basis, the Trust holds 10,028,388 common shares of the Company, or 9.0% of the total fully diluted common shares.

Of the Loan amount, the Company received approximately $1.1 million in cash after payment to Laurus of $1,000,000 toward reduction of the Laurus Note (described above). The remaining principal balance of the Laurus Note after such payment was $818,182, which balance was converted into 5,454,547 shares of common stock by Laurus at the reduced conversion rate of $0.15 per share.

If we default on the Loan and the Trust demands all payments due and payable, we will be required to pay 130% of the outstanding principal amount of the note and any accrued interest. The cash required to pay those amounts will most likely come out of our working capital. Since we rely on our working capital for our day-to-day operations, a default on the note could have a serious and adverse effect on our business, operating results and financial condition to such an extent that we are forced to restructure, sell some of our assets or curtail our operations, any of which would have a detrimental effect on the value of our common stock.

In the Company’s opinion, the issuance and sale of the Trust Warrant and the Laurus Warrant described above was exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act. The Trust and Laurus are accredited investors. The securities are not subject to resale except pursuant to registration under the Securities Act or pursuant to an available exemption from registration under the Securities Act. The Trust and Laurus had an opportunity to ask management questions about the Company and had adequate access to information about the Company. No sales of securities involved the use of an underwriter and no commissions were paid in connection with the issuance or sale of any securities.

The principal documents involved in the transaction are a Securities Purchase Agreement, an Amended and Restated Master Security Agreement, an Amended, Restated and Consolidated Senior Secured Term Note, a Common Stock Purchase Warrant issued to the Trust, a Common Stock Purchase Warrant issued to Laurus, a Registration Rights Agreement, an Amended and Restated Stock Pledge Agreement, an Amended and Restated Grant of Security Interest in Patents and Trademarks for the Company and certain of its subsidiaries, a Subsidiary Guaranty, a Subordination Agreement from Mark Mroczkowski and Nick VandenBrekel to the Trust, a Subordination Agreement from Eagle Funding, LLC to the Trust, and an Assignment, Assumption and Release, each of which is dated as of May 18, 2005.

In April 2004, the company entered into a $1.6 million note payable agreement with EastGroup Properties, LP (‘EastGroup”). The $1.6 million represented $893,112 of deferred rent expense and $706,888 of tenant improvements. Beginning August 1, 2004 and continuing on the first day of each month thereafter through and including June 1, 2010, the Company was scheduled to make payments consisting of principal and interest of $26,517. The note payable bears interest at six percent per annum. On May 17, 2005, EastGroup agreed to an additional six month deferment of the Company’s payments until December 1, 2005, contingent upon the payment of April and May 2005 prior to May 31, 2005, and that all rental payments through December 2005 were kept current. EastGroup also agreed to extend the note payable by twelve months to represent the twelve total deferred payments from December 2004 to November 2005.

F-15

On February 28, 2005 as part of the acquisition of Biometric Security (PTY) LTD, Constellation Biometrics Corporation entered into a note payable with Aregee Investments No. 105 for $440,000 payable in quarterly payments of $55,000 without interest. The note matures on April 1, 2007 and is collateralized by all the assets of Biometric Security (PTY) LTD.

The preceding information is summarized as follows at December 31, 2005:

	Face			Debt			Carrying
Included in Notes payable:	Amount			Discount			Amount
Note payable - GE		33,055			-			33,055

Included in Long-term debt:
EastGroup Properties, LP		1,525,376			-			1,525,376
Svenningsen Trust		3,650,000			(583,949	)		3,066,051
Aregee Investments No. 105		330,000			-			330,000
Total		5,505,376			(583,949	)		4,921,427
Less Current Portion		(1,053,016	)		-			(1,053,016	)
		4,452,360			(583,949	)		3,868,411

The preceding information is summarized as follows at December 31, 2004:

	Face			Debt			Carrying
Included in Notes payable:	Amount			Discount			Amount
Notes payable - Precision	$	47,634					$	47,634
Note payable - GE		50,556						50,556
Promissory note - Lee Harrison Corbin-Trustee for John Svenningsen		400,000			-			400,000
Promissory note - Lee Harrison Corbin-Trustee for John Svenningsen		400,000			-			400,000
Promissory note - Eagle Funding, LLC		200,000			(24,018	)		175,982
Promissory note - Lee Harrison Corbin-Trustee for John Svenningsen		500,000			(71,342	)		428,658
Promissory note - Lee Harrison Corbin		75,000			(10,701	)		64,299
Promissory note - Walter Sullivan		100,000			(15,272	)		84,728
Promissory note - Lee Harrison Corbin-Trustee for John Svenningsen		50,000			(9,780	)		40,220
	$	1,823,190		$	(131,113	)	$	1,692,077

Included in Long-term debt:
EastGroup Properties, LP		1,525,376			-			1,525,376
Laurus Master Fund, Ltd.		1,818,182			(201,520	)		1,616,662
Total		3,343,558			(201,520	)		3,142,038
Less Current Portion		(840,245	)		-			(840,245	)
		2,503,313			(201,520	)		2,301,793

F-16

The maturities of long-term debt as of December 31, 2005 are as follows:

2006	$	1,053,016
2007		3,407,387
2008		262,646
2009		278,845
2010		296,044
Thereafter		207,438
	$	5,505,376

5. Loans From Shareholders

On February 1, 2002, Mark Mroczkowski, the Chief Financial Officer and a shareholder of the Company, loaned the Company $50,000. On February 15, 2005 his wife Cynthia Mroczkowski loaned the Company $50,000. Interest is payable at 6%. As of December 31, 2005 and 2004, the balance due under these loans was $100,000 and $50,000, respectively, payable on demand together with accrued interest of $8,500 and $2,750, respectively.

Nicholas VandenBrekel, the President and Chief Executive Officer and majority shareholder of the Company, has advanced money to the Company under demand notes. At December 31, 2005 and 2004, the Company owed $361,648 and $271,650 on these notes, plus accrued interest of $31,370 and $24,106, respectively. The notes bear interest at 2% per annum and are due on demand.

Alan McGinn, the Chief Technology Officer and a shareholder of the Company, has advanced money to the Company. At December 31, 2005 and 2004, the Company owed $12,000 without interest or specific repayment terms.

A shareholder not employed by the Company advanced $75,000 to the Company on March 1, 2002. The terms of the demand note included interest payable at 6% and a right to convert the note to common stock at $1.00 per share. At December 31, 2004 the outstanding principal balance was $15,301. The note was repaid in full during 2005.

6. Mandatorily Redeemable Cumulative Convertible Preferred Stock

On November 30, 2005, the Company closed a preferred stock transaction with seven institutional investors, collectively the purchasers (“Purchasers”) pursuant to which the Company issued 1,575 shares of its Series A preferred stock, par value $0.001 per share (the “Preferred Stock”) with a stated per share value of $1,000 for total proceeds of $1,575,000 (the “Offering”). The Company also issued to the Purchasers a warrant exercisable into 7,500,000 shares of the Company’s common stock (the “Warrants”).

The Preferred Stock is non-voting and entitles the Purchasers to receive a 9% cumulative dividend payable semiannually. The Preferred Stock is convertible into 7,500,000 shares of the Company’s common stock at a fixed price of $0.21 per share.

On November 30, 2008, the Company shall redeem all of the then outstanding Preferred Stock, for an amount in cash equal to the sum of (1) 100% of the aggregate stated value then outstanding, (2) accrued but unpaid dividends and (3) all liquidated damages and other amounts due in respect of the Preferred Stock.

In connection with the Offering, the Purchasers received Warrants to purchase up to an aggregate of 7,500,000 shares of the Company’s common stock at $0.33 per share. All stock conversion prices and exercise prices are subject to adjustment for stock splits, stock dividends or similar events. The Company also agreed to file a registration statement with the U.S. Securities and Exchange Commission covering the shares issuable upon the conversion of the Preferred Stock and exercise of the Warrant.

F-17

In the Company’s opinion, the issuance and sale of the Preferred Stock and the Warrants were exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act. The Purchasers are accredited investors. The securities are not subject to resale except pursuant to registration under the Securities Act or pursuant to an available exemption from registration under the Securities Act. The Purchasers had an opportunity to ask management questions about the Company and had adequate access to information about the Company. No sales of securities involved the use of an underwriter and no commissions were paid in connection with the issuance or sale of any securities.

The principal documents involved in the transaction were a Securities Purchase Agreement, a certificate of Determination of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, a Registration Rights Agreement, a Common Stock Purchase Warrant, and an Escrow Deposit Agreement, each of which is dated as of November 30, 2005.

As a result of the issuance of the Warrant, a preferred stock discount of $1,004,625 was recorded and will be amortized over the life of the preferred stock, which is three years. Also, as a result of the Preferred Stock transaction, a preferred stock conversion feature of $570,375 and loan costs of $260,326 were recorded.

The preceding information is summarized as follows at December 31, 2005:

	Face		Debt			Carrying
	Amount		Discount			Amount

Mandatorily redeemable cumulative convertible preferred stock	$	1,575,000		(976,719	)	$	598,281

7. Income Taxes

The Company has estimated net operating loss carryforwards (“NOLs”) for federal income tax purposes of approximately $24,322,000 at December 31, 2005. These net operating losses can be carried forward and applied against future taxable income, if any, and expire in the years 2020 through 2025. However, as a result of certain acquisitions, the use of these NOLs may be limited under the provisions of section 382 of the Internal Revenue Code. Treasury Regulation 1.1502-21 regarding separate return limitation years may further limit these NOLs.

The following is a reconciliation of income taxes at the federal statutory rate of 34% to the provision for income taxes as reported in the accompanying consolidated statements of operations. The temporary differences between net income and taxable income result primarily from the accrual of officers’ salaries of $1,539,792 and $1,349,792, as of December 31, 2005 and 2004, respectively, that are expensed in the financial statements, but are not deductible for tax purposes until paid:

	Years ended December 31,
	2005			2004
Income tax benefit computed at the federal statutory rate	$	(1,846,500	)	$	(1,988,100	)
Deferred tax asset, NOL acquired from Brekel		-			630,800
Adjustment of NOLs		(696,800	)		-
State income tax benefit, net of federal benefit		(196,800	)		(144,800	)
Other		3,200			-
Increase in valuation allowance		2,736,900			1,502,100
Income tax expense (benefit)	$	-		$	-

The components of the deferred income tax asset are as follows at December 31,

Deferred tax assets:	2005			2004
Accrued salaries	$	614,500		$	603,100
Other		1,000			-
Net operating loss carryforward		9,152,200			6,427,700
Valuation allowance		(9,767,700	)		(7,030,800	)
Net deferred tax assets	$	-		$	-

Valuation allowances are provided against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has evaluated the realizability of the deferred tax assets on its balance sheets and has established a valuation allowance in the amount of $9,767,700 and $7,030,800 against its net deferred tax assets at December 31, 2005 and 2004, respectively. The valuation allowance increased $2,736,900 and $1,502,100 during the years ended December 31, 2005 and 2004, respectively.

F-18

8. Lease Agreements

Prior to the Company’s acquisition of the Brekel Group, Inc., effective July 1, 2001, the Brekel Group, Inc. entered into an operating lease agreement to rent approximately 60,000 square feet of combined office and manufacturing space through June 30, 2011. Because the Company determined to cease Brekel’s print and publishing operations before it was acquired, effective July 1, 2002, Brekel entered into a lease forbearance agreement for 10,000 square feet of the same space for the remaining term of the lease. In April 2004, the Company entered into a new lease agreement with the landlord that supercedes and replaces the lease forbearance agreement entered into by the Brekel Group, Inc. effective July 1, 2002 prior to its acquisition by the Company. The new lease for 24,085 square feet is for a period of seventy-two months beginning July 1, 2004 and ending on June 30, 2010.

During the year ended December 31, 2005, the Company entered into an operating lease agreement to rent office space through October 31, 2008 for approximately $1,100 per month. This space is used by the Company’s office located in South Africa.

Rental expense for the years ended December 31, 2005 and 2004 was $213,147 and $186,021, respectively. The new minimum future rentals required under the operating lease are as follows:

Year	Rentals
2006	$	220,307
2007		224,527
2008		226,598
2009		219,753
2010		110,999
	$	1,002,184

9. Shareholders’ Deficit

During the year ended December 31, 2005, the Company issued 4,293,238 and 2,373,772 common shares for business advisory and marketing services and payroll valued at $690,622 and $344,536, respectively based on the Company’s quoted market price on the date of the related agreements.

During the year ended December 31, 2005, the Company sold an aggregate of 537,358 shares of its common stock to two investors at an average price of $0.20 per share for net proceeds of $109,297.

During 2005, Laurus exercised warrants to purchase 914,444 shares of the Company’s common stock at prices ranging from $0.33 to $0.50 per share.

10. Employee Stock Incentive Plan

On September 23, 2003 Sequiam executed the Sequiam Corporation 2003 Employee Stock Incentive Plan and the Sequiam Corporation 2003 Non-Employee Directors And Consultants Stock Plan. This Stock Incentive Plan is intended to allow designated officers, directors (including non-employee directors), employees and certain non-employees, including any independent contractor or consultant providing services to the Company and its Subsidiaries to receive certain options (the “Stock Options”) to purchase Sequiam common stock, par value $0.001 per share, and to receive grants of the Common Stock subject to certain restrictions (the “Awards”). The maximum number of shares of the Common Stock that may be issued pursuant to these plans shall be 14,000,000 and 1,000,000, respectively at December 31, 2005.

F-19

The Company may grant Stock Options in such amounts, at such times, and to the Employees nominated by the management of the Company in its discretion. Stock Options granted under this Plan shall constitute “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986 as amended.

The purchase price (the “Exercise Price”) of shares of the Common Stock subject to each Stock Option shall be the Fair Market Value of the Common Stock on the date the Stock Option is granted; provided, however, for designated non-statutory stock options, the Board of Directors may determine an Exercise Price at, above or below Fair Market Value. For an Employee holding greater than 10 percent of the total voting power of all stock of the Company, either common or preferred, the Exercise Price of an incentive stock option shall be at least 110 percent of the Fair Market Value of the Common Stock on the date of the grant of the option.

The Stock Option term will begin on the date of grant of the Stock Option and shall be 10 years or such shorter period as is determined by the Company.

On April 1, 2004 and July 26, 2004 the Company granted options for 2,000,000 and 300,000 shares to two employees at exercise prices of $0.70 and $0.33, the fair market value of the stock on those dates, respectively. These options were canceled during 2005.

	2005					2004
	Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding beginning of year		11,723,000		$	0.278		9,660,500		$	0.186
Granted		-0-			-0-		2,300,000		$	0.652
Exercised		-0-			-0-		(237,500	)	$	0.170
Canceled		(2,300,000	)	$	0.652		-0-			-0-
Outstanding end of year		9,423,000		$	0.186		11,723,000		$	0.278

Exercisable at December 31		9,423,000		$	0.186		9,423,000		$	0.186

Available for grant at December 31		5,577,000					3,277,000

The following table summarizes the stock options outstanding and exercisable at December 31, 2005:

	Outstanding			Exercisable
Exercise Price	Number of Options	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price	Number of Options	Weighted- Average Exercise Price
$0.186	9,423,000	8 Years	$0.186	9,423,000	$0.186

The fair value of options granted during 2004 was calculated utilizing the following weighted-average assumptions: no dividend yield; expected volatility of 200.0%; risk-free interest rate of 3.91%; and expected lives of 10 years. The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. As of December 31, 2005 and 2004, no stock options had been granted under the Sequiam Corporation 2003 Non-Employee Directors and Consultants Stock Plan.

F-20

11. Commitments and Contingencies

On October 1, 2002, the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) entered into amended and restated employment agreements with Sequiam Corporation and its Subsidiaries. The amended agreements replace separate agreements with Sequiam, Inc. and Brekel Group, Inc. The agreements have an initial term of two years with automatic one-year renewals. The agreements provide for compensation in the form of minimum annual salary of $195,000 and $185,000 respectively, and allow for bonuses in cash, stock or stock options and participation in Company benefit plans. Full-time employment is a requirement of the contract. In the event that a change in control of the Company occurs without the prior approval of the then existing Board of Directors, these contracts will be deemed terminated and compensation of $5 million each is payable at termination, and $1 million annually for five years subsequent to termination will be due and payable to the CEO and CFO. For the years ended December 31, 2005 and 2004, Sequiam accrued and did not pay the minimum annual salaries payable to the CEO and CFO. In the event of such a change in control, each officer would receive a lump sum payment of $5,000,000, plus $1,000,000 each year thereafter for five years, for a total of $10,000,000 per person.

On November 1, 2002, the Company’s Chief Technology Officer (“CTO”) entered into an employment agreement with Sequiam Software. The agreement has an initial term of two years with automatic one-year renewals. The agreement provides for compensation in the form of minimum annual salary of $75,000 and allows for bonuses in cash, stock or stock options and participation in Company benefit plans. Full-time employment is a requirement of the contract.

On March 1, 2005, the President of two of the Company’s subsidiaries entered into employment agreements with Sequiam Biometrics, Inc. and Constellation Biometrics Corp. The agreements have an initial term of two years. The agreements provide for compensation in the form of minimum annual salary of $36,000 and $60,000, respectively and allow for bonuses in cash, stock or stock options and participation in Company benefit plans. Full-time employment is a requirement of the contracts.

Brekel entered into a note payable with Xerox Corporation in November 2000 to finance equipment. Brekel also entered into a Document Services Agreement (“Agreement”) with Xerox Corporation (“Xerox”) on November 1, 1999 commencing April 1, 2000. During the 63-month term of the Agreement ending June 30, 2005, Xerox agreed to provide equipment and services in accordance with specified performance standards. Those standards include, among other things, a performance satisfaction guaranty by Xerox. Under the terms of that guaranty, Brekel may terminate the agreement without incurring any early termination charges. Brekel gave proper notice of such termination in March 2001. On September 3, 2002 Xerox did, contrary to the contract, assert its claim for early termination charges and for monthly minimum service charges on billings made after the termination date. Xerox had taken no action since its September 3, 2002 demand letter until June 29, 2004, when Xerox Corporation filed a lawsuit in the Circuit Court in and for Pinellas County State of Florida. The claim amount in controversy is approximately $1,574,000. The Company disputes these claims and believes them to be without merit. Because this matter is in very preliminary stages, management is unable to determine the likelihood of an unfavorable outcome and, accordingly, has not accrued any amount for potential losses in connection with this lawsuit.

On December 21, 2004, the Company entered into a Letter Agreement with Chapman Spira & Carson, LLC (“Chapman”), pursuant to which Chapman agreed to provide various consulting, investment banking and business development services for the Company. On or about September 28, 2005, Chapman filed a complaint in United States District Court for the Southern District of New York, asserting claims for breach of contract and unjust enrichment. Chapman alleges that, notwithstanding its purported provision of services under the Letter Agreement between it and the Company, the Company failed to properly compensate Chapman for those services. The Company claims that none of those services were actually provided by Chapman. Chapman is seeking compensatory damages of $1,019,060, costs, including attorney's fees, 500,000 shares of common stock and a warrant to purchase 6,195,000 shares of stock at $0.26 per share. The Company believes that Chapman's claims are without merit and intends to vigorously defend itself against these allegations.

The Company currently operates without directors’ and officers’ insurance and is at risk for those types of losses.

F-21

12. Supplemental Cash Flow Information

	Year ended December 31,
	2005		2004
Supplemental cash flow information:
Cash paid for interest	$	107,159	$	124,358

Non-cash investing and financing activities:

Accounts payable converted to notes payable		-	$	150,000
Leasehold improvements financed		-	$	338,501
Refinance notes payable	$	1,350,000		-
Notes payable and long-term debt converted to common stock	$	997,780		-
Discount on debt	$	849,380	$	1,216,868
Discount on mandatorily redeemable preferred stock	$	1,004,625		-
Loan costs unpaid at end of year	$	51,704		-
Loan costs paid with warrants		-	$	49,333
Common shares issued for acquisition of Telepartners, Inc. assets and liabilities assumed		-	$	15,068
Common shares issued for acquisition of Constellation Biometrics Corporation	$	175,000		-

13. Operating Segments

Pursuant to FAS 131, the Company defines an operating segment as:

A business activity from which the Company may earn revenue and incur expenses;
Whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and
For which discrete financial information is available.

Sequiam has two operating segments, which are defined as each business line that it operates. This however, excludes corporate headquarters, which does not generate revenue.

Our operating segments are defined as follows:

The Information Management segment provides interactive web-based technologies, as well as ASP, ISP and other customer web development and software development services.

The Safety and Security segment provides fingerprint biometric access control systems technology and fingerprint identification technology.

The table below presents certain financial information by business segment for the year ended December 31, 2005.

	Information Management			Safety and Security			Segments Total			Corporate			Consolidated Total
Revenue from external customers (2)	$	386,141		$	239,779			625,920		$	-			625,920
Interest expense		114			-			114			(1,732,558	)		(1,732,444	)
Depreciation and amortization		294,638			246,631			541,269			-			541,269
Segment loss		(678,561	)		(1,344,164	)		(2,022,725	)		(3,407,935	)		(5,430,660	)
Segment assets (1) (2)		421,072			1,340,394			1,761,466			1,731,956			3,493,422

F-22

The table below presents certain financial information by business segment for the year ended December 31, 2004.

	Information Management			Safety and Security			Segments Total			Corporate			Consolidated Total
Revenue from external customers	$	165,729		$	99,765		$	265,494		$	-		$	265,494
Interest expense		(61,154	)		-			(61,154	)		(1,288,682	)		(1,349,836	)
Depreciation and amortization		353,241			207,408			560,649			71,331			631,980
Segment loss		(2,486,939	)		(409,682	)		(2,896,621	)		(2,950,396	)		(5,847,017	)
Segment assets (1)		1,403,164			469,470			1,872,634			643,021			2,515,655

(1) Segment assets have been adjusted for intercompany accounts to reflect actual assets for each segment.

(2) Revenue of $154,661 and assets of $109,711 were attributable to Biometric Security (Pty) Ltd., a subsidiary of Constellation Biometrics Corporation, whose operations are located in South Africa. Constellation Biometrics Corporation is a subsidiary of the Company.

14. Recent Events (Unaudited)

Series B Transaction

On May 17, 2006, we closed a preferred stock transaction with seventeen institutional and accredited investors, pursuant to which we issued 2,725 shares of our Series B preferred stock, par value $0.001 per share with a stated per share value of $1,000 for total proceeds of $2,725,000. On June 21, 2006, we issues another 237.5 shares of Series B preferred stock , par value $0.001 per share with a stated per share value of $1,000 for total proceeds of $237,500.

The Series B preferred stock is non-voting and entitles the purchasers to receive a 10% cumulative dividend payable annually and upon the conversion of any Series B preferred stock. The Series B preferred stock is convertible into an aggregate of 14,107,142 of our common shares at a fixed price of $0.21 per share.

In connection with the Series B financing, the purchasers received warrants to purchase up to an aggregate of 14,107,142 shares of our common stock at $0.30 per share. We paid a commission of $273,750 to our placement agent in connection with the Series B financing and agreed to issue warrants, with the same terms and conditions of the Series B warrants, to our placement agent and certain of its designees exercisable into an aggregate of 2,539,285 shares at an exercise price of $0.30 per share. All stock conversion prices and exercise prices are subject to adjustment for stock splits, stock dividends or similar events. We also agreed to file a registration statement with the U.S. Securities and Exchange Commission covering the shares issuable upon the conversion of the Series B preferred stock and exercise of the Series B warrants and the warrants issued to the placement agent and its designees.

The Series B transaction, together with projected cash from operations, should be sufficient to sustain our operations until the sales from our products increase to a level during 2006 where they are sufficient enough to sustain our operations.

F-23

Restricted Shares

Effective May 17, 2006, we entered into two Restricted Stock Agreements with Nicholas VandenBrekel and Mark Mroczkowski, our CEO and CFO, respectively. The purpose of the agreements is to convert accrued salaries and interest owed to the officers into restricted common shares.

In consideration of accrued and unpaid salary of $799,690 owed to Nicholas VandenBrekel and $740,102 owed to Mark Mroczkowski under the terms of their Amended and Restated Employment Agreements, together with interest thereon in the amount of $116,384 and $108,002, respectively we shall issue 3,664,296 shares and 3,392,416 shares to them, based on the conversion price of $0.25 per share of the our common stock, par value $0.001 per share, in their names subject to certain restrictions.

Both Nicholas VandenBrekel and Mark Mroczkowski accept the restricted shares subject to the following restrictions:

(a) Forfeiture Restrictions. The restricted shares may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of to the extent then subject to the forfeiture restrictions, and in the event of termination of such employee's employment with us, such employee shall, for no consideration, forfeit to us all restricted shares to the extent then subject to the forfeiture restrictions. The forfeiture restrictions shall be binding upon and enforceable against any transferee of restricted shares.

(b) Lapse of Forfeiture Restrictions. The forfeiture restrictions shall lapse as to the restricted shares on November 17, 2007 provided that such Employee has been continuously employed by us until November 17, 2007.

Restated Promissory Notes

On May 17, 2006, we entered into Amended and Restated Promissory Notes with Nicholas VandenBrekel and Mark Mroczkowski for $361,000.00 and $50,000.00, respectively. Each note is for a term of eighteen months, bears interest at 6% and replaces demand notes previously issued in 2002 for the same amounts.

F-24

Sequiam Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

	September 30, 2006			December 31, 2005
	(Unaudited)
Assets
Current assets:
Cash	$	25,759		$	763,197
Receivables, net		213,004			180,892
Inventory		857,982			78,531
Total current assets		1,096,745			1,022,620
Property and equipment, net		991,706			1,108,255
Intellectual properties, net		622,238			809,177
Product development costs		352,091			174,130
Loan costs, net		-			253,098
Receivables		-			75,000
Deposits and other assets		141,737			51,142
Total assets	$	3,204,517		$	3,493,422

Liabilities and shareholders’ deficit
Current liabilities:
Notes payable	$	-		$	33,055
Accounts payable		805,967			295,989
Accrued expenses		593,633			528,496
Deferred revenue		43,000			-
Deferred rents		36,735			37,231
Current portion of long-term debt		3,678,899			1,053,016
Loans from shareholders		62,000			473,648
Accrued shareholders’ salaries		-			1,539,792
Total current liabilities		5,220,234			3,961,227
Long-term debt		925,649			3,868,411
Loans from shareholders		411,000			-
Mandatorily redeemable cumulative convertible preferred stock		-			598,281
Total liabilities		6,556,883			8,427,919
Shareholders’ deficit:
Preferred shares		108,921			-
Common shares		80,402			64,458
Additional paid-in capital		20,873,286			12,883,563
Accumulated deficit		(24,421,570	)		(17,879,518	)
Accumulated other comprehensive income (loss)		6,595			(3,000	)
Total shareholders’ deficit		(3,352,366	)		(4,934,497	)
Total liabilities and shareholders’ deficit	$	3,204,517		$	3,493,422

See accompanying notes to condensed consolidated financial statements.

F-25

Sequiam Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2006			2005			2006			2005

Revenues
Services	$	28,198		$	206,143		$	85,909		$	368,747
Product sales		232,371			116,700			442,565			152,472

Total revenues		260,569			322,843			528,474			521,219

Costs and expenses:
Cost of services		27,221			154,577			82,292			450,928
Cost of product sales		254,714			130,164			512,873			234,922
Selling, general and administrative		674,434			511,488			2,678,292			2,321,548
Gain on sale of equipment		-			-			(5,000	)		(370	)
Loss on impairment of intellectual properties		-			154,469			-			154,469
Gain on restructuring of debt		-			-			(13,055	)		-
Loss on settlement of lawsuit		-			-			200,000			-
		956,369			950,698			3,455,402			3,161,497

Loss from operations		(695,800	)		(627,855	)		(2,926,928	)		(2,640,278	)

Interest expense		(846,927	)		(181,985	)		(2,320,012	)		(901,359	)

Net loss		(1,542,727	)		(809,840	)		(5,246,940	)		(3,541,637	)
Preferred stock dividends		(74,671	)		-			(108,918	)		-
Net loss applicable to common stock	$	(1,617,398	)	$	(809,840	)	$	(5,355,858	)	$	(3,541,637	)
Net loss per common share:
Basic and diluted	$	(0.02	)	$	(0.01	)	$	(0.08	)	$	(0.06	)

Shares used in computation of net loss per common share - Basic and diluted weighted average shares outstanding		77,176,832			62,337,353			70,668,864			55,823,443

See accompanying notes to condensed consolidated financial statements

F-26

Sequiam Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine months ended September 30,
	2006			2005
Cash flows from operating activities:
Net loss	$	(5,246,940	)	$	(3,541,637	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization		390,936			390,361
Accretion of debt discount		1,503,378			485,228
Amortization of loan costs		253,098			224,252
Amortization of product development costs		14,539			-
Issuance of common stock in exchange for services and interest		314,710			520,622
Issuance of common stock in exchange for salaries		282,269			344,536
Issuance of stock options to employees		34,246			-
Gain on sale of equipment		(5,000	)		-
Loss on impairment of intellectual properties		-			154,469
Gain on restructuring of debt		(13,055	)		-
(Increase) decrease in receivables		20,756			(140,952	)
Increase in allowance for bad debts		22,132			-
Increase in inventory		(779,451	)		-
(Increase) decrease in prepaid expenses, deposits and other assets		(90,595	)		70,122
Decrease in bank overdraft		-			(24,165	)
Increase (decrease) in deferred revenue		43,000			(6,000	)
Increase (decrease) in accounts payable		509,978			(162,626	)
Increase in accrued expenses		65,137			180,331
Increase (decrease) in deferred rents		(496	)		10,929
Increase in accrued shareholders’ salaries		-			170,000
Net cash used for operating activities		(2,681,358	)		(1,324,530	)

Cash flows from investing activities:
Proceeds from sale of equipment		5,000			-
Equipment purchases		(87,448	)		(288	)
Purchase of intellectual properties		-			(650	)
Product development costs capitalized		(192,500	)		(158,308	)
Net cash used for investing activities		(274,948	)		(159,246	)

Cash flows from financing activities:
Proceeds from sale of common stock and exercise of warrants		250,000			436,619
Proceeds from sale of preferred stock		2,962,500			-
Payment of stock issuance costs		(347,181	)		-
Repayment of notes payable		(20,000	)		(47,804	)
Proceeds from long-term debt		-			2,100,000
Repayment of long-term debt		(635,398	)		(1,055,000	)
Proceeds from shareholder loans		-			366,761
Repayment of shareholder loans		(648	)		(14,501	)
Net cash provided by financing activities		2,209,273			1,786,075
Effect of exchange rate changes on cash		9,595			-

Net increase (decrease) in cash		(737,438	)		302,299
Cash, beginning of period		763,197			-
Cash, end of period	$	25,759		$	302,299

See accompanying notes to condensed consolidated financial statements.

F-27

California	73723	33-0875030
(State or jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

Title of each class of securities to be registered	Amount being registered ^{(1) (2)}			Proposed maximum offering price per share			Proposed maximum aggregate offering price		Amount of registration fee
Common Stock, par value $.001 per share		14,706,114 shares	⁽³⁾	$	0.21	⁽³⁾	$	3,088,283.94	$	330.45
Total		14,706,114 shares					$	3,088,283.94	$	330.45

Number of shares that may be issued upon conversion
of outstanding Series B preferred stock	14,706,114 shares (1)

Total shares offered	14,706,114 shares

Common stock outstanding	81,344,488 shares (2)

Use of proceeds	We will receive none of the proceeds from the sale of the shares by the selling stockholders, except upon exercise of the common stock purchase warrants.

OTC Bulletin Board symbol	SQUM.OB

Risk Factors	This securities offering involves a high degree of risk. See “Risk Factors” on page 4.

	Market Prices
	2004				2005				2006
Quarter	High		Low		High		Low		High		Low
First quarter	$	0.85	$	0.30	$	0.30	$	0.12	$	0.41	$	0.25
Second quarter		0.74		0.27		0.29		0.06	$	0.32	$	0.20
Third quarter		0.54		0.22		0.77		0.06	$	0.32	$	0.17
Fourth quarter		0.44		0.23		0.53		0.23		_____		_____

Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the second column)
Equity compensation plans approved by security holders (1)		9,885,500	$	0.186		5,114,500
Equity compensation plans not approved by security holders		0		0		0
Total		9,885,500	$	0.186		5,114,500

SUMMARY	1
RISK FACTORS	4
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	13
WHERE YOU CAN FIND MORE INFORMATION	13
USE OF PROCEEDS	13
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS	13
MANAGEMENT’S DISCUSSION AND ANALYSIS	15
BUSINESS	26
MANAGEMENT	41
STOCK OWNERSHIP	45
ORGANIZATION WITHIN LAST FIVE YEARS	45
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	45
PRINCIPAL AND SELLING STOCKHOLDERS	48
PLAN OF DISTRIBUTION	55
DESCRIPTION OF SECURITIES	57
LEGAL MATTERS	60
EXPERTS	60
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	61
Index to Consolidated Financial Statements	F-1
Report of Independent Registered Certified Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Shareholders' Deficit	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7
Condensed Consolidated Balance Sheets	F-25
Condensed Consolidated Statements of Operations	F-26
Condensed Consolidated Statements of Cash Flows	F-27
Notes to Condensed Consolidated Financial Statements	F-29

Period	Safety and Security		Information Management

Fiscal year ended December 31, 2004	$	99,765	$	165,729
Fiscal year ended December 31, 2005	$	239,779	$	386,141
Nine Months ended September 30, 2006	$	442,565	$	85,909

	2005 Amount			2004 Amount
Revenue	$	625,920		$265,494
Costs of services and product sales	$	904,655		$1,173,354
Selling, general and administrative	$	3,119,022		$3,230,937
Interest expense	$	1,732,444		$1,349,836
Net loss	$	(5,430,660	)	$(5,847,017)

·	On April 27, 2006, Sequiam Biometrics, Inc. , a wholly owned subsidiary of Sequiam Corporation, entered into a Joint Venture Agreement with Changjiang Computer Group Corporation and Magstone Innovation, Inc. . The name of the joint venture is Shanghai Changjiang Intelligence Information Technology, LTD . The joint venture is headquartered in Shanghai. The purpose of the joint venture agreement is to develop and market biometric and other information technology products and applications in China and other regions and to support Sequiam Biometrics, Inc. by providing research and development for new products. The joint venture agreement grants Sequiam Biometrics, Inc. exclusive rights to distribute those products in North America, Europe and Africa.

·	Effective July 6, 2006, Sequiam Biometrics, Inc., a wholly-owned subsidiary of Sequiam Corporation, entered into a Distribution and Manufacturing Agreement with Quasar Group, Inc. The purpose of the agreement is to set out the terms and conditions of the distribution of certain biometric products and services of Sequiam Biometrics, Inc. Also, as part of the agreement, Sequiam Biometrics, Inc. and Quasar Group, Inc. agreed to form a new corporation in Switzerland. Sequiam Biometrics, Inc. will own 51% and Quasar Group, Inc. will own 49% of the new corporation. The new corporation agrees to purchase from Sequiam Biometrics, Inc., during the term of the agreement, all of its requirements as needed for its products for sale in Europe and the Middle East. In addition, Sequiam Biometrics, Inc. will act, during the term of the agreement, as the exclusive biometric designer and manufacturer of products for the new corporation. The term of the agreement is ten years, expiring on July 6, 2016, and may be renewed for additional 24-month terms unless either party provides the other with written notice of termination at least twelve months prior to the expiration of the then current term.

Year	Rentals		Maturities
2006	$	206,773	$	233,016
2007		210,993		247,387
2008		215,319		262,646
2009		219,753		278,845
2010		110,999		296,044
Thereafter		-		207,438
	$	963,837	$	1,525,376

Name	Age	Position
Nicholas H. VandenBrekel	42		Chairman, President and CEO; Director
Mark L. Mroczkowski	53		Senior Vice President and CFO; Director
James C. Stanley	67		Director
Alan McGinn	45		Vice President and CTO
Kevin Henderson	37		President of Sequiam Biometrics, Inc. and Constellation Biometrics Corporation

SUMMARY COMPENSATION TABLE
			ANNUAL COMPENSATION					LONG-TERM COMPENSATION
								AWARDS
Name & Principal Position	Year		Salary		Bonus	Other Annual Compensation(2)		Restricted Stock Awards	Securities Underlying Options/SARs (3)		LTIP Payouts	All Other Compensation
Nicholas VandenBrekel,		2005	$	195,000		$	14,400
President,		2004	$	194,375		$	14,400
CEO, Chairman (1)		2003	$	185,000		$	14,400			5,000,000

Mark Mroczkowski,		2005	$	185,000		$	12,000
Corporate Secretary,		2004	$	184,375		$	12,000
Senior Vice President,		2003	$	175,000		$	12,000			4,000,000
Treasurer and CFO (1)

Name	Shares Beneficially Owned			Percentage of Shares Beneficially Owned
Nicholas H. VandenBrekel		27,136,819	(1)		31.43	%
Mark L. Mroczkowski		12,794,118	(2)		14.99	%
Officers and Directors as a group (three persons)		40,474,408			44.69	%
Walter H. Sullivan, III 4 Embarcabero Center Suite 1570 San Francisco, California 94111		12,431,202	(3)		13.79	%
Lee Harrison Corbin, Attorney-in-Fact for the Trust Under the Will of John Svenningsen, now known as Stephen A. Ross, Attorney-in-Fact for the Trust Under the Will of John Svenningsen 33 Whitney Avenue Lower Level New Haven, CT 06510		10,028,388	(4)		11.22	%

Name	Common Stock Before Closing		Percent of Class			Common Stock After Closing			Percent of Class
Nicholas H. VandenBrekel		0		0	%		15,000,000	(1)		61.90	%
Mark L. Mroczkowski		0		0	%		5,500,000	(2)		22.70	%
James Rooney		0		0	%		500,000			2.06	%
Brekel Group, Inc.		0		0	%		1,000,000			4.13	%

Name	Common Stock Before Closing			Percent of Class(1)			Common Stock After Closing		Percent of Class(2)
Nicholas H. VandenBrekel		15,000,000	(3)		61.90	%		18,500,000		76.37	%
Mark L. Mroczkowski		5,500,000	(4)		22.70	%		4,957,000		20.46	%
James W. Rooney		500,000			2.06	%		526,666		2.17	%
Brekel Group, Inc.		1,000,000			4.13	%		0		0	%

			Beneficial Ownership After this Offering(2)
Name	Beneficial Ownership Prior to this Offering(1)	Shares Registered in this Offering	Number of Shares	Percent
Double U Master Fund LP(3)	2,540,817 (4)	993,249(5)	1,588,436	1.95%
Harborview Master Fund LP(6)	2,251,702 (7)	744,937 (8)	1,537,416	1.89%
Alpha Capital(9)	8,503,400 (10)	2,483,122 (11)	6,122,448	7.53%
Monarch Capital Fund Ltd.(12)	2,504,762 (13)	993,249 (14)	1,552,381	1.91%
Nite Capital LP(15)	2,363,946 (16)	744,937 (17)	1,649,660	2.03%
Whalehaven Capital Fund Limited(18)	5,498,231 (19)	1,738,186 (20)	3,831,564	4.71%
Ellis International (21)	952,380 (22)	496,624 (23)	476,190	0.59%
Brio Capital L.P. (24)	952,380 (25)	496,624 (26)	476,190	0.59%
Lee Harrison Corbin	2,718,562 (27)	744,937 (28)	2,004,276	2.46%
SIBEX Capital Fund Inc. (29)	2,857,142 (30)	1,489,873 (31)	1,428,571	1.76%
Thomas Torelli	1,428,572 (32)	744,937 (33)	714,286	0.88%
Martin J. Ferkin	333,334 (34)	173,819 (35)	166,667	0.20%
David Baum	238,096 (36)	124,157 (37)	119,048	0.15%
Howard Kent	380,952 (38)	198,650 (39)	190,476	0.23%
Noble Special Situations Fund (40)	1,428,572 (41)	744,937 (42)	714,286	0.88%
Greg Silver	952,380 (43)	496,624 (44)	476,190	0.59%
CMS Capital (45)	952,380 (46)	496,624 (47)	476,190	0.59%
Nico Pronk	1,891,666 (48)	304,004 (49)	1,594,047	1.96%
RFJM Partners LLC (50)	952,380 (51)	496,624 (52)	476,190	0.59%

Report of Independent Registered Certified Public Accounting Firm			F-2

Consolidated Financial Statements for the Years Ended December 31, 2005 and 2004:
Balance Sheets			F-3
Statements of Operations			F-4
Statements of Shareholders’ Deficit			F-5
Statements of Cash Flows			F-6
Notes to Consolidated Financial Statements			F-7

Unaudited Condensed Financial Statements for the Nine Months Ended September 30, 2006 and 2005:
Balance Sheets			F-25
Statements of Operations			F-26
Statements of Cash Flows			F-27
Notes to Consolidated Financial Statements			F-29

	December 31,
	2005			2004
Assets:
Current assets
Cash	$	763,197		$	-
Receivables, net of allowance for bad debts of $4,687 and $3,390 in 2005 and 2004, respectively		180,892			39,111
Prepaid expenses		-			97,125
Inventory		78,531			-
Total current assets		1,022,620			136,236

Property and equipment, net		1,108,255			1,303,757
Acquired software, net		-			163,200
Intellectual properties, net		809,177			644,896
Product development costs		174,130			34,509
Loan costs, net		253,098			224,252
Receivables		75,000			-
Deposits and other assets		51,142			8,805
Total assets	$	3,493,422		$	2,515,655

Liabilities and shareholders’ deficit
Current liabilities:
Bank overdraft	$	-		$	24,165
Notes payable		33,055			1,692,077
Accounts payable		295,989			706,966
Accrued expenses		528,496			96,299
Deferred revenue		-			6,000
Deferred rents		37,231			26,141
Current portion of long-term debt		1,053,016			840,245
Loans from shareholders		473,648			348,951
Accrued shareholders’ salaries		1,539,792			1,349,792
Total current liabilities		3,961,227			5,090,636

Long-term debt		3,868,411			2,301,793
Mandatorily redeemable cumulative convertible preferred stock, par value $.001; 50,000,000 shares authorized; 1,575 issued and outstanding at December 31, 2005		598,281			-
Total liabilities		8,427,919			7,392,429

Commitments and contingencies

Shareholders’ deficit:
Common shares, par value $.001; 200,000,000 shares authorized; 64,458,321 and 47,965,604 shares issued and outstanding		64,458			47,966
Additional paid-in capital		12,883,563			7,524,118
Accumulated deficit		(17,879,518	)		(12,448,858	)
Accumulated other comprehensive loss		(3,000	)		-
Total shareholders’ deficit		(4,934,497	)		(4,876,774	)
Total liabilities and shareholders’ deficit	$	3,493,422		$	2,515,655

	Common Shares				Additional			Accumulated Other
	Shares		Par		Paid-in			Comprehensive			Accumulated						Comprehensive
	Outstanding		Value		Capital			Loss			Deficit			Total			Loss
Balance at December 31, 2003		43,863,218	$	43,863	$	4,701,695		$	-			(6,601,841	)	$	(1,856,283	)
Shares issued to correct error		19,047		19		(19	)		-			-			-
Sale of common shares		1,993,757		1,994		759,098			-			-			761,092
Stock options exercised		237,500		238		40,137			-			-			40,375
Common shares issued for services		1,752,082		1,752		568,698			-			-			570,450

Debt settlement		100,000		100		50,900			-			-			51,000
Warrants issued in connection with loan agreements		-		-		1,339,208			-			-			1,339,208

Warrants issued for loan costs		-		-		49,333			-			-			49,333
Debt assumed with the acquisition of Telepartners		-		-		15,068			-			-			15,068
Net loss		-		-		-			-			(5,847,017	)		(5,847,017	)	$	(5,847,017	)
Comprehensive loss																	$	(5,847,017	)

Balance at December 31, 2004		47,965,604		47,966		7,524,118			-			(12,448,858	)		(4,876,774	)
Sale of common shares		537,358		537		108,760			-			-			109,297
Common shares issued for services		4,293,238		4,293		686,329			-			-			690,622

Common shares issued for salaries		2,373,772		2,374		342,162			-			-			344,536

Common share warrants exercised		914,444		914		356,408			-			-			357,322
Acquisition of Constellation Biometrics Corporation		1,635,513		1,636		173,364			-			-			175,000
Common shares issued for debt conversions		6,738,392		6,738		991,042			-			-			997,780
Warrants issued in connection with long-term debt		-		-		1,126,380			-			-			1,126,380
Warrants issued in connection with manditorily redeemable preferred stock		-		-		1,004,625			-			-			1,004,625
Mandatorily redeemable preferred stock conversion feature		-		-		570,375			-			-			570,375
Foreign currency translation adjustment		-		-		-			(3,000	)		-			(3,000	)	$	(3,000	)
Net loss		-		-		-			-			(5,430,660	)		(5,430,660	)		(5,430,660	)
Total comprehensive loss																	$	(5,433,660	)
Balance at December 31, 2005		64,458,321	$	64,458	$	12,883,563		$	(3,000	)	$	(17,879,518	)	$	(4,934,497	)

	September 30, 2006		December 31, 2005
Raw materials	$	549,141	$	78,531
Finished goods		308,841		-
	$	857,982	$	78,531

Options	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2006		9,451,000		$	0.186
Granted		550,000		$	0.180
Exercised		-0-			-0-
Canceled		(115,500	)	$	0.170
Outstanding at September 30, 2006		9,885,500		$	0.186		7.2		-0-

Vested or expected to vest at September 30, 2006		9,885,500		$	0.186		7.2		-0-

Exercisable at September 30, 2006		9,527,167		$	0.186		7.2		-0-

	Safety and Security			Information Management			Segments Total			Corporate			Consolidated Total
Revenue from external customers	$	232,371		$	28,198		$	260,569			-		$	260,569
Interest expense		-			-			-			(846,927	)		(846,927	)
Depreciation and amortization		(75,487	)		(16,211	)		(91,698	)		(42,613	)		(134,311	)
Segment loss		(287,175	)		(40,982	)		(328,157	)		(1,214,570	)		(1,542,727	)
Segment assets (1)		2,237,539			202,126			2,439,665			764,852			3,204,517

Registration fees	$	330.45
Legal fees and expenses	$	50,000.00
Printing and engraving expenses		-
Accounting fees and expenses	$	20,000.00
Miscellaneous	$	2,000.00
Total	$	72,330.45

Exhibit No.	Description of Exhibit

2.1	Agreement and Plan of Merger.¹

2.2	Stock Exchange Agreement and Plan of Reorganization.²

2.3	Asset Purchase Agreement.³

2.4	Agreement and plan of acquisition between Fingerprint Detection Technologies, Inc., a Florida corporation, UTEK Corporation, a Delaware corporation, and Sequiam Corporation, Inc., a California corporation.⁴

2.5	Asset Purchase Agreement with Smart Biometrics, Inc.⁵

2.6	Asset Purchase Agreement with Telepartners, Inc.⁶

2.7	Stock Exchange Agreement and Plan of Reorganization among Sequiam Corporation and the Shareholders of Brekel Group, Inc., dated June 17,2002⁷

2.8	Asset Purchase Agreement by and between Constellation Biometrics Corporation and Biometric Security (PTY), LTD, dated effective as of February 28, 2005.²⁷

2.9	Stock Purchase Agreement, dated as of and effective May 31, 2005, by and among Sequiam Corporation, Constellation Biometrics, Inc., and the shareholders of Constellation Biometrics, Inc.²⁷

3.1	Articles of Incorporation (Charter Document).⁸

3.2	Certificate of Amendment to Articles of Incorporation of Wedge Net Experts, Inc., dated April 29, 2002.⁹

3.3	Certificate of Amendment to Articles of Incorporation of Sequiam Corporation, dated January 6, 2003.³¹

3.4	Certificate of Amendment to Articles of Incorporation of Sequiam Corporation, dated December 8, 2005.³¹

3.5	Bylaws.⁸

3.6	Amendment to our Bylaws, dated July 18, 2002.¹⁰

4.1	Registration Rights Agreement, dated April 27, 2004, by and between Sequiam Corporation and Laurus Master Fund, Ltd.¹³

4.2	Securities Purchase Agreement, dated May 18, 2005, between Sequiam Corporation and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen.²⁶

4.3	Registration Rights Agreement, dated May 18, 2005, by and between Sequiam Corporation and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen.²⁶

4.4	Common Stock Purchase Warrant, dated May 18, 2005, issued by Sequiam Corporation, in favor of Laurus Master Fund, Ltd.²⁶

4.5	Common Stock Purchase Warrant, dated May 18, 2005, issued by Sequiam Corporation, in favor of Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen.²⁶

4.6	Amended and Restated Common Stock Purchase Warrant dated May 20, 2005, issued by Sequiam Corporation, in favor of Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen.²⁶

4.7	Amended and Restated Common Stock Purchase Warrant dated May 20, 2005, issued by Sequiam Corporation, in favor of Lee Harrison Corbin.²⁶

4.8	Stock Purchase Agreement, dated as of and effective May 31, 2005, by and among Sequiam Corporation, Constellation Biometrics, Inc., and the shareholders of Constellation Biometrics, Inc.²⁷

4.9	Common Stock Purchase Warrant, issued by Sequiam Corporation, in favor of Lee Harrison Corbin, Attorney-in-Fact for the Trust under the Will of John Svenningsen²⁷

4.10	Securities Purchase Agreement dated November 30, 2005, between Sequiam Corporation and the Purchasers.²⁸

4.11	Certificate of Determination of Preferences Rights and Limitations of Series A 9% Convertible Preferred Stock, dated November 30, 2005.²⁸

4.12	Registration Rights Agreement, dated November 30, 2005, by and between Sequiam Corporation and the Purchasers.²⁸

4.13	Common Stock Purchase Warrant dated November 30, 2005.²⁸

4.14	Certificate of Determination of Preferences Rights and Limitations of Series A 9% Convertible Preferred Stock, dated December 9, 2005.²⁹

4.15	Securities Purchase Agreement dated May 17, 2006, between Sequiam Corporation and the Purchasers.³²

4.16	Certificate of Determination of Preferences Rights and Limitations of Series B 10% Convertible Preferred Stock, filed as of April 26, 2006.³²

4.17	Amended and Restated Certificate of Determination of Preferences Rights and Limitations of Series B 10% Convertible Preferred Stock, filed as of May 9, 2006.³²

4.18	Registration Rights Agreement, dated May 17, 2006, by and between Sequiam Corporation and the Purchasers.³²

4.19	Form of Common Stock Purchase Warrant.³²

4.20	Amendment and Additional Issuance Agreement, dated June 21, 2006, between Sequiam Corporation and the Purchasers.³⁷

5.1	Opinion of Greenberg Traurig, P.A., as to the legality of the shares of common stock. *

10.1	Demand Promissory Note made by Sequiam, Inc. (a/k/a Sequiam Software, Inc.) payable to Nicholas H. VandenBrekel, dated June 30, 2002, in the principal amount of $301,000.¹⁵

10.2	Demand Promissory Note made by Sequiam Software, Inc. payable to Brekel Group, Inc. (a/k/a Sequiam Communications, Inc.), dated June 30, 2002, in the principal amount of $396,158.¹⁵

10.3	Employment Agreement with Nicholas Van den Brekel.⁹

10.4	Employment Agreement with Mark Mroczkowski.⁹

10.5	Amended and Restated Employment Agreement with Nicolas Van den Brekel.¹⁴

10.6	Amended and Restated Employment Agreement with Mark Mroczkowski.¹⁴

10.7	Employment Agreement with Alan McGinn.¹⁴

10.8	Put and Call Agreement, dated April 16, 2003.¹⁶

10.9	Agreement with World Olympians Association¹⁷

10.10	Agreement of Accord and Satisfaction, dated January 29, 2004¹⁸

10.11	Promissory Note, dated January 29, 2004, made by Sequiam Corporation in favor of La Jolla Cove Investors, Inc.¹⁸

10.12	Continuing Personal Guaranty, dated January 29, 2004¹⁸

10.13	Asset Purchase Agreement dated June 1, 2003, between Sequiam Software, Inc. and Great Barrier Reef, Inc.¹⁹

10.14	Subscriber Acquisition Agreement dated December 11, 2003, between Sequiam Software, Inc. and Internet Junction Corporation.¹⁹

10.15	Letter Agreement dated December 5, 2003, between Sequiam Corporation and The Eversull Group, Inc.¹⁹

10.16	Letter Agreement dated December 3, 2003, between Sequiam Corporation and The Research Works, Inc.¹⁹

10.17	License Agreement for Use of Co-location Space, dated November 2003, between Sequiam Software, Inc. and FDS Telecommunications, L.P.¹⁹

10.18	Exclusive Patent License Agreement, between Fingerprint Detection Technologies, Inc. and Westinghouse Savannah River Company LLC.¹⁹

10.19	Memorandum of Agreement, dated August 27, 2003, between Sequiam Biometrics, Inc. and T&N Enterprises²³

10.20	2003 Employee Stock Incentive Plan²⁰

10.21	2003 Non-Employee Directors and Consultants Stock Plan²⁰

10.22	Securities Purchase Agreement, dated April 27, 2004, between Sequiam Corporation and Laurus Master Fund, Ltd.¹⁸

10.23	Secured Convertible Term Note, dated April 27, 2004, made by Sequiam Corporation in favor of Laurus Master Fund, Ltd.¹³

10.24	Master Security Agreement, dated April 27, 2004, by and among Sequiam Corporation, Sequiam Software, Inc., Sequiam Biometrics, Inc., Sequiam Education, Inc., Sequiam Sports, Inc, Fingerprint Detection Technologies, Inc., and Laurus Master Fund, Ltd.¹³

10.25	Registration Rights Agreement, dated April 27, 2004, by and between Sequiam Corporation and Laurus Master Fund, Ltd.¹³

10.26	Common Stock Purchase Warrant, dated April 27, 2004, issued by Sequiam Corporation, in favor of Laurus Master Fund, Ltd.¹³

10.27	Subsidiary Guaranty, dated April 27, 2004, by and among Sequiam Software, Inc., Sequiam Biometrics, Inc., Sequiam Education, Inc., Sequiam Sports, Inc., and Fingerprint Detection Technologies, Inc.¹³

10.28	Grant of Security Interest in Patents and Trademarks, dated April 27, 2004, by and between Sequiam Corporation and the Purchaser¹³

10.29	Grant of Security Interest in Patents and Trademarks, dated April 27, 2004, by and between Sequiam Software, Inc. and Laurus Master Fund, Ltd.¹³

10.30	Grant of Security Interest in Patents and Trademarks, dated April 27, 2004, by and between Sequiam Sports, Inc. and Laurus Master Fund, Ltd.¹³

10.31	Grant of Security Interest in Patents and Trademarks, dated April 27, 2004, by and between Sequiam Biometrics, Inc. and Laurus Master Fund, Ltd.¹³

10.32	Stock Pledge Agreement, dated April 27, 2004 by and among Sequiam Corporation, Sequiam Software, Inc., Sequiam Biometrics, Inc., Sequiam Education, Inc., Sequiam Sports, Inc, Fingerprint Detection Technologies, Inc., and Laurus Master Fund, Ltd.¹³

10.33	Incremental Funding Side Letter, dated April 27, 2004, by and between Sequiam Corporation and Laurus Master Fund, Ltd.¹³

10.34	Subordination Agreement, dated April 27, 2004, by and among Mark Mroczkowsi, Nick VandenBrekel and Laurus Master Fund, Ltd.¹³

10.35	Funds Escrow Agreement, dated April 27, 2004, by and by and among Sequiam Corporation, Laurus Master Fund, Ltd. and Dechert LLP.¹³

10.36	License Agreement between Sequiam Biometrics, Inc. and Security Marketing Group, LLC²¹

10.37	Lease Agreement by and between Sequiam Sports, Inc. and EastGroup Properties, L.P.²³

10.38	Promissory Note, dated as of July 1, 2004, made by Sequiam Corporation in favor of EastGroup Properties, L.P.²³

10.39	Developer’s License Agreement, dated as of July 15, 2004, by and between Sequiam Corporation and Blackboard, Inc.²³

10.40	Agreement, dated as of August 19, 2004, by and between Sequiam Corporation and the National Rifle Association of America.²³

10.41	Promissory Note, dated as of September 7, 2004, made by Sequiam Corporation in favor of Eagle Funding, LLC²³

10.42	Promissory Note, dated as of September 30, 2004, made by Sequiam Corporation in favor of Lee Harrison Corbin²³

10.43	Promissory Note, dated as of September 30, 2004, made by Sequiam Corporation in favor of Lee Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John Svenningsen ²³

10.44	Employment Agreement with David Dobkin²³

10.45	Employment Agreement with Marianne Morrison²³

10.46	Amendment and Waiver to Securities Purchase Agreement, dated as of October 27, 2004, by and between Sequiam Corporation and Laurus Master Fund, Ltd.²³

10.47	Promissory Note, dated as of November 19, 2004, made by Sequiam Corporation in favor of Walter H. Sullivan, III.²⁴

10.48	Non-Exclusive Reseller Agreement with IKON Office Solutions, Inc. (Portions of this Agreement have been omitted pursuant to a request for confidential treatment)²⁵

10.49	Amended, Restated and Consolidated Senior Secured Term Note, dated May 18, 2005, made by Sequiam Corporation in favor of Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen.²⁶

10.50	Amended and Restated Master Security Agreement, dated May 18, 2005, by and among Sequiam Corporation, Sequiam Software, Inc., Sequiam Biometrics, Inc., Sequiam Education, Inc., Sequiam Sports, Inc, Fingerprint Detection Technologies, Inc., and Laurus Master Fund, Ltd.²⁶

10.51	Amended and Restated Subsidiary Guaranty, dated May 18, 2005, by and among Sequiam Software, Inc., Sequiam Biometrics, Inc., Sequiam Education, Inc., Sequiam Sports, Inc., and Fingerprint Detection Technologies, Inc. ²⁶

10.52	Amended and Restated Grant of Security Interest in Patents and Trademarks, dated May 18, 2005, by and between Sequiam Corporation and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen. ²⁶

10.53	Amended and Restated Grant of Security Interest in Patents and Trademarks, dated May 18, 2005, by and between Sequiam Software, Inc. and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen.²⁶

10.54	Amended and Restated Grant of Security Interest in Patents and Trademarks, dated May 18, 2005, by and between Sequiam Sports, Inc. and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen²⁶

10.55	Amended and Restated Grant of Security Interest in Patents and Trademarks, dated May 18, 2005, by and between Sequiam Biometrics, Inc and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen.²⁶

10.56	Amended and Restated Stock Pledge Agreement, dated May 18, 2005 by and among Sequiam Corporation, Sequiam Software, Inc., Sequiam Biometrics, Inc., Sequiam Education, Inc., Sequiam Sports, Inc, Fingerprint Detection Technologies, Inc., and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen.²⁶

10.57	Subordination Agreement, dated May 18, 2005, by and among Mark Mioczkowsi, Nick VandenBrekel and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen. ²⁶

10.58	Subordination Agreement, dated May 18, 2005, by and between Eagle Funding, LLC and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John Svenningsen.²⁶

10.59	Assignment, Assumption and Release, dated as of May 18, 2005, by and among Assignment, Assumption and Release, Sequiam Corporation and Laurus Master Fund, Ltd.²⁶

10.60	Debt Conversion Agreement, dated May 20, 2005, by and between Sequiam Corporation and Lee Harrison Corbin.²⁶

10.61	Debt Conversion Agreement, dated May 20, 2005, by and between Sequiam Corporation and Walter H. Sullivan.²⁶

10.62	Promissory Note dated March 7, 2005 from Sequiam Corporation in favor of Eagle Funding, LLC (renewal note).²⁶

10.63	Letter agreement dated May 17, 2005 from EastGroup Properties.²⁶

10.64	Promissory Note in the principal amount of $200,000, made on March 23, 2005 by Constellation Biometrics Corporation in favor of Lee Harrison Corbin, Attorney-in-Fact for the Trust under the Will of John Svenningsen (and assumed by Sequiam Corporation under that certain Stock Purchase Agreement dated as of and effective May 31, 2005 and referenced above).²⁷

10.65	Asset Purchase Agreement by and between Constellation Biometrics Corporation and Biometric Security (PTY), LTD, dated effective as of February 28, 2005.²⁷

10.66	Promissory Note dated February 28, 2005, in the principal amount of $440,000, made by Constellation Biometrics Corporation in favor of Biometric Security (PTY) LTD.²⁷

10.67	Escrow Deposit Agreement, dated November 30, 2005, by and between Sequiam Corporation and vFinance Investments, Inc.²⁸

10.68	Exclusive Co-Operative Development and Supply Agreement between Sequiam Biometrics, Inc., a wholly owned subsidiary of Sequiam Corporation, and Kwikset Corporation effective September 13, 2005 (Portions of this Agreement have been omitted pursuant to a request for confidential treatment)³⁰

10.69	Escrow Deposit Agreement, dated April 27, 2006, by and between Sequiam Corporation and vFinance Investments, Inc., as amended by that certain side letter, dated as of May 12, 2006.³¹

10.70	Employment Agreement with Kevin Henderson. ³²

10.71	Exclusive Distribution and Manufacturing Agreement, effective April 15, 2006, by and between Sequiam Biometrics, Inc. and CJCC. ³³

10.72	Joint Venture Agreement. ³⁴

10.73	Bylaws of Shanghai Changjiang Intelligence Information Technology, LTD. ³⁴

10.74	Restricted Stock Agreement with Nicholas H. VandenBrekel .³⁵

10.75	Restricted Stock Agreement with Mark L. Mroczkowski. ³⁵

10.76	Amended and Restated Promissory Note to Nicholas H. VandenBrekel.³⁵

10.77	Amended and Restated Promissory Note to Mark L. Mroczkowski. ³⁵

10.78	Exclusive License Agreement, effective April 10, 2006, by and between Sequiam Biometrics, Inc. and Tacoma Technology, Inc. ³⁶

10.79	Amendment No. 1 to Consent and Waiver, dated June 20, 2006, between Sequiam Corporation and DKR SoundShore Oasis Holding Fund Ltd.³⁷

16.1	Letter regarding change in certifying accountant.¹⁴

21.1	Subsidiaries. *

23.1	Consent of Tedder, James, Worden & Associates, P.A. *

23.2	Consent of Greenberg Traurig, P.A. (included in Exhibit 5.1)

24.1	Power of Attorney (set forth on signature page of the Registration Statement)*


	SEQUIAM CORPORATION

	By:	/s/ Nicholas H. VandenBrekel
		Nicholas H. VandenBrekel President, Chief Executive Officer and Chairman

/s/ Nicholas H. VandenBrekel Nicholas H. VandenBrekel	Director, Chairman, Chief Executive Officer and President	November 22, 2006


/s/ Mark L. Mroczkowski Mark L. Mroczkowski	Director, Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	November 22, 2006


/s/ Douglas R. Dillman Douglas R. Dillman	Controller	November 22, 2006


/s/ James C. Stanley James C. Stanley	Director	November 22, 2006

Sequiam Software, Inc.	United States

Sequiam Sports, Inc.	United States

Sequiam Biometrics, Inc.	United States

Sequiam Education, Inc.	United States

Fingerprint Detection Technologies, Inc.	United States

Constellation Biometrics, Inc.	United States

Biometric Security (PTY) LTD. (a/k/a Secure Biometrics.co.za)	South Africa