Immediatek, Inc.

Notes to Consolidated Financial Statements

Note 1 - Basis of Presentation

The consolidated interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these consolidated interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2004 and notes thereto included in the Company's 10-KSB annual report. The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim periods are not indicative of annual results.

Note 2 - Going concern

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has not generated significant revenues. In order to obtain the necessary capital, the Company has raised funds via private placement offering. If the securities offering does not provide sufficient capital, some of the shareholders of the Company have agreed to provide sufficient funds as a loan over the next twelve-month period. However, the Company is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful, without sufficient financing it would be unlikely for the Company to continue as a going concern.

Note 3 - Asset acquisition

On February 28, 2005, the Company entered into an "Asset Purchase Agreement" with Moving Records, LLC, ("MR") a private company established and operated in the State of Minnesota. Pursuant to the agreement, the Company acquired recording equipment valued at $258,043 and agreed to assume a total of $120,000 in debt from MR under separate promissory note and $15,703 in accounts payable, in exchange for 2,500,000 shares of the Company's $0.001 par value common stock. The fair value of the Company's common stock on the date of the agreement was $450,000. The difference between the value of the stock issued and the fair market value of the assets acquired is $365,406, which the Company expensed as non-cash compensation.

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Immediatek, Inc.

Notes to Consolidated Financial Statements

Note 4 - Fixed assets

During the six months ended June 30, 2005, the Company acquired equipment valued at $258,043 pursuant to an Asset Acquisition Agreement. Depreciation expense totaled $38,455 and $29,295 for the six months ended June 30, 2005 and 2004, respectively.

Note 5 - Accounts payable

As of June 30, 2005, the Company had outstanding accounts payable in the amount of $345,980 of which $293,504 has been outstanding over 90 days. The carrying value of accounts payable approximates fair value due to the short-term nature of the obligations.

Note 6 - Note payable

On March 15, 2005 the Company entered into a $425,000 Secured Promissory Note and. a Collateral Assignment and General Security Agreement with Mr. Osias Blum, an individual. The Note provides for the principal and interest, at the rate of 10% per annum, to be paid on the maturity date of April 1, 2006 or at an earlier date if the Company is successful in completing an exempt Regulation D private placement of our common stock of $1,000,000 or more. The Note is secured by all our tangible and intangible assets other than those assets previously pledged on prior debt transactions to other secured parties.

During the six month period ended June 30, 2005, the Company received an additional $27,500 for operating expenses from Mr. Blum. The short-term loan bears no interest and is due demand.

Note 7 - Stockholders' equity

The Company is authorized to issue 500,000,000 shares of $0.001 par value common stock.

On February 28, 2005, the Company issued 2,500,000 shares of its $0.001 par value common stock pursuant to an "Asset Acquisition Agreement". The fair market value of the underlying shares is $450,000.

On March 4, 2005, the Company issued 64,000 shares of its $0.001 par value common stock for consulting services valued at $7,680.

There were no other issuances of common stock during the six months ended June 30, 2005.

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Immediatek, Inc. is a technology company specializing in software and technology solutions, specifically geared towards the music and entertainment industry. Utilizing the strength of its core "instant" CD product and copy control software, Immediatek is striving to become the leading supplier of live and pre-recorded content through a variety of distribution sources.

On April 9, 2004, the Company completed the purchase of DiscLive, Inc., a privately held company that secures contracts with various music artists to record live concert performances, through the issuance of 1,666,667 shares of the Company's common stock in exchange for all of the outstanding capital stock of DiscLive. The DiscLive acquisition was valued at $600,000, based on the average market price of the Company's common shares at the time of acquisition. The company allocated $324,142 of the acquisition price to goodwill and the balance of $275,858 to assets and liabilities.

On February 28, 2005, the Company entered into an "Asset Purchase Agreement" with Moving Records, LLC, ("MR") a private company established and operated in the State of Minnesota. Pursuant to the agreement, the Company acquired recording equipment valued at $258,043 and agreed to assume a total of $120,000 in debt from MR under a separate promissory note and $15,703 in accounts payable, in exchange for 2,500,000 shares of the Company's common stock. The fair value of the Company's common stock on the date of the agreement was $450,000. The difference between the value of the stock issued and the fair market value of the assets acquired was $365,406, which the Company expensed as non-cash compensation.

The Company's ability to continue as a going concern is contingent upon the successful marketing and continued rollout of its DiscLive product, completion of additional financing arrangements, and the development of its software and technology solutions to achieve and maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used to further development of the Company's products, to provide financing for marketing and promotion, to secure additional property and equipment and for other working capital purposes. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

These conditions raise doubt about the Company's ability to continue as a going concern. The Company's financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue in existence.

The Company has a limited operating history upon which an evaluation of the Company, its current business and its prospects can be based. The Company's prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages. Such risks include, the Company's inability to anticipate and adapt to a developing market, the failure of the Company's infrastructure, changes in laws that adversely affect the Company's business, the ability of the Company to manage its operations, including the amount and timing of capital expenditures and other costs relating to the expansion of the Company's operations, the introduction and development of different or more extensive communities by direct and indirect competitors of the Company, including those with greater financial, technical and marketing resources, the inability of the Company to attract, retain and motivate qualified personnel and general economic conditions.

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Results of Operations

The Company generated $56,000 in revenues during the three months ended June 30, 2005. The Company experienced net losses of $(104,058) or a net loss of $(0.01) per share in the second quarter of 2005 compared to losses of $(621,559) or a net loss of $(0.01) per share in for the same period in 2004. For the second quarter ended, the Company incurred costs of services and operating expenses, which amounted to $829,303.

The decrease in comparative revenue for both the three months ending and six months ending is a direct result from a spike in revenue experienced during the month of April 2004. This month (April 2004) represented approximately half of the entire revenue for the fiscal year of 2004. The majority of this revenue experienced in this month came from a single business contract and did not continue until later that same year due to the schedule of the musical band that was touring. Other factors affecting the decrease in comparative revenues include the timing variances associated sales cycles as they relate to the live concert business. Management estimates that the sales cycle for similar business as experienced in April 2004 may take between three to six months before revenue is realized. As management continues to develop its business it believes that the sales cycle can be reduced to one to two months. Further it is expected that revenue from month to month will grow at a steadier rate and become less volatile.

Even though management has identified various small competitors, it is only aware of one primary competitor, Clear Channels, "Instant Live". It is believed by management that as it continues to execute its business model and improve its operations it will continue to increase its market share and eventually become profitable. The Company has relied on the support of its existing investor base for its liquidity.

Plan of Operation

Immediatek has several key products, DiscLive, however, represents the primary product of the group. DiscLive represents the immediate opportunity to grow, to establish market share and revenue - as well as providing a launching pad for Immediatek's other products.

DiscLive provides a very unique and exciting service in both the wholesale and retail markets. The Company's clients are typically recording artists, managers and labels, and more recently, venues. The Company provides, on a large scale, the instant recording of live events made available to attendees immediately succeeding an event. The Company makes this possible through its custom mobile recording and manufacturing facilities procured in the acquisition of DiscLive and the asset purchase of Moving Records. The mobile recording and duplication units are comprised of proprietary software, custom-designed hardware, intellectual property, and trade secrets, which have enabled DiscLive to become the first company to successfully implement such a product on a broad scale. In connection with the on-site sales opportunities, there are extensions to the base distribution model in which many more opportunities to grow exist. Such as offering content on the Internet, via USB key chain devices, and popular player devices such as Apple's iPod.

Additionally, through the increased venue presence of DiscLive, the brand has become more recognized and the Company has identified a new demand for DiscLive "systems" which can be installed into venues, and which enable venues to produce live discs of their events with some

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