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

Business. ---------

Zaldiva, Inc., a Florida corporation (the "Company," "we" or "us"), is in the business of selling comic books, toys and collectible items at our retail location at 331 East Commercial Blvd., Ft. Lauderdale, Florida, and through our web sites, Zaldiva.com, Zaldivacomics.com. We also offer web design, hosting and IT services as well as our own bran of premium cigars and accessories. Since fiscal 2003, we have focused our operations increasingly on our online comic book and collectible retail operations, with less emphasis on cigar sales and web design and hosting. Following the opening of our new "brick-and-mortar" retail location in December, 2006, we expect that our operations will increasingly focus on the comic book and collectible end of business. In the future, we may also acquire other small companies offering similar products and services, although we do not have any current deals in negotiation.

We sell Zaldiva cigars and accessories through our e-commerce web site as well as through direct sales to establishments and individuals. We also receive some referral business. We advertise through trade shows and some periodicals, although the bulk of our advertising is done on the Internet. Our web site, www.zaldivacigars.com acts mainly as an online brochure, but we are also able to accept orders through the shopping cart on the site.

Subsequent Events. ------------------

Our new retail location (located at 331 E Commercial Blvd, Ft. Lauderdale, FL 33334) officially opened for business on November 24, 2006; however, the Grand Opening celebration was held on December 16, 2006. We were able to organize some exciting in-store events for the day that drew in a better-than-expected crowd. There were in-store signings by a Golden Age comic book artist from Timely/Marvel Comics as well as a modern day independent comic book writer/creator. We gave away free comic magazines signed by the featured artist and free signed comic books from the writer/creator. Raffles were held every two hours for gifts and items including twelve-issue/one-title comic book subscriptions, dolls, action figures, original comic book art and more.

On December 11, 2006, our Board of Directors unanimously consented to appoint Christopher Ebersole as our Chief Financial Officer, to serve until the next annual meeting of the Company's Board of Directors or his prior resignation or termination. At the same time, our Board of Directors unanimously resolved to issue 300,000 "unregistered" and "restricted" shares of our common stock to Mr. Ebersole in consideration of past services rendered October through December 2006 and a signing bonus. These shares have not yet been formally issued and, unless indicated otherwise, the share calculations in this Report do not take these shares into account.

Comic Books and Related Collectibles. -------------------------------------

Comic books have been around at least as long as movies have. According to The Overstreet Comic Book Price Guide's regular publication The Golden Age Quarterly, 1933 saw the publication of the first comic book in the size that would subsequently define the format. Credit for the first comic book ever created typically goes to Richard Fenton Outcalt's creation, "The Yellow Kid," in 1896. Outcalt essentially synthesized what had been made before him and introduced a new element, the balloon, a space where he wrote what the characters said, and that pointed to their mouth with a kind of tail.

From that point, the basis for a brand-new kind of art was set, and the adventure began. In the first decades of their life, comic books were primarily for children's amusement, and this explains the name they carry today in the English language.

Presently, the comic book industry is still going strong more than 100 years after its birth. With advances like computer generated images (CGI), today's movie screens are filled with stories from comic books. In recent times, we have experienced such blockbuster movie hits as the "Batman" saga; "Spawn," which had its own animated series on HBO; "Spider-Man"; "X-Men" and "X-Men 2"; "The Hulk"; "The League of Extraordinary Gentlemen"; "DareDevil"; "Hellboy," "The Punisher" and "Electra". Many television shows have also sprung from the pages of comic books, most notably, "Smallville."

This unlimited market transcends all barriers, including age, race and gender, and also language, since most shows and movies are released in dubbed versions world-wide. Movies are released twice, first at the theater and then again in DVD and/or VHS format. The comic books themselves create a demand for collectible items; and the movies and televisions shows create even more of a demand. A popular comic book can, and often does, spawn hundreds of items to be collected and adored by its fans. We are engaged in the business of selling those items - everything from the comic book to the movie adaptation softcover book, and from the t-shirt to the prop replicas for the die-hard fans.

Traditional Marketing. ----------------------

With the grand opening of our brick-and-mortar retail location in December, 2006, our operations began to take a more traditional marketing approach.

Brick-and-Mortar Store ----------------------

Advertisement for the store has only just begun in recent weeks. The company has taken out advertisements in local papers read by our target audience and they've also purchased radio spots on high-school and college radio stations. Flyers have been passed out as well as cooperatively placed in local businesses and restaurants. A costumed character was hired to wave to the traffic passing by in front of the store. More than 65,000 cars pass the location each day on their way to the highway entrance, so the sign on the building itself is a huge and effective form of advertisement.

Zaldiva.com -----------

Advertisement for our web site is done through search engines, banner exchange programs and opt-in e-mail activities - all designed to drive traffic to our site. Weekly specials and featured items are regularly created to increase return traffic.

Zaldiva Web Solutions. ----------------------

We currently provide hosting services for over 100 clients which produces a residual income through their hosting renewals and maintenance of these sites. We offer three different Web Site packages, an E-commerce package as well as any custom work needed for potential clients. Our IT services include, but not limited to, diagnose, repair, maintain, set-up and solve software and hardware issues. We provide networking and wireless networking set-up and maintenance and eradicate viruses. Install computers, replace and add/remove hardware and software to existing networks and computers. Bringing companies up to speed on technologies, making them paperless and more.

In providing these types of services, Zaldiva Web Solutions can meet the Web and IT requirements of a small company to a large corporation.

Zaldiva Web Solutions completed construction of its new web site. We will aggressively market the web development industry through snail mail, on-line marketing within the top search engines and cross marketing. We offer interactive web tools for sale such as article and news manager, page publisher, listing manager, on-line mall directories and more.

We provide the following services:

Web Development -

* Internet & Intranet web site development & design

* E-commerce solutions, such as shopping carts

* Secure & password protected applications

* Graphic & artistic design & digital art

* Corporate identity logo creation

* Web standards & privacy consultation services

* Web site reporting & visitor traffic analysis

* Web site hosting & maintenance

Media and Marketing -

* Audio/video streaming & media conversion

* Interactive virtual tours

* Interactive CD/DVD authoring for education and training * Digital music production

* CD/DVD duplication services

* Branded & co-branded email services

* Internet strategy development

* Professional writing & content creation

* Web-based marketing & promotion campaigns

IT Solutions -

* Set-up, training and maintenance of 3rd party software

* IT consulting

* Networking and Wireless

* Computer systems set-up and configuration

* Virus eradication

Principal Products and Services. -------------------------------- Our principal products are the comic books, toys and collectibles that we sell from our newly-opened store in Ft. Lauderdale, Florida and through our web site (www.zaldiva.com). We also sell cigars and accessories, but this currently comprises less than ten percent of our business. Zaldiva has maintained an e-commerce web presence through Zaldiva.com since July of 1997. Experience and a very low overhead are Zaldiva's principal advantages in this area.

We also provide upscale web site development, design, programming and hosting, although this facet of our operations has also declined in importance in recent years. We have developed and maintain web sites for approximately 100 clients. Most of our clients are businesses. They are involved in many different industries and are widely dispersed geographically. We charge our clients on average $20 per month for hosting services, as well as design, updating and service fees. Zaldiva Web Solutions co-locates our servers with Rackspace, which allows us to offer 100% up time, guaranteed, with multiple connections for redundancy. It has approximately one megabyte of bandwidth, which is enough to support over 200 sites. We do not believe we will need to expand our bandwidth capability in the near future.

In our comic books business, we sell pop-culture comic book related collectibles, that primarily include action figures, dolls, statues, die-cast vehicles, T-shirts, books, magazines, posters and lithographs, household decor and decorative items, board and card games, caps and hats, licensed advertisements, plush toys, and some sports memorabilia.

The only services related to our comic book and related collectibles business provided by us are those services regarding newsletter subscriptions and/or free email accounts.

Distribution Methods of the Products or Services. -------------------------------------------------

All items sold in our comic book and related collectibles business are sold on our online stores at Zaldiva.com and ZaldivaComics.com and, since December, 2006, in our retail store in Ft. Lauderdale, Florida.

In November, 2003, we began accepting PayPal and eChecks from Authorize.net as payment for our products (in addition to traditional credit card payments). This has allowed us to make non-U.S. sales with ease, and these payment methods have proven beneficial to us.

Status of any Publicly Announced New Product or Service. --------------------------------------------------------

In December, 2006, which is subsequent to the end of the period covered by this Report, we opened our first retail outlet at 331 East Commercial Boulevard in Ft. Lauderdale, Florida. Other than this new retail outlet, Zaldiva does not currently have any new product/service that has been publicly announced.

Competitive Business Conditions. --------------------------------

The comic book and collectible retailing industry is no more or less competitive than any other business. Our competitors include other brick-and-mortar and online retailers of comics, toys and collectibles. Zaldiva.com Comics & Collectibles does however have several advantages in the current market.

No. 1: Location Zaldiva.com Comics & Collectibles is located on the East side of the Greater Ft. Lauderdale area where there are few current competitors.

No. 2: Location/Heavy Traffic Commercial Blvd. is a heavily traveled road which runs East and West through Ft. Lauderdale and the surrounding cities. There is no highway to take travelers East and West in this section of the city, so Commercial Blvd. is most often used. The store is located about one-half mile East of the extremely busy Commercial Blvd. entrances and exits to I95. This location puts at least 65,000 cars in front of the store each day. Zaldiva's largest competitor is about eight miles West of the new store. Many people who live on the East side of Ft. Lauderdale and surrounding cities have had to travel through heavy traffic to this competitor for the past decade - simply because there was no choice. The new store makes it easy not only for those living on the East side to get their collectibles, but for people to the South (the Hollywood/Miami areas) and to the North (the Boca/Palm Beach areas) because of our proximity to the highway (I95).

No. 3: Knowledge and Attitude We KNOW and love comics and collectibles. Other stores hire cheap labor to put behind the counter - and it shows. Zaldiva's customers receive a warm and genuinely friendly greeting when they arrive. All of their questions are answered. We can find a common interest with anyone that walks in and run with it. We can recommend comics books based upon their interests. If they haven't read a comic in years, we can get them up to speed. All of these things result in return customers. Many customers fly through our recommended books and return within days to get the next issue/volume or to get yet another recommendation.

No. 4: Our Online Store No other local shops currently provide an online purchase/in-store pick up option. No other local shops even offer their full line of products both online and in-store - so we are unique in that area. The web-site is maintained by Zaldiva, so the overhead is next to nothing.

No. 5: Gift Certificates We offer both on-line and in-store Gift Certificates. As simple as this sounds, none of our local competitors offer them. They were a big hit for Christmas and they cost no more than a little paper and ink.

Sources and Availability of Raw Materials and Names of Principal Suppliers. ---------------------------------------------------------------------------

Zaldiva does not use any raw materials in its operations.

Dependence on One or a Few Major Customers. -------------------------------------------

None; not applicable.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts. ----------------

We have obtained a trademark with the Florida Department of State for our logo, the word "Zaldiva" and a design of a crest in an oval shape with two birds, a star, leaves and a sunburst. Under Florida law, the knowing or willful forgery or counterfeiting of a Florida trademark constitutes the crime of counterfeiting, which may be a felony or a misdemeanor, depending on the circumstances. Our trademark will expire on October 23, 2007, but it may be renewed for a fee of $87.50. (This trademarked logo is used expressly for Zaliva Cigars). We have not applied for a registered trademark with the U.S. Patent and Trademark Office.

Need for any Governmental Approval of Principal Products or Services. ---------------------------------------------------------------------

None; not applicable. However, see the caption "Effect of Existing or Probable Governmental Regulations on Business," below.

Effect of Existing or Probable Governmental Regulations on Business. -------------------------------------------------------------------- Zaldiva is subject to general business laws, rules and regulations, as well as laws, rules and regulations relating to the Internet and e- commerce. These regulations may cover issues such as privacy, taxation, intellectual property, content, consumer protection and products liability. Compliance with these regulations may be expensive and time consuming and may impact our profitability in the future.

We do not currently collect sales taxes on goods that we sell through the internet. The United States Congress has enacted legislation limiting the ability of the states to impose taxes on Internet access or to impose multiple or discriminatory taxes on electronic commerce. This legislation, known as the Internet Tax Nondiscrimintation Act, imposed a moratorium , which commenced November 1, 2003 and ends on November 1, 2007, on state and local taxes on electronic commerce, where such taxes are discriminatory, and Internet access, unless the taxes were generally imposed and actually enforced prior to October 1, 1998. Failure to renew this legislation beyond November, 2007, will allow various states to impose taxes on Internet-based commerce. The imposition of these taxes could seriously adversely affect Internet commerce.

We do, however, currently collect taxes from the sales made in our retail store at 331 East Commercial Boulevard in Fort Lauderdale, Florida.

Sarbanes-Oxley Act. -------------------

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide variety of new regulatory requirements on publicly-held companies and their insiders. Many of these requirements will affect us. For example:

* Our chief executive officer and chief financial officer must now certify the accuracy of all of our periodic reports that contain financial statements;

* Our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures; and

* We may not make any loan to any director or executive officer and we may not materially modify any existing loans.

The Sarbanes-Oxley Act has required us to review our current procedures and policies to determine whether they comply with the Sarbanes-Oxley Act and the new regulations promulgated there under. We will continue to monitor our compliance with all future regulations that are adopted under the Sarbanes- Oxley Act and will take whatever actions are necessary to ensure that we are in compliance.

Research and Development. -------------------------

Zaldiva has not spent any money on research and development and we do not anticipate any need in the foreseeable future to spend resources on research and development.

Cost and Effects of Compliance with Environmental Laws. -------------------------------------------------------

Since the nature of its business is retail sales and marketing, Zaldiva does not believe that it will have any environmental compliance concerns.

Number of Employees. --------------------

As of September 30, 2006, Zaldiva had four full-time and no part-time employees. They are not part of any union, and we believe that our relationships with them are good.