UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,D.C.20549






FORM
10-Q





x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended: March 31,
      2008oro
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from: _____________ to
  _____________









FTS GROUP, INC.


(Exact name of registrant as
specified in its charter)





Nevada
            000-24829
            84-1416864(State
      or Other Jurisdiction
            (Commission
            (I.R.S.
      Employerof
      Incorporation)
            File
      Number)
            Identification
      No.)





300 State Street East, Suite
226,Oldsmar,Florida34677


(Address of Principal Executive Office)
(Zip Code)





(813)749-8805


(Registrant’s telephone number,
including area code)




N/A


(Former name, former address and former
fiscal year, if changed since last report)








Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes R No o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large accelerated
      filer  o
            Accelerated
      filer  oNon-accelerated
      filer (do not check if a smaller reporting company)  o
            Smaller reporting
      company  þ




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  Yes o No R





As of May
15, 2008, 397,807,653 of the issuer’s common stock, $0.001 par value, were
outstanding.













FTS GROUP, INC.TABLE
      OF CONTENTSPART
      I. FINANCIAL INFORMATION
              
              
              PageItem 1. Financial
      Statements
              
              
              1Item 2. Management's Discussion and Analysis ofFinancial
      Condition and Results of Operations
              
              2Item 3.Quantitative and Qualitative Disclosures
      about Market Risk
              
              
              3Item
      4T. Controls and
    Procedures
              
              
              3PART
      II. OTHER INFORMATIONItem 1. Legal
    Proceedings
              
              
              4Item
      1A. Risk Factors
              
              
              4Item 2. Unregistered Sales of Equity Securities and Use
      of Proceeds
              
              4Item 3. Defaults of Senior
      Securities
              
              
              4Item 4. Submission of Matters to a Vote of
      Security Holders
              
              4Item 5. Other Information
              
              
              4Item 6. Exhibits
              
              
              4
 
  PART
I - FINANCIAL INFORMATION
  ITEM
1. FINANCIAL STATEMENTS .
  Condensed
      Consolidated Financial Statements
              
              PageBalance Sheets - March 31, 2008 (unaudited) and
      December 31, 2007 (audited)
              
              F-1Statements of Operations - Three months ended
      March 31, 2008 (unaudited) and 2007
      (unaudited)
              
              F-2Statements of Cash Flows - Three months
      ended March 31, 2008 (unaudited) and 2007
      (unaudited)
              
              F-3Notes to Condensed Consolidated Financial
      Statements
              
              F-4
   1
 Table of Contents
  
 FTS
      GROUP, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
      SHEETSMARCH 31, 2008 AND DECEMBER 31,
      2007Assets
              
              2008
              
              
              2007(unaudited)
              
              
              (audited)Current
    assets:Cash and cash equivalents
              $
              2,733
              
              $
              21,713Accounts receivable
              
              78,917
              
              
              71,987Inventories
              
              315,460
              
              
              285,168Prepaid expenses and current assets
              
              102,763
              
              
              172,767Total
      current assets
              
              499,873
              
              
              551,635Property and equipment, net of
      accumulated depreciation
              
              
              60,491
              
              
              
              121,986Domain
      Portfolio
              
              
              315,087
              
              
              
              238,156Unamortized discount on
      convertible debt
              
              
              144,935
              
              
              
              192,991Goodwill
              
              
              5,177,696
              
              
              
              5,177,696Deposits
              
              
              6,386
              
              
              
              6,386Total
      assets
              $
              
              6,204,468
              
              $
              
              6,288,850Liabilities and Stockholders'
      EquityCurrent
      liabilities:Accounts payable and accrued expenses
              $
              
              757,257
              
              $
              
              802,238Notes payable
              
              
              1,595,250
              
              
              
              1,601,000Officer note payable
              
              
              109,666
              
              
              
              4,000Related party notes payable
              
              
              75,000
              
              
              
              75,000Related party convertible debt
              
              
              1,643,077
              
              
              
              2,079,822Fair
      value of derivative liabilities
              
              
              46,466
              
              
              
              115,049Total
      current liabilities
              
              
              4,226,716
              
              
              
              4,677,109Total liabilities
              
              
              4,226,716
              
              
              
              4,677,109Commitments
      and contingenciesStockholders'
      equity:10% Convertible preferred stock, Series A, $0.01 par
value:150,000 shares authorized; 0 shares issued and outstanding
              
              
              -
              
              
              
              -Preferred stock, $0.01 par value, 4,850,000 undesignatedshares authorized, none issued
              
              
              -
              
              
              
              -Convertible preferred stock, Series B, $0.01 par value:1,000,000 Shares authorized, issued and outstanding at March 31,
      2008 and December 31, 2007
              
              
              10,000
              
              
              
              10,000Common stock, $.001 par value. Authorized 855,000,000
      shares:174,205,601 shares issued and outstanding at December 31,
      2007,314,206,221
      shares issued and outstanding at March 31, 2008
              
              
              314,206
              
              
              
              174,206Deferred
      stock compensation
              
              
              (7,500
              )
              
              
              (10,000
              )Additional paid-in capital
              
              
              13,173,876
              
              
              
              12,745,977Accumulated deficit
              
              
              (11,512,830
              )
              
              
              (11,308,442
              )Total
      stockholders' equity
              
              
              1,977,752
              
              
              
              1,611,741Total
      liabilities and stockholders' equity
              $
              
              6,204,468
              
              $
              
              6,288,850See accompanying notes to
      consolidated financial statements.




F-1


Table of Contents







FTS GROUP, INC. AND
      SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS
      OF OPERATIONSFOR THE THREE MONTHS ENDED MARCH
      31, 2008 AND 20072008
              
              
              2007(unaudited)
              
              
              (unaudited)REVENUES
              
              $
              1,565,255
              
              
              $
              1,801,420COST OF GOODS
      SOLD
              
              
              650,573
              
              
              
              727,331GROSS
PROFIT
              
              
              914,682
              
              
              
              1,074,089GENERAL AND ADMINISTRATIVE
      EXPENSES
              
              
              1,127,336
              
              
              
              1,081,684INCOME (LOSS) FROM
      OPERATIONS
              
              
              (212,654
              )
              
              
              (7,595
              )OTHER INCOME
      (EXPENSE)Change in fair value of derivative liabilities
              
              
              68,583
              
              
              
              60,254Gain on disposal of assets
              
              
              16,872
              
              
              
              -Interest expense
              
              
              (77,189
              )
              
              
              (169,524
              )TOTAL
      OTHER INCOME (EXPENSES)
              
              
              8,266
              
              
              
              (109,270
              )NET INCOME
      (LOSS)
              
              $
              (204,388
              )
              
              $
              (116,865
              )PER SHARE
      INFORMATION:WEIGHTED AVERAGE SHARES
      OUTSTANDINGBasic
              
              
              219,934,698
              
              
              
              137,868,401Diluted
              
              
              219,934,698
              
              
              
              137,868,401NET LOSS PER COMMON
      SHARE:Basic
              
              $
              (0.00
              )
              
              $
              (0.00
              )Diluted
              
              $
              (0.00
              )
              
              $
              (0.00
              )See accompanying notes to
      consolidated financial statements.




F-2  Table of Contents






FTS
      GROUP, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS
      OF CASH FLOWSFOR THE THREE MONTHS ENDED MARCH
      31, 2008 AND 20072008
              
              
              2007(unaudited)
              
              
              (unaudited)Cash flows from operating
      activities:Net income (loss)
              $
              (204,388
              )
              $
              (116,865
              )Adjustments to reconcile net income to net cash used
      in operating activities:Depreciation and amortization
              
              67,551
              
              
              146,753Common shares issued for services
              
              74,900
              
              
              -Amortization of debt discount
              
              -
              
              
              2,679Amortization of deferred stock compensation
              
              2,500
              
              
              2,500(Gain) Loss on disposal of assets
              
              (16,872
              )
              
              -Change
      in fair value of derivative liabilites
              
              (68,583
              )
              
              (60,254
              )(Increase) decrease in operating assets:Accounts
      receivable
              
              (6,930
              )
              
              111,651Inventories
              
              (37,421
              )
              
              45,005Prepaid
      expenses
              
              70,004
              
              
              (95,448
              )Increase (decrease) in operating liabilities:Accounts
      payable and accrued expenses
              
              36,269
              
              
              38,099Net cash used in operating activities
              
              (82,970
              )
              
              74,120Cash flows from investing
      activities:Payments for investments
              
              
              -
              
              
              
              (22,229
              )Proceeds from disposal of assets
              
              
              66,000
              
              
              
              -Purchase of domain names
              
              
              (76,931
              )
              
              
              -Net cash used in investing activities
              
              
              (10,931
              )
              
              
              (22,229
              )Cash flows from financing
      activities:Proceeds from notes payable related parties
              
              
              127,259
              
              
              
              20,000Repayments of notes payable-truck loans
              
              
              -
              
              
              
              (1,830
              )Repayments of notes payable to individuals
              
              
              (5,750
              )
              
              
              (125,000
              )Repayment of loans from related parties
              
              
              (46,588
              )
              
              
              (2,500
              )Net cash provided by financing activities
              
              
              74,921
              
              
              
              (109,330
              )Net decrease in cash
              
              
              (18,980
              )
              
              
              (57,439
              )Cash at beginning of
      year
              
              
              21,713
              
              
              
              115,056Cash at end of
      year
              $
              
              2,733
              
              $
              
              57,617Supplemental schedule of
      cash flow informtion:Interest
      paid
              $
              
              -
              
              $
              
              1,911Supplemental disclosure of
      non-cash investing and financing activities:Stock
      issued in exchange for convertible debentures
              $
              
              436,745
              
              $
              
              72,847Stock
      issued as loan inducements
              $
              
              -
              
              $
              
              245,283Reassignment
      of note payable from Richard Miller to Funds
              $
              
              -
              
              $
              
              1,000,000See accompanying notes to
      consolidated financial statements.




F-3
 Table of Contents
  FTS GROUP, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008
 
 (1) Summary of
Significant Accounting Policies
  ORGANIZATION,
OWNERSHIP AND BUSINESS
 
 FTS
Group, Inc. (the "Company"), is a holding company incorporated under the laws of
the State of Nevada. The Company is focused on developing, acquiring and
investing in cash-flow positive businesses and viable business ventures
primarily in the Internet, Wireless and Technology industries. Through its
wholly-owned subsidiaries See World Satellites, Inc., FTS Wireless, Inc., OTG
Technologies Group, Inc. and Elysium Internet, Inc., the Company has acquired
and developed a diversified wireless business engaged in the distribution of
next generation wireless communications, entertainment products and services for
businesses and consumers alike. Elysium Internet, Inc.  owns and
operates an Internet advertising media business focused in the local directory
market. The Company's wholly-owned subsidiary See World Satellites, Inc. is a
leading distributor of satellite television systems and related products and
services for DISH Networks in the western Pennsylvania marketplace. The
Company's wholly-owned subsidiary FTS Wireless, Inc. is an emerging retail
wireless distributor operating in the gulf coast market of Florida. The
Company’s wholly-owned subsidiary OTG Technologies, Inc. was formed to acquire
information technology, or IT, assets. The Company sold its Elysium
Internet business on April 4, 2008.
  BASIS
OF PRESENTATION
 
 These
condensed interim consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America (“US GAAP”).
 
 The
interim results of operations are not necessarily indicative of the results to
be expected for the fiscal year ending December 31, 2008. The Company’s
financial statements contained herein are unaudited and, in the opinion of
management, contain all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of financial position, results of
operations and cash flows for the period presented. The Company’s accounting
policies and certain other disclosures are set forth in the notes to the
consolidated financial statements contained in the Company’s Annual Report on
Form 10-KSB/A for the year ended December 31, 2007 filed on May 15, 2008. These
financial statements should be read in conjunction with the Company’s audited
consolidated financial statements and notes thereto. The preparation of
financial statements in conformity with US GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent 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.
  PRINCIPLES
OF CONSOLIDATION
  The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries: FTS Wireless, Inc., See World Satellites, Inc., OTG
Technologies Group, Inc., and Elysium Internet, Inc. All significant
inter-company transactions and balances have been eliminated in
consolidation.
 
 USE
OF ESTIMATES
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses. Actual results could differ from these
estimates.
   F-4
 Table of Contents
  (2)  Property and
Equipment
  Major
classes of property and equipment, together with their estimated useful lives,
consisted of the following at March 31, 2008 and December 31, 2007:
  Years
              
              
              2008
              
              
              2007Leasehold
      Improvements
              
              
              5
              
              
              4,032
              
              
              4,032Furniture
      and Fixtures
              
              
              5
              
              
              138,252
              
              
              208,252Equipment
              
              
              3-5
              
              
              92,595
              
              
              92,595Vehicles
              
              
              3
              
              
              18,777
              
              
              18,777Total
      property and equipment
              
              
              
              
              
              253,656
              
              
              323,656Less:
      accumulated depreciation
              
              
              
              
              
              (193,165
              )
              
              (201,670
              )Net
      property and equipment
              
              
              
              
              
              60,491
              
              
              121,986
  (3)   Going Concern
 
 The
Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. The Company's ability to continue as a going concern
is contingent upon its ability to expand its operations and secure additional
financing. Failure to secure financing or expand operations may result in the
Company not being able to continue as a going concern. The Company had an
accumulated deficit of $11,512,830 as of March 31, 2008 and negative cash flows
from operations of $82,970 for the six months ended March 31,
2008. Additionally, the Company was in default on approximately $3,300,000
in debts owed to creditors as of March 31, 2008. The financial statements do not
include any adjustments to reflect the possible future effects of the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
  (4) Debt
  The table
below details transactions related to the loan payable to the Company's Chief
Executive Officer during the three months ended March 31, 2008:
  Beginning
      balance payable, as of December 31, 2007
                
                $
                4,000Accrued
      interest
                
                
                -Advances
      from Chief Executive Officer
                
                
                112,098Ending
      balance payable
                
                $
                116,098
  Notes
Payable
 
 The table
below details the balances owed to various creditors of the Company under
several notes payable as of March 31, 2008 and December 31, 2007, all of which
were in default as of March 31, 2008:
  March 31,
    2008
                  
                  
                  December 31,
                    2007Richard
    Miller
                  
                  $
                  1,587,500
                  
                  
                  $
                  1,587,500Philip
    Holman
                  
                  
                  7,750
                  
                  
                  
                  13,500$
                  1,595,250
                  
                  
                  $
                  1,601,000
  Related Party Notes
Payable
 
 The table
below details the balances owed to Alpha Capital as of March 31, 2008 and
December 31, 2007, which was in default as of March 31, 2008:
  March 31,
    2008
                  
                  
                  December 31,
                    2007Alpha
      Capital
                  
                  $
                  75,000
                  
                  
                  $
                  75,000
 
 Related Party Convertible
Debts
 
 The table
below details the balances owed to various creditors of the Company as of March
31, 2008 and December 31, 2007, all of which were in default as of March 31,
2008:
  March 31,
    2008
                  
                  
                  December 31,
                    2007Institutionals
      *
                  
                  $
                  1,643,077
                  
                  
                  $
                  2,079,822
  * Represents various
mutual funds which were issued convertible debentures in 2006 and
2005.
 In
December 2005 and January 2006, the Company raised a total of $1,470,000 from
the issuance of $1,858,622 in Secured Convertible Promissory Notes to
selected subscribers. The Notes were issued at an original discount of 21%. On
December 29, 2005, the Company received $1,000,000 of the proceeds and an
additional $470,000 in January 2006. Both amounts were after discount, but
before expenses. The Company agreed to issue 100 Class A and 50 Class B Warrants
for each 100 shares on the closing date of the issuance of the Notes, assuming
complete conversion. The Company also agreed to issue 36,260,486 shares of
common stock to be distributed pro rata to purchasers of the Notes (the common
stock was issued effective December 29, 2005 and is included in the number of
shares issued and outstanding at December 31, 2005). The conversion prices of
the Notes, Class A Warrants and Class B Warrants as stated on the Notes are
$0.04, $0.02868 and $0.0239, respectively.
 
 On
January 3, 2005, the Company acquired See World Satellites, Inc., a Pennsylvania
corporation. As part of the purchase price for See World, currently a
wholly-owned subsidiary of the Company, the Company agreed to issue a promissory
note in the amount of $3,500,000. On January 22, 2007, the Company assigned a
$1,000,000 portion of this Note to four investors (the "Assignees"). The Company
issued a Note to each Assignee with a combined principle amount of $1,000,000.
The Notes bear interest at a rate of 20% which was paid in the form of an
original issue discount to the Notes. Payments are due to each Assignee in
accordance with their pro rata share.
 
 As
consideration for the assignment, the Company agreed to issue 15,000,000 shares
of common stock to be distributed pro rata among the Assignees of the Notes. The
shares were issued in accordance with Rule 506 of Regulation D under the
Securities Act of 1933, as amended, in that:
  ·
                the sales were made to
      sophisticated or accredited investors, as defined in
      Rule 502;
 ·
                the Company gave each Assignee the
      opportunity to ask questions and receive answers concerning the terms and
      conditions of the offering and to obtain any additional information which
      the Company possessed or could acquire without unreasonable effort or
      expense that is necessary to verify the accuracy of information
      furnished;
 ·
                at a reasonable time prior to the
      sale of securities, the Company advised each Assignee of the limitations
      on resale in the manner contained in
    Rule 502(d)2;
 ·
                neither the Company nor any person
      acting on its behalf sold the securities by any form of general
      solicitation or general advertising; and
 ·
                the Company exercised reasonable
      care to assure that each Assignee of the securities is not an underwriter
      within the meaning of Section 2(11) of the Securities Act of 1933 in
      compliance with
Rule 502(d).
 The
Company accounted for the issuance of stock and warrants under the convertible
notes in line with the provisions of Emerging Issues Task Force "EITF" 00-27
which states that when a debt instrument includes detachable instruments such as
warrants, the proceeds of the issuance should be allocated to the convertible
instrument and the detachable instruments in proportion to their relative fair
market values. Accordingly, the Company calculated fair value of the stock based
on current market price and fair value of the warrants using the Black-Scholes
pricing model. Total proceeds from the funding were then allocated among debt
and equity based on their relative fair values.
  (5)    Income Taxes
  United
States of America
  Income
taxes for the interim periods were computed using an effective tax rate
estimated to be applicable for the full fiscal year, which is subject to ongoing
review and evaluation by management. The estimated federal income tax expenses
for the three months ended March 31, 2008 and 2007 are eliminated by net
operating loss carry forwards.
  Nevada
 
 The
Company is incorporated in the State of Nevada in the United States of America
but does not conduct business in Nevada.  Nevada does not have
corporate income taxes, franchise taxes or other significant taxes or fees for
doing business as a Nevada corporation. As a result, there is no provision for
Nevada income taxes and there are no deferred tax amounts related to Nevada as
of March 31, 2008.
 (6)  Commitments and
Contingencies
  Operating
Leases
  The
Company leases real property for its retail locations and its corporate office.
Four of the locations have lease terms ranging from one to five years while two
locations are on a month-to-month basis.
  Future
minimum payments due on the non-cancelable leases are as follows:
  AnnualYear
      Ending December 31,
              
              Payments2008
              $
              56,6002009
              
              52,8002010
              
              52,8002011
              
              52,8002012
              
              17,600$
              232,600
  Rent
expense was $36,963 and $53,927 for the three months ended March 31, 2008 and
2007, respectively.
 Litigation
 
 We may be
involved from time to time in ordinary litigation that will not have a material
effect on our operations or finances. We are not aware of any pending or
threatened litigation against the company or our officers and directors in their
capacity as such that could have a material impact on our operations or
finances.
 (7)   Concentration of Credit
Risk
 
 The
Company's concentrations of credit risk consist principally of Accounts
Receivable and Accounts Payable. Historically, the Company has purchased
approximately 90% of its telephone and satellite television supplies from two
vendors. Additionally, these same two vendors are also major customers of the
Company who provide over 80% of revenue.
 
 (8)   Stock
  On
January 15, 2006 the Company issued 1,500,000 restricted common shares to Scott
Gallagher relating to a two year employment agreement entered into on November
15, 2005.
  During
the three months ended March 31, 2006, the Company issued 1,500,000 restricted
shares of common stock to an officer of the Company relating to a two year
employment agreement dated February 1, 2006.
 
 During
the three months ended March 31, 2006, the Company issued 2,250,000 restricted
shares of common stock valued at $0.02 per share to an officer of the Company to
reduce an outstanding debt obligation of $45,000.
 
 During
the three months ended March 31, 2006, the Company issued 2,500,000 restricted
shares of common stock valued at $0.02 per share to an officer of the Company as
a success bonus for 2005.
 
 During
the three months ended March 31, 2006, the Company issued 1,000,000 shares of
its Series B Convertible Preferred stock to Mr. Richard Miller, the former owner
and current President of See World Satellites, Inc. The conversion rate for the
Series B Convertible Preferred Stock is 25 shares of common stock
for each share of Series B Convertible Preferred Stock. The shares of Series B
Convertible Preferred Stock may be converted into common stock at any time after
January 3, 2008, at the option of the Company or that of the holder. The Series
B Convertible Preferred Stock has no voting rights. Each share is
worth $1.00.
 
 On
January 14, 2008, the Company issued 1,307,190 restricted shares of common stock
to an institutional investor relating to the conversion of $10,000 of debt at a
price of $0.0765 per share.
 
 On
January 31, 2008, the Company issued 840,336 restricted shares of common stock
to an institutional investor relating to the conversion of $5,000 of debt at a
price of $0.00595 per share.
 
 On
February 8, 2008, the Company issued 948,766 restricted shares of common stock
to an institutional investor relating to the conversion of $5,000 of debt at a
price of $0.00527 per share.
 
 On March
3, 2008, the Company issued 2,083,333 restricted shares of common stock to an
institutional investor relating to the conversion of $10,000 of debt at a price
of $0.0048 per share.
 
 On March
3, 2008, the Company issued 8,000,000 restricted shares of common stock to two
consultants for services rendered to the Company.
 
 On March
6, 2008, the Company issued 4,613,610 restricted shares of common stock to an
institutional investor relating to the conversion of $20,000 of debt at a price
of $0.004335 per share.
 
 On March
18, 2008, the Company issued 5,263,157 restricted shares of common stock to an
institutional investor relating to the conversion of $20,000 of debt at a price
of $0.0038 per share.
 
 On March
31, 2008, the Company issued 5,692,599 restricted shares of common stock to an
institutional investor relating to the conversion of $15,000 of debt at a price
of $0.002635 per share.
 
 On March
31, 2008, the Company issued 2,928,257 restricted shares of common stock to an
institutional investor relating to the conversion of $10,000 of debt at a price
of $0.003415 per share.
 
 The
securities issued in the foregoing transactions were made in reliance upon Rule
506 of Regulation D under the Securities Act of 1933, as amended, by the fact
that:
  ·
                  the sales were made to
      sophisticated or accredited investors, as defined in
      Rule 502;
 ·
                  the Company gave
      each purchaser the opportunity to ask questions and receive answers
      concerning the terms and conditions of the offering and to obtain any
      additional information which the Company possessed or could acquire
      without unreasonable effort or expense that is necessary to verify the
      accuracy of information furnished;
 ·
                  at a reasonable time prior to the
      sale of securities, the Company advised each purchaser of the
      limitations on resale in the manner contained in
      Rule 502(d)2;
 ·
                  neither the Company nor any person
      acting on its behalf sold the securities by any form of general
      solicitation or general advertising; and
 ·
                  the Company exercised reasonable
      care to assure that each purchaser of the securities is not an
      underwriter within the meaning of Section 2(11) of the Securities Act
      of 1933 in compliance with
  Rule 502(d).
 COMMON
STOCK
 
 Holders
of shares of common stock are entitled to one vote for each share on all matters
to be voted on by the stockholders. Holders of common stock do not have
cumulative voting rights. Holders of common stock have no preemptive rights to
purchase the Company’s common stock. There are no conversion or redemption
rights or sinking fund provisions with respect to the common stock. Holders of
common stock are entitled to share ratably in dividends, if any, as may be
declared from time to time by the Company's Board of Directors in its discretion
from funds legally available therefore, subject to the rights of Preferred
stockholders. Please refer to the discussion below under "Preferred Stock." In
the event of the Company's liquidation, dissolution or winding up, the holders
of common stock are entitled to share pro rata all assets remaining after
payment in full of all liabilities, subject to the rights of Preferred
Stockholders.
 
 PREFERRED
STOCK
 
 The
Company's Articles of Incorporation, as amended, vest its Board of Directors
with authority to divide its preferred stock into series and to fix and
determine the relative rights and preferences of the shares of any such series
so established to the full extent permitted by the laws of the State of Nevada
and the Articles of Incorporation, as amended, in respect to, among other
things, (i)the number of shares to constitute such series and the distinctive
designations thereof; (ii)the rate and preference of dividends, if any, the time
of payment of dividends, whether dividends are cumulative and the date from
which any dividend shall accrue; (iii) whether Preferred Stock may be redeemed
and, if so, the redemption price and the terms and conditions of redemption;
(iv) the liquidation preferences payable on Preferred Stock in the event of
involuntary or voluntary liquidation; (v) sinking fund or other provisions, if
any, for redemption or purchase of Preferred Stock; (vi) the terms and
conditions by which Preferred Stock may be converted, if the preferred stock of
any series are issued with the privilege of conversion; and (vii) voting rights,
if any. A total of 150,000 shares were designated Series A Preferred Stock,
however, none are outstanding. All Series A Preferred shares have an issue
price and preference on liquidation equal to $1.00 per share. The Series A
Preferred shares accrue dividends at the rate of 10% per annum during the first
two years following issuance, which dividend is payable in cash and is
cumulative. During the third through fifth year in which the Series A Preferred
shares are outstanding, the holders are entitled to 3.75% of the Company's net
profits, also payable in cash. The Company may redeem this Series A Preferred
Stock at any time following notice to the holder for an amount equal to the
issue price, plus any accrued but unpaid dividends.
 
 The
Series A Preferred shares are convertible into shares of the Company's common
stock at the option of the holder on a one for one basis at any time up to the
fifth anniversary of the issuance. On the fifth anniversary, the Series A
Preferred shares automatically convert into shares of the Company's common
stock. The conversion rate is subject to adjustment in certain events, including
stock splits and dividends. Holders of the Company's Series A Preferred Stock
are entitled to one vote for each share held of record. Holders of the Series A
Preferred Stock vote with holders of the common stock as one class.
 
 In April
2006, a total of 1,000,000 shares were designated Series B Convertible Preferred
Stock and all 1,000,000 shares are outstanding. Upon liquidation (voluntary or
otherwise), dissolution or winding up of the Company, holders of Series B
Convertible Preferred Stock will receive their prorate share of the total value
of the assets and funds of the Company to be distributed, assuming the
conversion of Series B Convertible Preferred Stock to common stock. The holders
of shares of Series B Convertible Preferred Stock shall not be entitled to
receive dividends and shall have no voting rights. After June 1, 2006, the
shares of Series B Convertible Preferred Stock shall be redeemable at $2.00 per
share solely at the Company's option.
 
 Any
shares of Series B Convertible Preferred Stock may, at any time after January 3,
2008, at the option of the holder or the Company, be converted into fully paid
and nonassessable shares of common stock. The number of shares of common stock
to which a holder of Series B Convertible Preferred Stock shall be entitled upon
a conversion shall be the product obtained by multiplying the number of shares
of Series B Convertible Preferred Stock being converted by 25.
 
 (9)   Options and
Warrants
 
 Options
  The
Company had a Non-Qualified Stock Option and Stock Grant Plan. For the year
ended December 31, 2005, the Company had not granted any options. Under the
Plan, the Company's Board of Directors had reserved 2,500,000 shares that may
have been granted at the Board of Directors' discretion. No option may have been
granted after July 27, 2007 and the maximum term of the options under the Plan
is ten years. In accordance with SFAS 123R, the Company reviewed the provisions
of the Plan and its related outstanding options to comply with the required fair
value analysis component to SFAS 123R that took effect January 1, 2006. During
this analysis, the Company determined that the 598,000 options previously issued
have expired and are no longer outstanding as of January 1, 2006, per Plan
provisions.
  Warrants
  The
following details warrants outstanding as of March 31, 2008:
  In
accordance with the subscription agreement relating to the private placement the
Company closed during the period ended March 31, 2005, the Company issued the
following warrants. Investors received two classes of warrants, Class A and
Class B Warrants, for each share of common stock purchased. The B Warrants had
an initial exercise price of $0.08 and the A Warrants had an initial exercise
price of $0.12. The Company filed the terms and conditions of the financing and
registration rights in March 2005 in a Current Report on Form 8-K. The
funds raised in the private placement were primarily used for working capital,
costs related to the opening of new locations and to reduce outstanding
liabilities.
  The table
below summarizes warrants issued prior to December 2005 and still
outstanding as of the period ended March 31, 2008.
 
 March 31, 2008Underlying
      Shares
              
              
              Exercise
      PriceWarrants
      issued during 2000
              
              
              1,036,000
              
              $
              1.50Warrants
      issued during 2004 (Expired on August 7, 2007)
              
              
              0
              
              $
              0Warrants
      issued during 2004 and 2005, A Warrants
              
              
              4,956,250
              
              $
              0.045
 
 On
September 28, 2005, the Company reduced the exercise price of the A Warrants
from $0.12 to $0.10. Additionally, the Company reduced the exercise price of the
B Warrants from $0.08 to $0.03. On July 17, 2006, the Company lowered the
exercise price on the A Warrants from $0.10 to $0.045.
  In
accordance with the Subscription Agreement relating to the private placement
closed on December 29, 2005, the Company issued the following warrants.
Investors received two classes of warrants, called Class A and Class
B Warrants, for each share of common stock purchased. The A Warrants have
an exercise price of $0.02868 per share and the B Warrants have an exercise
price of $0.0239 per share.
  The
Company filed the terms and conditions of the financing and registration rights
in January 2006 in a Current Report on Form 8-K. The funds raised in the
private placement were primarily used for the acquisition of the Company's
wholly-owned subsidiary, See World Satellites, Inc.
  The table
below summarizes the Class A and B Warrants outstanding as of March 31,
2008, relating to the financing closed on December 29, 2005.
 
 March 31,
      2008Underlying
      Shares
              
              
              Exercise
      PriceWarrants
      issued in December 2005A
      Warrants
              
              
              46,465,550
              
              
              $
              0.02868B
      Warrants (new)
              
              
              11,458,338
              
              
              $
              0.04
  Based on
the table of A and B Warrants related to the December 31, 2005 financing, the
following summarizes the settlement alternatives at each balance sheet date
assuming net settlement in shares:
  March 31, 2008
              
              
              December 31,
      2007Shares
              
              Fair Value
              
              Shares
              
              Fair ValueA Warrants
              
              46,465,550
              
              $46,466
              
              
              46,465,550
              
              $115,049B Warrants-Old (Expired
      )
              0
              
              $0
              
              
              0
              
              $0B
    Warrants-New
              
              11,458,338
              
              $0
              
              
              11,458,338
              
              $057,923,888
              
              $46,466
              
              
              57,923,888
              
              $115,049
  Based on
the terms of Subscription Agreement in conjunction with Black-Scholes
methodology of calculating fair value amounts, a change in the price of the
Company's common shares is one factor in a four factor calculation which also
considers volatility, risk-free interest rate and time until expiration. A rise
in Company stock will generally have the affect of increasing fair value. This
however, is offset by decreasing life until expiration.
  Although,
the stockholders did authorize an increase in shares from 150,000,000 to
855,000,000 in October 2006, the warrants are still classified as a derivative
in total. Per EITF-0019, the reset provision in the Subscription Agreement
prevents the warrants from being reclassified into equity while they are
outstanding. Warrants were classified into equity upon effectiveness of the
Registration Statement on Form SB-2 and exercise of the warrants into
shares. On July 18, 2007, the Registration Statement was declared effective by
the Securites and Exchange Commission.
  (10)  See World Satellites,
Inc. Acquisition
  Effective
January 3, 2006, the Company acquired 100% of the capital stock of See World
Satellites, Inc. ("See World"), for consideration, providing for (i) $1,000,000
in cash to the stockholder of See World, (ii) a promissory note in the amount of
$3,500,000 and (iii) $1,000,000 in convertible preferred stock of the
Company.
  As
required by SFAS No. 141, the Company has recorded the acquisition using the
purchase method of accounting with the purchase price allocated to the acquired
assets and liabilities based on their respective estimated fair values at the
acquisition date. The purchase price of $5,500,000 had been allocated at
follows:
  Current
      assets
              
              $
              185,850Property
      and Equipment, net
              
              $
              136,454Goodwill
              
              $
              5,177,696$
              5,500,000
  Goodwill
recorded as a result of the acquisition is assignable to the See World
Satellites, Inc. segment and is tax deductible over a period of fifteen
years.
  Unaudited
pro forma data (included in the Company's Current Report on Form 8-K/A, filed on
March 3, 2006) summarizes the results of operations of the Company for the years
ended December 31, 2005 and 2004 as if the acquisition had been completed on
January 1, 2004. The pro forma data gives effect to the actual operating results
prior to acquisition. The pro forma results do not purport to be indicative of
the results that would have actually been achieved if the acquisition had
occurred on January 1, 2004 or may be achieved in the future.
  SFAS 141
also requires in the year of the acquisition, pro forma information displaying
the results of operations for the current period as if the combination had been
completed at the beginning of the period, unless the acquisition was at or near
the beginning of the period. Since See World Satellites, Inc. was acquired on
January 3, 2006, the first business day of the year, and the Company determined
transactions between January 1, 2006 through January 2, 2006 to be immaterial,
pro forma presentation is deemed unnecessary.
  F-5
 Table of Contents
  
 (11)  Stock-Based
Compensation
  The
disclosures required by paragraph 84 of SFAS 123R are stated below, although the
Company had not granted any options from 2001 to March 31,
2008.
  March
      31, 2008
              
              
              March
      31, 2007Net
      Income/ (Loss) as reported
              
              $
              (204,388
              )
              
              $
              (116,865)Basic
      and diluted earnings per share as reported
              
              $
              (0.00
              )
              
              $
              (0.00)Share-based
      employee compensation cost net of related tax effects included in net
      income as reported
              
              
              -
              
              
              
              -Share-based
      employee compensation cost net of related tax effects that would have been
      included in the net income if the fair-value based method had been applied
      to all awards
              
              
              -
              
              
              
              -Pro-forma
      net income as if the fair-value method had been applied to all
      awards
              
              $
              (204,388
              )
              
              $
              (116,865)Pro-forma
      basic and diluted earnings per share as if the fair-value based method had
      been applied to all awards.
              
              $
              (0.00
              )
              
              $
              (0.00)
  (12) Segment
Information
 
 During
2008, the Company currently has three reportable segments and corporate
overhead: (1) product sales for wireless products segment, includes sales of
wireless handsets and accessories; (2) service revenues for installments of
satellites segment, includes sales of satellite dish equipment and
installations; (3) sales revenue generated through Internet advertising and
affiliate programs and (4) a holding company for current and future commercial
ventures. The corporate overhead includes the Company's investment holdings
including financing current operations and expansion of its current holdings as
well as evaluating the feasibility of entering into additional
businesses.
  The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performances
based on profit or loss from operations before income taxes, not including
nonrecurring gains and losses and foreign exchange gains and
losses.
  The
Company's reportable segments are strategic business units that offer different
technology and marketing strategies.
  The
Company's areas of operations are principally in the United States. No single
foreign country or geographic area is significant to the consolidated financial
statements.
  Consolidated
revenues, operating income/(losses), and identifiable assets were as
follows:
  March
      31,2008
              
              
              2007Revenues:Service
      revenue - See World Satellites, Inc.
              
              $
              977,437
              
              
              $
              1,098,458Product
      sales - FTS Wireless, Inc.
              
              $
              569,600
              
              
              $
              702,962Domain
      Revenue-Elysium Internet, Inc.
              
              $
              18,218
              
              
              $
              -Corporate
      - FTS Group, Inc.
              
              $
              375,000
              
              
              $
              375,000Intersegment
      adjustments
              
              $
              (375,000
              )
              
              $
              (375,000
              )$
              1,565,255
              
              
              $
              2,176,420Income
      (loss) from operations:Service
      revenue - See World Satellites, Inc.
              
              $
              86,213
              
              
              $
              201,302Product
      sales - FTS Wireless, Inc.
              
              $
              (14,179
              
              
              $
              27,516Domain
      Revenue-Elysium Internet, Inc.
              
              $
              (10,595
              )
              
              $
              -Corporate
      - FTS Group, Inc.
              
              $
              (265,827
              )
              
              $
              (236,413
              )$
              (204,388
              )
              
              $
              (7,595)Identifiable
      assets:Service
      revenue - See World Satellites, Inc.
              
              $
              5,680,802
              
              
              $
              5,895,481Product
      sales - FTS Wireless, Inc.
              
              $
              30,018
              
              
              $
              543,620Domain
      Revenue-Elysium Internet, Inc.
              
              $
              322,450
              
              
              $
              -Corporate
              
              $
              171,198
              
              
              $
              237,052$
              6,204,468
              
              
              $
              6,676,153
  (13) 
Earnings Per Share
  Basic
earnings (loss) per share are calculated on the basis of the weighted average
number of common shares outstanding. Diluted earnings per share, in addition to
the weighted average determined for basic earning (loss) per share, include
common stock equivalents, which would arise from the conversion of the preferred
stock, convertible notes payable and warrants to purchase common shares. Diluted
earnings per common share assume that any dilutive convertible notes and
preferred stock that were outstanding at the beginning of each year were
converted at those dates. It also assumes that outstanding common shares were
increased by shares issuable upon exercise of those warrants for which market
price exceeds exercise price.
  For the Three
      months ended March 31,2008
              
              
              2007Basic income (loss) per
      share:Net income
      (loss)
              
              
              $
              (204,388
              )
              $
              (116,865
              )Weighted average
      common shares outstanding
              
              
              
              219,934,698
              
              
              137,868,401Weighted income per
      share:Weighted average
      common shares outstanding
              
              
              
              219,934,698
              
              
              137,868,401Convertible notes
      payable
              
              
              
              N/A
              
              
              N/AWarrants
      A
              
              
              
              N/A
              
              
              N/AWarrants
      B
              
              
              
              N/A
              
              
              N/AWeighted average
      common shares outstanding for diluted net earning per
share
              
              
              
              219,934,698
              
              
              137,868,401Net income (loss)
      per share - basic
              
              
              $
              0.00
              
              $
              0.00Net income (loss)
      per share - diluted
              
              
              $
              0.00
              
              $
              0.00
  (14
)  On The Go Healthcare, Inc. Transaction
 We
have not finalized an asset purchase with Metro One Development, Inc. and
therefore we are not certain how our results of operations will be effected when
the transaction is complete. Effective
March 18, 2008, together with our wholly-owned subsidiary OTG Technologies
Group, Inc., we entered into a binding letter of intent with On The Go
Healthcare, Inc., which subsequently changed its name to Metro One Development,
Inc., whereby we agreed to purchase certain assets of On The Go Healthcare’s
value-added reseller business unit, dba On The Go Technologies Group, including
its goodwill and intellectual property, and in addition, we agreed to assume On
The Go Technologies Group’s trade contracts beginning March 18, 2008. In
exchange for the foregoing, we agreed to pay $4,000,000.  The
$4,000,000 purchase price was comprised of a promissory note issued to On The Go
Healthcare and our assumption of On The Go Technologies Group’s vendor debt in
the amount of $1,100,000 and $2,900,000, respectively, subject to adjustment
based on a final determination of vendor debt outstanding on the effective
date.  Since the effective date of the binding letter of intent, we
have commenced further negotiations with Metro One Development to finalize
amounts due to various vendors and with respect to certain terms in the letter
of intent.  We cannot be certain how the asset acquisition will affect
our results of operations until such amounts are finalized.
   (15) 
Subsequent Events
  Subsequent
to the period ended April 4, 2008, the Company sold its majority-owned
subsidiary Elysium Internet, Inc. to US Biodefense, Inc., a Company
majority-owned by the Company's Chairman and Chief Executive Officer, Scott
Gallagher. The total transaction value was $2 million. The valuation of the deal
was based on third party domain name valuations, amount’s paid to acquire domain
names, recent market sales of domain names as well as current valuations of
portfolios of similar size. The Company received a note from US Biodefense,
Inc. for $1.5 million payable over 12 months upon completion of a financing, in
addition the Company received shares of a new class of preferred stock
convertible into 60% of the issued and outstanding shares of US Biodefense's
common stock at the time of the first conversion. The Company believes this transaction
was completed under terms which would have been substantially the same as if the
transaction were completed with independent third parties.
   F-6
 Table of Contents
  Item
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
 
 This
report on Form 10-Q contains forward-looking statements that involve risk and
uncertainties. You should not place undue reliance on these forward-looking
statements. Our actual results could differ materially from those anticipated in
the forward-looking statements for many reasons, including the risks described
in this report, our annual report on Form 10-K and other filings we make from
time to time with the Securities and Exchange Commission. Although we believe
the expectations reflected in the forward-looking statements are reasonable,
they relate only to events as of the date on which the statements are made. We
do not intend to update any of the forward-looking statements after the date of
this report to conform theses statements to actual results or to changes in our
expectations, except as required by law.
 
 This
“Management’s Discussion and Analysis” should be read in conjunction with our
Financial Statements, including the related notes, appearing in our 2007 Annual
Report on Form 10-K. The
preparation of this quarterly report on Form 10-Q requires us to make estimates
and assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of our financial
statements, and the reported amounts of revenue and expenses during the
reporting period.  There can be no assurance that actual results
reported in the future will not differ from those estimates or that revisions of
these estimates may not become necessary in the future.
 
 Overview
 
 We are an acquisition and development
company focused on developing, acquiring and investing in cash-flow positive
businesses and viable business projects primarily in the Internet, wireless and
technology industries. We operate a diversified wireless business through two of
our wholly-owned subsidiaries, See World Satellites, Inc. and FTS Wireless, Inc.
See World is a Regional Service Provider and retail distributor for DISH Network
Services satellite television systems primarily to business and retail customers
in the western Pennsylvania market and nationally through our retail channel.
FTS Wireless is an emerging distributor of next generation wireless
communications devices and related products and services. FTS Wireless operates
a chain of retail wireless locations in the Gulf Coast market of Florida as well
as an online e-store at www.CellChannel.com. All of the retail locations are
leased properties. Through our third majority-owned subsidiary (60%), Elysium
Internet, Inc., an online media company focused on developing and acquiring a
subscription based targeted Internet directory business, we owned and operated
an Internet media and advertising business. We generated revenue by selling
advertising directly to customers through our directory web sites as well as
through affiliate programs that leverage the direct navigation Internet traffic
of our domain portfolio.  On April 4, 2008, we sold the Elysium
Internet business to US Biodefense, Inc. As a result of the transaction we own
60% of US Biodefense, Inc. The sale of Elysium is not reflected in our
financials for the quarter ended March 31, 2008 because the sale occured after
the quarter ended. During the first quarter we formed a third wholly-owned
subsidiary OTG Technologies Group, Inc., a Florida corporation, to
facilitate the acquisition of assets to be acquired from Metro One Development,
Inc., formerly named On The Go Healthcare, Inc. As of the end of the first
quarter we do not consider the acquisition of assets transaction to be
finalized. We continue to work with Metro One Development,
Inc. and intend to finalize the transaction in the second
quarter.
 
 Critical
Accounting Policies and Estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
judgments and estimates. We
believe the following critical accounting policies effect our more significant
judgments and estimates used in the preparation of our consolidated financial
statements.
  Derivative
Financial Instruments
 
 We
estimate the fair value of our complex derivative financial instruments that are
required to be carried as liabilities at fair value pursuant to Statements on
Financial Accounting Standards No. 133 Accounting for Derivative Financial
Instruments and Hedging Activities (SFAS 133)
 
 We do not
use derivative financial instruments to hedge exposures to cash-flow, market or
foreign-currency risks. However, we frequently enter into certain other
financial instruments and contracts, such as debt financing arrangements,
preferred stock arrangements and freestanding warrants with features that are
either (i) not afforded equity classification, (ii) embody risks not clearly and
closely related to host contracts or (iii) may be net-cash settled by the
counterparty to a financing transaction. As required by SFAS 133, these
instruments are required to be carried as derivative liabilities, at fair value,
in our financial statements.
 
 We
estimate fair values of derivative financial instruments using various
techniques, and combinations thereof, that are considered to be consistent with
the objective measuring of fair values. In selecting the appropriate
technique(s), we consider, among other factors, the nature of the instrument,
the market risks that such instruments embody and the expected means of
settlement. For less complex derivative instruments, such as free-standing
warrants, we generally use the Black-Scholes option valuation technique, since
it embodies all of the requisite assumptions, including trading volatility,
estimated terms and risk free rates, necessary to fair value these instruments.
For complex derivative instruments, such as embedded conversion options, we
generally use the Flexible Monte Carlo valuation technique since it embodies all
of the requisite assumptions, including credit risk, interest-rate risk and
exercise/conversion behaviors, that are necessary to fair value these more
complex instruments. For forward contracts that contingently require net-cash
settlement as the principal means of settlement, we project and discount future
cash flows applying probability-weightage to multiple possible outcomes.
Estimating fair values of derivative financial instruments requires the
development of significant and subjective estimates that may, and are likely to,
change over the duration of the instrument with related changes in internal and
external market factors. In addition, option-based techniques are highly
volatile and sensitive to changes in our trading market price which has
high-historical volatility. Since derivative financial instruments are initially
and subsequently carried at fair values, our income will reflect the volatility
in these estimate and assumption changes.
 
 Revenue
Recognition
  Our
wholly-owned subsidiary, FTS Wireless, recognizes revenue from the activation of
new wireless customers and the sale of wireless handsets, airtime and
accessories at the time of activation or sale. Net revenues from wireless
activations are recognized during the month the activation is performed.
Allowances for charge-backs, returns, discounts and doubtful accounts are
provided when sales are recorded. Shipping and handling costs are included in
cost of sales.
 
 Our
wholly-owned subsidiary, See World Satellites, Inc. recognizes revenue when it
makes a sale within the store, completes a retail satellite receiver
installation at the customer's home and the customer signs a contract, or
completes a retail service provider satellite receiver installation at the
customer's home and the customer signs a contract.
  Elysium
Internet, Inc. recognized revenue when it made a sale through its director
business. Sales generated from third-party aggregators were recognized in the
month they are made.
  Although our
post-paid activations both at wireless and the retail side of See World’s
business are subject to possible charge-back of commissions if a customer
deactivates service within the allowable 180-day period after signing the
contract, they still recognize the activation in the period of the
activation. We have set up a reserve for possible activation charge-backs.
Based on SFAS No. 48, this is permitted if reliable estimates of the expected
refunds can be made on a timely basis, the refunds are being made for a large
pool of homogeneous terms, there is sufficient company-specific historical basis
upon which to estimate the refunds, and the amount of the commission specified
in the agreement at the outset of the arrangement is fixed, other than the
customer's right to request a refund.
  Accounts
Receivable
 
 Accounts
receivable consist primarily of trade receivables, net of a valuation allowance
for doubtful accounts.
 
 Cash
and Cash Equivalents
 
 For
purposes of the statement of cash flows, we consider all short-term debt
securities with maturity of three months or less to be cash
equivalents.
 
 Property
and Equipment
 
 Property
and equipment are recorded at cost less accumulated depreciation. Upon
retirement or sale, the cost of the assets disposed of and the related
accumulated depreciation are removed from the accounts, with any resultant gain
or loss included in the results of operations. Depreciation is computed over the
estimated useful lives of the assets (3-20 years) using the straight-line method
for financial reporting purposes and accelerated methods for income tax
purposes. Maintenance and repairs are charged to operations as
incurred.
 
 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 and disclosure of contingent 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 vary from those
estimates.
 
 Goodwill
and Intangible Asset Impairment
 
 Realization
of long-lived assets, including goodwill, is periodically assessed by our
management. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. In management's opinion, there was no impairment of such
assets at December 31, 2007.
 
 Inventories
  Inventories
are valued at the lower of cost determined on a first-in, first-out method, or
market value.
  SEGMENT
RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2008
  Three
      Months Ended March 31, 2008FTS
                
                
                FTS
                
                
                See
                
                
                ElysiumGroup
                
                
                Wireless
                
                
                World
                
                
                InternetInc.
                
                
                Inc.
                
                
                Satellites
                
                
                Inc.
                
                
                TotalRevenuesExternal
                
                $
                -
                
                
                $
                569,600
                
                
                $
                977,437
                
                
                $
                18,218
                
                
                $
                1,565,255Internal
                
                
                375,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                375,000Segment
      Revenues
                
                
                375,000
                
                
                
                569,600
                
                
                
                977,437
                
                
                
                18,218
                
                
                
                1,940,255Cost
      of Goods Sold
                
                
                -
                
                
                
                490,719
                
                
                
                159,854
                
                
                
                -
                
                
                
                650,573Gross
      Profit
                
                
                375,000
                
                
                
                78,881
                
                
                
                817,583
                
                
                
                18,218
                
                
                
                1,289,682Selling,
      General, & Administrative Expenses Less DepreciationExternal
                
                
                266,946
                
                
                
                90,664
                
                
                
                721,418
                
                
                
                28,813
                
                
                
                1,107,841Internal
                
                
                -
                
                
                
                75,000
                
                
                
                300,000
                
                
                
                -
                
                
                
                375,000Segment
      S, G, &A
                
                
                266,946
                
                
                
                165,664
                
                
                
                1,021,418
                
                
                
                28,813
                
                
                
                1,482,841Subtotal
                
                
                108,054
                
                
                
                (86,783
                )
                
                
                (203,835
                )
                
                
                (10,595
                )
                
                
                (193,159
                )Derivative
      Gain (Loss)
                
                
                68,583
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                68,583Depreciation
                
                
                (9,381
                )
                
                
                (2,396
                )
                
                
                (7,718
                )
                
                
                -
                
                
                
                (19,495
                )Gain
      on Disposed Assets
                
                
                16,872
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                16,872Interest
                
                
                (74,955
                )
                
                
                -
                
                
                
                (2,234
                )
                
                
                -
                
                
                
                (77,189
                )Net
      Income (Loss)
                
                
                109,173
                
                
                
                (89,179
                )
                
                
                (213,787
                )
                
                
                (10,595
                )
                
                
                (204,388
                )Intersegment
      Adjustments
                
                
                (375,000
                )
                
                
                75,000
                
                
                
                300,000
                
                
                
                
                
                
                
                -$
                (265,827
                )
                
                $
                (14,179
                )
                
                $
                86,213
                
                
                $
                (10,595
                )
                
                $
                (204,388
                )
   2 Table of Contents
  Results
of Operations and Financial Condition
 
 Three
Months Ended March 31, 2008 versus March 31, 2007
  Total
Operating Revenues
 
 We generated $1,565,255 of total
revenues for the three months ended March 31, 2008 as compared to $1,801,420 for
the three months ended March 31, 2007 resulting in a decrease of approximately
13.1%. The decrease in top line revenue is attributable to the strategic
decision we made to reduce our retail store count by selling three locations and
realign the retail side of our wireless distribution business towards a
predominately online business model. During the first quarter we launched our
online e-store at www.CellChannel.com. The decision is a result of the
changes in the rate plans of the national wireless carriers that are now more
competitive to Metro PCS by offering unlimited rate plans nationally as opposed
to Metro PCS’ local unlimited plans.
 
 Total
Operating Costs and Expenses
 
 Total
operating costs declined $31,106 to $1,777,909 for the three months ended March
31, 2008 compared to $1,809,015 for the three months ended March 31, 2007.
Included in total operating costs was a $76,758 decrease in cost of goods sold
from $727,331 during the three months ended March 31, 2007 to $650,573 during
the three months ended March 31, 2008. The primary reason for the decrease in
cost of goods sold was the decline in lower margin sales at FTS Wireless as a
result of selling three retail locations during the quarter. General and
Administrative expenses increased $45,652 from $1,081,684 during the three
months ended March 31, 2007 to $1,127,336 during the three months ended March
31, 2008. The increase in General and Administrative expenses is primarily
related to increases in gas prices effecting See World Satellite and
increased consulting fees relating to the Elysium and OTG transactions and
investor relations fees. We anticipate these expenses to continue through the
second quarter and then begin to decline in the second half of fiscal
2008.
 
 Other
Income (Expense)
 
 Included
in other income is an increase of $8,329 of income relating to changes in the
fair value of derivative liabilities. Income from derivative liabilities
increased from $60,254 during the three months ended March 31, 2007 to $68,583
for the three months ended March 31, 2008. During the three months ended March
31, 2008, we recorded a gain of $16,872 relating to the sale of certain retail
wireless locations. Interest expenses were lowered by $92,335 from $169,524
during the three months ended March 31, 2007 to $77,189 during the three months
ended March 31, 2008.
 
 Net
Income (Loss) from Continuing Operations
 
 We reported
a net loss of $204,388 for the three months ended March 31, 2008 compared to a
net loss of $116,865 for the three months ended March 31, 2007. The $87,523
increase to our net loss is primarily related to increased fuel prices as well
as increased consulting fees compared to the quarter over quarter
period.
 
 Liquidity
and Capital Resources
  Our
requirements for capital are to:
  o pay down
debt,
  o fund
possible acquisitions; and
  o provide
working capital and funds to expand our current business.
  Our
primary source of financing during the three months ended March 31, 2008 was
cash generated from operating activities, notes being issued and cash received
from the issuance of common stock.
  As of
March 31, 2008, our Current Assets were $499,873, consisting of $2,733 in cash
and cash equivalents, $315,460 in inventories, $78,917 of accounts receivables
and $102,763 of prepaid expenses and current assets. Current Liabilities were
$4,226,716, consisting of $1,643,077 of related party convertible debt, $75,000
of notes payable to a related party, $109,666 in an officer note payable,
$1,595,250 of notes payable and $757,257 in accounts payable and accrued
expenses.
  At March
31, 2008, we had total assets of $6,204,468, consisting of, in addition to the
assets described above, Goodwill of $5,177,696, Property and equipment, net of
accumulated depreciation of $60,491, unamortized discount of convertible debt of
$144,935, Internet domain portfolio of $315,087 and Deposits of
$6,386.
  Going
Concern Opinion
  We
believe that our continued existence is dependent upon our ability to grow the
profits of our satellite television operations and make our retail wireless
operations profitable, and our ability to raise additional capital to reduce
debt. Accordingly, the notes to our unaudited, interim consolidated financial
statements express substantial doubt about our ability to continue as a going
concern.
  Off
Balance Sheet Arrangements
  As of
March 31, 2008, we did not have any off-balance sheet transactions.
  Item
3. Quantitative and Qualitative Disclosures
about Market Risk.
 
 Because
we are a smaller reporting company, this Item is not applicable to
us.
  Item
4T. Controls and Procedures.
 
 Our
management evaluated, with the participation of our Chief Executive Officer /
Interim Chief Financial Officer, the effectiveness of our disclosure controls
and procedures as of the end of the period covered by this quarterly report on
Form 10-Q.  Based on this evaluation, our Chief Executive Officer /
Interim Chief Financial Officer has concluded that our disclosure controls and
procedures are effective to ensure that information we are required to disclose
in reports that we file or submit under the Securities Exchange Act of 1934 (i)
is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms, and (ii) is
accumulated and communicated to our management, including our Chief Executive
Officer / Interim Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.  Our disclosure controls and
procedures are designed to provide reasonable assurance that such information is
accumulated and communicated to our management.  Our disclosure
controls and procedures include components of our internal control over
financial reporting.  Management’s assessment of the effectiveness of
our internal control over financial reporting is expressed at the level of
reasonable assurance that the control system, no matter how well designed and
operated, can provide only reasonable, but not absolute, assurance that the
control system’s objectives will be met.
 
 Management’s
Report on Internal Control Over Financial Reporting
  Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with U.S. generally accepted accounting principles. Our
internal control over financial reporting includes those policies and procedures
that:
 
 1.pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect our transactions and
dispositions of our assets;
  2.provide reasonable assurance that our
transactions are recorded as necessary to permit preparation of our financial
statements in accordance with generally accepted accounting principles, and that
our receipts and expenditures of our Company are being made only in accordance
with authorizations of our management and our directors; and
  3.provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of our assets that could have a material effect on our financial
statements.
  Internal
control over financial reporting includes the controls themselves, monitoring
and internal auditing practices and actions taken to correct deficiencies
identified.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with policies or procedures may deteriorate.
  Under the
supervision and with the participation of our management, including our Chief
Executive Officer / Interim Chief Financial Officer, we conducted an assessment
of the effectiveness of our internal control over financial reporting as of
March 31, 2008. In making this assessment, management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal
Control—Integrated
Framework, specifically as supplemented by the COSO publication, Internal Control over Financial
Reporting – Guidance for Smaller Public Companies. Based on this
evaluation, our management concluded that our internal control over financial
reporting was effective as of March 31, 2008.
 
 Changes
in Internal Controls
 
 There
were no changes in our internal control over financial reporting that occurred
during the first quarter covered by this quarterly report on Form 10-Q that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
 
 This
quarterly report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by our
registered public accounting firm pursuant to the temporary rules of the
Securities and Exchange Commission that permit us to provide only management’s
report in this annual report.
   3
 Table of Contents
  PART
II – OTHER INFORMATION
 
 Item
1. Legal Proceedings.
 
 Neither
we, nor any of our officers or directors in their capacities as such, are
subject to any material legal proceedings, and we do not know of any potential
or threatened legal proceeding.
 
 Item
1A. Risk Factors.
  Please
refer to the Risk Factors section of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2007.  We believe there were no new
risk factors related to our business in the first quarter of 2008 except as set
forth below:
  Changes
in the market price of fuel may have a material adverse effect on our
business.
  Our
wholly-owned subsidiary, See World Satellites, uses a significant amount of fuel
in its operations. As the price of fuel has sharply increased, our expenses have
also increased to operate our vehicles. The cost of fuel, which has been at
historically high levels over the last three years, is largely unpredictable and
could have a significant impact on our results of operations.
 Item
2. Unregistered Sales of Equity Securities and
Use of Proceeds.
  On March
3, 2008, we issued 8,000,000 restricted shares of common stock to two
consultants for services rendered to our Company. These services were
valued at $22,400.
  Item
3. Defaults upon Senior Securities.
 
 None.
 
 Item
4. Submission of Matters to a Vote of Security
Holders.
 
 There
were no matters submitted to a vote of our stockholders during the quarter ended
March 31, 2008.
 
 Item
5. Other Information.
 
 None.
 
 Item 6. Exhibits.
 
 Exhibit
                Number
              
              Description
      of Exhibits
 
 2.1
              Agreement
      and Plan of Merger between the Company and FTS Apparel, Inc., dated
      December 23, 2003 (included as Attachment A to the Definitive Proxy on
      Form DEF 14A filed January 9, 2004, and incorporated herein by
      reference).
  3.1
              Articles
      of Incorporation dated December 23, 2003 (included as Attachment B to the
      Definitive Proxy on Form DEF 14A filed January 9, 2004, and incorporated
      herein by reference).
 
 3.2
              Certificate
      of Designation for Series A Convertible Preferred Stock, dated April 15,
      1998 (included as Exhibit 2.2 to the Form 10SB12G filed August 24, 1998,
      and incorporated herein by
reference).
 
 3.3
              Bylaws
      (included as Attachment C to the Definitive Proxy on Form DEF 14A filed
      January 9, 2004, and incorporated herein by
  reference).
 
 3.4
              Amendment
      to the Articles of Incorporation (included as Exhibit 10.1 to the Form 8-K
      filed March 13, 2006, and incorporated herein by
    reference).
 
 3.5
              Certificate
      of Designation for Series B Convertible Preferred Stock dated March 8,
      2006 (included as Exhibit 10.1 to the Form 8-K filed March 13, 2006 and
      incorporated herein by reference).
 
 3.6
              Amendment
      to the Articles of Incorporation, as amended, dated October 20, 2006,
      filed with the State of Nevada January 18, 2007 (filed
      herewith).
 
 4.1
              Form
      of Certificate for Common Shares (included as Exhibit 4.1 to the
      Registrant's Annual Report on Form 10-KSB for the fiscal year ended
      December 31, 1998 and incorporated herein by this
    reference).
 
               4.2
              A
      Warrant Form (included as Exhibit 4.1 to the Form 8-K filed March 24,
      2005, and incorporated herein by
reference).
 
 4.3
              B
      Warrant Form (included as Exhibit 4.2 to the Form 8-K filed March 24,
      2005, and incorporated herein by
reference).
 
 4.4
              Promissory
      Note between the Company and Dutchess Private Equities Fund, II, L.P.,
      dated October 27, 2004 (included as Exhibit 4.11 to the Form SB-2 filed
      June 17, 2005, and incorporated herein by
  reference).
 
 4.5
              Promissory
      Note between the Company and Dutchess Private Equities Fund, II, L.P.,
      dated January 10, 2005 (included as Exhibit 4.12 to the Form SB-2 filed
      June 17, 2005, and incorporated herein by
  reference).
 
 4.6
              A
      Warrant Form (included as Exhibit 4.1 to the Form 8-K filed January 5,
      2006, and incorporated herein by
reference).
 
 4.7
              B
      Warrant Form (included as Exhibit 4.2 to the Form 8-K filed January 5,
      2006, and incorporated herein by
reference).
 
 4.8
              Form
      of Common Stock Purchase Warrant between the Company and Olympus
      Securities, (included as Exhibit 4.16 to the Form SB-2/A filed July 5,
      2006, and incorporated herein by
reference).
           
                                           10.1
              Promissory
      Note between the Company and Alpha Capital Aktiengesellschaft (included as
      Exhibit 10.1 to the Form 8-K filed January 5, 2006, and incorporated
      herein by reference).
 
 10.2
              Subscription
      Agreement between the Company and certain subscribers, dated December 29,
      2005 (included as Exhibit 10.2 to the Form 8-K filed January 5, 2006, and
      incorporated herein by reference).
 
 10.3
              Guaranty
      Agreement between the Company and certain lenders, dated December 29, 2005
      (included as Exhibit 10.3 to the Form 8-K filed January 5, 2006, and
      incorporated herein by reference).
 
 10.4
              Security
      Agreement between the Company and certain lenders, dated December 29, 2005
      (included as Exhibit 10.4 to the Form 8-K filed January 5, 2006, and
      incorporated herein by reference).
 
 10.5
              Security
      and Pledge Agreement between the Company and certain lenders, dated
      December 29, 2005 (included as Exhibit 10.5 to the Form 8-K filed January
      5, 2006, and incorporated herein by
reference).
 
 10.6
              Collateral
      Agent Agreement between the Company and certain lenders (included as
      Exhibit 10.6 to the Form 8-K filed January 5, 2006, and incorporated
      herein by reference).
 
 10.7
              Promissory
      Note between the Company and Richard E. Miller, dated January 3, 2006
      (included as Exhibit 10.1 to the Form 8-K filed January 9, 2006, and
      incorporated herein by reference).
 
 10.8
              Stock
      Purchase Agreement between the Company and Richard E. Miller, dated
      January 3, 2006 (included as Exhibit 10.2 to the Form 8-K filed January 9,
      2006, and incorporated herein by
reference).
 
 10.9
              Stock
      Escrow Agreement between the Company, Richard E. Miller, and Lambert&
      Martineau, attorneys at law, dated January 3, 2006 (included as Exhibit
      10.3 to the Form 8-K filed January 9, 2006, and incorporated herein by
      reference).
 
 10.10
              Amendment
      Number 1 to the Retailer Agreement between the Company and EchoStar
      Satellite LLC, dated March 31, 2006 (included as Exhibit 10.1 to the Form
      8-K filed March 31, 2006, and incorporated herein by
      reference).
 
 10.11
              Amendment
      to extend Authorized Regional Service Provider Agreement between the
      Company and Dish Network Service LLC dated March 31, 2006 (included as
      Exhibit 10.2 to the Form 8-K filed March 31, 2006, and incorporated herein
      by reference).
 
 10.12
              Letter
      Agreement between the Company and EchoStar Satellite LLC, dated March 27
      2006 (included as Exhibit 10.1 to the Form 8-K filed April 5, 2006 and
      incorporated herein by reference).
 
 10.13
              Employment
      Agreement between the Company and Scott Gallagher dated November 15, 2005
      with amended start date of February 1, 2007 (included as Exhibit 10.27 to
      the Form 10-QSB filed May 15, 2006 and incorporated herein by
      reference).
 
 10.14
              Employment
      Agreement between the Company and David Rasmussen dated February 1, 2006
      (included as Exhibit 10.28 to the Form 10-QSB filed May 15, 2006 and
      incorporated herein by reference).
 
 10.15
              Promissory
      Note between the Company and Alpha Capital Anstalt, dated January 22, 2007
      (included as Exhibit 10.1 to the Form 8-K filed January 26, 2007 and
      incorporated herein by reference).
 
 10.16
              Promissory
      Note between the Company and Ellis International, Ltd., dated January 22,
      2007 (included as Exhibit 10.2 to the Form 8-K filed January 26, 2007 and
      incorporated herein by reference).
 
 10.17
              Promissory
      Note between the Company and Platinum Long Term Growth V, dated January
      22, 2007 (included as Exhibit 10.3 to the Form 8-K filed January 26, 2007
      and incorporated herein by
reference).
 
 10.18
              Promissory
      Note between the Company and Whalehaven Capital Fund Limited, dated
      January 22, 2007 (included as Exhibit 10.4 to the Form 8-K filed January
      26, 2007 and incorporated herein by
reference).
 
 10.19
              Assignment
      and Amendment No. 1 to Note Agreement by and among the Company, Richard E.
      Miller and Assignees, dated January 22, 2007 (included as Exhibit 10.5 to
      the Form 8-K filed January 26, 2007 and incorporated herein by
      reference).
 
 10.20
              Asset
      Purchase Agreement between the Company and US Biodefense, Inc., dated
      March 19, 2008 (included as Exhibit 10.1 to the Form 8-K filed April 11,
      2008, and incorporated herein by
reference).
 
 10.21
              Promissory
      Note due January 3, 2010, issued to the Company by US Biodefense, Inc.
      (included as Exhibit 10.2 to the Form 8-K filed April 11, 2008, and
      incorporated herein by reference).
 
 10.22
              Binding
      Agreement between the Company and OTG Technologies Group, Inc. on one side
      and On The Go HealthCare, Inc. DBA On The Go Technologies, Inc. on the
      other side, dated March 18, 2008 (filed
  herewith).
 
 31.1
              Certification
      of the Chief Executive Officer and Interim Chief Financial Officer
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.
 
 32.1
              Certification
      of Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002.
 
 SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 .
   FTS GROUP,
      INC.Dated: May 21,
      2008
              By:     /s/ Scott
      GallagherName: Scott
      GallagherTitle:  
      Chairman of the Board, Chief Executive Officer,Principal Accounting Officer and PresidentDated: May 21,
      2008
              By:     /s/ David R.
      RasmussenName: David
      RasmussenTitle:   Chief
      Operating Officer and Director
   4