**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON, D.C. 20549




**FORM
      10-QSB**


(MARK
      ONE)




**|X|
      QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE**


**ACT
      OF**


**1934
      FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007**




**|_|
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
      SECURITIES**


**EXCHANGE**


**ACT
      OF 1934 FOR THE TRANSITION PERIOD FROM**


**__________
      TO __________**






*COMMISSION
      FILE NUMBER 000-24829*









**FTS
      GROUP, INC.**


(exact
      name of small business issuer as specified in its charter)







Nevada
            84-1416864(State
                or Jurisdiction of Incorporation or Organization)
            (I.R.S.
                Employer Identification No.)





300
      State St. East, Suite 226, Oldsmar, Florida 34677


(Address
      of principal executive offices)





(813)
      749-8805


(issuer's
      telephone number)





Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 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 in for the past 90 days. Yes |X| No
      |_|




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




As
      of
      June 30, 2007, we had 156,165,294 shares of common stock, par value
      $0.001, outstanding.




Transitional
      Small Business Disclosure Format (check one): Yes |_| No |X|







**FTS
                GROUP, INC.****TABLE
                OF CONTENTS****PART
                I. FINACIAL INFORMATION**
            
            **Page**Item
                1. Financial
                Statements
            
            1Item
                2. Management’s Discussion and Analysis or Plan of
                Operation
            19Item
                3. Controls and
                Procedures
            
            23**PART
                II. OTHER INFORMATION**Item
                1. Legal Proceedings
            
            24Item
                2. Unregistered Sales of Equity Securities
                and Use of Proceeds
            24Item
                3. Defaults of Senior Securities
            
            25Item
                4. Submission of Matters to a Vote of Security
                Holders
            25Item
                5. Other Information
            
            25Item
                6. Exhibits
            
            25







**PART
      I - FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS.**







Condensed
                Consolidated Financial Statements (Unaudited)
            **Page**Balance
                Sheet- June 30, 2007 and December 31,
                2006
            2Statements
                of Operations- Three and Six months
                ended June 30, 2007 and 2006
            3Statement
                of Cash Flows- Three and Six months
                ended June 30, 2007 and 2006
            4Notes
                to Condensed Consolidated Financial
                Statements
            5




1


Table
            of Contents





**FTS
                    GROUP, INC. AND SUBSIDIARIES****CONSOLIDATED
                    BALANCE SHEETS****JUNE
                    30, 2007 AND DECEMBER  31, 2006**Assets
                
                
                2007
                
                2006Current
                    assets:Cash
                    and cash equivalents
                
                
                $
                48,637
                
                115,056Restricted
                    cash
                
                
                
                
                -
                
                -Accounts
                    receivable
                
                
                
                
                77,888
                
                130,025Inventories,
                    net
                
                
                
                
                394,198
                
                373,734Prepaid
                    expenses and current assets
                
                
                343,506
                
                247,686Total
                    current assets
                
                
                
                864,229
                
                866,501Property
                    and equipment, net of accumulated depreciation
                
                
                264,318
                
                303,641Unamortized
                    discount on convertible debt
                
                
                250,552
                
                232,925Unamortized
                    debt issuance costs
                
                
                -
                
                29,573Investments
                
                
                
                
                128,379
                
                92,505Goodwill
                
                
                
                
                
                5,177,696
                
                5,177,696Deposits
                
                
                
                
                
                16,482
                
                16,482Total
                    assets
                
                
                
                $
                6,701,656
                
                6,719,323Liabilities
                    and Stockholders' EquityCurrent
                    liabilities:Accounts
                    payable and accrued expenses
                
                $
                676,969
                
                548,707Current
                    portion of notes payable to related parties, net of
                    discount
                
                
                2,595,140
                
                1,820,215Convertible
                    debentures-current portion
                
                
                1,157,874
                
                1,238,321Current
                    installments of long-term debt-equipment loans
                
                
                1,613
                
                4,824Total
                    current liabilities
                
                $
                4,431,596
                
                3,612,067Fair
                    value of derivative liabilities
                
                
                
                383,104
                
                453,039Convertible
                    debentures
                
                
                
                
                -
                
                -Long-term
                    debt to related parties, less current installments
                
                
                -
                
                1,000,000Total
                    liabilities
                
                
                
                
                4,814,700
                
                5,065,106Stockholders'
                    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 June 30, 2007
                
                
                10,000
                
                10,000Common
                    Stock, $0.001 par value.  Authorized 855,000,000
                    shares:156,165,294
                    shares issued and outstanding at June 30, 2007137,650,469
                    shares issued and outstanding at December 31, 2006
                
                
                156,166
                
                137,650Additional
                    paid-in capital
                
                
                
                12,558,240
                
                12,231,626Accumulated
                    deficit
                
                
                
                
                (10,821,617)
                
                (10,704,226)Total
                    stockholders' equity
                
                
                1,902,789
                
                1,675,050Deferred
                    stock compensation
                
                
                
                (15,833)
                
                (20,833)Total
                    liabilities and stockholders' equity
                
                $
                6,701,656
                
                6,719,323See
                    accompanying notes to consolidated financial statements.




2


Table
            of Contents




**FTS
                  GROUP, INC. AND SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF OPERATIONS****FOR THE
                  THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND
                  2006**Three
                  Months Ended June 30,
              
              
              Six
                  Months Ended June 302007
              
              
              2006
              
              
              2007
              
              
              2006(Restated)
              
              
              
              
              
              (Restated)REVENUESService
                  Revenue-See World Satellites, Inc.
              
              $
              1,133,240
              
              
              $
              1,192,055
              
              
              $
              2,231,698
              
              
              $
              2,330,091Product
                  Retail Sales-FTS Wireless, Inc.
              
              
              632,433
              
              
              
              441,337
              
              
              
              1,335,395
              
              
              
              936,9151,765,673
              
              
              
              1,633,392
              
              
              
              3,567,093
              
              
              
              3,267,006COST
                  OF GOODS SOLDService-See
                  World Satellites, Inc.
              
              
              180,597
              
              
              
              124,255
              
              
              
              357,305
              
              
              
              333,463Product-FTS
                  Wireless, Inc.
              
              
              538,813
              
              
              
              348,255
              
              
              
              1,089,436
              
              
              
              722,529719,410
              
              
              
              472,510
              
              
              
              1,446,741
              
              
              
              1,055,992GROSS
                  PROFITService-See
                  World Satellites, Inc.
              
              
              952,643
              
              
              
              1,067,800
              
              
              
              1,874,393
              
              
              
              1,996,628Product-FTS
                  Wireless, Inc.
              
              
              93,620
              
              
              
              93,082
              
              
              
              245,959
              
              
              
              214,3861,046,263
              
              
              
              1,160,882
              
              
              
              2,120,352
              
              
              
              2,211,014GENERAL
                  AND ADMINISTRATIVE EXPENSESSelling,
                  general and administrative expenses
              
              
              981,270
              
              
              
              1,066,642
              
              
              
              2,062,954
              
              
              
              2,074,828981,270
              
              
              
              1,066,642
              
              
              
              2,062,954
              
              
              
              2,074,828INCOME
                  (LOSS) FROM OPERATIONS
              
              
              64,993
              
              
              
              94,240
              
              
              
              57,398
              
              
              
              136,186OTHER
                  INCOME (EXPENSE)Change in fair value of derivative liabilities
              
              
              9,681
              
              
              
              6,825,789
              
              
              
              69,935
              
              
              
              (652,875
              )Interest
              
              
              (75,196
              )
              
              
              (70,563
              )
              
              
              (244,720
              )
              
              
              (109,592
              )(65,515
              )
              
              
              6,755,226
              
              
              
              (174,785
              )
              
              
              (762,467
              )NET
                  INCOME (LOSS)
              
              $
              (522
              )
              
              $
              6,849,466
              
              
              $
              (117,387
              )
              
              $
              (626,281
              )PER
                  SHARE INFORMATION:WEIGHTED
                  AVERAGE SHARES OUTSTANDINGBasic
              
              
              155,142,325
              
              
              
              105,776,228
              
              
              
              153,114,029
              
              
              
              107,195,939Diluted
              
              
              155,142,325
              
              
              
              117,396,392
              
              
              
              153,114,029
              
              
              
              120,862,553NET
                  LOSS PER COMMON SHARE:Basic
              
              $
              (0.00
              )
              
              $
              0.06
              
              
              $
              (0.00
              )
              
              $
              (0.01
              )Diluted
              
              $
              (0.00
              )
              
              $
              0.06
              
              
              $
              (0.00
              )
              
              $
              0.00See
                accompanying notes to consolidate financial statements.




3


Table
            of Contents





**FTS
                  GROUP, INC. AND
                  SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS****SIX
                  MONTHS ENDED JUNE 30, 2007 AND 2006**2007
              
              2006(Restated)Cash
                  flows from operating activities:Net
                  income (loss)
              
              
              $
              (117,387)
              $
              (626,281)Adjustments
                  to reconcile net income (loss) to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              
              
              264,900
              
              193,914Common
                  shares issued for services
              
              -
              
              98,400Amortization
                  of debt discount
              
              
              5,358
              
              -Amortization
                  of deferred stock compensation
              
              5,000
              
              3,667Change
                  in fair value of derivative liabilities
              
              (69,935)
              
              652,875(Increase)
                  decrease in operating assets:Accounts
                  receivable
              
              
              
              52,137
              
              (30,624)Inventories
              
              
              
              (20,464)
              
              (241,193)Prepaid
                  expenses
              
              
              
              (95,820)
              
              354,182Other
                  assets
              
              
              
              -
              
              (1,043)Increase
                  (decrease) in operating liabilities:Accounts
                  payable and accrued expenses
              
              133,257
              
              (326,475)Net
                  cash provided by operating activities
              
              157,046
              
              77,422Cash
                  flows from investing activities:Net
                  assets 100% acquisition of See World Satellites, Inc.
              
              -
              
              (206,100)Investment
                  in private entities
              
              
              
              (35,874)
              
              (26,179)Capital
                  expenditures for property and equipment
              
              (13,630)
              
              (75,481)Proceeds
                  from funding restricted for investment in acquisition
              
              -
              
              (440,000)Release
                  of restriction on funding proceeds for investment in
                  acquisition
              
              -
              
              560,000Payment
                  to See World Satellites, Inc. acquisition
              
              -
              
              (500,000)Net
                  cash used in investing activities
              
              (49,504)
              
              (687,760)Cash
                  flows from financing activities:Proceeds
                  from issuance of stock
              
              
              
              -
              
              413,964Proceeds
                  from convertible debentures
              
              
              
              
              30,000Proceeds
                  from notes payable related parties
              
              20,000
              
              635,002Repayments
                  of notes payable-truck loans
              
              (3,211)
              
              (9,087)Repayments
                  of notes payable to individuals
              
              (162,500)
              
              -Repayment
                  of loans from related parties
              
              (28,250)
              
              (665,062)Net
                  cash provided by (used in) financing activities
              
              (173,961)
              
              404,817Net
                  decrease in cash
              
              
              (66,419)
              
              (205,521)Cash
                  at beginning of year
              
              
              
              115,056
              
              243,079Cash
                  at end of year
              
              
              $
              48,637
              $
              37,558Supplemental
                  schedule of cash flow information:Interest
                  paid
              
              
              
              $
              3,822
              
              4,524Supplemental
                  disclosure of non-cash investing and financing activities:Stock
                  issued in exchange for convertible debentures
              $
              80,447
              
              -Acquisition
                  of See World Satellites, Inc.Final
                  negotiated purchase price of 100% of See World Satellites, Inc.
                  stock
              $
              -
              
              5,500,000Amount
                  financed through formal promissory note
              
              -
              
              (3,500,000)Paid
                  in preferred stock of FTS Group, Inc.
              
              -
              
              (1,000,000)Due
                  upon contact execution completion-restricted cash at
                  3/31/2006
              
              -
              
              (500,000)Cash
                  paid for See World Satellites, Inc. acquisition
              $
              -
              
              500,000Stock
                  issued as loan inducements
              
              $
              245,283
              $
              -Reassignment
                  of note payable from Richard Miller to Funds
              $
              1,000,000
              $
              -See
                  accompanying notes to consolidated financial statements.


4


Table
            of Contents





**FTS
      GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**


**June
      30, 2007**


**(UNAUDITED)**






**(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. The Company
        incorporated Elysium Internet, Inc. on July 3, 2007 and beginning with the
        third
        fiscal quarter of 2007, the operations of Elysium Internet will be consolidated
        into FTS Group, Inc. as a wholly-owned subsidiary. Through its three
        wholly-owned subsidiaries, See World Satellites, Inc., Elysium Internet,
        Inc.
        and FTS Wireless, Inc., the Company has acquired and developed a diversified
        wireless business engaged in the distribution of next generation wireless
        communications and entertainment products and services for businesses and
        consumers alike. 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 Elysium Internet, Inc. is an emerging Internet
        Media Company focused on developing and acquiring direct navigation Internet
        advertising directory properties.
  **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.
  The
          Company believes the following critical accounting policies affect the
          Company’s
          more significant judgments and estimates used in the preparation of its
          consolidated financial statements.
 **Principles
        of Consolidation**
  The
        consolidated financial statements include the accounts of the Company and
        its
        wholly-owned subsidiaries: FTS Wireless, Inc. and See World Satellites, Inc.
        Elysium Internet was incorporated during the third quarter of 2007 and will
        not
        be included in the Company's consolidated financial statements for the current
        period ended June 30, 2007. All significant inter-company transactions and
        balances have been eliminated in consolidation.
  The
        accompanying unaudited condensed consolidated financial statements have been
        prepared in accordance with U.S. generally accepted accounting principles
        ("GAAP") for interim financial information and with the instructions to Form
        10-QSB. Accordingly, they do not include all of the information and footnotes
        required by GAAP for complete financial statements. In the opinion of
        management, all adjustments (consisting of normal recurring adjustments)
        considered necessary for a fair presentation have been included. Operating
        results for the three and six month period ended June 30, 2007 are not
        indicative of the results that may be expected for the year ending December
        31,
        2007.
  As
        contemplated by the Securities and Exchange Commission (SEC) under the Rules
        of
        Regulation S-B, the accompanying financial statements and related footnotes
        have
        been condensed and do not contain certain information that will be included
        in
        the Company's annual financial statements and footnotes thereto. For further
        information, refer to the Company's audited consolidated financial statements
        and related footnotes thereto included in the Company's annual report on
        Form
        10-KSB, as amended, for the year ended December 31, 2006.
  **Cash
        and Cash Equivalents**
  For
        purposes of the statement of cash flows, the Company considers all short-term
        debt securities with maturity of three months or less to be cash
        equivalents.
   5
 Table
              of Contents
  **Accounts
        Receivable**
  Accounts
        receivable consist primarily of trade receivables, net of a valuation allowance
        for doubtful accounts.
  **Inventories**
  Inventories
        are valued at the lower-of-cost or market on a first-in, first-out
        basis.
  **Investment
        Securities**
  The
        Company accounts for its investments in accordance with Statement of Financial
        Accounting Standards No. 115, "Accounting for Certain Investments in Debt
        and
        Equity Securities." Management determines the appropriate classification
        of its
        investments in marketable securities at the time of purchase and reevaluates
        such determination at each balance sheet date. Securities that are bought
        and
        held principally for the purpose of selling them in the near term are classified
        as trading securities. Debt securities for which the Company does not have
        the
        intent or ability to hold to maturity and equity securities not classified
        as
        trading securities are classified as available-for-sale. The cost of investments
        sold is determined on the specific identification or the first-in, first-out
        method. Trading securities are reported at fair value with unrealized gains
        and
        losses recognized in earnings, and available-for-sale securities are also
        reported at fair value but unrealized gains and losses are shown in the caption
        "unrealized gains (losses) on shares available-for-sale" included in
        stockholders' equity. Management determines fair value of its investments
        based
        on quoted market prices at each balance sheet date.
  **Property,
        Equipment and Depreciation**
  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.
  **Intangible
        Assets**
  SFAS
        No.
        142 eliminates the amortization of goodwill, and requires annual impairment
        testing of goodwill and introduces the concept of indefinite life intangible
        assets. The Company adopted SFAS No. 142 effective January 1, 2002. Goodwill
        and
        indefinite-lived intangible asset impairment is always assessed based upon
        a
        comparison of carrying value with fair value.
   6  Table
              of
              Contents
 **Impairment
        of Long-Lived Assets**
  Realization
        of long-lived assets, including goodwill, is periodically assessed by the
        management of the Company. 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 June 30, 2007 or December 31,
        2006.
  **Revenue
        Recognition**
  The
        Company 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.
  Although
        the Company's post-paid activations 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. The Company has 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 items, 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.
  The
        Company's 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 signs a contract.
   7
 
 Table
              of Contents
  **Income
        Taxes**
  The
        Company is a taxable entity and recognizes deferred tax assets and liabilities
        for the future tax consequences attributable to differences between the
        financial statement carrying amounts of existing assets and liabilities and
        their respective tax basis. Deferred tax assets and liabilities are measured
        using enacted tax rates expected to be in effect when the temporary differences
        reverse. The effect on the deferred tax assets and liabilities of a change
        in
        tax rates is recognized in income in the year that includes the enactment
        date
        of the rate change. A valuation allowance is used to reduce deferred tax
        assets
        to the amount that is more likely than not to be realized.
  **Earnings
        Per Share**
  The
        basic
        net earnings (loss) per common share is computed by dividing the net earnings
        (loss) by the weighted average number of shares outstanding during a period.
        Diluted net earnings (loss) per common share is computed by dividing the
        net
        earnings, adjusted on an as-if-converted basis, by the weighted average number
        of common shares outstanding plus potential dilutive securities. For the
        three
        and six months ended June 30, 2007 and 2006, potential dilutive securities
        that
        had an anti-dilutive effect were not included in the calculation of diluted
        net
        earnings (loss) per common share. These securities include options to purchase
        shares of common stock.
  **Advertising
        Costs**
  The
        cost
        of advertising is expensed as incurred. Advertising expense was $48,086 and
        $74,629 for the six months ended June 30, 2007 and 2006
        respectively.
  **Management’s
        Estimates and Assumptions**
  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.
  **Stock-Based
        Compensation**
  Effective
        the first quarter of fiscal 2006, the Company adopted SFAS 123(R) which
        establishes accounting for stock-based awards exchanged for employee services.
        Accordingly, stock-based compensation cost is measured at grant date, based
        on
        the fair value of the award, over the requisite service period. The Company
        previously applied APB 25 and related interpretations, as permitted by SFAS
        123.
   8
  Table
              of Contents
  Fair Value of Derivative Financial
        Instruments
 The
          Company estimates the fair value of 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 (FAS
          133).*
 The
        Company does not use derivative financial instruments to hedge exposures
        to
        cash-flow, market or foreign-currency risks. However, the Company frequently
        enters 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
        FAS 133, these instruments are required to be carried as derivative liabilities,
        at fair value, in the Company’s financial statements.
 
 The
        Company estimates 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), the Company considers, 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, the Company generally uses 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, the Company generally uses 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, the Company
        projects and discounts 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 the
        Company’s trading market price which has high-historical volatility. Since
        derivative financial instruments are initially and subsequently carried at
        fair
        values, the Company’s income will reflect the volatility in these estimate and
        assumption changes.
  **New
        Accounting Standards**
  In
        May
        2005, the Financial Accounting Standards Board ("FASB") issued Statement
        of
        Financial Accounting Standards ("SFAS") No. 154, Accounting Changes and Error
        Corrections. SFAS No. 154 replaces Accounting Principles Board Opinion No.
        20,
        Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Internal
        Financial Statements, and changes the requirements for the accounting for
        and
        reporting of a change in accounting principle. SFAS No. 154 requires
        retrospective application of changes in accounting principle to prior periods'
        financial statements, unless it is impracticable to determine either the
        period-specific effects or the cumulative effect of the change. SFAS No.
        154 is
        effective for accounting changes and corrections of errors made in fiscal
        years
        beginning after December 15, 2005. The Company adopted SFAS No. 154 on January
        1, 2006. Any impact on the Company's consolidated results of operations and
        earnings per share will be dependent on the amount of any accounting changes
        or
        corrections of errors whenever recognized.
  In
        December 2004, the FASB issued Statement of Financial Accounting Standards
        No.
        153. This statement addresses the measurement of exchanges of nonmonetary
        assets. The guidance in APB Opinion No. 29, "Accounting for Nonmonetary
        Transactions," is based on the principle that exchanges of nonmonetary assets
        should be measured based on the fair value of the assets exchanged.
  The
        guidance in that opinion, however, included certain exceptions to that
        principle. This statement amends Opinion 29 to eliminate the exception for
        nonmonetary exchanges of similar productive assets and replaces it with a
        general exception for exchanges of nonmonetary assets that do not have
        commercial substance. A nonmonetary exchange has commercial substance if
        the
        future cash flows of the entity are expected to change significantly as a
        result
        of the exchange. This statement is effective for financial statements for
        fiscal
        years beginning after June 15, 2005. Earlier application is permitted for
        nonmonetary asset exchanges incurred during fiscal years beginning after
        the
        date this statement was issued. Management believes the adoption of this
        statement will have no impact on the financial statements of the
        Company.
   9
 
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  In
        December 2004, the FASB issued Statement of Financial Accounting Standards
        No.
        152, which amends FASB statement No. 66, "Accounting for Sales of Real Estate,"
        to reference the financial accounting and reporting guidance for real estate
        time-sharing transactions that is provided in AICPA Statement of Position
        (SOP)
        04-2, "Accounting for Real Estate Time-Sharing Transactions." This statement
        also amends FASB Statement No. 67, "Accounting for Costs and Initial Rental
        Operations of Real Estate Projects," to state that the guidance for (a)
        incidental operations and (b) costs incurred to sell real estate projects
        does
        not apply to real estate time-sharing transactions. The accounting for those
        operations and costs is subject to the guidance in SOP 04-2. This statement
        is
        effective for financial statements for fiscal years beginning after June
        15,
        2005. Management believes the adoption of this statement will have no impact
        on
        the financial statements of the Company.
  In
        November 2004, the FASB issued Statement of Financial Accounting Standards
        No.
        151, "Inventory Costs--an amendment of ARB No. 43, Chapter 4." This statement
        amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify
        the accounting for abnormal amounts of idle facility expense, freight, handling
        costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
        previously stated that "under some circumstances, items such as idle facility
        expense, excessive spoilage, double freight, and rehandling costs may be
        so
        abnormal as to require treatment as current period charges." This statement
        requires that those items be recognized as current-period charges regardless
        of
        whether they meet the criterion of "so abnormal." In addition, this statement
        requires that allocation of fixed production overheads to the costs of
        conversion be based on the normal capacity of the production facilities.
        This
        statement is effective for inventory costs incurred during fiscal years
        beginning after June 15, 2005. Management does not believe the adoption of
        this
        statement will have any immediate material impact on the financial statements
        of
        the Company.
  **(2)** 
        **Property and Equipment**
  Major
        classes of property and equipment together with their estimated useful lives,
        consisted of the following at June 30, 2007 and December 31, 2006:
  
 **Years**
              
              
              **2007**
              
              
              **2006****Leasehold
                  Improvements**
              
              
              5
              
              
              143,769
              
              
              142,822**Furniture
                  and Fixtures**
              
              
              5
              
              
              207,022
              
              
              194,340**Equipment**
              
              
              3-5
              
              
              120,583
              
              
              120,583**Vehicles**
              
              
              3
              
              
              25,777
              
              
              25,777**Total
                  property and equipment**
              
              
              
              
              
              497,151
              
              
              483,522**Less:
                  accumulated depreciation**
              
              
              
              
              
              (232,833)
              )
              
              (179,881
              )**Net
                  property and equipment**
              
              
              
              
              
              264,318
              
              
              303,641
  Depreciation
        expense for the six months ended June 30, 2007 and 2006 was $52,953 and
        $61,378, respectively.
   10
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  **(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. The Company has warrants outstanding that if exercised will provide
        for additional operating capital, however there is no guarantee that the
        warrants will be exercised. The Company is pursuing additional financing
        options
        in order to raise funds required to reduce outstanding debt obligations and
        execute its operating and expansion plans. Failure to secure financing or
        expand
        operations may result in the Company not being able to continue as a going
        concern. 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)** 
        **Convertible Debt**
  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 with
        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 a
        further
        $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 an accredited investor, as defined in Rule 501;
        and
 
 -
        the
        Company gave the Assignee the opportunity to ask questions and receive answers
        concerning the terms and conditions of the offering and to obtain any additional
        information which it possessed or could acquire without unreasonable effort
        or
        expense that is necessary to verify the accuracy of information
        furnished.
  The
        Company accounted for the issuance of stock and warrants under the convertible
        notes in line with the provisions of EITR 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**
  Income
        taxes for the interim periods were computed using the 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 expense
        for the three and six months ended June 30, 2007 and 2006 is eliminated by
        net
        operating loss carry forwards.
   11  Table
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  **(6)** 
        **Operating Leases**
  The
        Company leases real property for its six retail locations and 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
              
              Payments2007
              $
              56,5002008
              
              93,6002009
              
              52,8002010
              
              52,8002011
              
              52,8002012
              
              17,600$
              326,100
 
 
 Rent
        expense was $90,982 and $92,849 for the six months ended June 30, 2007 and
        2006,
        respectively.
  **(7)** 
        **Concentration of Credit Risk**
  The
        Company's concentrations of credit risk consist principally of Accounts
        Receivable and Accounts Payable. The Company purchases approximately 95%
        of its
        satellite system supplies from Echostar Satellite, L.L.C. and DISH Network
        Service, L.L.C. The Company further purchases approximately 90% of its telephone
        supplies from one vendor, Metro PCS. Additionally, these three vendors are
        major
        customers of the Company who provide products that generate over 90% of
        revenue.
  **(8)** 
        **Stock**
  On
        January 5, 2007, the Company issued 1,000,000 restricted shares of common
        stock
        relating to the conversion of $40,000 of debt at a price of $0.04 per
        share.
  On
        January 22, 2007, the Company issued 15,000,000
        restricted shares of common stock to four accredited investors relating to
        a
        $1,000,000 financing.
  On
        February 13, 2007, the Company issued 160,177 restricted shares of common
        stock
        relating to the conversion of $4,627 of debt at a price of $0.029 per
        share.
  On
          February 14, 2007, the Company issued 188,857 restricted shares of common
          stock
          relating to the conversion of $4,627 of debt at a price of $0.025 per
          share.
  On
        March
        1, 2007, the Company issued 263,911 restricted shares of common stock to
        two
        investors relating to the conversion of $6,940 of debt at a price of $0.026
        per
        share.
  On
        March
        16, 2007, the Company issued 246,050 restricted shares of common stock relating
        to the conversion of $9,710 of debt at a price of $0.039 per share.
  On
        March
        30, 2007, the Company issued 275,430 restricted shares of common stock to
        two
        investors relating to the conversion of $6,940 of debt at a price of $0.025
        per
        share.
 
 On
        May 4,
        2007, the Company issued 230,303 restricted shares of common stock to an
        institutional investor relating to the conversion of $3,800 of debt at a
        price
        of $0.0165 per share.
 
 On
        June
        11, 2007, the Company issued 199,117 restricted shares of common stock to
        an
        institutional investor relating to the conversion of $3,800 of debt at a
        price
        of $0.01908 per share.
 
 On
        June
        14, 2007, the Company issued 705,882 restricted shares of common stock to
        an
        institutional investor relating to the conversion of $14,399.99 of debt at
        a
        price of $0.02040 per share.
 
 On
        June
        18, 2007, the Company issued 245,098 restricted shares of common stock to
        an
        institutional investor relating to the conversion of $5,000 of debt at a
        price
        of $0.02040 per share.
  **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 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. 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. 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. Please refer to the discussion below under "Preferred
        Stock."
   12
 Table
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  **Preferred
        Stock**
  The
        Company's Articles of Incorporation, as amended, vest its Board of Directors
        with authority to divide the Company’s 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 our 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.
  At
        June
        30, 2007, 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 pro rata 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 the
        number
        of shares of Series B Convertible Preferred Stock being converted by
        25.
   13  Table
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 **(9)** 
        **Options and Warrants**
  **Options**
  The
        Company had a Non-Qualified Stock Option and Stock Grant Plan (the “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 June 30, 2007:
  The
        Company had 3,000,000 warrants outstanding relating to a dividend declared
        to
        stockholders of record on August 27, 2004. The warrants have an exercise
        price
        of $0.25 and expire on August 7, 2007. The Company does not expect these
        warrants to be exercised in the near future because the exercise price exceeds
        the current stock price.
  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 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 June 30, 2007.
 
 **June 30,
                  2007**
              
              
              **June 30,
                  2007****Underlying
                  Shares**
              
              
              **Exercise
                  Price**Warrants
                  issued during 2000
              
              
              1,036,000
              
              $
              1.50Warrants
                  issued during 2004
                (10%
                  Warrant Dividend)
              
              
              3,000,000
              
              $
              0.25Warrants
                  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 and the B Warrants have an exercise price of
        $0.0239.
   14  Table
              of
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 The
        Company filed the terms and conditions of the financing and registration
        rights
        in January 2006 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 June 30, 2007
        relating to the financing closed on December 29, 2005.
 
 **June 30,
                  2007**
              
              
              **June 30,
                  2007****Underlying
                  Shares**
              
              
              **Exercise
                  Price****Warrants
                  issued in December 2005****A
                  Warrants**
              
              
              46,465,550
              
              $
              0.02868**B
                  Warrants**
              
              
              11,774,437
              
              $
              0.0239**B
                  Warrants (new)**
              
              
              11,458,338
              
              $
              0.04
  At
        June
        30, 2007, 1,185,350 restricted shares due to one of the investors remained
        unissued.
   15
 Table
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 **(10)** 
        **See World 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 shareholder 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**
              **$185,850****Property
                  and Equipment, net**
              **$136,454****Goodwill**
              **$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 8-K/A filing 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
        that transactions between January 1, 2006 through January 2, 2006 to be
        immaterial, pro forma presentation is deemed unnecessary.
  **(11)** 
        **Related Party Transactions (See World Acquisition)**
  At
        June
        30, 2007, the Company had the following debt obligations and made the following
        payments to Mr. Richard Miller, a director and President of the Company's
        wholly-owned subsidiary, See World Satellites, Inc. The Company paid Mr.
        Miller
        $500,000 on January 3, 2006 relating to the acquisition of See World. The
        Company carried a short-term note obligation in the amount of $500,000 due
        to
        Mr. Miller. This note was due within 30 days of the effective date of a new
        five-year contract among Echo Star Satellites, L.L.C., DISH Network
        Services, L.L.C. and See World. During the three months ended September 30,
        2006, the Company paid this note in full. Additionally, the Company issued
        1,000,000 shares of its Series B Convertible Preferred Stock to Mr. Miller
        during the three months ended March 31, 2006. The conversion rate for the
        Series
        B 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 Company's
        option or that of the holder. The Series B stock has no voting rights. Each
        share is worth $1.00. On April 3, 2006, the Company made a $250,000 payment
        to
        Mr. Miller reducing the outstanding note amount to $3.25 million as of June
        30,
        2006. On July 5, 2006, the Company made a $250,000 payment to Mr. Miller
        reducing the outstanding note amount to $3 million. In October 2006, the
        Company
        made a $250,000 payment to Mr. Miller reducing the outstanding note amount
        due
        to $2.75 million. In January 2007, the Company made a $1,000,000 payment
        to Mr.
        Miller reducing the outstanding note amount to $1.75 million. In February
        2007,
        the Company made a $162,500 payment to Mr. Miller reducing the outstanding
        note
        amount to $1.587 million at June 30, 2007. The Company filed an 8-K with
        the
        terms and conditions of this note on January 5, 2006.
   16
 
 Table
              of Contents
   **(12)** 
        **Stock-Based Compensation**
  The
        disclosures required by paragraph 84 of SFAS 123 (R) are stated below, although
        the Company had not granted any options from 2001 to June 30,
        2007.
  
 **June
                  30, 2007**
              
              
              **June
                  30, 2006**Net
                  Income/ (Loss) as reported
              
              
              ($117,387
              )
              
              ($626,281
              )Basic
                  and diluted earnings per share as reported
              
              
              ($0.00
              )
              
              ($0.01
              )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
              
              
              ($117,387
              )
              
              ($626,281
              )Pro-forma
                  basic and diluted earnings per share as if the fair-value based
                  method had
                  been applied to all awards.
              
              
              ($0.00
              )
              
              ($0.01
              )


**(13)********Segment
      Information**




The
      Company has two 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; and (3) a holding
      company for 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:




Three
                  Months Ended June 30,
              
              Six
                  Months ended June 30,2007
              
              2006
              
              2007
              
              2006**Revenues:**Service
                  revenue - See World Satellites, Inc.
              $
                  1,133,240
              
              $
                  1,192,055
              
              $
                  2,231,698
              
              $
                  2,330,091Product
                  sales - FTS Wireless, Inc.
              
              $    632,433
              
              $    441,337
              
              $
                  1,335,395
              
              $    936,915Corporate
              
              
              
              $                -
              
              $                -
              
              $                -
              
              $                -$
                  1,765,673
              
              $
                  1,633,392
              
              $
                  3,567,093
              
              $
                  3,267,006**Income
                  (loss) from operations:**Service
                  revenue - See World Satellites, Inc.
              $    269,532
              
              $    387,015
              
              $    470,834
              
              $    621,040Product
                  sales - FTS Wireless, Inc.
              
              $    (18,779)
              
              $    (47,516)
              
              $        8,737
              
              $    (62,463)Corporate
              
              
              
              $  (185,760)
              
              $  (245,259)
              
              $  (422,173)
              
              $  (422,391)$      64,993
              
              $      94,240
              
              $      57,398
              
              $    136,186**Identifiable
                  assets:**Service
                  revenue - See World Satellites, Inc.
              $
                  6,007,296
              
              $
                  6,103,748
              
              $
                  6,007,296
              
              $
                  6,103,748Product
                  sales - FTS Wireless, Inc.
              
              $    166,943
              
              $    366,271
              
              $    166,943
              
              $    366,271Corporate
              
              
              
              $    527,417
              
              $    249,304
              
              $    527,417
              
              $    249,304$
                  6,701,656
              
              $
                  6,719,323
              
              $
                  6,701,656
              
              $
                  6,719,323






17  Table
            of Contents




**(14)** 
      **Restatement**




The
        Company has restated its financial statements for the year ended December
        31,
        2005 to amend and restate the accounting for derivatives issued in connection
        with a financing closed December 29, 2005. These security components were
        originally treated as equity transactions associated with the issuance of
        secured, convertible promissory notes. Upon further review of accounting
        issues,
        statements and pronouncements by the APB (Accounting Principals Board), FASB
        (Financial Accounting Standards Board) and EITF (Emerging Issues Task Force),
        the Company identified the need to include fair value accounting of certain
        warrants considered to be derivatives in order to be compliant with GAAP
        (Generally Accepted Accounting Principals) accounting in its quarterly and
        annual financial statements. For this reason, the Company restated its 10-QSB
        for the period ended June 30, 2006 to include fair value derivative accounting
        and reclassification of certain other financial items.
 
 The
        restatement also reclassified the restricted portion of cash to a separate
        line
        item on the Balance Sheet with a corresponding correction to the Statement
        of
        Cash Flows to reflect the restriction.
 
 There
        were also related adjustments to the Company’s consolidated statement of cash
        flows and consolidated statement of stockholders' equity.
 
 The
        effect of the restatement on specific amounts provided in the consolidated
        financial statements is as follows:


**Restatement
                  of previously Issued Quarterly Data (Unaudited)**Aspreviously
              
              
              Restatement
              
              
              Asreported
              
              
              adjustments
              
              
              restated**Six
                  months ended June 30, 2006**Interest
                  income (expense)
              
              $
              (74,068
              )
              
              $
              (35,524
              )
              
              $
              (109,592
              )Change
                  in fair value of derivative liabilities
              
              $
              -
              
              
              $
              (652,875
              )
              
              $
              (652,875
              )Total
                  other income (expenses)
              
              $
              (74,068
              )
              
              $
              (688,399
              )
              
              $
              (762,467
              )Net
                  income (loss)
              
              $
              62,118
              
              
              $
              (688,399
              )
              
              $
              (626,281
              )Aspreviously
              
              
              Restatement
              
              
              Asreported
              
              
              adjustments
              
              
              restated**June
                  30, 2006**Investments
              
              $
              -
              
              
              $
              26,179
              
              
              $
              26,179Prepaid
                  expenses
              
              $
              154,319
              
              
              $
              (52,012
              )
              
              $
              102,307Accounts
                  payable and accrued expenses
              
              $
              212,946
              
              
              $
              35,524
              
              
              $
              248,470Fair
                  value of derivative liabilities
              
              $
              -
              
              
              $
              2,506,816
              
              
              $
              2,506,816Additional
                  paid-in capital
              
              $
              11,952,059
              
              
              $
              (224,110
              )
              
              $
              11,727,949Accumulated
                  deficit
              
              $
              (10,243,644
              )
              
              $
              (2,318,230
              )
              
              $
              (12,561,874
              )Deferred
                  Compensation
              
              $
              -
              
              
              $
              25,833
              
              
              $
              25,833


18  Table
            of Contents




In
        addition, two reclassifications are required for previously reported activity.
        Firstly, the Company invested funds into Elysium Internet. This investment
        was
        initially treated as prepaid expense; however, a reclassification to Investment
        is appropriate in each of the first three quarters. Secondly, David Rasmussen
        was given 1,500,000 shares of the Company’s common stock as part of his
        employment contract. The value of this stock was entered as a prepaid item,
        and
        is being amortized over the term of his employment contract. However, a
        reclassification to Deferred Compensation is appropriate for this item. These
        two items have balance sheet impact only.
  (15) 
        Subsequent Events
  Subsequent
        to the period ended June 30, 2007, the Company acquired certain Internet
        domain
        assets and incorporated Elysium Internet as a Florida Corporation. Beginning
        with the fiscal third quarter of 2007, the operations of Elysium
        Internet will be consolidated into FTS Group as a wholly-owned subsidiary.
        Also, on July 24, 2007, Elysium Internet acquired two Internet directories
        and
        related domain assets for a total of $100,000 in cash. Elysium
        Internet paid $25,000 at closing and will pay an additional $75,000 through
        September 15, 2007. On July 18, 2007, the Company’s SB-2 registration statement
        was declared effective.
 
 **ITEM
        2. Management’s Discussion and Analysis or Plan of
        Operation.**
  The
        following discussion and analysis contains a comparison of the results of
        operations for the three and six months ended June 30, 2007 and the same
        period
        in 2006. This discussion and analysis should be read in conjunction with
        the
        un-audited interim consolidated financial statements and the notes thereto
        included in this report, and the audited financial statements in our Annual
        Report on Form 10-KSB, as amended, for the year ended December 31,
        2006.
  **CAUTIONARY
        STATEMENT REGARDING FORWARD LOOKING STATEMENTS**
  This
        report on Form 10-QSB contains forward-looking statements that involve risks
        and
        uncertainties. We generally use words such as "believe," "may," "could,"
        "will,"
        "intend," "expect," "anticipate," "plan," and similar expressions to identify
        forward-looking statements. 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
        , but not limited to, our ability to raise capital, our ability to continue
        as a
        going concern, our ability to effectively manage our growth, changes in
        technology, the impact of competition and pricing, and other risks described
        in
        this report, our annual report on Form 10-KSB, as amended, and other
        filings we made from time to time filed 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, and our future results, levels of
        activity, performance or achievements may not meet these expectations. We
        do not
        intend to update any of the forward-looking statements after the date of
        this
        document to conform these statements to actual results or to changes in our
        expectations, except as required by law.


19


Table
            of Contents




**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 our two wholly-owned subsidiaries See
      World Satellites, Inc. and FTS Wireless, Inc. See World is a Regional Service
      Provider, or RSP, 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 nine retail
      wireless locations in the Gulf Coast market of Florida. All of the retail
      locations are leased properties.





**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 affect our more significant
      judgments and estimates used in the preparation of our consolidated financial
      statements.




Fair Value of Derivative Financial
      Instruments




We
      estimate the fair value of 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 (FAS 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 FAS 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.




**Principles
      of Consolidation**




The
      consolidated financial statements include our accounts and those of our
      wholly-owned subsidiaries: FTS Wireless, Inc. and See World Satellites, Inc.
      All
      significant intercompany transactions and balances have been eliminated in
      consolidation.




The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with U.S. generally accepted accounting principles,
      or
      GAAP, for interim financial information and with the instructions to Form
      10-QSB. Accordingly, they do not include all of the information and footnotes
      required by GAAP for complete financial statements. In the opinion of
      management, all adjustments (consisting of normal recurring adjustments)
      considered necessary for a fair presentation have been included. Operating
      results for the three and six month period ended June 30, 2007 are not
      indicative of the results that may be expected for the year ending December
      31,
      2007.




As
      contemplated by the Securities and Exchange Commission, under the rules of
      Regulation S-B, the accompanying financial statements and related footnotes
      have
      been condensed and do not contain certain information that will be included
      in
      our annual financial statements and footnotes thereto. For further information,
      refer to our audited consolidated financial statements and related footnotes
      thereto included in our annual report on Form 10-KSB, as amended, for the year
      ended December 31, 2006.




**Accounts
      Receivable**




Accounts
      receivable consist primarily of trade receivables, net of a valuation allowance
      for doubtful accounts.




**Inventories**




Inventories
      are valued at the lower-of-cost or market on a first-in, first-out
      basis.




**Investment
      Securities**




We
      account for our investments in accordance with Statement of Financial Accounting
      Standards No. 115, "Accounting for Certain Investments in Debt and Equity
      Securities." We determine the appropriate classification of our investments
      in
      marketable securities at the time of purchase and reevaluate such determination
      at each balance sheet date. Securities that are bought and held principally
      for
      the purpose of selling them in the near term are classified as trading
      securities. Debt securities for which we do not have the intent or ability
      to
      hold to maturity, and equity securities not classified as trading securities,
      are classified as available-for-sale. The cost of investments sold is determined
      on the specific identification or the first-in, first-out method. Trading
      securities are reported at fair value with unrealized gains and losses
      recognized in earnings, and available-for-sale securities are also reported
      at
      fair value but unrealized gains and losses are shown in the caption "unrealized
      gains (losses) on shares available-for-sale" included in stockholders' equity.
      We determine fair value of our investments based on quoted market prices at
      each
      balance sheet date.




**Property,
      Equipment and Depreciation**




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 being recognized as a component of other income or expense. 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.




**Intangible
      Assets**




SFAS
      No.
      142 eliminates the amortization of goodwill, and requires annual impairment
      testing of goodwill and introduces the concept of indefinite life intangible
      assets. We adopted SFAS No. 142 effective January 1, 2002. Goodwill and
      indefinite-lived intangible asset impairment is always assessed based upon
      a
      comparison of carrying value with fair value.




**Impairment
      of Long-Lived Assets**




We
      periodically assess realization of long-lived assets, including goodwill.
      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, we compare
      the
      estimated future undiscounted cash flows associated with the asset to the
      asset's carrying amount to determine if a write-down to market value is
      necessary. We believe there was no impairment of such assets at June 30, 2007
      or
      December 31, 2006.




**Revenue
      Recognition**




We
      recognize 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.




Although
      our post-paid activations are subject to possible charge-back of commissions
      if
      a customer deactivates service within the allowable 180-day period after signing
      the contract, we 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
      items, 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.




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 signs a contract.




Net
      revenues from product sales are recognized upon the transfer of title and risk
      of ownership to customers. Allowances for estimated returns, discounts and
      doubtful accounts are provided when sales are recorded. Shipping and handling
      costs are included in cost of sales.




We
      recognize revenue from the sale and activation of wireless handsets and related
      accessories.






20


Table
            of Contents




**Income
      Taxes**




We
      are a
      taxable entity and recognize deferred tax assets and liabilities for the future
      tax consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      basis. We measure deferred tax assets and liabilities using enacted tax rates
      expected to be in effect when the temporary differences reverse. The effect
      on
      the deferred tax assets and liabilities of a change in tax rates is recognized
      in income in the year that includes the enactment date of the rate change.
      We
      use a valuation allowance to reduce deferred tax assets to the amount that
      is
      more likely than not to be realized.




**Earnings
      Per Share**




We
      compute the basic net earnings (loss) per common share by dividing the net
      earnings (loss) by the weighted average number of shares outstanding during
      a
      period. We compute diluted net earnings (loss) per common share by dividing
      the
      net earnings, adjusted on an as-if-converted basis, by the weighted average
      number of common shares outstanding plus potential dilutive securities. For
      the
      three and six months ended June 30, 2007 and 2006, we did not include potential
      dilutive securities that had an anti-dilutive effect in the calculation of
      diluted net earnings (loss) per common share. These securities include options
      to purchase shares of common stock.




**Advertising
      Costs**




The
      cost
      of advertising is expensed as incurred.




**Management’s
      Estimates and Assumptions**




The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires us 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.




**Stock-Based
      Compensation**




Effective
      the first quarter of fiscal 2006, we adopted SFAS 123(R) which establishes
      accounting for stock-based awards exchanged for employee services. Accordingly,
      stock-based compensation cost is measured at grant date, based on the fair
      value
      of the award, over the requisite service period. We previously applied APB
      25
      and related interpretations, as permitted by SFAS 123.






**Results
      of Operations**


**Segment
      Results for the Three and Six Months Ended June 30, 2007 and
      2006**




Three
                  Months Ended June 30, 2007
              
              Six
                  Months Ended June 30, 2007FTS
              FTS
              See
              
              
              FTS
              FTS
              SeeGroup
              Wireless
              World
              
              
              Group
              Wireless
              WorldInc.
              Inc.
              Satellites
              Total
              
              Inc.
              Inc.
              Satellites
              TotalRevenuesExternal
              
              
              $            -
              $632,433
              $1,133,240
              $1,765,673
              
              $            -
              $1,335,395
              $2,231,698
              $3,567,093Internal
              
              
              
              375,000
              -
              -
              375,000
              
              750,000
              
              
              750,000Segment
                  Revenues
              
              
              375,000
              632,433
              1,133,240
              2,140,673
              
              750,000
              1,335,395
              2,231,698
              4,317,093Cost
                  of Goods Sold
              
              
              -
              538,813
              180,597
              719,410
              
              -
              1,089,436
              357,305
              1,446,741-
              -
              -
              -
              
              
              
              
              -Gross
                  Profit
              
              
              375,000
              93,620
              952,643
              1,421,263
              
              750,000
              245,959
              1,874,393
              2,870,352Selling,
                  General, and AdministrativeExternal
              
              
              178,377
              102,226
              674,007
              954,610
              
              407,867
              216,912
              1,385,222
              2,010,001Internal
              
              
              -
              75,000
              300,000
              375,000
              
              -
              150,000
              600,000
              750,000Segment
                  S, G, and A
              
              
              178,377
              177,226
              974,007
              1,329,610
              
              407,867
              366,912
              1,985,222
              2,760,001-
              -
              -
              -
              
              
              
              
              -Subtotal
              
              
              
              196,623
              (83,606)
              (21,364)
              91,653
              
              342,133
              (120,953)
              (110,829)
              110,351Derivative
                  Gain (Loss)
              
              
              9,681
              -
              -
              9,681
              
              69,935
              -
              
              69,935Depreciation
              
              
              (7,383)
              (10,173)
              (9,104)
              (26,660)
              
              (14,306)
              (20,310)
              (18,337)
              (52,953)Interest
              
              
              
              (75,058)
              -
              (138)
              (75,196)
              
              (244,074)
              -
              (646)
              (244,720)-
              -
              -
              -
              
              
              
              
              -Net
                  Income (Loss)
              
              
              123,863
              (93,779)
              (30,606)
              (522)
              
              153,688
              (141,263)
              (129,812)
              (117,387)Intersegment
                  Adjustments
              
              (375,000)
              75,000
              300,000
              -
              
              (750,000)
              150,000
              600,000
              -$(251,137)
              $
                  (18,779)
              $   269,394
              $        (522)
              
              $(596,312)
              $      8,737
              $   470,188
              $  (117,387)


***Sales
      Revenue***




**Consolidated**




For
      the
      three months ended June 30, 2007, consolidated sales increased $132,281, or
      8.1%, to $1,765,673, as compared to $1,633,392 for the three months ended June
      30, 2006. For the six months ended June 30, 2007, consolidated sales increased
      $300,087, or 9.2%, to $3,567,093 as compared to $3,267,006 for the six months
      ended June 30, 2006. The increase in year to date consolidated sales is
      primarily related to a $398,480 year-over-year sales increase at FTS Wireless,
      Inc.




**FTS
      Wireless, Inc.**




For
      the
      three months ended June 30, 2007, FTS Wireless sales increased by $191,096,
      or
      43.3%, to $632,433 when compared to sales of $441,337 for the three months
      ended
      June 30, 2006. For the six months ended June 30, 2007, FTS Wireless sales
      increased by $398,480, or 42.5%, to $1,335,395 when compared to sales of
      $936,915 for the six months ended June 30, 2006. FTS Wireless generated 36%
      of
      our consolidated sales during the three month period ended June 30, 2007
      compared to 27% of our consolidated sales during the three months ended June
      30,
      2006. Our sales revenue for FTS Wireless is primarily generated from the sale
      of
      wireless handsets, wireless accessories and related products. The increase
      in
      sales revenue at FTS Wireless is primarily related to the expanded network
      footprint of our primary wireless carrier vendor Metro PCS through the opening
      of the Orlando, Florida market and an increased focus on selling related
      wireless accessories.




**See
      World Satellites, Inc.**




For
      the
      three months ended June 30, 2007, See World's year-over-year sales remained
      near
      flat but decreased by $58,815, or 4.9%, to $1,133,240 compared to sales of
      $1,192,055 for the period ended June 30, 2006. For the six months ended June
      30,
      2007, See World's year-over-year sales also remained near flat but decreased
      by
      $98,393, or 4.2%, to $2,231,698 compared to sales of $2,330,091 for the period
      ended June 30, 2006. See World Satellites generated 64% of our consolidated
      sales during the period ended June 30, 2007 as compared to 73% during the period
      ended June 30, 2006. Our sales revenue for See World Satellites, Inc. is
      primarily generated from the sale, service and installation of DISH Network
      satellite television systems. The decrease in year-over-year sales is primarily
      related to bad weather conditions experienced in the western Pennsylvania area
      during the beginning of the quarter ended June 30, 2007.






21





Table
            of Contents




***Cost
      of Goods Sold***




**Consolidated**




For
      the
      three months ended June 30, 2007, consolidated cost of goods sold increased
      by
      $246,900, or 52.3%, to $719,410, as compared to $472,510 for the three months
      ended June 30, 2006. For the six months ended June 30, 2007, consolidated cost
      of goods sold increased by $390,749, or 37.0%, to $1,446,741, as compared to
      $1,055,992 for the six months ended June 30, 2006. The increase in cost of
      goods
      sold is primarily related to increased wireless handset buying and the increase
      in year-over-year sales at FTS Wireless.




**FTS
      Wireless, Inc.**




For
      the
      three months ended June 30, 2007, FTS Wireless reported an increase in cost
      of
      goods sold of $190,558, or 54.7%, to $538,813 when compared to cost of goods
      sold of $348,255 for the three months ended June 30, 2006. For the six months
      ended June 30, 2007, FTS Wireless reported an increase in cost of goods sold
      of
      $366,907, or 50.8%, to $1,089,436 when compared to cost of goods sold of
      $722,529 for the six months ended June 30, 2006. The increase in cost of goods
      sold is primarily related to increased purchases of wireless handsets and
      related products as sales have increased.




**See
      World Satellites, Inc.**




For
      the
      three months ended June 30, 2007, See World Satellites reported an increase
      in
      cost of goods sold of $56,342, or 45.3%, to $180,597 when compared to cost
      of
      goods sold of $124,255 for the three months ended June 30, 2006. For the six
      months ended June 30, 2007 See World Satellites reported an increase in cost
      of
      goods sold of $23,842, or 7.1%, to $357,305 when compared to cost of goods
      sold
      of $333,463 for the six months ended June 30, 2006. The increase in cost of
      goods sold is related to a slight increase in purchasing products related to
      the
      installation of satellite television systems.




***Gross
      Profits***




**Consolidated**




For
      the
      three months ended June 30, 2007, gross profits decreased by $114,619, or 9.9%,
      to $1,046,263 from $1,160,882 during the three months ended June 30, 2006.
      For
      the six months ended June 30, 2007, gross profits decreased by $90,662, or
      4.1%,
      to $2,120,352 from $2,211,014 during the six months ended June 30, 2006. The
      decrease in gross profits is attributed to the increased employee costs and
      a
      slight drop in sales at See World Satellites. Gross profits as a percentage
      of
      sales decreased 11.8% to 59.3% for the three months ended June 30, 2007 as
      compared to 71.1% gross profit as a percentage of sales during the three months
      ended June 30, 2006. Gross profits as a percentage of sales decreased 8.3%
      to
      59.4% for the six months ended June 30, 2007 as compared to 67.7% gross profit
      as a percentage of sales during the six months ended June 30, 2006. The decrease
      in gross profits as a percentage of sales is related to the slight decrease
      in
      sales at the higher margin business of See World Satellites for the
      year-over-year period.




**FTS
      Wireless, Inc.**




For
      the
      three months ended June 30, 2007, gross profits increased by $538, or
      0.6%, to $93,620 when compared to gross profit of $93,082 for the three
      months ended June 30, 2006. For the six months ended June 30, 2007, gross
      profits increased by $31,573, or 14.7%, to $245,959 when compared to gross
      profit of $214,386 for the six months ended June 30, 2006. The increase in
      gross
      profits during the six month period is primarily related to increased sales
      of
      Metro PCS wireless handsets and related increased sales of wireless
      accessories.




**See
      World Satellites, Inc.**




For
      the
      three months ended June 30, 2007, See World Satellites’ gross profit decreased
      by $115,157 or 10.8%, to $952,643 as compared to gross profits of $1,067,800
      during the three months ended June 30, 2006. For the six months ended June
      30,
      2007, See World Satellites’ gross profit decreased by $122,235 or 6.1%, to
      $1,874,393 as compared to gross profits of $1,996,628 during the six months
      ended June 30, 2006. The decrease in gross profit is related to the decrease
      in
      sales at See World during the year-over-year period and an increase in employee
      benefit costs.




**Selling,
      General and Administrative**




Selling,
      General and Administrative Expenses for the three months ended June 30, 2007
      decreased $85,372, or 8.0%, to $981,270 as compared to $1,066,642 for the three
      months ended June 30, 2006. Selling, General and Administrative Expenses for
      the
      six months ended June 30, 2007, decreased $11,874 or 0.6% to $2,062,954 as
      compared to $2,074,828 for the six months ended June 30, 2006. The slight
      decrease in Selling, General and Administrative Expenses for the three and
      six
      months ended June 30, 2007 was primarily related to an increased focus by
      management to control cost and expenses.




**Operating
      Income/Loss**




During
      the three months ended June 30, 2007 operating income decreased by $29,247
      to
      $64,993 as compared to operating income of $94,240 during the three months
      ended
      June 30, 2006. During the six months ended June 30, 2007 operating income
      decreased by $78,788 to $57,398 as compared to operating income of $136,186
      during the six months ended June 30, 2006. The decrease in operating income
      was
      directly related to increased legal and accounting fees as a result of our
      earnings restatements as well as a slight decline in sales at See World
      Satellites, Inc.




**Net
      Income/Loss**




During
      the three months ended June 30, 2007 net income decreased by $6,849,988 to
      a net
      loss of $522 as compared to a net income of  $6,849,466 during the
      three months ended June 30, 2006. During the six months ended June 30, 2007,
      net
      loss improved by $508,894, to a net loss of $117,387, as compared to a net
      loss
      of $626,281 for the six months ended June 30, 2006. The primary changes to
      the
      net income/loss for both the three and six months ended June 30, 2007 and 2006
      is related to accounting changes in fair value calculations of derivative
      liabilities associated with outstanding warrants.






22


Table
            of Contents




**Interest
      Expense**




Interest
      expense increased by $4,633, or 6.6%, to $75,196 for the three months ended
      June 30, 2007, as compared to $70,563 for the three months ended June 30, 2006.
      Interest expense increased by $135,128, or 123.3%, to $244,720 for the six
      months ended June 30, 2007, as compared to $109,592 for the six months ended
      June 30, 2006. The year-over-year increase in interest expenses is related
      to
      increased financing costs incurred during the year-over-year
      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 June 30, 2007 includes
      cash generated from operating activities and cash received from the issuance
      of
      common stock.




As
      of
      June 30, 2007, our Current Assets were $864,229, consisting of $48,637 in cash,
      $394,198 in inventories, net, $77,888 of accounts receivables and $343,506
      of
      prepaid expenses and current assets. Current Liabilities were $4,431,596,
      consisting of $1,157,874 of convertible debentures, current portion, $2,595,140
      of notes payable to related parties, $676,969 in accounts payable and accrued
      expenses and $1,613 of long-term debt, equipment loans.




At
      June
      30, 2007, we had total assets of $6,701,656, consisting of, in addition to
      the
      assets described above, Goodwill of $5,177,696, Property and equipment, net
      of
      accumulated depreciation of $264,318, unamortized discount of convertible debt
      of $250,552, Investments of $128,379 and Deposits of $16,482.




**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 financial statements
      express substantial doubt about our ability to continue as a going
      concern.




**Financing
      Activities**




On
      January 5, 2007, we issued 1,000,000 restricted shares of common stock relating
      to the conversion of $40,000 of debt at a price of $0.04 per share.




On
        January 22, 2007, we issued 15,000,000 unregistered shares of common stock
        to a
        group of institutional investors relating to a $1,000,000
        financing.




On
      February 13, 2007, we issued 160,177 restricted shares of common stock relating
      to the conversion of $4,627.70 of debt at a price of $0.029 per
      share.




On
        February 14, 2007, we issued 188,857 restricted shares of common stock relating
        to the conversion of $4,627.70 of debt at a price of $0.025 per
        share.


On
      March
      1, 2007, we issued 263,911 restricted shares of common stock to two investors
      relating to the conversion of $6,940.85 of debt at a price of $0.026 per
      share.




On
      March
      16, 2007, we issued 246,050 restricted shares of common stock relating to the
      conversion of $9,710.60 of debt at a price of $0.039 per share.




On
      March
      30, 2007, we issued 275,430 restricted shares of common stock to two investors
      relating to the conversion of $6,940.85 of debt at a price of $0.025 per
      share.





On
      May 4,
      2007, we issued 230,303 restricted shares of common stock to an institutional
      investor relating to the conversion of $3,800 of debt at a price of $0.0165
      per
      share.





On
      June
      11, 2007, we issued 199,117 restricted shares of common stock to an
      institutional investor relating to the conversion of $3,800 of debt at a price
      of $0.01908 per share.





On
      June
      14, 2007, we issued 705,882 restricted shares of common stock to an
      institutional investor relating to the conversion of $14,399.99 of debt at
      a
      price of $0.02040 per share.





On
      June
      18, 2007, we issued 245,098 restricted shares of common stock to an
      institutional investor relating to the conversion of $5,000 of debt at a price
      of $0.02040 per share.




**Subsidiaries**




As
      of
      June 30, 2007, we had two wholly-owned subsidiaries, FTS Wireless, Inc. and
      See World Satellites, Inc.




**ITEM
      3. CONTROLS AND
      PROCEDURES.**





**Evaluation
      of Disclosure 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-QSB. 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.






23


Table
            of Contents




**Changes
      in Internal Controls**





There
      was
      no change in our internal control over financial reporting that occurred during
      the first quarter covered by this Quarterly Report on Form 10-QSB that
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.




**PART
      II - OTHER INFORMATION**




**ITEM
      1. LEGAL PROCEEDINGS.**




We
      are
      not aware of any litigation or potential litigation that could have a material
      impact on our business.




**ITEM
      2. UNREGISTERED SALES OF
      EQUITY SECURITIES AND USE OF
      PROCEEDS.**




On
      May 4,
      2007, we issued 230,303 restricted shares of common stock to an institutional
      investor relating to the conversion of $3,800 of debt at a price of $0.0165
      per
      share.





On
      June
      11, 2007, we issued 199,117 restricted shares of common stock to an
      institutional investor relating to the conversion of $3,800 of debt at a price
      of $0.01908 per share.





On
      June
      14, 2007, we issued 705,882 restricted shares of common stock to an
      institutional investor relating to the conversion of $14,399.99 of debt at
      a
      price of $0.02040 per share.





On
      June
      18, 2007, we issued 245,098 restricted shares of common stock to an
      institutional investor relating to the conversion of $5,000 of debt at a price
      of $0.02040 per share.




With
      respect to the sales of our securities described
      above, we relied on the Section 4(2) exemption from securities registration
      under the federal securities laws for transactions not involving any public
      offering. No advertising or general solicitation was employed in offering the
      securities. The securities were sold to accredited investors. The securities
      were offered for investment purposes only and not for the purpose of resale
      or
      distribution, and the transfer thereof was appropriately restricted by
      us.







24


Table
            of Contents




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES.**




None.




**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**




None.




**ITEM
      5. OTHER INFORMATION.**




None.




**ITEM
      6. EXHIBITS.**








**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
      Bylaws (included as Attachment C to the Definitive Proxy on Form DEF 14A filed
      January 9, 2004, and incorporated herein by reference).





3.3
      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).




3.4
      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).





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 reference).




4.2
      Subscription Agreement Form (included as exhibit 10.1 to the Form 8-K filed
      February 24, 2003, and incorporated herein by reference).




4.3
      Debenture Agreement between the Company and Dutchess Private Equities Fund,
      L.P., dated February 14, 2003 (included as exhibit 10.2 to the Form 8-K filed
      February 24, 2003, and incorporated herein by reference).




4.4
      Registration Rights Agreement between the Company and Dutchess Private Equities
      Fund, L.P., dated February 14, 2003 (included as exhibit 10.3 to the Form 8-K
      filed February 24, 2003, and incorporated herein by reference).




4.5
      Debenture Exchange Agreement between the Company and Dutchess Private Equities
      Fund, L.P., dated February 14, 2003 (included as exhibit 10.5 to the Form 8-K
      filed February 24, 2003, and incorporated herein by reference).




4.6
      Addendum to the Subscription Agreement, dated July 21, 2003 (included as Exhibit
      10.1 to the Form 8-K filed July 22, 2003, and incorporated herein by
      reference).




4.7
      Amended Debenture between the Company and Dutchess Private Equities Fund, L.P.,
      dated February 14, 2003 (included as Exhibit 10.2 to the Form 8-K filed July
      22,
      2003, and incorporated herein by reference).




4.8
      Registration Rights Agreement between the Company and Dutchess Private Equities
      Fund, L.P., dated January 9, 2004 (filed as Exhibit 10.16 to the Form SB-2
      filed
      January 28, 2004, and incorporated herein by reference).




4.9
      Subscription Agreement Form (included as exhibit 10.1 to the Form 8-K filed
      March 24, 2005, and incorporated herein by reference).




4.10
      A
      Warrant Form (included as exhibit 4.1 to the Form 8-K filed March 24, 2005,
      and
      incorporated herein by reference).




4.11
      B
      Warrant Form (included as exhibit 4.2 to the Form 8-K filed March 24, 2005,
      and
      incorporated herein by reference).




4.12
      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).




4.13
      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).




4.14
      A
      Warrant Form (included as Exhibit 4.1 to the Form 8-K filed January 5, 2006,
      and
      incorporated herein by reference).




4.15
      B
      Warrant Form (included as Exhibit 4.2 to the Form 8-K filed January 5, 2006,
      and
      incorporated herein by reference).




4.16
      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
      Subscription Agreement Form (included as exhibit 10.1 to the Form 8-K filed
      February 24, 2003, and incorporated herein by reference).




10.2
      Debenture Agreement between the Company and Dutchess Private Equities Fund,
      LP,
      dated February 14, 2003 (included as exhibit 10.2 to the Form 8-K filed February
      24, 2003, and incorporated herein by reference).




10.3
      Registration Rights Agreement between the Company and Dutchess Private Equities
      Fund, LP, dated February 14, 2003 (included as exhibit 10.3 to the Form 8-K
      filed February 24, 2003, and incorporated herein by reference).




10.4
      Escrow Agreement between the Company and Dutchess Private Equities Fund, LP,
      dated February 14, 2003 (included as exhibit 10.4 to the Form 8-K filed February
      24, 2003, and incorporated herein by reference).




10.5
      Debenture Exchange Agreement between the Company and Dutchess Private Equities
      Fund, LP, dated February 14, 2003 (included as exhibit 10.5 to the Form 8-K
      filed February 24, 2003, and incorporated herein by reference).




10.6
      Addendum to the Subscription Agreement, dated July 21, 2003 (included as Exhibit
      10.1 to the Form 8-K filed July 22, 2003, and incorporated herein by
      reference).




10.7
      Amended Debenture between the Company and Dutchess Private Equities Fund, LP,
      dated February 14, 2003 (included as Exhibit 10.2 to the Form 8-K filed July
      22,
      2003, and incorporated herein by reference).




10.8
      Memorandum of Understanding between the Company and Malsha Imports, Inc., dated
      February 28, 2003 (included as Exhibit 10.11 to the Form SB-2/A filed September
      15, 2003, and incorporated herein by reference).




10.9
      Confidentiality and No Conflict Agreement between the Company and American
      Connections, LLC, dated February 28, 2003 (included as Exhibit 10.12 to the
      Form
      SB-2/A filed September 15, 2003, and incorporated herein by
      reference).




10.10
      Authorized Subcontractor Agreement between the Company and American Connections,
      LLC, dated February 28, 2003 (included as Exhibit 10.13 to the Form SB-2/A
      filed
      September 15, 2003, and incorporated herein by reference).




10.11
      Lease Agreement between the Company and American Connections Florida, LLC,
      dated
      May 22, 2003 (included as Exhibit 10.14 to the Form SB-2/A filed September
      15,
      2003, and incorporated herein by reference).




10.12
      Investment Agreement between the Company and Dutchess Private Equities Fund,
      LP,
      dated January 9, 2004 (included as exhibit 10.15 to the Form SB-2 filed January
      28, 2004, and incorporated herein by reference).




10.13
      Registration Rights Agreement between the Company and Dutchess Private Equities
      Fund, LP, dated January 9, 2004 (included as Exhibit 10.16 to the Form SB-2
      filed January 28, 2004, and incorporated herein by reference).




10.14
      Placement Agent Agreement between the Company, Dutchess Private Equities Fund,
      LP, and Charleston Capital Securities, dated January 9, 2004 (included as
      Exhibit 10.17 to the Form SB-2 filed January 28, 2004, and incorporated herein
      by reference).




10.15
      Consulting Agreement between the Company and W. Scott McBride, dated January
      15,
      2004 (included as exhibit 99.1 to the Form S-8 filed February 3, 2004, and
      incorporated herein by reference).




10.16
      Corporate Consulting Agreement between the Company and Theodore J. Smith, Jr.,
      dated January 28, 2004 (included as exhibit 99.2 to the Form S-8 filed February
      3, 2004, and incorporated herein by reference).




10.17
      Consulting Agreement between the Company and Mike DeGirolamo, dated January
      5,
      2004 (included as exhibit 99.3 to the Form S-8 filed February 3, 2004, and
      incorporated herein by reference).




10.18
      Consulting Agreement between the Company and Jeff Teischer, dated January 5,
      2004 (included as exhibit 99.4 to the Form S-8 filed February 3, 2004, and
      incorporated herein by reference).




10.19
      Consulting Agreement between the Company and David Taylor, dated December 12,
      2003 (included as exhibit 99.5 to the Form S-8 filed February 3, 2004, and
      incorporated herein by reference).




10.20
      Consulting Agreement between the Company and Pablo Oliva, dated November 12,
      2003 (included as exhibit 99.6 to the Form S-8 filed February 3, 2004, and
      incorporated herein by reference).




10.21
      Consulting Agreement between the Company and Tommy Hollman, dated January 27,
      2004 (included as exhibit 99.7 to the Form S-8 filed February 3, 2004, and
      incorporated herein by reference).




10.22
      Compensation Agreement between the Company, W. Scott McBride, David Rasmussen,
      James H. Gilligan, and Scott Gallagher, dated January 29, 2004 (included as
      exhibit 99.8 to the Form S-8 filed February 3, 2004, and incorporated herein
      by
      reference).




10.23
      Lease Agreement between the Company and Investments Limited, dated August 25,
      2004 (included as exhibit 10.1 to the Form 8-K filed September 9, 2004, and
      incorporated herein by reference).




10.24
      Consulting Agreement between the Company and Pablo Oliva, dated October 26,
      2004
      (included as exhibit 99.1 to the Form S-8 filed January 11, 2005, and
      incorporated herein by reference).




10.25
      Corporate Consulting Agreement between the Company and Theodore J. Smith, Jr.,
      dated October 26, 2004 (included as exhibit 99.2 to the Form S-8 filed January
      11, 2005, and incorporated herein by reference).




10.26
      Subscription Agreement Form (included as exhibit 10.1 to the Form 8-K filed
      March 24, 2005, and incorporated herein by reference).




10.27
      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).




10.28
      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).




10.29
      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).




10.30
      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).




10.31
      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).




10.32
      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).




10.33
      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).




10.34
      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).




10.35
      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).




10.36
      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).




10.37
      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).




10.38
      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).




10.39
      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).




10.40
      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).




10.41
      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).




10.42
      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).




10.43
      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).




10.44
      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).




10.45
      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).





14.1
      Corporate Code of Conduct and Ethics (filed as exhibit 14.1 to the Form 10-KSB
      filed April 14, 2004, and incorporated herein by reference).





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 Company has
      caused this report to be signed on its behalf by the undersigned thereunto
      duly
      authorized.




**FTS
      GROUP, INC.**







*/s/
                Scott Gallagher*Scott
                GallagherChief
                Executive Officer,Interim
                Chief Financial Officer and
              Principal
                Accounting OfficerAugust
                14, 2007




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