**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549




**FORM
      10-QSB/A**




(MARK
      ONE)




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


**ACT
      OF** **1934
      FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006**




**|_|
      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 Other Jurisdiction of       (I.R.S.
                Employer
              Incorporation
                or Organization)       Identification
                No.)





7610
      West Hillsborough Ave., Tampa, Florida 33615


(Address
      of principal executive offices)





(215)
      688-2355


(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
      September 30, 2006 we had 131,737,469 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. FINANCIAL INFORMATION**
            
            **Page**Item
                1. Financial Statements
            
            1Item
                2. Management’s Discussion and analysis or Plan of
                Operation
            19Item
                3. Controls and Procedures
            
            27**PART
                II OTHER INFORMATION**Item
                1. Legal Proceedings
            
            28Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            28Item
                3. Defaults of senior Securities
            
            29Item
                4. Submission of Matters to a Vote of Security Holders
            
            29Item
                5. Other Information
            
            29Item
                6. Exhibits and Reports on Form 8-K
            
            29







**PART
      I - FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS.**







Condensed
                Consolidated Financial Statements (Unaudited)
            **Page**Balance
                Sheet- September 30, 2006 and December 31, 2005
            2Statements
                of Operations- Three and nine months ended September 30, 2006
                and 2005
            3Statement
                of Cash Flows- Three and nine months ended September 30, 2006
                and 2005
            4Notes
                to Condensed Consolidated Financial Statements
            5




1







**FTS
                  GROUP, INC. AND SUBSIDIARIES****CONDENSED
                  CONSOLIDATED BALANCE SHEETS****SEPTEMBER
                  30, 2006 AND DECEMBER 31, 2005**Assets
              
              2006
              
              2005Current
                  assets:
              
              
              (restated
              )
              
              (restated)Cash
                  and cash equivalents
              
              $
              25,356
              
              $
              243,079Restricted
                  cash
              
              
              -
              
              
              560,000Accounts
                  receivable
              
              
              170,150
              
              
              12,201Inventories
              
              
              369,876
              
              
              33,180Prepaid
                  expenses and current assets
              
              
              117,042
              
              
              474,683Total
                  current assets
              
              
              682,424
              
              
              1,323,143Property
                  and equipment, net of accumulated depreciation
              
              
              340,604
              
              
              208,210Unamortized
                  discount on convertible debt
              
              
              278,535
              
              
              380,690Unamortized
                  debt issuance costs
              
              
              59,145
              
              
              46,313Investment
                  in private entity
              
              
              59,339
              
              
              -Goodwill
              
              
              5,177,696
              
              
              -Deposits
              
              
              17,182
              
              
              16,139Total
                  assets
              
              $
              6,614,925
              
              $
              1,974,495Liabilities
                  and Stockholders' EquityCurrent
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              218,923
              
              $
              468,185Current
                  portion of notes payable to related parties
              
              
              1,830,895
              
              
              80,850Convertible
                  debentures
              
              
              1,238,321
              
              
              782,961Current
                  installments of long-term debt-equipment loans
              
              
              7,618
              
              
              -Total
                  current liabilities
              
              
              3,295,757
              
              
              1,331,996Fair
                  Value of derivative liabilities
              
              
              2,190,851
              
              
              1,849,366Convertible
                  debentures
              
              
              -
              
              
              430,088Long-term
                  debt to related parties, less current installments
              
              
              1,250,000
              
              
              -Long-term
                  debt equipment loans, less current installments
              
              
              620
              
              
              -Total
                  liabilities
              
              
              6,737,228
              
              
              3,611,450Stockholders'
                  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 September
                  30,2006
              
              
              10,000
              
              
              -Common
                  stock, $.001 par value. Authorized 150,000,000 shares:131,737,469
                  shares issued and outstanding at September 30, 2006,102,098,756
                  shares issued and outstanding at December 31, 2005.
              
              
              131,737
              
              
              102,099Additional
                  paid-in capital
              
              
              11,973,568
              
              
              10,196,539Accumulated
                  deficit
              
              
              (12,214,275
              )
              
              (11,935,593)(98,970
              )
              
              (1,636,955)Deferred
                  stock compensation
              
              
              (23,333
              )
              
              -Total
                  stockholders' equity
              
              
              (122,303
              )
              
              (1,636,955)Total
                  liabilities and stockholders' equity
              
              $
              6,614,925
              
              $
              1,974,495See
                  accompanying notes to consolidated financial statements.




2





**FTS
                  GROUP, INC. AND SUBSIDIARIES****CONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONS****FOR
                  THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
                  2006 AND 2005**Three
                  Months Ended September 30,
              
              Nine
                  Months ended September 30,2006
              
              2005
              
              2006
              
              2005(restated)
              
              
              
              
              
              (restated)REVENUESService
                  Revenue-See World Satelltites, Inc.
              
              $
              1,233,984
              
              $
              -
              
              $
              3,564,075
              
              $
              -Product
                  Retail Sales-FTS Wireless, Inc.
              
              
              411,263
              
              
              283,505
              
              
              1,348,179
              
              
              934,0961,645,247
              
              
              283,505
              
              
              4,912,254
              
              
              934,096COST
                  OF GOODS SOLDService-See
                  World Satelltites, Inc.
              
              
              161,206
              
              
              -
              
              
              494,669
              
              
              -Product-FTS
                  Wireless, Inc.
              
              
              369,548
              
              
              216,971
              
              
              1,092,078
              
              
              612,356530,754
              
              
              216,971
              
              
              1,586,747
              
              
              612,356GROSS
                  PROFITService-See
                  World Satelltites, Inc.
              
              
              1,072,778
              
              
              -
              
              
              3,069,406
              
              
              -Product-FTS
                  Wireless, Inc.
              
              
              41,715
              
              
              66,534
              
              
              256,101
              
              
              321,7401,114,493
              
              
              66,534
              
              
              3,325,507
              
              
              321,740GENERAL
                  AND ADMINISTRATIVE EXPENSESSelling,
                  general and administrative expenses
              
              
              1,008,030
              
              
              245,388
              
              
              3,082,858
              
              
              1,271,6651,008,030
              
              
              245,388
              
              
              3,082,858
              
              
              1,271,665INCOME
                  (LOSS) FROM OPERATIONS
              
              
              106,463
              
              
              (178,854
              )
              
              242,649
              
              
              (949,925)OTHER
                  INCOME (EXPENSE)Change
                  in fair value of derivative liabilities
              
              
              315,966
              
              
              -
              
              
              (336,909
              )
              
              -Interest
              
              
              (74,828
              )
              
              (491
              )
              
              (184,420
              )
              
              (190,238)241,138
              
              
              (491
              )
              
              (521,329
              )
              
              (190,238)NET
                  INCOME (LOSS)
              
              **$**
              347,601
              
              **$**
              (179,345
              )
              **$**
              (278,680
              )
              **$**
              (1,140,163)PER
                  SHARE INFORMATION:WEIGHTED
                  AVERAGE SHARES OUTSTANDINGBasic
              
              
              114,977,066
              
              
              56,982,202
              
              
              112,767,697
              
              
              53,952,681Diluted
              
              
              117,230,110
              
              
              56,982,202
              
              
              122,383,360
              
              
              53,952,681NET
                  LOSS PER COMMON SHARE:Basic
              
              $
              0.00
              
              
              ($0.00
              )
              
              ($0.00
              )
              
              ($0.02)Diluted
              
              $
              0.00
              
              
              ($0.00
              )
              
              ($0.00
              )
              
              ($0.02)See
                  accompanying notes to consolidated financial statements.
   3






**FTS
                  GROUP, INC. AND SUBSIDIARIES****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH
                  FLOWS****NINE
                  MONTHS ENDED SEPTEMBER, 2006 AND 2005**2006
              
              2005(restated)Cash
                  flows from operating activities:Net
                  income (loss)
              
              
              
              
              $
              (278,680
              )
              $
              (1,140,163)Adjustments
                  to reconcile net income to net cashused
                  in operating activities:Depreciation
                  and amortization
              
              
              
              
              
              291,042
              
              
              26,980Common
                  shares issued for services
              
              
              
              
              
              98,400
              
              
              294,350Amortization
                  of debt discount
              
              
              
              
              
              -
              
              
              188,393Amortization
                  of deferred stock compensation
              
              
              
              
              
              6,667
              
              
              -Change
                  in fair value of derivative liabilities
              
              
              
              
              
              336,909
              
              
              -(Increase)
                  decrease in operating assets:Accounts
                  receivable
              
              
              
              
              
              (72,191
              )
              
              (77,561)Inventories
              
              
              
              
              
              (192,152
              )
              
              (23,688)Prepaid
                  expenses
              
              
              
              
              
              338,947
              
              
              30,030Other
                  assets
              
              
              
              
              
              (1,043
              )
              
              (1,000)Increase
                  (decrease) in operating liabilities:Accounts
                  payable and accrued expenses
              
              
              
              
              
              (356,808
              )
              
              160,028Net
                  cash used in operating activities
              
              
              
              
              
              171,091
              
              
              (542,631)Cash
                  flows from investing activities:Net
                  assets 100% acquisition of See World Satellites, Inc.
              
              
              
              
              
              (206,100
              )
              
              -Investment
                  in private entity
              
              
              
              
              
              (59,339
              )
              
              -Capital
                  expenditures for property and equipment
              
              
              
              
              
              (88,177
              )
              
              (119,629)Proceeds
                  from funding restricted for investment in acquisition
              
              
              
              
              
              (440,000
              )
              
              -Release
                  of restriction on funding proceeds for investment in acquisition
              
              
              
              
              
              1,060,000
              
              
              -Payment
                  to See World Satellites, Inc. acquisition from escrowed amounts
              
              
              
              
              
              (1,000,000
              )
              
              -Net
                  cash used in investing activities
              
              
              (733,616
              )
              
              (119,629)Cash
                  flows from financing activities:Proceeds
                  from issuance of stock
              
              
              
              
              
              665,964
              
              
              844,460Proceeds
                  from convertible debentures
              
              
              
              
              
              30,000Proceeds
                  from stock issued under equity line
              
              
              
              
              
              -
              
              
              325,078Proceeds
                  from note payable to Dutchess Advisors
              
              
              
              
              
              -
              
              
              500,000Proceeds
                  from notes payable related parties
              
              
              
              
              
              635,002
              
              
              70,661Repayments
                  of notes payable-truck loans
              
              
              
              
              
              (12,411
              )
              
              -Repayments
                  of note payable to Dutchess Advisors
              
              
              
              
              
              -
              
              
              (861,022)Repayments
                  of debenture loan
              
              
              
              
              
              -
              
              
              (26,876)Repayments
                  of notes payable to individuals
              
              
              
              
              
              -
              
              
              (34,000)Repayment
                  of loans from related parties
              
              
              
              
              
              (973,753
              )
              
              (161,682)Net
                  cash provided by financing activities
              
              
              
              
              
              344,802
              
              
              656,619Net
                  decrease in cash
              
              
              
              
              
              (217,723
              )
              
              (5,641)Cash
                  at beginning of year
              
              
              
              
              
              243,079
              
              
              7,949Cash
                  at end of year
              
              
              
              
              $
              25,356
              
              $
              2,308Supplemental
                  schedule of cash flow information:Interest
                  paid
              
              
              
              
              $
              4,524
              
              $
              44,566Supplemental
                  disclosure of non-cash investing and financing activities:Stock
                  issued in exchange for convertible debentures
              
              
              
              
              $
              8,085
              
              $
              73,617Stock
                  issued as loan inducements
              
              
              
              
              $
              -
              
              $
              38,462Stock
                  issued in payment of accounts payable and accrued expenses
              
              
              
              
              $
              -
              
              $
              77,365Acquisition
                  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 to Richard Miller
              
              
              
              
              
              (3,500,000
              )Paid
                  in preferred stock of FTS Group, Inc.
              
              
              
              
              
              (1,000,000
              )Cash
                  down payment for See World Satellites, Inc.
              
              
              
              
              $
              1,000,000See
                  accompanying notes to consolidated financial statements.






4









**FTS
      GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


September
      30, 2006


(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 those in the Internet, Wireless and Technology industries. Through
      its
      two wholly-owned subsidiaries See World Satellites, 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 relating 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.




**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.
      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
      ("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 nine months period ended September 30, 2006 are not
      indicative of the results that may be expected for the year ending December
      31,
      2006.




As
      contemplated by the Securities and Exchange Commission (SEC) under 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/A for the year ended December 31, 2005.




**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





**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 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





**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 September 30, 2006 or December
      31, 2005.




**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





**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 nine months ended September 30, 2006 and 2005, 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 $74,629 and
      $9,091 for the nine months ended September 30, 2006 and 2005
      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





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





·
            Estimating
                the fair value of the Company's 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)*




**FAIR
      VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS**





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. We 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 Financial Accounting Standards Board 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





In
      December 2004, the Financial Accounting Standards Board 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 Financial Accounting Standards Board (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 Company.




**(2)**  **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 is, in addition to
      restating its 2005 annual report filed on form 10KSB/A, restating its form
      10QSB
      for the period ended September 30, 2006 to include fair value derivative
      accounting and reclassification of certain other financial items.





The
      restatement will also reclassify 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 stockholder’s 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**Nine
                months ended September 30, 2006**Interest
                income (expense)
            
            
            
            
            $
            (110,980
            )
            $
            (73,440
            )
            $
            (184,420Change
                in fair value of derivative liabilities
            
            
            
            
            $
            -
            
            $
            (336,909
            )
            $
            (336,909Total
                other income (expenses)
            
            
            
            
            $
            (110,980
            )
            $
            (410,349
            )
            $
            (521,329Net
                income (loss)
            
            
            
            
            $
            131,669
            
            $
            (410,349
            )
            $
            (278,680As
            
            
            2005
            
            
            2006previously
            
            
            Restatement
            
            
            Restatement
            
            
            Asreported
            
            
            adjustments
            
            
            adjustments
            
            
            restated**September
                30, 2006**Investments
            
            $
            -
            
            $
            -
            
            $
            59,339
            
            $
            59,339Prepaid
                expenses
            
            $
            199,714
            
            $
            -
            
            $
            (82,672
            )
            $
            117,042Accounts
                payable and accrued expenses
            
            $
            145,483
            
            $
            -
            
            $
            73,440
            
            $
            218,923Fair
                value of derivative liabilities
            
            $
            -
            
            $
            -
            
            $
            2,190,851
            
            $
            2,190,851Accumulated
                deficit
            
            $
            (10,174,095
            )
            $
            (1,629,831
            )
            $
            (410,349
            )
            $
            (12,214,275Deferred
                Compensation
            
            $
            -
            
            $
            -
            
            $
            23,333
            
            $
            23,333




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 Company 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.


10





**(3)**  **RESTRICTED
      CASH**




At
      June
      30, 2006 Restricted Cash of $500,000 represented a short term note obligation
      due Richard Miller as part of the financing of the acquisition of See World
      Satellites, Inc. ("See World"). Per the purchase agreement, Mr. Miller is to
      receive $500,000 within 30 days of the ratification of new five year renewal
      contracts with Echo Star Satellites, LLC and DISH Network Services, LLC, both
      of
      which were signed in June 2006. The $500,000 payment was made to Mr. Miller
      during the third quarter 2006. Therefore, restricted cash is zero at September
      30, 2006. At
      December 31, 2005 Restricted Cash of $560,000 represents funds held in escrow
      by
      Grushko & Mittman to be utilized at the closing of acquisition of See World
      in January 2006. The source of the funds was from the December 2005 issuance
      of
      promissory notes designed for the purpose of raising funds for this acquisition.
      The funds were contractually restricted to be remitted directly towards
      settlement of the acquisition January 3, 2006.




**(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 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.




The
      Company accounted for the issuance of stocks 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.




As
      discussed in footnote #2, a restatement was necessary as the $219,535 allocated
      to warrants was initially classified as equity. Due to an insufficient number
      of
      authorized and unissued shares available at the date of the issue to cover
      complete conversion, the warrant portion of the allocation is being
      reclassified to liability with an adjustment each reporting date to mark the
      liability to market.




**(5)**  **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.




11







**(6)**  **PROPERTY
      AND EQUIPMENT**




Major
      classes of property and equipment together with their estimated useful lives,
      consisted of the following at September 30, 2006 and December 31,
      2005:




**Years**
            **2006**
            **2005**Leasehold
                Improvements
            5
            $189,878
            $180,937Furniture
                and Fixtures
            5
            $128,535
            $54,208Equipment
            3-5
            $81,942
            $20,890Vehicles
            3
            $313,505
            $11,927Total
                property and equipment
            
            $713,860
            $267,962Less:
                accumulated depreciation
            
            $373,255
            ($59,752)Net
                property and equipment
            
            $340,604
              =======
            $208,210
              =======









Depreciation
      expense for the nine months ended September 30, 2006 and September 30, 2005
      was
      $92,237 and $26,980




There
      was
      a significant increase in the Vehicles component of Property and Equipment
      in
      2006 from that reported for the comparable period in 2005. This increase
      resulted from acquiring a fleet of trucks in the acquisition of See World
      Satellites, Inc. The trucks are utilized for delivery of equipment and service
      related activities consistent with that of the Company's established business
      purpose.




12









**(7)**  **OPERATING
      LEASES**




The
      Company leases real property for its nine retail locations. Four of the
      locations have lease terms ranging from three months to three years while five
      locations are on a month-to-month basis.




Future
      minimum payments due on the non-cancelable leases are as follows:





**Year
                Ending**
            **Annual
                Payments**2006
            $25,3802007
            $72,0262008
            $30,678$128,084========




13





Rent
      expense was $135,297 and $132,754 for the nine months ended September 30, 2006
      and 2005, respectively.




**(8)**  **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 80% 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.




**(9)**  **STOCK**




During
      the three months ending March 31, 2006, the Company issued 1,500,000 restricted
      shares of common stock to an officer of the Company relating to a two year
      employment agreement dated February 1, 2006.




During
      the three months ending March 31, 2006, the Company issued 2,250,000 restricted
      shares of common stock valued at $0.02 to an officer of the Company to reduce
      an
      outstanding debt obligation of $45,000.




During
      the three months ending March 31, 2006, the Company issued 2,500,000 restricted
      shares of common stock valued at $0.02 to an officer of the Company as a success
      bonus for 2005.




During
      the three months ending March 31, 2006, the Company issued 920,000 restricted
      shares of common stock valued at $0.02 to a consultant of the Company to reduce
      the $18,400 owed for consulting services relating to services rendered during
      2005.




During
      the three months ended June 30, 2006, the Company agreed to issue 11,458,338
      restricted common shares relating to warrants priced at $0.0239 that were
      exercised by four accredited investors for total proceeds of $273,854.28. At
      September 30, 2006, 1,185,350 restricted shares due to one of the investors
      remained unissued. 11,458,338 new warrants were issued to the investors under
      the same terms other than the strike price which was increased to $0.04. During
      the three months ended September 30, 2006, relating to the exercise of warrants,
      the Company issued 5,600,000 shares at $0.045 for proceeds of $252,000.
      Additionally, the Company issued 1,000,000 shares of its Series B Convertible
      Preferred stock to Mr. Richard Miller, President of See World 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 option of the Company or that
      of
      the holder. The Series B stock has no voting rights. Each share is worth $1.00.
      The following is a discussion of the rights and privileges of our outstanding
      classes of common stock and Preferred Stock:




**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. Please refer to the Company's
      discussion below under "Preferred Stock." In the event of the Company's
      liquidation, dissolution or winding up, the holders of common stock are entitled
      to share pro rata all assets remaining after payment in full of all liabilities,
      subject to the rights of Preferred Stockholders. Please refer to the discussion
      below under "Preferred Stock."




Holders
      of common stock have no preemptive rights to purchase our common stock. There
      are no conversion or redemption rights or sinking fund provisions with respect
      to the common stock. Each holder of common stock is entitled to one vote per
      share on all matters on which such stockholders are entitled to vote. Shares
      of
      common stock do not have cumulative voting rights.




14





**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 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 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 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 Preferred Stock are entitled to
      one
      vote for each share held of record. Holders of the Preferred Stock vote with
      holders of the common stock as one class.




In
      April
      2006, a total of 1,000,000 shares were designated Series B Preferred Stock
      and
      all 1,000,000 shares are outstanding. Upon liquidation (voluntary or otherwise),
      dissolution or winding up of the Company, holders of Series B Convertible
      Preferred Stock will receive their prorate share of the total value of the
      assets and funds of the Company to be distributed, assuming the conversion
      of
      Series B Convertible Preferred Stock to Common Stock. The holders of shares
      of
      Series B Convertible Preferred Stock shall not be entitled to receive dividends
      and shall have no voting rights. After June 1, 2006, the shares of Series B
      Convertible Preferred Stock shall be redeemable at $2.00 per share solely at
      the
      Company's option.




Any
      shares of Series B Convertible Preferred Stock may, at any time after January
      3,
      2008, at the option of the holder or the Corporation, 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.




15





**(10)**  **OPTIONS
      AND WARRANTS**




**OPTIONS**




The
      Company has a Non-Qualified Stock Option and Stock Grant Plan (the Plan) adopted
      in July 1997. For the year ended December 31, 2005 the Company has not granted
      any options. Under the Company's plan, the Company's board of directors has
      reserved 2,500,000 shares that may be granted at the board of directors'
      discretion. No option may be 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 December 31, 2005:




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 ending March 31, 2005, the Company issued
      the
      following warrants. Investors received two classes of warrants, Series A and
      Series B warrants, for each share of common stock purchased. The B warrants
      had
      an initial exercise price of $0.08 and 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.







**2005**
            
            
            **2005****Underlying
                Shares**
            
            
            **Exercise
                Price**Warrants
                issued during 2000
            
            
            1,036,000
            
            $
            1.50Warrants
                issued during 2004
              (10%
                Warrant Dividend)
            
            
            3,000,000
            
            $
            .25Warrants
                issued during 2004 and 2005, A Warrants
            
            
            15,431,250
              --------------
            
            
            .045
              ----------------





On
      September 28, 2005, the Company reduced the exercise price of the A warrants
      from $0.12 to $0.10. Additionally, he 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.




During
      the three months ending March 31, 2006, 4,670,313 "B" warrants priced at $0.03
      were exercised for gross proceeds of $140,109. Expenses relating to warrant
      exercises were $14,048. Additionally, during the three months ended March 31,
      2006, 9,499,937 "B" warrants expired.




During
      the three months ending September 30, 2006, 5,600,000 "A" warrants priced at
      $0.045 were exercised for gross proceeds of $252,000.




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 Series A and Series 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.




16





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.




As
      discussed in footnote #2, a restatement was necessary as the $219,535 allocated
      to warrants was initially classified as equity. Due to an insufficient number
      of
      authorized and unissued shares available at the date of the issue to cover
      complete conversion, the warrant portion of the allocation is being reclassified
      to liability, with an adjustment at each reporting date to mark the liability
      to
      market.




As
      discussed in footnote #4, the warrants associated with this Issue, along with
      the related stock, were allocated based on their relative fair values, with
      the
      fair value of the warrant component determined using the Black-Scholes pricing
      model considering market factors at December 29, 2005. The fair value
      calculation for this grouping of warrants was performed independently of any
      other issue. Therefore, the reduction to the exercise prices for Series A and
      B
      warrants on September 28, 2005 and July 7, 2006 did not impact the fair value
      measurement of the warrants associated with the December 29, 2005
      financing.




The
      table
      below summarizes the A and B warrants outstanding as of September 30, 2006
      relating to the financing closed on December 29, 2005.





**2005**
            
            
            **2005****Underlying**
            
            
            **Exercise****Shares**
            
            
            **Price**Warrants
                issued in December 2005/2006A
                Warrants
            
            
            46,465,550
            
            $
            .02868B
                Warrants
            
            
            11,774,437
            
            $
            .0239B
                Warrants (New)
            
            
            11,458,338
            
            $
            .04







During
      the three months ended June 30, 2006, the Company agreed to issue 11,458,338
      restricted common shares relating to warrants priced at $0.0239 that were
      exercised by four accredited investors for total proceeds of $273,854.28. At
      September 30, 2006, 1,185,350 restricted shares due to one of the investors
      remained unissued. New warrants totaling 11,458,338 were issued to the investors
      under the same terms other than the strike price which was increased to
      $0.04.




17





**(11)**  **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
            
            $
            185,850Property
                and Equipment, net
            
            $
            136,454Goodwill
            
            $
            5,177,696$
            5,500,000===========







Goodwill
      recorded as a result of the acquisition is assignable to the See World
      Satellites, Inc. segment and is tax deductible over a period of fifteen years.
      Revenues and expenses are included in the Company's statement of operations
      from
      January 3, 2006 through September 30, 2006.




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, proforma 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 Jaunary 1, 2006 through January 2, 2006 to be
      immaterial, proforma presentation is deemed unnecessary.




**(12)**  **RELATED
      PARTY TRANSACTIONS (SEE WORLD ACQUISITION)**




At
      September 30, 2006, 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. 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 is due within 30 days of the effective date of a new
      five
      year contract between 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 of 2006 the Company made
      a
      $250,000 payment to Mr. Miller reducing the outstanding note amount due to
      $2.750 million as of November 15, 2006. The Company filed an 8-K with the terms
      and conditions of this note on January 5, 2006. Mr. Miller also extended a
      short-term note in the amount of $551,073 to the Company, of which $375,000
      was
      paid back January 13, 2006. During the three months ended September 30, 2006
      the
      Company repaid $58,691 of the outstanding note leaving an unpaid balance of
      $117,382 at September 30, 2006. Subsequent to the end of the September 30,
      2006
      period the Company paid an additional $117,382 to Mr. Miller to extinguish
      an
      existing note due January 3, 2007.




**(13)**  **STOCK
      BASED COMPENSATION**




The
      disclosures required by paragraph 84 of SFAS 123 ( R ) are stated below,
      although the Company had not granted any options since 2001 to the September
      30,
      2006, and options to purchase 598,000 shares of the Company have not been
      exercised:





**2005**
            
            
            **2004**Net
                Income/ (Loss) as reported
            
            
            ($3,627,067
            )
            
            ($2,328,353Basic
                and diluted earnings per share as reported
            
            
            ($.04
            )
            
            ($.08Share-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
            
            
            ($3,627,067
            )
            
            ($2,328,353Pro-forma
                basic and diluted earnings per share as if the fair-value based method
                had
                been applied to all awards.
            
            
            ($.06
            )
            
            ($.08




18





**(14)**  **SUBSEQUENT
      EVENTS**




In
      October and November 2006 the Company paid $117,382 relating to an outstanding
      note with Mr. Richard Miller. These payments extinguished the outstanding note
      that was due January 3, 2007. In October the Company issued 4,875,000 shares
      to
      investors relating to warrant exercises. The warrants were exercised at $0.045
      for proceeds of  $219,375. On October 3, 2006 the Company announced that it
      had acquired a 25% stake in Elysium Internet. Elysium is a start-up venture
      generating minimal revenue at this point. In addition on October 20, 2006 the
      Company held its 2006 annual meeting. At the meeting two proposals were passed
      by the stockholders of the Company. The stockholders re-elected the Company's
      two directors Scott Gallagher and David Rasmussen. The stockholders also
      approved an increase in the amount of authorized shares from 150,000,000 to
      855,000,000. The results were as follows:




1.
      Election of Directors:







**For**
            **Against**
            **Abstain**Scott
                Gallagher
            76,600,556
            0
            140,000David
                Rasmussen
            76,565,556
            0
            175,000







2.
      Proposal to increase the Company's authorized shares of common stock from 150
      million shares to 855 million shares.







**For**
            74,815,571**Against**
            1,918,985**Abstain**
            5,200







**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 nine months ended September 30, 2006 and the same
      period in 2005. 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/A for the year ended December 31, 2005.




**CAUTIONARY
      STATEMENT REGARDING FORWARD LOOKING STATEMENTS**




This
      report on Form 10-QSB/A 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 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





**OVERVIEW**




We
      focus
      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.





·
            Estimating
                the fair value of our complex derivative financial instruments that
                are
                required to be carried as liabilities at fair value pursuant to Statements
                on Financial Accounting Standards No. 133*Accounting
                for Derivative Financial Instruments and Hedging Activities (FAS
                133)*




**FAIR
      VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS**





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
      ("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 nine months period ended September 30, 2006 are not
      indicative of the results that may be expected for the year ending December
      31,
      2006.




As
      contemplated by the Securities and Exchange Commission (SEC) under 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/A for the year ended December 31, 2005.




**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.




20





**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 (5-20 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 that there was no impairment of such assets at December
      31, 2005. When we completed our impairment testing for the year ended December
      31, 2004, we determined that the value of assets acquired related to certain
      store locations were impaired in the amount of $107,000.




21





**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.




22





**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
      nine months ended September 30, 2006 and 2005, 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.




23







**THREE
      MONTH PERIOD ENDED SEPTEMBER 30, 2006 AS COMPARED TO THREE
      MONTHS**


**ENDED
      SEPTEMBER 30, 2005 RESULTS OF OPERATIONS**


**SEGMENT
      RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTMEBER
      30,2006**




Three
                    Months Ended September 30, 2006
                
                Nine
                    Months Ended September 30, 2006FTS
                
                
                FTS
                
                
                See
                
                
                
                
                
                FTS
                
                
                FTS
                
                
                SeeGroup
                
                
                Wireless
                
                
                World
                
                
                
                
                
                Group
                
                
                Wireless
                
                
                WorldInc.
                
                
                Inc.
                
                
                Satellites
                
                
                Total
                
                
                Inc.
                
                
                Inc.
                
                
                Satellites
                
                
                TotalRevenuesExternal
                
                $
                -
                
                $
                411,263
                
                $
                1,233,984
                
                $
                1,645,247
                
                $
                -
                
                $
                1,348,178
                
                $
                3,564,075
                
                $
                4,912,253Internal
                
                
                375,000
                
                
                -
                
                
                -
                
                
                375,000
                
                
                1,125,000
                
                
                
                
                
                
                
                
                1,125,000Segment
                    Revenues
                
                
                375,000
                
                
                411,263
                
                
                1,233,984
                
                
                2,020,247
                
                
                1,125,000
                
                
                1,348,178
                
                
                3,564,075
                
                
                6,037,253Cost
                    of Goods Sold
                
                
                -
                
                
                369,549
                
                
                161,206
                
                
                530,755
                
                
                -
                
                
                1,092,078
                
                
                494,669
                
                
                1,586,747Gross
                    Profit
                
                
                375,000
                
                
                41,714
                
                
                1,072,778
                
                
                1,489,492
                
                
                1,125,000
                
                
                256,100
                
                
                3,069,406
                
                
                4,450,506Selling,
                    General & AdministrativeExternal
                
                
                143,173
                
                
                103,053
                
                
                701,369
                
                
                947,595
                
                
                495,307
                
                
                359,637
                
                
                2,046,957
                
                
                2,901,901Internal
                
                
                -
                
                
                75,000
                
                
                300,000
                
                
                375,000
                
                
                -
                
                
                225,000
                
                
                900,000
                
                
                1,125,000Segment
                    S, G, & A
                
                
                143,173
                
                
                178,053
                
                
                1,001,369
                
                
                1,322,595
                
                
                495,307
                
                
                584,637
                
                
                2,946,957
                
                
                4,026,901Subtotal
                
                
                231,827
                
                
                (136,339
                )
                
                71,409
                
                
                166,897
                
                
                629,693
                
                
                (328,537
                )
                
                122,449
                
                
                423,605Change
                    in fair value of derivatives
                
                
                315,964
                
                
                -
                
                
                -
                
                
                315,964
                
                
                (336,910
                )
                
                -
                
                
                -
                
                
                (336,910
                )Depreciation
                
                
                (5,556
                )
                
                (10,303
                )
                
                (15,000
                )
                
                (30,859
                )
                
                (16,669
                )
                
                (30,568
                )
                
                (45,000
                )
                
                (92,237
                )Amortization
                
                
                (29,573
                )
                
                -
                
                
                -
                
                
                (29,573
                )
                
                (88,718
                )
                
                -
                
                
                -
                
                
                (88,718
                )Interest
                
                
                (74,612
                )
                
                -
                
                
                (216
                )
                
                (74,828
                )
                
                (183,527
                )
                
                -
                
                
                (893
                )
                
                (184,420
                )Net
                    Income (Loss)
                
                
                438,050
                
                
                (146,642
                )
                
                56,193
                
                
                347,601
                
                
                3,869
                
                
                (359,105
                )
                
                76,556
                
                
                (278,680
                )Intersegment
                    Adjustments
                
                
                (375,000
                )
                
                75,000
                
                
                300,000
                
                
                -
                
                
                (1,125,000
                )
                
                225,000
                
                
                900,000
                
                
                -$
                63,050
                
                $
                (71,642
                )
                $
                356,193
                
                $
                347,601
                
                $
                (1,121,131
                )
                $
                (134,105
                )
                $
                976,556
                
                $
                (278,680
                )







**SALES
      REVENUE**




**CONSOLIDATED**




For
      the
      three months ended September 30, 2006, consolidated sales increased $1,361,742
      or 480%, to $1,645,247, as compared to $283,505 for the three months ended
      September 30, 2005. For the nine months ended September 30, 2006 consolidated
      sales increased to $4,912,253 from $934,096 during the same period in 2005.
      The
      increase in year to date consolidated sales is related to the inclusion of
      results of See World Satellites not included in the prior years results as
      well
      as a year to date increase in sales at FTS Wireless of 44%.




**FTS
      WIRELESS**




For
      the
      three months ended September 30, 2006, FTS Wireless sales increased by $127,758
      to $411,263 when compared to sales of $283,505 for the three months ended
      September 30, 2005. For the nine months ended September 30, 2006 FTS Wireless,
      revenue increased $414,083 or 44.0% to $1,348,179 compared to revenue of
      $934,096 for the nine months ended September 30, 2005. FTS Wireless generated
      25.0% of our total sales or $411,263 for the three months ended September 30,
      2006, compared to revenue of $283,505 for the three months ended September
      30,
      2005 for an increase of 45%. 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 related to the
      introduction of Metro PCS handsets and rate plans into our core market. During
      the three and nine months ended September 30, 2005 Metro PCS did not operate
      in
      the Tampa, Florida market.




**SEE
      WORLD SATELLITES**




For
      the
      three months ended September 30, 2006, See World generated sales of $1,233,984.
      See World generated approximately 75.0% of our consolidated sales for the three
      months ended September 30, 2006. For the nine months ended September 30, 2006
      See World generated sales of $3,564,075 which accounted for approximately 73%
      of
      our consolidated sales for the period. Our sales revenue for See World
      Satellites, Inc. is primarily generated from the sale, service and installations
      of DISH Network satellite television systems. Since See World was acquired
      in
      January 2006 we do not have year over year comparisons.




24







**COST
      OF GOODS SOLD**




**CONSOLIDATED**




For
      the
      three months ended September 30, 2006, consolidated cost of goods sold increased
      by $313,783 to $530,754, as compared to $216,971 for the three months ended
      September 30, 2005. For the nine months ended September 30, 2006 cost of goods
      sold increase by $974,391 to $1,586,747 as compared to $612,356 for the nine
      months ending September 30, 2005.




**FTS
      WIRELESS**




For
      the
      three months ended September 30, 2006, FTS Wireless reported an increase in
      cost
      of goods sold of $152,577 to $369,548 when compared to cost of goods sold of
      $216,971 for the three months ended September 30, 2005. FTS Wireless reported
      an
      increase in cost of goods sold for the nine months ended September 30,2006
      of
      $479,722 to $1,092,078 when compared to $612,356 for the three months ended
      September 30, 2005. The increase in cost of goods sold for both periods is
      primarily related to increased pricing and purchases of wireless handsets and
      related products.




**SEE
      WORLD SATELLITES**




For
      the
      three months ended September 30, 2006 See World Satellites reported cost of
      goods sold of $161,206. For the nine months ended September 30, 2006 See World
      reported cost of goods sold of $464,669. Since the business was acquired in
      January 2006 we do not have year over year comparisons for cost of goods sold
      at
      See World.




**GROSS
      PROFITS**




**CONSOLIDATED**




For
      the
      three months ended September 30, 2006, gross profits increased by $1,047,959
      from $66,534 in 2005 to $1,114,493 in 2006. For the nine months ended September
      30, 2006, gross profits increased by $3,003,767 to $3,325,507 as compared to
      $321,740 for the nine months ending September 30, 2005. The increase in gross
      profits is attributed to the increase in sales revenue of DISH satellite systems
      relating to our wholly-owned subsidiary See World Satellites not offered during
      the comparable period and a 45% increase in year over year sales revenue at
      our
      wholly-owned subsidiary FTS Wireless. For the nine months ended September 30,
      2006, gross profits as a percentage of sales increased to 67% in 2006 compared
      to 34% in 2005.




**FTS
      WIRELESS**




For
      the
      three months ended September 30, 2006, FTS Wireless' gross profit decreased
      by
      $24,820 to $41,715 when compared to gross profit of $66,534 for the three months
      ended September 30, 2005. For the nine months ended September 30, 2006, FTS
      Wireless' gross profit decreased by $65,640 to $256,100 when compared to gross
      profits of $321,740 for the nine months ended September 30, 2005. The decrease
      in gross profits is primarily related to reduced margins on sales on Metro
      PCS
      handsets when compared to the higher margin post-pay products. However, with
      Metro PCS we do not have any ongoing charge back exposure.




**SEE
      WORLD SATELLITES**




For
      the
      three months ended September 30, 2006, See World reported gross profits of
      $1,072,778. For the three months ended September 30, 2006 we reported gross
      profits of $3,069,406. Since See World was acquired in January of 2006, we
      do
      not have year over year comparisons in gross profits for See World.




**SELLING,
      GENERAL AND ADMINISTRATIVE**




Selling,
      General and Administrative Expenses for the three months ended September 30,
      2006, increased $762,642 or 311% to $1,008,030 as compared to $245,388 for
      the
      three months ended September 30, 2005. For the nine months ended September
      30,
      2006, Selling, General and Administrative Expenses increased to $3,082,858
      or
      63% of total sales compared to $1,271,665 for the nine months ended September
      30, 2006. The increase for the three and nine months ended September 30, 2006
      in
      Selling, General and Administrative expenses was primarily related to increased
      operating costs related to our acquisition of See World Satellites, Inc. on
      January 3, 2006. The year over year comparisons include operations of See World
      Satellites, Inc. not included in the three and nine months ended September
      30,
      2005.




**OPERATING
      INCOME**




Operating
      income increased to $106,463 during the three months ended September 30, 2006,
      compared to an operating loss of ($178,854) for the three months ended September
      30, 2005 for a net improvement of $285,317. Operating income increased to
      $242,649 during the nine months ended September 30, 2006, compared to an
      operating loss of ($949,925) for the nine months ended September 30, 2005,
      for a
      net improvement of $1,192,574. The year over year comparisons include operations
      of See World Satellites, Inc. not included in the three and nine months ended
      September 30, 2005.




**NET
      INCOME**




Net
      income increased by $526,946 to $347,601 for the three months ended September
      30, 2006 compared to a net loss of ($179,345) during the three months ending
      September 30, 2005. The increase in net income was primarily related to an
      increase in revenue of $1,233,984 from our new wholly-owned subsidiary See
      World
      Satellites, inc. not included in the prior years results and an increase of
      $315,966 relating to fair value calculations. Net income for the nine month
      ended September 30, 2006 increased to a net loss of $278,680 compared
      to a net loss of $1,140,163 for a net improvement of $861,483. The increase
      in
      net income was primarily related to an increase in revenue of $3,564,075 from
      our wholly-owned subsidiary See World Satellites, Inc. not included in the
      prior
      years results.




25





**INTEREST
      EXPENSE**




Interest
      expense increased $74,337 to $74,828 for the three months ended September 30,
      2006, as compared to $491 for the three months ended September 30, 2005. The
      year over year increase in interest expenses is related to an increase in
      interest expenses from a private placement closed on December 29,
      2005.




**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 September 30, 2006
      includes cash received from the issuance of common stock and cash generated
      from
      operations.




As
      of
      September 30, 2006, our current assets were $682,424 consisting of $25,356
      in
      cash, $369,876 in inventories, $170,150 of accounts receivables and $117,042
      of
      prepaid expenses and current assets. Current liabilities were $3,295,757,
      consisting of $1,238,321 of convertible debentures, $1,830,895 of notes payable
      to related parties, $218,923 in accounts payable and accrued expenses and $7,618
      of long term debt-equipment loans.




At
      September 30, 2006, we had total assets of $6,614,925 consisting of, in addition
      to the assets described above, Goodwill of $5,177,696, property and equipment,
      net of accumulated depreciation of $340,604, unamortized discount of convertible
      debt of $278,535, unamortized debt issuance costs $59,145 and deposits of
      $17,182.




26





**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 un-audited, interim financial statements
      express substantial doubt about our ability to continue as a going
      concern.




**FINANCING
      ACTIVITIES**




During
      the three months ending September 30, 2006, 5,600,000 "A" warrants priced at
      $0.045 were exercised for gross proceeds of $252,000. At September 30, 2006,
      we
      had not issued 1,185,350 restricted shares that we owed to one of the
      investors.




**SUBSIDIARIES**




As
      of
      September 30, 2006, 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.





**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. In connection with the restatement and the
      filing of this Form 10-QSB/A, our management, with the participation of our
      Chief Executive Officer/Interim Chief Financial Officer, re-evaluated the
      effectiveness of our disclosure controls and procedures as of the end of the
      period covered by this report. Based on the re-evaluation, the Chief Executive
      Officer/Interim Chief Financial Officer concluded that the disclosure controls
      and procedures as of the end of the period covered by this report were
      effective. Specifically, our Chief Executive Officer/Interim Chief Financial
      Officer evaluated the effects of EITF 00-19, FASB Statement 133 and APB 14
      relating to the issuance of certain warrants now considered derivatives. Even
      though our Chief Executive Officer/Interim Chief Financial Officer believed
      that
      our controls and procedures were effective and that the initial treatment of
      warrants was correct based on our findings at the time, upon further review
      and
      consultations with industry professionals, management determined that in order
      to be compliant with GAAP accounting it would be necessary to restate certain
      financials to include fair value accounting of certain outstanding warrants
      now
      considered derivatives. Management believes that its controls and procedures
      are
      effective and the restatement is due to complex and evolving changes to
      accounting methods relating to derivatives.





Despite
      the restatement, as of April 27, 2007, there were no changes in our internal
      control over financial reporting that occurred during the fiscal quarter ended
      September 30, 2006 that materially affected, or is reasonably likely to
      materially affect, our internal control over financial reporting.




27







**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.**




We
      did
      not have any issuances of unregistered securities during the three months ended
      September 30, 2006




28








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




We
      have
      filed a Registration Statement on Form SB-2. The purpose of the Registration
      Statement is to register the resale of certain securities we issued as part
      of a
      private placement completed in January 2006.Until the SB-2 is declared effective
      by the Securities and Exchange Commission we are accruing liquidated damages
      that we anticipate paying either in cash or by issuing shares of common
      stock.




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




None.




**ITEM
      5. OTHER INFORMATION.**




None.




**ITEM
      6. EXHIBITS AND REPORTS ON FORM 8-K.**





None





**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).




29





4.1
      Form
      of Certificate for Common Shares (included as exhibit 4.1 to the Registrant's
      Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998, and
      incorporated herein by this reference).




4.2
      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).




30





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
      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).




31





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).




10.12
      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).




10.23
      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).




10.25
      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
      Employment Agreement between the Company and Scott Gallagher, dated November
      15,
      2005 (included as exhibit 10.27 to the Form 10-QSB filed May 15, 2006, and
      incorporated herein by reference).




10.28
      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).




32





14.1
      Corporate Code of Conduct and Ethics (included 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 Officers 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
                Gallagher
              Chief
                Executive Officer and
              Interim
                Chief Financial Officer
              (Principal
                Accounting Officer)
              May
                1, 2007