**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 MARCH 31, 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
      March 31, 2006 we had 114,679,131 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 orPlan
              of Operation
            15Item 3. Controls and
              Procedures
            18PART II. OTHER INFORMATION-----------------------------------------------Item 1. Legal Proceedings
            19Item 2. Unregistered Sales of Equity
              Securities and Use of Proceeds
            19Item 3. Defaults Upon Senior Securities
            19Item 4. Submission of Matters to a Vote
              of Security Holders
            20Item 5. Other Information
            20Item 6. Exhibits and Reports on Form
              8-K
            20






**PART
      I - FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS.**







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





1








**FTS
                GROUP, INC. AND
                SUBSIDIARIES****CONDENSED
                CONSOLIDATED BALANCE SHEETS****MARCH
                31, 2006 AND DECEMBER 31, 2005**Assets
            2006
            
            2005Current
                assets:
            
            
            
            (restated)
            
            
            (restated)Cash
              and cash equivalents
            $
            124,801
            
            $
            243,079Restricted
              cash
            
            500,000
            
            
            560,000Accounts
              receivable
            
            136,713
            
            
            12,201Inventories
            
            212,807
            
            
            33,180Prepaid
              expenses and current assets
            
            79,179
            
            
            474,683Total
              current assets
            
            1,053,500
            
            
            1,323,143Property
                and equipment, net of accumulated depreciation
            
            389,762
            
            
            208,210Unamortized
                discount on convertible debt
            
            351,927
            
            
            380,690Unamortized
                debt issuance costs
            
            
            118,291
            
            
            46,313Investment
                in private entity
            
            
            
            15,000
            
            
            -Goodwill
            
            
            
            
            5,177,696
            
            
            -Deposits
            
            
            
            
            17,182
            
            
            16,139Total
              assets
            $
            7,123,358
            
            $
            1,974,495Liabilities
                and Stockholders' EquityCurrent
                liabilities:Accounts
              payable and accrued expenses
            $
            238,886
            
            $
            468,185Current
              portion of notes payable to related parties
            
            2,397,048
            
            
            80,850Convertible
              debentures
            
            
            
            1,238,321
            
            
            782,961Current
              installments of long-term debt-equipment loans
            
            13,088
            
            
            -Total
              current liabilities
            
            3,887,343
            
            
            1,331,996Fair
                value of derivative liabilities
            
            
            9,332,605
            
            
            1,849,366Convertible
                debentures
            
            
            
            -
            
            
            430,088Long-term
                debt to related parties, less current installments
            
            1,750,000
            
            
            -Long-term
                debt equipment loans, less current installments
            
            2,851
            
            
            -Total
              liabilities
            
            14,972,799
            
            
            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 undesignated shares authorized, none
              issued
            
            -
            
            
            -Convertible
              preferred stock, Series B, $0.01 par value:500,000
              Shares authorized, issued and outstanding at March 31, 2006
            
            10,000
            
            
            -Common
              stock, $.001 par value. Authorized 150,000,000 shares:114,679,131
              shares issued and outstanding at March 31, 2006,102,098,756
              shares issued and outstanding at December 31, 2005.
            
            114,679
            
            
            102,099Additional
              paid-in capital
            
            11,465,553
            
            
            10,196,539Accumulated
              deficit
            
            (19,411,340)
            
            
            (11,935,593)(7,821,108)
            
            
            (1,636,955)Deferred
              stock compensation
            
            (28,333)
            
            
            -Total
              stockholders' equity
            
            (7,849,441)
            
            
            (1,636,955)Total
              liabilities and stockholders equity
            $
            7,123,358
            
            $
            1,974,495See
                accompanying notes to consolidated financial statements.




2








**FTS
                GROUP, INC. AND SUBSIDIARIES****CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS****FOR
                THE THREE MONTHS ENDED MARCH 31,
                2006 AND 2005**2006
            
            2005(restated)
            
            (restated)REVENUESService
                Revenue-See World Satellites, Inc.
            $
                1,138,036
            $
            -Product
                Retail Sales-FTS Wireless, Inc.
            495,578
            
            303,9701,633,614
            
            303,970COST
                OF GOODS SOLDService-See
                World Satellites, Inc.
            209,208
            
            -Product-FTS
                Wireless, Inc.
            374,274
            
            135,518583,482
            
            135,518GROSS
                PROFITService-See
                World Satellites, Inc.
            928,828
            
            -Product-FTS
                Wireless, Inc.
            121,304
            
            168,4521,050,132
            
            168,452GENERAL
                AND ADMINISTRATIVE EXPENSESSelling,
                general and administrative expenses
            1,008,186
            
            755,3271,008,186
            
            755,327INCOME
                (LOSS) FROM OPERATIONS
            41,946
            
            (586,875)OTHER
                INCOME (EXPENSE)Change
                in fair value of derivative liabilities
            (7,478,664)
            
            -Interest
            
            
            (39,029)
            
            (184,112)(7,517,693)
            
            (184,112)NET
                INCOME (LOSS)
            
            $
                (7,475,747)
            
            $
                (770,987)PER
                SHARE INFORMATION:WEIGHTED
                AVERAGE SHARES OUTSTANDINGBasic
            
            
            107,195,939
            
            52,020,779Diluted
            
            
            120,862,553
            
            52,020,779NET
                LOSS PER COMMON SHARE:Basic
            
            
            ($0.07)
            
            ($0.01)Diluted($0.06)
            
            ($0.02)See
              accompanying notes to consolidated financial statements.




3





**FTS
                GROUP, INC. AND SUBSIDIARIES****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS****THREE
                MONTHS ENDED MARCH 31, 2006 AND 2005**2006
            
            2005(restated)
            
            (restated)Cash
                flows from operating activities:Net
                income (loss)
            
            
            ($7,475,747)
            
            ($770,987)Adjustments
                to reconcile net income to net cash used in operating
                activities:Depreciation
              and amortization
            
            95,169
            
            8,077Common
              shares issued for services
            98,400
            
            294,350Amortization
              of debt discount
            
            -
            
            180,877Amortization
              of deferred stock compensation
            1,167
            
            -Change
              in fair value of derivative liability
            7,478,664
            
            -(Increase)
              decrease in operating assets:Accounts
              receivable
            (38,754)
            
            (124,334)Inventories
            (35,083)
            
            (9,136)Prepaid
              expenses
            437,310
            
            8,158Other
              assets
            (1,043)
            
            (1,000)Increase
              (decrease) in operating liabilities:Accounts
              payable and accrued expenses
            (336,064)
            
            45,682Net
              cash provided by (used in) operating activities
            224,019
            
            (368,313)Cash
                flows from investing activities:Net
                assets 100% acquisition of See World Satellites, Inc.
            (206,100)Investment
                in private entity
            
            
            (15,000)Capital
                expenditures for property and equipment
            (74,000)
            
            (85,064)Release
                of restriction on funding proceeds for investment in acquisition
            60,000
            
            -Payment
                to See World Satellites, Inc. acquisition
            (500,000)
            
            -#
            Net
              cash used in investing activities
            (735,100)
            
            (85,064)Cash
                flows from financing activities:Proceeds
                from issuance of stock
            
            
            140,109
            
            713,460Proceeds
                from convertible debentures
            
            30,000
            
            -Proceeds
                from stock issued under equity line
            -
            
            270,994Proceeds
                from note payable to Dutchess Advisors
            -
            
            500,000Proceeds
                from notes payable to individuals
            635,002
            
            -Repayments
                of note payable Dutchess Advisors
            
            
            (817,599)Repayments
                of notes payable-truck loans
            (4,708)
            
            -Repayments
                of notes payable to related parties
            -
            
            (193,815)Repayments
                of debenture loan
            
            
            -
            
            (26,876)Repayments
                of notes payable to individuals
            (375,000)
            
            -Repayment
                of loans from related parties
            (32,600)
            
            -Net
              cash provided by financing activities
            392,803
            
            446,164Net
              decrease in cash
            (118,278)
            
            (7,213)Cash
                at beginning of year
            
            
            243,079
            
            7,949Cash
                at end of year
            
            
            $124,801
            
            $736See
                accompanying notes to consolidated financial statements.Supplemental
                schedule of cash flow information:Interest
                paid
            
            
            
            $389
            
            $93,133Supplemental
                disclosure of non-cash investing and financing activities:Stock
                issued in exchange for convertible debentures
            
            
            $51,016See
                accompanying notes to consolidated financial statements.





4





**FTS
      GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


March
      31,
      2006


(UNAUDITED)




**(1)**  **BASIS
      OF PRESENTATION**




**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 three month period ended March 31, 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.




**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.




**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 March 31, 2006 or December 31,
      2005.




5





**REVENUE
      RECOGNITION**




The
      Company's wholly-owned subsidiary, FTS Wireless, recognizes revenue from the
      activation of new wireless customers and the sale of wireless handsets, airtime
      and accessories at the time of activation or sale. Net revenues from wireless
      activations are recognized during the month the activation is performed.
      Allowances for charge-backs, returns, discounts and doubtful accounts are
      provided when sales are recorded. Shipping and handling costs are included
      in
      cost of sales.




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.




**INCOME
      TAXES**




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




**EARNINGS
      PER SHARE**




The
      basic
      net earnings (loss) per common share is computed by dividing the net earnings
      (loss) by the weighted average number of shares outstanding during a period.
      Diluted net earnings (loss) per common share is computed by dividing the net
      earnings, adjusted on an as if converted basis, by the weighted average number
      of common shares outstanding plus potential dilutive securities. For the three
      months ended March 31, 2006, potential dilutive securities that had an
      anti-dilutive effect were not included in the calculation of diluted net
      earnings (loss) per common share. These securities include options to purchase
      shares of common stock.




**ADVERTISING
      COSTS**




The
      cost
      of advertising is expensed as incurred. Advertising expense was $31,001 and
      $9,091 for the three months ended March 31, 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.




**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)*




6





**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.




**NEW
      ACCOUNTING STANDARDS**




In
      May
      2005, the Financial Accounting Standards Board ("FASB") issued Statement of
      Financial Accounting Standard ("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 will adopt 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 of this statement is issued. Management believes the adoption of this
      statement will have no impact on the financial statements of the
      Company.




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.




7





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 March 31, 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**Three
                months ended March 31, 2006**Interest
                income (expense)
            
            (36,695)
            (2,334)
            (39,029)Change
                in fair value of derivative liabilities
            
            0
            (7,478,664)
            (7,478,664)Total
                other income (expenses)
            
            (36,695)
            (7,480,998)
            (7,517,693)Net
                income (loss)
            
            5,251
            (7,480,998)
            (7,475,747)As
            2005
            2006previously
            Restatement
            Restatement
            Asreported
            adjustments
            adjustments
            restated**March
                31, 2006**Cash
                and cash equivalents
            $
                624,801
            $
                -
            $
                (500,000)
            $
                124,801Restricted
                cash
            $
                -
            $
                -
            $
                500,000
            $
                500,000Property
                and equipment, net
            $
                319,762
            $
                -
            $
                70,000
            $
                389,762Investment
                in private entity
            $
                70,000
            $
                -
            $
                (70,000)
            $
                -Investments
            $
                -
            $
                -
            $
                15,000
            $
                15,000Prepaid
                expenses
            $
                122,512
            $
                -
            $
                (43,333)
            $
                79,179Accounts
                payable and accrued expenses
            $
                236,552
            $
                -
            $
                2,334
            $
                238,886Fair
                value of derivative liabilities
            $
                -
            $
                -
            $
                9,332,606
            $
                9,332,606Convertible
                preferred stock
            $
                1,000,000
            $
                -
            $
                (990,000)
            $
                10,000Additional
                paid-in capital
            $
                10,699,663
            $
                (219,535)
            $
                985,425
            $
                11,465,553Accumulated
                deficit
            $(10,300,511)
            $
                (1,629,831)
            $
                (7,480,998)
            $(19,411,340)Deferred
                Compensation
            $
                -
            $
                -
            $
                28,333
            $
                28,333





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.




8





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




At
      March
      31, 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. 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 $1,858,622 from
      the
      issuance of Secured Convertible Promissory Notes with selected subscribers
      before the original issue discount. 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.




We
      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 if the allocation is being reclassified
      to liability, with an adjustment at 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. 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.




9







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




Property
      and equipment are as follows at March 31, 2006 and December 31,
      2005:





2006
            
            2005Leasehold improvements
            
            $
            189,878
            $
            180,937Furniture and fixtures
            
            $
            124,208
            $
            54,208Equipment
            
            $
            81,942
            $
            20,890Vehicles
            
            $
            303,655
            $
            11,927Total property and equipment
            
            $
            699,683
            $
            267,962Less:
              accumulated depreciation
            
            $
            (309,921)
            $
            (59,752)Net
              property and equipment
            
            $
            389,762
            $
            208,210






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




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




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





Year
                Ending
            
            Annual
                Payments2006
            
            $108,5052007
            
            87,7052008
            
            30,634$226,844





Rent
      expense was $49,713 and $49,604 for the three months ended March 31,
      2006 and 2005, respectively.




10







**(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
      their 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. Additionally, these same three vendors are also major
      customers of the Company who provide 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 three year
      employment agreement dated February 1, 2006.




During
      the three months ending March 31, 2006, the Company issued 2,250,000 restricted
      shares 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 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 valued at $0.02 to a consultant of the Company to reduce $18,400
      consulting services relating to services rendered during 2005.




**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.




11





**PREFERRED
      STOCK**




The
      Company's Articles of Incorporation, as amended, vest its Board of Directors
      with authority to divide our 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.




During
      the period ended March 31, 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.




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




**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 previous issued have expired and are no longer outstanding
      as of
      January 1, 2006 per plan provisions.




**WARRANTS**




The
      following details warrants outstanding as of March 31, 2006:




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.




12





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
      have
      an exercise price of $0.08 and A warrants have an exercise price of $0.12.
      The
      Company filed the terms and conditions of the financing and registration rights
      in March of 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
                  Underlying Shares
              
              2005ExercisePriceWarrants issued during 2000
              1,036,000
              $
              1.50Warrants issued during 2004 (10%
                Warrant Div)
              3,000,000
              $
              0.25Warrants
                issued during 2004 and 2005A
                Warrants
              15,431,250
              $
              0.10





On
      September 28, 2005, the Company reduced the exercise price of the A warrants
      from $0.12 to $0.10. Additionally, the Company reduced the exercise price of
      the
      B warrants from $0.08 to $0.03.




During
      the three months ending March 31st, 2006 4,670,313 "B" warrants priced at $.03
      were exercised for gross proceeds of $140,109. Expenses relating to warrant
      exercises were $14,048. Additionally, during the three months ended March 31st,
      2006 9,499,937 "B" warrants expired.




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.
      The Company filed the terms and conditions of the financing and registration
      rights in January of 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 if the allocation is being reclassified
      to liability with an adjustment each reporting period 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.


2005
            
            2005Underlying
            
            ExerciseShares
            
            PriceWarrants
                issued in December 2005/2006A
                Warrants
            
            
            46,465,550
            
            $
            .02868B
                Warrants
            
            
            23,232,775
            
            $
            .0239







13





**(11)**  **SEE
      WORLD SATELLITES, INC ACQUISITION**




Effective
      January 3, 2006, the Company acquired 100% of the capital stock of See World
      Satellites, Inc. ("See World"), for consideration, providing for (i) $1,000,000
      in cash to the 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 March 30, 2006.




Unaudited
      pro forma data (included in the Company 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 January 1, 2006 through January 2, 2006 to be
      immaterial, proforma presentation is deemed unnecessary.




**(12)**  **RELATED
      PARTY TRANSACTION (SEE WORLD SATELLITES, INC.)**




At
      March
      31, 2006, the Company had the following debt obligations and made the following
      payments to Mr. Richard Miller a director and President of the Companies wholly
      owned subsidiary See World Satellites, Inc. (SWS). The Company paid Mr. Miller
      $500,000 on January 3rd, 2006 relating to the acquisition of SWS. The Company
      currently has 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
      SWS. Additionally, the Company issued 500,000 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 our option or that of the holder. The Series B stock has
      no
      voting rights. Each share is worth $2.00. The Company also has a $3.5 Million
      note payable to the President of SWS. 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 $143,798 to the Company. The Company expects to
      repay
      the $143,798 note during 2006.




**(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 March 31, 2006,
      and options to purchase 598,000 shares of the Company have expired:





2005
            2004Net Income /(Loss) as
              reported
            $(3,627,067)
            $(2,328,353)Basic and diluted earnings per share
              as
              reported
            $(.06)
            $(.08)Share-based
              employee compensation cost net of related tax effects includedin
              net income as reported
            -
            -Share-based
              employee compensation cost, net of related tax effects thatwould
              have been included in net income if the fair-value based method hadbeen
              applied to all awards
            -
            -Pro-forma
              net income as if the fair-value method had been applied to allawards
            $(3,627,067)
            $(2,328,353)Pro-forma
              basic and diluted earrings per share as if the fair-value basedmethod
              had been applied to all awards
            $(.06)
            $(.08)





14





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




In
      May
      2006, 11,458,338 "B" warrants priced at $0.0239 were exercised. The Company
      received total proceeds of $273,854. Simultaneously, the Company issued
      11,458,388 new "B" warrants priced at $.04. On April 3, 2006, the Company made
      a
      payment of $250,000 to Mr. Richard Miller relating to the acquisition of See
      World Satellites, Inc. The $3.5 Million note was reduced to $3.250 Million
      on
      April 3, 2006.




**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 months ended March 31, 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 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
      the risks described in this report and in our annual report on Form 10-KSB
      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.




**OVERVIEW**




We
      focus
      on developing, investing in, and acquiring cash-flow positive businesses and
      viable business projects primarily in the wireless and technology industries.
      Through our-wholly owned subsidiaries See World Satellites, Inc. and FTS
      Wireless, Inc. we operate a RSP (Regional Service Provider)and retail
      distribution business for DISH Network satellite television systems primarily
      to
      the western Pennsylvania market and nationally through our retail channel.
      We
      also operate a chain of nine retail wireless locations in the Gulf Coast market
      of Florida. Currently, we lease a location in Indiana, Pennsylvania for our
      satellite RSP business. Additionally, we lease nine retail locations in Florida.
      We lease three locations in Tampa, two locations in St. Petersburg, one in
      Largo, one in Lutz, one in Seminole and one in Clearwater.




15





**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.




**REVENUE
      RECOGNITION**


The
        Company's wholly-owned subsidiary, FTS Wireless, recognizes revenue from
        the
        activation of new wireless customers and the sale of wireless handsets, airtime
        and accessories at the time of activation or sale. Net revenues from wireless
        activations are recognized during the month the activation is performed.
        Allowances for charge-backs, returns, discounts and doubtful accounts are
        provided when sales are recorded. Shipping and handling costs are included
        in
        cost of sales.
  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.




**IMPAIRMENT
      OF LONG-LIVED ASSETS**




We
      review
      our long-lived assets including property and equipment and our identifiable
      intangible assets subject to amortization whenever current events or changes
      in
      circumstances indicate that the carrying amount of the assets may not be fully
      recoverable. To determine recoverability of our long-lived assets, we evaluate
      the estimated future undiscounted cash flows that are directly associated with
      and that are expected to arise as a direct result of the use and eventual
      disposition of that long-lived asset. If the estimated future undiscounted
      cash
      flows demonstrate that recoverability is not probable, an impairment loss would
      be recognized. An impairment loss would be calculated based on the excess
      carrying amount of the long-lived asset over the long-lived assets fair
      value.




**THREE
      MONTHS PERIOD ENDED MARCH 31, 2006 AS COMPARED TO THREE MONTHS
      ENDED**


**MARCH
      31, 2005**


**RESULTS
      OF OPERATIONS**


**SEGMENT
      RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2006**


Three
                  Months Ended March 31, 2006FTS
              FTS
              
              SeeGroup
              Wireless
              
              WorldInc.
              Inc.
              
              Satellites
              
              TotalExternal
                  Revenues
              $
              -
              $495,578
              $
              1,138,036
              $
              1,633,614Internal
                  Revenues
              
              375,000
              
              
              
              
              375,000Segment
                  Revenues
              
              375,000
              495,578
              
              1,138,036
              
              2,008,614Cost
                  of Goods Sold
              
              -
              374,274
              
              209,208
              
              583,482Gross
                  Profit
              
              375,000
              121,304
              
              928,828
              
              1,425,132Selling,
                    General,and Administrative
              
              143,365
              201,155
              
              979,803
              
              1,324,323Subtotal
              
              231,635
              (79,851)
              
              (50,975)
              
              100,809Loss
                  on change in fair value of derivative liabilities
              
              (7,478,664)
              
              
              
              
              (7,478,664)Depreciation
              
              (3,806)
              (10,096)
              
              (15,000)
              
              (28,902)Amortization
              
              (29,573)
              -
              
              -
              
              (29,573)Interest
              
              (39,028)
              -
              
              (389)
              
              (39,417)Net
                  Income (Loss)
              
              (7,319,436)
              (89,947)
              
              (66,364)
              
              (7,475,747)Intersegment
                  Adjustments
              
              (375,000)
              75,000
              
              300,000
              
              -$
              (7,694,436)
              $
                  (14,947)
              $
              233,636
              $
              (7,475,747)


**SALES
      REVENUE**




For
      the
      three months ended March 31, 2006, overall sales increased $1,329,644 or 537%,
      to $1,633,614, as compared to $303,970 for the three months ended March 31,
      2005. The increase in sales revenue was primarily related to increased sales,
      service and installations of DISH satellite television systems resulting from
      the acquisition of our wholly owned subsidiary See World Satellites, Inc.,
      closed during the quarter. Sales in our retail wireless business also increased
      during the first quarter of 2006 primarily due to greater acceptance of Metro
      PCS wireless products and services as well as effective marketing and promotion
      strategies.




**COST
      OF GOODS SOLD**




For
      the
      three months ended March 31, 2006, cost of goods sold increased by $447,694
      to
      $583,482, as compared to $135,518 for the three months ended March 31, 2005.
      The
      increase in cost of goods sold was related to increased product purchases of
      satellite television systems and wireless handsets and other related
      products.




16





**GROSS
      PROFITS**




Gross
      Profits increased by $881,680 from $168,452 in 2005 to $1,050,132 in 2006.
      The
      increase in gross profits is attributed to the increase in service and sale
      of
      wireless satellite systems and an increase in sales of wireless handsets during
      the period. Gross profits as a percentage of sales increased to 64% in 2006
      compared to 23% in 2005. The increase in gross profits as a percentage of sales
      is related to the introduction of business related to the sales, service and
      installation of satellite television systems for DISH networks and a shift
      from
      post-paid handsets sales to a greater focus on pre-paid handset sales for Metro
      PCS.




**SELLING,
      GENERAL AND ADMINISTRATIVE**




Selling,
      General and Administrative Expenses for the three months ended March 31, 2006,
      increased $252,859 or 33% to $1,008,186, as compared to $755,327 for the three
      months ended March 31, 2005. The increase in Selling, General and Administrative
      expenses was primarily related to increased operating costs related to our
      newly-acquired operations at See World Satellites, Inc. and related acquisition
      and financing costs.




**OPERATING
      INCOME**




Operating
      income increased to $41,946 during the three months ended March 31, 2006,
      compared to an operating loss of ($586,875) for the three months ended March
      31,
      2005 for a net improvement of $628,821. The improvement in operating income
      was
      primarily related to improved operating conditions for our retail wireless
      subsidiary due to increased sales of Metro PCS products and services. In
      addition the inclusion of business relating to the acquisition of See World
      Satellites not included in the 2005 financial statements also helped improve
      our
      operating income.




**NET
      INCOME/LOSS**




Net
      loss
      increased to ($7,475,747) for the three months ended March 31, 2006 compared
      to
      a net loss of ($770,987) during the three months ending March 31, 2005. The
      increase in net loss was primarily related to the inclusion of a $7,478,664
      fair
      value expense related to derivative accounting.




**INTEREST
      EXPENSE**




Interest
      expense decreased $145,083, to $39,029 for the three months ended March 31,
      2006, as compared to $184,112 for the three months ended March 31, 2005. The
      decrease in year over year interest expenses is related to reduced financing
      costs and fees incurred on promissory notes incurred during the first quarter
      of
      2005.




**LIQUIDITY
      AND CAPITAL RESOURCES**




Our
      requirements for capital are to (i) pay down debt,(ii)fund possible
      acquisitions, and (iii) provide working capital and funds to expand our current
      business. Our primary source of financing during the three months ended March
      31, 2006 include cash received from the issuance of common stock and cash
      generated from operations.




As
      of
      March 31, 2006, our Current Assets were $1,053,500 and Current Liabilities
      were
      $3,887,343. Our Current Liabilities consist mainly of $1,238,321 of convertible
      debentures, $2,397,048 of current portion of notes payable to related parties,
      accounts payable and accrued expenses of $238,886, current installments of
      long
      term debt equipment loans of $13,088 and long term debt equipment loans, less
      current installments of $2,851. Our total liabilities included 9,332,605 in
      fair
      value derivative liability and $1,750,000 Long-term debt to related parties,
      less current installments.




17







At
      March
      31, 2006, we had cash available of $124,801, accounts receivable of $136,713,
      inventory of $212,807, property and equipment net of accumulated depreciation
      of
      $389,762, prepaid expenses and current assets of $79,179, restricted cash of
      $500,000, deposits of $17,182, unamortized discount on convertible debt of
      $351,927, unamortized debt issuance costs of $118,291and Goodwill of $5,177,696
      for total assets of $7,123,358.




During
      the three month period ended March 31, 2006, we generated cash of $209,019
      in
      operating activities as compared to the three month period ended March 31,
      2005,
      where we used $368,313 in cash for operating activities. Net cash provided
      by
      financing activities for the three months ended March 31, 2006 and 2005 of
      $392,803 and $446,164, respectively. Accumulated deficit increased to
      ($19,411,340) at March 31, 2006 from ($11,935,593) at December 31, 2005.
      Stockholders equity decreased to ($7,849,441) at March 31, 2006 from
      ($1,636,955) at December 31, 2005 for a net change of ($6,212,486) primarily
      related to changes in fair value derivatives expenses.




**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 ended March 31, 2006, 4,670,313 warrants priced at $0.03 were
      exercised during the quarter ended March 31, 2006 for gross proceeds of
      $140,109.




**SUBSIDIARIES**




As
      of
      March 31, 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
      March 31, 2006 that materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting.




18







**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.**




During
      the three months ending March 31, 2006, we issued 1,500,000 restricted shares
      of
      our common stock to Mr. David Rasmussen relating to a three year employment
      agreement dated February 1, 2006.




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




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




During
      the three months ending March 31, 2006, we issued 920,000 restricted shares
      valued at $0.02 to an officer of the Company to reduce $18,400 consulting
      services relating to services rendered during 2005.




Additionally
      the Company issued 500,000 shares of its Series B Convertible Preferred stock
      to
      Mr. Richard Miller, President of See World Satellites, Inc. 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 our option or that of the holder.
      The Series B stock has no voting rights. Each share is worth $2.00.




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




None.




19








**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.**




Reports
      on form 8K




On
      January 5, 2006, we filed a Form 8-K relating to a financing and a new material
      obligation.




On
      January 9, 2006, we filed a Form 8-K relating to the acquisition of 100% of
      the
      outstanding shares of See World Satellite, Inc.




On
      January 12, 2006, we filed an 8-K relating to the departure of a director of
      the
      Company.




On
      March
      3, 2006, we filed an amended 8-K with the audited financials statement of our
      acquisition. The original Form 8-K relating to the acquisition was filed on
      January 9, 2006




On
      March
      13, 2006, we filed a Form 8-K relating to the issuance of Series B Preferred
      Convertible stock.




On
      March
      31, 2006, we filed a Form 8-K relating to an amendment to our agreement with
      EchoStar Satellite, L.L.C. and DISH Network Service, L.L.C.




On
      April
      5, 2006, we filed a Form 8-K relating to agreements between EchoStar Satellite,
      L.L.C., Richard Miller and See World Satellites, Inc. relating to our
      acquisition of See World Satellites, Inc.







Number        Description
      of
      Exhibit




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).




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).




20





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).




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




4.11B
      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).




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




21





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




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




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




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




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




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




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




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




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




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




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




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




22





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




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




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




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




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




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




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




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




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




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




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




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




23





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).




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)
              April
                30, 2007





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