**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**


(Mark
      One)





**[X]**  **ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**





For
      the
      fiscal year ended December 31, 2006




**[ 
      ]**  **TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**





For
      the
      transition period from ___________ to __________




Commission
      file number: 000-50021





**NUTECH
      DIGITAL, INC.**


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





**CALIFORNIA**
            **95-4642831**(State
                or other jurisdiction of
              incorporation
                or organization)
            (IRS
                Employer Identification No.)





**3841
      HAYVENHURST DR.**


**ENCINO,
      CALIFORNIA 91436**


(Address
      of principal executive offices)





**(818)
      994-3841**


(Registrant's
      telephone number)





Securities
      registered under Section 12(b) of the Exchange Act:





NONE





Securities
      registered under Section 12(g) of the Exchange Act:





COMMON
      STOCK, NO PAR VALUE PER SHARE





Check
      whether the registrant (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 for the past 90 days. Yes [X] No [ 
]





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B not contained in this form, and no disclosure will be contained,
      to the best of the registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. [ X]


















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





The
      issuer's revenues for the most recent fiscal year ended December 31, 2006 were
      $1,237,431.





The
      aggregate market value of the issuer's voting and non-voting common equity
      held
      by non-affiliates computed by reference to the average bid and ask price of
      such
      common equity as of April 2, 2007, was approximately $449,755.





As
      of
      March 28, 2007 the issuer had 34,172,494 shares of common stock, $.001 par
      value
      per share outstanding ("Common Stock").





Documents
      Incorporated by Reference: NONE





Transitional
      Small Business Disclosure Format: Yes [  ] No [X]

















NUTECH
      DIGITAL, INC.


FORM
      10-KSB


INDEX





**Part
      I**





Item
                1.
            Description
                of Business
            3Item
                2.
            Description
                of Property
            10Item
                3.
            Legal
                Proceedings
            10Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            10




Part
      II




Item
                5.
            Market
                for Common Equity and Related Stockholder Matters
            11Item
                6.
            Management's
                Discussion and Analysis or Plan of Operation
            12Item
                7.
            Financial
                Statements
            F-1Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            31Item
                8A
            .Controls
                and Procedures
            31Item
              8B
            Other
                Information
            31




Part
      III


Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act
            32Item
                10.
            Executive
                Compensation
            37Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            39Item
                12.
            Certain
                Relationships and Related Transactions
            42Item
                13.
            Exhibits
                and Reports on Form 8-K
            46Item
                14.
            Principal
                Accountant Fees and Services Signatures
            49
















**PART
      I**





**ITEM
      1. DESCRIPTION OF BUSINESS**





SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS





CERTAIN
      STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-KSB (THIS "FORM 10 KSB"), INCLUDING
      STATEMENTS UNDER "ITEM 1. DESCRIPTION OF BUSINESS," AND "ITEM 6. MANAGEMENT'S
      DISCUSSION AND ANALYSIS", CONSTITUTE "FORWARD LOOKING STATEMENTS" WITHIN THE
      MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1934, AS AMENDED, AND THE
      PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (COLLECTIVELY, THE "REFORM
      ACT"). CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH FORWARD-LOOKING STATEMENTS
      CAN
      BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES",
      "EXPECTS", "MAY", "SHOULD", OR "ANTICIPATES", OR THE NEGATIVE THEREOF OR OTHER
      VARIATIONS THEREON OR COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY
      THAT
      INVOLVE RISKS AND UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN
      AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL
      RESULTS, PERFORMANCE OR ACHIEVEMENTS OF NUTECH DIGITAL, INC ("NUTECH", "THE
      COMPANY", "WE", "US" OR "OUR") TO BE MATERIALLY DIFFERENT FROM ANY FUTURE
      RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
      FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM 10-KSB, UNLESS ANOTHER
      DATE
      IS STATED, ARE TO DECEMBER 31, 2006.





**BUSINESS
      HISTORY**





NuTech
      Entertainment, Inc. was founded in 1993 for the purpose of licensing and
      distributing karaoke software. NuTech Digital, Inc. was founded in 1997 for
      the
      purpose of licensing and distributing films. In 1999 the business of NuTech
      Entertainment, Inc. was combined with the business of NuTech Digital, Inc.
      by
      distributing the assets of NuTech Entertainment, Inc. to its sole shareholder,
      Mr. Lee Kasper, who subsequently transferred the assets into NuTech Digital,
      Inc. NuTech Entertainment, Inc. ceased doing business in 1999 and was dissolved
      in 2001.





During
      the 2005 fiscal year we continued to change the direction of our business from
      licensing and distributing general entertainment products to producing, filming
      and distributing popular music concerts. Prior to 2004, our primary business
      activities centered around licensing and distributing karaoke products as well
      as general entertainment films that included action adventure films, children's
      animated films, horror films, comedies, Japanese hentai (which is adult
      animation) and late night programming. While we continue to offer action
      adventure, horror and comedy films, Japanese hentai and late night programming,
      we have stopped licensing new products to sell. Furthermore, we have not renewed
      the license we had to manufacture and distribute children's animated films
      and
      we have stopped offering karaoke products.







-3-







We
      began
      our production and filming of popular music concerts in March 2004 with a
      concert given by Russell Jones, who performs under the name Ol' Dirty Bastard.
      During 2004, we also produced and filmed concerts given by Jessica Simpson
      and
      Macy Gray and we acquired the rights to distribute DVDs of concerts given by
      RZA
      and Kool and the Gang. During 2005, we filmed an additional four concerts by
      hip-hop artists. We did not film any concerts during 2006.





Aside
      from the right to sell DVDs of the concert video, we sometimes acquire broadcast
      rights, usually for all media, including the Internet. In May 2005 we entered
      into an agreement with Warner Elektra Atlantic Corporation ("WEA") for the
      exclusive distribution of our concert videos in the United States, its
      territories and possessions and Canada. Upon signing the agreement, we received
      a $200,000 recoupable advance. Once the advance is recouped, we are paid net
      receipts. Net receipts are defined as gross sales made by WEA, net of returns,
      less manufacturing and packaging costs, the distribution fee (22% of net sales),
      product returns, storage costs, freight charges, content preparation charges
      and
      other out-of-pocket expenses. WEA recouped the advance and began making payments
      to us in October 2005. During the 2006 fiscal year, we earned no revenues from
      our distribution arrangement with WEA.





We
      are
      engaged in the business of licensing and selling and distributing general
      entertainment products, most of which are made available through digital
      versatile discs, commonly known as DVDs. Our products include popular music
      concerts, Japanese anime, late night programming and general entertainment
      action adventure films. We hold and sell a film library of over 600 titles.
      Moving forward, we plan to continue to aggressively sell DVDs from our film
      library, while also working to expand our library of high definition music
      concerts and, whenever possible, to obtain broadcast rights to these
      concerts.





All
      of
      our DVD products are sold through retail stores, the Internet, and wholesale
      distributors. We also license the broadcast rights to the music concerts we
      produce and film.





In
      January 2005 we implemented a digital rights management technology ("DRM")
      affording us the ability to offer our products on demand over the Internet.
      Our
      digital rights management technology allows our products to be accessed via
      secure downloads to a personal computer. We build around the importance of
      DRM
      and the live music concerts produced in Hi-Definition. Currently, this
      technology is applied to third parties with our license content through
      licensing and affiliate websites or unaffiliated partnering websites. Once
      we
      encrypt the content title, it cannot be viewed without a playback license,
      which
      triggers the revenues, thus enabling NuTech to share its library with a less
      technically oriented website organization. We are continuing to develop our
      software to integrate with any website on the Internet. We have been focusing
      on
      the biggest names in the technology field to partner with for our content.
      We
      believe that this is the only on ramp to the future delivering methods of high
      definition on demand video and music concerts.





Our
      acquisition of general entertainment films is typically done through the payment
      of advance royalties in exchange for a license that usually lasts between five
      years and 10 years.
      The licenses for certain of our hentai products permitted us to recover from
      the
      licensor all reasonable and necessary costs paid by us to exploit the
      license.







-4-





The
      production and filming of popular music concerts is extremely cash intensive.
      Production costs, such as fees or costs for the artist, venue, musicians, sound
      and cameramen, make-up, wardrobe, insurance and releases, are paid either prior
      to or immediately following the performance. To date, we have paid these costs
      or, in some instances, we have partnered with unrelated third parties who assist
      us with the payment of these costs in exchange for a share of the royalties.
      After the performance, we must spend additional funds to have the master
      prepared and ultimately approved by the artist, which may take several months.
      For example, while we filmed our first concert in April 2004, the release of
      our
      first concert DVD did not occur until November 2004. Depending on our agreement
      with the artist, we may obtain all the rights to the production, in which case
      we can exploit it in any medium, or we may obtain only restricted rights, such
      as the right to broadcast the concert only outside the United States. Generally,
      our agreements require us to split the royalty from sales of the concert DVD
      and, if we received them, broadcast rights, with the artist after we recoup
      our
      production expenses, although the terms of these agreements vary. There is
      no
      guarantee that any concert we film will result in a DVD that will sell enough
      copies to make filming the concert profitable. During the year ended December
      31, 2006, revenues from our music concert sales totaled $155,994. Although
      we
      expect revenues from this source to increase as we release more concert DVDs,
      we
      cannot be certain that this will happen. During the year ended December 31,
      2006, we also sold licensing rights to certain music concerts in the amount
      of
      $201,572. In accordance with SOP 00-2 we recognized the revenue at the date
      of
      the various agreements. This revenue is not recurring and we cannot be certain
      this level will increase in the future.





In
      May
      2006, we entered into several Broadcasting Agreements with HDNet, LLC ("HDNet")
      in connection with the broadcasting of live high definition concerts which
      we
      filmed and produced (the "Broadcasting Agreements"). The Broadcasting Agreements
      provide that we are to be paid a fee of $28,571 for each program broadcast
      by
      HDNet, which fee provides HDNet the right to re-broadcast the program for up
      to
      thirty (30) days per year, and up to three (3) times each day. The Broadcasting
      Agreements have a term of three (3) years, commencing on the initial broadcast
      of each program, and provide for HDNet to have the right of first refusal to
      broadcast the high definition version of the programs for six (6) months
      following the termination of the Broadcasting Agreements. To date, we have
      generated $142,855 in revenues through our Broadcasting Agreements with
      HDNet.





In
      July
      2006, we entered into a Video Licensing Agreement (the "Licensing Agreement")
      with MusicGiants, Inc. ("MusicGiants"), pursuant to which we agreed to provide
      certain video content to MusicGiants for downloading through MusicGiants’
Internet website. Pursuant to the Licensing Agreement, MusicGiants was appointed
      as a non-exclusive reseller of the video content. We reserved the right to
      terminate MusicGiants' use of any of the video content by providing MusicGiants
      two days prior written notice. The Licensing Agreement provided for MusicGiants
      to pay us $1.49 for each individual track and $9.99 for each complete DVD
      downloaded from MusicGiants’ website (www.MusicGiants.com), which we have
      licensed to MusicGiants, payable to us within ten days of each calendar month
      in
      arrears. The term of the Licensing Agreement is three (3) years, and shall
      automatically renew for additional years unless previously terminated by either
      party. The Licensing Agreement can be terminated by either party if any
      provision of the Licensing Agreement is breached and not cured after thirty
      (30)
      days written notice, and/or by us if MusicGiants fails to pay us any monthly
      payment after 10 days written notice of such failure. To date, we have not
      generated any revenues through our Video Licensing Agreement with
      MusicGiants.







-5-










In
      August
      2006, we entered into five (5) separate consulting agreements with five (5)
      consultants to provide us consulting services in connection with potential
      strategic alliances, business development activities, business expansion,
      marketing opportunities, and partnering opportunities, which services the
      consultants agreed would not be in connection with fund raising activities,
      and
      issued those consultants an aggregate of 5,000,000 shares of our Form S-8
      registered common stock.





**RECENT
      EVENTS**





On
      or
      about January 15, 2007, we entered into a Joint Venture agreement with Coalition
      Media Group (“Coalition” and the “Joint Venture Agreement”), which Joint Venture
      Agreement contemplates the parties entering into a definitive agreement
      subsequent to the date of the Joint Venture Agreement, which has not been
      finalized to date. It is anticipated that through the Joint Venture, we will
      form a new separate division of the company, which will be run by Coalition
      (the
“Division”).





Mr.
      Carter is required pursuant to the Joint Venture to provide content to the
      new
      division, to be used or developed for use in the division. We agreed to enter
      into a non-exclusive consulting agreement with Mr. Carter pursuant to the Joint
      Venture Agreement, which has not been entered into to date, pursuant to which
      Mr. Carter will serve as the Chief Executive Officer of the
      division.





In
      consideration for the Coalition entering into the Joint Venture Agreement with
      us, we agreed to issue Mr. Carter 15,000,000 shares of our restricted common
      stock, and give Mr. Carter customary anti-dilution rights with respect to
      maintaining his proportional share of ownership of our outstanding shares.
      We
      also agreed to grant him “piggyback” registration rights in connection with the
      shares, whereby we will be required to include his shares in any registration
      statement we may file in the future. As we have not finalized any final
      agreements with Mr. Carter to date, the 15,000,000 shares of common stock have
      not been issued to date.





Pursuant
      to the Joint Venture Agreement, we are to receive 10% of the Division’s gross
      revenues, which amount shall be used by us exclusively for costs associated
      with
      our public filings, press releases and annual meetings, which amount is capped
      at 33.33% of the actual costs associated with such filings.





The
      Joint
      Venture also requires that three members of our previous four member board
      of
      Directors will resign (however only one such member has resigned to date, as
      described below) and that Mr. Carter will have the ability to appoint three
      of
      the four members of our then four member board of Directors and that our current
      Chief Executive Officer, Lee Kasper, will have the power to appoint one
      Director.







-6-










The
      Division will be responsible for any obligations assumed by the Division and
      will indemnify us against any such assumed obligations. We also agreed to enter
      into an indemnification agreement with Mr. Carter, whereby we will agree to
      indemnify Mr. Carter against any claims, suits, or litigation commenced against
      us, our Board of Directors or our other actions not related to the Division
      and
      to maintain errors and omissions insurance in an amount suitable to cover all
      pre-existing and future claims.





On
      December 15, 2006, we issued 500,000 shares of common stock to our Director
      Joseph Giarmo, in consideration for services rendered by Mr. Giarmo during
      2006.





On
      December 15, 2006, we issued 500,000 shares of common stock to our Director
      Yegia Eli Aramyan, in consideration for services rendered by Mr. Aramyan during
      2006.





On
      or
      about December 20, 2006, we entered into a “Licensing Agreement Regarding DVD
      Distribution” with VCX, Ltd., Inc. (“VCX” and the “License Agreement”). Pursuant
      to the License Agreement, we granted VCX an exclusive license to distribute
      and
      sell certain DVD’s which we have and will produce in North America, at the rate
      of $1.50 per DVD. In connection with the License Agreement, we have earned
      approximately $70,000 to date.





On
      January 10, 2007, we issued 2,000,000 shares of common stock to our Chief
      Executive Officer and Director, Lee Kasper in consideration of payroll accrued
      in 2006 and the fact that Mr. Kasper has not demanded repayment of any of his
      outstanding loans to the Company (described in greater detail below under
“Liquidity and Capital Resources.”)





On
      or
      about February 6, 2007, we entered into a license agreement with iN Demand,
      L.L.C. (“iN Demand”), whereby we agreed to provide iN Demand certain broadcast
      rights to three (3) of our live concert productions, including exclusive rights
      to exhibit the standard definition recording of such programs and non-exclusive
      rights to distribute the high definition recordings of those three (3) programs.
      The license agreement is for a term of two (2) years and gives iN Demand the
      right to broadcast the programs an unlimited number of times. The license fee
      payable to us pursuant to the license agreement for pay-per-view broadcasts
      is
      equal to 25% of the gross receipts iN Demand receives from such broadcasts
      and/or 25% of the suggested retail price of each program, as defined in the
      agreement, whichever is greater. The license fee payable to us for
      non-pay-per-view broadcasts, which shall be “on demand” broadcasts, is equal to
      $0.05 time the number of hours such program is broadcast, rounded up to the
      nearest quarter hour times the number of subscribers to that package during
      the
      first month of exhibition. Pursuant to the license agreement, we agreed to
      maintain $1,000,000 of insurance on each program per single occurrence and
      $3,000,000 of insurance for all claims in aggregate in connection with each
      program.








-7-







**Our
      Suppliers and Customers**





We
      distribute our products throughout the world via retail stores, the Internet,
      wholesale distributors and through our digital rights management technology.
      We
      host two websites, www.nutechdvd.com and www.nutechdigital.tv. Information
      included on our websites is not a part of this annual report.





We
      do not
      have long-term or exclusive agreements with our retail or wholesale customers.
      Business generation is based primarily on customer satisfaction with
      reliability, quality and price, which has allowed us to establish long-term
      relationships with many of our customers.





We
      obtain
      exclusive rights to our Japanese anime products primarily from studios that
      produce the works and license them outside of Japan. We license our late night
      entertainment and our karaoke products from the producers or other copyright
      holders of those works.





During
      2005, we entered into an exclusive replication and packaging services agreement
      with L & M Optical Disk West, LLC. If this supplier was to become unable to
      provide the replication services necessary for our business, we believe that
      we
      could find other suppliers who would be able to provide these services to us
      at
      competitive prices.





**The
      Effect of Government Regulation on our Business**





While
      production of our products does not require government approval, the sale of
      our
      late night programming is subject to regulation by the federal government,
      as
      well as by various state and municipal governments. Several states and
      communities in which our products are distributed have enacted laws regulating
      the distribution of late night programming with some offenses designated as
      misdemeanors and others as felonies, depending on numerous factors. The
      consequences for violating the state statutes are varied. There is also a
      federal prohibition with respect to the dissemination of late night programming,
      and the potential penalties for individuals (including corporate Directors
      and
      officers) violating these federal laws include fines, community service,
      probation, forfeiture of assets and incarceration. We attempt to comply with
      all
      applicable statutes and regulations relating to the sale of late night
      programming.





We
      are
      subject to the same federal, state, and local laws as other companies conducting
      business on the Internet. Today there are relatively few laws specifically
      directed towards online sales. However, due to the increasing popularity and
      use
      of the Internet and online sales, it is possible that laws and regulations
      will
      be adopted in the future governing the Internet or online sales. These laws
      and
      regulations could cover issues such as online contracts, user privacy, freedom
      of expression, pricing, fraud, content and quality of products and services,
      taxation, advertising, intellectual property rights, and information security.
      Applicability to the Internet of existing laws governing issues such as property
      ownership, copyrights and other intellectual property issues, taxation, libel,
      obscenity, and personal privacy is still evolving.







-8-







Due
      to
      the global nature of the Internet, it is possible that the governments of
      foreign countries might attempt to regulate our activity or prosecute us for
      violations of their laws.





Our
      products are subject to copyright laws. We may become the subject of
      infringement claims or legal proceedings by third parties with respect to our
      current or future products. In addition, we may initiate claims or litigation
      against third parties for infringement of our proprietary rights, or to
      establish the validity of our proprietary rights. Any such claims could be
      time-consuming, divert management from our daily operations, result in
      litigation, cause product shipment delays or lead us to enter into royalty
      or
      licensing agreements rather than disputing the merits of such claims. Moreover,
      an adverse outcome in litigation or similar adversarial proceedings could
      subject us to significant liabilities to third parties, require the expenditure
      of significant resources to develop non-infringing products, require disputed
      rights to be licensed from others or require us to cease the marketing or use
      of
      certain products, any of which could have a material adverse effect on our
      business and operating results.





**Licenses
      and Other Intellectual Property**





We
      do not
      have patents, franchises or concessions and we have not entered into labor
      contracts. However, many of our film titles are licensed from third parties.
      License periods are generally no shorter than five years and no more than 10
      years. Most of the license agreements require us to pay an advance royalty,
      which we recoup through sales. Some of the license agreements require us to
      pay
      royalties during the term of the license. The computation of royalties varies,
      depending on our determination of the importance of the title to our product
      offerings. Royalties are primarily computed as a percentage of gross sales
      and
      may include guaranteed payments of royalties. We also purchase the rights to
      certain of our film titles for a one-time fee, rather than for the payment
      of
      on-going royalties.





The
      films
      we make of popular music concerts will be registered with the United States
      Copyright Office. Generally, we co-own the copyright of the work with the
      artist. Depending on our agreement with the artist, we retain the exclusive
      right to exploit the work for varying periods of time, which may range from
      a
      term of years to perpetuity.





While
      we
      have not registered our trade names or our logo with the United States Patent
      and Trademark Office, we believe that the name recognition and image that we
      have developed in each of our markets significantly enhance customer response
      to
      our sales promotions.





**Competition**





All
      of
      our products compete with other products and services that utilize free time
      or
      disposable income. The entertainment industry is, in general, highly competitive
      and many of our competitors, such as major motion picture studios and recording
      labels like Sony/BMG, WEA, and Universal, have much larger selections of
      products, the ability to spend significant sums on advertising and promotion
      and
      much greater distribution capacities than we have. We do not represent a
      significant presence in our markets. We cannot guarantee you that we can compete
      successfully.







-9-





**Employees**





As
      of
      December 31, 2006, we had only one (1) employee who works for us on a full-time
      basis.





**ITEM
      2. DESCRIPTION OF PROPERTY**





Our
      Chief
      Executive Officer, Lee Kasper currently provides us approximately 700 square
      feet of office space in his home at a rate of $2,000 per month. We have no
      current plans to rent additional office space at this time.





Other
      than the office space provided by Mr. Kasper, we do not have any other office
      space or warehouse leases in place at this time.





**ITEM
      3. LEGAL PROCEEDINGS**





Occasionally
      we are named as a party in claims and legal proceedings arising out of the
      normal course of our business. These claims and legal proceedings may relate
      to
      contractual rights and obligations, employment matters, or to other matters
      relating to our business and operations.





In
      May
      2006, Future Media Productions, Inc., a California corporation ("Future Media"),
      which is currently in Chapter 11 Bankruptcy, filed a complaint against The
      Company in the United States Bankruptcy Court in the Central District of
      California. The complaint alleged that The Company owes Future Media $18,000
      in
      unpaid invoices in connection with the manufacture by Future Media of certain
      DVD's for The Company. The complaint also asked for interest on the overdue
      amount and costs and attorneys fees for Future Media. The Company did not file
      an answer to the complaint and Future Media filed an entry for a Default
      Judgment against us in July 2006, which Default Judgment in the amount of
      $36,240.33, including $33,383.34 of damages and $2,856.99 in attorney's fees
      and
      costs, was granted against us in September 2006. We have not paid the Default
      Judgment amount to date and are currently working with Future Media to settle
      the Default Judgment for less than the Default Judgment amount, of which there
      can be no assurance.





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





None.














[Remainder
      of page left intentionally blank.]







-10-







**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





"Bid"
      and
      "asked" offers for the common stock are listed on the Over-The-Counter Bulletin
      Board (“OTCBB”) published by the National Quotation Bureau, Inc. The Company's
      common stock trades on the OTCBB under the symbol “NTDL.”





The
      following table sets forth the high and low bid prices for the Company's common
      stock for the periods indicated as reported by the OTCBB. The quotations reflect
      inter-dealer prices, without retail mark-up, mark-down or commission and may
      not
      represent actual transactions.





******Quarter
                Ended**
            **High**
            **Low**December
                31, 2006
            $0.052
            $0.012September
                30, 2006
            $0.052
            $0.016June
                30, 2006
            $0.050
            $0.016March
                21, 2006
            $0.090
            $0.030December
                31, 2005
            $0.140
            $0.035September
                31, 2005
            $0.150
            $0.080June
                30, 2005
            $0.170
            $0.090March
                31, 2005
            $0.280
            $0.120








There
      were approximately 56 holders of record of the Common Stock as of March 28,
      2007. The Company has never paid a cash dividend on its Common Stock and does
      not anticipate the payment of a cash dividend in the foreseeable future. The
      Company intends to reinvest in its business operations any funds that could
      be
      used to pay a cash dividend. The Company's Common Stock is considered a "penny
      stock" as defined in the Commission's rules promulgated under the Exchange
      Act.
      In general, a security which is not quoted on NASDAQ or has a market price
      of
      less than $5.00 per share where the issuer does not have in excess of $2,000,000
      in net tangible assets (none of which conditions the Company meets) is
      considered a penny stock. The Commission's rules regarding penny stocks impose
      additional sales practice requirements on broker-dealers who sell such
      securities to persons other than established customers and accredited investors
      (generally persons with net worth in excess of $1,000,000 or an annual income
      exceeding $200,000 or $300,000 jointly with their spouse). For transactions
      covered by the rules, the broker-dealer must make a special suitability
      determination for the purchaser and receive the purchaser's written agreement
      to
      the transaction prior to the sale. Thus, the Rules affect the ability of
      broker-dealers to sell the Company's shares should they wish to do so because
      of
      the adverse effect that the Rules have upon liquidity of penny stocks. Unless
      the transaction is exempt under the Rules, under the Securities Enforcement
      Remedies and Penny Stock Reform Act of 1990, broker-dealers effecting customer
      transactions in penny stocks are required to provide their customers with (i)
      a
      risk disclosure document; (ii) disclosure of current bid and ask quotations
      if
      any; (iii) disclosure of the compensation of the broker-dealer and its sales
      personnel in the transaction; and (iv) monthly account statements showing the
      market value of each penny stock held in the customer's account. As a result
      of
      the penny stock rules the market liquidity for the Company's securities may
      be
      severely adversely affected by limiting the ability of broker-dealers to sell
      the Company's securities and the ability of purchasers of the securities to
      resell them.







-11-










**RECENT
      SALES OF UNREGISTERED SECURITIES**





On
      December 15, 2006, we issued 500,000 shares of common stock to our Director
      Joseph Giarmo, in consideration for services rendered by Mr. Giarmo during
      2006.





On
      December 15, 2006, we issued 500,000 shares of common stock to our Director
      Yegia Eli Aramyan, in consideration for services rendered by Mr. Aramyan during
      2006.





On
      January 10, 2007, we issued 2,000,000 shares of common stock to our Chief
      Executive Officer and Director, Lee Kasper in consideration of payroll accrued
      in 2006 and the fact that Mr. Kasper has not demanded repayment of any of his
      outstanding loans to the Company.





The
      3,000,000 shares which we issued in December 2006 and January 2007, were issued
      as free trading.





On
      January 17, 2007, we agreed to issue 15,000,000 shares to Troy Carter in
      connection with Mr. Carter’s entry into the Joint Venture Agreement described
      above; however we have not entered into a final Joint Venture Agreement with
      Mr.
      Carter to date and have therefore not issued him any shares of common stock
      to
      date. Assuming such shares are issued, we will claim an exemption from
      registration afforded by Section 4(2) of the Securities Act of 1933, as amended,
      since the foregoing issuance will not involve a public offering, the recipient
      will take the shares for investment and not resale, and we will take appropriate
      measures to restrict transfer. No underwriters or agents will be involved in
      the
      offering, and we will not pay any underwriting discounts or
      commissions.








**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





This
      report contains forward looking statements within the meaning of Section 27a
      of
      the Securities Act of 1933 and Section 21e of the Securities Exchange Act of
      1934. These forward looking statements are subject to certain risks and
      uncertainties that could cause actual results to differ materially from
      historical results or anticipated results, including those set forth under
      "Risk
      Factors" in this Management's Discussion and Analysis of Financial Condition
      and
      Results of Operations" and elsewhere in this report. The following discussion
      and analysis should be read in conjunction with "Selected Financial Data" and
      the Company's financial statements and notes thereto included elsewhere in
      this
      report.










-12-






Overview


We
      are
      engaged in the business of licensing and distributing general entertainment
      products, most of which are made available through digital versatile discs,
      commonly known as DVDs. Our products include popular music concerts, Japanese
      anime, late night programming and general entertainment action adventure films.
      Prior to 2005, we also actively engaged in the sale of children's animated
      films
      and karaoke software. We began phasing out these products during 2005 when
      management decided to shift the emphasis of our business from selling general
      entertainment products to producing films of music concerts using high
      definition technology, and distributing these films. While we continue to sell
      films from our library of over 600 titles, we are working to expand our library
      of high definition music concerts and, whenever possible, to obtain broadcast
      rights to these concerts.





All
      of
      our DVD products are sold through retail stores, the Internet, and wholesale
      distributors. We also license the broadcast rights to the music concerts we
      produce and film.





Our
      acquisition of general entertainment films is typically done through the payment
      of advance royalties in exchange for a license that usually lasts between five
      years and 10 years. The licenses for certain of our hentai products permitted
      us
      to recover from the licensor all reasonable and necessary costs paid by us
      to
      exploit the license.





The
      production and filming of popular music concerts is extremely cash intensive.
      Production costs, such as fees or costs for the artist, venue, musicians, sound
      and cameramen, make-up, wardrobe, insurance and releases, are paid either prior
      to or immediately following the performance. To date, we have paid these costs
      or, in some instances, we have partnered with unrelated third parties who assist
      us with the payment of these costs in exchange for a share of the royalties.
      After the performance, we must spend additional funds to have the master
      prepared and ultimately approved by the artist, which may take several months.
      For example, while we filmed our first concert in April 2004, the release of
      our
      first concert DVD did not occur until November 2004. Depending on our agreement
      with the artist, we may obtain all the rights to the production, in which case
      we can exploit it in any medium, or we may obtain only restricted rights, such
      as the right to broadcast the concert only outside the United States. Generally,
      our agreements require us to split the royalty from sales of the concert DVD
      and, if we received them, broadcast rights, with the artist after we recoup
      our
      production expenses, although the terms of these agreements vary. There is
      no
      guarantee that any concert we film will result in a DVD that will sell enough
      copies to make filming the concert profitable. During the year ended December
      31, 2006, revenues from our music concerts totaled $155,994. Although we expect
      revenues from this source to increase as we release more concert DVDs, we cannot
      be certain that this will happen. During the year ended December 31, 2006,
      we
      also sold licensing rights to certain music concerts in the amount of $201,572.
      In accordance with SOP 00-2 we recognized the revenue at the date of the various
      agreements. This revenue is not recurring and we cannot be certain this level
      will increase in the future.





Our
      plans
      for fiscal 2007 include seeking out and entering into agreements with production
      partners regarding the filming and production of music concerts and other
      events, which if produced, of which there can be no assurance, we would then
      distribute though our website. We currently anticipate being able to continue
      our business operations for the next nine (9) months if no additional funding
      is
      raised, due to the fact that our officer and Directors have been accepting
      shares of common stock in lieu of cash payment for services and our overhead
      is
      currently relatively low. We do believe however that we will require
      approximately $150,000 of additional capital to continue our business operations
      for the next 12 months, of which there can be no assurance. If we are required
      to raise additional money to continue our business operations, we may choose
      to
      do so through sales of our common stock, which may cause dilution to our
      existing shareholders and/or through sales of convertible debt, which may be
      on
      unfavorable terms and which may additionally cause substantial dilution to
      our
      existing shareholders.







-13-







**Critical
      Accounting Policies and Estimates**





In
      consultation with our Board of Directors, we have identified various accounting
      principles that we believe are key to an understanding of our financial
      statements. These important accounting policies require management’s subjective
      judgments.





*Revenue
      Recognition.* In
      2006,
      management decided to record income on the cash basis due to the fact that
      we
      can not make reliable estimates of revenue and projected cash flow can not
      be
      determined. In 2005, the Company’s sales were recorded when its products were
      shipped, net of an estimate of returns.





*Inventory,
      Completed Masters, Production Costs.* Effective
      July 1, 2006, the Company expenses all inventory, completed masters and
      production costs due to the fact that reliable estimates of revenue and
      projected cash flow can not be determined.





*Accounting
      Estimates* .
      Management uses estimates and assumptions in preparing financial statements
      in
      accordance with accounting principles generally accepted in the United States
      of
      America. Those estimates and assumptions affect the reported amounts of assets
      and liabilities, the disclosure of contingent assets and liabilities, and the
      reported revenues and expenses. Each quarter, management compares current and
      historical product sales to potential customer orders and reviews the economic
      conditions of the industry. However, these judgments require significant
      estimates from management and actual results could vary from the estimates
      that
      were used. Each quarter, management reviews the estimated future revenue to
      be
      received in order to determine the fair value of its assets and potential asset
      impairment.





*Income
      Taxes* .
      We
      account for income taxes in accordance with Statement of Financial Accounting
      Standards No. 109 (SFAS 109), which is an asset and liability method of
      accounting that requires the recognition of deferred tax liabilities and assets
      for the expected future tax consequences of temporary differences between tax
      bases and financial reporting bases of accounting. In assessing whether deferred
      tax assets will be realized, management considers whether it is more likely
      than
      not that some portion or all of the deferred tax assets will not be realized.
      The ultimate realization of deferred tax assets is dependent upon the generation
      of future taxable income during the periods in which those temporary differences
      become deductible. Management considers the scheduled reversal of deferred
      tax
      liabilities, projected future taxable income and tax planning strategies in
      making this assessment.







-14-










*Common
      Stock Issued for Non-Cash Transactions* .
      It is
      our policy to value stock issued for non-cash transactions, such as services,
      at
      the fair market value of the goods or services received or the consideration
      granted, whichever is more readily determinable, at the date the transaction
      is
      negotiated.







*Stock
      based Compensation. .* Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting Standards
      (“SFAS”) No. 123(R), “Share-Based Payment: An Amendment of FASB Statements No.
      123 and 95” using the modified prospective method. Under this method,
      compensation cost is recognized on or after the effective date for the portion
      of outstanding awards, for which the requisite service has not yet been
      rendered, based on the grant date fair value of those awards. Prior to January
      1, 2006, the Company accounted for employee stock options using the intrinsic
      value method in accordance with Accounting Principles Board (“APB”) Opinion No.
      25 (“APB No. 25”), “Accounting for Stock Issued to Employees,” and adopted the
      disclosure only alternative of SFAS No. 123. For stock-based awards issued
      on or
      after January 1, 2006, the Company recognizes the compensation cost on a
      straight-line basis over the requisite service period for the entire award.
      Measurement and attribution of compensation cost for awards that are unvested
      as
      of the effective date of SFAS No. 123(R) are based on the same estimate of
      the
      grant-date or modification-date fair value and the same attribution method
      used
      previously under SFAS No. 12.




The
      Black-Scholes option-pricing model was developed for use in estimating the
      fair
      value of traded options which have no vesting restrictions and are fully
      transferable. In addition, option valuation models require the input of highly
      subjective assumptions including the expected stock price volatility. Because
      the Company’s stock options and warrants have characteristics different from
      those of traded options, and because changes in the subjective input assumptions
      can materially affect the fair value estimate, in management’s opinion, the
      existing models do not necessarily provide a reliable single measure of the
      fair
      value of such stock options.












-15-





**COMPARISON
      OF OPERATING RESULTS**





**FISCAL
      YEAR ENDED DECEMBER 31, 2006 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
      2005**





*Selected
      Statement Of Operations Data*





*Comparison
      of Year End Periods* .
      Summarized in the table below is statement of operations data comparing the
      year
      ended December 31, 2006 with the year ended December 31, 2005:





Year
                Ended
            Increase/(Decrease)December
                31, 2006
            December
                31, 2005SalesGeneral
                Products and Licensing
            $
                871,437
            $
                1,923,919
            $
                (
                1,052,482)Live
                Concert Products and Licensing
            155,994
            860,295
            (
                704,301)Total
                Sales
            1,027,431
            2,784,214
            (
                1,756,783)Operating
                Expenses
            2,305,830
            4,976,655
            (
                2,670,825)Operating
                (Loss)
            (
                1,278,399)
            (
                2,192,441)
            914,042Interest
                Expense
            (
                155,489)
            (
                152,759)
            2,730Loss
                on Impairment of Assets
            (
                2,086,936)
            (
                2,147,295)
            (
                60,359)Recovery
                of Bad Debts
            -
            533,164
            (
                533,164)Recovery
                of Prior Year Security Deposit
            50,000
            -
            50,000Loss
                on Sale of Fixed Assets
            (
                90,437)
            -
            90,437Rental
                Income
            31,451
            12,000
            19,451(Loss)
                before Corporation
              Income Taxes
            (
                3,529,810)
            (
                3,947,331)
            (
                417,521)Corporation
                Income Tax
            800
            800
            -Net
                (Loss)
            (
                $3,530,610)
            (
                $
                3,948,131)
            $
                (
                417,521)Net
                (Loss) Per Share
              Basic and Diluted
            $
                (
                0.13)
            $
                (
                0.17)
            $
                (
                0.05)








*Sales* ******





Our
      sales
      for the year ended December 31, 2006 were $1,027,431, as compared to sales
      of
      $2,784,214 for the year ended December 31, 2005, a 63% decrease. This decrease
      in sales for the year ended December 31, 2006, compared to the prior year is
      primarily attributable to the reduction in demand for the products that we
      sell,
      our change to recording revenue on a cash basis, and our continued change in
      business focus away from Internet DVD sales to production of and sale of live
      concerts as described in greater detail herein..





*Cost
      of Sales*





Our
      cost
      of sales for the year ended December 31, 2006 were $505,993 or approximately
      41%
      of sales, as compared to $1,730,756 or 62% of sales for the year ended December
      31, 2005. This decrease in cost of sales and cost of sales as a percentage
      of
      sales is attributable to an increase in amortization of reimbursable production
      costs due to the decrease in sales described above, the change in our policy
      to
      expense all costs when incurred, as well as a significant volume of returns
      of
      our products for the year ended December 31, 2006, which attributed to our
      lower
      sales volume.







-16-










*Loss
      on Impairment of Assets.*





In
      prior
      periods, the Company was amortizing completed masters, royalty advances and
      prepaid production costs over time. Due to the difficulty in projecting sales
      and due to the large amount of sales returns, our management has determined
      that
      the following assets should be written off as impaired as the future cash flows
      from the assets are not determinable:





Completed
                Masters
            $
            425,040Royalty
                Advances
            
            668,634Prepaid
                Production costs
            
            474,987Inventory
            
            467,119$
            2,035,780




In
      addition, we cannot make reliable estimates as to our sales returns
      and our returns have been very substantial and material
      when compared to our amounts billed for sales.


Therefore,
      our management has elected to write-off all accounts
      receivable as impaired.







*Cancellation
      of Bad Debt*




During
      the year ended December 31, 2005, a note payable in the amount of $533,164,
      consisting of $400,000 of principal and $133,164 of accrued interest, was
      cancelled, as the debt is uncollectible due to expiration of the statute of
      limitations for debt collection.





*Loss
      on Sale of Fixed Assets*





During
      the year ended December 31, 2006, we sold various fixed assets due to the
      relocation of our office, and experienced a loss on the sale of
      $90,437.










-17-






Royalty,
      Selling, Consulting and General and
      Administrative Expenses





Summarized
      in the table below are royalty, selling, consulting and general and
      administrative expenses comparing the year ended December 31, 2006 with the
      year
      ended December 31, 2005:





Year
                Ended
            Increase/(Decrease)December
                31, 2006
            December
                31, 2005Royalty
                Expenses
            $
                167,491
            $
                661,152
            $
                (
                493,661)Cost
                of Sales
            $
                505,993
            $
                1,730,756
            $
                (
                1,224,763)Selling
                ExpensesCredit
                Card Fees
            $
                8,893
            $
                20,043
            $
                (
                11,150)Salaries,
                Wages and Payroll Taxes
            28,889
            52,143
            (
                23,254)Commission
                Expense
            -
            11,705
            (
                11,705)Other
                Selling Expenses
            8,972
            45,680
            (
                36,708)$
                46,754
            $
                129,571
            $
                (
                82,817)Consulting
                Expenses
            $
                116,580
            $
                393,970
            $
                (
                277,390)Salaries
                and wages
            $
                872,217
            $
                1,011,372
            $
                (
                139,155)Legal
                Expenses
            $
                98,299
            $
                274,612
            $
                (
                176,313)General
                and Administrative ExpensesBad
                Debts
            $
                8,185
            $
                1,317
            $
                6,868Loan
                Fee
            8,557
            -
            8,557Automobile
                Expenses
            3,993
            26,015
            (
                22,022)Travel
                Expenses
            1,618
            34,237
            (
                32,619)Internet
                and Web Development
            22,485
            14,645
            7,840Telephone
                and Utility Expense
            33,904
            52,064
            (
                18,160)Accounting
                Fees
            89,548
            91,375
            (
                1,827)Promotion
                and Public Relations
            -
            1,118
            (
                1,118)Rent
            83,178
            115,824
            (
                32,646)Insurance
            70,999
            143,124
            (
                72,125)Amortization
                and Depreciation
            55,872
            92,199
            (
                36,327)Other
                General and Administrative
              Expenses
            120,157
            203,304
            (
                83,147)$
                498,496
            $
                775,222
            $
                (
                276,726)







Our
      royalty expenses decreased by $493,661 or 75% during the year ended December
      31,
      2006 to $167,491 as compared to $661,152 for the year ended December 31, 2005.
      This decrease is directly related to the decrease in sales and a change in
      our
      method of accounting to expense all costs when incurred.





Our
      selling expenses decreased $82,817 or 64% during the year ended December 31,
      2006 to $46,754 as compared to $129,571 for the year ended December 31, 2005.
      This decrease was the result of a reduction in our sales force, which in turn,
      resulted in lower salary, wages and payroll taxes. In addition, there was no
      commission expense during the year ended December 31, 2006, which was directly
      related to the decrease in the sale of licensing agreements for our live
      concerts during that period. These decreases were offset by an increase in
      advertising expenses during the year ended December 31, 2006 in an unsuccessful
      effort to increase sales.





The
      consulting expenses incurred during the year ended December 31, 2005 related
      to
      our retention of several consultants to assist us in developing a business
      plan,
      promoting our products, acquiring performers for musical concerts and
      maintaining investor relations. As expected, these expenses did not continue
      at
      the same level during the year ended December 31, 2006; however, we did issue
      an
      aggregate of 6,825,000 shares of common stock to various consultants and
      employees in consideration of services rendered during the year ended December
      31, 2006, which were valued at an aggregate of $117,437, which partially offset
      the decrease.







-18-







Salaries
      and wages expense decreased by $139,155, or 14% during the year ended December
      31, 2006 to $872,217, as compared to $1,011,372 for the year ended December
      31,
      2005. This decrease was the result of a reduction in our sales force, and a
      reduction of officer salaries, which in turn, resulted in lower salary, wages
      and payroll taxes, net of $207,934 compensation paid with stock options during
      the year ended December 31, 2006.





The
      overall decrease of $276,726 or 36% in our other general and administrative
      expenses for the year ended December 31, 2006 to $498,496 from $775,222 for
      the
      year ended December 31, 2005 was mainly attributable to a decrease in automobile
      expenses and travel due to lack of monetary funds, the termination of various
      insurance policies, a decrease in rent due to the relocation of our office
      to a
      section of the owner’s home, and a deduction in telephone and utilities costs
      associated with such change in office space, as well as various other decreases
      in general and administrative expenses due to the Company trying to cut back
      on
      various expenses.





*Net
      (Loss)*





Our
      net
      loss decreased $417,521 or 11% from $3,948,131 for the year ended December
      31,
      2005 to $3,530,610 for the year ended December 31, 2006, which decrease was
      primarily caused by the decrease in expenses, and a cancellation of bad debt
      which occurred during the year ended December 31, 2005.





**LIQUIDITY
      AND CAPITAL RESOURCES**





We
      had
      total assets as of December 31, 2006, of $101,124, consisting of total current
      assets of $43,363, total property and equipment, net of accumulated depreciation
      of $51,227, and total other assets of $6,534.





We
      had
      total current assets of $43,363 as of December 31, 2006, which included cash
      of
      $7,101, and prepaid expenses, current portion of $36,262.





We
      had
      total other assets of $6,534 as of December 31, 2006, which consisted solely
      of
      prepaid expenses, long-term portion.





In
      prior
      periods, the Company was amortizing completed masters, royalty advances and
      prepaid production costs. Due to the difficulty in projecting sales and due
      to
      the large amount of sales returns, management has determined that the following
      assets should be written off as impaired as the future cash flows from the
      assets are not determinable, and such assets totaling $2,086,936 as of December
      31, 2006, were written off and do not appear on our balance sheet as of December
      31, 2006.





We
      had
      total liabilities of $3,286,300 as of December 31, 2006, consisting solely
      of
      current liabilities.





Total
      current liabilities as of December 31, 2006, included bank overdraft of $8,277,
      accounts payable of $1,396,394, accrued liabilities, other of $157,951, accrued
      payroll of $308,403, including $268,688 of accrued payroll owed to our Chief
      Executive Officer and Director, Lee Kasper, demand notes payable, related party
      of $201,894, notes payable, related party, current portion of $261,019, notes
      payable, other, current potion of $814,796, and convertible promissory note
      of
      $137,566, in connection with past amounts owed to our former legal counsel.
      The
      convertible notes were issued on July 7, 2003, in the original amount of
      $137,566, and were due and payable on July 7, 2005. The convertible note is
      convertible into shares of our common stock at the rate of one share for each
      $0.25 owed, or approximately 550,264 shares of common stock. No amount of the
      convertible notes has been converted into common stock by the holders to
      date.







-19-










To
      date,
      we have financed our operations with cash from our operating activities, a
      Small
      Business Administration loan, various loans from individuals, cash raised
      through the sale of our securities or the exercise of options or warrants,
      and
      the issuance of our securities to various consultants and employees in payment
      for the provision of their services or to other creditors in satisfaction of
      our
      indebtedness to them.





In
      July
      2000, we received a $900,000 Small Business Administration loan with Comerica
      Bank participation. The interest rate per annum is 2% over prime, and the loan
      is scheduled to be paid over an 18 year period. The balance of this loan as
      of
      December 31, 2006 was approximately $673,616.





From
      time
      to time we borrow funds from Mr. Lee Kasper, our Chief Executive Officer,
      President, Director and significant shareholder. These loans accrue interest
      at
      the rate of 10% per annum and are due on demand. At December 31, 2006, we owed
      Mr. Kasper $201,894 from these borrowings.





On
      August
      1, 2005 we received from Mr. Kasper a loan in the amount of $350,000. The
      interest rate on the loan is 8% per annum, and the loan is scheduled to be
      repaid over a 36 month period. We used these funds to produce live music
      concerts. The balance of this loan as of December 31, 2006 was approximately
      $261,019, and as of December 31, 2006, we were approximately five months
      delinquent in making payments to Mr. Kasper pursuant to the loan, and are in
      default of such loan.





On
      July
      27, 2005 we borrowed $100,000 from Noel Gimbel, an unrelated individual. The
      interest rate on the loan is 10% per annum and the loan was due in full on
      November 30, 2006, but has since been verbally extended until December 2007.
      As
      of December 31, 2006, we owed Mr. Gimbel $99,005, pursuant to the loan. We
      used
      these funds to produce live music concerts.





In
      March
      2006, Kickarock Productions, Inc. ("Kickarock") loaned us $15,000, pursuant
      to a
      Promissory Note, which note bears interest a the rate of 7% per annum, which
      amount has not been paid to date. The loan is guaranteed by our Chief Executive
      Officer, Lee Kasper.





In
      August
      2006, we received from Kickarock Productions, Inc a loan in the amount of
      $22,175. The interest rate on the loan is 7% per annum. No amount has been
      paid
      under this loan to date. Subsequent to August 2006, Kickarock loaned us an
      additional $5,000, which funds we used to pay our independent
      auditors.







-20-







Sources
      And Uses Of Cash





Summarized
      in the table below is information derived from our statements of cash flow
      comparing the year ended December 31, 2006 with the year ended December 31,
      2005:





Year EndedDecember
                31, 2006
            December
                31, 2005Net
                Cash Provided (Used) ByOperating
                Activities
            $
                164,148
            $
                (
                307,738)Investing
                Activities
            37,100
            (
                55,480)Financing
                Activities
            (
                198,764)
            367,835Net
                Increase (Decrease) in Cash
            $
                2,484
            $
                4,617








*Operating
      Activities*





During
      the year ended December 31, 2006, our net loss was $3,530,610. This included
      non-cash items of depreciation in the amount of $52,673, amortization in the
      amount of $115,630, a provision for doubtful accounts of $110, a loss on
      disposal of fixed assets of $90,437, a loss on impairment of assets of
      $2,086,936, amortization of options issued to employees in the amount of $65,984
      and payment of consulting fees and expenses with common stock in the amount
      of
      $279,275. Cash was provided from operations by the decrease of accounts
      receivable of $395,335, the decrease of production costs receivable of $50,626,
      the decrease of inventories of $18,967, the decrease of production costs of
      $446,851, the decrease of prepaid royalties of $85,420, the decrease of prepaid
      expenses of $9,115, and the decrease of deposits of $7,800 and an increase
      in
      accounts payable of $86,266. We used the cash provided from operations to fund
      a
      decrease in accrued liabilities of $96,667.





During
      the year ended December 31, 2005, our net loss was $3,948,131. This included
      non-cash items of depreciation in the amount of $372,680, amortization of
      $447,652, a provision for doubtful accounts of $291,000, the cancellation of
      debt of ($533,164), the loss on impairment of assets of $2,147,295 and payment
      of consulting fees and services with common stock in the amount of $252,242.
      Cash was provided from operations by the decrease of inventories $433,693,
      the
      decrease in production costs of $25,562, the decrease in prepaid royalties
      of
      $234,936, the decrease of prepaid expenses of $243,180, and the increase in
      accrued liabilities $265,895. We used the cash provided from operations to
      fund
      a decrease in accounts payable of ($194,423).





*Investing
      Activities*





During
      the year ended December 31, 2006, there were disposals of property and equipment
      of $37,100. During the year ended December 31, 2005, there were acquisitions
      of
      property and equipment of $55,480.










-21-






Financing Activities


Financing
      activities for the year ended December 31, 2006 used net cash of $198,764.
      We
      repaid a bank overdraft in the amount of $54,692 and made principal payments
      on
      our demand loans payable, our notes payable to unrelated parties and our notes
      payable to related parties, in the amounts of $87,989, $13,302, and $133,839,
      respectively. We received $26,883, $22,000 and $42,175 in proceeds from our
      demand loan payable, notes payable to a related party, and notes payable to
      an
      unrelated party, respectively.





Financing
      activities for the year ended December 31, 2005 provided net cash of $367,835.
      We had a bank overdraft decrease in the amount of $20,236, had net proceeds
      from
      issuance of common stock - private placement in the amount of $85,000, had
      proceeds from our demand loan payable to related parties, notes payable to
      related parties, and notes payable to unrelated parties in the amounts of
      $263,000, $350,000, and $100,000, respectively. We made payments on our demand
      loan payable to unrelated parties, notes payable to an unrelated party, notes
      payable to related parties, and capital leases in the amounts of $53,745,
      $16,845, $368,098, and $11,713, respectively.





*Commitments
      For Capital Expenditures*





At
      December 31, 2006, we had no commitments for capital expenditures.





*Going
      Concern*





The
      financial statements included in this report are presented on the basis that
      the
      Company is a “going concern.” Going concern contemplates the realization of
      assets and the satisfaction of liabilities in the normal course of business
      over
      a reasonable length of time. Our auditors have indicated that the following
      factors raise substantial doubt as to our ability to continue as a going
      concern:





·
            we
                have an accumulated a deficit of $9,293,715 since
                inception;





·
            we
                have a working capital deficit of $3,242,937;





·
            we
                continue to incur operating losses;
                and





·
            we
                have begun producing music concerts which require a substantial investment
                of cash but have not, to date, generated substantial revenues for
                us.





We
      believe that the following will help to eliminate this
      qualification:





·
            we
                have eliminated public relations expenses for the immediate
                future;





·
            we
                intend to continue negotiating with major artists for the exclusive
                rights
                to produce and distribute their live music concerts worldwide;
                and





·
            we
                entered into a Joint Venture agreement on January 15, 2007 with Coalition
                Media Group, in which we will form a new separate division of the
                Company,
                which will be funded by Coalition.







-22-








*Past
      Due Accounts Payable*





Approximately
      $785,000 of accounts payable were over 90 days old as of December 31, 2006,
      and
      could hamper our acquisition of inventory in future periods.





*Off-Balance
      Sheet Arrangements*





There
      are
      no guarantees, commitments, lease and debt agreements or other agreements that
      could trigger an adverse change in our credit rating, earnings, cash flows
      or
      stock price, including requirements to perform under standby
      agreements.





*Capital
      Requirements And Available Capital Resources*





Our
      capital requirements, particularly as they relate to the production of popular
      music concerts, have been and will continue to be significant. Our primary
      use
      of cash consists of licensing and royalty costs ranging from 20% to 30%,
      production of live music concerts and general operating costs. Our future cash
      requirements and the adequacy of available funds will depend on many factors,
      including the pace at which we expand our production of popular music concerts,
      our ability to negotiate favorable production agreements with the artists whose
      concerts we film, whether our popular music concerts generate significant
      revenues, and the general state of the economy, which impacts the amount of
      money that may be spent for entertainment.





As
      of
      December 31, 2006 we had available $7,101 of cash on hand and a working capital
      deficit of $3,242,937. We currently anticipate being able to continue our
      business operations for the next nine (9) months if no additional funding is
      raised, due to the fact that our officer and Directors have been accepting
      shares of common stock in lieu of cash payment for services and our overhead
      is
      currently relatively low. We do believe however that we will require
      approximately $150,000 of additional capital to continue our business operations
      for the next 12 months, of which there can be no assurance. If we are required
      to raise additional money to continue our business operations, we may choose
      to
      do so through sales of our common stock, which may cause dilution to our
      existing shareholders and/or through sales of convertible debt, which may be
      on
      unfavorable terms and which may additionally cause substantial dilution to
      our
      existing shareholders.





We
      currently do not have any commitments for, or readily available sources of,
      additional financing. We cannot provide any assurances that we will be able
      to
      secure the additional cash or working capital we may require to continue our
      operations in the future. If we are unable to raise additional capital in the
      future, any investment in us could become worthless.





Moving
      forward, if we are unable to raise sufficient capital to continue our business
      operations, we may seek to merge with other companies and/or to have other
      companies acquire us. In the event that we do enter into a merger and/or
      acquisition with a separate company, our majority shareholders will likely
      change and new shares of common stock could be issued resulting in substantial
      dilution to our then current shareholders. As a result, our new majority
      shareholders will likely change the composition of our Board of Directors and
      replace our current management. The new management will likely change our
      business focus and we can make no assurances that our new management will be
      able to properly manage our direction or that this change in our business focus
      will be successful. If we do enter into a merger or acquisition, and our new
      management fails to properly manage and direct our operations, we may be forced
      to scale back or abandon our operations, which will cause the value of our
      common stock to decline or become worthless. We have not entered into any merger
      or acquisition agreements as of the date of this filing and we will continue
      with our current business in the event a merger or acquisition is not
      completed.


















[Remainder
      of page left intentionally blank.]















-23-










**RISK
      FACTORS**





**RISKS
      RELATING TO THE COMPANY**





**WE
      REQUIRE SUBSTANTIAL ADDITIONAL CAPITAL, WHICH WE DO NOT CURRENTLY HAVE
      COMMITMENTS FOR, TO PAY OUR CURRENT LIABILITIES AND CONTINUE OUR OPERATIONS
      FOR
      THE NEXT TWELVE MONTHS.**





Our
      capital requirements, particularly as they relate to the production of popular
      music concerts, have been and will continue to be significant. Our primary
      use
      of cash consists of licensing and royalty costs ranging from 20% to 30%,
      production of live music concerts and general operating costs. Our future cash
      requirements and the adequacy of available funds will depend on many factors,
      including the pace at which we expand our production of popular music concerts,
      our ability to negotiate favorable production agreements with the artists whose
      concerts we film, whether our popular music concerts generate significant
      revenues, and the general state of the economy, which impacts the amount of
      money that may be spent for entertainment.





As
      of
      December 31, 2006 we had available $7,101 of cash on hand, a working capital
      deficit of $3,242,937 and a total accumulated deficit of $9,293,715. We
      currently anticipate being able to continue our business operations for the
      next
      nine (9) months if no additional funding is raised, due to the fact that our
      officer and Directors have been accepting shares of common stock in lieu of
      cash
      payment for services and our overhead is currently relatively low. We do believe
      however that we will require approximately $150,000 of additional capital to
      continue our business operations for the next 12 months, of which there can
      be
      no assurance. If we are required to raise additional money to continue our
      business operations, we may choose to do so through sales of our common stock,
      which may cause dilution to our existing shareholders and/or through sales
      of
      convertible debt, which may be on unfavorable terms and which may additionally
      cause substantial dilution to our existing shareholders. We currently do not
      have any binding commitments for, or readily available sources of, additional
      financing. We cannot provide any assurances that we will be able to secure
      the
      additional cash or working capital we may require to continue our
      operations.





**WE
      HAVE BEGUN PRODUCING AND FILMING POPULAR MUSIC CONCERTS, HOWEVER WE ARE NOT
      CERTAIN THAT THIS ACTIVITY WILL BE PROFITABLE.**





During
      the 2005 fiscal year we shifted the emphasis of our business from licensing
      and
      distributing general entertainment products to producing, filming and
      distributing popular music concerts. We have stopped selling karaoke products
      and we do not intend to license new film products. The shift in emphasis to
      producing, filming and distributing popular music concerts and, whenever
      possible, obtaining the broadcast rights for them, will be more expensive than
      licensing and distributing general entertainment products, and the time between
      our expenditure of funds and receipt of revenues will be longer. Furthermore,
      our filmed concert programming may not ultimately be as desirable to our
      customers as we anticipate, which would lead to lower than expected sales,
      decreased profit margins or losses. We cannot predict whether this new venture
      will be profitable.







-24-










**WE
      WILL CONTINUE TO NEED ADDITIONAL FINANCING TO PRODUCE AND FILM MUSIC CONCERTS
      AND WE CAN PROVIDE NO ASSURANCES THAT WE WILL BE ABLE TO OBTAIN SUFFICIENT
      FINANCING. IF WE CANNOT OBTAIN SUFFICIENT FINANCING, OUR BUSINESS AND RESULTS
      OF
      OPERATIONS WILL BE ADVERSELY AFFECTED.**





The
      production, filming and distribution of concert DVDs requires a significant
      outlay of capital. It is unlikely that we will be able to continue to produce
      and distribute music concerts without additional financing. In the past, we
      have
      borrowed money from Lee Kasper, our Chief Executive Officer and President and
      a
      significant shareholder, and sold our securities to raise money. Currently,
      we
      have no commitments from investors for additional financing. To the extent
      that
      we need additional financing to continue our production of music concerts,
      we
      cannot assure you that funds will be available to us on favorable terms, or
      at
      all. To the extent that additional funds are raised through the sale of our
      securities, the issuance of those securities could result in dilution to our
      shareholders. The unavailability of funds could have a material adverse effect
      on our ability to continue our concert production work, which will adversely
      affect our business and results of operations.





**WE
      ARE IN DEFAULT OF VARIOUS LOANS WHICH WERE PREVIOUSLY MADE TO US, WHICH DEFAULTS
      COULD CAUSE THOSE LENDERS TO TAKE ACTION AGAINST US TO RECOVER THOSE LOANS,
      WHICH COULD CAUSE US TO SELL OUR ASSETS AND/OR ABANDON OUR BUSINESS
      ACTIVITIES.**





In
      July
      2000, we obtained a Small Business Administration loan from Comerica Bank,
      of
      which $673,616 was due as of December 31, 2006, and which loan bears interest
      at
      the rate of prime plus 2% (equal to approximately 10.25%, with the prime rate
      at
      8.25% as of the filing of this report), is payable in monthly payments of
      $6,414, and which loan has been in default since approximately July 2006. In
      August 2005, Lee Kasper, our Chief Executive Officer provided us with a $350,000
      loan, which bears interest at the rate of 8% per annum and is due in thirty-six
      monthly payments of $10,968. We have been in default of the required payments
      on
      the loan since approximately August 2006. The loan had an outstanding balance
      of
      $261,019 as of December 31, 2006. Additionally, we have approximately $2,141,655
      of current liabilities, which we do not currently have sufficient funds to
      repay. If Comerica Bank or Mr. Kasper, or any other of our creditors were to
      bring a lawsuit against us regarding our notes which are currently in default
      and/or any of our other current liabilities which may become due, we could
      be
      forced to expend substantial resources and funds in connection with the defense
      of such lawsuit and/or may be forced to allow such creditors to take a default
      judgment against us. If this were to happen, we could be forced to sell all
      or a
      portion of our assets and/or the rights to our licensing agreements to pay
      for
      such legal fees and/or to satisfy any judgments obtained against us. Such sales
      could cause us to curtail or abandon our business operations and could cause
      our
      securities to become worthless.







-25-







**WE
      MAY BE UNABLE TO CONTINUE OUR OPERATIONS IF WE DO NOT OBTAIN
      FINANCING.**





Our
      independent auditor has noted in its report concerning our financial statements
      as of December 31, 2006 that we have incurred significant operating losses
      and
      that we have negative working capital. If we are not able to obtain financing,
      we may be unable to continue our operations.





**WE
      FACE A RISK OF A CHANGE IN CONTROL DUE TO THE FACT THAT OUR CURRENT OFFICERS
      AND
      DIRECTORS DO NOT OWN A MAJORITY OF OUR OUTSTANDING COMMONS
      STOCK.**





Our
      current officers and Directors can vote an amount of common stock equal to
      approximately thirty (30%) of our outstanding common stock. As a result, our
      officers and Directors may not exercise majority voting control over us and
      our
      shareholders who are not officers and Directors of us may be able to obtain
      a
      sufficient number of votes to choose who serves as our Directors. Because of
      this, the current composition of our Board of Directors may change in the
      future, which could in turn have an effect on those individuals who currently
      serve in management positions with us. If that were to happen, our new
      management could affect a change in our business focus and/or curtail or abandon
      our business operations, which in turn could cause the value of our securities,
      if any, to decline.





**THE
      HOME ENTERTAINMENT INDUSTRY IS INTENSELY COMPETITIVE. WE CANNOT GUARANTEE THAT
      WE CAN COMPETE SUCCESSFULLY WITHIN OUR INDUSTRY.**





The
      home
      entertainment industry is intensely competitive. Our competitors include both
      major motion picture studios and music labels that are much larger than we
      are
      and have far greater name recognition and financial resources than we have.
      In
      addition we compete against smaller, independent companies that seek to create
      niche markets.





**DECREASING
      RETAIL PRICES FOR DVDS MAY NEGATIVELY IMPACT OUR REVENUES.**





The
      home
      entertainment programming market in which we compete is rapidly evolving and
      intensely competitive. Many of our competitors, including major studios, are
      increasingly offering programming, particularly DVD programming, at lower
      prices. They may be able to produce or secure programming on more favorable
      terms and may be able to adopt more aggressive pricing policies. Higher levels
      of competition within the industry may lead to lower prices and thus reduce
      sales revenue, decrease profit margins or decrease overall
      revenues.







-26-






IF MUSIC ENTERTAINMENT PROGRAMMING LOSES MARKET
      SHARE
      WITHIN THE HOME ENTERTAINMENT INDUSTRY, OUR BUSINESS MAY BE ADVERSELY
      AFFECTED.




While
      we
      have decided to enter the music entertainment market, we cannot assure you
      that
      the music industry in general will continue to prosper or that music
      entertainment programming will compete successfully against other home
      entertainment programming. If music programming loses market share within the
      home entertainment market, our business may be adversely affected.





**INVENTORY
      OBSOLESCENCE POSES A SIGNIFICANT RISK TO US.**





We
      maintain a substantial investment in product inventory and if we overestimate
      the demand for a particular title, we may retain significant excess quantities
      of that title in our warehouse. Retained inventory may become obsolete as our
      distribution term for the title expires. Although we may sell such inventory
      at
      a steeply discounted price toward the end of the distribution term in order
      to
      recoup our manufacturing, storage and other costs, there is no guarantee that
      a
      market will exist for a given title, even at a steeply discounted
      price.





**OUR
      OVERALL SUCCESS CURRENTLY DEPENDS ON THE UNPREDICTABLE COMMERCIAL SUCCESS OF
      OUR
      PROGRAMMING.**





Conducting
      business in the entertainment industry involves a substantial degree of risk.
      Each music video, feature film or other programming title is an individual
      artistic work, and unpredictable audience reactions primarily determine
      commercial success. The commercial success of a title also depends upon the
      quality and acceptance of other competing programs or titles released into
      the
      marketplace, critical reviews, the availability of alternative forms of
      entertainment and leisure activities, general economic conditions and other
      tangible and intangible factors, all of which are subject to change and cannot
      be predicted with certainty. Our success will depend in part on the popularity
      of our programming, which, in turn, depends on our ability to gauge and predict
      expected popularity.





**THE
      MARKET IN WHICH WE DO BUSINESS MAY CHANGE, DECREASING THE DEMAND FOR OUR
      PRODUCTS. IF THE DEMAND FOR OUR PRODUCTS DECLINES, OUR BUSINESS AND RESULTS
      OF
      OPERATIONS MAY BE ADVERSELY AFFECTED.**





The
      majority of our revenues continue to be derived from sales of our DVD products.
      Our DVD products compete with pay-per-view cable television systems, in which
      cable television subscribers pay a fee to see a movie or other program selected
      by the subscriber. Existing pay-per-view services offer a limited number of
      channels and programs and are generally available only to households with a
      converter to unscramble incoming signals. Recently developed technologies,
      however, permit certain cable companies, direct broadcast satellite companies,
      telephone companies and other telecommunications companies to transmit a much
      greater number of movies to homes in more markets. Ultimately, further
      improvements in these technologies or the development of other technologies,
      such as Internet-TV, could lead to the availability of a broad selection of
      movies or music videos to consumers on demand at low prices, which could
      substantially decrease the demand for DVD-video purchases or rentals. This
      could
      have a material adverse effect on our financial condition and results of
      operations.







-27-








**WE
      COULD BECOME INVOLVED IN LITIGATION OVER OUR RIGHTS TO USE OUR PRODUCTS, OR
      THE
      RIGHTS OF OTHERS TO USE OUR PRODUCTS. RESOLUTION OF ANY SUCH LITIGATION COULD
      BE
      TIME CONSUMING AND COSTLY, WHICH MAY HAVE A MATERIAL ADVERSE AFFECT ON OUR
      OPERATIONS AND FINANCIAL POSITION.**





We
      are
      not aware that the use or licensing of any of our products infringe the
      proprietary rights of third parties, and we are not currently engaged in any
      material intellectual property litigation or proceedings. Nonetheless, we cannot
      assure you that we will not become the subject of infringement claims or legal
      proceedings by third parties with respect to our current or future
      products.





Moreover,
      an adverse outcome in litigation or similar adversarial proceedings could
      subject us to significant liabilities to third parties, require the expenditure
      of significant resources to develop non-infringing products, require disputed
      rights to be licensed from others or require us to cease the marketing or use
      of
      certain products, any of which could have a material adverse effect on our
      business and operating results.





**WE
      RELY UPON KEY PERSONNEL AND IF THEY LEAVE US, OUR BUSINESS PLAN AND RESULTS
      OF
      OPERATIONS COULD BE ADVERSELY AFFECTED.**





We
      rely
      heavily on our executive officers and other key personnel, particularly our
      founder, Mr. Kasper, and our Vice President, Mr. Joseph Giarmo, for our success.
      Their experience and input create the foundation for our business and they
      are
      responsible for the directorship and control over our business activities.
      While
      we currently have an employment agreement with Mr. Kasper, we do not have an
      employment agreement with Mr. Giarmo, nor do we currently have a "key man"
      insurance policy on Mr. Kasper or Mr. Giarmo. Moving forward, should we lose
      the
      services of either Mr. Kasper or Mr. Giarmo, for any reason, we will incur
      costs
      associated with recruiting replacements and delays in our operations. If we
      are
      unable to replace either individual with another suitably trained individual
      or
      individuals, we may be forced to scale back or curtail our business plan and
      business activities. As a result of this, your investment in us could become
      devalued or worthless.





**IF
      WE ARE LATE IN FILING OUR QUARTERLY OR ANNUAL REPORTS WITH THE SEC, WE MAY
      BE
      DE-LISTED FROM THE OVER-THE-COUNTER BULLETIN BOARD.**





Pursuant
      to new Over-The-Counter Bulletin Board ("OTCBB") rules relating to the timely
      filing of periodic reports with the SEC, any OTCBB issuer which fails to file
      a
      periodic report (Form 10-QSB's or 10-KSB's) by the due date of such report
      (not
      withstanding any extension granted to the issuer by the filing of a Form
      12b-25), three (3) times during any twenty-four (24) month period is
      automatically de-listed from the OTCBB. Such removed issuer would not be
      re-eligible to be listed on the OTCBB for a period of one-year, during which
      time any subsequent late filing would reset the one-year period of de-listing.
      As we were late in filing our 10-QSB for the quarterly period ending September
      30, 2006, if we are late in our filings two more times in the current
      twenty-four (24) month period, and/or are late in our filings any three times
      in
      any subsequent twenty-four (24) month period and are de-listed from the OTCBB,
      our securities may become worthless and we may be forced to curtail or abandon
      our business plan.







-28-










**THE
      MARKET FOR OUR COMMON STOCK IS HIGHLY ILLIQUID AND
      VOLATILE.**





The
      market for our common stock is highly illiquid and volatile, and anticipate
      that
      such market will be continue to be subject to wide fluctuations in response
      to
      several factors, including, but not limited to:





(1)
            actual
                or anticipated variations in our results of operations;(2)
            our
                ability or inability to generate new revenues;(3)
            the
                number of shares in our public float;(4)
            increased
                competition; and(5)
            conditions
                and trends in the market for DVDs, television broadcasting and live
                concerts.





Furthermore,
      because our common stock is traded on the NASD OTCBB, our stock price may be
      impacted by factors that are unrelated or disproportionate to our operating
      performance. These market fluctuations, as well as general economic, political
      and market conditions, such as recessions, interest rates or international
      currency fluctuations may adversely affect the market price of our common stock.
      Additionally, at present, we have a limited number of shares in our public
      float, and as a result, there could be extreme fluctuations in the price of
      our
      common stock. Further, due to the limited volume of our shares which trade
      and
      our limited public float, we believe that our stock prices (bid, asked and
      closing prices) are entirely arbitrary, are not related to the actual value
      of
      the Company, and do not reflect the actual value of our common stock (and in
      fact reflect a value that is much higher than the actual value of our common
      stock). Shareholders and potential investors in our common stock should exercise
      caution before making an investment in the Company, and should not rely on
      the
      publicly quoted or traded stock prices in determining our common stock value,
      but should instead determine value of our common stock based on the information
      contained in the Company's public reports, industry information, and those
      business valuation methods commonly used to value private
      companies.





**INVESTORS
      MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO
      FEDERAL REGULATIONS OF PENNY STOCKS.**





Our
      common stock will be subject to the requirements of Rule 15(g)9, promulgated
      under the Securities Exchange Act as long as the price of our common stock
      is
      below $4.00 per share. Under such rule, broker-dealers who recommend low-priced
      securities to persons other than established customers and accredited investors
      must satisfy special sales practice requirements, including a requirement that
      they make an individualized written suitability determination for the purchaser
      and receive the purchaser's consent prior to the transaction. The Securities
      Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
      additional disclosure in connection with any trades involving a stock defined
      as
      a penny stock. Generally, the Commission defines a penny stock as any equity
      security not traded on an exchange or quoted on NASDAQ that has a market price
      of less than $4.00 per share. The required penny stock disclosures include
      the
      delivery, prior to any transaction, of a disclosure schedule explaining the
      penny stock market and the risks associated with it. Such requirements could
      severely limit the market liquidity of the securities and the ability of
      purchasers to sell their securities in the secondary market.












[Remainder
        of page left intentionally blank.]





-29-








**ITEM
      7. FINANCIAL STATEMENTS**





The
      Financial Statements required by Item 310 of Regulation S-B are stated in U.S.
      dollars and are prepared in accordance with U.S. Generally Accepted Accounting
      Principles.







































-30-





To
        the
        Board of Directors and Stockholders
 Nutech
        Digital, Inc.
 Van
        Nuys,
        California
 
 REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 We
        have
        audited the accompanying balance sheets of Nutech Digital, Inc. as of December
        31, 2006 and 2005 and the related statements of income, stockholders’ deficit,
        and cash flows for the years then ended. Nutech Digital, Inc’s management is
        responsible for these financial statements. Our responsibility is to express
        an
        opinion on these financial statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        financial statements are free of material misstatement. Our audits of the
        financial statements include examining, on a test basis, evidence supporting
        the
        amounts and disclosures in the financial statements, assessing the accounting
        principles used and significant estimates made by management, and evaluating
        the
        overall financial statement presentation. We believe that our audits provide
        a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Nutech Digital, Inc. as of December
        31, 2006 and 2005, and the results of its operations and cash flows for the
        years then ended in conformity with accounting principles generally accepted
        in
        the United States of America.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 1 to the financial
        statements, the Company has suffered recurring losses from operations and
        is
        dependent upon the continued sale of its securities or obtaining debt financing
        for funds to meet its cash requirements. These factors raise substantial
        doubt
        about the Company’s ability to continue as a going concern. The financial
        statements do not include any adjustments that might result from the outcome
        of
        this uncertainty.
 
 
 /s/
        Weaver & Martin, LLC
 Weaver
        & Martin, LLC
 Kansas
        City, Missouri
 March
        21,
        2007








F-1


**NUTECH
        DIGITAL, INC.**
 **BALANCE SHEET**
 **DECEMBER 31, 2006**
  
 
 **ASSETS****CURRENT
                  ASSETS**Cash
                  in bank
              
              $
              7,101Prepaid
                  expenses, current portion
              
              
              36,262**TOTAL
                  CURRENT ASSETS**
              
              
              43,363**PROPERTY
                  AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION**
              
              
              51,227**OTHER
                  ASSETS**Prepaid
                  expenses, long-term portion
              
              
              6,534**TOTAL
                  OTHER ASSETS**
              
              
              6,534**TOTAL
                  ASSETS**
              
              $
              101,124**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****CURRENT
                  LIABILITIES**Bank
                  overdraft
              
              $
              8,277Accounts
                  payable
              
              
              1,396,394Accrued
                  payroll, related parties
              
              
              308,403Accrued
                  liabilities, other
              
              
              157,951Demand
                  notes payable, related party
              
              
              201,894Notes
                  payable, related party
              
              
              261,019Notes
                  payable, other
              
              
              814,796Convertible
                  promissory note
              
              
              137,566**TOTAL
                  CURRENT LIABILITIES**
              
              
              3,286,300**STOCKHOLDERS’
                  EQUITY**Preferred
                  stockAuthorized
                  - 50,000,000 sharesIssued
                  and outstanding -0- shares
              
              
              -Common
                  stockAuthorized
                  100,000,000 shares, no par valueIssued
                  and outstanding - 32,172,494 shares
              
              
              6,108,539Accumulated
                  (deficit)
              
              
              (
                  9,293,715
              )**TOTAL
                  STOCKHOLDERS’ EQUITY**
              
              
              (
                  3,185,176
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY**
              
              $
              101,124
  
  The
        accompanying notes are an integral part of these financial
        statements.
  
  F-2
   **NUTECH
        DIGITAL, INC.**
 **STATEMENTS
        OF OPERATIONS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006 AND 2005**
 
 **2006**
              
              **2005****SALES,
                  NET**
              
              $
              1,027,431
              
              $
              2,784,214**OPERATING
                  EXPENSES****COST
                  OF SALES**
              
              
              505,993
              
              
              1,730,756**SELLING
                  EXPENSES**
              
              
              46,754
              
              
              129,571**ROYALTY
                  EXPENSES**
              
              
              167,491
              
              
              661,152**CONSULTING
                  FEES**
              
              
              116,580
              
              
              393,970**SALARIES
                  AND WAGES**
              
              
              872,217
              
              
              1,011,372**LEGAL
                  EXPENSES**
              
              
              98,299
              
              
              274,612**GENERAL
                  AND**
                **ADMINISTRATIVE EXPENSES**
              
              
              498,496
              
              
              775,222**TOTAL
                  OPERATING EXPENSES**
              
              
              2,305,830
              
              
              4,976,655**OPERATING
                  (LOSS)**
              
              
              (
                  1,278,399
              )
              
              (
                  2,192,441
              )**OTHER
                  INCOME (EXPENSE)**Interest
                  expense
              
              
              (
                  155,489
              )
              
              (152,759
              )Loss
                  on impairment of assets
              
              
              (
                  2,086,936
              )
              
              (
                  2,147,295
              )Cancellation
                  of bad debt
              
              
              -
              
              
              533,164Recovery
                  of prior year security deposit
              
              
              50,000
              
              
              -Loss
                  on sale of fixed assets
              
              
              (
                  90,437
              )
              
              -Rental
                  income
              
              
              31,451
              
              
              12,000**TOTAL
                  OTHER INCOME (EXPENSE)**
              
              
              (
                  2,251,411
              )
              
              (
                  1,754,890
              )**(LOSS)
                  BEFORE CORPORATION INCOME TAXES**
              
              
              (
                  3,529,810
              )
              
              (
                  3,947,331
              )**CORPORATION
                  INCOME TAXES**
              
              
              800
              
              
              800**NET
                  (LOSS)**
              
              $
              (3,530,610
              )
              $
              (
                  3,948,131
              )**NET
                  (LOSS) PER COMMON SHARE**
                **BASIC
                  AND DILUTED**
              
              $
              (0.13
              )
              $
              (
                  0.17
              )**WEIGHTED
                  AVERAGE NUMBER**
                **OF COMMON SHARES**
                **OUTSTANDING**
                **BASIC
                  AND DILUTED**
              
              
              27,593,590
              
              
              22,755,954
 
   
  The
        accompanying notes are an integral part of these financial
        statements.
  
   F-3
   **NUTECH
        DIGITAL, INC.**
 **STATEMENTS
        OF STOCKHOLDERS’ EQUITY**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006 AND 2005**
   **Common
                      Stock**
                  
                  
                  
                  **Accumulated**
                    **Deficit**
                  
                  **Total****Shares**
                    **Issued**
                  
                  **Shares        
                      Owed But Not Issued**
                  
                  **Amount**
                    **Issued**
                  
                  **Amount
                      Owed But Not Issued****BALANCE,
                      JANUARY 1, 2005**
                  
                  
                  21,880,494
                  
                  
                  -
                  
                  $
                  5,046,769
                  
                  $
                  -
                  
                  $
                  (
                      1,814,974
                  )
                  $
                  3,231,795**ISSUANCE
                      OF COMMON STOCK FOR:****SERVICES
                      UNDER 2003 CONSULTANT STOCK PLAN**
                  
                  
                  500,000
                  
                  
                  -
                  
                  
                  75,500
                  
                  
                  -
                  
                  
                  -
                  
                  
                  75,500**OTHER
                      SERVICES AND PREPAID EXPENSES**
                  
                  
                  1,645,000
                  
                  
                  -
                  
                  
                  151,922
                  
                  
                  -
                  
                  
                  -
                  
                  
                  151,922**WARRANTS
                      ISSUED FOR SERVICES**
                  
                  
                  -
                  
                  
                  -
                  
                  
                  11,700
                  
                  
                  
                  
                  
                  -
                  
                  
                  11,700**CASH
                      - OPTIONS EXERCISED UNDER THE 2001   EQUITY INCENTIVE
                      PLAN**
                  
                  
                  -
                  
                  
                  1,172,000
                  
                  
                  -
                  
                  
                  85,000
                  
                  
                  -
                  
                  
                  85,000**OPTIONS
                      ISSUED FOR SERVICES**
                  
                  
                  -
                  
                  
                  -
                  
                  
                  13,120
                  
                  
                  -
                  
                  
                  
                  
                  
                  13,120**NET
                      LOSS FOR THE YEAR ENDED DECEMBER 31, 2005**
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (
                      3,948,131
                  )
                  
                  (
                      3,948,131
                  )**BALANCE,
                      DECEMBER 31, 2005**
                  
                  
                  24,025,494
                  
                  
                  1,172,000
                  
                  
                  5,299,011
                  
                  
                  85,000
                  
                  
                  (
                      5,763,105
                  )
                  
                  (
                      379,094
                  )
 
  The
        accompanying notes are an integral part of these financial
        statements.
  
  F-4
 
  **NUTECH
        DIGITAL, INC.**
 **STATEMENTS
        OF STOCKHOLDERS’ EQUITY (CONTINUED)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006 AND 2005**
  
  **Common
                    Stock**
                
                
                
                **Accumulated**
                  **Deficit**
                
                **Total****Shares**
                  **Issued**
                
                **Shares**
                  **Owed****But        
                    Not Issued**
                
                **Amount**
                  **Issued**
                
                **Amount
                    Owed But Not Issued****ISSUANCE
                    OF COMMON STOCK FOR:****SERVICES
                    UNDER 2003 CONSULTANT STOCK PLAN**
                
                
                5,825,000
                
                
                -
                
                $
                119,475
                
                $
                -
                
                $
                -
                
                $
                119,475**ISSUANCE
                    OF SHARES FROM PRIOR PERIOD**
                
                
                1,172,000
                
                
                (
                    1,172,000
                )
                
                85,000
                
                
                (
                    85,000
                )**OTHER
                    SERVICES AND EXPENSES**
                
                
                1,150,000
                
                
                -
                
                
                412,119
                
                
                -
                
                
                -
                
                
                412,119**CASH
                    - OPTIONS EXERCISED UNDER THE 2001 EQUITY INCENTIVE
                    PLAN**
                
                
                -
                
                
                -
                
                
                192,934
                
                
                -
                
                
                -
                
                
                192,934**NET
                    (LOSS) FOR YEAR ENDED DECEMBER 31, 2006**
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (
                    3,530,610
                )
                
                (
                    3,530,610
                )**BALANCE,
                    DECEMBER 31, 2006**
                
                
                32,172,494
                
                
                -
                
                $
                6,108,539
                
                $
                -
                
                $
                (
                    9,293,715
                )
                $
                (
                    3,185,176
                )
 
  The
        accompanying notes are an integral part of these financial
        statements.
   F-5
   **NUTECH
        DIGITAL, INC.**
 **STATEMENTS
        OF CASH FLOWS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006 AND 2005**
  
 **2006**
              
              **2005****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  (loss)
              
              $
              (3,530,610
              )
              $
              (
                  3,948,131
              )Adjustments
                  to reconcile net income (loss) to net cash provided (used) by operating
                  activities:Depreciation
              
              
              52,673
              
              
              372,680Amortization
              
              
              115,630
              
              
              447,652Provision
                  for doubtful accounts
              
              
              110
              
              
              291,000Cancellation
                  of debt
              
              
              -
              
              
              (
                  533,164
              )Loss
                  on disposal of fixed assets
              
              
              90,437
              
              
              -Loss
                  on impairment of assets
              
              
              2,086,936
              
              
              2,147,295Issuance
                  of common stock for services, consulting fees and other
                  expenses
              
              
              128,325
              
              
              252,242Non-cash
                  rent expense
              
              
              9,000
              
              
              -Amortization
                  of options issued to employees
              
              
              207,934
              
              
              -Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              395,335
              
              
              (
                  233,529
              )Production
                  costs receivable
              
              
              50,626
              
              
              (
                  112,626
              )Inventories
              
              
              18,967
              
              
              433,693Production
                  costs
              
              
              446,851
              
              
              25,562Prepaid
                  royalties
              
              
              85,420
              
              
              234,936Prepaid
                  expenses
              
              
              9,115
              
              
              243,180Deposits
              
              
              7,800
              
              
              -Accounts
                  payable
              
              
              86,266
              
              
              (
                  194,423
              )Accrued
                  liabilities
              
              
              (
                  96,667
              )
              
              265,895**NET
                  CASH PROVIDED (USED) BY OPERATING ACTIVITIES**
              
              
              164,148
              
              
              (
                  307,738
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Purchases
                  of property and equipment
              
              
              -
              
              
              (
                  55,480
              )Disposal
                  of property and equipment
              
              
              37,100
              
              
              -**NET
                  CASH PROVIDED (USED) BY****INVESTING
                  ACTIVITIES**
              
              
              37,100
              
              
              (
                  55,480
              )**CASH
                  FLOWS FROM FINANCING****ACTIVITIES**Bank
                  overdraft
              
              
              (
                  54,692
              )
              
              20,236Net
                  proceeds from issuance of common stock - private placement
              
              
              -
              
              
              85,000Proceeds
                  from demand loan payable, related parties
              
              
              26,883
              
              
              263,000Proceeds
                  from notes payable, related parties
              
              
              22,000
              
              
              350,000Proceeds
                  from notes payable, other
              
              
              42,175
              
              
              100,000Repayment
                  of demand loan payable, related parties
              
              
              (
                  87,989
              )
              
              (
                  53,745
              )Repayment
                  of notes payable, other
              
              
              (
                  13,302
              )
              
              (
                  16,845
              )Repayment
                  of notes payable, related parties
              
              
              (
                  133,839
              )
              
              (
                  368,098
              )Payments
                  on capital leases payable
              
              
              -
              
              
              (
                  11,713
              )**NET
                  CASH PROVIDED (USED) BY FINANCING ACTIVITIES**
              
              
              (
                  198,764
              )
              
              367,835**NET
                  INCREASE IN CASH**
              
              
              2,484
              
              
              4,617**CASH
                  BALANCE, AT BEGINNING OF PERIOD**
              
              
              4,617
              
              
              -**CASH
                  BALANCE, AT END OF PERIOD**
              
              $
              7,101
              
              $
              4,617
 
 
 
 The
        accompanying notes are an integral part of these financial
        statements.
 
  F-6
   **NUTECH
        DIGITAL, INC.**
 **STATEMENTS
        OF CASH FLOWS (CONTINUED)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006 AND 2005**
  
 **2006**
              
              **2005****SUPPLEMENTARY
                  DISCLOSURE OF CASH FLOW INFORMATION****CASH
                  PAID DURING THE PERIOD FOR:**Interest
              
              $
              159,705
              
              $
              128,394Taxes
              
              $
              -
              
              $
              800**NON-CASH
                  INVESTING AND FINANCING ACTIVITIES**Issuance
                  of common stock for prepaid expenses, services consulting fees
                  and
                other
                  expenses
              
              $
              128,325
              
              $
              252,242Non-cash
                  rent
                  expense.........................................................................................
              
              $
              9,000
              
              
              -Amortization
                  of options issued to
                  employees.......................................................
              
              $
              207,934
              
              
              -Cancellation
                  of debt
              
              $
              -
              
              $
              533,164Asset
                  impairment
              
              $
              2,209,912
              
              $
              2,147,295
 
 
  The
        accompanying notes are an integral part of these financial
        statements. ****
 
   F-7
   **NOTE
        1**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
  **Nature
        of Business**
  NuTech
        Digital, Inc. is engaged in the business of producing popular music concerts
        and
        licensing and distributing general entertainment products, most of which
        are
        made available through digital versatile discs, commonly known as DVDs. Our
        products include Japanese anime, late night programming, and children's animated
        films. We own more than 600 exclusive DVD titles and a growing library of
        high
        definition music concerts. During the 2005 fiscal year, the Company changed
        the
        focus of its business from the licensing and sale of general entertainment
        products to the production of popular music concerts for distribution. The
        Company’s products are principally sold through retail stores, the Internet and
        wholesale distributors.
  **Basis
        of Presentation - Going Concern**
  The
        Company’s financial statements have been prepared on an accrual basis of
        accounting, in conformity with accounting principles generally accepted in
        the
        United States of America. These principles contemplate the realization of
        assets
        and liquidation of liabilities in the normal course of business.
  These
        financial statements are presented on the basis that the Company is a going
        concern. Going concern contemplates the realization of assets and the
        satisfaction of liabilities in the normal course of business over a reasonable
        length of time. The following factors raise substantial doubt as to the
        Company’s ability to continue as a going concern:
  A.
            The
                Company has accumulated a deficit of $9,083,715 since
                inception.  B.
            The
                Company has a working capital deficit of
                $3,032,937.  C.
            The
                Company continues to incur operating
                losses.  See
        Note
        24 for managements plan to eliminate the going concern
        qualification.
  **Property
        and Equipment**
  Property
        and equipment are stated at cost. Major renewals and improvements are charged
        to
        the asset accounts while replacements, maintenance and repairs, which do
        not
        improve or extend the lives of the respective assets, are expensed. At the
        time
        property and equipment are retired or otherwise disposed of, the asset and
        related accumulated depreciation accounts are relieved of the applicable
        amounts. Gains or losses from retirements or sales are credited or charged
        to
        income.
  The
        Company depreciates its property and equipment
        for financial reporting purposes using the straight-line method based upon
        the
        following useful lives of the assets:
  Office
                  furniture and equipment
              5-7
                  yearsComputer
                  equipment
              5
                  yearsComputer
                  software
              3
                  yearsTrade
                  show equipment
              7
                  years
   **Inventory,
        Completed Masters, Production Costs**
  Effective
        July 1, 2006, the Company expenses all inventory, completed masters and
        production costs due to the fact that reliable estimates of revenue and
        projected cash flow can not be determined.
   F-8
   **NOTE
        1**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
  **Revenue
        Recognition**
  In
        2006,
        management decided to record income on the cash basis due to the fact that
        we
        can not make reliable estimates of revenue and projected cash flow can not
        be
        determined. In 2005, the Company’s sales were recorded when its products were
        shipped, net of an estimate of returns.
  **Disclosure
        About Fair Value of Financial Instruments**
  The
        Company has financial instruments, none of which are held for trading purposes.
        The Company estimates that the fair value of all financial instruments at
        December 31, 2006 as defined in FASB 107, does not differ materially from
        the
        aggregate carrying values of its financial instruments recorded in the
        accompanying balance sheet. The estimated fair value amounts have been
        determined by the Company using available market information and appropriate
        valuation methodologies. Considerable judgment is required in interpreting
        market data to develop the estimates of fair value, and accordingly, the
        estimates are not necessarily indicative of the amounts that the Company
        could
        realize in a current market exchange.
  **Income
        Taxes**
  Provisions
        for income taxes are based on taxes payable or refundable for the current
        year
        and deferred taxes on temporary differences between the amount of taxable
        income
        and pretax financial income and between the tax bases of assets and liabilities
        and their reported amounts in the financial statements. Deferred tax assets
        and
        liabilities are included in the financial statements at currently enacted
        income
        tax rates applicable to the period in which the deferred tax assets and
        liabilities are expected to be realized or settled as prescribed in FASB
        Statement No. 109, Accounting for Income Taxes. As changes in tax laws or
        rates
        are enacted, deferred tax assets and liabilities are adjusted through the
        provision for income taxes.
  **Common
        Stock Issued for Non-Cash Transactions**
  It
        is the
        Company’s policy to value stock issued for non-cash transactions, such as
        services, at the fair market value of the goods or services received or the
        consideration granted, whichever is more readily determinable, at the date
        the
        transaction is negotiated.
  **Stock
        based Compensation**
  Effective
        January 1, 2006, the Company adopted Statement of Financial Accounting Standards
        (“SFAS”) No. 123(R), “Share-Based Payment: An Amendment of FASB Statements No.
        123 and 95” using the modified prospective method. Under this method,
        compensation cost is recognized on or after the effective date for the portion
        of outstanding awards, for which the requisite service has not yet been
        rendered, based on the grant date fair value of those awards. Prior to January
        1, 2006, the Company accounted for employee stock options using the intrinsic
        value method in accordance with Accounting Principles Board (“APB”) Opinion No.
        25 (“APB No. 25”), “Accounting for Stock Issued to Employees,” and adopted the
        disclosure only alternative of SFAS No. 123. For stock-based awards issued
        on or
        after January 1, 2006, the Company recognizes the compensation cost on a
        straight-line basis over the requisite service period for the entire award.
        Measurement and attribution of compensation cost for awards that are unvested
        as
        of the effective date of SFAS No. 123(R) are based on the same estimate of
        the
        grant-date or modification-date fair value and the same attribution method
        used
        previously under SFAS No. 12.
   F-9
   **NOTE
        1**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
  The
        Black-Scholes option-pricing model was developed for use in estimating the
        fair
        value of traded options which have no vesting restrictions and are fully
        transferable. In addition, option valuation models require the input of highly
        subjective assumptions including the expected stock price volatility. Because
        the Company’s stock options and warrants have characteristics different from
        those of traded options, and because changes in the subjective input assumptions
        can materially affect the fair value estimate, in management’s opinion, the
        existing models do not necessarily provide a reliable single measure of the
        fair
        value of such stock options.
 
 **Long-Lived
        Assets**
 
 Statement
        of Financial Accounting Standards No. 144, “Accounting for the Impairment of
        Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” requires that
        long-lived assets be reviewed for impairment whenever events or changes in
        circumstances indicate that the historical cost-carrying value of an asset
        may
        no longer be appropriate. The Company assesses the recoverability of the
        carrying value of an asset by estimating the future net cash flows expected
        to
        result from the asset, including eventual disposition. If the future net
        cash
        flows are less than the carrying value of the asset, an impairment loss is
        recorded equal to the difference between the asset’s carrying value and fair
        value. The Company had impairment losses of $2,086,936 in 2006 and $2,147,295
        in
        2005.
 
  **Shipping
        and Handling Costs**
  The
        Company’s policy is to classify shipping and handling costs as part of cost of
        good sold in the statements of operations.
  **Reclassifications**
  Certain
        2005 amounts have been reclassified to conform to 2006
        presentations.
  **NOTE
        2**  **MAJOR
        CUSTOMERS**
  For
        the
        year ended December 31, 2006, the Company had two customers that accounted
        for
        31% of total revenue. For the year ended December 31, 2005, the Company had
        one
        customer that accounted for 21% of total revenue.
  **NOTE
        3**  **PROPERTY
        AND EQUIPMENT**
  Property
        and equipment and accumulated depreciation consist of:
  Office
                  furniture and equipment
              $                                             
                  12,118Computer
                  equipment
              107,239Computer
                  software
              51,252170,609Less
                  accumulated depreciation
              119,382$                                              51,227
    F-10
   NOTE
        4ACCOUNTS
        PAYABLE
  A
        summary
        of the accounts payable at December 31, 2006 is as follows:
  U-Tech
                  Media Corp.
              $
              227,471Queenstone
                  Financial Corp
              
              312,798Richardson
                  & Patel
              
              144,597Other
              
              501,528$
              1,186,394
 
 **NOTE
        5**  **ACCRUED
        PAYROLL, RELATED PARTIES**
  A
        summary
        of the accrued payroll at December 31, 2006 is as follows:
  Lee
                  Kasper
              
              $
              254,686Joe
                  Giarmo
              
              
              38,179Eli
                  Aramyan
              
              
              14,000Jay
                  Hergott1,538$
              308,403
 **NOTE
        6**  **ASSET
        IMPAIRMENT**
  Effective
        July 1, 2006, the Company expenses all inventory, completed masters and
        production costs due to the fact that reliable estimates of revenue and
        projected cash flow can not be determined.
  Management
        reviewed its projected cash flows and sales from its DVD’s and produced
        concerts, and determined the necessity to write-off the following assets
        as
        impaired:
  2006
              
              2005Impairment
                  of prepaid royalties
              
              $
              668,634
              
              $
              2,014,059Impairment
                  of completed masters
              
              
              425,040
              
              
              133,236Impairment
                  of accounts receivable
              
              
              51,156
              
              
              -Impairment
                  of inventory
              
              
              467,119
              
              
              -Impairment
                  of production costs
              
              
              474,987
              
              
              -$
              2,086,936
              
              $
              2,147,295
  **NOTE
        7**  **CANCELLATION
        OF DEBT**
  In
        December 2005, a note payable to a supplier in the amount of $533,164,
        consisting of $400,000 of principal and $133,164 of accrued interest, was
        cancelled as the debt is uncollectible due to expiration of the statute of
        limitations for debt collection.
  **NOTE
        8**  **INCOME
        TAXES**
  **Provision**
  The
        provision for income taxes for the years ended December 31, 2006 and 2005
        represents primarily California franchise taxes and consists of the
        following:
  
 F-11
   NOTE
        8INCOME
        TAXES (CONTINUED)
  2006  2005
  Current                                                
$       
800                 $    
    800
 Deferred                                               $           
-                 
$            -
   **Deferred
        Tax Components**
  Significant
        components of the Company’s deferred tax assets are as follows at December 31,
        2006:
  Net
                  operating loss carryforwards
              
              $
              3,114,621Less
                  valuation allowance
              
              
              3,114,621Net
                  deferred tax assets
              
              $
              -Summary
                  of valuation allowance:Balance,
                  January 1, 2006
              
              $
              1,929,300Increase for
                  the year ended December 31, 2006
              
              
              1,185,321Balance,
                  December 31, 2006
              
              $
              3,114,621
 
  In
        assessing the realizability of deferred tax assets, management considers
        whether
        it is more likely than not that some portion or all of the deferred tax assets
        is dependent upon the generation of future taxable income during the period
        in
        which those temporary differences become deductible. Management considers
        the
        scheduled reversal of deferred tax liabilities, projected future taxable
        income
        and tax planning strategies in making this assessment.
  **Net
        Operating Loss Carryforwards**
  The
        Company has the following net operating loss carryforwards:
  **Year
                  of Loss**
              
              **Expiration
                  Date**December
                  31, 2003
              
              
              December
                  31, 2023
              
              $
              653,358December
                  31, 2004
              
              
              December
                  31, 2024
              
              
              1,089,001December
                  31, 2005
              
              
              December
                  31, 2025
              
              
              3,625,948December
                  31, 2006
              
              
              December
                  31, 2026
              
              
              3,530,610$
              8,898,917
 
  In
        the
        event that a change in ownership of the Company of greater than 50 percent
        occurs/occurred as a result of the Company’s issuance of common and preferred
        stock, the utilization of the net operating loss carryforward will be subject
        to
        limitation or may not be available under certain provisions of the United
        States
        Internal Revenue Code.
 
 
 F-12
 
 
 **Total******
              
              **Current**
                **Portion**LEE
                  KASPER (PRESIDENT OF THE COMPANY)Mr.
                  Kasper routinely provides the Company with advances anddebt
                  payments as necessary. The loan is due upon demand andbears
                  interest at 10% per annum. The principal balance atDecember
                  31, 2006 is:
              
              
              $
              201,894
              
              $
              201,894
 
  **NOTE
        10 NOTES PAYABLE, RELATED PARTY**
  **Total**
              
              **Current
                  Portion**LEE
                  KASPER (PRESIDENT OF THE COMPANY)
                
                On
                  August 1, 2005, Mr. Kasper received an additional $350,000 loan
                  from Skura
                  Intercontinental Trading Company and loaned the $350,000 proceeds
                  to the
                  Company. The terms of the loan are the same as the terms of the
                  loan from
                  Skura Intercontinental Trading Company to Mr. Kasper as
                  follows:
                
                1.
                  The loan is secured by a deed of trust on Mr. Kasper’s personal
                  residence.
                2.
                  Interest - 8% per annum.
                3.
                  Thirty-six monthly payments of principal and interest in the amount
                  of
                  $10,968.
                4.
                  The Company is five months behind in its payments and is in default
                  on the
                  loan.
                5.
                  Principal balance at December 31, 2006 is:
              
              $
              261,019
              
              $
              261,019
 
 **NOTE
        11**  **NOTES
        PAYABLE, OTHER**
  **Total**
              
              **Current
                  Portion**SMALL
                  BUSINESS ADMINISTRATION AND COMERICA BANK LOAN
                
                On
                  July 12, 2000, the Company received a $900,000 Small Business
                  Administration loan with Comerica Bank participation. The loan
                  requires
                  monthly payments of $6,414, including interest at 2% over prime.
                  The loan
                  is secured by all assets of the Company and the major stockholder’s
                  personal residence and personal guaranty. The loan matures on July
                  14,
                  2018. Effective interest rate at December 31, 2006 was 9.25%. The
                  Company
                  is six months behind in its payments on the loan balance and is
                  in default
                  on the loan.
              
              $
              673,616
              
              $
              673,616
 
  
 F-13
 **NUTECH
              DIGITAL, INC.**
 **NOTES
              TO FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
              31, 2006**
   NOTE
        11NOTES
        PAYABLE, OTHER (CONTUNUED)
  KICKAROCK
                  PRODUCTIONS INC.
                
                During
                  2006, the Company received loans in the amount of $42,175 from
                  an
                  unrelated company. The loan matures in December 2007. The loan
                  accrues
                  interest at a rate of 7% per annum.
              
              
              42,175
              
              
              42,175NOEL
                  GIMBEL
                
                On
                  July 27, 2005, the Company received a $100,000 loan from an unrelated
                  individual. The loan requires the payment of the principal in full
                  in
                  December 2007, together with any accrued interest at the rate of
                  10%. The
                  loan is personally guaranteed by Mr. Lee Kasper.
              
              
              99,005
              
              
              99,005$
              814,796
              
              $
              814,796
 
  Future
        minimum principal payments on the notes payable to others are as
        follows:
  December
                  31, 2007
              
              $
              814,796
 
  **NOTE
        12**  **CONVERTIBLE
        PROMISSORY NOTES**
  In
        July
        2003 the Company issued two convertible promissory notes totaling $137,566.
        The
        notes can be converted after July 7, 2004 into common stock of the Company
        at a
        conversion price of $0.25 per share (550,264 total shares). The notes are
        unsecured and bear interest at the minimum rate permitted by the IRS. The
        Company’s stock was trading at $0.15 per share on the date that the note was
        issued. Accordingly, no beneficial conversion feature existed on these notes.
        The notes are due upon demand.
  **NOTE
        13**  **ADVERTISING**
  The
        Company expenses all advertising as incurred. Advertising expenses for the
        years
        ended December 31, 2006 and 2005 were $17,435 and $7,292,
        respectively.
  **NOTE
        14**  **COMMON
        STOCK**
  During
        the year ended December 31, 2005, the Company issued the following shares
        of
        common stock:
  On
        February 28, 2005, 150,000 shares of common stock, with an aggregate fair
        value
        of $33,000, were issued to a consultant for a one year consulting agreement
        that
        expires on February 22, 2006.
  On
        April
        18, 2005, 100,000 shares of common stock, with an aggregate fair value of
        $12,000, were issued to a consultant for a one year consulting agreement
        that
        expires on February 22, 2006.
  On
        April
        19, 2005, 200,000 shares of common stock, with an aggregate fair value of
        $26,000, were issued to a consultant for a one year consulting agreement
        that
        expires on April 19, 2006.
  On
        June
        10, 2005, 250,000 shares of restricted common stock, with an aggregate fair
        value of $32,500, were issued to a consultant for a two month consulting
        agreement that expires on August 10, 2005.
  
 F-14
 **NUTECH
              DIGITAL, INC.**
 **NOTES
              TO FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
              31, 2006**
    NOTE
        14COMMON
        STOCK (CONTINUED)
  On
        September 1, 2005, 25,000 shares of restricted
        common stock, with an aggregate fair value of $2,750, were issued to a
        consultant for services rendered during July, August and September of
        2005.
  On
        September 14, 2005, 200,000 shares of restricted common stock, with an aggregate
        fair value of $23,800, were issued to the Company’s SEC counsel in payment of
        services rendered December 2004 through June 2005.
  On
        October 28, 2005, the Company received $85,000 cash in exchange for 1,172,000
        shares of restricted common stock at the market value of $0.0725 on the date
        of
        approval. The shares were sold to two unrelated parties. The shares were
        not
        issued as of December 31, 2005, but were issued in 2006.
  On
        November 15, 2005, 50,000 shares of restricted common stock, with an aggregate
        fair value of $4,500 were issued to a consultant for services to be rendered
        during the fourth quarter of 2005.
  On
        November 28, 2005, 1,170,000 shares of restricted common stock with an aggregate
        fair value of $95,199 were issued to the Company’s SEC council in payment of
        services rendered through July 2005 through October 2005.
  During
        the year ended December 31, 2006, the Company issued the following shares
        of
        common stock:
  On
        February 6, 2006, 75,000 shares of common stock, with an aggregate fair value
        of
        $3,975 were issued to a consultant for a nine month consulting agreement
        that
        expires on December 31, 2006.
  On
        February 10, 2006, 150,000 shares were issued with an aggregate fair value
        of
        $8,850 to three individuals for their loaning funds to the Company.
  On
        February 22, 2006, 150,000 shares of common stock, with an aggregate fair
        value
        of $9,000 were issued to a consultant for past services provided.
  On
        August
        8, 2006, 5,000,000 shares of common stock, with an aggregate fair value of
        $82,500 were issued to five consultants for a six month consulting agreement
        that expires on February 8, 2007. Of this amount, $65,462 was expensed and
        $17,038 was recorded on the balance sheet as prepaid expenses as of December
        31,
        2006.
  On
        December 15, 2006, 1,000,000 shares of common stock, with an aggregate fair
        value of $15,000 were issued to two employees of the company as a substitution
        for wages owed.
  On
        December 20, 2006, 600,000 shares of common stock, with an aggregate fair
        value
        of $10,200 were issued to a consultant for $24,000 of past services
        provided.
  **NOTE
        15**  **REAL
        ESTATE LEASES**
  On
        May 1,
        2001, the Company leased its office and warehouse facilities for five years
        and
        three months. The details on the lease are as follows:
  1.
              Base
                  rentals - $7,800 per month plus operating costs with cost of living
                  adjustments in May of each year.
  2.
              Termination
                  date - July 31, 2006
  At
        the
        end of the lease, the Company relocated to the home of an officer of the
        Company. The Company is being charged an amount of $2,000 per month for the
        use
        of this location.
  
 F-15
 **NUTECH
              DIGITAL, INC.**
 **NOTES
              TO FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
              31, 2006**
 
 NOTE
        15REAL
        ESTATE LEASES (CONTINUED)
  The
        rent
        expense for the years ended December 31, 2006 and 2005 was $83,178 and $114,488,
        respectively.
  **NOTE
        16**  **INCENTIVE
        STOCK OPTIONS**
  The
        Board
        of Directors and stockholders approved the NuTech Digital, Inc. 2001 Equity
        Incentive Plan which permits the Board of Directors to grant, for a ten year
        period, both stock purchase rights and stock options. The Company has reserved
        12,695,000 shares of its common stock for issuance to the directors, employees
        and consultants under the Plan. The Plan is administered by the Board of
        Directors.
  The
        administrators have the authority and discretion, subject to the provisions
        of
        the Plan, to select persons to whom stock purchase rights or options will
        be
        granted, to designate the number of shares to be covered by each option or
        stock
        purchase right, to specify the type of consideration to be paid, and to
        establish all other terms and conditions of each option or stock purchase
        right.
        Options granted under the Plan will not have a term that exceeds ten years
        from
        date of grant.
  The
        stock
        subject to the plan and issuable upon exercise of options granted under the
        plan
        are shares of the Company’s common stock, no par value, which may be restricted,
        or grants of options to purchase shares of common stock.
  On
        July
        7, 2006, the exercise price for 1,955,000 options, that were previously issued,
        was amended to a value of $0.01 per option granted.
  Vesting
        terms of the options range from immediate to ten years.
  A
        summary
        of the option activity for the year ended December 31, 2006, pursuant to
        the
        terms of the plan is as follows:
  
  **Shares**
                **Under**
                **Option**
              
              **Weighted
                  Average Exercise**
                **Price**Options
                  outstanding at January 1, 2006
              
              
              2,190,000
              
              $
              0.33Cancelled
                  and expired
              
              
              115,000
              
              
              0.33Options
                  outstanding at December 31, 2006
              
              
              2,075,000
              
              $
              0.02
 
  Information
        regarding stock options outstanding as of December 31, 2006 is as
        follows:
  Price
                  range
              
              
              $0.01
                    - $ 0.11Weighted
                  average exercise price
              
              
              $0.02Weighted
                  average remaining contractual life
              
              
              3
                  years, 5 months
 
  
 F-16
 **NUTECH
              DIGITAL, INC.**
 **NOTES
              TO FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
              31, 2006**
 
 A
        summary
        of the option activity for the year ended December 31, 2005, pursuant to
        the
        terms of the plan is as follows:
  **NOTE
        16**  **INCENTIVE
        STOCK OPTIONS (CONTINUED)**
  **Shares**
                **Under**
                **Option**
              
              **Weighted
                  Average Exercise**
                **Price**Options
                  outstanding at January 1, 2005
              
              
              2,715,000
              
              $
              0.31Cancelled
                  and expired
              
              
              (525,000
              )
              
              0.20Options
                  outstanding at December 31, 2005
              
              
              2,190,000
              
              $
              0.33
 
 Options
        for the purchase of 2,190,000 shares were exercisable at December 31,
        2005.
  Information
        regarding stock options outstanding as of December 31, 2005 is as
        follows:
  Price
                  range
              
              $
                  0.11 - $ 0.66Weighted
                  average exercise price
              
              $
                  0.59Weighted
                  average remaining contractual life
              
              4
                  years, 5 months
 
 **NOTE
        17**  **ADDITIONAL
        STOCK OPTIONS**
  The
        Company, from time to time, grants stock options approved by the Board of
        Directors to employees as incentives and awards outside of the NuTech Digital,
        Inc. 2001 Equity Incentive Plan. The stock options grants have been approved
        by
        stockholders.
  On
        June
        18, 2004, Lee Kasper was granted an option to purchase 2,000,000 shares of
        common stock at a price of $0.385 per share, 110% of the fair market value
        on
        the date of grant. The term of the option is five years. Mr. Kasper had the
        right to purchase 1,000,000 shares if the Company earns at least $2,000,000
        in
        any calendar quarter during the 2004 fiscal year. Mr. Kasper’s right to purchase
        an additional 500,000 shares will vest if the Company earns at least $5,000,000
        in revenues during the 2004 fiscal year. The right to purchase 500,000 shares
        will vest if the Company successfully produces at least two major music concerts
        during the 2004 fiscal year. A major music concert is defined as a concert
        having a production budget that is no less that $250,000. The Company has
        successfully produced two major music concerts during the 2004 fiscal year.
        As
        of December 31, 2004, the right to purchase 1,500,000 of those warrants
        lapsed.
  On
        June
        18, 2004, Joseph Giarmo was granted an option to purchase 300,000 shares
        of
        common stock at a price of $0.35 per share, the fair market value on the
        date of
        grant. The term of the option is ten years. The right to purchase 150,000
        shares
        vested immediately, in recognition of Mr. Giarmo’s efforts in filming our first
        music concert. Mr. Giarmo was granted the right to purchase 50,000 shares
        if the
        Company earned at least $2,000,000 in any calendar quarter during the 2004
        fiscal year. Mr. Giarmo’s right to purchase an additional 50,000 shares was to
        vest if the Company earned at least $5,000,000 in revenues during the 2004
        fiscal year. The right to purchase 50,000 shares was to vest if the Company
        successfully produced at least two major music concerts during the 2004 fiscal
        year. A major music concert is defined as a concert having a production budget
        that is no less that $250,000. The Company successfully produced two major
        music
        concerts during the 2004 fiscal year. As of December 31, 2004, the right
        to
        purchase 100,000 of these warrants lapsed.
  
 F-17
 **NUTECH
              DIGITAL, INC.**
 **NOTES
              TO FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
              31, 2006**
   NOTE
        17ADDITIONAL
        STOCK OPTIONS (CONTINUED)
 On
        June
        18, 2004, Yegia Eli Aramyan was granted an option to purchase 100,000 shares
        of
        common stock at a price of $0.35 per share, the fair market value on the
        date of
        grant. The term of the option is ten years. The right to purchase 25,000
        shares
        vest immediately, in recognition of Mr. Aramyan’s past service to the Company.
        The right to purchase the remaining 75,000 shares vests over a three year
        period, 25,000 shares per year, on the anniversary date of the date of
        grant.
  On
        September 1, 2004, Joseph Giarmo was granted an option to purchase 1,000,000
        shares of common stock at a price of $0.26 per share, the fair market value
        on
        the date of grant. The term of the option is ten years. The right to purchase
        500,000 shares vested on the date of grant while the right to purchase the
        remaining 500,000 shares vested on October 1, 2004.
  On
        September 1, 2004, Jay Hergott was granted an option to purchase 40,000 shares
        of common stock at a price of $0.26 per share, the fair market value on the
        date
        of grant. The term of the option is ten years. The option vested
        immediately.
  On
        September 1, 2005, Lee Kasper was granted an option to purchase 6,000,000
        shares
        of common stock at a price of $0.121 per share, 110% of the fair market value
        on
        the date of grant as an incentive to execute an Employment Agreement with
        the
        Company. The term of the option is five years. The option vested immediately.
  On
        July
        7, 2006, the exercise price for the 7,840,000 additional options that were
        previously issued outside of the NuTech Digital, Inc. 2001 Equity Incentive
        Plan, were amended to a value of $0.01 per option granted.
  **NOTE
        18**  **COMMON
        STOCK PURCHASE WARRANTS**
  On
        February 24, 2004, the Company issued warrants to acquire up to 12,500,000
        shares of common stock at the exercise price of $0.75 in agreement with a
        private offering on the same date. The warrants expire on February 24, 2014
        and
        are fully vested.
  On
        March
        17, 2005, the Company issued a warrant to acquire up to 3,000,000 shares
        of
        common stock at an exercise price of $0.14 to the Company’s President, Lee
        Kasper. On April 26, 2005, the warrant was cancelled by mutual agreement
        of the
        Company and Mr. Kasper.
  On
        April
        25, 2005, the Company issued a warrant to acquire up to 300,000 shares of
        common
        stock at an exercise price of $0.65 per share for the first 100,000 shares,
        $0.85 per share for the second 100,000 shares and $1.00 per share for the
        remaining 100,000 shares, to Redwood Consultants, LLC for consulting services
        rendered during the second quarter of 2005. The warrant expires April 25,
        2007
        and is fully vested and exercisable. The Company estimated the fair value
        of the
        warrants at the grant date by using the Black-Scholes option pricing model
        based
        on the following assumptions; risk free interest rate of 4.34%, life of 2
        years,
        volatility of 136% and dividend yield of 0. Accordingly, the Company recorded
        an
        expense in the amount of $11,700 for non-cash compensation during the year
        ended
        December 31, 2005.
  The
        following table summarizes information about fixed stock warrants outstanding
        at
        December 31, 2006:
  
  
 F-18
 **NUTECH
              DIGITAL, INC.**
 **NOTES
              TO FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
              31, 2006**
  NOTE
        18COMMON
        STOCK PURCHASE WARRANTS (CONTINUED)
   **Date**
              
              **Number
                  of Shares**
              
              **Term**
              
              **Exercise
                  Price**February
                  24, 2004
              
              
              12,500,000
              
              
              10
                  years
              
              $
              0.75April
                  25, 2005
              
              
              100,000
              
              
              2
                  years
              
              $
              0.65April
                  25, 2005
              
              
              100,000
              
              
              2
                  years
              
              $
              0.85April
                  25, 2005
              
              
              100,000
              
              
              2
                  years
              
              $
              1.0012,800,000
 
  NOTE
        19COMMITMENTS
        AND CONTINGENCIES
  *L&M
        Optical Disk West, LLC*
  On
        August
        1, 2005, the Company entered into an Exclusive Replication Services Agreement
        with L&M Optical Disk West, LLC, (“L&M”), whereby L&M is the
        Company’s exclusive provider of replication and packaging services. The
        agreement has a term of two years and calls for payment in accordance with
        L&M’s regular fee schedule.
   *Employment
        Agreement*
  On
        September 1, 2005, the Company’s Board of Directors approved an Employment
        Agreement for Lee Kasper, the Company’s President. The term of the Employment
        Agreement is seven years. After the initial term, unless either party gives
        180
        days notice to the other that it wishes to terminate the Employment Agreement,
        the term will be renewed for successive one year periods.
  Mr.
        Kasper received a base salary of $600,000 during 2005, and $300,000 during
        2006.
        Mr. Kasper will also be entitled to receive an annual performance bonus based
        on
        standards and goals established by the Board of Directors and Mr. Kasper
        within
        90 days of the beginning of each fiscal year. Mr. Kasper is also entitled
        to
        participate in any benefit programs established for the Company’s employees. In
        2006, Mr. Kasper’s salary was reduced to a base of $300,000.
  The
        Company may terminate Mr. Kasper’s employment for cause, as defined in the
        Employment Agreement. Irrespective of the reason for Mr. Kasper’s termination,
        the Company must immediately prepay in full, irrespective of the terms of
        the
        promissory notes or other agreements evidencing the indebtedness, any loans
        made
        by Mr. Kasper to the Company or personally guaranteed by Mr. Kasper on behalf
        of
        the Company.
  Mr.
        Kasper was also granted certain options to purchase shares of the Company’s
        common stock. See Note 17.
    F-19
   **NOTE
        20**  **2003
        CONSULTANT STOCK PLAN**
  In
        July
        2003, the Company adopted the 2003 Consultant Stock Plan and reserved 5,000,000
        shares of common stock for issuance to consultants for the Company. The purpose
        of the plan is to advance the interests of the Company by helping the Company
        obtain and retain the services of persons providing consulting service upon
        whose judgment, initiative, efforts and/or service the Company is substantially
        dependent, by offering to or providing those persons with incentives or
        inducements affording such persons an opportunity to become owners of common
        stock in the Company. The plan term is for ten years and the shares are issued
        at the fair market value on the date the shares are awarded.
  The
        following is a summary of the shares covered by the plan as of December 31,
        2006:
  Total
                  shares authorized
              
              
              5,000,000Shares
                  issued during the year ended December 31, 2003 ($0.12 - $1.20 per
                  share)
              
              
              1,315,000Shares
                  issued during the year ended December 31, 2004 ($0.24 - $1.20 per
                  share)
              
              
              1,082,223Shares
                  issued during the year ended December 31, 2005 ($0.09 - $0.22 per
                  share)
              
              
              500,000Shares
                  issued during the year ended December 31, 2006
              
              
              -Shares
                  available for future issuance
              
              
              2,102,777
 
 **NOTE
        21**  **BUSINESS
        SEGMENTS**
  FASB
        Statement No.131 “Disclosures About Segments of an Enterprise and Related
        Information,” requires companies to provide certain information about their
        operating segments. The Company has two operating segments: revenues derived
        from purchasing licensing rights to entertainment products and revenue from
        the
        sales derived from product of live concerts.
  Summarized
        financial information concerning the Company’s reportable segments is shown on
        the following table:
   2006
                  
                  **Purchasing**
                    **Licenses
                      And General****Operations**
                  
                  **Production
                      of**
                    **Live
                      Concerts**
                  
                  **Total**Sales,
                      net
                  
                  $
                  918,683
                  
                  $
                  108,748
                  
                  $
                  1,027,431Operating
                      (loss)
                  
                  
                  (
                      1,122,405
                  )
                  
                  (
                      155,994
                  )
                  
                  (
                      1,278,399
                  )Total
                      assets
                  
                  
                  101,124
                  
                  
                  -
                  
                  
                  101,124Depreciation
                      and amortization
                    Capital
                      expenditures
                  
                  
                  52,672
                    -
                  
                  
                  112,430
                    -
                  
                  
                  165,102
                    -
 2005
                
                **Purchasing**
                  **Licenses
                    And General**
                  ******Operations**
                
                **Production
                    of**
                  **Live
                    Concerts**
                
                **Total**Sales,
                    net
                
                $
                1,923,919
                
                $
                860,295
                
                $
                2,784,214Operating
                    (loss)
                
                
                (
                    1,748,575
                )
                
                (
                    443,866
                )
                
                (
                    2,192,441
                )Total
                    assets
                
                
                2,462,043
                
                
                654,328
                
                
                3,116,371Depreciation
                    and amortization
                  Capital
                    expenditures
                
                
                372,680
                  55,480
                
                
                447,652
                  -
                
                
                820,332
                  55,480
  F-20
   **NOTE
        22**  **RECOVERY
        OF SECURITY DEPOSIT**
  On
        August
        29, 2006, the Company received $50,000 from a service company that had
        previously been expensed in a prior year.
  **NOTE
        23**  **SUBSEQUENT
        EVENTS**
  On
        January 10, 2007, 2,000,000 shares of common stock, with an aggregate fair
        value
        of $24,000 were issued to an officer of the Company for services
        rendered.
  On
        January 15, 2007, the Company entered into a Joint Venture agreement with
        Coalition Media Group, in which it is anticipated that through the Joint
        Venture, they will form a new separate division of the Company, which will
        be
        funded by Coalition. Under the terms of the agreement, Mr. Troy Carter will
        become the Chief Executive Officer of this new company and will develop
        programming for marketing and media distribution channels along with NuTech.
        In
        exchange for these services, NuTech issued 15,000,000 shares to Mr.
        Carter.
  **NOTE
        24**  **MANAGEMENT
        PLANS**
  Management’s
        plans to eliminate the going concern situation include, but are not limited
        to:
  a.
              Eliminate
                  public relations expenses for the immediate
                  future.
  b.
              Continue
                  negotiating with major artists for the exclusive rights to produce
                  and
                  distribute their live music concerts
                  worldwide.
  c.
              Enter
                  into a Joint Venture agreement to provide additional cash flows
                  (see note
                  24).


F-21






**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL DISCLOSURE**





Farber
      & Hass LLP, the independent accountant who had been engaged by us as the
      principal accountant to audit our consolidated financial statements, was
      dismissed effective April 14, 2005. On April 14, 2005, our Board of Directors
      approved the engagement of Weaver & Martin, LLC as our new principal
      independent accountant to audit our consolidated financial statements for the
      year ending December 31, 2005.





The
      decision to change our independent accountant from Farber & Hass LLP to
      Weaver & Martin, LLC was approved by our Board of Directors.





The
      report of Farber & Hass LLP on our financial statements as of and for the
      years ended December 31, 2004 and December 31, 2003 did not contain an adverse
      opinion, or a disclaimer of opinion, however the report issued on the financial
      statements for the year ended December 31, 2004 was modified as to our ability
      to continue as a going concern. During the periods ended December 31, 2003
      and
      December 31, 2004 and the interim period from January 1, 2005 through the date
      of dismissal, we did not have any disagreements with Farber & Hass LLP on
      any matter of accounting principles or practices, financial statement
      disclosure, or auditing scope or procedure, which disagreements, if not resolved
      to the satisfaction of Farber & Hass LLP, would have caused it to make a
      reference to the subject matter of the disagreements in connection with its
      reports.





Prior
      to
      engaging Weaver & Martin, LLC, we had not consulted Weaver & Martin, LLC
      regarding the application of accounting principles to a specified transaction,
      completed or proposed, or the type of audit opinion that might be rendered
      on
      our financial statements.





**ITEM
      8A. CONTROLS AND PROCEDURES**





(a)
      Evaluation of disclosure controls and procedures. Our Chief Executive Officer
      and Principal Financial Officer, after evaluating the effectiveness of our
      "disclosure controls and procedures" (as defined in the Securities Exchange
      Act
      of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
      by
      this Annual Report on Form 10-KSB (the "Evaluation Date"), has concluded that
      as
      of the Evaluation Date, our disclosure controls and procedures are effective
      to
      provide reasonable assurance that information we are required to disclose in
      reports that we file or submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the Securities
      and
      Exchange Commission rules and forms, and that such information is accumulated
      and communicated to our management, including our Chief Executive Officer and
      Chief Accounting Officer, as appropriate, to allow timely decisions regarding
      required disclosure.





(b)
      Changes in internal control over financial reporting. There were no changes
      in
      the Company's internal control over financial reporting during the fourth fiscal
      quarter that materially affected, or are reasonably likely to materially affect,
      the Company's internal control over financial reporting.






**ITEM
        8B. OTHER INFORMATION.**
 
 None.





-31-





**PART
      III**





**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT**





**DIRECTORS
      AND OFFICERS:**








The
      following table sets forth certain information regarding our Directors and
      executive officers.





**Name**
            **Age**
            **Position**Lee
                Kasper
            61
            Chief
                Executive Officer, President,Chief
                Financial Officer, DirectorJoseph
                Giarmo
            38
            Vice
                President, DirectorYegia
                Eli Aramyan
            54
            Accountant,
                Director





There
      are
      no family relationships among any of the Directors or officers of the
      Company.





**Business
      Experience:**





**Lee
      Kasper**


*President,
      Chief Executive Officer, Chief Financial Officer, founder and
      Director*





Mr.
      Kasper began his career in the entertainment industry in 1982 by co-founding
      Image Entertainment, a publicly traded company. Image Entertainment distributes
      video programming on laserdisc and DVD. During his years with Image
      Entertainment, Mr. Kasper was a Director as well as the Executive Vice
      President. He was responsible for business development as well as for licensing,
      manufacturing, and product fulfillment. His major accomplishments while he
      was
      at Image Entertainment included building a team of international manufacturers,
      acting as primary negotiator of licensing agreements with over one hundred
      studios, developing sales relationships with major retailers and raising over
      $6,000,000 from Mitsubishi and Mitsui. When Mr. Kasper left Image Entertainment
      in 1993, its annual sales had grown to $60,000,000. Mr. Kasper left Image
      Entertainment to found NuTech Entertainment, Inc., a producer of karaoke music
      software, which is now included in the operations of NuTech. In 1997 Mr. Kasper
      formed NuTech for the purpose of licensing, manufacturing and distributing DVD
      products worldwide. Mr. Kasper has been a Director since our
      inception.





**Joseph
      Giarmo**


*Vice-President
      and Director*





Mr.
      Giarmo joined us as Vice President on December 1, 1998. Since that time, he
      has
      developed numerous DVD product lines, award nominated productions and e-commerce
      Web sites. Mr. Giarmo is in charge of production of our products, and has been
      personally responsible for the production of our anime products. We received
      the
      AVN 2002
      Award for best DVD menus primarily as a result of Mr. Giarmo's efforts. Prior
      to
      joining NuTech, Mr. Giarmo was employed by Metro Global Media, Inc. ("Metro").
      Mr. Giarmo joined Metro in September 1995 as a CD-Rom Specialist, creating
      interactive games and developing products based on Mac/PC formats. In 1996
      Mr.
      Giarmo was promoted to Managing Director after launching and marketing various
      award winning product lines. In 1997 Mr. Giarmo was promoted to Vice President,
      Product Development. During his last year with Metro, Mr. Giarmo created the
      first true perspective multi-angle DVD. From 1988 until he joined Metro, Mr.
      Giarmo was employed by the company he founded, Compu-Doc, a computer service
      company that provided services primarily to military and educational facilities.
      Working closely with state educational facilities, Mr. Giarmo became a licensed
      authorized service center for IBM, HP, Digital and Zenith data systems, among
      others. After becoming one of the largest service centers for Zenith data
      systems, and earning Factory Service Status, Compu-Doc eventually became the
      sole provider of all service for the tri-state military installations. Compu-Doc
      opened a retail division in 1992, the focus of which was custom-built, high
      performance computer systems. Mr. Giarmo has been a Director of NuTech since
      May
      2001.







-32-





**Yegia
      Eli Aramyan.**


*Accountant
      and Director*





Mr.
      Aramyan joined NuTech in 2001 as an accountant, responsible for maintaining
      our
      general ledger, preparing financial statements, undertaking internal auditing
      and working with our independent auditors on our financial statement
      preparation. Since approximately January 2007, Mr. Aramyan has been employed
      by
      Steno Enterprise. As a result of his alternate employment, Mr. Aramyan spends
      approximately ten (10) hours per week on Company matters. Prior to joining
      NuTech, Mr. Aramyan worked for 20 years as Group Controller and Accounting
      Manager for various companies in an investment group, including Morfi
      International and Sobleski USA. His responsibilities included budgeting,
      control, tax, audit, consolidations and general ledger and supporting work.
      On a
      consulting basis, Mr. Aramyan has worked for a number of high technology firms,
      performing accounting and implementing information systems. Mr. Aramyan earned
      his Bachelor of Arts and Masters of Arts degrees in Economics and Finance from
      the University of Armenia. Mr. Aramyan became a Director in June
      2002.





We
      do not
      have an audit committee and no individual on our Board of Directors possesses
      all of the attributes of an audit committee financial expert and no one on
      our
      Board of Directors is deemed to be an audit committee financial expert. In
      forming our Board of Directors, we sought out individuals who would be able
      to
      guide our operations based on their business experience, both past and present,
      or their education. Our business model is not complex and our accounting issues
      are straightforward. Responsibility for our operations is centralized within
      management, which is comprised of three people. We rely on the assistance of
      others, such as our accountant, to help us with the preparation of our financial
      information. We recognize that having a person who possesses all of the
      attributes of an audit committee financial expert would be a valuable addition
      to our Board of Directors, however, we are not, at this time, able to compensate
      such a person therefore, we may find it difficult to attract such a
      candidate.







-33-







There
      have been no material changes to the procedures by which shareholders may
      recommend nominees to our Board of Directors, as described in our last proxy
      statement.





**Term
      of Office**





The
      Directors named above will serve until the next annual meeting of our
      shareholders. Absent an employment agreement, officers hold their positions
      at
      the pleasure of the Board of Directors.





**Code
      of Ethics**





On
      February 13, 2004 our Board of Directors adopted a Code of Business Conduct
      and
      Ethics that applies to all of our officers, Directors and employees. We will
      provide to any person, upon request and without charge, a copy of our Code
      of
      Ethics. Requests should be in writing and addressed to Mr. Lee Kasper, c/o
      NuTech Digital, Inc., 7900 Gloria Avenue, Van Nuys, California
      91406.





**COMPENSATION
      DISCUSSION AND ANALYSIS**





**Director
      Compensation**





Other
      than Mr. Hergott, our former Director, who previously drew a salary from us
      for
      his services to the Board of Directors, our Directors do not receive any
      separate consideration from the Company other than the compensation (if any),
      that they are paid as the Company’s executives for their services on the Board
      of Directors. The Board of Directors reserves the right in the future to award
      the members of the Board of Directors cash or stock based consideration for
      their services to the Company, which awards, if granted shall be in the sole
      determination of the Board of Directors. Mr. Hergott accrued $1,538 of
      consideration during the year ended December 31, 2006, in connection with his
      service to the Board of Directors; however, Mr. Hergott has since resigned
      from
      the Company.





**Executive
      Compensation Philosophy**





Our
      Board
      of Directors determines the compensation provided to our executive officers
      in
      their sole determination. Our executive compensation program is designed to
      attract and retain talented executives to meet our short-term and long-term
      business objectives. In doing so, we attempt to align our executives’ interests
      with the interests of our shareholders by providing an adequate compensation
      package to such executives. This compensation package may include a base salary,
      funding permitting, which we believe is competitive with other companies of
      our
      relative size. In addition, we have previously granted certain options to our
      executive and non-executive employees as part of our compensation package,
      and
      our Board of Directors reserves the right to award incentive bonuses which
      are
      linked to our performance, as well as to the individual executive officer’s
      performance in the future. This package may also include long-term, stock based
      compensation to certain executives which is intended to align the performance
      of
      our executives with our long-term business strategies. As we have had
      significant working capital deficiencies during the past two fiscal years,
      our
      executive officers have agreed to keep their salaries and compensation packages
      to a minimum to conserve our working capital for business operations and current
      liabilities.







-34-










**Compliance
      With Section 16(a) of Exchange Act**





Section
      16(a) of the Securities Exchange Act requires our Directors, executive officers
      and persons who own more than 10% of our common stock to file reports of
      ownership and changes in ownership of our common stock with the Securities
      and
      Exchange Commission. Directors, executive officers and persons who own more
      than
      10% of our common stock are required by Securities and Exchange Commission
      regulations to furnish to us copies of all Section 16(a) forms they
      file.





To
      our
      knowledge, based solely upon review of the copies of such reports received
      or
      written representations from the reporting persons, we believe that during
      our
      2006 fiscal year our Directors, executive officers and persons who own more
      than
      10% of our common stock did not comply with all Section 16(a) filing
      requirements. These deficiencies include, but are not limited to the fact that
      Mr. Aramyan and Giarmo failed to file Form 4 filings in connection with the
      issuances of shares they received in December 2006 and Mr. Kasper failed to
      file
      a Form 4 in connection with his grant of shares in January 2007.





**Employment
      Agreements**





On
      September 1, 2005 our Board of Directors approved an Employment Agreement for
      Lee Kasper. The term of the Employment Agreement is seven years. After the
      initial term, unless either party gives 180 days notice to the other that it
      wishes to terminate the Employment Agreement, the term will be renewed for
      successive one year periods.





Mr.
      Kasper will receive a base salary of $300,000 per year. Mr. Kasper will also
      be
      entitled to receive an annual performance bonus based on standards and goals
      established by the Board of Directors and Mr. Kasper within 90 days of the
      beginning of each fiscal year. Mr. Kasper is also entitled to participate in
      any
      benefit programs established for our employees.





We
      may
      terminate Mr. Kasper's employment for cause, including, his conviction for
      embezzlement, fraud, larceny or theft from the Company, his conviction for
      any
      felony or misdemeanor involving moral turpitude, deceit, dishonesty or fraud,
      any material misconduct or violation of the Company’s policies which continues
      for 90 days after written notice of such conduct, or a material breach of any
      of
      the covenants he agreed to in the employment agreement. If Mr. Kasper's
      employment were to be terminated for cause, he would not receive severance
      benefits. We may also terminate Mr. Kasper's employment by giving him 90 days
      written notice of termination or if he becomes disabled. Mr. Kasper's employment
      will be terminated as a result of his death. If Mr. Kasper's employment were
      to
      be terminated for any of these reasons (other than for cause), Mr. Kasper would
      be entitled to the following severance benefits:





o  payment,
      in a lump sum, of his base salary for the remainder of the term;







-35-







o  three
      years' base salary;





o  any
      performance bonus to which he may be entitled; and





o  an
      amount
      equal to the average of any discretionary bonus he received during the past
      three years.





Irrespective
      of the reason for Mr. Kasper's termination, we must immediately repay in full,
      irrespective of the terms of the promissory notes or other agreements evidencing
      the indebtedness, any loans made by Mr. Kasper to us or personally guaranteed
      by
      Mr. Kasper on behalf of us in the event of the termination of his employment
      from the Company.
































[Remainder
      of page left intentionally blank.]








-36-






**ITEM
      10. EXECUTIVE COMPENSATION**





The
      following table sets forth information as to the compensation paid or accrued
      to
      our officers and Directors, for the years ended December 31, 2006, December
      31,
      2005 and December 31, 2004:








**SUMMARY
      COMPENSATION TABLE**


**Securities****Underlying**
              
              
              
              **All Other**
              
              **Total****Name
                  and Principal**
              
              
              
              **Salary**
              
              **Bonus**
              
              **Options/**
              
              **Stock**
              
              **Compensation**
              
              **Compensation****Position**
              
              **Year**
              
              **($)**
              
              **($)**
              
              **SARs(1)**
              
              **Awards**
              
              **($)**
              
              **($)****Lee
                  Kasper**
              
              
              2006
              
              $
              213,461
                  (1)
              
              
              --
              
              
              --
              
              
              (2)
              
              
              *
              
              $
              213,461Director, CEO,
              
              
              2005
              
              $
              288,462
              
              
              --
              
              $
              297,600(3)
              
              
              --
              
              
              --
              
              $
              586,062President, CFO
              
              
              2004
              
              $
              497,308
                  (1)
                (4)
              
              
              --
              
              $
              972,300(5)
              
              
              --
              
              
              --
              
              $
              1,469,608**Joseph
                  Giarmo**
              
              
              2006
              
              $
              38,177
                  (6)
              
              
              **--**
              
              
              **--**
              
              $
              7,500
                  (7)
              
              
              --
              
              $
              45,677Director
              
              
              2005
              
              $
              137,500
              
              
              --
              
              $
              7,440
                  (8)
              
              
              --
              
              
              --
              
              $
              144,940Vice President
              
              
              2004
              
              $
              136,779
              
              
              --
              
              $
              383,600
                  (9)
              
              
              --
              
              
              --
              
              $
              520,379Secretary**Yegia
                  Eli Aramyan**
              
              
              2006
              
              $
              14,000
                  (10)
              
              
              --
              
              
              --
              
              $
              7,500
                  (11)
              
              
              --
              
              $
              8,900Director,
                  Accountant
              
              
              2005
              
              $
              66,000
              
              
              --
              
              $
              22,320
                  (12)
              
              
              --
              
              
              --
              
              $
              88,3202004
              
              $
              65,308
              
              $
              5,000
              
              $
              36,590
                  (13)
              
              
              --
              
              
              --
              
              $
              106,898**Jay S. Hergott**
              
              
              2006
              
              $
              1,538
                  (14)
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              $
              1,538Former Director
              
              
              2005
              
              $
              10,000
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              $
              10,0002004
              
              $
              10,000
              
              
              --
              
              $
              10,700
                  (15)
              
              $
              37,450
                  (16)
              
              
              --
              
              $
              51,150





----------





(1)
      All
      but $1,000 of the amount Mr. Kasper was due in salary for the year ended
      December 31, 2006, was accrued. Additionally, $56,227 of Mr. Kasper’s salary for
      the year ended December 31, 2004 was accrued. As a result, the total amount
      of
      accrued salary owed to Mr. Kasper as of December 31, 2006, was approximately
      $268,688.





(2)
      Mr.
      Kasper was issued 2,000,000 shares of common stock in January 2007, in
      consideration for payroll accrued in 2006 and the fact that Mr. Kasper has
      not
      demanded repayment of any of his outstanding loans to the Company, which shares
      were valued at approximately $30,000. Because these shares were issued in
      consideration for accrued payroll, they have not been given any value in the
      table above.





(3)
      On
      September 1, 2005, in conjunction with the execution of his employment
      agreement, we granted an option to Mr. Kasper for the purchase of 6,000,000
      shares of our common stock at an exercise price of $0.121 per share, which
      exercise price has since been amended to $0.01 per share. The option has a
      term
      of five years. On that date we also granted Mr. Kasper a performance-based
      option for the purchase of 2,000,000 shares of common stock. This option has
      expired.








-37-





(4)
      Of
      the amount shown as compensation paid to Mr. Kasper in 2004, the payment of
      $56,226 has been accrued but unpaid.





(5)
      Represents the value of 500,000 options granted to Mr. Kasper pursuant to the
      Company’s 2001 Stock Option Plan and 2,500,000 options granted to Mr. Hergott
      separate from the 2001 Stock Option Plan, of which 1,500,000 options were
      subsequently cancelled.





(6)
      All
      but $7,000 of the amount Mr. Giarmo was due in salary for the year ended
      December 31, 2006, was accrued. As a result, the total amount of accrued salary
      owed to Mr. Giarmo as of December 31, 2006 was $38,179.





(7)
      Represents the value of 500,000 shares of common stock issued to Mr. Giarmo
      on
      December 15, 2006, in consideration for services rendered during
      2006.





(8)
      Represents the value of 600,000 options granted to Mr. Giarmo separate from
      the
      Company’s 2001 Stock Option Plan.





(9)
      Represents the value of 100,000 options granted to Mr. Giarmo pursuant to the
      Company’s 2001 Stock Option Plan and 1,300,000 options granted to Mr. Giarmo
      separate from the 2001 Stock Option Plan.





(10)
      All
      but $7,000 of the amount Mr. Aramyan was due in salary for the year ended
      December 31, 2006, was accrued. As a result, the total amount of accrued salary
      owed to Mr. Aramyan as of December 31, 2006 was $14,000.





(11)
      Represents the value of 500,000 shares of common stock issued to Mr. Aramyan
      on
      December 15, 2006, in consideration for services rendered during
      2006.





(12)
      Represents the value of 600,000 options granted to Mr. Aramyan, which options
      were not granted pursuant to the Company’s 2001 Stock Option Plan.





(13)
      Represents the value of 50,000 options granted to Mr. Aramyan pursuant to the
      Company’s 2001 Stock Option Plan and 100,000 options granted to Mr. Aramyan
      separate from the 2001 Stock Option Plan.





(14)
      The
      entire amount of Mr. Hergott’s salary reported above for the year ended December
      31, 2006, was accrued. As a result, the total amount of accrued salary owed
      to
      Mr. Hergott as of December 31, 2006 was $1,538.





(15)
      Represents the value of 30,000 options granted to Mr. Hergott pursuant to the
      Company’s 2001 Stock Option Plan and 40,000 options granted to Mr. Hergott
      separate from the 2001 Stock Option Plan.





(16)
      Represents the value, on January 28, 2004, of 35,000 shares of common stock
      issued to Mr. Hergott.







-38-








*
      Does
      not include approximately $2,000 per month which Mr. Kasper is paid by us for
      use of a portion of his home as an office for the Company.





Other
      than Lee Kasper, with whom we have an employment agreement, we do not have
      a
      long term incentive plan or arrangement of compensation with any individual
      in
      the group of officers and Directors.





**Outstanding
      Options Held by Officers and Directors**


**As
      of December 31, 2006**





**Original**
            **Amended****Original
                Date**
            **Expiration**
            **Exercise**
            **Exercise****Name**
            **Options**
            **Issued**
            **Date**
            **Price**
            **Price
                (2)**Yegia
                Aramyan
            100,000
                (1)
            5/30/2003
            5/30/2013
            $0.16
            $0.01Joseph
                Gairmo
            300,000
                (1)
            5/30/2003
            5/30/2013
            $0.16
            $0.01Jay
                Hergott
            25,000
                (1)
            5/30/2003
            5/30/2013
            $0.16
            $0.01Lee
                Kasper
            700,000
                (1)
            5/30/2003
            5/30/2008
            $0.16
            $0.01Yegia
                Aramyan
            100,000
                (1)
            10/7/2003
            10/7/2013
            $0.50
            $0.01Joseph
                Giarmo
            50,000
                (1)
            10/7/2003
            10/7/2013
            $0.50
            $0.01Joseph
                Giarmo
            100,000
                (1)
            1/9/2004
            1/9/2014
            $0.60
            $0.01Lee
                Kasper
            500,000
                (1)
            1/9/2004
            1/9/2009
            $0.60
            $0.01Yegia
                Eli Aramyan
            100,000
            6/18/2004
            6/18/2014
            $0.40
            $0.01Joseph
                Giarmo
            200,000
            6/18/2004
            6/18/2014
            $0.40
            $0.01Lee
                Kasper
            500,000
            6/18/2004
            6/18/2009
            $0.40
            $0.01Lee
                Kasper
            2,000,000
            6/18/2004
            6/18/2009
            $0.40
            $0.01Joseph
                Giarmo
            1,000,000
            9/1/2004
            9/1/2014
            $0.26
            $0.01Jay
                Hergott
            40,000
            9/1/2004
            9/1/2014
            $0.26
            $0.01Yegia
                Aramyan
            50,000
                (1)
            12/6/2004
            12/6/2009
            $0.27
            $0.01Jay
                Hergott
            30,000
                (1)
            12/6/2004
            12/6/2008
            $0.27
            $0.01Yegia
                Eli Aramyan
            300,000
            9/1/2005
            9/1/2015
            $0.11
            $0.01Lee
                Kasper
            6,000,000
            9/1/2005
            9/1/2010
            $0.11
            $0.01Yegia
                Eli Aramyan
            300,000
            12/20/2005
            12/20/2015
            $0.06
            $0.01Joseph
                Giarmo
            300,000
            12/20/2005
            12/20/2015
            $0.06
            $0.01(1)
                Originally granted pursuant to the Company's 2001 Stock Option
                Plan.(2)
                On July 7, 2006, our Board of Directors voted to amend the previous
                stock
                option awards granted to our officers and
                Directors.








**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**





The
      following table sets forth, as of March 30, 2007, information regarding the
      beneficial ownership of our common stock with respect to each of our executive
      officers, each of our Directors, each person known by us to own beneficially
      more than 5% of the common stock, and all of our Directors and executive
      officers as a group. Beneficial ownership is determined under the rules of
      the
      Securities and Exchange Commission and generally includes voting or investment
      power over securities. The term "executive officer" is defined as the Chief
      Executive Officer/President, Chief Financial Officer and the Vice-President.
      Each individual or entity named has sole investment and voting power with
      respect to the shares of common stock indicated as beneficially owned by them,
      subject to community property laws, where applicable, except where otherwise
      noted.







-39-





Shares
      of
      common stock subject to options or warrants that are currently exercisable
      or
      exercisable within 60 days of March 30, 2007, are considered outstanding and
      beneficially owned by the person holding the options or warrants for the purpose
      of computing the percentage ownership of that person but are not treated as
      outstanding for the purpose of computing the percentage ownership of any other
      person.





**Name
                and Address**
              **(1)**
            
            **Number
                of Shares of**
              **Common
                Stock**
              **Beneficially
                Owned**
            
            **Percentage
                of**
              **Ownership****Lee
                Kasper**
            
            17,701,178
            (2)
            41.8%
            (6)Chief
                Executive Officer, Chief Financial Officer and Director**Joseph
                Giarmo**
            
            2,450,000
            (3)
            6.8%
            (6)Vice
                President and Director**Yegia
                Eli Aramyan**
            
            1,450,000
            (4)
            4.1%
            (7)Director**Jay
                S. Hergott**
            
            157,500
            (5)
            0.5%
            (8)Former
                Director (X)4140
                Ponchartrain Dr.New
                Buffalo, Michigan, 49117**All
                current Officers**
              **and
                Directors (3**
              **Persons)**
            
            20,601,178
            (2)(3)(4)
            63.2%
            (9)





----------





(1)
      Unless otherwise indicated, the address of the persons named in this column
      is
      NuTech Digital, Inc., 3841 Hayvenhurst Dr., Encino, California 91436.





(2)
      Includes 200,000 shares of common stock owned by Mr. Kasper’s children, which
      shares he is deemed to beneficially own. Also includes 1,200,000 options to
      purchase shares of our common stock held by Mr. Kasper which were issued
      pursuant to our 2001 Stock Option Plan and an additional 7,000,000 options
      to
      purchase shares of common stock held by Mr. Kasper, which were issued outside
      of
      our 2001 Stock Option Plan. All options have an exercise price of $0.01 per
      share.







-40-










(3)
      Includes 450,000 options to purchase shares of common stock held by Mr. Giarmo
      which were issued pursuant to our 2001 Option Plan and an additional 1,500,000
      options to purchase shares of common stock held by Mr. Giarmo, which were
      granted outside of our 2001 Stock Option Plan. All options have an exercise
      price of $0.01 per share.





(4)
      Includes 250,000 options to purchase shares of common stock held by Mr. Aramyan
      which were issued pursuant to our 2001 Option Plan and an additional 7000,000
      options to purchase shares of common stock held by Mr. Aramyan, which were
      granted outside of our 2001 Stock Option Plan. All options have an exercise
      price of $0.01 per share.





(5)
      Includes 55,000 options to purchase shares of common stock held by Mr. Hergott
      which were issued pursuant to our 2001 Option Plan and an additional 40,000
      options to purchase shares of common stock which were granted outside of our
      2001 Stock Option Plan. Also includes 62,5000 shares of common stock
      beneficially owned by Mr. Hergott, which shares are held in the name of the
      Jay
      S. Hergott Revocable Trust. All options have an exercise price of $0.01 per
      share.





(6)
      Based
      on 42,372,494 shares of common stock outstanding assuming the exercise of all
      options held by Mr. Kasper.





(7)
      Based
      on 36,122,494 shares of common stock outstanding assuming the exercise of all
      options held by Mr. Giarmo.





(8)
      Based
      on 35,122,494 shares of common stock outstanding assuming the exercise of all
      options held by Mr. Aramyan.





(9)
      Based
      on 34,267,494 shares of common stock outstanding assuming the exercise of all
      options held by Mr. Hergott.





(10)
      Based on 45,367,494 shares of common stock outstanding assuming the exercise
      of
      all options held by the Company’s currently officers and Directors.














-41-







**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS**





In
      order
      to fund working capital requirements, we have from time to time borrowed money
      from persons who are executive officers, Directors and/or beneficial holders
      of
      5% or more of our common stock, or their affiliates. Our unpaid principal
      indebtedness to these persons is set forth below.





In
      July
      2000, Mr. Kasper provided both his personal residence and his personal guaranty
      as security for a loan in the amount of $900,000 that we borrowed through the
      Small Business Administration. We make monthly payments of principal and
      interest in the amount of $6,414. This loan is described in greater detail
      above
      under “Liquidity and Capital Resources.”





On
      May
      15, 2001, our Board of Directors adopted and our shareholders approved the
      NuTech Digital, Inc. 2001 Equity Incentive Plan (the "Equity Incentive Plan").
      The Equity Incentive Plan has a term of 10 years and is administered by our
      Board of Directors. Pursuant to the Equity Incentive Plan, the Board of
      Directors may grant to eligible persons, which include employees, officers,
      Directors, consultants and agents, awards of options (which may be qualified
      or
      non-qualified) or common stock. 3,500,000 shares of our common stock were
      originally set aside for grants made under the Equity Incentive Plan. Pursuant
      to the terms of the Equity Incentive Plan, the number of shares available for
      issuance may be increased on the first day of each fiscal year by a number
      that
      will increase the total number of shares reserved to 30% of our issued and
      outstanding common stock. As of December 31, 2006, a total of 12,695,000 shares
      of the common stock included in the Equity Incentive Plan had been reserved
      for
      issuance for awards. Of this amount, 2,190,000 shares have been reserved for
      option grants, and 115,000 of those options have since been cancelled or
      expired, leaving 2,075,000 outstanding options as of December 31, 2006.
      Generally, the option terms extend for a period of between five and 10 years
      from the date of grant, with the exception of options granted to our Chief
      Executive Officer and President, Mr. Lee Kasper, whose options will expire 5
      years from the date of grant. The price for each share of common stock purchased
      pursuant to the options varies. With the exception of the exercise price of
      the
      options granted to Mr. Kasper, which equals 110% of the fair market value of
      our
      common stock on the date of grant, the exercise price per share for the options
      granted is generally the fair market value of our common stock on the date
      of
      grant.





In
      March
      2002, Mr. Kasper also agreed to personally guarantee our bank line of credit
      in
      the amount of $650,000. We breached certain covenants of the loan agreement
      and
      our lender, U.S. Bank, N.A. wanted us to repay the loan. On November 7, 2002,
      U.S. Bank, N.A. agreed to make a loan in the amount of $640,000 to Mr. Lee
      Kasper, who used the proceeds to pay-off our line of credit. The loan to Mr.
      Kasper required 30 monthly payments of $21,333 plus interest at 3% over prime.
      We pledged all of our assets as collateral for repayment of the loan and we
      have
      guaranteed repayment of the loan. This loan is paid in full.





In
      February 2003, Mr. Kasper received a personal loan of $500,000 from Skura
      Intercontinental Trading Company, which is secured by his assets. The interest
      rate of the loan is 3% and the term is 36 months. Mr. Kasper loaned these funds
      to us on terms identical to the terms he received.







-42-










In
      July
      2003, the Company adopted the 2003 Consultant Stock Plan and reserved 5,000,000
      shares of common stock for issuance to consultants for the Company. The purpose
      of the plan is to advance the interests of the Company by helping the Company
      obtain and retain the services of persons providing consulting service upon
      whose judgment, initiative, efforts and/or service the Company is substantially
      dependent, by offering to or providing those persons with incentives or
      inducements affording such persons an opportunity to become owners of common
      stock in the Company. The plan term is for ten years and the shares are issued
      at the fair market value on the date the shares are awarded.




On
      June
      18, 2004, Lee Kasper was granted an option to purchase 2,000,000 shares of
      common stock at a price of $0.385 per share, 110% of the fair market value
      on
      the date of grant. The term of the option is five years. Mr. Kasper had the
      right to purchase 1,000,000 shares if the Company earns at least $2,000,000
      in
      any calendar quarter during the 2004 fiscal year. Mr. Kasper’s right to purchase
      an additional 500,000 shares would have vested if the Company earns at least
      $5,000,000 in revenues during the 2004 fiscal year. The right to purchase
      500,000 shares would vest if the Company successfully produces at least two
      major music concerts during the 2004 fiscal year. A major music concert is
      defined as a concert having a production budget that is no less that $250,000.
      The Company has successfully produced two major music concerts during the 2004
      fiscal year. As of December 31, 2004, the right to purchase 1,500,000 of those
      warrants had lapsed.







On
      June
      18, 2004, Joseph Giarmo was granted an option to purchase 300,000 shares of
      common stock at a price of $0.35 per share, the fair market value on the date
      of
      grant. The term of the option is ten years. The right to purchase 150,000 shares
      vested immediately, in recognition of Mr. Giarmo’s efforts in filming our first
      music concert. Mr. Giarmo was granted the right to purchase 50,000 shares if
      the
      Company earned at least $2,000,000 in any calendar quarter during the 2004
      fiscal year. Mr. Giarmo’s right to purchase an additional 50,000 shares was to
      vest if the Company earned at least $5,000,000 in revenues during the 2004
      fiscal year. The right to purchase 50,000 shares was to vest if the Company
      successfully produced at least two major music concerts during the 2004 fiscal
      year. A major music concert is defined as a concert having a production budget
      that is no less than $250,000. The Company successfully produced two major
      music
      concerts during the 2004 fiscal year. As of December 31, 2004, the right to
      purchase 100,000 of those warrants had lapsed.




On
      June
      18, 2004, Yegia Eli Aramyan was granted an option to purchase 100,000 shares
      of
      common stock at a price of $0.35 per share, the fair market value on the date
      of
      grant. The term of the option was ten years. The right to purchase 25,000 shares
      vest immediately, in recognition of Mr. Aramyan’s past service to the Company.
      The right to purchase the remaining 75,000 shares vests over a three year
      period, 25,000 shares per year, on the anniversary date of the date of
      grant.







-43-





On
      September 1, 2004, Joseph Giarmo was granted an option to purchase 1,000,000
      shares of common stock at a price of $0.26 per share, the fair market value
      on
      the date of grant. The term of the option was ten years. The right to purchase
      500,000 shares vested on the date of grant while the right to purchase the
      remaining 500,000 shares vested on October 1, 2004.


On
      September 1, 2004, Jay Hergott was granted an option to purchase 40,000 shares
      of common stock at a price of $0.26 per share, the fair market value on the
      date
      of grant. The term of the option is ten years. The option vested
      immediately.




On
      March
      17, 2005, the Company issued a warrant to acquire up to 3,000,000 shares of
      common stock at an exercise price of $0.14 to the Company’s President, Lee
      Kasper. On April 26, 2005, the warrant was cancelled by mutual agreement of
      the
      Company and Mr. Kasper.




The
      following is a summary of the shares covered by the Company’s 2001 Stock Option
      Plan as of December 31, 2006:





Total
                shares authorized
            5,000,000Shares
                issued during the year ended December 31, 2003 ($0.12 - $1.20 per
                20 per
                share)
            1,315,000Shares
                issued during the year ended December 31, 2004 ($0.24 - $1.20 per
                20 per
                share)
            1,082,223Shares
                issued during the year ended December 31, 2005 ($0.09 - $0.22 per
                22 per
                share)
            500,000Shares
                issued during the year ended December 31, 2006
            -Shares
                available for future issuance
            2,102,777







On
      September 1, 2005, the Company’s Board of Directors approved an Employment
      Agreement for Lee Kasper, the Company’s President. The term of the Employment
      Agreement is seven years. After the initial term, unless either party gives
      180
      days notice to the other that it wishes to terminate the Employment Agreement,
      the term will be renewed for successive one year periods. The employment
      agreement is described in greater detail above.





On
      September 1, 2005, Lee Kasper was granted an option to purchase 6,000,000 shares
      of common stock at a price of $0.121 per share, 110% of the fair market value
      on
      the date of grant as an incentive to execute an Employment Agreement with the
      Company. The term of the option is five years. The option vested immediately.





In
      August
      2005, Mr. Kasper received an additional $350,000 loan from Skura
      Intercontinental Trading Company, which is secured by his personal residence.
      Mr. Kasper loaned these funds to us on the same terms on which they were
      borrowed. The interest rate is 8% and the term is 36 months.







-44-





On
      July
      7, 2006, our Board of Directors, pursuant to a consent to action without meeting
      of the Board of Directors, voted to amend the award of previous stock options
      to
      our officers, Directors and employees as follows:





**Original**
            **Amended****Original
                Date**
            **Exercise**
            **Exercise****Name**
            **Options**
            **Issued**
            **Price**
            **Price**Yegia
                Aramyan
            100,000
                (1)
            5/30/2003
            $
                0.16
            $0.01Joseph
                Gairmo
            300,000
                (1)
            5/30/2003
            $
                0.16
            $0.01Jay
                Hergott
            25,000
                (1)
            5/30/2003
            $
                0.16
            $0.01Lee
                Kasper
            700,000
                (1)
            5/30/2003
            $
                0.16
            $0.01Yegia
                Aramyan
            100,000
                (1)
            10/7/2003
            $
                0.50
            $0.01Joseph
                Giarmo
            50,000
                (1)
            10/7/2003
            $
                0.50
            $0.01Joseph
                Giarmo
            100,000
                (1)
            1/9/2004
            $
                0.60
            $0.01Lee
                Kasper
            500,000
                (1)
            1/9/2004
            $
                0.60
            $0.01Yegia
                Eli Aramyan
            100,000
            6/18/2004
            $
                0.40
            $0.01Joseph
                Giarmo
            200,000
            6/18/2004
            $
                0.40
            $0.01Lee
                Kasper
            500,000
            6/18/2004
            $
                0.40
            $0.01Lee
                Kasper
            2,000,000
            6/18/2004
            $
                0.40
            $0.01Joseph
                Giarmo
            1,000,000
            9/1/2004
            $
                0.26
            $0.01Jay
                Hergott
            40,000
            9/1/2004
            $
                0.26
            $0.01Yegia
                Aramyan
            50,000
                (1)
            12/6/2004
            $
                0.27
            $0.01Jay
                Hergott
            30,000
                (1)
            12/6/2004
            $
                0.27
            $0.01Yegia
                Eli Aramyan
            300,000
            9/1/2005
            $
                0.11
            $0.01Lee
                Kasper
            6,000,000
            9/1/2005
            $
                0.11
            $0.01Yegia
                Eli Aramyan
            300,000
            12/20/2005
            $
                0.06
            $0.01Joseph
                Giarmo
            300,000
            12/20/2005
            $
                0.06
            $0.01





(1)
      Originally granted pursuant to our 2001 Equity Incentive Plan.





In
      or
      around July 2006, we adopted the NuTech Digital, Inc. 2006 Directors, Officers
      and Consultants, Stock Option, Stock Warrant and Stock Award Plan, which has
      not
      been approved by our shareholders, which plan allowed for the issuance of
      5,000,000 shares of common stock, warrants options or preferred stock to
      eligible Directors, employees, consultants, and attorneys who provide bona
      fide
      services to the Company, which is described in greater detail in our
      Registration Statement on Form S-8, filed with the Commission on August 2,
      2006.





On
      December 15, 2006, we issued 500,000 shares of common stock to our Director
      Joseph Giarmo, in consideration for services rendered by Mr. Giarmo during
      2006.





On
      December 15, 2006, we issued 500,000 shares of common stock to our Director
      Yegia Eli Aramyan, in consideration for services rendered by Mr. Aramyan during
      2006.





On
      January 10, 2007, we issued 2,000,000 shares of common stock to our Chief
      Executive Officer and Director, Lee Kasper in consideration of payroll accrued
      in 2006 and the fact that Mr. Kasper has not demanded repayment of any of his
      outstanding loans to the Company (described in greater detail above under
“Liquidity and Capital Resources.”







-45-





Our
      Chief
      Executive Officer, Lee Kasper currently provides us approximately 700 square
      feet of office space in his home at a rate of $2,000 per month. We have no
      current plans to rent additional office space at this time.





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





(a)
      EXHIBITS





Exhibit
                No.
            Description
                of Exhibit3.1
            Articles
                of Incorporation, as amended.(1)3.2
            Bylaws
                of NuTech Digital, Inc (1)10.1
            2001
                NuTech Digital Inc. Equity Incentive Plan, as amended August 13,
                2003.(4)10.2
            Business
                Security Loan Agreement between NuTech Digital, Inc. and U.S. Bank
                N.A.,
                dated as of March 20, 2002including the Addendum and Amendment thereto.
                (1)10.3
            Letter
                of Intent between NuTech Digital, Inc. and Ritek Corp. dated as of
                August
                6, 1996 (including Letter of Intent A). (1)10.4
            Promissory
                Note and Commercial Security Agreement memorializing Small Business
                Administration Loan between NuTech Digital, Inc. and Imperial Bank,
                SBA
                Department, dated as of July 12, 2000. (1)10.5
            Unconditional
                Guarantee signed by Lee Kasper in favor of Imperial Bank dated July
                12,
                2000. (1)10.6
            Lease
                Agreement between Kathy Schreiber, Todd Lorber and Hiroko ("Lessor")
                and
                NuTech Digital, Inc. ("Lessee") for the premises located at 7900
                Gloria
                Avenue, Los Angeles, CA, dated as of March 10, 2001. (1)10.7
            Note
                Secured by Deed of Trust by and between Lee H. and Michelle Kasper
                and
                Skura Intercontinental Trading Company dated February 19, 2003. (2)10.8
            Deed
                of Trust dated February 19, 2003 by Lee H. Kasper and Michelle Kasper
                in
                favor of Skura Intercontinental Trading Company. (2)10.9
            Term
                Loan Agreement dated November 7, 2002 between Lee Kasper and U.S
                Bank,
                N.A. (2)10.10
            Addendum
                to Term Loan Agreement dated November 7, 2002 between U.S. Bank N.A.
                and
                Lee Kasper. (2)10.11
            Form
                of Common Stock Purchase Agreement. (4)






-46-




10.12
              Form
                  of Warrant. (4)10.13
              Warrant
                  issued to Brighton Capital, Ltd.(4)10.14
              Amended
                  and Restated NuTech Digital, Inc. 2003 Consultant Stock Plan. (4)10.15
              Consulting
                  Agreement dated February 18, 2004 between NuTech Digital, Inc.
                  and Redwood
                  Consultants, LLC.(4)10.16
              Agreement
                  dated February 4, 2004 between NuTech Digital, Inc. and Brighton
                  Capital,
                  Ltd.(4)10.17
              Agreement
                  dated January 29, 2004 between NuTech Digital, Inc. and Lyons Capital,
                  LLP.(4)10.18
              Agreement
                  dated February 2, 2004 between NuTech Digital, Inc. and Sloan Securities
                  Corp.(4)10.19
              Agreement
                  dated December 4, 2003 between NuTech Digital, Inc. and Queenstone
                  Financial Corp., including an amendment thereto dated February
                  22, 2004(4)10.20
              Option
                  grant to Lee Kasper dated June 18, 2004.(5)10.21
              Option
                  grant to Joseph Giarmo dated June 18, 2004.(5)10.22
              Option
                  grant to Yegia Eli Aramyan dated June 18, 2004.(5)10.23
              Option
                  grant to Joseph Giarmo dated September 1, 2004.(5)10.24
              Employment
                  Agreement with Lee Kasper dated September 1, 2005(6)10.25
              Option
                  grant to Lee Kasper dated September 1, 2005 (6)10.26
              Heads
                  of Agreement for Manufacturing and Distribution between Warner
                  Elektra
                  Atlantic Corporation and NuTech Digital, Inc. (7)10.27
              Consulting
                  Agreement dated April 14, 2006 between the Company and Digital
                  Acquisitions Company LLC (8)10.28
              Joint
                  Venture Agreement with Coalition Media Group (9)10.29
              Video
                  Licensing Agreement with MusicGiants, Inc. (10)10.30
              Licence
                  Agreement Regarding Due Distribution*10.31
              Licence
                Agreement Regarding DVD
                Distribution*






-47-





31.1
            Certificate
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002*32.1
            Certificate
                of the Chief Executive Officer of Chief Financial Officer pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of
                2002*





----------





(1)
      Incorporated by reference to the respective exhibits filed with registrant's
      Registration Statement on Form SB-2 (Commission File No. 333-88550).





(2)
      Incorporated by reference from the registrant's Form 10-KSB for the fiscal
      year
      ended December 31, 2002 filed on March 31, 2003, as amended on April 10, 2003.





(3)
      Incorporated by reference from the registrant's Form 8-K filed on October 15,
      2002.





(4)
      Incorporated by reference from the registrant's Form 10-KSB for the fiscal
      year
      ended December 31, 2003 filed on March 24, 2004.





(5)
      Incorporated by reference from the registrant's Form 10-KSB for the fiscal
      year
      ended December 31, 2004 filed on April 11, 2005.





(6)
      Incorporated by reference from the registrant's Form 8-K filed on September
      2,
      2005.





(7)
      Filed
      as an exhibit to our Form 10-KSB, filed with the Commission on April 17, 2007,
      and incorporated herein by reference.





(8)
      Filed
      as an exhibit to our Form 10-QSB, filed with the Commission on May 22, 2006,
      and
      incorporated herein by reference.





(9)
      Filed
      as an exhibit to our Form 8-K, filed with the Commission on January 19, 2007,
      and incorporated herein by reference.





(10)
      Filed as an exhibit to our Form 10-QSB, filed with the Commission on November
      22, 2006 and incorporated herein by reference.





*
      Filed
      herein





**(B)
      Reports on Form 8-K**





The
      Company filed the following one report on Form 8-K during the last quarter
      of
      the fiscal period covered by this report:





o
            On
                January 19, 2007, we filed a report on Form 8-K to report our entry
                into
                the Joint Venture Agreement with Coalition Media Group and the resignation
                of our Former Director, Jay S.
                Hergott.








-48-





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND
      SERVICES**





The
      following table sets forth fees billed to us by our auditors during the fiscal
      years ended December 31, 2006 and December 31, 2005 for: (i) services rendered
      for the audit of our annual financial statements and the review of our quarterly
      financial statements, (ii) services by our auditor that are reasonably related
      to the performance of the audit or review of our financial statements and that
      are not reported as Audit Fees, (iii) services rendered in connection with
      tax
      compliance, tax advice and tax planning, and (iv) all other fees for services
      rendered.





December
                  31, 2006
            
            December
                31, 2005(i)
                Audit Fees
            
            $
            27,275
            
            $
            37,250(ii)
                Audit Related Fees
            
            $
            0
            
            $
            0(iii)
                Tax Fees
            
            $
            0
            
            $
            0(iv)
                All Other Fees
            
            $
            0
            
            $
            0








-49-





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      Registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.





**NUTECH DIGITAL, INC.**





DATED:
      April 6,
      2007 By:
      /s/ Lee Kasper


Lee Kasper


President, Chief Executive Officer


and Chief Financial Officer


(Principal
      Accounting Officer)





In
      accordance with the Securities Exchange Act of 1934, this report has been signed
      below by the following persons on behalf of the Registrant and in the capacities
      and on the dates indicated.





**Name**
              **Title**
              **Date**/s/
                  Lee Kasper
              President,
                  Chief Executive Officer,
              April
                  6, 2007Lee
                  Kasper
              Chief
                  Financial Officer(Principal
                  Accounting Officer)and
                  Director/s/Joseph
                  Giarmo
              Vice-President,
                  Director
              April
                  6, 2007Joseph
                  Giarmo/s/
                  Yegia Eli Aramyan
              Director
              April
                  6, 2007Yegia
                  Eli Aramyan











-50-