FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   (Mark One)

  [X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
                                   Act of 1934

                   For the fiscal year ended December 31, 2004

     [ ] Transition report pursuant to section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                         Commission File Number 0-24829

                                 FTS GROUP, INC.
                                 ---------------


             (Exact name of registrant as specified in its charter)


         Nevada                                                84-1416864
-------------------------------                             -------------------
(State  or  other  jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               identification No.)


7610  West  Hillsborough  Ave.,  Tampa,  Florida                         33615
--------------------------------------------------------              ----------
(Address of principal executive offices)                              (Zip Code)

                                        1



       Issuer's telephone number, including area code: (813) 600-3600

        Securities Registered Pursuant To Section 12(b) Of The Act: None

           Securities Registered Pursuant To Section 12(g) Of The Act:
                               Title of each class

                          Common Stock, $.001 Par Value
                          -----------------------------

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

Check  if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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]

Issuer's  revenues  for  the most  recent  fiscal  year total $712,282.

The  aggregate  market  value  of  the  3,456,402 shares of common stock held by
non-affiliates  of  the  issuer as of March 15, 2005 was $449,332 based upon the
sale price  of  the  common stock of $0.15 per share on March 15, 2005.

The  issuer  had 54,877,195  shares  of common stock outstanding as of March 31,
2005.

                      DOCUMENTS INCORPORATED BY REFERENCE:

                                      None

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

                                 FTS GROUP, INC.
                                   FORM 10-KSB


                                TABLE OF CONTENTS

PART I                                                                PAGE  NO.

ITEM 1.  DESCRIPTION OF BUSINESS.                                             3
ITEM 2.  DESCRIPTION OF PROPERTY.                                             6
ITEM 3.  LEGAL PROCEEDINGS.                                                   6
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                 6

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.            6
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.           7
ITEM 7.  FINANCIAL STATEMENTS.                                               13
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.                                               25
ITEM 8A. CONTROLS AND PROCEDURES.                                            25
ITEM 8B. OTHER INFORMATION.                                                  25

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.                  25
ITEM 10. EXECUTIVE COMPENSATION.                                             26
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         AND RELATED STOCKHOLDER MATTERS.                                    27
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                     28
ITEM 13. EXHIBITS.                                                           28
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.                             29

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This  report  contains  forward-looking  statements  that  involve  risks  and
uncertainties.  We  generally  use  words  such  as  "believe,"  "may," "could,"
"will,"  "intend,"  "expect,"  "anticipate,"  "plan," and similar expressions to
identify  forward-looking  statements.  You  should  not place undue reliance on
these  forward-looking  statements.  Our  actual results could differ materially
from  those  anticipated  in  the  forward-looking  statements for many reasons,
including  the  risks described below and elsewhere in this report.  Although we
believe  the  expectations  reflected  in  the  forward-looking  statements  are
reasonable,  they  relate  only to events as of the date on which the statements
are  made,  and  our  future  results,  levels  of  activity,  performance  or
achievements may not meet these expectations.  We do not intend to update any of
the  forward-looking statements after the date of this document to conform these
statements  to  actual  results  or  to  changes  in our expectations, except as
required  by  law.

                                        2

                                     PART I

ITEM  1.  DESCRIPTION  OF  BUSINESS.

HISTORY

We  organized  as  Full  Tilt  Sports, Inc. in 1997 as a Colorado corporation to
develop  and  market  a  line of young men's casual apparel. We own several U.S.
trademarks  relating to that business. Effective August 23, 2000, we changed our
name  to  FTS  Apparel, Inc. Our attempts to build a profitable apparel business
were unsuccessful and the prior management team was unable to raise the required
funds  to  continue  in the apparel business. As a result, we exited the apparel
business.  In  January  2002,  we  experienced a change in management. Effective
January  11,  2002,  Scott Gallagher became our new Chairman and Chief Executive
Officer  and  we  appointed  three  new  directors.  The  new Chairman agreed to
purchase  1,861,618  shares  of  our  common  stock  owned  by two of the former
officers and directors and other shareholders. The new management team initially
developed a strategic plan to acquire and develop cash flow positive businesses.
After  an  analysis  of  the market, management determined to primarily focus on
building  a  chain of retail wireless locations that sell cellular and satellite
handsets  and  activations.  FTS  Wireless  Inc., a wholly owned subsidiary, was
organized  as  a  Florida  corporation in February 2003 to become a full service
wireless  company operating a chain of retail wireless locations. On January 26,
2004,  we  changed  our  name  to  FTS  Group, Inc. to reflect the change in our
operations.  Additionally,  on  that date, we changed our state of incorporation
from  Colorado  to  Nevada.

BUSINESS

We  develop,  invest  in  and  acquire  cash-flow positive businesses and viable
business  projects, primarily in the wireless industry. Through our wholly-owned
subsidiary  FTS  Wireless,  Inc.,  we  are  engaged  in  a  targeted,  strategic
development  strategy  to  consolidate  the highly fragmented cellular phone and
services  industry.  We currently operate seven retail wireless locations in the
Florida  market.  Over the past twenty-four months we have grown our business by
acquiring  existing retail locations as well as developing new retail locations.

We  operate our business as a "Bricks and Clicks" model. On the "Bricks" side of
our  business  we operate a chain of seven retail wireless locations in the Gulf
Coast market of Florida. We distribute wireless products and services from three
of  the  nation's  largest  wireless carriers, Cingular Wireless, Sprint PCS and
Nextel,  in  the  Gulf  Coast  market of Florida and selected markets around the
country.

On  the  "Clicks"  side  of our business model we own and operate three Internet
based  e-commerce  wireless  businesses;  www.SatPhoneCenter.com,
www.CellularDeals.com  and  www.CellChannel.com.  We  drive  traffic  to  these
businesses  by  offering in store specials and discounts in our retail stores as
well as traditional online advertising. SatPhoneCenter.com is focused on renting
and  selling  Global Star satellite wireless products and services to retail and
business customers. CellularDeals.com primarily markets and distributes wireless
accessories and products globally over the Internet. CellChannel.com markets and
sells  wireless  content  such  as  custom  MP3  ring tones, wallpaper and games
primarily  to  retail  and  Internet  customers.

We  constantly  re-evaluate  our product portfolio to stay current with industry
trends  and  meet  the needs of our customers. We also continuously evaluate how
new technologies such as Wi-Fi and Voice over Internet, or VoIP, will affect our
business.  We  believe  these new communication technologies will provide us and
distributors  like  us  with  new  opportunities as the technologies become more
widely  adopted  and  next  generation  products  and services are developed and
increase  in  demand.

THE  MARKET  FOR  OUR  PRODUCTS  AND  SERVICES

According  to  a  semi-annual  industry  survey  released  in  March 2005 by the
Cellular Telecommunications & Internet Association, wireless subscribership grew
by  21.7 percent during 2004. Wireless subscribers now exceed 180 million in the
United  States,  representing  a  penetration  rate of more than 60 percent. The
survey  also  found  wireless users in the United States for the first time used
more  than  one  trillion  wireless minutes during 2004, while the average local
monthly  bill  grew by only 1.5 percent to $50.64. Capital investment in network
expansion  and upgrades reached nearly $28 billion, according to the survey. The
total  number  of  cell  sites  at  the  end  of  the  year  was  175,725.

                                        3

We believe the increase in wireless subscribers validates our business model and
represents  a  significant  opportunity for us to gain market share and increase
our  retail  and  Internet  distribution channels within the markets in which we
operate. We have made a concerted effort to target our marketing and product mix
towards  certain niche sectors of the Industry. One niche sector of the wireless
Industry  we  have targeted and experienced success with is the Hispanic market.
Our  primary operating market, Tampa, Florida, was recently ranked as having the
second highest Hispanic buying power in the nation, more than $5 billion a year.
We feel that as new products and services are developed targeting this and other
niche  markets,  penetration  rates  will continue to increase, resulting in new
opportunities  for  us  to  grow.  We  believe  that as Third Generation, or 3G,
wireless  networks  contribute  to an increase in coverage, subscribership rates
will  increase  by  enabling  wireless  carriers  to  expand  wireless  data and
entertainment  product  offerings  such  as  streaming  video  and enhanced data
services.


STRATEGIC  PARTNERS  AND  CONTRACTS

POST-PAID

We activate wireless services through agreements with companies known as "Master
Agents."  A  Master  Agent  has  the  ability  to pay us a higher per activation
commission  than  we  could receive if we dealt directly with the major wireless
carriers. Their commission tier is based on the consolidated monthly activations
of  all  of  their  dealers.  These  companies  pay us a commission for each new
cellular  customer  who  signs  a  one  or  two  year cellular contract with the
carrier. However, if that customer deactivates their cellular service within the
180-day  period after signing the contract, the commission paid to us is charged
back  to  our  account  and  not  paid.  We  have  set up a reserve for possible
activation  charge-backs.

For  Cingular  Wireless  we  have  an agreement in place with Philadelphia-based
Master  Agent  Digital  Communications  Warehouse  to  market  and sell Cingular
products and services in approximately 19 markets around the country. For Sprint
PCS  we  have  an  agreement  in  place  with New York-based Master Agent Malsha
Products,  Inc.  to market and sell Sprint PCS products and services anywhere in
the  United States. For Nextel, we have an agreement in place with Florida-based
American  Connections of Florida, Inc. to market and sell Nextel products in the
Gulf  Coast  market  of  Florida.

We  activate  and  rent  satellite  phones through an agreement with GlobalStar.
GlobalStar  is  one  of  the  largest  satellite communications providers in the
world. We also offer retail customers Wi-Fi Internet access through an agreement
with  Air  Rover  Wi-Fi whereby Air Rover supplies us with the hardware, billing
and  support  services  in  exchange  for  a  revenue  sharing  arrangement.


PRE-PAID

We  have  marketing  and  distribution rights from a number of national pre-paid
wireless  carriers  known  as  Mobile Virtual Network Operators, or MVNOs. MVNOs
resell  airtime from the national carriers. We function as a Master Agent for an
MVNO  called  Air  Voice  Wireless  which  resells prepaid airtime over the AT&T
wireless  network.  We  also resell products and services from a number of other
MVNOs such as Virgin Mobile, STI-Mobile and Boost Mobile through agreements with
our  master  agents.  We  are  generally  able  to  market and sell products and
services  from  the MVNO in any market the MVNO operates. We derive revenue from
the  sale  of  wireless  handsets  and  the  sale  of  prepaid wireless airtime.

COMPETITION

We  operate  in  a  highly  competitive environment. We principally compete with
other  independent  retailers, privately held chains that offer a broad range of
products,  and  carrier  owned and operated stores with more name recognition
and  brand identity than us. We believe that success in the industry is based on
maintenance  of  product  quality,  competitive  pricing,  delivery  efficiency,
customer  service  and  satisfaction  levels, maintenance of satisfactory dealer
relationships,  and  the ability to anticipate technological changes and changes
in  customer  preferences.

CARRIERS  CORPORATE  OWNED  STORES

We compete against stores owned by service carriers including:

-     Sprint  PCS;
-     Cingular;
-     T-Mobile;
-     Nextel; and
-     Verizon  Wireless.

The  carrier-owned  corporate  stores  generally  sell  only  their own wireless
products  and  services.  We  believe  our  product  offerings  are  superior to
corporate  stores  because we offer customers service from multiple carriers and
provide  the best solution for each customer's individual needs. In addition, we
offer  wireless  content,  accessories,  Wi-Fi  access, Satellite phones and
service.

LARGE  NATIONAL  RETAILERS

                                        4

We  compete  against  large  national  retailers  including:

-     Radio  Shack;
-     Best  Buy;
-     Staples; and
-     Office  Depot.

These  retailers  promote wireless-boxed products with limited customer support.
We  believe we offer a higher level of customer service and product knowledge to
our  customers  as  compared  to  large  national retailers. We also believe our
customer  service  is superior because we focus  only on wireless products and
services,  which  are  only  a  part  of  the  business  of  the above-mentioned
retailers.  However,  due  to scale of purchasing power, number of locations and
advertising  budgets,  large  national  retailers  can sometimes offer discounts
superior  to  ours.

LOCAL WIRELESS  RETAILERS

We compete with a variety of smaller independent retailers. Our main competitors
are:

-    Beepers  N  Phones,  which operates approximately 50 stores in the state of
     Florida  and  promotes  several  brands  of  wireless  products.

-    Choice  Cellular,  which  operates  approximately 15 stores in the state of
     Florida  and  promotes  several  brands  of wireless products and services.

-    GCS  Wireless  which  operates  approximately  10  stores  in  Florida  and
     primarily  promotes  products  and services from only one wireless carrier.

We  also compete with a variety of smaller, independent retailers operating less
than  three  stores.  We  compete  against  these  retailers by offering a broad
product  range  and  superior  customer  service.


MARKETING

We  depend  on  advertising and marketing to attract new customers. We currently
advertise  in  local  print  publications, including daily newspapers and weekly
publications,  advertise  on the Internet and in flyers. Additionally, we run in
store  product  related  promotions  including  a  referral  program  geared  at
generating  new  business through our existing customer base. We currently spend
between $3,000 and $5,000 per month on advertising depending on the placement of
our ads. During times of increased advertising, we spend approximately $5,000 to
$7,500  or  more  per  month  on  new  product roll-outs and marketing campaigns
including  print,  Internet  and  television  media  advertising. We believe our
advertising  campaigns  have  increased foot traffic in our stores and increased
our  overall  name  recognition.

INVESTMENTS

In  March  2003, we acquired 30,000 shares of preferred stock in Vidyah, Inc., a
private  technology  company,  for  $15,000  in  cash.  Holders  of  the  Vidyah
preferred  stock have the same voting rights as holders of the common stock. The
preferred  stock  has  liquidation  rights  and  is convertible, at the holder's
option,  into an equivalent number of shares of common stock, subject to certain
adjustments.  Vidyah  provides  comprehensive  technology  learning  solutions,
certification  programs,  and  customized learning for a variety of Fortune 1000
companies,  including,  Disney,  Sony,  Microsoft,  IBM,  Cisco Systems, Harvard
University,  etc.  We  purchased  an  interest  in  Vidya.com because we believe
Vidyah  represents  an  attractive  investment  that will increase in value over
time.

SEASONALITY

The  wireless  industry  typically  generates  a  higher  number  of  subscriber
additions  and  handset sales in the fourth quarter of each year, as compared to
the  remaining quarters. This is due to the use of retail distribution, which is
dependent  on  the  holiday  shopping season; timing of new products and service
introductions;  and  aggressive marketing and sales promotions. To date, we have
not  experienced  any seasonality in our sales, although we may in the future as
we  expand  our  retail  operations.

EMPLOYEES

As  of  December  31,  2004,  we  had  twelve  full  time employees.  Two of our
employees  are at the corporate level, our Chairman and Chief Executive Officer,
Scott  Gallagher  and  Linda  Ehlen, our Chief Financial Officer.  In connection
with  our  cellular  phones  and  accessories business, we employ nine full time
individuals  and  one  part  time  individual  to  run  our  Florida  stores.

We  expect  to  hire  additional  employees  over  the next twelve months as our
business grows. From time-to-time, we engage the services of outside consultants
to  assist  in our business, including attorneys, accountants, and marketing and
advertising  personnel.  We may engage the services of additional individuals in
the  future  as  our  business needs dictate and our financial resources permit.
                                        5


ITEM  2.  DESCRIPTION  OF  PROPERTY.

We  currently  have  seven  leases  for  our  retail  stores  and  our corporate
facilities  in  Tampa, Florida. Our retail stores are located in the counties of
Hillsborough  and  Pinellas,  generally  within  30 miles of Tampa, Florida. The
retail  stores  vary in size from 500 to 2,000 square feet. Our principal office
is located in approximately 1,500 square feet of the leased facilities in Tampa,
Florida.  The  minimum aggregate monthly rental commitment for the retail stores
is  $9,429. The terms of the leases vary from month to month to three years with
a  three-year  option.

ITEM  3.  LEGAL  PROCEEDINGS.

Neither  we,  nor  any of our officers or directors in their capacities as such,
are  subject  to  any  material  legal  proceedings,  and  we do not know of any
potential  or  threatened  legal  proceeding.

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

No  matters  were  submitted  to  a  vote  of security holders during the fourth
quarter  of  the  year  covered  by  this  Annual  Report.

                                     PART II

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

Our  common  stock  has  traded  over the counter and has been quoted in the OTC
Bulletin  Board  since  March  18,  1999.  The  stock currently trades under the
symbol  "FLIP."

The  following  table  sets  forth  the  range of high and low bid quotations as
reported  by the National Association of Securities Dealers for the common stock
of  the  Company  for  the  last  two fiscal years.  Quotations represent prices
between  dealers, do not include retail markups, markdowns or commissions and do
not  necessarily  represent  prices  at which actual transactions were effected.


<TABLE>
<CAPTION>
<S>                        <C>            <C>
Year Ended                  High            Low
------------------         ------          -----
2003
----
March 31                   $.26           $.09
June 30                    $.28           $.16
September 30               $.68           $.23
December 31                $.25           $.15

2004
----
March 31                   $.40           $.15
June 30                    $.27           $.15
September 30               $.17           $.09
December 31                $.18           $.09

2005
----
March 31*                  $.23           $.10
</TABLE>


*  Through  March  15,  2005.

We  had  approximately  157 record holders of our common stock as of January 15,
2005.

DIVIDEND  POLICY

Holders  of  common  stock  are  entitled  to  receive  such dividends as may be
declared  by  the  Board  of  Directors.  In  July  2004, the Board of Directors
approved a 10% warrant dividend to stockholders of record on August 28,2004. The
warrant  allows stockholders of record to purchase one new share of common stock
at $.25 for each ten common shares owned. The warrant expires in three years. No
cash  dividends  on  the common stock have been paid or declared by the Board to
date. We do not anticipate any cash dividends being paid out in the near future.

TRANSFER  AGENT

Our  transfer  agent  is Securities Transfer Corporation, located at 2591 Dallas
Parkway  Suite  102, Frisco, Texas 75034.  Their phone number is (469) 633-0101.

                                        6

RECENT  SALES  OF  SECURITIES

During  the  three month period ended December 31,2004, we issued 933,973 shares
of  restricted  common  stock  for  consulting  services.

The  securities  issued in the foregoing transactions were made in reliance upon
an  exemption from registration under Rule 701 promulgated under Section 3(b) of
the Securities Act. Alternatively, these issuances of securities were undertaken
under  Rule 506 of Regulation D under the Securities Act of 1933, as amended, by
the  fact  that:

-  the  sale  was  made to a sophisticated or accredited investor;

-  we  gave  the  purchaser the opportunity to ask questions and receive answers
concerning the terms and conditions of the offering and to obtain any additional
information  which  we possessed or could acquire without unreasonable effort or
expense  that  is  necessary  to  verify  the accuracy of information furnished;

- at a reasonable time prior to the sale of securities, we advised the purchaser
of  the  limitations  on  resale  in  the  manner  contained  in  Rule  502(d)2;

- neither we nor any person acting on our behalf sold the securities by any form
of  general  solicitation  or  general  advertising;  and

- we exercised reasonable care to assure that the purchaser of the securities is
not  an underwriter within the meaning of Section 2(11) of the Securities Act of
1933  in  compliance  with  Rule  502(d).

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

OVERVIEW

Historically  and  through  the  year  ended  December  31,  2001,  we  operated
exclusively  in  the  apparel  industry.  In  January  2002,  we  experienced  a
management  change  after  the  prior  management  team  was unable to raise the
required  funds to continue in the apparel business. Our business now focuses on
developing  and  acquiring  cash-flow  positive  businesses  and viable business
projects, primarily those in the wireless and technology industries. As of March
15,  2005,  we  operated  a  total  of seven retail locations. Due to continuing
losses  from  operations,  the  independent  registered  public  accountant that
audited  our  financial statements for the year ended December 31, 2004 assessed
that  there  was  substantial  doubt  about  our  ability to continue as a going
concern.

RESULTS  OF  OPERATIONS

Sales revenues for the year ended December 31, 2004 increased $603,627, or 556%,
to  $712,282,  as compared to $108,655 for the year ended December 31, 2003. The
increase  in  sales  revenues was primarily related to acquisition of new stores
and  opening  of  new  retail  outlets.

Cost  of  Goods Sold for the year ended December 31, 2004, increased $431,602 to
$521,660,  as  compared  to  $90,058  for  the  year ended December 31,2003. The
increase in Cost of Goods Sold is primarily related to the overall growth of our
business and increased buying levels of wireless handsets, airtime, devices, and
accessories.  Though  revenue  for  2004 rose 556%, Cost of Goods Sold rose only
479%.  We  were able to control Cost of Goods Sold increases due to economies of
scale  related  to  enhanced  purchasing  power.

Selling, General and Administrative expense for the year ended December 31, 2004
increased $1,347,720 to $2,191,837 as compared to $844,117 for the year December
31, 2003. The increase in Selling, General and Administrative expense was due to
a  number of factors including, higher store operating costs associated with the
increase  in  the  number  of stores, increase in consulting fees to support the
expansion  of  our  operations  through  the  end  of  2004, and increased costs
associated  with  acquisitions  of new locations and costs incurred in obtaining
additional  financing  and  market  support.

Interest expense increased to $212,638 for the year ended December 31, 2004 from
$48,121 for the year ended December 31, 2003. The increase was due mainly to the
accrual  of interest on the convertible debt and promissory notes as part of the
capital  raised  during  the  year  ended  December  31,  2004.

During  the year ended December 31, 2004 we took a charge of $107,000 related to
writes  downs  of  certain  long-lived assets relating to the acquisition of new
retail  locations.

We  had a net loss of $2,328,353 for the fiscal year ended December 31, 2004, as
compared  to  net  loss of $873,641 for the fiscal year ended December 31, 2003.
The  increase  in  net loss was primarily due to an increase in consulting fees,
financing-related expenses, new store openings and increased operating expenses.

As  of  December 31, 2004, we had an accumulated deficit of $8,308,526.

LIQUIDITY  AND  CAPITAL  RESOURCES

                                        7

As  of  December 31, 2004, total current assets were $175,862 which consisted of
$7,949  of  cash,  $87,485  of  accounts  receivable, $44,998 of inventories and
$35,430  of  prepaid  expenses.

As of December 31, 2004, total current liabilities were $648,724 which consisted
of  $259,723  of  accounts payable and accrued expenses, promissory notes in the
following  amounts  $240,000  to  Dutchess  Private  Equities  Fund, $111,751 to
related  parties  and  $37,250  to  a  private  investor.

FINANCING

We  will  require  additional  capital to support strategic acquisitions and our
current  expansion  plans.  We  currently  have  an  equity  line of credit with
Dutchess  Private  Equities  Fund.  This  facility  provides us with access to a
maximum  of  $6  million  in  financing subject to certain terms and conditions.
Additionally,  we  raise funds through private placements of our equity that may
involve  dilution  to  our  existing  shareholders.

In  2004, we borrowed approximately $98,250 from several private investors at an
annual  interest rate of 8%. One note in the aggregate amount of $84,000 carried
a  20%  premium  to the face value, which has been charge to interest expense in
2004,  and  is  due in June and September of 2005. As of March 31,2005 all notes
have  been  paid  in  full.

We  signed  a  short-term note payable to Dutchess Equities Fund, II L.P. in the
amount of $240,000 which was due December 27, 2004. The loan bears interest at a
rate  of  12% per annum, it includes a 20% premium and it includes a 10% penalty
for  failure  to  pay  by the due date. The premium in the amount of $40,000 has
been charged to the interest expense for 2004 The loan was not paid back timely;
hence,  the  penalty  was  assessed. The entire balance including principal plus
penalty  was  repaid  in  2005.

The  note contained a stipulation that we would deliver 250,000 shares of common
stock  to  Dutchess  as  inducement  for entering into the financing. The shares
related  to  this  loan  were issued in 2005. The fair value of these shares was
$25,000  and  the  amount  has  been  charged  to  interest expense during 2004.

During  the  year ended December 31, 2004, we borrowed, under several short term
loan  agreements,  $434,700  from  Dutchess  Private  Equities  Fund  bearing an
interest  rate  of  12%.

During February 2003, we completed an additional debenture offering. Pursuant to
a subscription agreement with Dutchess, we received $212,500 from the sale of 6%
secured  convertible debentures. The terms of the debentures provide for payment
by February 14, 2007 with the debentures being convertible into our common stock
at  any  time at the lesser of (i) 80% of the average of the five lowest closing
bid prices during the 15 days prior to conversion or (ii) 100% of the average of
the closing bid prices for the 20 trading days immediately preceding the closing
date.  We agreed to register the shares underlying the debentures on a Form SB-2
Registration Statement. As of December 31, 2004 and 2003 the amount of debenture
outstanding  was  $100,493  and  $450,586,  respectively.  During 2004, Dutchess
converted  $350,093  worth  of debentures into approximately 3,570,030 shares of
stock.

Our  currently  anticipated levels of revenues and cash flow are subject to many
uncertainties.  Until  we  generate  cash  flow  from  operations  that  will be
sufficient  to  satisfy  our  cash  requirements,  we  will  continue  to  seek
alternative  means  for financing our operations and capital expenditures and/or
postpone or eliminate certain investments or expenditures. Potential alternative
means  for  financing  may  include  accessing  our  Equity  Line of Credit with
Dutchess Private Equities Fund or obtaining additional debt or equity financing.
When  needed,  additional  financing  may  not  be  available,  or  available on
acceptable  terms.  The  inability  to  obtain  additional financing or generate
sufficient  cash  from  operations  could  require  us  to  reduce  or eliminate
expenditures  for  acquiring or developing new retail locations or marketing our
products, or otherwise curtail or discontinue our operations, which could have a
material  adverse  effect  on  our  business, financial condition and results of
operations. Furthermore, if we raise funds through the sale of additional equity
securities,  the  common  stock  currently  outstanding  will  be  diluted.


NEW  ACCOUNTING  PRONOUNCEMENTS


                                        8

In  December  2004, the FASB issued Statement of Financial Accounting Standards,
or SFAS, No. 123R "Share-Based Payment." SFAS No. 123R establishes standards for
the  accounting  for  transactions  in  which  an  entity  exchanges  its equity
instruments  for  goods  or  services.  This  Statement  focuses  primarily  on
accounting  for  transactions  in  which  an entity obtains employee services in
share-based  payment transactions. SFAS No. 123R requires that the fair value of
such  equity instruments be recognized as an expense in the historical financial
statements  as  services are performed. SFAS 123R, replaces SFAS 123, Accounting
for  Stock  Based  Compensation and Supercedes APB opinion No.25, Accounting for
Stock  Issued  to  Employees. This guidance is effective as of the first interim
or  annual  reporting  period after December 15, 2005 for Small Business Filers.
The  adoption  of  SFAS 123 (R) is not expected to have a material effect on our
financial  position  or  operations.

In  December  2004,  the  FASB  issued  SFAS  No. 153, "Exchanges of Nonmonetary
Assets,  an  Amendment  of  APB  Opinion  No.  29."  The  guidance in Accounting
Principles  Board, APB, ("APB") Opinion  No.  29,  "Accounting  for  Nonmonetary
Transactions,"  is  based  on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged. The guidance
in  APB  Opinion No. 29, however, included certain exceptions to that principle.
SFAS  No.  153  amends  APB  Opinion  No.  29  to  eliminate  the  exception for
nonmonetary  exchanges  of  similar  productive  assets  and  replaces it with a
general  exception  for  exchanges  of  nonmonetary  assets  that  do  not  have
commercial  substance.  A  nonmonetary  exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. The provisions of SFAS No. 153 will be applied prospectively to
nonmonetary  asset  exchange  transactions  in fiscal year 2006. The adoption of
SFAS  No.  153  is not expected to have a significant effect on our consolidated
financial  statements.

In  January  2003,  the  FASB  issued  Interpretation  No.  46 "Consolidation of
Variable  Interest Entities", and interpretation of Accounting Research Bulletin
No.  51  "Consolidated  Financial  Statements."  FIN  No.  46  prescribes how to
identify variable interest entities and how an enterprise assesses its interests
in  a  variable  interest  entity  to decide whether to consolidate that entity.
This  interpretation requires existing unconsolidated variable interest entities
to  be  consolidated  by  their  primary  beneficiaries  if  the entities do not
effectively  disperse  risks among parties involved.  FIN 46 was scheduled to be
effective  for  variable  interest  entities created after January 31, 2003.  On
December  24,  2003,  the  FASB  published  FIN  No. 46(R),  a  revision  to FIN
No.  46.  FIN  No.  46(R) clarifies certain provisions of FIN No. 46 and exempts
certain  entities  from  its  requirements.  For  interests in variable interest
entities  acquired  prior  to  January 31, 2003, the provisions of FIN No. 46(R)
have  been  applied  on  March  31,  2004.  We  determined  the  adoption of FIN
46(R)  did  not  have  a material effect on our financial position or results of
operations.


CRITICAL  ACCOUNTING  POLICIES  AND  ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
judgments  and  estimates.

We  believe  the  following  critical  accounting  policies  affect  our  more
significant  judgments and estimates used in the preparation of our consolidated
financial  statements.

REVENUE  RECOGNITION

Net  revenues  from  wireless  activations  are  recognized during the month the
activation  is  performed.  Allowances  for charge backs, returns, discounts and
doubtful  accounts  are  provided when sales are recorded. Shipping and handling
costs  are  included  in  cost  of  sales.

We  recognize revenue from the activation of new wireless customers and the sale
of wireless handsets, airtime and accessories at the time of activation or sale.

IMPAIRMENT OF LONG-LIVED ASSETS

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

IMPACT  OF  INFLATION

Inflationary  factors  have  not  had  a  significant  effect on our operations.

RISK  FACTORS

An  investment  in  our  common stock involves a high degree of risk. You should
carefully  consider  the  following risk factors and information in our periodic
reports  filed  with  the SEC. If any of the following risks actually occur, our
business,  financial condition, or results of operations could be materially and
adversely  affected  and  you  may  lose  some  or  all  of  your  investment.

WE  HAD  A  LOSS  FOR  THE YEAR ENDED DECEMBER 31, 2004 AND EXPECT NET LOSSES TO
CONTINUE  IN  THE  NEAR  FUTURE. THERE IS A RISK WE MAY NEVER BECOME PROFITABLE.

                                        9

We  had  a net loss of $2,328,353 for the year ended December 31, 2004 and a net
loss of $873,641 for the year ended December 31, 2003. Our future operations may
not  be  profitable if we are unable to develop and expand our wireless business
and  our  Internet  operations.  Revenues  and profits, if any, will depend upon
various  factors,  including  whether  we  will  be  able  to receive funding to
advertise  our products or find additional businesses to operate and/or acquire.
We may not achieve our business objectives and the failure to achieve such goals
would  have  an  adverse  impact  on  us.

THERE  IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN DUE
TO  RECURRING  LOSSES AND WORKING CAPITAL SHORTAGES, WHICH MEANS THAT WE MAY NOT
BE  ABLE  TO  CONTINUE  OPERATIONS  UNLESS  WE  OBTAIN  ADDITIONAL  FUNDING.

Our  audited  financial  statements for the fiscal year ended December 31, 2004,
reflect  a  net  loss  of $2,383,353,a working capital deficit of $472,862 and a
stockholders' deficit of $421,811 as of December 31,2004. These conditions raise
substantial doubt about our ability to continue as a going concern if sufficient
additional  funding  is  not  acquired or alternative sources of capital are not
developed  to  meet  our  working capital needs. If we can not obtain additional
funding  as  needed,  our  business  may  fail.

WE  MAY,  IN THE FUTURE, ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK WHICH WOULD
REDUCE  INVESTORS  PERCENT  OF  OWNERSHIP  AND  MAY  DILUTE  OUR  SHARE  VALUE.

Our  articles  of  incorporation authorize the issuance of 150,000,000 shares of
common stock. As of March 31, 2005 we have 55,048,495 shares of our common stock
issued  and  outstanding.  We are also authorized to issue 150,000 shares of our
Series  A  10%  convertible  preferred  stock  of  which no shares are issued or
outstanding  and  4,850,000 undesignated preferred shares of which no shares are
issued  or  outstanding.  The  future  issuance  of all or part of our remaining
authorized  common stock may result in substantial dilution in the percentage of
our common stock held by our then existing shareholders. We may value any common
stock  issued  in the future on an arbitrary basis. The issuance of common stock
for  future  services  or  acquisitions or other corporate actions will have the
effect of diluting the value of the shares held by our investors, and might have
an  adverse  effect  on  any  trading  market  for  our  common  stock.

WE  ONLY  RECENTLY  ACQUIRED  OUR  OPERATING UNIT AND HAVE BEEN SELLING WIRELESS
COMMUNICATIONS  AND  NETWORKING PRODUCTS AND SERVICES FOR A SHORT PERIOD OF TIME
AND  WE  MAY  NOT  BE  ABLE  TO  SUCCESSFULLY  MANAGE  OUR  BUSINESS.

We began our retail wireless operations in February 2003 with our acquisition of
selected  assets of Simply Cellular, Inc. Since we have just begun operations in
this  industry,  we  may  not  find  commercial  acceptance  of our products and
services.  We  have  no  way of predicting whether our marketing efforts will be
successful in attracting new customers and acquiring market share. We may not be
able  to  acquire  products and technologies that will attract customers without
which  we  cannot  operate  profitably.

OUR  OPERATING  RESULTS  HAVE FLUCTUATED SIGNIFCANTLY IN THE PAST AND WE BELIEVE
THEY  WILL  FLUCTUATE  SIGNIFICANTLY  FOR  THE FORESEEABLE FUTURE. INVESTORS MAY
PREFER  STABLE  AND  PREDICTIBLE OPERATING RESULTS AND MAY SELL OUR STOCK IF OUR
OPERATING  RESULTS  CONTINUE  TO FLUCTUATE OR DO NOT MEET THEIR EXPECTATIONS FOR
GROWTH.  AS  A  RESULT  YOUR  INVESTMENT  IN  OUR  STOCK  MAY  LOSE  VALUE.

Our  quarterly  results  of operations have varied in the past and are likely to
continue  to  vary significantly from quarter to quarter. Our operating expenses
are  based  on  expected  future  revenues and are relatively fixed in the short
term.  If  our revenues are lower than expected, our results of operations could
be  lower  than  expected.  Additionally,  we  are unable to forecast our future
revenues  with  certainty because our business plan contemplates the acquisition
of  new  enterprises,  which may not occur. Many factors can cause our financial
results  to  fluctuate,  some  of  which  are  outside  of  our  control.
Quarter-to-quarter  comparisons  of  our operating results may not be meaningful
and you should not rely upon them as an indication of our future performance. In
addition,  during  certain future periods our operating results likely will fall
below  the  expectations of public market analysts and investors. In this event,
the  market  price  of  our  common  stock  likely  would  decline.

WE  NEED  ADDITIONAL  CAPITAL  TO  GROW  OUR BUSINESS AND IF WE DO NOT FIND SUCH
CAPITAL ON ACCEPTABLE TERMS, WE WILL NOT BE ABLE TO FULLY IMPLEMENT OUR BUSINESS
PLAN.

We  believe  we must grow our operations to generate enough revenue to cover our
operating  and  overhead  costs.  Therefore,  our business plan contemplates the
acquisition  of  new  enterprises.  The  proceeds  from  our  existing financial
arrangement  may  not  be  sufficient  to  fully  implement  our business plan.
Additionally,  we  may  not  be  able  to  generate sufficient revenues from our
existing  operations  to  fund  our  capital  requirements.  Accordingly, we may
require  additional funds to enable us to operate profitably. Such financing may
not be available on terms acceptable to us. We currently have no bank borrowings
or credit facilities, and we may not be able to arrange any such debt financing.
Additionally, we may not be able to successfully consummate additional offerings
of  stock  or other securities in order to meet our future capital requirements.
If  we cannot raise additional capital through issuing stock or bank borrowings,
we  may  not  be  able  to  sustain  or  grow  our  business.
                                       10


TO  BECOME PROFITABLE  AND  GROW, WE MUST SUCCESSFULLY INTEGRATE NEW BUSINESSES.

Our  success  depends  upon  our  ability  to  identify  and acquire undervalued
businesses.  Although  we  have  identified  certain  companies  available  for
potential  acquisition  that are undervalued and might offer attractive business
opportunities, we may not be able to negotiate profitable acquisitions. If we do
make  business  acquisitions,  we  must  continue  to  implement and improve our
operational,  financial  and  management information systems. We must also hire,
train  and retain additional qualified personnel, continue to expand and upgrade
core  technologies,  and  effectively  manage  our relationships with customers,
suppliers, and other third parties. If we expand as anticipated, expansion could
place a significant strain on our current services and support operations, sales
and administrative personnel, capital resources, and other company resources. If
we  fail to effectively manage our growth, our expenses may increase which could
lower  our  earnings  or  prevent  us  from  becoming  profitable.  Failure  to
effectively  manage  our  growth  could  also  result  in us failing to generate
sufficient  revenues  to  become  profitable.

WE  DEPEND ON MR. SCOTT GALLAGHER, OUR CHIEF EXECUTIVE OFFICER, AND IF HE LEAVES
US,  WE  MAY  NOT  BE  ABLE  TO  IMPLEMENT  OUR  BUSINESS  PLAN.

Our  success  in achieving our growth objectives depends upon the efforts of our
top  management  team  including the efforts of Mr. Scott Gallagher. The loss of
Mr.  Gallagher's  services  would negatively affect our ability to implement our
business  plan,  and,  as  a result, our financial condition, including our cash
position,  ability  to  obtain  funding  and  generate revenues would be harmed.
Although  we  intend  to  apply  for key-man life insurance, we do not currently
maintain  key  life  insurance  policies  for  Mr.  Gallagher.

OUR  STOCK  PRICE  IS  VOLATILE AND YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT A
PRICE  HIGHER  THAN  WHAT  YOU  PAID.

The  market  for  our  common  stock  is  highly  volatile. Our common stock has
experienced,  and  is  likely to experience in the future, significant price and
volume  fluctuations.  As  a  result, the market price of our common stock could
decrease  without  regard  to our operating performance. In addition, we believe
factors  such  as quarterly fluctuations in our financial results, announcements
of  technological  innovations or new products by our competitors or us, changes
in  prices  of  our  products  and  services  or  our  competitors' products and
services,  changes  in our product mix and changes in the overall economy or the
condition  of the financial markets could cause the price of our common stock to
fluctuate  substantially.  If our stock price fluctuates, you may not be able to
sell  your  shares  at  a  price  higher  than  what  you  paid.

THE  LIMITED  TRADING  VOLUME OF OUR STOCK MAY DEPRESS THE PRICE OF OUR STOCK OR
CAUSE  IT  TO  FLUCTUATE  SIGNIFICANTLY.

There  has  been  a  limited  public  market  for our common stock and an active
trading market for our common stock may not develop. As a result, you may not be
able  to  sell  your  common  stock  in  short time periods, or possibly at all.

WE MUST COMPLY WITH PENNY STOCK REGULATIONS WHICH COULD EFFECT THE LIQUIDITY AND
PRICE  OF  OUR  STOCK.

The  Securities  and  Exchange  Commission  has  adopted  rules  that  regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks  generally  are  equity securities with a price of less than $5.00, other
than securities registered on certain national securities exchanges or quoted on
NASDAQ,  provided  that  current  price  and  volume information with respect to
transactions  in such securities is provided by the exchange or system. Prior to
a  transaction  in  a  penny  stock,  a  broker-dealer is required to: Deliver a
standardized  risk disclosure document prepared by the SEC; Provide the customer
with  current  bid  and  offers  quotations  for  the  penny  stock; Explain the
compensation  of  the  broker-dealer  and  its  salesperson  in the transaction;
Provide  monthly account statements showing the market value of each penny stock
held  in  the  customer's account; Make a special written determination that the
penny  stock  is  a  suitable  investment  for  the  purchaser  and receives the
purchaser's;  and  Provide  a  written  agreement  to  the  transaction.  These
requirements  may  have  the effect of reducing the level of trading activity in
the  secondary market for our stock. Because our shares are subject to the penny
stock  rules,  you  may  find  it  more  difficult  to  sell  your  shares.

WE DEPEND ON THIRD PARTY VENDORS AND IF WE ARE NOT ABLE TO SECURE COST-EFFECTIVE
PRODUCTS,  WE  MAY  NOT  BECOME  OR  REMAIN  PROFITABLE.

Our  performance  depends  on  our  ability  to  purchase products in sufficient
quantities at competitive prices and on our vendors' ability to make and deliver
high  quality  products  in a cost effective, timely manner. Some of our smaller
vendors  have  limited  resources, production  capacities, and limited operating
histories.  We  have  no  long-term  purchase  contracts or other contracts that
provide  continued  supply,  pricing or access to new products and any vendor or
distributor  could  discontinue selling to us at any time. We may not be able to
acquire  the products that we need in sufficient quantities or on terms that are
acceptable  to  us  in  the  future.  As a result, we may not become
profitable.

                                       11

WE  EARN  REVENUES  BASED  ON  AGREEMENTS  WITH  CELLULAR  AND SATELLITE SERVICE
PROVIDERS  AND, IF THE CONTRACTS ARE CANCELLED, OUR REVENUES MAY DECREASE AND WE
MAY  NOT  BECOME  PROFITABLE.

We  earn  revenues  by  providing  cellular  and satellite activations for major
wireless  carriers  such  as  Cingular,  Sprint,  Nextel,  and GlobalStar. These
agreements  are  partly  based  on  geography  and  we  signed contracts to earn
revenues  from  activations  in  Florida. Our agreements may be cancelled at any
time  by  either party. If any of our agreements are cancelled, we will not earn
activations  through  that carrier which will cause our revenues to decrease. If
we  do not provide activations for a broad line of carriers, our stores will not
be  as competitive. As a result, our revenues may decrease and we may not become
profitable.

WE  MAY  NOT  BE  ABLE  TO SUCCESSFULLY COMPETE WITH OTHER COMPANIES WHICH WOULD
NEGATIVELY  AFFECT  OUR  EARNINGS  AND  POSSIBLY  CAUSE  A DECLINE IN OUR STOCK.

We  operate  in  a  highly  competitive environment. We principally compete with
other  independent  retailers, privately held chains that offer a broad range of
products  and  carrier  owned and operated stores with more name recognition and
brand  identity  than  us.  We  believe that success in the industry is based on
maintenance  of  product  quality,  competitive  pricing,  delivery  efficiency,
customer  service  and  satisfaction  levels, maintenance of satisfactory dealer
relationships,  and  the ability to anticipate technological changes and changes
in  customer  preferences.  Additionally, we believe competition may become more
intense  over time due to an increasing percentage of customers that already own
the  products  we sell. If we can not compete in our markets, we will not sell a
sufficient  number of products to generate enough revenues to become profitable.
Additionally,  our  suppliers,  whose  products we distribute, or major cellular
phone  manufacturers, may acquire, startup, and or expand their own distribution
systems to sell directly to commercial and retail customers which would cause us
to  lose  revenue  which  could  ultimately  cause a decline in the value of our
stock.

THE  TELECOMMUNICATIONS  INDUSRY IS CONSTANTLY EVOLVING AND IF THE INDUSTRY DOES
NOT  REMAIN AN ATTRACTIVE INVESTMENT OPPORTUNITY FOR US WE MAY HAVE TO SHIFT OUR
BUSINESS  PLAN  WHICH  COULD  RESULT IN LOWER OR NO EARNINGS AND OUR STOCK PRICE
COULD  DECLINE.

The  technology  that  our  products  rely  on is constantly changing. The rapid
change  in technology may lead to the development of wireless telecommunications
services  or  alternative  services  that  consumers  prefer  over  traditional
cellular.  As  a  result, we must continue to stay current with new technologies
and  offer  products and services that meet customer demands. It is difficult to
predict  how  our  product line will evolve over time and what our profitability
margins  will  be  on  future  products. It is also difficult to predict whether
consumers  will  purchase  new  products  to  take  advantage of advancements in
technology.  There  is uncertainty as to the extent to which airtime charges and
monthly  recurring  charges  may continue to decline. If the technology that our
products  rely on changes in a way that reduces customer demand for our products
or reduces the profitability of our products, we may have to adjust our business
plan. If we adjust our business plan, our revenues and earnings may decrease and
our  stock  price  may  move  lower.

WE  SELL  PRODUCTS  THAT RELY ON THIRD PARTY NETWORKS TO OPERATE. IF ANY NETWORK
DISRUPTION  OCCURS,  OUR  REVENUES  AND  EARNINGS  MAY  DECREASE.

The  products  we  sell  rely  on  the  efficient and uninterrupted operation of
cellular and satellite networks, which are built and maintained by third parties
such  as Cingular and Sprint. Any failure of these cellular or satellite systems
could  cause our products to work poorly or not at all. A failure by these third
parties  to  maintain their cellular and satellite systems could result in lower
sales  of  our  products which could reduce our revenues and lower our earnings.
Additionally, our customers may not understand that the failure of a cellular or
satellite  system  is  due  to  a  third  party rather than our products and our
reputation  could be harmed. If our reputation is harmed, we may have difficulty
selling  our  products.  We may have to increase our advertising costs to repair
our  reputation  or  educate  consumers.  As a result, a third party failure may
result  in  us  failing to become profitable or, if we become profitable, we may
not  be  able  to  sustain  profitability.




                                       12

ITEM  7.  FINANCIAL  STATEMENTS.

                         FTS  Group,  Inc.  and  Subsidiary
                   Index  to  Consolidated  Financial  Statements

Consolidated  financials  Statements                                  Page

Report  of  Independent  Registered  Public  Accounting  Firm          13

Report  of  Independent  Registered  Public  Accounting  Firm          13

Consolidated  Balance  Sheets  as  of  December  31,2004  and  2003    14

Consolidated  Statements  of  Operations  for  the  years  ended
December  31,  2004  and  2003                                         15

Consolidated  Statements  of  Stockholders'  Deficiency  for  the
Years  ended  December  31,2004  and  2003                             16

Consolidated  Statements  of  Cash  Flows  for  the  years  ended
December  31,2004  and  2003                                           17

Notes  to  the  Consolidated  Financial  Statements                    18



REPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM

To  the  Board  of  Directors  and  Stockholders,
FTS  Group,  Inc.

We  have  audited the accompanying consolidated balance sheet of FTS Group, Inc.
and  subsidiary as of December 31, 2004, and the related consolidated statements
of  operations, stockholders' deficiency and cash flows for the year then ended.
These  consolidated financial statements are the responsibility of the Company's
management.  Our  responsibility  is to express an opinion on these consolidated
financial  statements  based  on  our  audit.

We  conducted  our  audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material misstatement. An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audit  provides  a
reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects, the consolidated financial position of FTS
Group, Inc. and subsidiary as of December 31, 2004, and the consolidated results
of  their  operations and their cash flows for the year then ended in conformity
with  accounting  principles generally accepted in the United States of America.

The  accompanying  consolidated financial statements have been prepared assuming
that  the  Company  will continue as a going concern. As more fully described in
Note  3  to  the  consolidated  financial  statements, the Company has a working
capital  deficit  of  $472,862  and  a  stockholders'  deficit of $421,811 as of
December  31,2004.  These conditions raise substantial doubt about the Company's
ability  to  continue  as a going concern. Management's plans in regard to these
matters  are  also described in Note 3. The consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

/s/  WithumSmith+Brown,  P.C.
Princeton,  New  Jersey
March  7,  2005, except for note 15 which is dated March 31, 2005




REPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM


The  Board  of  Directors  and  Stockholders
FTS  Group,  Inc.:

We have audited the consolidated balance sheet of FTS Group, Inc. and subsidiary
as  of December 31, 2003, and the related consolidated statements of operations,
stockholders'  equity and cash flows for the year then ended. These consolidated
financial  statements  are  the  responsibility of the Company's management. Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based  on  our  audit.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements  are free of material misstatement. An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audit  provides  a
reasonable  basis  for  our  opinion.

                                       13

In  our opinion, the consolidated financial statements referred to above present
fairly,  in all material respects, the financial position of FTS Group, Inc. and
subsidiary  as  of  December  31,  2003, and the results of their operations and
their  cash  flows  for  the  year  then  ended,  in  conformity with accounting
principles  generally  accepted  in  the  United  States  of  America.

The  accompanying  consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered recurring losses from operations,
and  has  working  capital  and  stockholders'  deficits.  These  factors  raise
substantial  doubt  about  the Company's ability to continue as a going concern.
Management's  plans  in  regard to this matter are also discussed in Note 3. The
consolidated  financial  statements  do  not  include any adjustments that might
result  from  the  outcome  of  these  uncertainties.

/s/  R.  E.  Bassie  &  Co.
Houston,  Texas
April 2,2004

<TABLE>
<CAPTION>
                                    FTS GROUP, INC. AND SUBSIDIARY
                                      CONSOLIDATED BALANCE SHEETS
                                      DECEMBER 31, 2004 AND 2003

<S>                                                          <C>           <C>
                                                                    2004          2003
                                                             ------------  ------------
ASSETS

CURRENT ASSETS
  Cash. . . . . . . . . . . . . . . . . . . . . . . . . . .  $     7,949   $     6,887
  Accounts receivable                                             87,485         3,905
  Inventory . . . . . . . . . . . . . . . . . . . . . . . .       44,998         7,759
  Prepaid Expenses. . . . . . . . . . . . . . . . . . . . .       35,430         1,512
                                                             ------------  ------------
      Total current assets. . . . . . . . . . . . . . . . .      175,862        20,063
                                                             ------------  ------------

PROPERTY AND EQUIPMENT, NET . . . . . . . . . . . . . . . .      124,555        50,577
                                                             ------------  ------------

OTHER ASSETS
  Investment in private entity. . . . . . . . . . . . . . .        7,500        15,000
  Deposits. . . . . . . . . . . . . . . . . . . . . . . . .       19,489        17,650
                                                             ------------  ------------
      Total other assets. . . . . . . . . . . . . . . . . .       26,989        32,650
                                                             ------------  ------------


                                                             $   327,406   $   103,290
                                                             ============  ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accounts payable and accrued expenses . . . . . . . . . .  $   259,723   $   229,862
  Notes payable - individuals . . . . . . . . . . . . . . .       37,250             -
  Notes payable related parties, net of debt discount
  49,931 and $0 at December 31,2004 and 2003, respectively       111,751        29,416
  Note payable-Dutchess Advisors . . . . . . . . . . . . .       240,000             -
                                                             ------------  ------------
      Total current liabilities . . . . . . . . . . . . . .      648,724       259,278
                                                             ------------  ------------
CONVERTIBLE DEBENTURES. . . . . . . . . . . .  . . . . . .       100,493       450,586
                                                             ------------  ------------

STOCKHOLDERS' DEFICIT
  10% Convertible preferred stock, Series A, $0.01 par
    value, 150,000 shares authorized, 0 shares issued
    and outstanding . . . . . . . . . . . . . . . . . . . .            -             -
  Preferred stock, $0.01 par value, 4,850,000 undesignated
    shares authorized, none issued. . . . . . . . . . . . . .          -             -
  Common stock, $0.001 par value, 150,000,000 shares
    authorized, 37,882,183 and 18,141,564
    shares issued and outstanding at December 31, 2004
    and 2003                                                      37,882        18,142
  Additional paid in capital. . . . . . . . . . . . . . . .    7,848,833     5,465,030
  Accumulated deficit . . . . . . . . . . . . . . . . . .     (8,308,526)   (5,943,196)
  Deferred compensation                                                -      (146,550)
                                                             ------------  ------------
      Total stockholders' deficit . . . . . . . . . . . .       (421,811)     (606,574)
                                                             ------------  ------------

                                                             $   327,406   $   103,290
                                                             ============  ============
See accompanying notes to consolidated financial statements
</TABLE>

                                       14


<TABLE>
<CAPTION>

                                 FTS GROUP, INC. AND SUBSIDIARY
                             CONSOLIDATED STATEMENTS OF OPERATIONS
                         FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


<S>                                                <C>           <C>

                                                          2004          2003
                                                   ------------  ------------


 REVENUES
   Sales, Net . . . . . . . . . . . . . . . . . .   $  712,282   $   108,655


 COST OF GOODS SOLD . . . . . . . . . . . . . . .      521,660        90,058
                                                   ------------  ------------
 GROSS PROFIT . . . . . . . . . . . . . . . . . .      190,622        18,597
                                                   ------------  ------------

 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses.    2,191,837       844,117
                                                   ------------  ------------
                                                     2,191,837       844,117
                                                   ------------  ------------

 LOSS FROM OPERATIONS . . . . . . . . . . . . . .   (2,001,215)     (825,520)
                                                   ------------  ------------

OTHER INCOME (EXPENSE)
  Impairment of long-lived assets                      (107,000)           -
  Interest Expense . . . . . . . . . . . . . . . .     (212,638)     (48,121)
                                                   ------------  ------------
                                                       (319,638)     (48,121)
                                                   ------------  ------------

NET LOSS FROM OPERATIONS. . . . . . . . . . . . .   (2,320,853)     (873,641)

UNREALIZED LOSS ON INVESTMENT . . . . . . . . . .       (7,500)            -
                                                   ------------  ------------

NET LOSS. . . . . . . . . . . . . . . . . . . . .  $(2,328,353)  $  (873,641)
                                                   ============  ============


PER SHARE INFORMATION:
WEIGHTED AVERAGE SHARES OUTSTANDING
  (BASIC AND DILUTED) . . . . . . . . . . . . . .   27,459,250    17,388,519
                                                   ============  ============

NET LOSS PER COMMON SHARE (BASIC AND DILUTED) . .  $     (0.08)  $     (0.05)
                                                   ============  ============
See accompanying notes to consolidated financial statements
</TABLE>


                                       15

<TABLE>
<CAPTION>

FTS GROUP, INC. AND SUBSIDIARY
                                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                                                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


<S>               <C>          <C>          <C>         <C>       <C>         <C>             <C>            <C>
                               Preferred                Total      Additional
                  Preferred    Stock        Common      common     Paid-In     Deferred       Accumulated    Stockholders'
                  Shares       Amount       Shares      Amount    Capital     Compensation    Deficit        Deficit
                  -----------  -----------  ----------  --------  ----------  --------------  -------------  ---------------
BALANCE. . . . .      50,000       $50,000   15,530,240  $ 15,530  $4,956,942  $     (60,000)  $ (5,069,555)  $     (107,083)
DECEMBER 31,2002

Issuance
of common
shares for cash           -            -      540,000       540      43,460              -               -           44,000

Issuance
of common
shares
for services. .           -            -     1,630,000     1,630     342,070         (86,550)            -           257,150

Conversion
of debentures
into shares of
common stock . .          -            -        91,324        92       9,908              -              -            10,000

Issuance of
common shares
for acquisition
 of assets . . .          -            -       300,000       300      62,700              -              -             63,000

Conversion
of preferred
stock into
common shares .     (50,000)     (50,000)      50,000        50       49,950              -              -             -

Net loss . . . .          -             -           -          -          -               -        (873,641)         (873,641)
                  -----------  -----------  ----------    ------   ---------         --------    ----------         ----------
BALANCE. . . . .           -            -   18,141,564    18,142   5,465,030        (146,550)    (5,943,196)         (606,574)
DECEMBER 31,2003

Issuance
 of common
 shares for cash           -            -    6,000,000     6,000      411,341              -             -            417,341

Issuance
of common
shares
for services . .           -            -    7,994,720     7,994     1,212,207              -            -           1,220,201

Conversion
of debentures
into shares of
common stock . .           -            -    3,570,030      3,570      346,521              -            -             350,091

Issuance of
common shares
for acquisition
of assets. . . .           -            -       30,000         30        2,070              -            -               2,100

Issuance of
common shares
through
equity line. . .           -             -   2,145,869      2,146      374,687              -            -             376,833

Issuance of
Stock warrants as
Dividends on common
shares .                   -             -          -           -       36,977              -      (36,977)                  -

Amortization of
Deferred Compensation      -             -          -           -            -        146,550            -             146,550

Net loss . . . .           -             -          -           -            -             -    (2,328,353)         (2,328,353)
                  -----------  -----------  ----------  ---------   ----------  --------------  -------------  -----------------
BALANCE
DECEMBER 31,2004           -   $         -  37,882,183  $ 37,882    $7,848,833  $          -   $(8,308,526)    $      (421,811)
                  ===========  =========== ===========  ========    ==========  ============== ==============  =================
See accompanying notes to consolidated financial statements

</TABLE>


                                       16

<TABLE>
<CAPTION>
                         FTS GROUP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<S>                                                     <C>           <C>
                                                           2004        2003
                                                        ------------  ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Loss . . . . . . . . . . . . . . . . . . . . . .  $ (2,328,353)  $(873,641)
  Adjustments to reconcile net income to net cash
    Used in operating activities
      Depreciation and amortization. . . . . . . . . .        15,851       7,270
      Impairment of long-lived assets. . . . . . . . .       107,000           -
      Issuance of common shares for services . . . . .     1,220,201     342,070
      Unrealized loss on investment in private entity.         7,500           -
      Decrease in deferred compensation . . . . . . .        146,550           -
      Amortization of debt discount . . . . . . . . .         98,107           -
      Changes in operating asset and liabilities
        Increase in accounts receivable . . . . . . .        (83,580)     (3,905)
        Increase in inventories . . . . . . . . . . .        (37,239)     (7,759)
        Increase  in prepaid expenses          . . . .       (33,918)     (1,512)
        Increase in other assets . . . . . . . . . . .        (1,839)     (5,750)
        (Decrease)Increase accounts payable
          and accrued expenses . . . . . . . . . . . .       (24,904)      2,248
                                                        ------------  ----------

  Net cash used in operating activities. . . . . . . .      (914,674)   (540,979)
                                                        ------------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment . . . . . . . . .      (194,729)          -
  Investment in stock of private entity. . . . . . . .             -     (15,000)
  Investment in leasehold rights . . . . . . . . . . .             -     (11,000)
                                                        ------------  ----------

  Net cash used in investing activities.                    (194,729)    (26,000)
                                                         ------------  ----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Increase in amounts due to related parties  . . . .        140,235     117,147
  Proceeds for stock to be issued                             54,765          -
  Repayment of loans from related parties. . . . . . .       (99,974)         -
  Proceeds from issuance of stock. . . . . . . . . . .       417,341      44,000
  Proceeds from sale of debentures . . . . . . . . . .            -      412,500
  Proceeds from stock issued under equity line. . . .        376,833           -
  Proceeds from note payable Dutchess Advisors . . . .       450,500           -
  Repayments to note payable Dutchess Advisors . . . .      (266,485)          -
  Proceeds from notes payable from individuals . . . .        98,250           -
  Repayment of notes payable from individuals. . . . .       (61,000)          -
                                                        ------------  ----------

  Net cash provided by financing activities. . . . . .     1,110,465     573,647
                                                        ------------  ----------

Net increase in cash. . . . . . . . . . . . . . . . .          1,062       6,668

Cash, beginning of year. . . . . . . . . . . . . . . .         6,887         219
                                                        ------------  ----------

Cash, end of year. . . . . . . . . . . . . . . . . . .  $      7,949   $   6,887
                                                        ============  ==========
</TABLE>

<TABLE>
<CAPTION>

<S>                                                                       <C>       <C>
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION:
                                                                           2004      2003

Cash paid during the year for:
  Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .  $188,344   $ 48,121
                                                                          =========   ========

SUPPLEMENTARY DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES:

Stock issued in exchange for convertible debentures . . . . . . . . . . .  $350,091    $10,000
                                                                          =========   ========

Stock issued in exchange for acquisition of assets . . . . . . . . . . . . $  2,100   $ 63,000
                                                                          =========   ========

</TABLE>


                                       17

See accompanying notes to consolidated financial statements


                                 FTS GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004



NOTE  1          SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
                 ----------------------------------------------

NATURE  OF  OPERATIONS
----------------------

FTS  Group,  Inc.  (the "Company"), formerly FTS Apparel, Inc., was incorporated
under the laws of the State of Nevada. The Company is engaged in the acquisition
and development of a chain of full service retail wireless stores. The Company's
primary business is the marketing, sale and activation of cellular and satellite
handsets, cellular accessories and other related wireless products such as Wi-Fi
service  and  related  access  equipment  for  residential or business purposes.

     PRINCIPLES  OF  CONSOLIDATION
     -----------------------------

The  consolidated  financial  statements include the accounts of the Company and
its  wholly-owned  subsidiary:  FTS Wireless, Inc. All significant inter-company
transactions  and  balances  have  been  eliminated  in  consolidation.

     BASIS  OF  PRESENTATION
     -----------------------

The  accompanying  financial  statements  have  been prepared in accordance with
Accounting  Principles  Generally  Accepted  ("GAAP")  in  the  United States of
America  and  with  the  instructions  to  Form  10-KSB.

USE  OF  ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and  disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the  reporting  period.  Actual  results  could  differ significantly from those
estimates.  The  Company  considers  its  calculation  for  the  reserve  for
charge-backs  to  be  a  significant estimate and it is reasonably possible that
this  estimate  could  change  in  the  near  term.

INVENTORIES

Inventories,  which  consist  of  cellular  phones and related accessories,  are
stated  at  the  lower  of  cost (determined on a first in first out method)  or
market  value.

PROPERTY  AND  EQUIPMENT

Property  and  equipment  are  recorded  at  cost.  Maintenance  and repairs are
charged to expense when incurred; major renewals and betterment are capitalized.
When  property or equipment is sold or retired, the related cost and accumulated
depreciation  is  removed  from the accounts and any gain or loss is included in
the  results  of operations.  Depreciation is calculated using the straight line
method  over  the  estimated  useful  lives  of  the  respective  assets ranging
from  three  to  five  years.

DEBT DISCOUNT

Costs  incurred  with  parties who are providing actual financing, which include
the  value  of  loan  premiums  and  stock are reflected as debt discount. These
discounts  are  generally  amortized  over  the  life  of  the  related  debt.
Amortization  expense related to these discounts approximated $98,000 and $0 for
the  years  ended  December  31,  2004  and  2003,  respectively.

FINANCIAL  INSTRUMENTS

Fair  value estimates discussed herein are based upon certain market assumptions
and  pertinent  information  available to management as of December 31, 2004 and
2003.  The  respective  carrying  value  of  certain  on-balance-sheet financial
instruments  approximated their fair values. These financial instruments include
cash,  accounts  payable,accrued  expenses  and  notes  payable. Fair values are
assumed  to  approximate carrying values for these financial instruments because
they are short term in nature, or are receivable or payable on demand, and their
carrying  amounts  approximate  fair  value.

IMPAIRMENT  OF  LONG-LIVED  ASSETS

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

NET  LOSS  PER  COMMON  SHARE

                                       18

Basic  net  loss  per  common share was computed by dividing the net loss by the
weighted  average  number  of  common  shares  outstanding  for  the years ended
December  31,2004  and 2003, the effect of including common stock equivalents in
the  calculation  of  net  loss  per  share  would  be anti-dilutive. Therefore,
outstanding  common  stock equivalents have not been included in the calculation
of  the net loss per share. As a result, basic net loss per share is the same as
diluted  net  loss  per  share  for  the  years ended December 31,2004 and 2003.

STOCK-BASED  COMPENSATION

The  Company  accounts  for  equity instruments issued to employees for services
based on the fair value of the equity instruments issued and accounts for equity
instruments  issued  to  other  than  employees  based  on the fair value of the
consideration received or the fair value of the equity instruments, whichever is
more  reliably  measurable. The Company accounts for stock based compensation in
accordance  with  SFAS  123,  "Accounting  for  Stock-Based  Compensation."  The
provisions  of  SFAS  123  allow  companies to either expense the estimated fair
value  of  stock options or to continue to follow the intrinsic value method set
forth in Accounting Principles Board Opinion 25, "Accounting for Stock Issued to
Employees"  ("APB  25")  but disclose the pro forma effects on net income (loss)
had  the  fair  value  of  the options been expensed. The Company has elected to
continue  to  apply  APB  25 in accounting for its stock option incentive plans.

REVENUE  RECOGNITION

Net  revenues  from  product sales are recognized upon the transfer of title and
risk  of ownership to customers. Allowances for estimated returns, discounts and
doubtful  accounts  are  provided when sales are recorded. Shipping and handling
costs  are  included  in  the cost of sales. The Company also recognizes revenue
from  the  sale and activation of wireless handsets at the time of activation or
sale.

ACCOUNTS  RECEIVABLE

Accounts  receivable  are  uncollateralized  customer  obligations due under the
normal  trade  terms  requiring payment within 45 days, depending on contractual
terms.  Customer  account  balances  with  invoices  dated  over 90 days old are
considered delinquent. Unpaid accounts do not bear interest. Accounts receivable
are stated at the amount billed to the customer. Payments of accounts receivable
are  allocated  to  the specific invoices identified on the customers remittance
advice  or  if  unspecified,  are  applied  to  the  earliest  unpaid  balance.

The  carrying  amount of accounts receivable is reduced by a valuation allowance
that  reflects  management's  best  estimates  of  the  amounts that will not be
collected. Management individually reviews all accounts receivable balances that
exceed  90  days  from  the  invoice  date and based on an assessment of current
credit worthiness estimates the portion, if any, of the balance that will not be
collected.

Income  Taxes

Deferred  income  tax assets and liabilities are determined based on differences
between  the  financial  statement  reporting  and  the  tax basis of assets and
liabilities and are measured using the enacted tax rate and laws that will be in
effect  when  the  differences  are  expected to reverse. The measurement of the
deferred  income  tax  assets is reduced, if necessary, by a valuation allowance
for  any  tax  benefits  that  are  not  expected  to be realized. The effect on
deferred  income  tax  assets  and  liabilities  of a change in the tax rates is
recognized  in  the  period  that  such  rate  changes  are  enacted.

RECLASSIFICATIONS

Certain  amounts  contained  in  the 2003 consolidated financial statements have
been  reclassified  in  order  to  conform  with  the  2004  presentation.

ADVERTISTING  COSTS

The  cost of advertising is expensed as incurred. Advertising expense charged to
operations  was  $17,792  and  $11,385 for the years ended December 31, 2004 and
2003,  respectively.

RECENT  ACCOUNTING  PRONOUNCEMENTS

In  December  2004, the FASB issued Statement of Financial Accounting Standards,
or SFAS, No. 123R "Share-Based Payment." SFAS No. 123R establishes standards for
the  accounting  for  transactions  in  which  an  entity  exchanges  its equity
instruments  for  goods  or  services.  This  Statement  focuses  primarily  on
accounting  for  transactions  in  which  an entity obtains employee services in
share-based  payment transactions. SFAS No. 123R requires that the fair value of
such  equity instruments be recognized as an expense in the historical financial
statements  as  services are performed. SFAS 123R, replaces SFAS 123, Accounting
for  Stock  Based  Compensation and Supercedes APB opinion No.25, Accounting for
Stock Issued to Employees. This guidance is effective as of the first interim or
annual  reporting  period after December 15, 2005 for Small Business Filers. The
adoption  of  SFAS  123  (R)  is  not  expected to have a material effect on our
financial  position  or  operations.

                                       19

In  December  2004,  the  FASB  issued  SFAS  No. 153, "Exchanges of Nonmonetary
Assets,  an  Amendment  of  APB  Opinion  No.  29."  The  guidance in Accounting
Principles  Board  ("APB")  Opinion  No.  29,  "Accounting  for  Nonmonetary
Transactions,"  is  based  on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged. The guidance
in  APB  Opinion No. 29, however, included certain exceptions to that principle.
SFAS  No.  153  amends  APB  Opinion  No.  29  to  eliminate  the  exception for
nonmonetary  exchanges  of  similar  productive  assets  and  replaces it with a
general  exception  for  exchanges  of  nonmonetary  assets  that  do  not  have
commercial  substance.  A  nonmonetary  exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. The provisions of SFAS No. 153 will be applied prospectively to
nonmonetary  asset  exchange  transactions  in fiscal year 2006. The adoption of
SFAS  No.  153  is  not  expected  to  have  a  material effect on the Company's
financial  position  or  results  of  operations.


In  January  2003,  the  FASB  issued  Interpretation  No.  46 "Consolidation of
Variable  Interest Entities", and interpretation of Accounting Research Bulletin
No.  51  "Consolidated  Financial  Statements."  FIN  No.  46  prescribes how to
identify variable interest entities and how an enterprise assesses its interests
in  a  variable  interest  entity  to decide whether to consolidate that entity.
This  interpretation requires existing unconsolidated variable interest entities
to  be  consolidated  by  their  primary  beneficiaries  if  the entities do not
effectively  disperse  risks among parties involved.  FIN 46 was scheduled to be
effective  for  variable  interest  entities created after January 31, 2003.  On
December  24,  2003,  the  FASB  published  a  revision  to FIN No. 46 ("FIN No.
46(R)").  FIN  No.  46(R) clarifies certain provisions of FIN No. 46 and exempts
certain  entities  from  its  requirements.  For  interests in variable interest
entities  acquired  prior  to  January 31, 2003, the provisions of FIN No. 46(R)
have been applied on March 31, 2004.  The Company determined the adoption of FIN
46(R)  did  not  have  a material effect on its financial position or results of
operations.


NOTE  2          PROPERTY  AND  EQUIPMENT
                 ------------------------

          Property  and  equipment are as follows at December 31, 2004 and 2003:

<TABLE>
<CAPTION>



<S>                                                                                              <C>         <C>
                                                                                                    2004       2003
                                                                                                  -------    -------
    Office furniture, fixtures and equipment                                                      $71,333    $58,504
    Construction in progress                                                                      $77,000         -
                                                                                                  -------    -------

                                                                                                  $148,333   $58,504


    Less: accumulated depreciation                                                                 (23,778)  (7,927)
                                                                                                  --------   -------

        Net property and equipment                                                                $124,555   $50,577
                                                                                                  ========   =======

    Depreciation expense was $15,851 and $7,270 for the years ended December 31, 2004 and 2003, respectively
</TABLE>




         NOTE  3  GOING  CONCERN
                  ---------------

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of  liabilities  and  commitments  in  the  normal  course  of  business.

At December 31, 2004 the Company had a working capital deficit of $472,862 and a
Stockholders'  deficit  of  $421,811.  Also  the  Company incurred a net loss of
$2,328,353  in  2004.These financial conditions of the Company raise substantial
doubt  about its ability to continue as a going concern. As part of management's
plans, management is seeking to raise additional capital to execute its business
plans.

The  Company  will have to raise additional funds, either through debt or equity
offerings,  in  order  to  implement  its  business  expansion  and  acquisition
strategies.  The  Company  has  engaged  professional advisors for this purpose.
There can be no assurance that the Company will be successful in its attempts to
raise  additional  capital  and  become profitable or maintain itself as a going
concern.

                                       20

The  financial statements do not include any adjustments to reflect the possible
future  effects  of  the  recoverability  and  classifications  of assets or the
amounts  and  classifications  of  liabilities that may result from the possible
inability  of  the  Company  to  continue  as  a  going  concern.

          NOTE  4  NOTES PAYABLE RELATED PARTIES
                   ----------------------------

During  the  year ended December 31, 2004 the Company borrowed $195,000 from two
of  its  officers and directors with an interest rate of 8% per annum and due in
June  and  September  of  2005.  Two  of  the notes carried a 20% premium in the
aggregate  amount of $37,240. The funds were primarily used to fund acquisitions
and  to  repay  loans  from  Dutchess  Private  Equities  Fund  II,LP.

The two notes also included a stipulation that the related parties would receive
932,000  of  common  stock  as  an  inducement  to  provide  the  financing.

Proceeds  in  the amount of $186,200 borrowed from two of its officers have been
allocated $131,435 to notes payable and $54,765 to the value of the common stock
to  be  issued  to  the  individuals  based  on  their relative fair values. The
difference between the amount to be repaid aggregating $223,440 and the $131,435
represents  a  debt  discount in the amount of $92,005 which was recorded by the
Company. This amount is being amortized over the life of the loans. For the year
ended  December  31,  2004,  the  Company  has  amortized  $42,073  leaving  an
unamortized  debt  discount  of  $49,931  at  December  31,  2004.


         NOTE  5          FINANCING  ACTIVITIES
                          ---------------------

During  the  year  ended  December  31,  2004  the  Company issued approximately
3,570,030  shares to Dutchess Private Equities Fund, LP to reduce its balance by
$350,091.  At  December  31,  2004 the outstanding unconverted debenture totaled
$100,493,  which has since been converted into approximately 1,004,930 shares of
stock  of  Dutchess.

During  the  year ended December 31, 2004 the Company raised $376,833 through he
issuance  of  2,145,869  shares  to Dutchess Private Equities Fund, LP under its
Equity  Line  of  Credit.  Funds  raised  from  the  Equity  Line  are priced at
approximately  93% of the three-day average of the lowest three out of five days
subsequent  to a put for funds. 15,000,000 shares were registered under SEC Form
SB-2 during the first quarter of 2004. 12,850,131 shares were still available to
the  Company  as  of  December  31,2004.

During  the  year  ended December 31, 2004, the Company sold 6,000,000 shares of
restricted  common stock to accredited investors at an average price of $.08 per
share.  A  group of accredited investors mentioned above owning 4,750,000 shares
also acquired the right to purchase 4,750,000 additional shares at $.08 referred
to as "Green Shoe" or "B" Warrants. In addition these investors were granted "A"
warrants expiring in 2008 to purchase 4,750,000 additional shares at $.12. As of
December  31,2004  no  Green  Shoes  warrants  or  three year warrants have been
exercised.  The  4,750,000  shares  have "piggy-back" registration rights as set
forth  in  the  subscription  agreement.  A  placement  agent fee of 10% plus 3%
expenses  was  paid  to  Westor  Online  who  served  as  the placement agent in
connection  with  this  financing.

          NOTE  6     Impairment  of  long-lived  assets
                      ----------------------------------

When  the Company completed its impairment testing, it determined that the value
of  assets  acquired  related  to  certain  store locations were impaired in the
amount  of  $107,000.

          NOTE  7     NOTES  PAYABLE  -  INDIVIDUALS
                     ------------------------------
In  2004  the  Company  borrowed  approximately  $98,250  from  several  private
investors  at an annual interest rate of 8%. One note in the aggregate amount of
$84,000  carried  a  20%  premium  to  the face value, which has been charged to
interest  expense in 2004, and is due in June and September of 2005.

          NOTE  8     NOTE  PAYABLE  -  DUTCHESS  PRIVATE  EQUITIES  FUND
                      ---------------------------------------------------

The  Company signed a short-term note payable to Dutchess Equities Fund, II L.P.
in  the  amount  of  $240,000  which  was  due December 27, 2004. The loan bears
interest at a rate of 12% per annum, it includes a 20% premium and it includes a
10%  penalty  for  failure  to pay by the due date. The premium in the amount of
$40,000  has been charged to the interest expense for 2004 The loan was not paid
back  timely;  hence,  the  penalty  was  assessed.

The  note  contained a stipulation that the Company would deliver 250,000 shares
of  common stock to Dutchess as inducement for entering into the financing.

The  Company  has  recorded a debt discount in the amount of $56,000 relating to
this loan. For the year ended December 31,2004, the Company amortized the entire
$56,000  debt  discount.

                                       21

During the year ended December 31, 2004 the Company also borrowed, under several
short term loan agreements, $210,500 from Dutchess Private Equities Fund bearing
an  interest  rate  of  12%.The  entire  balance  was  repaid  during  2004.

          NOTE  9     EQUITY  LINE  OF  CREDIT
                       ------------------------

The  Company  entered into an investment agreement in 2004 for an equity line of
credit with Dutchess Private Equities Fund. The agreement provides for a maximum
of $6,000,000 with 15,000,000 shares of common stock registered and available to
repay credit line advances. Shares are convertible based on 93% of the three-day
average  of  the lowest three out of five days subsequent to a put for funds. At
December  31,2004 12,854,131 shares were available under the terms of the equity
line  agreement. During 2004 the Company raised $376,833 from the equity line of
credit.

          NOTE  10     COMMITMENTS  AND  CONTINGENCIES
                       -------------------------------

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

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


<TABLE>
<CAPTION>

<S>                    <C>
Fiscal Year            Annual
  Ending               Payments
-----------            ---------

  2005                 $ 113,145
  2006                    95,439
  2007                    53,807
  2008                       633
                       ---------
Total                  $263,025
                       =========
</TABLE>

Rent  expense  was  $135,447  and $110,447 for the years ended December 31, 2004
and  2003,  respectively.

The  Company  did  not have liability and workers compensation insurance for the
year  ended  December  31,2004. The Company is currently negotiating renewals of
its  liability  insurance  commitments  and  worker's  compensation policies and
anticipates  securing  the  necessary  policies.

NOTE  11   CONCENTRATIONS OF CREDIT RISK

The  Company's  concentrations  of  credit  risk consist principally of Accounts
Receivable  and  Accounts  Payable.  The  Company purchases approximately 90% of
their  telephone supplies from two vendors. Additionally, these same two vendors
are  also  major  customers  of  the  Company  who  provide over 60% of revenue.

NOTE  12     CONVERTIBLE  DEBENTURES

During  February  2003  the  Company completed an additional debenture offering.
Pursuant  to  a  subscription  agreement with Dutchess Private Equities Fund, LP
("Dutchess")  the  Company  received  $212,500  from  the  sale  of  6%  secured
convertible  debentures.  The  terms  of  the  debentures provide for payment by
February  14,  2007  with  the  debentures  being convertible into the Company's
common  stock  at  any  time at the lesser of (i) 80% of the average of the five
lowest closing bid prices during the 15 days prior to conversion or (ii) 100% of
the  average  of  the  closing  bid  prices  for the 20 trading days immediately
preceding  the closing date. The Company has registered the underlying shares.on
Form  SB-2  .  As  of  December  31,  2004  and  2003  the  amount of debentures
outstanding  was  $100,493  and  $450,586,  respectively.  During  2004 Dutchess
converted  $350,093  worth  of  debentures  into  3,570,030  shares  of  stock.

NOTE  13     CAPITAL  STOCK  AND  STOCK  OPTIONS

The  Company  has  authorized  155,000,000 shares of stock, of which 150,000,000
shares  are $.001 par value common stock and 5,000,000 shares are $.01 par value
preferred  stock.  The  Board  of Directors is authorized to divide the class of
preferred  shares  into  series and to fix and determine the relative rights and
preferences  of  those  shares.

                                       22

In  April 1998 the Company authorized the issuance of 150,000 shares of Series A
Voting  Convertible  Cumulative  Preferred  Stock  for $1 per share. At December
31,  2004  no  Series  A  Preferred  shares are currently issued or outstanding.

During  July  2003,  the Company filed Form SB-2 Registration Statement with the
Securities and Exchange Commission to register 5,600,000 shares of common stock.
In  conjunction  with this registration statement the Company incurred legal and
accounting  costs  of approximately $35,000. The SB-2 Registration statement was
declared effective by the Securities and Exchange Commission in October of 2003.

During  July of 2004, the Board of Directors declared a 10% warrant dividend for
stockholders  of  record  August  27, 2004. The warrant was a three year warrant
giving  each record holder the right to purchase one additional restricted share
of common stock for every ten shares owned at a fixed price of $.25. The Company
has  not  registered  any  shares  in  relation  to  this  dividend.

During  January of 2004, the Company filed Form SB-2 Registration Statement with
the  Securities  and Exchange Commission to register 15,000,000 shares of common
stock.  In  conjunction  with  this  registration statement the Company incurred
legal  and  accounting  costs  of  approximately  $25,000. The SB-2 Registration
statement  was  declared  effective by the Securities and Exchange Commission in
February  of  2004.

During  the  quarter ended March 31, 2004 the Company issued 3,785,000 shares of
common  stock  for  services  pursuant to a Form S-8 registration statement. The
shares were valued at their fair market value on the date it was agreed that the
shares  would be issued. The non-cash stock compensation expense of $643,450 has
been  charged  to  operations  during  the  period  and  reported  under  SG&A.

During  the  quarter ended June 30, 2004, the Company issued 2,122,247 shares of
restricted  common  stock  for  compensation  and  consulting services valued at
$297,900.


During the quarter ended September 30, 2004, the Company issued 1,153,500 shares
of  restricted  common  stock  for  consulting  services  valued  at  $173,000.

During  the  quarter ended December 31,2004 the Company issued 933,973 shares of
restricted  common  stock  for  consulting  services valued at $105,851.

For  the  period ended December 31, 2003, the Company issued 1,630,000 shares of
stock  for  consulting  services  valued  at  $257,150

The  Company has a Non-Qualified Stock Option and Stock Grant Plan (the "Plan"),
adopted  in  July 1997.For the years ended December 31,2004 and 2003 the Company
has  not granted any options and currently plans to cancel the plan at a time to
be  determined  in  the near future pending attorney review. Under the Company's
Plan, the Company's Board of Directors has reserved 2,500,000 shares that may be
granted  at  the  Board of Directors' discretion. No option may be granted after
July  27, 2007 and the maximum term of the options granted under the Plan is ten
years.

The  effect  of  applying  SFAS 123 on a pro forma basis was $0 in 2004 and 2003
because  all  of  the  options  were  granted  and  fully  vested prior to 2003.

Changes  in  options  outstanding  under  the  plan  are  summarized as follows:

<TABLE>
<CAPTION>
<S>                                      <C>                <C>
                                         Number of shares   Weighted Average Exercise Price
                                         -----------------  -------------------------------
Outstanding at December 31, 2002. . . . .       598,000     $                       1.50
                                          ----------------  ----------------------------
Granted . . . . . . . . . . . . . . . . .                -                             -
Exercised . . . . . . . . . . . . . . . .                -                             -
Forfeited . . . . . . . . . . . . . . . .                -   $                         -
Outstanding at December 31, 2003 and 2004          598,000   $                      1.50
                                          ----------------  -----------------------------
</TABLE>

The exercise price for all options is at or above the market value of the common
stock  as  of  the  date  of  grant.

The following table summarizes information about fixed price stock options:

<TABLE>
<CAPTION>
<S>                <C>            <C>            <C>
           OUTSTANDING AND EXERCISABLE
Weighted           Weighted        Weighted      Weighted
Average            Average         Average       Average
Exercise. .        Number         Contractual    Exercise
Price . . .        Outstanding       Life          Price
===========        -----------   --------------   --------
0.81-1.38            4,000         6.1 years     $ 1.14
1.50- 2.75         594,000         6.7 years     $ 1.50
-----------        -----------   --------------   --------
</TABLE>

                                       23

The following details the warrants outstanding as of December 31, 2004 and 2003:

<TABLE>
<CAPTION>
<S>                                                <C>         <C>               <C>          <C>
                                                     2004        2004               2003       2003
                                                   Underlying  Exercise           Underlying   Exercise
                                                   Shares      Price             Shares        Price
                                                   ==========  =========         ==========   =========
Warrants issued during 2000                         1,036,000    $ 1.50           1,036,000    $ 1.50
Warrants issued during 2004 (10% Warrant Div)       3,000,000    $  .25                   -         -
Warrants issued during 2004 (A and B Warrants)      9,500,000    $.08/$.12                -         -
                                                    ---------- ---------          ----------  ---------
</TABLE>

During  the  year  ended  December  31, 2004 the Company declared a dividend and
agreed  to issue 3,000,000 three year warrants with an exercise price of $.25 to
stockholders  of record on August 27, 2004. If fully exercised the Company would
receive gross proceeds of approximately $750,000 before fees and expenses. As of
December  31,2004  no  warrants have been exercised. The Company also issued two
classes  of  warrants in conjunction with private placements closed during 2004,
the  Company  issued  4,750,000  "Green  Shoe"  or  "B"  warrants priced at $.08
expiring 180 days from the effective date of an SB-2 registration statement. The
Company  issued 4,750,000 "A" warrants priced at $.12 expiring in 2008. If fully
exercised  the  company  would  receive gross proceeds of approximately $950,000
before  fees  and  expenses.  As  of  December  31,2004  no  warrants  have been
exercised.


NOTE 14    INCOME TAXES
           ------------

The  Company  accounts  for  income taxes under SFAS 109, "Accounting for Income
Taxes",  which  requires  use  of  the  liability method. SFAS 109 provides that
deferred  tax  assets  and  liabilities  are  recorded  based on the differences
between  the  tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes, referred to as temporary differences. Deferred tax
assets  and  liabilities  at  the  end  of  each period are determined using the
enacted  tax  rates  that will be in effect when the differences are expected to
reverse.

Reconciliation  of the federal statutory income tax rate of 34% to the effective
rate  is  as  follows:



<TABLE>
<CAPTION>
<S>                                                       <C>           <C>
                                                               December 31
                                                              =============
                                                             2004         2003
                                                            ------       ------
Tax provision at the federal statutory income tax rate    ($792,000)    (297,000)

Valuation allowance                                        $792,000      297,000
                                                           --------      --------
Actual Tax provision                                       $     -       $     -
</TABLE>

The tax effects of temporary differences and net operating losses that give rise
to  significant portions of deferred tax assets and liabilities consisted of the
following:

<TABLE>
<CAPTION>
<S>                                  <C>               <C>
                                          December 31
                                          =============
Reconciling items: . . . . . . .        2004            2003
                                       -------          ------
Net operating loss carryforward:    $2,585,000       $1,793,000

Less valuation allowance . . . . .  (2,585,000)      (1,793,000)
                                    -----------      -----------
Net deferred tax asset . . . . .    $      -         $      -
                                    ----------       ----------
</TABLE>
The  net  operating  loss  carryforwards of approximately $6,700,000 will expire
through  2023.


                                       24

NOTE  15          SUBSEQUENT  EVENTS
                 ------------------

Subsequent  to  December 31, 2004 the Company fully extinguished its convertible
debenture  with  Dutchess  Private  Equities  Fund,  LP by issuing approximately
772,086  shares  of  its  stock  under  terms  of  its  convertible  debenture.

In March the Company closed an additional financing of approximately $777,000 by
issuing  9,375,000  shares valued at $.08 to a group of accredited investors. In
accordance  with  the  subscription  agreement  the  investors  will receive two
classes,  A  and B warrants for each share purchased. The warrants are priced at
$.08  and  $.12.  The  Company  filed the terms and conditions of the financing,
including  registration  rights in March of 2005 on Form 8K. Funds have been and
will  continue  to  be  used  to  reduce  debt, fund future acquisitions and for
general working capital purposes. During the period the Company closed a private
placement  of  shares  valued  at  $.08  to  an  accredited  investor by issuing
1,300,000  restricted  shares.

During  the  period  ended March 31, 2005 2,085,426 shares were issued under our
Equity  line  of  credit  for  proceeds  of  $292,000.

During 2005 all related party Notes have been paid in full.

During 2005 all notes payable to individuals  were  paid  in  full.

During  the  period ended March 31, 2005 the Company delivered 500,000 shares to
Dutchess  Private  Equities  Fund,  per a note agreement entered into during the
period  ended  December  31,  2004.

During  the  period  ended  March  31,  2005  the  Company  issued 2,030,000 for
consulting  services.  These  agreement  were  filed in an S-8 during January of
2005.

During  the period ended March 31, 2005 the Company issued 932,500 shares to two
officers  of  the  Company relating to note agreements entered into during 2004.


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

Changes in accountants were previously reported on Form 8-K.

ITEM  8A.  CONTROLS  AND  PROCEDURES.

EVALUATION  OF  DISCLOSURE  CONTROLS  AND  PROCEDURES

Our  Chief  Executive  Officer  and  Chief Financial Officer are responsible for
establishing and maintaining adequate internal controls over financial reporting
for  the  Company.  Our  Chief  Executive  Officer  and  Chief Financial Officer
evaluated  the effectiveness of our disclosure controls and procedures as of the
end  of  the  quarter  covered  by  this Annual Report on Form 10-KSB. Our Chief
Executive  Officer  and  Chief  Financial  Officer concluded that our disclosure
controls  and  procedures  are  currently  effective  but may not continue to be
effective  as  the  Company grows. Based on this evaluation, the Chief Executive
Officer  and  Chief  Financial  Officer  will  accelerate  plans  to  implement
additional  operating  and financial reporting controls and procedures to ensure
that information in reports that we file or submit under the Securities Exchange
Act  of  1934  are  recorded, processed, summarized and reported within the time
periods  specified  in  Securities  and  Exchange  Commission  rules  and forms.

CHANGES  IN  INTERNAL  CONTROLS

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

ITEM  8B.  OTHER  INFORMATION.

None.

                                    PART III

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

The  following  individuals  presently  serve  as  officers and directors of the
Company.


                                       25

<TABLE>
<CAPTION>
<S>                      <C>           <C>
Name                     Age            Position
---------------------     -----         -----------
Scott Gallagher           38           Chairman  of  the  Board of Directors,
                                       Chief  Executive  Officer and President

Linda Ehlen               55           Director, Chief Financial Officer

David R.  Rasmussen       38           Director
</TABLE>


All  directors  hold  office  until  the next annual meeting of stockholders and
until  their  successors  are elected. Officers are elected to serve, subject to
the  discretion of the Board of Directors, until their successors are appointed.

SCOTT  GALLAGHER.  Mr.  Gallagher  has  served  on  our board of directors since
January  11,  2002.  Mr.  Gallagher  serves as the Chief Executive Officer and a
director  of  our  wholly  owned  subsidiary  FTS Wireless, Inc. Since 1998, Mr.
Gallagher  has  served  as  the  president  of About-Face Communications, LLC, a
privately  held business consulting firm located in Yardley, Pennsylvania. Prior
to  founding  About-Face  Communications,  LLC,  Mr.  Gallagher  was  the  chief
investment  officer  and  a  general  partner with the Avalon Investment Fund, a
private hedge fund based in New York City and Philadelphia. Prior to co-founding
Avalon  Investment  Fund,  Mr.  Gallagher  was  a  manager  and  founder  of the
Langhorne,  Pennsylvania  office  for  Scottsdale  Securities,  Inc., a national
brokerage  firm  based  in  St.  Louis,  Missouri. Mr. Gallagher previously held
S.E.C.  licenses series 7, 63 and 24 all of which were retired in good standing.

LINDA  EHLEN. Ms. Ehlen has served on our board of directors since February 7th,
2004.  Since  1995,  Ms. Ehlen has served as the Chief Financial Officer of Casa
Comieda, Inc., a company involved in the restaurant business. From 1981 to 1995,
she was a principal and controller for Livingston Oil Corp. Ms. Ehlen earned her
Bachelor's  Degree  in  Accounting  from  Monmouth University, Rutgers School of
Government  and  Accounting.

DAVID  R.  RASMUSSEN.  Mr.  Rasmussen has served on our board of directors since
February  10,  2002.  Mr.  Rasmussen  received  a  Bachelor's degree in Computer
Technology from Rockhurst University in Kansas City Missouri. He has been in the
IT  (information  Technology Field) since 1992. From 1997 through 2000 he worked
as  a  program  analyst for National Association of Insurance Commissions. Since
2000, Mr. Rasmussen has served as a Project leader for ERC, Inc, a subsidiary of
General  Electric.  In  his  current  position  he  is charged with providing IT
solutions  that  enable  business  to  drive  core processes and grow profitable
relationships.

INVOLVEMENT  IN  CERTAIN  LEGAL  PROCEEDINGS

We are not aware of any material legal proceedings that have occurred within the
past  five  years  concerning  any director, director nominee, or control person
which  involved  a criminal conviction, a pending criminal proceeding, a pending
or  concluded administrative or civil proceeding limiting one's participation in
the  securities or banking industries, or a finding of securities or commodities
law  violations.

ITEM  10.  EXECUTIVE  COMPENSATION.

The  following  table  presents  a summary of the compensation paid to our Chief
Executive Officer during the last three fiscal years. No other executive officer
received compensation in excess of $100,000 during 2004. Except as listed below,
there  are  no  bonuses,  other  annual compensation, restricted stock awards or
stock  options/SARs  or  any  other compensation paid to the executive officers.

<TABLE>
<CAPTION>
<S>                             <C>            <C>            <C>
                           Summary Compensation Table
                                                                 Long-term
                                   Annual Compensation          Compensation
                                ---------------------------   ------------------
                                                Other Annual     Securities
Name and Position                Year  Salary   Compensation  Underlying Options
-------------------------------  ----  ------   ------------  ------------------
Scott Gallagher                  2004  $100,000(3)  $25,000
                                 2003  $100,000(2)  $25,000
                                 2002  $201,000(1)  $25,000
 Chairman of the Board and
 Chief Executive Officer
<FN>
(1)In 2002, we did not pay Mr. Gallagher in cash. Instead, we paid him 1,200,000
shares  of  stock  valued  at  $120,000  pursuant to his employment contract. In
addition  we  paid  him  1,145,833  shares  that were converted into $75,000 and
applied  to his salary and 75,000 shares as board compensation valued at $6,000.
At  the  end of the year, Mr. Gallagher had $45,000 in unpaid accrued salary and
bonuses.  In  2003, the accrued amounts were converted into common shares at the
prevailing  market  rate. Mr. Gallaghers contract includes an annual bonus of at
least  $25,000

(2)In  2003,  Mr.  Gallagher was issued 1,000,000 common shares in lieu of cash.
Mr.  Gallaghers'  contract  includes  an  annual  bonus  of  at  least  $25,000

(3)In 2004, Mr. Gallagher was issued 625,000 restricted common shares in lieu of
cash.  Mr.  Gallaghers'  annual  bonus  for  2004  was  $25,000
</TABLE>

                                       26

COMPENSATION  AGREEMENTS
------------------------

We  do  not  currently  have   employment agreements with any of our executive
officers.

Directors  may be  compensated  $2,000  per  quarter  at our
discretion.

We  did not grant stock options in 2003 or 2004.  Additionally, no stock options
were  exercised  by  any  of  the  named  executive  officers  in  2003 or 2004.

AUDIT  COMMITTEE

We  do  not have a separate Audit Committee. Our Board of Directors performs the
functions  usually designated to an Audit Committee. Linda Ehlen, a Director and
our  Chief Financial Officer, qualifies as an "audit committee financial expert"
under  the  rules  of  the  Securities  and  Exchange Commission. We employee an
outside  firm  to  advise  and  consult  management and the board on all matters
relating  to  our  financial  statements.

COMPLIANCE  WITH  SECTION  16(A).

Section  16(a) of the Exchange Act, as amended, requires our executive officers,
directors  and persons who beneficially own more than 10% of our common stock to
file  reports of their beneficial ownership and changes in ownership (Forms 3, 4
and  5,  and any amendment thereto) with the SEC. Executive officers, directors,
and  greater-than-ten  percent holders are required to furnish us with copies of
all  Section  16(a)  forms they file. Based on our review of the activity of our
officers  and  directors for the fiscal year ended December 31, 2004, we believe
Forms  3,  4  or  5  were  timely  filed.

CODE OF ETHICS
We  have  adopted  a Code of Ethics. A copy of our Code of Ethics was filed with
our  Form  10-KSB  for  the  period  ending  December  31,  2003.

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED  STOCKHOLDER  MATTERS.

The following table sets forth certain information as of the date of this Report
regarding  the  beneficial  ownership  of  our  common stock held by each of our
executive officers and directors, individually and as a group and by each person
who beneficially owns in excess of five percent of the common stock. In general,
beneficial  ownership includes those shares that a person has the power to vote,
sell,  or  otherwise  dispose. Beneficial ownership also includes that number of
shares,  which  an  individual  has the right to acquire within 60 days (such as
stock  options)  of the date this table was prepared. Two or more persons may be
considered  the  beneficial  owner  of  the  same  shares. The inclusion in this
section of any shares deemed beneficially owned does not constitute an admission
by  that  person  of  beneficial  ownership  of  those  shares.

The shareholders listed below have sole voting and investment power. The address
of  each  of  the  beneficial  owners  is 7610 West Hillsborough Ave. Tampa, Fl.
33615,  unless  otherwise  indicated.  All  ownership  of  securities  is direct
ownership  unless  otherwise  indicated.

<TABLE>
<CAPTION>
<S>                                    <C>                    <C>
Name                                   Shares                 Voting  Securities (1)
---------------------------------      ----------             -----------------

Scott  Gallagher                        6,614,951                 12.0%

Linda  Ehlen                              729,916                  1.3%

David  R.  Rasmussen                      125,000                   *

All  Officers  and  Directors
as  a  Group  (3  persons)              7,469,867                 13.6%

LeRoy  Landhuis(2)                      6,793,471                 12.3%
212  N.  Wahsatch  Avenue,
Suite  301
Colorado  Springs,  CO  80903
-----------------------------
<FN>

 *   Represents  less  than  one  percent  of  the  Company's  shares  outstanding.

(1)  Based on 54,877,195 shares of our common stock outstanding as of March 31, 2005.

(2)  Includes  warrants  for  1,036,000  shares of common stock with an exercise
price  of  $1.50  per  share  and  expiring  on  April  19,  2010.
</TABLE>

                                       27

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.

During  June  2004,  we  entered  into a note agreement with our Chief Financial
Officer,  Linda  Ehlen. Ms. Ehlen extended a loan to us in the amount of $61,200
bearing an interest amount of 8% per annum and a face amount premium of 20%. Ms.
Ehlen  was  issued  307,000  shares  of  restricted  stock  relating to the loan
agreement.  In  September  2004,  our  Chief Executive Officer, Scott Gallagher,
entered  into a note agreement. Mr. Gallagher extended us loans in the amount of
$133,800  one  note  bears  an  interest  rate of 8% per annum and a face amount
premium  of  20%. Mr. Gallagher was issued 625,000 restricted shares relating to
the  $125,000  loan  agreement.

ITEM  13.  EXHIBITS.

3.1  Articles  of  Incorporation filed June 30, 1997 (included as exhibit 2.1 to
the  Form  10-SB  dated  August  24, 1998 and incorporated herein by reference).

3.2 Articles of Amendment of the Articles of Incorporation, filed April 15, 1998
(included  as  exhibit  2.2  to  the  Form  10-SB  dated  August  24,  1998  and
incorporated  herein  by  reference).

3.3  Articles  of  Amendment  of the Articles of Incorporation, filed August 23,
2000 (included as exhibit 3.3 to our Annual Report on Form 10-KSB for the fiscal
year  ended  December  31,  2000,  and  incorporated  herein by this reference).

3.4  Bylaws (included as exhibit 2.3 to the Form 10-SB dated August 24, 1998 and
incorporated  herein  by  reference).

3.5 Articles of Incorporation, dated December 23, 2003 (filed as Attachment B to
the  Registrant's  Definitive Proxy on Form DEF 14A filed on January 9, 2004 and
incorporated  herein  by  reference).

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

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

10.1 Subscription Agreement between the Registrant and Dutchess Private Equities
Fund,  LP  (included  as exhibit 10.1 to the Registrant's Current Report on Form
8-K,  dated  February  24,  2003  and  incorporated  herein  by  reference).

10.2  Debenture  Agreement  between the Registrant and Dutchess Private Equities
Fund,  LP  (included  as exhibit 10.2 to the Registrant's Current Report on Form
8-K,  dated  February  24,  2003  and  incorporated  herein  by  reference).

10.3  Registration  Rights Agreement between the Registrant and Dutchess Private
Equities  Fund,  LP (included as exhibit 10.3 to the Registrant's Current Report
on  Form  8-K,  dated  February  24, 2003 and incorporated herein by reference).

10.4 Escrow Agreement between the Registrant and Dutchess Private Equities Fund,
LP  (included  as  exhibit  10.4 to the Registrant's Current Report on Form 8-K,
dated  February  24,  2003  and  incorporated  herein  by  reference).

10.5  Debenture  Exchange  Agreement between the Registrant and Dutchess Private
Equities  Fund,  LP (included as exhibit 10.5 to the Registrant's Current Report
on  Form  8-K,  dated  February  24, 2003 and incorporated herein by reference).

10.6  Addendum  to  the Subscription Agreement, dated July 21, 2003, between the
Registrant  and  Dutchess Private Equities Fund, LP (included as Exhibit 10.1 to
the Registrant's Current report on form 8-K dated July 22, 2003 and incorporated
herein  by  reference).

10.7  Amended  Debenture  between  the  Registrant and Dutchess Private Equities
Fund,  LP  (included  as Exhibit 10.2 to the Registrant's Current Report on Form
8-K,  dated  July  22,  2003  and  incorporated  by  reference).

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

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

                                       28

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

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

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

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

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

10.15  Consulting  Agreement  between  the  Registrant  and  Pablo  Oliva, dated
November  12,  2003  (filed  as  exhibit  99.6  to the Registrant's S-8 filed on
February  3,  2004  and  incorporated  herein  by  reference).

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

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley  Act  of  2002.

31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley  Act  of  2002.

32.1  Certification  of  Officers pursuant to 18 U.S.C. Section 1350, as adopted
pursuant  to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002.


ITEM  14.  PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES.

AUDIT  FEES

For  their  audit of our annual financial statements and for their review of our
Quarterly Reports on Form 10-QSB, WithumSmith+Brown, P.C. entered into an annual
agreement whereby we pay a fixed annual rate of $45,000 for substantially all of
our annual SEC related accounting fees during 2005. For the year ending December
31,  2004  we  paid  approximately  $13,500  to  WithumSmith+Brown, P.C. in fees
related  to our third quarter 10-QSB filing. We paid R.E. Bassie and Co. fees of
$22,500  relating to our 2003 audit and first two quarterly filings during 2004.

AUDIT-RELATED FEES

None.

TAX  FEES

For  their  review of tax matters, Stark Winter Schenkein & Co., LLP billed us a
total  of  $1,250  in  the  fiscal year ended December 31, 2003. During 2004 the
Company  paid  its  principal  accountant  $0  related  to  tax.

OTHER FEES

Stark  Winter  Schenkein  &  Co., LLP billed us $8,235 related to a registration
statement  on Form SB-2 and $865 related to a proposed merger in the fiscal year
ended  December  31,  2003.


                                   SIGNATURES
                                   ----------

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

                                 FTS GROUP, INC.

                       By:  /s/  Scott  Gallagher
                           -----------------------------------------------
                           Scott  Gallagher,  Chairman  of  the  Board,
                           Chief  Executive  Officer,  President  and  Director

                             Date:  April 5, 2005
                             -------------------------------------------

                       By:  /s/  Linda  Ehlen
                           ------------------------------------------------
                           Linda  Ehlen,  Chief  Financial  Officer, Controller,
                           Director

                             Date:  April 5, 2005
                             -------------------------------------------

                       By:  /s/  David  R.  Rasmussen
                           ------------------------------------------------
                           David  R.  Rasmussen,  Director

                             Date:  April 5, 2005
                             -------------------------------------------

                                       29