UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB**


(Mark
        One)
  x
              ANNUAL
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934
  For
        the
        fiscal year ended **April
        30, 2007**
 
 o
              TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT
  For
        the
        transition period from _________ to ________
 
 Commission
        file number **333-136592**





**MSTI
                Holdings, Inc.**(Name
                of small business issuer in its charter)**Delaware**
            **26-0240347**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)**259-263
                Goffle Road**
              **Hawthorne,
                New Jersey**
            **07506**(Address
                of principal executive offices)
            (Zip
                Code)Issuer’s
                telephone number:(973)
                304-6080




Securities
                registered under Section 12(b) of the Exchange Act:Title
                of each class
            Name
                of each exchange on which registered**None**
            **Not
                Applicable**Securities
                registered under Section 12(g) of the Exchange Act:Title
                of each class
            Name
                of each exchange on which registered**None**
            **Not
                Applicable**





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. **o**





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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure
      will be contained, to the best of 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.
**o**





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


**Yes
      o No x**





State
      issuer’s revenues for its most recent fiscal year. **$0**





As
      of
      July 26, 2007, the aggregate market value of the voting and non-voting common
      equity held by non-affiliates computed by reference to the average bid and
      asked
      price of such common equity was **$10,593,709.**





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date. **29,386,552**  **Common
      Shares as of July 19, 2007.**





Transitional
      Small Business Disclosure Format (Check One): **Yes:
      __; No x**







EXPLANATORY
      NOTE





UNLESS
      SPECIFICALLY NOTED OTHERWISE, THE INFORMATION AND DISCUSSIONS CONTAINED IN
      THIS
      ANNUAL REPORT ON FORM 10-KSB REFLECT THE FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS OF MSTI HOLDINGS, INC. f/k/a FITNESS XPRESS SOFTWARE, INC. FOR THE
      FISCAL YEAR ENDED APRIL 30, 2007. SUBSEQUENT TO THE REPORTING PERIOD, ON MAY
      24,
      2007, WE COMPLETED A MERGER BETWEEN OUR WHOLLY OWNED SUBSIDIARY, MICROWAVE
      ACQUISITION CORP., A DELAWARE CORPORATION, AND MICROWAVE SATELLITE TECHNOLOGIES,
      INC., A NEW JERSEY CORPORATION (“MST”), AS DESCRIBED IN OUR CURRENT REPORT ON
      FORM 8-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 2007,
      AND
      AS AMENDED ON MAY 30, 2007 (THE “MERGER”). SUCH REPORT ALSO INCLUDES A CURRENT
      DESCRIPTION OF OUR BUSINESS.


PRIOR
        TO
        THE MERGER, ON MAY 18, 2007, FITNESS XPRESS SOFTWARE, INC., A NEVADA CORPORATION
        (“FXSI-NV”), WAS MERGED WITH AND INTO FITNESS XPRESS SOFTWARE, INC., A DELAWARE
        CORPORATION (“FXSI-DE”), FOR THE SOLE PURPOSE OF CHANGING ITS STATE OF
        INCORPORATION TO DELAWARE FROM NEVADA PURSUANT TO A CERTIFICATE OF OWNERSHIP
        AND
        MERGER DATED MAY 18, 2007 AND APPROVED BY STOCKHOLDERS ON MAY 18, 2007. UNDER
        THE TERMS OF THE CERTIFICATE OF OWNERSHIP AND MERGER, EACH SHARE OF FXSI-NV
        WAS
        EXCHANGED FOR 1.0563380282 SHARES OF FXSI-DE.




PURSUANT
      TO THE TERMS AND CONDITIONS OF THE MERGER, EACH SHARE OF MST COMMON STOCK ISSUED
      AND OUTSTANDING IMMEDIATELY PRIOR TO THE CLOSING OF THE MERGER WAS CONVERTED
      INTO THE RIGHT TO RECEIVE 120,000 SHARES OF FXSI-DE COMMON STOCK. IN ADDITION,
      $5,000,000 OF OUTSTANDING INDEBTEDNESS OF MST TO TELKONET, INC., A UTAH
      CORPORATION AND MST’S 90% SHAREHOLDER PRIOR TO THE MERGER (“TELKONET”), WAS
      CONVERTED AT $1.00 PER SHARE INTO 5,000,000 SHARES OF FXSI-DE COMMON STOCK.
      AS A
      RESULT, AN AGGREGATE OF 20,000,000 SHARES OF FXSI-DE COMMON STOCK WAS ISSUED
      TO
      THE HOLDERS OF MST COMMON STOCK.




IMMEDIATELY FOLLOWING
      THE CLOSING OF THE MERGER, UNDER THE TERMS OF AN AGREEMENT OF CONVEYANCE,
      TRANSFER AND ASSIGNMENT OF ASSETS AND ASSUMPTION OF OBLIGATIONS, FXSI-DE
      TRANSFERRED ALL OF ITS PRE-MERGER ASSETS AND LIABILITIES TO ITS
      WHOLLY-OWNED SUBSIDIARY, FXS HOLDINGS, INC., A DELAWARE CORPORATION (“SPLITCO”).
      THEREAFTER, PURSUANT TO A STOCK PURCHASE AGREEMENT, FXSI-DE TRANSFERRED ALL
      OF THE OUTSTANDING CAPITAL STOCK OF SPLITCO TO A MAJOR STOCKHOLDER OF
      FXSI-DE IN EXCHANGE FOR CANCELLATION OF 3,169,014 SHARES OF FXSI-DE COMMON
      STOCK
      HELD BY SUCH STOCKHOLDER (THE “SPLIT-OFF”).




UPON
      THE
      CLOSING OF THE MERGER, RON BELL RESIGNED AS THE SOLE OFFICER AND DIRECTOR
      OF FXSI-DE AND SIMULTANEOUSLY THEREWITH A NEW BOARD OF DIRECTORS WAS APPOINTED.
      THE NEW BOARD OF DIRECTORS INITIALLY CONSISTED OF RONALD W. PICKETT, FRANK
      T.
      MATARAZZO, WARREN V. MUSSER, THOMAS C. LYNCH AND THOMAS M. HALL.





AS
      A
      RESULT OF THE MERGER, OUR FISCAL YEAR END HAS CHANGED FROM APRIL 30 TO DECEMBER
      31. WE WILL THEREFORE FILE A SEPARATE ANNUAL REPORT ON FORM 10-KSB FOR THE
      FISCAL YEAR ENDING DECEMBER 31, 2007 RELATING TO OUR FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
      ACT
      OF 1934, AS AMENDED.




i





**TABLE
      OF CONTENTS**





PagePART
                IItem
                1.
            
            Description
                of Business
            
            1Item
                2.
            
            Description
                of Property
            
            6Item
                3.
            
            Legal
                Proceedings
            
            6Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            6PART
                IIItem
                5.
            
            Market
                for Common Equity and Related Stockholder Matters
            
            7Item
                6.
            
            Plan
                of Operation
            
            7Item
                7.
            
            Financial
                Statements
            
            12Item
                8.
            
            Changes
                In and Disagreements With Accountants on Accounting and Financial
                Disclosure
            
            13Item
                8A.
            
            Controls
                and Procedures
            
            13Item
                8B.
            
            Other
                Information
            
            13PART
                IIIItem
                9.
            
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance With
                Section
                16(a) of the Exchange Act
            
            13Item
                10.
            
            Executive
                Compensation
            
            17Item
                11.
            
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            18Item
                12.
            
            Certain
                Relationships and Related Transactions
            
            20Item
                13.
            
            Exhibits
            
            21Item
                14.
            
            Principal
                Accountant Fees and Services
            
            24





ii


PART
      I




**Item
      1. Description of Business**




We
      were
      incorporated pursuant to the laws of Nevada on February 10, 2006 for the purpose
      of marketing and distributing a specific suite of fitness management software
      known as Fitness Express. The Fitness Express software was owned by Just Ladies
      Fitness Ltd., a private British Columbia company.





On
      June
      29, 2006, we executed a manufacturer/dealer agreement with Just Ladies Fitness
      Ltd. that provided us with a non-exclusive license to market and sub-license
      the
      company's fitness industry point-of-sale and customer management software in
      North America. The material terms of the agreement were as follows:





1.
      the
      parties would use their best efforts to accomplish an initial launch of the
      Fitness Express software by October 27, 2006;





2.
      we
      must establish a website devoted to the fitness industry and the Fitness Express
      software;





3.
      we
      must provide licensees of the software with customer support;





4.
      Just
      Ladies Fitness Ltd. must provide us with web page information, product training
      and user manuals;





5.
      we
      will be responsible for invoicing and collections relating to the sub-licensing
      of the software;




6.
      we
      must pay Just Ladies Fitness Ltd. 55% of its software published list price
      and
      were entitled to retain the remaining 45% for our services; and





7.
      the
      agreement was effective until June 29, 2008 and transferred to SplitCo in
      connection with the Merger on May 24, 2007.





Key
      features of the Fitness Express software were as follows:





1.
      it was
      based upon a Windows operating system rather than an antiquated DOS (disk
      operating system)





2.
      it
      tracked and reported marketing and media campaigns, user-defined target market
      creation and reporting, as well as gift card creation and
      redemption;





3.
      it
      allowed for an unlimited number of members, workstations and locations, as
      well
      as user-definable customer and product fields and reporting;





4.
      it
      provided real time, web-based membership, service, inventory and financial
      information;





5.
      it
      allowed employees to check in and out of the system, either through a
      fingerprint scan or card system, eliminating the need for a time clock.
      Management could track employee attendance information, as well as location
      and
      work status. Contractor hours and class participation can also be tracked and
      reported; and




1




6.
      it
      included a point of sale module that supported barcode scanning, receipts,
      cash
      dispensing and tax and discount calculations. Sales and inventory information
      was updated based on transactions.





**Fitness
      Industry**





The
      fitness industry has seen enormous growth over the past five years across North
      America. This growth is occurring for a variety of reasons: The baby boom
      generation is moving through middle age and into retirement, and with more
      free
      time, is turning to fitness to maintain or improve its lifestyle. Concurrently,
      the Generation X group, which has grown up with the fitness industry, is looking
      for more from a modern Health & Fitness Club.





Currently,
      fitness clubs across North America are burdened with legacy software systems
      that were not designed for the complex operating environments available today
      and are not capable of meeting the sophisticated requirements of today's
      gyms.





**Sales
      and Marketing Strategy**





As
      of
      April 30, 2007, we developed a unique concept for marketing fitness management
      software. Traditionally, the fitness software business had been dominated by
      manufacturing, marketing and sales companies. The problem with this business
      concept was that seldom does one company carry out all three functions well.
      Good programmers seldom make good sales people. And good marketers often are
      unable to acquire the budget and resources required to develop and brand the
      product. The uniqueness of the opportunity for fitness management software
      was
      four fold:





1.
      we had
      a non- exclusive North American marketing and sales license for the Fitness
      Express software;





2.
      our
      focus was fixed on marketing and sales rather than programming and
      development;





3.
      the
      fitness industry is rapidly expanding; and





4.
      the
      industry was populated by a number of old DOS based systems that were not
      designed for today's complex operating systems and peripheral
      products.





We
      planned to market the Fitness Express software to established point of sale
      dealers and selected independent operators in the fitness industry. As well,
      we
      planned to create direct marketing campaigns that targeted large national
      fitness chains.





The
      benefits of Fitness Express software to potential customers were to include
      the
      following:





· No
        upfront cost or fees




2




· No
        on-hand inventory




·
      Advance media exposure




·
      Multiple marketing channels




·
      Focus on sales rather than
      manufacturing




·
      Old legacy systems do not provide the
      required flexibility and expandability




·
      Most existing Windows-based software
      products are expensive, enterprise systems




·
      Competitive price point system




Currently,
      75% of the fitness business is utilizing an antiquated DOS based system. The
      remaining 25% are using larger, bundled, expensive Windows/Web based solutions.
      Our primary target market was those fitness companies running older legacy
      systems needing to convert to a more affordable, full featured, Windows/Web
      based solutions.





We
      intended to market the Fitness Express software system in the following
      ways:





Magazines
      & Publications - Articles and reviews would have been the first marketing
      action. We planned to brand our product through press releases, paid
      advertisements, articles and reviews in leading fitness magazines and
      publications.





Web
      Site
      - Our web site, which was yet to be developed, would have been forward on a
      continuation of the branding of the Fitness Express software. We planned to
      use
      state of the art search engine optimization tools to allow Internet users to
      find the fitness software information that they were seeking. As well, we
      planned to allocate a portion of our marketing budget to initiate a Google
      Adword campaign featuring keywords and phrases used by the fitness industry.
      The
      content of the webpage was to feature product overviews, news & events,
      on-line demonstrations and on-line video training.





Conferences
      and Trade Shows - As a follow up to our initial marketing effort, we planned
      to
      attend targeted industry specific trade shows in North America.





*Other
      Products and Services*





·
            On-going
                software support was to be
                implemented.





·
            On-going
                software upgrades were to be a part of subscribed
                program.





·
            An
                online shopping cart with secured payment processing was to be populated
                with software products, services, and hardware peripherals to be
                implemented as tabs on the web
                page.





·
            On-line
                video training was to be available as part of the initial sale or
                to be
                purchased as an annual subscription
                fee.





·
            Biometric
                security was to be offered as an "additional
                Module".




3




·
            Electronic
                Document and Signature Storage was to be available as an "additional
                product offering".





·
            General
                ledger export to various popular accounting systems were to be available
                as an "additional product
                offering."





·
            On-line
                web scheduling and booking "additional product offering" were to
                make it
                easy and convenient for members to identify classes they would like
                to
                participate in, their availability and instructor
                information.





·
            An
                Internet based payment processing module was to be offered as an
                "additional product offering" enabling the point of sale screen to
                easily
                and quickly process credit and debit card transactions directly through
                the software.





·
            Additional
                workstation and location licenses were to be available for purchase
                as
                needed.





**Product
      Development**





Internet
      Value Added Services - As we continued to provide convenience to our customers
      through traditional means, we also planned to develop and introduce Internet
      value added services to our business model. One of many types of services we
      planned to implement in this model was our Web Store and Training Center.
      Through our web site, which we were developing, we planned to provide
      information, services and a shopping cart to which customers could not only
      inquire and/or stay abreast of all products and services offered, but actually
      execute their purchase decision online. Our product offering was to include
      all
      point of sale peripheral products required for a club or location installation.
      Our information services would also include on- line demonstrations and a series
      of on line training sessions.





Through
      the Internet, potential buyers were to have access to extensive selection,
      information, convenient shopping hours, knowledgeable sales professionals,
      responsive customer & training services and broad geographic coverage. Our
      "Click & Brick" -commerce model was designed to provide consumers with a
      convenient and enjoyable shopping experience in either an Internet or via email
      or phone to a company sales representative.





**Extensive
      Product Information and Knowledge**





Our
      goal
      was to promote increased sales by making our web-site easy to find and use.
      We
      were to develop and provide professionally done easy to understand demonstration
      and training videos, as well as competitively priced, brand recognizable
      hardware products. Our sale representatives were to be industry based and
      professionally trained.





**Competitive
      Price and Compelling Value**





We
      planned to offer our customers high value software and hardware products at
      competitive prices and, combined with our high-quality shopping experience,
      would have provided compelling value.




4





**Geographic
      Coverage**





Initially,
      industry specific publications and a significant Internet presence were to
      allow
      Fitness Xpress software to enter the market. Later, we planned to include
      industry specific trade shows and conferences to expand our coverage
      area.





Corporate
      Sales Team - Initially, reference sales and a corporate web site were to raise
      the industry's consciousness to our products and services. However, we were
      convinced that our corporate needs would have been best met through direct
      contact, either in person or via email. Our president, who planned to initiate
      all marketing activities, was to demonstrate the difference between our product
      and our competitors' software. Furthermore, we planned to market ourselves
      as a
      full service organization, including ongoing consultation, service and support,
      that could efficiently deliver products and services anywhere in North
      America.





Channel
      Partners - To serve as another point of contact to the business community,
      we
      planned to develop relationships with specific value added resellers and dealers
      who held their own established business contacts through the course of their
      particular business enterprises. This program would have allowed our products
      and services to be presented as business opportunities that may have been
      overseen or not yet approached by our corporate sales team. By working in
      conjunction with our corporate sales team, our channel partners would have
      received support, expertise and sales consulting on any opportunity
      presented.





**Compliance
      with Government Regulation**





We
      did
      not believe that government regulation would have had a material impact on
      the
      way we conducted our business.





**Employees**





We
      had no
      employees as of April 30, 2007 other than our president, Ron Bell.





**Research
      and Development Expenditures**





We
      did
      not incur any research or development expenditures since our incorporation
      through April 30, 2007.





**Subsidiaries**





As
      of
      April 30, 2007, we did not have any subsidiaries.





**Patents
      and Trademarks**





As
      of
      April 30, 2007, we did not own, either legally or beneficially, any patents
      or
      trademarks.




5





**Item
      2. Description of Property**





Prior
      to
      the reverse Merger with MST described above, we did not hold ownership or
      leasehold interest in any property. Our president, Mr. Ron Bell, provided us
      with office space and related office services free of charge.





With
      the
      completion of the Merger, we relocated our principal offices to Hawthorne,
      New
      Jersey, where we lease approximately 12,600 square feet of office and warehouse
      space for approximately $6,729 per month, plus applicable taxes, subject to
      adjustments in accordance with consumer price index fluctuations. The current
      lease term expires on April 30, 2010 at which time we have the option to extend
      the lease for an additional five-year period. We believe our current facilities
      are adequate for our immediate and near-term needs. Additional space may be
      required as we expand our activities. We do not currently foresee any
      significant difficulties in obtaining any required additional
      facilities.




We
      lease
      approximately 64 square feet at a collocation facility located in New York
      City
      for our telecommunications and video equipment, at a monthly rent of
      $1,664.




We
      have a
      license to maintain a major point-of-presence at the Trump International Hotel
      and Tower Condominium located at Columbus Circle in New York City. Pursuant
      to
      the license agreement, we have the right to install antennas and other equipment
      on the building’s rooftop and in certain equipment storage areas for a license
      fee of $3,800 per month. The term of the agreement expires on June 30,
      2012.





**Item
      3. Legal Proceedings**





As
      of
      April 30, 2007, we were not a party to any pending legal proceeding and were
      not
      aware of any pending legal proceeding to which any of our officers, directors,
      or any beneficial holders of 5% or more of our voting securities are adverse
      to
      us or have a material interest adverse to us.





**Item
      4. Submission of Matters to a Vote of Security Holders**





No
      matters were submitted to our security holders for a vote, through the
      solicitation of proxies or otherwise, during the fourth quarter of the fiscal
      year ended April 30, 2007.





6


**PART
      II**





**Item
      5. Market for Common Equity and Related Stockholder
      Matters**





Prior
      to
      the Merger with MST, there was no public market for our common
      stock.




As
      of
      July 19, 2007, there were 69 holders of record of our common stock. Additional
      beneficial owners of our common stock hold shares in street names through
      brokers and custodians.




We
      have
      not declared or paid any cash dividends on our common stock and do not
      anticipate declaring or paying any cash dividends in the foreseeable future.
      We
      currently expect to retain future earnings, if any, for the development of
      our
      business. Dividends may be paid on our common stock only if and when declared
      by
      our Board of Directors.




During
      the year ended April 30, 2007, we did not (1) sell any securities that were
      not
      registered under the Securities Act, (2) have any equity compensation plans
      in
      place and (3) repurchase any of our equity securities.





**Item
      6. Plan of Operation**





**Forward-Looking
      Statements**




Certain
      statements, other than purely historical information, including estimates,
      projections, statements relating to our business plans, objectives, and expected
      operating results, and the assumptions upon which those statements are based,
      are “forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
      and Section 21E of the Securities Exchange Act of 1934. These
      forward-looking statements generally are identified by the words “believes,”
“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and
      similar expressions. We
      intend
      such forward-looking statements to be covered by the safe-harbor provisions
      for
      forward-looking statements contained in the Private Securities Litigation Reform
      Act of 1995, and are including this statement for purposes of complying with
      those safe-harbor provisions. Forward-looking
      statements are based on current expectations and assumptions that are subject
      to
      risks and uncertainties which may cause actual results to differ materially
      from
      the forward-looking statements. Our
      ability to predict results or the actual effect of future plans or strategies
      is
      inherently uncertain. These risks and uncertainties should also be considered
      in
      evaluating forward-looking statements and undue reliance should not be placed
      on
      such statements. We
      undertake no obligation to update or revise publicly any forward-looking
      statements, whether as a result of new information, future events or otherwise. Further
      information concerning our business, including additional factors that could
      materially affect our financial results, is included herein and in our other
      filings with the SEC.




**Plan
      Of Operations**




**Product
      Introduction**




We
      planned to rely upon the growth of the North American fitness industry for
      the
      success of our business plan.




7




We
      were
      to commence operation by distributing Fitness Express software through corporate
      sales personnel. We expected that it would take us six to nine months to develop
      a complete customer prospect list. The process was to evolve as we created
      and
      developed our corporate web site and offered on-line, as well as on site,
      product demonstrations to all interested parties. We also planned to identify,
      attend and demonstrate the software at industry related conferences and
      trade-shows. We then planned to follow up on all relevant sale leads. Because
      our licensing agreement did not require us to compensate the licensee unless
      we
      sold their software, we did not incur any cost of inventory during this
      period.




**Sales**




Our
      business objective was to market and distribute the Fitness Express software.
      As
      part of our licensing agreement, the owner of Fitness Express was to launch
      a
      web site that would have detailed the features and benefits of the software,
      shown customer references, as well as offered on-line video demonstrations
      and
      training. As our primary source of product information, we planned to design
      our
      own website. It was to feature company information, downloadable brochures,
      a
      product overview, as well as links to related articles, publicity and to the
      licensor's web site.




Following
      this initial phase, our corporate sales initiative intended to have a
      significant number of sales prospects ready for contact in approximately nine
      months.




We
      planned to purchase Fitness Express software from the licensor upon receiving
      orders from customers. This software was to be purchased at a 50% discount
      from
      the stated retail price. Hardware and point of sale products were also to be
      purchased in the same manner from national distributors and resold to customers
      at a competitive retail price. Hardware installation was to be carried out
      by a
      national system services organization and software would have been loaded via
      the Internet, directly from the software licensor. We did not have any
      agreements or arrangements in place regarding hardware supplies or installation.
      We planned to seek to develop such relationships.




The
      specific business milestones that we hoped to achieve were as
      follows:




2006:




· design
        of
        corporate web site




· generation
        of potential customer list




· retention
        of commission sales staff




· execution
        of agreements with hardware suppliers and installers




· initial
        contact with potential customers


· industry
        magazine and publication marketing




8




· attendance
        at industry conferences and trade shows




January
      2007 to April 2007:




· sale
        and
        installation of our first software systems




· initiation
        of a channel sales program




The
      planned costs of achieving the above milestones are included in our estimated
      expenses outlined below.




Our
      president was to initiate all sales contacts, and we planned to retain one
      full-
      time sales person during our first 12 months, as well as one additional
      full-time sales person in the six months thereafter. These individuals were
      to
      be independent contractors compensated solely in the form of commission, based
      upon the system sales they arranged. We expected to pay each sales person 12%
      to
      15% of the net profit we realized from such sales.




**Costs**




We
      therefore expected to incur the following costs during our first 12 months
      in
      connection with our business operations:


Travel
                  to trade shows & client sites
              
              $
              8,000.00Web
                  page development
              
              $
              1,500.00General
                  Marketing
              
              $
              6,000.00General
                  administrative costs:
              
              $
              9,000.00Total:
              
              $
              25,500.00




In
      addition, we anticipated spending an additional $25,000 on administrative fees
      incurred in connection with complying with SEC reporting
      obligations.




Total
      expenditures over our first 12 months were therefore expected to be
      $50,500.




While
      we
      had sufficient funds on hand to commence business operations, our cash reserves
      were not sufficient to meet our obligations for our initial twelve-month period.
      As a result, we planned to seek additional funding. We did not have a specific
      plan of how we would obtain such funding; however, we anticipated that
      additional funding would have been in the form of equity financing from the
      sale
      of our common stock.




**Employees**




We
      did
      not have any employees as of April 30, 2007, other than Ron Bell. Our former
      sole officer and director, Ron Bell, served without compensation.




**Research
      and Development**




As
      of
      April 30, 2007, we did not have a formal research and development
      effort.




9





**Purchase
      and Sale of Significant Equipment**





As
      of
      April 30, 2007, we did not anticipate any purchase or sale of equipment over
      the
      next twelve months.





**Results
      of Operations for the Year Ended April 30, 2007**





We
      did
      not earn any revenue during the fiscal year ended April 30, 2007 and have not
      earned any revenue since our inception on February 10, 2006.





We
      incurred operating expenses in the amount of $29,734 for the period from
      inception (February 10, 2006) to April 30, 2007. For the period from inception
      to April 30, 2007, these expenses mainly consisted of accounting and audit
      fees
      in the amount of $15,052.





We
      incurred a net loss of $24,138 for the period from inception (February 10,
      2006)
      to April 30, 2007. Our losses for this period are mainly attributable to
      operating expenses.




**Liquidity
      and Capital Resources**





As
      of
      April 30, 2007, we had total current assets of $8,545 and total assets of
      $8,545. Our total current assets as of April 30, 2007 consisted of cash in
      the
      amount of $8,545. Our total current liabilities as of April 30, 2007 were
      $8,329, consisting of an obligation due to a related party and accrued expenses.
      As a result, on April 30, 2007, we had working capital of $216.




Operating
      activities used $24,609 in cash for the period from inception (February 10,
      2006) to April 30, 2007. Our net loss of $29,734 since inception was the primary
      components of our negative operating cash flow. Net cash flows provided by
      financing activities for the period from inception (February 10, 2006) to April
      30, 2007 was $33,154 represented as proceeds from the sale of our stock and
      advances from a related party.





As
      of
      April 30, 2007, we were a development stage corporation and had not generated
      any revenue to date from our activities. Despite our hope for revenues in the
      foreseeable future, we believed that revenues would have been sparse and
      irregular and, if we had received any at all, they would have been far less
      than
      necessary to carry our business forward without additional financing. We had
      cash in the amount of $8,545 as of April 30, 2007, which was not enough to
      meet
      our projected expenditures in the next twelve months.





In
      connection with the Merger on May 24, 2007, we completed a private placement,
      pursuant to which we issued 5,597,664 shares of common stock and five-year
      warrants to purchase 2,798,836 shares of common stock at an exercise price
      of
      $1.00 per share, for aggregate gross proceeds of $3,078,716.50. In connection
      with this private placement, we incurred placement agent fees of approximately
      $215,510, and issued the placement agents five-year warrants to purchase an
      aggregate of 391,838 shares of common stock at an exercise price of $1.00 per
      share.





In
      conjunction with the Merger on May 24, 2007, on May 25, 2007 we also sold senior
      convertible debentures in the aggregate principal amount of $6,050,000 (plus
      an
      8% original issue discount added to such principal amount). The debentures
      bear
      8% interest per annum, commencing on the first anniversary of the original
      issue
      date of the debentures, payable quarterly in cash or common stock, at our
      option, and mature on April 30, 2010. The debentures are not callable and are
      convertible at a conversion price of $0.65 per share into 10,117,462 shares
      of
      common stock, subject to certain limitations. In addition, holders of the
      debentures received five-year warrants to purchase an aggregate of 5,058,730
      shares of our common stock at an exercise price of $1.00 per share. In
      connection with the issuance of the debentures, we incurred placement agent
      fees
      totaling approximately $423,500, and issued to such placement agents five-year
      warrants to purchase 708,222 shares of common stock at an exercise price of
      $1.00 per share.




10





**Off
      Balance Sheet Arrangements**





As
      of
      April 30, 2007, there were no off balance sheet arrangements.




11


**Item
      7. Financial Statements**





Index
      to
      Financial Statements:




**Audited
                Financial Statements:**F-1
            Report
                of Independent Registered Certified Public Accounting
                FirmF-2
            Balance
                Sheet as of April 30, 2007F-3
            Statement
                of Stockholders’ Equity (Deficit) from inception (February 10, 2006) to
                April 30, 2007F-4
            Statements
                of Operations -Period from inception (February 10, 2006) to April
                30,
                2007F-5
            Statements
                of Cash Flows for the period from inception (February 10, 2006) to
                April
                30, 2007F-6
            Notes
                to Financial Statements





12


**Item
      8. Changes In and Disagreements with Accountants on Accounting and Financial** **Disclosure**





No
      events
      occurred requiring disclosure under Item 304(b) of Regulation S-B during the
      fiscal year ending April 30, 2007.





**Item
      8A. Controls and Procedures**





We
      carried out an evaluation, under the supervision and with the participation
      of
      our management, including our Chief Executive Officer and Vice President of
      Finance, of the effectiveness of the design and operation of our disclosure
      controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Exchange Act. Disclosure controls and procedures include, without limitation,
      controls and procedures designed to ensure that information required to be
      disclosed by an issuer in the reports that it files or submits under the
      Exchange Act is accumulated and communicated to the issuers management,
      including its principal executive and principal financial officers, or persons
      performing similar functions, as appropriate to allow timely decisions regarding
      required disclosure. Based upon our evaluation, our chief executive officer
      and
      chief financial officer concluded that our disclosure controls and procedures
      are effective, as of the end of the period covered by this report (April 30,
      2007), in ensuring that material information that we are required to disclose
      in
      reports that we file or submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the SEC rules
      and
      forms. There were no changes in our internal control over financial reporting
      during the three month period ended April 30, 2007 that have materially
      affected, or are 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**





Prior
      to
      the Merger with MST, Ron Bell was our sole director and also served as our
      President, Chief Executive Officer, Secretary and Treasurer. Information
      regarding Mr. Bell is included below.




***Ron
      Bell, President, President, Chief Executive Officer, Secretary, Treasurer and
      Director*** .
      Mr.
      Bell, 55, was our sole officer and director. Prior to joining Fitness Xpress
      Software, Mr. Bell was president and principal of Berrenger Group from June
      1989
      to March 2000. Berrenger Group was a Vancouver based reseller of point of sale
      hardware and software across Canada. From March 2000 to September 2005, Mr.
      Bell
      was president of Maximum Barcode Superstore Ltd., Vancouver based distributor
      of
      point of sale hardware across North America.




13




In
      connection with the Merger completed on May 24, 2007, Mr. Bell resigned his
      positions and the directors and executive officers of MST became our directors
      and executive officers. The names of all current executive officers and members
      of the Board of Directors and certain information regarding them is set forth
      below. Directors hold office for one-year terms until the election and
      qualification of their successors. Officers are elected annually by the Board
      of
      Directors and serve at the discretion of the Board.





**Name**
            
            **Age**
            
            **Position**Warren
                V. Musser
            
            80
            
            Chairman
                of the Board of DirectorsFrank
                T. Matarazzo
            
            46
            
            Chief
                Executive Officer, Secretary and DirectorRonald
                W. Pickett
            
            59
            
            President
                and DirectorKeith
                V. Scarzafava
            
            44
            
            Chief
                Technology Officer and Director of OperationsRichard
                J. Leimbach
            
            38
            
            Vice
                President of FinanceThomas
                C. Lynch
            
            65
            
            DirectorThomas
                M. Hall, M.D.
            
            55
            
            Director





**Biographies**




***Warren
      V. Musser*** has
      served as our Chairman since May 24, 2007. Mr. Musser has been the Chairman
      of
      the Board of MST since January 2006. He is the founder and chairman emeritus
      of
      Safeguard Scientifics, Inc. (NYSE: SFE), a high-tech venture capital company,
      formerly known as Safeguard Industries, Inc. Mr. Musser has been the President
      and CEO of The Musser Group, a business consulting firm, since 2001. In
      addition, Mr. Musser is chairman of InfoLogix, Inc. (OTCBB: IFLG.OB), a
      technology provider of mobile enterprise solutions, chairman of Telkonet, Inc.
      (AMEX: TKO), a provider of broadband access, a director of Internet Capital
      Group, Inc., a business-to-business venture capital company, and a director
      of
      NutriSystem, Inc., a weight management company. Mr. Musser serves on a variety
      of civic, educational and charitable boards of directors, and serves as chairman
      of Eastern Technology Council, a business advisory firm, chairman of Economics
      PA and vice chairman of National Center for the American Revolution.




***Frank
      T. Matarazzo*** has
      served as our Chief Executive Officer, Secretary and as a director since May
      24,
      2007. Mr. Matarazzo has been a director and Chief Executive Officer of MST
      since
      its inception in 1982. From 1982 until the May 2007, he also held the office
      of
      President of MST. He is in charge of directing our growth and development.
      Mr.
      Matarazzo designed and constructed the first private cable television systems
      operated by us and continues to be involved in all technology deployed by us.
      Mr. Matarazzo’s experience includes employment for Conrac Avionics from 1980 to
      1982, as a prototype design engineer, working on the development of the
      guidance/navigation systems for military fighter planes as well as the
      development and construction of the FM communication systems and engine
      interface units for the Space Shuttle Columbia. Mr. Matarazzo is known in the
      private cable television industry, having both written articles for trade
      publications and served as a technical consultant to municipalities in the
      area
      of satellite delivered information systems.




***Ronald
      W. Pickett*** has
      served as our President and as a director since May 24, 2007. Mr. Pickett has
      been a director of MST since January 2006. Mr. Pickett was the principal
      investor and co-founder of Telkonet, Inc., our majority stockholder, and has
      been its President since January 2003. He also was the founder, and for twenty
      years served as chairman of the board of directors and president, of Medical
      Advisory Systems, Inc., a company providing international medical services
      and
      pharmaceutical distribution, until its merger with Digital Angel Corporation
      (AMEX: DOC) in March 2002.




14




***Keith
      V. Scarzafava*** has
      served as our Chief Technology Officer and Director of Operations since May
      24,
      2007. From June 2000 to July 2006, Mr. Scarzafava served as the Director of
      Technology and Research Design at the Warwick Valley Telephone Company (NASDAQ
      GM: WWVY), an independent telephone company located in upstate New York. During
      his service at Warwick Valley Telephone Company, Mr. Scarzafava engineered
      and
      constructed an Internet division to encompass several counties and to serve
      three states, making Warwick the first independent telephone company in the
      United States to successfully operate as an ISP. In addition, Mr. Scarzafava
      directly assisted Warwick in becoming the first independent telephone company
      to
      construct a high capacity optical network to distribute Warwick’s Digital TV
      service over DSL technology. Mr. Scarzafava then deployed one of the first
      fiber
      to home systems in the United States.




***Richard
      J. Leimbach*** has
      served as our Vice President of Finance since June 2006, and as our Controller
      from February 2006 until June 2006. Mr. Leimbach is a certified public
      accountant with over fourteen years of public accounting and private industry
      experience. Concurrently with his working for us, Mr. Leimbach has held the
      same
      positions at Telkonet, Inc. since January 2004. Prior to joining Telkonet,
      from
      October 2001 to January 2004, Mr. Leimbach was the Controller at Ultrabridge,
      Inc., an applications solution provider. Mr. Leimbach also served as Corporate
      Accounting Manager for Snyder Communications, Inc., a global provider of
      integrated marketing solutions, from July 1998 to August 2001.




***Thomas
      C. Lynch*** has
      served as a director of ours since May 24, 2007. Mr. Lynch has been a director
      of Telkonet, Inc. since January 2006 and is senior vice president and director
      of The Staubach Company’s Federal Sector, a real estate management and advisory
      services firm in the Washington, D.C. area. Mr. Lynch joined The Staubach
      Company in November 2002 after six years as senior vice president at Safeguard
      Scientifics, Inc. While at Safeguard, he served nearly two years as president
      and chief operating officer at CompuCom Systems, a Safeguard subsidiary. After
      a
      31-year career of naval service, Mr. Lynch retired in the rank of Rear Admiral.
      Mr. Lynch’s naval service included Chief, Navy Legislative Affairs, command of
      the Eisenhower Battle Group during Operation Desert Shield, Superintendent
      of
      the United States Naval Academy from 1991 to 1994 and Director of the Navy
      Staff
      in the Pentagon from 1994 to 1995. Mr. Lynch presently serves as a Director
      of
      Pennsylvania Eastern Technology Council, Armed Forces Benefit Association,
      Catholic Leadership Institute, National Center for the American Revolution
      at
      Valley Forge, and Mikros Systems (OTCBB: MKRS.OB).




***Thomas
      M. Hall, M.D*** .
      has
      served as a director of ours since May 24, 2007. Dr. Hall has been a director
      of
      Telkonet, Inc. since January 2006. Dr. Hall has been the managing director
      of
      Marrell Enterprises LLC, an international business development company, since
      its founding in September 2003. For 12 years (until it was acquired by Digital
      Angel Corp. in 2002), Dr. Hall was the chief executive officer of Medical
      Advisory Systems, Inc., an international medical services and pharmaceutical
      distribution company. From 2002 until November 2006, he served as Executive
      Medical Director at Digital Angel Corp., where he provided consulting services,
      primarily in Europe. Dr. Hall holds a bachelor of science and a medical degree
      from the George Washington University and a master of international management
      degree from the University of Maryland.




15




There
      are
      no family relationships among our directors and executive officers.




**Board
      Committees**




*Audit
      Committee*




We
      intend
      to establish an audit committee of the board of directors, which will consist
      of
      independent directors, of which at least one director will qualify as a
      qualified financial expert as defined in Item 407(d)(5)(ii) of Regulation S-B.
      The audit committee’s duties would be to recommend to our board of directors the
      engagement of independent auditors to audit our financial statements and to
      review our accounting and auditing principles. The audit committee would review
      the scope, timing and fees for the annual audit and the results of audit
      examinations performed by the internal auditors and independent public
      accountants, including their recommendations to improve the system of accounting
      and internal controls. The audit committee would at all times be composed
      exclusively of directors who are, in the opinion of our board of directors,
      free
      from any relationship which would interfere with the exercise of independent
      judgment as a committee member and who possess an understanding of financial
      statements and generally accepted accounting principles.




*Compensation
      Committee*




We
      intend
      to establish a compensation committee of the board of directors. The
      compensation committee would review and approve our salary and benefits
      policies, including compensation of executive officers. The compensation
      committee would also administer our stock option plans and recommend and approve
      grants of stock options under such plans.




**Board
      Independence**




Each
      of
      Mr. Musser, Mr. Lynch and Dr. Hall qualify as an “independent” director as that
      term is defined by applicable listing standards of the NASDAQ Stock Market
      and
      Securities and Exchange Commission rules, including the rules relating to the
      independence standards of an audit committee and the non-employee director
      definition of Rule 16b-3 promulgated under the Exchange Act.




**Code
      of Ethics**




We
      intend
      to adopt a code of ethics that applies to our officers, directors and employees,
      including our Chief Executive Officer and Chief Financial Officer, but have
      not
      done so to date due to our relatively small size.




16




Item
      10. Executive Compensation




**Summary
      Compensation Table**




The
      following Summary Compensation Tables set forth, for the years indicated, all
      cash compensation paid, distributed or accrued for services, including salary
      and bonus amounts, rendered in all capacities by our Chief Executive Officer
      and
      all other executive officers who received or are entitled to receive
      remuneration in excess of $100,000 during the stated periods.





Table
      1
      refers to compensation paid by Fitness Xpress Software, Inc. to Fitness Xpress
      Software, Inc.’s Chief Executive Officer, its sole executive officer, prior to
      the Merger on May 24, 2007, for the fiscal years ended April 30, 2006 and 2007.
      Table 2 discloses compensation paid by MST, our operating subsidiary whose
      business succeeded the business of Fitness Xpress Software, Inc. as our sole
      business following the Merger on May 24, 2007, to MST’s Chief Executive Officer
      during the fiscal years ended December 31, 2005 and 2006. Except for MST’s Chief
      Executive Officer, no other executive officer received annual remuneration
      in
      excess of $100,000 during 2006.





Table
      1 -
      Fitness Xpress Software, Inc.





Name
                and
              Principal
                Position
            
            Year
            
            Salary($)
            
            All
                OtherCompensation
                ($)
            
            Total($)Ron
                Bell,
              *Chief
                Executive Officer*
            
            
            2007
            
            
            3,000
            
            
            —
            
            
            —2006
            
            
            500
            
            
            —
            
            
            —





Table
      2 -
      Microwave Satellite Technologies, Inc.





Name
                and
              Principal
                Position
            
            Year
            
            Salary($)
            
            All
                OtherCompensation
                ($)
            
            Total($)Frank
                T. Matarazzo,
              *Chief
                Executive Officer and Secretary*
            
            
            2006
            
            
            229,539
            
            
            30,497(1
            )
            
            260,0362005
            
            
            140,214
            
            
            2,606,488(2
            )
            
            2,746,702







(1)
      Includes $9,186 life insurance premiums and $21,311 of matching contributions
      to
      Mr. Matarazzo’s 401K plan.





(2)
      Includes $9,186 life insurance premiums, $22,050 of matching contributions
      to
      Mr. Matarazzo’s 401K plan and $2,575,252 of commission paid in connection with
      the sale of subscribers to Cablevision Systems New York City
      Corporation.





**Outstanding
      Equity Awards at Fiscal Year-End**





*Fitness
      Xpress Software, Inc* .
      There
      were no equity awards granted to Mr. Bell during our most recent financial
      reporting period ended April 30, 2007, nor were any granted since our inception
      date of February 10, 2006.




17





*Microwave
      Satellite Technologies, Inc.* As of
      December 31, 2006, there were no outstanding equity awards held by executive
      officers of MST.





**Stock
      Incentive Plans**




Prior
      to
      the consummation of the Merger, our board of directors and stockholders adopted
      the 2007 Incentive Stock Plan. The purpose of the 2007 Incentive Stock Plan
      is
      to provide an incentive to attract and retain directors, officers, consultants,
      advisors and employees whose services are considered valuable, to encourage
      a
      sense of proprietorship and to stimulate an active interest of such persons
      in
      our development and financial success. Under the 2007 Incentive Stock Plan,
      we
      are authorized to issue incentive stock options intended to qualify under
      Section 422 of the Code, non-qualified stock options and restricted stock.
      The
      2007 Incentive Stock Plan is administered by our Board of Directors. Upon
      consummation of the Merger, Frank T. Matarazzo and Ronald W. Pickett were
      granted ten-year options to purchase 2,000,000 shares and 1,000,000 shares
      of
      our common stock, respectively, exercisable at $0.65 per share, under the 2007
      Incentive Stock Plan. Such options vest in equal monthly installments over
      48
      months. ****





**Compensation
      of Directors**





We
      do not
      currently compensate our directors for acting as such, although we may do so
      in
      the future, including with cash or equity. We reimburse our directors for
      reasonable expenses incurred in connection with their service as directors.
      As
      of April 30, 2007, none of our directors received any compensation from
      us.





**Item
      11. Security Ownership of Certain Beneficial Owners and Management and Related** **Stockholder
      Matters**





Prior
      to
      the Merger, Ron Bell beneficially owned 3,171,444 shares of common stock,
      representing approximately 46% of the outstanding common stock. 3,169,014 of
      such shares were cancelled in connection with the Merger.





The
      following table sets forth, as of July 20, 2007, the beneficial ownership of
      our
      common stock by:





·  each
        person who is known to own beneficially five percent (5%) or more of our
        common
        stock;





·  each
      director;





·  each
      executive officer; and





·  all
      directors and executive officers as a group.




18





Except
      as
      indicated in the footnotes to this table, each beneficial owner named in the
      table below has sole voting and sole investment power with respect to all shares
      beneficially owned and each person’s address is c/o 259-263 Goffle Road,
      Hawthorne, New Jersey 07506 unless otherwise indicated.





**Name
                of Beneficial Owners of Common Stock**
            
            **Amount
                and Nature of Beneficial Ownership(1)**
            
            **%
                of Common Stock(2)**Warren
                V. Musser
            
            
            —
            
            
            —Frank
                T. Matarazzo
            
            
            1,764,860(3
            )
            
            6.0
            %Ronald
                W. Pickett
            
            
            202,359(4
            )
            
            *Thomas
                C. Lynch
            
            
            136,364(5
            )
            
            *Thomas
                M. Hall, M.D.
            
            
            139,860(6
            )
            
            *Keith
                V. Scarzafava
            
            
            —
            
            
            —Richard
                Leimbach
            
            
            —
            
            
            —**DIRECTORS
                AND OFFICERS - TOTAL**
            
            
            **2,243,443**
            
            
            **7.55**
            **%****5%
                SHAREHOLDERS**Telkonet,
                Inc.
              20374
                Seneca Meadows Parkway
              Germantown,
                Maryland 20876
            
            
            18,500,000
            
            
            63.0
            %





(1)
      Unless otherwise indicated, includes shares owned by a spouse, minor children,
      and relatives sharing the same home, as well as entities owned or controlled
      by
      the named beneficial owner. Unless otherwise noted, shares are owned of record
      and beneficially by the named beneficial owner.




(2)
      Based
      on 29,386,552 shares of common stock issued and outstanding as of July 19,
      2007.




(3)
      Includes 46,620 shares of common stock issuable upon the exercise of warrants
      within 60 days. Includes 125,000 shares of common stock issuable upon the
      exercise of stock options within 60 days.




(4)
      Includes 46,620 shares of common stock issuable upon the exercise of warrants
      within 60 days. Includes 62,499 shares of common stock issuable upon the
      exercise of stock options within 60 days.




(5)
      Includes 45,455 shares of common stock issuable upon the exercise of warrants
      within 60 days.




(6)
      Includes 46,620 shares of common stock issuable upon the exercise of warrants
      within 60 days.




19





**Item
      12. Certain Relationships and Related Transactions**





**Fitness
      Xpress Software, Inc.**




As
      of
      April 30, 2007, none of our directors or executive officers, nor any proposed
      nominee for election as a director, nor any person who beneficially owns,
      directly or indirectly, shares carrying more than 5% of the voting rights
      attached to all of our outstanding shares, nor any members of the immediate
      family (including spouse, parents, children, siblings, and in-laws) of any
      of
      the foregoing persons had any material interest, direct or indirect, in any
      transaction over the last two years or in any presently proposed transaction
      which, in either case, has or will materially affect us.




**Microwave
      Satellite Technologies, Inc**




The
      following transactions relate to either (i) MST, our operating subsidiary whose
      business succeeded the business of Fitness Xpress Software, Inc. as our sole
      business following the Merger on May 24, 2007 or (ii) us following the Merger
      with MST on May 24, 2007. As such, none of these transactions are reflected
      in
      the financial statements under Item 7 above.





We
      hold a
      50% membership interest in Interactivewifi.com, which is 50% owned by Global
      Transport Logistics, Inc. Global Transport Logistics, Inc. is 100% owned by
      Eileen Matarazzo, the sister-in-law of Frank T. Matarazzo, our Chief Executive
      Officer. Our joint venture with Global Transport Logistics, Inc. does not
      contain a non-competition restriction.




We
      also
      have a one-year professional services agreement with Global Transport Logistics,
      Inc., which expires February 1, 2008, for the provision of marketing and
      business development consulting services, for which Global Transport Logistics,
      Inc. is paid a fee of $10,000 per month. Since January 1, 2005, payments in
      the
      aggregate amount of $150,000 have been paid under this agreement.




Laura
      Matarazzo, our Chief Administrative Officer, is our Chief Executive Officer’s
      sister and has been employed by us since 1982. Ms. Matarazzo receives an annual
      base salary of $133,987, including a car allowance.




On
      August
      17, 2005, we issued a non-interest bearing demand promissory note in the amount
      of $100,000 to Frank T. Matarazzo, our Chief Executive Officer, evidencing
      his
      $100,000 loan to us. On May 10, 2007 we issued an additional non-interest
      bearing demand promissory note in the amount of $60,000 to him, evidencing
      an
      additional loan by him in the amount of $60,000. As of July 30, 2007, both
      notes
      were repaid in full.




We
have
      a
      co-marketing agreement with Telkonet, Inc., which owns approximately 63% of
      our
      outstanding common stock. Since January 1, 2005, $244,271 was paid to Telkonet
      pursuant to the terms of this agreement.




Telkonet,
      Inc. has made approximately $7,004,000 in unsecured loans to MST, bearing
      interest at approximately 8% per annum. Since May 24, 2007, we have made
      principal and interest payments in the aggregate amount of approximately
      $2,381,000, and $5,000,000 of such indebtedness was converted into 5,000,000
      shares of our common stock at a conversion price of $1.00 per share.
      Additionally, on July 18, 2007, Telkonet issued unregistered shares of its
      common stock worth approximately $1,500,000 as consideration for the acquisition
      of substantially all of the assets of Newport Telecommunications Co. At July
      26,
      2007, approximately $1,558,000 remained outstanding under these
      loans.




20




**Item
      13.** **Exhibits**





**Exhibit
                No**.
            
            **Description**2.1
            
            Agreement
                of Merger and Plan of Reorganization, dated as of May 22, 2007, by
                and among Fitness Xpress Software, Inc., Microwave Satellite Technologies,
                Inc., and Microwave Acquisition Corp. (Incorporated herein by reference
                to
                Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the
                Securities and Exchange Commission on May 29, 2007 (the “May 29, 2007
                8-K”))2.2
            
            Delaware
                Certificate of Merger, dated May 22, 2007, between Microwave
                Satellite Technologies, Inc. and Microwave Acquisition Corp. (Incorporated
                herein by reference to Exhibit 2.2 to the May 29, 2007
                8-K)2.3
            
            New
                Jersey Certificate of Merger, dated May 22, 2007, between Microwave
                Satellite Technologies, Inc. and Microwave Acquisition Corp., effective
                May 24, 2007 (Incorporated herein by reference to Exhibit 2.3 to the
                May 29, 2007 8-K)3.1
            
            Certificate
                of Incorporation (Incorporated herein by reference to Exhibit 3.1
                to the
                Company’s Current Report on Form 8-K filed with the Securities and
                Exchange Commission on May 24, 2007)3.2
            
            By-laws
                (Incorporated herein by reference to Exhibit 3.2 to the Company’s Current
                Report on Form 8-K filed with the Securities and Exchange Commission
                filed
                on May 24, 2007)3.3
            
            Certificate
                of Amendment to Certificate of Incorporation, dated May 24, 2007
                (Incorporated herein by reference to Exhibit 3.3 to the May 29, 2007
                8-K)10.1
            
            Form
                of Unit Subscription Agreement (Incorporated herein by reference
                to
                Exhibit 10.1 to the May 29, 2007 8-K)10.2
            
            Form
                of Unit Subscription Addendum (Incorporated herein by reference to
                Exhibit
                10.2 to the May 29, 2007 8-K)10.3
            
            Form
                of Unit Registration Rights Agreement (Incorporated herein by reference
                to
                Exhibit 10.3 to the May 29, 2007
                8-K)




21




10.4
            
            Form
                of Unit Registration Rights Addendum (Incorporated herein by reference
                to
                Exhibit 10.4 to the May 29, 2007 8-K)10.5
            
            Form
                of Investor Warrant (Incorporated herein by reference to Exhibit
                10.5 to
                the May 29, 2007 8-K)10.6
            
            Form
                of Unit Lockup Agreement (Incorporated herein by reference to Exhibit
                10.6
                to the May 29, 2007 8-K)10.7
            
            Securities
                Purchase Agreement for 8% Senior Convertible Debentures, dated
                May 25, 2007, by and among the Company and signatories thereto
                (Incorporated herein by reference to Exhibit 10.7 to the May 29,
                2007
                8-K)10.8
            
            Form
                of 8% Secured Convertible Debenture due April 30, 2010 (Incorporated
                herein by reference to Exhibit 10.8 to the May 29, 2007
                8-K)10.9
            
            Form
                of Debenture Warrant (Incorporated herein by reference to Exhibit
                10.9 to
                the May 29, 2007 8-K)10.10
            
            Form
                of Debenture Registration Rights Agreement (Incorporated herein by
                reference to Exhibit 10.10 to the May 29, 2007 8-K)10.11
            
            Form
                of Debenture Lockup Agreement (Incorporated herein by reference to
                Exhibit
                10.11 to the May 29, 2007 8-K)10.12
            
            Form
                of Security Agreement (Incorporated herein by reference to Exhibit
                10.12
                to the May 29, 2007 8-K)10.13
            
            Placement
                Agent Agreement, dated May 15, 2007, between Microwave Satellite
                Technologies, Inc. and Palladium Capital Advisors, LLC (Incorporated
                herein by reference to Exhibit 10.13 to the May 29, 2007
                8-K)10.14
            
            Placement
                Agent Agreement, dated May 9, 2007, between Microwave Satellite
                Technologies, Inc. and WFG Investments, Inc. (Incorporated herein
                by
                reference to Exhibit 10.14 to the May 29, 2007 8-K)10.15
            
            Placement
                Agent Agreement, dated May 22, 2007, between Microwave Satellite
                Technologies, Inc. and Granite Financial Group, LLC (Incorporated
                herein
                by reference to Exhibit 10.15 to the May 29, 2007 8-K)10.16
            
            Form
                of Directors and Officers Indemnification Agreement (Incorporated
                herein
                by reference to Exhibit 10.16 to the May 29, 2007 8-K)10.17
            
            Company’s
                2007 Incentive Stock Plan (Incorporated herein by reference to Exhibit
                10.17 to the May 29, 2007 8-K)




22




10.18
            
            Form
                of 2007 Incentive Stock Option Agreement (Incorporated herein by
                reference
                to Exhibit 10.18 to the May 29, 2007 8-K)10.19
            
            Form
                of 2007 Non-Qualified Stock Option Agreement (Incorporated herein
                by
                reference to Exhibit 10.19 to the May 29, 2007 8-K)10.20
            
            Agreement
                of Conveyance, Transfer and Assignment of Assets and Assumption of
                Obligations, made as of May 24, 2007, by Fitness Xpress Software,
                Inc. and FXS Holdings, Inc. (Incorporated herein by reference to
                Exhibit
                10.26 to the Company’s Current Report on Form 8-K/A filed with the
                Securities and Exchange Commission on May 30,
                2007)10.21
            
            Stock
                Purchase Agreement, dated May 24, 2007, by and between the Company
                and Ron Bell (Incorporated herein by reference to Exhibit 10.20 to
                the
                Company’s Current Report on Form 8-K/A filed with the Securities and
                Exchange Commission on May 30, 2007)10.22
            
            Resignation
                letter from Ron Bell, dated May 24, 2007 (Incorporated herein by
                reference to Exhibit 10.23 to the Company’s Current Report on Form 8-K/A
                filed with the Securities and Exchange Commission on May 30,
                2007)10.23
            
            Employment
                Agreement, dated January 31, 2006, between Microwave Satellite
                Technologies, Inc. and Frank T. Matarazzo (Incorporated herein by
                reference to Exhibit 10.21 to the May 29, 2007 8-K)10.24
            
            Amendment
                to Employment Agreement, dated May 24, 2007, between Microwave
                Satellite Technologies, Inc. and Frank T. Matarazzo (Incorporated
                herein
                by reference to Exhibit 10.22 to the Company’s Current Report on Form
                8-K/A filed with the Securities and Exchange Commission on May 30,
                2007)10.25
            
            Telecommunications
                Space License Agreement, dated as of February 20, 2006, between
                Microwave Satellite Technologies, Inc. and Rudin Management Company,
                Inc.
                (Incorporated herein by reference to Exhibit 10.24 to the May 29,
                2007
                8-K)10.26
            
            Access
                Agreement entered into in June 2006 between the Company and
                Cablevision of Oakland LLC and Cablevision Lightpath-NJ, Inc.
                (Incorporated herein by reference to Exhibit 10.25 to the May 29,
                2007
                8-K)10.27
            
            Program
                Service Agreement, dated June 2, 2007, by and between Microwave Satellite
                Technologies, Inc. and CSI Digital, Inc. (Incorporated herein by
                reference
                to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed
                with the Securities and Exchange Commission on June 7,
                2007)21.1
            
            List
                of Subsidiaries (Incorporated herein by reference to Exhibit 21.1
                to the
                Company’s Registration Statement on Form SB-2 filed with the Securities
                and Exchange Commission on July 23, 2007 (File No.
                333-144786)




23




31.1
            
            Section
                302 Certification of Principal Executive Officer31.2
            
            Section
                302 Certification of Principal Financial Officer32.1
            
            Section
                906 Certification of Principal Executive Officer32.2
            
            Section
                906 Certification of Principal Financial
                Officer




Item
      14. Principal Accountant Fees and
      Services


Russell
        Bedford Stefanou Mirchandani LLP has served as our independent registered
        public
        accounting firm since July 2007. Russell Bedford Stefanou Mirchandani
        LLP was also MST’s independent registered public accounting firm prior to the
        Merger on May 24, 2007.
 
 **(1)** **Audit
        Fees**
  No
        fees
        of this sort were billed by Russell Bedford Stefanou Mirchandani LLP during
        2006
        and 2007.
 
 **(2)
        Audit-Related Fees**
 
 No
        fees
        of this sort were billed by Russell Bedford Stefanou Mirchandani LLP during
        2006
        and 2007.
 
 **(3)
        Tax Fees**
 
 No
        fees
        of this sort were billed by Russell Bedford Stefanou Mirchandani LLP during
        2006
        and 2007.
 
 **(4)
        All Other Fees**
 
 No
        fees
        of this sort were billed by Russell Bedford Stefanou Mirchandani LLP during
        2006
        and 2007.


24


**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act
      of 1934, the registrant has duly caused this report to be signed on its behalf
      by the undersigned, thereunto duly authorized.





July
      30,
      2007.


**MSTI
                HOLDINGS, INC.**/s/
                Frank T. Matarazzo*Frank
                T. Matarazzo, Chief Executive Officer and
                Director*





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.




**Signature**
            
            **Capacity**
            
            **Date**/s/
Warren
              V. Musser
            
            Chairman
                of the Board and Director
            
            July
                30, 2007Warren
                V. Musser/s/
Frank
              T. Matarazzo
            
            Chief
                Executive Officer and Director (Principal
            
            July
                30, 2007Frank
                T. Matarazzo
            
            Executive
              Officer)/s/
Ronald
              W. Pickett
            
            President
                and Director
            
            July
                30, 2007Ronald
                W. Pickett/s/
Richard
              J. Leimbach
            
            Vice
                President of Finance (Principal Financial and
            
            July
                30, 2007Richard
                J. Leimbach
            
            Accounting
              Officer)/s/
Thomas
              C. Lynch
            
            Director
            
            July
                30, 2007Thomas
                C. Lynch/s/
Thomas
              M. Hall, M.D.
            
            Director
            
            July
                30, 2007Thomas
                M. Hall, M.D.





25




**REPORT
      OF INDEPENDENT REGISTERED** **CERTIFIED
      PUBLIC ACCOUNTING FIRM**




Board
      of
      Directors


MSTI
      Holdings, Inc.


(Formerly
      Fitness Xpress Software, Inc)




We
      have
      audited the accompanying balance sheet of MSTI Holdings, Inc. (formerly Fitness
      Xpress Software, Inc., a Nevada Corporation and a development stage company)
      as
      of April 30, 2007 and the related statements of operations, statement of
      stockholders' equity and cash flows for each of the year ended April 30, 2007
      and the period February 10, 2006 (date of inception) through April 30, 2007.
      These financial statements are the responsibility of the company's management.
      Our responsibility is to express an opinion on the financial statements based
      upon our audits.




We
      have
      conducted our audits in accordance with auditing standards of the Public Company
      Accounting Oversight Board (PCAOB) (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 our
      audits provide a reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of MSTI Holdings, Inc. (formerly
      Fitness Xpress Software, Inc., a Nevada Corporation and a development stage
      company) at April 30, 2007 and the results of its operations and its cash flows
      for the year ended April 30, 2007 and the period February 10, 2006 (date of
      inception) through April 30, 2007 in conformity with accounting principles
      generally accepted in the United States of America.




/s/ RBSM
              LLPRBSM
              LLPCertified
              Public
              Accountants




New
      York,
      New York


July
      24,
      2007




F-1


**MSTI
      HOLDINGS, INC.**


**(Formerly
      Fitness Xpress Software, Inc.)**


(A
      Development Stage Company)


BALANCE
      SHEET


April
      30,
      2007


2007**ASSETS**CurrentCash
              
              $
              8,545$
              8,545**LIABILITIES**CurrentAccounts
                  payable and accrued liabilities
              
              $
              5,125Due
                  to related party - Note 4
              
              
              3,2048,329**STOCKHOLDERS’
                  EQUITY**Capital
                  stock - Note 375,000,000
                  shares authorized, $0.001 par value6,957,888
                  shares issued and outstanding
              
              
              6,958Additional
                  paid-in capital
              
              
              22,992Deficit
                  accumulated during the development stage
              
              
              (29,734
              )216$
              8,545




The
      accompanying notes are an integral part of these
      financial statements.


F-2


**MSTI
      HOLDINGS, INC.**


**(Formerly
      Fitness Xpress Software, Inc.)**


(A
      Development Stage Company)


STATEMENT
      OF STOCKHOLDERS’ EQUITY


For
      the
      period February 10, 2006 (Inception) to April 30, 2007





DeficitAccumulatedAdditional
            
            During
                theCommon
                Shares
            
            Paid-in
            
            DevelopmentNumber
            
            Par
                Value
            
            Capital
            
            Stage
            
            TotalBalance,
                February 10, 2006 (Inception)
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Common
                stock issued for cash:March,
                2006 - at $0.001
            
            
            3,169,014
            
            
            3,169
            
            
            (169
            )
            
            -
            
            
            3,000April,
                2006 - at $0.005
            
            
            3,750,000
            
            
            3,750
            
            
            14,000
            
            
            -
            
            
            17,750April,
                2006 - at $0.25
            
            
            38,874
            
            
            39
            
            
            9,161
            
            
            -
            
            
            9,200Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (5,596
            )
            
            (5,596
            )Balance,
                April 30, 2006
            
            
            6,957,888
            
            
            6,958
            
            
            22,992
            
            
            (5,596
            )
            
            24,354Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (24,138
            )
            
            (24,138
            )Balance,
                April 30, 2007
            
            
            6,957,888
            
            $
            6,958
            
            $
            22,992
            
            $
            (29,734
            )
            $
            216




The
      accompanying notes are an integral part of these
      financial statements.


F-3


**MSTI
      HOLDINGS, INC.**


**(Formerly
      Fitness Xpress Software, Inc.)**


(A
      Development Stage Company)


STATEMENT
      OF OPERATIONS





February
                10, 2006
            
            February
                10, 2006Year
                Ended
            
            (inception)
            
            (inception)April
                30,
            
            to
                April 30,
            
            to
                April 30,2007
            
            2006
            
            2007ExpensesAccounting
                and audit fees
            
            $
            15,052
            
            $
            4,700
            
            $
            19,752Management
                fees
            
            
            3,000
            
            
            500
            
            
            3,500Office
                and general
            
            
            5,907
            
            
            396
            
            
            6,303Travel
            
            
            179
            
            
            -
            
            
            179Net
                loss
            
            $
            (24,138
            )
            $
            (5,596
            )
            $
            (29,734
            )Basic
                and diluted loss per share
            
            $
            (0.00
            )
            $
            (0.00
            )Weighted
                average number of shares outstanding
            
            
            6,957,888
            
            
            2,686,624




The
      accompanying notes are an integral part of these
      financial statements.


F-4


**MSTI
      HOLDINGS, INC.**


**(Formerly
      Fitness Xpress Software, Inc.)**


(A
      Development Stage Company)


STATEMENT
      OF CASH FLOWS





February
                10, 2006
            
            February
                10, 2006Year
                Ended
            
            (inception)
            
            (inception)April
                30,
            
            to
                April 30,
            
            to
                April 30,2007
            
            2006
            
            2007Operating
                ActivitiesNet
                loss
            
            $
            (24,138
            )
            $
            (5,596
            )
            $
            (29,734
            )Change
                in non-cash working capital itemsAccounts
                payable and accrued liabilities
            
            
            50
            
            
            5,075
            
            
            5,125Net
                cash flows used in operations
            
            
            (24,088
            )
            
            (521
            )
            
            (24,609
            )Financing
                ActivitiesAdvance
                from related party
            
            
            2,704
            
            
            500
            
            
            3,204Proceeds
                from issuance of common stock
            
            
            -
            
            
            29,950
            
            
            29,950Net
                cash flows from financing activities
            
            
            2,704
            
            
            30,450
            
            
            33,154Increase
                (decrease) in cash during the period
            
            
            (21,384
            )
            
            29,929
            
            
            8,545Cash,
                beginning
            
            
            29,929
            
            
            -
            
            
            -Cash,
                ending
            
            $
            8,545
            
            $
            29,929
            
            $
            8,545




Supplementary
                disclosure of cash flow information:Cash
                paid for:Interest
            
            $
            -
            
            $
            -
            
            $
            -Income
                Taxes
            
            $
            -
            
            $
            -
            
            $
            -




The
      accompanying notes are an integral part of these
      financial statements.




F-5




**MSTI
      HOLDINGS, INC.**


**(Formerly
      Fitness Xpress Software, Inc.)**


(A
      Development Stage Company)


NOTES
      TO
      THE FINANCIAL STATEMENTS


April
      30,
      2007




Note
                1
            Basis
                of Presentation, Business Combination and Corporate
                Restructure




Fitness
      Xpress Software Inc. (“FXSI-NV”) was incorporated in the State of Nevada, United
      States of America on February 10, 2006 and its fiscal year end was April 30.
      FXSI-NV was in the process of obtaining a license to distribute Fitness
      Management Software (“FMS”) developed by an unrelated private company. The FMS
      allows fitness clubs to make informed management decision through an integrated
      “real time view” of club activities and operations. The accompanying financial
      statements present the historical financial condition, results of operations
      and
      cash flows of FXSI-NV.




On
      May
      18, 2007, FXSI-NV was merged with and into Fitness Xpress Software, Inc., a
      Delaware corporation, (“FXSI-DE”), for the sole purpose of changing its state of
      incorporation to Delaware from Nevada pursuant to a Certificate of Ownership
      and
      Merger dated May 18, 2007 and approved by stockholders on May 18,
      2007.




In
      accordance with the merger, each share of common stock, par value $0.001 per
      share, of FXSI-NV that was issued and outstanding immediately prior to the
      Merger was converted into 1.0563380282 issued and outstanding shares of common
      stock, par value $0.001 per share, of the FXSI-DE (“Common Stock”), so that the
      holders of all of the issued and outstanding shares of common stock of FXSI-NV
      immediately prior to the Merger are the holders of Common Stock of the FXSI-DE.
      All references to common stock, share and per share amounts have been
      retroactively restated to reflect the exchange ratio of 1 share of FXSI-NV
      common stock for 1.0563380282 shares of the FXSI-DE common stock outstanding
      immediately prior to the merger as if the exchange had taken place as of the
      beginning of the earliest period presented.




On
      May
      24, 2007, Microwave Acquisition Corp., a newly formed wholly-owned subsidiary
      of
      Fitness Xpress-Software Inc. merged with and into Microwave Satellite
      Technologies, Inc. (“MST”), as described in the Company’s current report on Form
      8-K filed with the Commission on May 29, 2007.




In
      addition, pursuant to the terms and conditions of the Merger
      Agreement:




·
            Each
                share of MST common stock issued and outstanding immediately prior
                to the
                closing of the Merger converted into the right to receive 120,000
                shares
                of Fitness Xpress common stock. In addition, $5,000,000 of outstanding
                indebtedness of MST to Telkonet, Inc., a Utah corporation and MST’s 90%
                shareholder prior to the Merger (“Telkonet”), was converted at $1.00 per
                share into 5,000,000 shares of FXSI common stock. As a result, an
                aggregate of 20,000,000 shares of FXSI common stock were issued to
                the
                holders of MST common stock.




F-6




**MSTI
        HOLDINGS, INC.**
 **(Formerly
        Fitness Xpress Software, Inc.)**
 (A
        Development Stage Company)
 NOTES
        TO
        THE FINANCIAL STATEMENTS
 April
        30,
        2007




·
            Immediately
                prior to the closing of the Merger, under the terms of a Stock Purchase
                Agreement, FXSI transferred all of its interest in its wholly-owned
                subsidiary, Fitness Xpress Software, Inc., a Nevada corporation
                (“SplitCo”) to a major stockholder of FXSI in exchange for cancellation of
                3,169,014 shares of FXSI common stock held by such stockholder (the
                “Split-Off”), which will leave 3,788,874 shares of FXSI common stock held
                by existing stockholders of FXSI.




As
      a
      result of the merger on May 24, 2007, there was a change in control of the
      public entity. In accordance with SFAS No. 141, MST was deemed the acquiring
      entity. While the transaction is accounted for using the purchase method of
      accounting, in substance the Agreement is a recapitalization of the MST's
      capital structure.




For
      accounting purposes, the Company will account for the transaction as a reverse
      acquisition. For financial statement reports for periods ending subsequent
      to
      the consummation of the merger, the assets and liabilities and the historical
      operations that will be reflected in financial statements for periods presented
      prior to the Merger will be those of MST and will be recorded at the historical
      cost basis of MST, and the consolidated financial statements after completion
      of
      the Merger will include the assets and liabilities of FXSI and MST , historical
      operations of MST and operations of FXSI from the closing date of the
      Merger




In
      connection with the merger, Fitness Xpress Software, Inc. changed its name
      to
      MSTI Holdings, Inc. and adopted a change from a fiscal year end of April 30
      to a
      calendar year-end.




Upon
      closing of the merger, MST became a wholly-owned subsidiary of Fitness Xpress
      and Fitness Xpress Software Inc. succeeded to MST’s line of business as its sole
      line of business. MST, formed in New Jersey in 1982, is a carrier class
      communications technology company that specializes in providing true quadruple
      play (“Quad-Play”) services to multi-tenant unit (“MTU”) and multi-dwelling unit
      (“MDU”) residential, hospitality and commercial properties. These Quad-Play
      services include video, voice, high-speed internet and wireless fidelity
      (“Wi-Fi”) access. MST is also a national internet service provider (“ISP”) and
      offers a suite of ancillary services including the design, installation and
      service of satellite and Internet Protocol (“IP”) based video conferencing and
      surveillance systems.




F-7




**MSTI
        HOLDINGS, INC.**
 **(Formerly
        Fitness Xpress Software, Inc.)**
 (A
        Development Stage Company)
 NOTES
        TO
        THE FINANCIAL STATEMENTS
 April
        30,
        2007




Note
                2
            Summary
                of Significant Accounting
                Policies




Development
      Stage Company




The
      Company complies with Financial Accounting Standard Board Statement (“FASB”) No.
      7 and The Securities and Exchange Commission Act Guide 7 for its
      characterization of the Company as development stage.




Foreign
      Currency Translation




The
      financial statements are presented in United States dollars. In accordance
      FASB
      No. 52, “Foreign Currency Translation”, foreign denominated monetary assets and
      liabilities are translated into their United States dollar equivalents using
      foreign exchange rates which prevailed at the balance sheet date. Non monetary
      assets and liabilities are translated at the exchange rates prevailing on the
      transaction date. Revenue and expenses are translated at average rates of
      exchange during the year. Gains or losses resulting from foreign currency
      transactions are included in the results of operations.




Net
      Loss per Share




Basic
      loss per share includes no dilution and is computed by dividing loss available
      to common stockholders by the weighted average number of common shares
      outstanding for the period. Dilutive loss per share reflect the potential
      dilution of securities that could share in the losses of the Company. Because
      the Company does not have any potentially dilutive securities, the accompanying
      presentation is only of basic loss per share.




Liquidity




As
      shown
      in the accompanying financial statements, the Company has incurred a net loss
      of
      $29,734 from its inception through April 30, 2007. The Company's has a net
      working capital of $216 with cash and cash equivalents of $8,545 at April 30,
      2007.




Stock
      Based Compensation




The
      Company adopted Financial Accounting Standards Board, Share-Based Payment ("SFAS
      123 (R)") Accounting for Stock Based Compensation on May 1, 2006, and
      implemented the new standard utilizing the modified prospective application
      ransition method. SFAS 123 (R) requires the Company to measure the cost of
      employee services received in exchange for an equity award based on the grant
      date fair value. Stock based compensation expense for all stock-based awards
      granted subsequent to May 1, 2006 will be based on the grant date fair value
      estimated in accordance with the provisions of SFAS No. 123 (R).




F-8




**MSTI
        HOLDINGS, INC.**
 **(Formerly
        Fitness Xpress Software, Inc.)**
 (A
        Development Stage Company)
 NOTES
        TO
        THE FINANCIAL STATEMENTS
 April
        30,
        2007




Prior
      to
      the adoption of SFAS 123 (R), the Company had elected to apply Accounting
      Principles Board Opinion 25 to account for its stock-based compensation plans,
      as permitted under SFAS No. 123, Accounting for Stock-Based Compensation. This
      method applied the intrinsic value method for stock options and other awards
      granted to employees.




During
      the period February 10, 2006 (inception) to April 30, 2007, the Company had
      not
      granted any stock option awards.




Income
      Taxes




The
      Company uses the asset and liability method of accounting for income taxes
      in
      accordance with FAS No. 109 “Accounting for Income Taxes”. Under this method,
      deferred tax assets and liabilities are recognized for the future tax
      consequences attributable to temporary differences between the financial
      statements carrying amounts of existing assets and liabilities and loss
      carryforwards and their respective tax bases. Deferred tax assets and
      liabilities are measured using enacted tax rates expected to apply to taxable
      income in the years in which those temporary differences are expected to be
      recovered or settled.




Fair
      Value of Financial Instruments




The
      carrying value of the Company’s financial instruments consisting of cash,
      accounts payable and accrued liabilities and due to related party approximate
      their carrying value due to the short-term maturity of such instruments. Unless
      otherwise noted, it is management’s opinion that the Company is not exposed to
      significant interest, currency or credit risks arising from these financial
      instruments.




Recent
      Accounting Pronouncements




In
      November 2005, the Financial Accounting Standard Board issued FSP FAS 115-1
      and
      FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application
      to Certain Investments” (“FSP FAS 115-1”), which provides guidance on
      determining when investments in certain debt and equity securities are
      considered impaired, whether that impairment is other-than-temporary, and on
      measuring such impairment loss. FSP FAS 115-1 also includes accounting
      considerations subsequent to the recognition of an other-than temporary
      impairment and requires certain disclosures about unrealized losses that have
      not been recognized as other-than-temporary impairments. FSP FAS 115-1 is
      required to be applied to reporting periods beginning after December 15, 2005.
      The Company is required to adopt FSP FAS 115-1 in the first quarter of fiscal
      2007. Management does not expect the adoption of this statement will have a
      material impact on the Company’s results of operations or financial
      condition.




In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments-an amendment of FASB Statements No. 133 and 140”, to
      simplify and make more consistent the accounting for certain financial
      instruments. SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative
      Instruments and Hedging Activities”, to permit fair value re-measurement for any
      hybrid financial instrument with an embedded derivative that otherwise would
      require bifurcation, provided that the whole instrument is accounted for on
      a
      fair value basis. SFAS No. 155 amends SFAS No. 140, “Accounting for the
      Impairment or Disposal of Long-Lived Assets”, to allow a qualifying
      special-purpose entity to hold a derivative financial instrument that pertains
      to a beneficial interest other than another derivative financial instrument.
      SFAS No. 155 applies to all financial instruments acquired or issued after
      the
      beginning of an entity's first fiscal year that begins after September 15,
      2006,
      with earlier application allowed. This standard is not expected to have a
      significant effect on the Company’s future reported financial position or
      results of operations.




F-9




**MSTI
        HOLDINGS, INC.**
 **(Formerly
        Fitness Xpress Software, Inc.)**
 (A
        Development Stage Company)
 NOTES
        TO
        THE FINANCIAL STATEMENTS
 April
        30,
        2007




In
      March
      2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial
      Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and
      Servicing of Financial Assets and Extinguishments of Liabilities". This
      statement requires all separately recognized servicing assets and servicing
      liabilities be initially measured at fair value, if practicable, and permits
      for
      subsequent measurement using either fair value measurement with changes in
      fair
      value reflected in earnings or the amortization and impairment requirements
      of
      Statement No. 140. The subsequent measurement of separately recognized servicing
      assets and servicing liabilities at fair value eliminates the necessity for
      entities that manage the risks inherent in servicing assets and servicing
      liabilities with derivatives to qualify for hedge accounting treatment and
      eliminates the characterization of declines in fair value as impairments or
      direct write-downs. SFAS No. 156 is effective for an entity's first fiscal
      year
      beginning after September 15, 2006. This adoption of this statement is not
      expected to have a significant effect on the Company’s future reported financial
      position or results of operations.




On
      September 15, 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS No. 157”). No. 157 addresses how companies should measure fair value when
      they are required to use a fair value measure for recognition and disclosure
      purposes under generally accepted accounting principles. SFAS No. 157 will
      require the fair value of an asset or liability to be based on a market based
      measure which will reflect the credit risk of the company. SFAS No. 157 will
      also require expanded disclosure requirements which will include the methods
      and
      assumptions used to measure fair value and the effect of fair value measures
      on
      earnings. SFAS No. 157 will be applied prospectively and will be effective
      for
      fiscal years beginning after November 15, 2007 and to interim periods within
      those fiscal years.




In
      September 2006, the Financial Accounting Standards Board issued FASB Statement
      No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans” (“SFAS 158”). SFAS 158 requires us to record the funded
      status of its defined benefit pension and other postretirement plans in its
      financial statements. We are required to record an asset in its financial
      statements if a plan is overfunded or record a liability in its financial
      statements if a plan is underfunded with a corresponding offset to shareholders’
equity. Previously unrecognized assets and liabilities are recorded as a
      component of shareholders’ equity in accumulated other comprehensive income, net
      of applicable income taxes. SFAS 158 also requires us to measure the value
      of
      our assets and liabilities as of the end of our fiscal year ending after
      December 15, 2008. We have implemented SFAS 158 using the required prospective
      method. The recognition provisions of SFAS 158 are effective for the fiscal
      year
      ending after December 15, 2006. We do not expect that adoption of this new
      standard to have a material impact on our financial position, results of
      operations or cash flows.




F-10




**MSTI
        HOLDINGS, INC.**
 **(Formerly
        Fitness Xpress Software, Inc.)**
 (A
        Development Stage Company)
 NOTES
        TO
        THE FINANCIAL STATEMENTS
 April
        30,
        2007




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose
      to measure many financial instruments, and certain other items, at fair value.
      SFAS 159 applies to reporting periods beginning after November 15, 2007. The
      adoption of SFAS 159 is not expected to have a material impact on our financial
      condition or results of operations.




On
      July
      13, 2006, the FASB issued FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109” (“FIN
      No. 48”). FIN No. 48 clarifies what criteria must be met prior to recognition of
      the financial statement benefit of a position taken in a tax return. FIN No.
      48
      will require companies to include additional qualitative and quantitative
      disclosures within their financial statements. The disclosures will include
      potential tax benefits from positions taken for tax return purposes that have
      not been recognized for financial reporting purposes and a tabular presentation
      of significant changes during each period. The disclosures will also include
      a
      discussion of the nature of uncertainties, factors which could cause a change,
      and an estimated range of reasonably possible changes in tax uncertainties.
      FIN
      No. 48 will also require a company to recognize a financial statement benefit
      for a position taken for tax return purposes when it will be
      more-likely-than-not that the position will be sustained. FIN No. 48 will be
      effective for fiscal years beginning after December 15, 2006.




In
      December 2006, the FASB issued FSP EITF 00-19-2, Accounting for Registration
      Payment Arrangements ("FSP 00-19-2") which addresses accounting for registration
      payment arrangements. FSP 00-19-2 specifies that the contingent obligation
      to
      make future payments or otherwise transfer consideration under a registration
      payment arrangement, whether issued as a separate agreement or included as
      a
      provision of a financial instrument or other agreement, should be separately
      recognized and measured in accordance with FASB Statement No. 5, Accounting
      for
      Contingencies. FSP 00-19-2 further clarifies that a financial instrument subject
      to a registration payment arrangement should be accounted for in accordance
      with
      other applicable generally accepted accounting principles without regard to
      the
      contingent obligation to transfer consideration pursuant to the registration
      payment arrangement. For registration payment arrangements and financial
      instruments subject to those arrangements that were entered into prior to the
      issuance of EITF 00-19-2, this guidance is effective for financial statements
      issued for fiscal years beginning after December 15, 2006 and interim periods
      within those fiscal years. We have not yet determined the impact that the
      adoption of FSP 00-19-2 will have on our financial statements.




F-11




**MSTI
        HOLDINGS, INC.**
 **(Formerly
        Fitness Xpress Software, Inc.)**
 (A
        Development Stage Company)
 NOTES
        TO
        THE FINANCIAL STATEMENTS
 April
        30,
        2007




In
      September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements.” SAB No. 108 addresses how
      the effects of prior year uncorrected misstatements should be considered when
      quantifying misstatements in current year financial statements. SAB No. 108
      requires companies to quantify misstatements using a balance sheet and income
      statement approach and to evaluate whether either approach results in
      quantifying an error that is material in light of relevant quantitative and
      qualitative factors. SAB No. 108 is effective for periods ending after November
      15, 2006 which for the Company would be February 1, 2007. The adoption of SAB
      No. 108 is not expected to have a significant effect on the Company’s future
      reported financial position or results of operations.




Note
                3
            Capital
                Stock




The
      total
      number of common shares authorized that may be issued by the Company is
      75,000,000 shares with a par value of one tenth of one cent ($0.001) per share
      and no other class of shares is authorized.




All
      references to common stock, share and per share amounts have been retroactively
      restated to reflect the exchange ratio of 1 share of FXSI-NV common stock for
      1.0563380282 shares of the FXSI-DE common stock outstanding immediately prior
      to
      the merger as if the exchange had taken place as of the beginning of the
      earliest period presented.




During
      the period from February 10, 2006 (inception) to April 30, 2006, the Company
      issued 6,957,888 shares of common stock for total proceeds of
      $29,950.




Except
      for the 2007 Stock Incentive Plan adopted subsequent to the periods presented,
      the Company had not adopted an equity incentive plan or otherwise reserved
      shares for issuance as incentive awards to officers, directors, employees and
      other qualified persons.




F-12




**MSTI
        HOLDINGS, INC.**
 **(Formerly
        Fitness Xpress Software, Inc.)**
 (A
        Development Stage Company)
 NOTES
        TO
        THE FINANCIAL STATEMENTS
 April
        30,
        2007




Note
                4
            Related
                Party Transactions




The
      President of the Company provides management services to the Company. The
      services are valued at $250 per month. During the year ended April 30, 2007
      and
      period from February 10, 2006 (inception) to April 30, 2006, the Company charged
      to operations related party management services of $3,000 and $500,
      respectively.




Note
                5
            Income
                Taxes




The
      significant components of the Company’s statutory and effective tax rate and
      deferred tax assets are as follows:




April
                30,
              2007
            
            April
                30,
              2006Net
                loss
            
            $
            (24,138
            )
            $
            (5,596
            )Statutory
                tax rate
            
            
            15.0
            %
            
            15.0
            %Effective
                tax rate
            
            
            -
            
            
            -Deferred
                tax asset
            
            
            3,620
            
            
            839Valuation
                allowance
            
            
            (3,620
            )
            
            (839
            )Net
                deferred tax asset
            
            $
            -
            
            $
            -




There
      were no temporary differences between the Company’s tax and financial bases that
      result in deferred tax assets or liabilities, except for the Company’s net
      operating loss carryforwards amounting to approximately $29,700 at April 30,
      2007, which may be available to reduce future year’s taxable income. This
      carryforwards will expire, if not utilized, commencing in 2026. Management
      believes that the realization of the benefits from this deferred tax assets
      appears uncertain due to the Company’s limited operating history and continuing
      losses. Accordingly a full, deferred tax asset valuation allowance has been
      provided and no deferred tax asset benefit has been recorded.




Note
                6
            Subsequent
                Events




*Private
      Placement*




In
      connection with the reverse merger on May 24, 2007, the Company completed a
      private placement, pursuant to which the Company issued 5,597,664 shares of
      common stock and five-year warrants to purchase 2,798,836 shares of common
      stock
      at an exercise price of $1.00 per share, for aggregate gross proceeds of
      $3,078,716.50. In connection with this private placement, the Company incurred
      placement agent fees of approximately $215,510, and issued the placement agents
      five-year warrants to purchase an aggregate of 391,838 shares of common stock
      at
      an exercise price of $1.00 per share.




F-13




**MSTI
        HOLDINGS, INC.**
 **(Formerly
        Fitness Xpress Software, Inc.)**
 (A
        Development Stage Company)
 NOTES
        TO
        THE FINANCIAL STATEMENTS
 April
        30,
        2007




*Secured
      Convertible Debentures*




In
      conjunction with the reverse merger on May 24, 2007, on May 25, 2007 the Company
      also sold senior convertible debentures in the aggregate principal amount of
      $6,050,000 (plus an 8% original issue discount added to such principal amount).
      The debentures bear 8% interest per annum, commencing on the first anniversary
      of the original issue date of the debentures, payable quarterly in cash or
      common stock, at our option, and mature on April 30, 2010. The debentures are
      not callable and are convertible at a conversion price of $0.65 per share into
      10,117,462 shares of common stock, subject to certain limitations. In addition,
      holders of the debentures received five-year warrants to purchase an aggregate
      of 5,058,730 shares of our common stock at an exercise price of $1.00 per share.
      In connection with the issuance of the debentures, the Company incurred
      placement agent fees totaling approximately $423,500, and issued to such
      placement agents five-year warrants to purchase 708,222 shares of common stock
      at an exercise price of $1.00 per share.




*Stock
      Option Plan*




Immediately
      prior to the Merger, the Company adopted a 2007 Stock Incentive Plan that will
      provide for the grant of up to 4,500,000 shares of common stock as restricted
      stock or stock options to employees, directors and consultants.




*Commitment*




On
      June
      2, 2007, our wholly-owned operating subsidiary, Microwave Satellite
      Technologies, Inc. (“MSTI”), entered into a program service agreement with CSI
      Digital, Inc. (“CSI”) for the construction of super headend facilities and
      certain transport and programming services, to be used as a component part
      of
      MSTI’s own integrated, end-to-end programming that it will offer to its own
      retail customers. Pursuant to the terms of the service agreement, MSTI agreed
      to
      pay CSI a monthly service fee based on the number of monthly subscribers to
      MSTI’s Internet Protocol Television services. The term of the service program
      agreement is for five years commencing on July 23, 2007.




*Acquisition
      of Newport Telecommunications Co.*




On
      July
      18, 2007, our wholly-owned operating subsidiary, Microwave Satellite
      Technologies, Inc. (“MSTI”), acquired substantially all of the assets of Newport
      Telecommunications Co., a New Jersey general partnership (“NTC”), relating to
      NTC’s business of providing broadband internet and telephone services to
      customers at certain residential and commercial properties in the development
      known as Newport in Jersey City, New Jersey (the “Acquisition”).




F-14




**MSTI
        HOLDINGS, INC.**
 **(Formerly
        Fitness Xpress Software, Inc.)**
 (A
        Development Stage Company)
 NOTES
        TO
        THE FINANCIAL STATEMENTS
 April
        30,
        2007




The
      total
      consideration paid in the Acquisition was $2,550,000, consisting of (i) 866,856
      unregistered shares of Telkonet, Inc. (the “Telkonet Common Stock”), equal to
      $1,530,000 (based on the average closing prices for Telkonet Common Stock for
      the ten trading days immediately prior to the closing date), and (ii) $1,020,000
      in cash, subject to adjustments. The total consideration will be increased
      or
      decreased depending on the number of subscriber accounts acquired in the
      Acquisition that were in good standing at that time. The number will be
      determined within 120 days of the closing of the Acquisition. The stock
      certificates representing the Telkonet Common Stock, and $510,000 of the cash
      consideration were paid to U.S. Bank National Association, as escrow agent,
      to
      be released after the final determination of the number of subscriber accounts
      in good standing acquired in the Acquisition. In connection with the
      Acquisition, we have agreed to either (a) pay Telkonet, Inc. $1,530,000 in
      cash
      or (b) issue to Telkonet, Inc. unregistered shares of our common stock equal
      to
      $1,530,000 (based at a price per share of our common stock equal to the lesser
      of (i) the closing price for our common stock on the day of the issuance of
      the
      shares of common stock to Telkonet, Inc. and (ii) $1.00 per share) as
      consideration for Telkonet, Inc.’s issuance of the Telkonet Common Stock to
      NTC.




F-15


**EXHIBIT
        INDEX**
 
 **Exhibit
                  No**.
              
              **Description**2.1
              
              Agreement
                  of Merger and Plan of Reorganization, dated as of May 22, 2007, by
                  and among Fitness Xpress Software, Inc., Microwave Satellite Technologies,
                  Inc., and Microwave Acquisition Corp. (Incorporated herein by reference
                  to
                  Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the
                  Securities and Exchange Commission on May 29, 2007 (the “May 29, 2007
                  8-K”))2.2
              
              Delaware
                  Certificate of Merger, dated May 22, 2007, between Microwave
                  Satellite Technologies, Inc. and Microwave Acquisition Corp. (Incorporated
                  herein by reference to Exhibit 2.2 to the May 29, 2007
                  8-K)2.3
              
              New
                  Jersey Certificate of Merger, dated May 22, 2007, between Microwave
                  Satellite Technologies, Inc. and Microwave Acquisition Corp., effective
                  May 24, 2007 (Incorporated herein by reference to Exhibit 2.3 to the
                  May 29, 2007 8-K)3.1
              
              Certificate
                  of Incorporation (Incorporated herein by reference to Exhibit 3.1
                  to the
                  Company’s Current Report on Form 8-K filed with the Securities and
                  Exchange Commission on May 24, 2007)3.2
              
              By-laws
                  (Incorporated herein by reference to Exhibit 3.2 to the Company’s Current
                  Report on Form 8-K filed with the Securities and Exchange Commission
                  filed
                  on May 24, 2007)3.3
              
              Certificate
                  of Amendment to Certificate of Incorporation, dated May 24, 2007
                  (Incorporated herein by reference to Exhibit 3.3 to the May 29,
                  2007
                  8-K)10.1
              
              Form
                  of Unit Subscription Agreement (Incorporated herein by reference
                  to
                  Exhibit 10.1 to the May 29, 2007 8-K)10.2
              
              Form
                  of Unit Subscription Addendum (Incorporated herein by reference
                  to Exhibit
                  10.2 to the May 29, 2007 8-K)10.3
              
              Form
                  of Unit Registration Rights Agreement (Incorporated herein by reference
                  to
                  Exhibit 10.3 to the May 29, 2007
                  8-K)
  
  10.4
              
              Form
                  of Unit Registration Rights Addendum (Incorporated herein by reference
                  to
                  Exhibit 10.4 to the May 29, 2007 8-K)10.5
              
              Form
                  of Investor Warrant (Incorporated herein by reference to Exhibit
                  10.5 to
                  the May 29, 2007 8-K)10.6
              
              Form
                  of Unit Lockup Agreement (Incorporated herein by reference to Exhibit
                  10.6
                  to the May 29, 2007 8-K)10.7
              
              Securities
                  Purchase Agreement for 8% Senior Convertible Debentures, dated
                  May 25, 2007, by and among the Company and signatories thereto
                  (Incorporated herein by reference to Exhibit 10.7 to the May 29,
                  2007
                  8-K)10.8
              
              Form
                  of 8% Secured Convertible Debenture due April 30, 2010 (Incorporated
                  herein by reference to Exhibit 10.8 to the May 29, 2007
                  8-K)10.9
              
              Form
                  of Debenture Warrant (Incorporated herein by reference to Exhibit
                  10.9 to
                  the May 29, 2007 8-K)10.10
              
              Form
                  of Debenture Registration Rights Agreement (Incorporated herein
                  by
                  reference to Exhibit 10.10 to the May 29, 2007 8-K)10.11
              
              Form
                  of Debenture Lockup Agreement (Incorporated herein by reference
                  to Exhibit
                  10.11 to the May 29, 2007 8-K)10.12
              
              Form
                  of Security Agreement (Incorporated herein by reference to Exhibit
                  10.12
                  to the May 29, 2007 8-K)10.13
              
              Placement
                  Agent Agreement, dated May 15, 2007, between Microwave Satellite
                  Technologies, Inc. and Palladium Capital Advisors, LLC (Incorporated
                  herein by reference to Exhibit 10.13 to the May 29, 2007
                  8-K)10.14
              
              Placement
                  Agent Agreement, dated May 9, 2007, between Microwave Satellite
                  Technologies, Inc. and WFG Investments, Inc. (Incorporated herein
                  by
                  reference to Exhibit 10.14 to the May 29, 2007 8-K)10.15
              
              Placement
                  Agent Agreement, dated May 22, 2007, between Microwave Satellite
                  Technologies, Inc. and Granite Financial Group, LLC (Incorporated
                  herein
                  by reference to Exhibit 10.15 to the May 29, 2007 8-K)10.16
              
              Form
                  of Directors and Officers Indemnification Agreement (Incorporated
                  herein
                  by reference to Exhibit 10.16 to the May 29, 2007 8-K)10.17
              
              Company’s
                  2007 Incentive Stock Plan (Incorporated herein by reference to
                  Exhibit
                  10.17 to the May 29, 2007 8-K)
  
  10.18
              
              Form
                  of 2007 Incentive Stock Option Agreement (Incorporated herein by
                  reference
                  to Exhibit 10.18 to the May 29, 2007 8-K)10.19
              
              Form
                  of 2007 Non-Qualified Stock Option Agreement (Incorporated herein
                  by
                  reference to Exhibit 10.19 to the May 29, 2007 8-K)10.20
              
              Agreement
                  of Conveyance, Transfer and Assignment of Assets and Assumption
                  of
                  Obligations, made as of May 24, 2007, by Fitness Xpress Software,
                  Inc. and FXS Holdings, Inc. (Incorporated herein by reference to
                  Exhibit
                  10.26 to the Company’s Current Report on Form 8-K/A filed with the
                  Securities and Exchange Commission on May 30,
                  2007)10.21
              
              Stock
                  Purchase Agreement, dated May 24, 2007, by and between the Company
                  and Ron Bell (Incorporated herein by reference to Exhibit 10.20
                  to the
                  Company’s Current Report on Form 8-K/A filed with the Securities and
                  Exchange Commission on May 30, 2007)10.22
              
              Resignation
                  letter from Ron Bell, dated May 24, 2007 (Incorporated herein by
                  reference to Exhibit 10.23 to the Company’s Current Report on Form 8-K/A
                  filed with the Securities and Exchange Commission on May 30,
                  2007)10.23
              
              Employment
                  Agreement, dated January 31, 2006, between Microwave Satellite
                  Technologies, Inc. and Frank T. Matarazzo (Incorporated herein
                  by
                  reference to Exhibit 10.21 to the May 29, 2007 8-K)10.24
              
              Amendment
                  to Employment Agreement, dated May 24, 2007, between Microwave
                  Satellite Technologies, Inc. and Frank T. Matarazzo (Incorporated
                  herein
                  by reference to Exhibit 10.22 to the Company’s Current Report on Form
                  8-K/A filed with the Securities and Exchange Commission on May 30,
                  2007)10.25
              
              Telecommunications
                  Space License Agreement, dated as of February 20, 2006, between
                  Microwave Satellite Technologies, Inc. and Rudin Management Company,
                  Inc.
                  (Incorporated herein by reference to Exhibit 10.24 to the May 29,
                  2007
                  8-K)10.26
              
              Access
                  Agreement entered into in June 2006 between the Company and
                  Cablevision of Oakland LLC and Cablevision Lightpath-NJ, Inc.
                  (Incorporated herein by reference to Exhibit 10.25 to the May 29,
                  2007
                  8-K)10.27
              
              Program
                  Service Agreement, dated June 2, 2007, by and between Microwave
                  Satellite
                  Technologies, Inc. and CSI Digital, Inc. (Incorporated herein by
                  reference
                  to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed
                  with the Securities and Exchange Commission on June 7,
                  2007)21.1
              
              List
                  of Subsidiaries (Incorporated herein by reference to Exhibit 21.1
                  to the
                  Company’s Registration Statement on Form SB-2 filed with the Securities
                  and Exchange Commission on July 23, 2007 (File No.
                  333-144786)
  
  31.1
              
              Section
                  302 Certification of Principal Executive Officer31.2
              
              Section
                  302 Certification of Principal Financial Officer32.1
              
              Section
                  906 Certification of Principal Executive Officer32.2
              
              Section
                  906 Certification of Principal Financial
                  Officer