**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB** ****





Mark
      One:





**x
      ANNUAL REPORT PURSUANT
      TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** FOR
      THE
      FISCAL YEAR ENDED DECEMBER 31, 2006





**o
      TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**





**Commission
      file number 0-31176**





**SHELRON
      GROUP INC.**


**Delaware**
              **04-2968425**(State
                  or Other Jurisdiction of Incorporation or Organization)
              (I.R.S.
                  Employer Identification No.)**29
                  Broadway, New York, New York 10006**
              **69719**(Address
                  of principal executive offices)
              (Zip
                  Code)





**212-836-4041**


(Issuer's
      Telephone Number, Including Area Code)





****


(Former
      address of principal executive offices)




Securities
      registered under Section 12(b) of the Exchange Act: **None**





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


**Common
      Stock**  **$.001
      par value**





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 **.**x





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


Yes
o 
No
x





Issuer's
      revenues for the year ended December 31, 2006: $1,115,414


The
        aggregate market value as at March 27, 2007 of the Common Stock of the issuer
        held by non-affiliates was $5,338,524 (based
        on the last reported closing price of $0.014 per
        share
        on March 27 ,
        2007).




The
      number of shares outstanding of the issuer's Common Stock as of March 27, 2007
      was 410,688,645.





Transitional
      Small Business Disclosure Format:   Yes
o 
No
x











**SHELRON
      GROUP INC.**


**2006
      FORM 10-KSB ANNUAL REPORT**





**TABLE
      OF CONTENTS**


**PART
                  I**Item
                  1.
              Description
                  of Business
              3Item
                  2.
              Description
                  of Properties
              13Item
                  3.
              Legal
                  Proceedings
              14Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              14**PART
                  II**Item
                  5.
              Market
                  for Common Equity and Related Stockholder Matters
              14Item
                  6.
              Management's
                  Discussion and Analysis of FinancialConditions
                  and Results of Operation
              15Item
                  7.
              Financial
                  Statements
              22Item
                  8.
              Changes
                  in and Disagreements with Accountants onAccounting
                  and Financial Disclosure
              22Item 8A.
              Controls
                and
                Procedures
              22Item 8B.
              Other
                Information
              23**PART
                  III**Item
                  9.
              Directors,
                  Executive Officers, Promoters and ControlPersons
                  of the Company, Compliance with Section 16(a)of
                  the Exchange Act
              23Item
                  10.
              Executive
                  Compensation
              24Item
                  11.
              Beneficial
                  Ownership of Certain Shareholders, Directorsand
                  Executive Officers
              26Item
                  12.
              Certain
                  Relationships And Related Transactions
              27Item
                  13.
              Exhibits,
                  Lists, and Reports on Form 8-K
              28Item
                  14.
              Principal
                  Accountant and Fees
              29





**FORWARD
      LOOKING STATEMENTS**





CERTAIN
      STATEMENTS MADE IN THIS ANNUAL REPORT ON FORM 10-KSB ARE "FORWARD-LOOKING
      STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM
      ACT
      OF 1995. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY TERMINOLOGY SUCH AS
      "MAY", "WILL", "SHOULD", "EXPECTS", "INTENDS", "ANTICIPATES", "BELIEVES",
      "ESTIMATES", "PREDICTS", OR "CONTINUE" OR THE NEGATIVE OF THESE TERMS OR OTHER
      COMPARABLE TERMINOLOGY. BECAUSE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND
      UNCERTAINTIES, THERE ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS
      TO
      DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING
      STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT EXPECTATIONS REFLECTED IN THE
      FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CANNOT GUARANTEE FUTURE RESULTS,
      PERFORMANCE OR ACHIEVEMENTS. MOREOVER, NEITHER THE COMPANY NOR ANY OTHER PERSON
      ASSUMES RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THESE
      FORWARD-LOOKING STATEMENTS. THE COMPANY IS UNDER NO DUTY TO UPDATE ANY
      FORWARD-LOOKING STATEMENTS AFTER THE DATE OF THIS REPORT TO CONFORM SUCH
      STATEMENTS TO ACTUAL RESULTS.





2




**PART
      1**





**ITEM
      1. DESCRIPTION OF BUSINESS**





**COMPANY
      OVERVIEW**





Shelron
      Group, Inc. is a company that develops and markets e-commerce advertising and
      comparative shopping software products and services. We released our initial
      product, ActiveShopper, in August 2004. ActiveShopper is a free software
      download that automatically scans, locates and compares prices for an item
      that
      a consumer selects at an e-commerce
      site and is designed to assist consumers to make informed purchase decisions
      by
      enabling them to find the items they are looking for, compare products, prices
      and stores, and buy from among thousands of online merchants.. We are also
      considering strategic acquisitions of synergistic technologies that management
      believes will enhance our market positioning.





We
      have
      been engaged in the on-line shopping business since March 2004. Prior to that
      time, we were engaged in the field of designing and developing business
      applications software. We generate revenues primarily in the form of payments
      from online merchants for directing traffic to their websites and managing
      merchants advertising campaigns through ActiveShopper.





We
      were
      originally incorporated in the State of Massachusetts in June 1987 under the
      name "Professional Brushes, Inc." In April 1999, we changed our state of
      incorporation to Delaware by means of a merger with and into a Delaware company
      and, in connection therewith, changed our name to "PB Acquisition Corp." In
      May
      2000, we entered into a share exchange agreement with TTTTickets.com, Inc.,
      a
      Delaware corporation ("Tickets") incorporated in April 2000 for the purposes
      of
      developing and maintaining an internet website for the sale and purchase of
      event tickets, pursuant to which Tickets became a wholly owned subsidiary of
      our
      company. We also changed our name to "TTTTickets Holding Corp." Thereafter,
      in
      November 2001, we entered into a stock purchase and merger agreement with B-Park
      Communications, Inc., a Delaware corporation formed in August 2001 for the
      sole
      purpose of entering into such agreement


("B-Park").
      In September 2002, we changed our name to the "Shelron Group,
      Inc.".





In
      this
      report, the terms "we," "us" and the "Company" refer to Shelron Group, Inc.
      and
      its predecessors and subsidiaries, unless the context indicates
      otherwise.





**INDUSTRY
      BACKGROUND**





When
      online shopping emerged in the mid-1990s, there were only a handful of online
      retailers so users could easily check the prices of products that were sold
      on
      the web by going from one store to the other and manually comparing prices
      for
      different products. As e-commerce evolved, more and more online retailers were
      launched and more customers began to shop online and to increase their level
      of
      online spending. With more people and more money being spent online in the
      years
      1998-2000, the previous simple task of price comparison became an unmanageable
      task and at that same time, the first Internet-based shopping comparison
      websites emerged.





These
      websites all offer quite similar services to their users. Users basically access
      the website and search or browse for products that they desire, and then receive
      information about the product and the merchants that sell it. While these sites
      may offer extensive information such as a review of the product, side-by-side
      comparison of a product with similar products, etc., the most valued information
      is what stores sell the product and at what prices.




3




Generally
      speaking, shopping comparison websites generate their revenue from one or more
      of the following revenue streams:





-
      Payments from merchants for directing traffic to their sites (Pay Per
      Click).




-
      Payments from merchants when a directed customer actually buys a product in
      the
      merchant's site
      (Pay
      Per Sale / Purchase/Action).




-
      Other
      advertising activities on the comparison shopping website.





Pay
      Per
      Click models are the most common and the Pay Per Click revenue earned for
      directing users to shopping website tends to be high, as these users tend to
      be
      high-probability purchasers.





Over
      the
      years, little has changed in the way that comparative shopping services function
      and what they offer to their users. We believe that ActiveShopper's model may
      impact the market and shift users to our more comprehensive solution.
      ActiveShopper offers simplicity in its use by consumers without providing
      complex mechanisms and comparison data offered by most of shopping comparison
      services, protecting consumers better from pseudo-attractive buying offers received
      by email and advertising banners as examples.




**SHELRON'S
      COMPARATIVE SHOPPING PRODUCTS**





ActiveShopper
      is a free software application that automatically scans, locates and compares
      prices for an item that a consumer selects at an e-commerce site. Our approach
      to comparative shopping is comprehensive in that it offers both a website and
      a
      shopping toolbar. This answers the needs of different users in different
      scenarios as novice users or one time users may prefer to use a website, while
      others (for example, people who often compare prices or shop online and people
      who are impulse buyers) would prefer to have the price comparison process done
      automatically for them while they are shopping. ActiveShopper is comprised
      of
      software components that we purchased in March 2004 from an independent and
      non-affiliated third party software developer for aggregate consideration of
      $150,000.





ActiveShopper
      incorporates a toolbar, a text free search field in the toolbar and a Sidebar.
      In addition, ActiveShopper owns and operates a series of websites through which
      users can locate and compare prices for an item as selected by the user, in
      the
      United States, the United Kingdom, Australia, and more recently, in France
      and
      Germany. We are continuously working to further promote ActiveShopper activities
      in additional geographic areas.





ActiveShopper
      has already gone through several iterations.





On
      November 21, 2004, we released ActiveShopper 1.0 with a newly designed interface
      and a broader range of products for comparative shopping. Following this
      release, ActiveShopper was able to provide comparative shopping information
      for
      computers and their peripherals and for other electronic products, such as
      televisions and digital cameras.





On
      December 29, 2004, we released ActiveShopper 1.1 which included a free text
      search field in the toolbar, allowing ActiveShopper users to search a
      comparative shopping database for products that they desire, without having
      to
      actually be in that product's page in an e-store in order to receive the
      relevant information.





On
      January 20, 2005, we released an enhanced version of ActiveShopper's website,
      which includes more user functionality and banner display that serves as an
      additional source of revenue.





4





On
      March
      31, 2005 we released ActiveShopper 1.2 which included, as an additional advanced
      feature, the ActiveShopper Sidebar, a new enhancement that would automatically
      display comparative shopping results when users search for information in
      leading search engines such as Google, MSN, AOL, and Yahoo.





As
      of
      today, ActiveShopper’s revenues are generated from : (i) ActiveShopper websites’
search for the United States, United Kingdom, Australia, France and Germany,
      with the last two still under testing and (ii) ActiveShopper Sidebar, which
      automatically displays comparative shopping results when users search for
      information in leading search engines such as Google, MSN, AOL, and
      Yahoo





**OUR
      STRATEGY**





Our
      objective is to enhance ActiveShopper's features and functionality and to
      increase consumer awareness and usage of both our ActiveShopper website and
      side
      bar. In addition, we plan to target new market segments. To achieve these
      objectives, the key elements of our strategy include the following:




·
            Consumer
                Market Analysis and our Product Features. We will seek to implement
                changesto
                enhance our service based on feedback from ActiveShopper users, ourconstant
                current marketing analysis and our know-how. We believe that the
                enhancingof
                our service will add to ActiveShopper's competitiveness and encourage
                its
                further usage.





·
            Marketing
                ActiveShopper through the Internet. We currently marketActive
                Shopper through Internet-based campaigns, which wecontinuously
                analyze in order to identify efficient ways to expandour
                users' base. Our internet based campaigns and advertisinginclude
                major first tier search engines such as Google and Yahoo.During
                2005 and 2006, we entered into agreements for the distribution ofActiveShopper
                co-branded and white label clients.





·
            Global
                Market Expansion through Strategic and CollaborativeRelationships.
                We believe that collaboration with leading on-linecomparison
                shopping websites is an avenue for us to increaseconsumer
                usage of our technology, increase demand for our servicesand
                generate revenues. ActiveShopper's technologies are currentlyimplemented
                to analyze web pages in e-commerce sites based in theUnited
                States and in several other countries outside the United States.
                We intend
                to continue implementing ActiveShopper technologies in moregeographic
                areas, outside the United States, in addition to its present
                implementation in the United States, the United Kingdom, Australia,
                France
                and Germany, aspart
                of our expanding strategy.





No
      assurance can be provided that we will successfully implement our strategy.
      We
      are subject to significant business risks and may need to raise additional
      capital in order to realize our business plan and effectuate the above strategy.
      See "Risk Factors".




5




**MARKETING
      PLAN**





During
      2006, we devoted much of our efforts to further promote ActiveShopper
      activities, primarily through internet-based marketing campaigns and
      affiliations.





We
      intend
      to enter into additional partnership agreements with more on-line comparison
      shopping and into additional agreements for the distribution of the
      ActiveShopper co-branded and white label clients.





However,
      except as noted above, we presently have no other revenue generating arrangement
      and no assurance can be provided that we will in fact be able to enter into
      such
      agreements or arrangements on terms that are commercially acceptable to us.
      Our
      success in concluding any revenue generating commercial agreements is premised,
      in part, on the acceptance of our products. Additionally, we have seen that
      our
      business is subjected to seasonal fluctuations. We anticipate that this pattern
      will continue during the year 2007 and that our business may generate
      disproportionate amount of revenues from one seasonal shopping related period
      to
      another. Therefore, our financial results will vary significantly from period
      to
      period.





**RESEARCH
      AND DEVELOPMENT**





Research
      and development expenses, as included in our statements of operations, consist
      of subcontracting personnel and related expenses of research and development
      teams in Israel and abroad. During fiscal years 2006 and 2005 we incurred
      $132,336 and $322,224, respectively, on research and development in connection
      with our ActiveShopper technologies.




**PROPRIETARY
      RIGHTS**





Protecting
      our proprietary rights, such as our brand name and our proprietary technologies,
      is critical to building consumer loyalty and attracting and retaining customers.
      We seek to protect our proprietary rights through a combination of copyright,
      trade secret, patent and trademark law and contractual restrictions, such as
      confidentiality agreements and proprietary rights agreements. We enter into
      confidentiality and proprietary rights agreements with our service providers,
      and generally control access to and distribution of our proprietary information.
      Despite our efforts to protect our proprietary rights, unauthorized parties
      may
      obtain and use our intellectual property, and we cannot be certain that the
      steps we have taken will prevent misappropriation or confusion among consumers
      and merchants. If we are unable to procure, protect and enforce our intellectual
      property rights, then we may not realize the full value of these assets, and
      our
      business may suffer.





On
      April
      18, 2005, we entered into an agreement with Infospace, Inc. to purchase the
      rights, title and interest of Infospace, Inc.'s U.S. and foreign trademarks,
      trade names and service marks for "ActiveShopper" and the domain names
      activeshopper.com, activeshopper.org, active-shop.com, active-shopper.com,
      active-shopper.net and active-shopper.org. We made a one-time payment of $40,000
      for such trademarks and domain names.





We
      do not
      currently have any additional registered trademarks. We do not currently have
      any registered patent on our technologies.





6




**COMPETITION**





The
      market for advertising and comparative shopping software products and services
      is highly competitive and we expect competition to intensify in the future.
      Our
      competitors include Web sites such as Shopping.com, Shopzilla, PriceGrabber.com,
      and Mysimon.com. Many of our competitors have longer operating histories,
      greater name recognition and significantly greater financial, technical, sales
      and marketing resources than we have. As a result, these competitors are able
      to
      devote greater resources to the development, promotion, sale and support of
      their products. In addition, these entities have large market capitalization
      or
      cash reserves and are in a much better position to acquire other companies
      in
      order to gain new technologies or products. Many of our competitors also have
      much greater brand name recognition, more extensive customer bases, more
      developed distribution channels and broader product offerings than we do. These
      companies can use their broader customer bases and product offerings and adopt
      aggressive pricing policies to gain market share.





We
      expect
      competitors to introduce new and improved products and services with lower
      prices, and we will need to do the same to remain competitive. We may not be
      able to compete successfully against either current or future competitors with
      respect to new products.





**EMPLOYEES
      AND CONSULTANTS**





We
      currently have one full time employee, who is our President. Our President
      also
      currently serves as one of our directors.





We
      presently hire six professional service providers and consultants, who provide
      services including, management, technical maintenance, marketing, financial
      accounting and administration and public relations services. These service
      providers and consultants may provide their services to us on a full-time basis,
      part-time basis, or on demand.





**AVAILABLE
      INFORMATION**





The
      public may read and copy any materials we file with the Securities and Exchange
      Commission ("SEC") at the SEC's Public Reference Room at 450 Fifth Street,
      N.W.,
      Washington, D.C. 20549. The public may obtain information on the operation
      of
      the Public Reference Rooms by calling the SEC at 1-800-SEC-0330. The SEC also
      maintains an Internet website that contains reports, proxy and information
      statements and other information regarding issuers that file electronically
      with
      the SEC. The SEC's Internet website is located at
      http://www.sec.gov.




**RISK
      FACTORS**





We
      are
      subject to various risks that may materially harm our business, financial
      condition and results of operations. You should carefully consider the risks
      and
      uncertainties described below and the other information in this filing before
      deciding to purchase our common stock. If any of these risks or uncertainties
      actually occurs, our business, financial condition or operating results could
      be
      materially harmed. In that case, the trading price of our Common Stock could
      decline and you could lose all or part of your investment.





You
      must
      consider our prospects in light of the risks, expenses and difficulties we
      might
      encounter because we are at an early stage of development in a new and rapidly
      evolving market. Many of these risks are described under the sub-headings below.
      We may not successfully address any or all of these risks and our business
      strategy may not be successful.





7




**RISKS
      CONCERNING OUR BUSINESS**





**WE
      HAVE A LIMITED OPERATING HISTORY IN THE FIELD OF SHOPPING COMPARISON SOFTWARE
      AND, CONSEQUENTLY, THERE IS LIMITED HISTORICAL FINANCIAL DATA UPON WHICH AN
      EVALUATION OF OUR BUSINESS PROSPECTS CAN BE MADE.**





We
      have
      been engaged in the development of shopping comparison software and products
      since March 2004. We have released only one product, ActiveShopper and have
      generated limited revenues from our product. As a result, we have limited
      historical financial data that can be used to evaluate our business prospects
      and to project future operating results. For example, we cannot predict
      operating expenses based on our historical results, and we have instead to
      forecast expenses based in part on future revenue projections. In addition,
      our
      ability to accurately forecast our revenue going forward is
      limited.





**WE
      HAVE A HISTORY OF OPERATING LOSSES THAT MAY CONTINUE FOR THE FORESEEABLE FUTURE,
      THUS RAISING SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
      CONCERN.**





Since
      inception, we have incurred significant operating losses. We incurred operating
      losses of $918,058 and $1,476,822 for the years ended December 31, 2006 and
      2005, respectively. As of December 31, 2006, we had an accumulated deficit
      of
      $4,911,035. We may continue to incur net losses for the foreseeable future
      as we
      continue to develop our product line. Historically we have funded our operations
      through the sale of our securities and expect to continue doing so for the
      foreseeable future. Our ability to generate and sustain significant additional
      revenues or achieve profitability will depend upon the factors discussed
      elsewhere in this "Risk Factors" section. We cannot assure you that we will
      achieve or sustain profitability or that our operating losses will not increase
      in the future. If we do achieve profitability, we cannot be certain that we
      can
      sustain or increase profitability on a quarterly or annual basis in the future.
      We expect to expend substantial financial resources on research and development,
      marketing and administration as we continue to develop our products. These
      expenditures will necessarily precede the realization of substantial revenues
      from the commercialization of our solutions and products, if any, which may
      result in future operating losses.





The
      independent registered public accounting firms’ reports for our financial
      statements for the years ended December 31, 2006 and 2005, respectively, include
      explanatory paragraphs regarding substantial doubt about our ability to continue
      as a going concern. This "going concern" paragraph may have an adverse effect
      on
      our ability to obtain financing for operations and to further develop and market
      products. If we do not receive additional capital, when and in the amounts
      needed in the near future, our ability to continue as a going concern is in
      substantial doubt.





**WE
      MAY BE UNABLE TO MEET OUR FUTURE CAPITAL REQUIREMENTS AND MIGHT REQUIRE
      ADDITIONAL FUNDING SOONER THAN PREVIOUSLY ANTICIPATED**





Based
      on
      our current operating plan, we can not anticipate that the amount of cash we
      have on hand will allow us to meet our cash requirements for the next twelve
      months. We might require additional funding sooner than previously anticipated.
      However, unplanned acquisition and development opportunities and other
      contingencies may arise, which may deplete our cash resources and could require
      us to raise additional capital. The independent registered public accounting
      firms’ reports for our financial statements for the years ended December 31,
      2006 and 2005, respectively, include explanatory paragraphs regarding
      substantial doubt about our ability to continue as a going concern. This "going
      concern" paragraph may have an adverse effect on our ability to obtain financing
      for operations and to further develop and market products. If we do not receive
      additional capital when and in the amounts needed, in the near future, our
      ability to continue as a going concern is in substantial doubt.





8




Additionally,
      if we raise additional capital through the sale of equity securities, including
      preferred stock or convertible debt, the percentage ownership of our then
      existing stockholders will be diluted.





If
      we are
      not able to obtain adequate financing when and in the amounts needed, and on
      terms that are acceptable, our operations, financial condition and prospects
      could be materially and adversely affected, and we could be forced to curtail
      our operations or sell part or all of our assets or seek protection under
      bankruptcy laws.





**AS
      BENEFICIAL OWNER OF ALL OF THE SHARES OF OUR SERIES A PREFERRED STOCK, OUR
      CHAIRMAN AND PRESIDENT CAN CONTROL OUR AFFAIRS.**





Through
      his controlling ownership interest in Hull Services, Inc., our Chairman, Mr.
      Eliron Yaron, may be deemed to beneficially own all of our issued and
      outstanding Series A Preferred Stock. The holders of our Series A Preferred
      Stock are entitled to vote together with holders of our Common Stock, as a
      single class, on all matters on which the holders of our Common Stock are
      entitled to vote. On any such matter, the holders of our Series A Preferred
      Stock may cast votes equal to 52 % of the total votes entitled to be cast by
      holders of the issued and outstanding Common Stock. As beneficial owner of
      our
      Series A Preferred Stock, Mr. Yaron is able to control us and direct our
      affairs, by, among other things:





·
            electing
                a majority of our directors;


·
            causing
                an increase in our authorized capital; or


·
            causing
                our dissolution, merger or the sale of substantially all ofour
                assets.





The
      controlling voting power of the holders of our Series A Preferred Stock might
      also impede or prevent a change of control. As a result of that controlling
      voting power, potential acquirers may be discouraged from seeking to acquire
      control of us through the purchase of Common Stock, which could have a
      depressive effect on the market price of our securities.





**WE
      ARE CURRENTLY DEPENDENT ON ONE MAIN LINE OF BUSINESS**





Our
      success is highly dependent on continuous market acceptance of our ActiveShopper
      product. The market for comparison shopping software is very competitive. As
      a
      result, demand and market acceptance for ActiveShopper is uncertain. If the
      market for ActiveShopper (or any related product we develop) fails to grow,
      develops more slowly than we expect, or becomes saturated with competing
      products or services, then our business, financial condition and results of
      operations will be materially adversely affected.





Investors
      should consider the risks and uncertainties that we may encounter as a
      development stage company in a new and unproven market. These uncertainties
      include:




·
            our
                ability to further design products having the desired technological
                features in a cost efficient
                manner;


·
            consumer
                demand for and acceptance of products utilizing our
                technologies;


·
            our
                ability to demonstrate the benefits of our products and services
                to end
                users;


·
            our
                unproven and evolving products;


·
            unfavorable
                economic conditions in the industry; and


·
            our
                ability to raise funds when needed on commercially acceptable
                terms.





9




**WE
      PRESENTLY HAVE LIMITED REVENUE GENERATING SOURCES WHICH ARE SUBJECT TO SEASONAL
      FLUCTUATIONS.**





We
      presently have two revenue generating main arrangements and no assurance can
      be
      provided that we will in fact be able to enter into additional agreements or
      arrangements on terms that are commercially acceptable to us. Our success in
      concluding any additional revenue generating commercial agreements is premised,
      in part, on the acceptance of our products. Additionally, we have seen that
      our
      business is subjected to seasonal fluctuations. We anticipate that this pattern will
      continue during the year 2007 and that our business may generate
      disproportionate amount of revenues from one seasonal shopping related period
      to
      another. Therefore our financial results will vary significantly from period
      to
      period.





During
      the year ended December 31, 2006, revenues generated from two customers
      accounted for approximately 92% of total revenues accounted for the year. These
      two customers comprise approximately 98% of the Company's accounts receivable
      at
      December 31, 2006.





**WE
      ARE HIGHLY DEPENDENT ON OUR CHAIRMAN TO MANAGE OUR BUSINESS AND BECAUSE OF
      COMPETITION FOR QUALIFIED PERSONNEL WE MAY NOT BE ABLE TO RECRUIT OR RETAIN
      NECESSARY PERSONNEL.**





Our
      continued growth and success depend to a significant degree on the continued
      services of our Chairman, Mr. Eliron Yaron, and our ability to attract and
      retain highly skilled and experienced technical, managerial, sales and marketing
      personnel. We also expect to encounter new product development challenges,
      new
      customer requirements, new competitors and other new business challenges, with
      which we may not be familiar. There can be no assurance that we will be
      successful in recruiting new personnel or in retaining existing personnel.
      The
      loss of Mr. Yaron or our inability to attract additional qualified employees
      could have a material adverse effect on our business, results of operations
      and
      financial condition. In addition, we may experience increased compensation
      costs
      in order to attract and retain skilled employees.





**OUR
      NEW PRODUCTS MAY CONTAIN TECHNOLOGICAL FLAWS WHICH COULD RESULT IN THE FAILURE
      OF OUR PRODUCTS TO ACHIEVE MARKET ACCEPTANCE**





Complex
      technological products like ours often contain undetected errors or failures
      when first introduced or as new versions are released. Despite our testing,
      there still may be errors in ActiveShopper, even after commencement of
      commercial shipments. The occurrence of these errors could result in delays
      or
      failure to achieve market acceptance of our products, which could have a
      material adverse effect on our business, financial condition and results of
      operations.





**IF
      USE OF THE INTERNET, PARTICULARLY WITH RESPECT TO ONLINE COMMERCE, DOES NOT
      CONTINUE TO INCREASE AS RAPIDLY AS WE ANTICIPATE, OUR BUSINESS MAY BE
      HARMED**





Our
      future revenues are substantially dependent upon the continued use of the
      Internet as an effective medium of commerce by our target customers. Internet
      use may not continue to develop at historical rates and consumers may not
      continue to use the Internet and other online services as a medium for commerce.
      Highly publicized failures by some online retailers to meet consumer demands
      could result in consumer reluctance to adopt the Internet as a means for
      commerce, and thereby substantially harm our business and results of
      operations.





10




In
      addition, the growth of the Internet as a viable long-term commercial
      marketplace may slow for a number of reasons, including:





·
            actual
                or perceived lack of security of information or privacy
                protection;


·
            possible
                disruptions, computer viruses or other damage to the Internet servers
                or
                to users'computers;
                and


·
            excessive
                governmental regulation.





Our
      success will depend, in large part, upon third parties maintaining the Internet
      infrastructure to provide a reliable network backbone with the speed, data
      capacity, security and hardware necessary for reliable Internet access and
      services





**GOVERNMENT
      REGULATION OF THE INTERNET AND E-COMMERCE IS EVOLVING AND UNFAVORABLE CHANGES
      COULD SUBSTANTIALLY HARM OUR BUSINESS AND RESULTS OF
      OPERATIONS.**





We
      are
      subject to general business regulations and laws as well as regulations and
      laws
      specifically governing the Internet and e-commerce. Existing and future laws
      and
      regulations may impede the growth of the Internet or other online services.
      These regulations and laws may cover taxation, restrictions on imports and
      exports, customs, tariffs, user privacy, data protection, pricing, content,
      copyrights, distribution, electronic contracts and other communications, consumer
      protection, the provision of online payment services, broadband residential
      Internet access and the characteristics and quality of products and services.
      It
      is not clear how existing laws governing issues such as property ownership,
      sales and other taxes, libel and personal privacy apply to the Internet and
      e-commerce. Unfavorable resolution of these issues may


substantially
      harm our business and results of operations.





**OUR
      FAILURE TO RAPIDLY RESPOND TO TECHNOLOGICAL CHANGE COULD RESULT IN OUR SERVICES
      OR SYSTEMS BECOMING OBSOLETE AND SUBSTANTIALLY HARM OUR BUSINESS AND RESULTS
      OF
      OPERATIONS.**





As
      the
      Internet and e-commerce industries evolve, we may be required to license
      emerging technologies useful in our business, enhance our existing services,
      develop new services and technologies that address the increasingly
      sophisticated and varied needs of our prospective customers and respond to
      technological advances and emerging industry standards and practices on a
      cost-effective and timely basis. We may not be able to successfully implement
      new technologies or adapt our web site proprietary.





**WE
      WILL NEED TO IMPLEMENT ADDITIONAL FINANCE AND ACCOUNTING SYSTEMS, PROCEDURES
      AND
      CONTROLS AS WE GROW OUR BUSINESS AND ORGANIZATION AND TO SATISFY NEW REPORTING
      REQUIREMENTS.**





As
      a
      public reporting company, we are required to comply with the Sarbanes-Oxley
      Act
      of 2002 and the related rules and regulations of the SEC, including expanded
      disclosures and accelerated reporting requirements and more complex accounting
      rules. Compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and other
      requirements will increase our costs and require additional management time
      and
      resources.





We
      may
      need to continue to implement additional finance and accounting systems,
      procedures and controls to satisfy new reporting requirements. Compliance with
      Section 404 will first apply to our next annual report for the fiscal year
      ending December 31, 2007. If our internal controls over financial reporting
      are
      determined to be ineffective, investors could lose confidence in the reliability
      of our internal controls over financial reporting, which could adversely affect
      our stock price.





11




**WE
      MAY NOT BE ABLE TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGE**





Our
      market is characterized by rapid technological change and frequent new product
      announcements. Significant technological changes could render our existing
      technology obsolete. If we are unable to successfully respond to these
      developments or do not respond in a cost-effective way, our business, financial
      condition and results of operations will be materially adversely affected.
      To be
      successful, we must adapt to our rapidly changing market by continually
      improving the responsiveness, services and features of our product and by developing
      new features to meet customer needs. Our success will depend, in part, on our
      ability to adapt to rapidly changing technologies, to enhance our existing
      services and to develop new services and technologies that address the needs
      of
      our customers.





**WE
      MAY NOT HAVE ADEQUATELY PROTECTED OUR INTELLECTUAL PROPERTY
      RIGHTS.**





Protecting
      our proprietary rights, such as our brand name and our proprietary technologies,
      is critical to building consumer loyalty and attracting and retaining customers.
      We seek to protect our proprietary rights through a combination of copyright,
      trade secret, patent and trademark law and contractual restrictions, such as
      confidentiality agreements and proprietary rights agreements. We enter into
      confidentiality and proprietary rights agreements with our service providers,
      and generally control access to and distribution of our proprietary information.
      Despite our efforts to protect our proprietary rights, unauthorized parties
      may
      obtain and use our intellectual property, and we cannot be certain that the
      steps we have taken will prevent misappropriation or confusion among consumers
      and merchants. If we are unable to procure, protect and enforce our intellectual
      property rights, then we may not realize the full value of these assets, and
      our
      business may suffer.




**RISKS
      ASSOCIATED WITH OUR SECURITIES AND CAPITAL STRUCTURE**





**FUTURE
      SALES OF COMMON STOCK OR OTHER DILUTIVE EVENTS MAY ADVERSELY AFFECT PREVAILING
      MARKET PRICES FOR OUR COMMON STOCK.**





As
      of
      March 27, 2007, we had 410,688,645 shares of our Common Stock issued and
      outstanding. There are available for issuance, a significant number of
      additional shares of our Common Stock for future sales and such issuance would
      dilute the interest in our company represented by each share of Common Stock
      and
      may adversely affect the prevailing market price of our Common
      Stock.





**OUR
      BOARD OF DIRECTORS' RIGHT TO AUTHORIZE THE ISSUANCE OF ADDITIONAL SHARES OF
      PREFERRED STOCK COULD ADVERSELY IMPACT THE RIGHTS OF HOLDERS OF OUR COMMON
      STOCK.**





Our
      board
      of directors currently has the right to designate and authorize the issuance
      up
      to an additional 9,000,000 shares of our preferred stock, in one or more series,
      with such voting, dividend and other rights as our directors may determine.
      The
      board of directors can designate new series of preferred stock without the
      approval of the holders of our Common Stock. The rights of holders of our Common
      Stock may be adversely affected by the rights of any holders of shares
      of
      preferred stock that may be issued in the future, including without limitation
      dilution of the equity ownership percentage of our holders of Common Stock
      and
      their voting power if we issue preferred stock with voting rights. Additionally,
      the issuance of preferred stock could make it more difficult for a third party
      to acquire a majority of our outstanding voting stock.





12




**OUR
      STOCK PRICE IS VOLATILE AND SUCH VOLATILITY CAN ADVERSELY AFFECT SALES BY
      INVESTORS OF OUR COMMON STOCK.**





The
      trading price for our Common Stock has been volatile, ranging during the year
      ended December 31, 2006 from a closing price of $0.015 per share on July 14,
      2006 to a closing price of $0.083 on February 6, 2006, and during the year
      ended
      December 31, 2005 from a closing price of $0.128 per share on January 5, 2005
      to
      a closing price of $0.046 per share on November 23, 2005. An investment in
      our
      Common Stock is subject to such volatility and, consequently, is subject to
      significant risk.





**ADDITIONAL
      BURDENS IMPOSED UPON BROKER-DEALERS BY THE APPLICATION OF THE "PENNY STOCK"
      RULES TO OUR COMMON STOCK MAY LIMIT THE MARKET FOR OUR COMMON
      STOCK.**





Broker-dealer
      practices in connection with transactions in "penny stocks" are regulated by
      certain penny stock rules adopted by the Securities and Exchange Commission.
      Penny stocks generally are equity securities with a price of less than $5.00
      (other than securities registered on certain national securities exchanges
      or
      quoted on the Nasdaq system, provided that current prices and volume
      information with respect to transactions in such securities are provided by
      the
      exchange or system). If our Common Stock continues to be offered at a market
      price less than $5.00 per share, and does not qualify for any exemption from
      the
      penny stock regulations, our Common Stock will continue to be subject to these
      additional regulations relating to low-priced stocks.





The
      penny
      stock rules require a broker-dealer, prior to a transaction in a penny stock
      not
      otherwise exempt from the rules, to deliver a standardized risk disclosure
      document that provides information about penny stocks and the risks in the
      penny
      stock market. The broker-dealer also must provide the customer with current
      bid
      and offer quotations for the penny stock, the compensation of the broker-dealer
      and its salesperson in the transaction, and monthly account statements
      showing the market value of each penny stock held in the customer's account.
      In
      addition, the penny stock rules generally require that prior to a transaction
      in
      a penny stock the broker-dealer make a special written determination that the
      penny stock is a suitable investment for the purchaser and receive the
      purchaser's written agreement to the transaction. These


requirements
      have historically resulted in reducing the level of trading activity in
      securities that become subject to the penny stock rules.





The
      additional burdens imposed upon broker-dealers by these penny stock requirements
      may discourage broker-dealers from effecting transactions in our Common Stock,
      which could severely limit the market liquidity of our Common Stock and our
      shareholders' ability to sell our Common Stock in the secondary
      market.




**ITEM
      2. DESCRIPTION OF PROPERTY.**





We
      do not
      own any real property.





We
      maintain an office at 29 Broadway, New York. No rent is charged for this space.
      We also lease an apartment in New York on a month-to-month basis from an
      unaffiliated party for approximately $2,700 per month. In addition, on May
      31,
      2005, we began leasing approximately 180 square meters of office space at 22
      a
      Raul Wallenberg Street, Tel Aviv, Israel from an unaffiliated party for
      approximately $2,400 per month in addition to certain occupancy and office
      maintenance costs. The offices in Tel Aviv serve for the conducting of technical
      maintenance and research and development as and when required through our
      subsidiary in Israel.




13




**ITEM
      3. LEGAL PROCEEDINGS.**





We
      are
      not involved in any pending legal proceedings which we anticipate can result
      in
      a material adverse effect on our business or operations.





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





None.





**PART
      II**





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





The
      Company's Common Stock is listed on the OTC Bulletin Board under the symbol
      "SHRN" since 2002. The following table sets forth the high and low bid
      information for the Company's Common Stock for each quarterly period during
      the
      year ended December 31, 2006 and 2005 as reported by the OTC Bulletin Board.
      The
      OTC Bulletin Board quotations reflect inter-dealer prices, are without retail
      markup, markdown or commission, and may not represent actual
      transactions.


High
              
              LowCalendar
                  Year 2006First
                  Quarter
              
              $
              0.083
              
              $
              0.041Second
                  Quarter
              
              $
              0.065
              
              $
              0.032Third
                  Quarter
              
              $
              0.037
              
              $
              0.020Fourth
                  Quarter
              
              $
              0.028
              
              $
              0.015Calendar
                  Year 2005First
                  Quarter
              
              $
              0.130
              
              $
              0.060Second
                  Quarter
              
              $
              0.129
              
              $
              0.062Third
                  Quarter
              
              $
              0.080
              
              $
              0.045Fourth
                  Quarter
              
              $
              0.085
              
              $
              0.046


**HOLDERS**





At
      the
      date of this filing there are approximately 362 holders
      of record of the Company's common stock. This does not reflect those shares
      held
      beneficially or those shares held in "street" name.




**DIVIDENDS**





Holders
      of Common Stock and Series A Preferred Stock are entitled to dividends, when,
      as, and if declared by our Board of Directors out of funds legally available
      therefore. Except for a dividend distribution in August 2003 of 10,158,926
      shares of its common stock, we have paid no dividends on the Common Stock or
      Series A Preferred Stock and do not expect to pay cash dividends in the
      foreseeable future with respect to the Common Stock or Series A Preferred
      Stock.





It
      is the
      present policy of our Board of Directors to retain all earnings to provide
      funds
      for our growth. The declaration and payment of dividends in the future will
      be
      determined by our Board of Directors based upon our earnings, financial
      condition, capital requirements and such other factors as our Board of Directors
      may deem relevant. We are not under any contractual restriction as to our
      present or future ability to pay dividends.





14





**EQUITY
      COMPENSATION PLAN INFORMATION**





The
      Company has not authorized any equity-based compensation.





**RECENT
      SALES OF UNREGISTERED SECURITIES**





Set
      forth
      below is certain information concerning sales by us of unregistered securities
      during the three months ended December 31, 2006.





In
      November 2006, we issued 17,157 shares of Common Stock valued at $858 to a
      service provider in consideration of services.




In
        December 2006, we issued 19,000,000 shares of Common Stock to Hull Services
        Ltd.
        ("Hull"), the personal services corporation solely owned by our Chairman
        and
        President , in exchange for a total amount of $444,466 of accrued compensation
        and other advances which were provided by Hull through November 30,
        2006.


All
      of
      the securities issued in the transactions described above were issued without
      registration under the Securities Act in reliance upon the exemption provided
      in
      Section 4(2) of the Securities Act as transactions by an issuer not involving
      a
      public offering, the issuance and sale to financially sophisticated individuals
      who are fully aware of the Company's activities, as well as its business and
      financial condition, and who acquired said securities for investment purposes
      and understood the ramifications of same.





**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF
      OPERATIONS**





**FORWARD-LOOKING
      STATEMENTS**





THE
      FOLLOWING DISCUSSION AND EXPOSITIONS SHOULD BE READ IN CONJUNCTION WITH OUR
      FINANCIAL STATEMENTS AND THE NOTES RELATED TO THOSE STATEMENTS, AS WELL AS
      OTHER
      FINANCIAL INFORMATION INCLUDED IN THIS ANNUAL REPORT. SOME OF OUR DISCUSSION
      IS
      FORWARD-LOOKING AND INVOLVES RISKS AND UNCERTAINTIES. FOR INFORMATION REGARDING
      RISK FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, REFER
      TO
      RISKS ASSOCIATED WITH OUR BUSINESS SECTION OF THIS ANNUAL REPORT.





**OVERVIEW**





We
      are a
      development stage company that develops e-commerce advertising and comparative
      shopping software products and services.





We
      released our initial product, ActiveShopper, in August 2004. ActiveShopper
      is a
      free software application that automatically scans, locates and compares prices
      for an item that a consumer selects at an e-commerce site and is designed to
      assist consumers to make informed purchase decisions by enabling them to find
      the items they are looking for, compare products, prices and stores, and buy
      from among thousands of online merchants.





We
      have
      been engaged in the on-line shopping business since March 2004. Prior to that
      time, we were engaged in the field of designing and developing business
      applications software.





We
      presently generate revenues primarily from merchants in exchange of directing
      traffic to their websites through ActiveShopper.





15





We
      presently generate revenues primarily according to pay-per-click models
      resulting from the directing of traffic to merchants' websites. We generate
      revenues also according to pay-per-sale (pay-per-purchase) model when a sale
      derives from the directing of traffic to a merchant website,





Revenues
      shall increase as more software installations of ActiveShopper take place.
      Although ActiveShopper is a free-download software, promoting it is essential,
      as there is no assurance that users will keep their ActiveShopper download
      for
      the long run.





In
      addition, since revenues are subjected to seasonal fluctuations, revenue levels
      cannot be sustained and growth is not assured.





We
      are
      considered a development stage company and have a limited operating history
      upon
      which an evaluation of our prospects can be made. For the years ended December
      31, 2006 and 2005, we incurred a net loss of $918,058 and $1,476,826,
      respectively, and as of December 31, 2006 we had an accumulated deficit of
      $4,911,035. Our prospects must therefore be evaluated in light of the problems,
      expenses, delays and complications associated with a development stage company.
      As a result of recurring losses from operations and a net deficit, our
      independent registered public accounting firms, in their report covering our
      financial statements for the years ended December 31, 2006 and 2005, have
      expressed substantial doubt about our ability to continue as a going
      concern.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





Our
      financial statements and accompanying notes have been prepared in accordance
      with accounting principles generally accepted in the United States of America.
      The preparation of these financial statements requires our management to make
      estimates, judgments and assumptions that affect the reported amounts of assets,
      liabilities, revenues and expenses. We continually evaluate the accounting
      policies and estimates we use to prepare the consolidated financial statements.
      We base our estimates on historical experiences and assumptions believed to
      be
      reasonable under current facts and circumstances. Actual amounts and results
      could differ from these estimates made by management.





We
      do not
      participate in, nor have we created, any off-balance sheet special purpose
      entities or other off-balance sheet financing.





We
      have
      identified the accounting policies below as critical to our business operations
      and the understanding of our results of operations.





**Principles
      of consolidation** - The
      accompanying consolidated financial statements include the accounts of Shelron
      Group Inc. and its wholly-owned subsidiary (collectively, the "Company"). All
      significant inter company transactions have been eliminated.





**Functional
      currency** - The
      currency of the primary economic environment in which we operate is the U.S.
      dollar, which is used as the Company's functional and reporting
      currency.





**Cash** - We
      maintain cash in bank accounts which may, at times, exceed federally insured
      limits. We have not experienced any loss on these accounts.





**Accounts
      receivables** -
      Accounts receivable are reported at their outstanding unpaid principal balances
      reduced by an allowance for doubtful accounts. We estimate doubtful accounts
      based on historical bad debts, factors related to specific customers' ability
      to
      pay, and current economic trends. We write off accounts receivable against
      the
      allowance when a balance is determined to be uncollectible.





**Property
      and equipment** -
      Depreciation of property and equipment is provided for by the straight-line
      method over the estimated useful lives of the related assets. Long-lived assets
      are reviewed for impairment whenever events or changes in circumstances indicate
      that the carrying amount of the asset may not be recoverable.





16




**Intangible
      assets** -
      Intangible assets are carried at cost less accumulated amortization.
      Amortization is computed on the straight-line method over the ten-year estimated
      useful life of the assets. We periodically review the carrying value of our
      intangible assets to determine whether impairment may exist. We consider
      relevant cash flow and profitability information, including estimated future
      operating results, trends and other available information, in assessing whether
      the carrying value of the intangible assets can be recovered. If it is
      determined that the carrying value of the intangible assets will not be
      recovered from the undiscounted future cash flows, the carrying value of the
      assets would be considered impaired. An impairment charge is measured as any
      deficiency in the amount of estimated fair value of the intangible assets
      over


carrying
      value.




**Revenue
      recognition**  - The
      Company's revenue derives from service revenue and the management of advertising
      campaigns, both of which are related to ActiveShopper.





Service
      revenue primarily derives from the implementation of partnership agreements
      according to which the Company provides a service of directing traffic to
      merchants' websites. Service revenue is primarily based on a pay-per-click
      model, reported at their net values to the Company, which represent the revenues
      the Company is entitled to receive according to the partnership agreements.
      In
      order to recognize service revenue, the following criteria must be met: the
      partnership agreement must be signed by the customer, the signed agreement
      must
      specify the fees to be received for the services, the service has been performed
      and accepted by the customer, no significant Company obligations remain and
      collectibility is probable.





Management
      of advertising campaign revenues primarily relates to advertising through
      ActiveShopper websites. In order to recognize management of advertising
      campaigns revenue, the following criteria must be met: an agreement must be
      signed by the customer, the signed agreement must specify the fees to be
      received, consultancy and management have been provided and accepted by the
      customer, no significant Company obligations remain and collectibility is
      probable.





When
      the
      above stated revenue recognition criteria are not met, the Company records
      deferred revenue.





**Research
      and development** - Costs
      incurred in connection with the research and development of the Company's
      products are expensed as incurred.





**Marketing
      and advertising** -
      Marketing and advertising costs are expensed as incurred.





**Income
      taxes** - Income
      taxes are accounted for under the liability method. Under this method, deferred
      tax assets and liabilities are recorded based on the temporary differences
      between the financial statement and the tax bases of assets and liabilities
      and
      for operating loss carryforwards measured using the enacted tax rates in effect
      for the year in which the differences are expected to
      reverse. The Company periodically evaluates whether its net deferred tax assets
      will be realized and records a valuation allowance if, based on the weight
      of
      available evidence, it is more likely than not that some or all of the deferred
      tax assets will not be realized.





17




**Earnings
      (loss) per share -** Basic
      earnings (loss) per share is computed by dividing net income (loss) by the
      weighted-average number of shares of common stock outstanding during the period. Diluted
      earnings (loss) per share give effect to dilutive convertible securities,
      options, warrants and other potential common stock outstanding during the
      period, only in the periods in which such effect is dilutive.





**Stock-based
      Compensation** - In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standard ("SFAS") No. 123R "Share Based Payment". This
      statement is a revision of SFAS Statement No. 123, "Accounting for Stock-Based
      Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued
      to
      Employees," and its related implementation guidance. SFAS 123R addresses all
      forms of share based payment ("SBP") awards including shares issued under
      employee stock purchase plans, stock options, restricted stock and stock
      appreciation rights. Under SFAS 123R, SBP awards result in a cost that will
      be
      measured at fair value on the awards' grant date, based on the estimated number
      of awards that are expected to vest and will be reflected as compensation
      expense in the financial statements. This statement is effective for public
      entities that file as small business issuers as of the beginning of the first
      interim or annual reporting period that begins after December 15, 2005, and
      as
      adopted by the Company commencing January 1, 2006.





Stock
      options granted to non-employees are recorded at their fair value, as determined
      in accordance with SFAS No. 123 and Emerging Issues Task Force Consensus No.
      96-18, and recognized over the related service period.




**RESULTS
      OF OPERATIONS**





Comparison
      of the Year Ended December 31, 2006 (the "2006 Period") and the Year Ended
      December 31, 2005 (the "2005 Period"):





**Revenues
      and Major Customers**





Revenues
      were primarily attributable to the implementation of partnership agreements
      according to which we direct traffic to merchants' websites through
      ActiveShopper. Revenues for the 2006 Period were $1,115,414, an increase of
      $741,153 over revenues for the 2005 Period which were $374,261. Revenues for
      the
      2006 period include $72,500 which was deferred in 2005 and were primarily
      attributable to management and consulting fees provided by the Company in
      connection with advertising campaigns based on ActiveShopper. Deferred revenues
      are recognized at such time they are actually collected.





During
      the 2006 Period, revenues generated from two customers accounted for
      approximately 92% of total revenues accounted for the period, of which one
      customer accounted for approximately 82% of total revenues for the period.
      These
      customers comprise approximately 98% of the Company's accounts receivables
      at
      December 31, 2006, of which one customer accounted for approximately 81% of
      our
      accounts receivable.





During
      the 2005 Period, revenues generated from one customer accounted for
      approximately 98% of total revenues accounted for the period. This customer
      comprised approximately 97% of the Company's accounts receivables at December
      31, 2005.





The
      increase in revenues is primarily attributable to increased activities through
      ActiveShopper, as a result of the Company’s additional marketing efforts during
      the 2006 Period.





**Operating
      Expenses**





Our
      operating expenses consist of salaries, consulting expenses, research and
      development, marketing and advertising and other expenses associated with the
      operations of our business.





18





For
      the
      2006 Period, our operating expenses were $2,034,803, an increase of 8.7% as
      compared to $1,871,706 for the 2005 Period.





**Consulting
      Expenses**





For
      the
      2006 Period and 2005 Period, our consulting expenses were $296,571 and $576,232,
      respectively. The decrease in consulting expenses of 48% in 2006 is primarily
      due to a one-time consulting fee rendered in exchange for 4,000,000 shares
      of
      our common stock valued at $324,324.





**Research
      and Development Expenses**





Research
      and development consist of subcontracting personnel and related expenses of
      research and development teams in Israel and abroad. Research and development
      expenses decreased to $132,336 in the 2006 Period from $322,224 in the 2005
      Period. These amounts included $7,261 and $160,247, respectively, of
      non-cash expenses incurred by the issuance of shares of Common Stock for
      services rendered to the Company. The decrease in research and development
      activities is primarily attributable to the successful completion of
      ActiveShopper software’s first developing phase





**Employment
      Compensation**





In
      March
      2005, we entered into a consulting agreement with Hull. Pursuant to the terms
      of
      this Consulting Agreement, we pay to Hull $156,000 per annum in installments
      of
      $3,000 per week, in addition to reimbursing all reasonable expenses incurred
      in
      connection with services rendered on behalf of our Company. In addition, Mr.
      Yaron received remuneration from our Israeli subsidiary for services
      performed.





For
      the
      2006 Period and 2005 Period, employment compensation totaled $170,792 and
      $156,000, respectively. The increase in employment compensation was the result
      of additional compensation accrued to Mr. Yaron for services performed for
      the Israeli subsidiary.





**Professional
      Fees**





Professional
      fees consist primarily of legal, accounting and auditing and public and investor
      relation fees. For the 2006 Period and 2005 Period, our professional fees were
      $297,044 and $192,097, respectively. The increase in consulting expenses of
      55%
      in 2006 is primarily due to a one-time fee rendered in exchange for 4,400,000
      shares of our common stock valued at $110,000.





**Marketing
      and Advertising**





Our
      marketing and advertising expenses for the 2006 Period and 2005 Period amounted
      to $840,785 and $365,441, respectively. The increase in marketing and
      advertising expenses is principally attributable to increased efforts to further
      promote ActiveShopper and its directing of traffic to merchants’
websites.





19




**Rent
      Expense**





We
      maintain an office at 29 Broadway, New York. No rent is charged for this space.
      We also lease an apartment in New York on a month-to-month basis from an
      unaffiliated party for approximately $2,700 per month. In addition, on May
      31,
      2005, we began leasing approximately 180 square meters of office space at 22
      a
      Raul Wallenberg Street, Tel Aviv, Israel from an unaffiliated party for
      approximately $2,400 per month in addition to certain occupancy and office
      maintenance costs. The offices in Tel Aviv serve for the conducting of technical
      maintenance and research and development as and when required through our
      subsidiary in Israel.





Rent
      expense for the 2006 Period and 2005 Period totaled $72,873 and $49,788,
      respectively, an increase of approximately 46%. The increase in rent expense
      is
      primarily attributable to additional rent expenses in connection with the
      offices leased in Tel Aviv commencing May 31, 2005.





**Insurance
      Expense**





Insurance
      consists of a Directors and Officers policy that was acquired on July 1, 2005
      and expired on June 30, 2006. The policy was not renewed. For the 2006 Period
      and 2005 Period, insurance expense in each of the Periods amounted to
      $22,500.




**Registration
        Penalty**
 
 The
        $17,000 registration penalty was incurred under a 2005 private placement
        (see
        Note 7 of the financial statements).




**LIQUIDITY
      AND CAPITAL RESOURCES**




To
        date,
        we have financed our operations primarily from cash generated through the
        sale
        of our common stock in private placements as well as from cash earned from
        our
        operations. In January 2005 and July 2005, we raised gross proceeds of
        $1,500,000 and $300,000, respectively, from the private placement to an investor
        of 18,500,000 and 4,500,000 shares of our Common Stock,
        respectively.
 
 As
        of
        December 31, 2006, we had a cash balance of $289,083 and accounts receivable
        of
        $346,532.


Cash
      used
      in operating activities was $508,559 for 2006 compared to $962,681 for 2005.
      The
      decrease in the operating cash used is primarily attributable to funding the
      net
      losses in both years.





Cash
      used
      in investing activities in 2006 was $421 and $74,015 in 2005. Cash used in
      2005
      was primarily attributable to the acquisition of trademarks and domains and
      the
      purchase of property and equipment.





Cash
      provided by financing activities was $6,350 in 2006 as compared to $1,785,000
      in
      2005. The cash provided by financing activities in the year 2006 was from the
      collection of a note receivable and the cash provided in 2005 period consisted
      primarily of proceeds from the issuance of common stock in January 2005 and
      July
      2005.





20








Our
      current operating plan is based on continuing to promote ActiveShopper
      downloads, entering into more partnership agreements and affiliation programs,
      adding more categories of product for which ActiveShopper will provide services,
      and further expanding ActiveShopper activities outside the USA. As of today,
      we
      are still depending in one main single line of business with limited revenue
      generating sources which are subjected to seasonable fluctuations.





Our
      relatively low operational costs and cash resources have enabled so far the
      continuation of our activities. Although advertising campaigns required to
      promote ActiveShopper and their related budgets may be expended at our
      discretion, competition and the need to more aggressively promote ActiveShopper
      may require higher budgets than expected and therefore negatively affect our
      cash flows.





Our
      continuation as a going concern, however, is dependent upon, among other things,
      our ability to obtain additional financing when and as needed and to generate
      sufficient cash flow to meet our obligations on a timely basis. No assurance
      can
      be given that we will be able to obtain such financing on acceptable terms.
      Our
      independent registered public accounting firms, in their reports
      on our financial statements for the years ended December, 2006 and 2005,
      expressed substantial doubt about our ability to continue as a going concern.
      These circumstances could complicate our ability to raise additional capital.
      Our financial statements do not include any adjustments to the carrying amounts
      of our assets and liabilities that might result from the outcome of this
      uncertainty.





In
      addition, any future capital raise by our Company is likely to result in
      substantial dilution to existing stockholders.





**RECENTLY
      ISSUED ACCOUNTING STANDARDS**





In
      February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
      Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
      Derivative Instruments and Hedging Activities", and SFAS No. 140, "Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid
      financial instrument that contains an embedded derivative that otherwise would
      require bifurcation, clarifies which interest-only strips and principal-only
      strips are not subject to the requirements of SFAS No. 133, establishes a
      requirement to evaluate interest in securitized financial assets to identify
      interests that are freestanding derivatives or that are hybrid financial
      instruments that contain an embedded derivative requiring bifurcation, clarifies
      that concentrations of credit risk in the form of subordination are not embedded
      derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
      qualifying special-purpose entity from holding a derivative financial instrument
      that pertains to a beneficial interest other than another derivative financial
      instrument. This statement is effective for all financial instruments acquired
      or issued after the beginning of the Company's first fiscal year that begins
      after September 15, 2006. SFAS No. 155 is not expected to have a material effect
      on the financial position or results of operations of the Company.





In
      June
      2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in
      Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48"), which
      clarifies the accounting for uncertainty in income taxes recognized in financial
      statements in accordance with FASB No. 109,"Accounting for Income Taxes". FIN
      48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. The provisions of FIN 48 are effective for fiscal years
      beginning after December 15, 2006, with the cumulative effect of the change
      in
      accounting principle recorded as an adjustment to opening retained earnings.
      The
      Company does not expect the adoption of this pronouncement to have a material
      effect on the financial position or results of operations of the
      Company.




21




In
      September 2006, the FASB issued Statement No. 157, "Fair Value Measurements".
      This Statement defines fair value, establishes a framework for measuring fair
      value in generally accepted accounting principles and expands disclosure about
      fair value measurement. The implementation of this guidance is not expected
      to
      have any impact on the Company's consolidated financial statements.




In
      September 2006, FASB issued SFAS 158 'Employers' Accounting for Defined Benefit
      Pension and Other Postretirement Plans--an amendment of FASB Statements No.
      87,
      88, 106, and 132(R)' This Statement improves financial reporting by requiring
      an
      employer to recognize the over funded or under funded status of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a
      not-for-profit organization. This Statement also improves financial reporting
      by
      requiring an employer to measure the  funded
      status of a plan as of the date of its year-end statement of financial position,
      with limited exceptions. An employer with publicly traded equity securities
      is
      required to initially recognize the funded status of a defined benefit
      postretirement plan and to provide the required disclosures as of the end of
      the
      fiscal year ending after December 15, 2006. An employer without publicly traded
      equity securities is required to recognize the funded status of a defined
      benefit postretirement plan and to provide the required disclosures as of the
      end of the fiscal year ending after June 15, 2007. However, an employer without
      publicly traded equity securities is required to disclose the following
      information in the notes to financial statements for a fiscal year ending after
      December 15, 2006, but before June 16, 2007, unless it has applied the
      recognition provisions of this Statement in preparing those financial
      statements: (1) a brief description of the provisions of this Statement; (2)
      the
      date that adoption is required and (3) the date the employer plans to adopt
      the
      recognition provisions of this Statement, if earlier. The
      Company does not expect the adoption of this pronouncement to have a material
      effect on the financial position or results of operations of the
      Company.




**ITEM
      7. FINANCIAL STATEMENTS**





The
      financials statements of our company for the years ended December 31, 2006
      and
      2005 are attached hereto following the signature page commencing on page
      F-1.





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





None





**ITEM
      8A. CONTROLS AND PROCEDURES**





**EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES**





Based
      on
      an evaluation of our disclosure controls and procedures as of the end of the
      period covered by this annual report, our principal executive officer who is
      also our principal financial officer has concluded that our disclosure controls
      and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act
      of
      1934 (the "Exchange Act")) are effective for the purposes set forth in Rule
      13a-15(e).





**CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING**





There
      have not been any changes in our internal control over financial reporting
      identified in connection with the evaluation discussed above that occurred
      during our last fiscal year that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial reporting.





22





LIMITATIONS
      ON THE EFFECTIVENESS OF INTERNAL CONTROL





Management
      does not expect that our disclosure controls and procedures or our internal
      control over financial reporting will necessarily prevent all fraud and material
      errors. An internal control system, no matter how well conceived and operated,
      can provide only reasonable, not absolute, assurance that the objectives of
      the
      control system are met. Further, the design of a control system must reflect
      the
      fact that there are resource constraints and the benefits of controls must
      be
      considered relative to their costs. Because of the inherent limitations on
      all
      internal control systems, no evaluation of controls can provide absolute
      assurance that all control issues and instances of fraud, if any, within the
      Company have been detected. These inherent limitations include the realities
      that judgments in decision-making can be faulty and that breakdowns can occur
      because of simple error or mistake. The design of any system of internal control
      is also based in part upon certain assumptions about the likelihood of future
      events and there can be no assurance that any design will succeed in achieving
      its stated goals under all potential future conditions. Over time, controls
      may
      become inadequate because of changes in circumstances, and/or the degree of
      compliance with the policies and procedures may deteriorate. Because of the
      inherent limitations in a cost effective internal control system, financial
      reporting misstatements due to error or fraud may occur and not be detected
      on a
      timely basis.





There
      have been no significant changes (including corrective actions with regard
      to
      significant deficiencies or material weaknesses) in our internal controls or
      in
      other factors that could significantly affect these controls subsequent to
      the
      date of the evaluation referenced in the above paragraph.





**ITEM
      8B. OTHER INFORMATION**





None.




**PART
      III**





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





The
      following table sets forth information concerning our directors and executive
      officer :


Name
              
              Age
              
              PositionEliron
                  Yaron
              
              38
              
              Chairman,
                  Principal Executive Officer and
                  Principal
                  Financial And
                  Accounting OfficerIssac
                  Maizel
              
              26
              
              DirectorYossi
                  Levi
              
              26
              
              Director





Eliron
      Yaron, age 38, has been the chairman of our board of directors, Principal
      Executive Officer and Principal Financial and Accounting Officer since company's
      inception date in August 2001. Prior to join us, from 1996 through 2001, he
      was
      the founder and Chief Executive Officer of Shelron Internet Ltd., a web project
      oriented company. Prior to that time, since 1993, he has engaged in either
      founding web related business or working in related technology areas. Eliron
      Yaron has served on the boards of Internet companies in the US and Israel,
      and
      has advised venture capital funds and investment companies on IT and Internet
      related investments and marketing.




Issac
        Maizel, age 26, has worked since 2001 as a computer network consultant, with
        an
        expertise in large networks implementation.
  Yossi
          Levi, age 26, has worked since 2001 as a E-learning consultant, and as
          an
          internet advertising salesman.




23




**THE
      COMMITTEES**





The
      Board
      of Directors does not have a Compensation, Audit or Nominating Committee, and
      the usual functions of such committees are currently performed by the Board
      of
      Directors. The directors have determined that at present we do not have an
      audit
      committee financial expert. The directors believe that they are capable of
      analyzing and evaluating our financial statements and understanding internal
      controls and procedures for financial reporting. In addition, we have been
      seeking and continue to seek appropriate individuals to serve on the Board
      of
      Directors and the Audit Committee who will meet the requirements necessary
      to be
      an independent financial expert.





**EXECUTIVE
      OFFICERS OF OUR COMPANY**





Officers
      are appointed to serve at the discretion of the Board of Directors. Mr. Eliron
      Yaron currently serves as our president and sole executive officer.





**CODE
      OF ETHICS**





We
      adopted a code of ethics that applies to our Principal Executive Officer and
      Principal Financial and Accounting Officer, and other persons who perform
      similar functions. A copy of our Code of Ethics is filed as an exhibit to the
      Annual Report on Form 10-KSB for the year ended December 31, 2003. Our Code
      of
      Ethics is intended to be a codification of the business and ethical principles
      which guide us, to deter wrongdoing, promote honest and ethical conduct, avoid conflicts
      of interest, and foster full, fair, accurate, timely and understandable
      disclosures, compliance with applicable governmental laws, rules and
      regulations, the prompt internal reporting of violations and accountability
      for
      adherence to this Code.





**SECTION
      16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**





Section
      16(a) of the Exchange Act requires the Company's executive officers, directors
      and persons who beneficially own more than 10% of a registered class of the
      Company's equity securities to file with the Commission initial reports of
      ownership and reports of changes in ownership of Common Stock and other equity
      securities of the Company. Such persons are required by Commission regulations
      to furnish the Company with copies of all Section 16(a) forms they filed. Based
      solely upon a review of (i) Forms 3 and 4 and amendments thereto


furnished
      to the Company pursuant to Rule 16a-3(e), promulgated under the Securities
      Exchange Act of 1934 (the "Exchange Act"), during the Company's fiscal year
      ended December 31, 2006, and (ii) Forms 5 and amendments thereto and/or written
      representations furnished to us by any director,
      officer or 10% security holder of the Company (collectively "Reporting Persons")
      stating that he or she was not required to file a Form 5 during the Company's
      fiscal year ended December 31, 2006, it has been determined that all officers,
      directors and persons who beneficially own more than 10% of a registered class
      of the Company's equity securities have met their reporting obligations set
      forth in Section 16(a) of the Exchange Act.





**ITEM
      10. EXECUTIVE COMPENSATION.**





The
      Summary Compensation Table below sets forth compensation paid by the Company
      for
      the fiscal years ended December 31, 2006, 2005 and 2004 for services to its
      principal executive officer and other executive officers who received a total
      annual salary and bonus which exceeded $100,000.




24




SUMMARY
        COMPENSATION TABLE


NAME
                        AND POSITION
                
                YEAR
                
                ANNUAL
                      AND
                    TOTAL
                    COMPENSATIONEliron
                    Yaron,Chairman,
                    Principal Executive
                
                
                2006
                
                $
                170,792
                (1)Officer
                    and Principal Financial
                
                
                2005
                
                $
                156,000And
                    Accounting Officer
                
                
                2004
                
                $
                156,000




( 1) Includes
        $14,792 of compensation paid by the Company's subsidiary in Israel.
 Mr.
        Yaron
        did not receive a bonus or any type of other compensation, not mentioned
        above,
        for the three years presented.





**OPTION
      GRANTS IN 2006**





None
      of
      the Named Executive Directors were granted any options during the year ended
      December 31, 2006.





**AGGREGATE
      OPTIONS EXERCISED IN 2006 AND 2006 YEAR END VALUES**





Not
      applicable .





**EQUITY
      COMPENSATION PLAN INFORMATION**





Not
      applicable





**EXECUTIVE
      EMPLOYMENT**





In
      March
      2005, we entered into a consulting agreement with Hull Services Inc. ("Hull"),
      a
      company wholly-owned and controlled by Eliron Yaron, the Chairman of the Board
      of Directors and the Principal Executive Officer of the Company. Pursuant to
      the
      terms of this Consulting Agreement, we pay to the consultant $156,000 per annum
      in installments of $3,000 per week, in addition to reimbursing all reasonable
      expenses incurred in connection with services rendered on behalf of our Company.
      The agreed compensation accrues and is paid when funds for such payments are
      available. As of December 31, 2006, accrued and outstanding fees to Hull are
      $4,467. The agreement continues in effect through March 2007 and contains
      certain customary confidentiality and non-compete provisions. The agreement
      is
      renewed automatically for successive one year periods until either party gives
      the other a 180-day prior written notice of its intent to terminate the
      agreement. As of December 31, 2006, no prior written notice with the intent
      to
      terminate the agreement was provided. Therefore the consulting agreement has
      been automatically extended until March 2008.




25




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





The
      following table sets forth information as of March 27, 2007, concerning all
      persons known by us to own beneficially more than 5% of our Common Stock and
      concerning shares beneficially owned by each director and named executive
      officer and by all directors and executive officers as a group. Unless expressly
      indicated otherwise, each shareholder exercises sole voting and investment
      power
      with respect to the shares beneficially owned.





In
      accordance with the rules of the SEC, the table gives effect to the shares
      of
      common stock that could be issued upon the exercise of outstanding options
      and
      common stock purchase warrants within the next 60 days. Unless otherwise noted
      in the footnotes to the table and subject to community property laws where
      applicable, the following individuals have sole voting and investment control
      with respect to the shares beneficially owned by them.





The
      address of each executive officer and director is 7 Tfuzot Israel, Givataim,
      Israel We have calculated the percentages of shares beneficially owned based
      on
      410,688,645 shares of common stock outstanding at March 27,
      2007.





**Name
                and Address of****Beneficial
                Owner**
            
            **Shares
                of**
              **Common
                Stock**
            
            **Percentage
                Ownership of Shares of****Common
                Stock****(1)**
            
            **Shares
                of**
              **Preferred
                Stock (2)**
            
            **Voting
                Power of Shares of****Preferred
                Stock**Executive
                Offices andDirectorsEliron
                Yaron
            
            
            29,365,500
            
            
            7.17
            %
            
            1,000,000
            
            
            52
            %Issac
                Maizel
            
            
            0
            
            
            
            
            
            0Yossi
                Levi
            
            
            0
            
            
            
            
            
            0All
                Executive Officers and Directors as a group
              (3
                persons)
            
            
            29,365,500
            
            
            7.17
            %
            
            1,000,000
            
            
            52
            %5%
                StockholdersJoseph
                Corso
            
            
            89,000,000
            
            
            21.72
            %
            
            0
            
            
            *All
                Executive Officers, Directors and 5% Stockholders as a group (2
                persons)
            
            
            118,365,500
            
            
            28.89
            %
            
            1,000,000
            
            
            52
            %





*
            less
                than one percent (1%).




(1)
      Percentage of beneficial ownership as to any person as of a particular date
      is
      calculated by dividing the number of shares of common stock issued and
      outstanding of such person as of such date and the number of unissued shares
      as
      to which such person has the right to acquire voting and/or investment power
      within 60 days, by the total issued and outstanding shares of common stock
      of
      the Company at such date.




26





(2)
      Comprised of 1,000,000 shares of common stock issuable upon the conversion
      of
      1,000,000 shares of Series A Preferred Stock issued to Hull, a company
      wholly-owned and controlled by Mr. Yaron. As the sole stockholder of Hull,
      Mr.
      Yaron may be deemed a beneficial owner of the shares of Common Stock issuable
      upon conversion of the Series A Preferred Stock.





(3)
      Derived from a Schedule 13G filed by Joseph Corso on January 4, 2007. The
      address of such person is: 15 Ottavio, Promenade, Staten Island, NY 10307,
      US.





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





In
        March
        2005, we entered into a consulting agreement with Hull, a company wholly-owned
        and controlled by Eliron Yaron, the Chairman of the Board of Directors and
        the
        Principal Executive Officer of the Company. Pursuant to the terms of this
        Consulting Agreement, we pay to Hull $156,000 per annum in installments of
        $3,000 per week, in addition to reimbursing all reasonable expenses incurred
        in
        connection with services rendered on behalf of our Company. The agreed
        compensation accrues and is paid when funds for such payments are available.
        The
        agreement continues in effect through March 2007 and contains certain customary
        confidentiality and non-compete provisions. The agreement is renewed
        automatically for successive one year periods until either party gives the
        other
        a 180-day prior notice of its intent to terminate the agreement. As of December
        31, 2006, no prior written notice with the intent to terminate the agreement
        was
        provided. Therefore the consulting agreement has been automatically extended
        until March 2008.
 
 On
        December 29, 2006, the Company was indebted to Hull in the amount of $444,466
        for accrued compensation and other advances to Hull as of November 30, 2006
        (the
        "Debt"). On December 29, 2006, the parties agreed to settle the Debt in exchange
        for the issuance of 63,187,111 restricted shares of the Company's common
        stock.
        Such issuance was approved by the Company's board of directors. On March
        26,
        2007, the Company and Hull agreed to reduce the number of shares to be issued
        to
        Hull in consideration for and in settlement of the Debt from 63,187,111 to
        19,000,000. On the same date, the Company and Hull entered into an amended
        and
        restated settlement agreement to amend and supercede the terms of any previous
        settlement agreement entered into between the parties.
 
 As
        of
        December 31, 2006, the Company owes Hull $4,467.




In
      January 2005, the Company privately placed 18,500,000 shares of its common
      stock
      par value $0.001 per share (the “Common Stock”) with Mr. Joseph Corso, an
      accredited investor, for gross proceeds of $1.5 million pursuant to a
      subscription agreement dated January 4, 2005. Under the terms of the
      subscription agreement, the Company agreed to file a registration statement
      under the Securities Act of 1933, as amended covering the resale of the shares
      within 90 days of the closing date, which period was subsequently extended
      to
      December 31, 2005. In addition, the subscription agreement provided that if
      the
      Company did not file the registration statement by such date, it would be liable
      for penalties.





In
      connection with this subscription agreement, the Company entered into a
      financial advisory agreement with Mr. Corso, pursuant to which the investor
      has
      provided the Company with general financial consulting services, including,
      assistance with capital-raising activities, and identification of possible
      merger and acquisition candidates. In consideration of such services, the
      Company paid the investor a one-time consulting fee of 4,000,000 shares of
      its
      Common Stock. The Company also undertook to file a registration statement
      covering the resale of these shares, by December 31, 2005. Financial advisory
      fees in the amount of $324,324 were charged to consulting expense in
      2005.




In
      addition, in connection with the Corso subscription agreement described above,
      the Company entered into a finder’s agreement pursuant to which the Company
      issued 850,000 shares of its Common Stock to an individual as compensation
      for
      that individual’s services in introducing the Company to the investor and the
      consummation of the transaction described above. Finder's fees in the amount
      of
      $850 have been charged to equity in 2005.




27





By
      December 31, 2005, the Company had not filed a registration statement and
      therefore, penalties incurred in the amount of 100,000 shares of Common Stock
      per each delaying month.





Penalties
      totaling $17,000, as measured at the fair value of the common stock, were
      accrued and charged to financial expenses for the three month period ended
      March
      31, 2006. On April 24, 2006, the accrued liability was reclassified as a
      contribution to capital with the elimination of the penalties by the accredited
      investor at that date.





On
      April
      24, 2006, Mr. Corso, executed a letter agreement with the Company to clarify
      and
      amend the subscription agreement and the financial advisory agreement, dated
      January 4, 2005 (the "Agreements"), a first extension letter, dated May 10,
      2005
      and a second extension letter, dated June 7, 2005 (the "Extension
      Letters"). The April 24, 2006 letter agreement serves to clarify the
      following: (i) that the Extension Letters were amendments to the Agreements
      which provided that all matters relating to the timing of the filing of the
      registration statement covering the shares issued to Mr. Corso under the
      Agreements are within the Company’s control so that the Company can use its best
      efforts to file the registration statement; (ii) that Mr. Corso irrevocably
      agreed not to rescind the Agreements, or otherwise demand repayment of the
      purchase price for the shares issued in connection with the Agreements due
      to
      Company’s failure to register the shares as was contemplated in the Agreements;
      and that (iii) any references in the Extension Letters to penalties that might
      be triggered or accrue as a result of not filing on a timely basis are
      eliminated by the letter agreement.  The $1.5 million gross proceeds
      received pursuant to the subscription agreement dated January 4, 2005, have
      been
      classified as permanent equity in the accompanying balance sheet in accordance
      with EITF D-98, on April 24, 2006.





In
      July
      2005, the Company privately placed 4,500,000 shares of its common stock par
      value $0.001 per share (the “Common Stock”) with an accredited investor for
      gross proceeds of $300,000 pursuant to a subscription agreement dated July
      16,
      2005. The investor has been granted piggyback registration rights.





In
      connection with this subscription agreement, the Company entered into a finder’s
      agreement pursuant to which the Company issued 200,000 shares of its Common
      Stock to an individual as compensation for that individual’s services in
      introducing the Company to the investor and the consummation of the transaction
      described above. Finder's fees in the amount of $200 have been charge to
      equity.




**ITEM
      13. EXHIBITS**


Exhibit
                Number
              
              Description3.1
              
              Certificate
                  of Incorporation of the Company. (1)3.2
              
              Bylaws
                  of the Company. (1)3.3
              
              Certificate
                  of Amendment of Certificate of Incorporation.4.1
              
              Certificate
                  of Designation of the Company.(2)10.1
              
              Stock
                  Purchase Agreement. (3)10.2
              
              Debentures
                  dated October 31, 2001. (2)10.3
              
              Subscription
                  Agreement dated as of January 4, 2005 between the Company and Joseph
                  Corso. (5)10.4
              
              Financial
                  Advisory Agreement dated as of January 4, 2005 between the Company
                  and
                  Joseph Corso. (5)10.5
              
              Consulting
                  Agreement dated as of March 1, 2005 between the Company and Hull
                  Services,
                  Inc. (5)10.6
              
              Letter
                  Agreement, dated April 24, 2006, by and between Joseph Corso and
                  Shelron
                  Group, Inc. (6)10.7
              
              Extension
                  letter, dated May 10, 2005, by Joseph Corso (6)10.8
              
              Extension
                  letter, dated June 7, 2005, by Joseph Corso (6)14
              
              Code
                  of Ethics. (4)31
              
              Certification
                  of Principal Executive Officer and Principal Financial Officer
                  Pursuant to
                  Section 302(a) of the Sarbanes-Oxley Act of 2002.32
              
              Certification
                  of Principal Executive Officer and Principal Financial Officer
                  Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of
                  2002.





(1)
      This
      exhibit was filed as an exhibit to the Registration statement on Form 10-SB12G
      filed on October 11, 2000 and is incorporated herein by reference.





(2)
      This
      exhibit was filed as an exhibit to the Annual Report on Form 10-KSB filed on
      April 16, 2002 and is incorporated herein by reference.





(3)
      This
      exhibit was filed as an exhibit to the Current Report on Form 8-K filed on
      November 16, 2001 and is incorporated herein by reference.





(4)
      This
      exhibit was filed as an exhibit to the Annual Report on Form 10-KSB filed on
      May
      21, 2004 and is incorporated herein by reference.





(5)
      This
      exhibit was filed as an exhibit to the Annual Report on Form 10-KSB filed on
      April 8, 2005 and is incorporated herein by reference.





(6)
      This
      exhibit was filed as an exhibit to the Current Report on Form 8-K filed on
      May
      8, 2006 and is incorporated herein by reference.




28





**ITEM
      14. PRINCIPAL ACCOUNTANT AND FEES**





From
      July
      17, 2006 and through the subsequent periods for fiscal year ended December
      31,
      2006, our principal independent auditor was Rotenberg Meril Solomon Bertiger
      & Guttilla, P.C. ("RMSBG). During fiscal year ended December 31, 2005, and
      during the three month ended March 31, 2006 in fiscal year 2006, our principal
      independent auditor was Goldstein Golub Kessler LLP ("GGK"). The following
      are
      the services provided and the amount billed:





**AUDIT
      FEES**





The
      aggregate fees billed or to be billed by RMSBG for professional services
      rendered for the audit of the Company's annual financial statements for the
      fiscal year ended December 31, 2006, and for the review of the financial
      statements included in the Company's Quarterly Reports on Form 10-QSB for the
      six and nine month periods ended June 30, 2006 and September 30, 2006,
      respectively, during fiscal years 2006 were $40,000.




The
      aggregate fees billed by Goldstein Golub Kessler LLP for professional services
      rendered for the review of the financial statements included in the Company's
      Quarterly Reports on Form 10-QSB for the three month period ended March 31,
      2006, the audit of the Company's annual financial statements for the fiscal
      year
      ended December 31, 2005, and for the review of the financial statements included
      in the Company's Quarterly Reports on Form 10-QSB for fiscal year 2005 were
      $45,500.





**AUDIT
      RELATED FEES**





Other
      than the fees described under the caption "Audit Fees" above, RMSBG and GGK
      did
      not bill any fees for services rendered to us during fiscal years 2006 and
      2005
      for assurance and related services in connection with the audit or review of
      our
      consolidated financial statements.





**TAX
      FEES**





There
      were no fees billed by RMSBG and GGK for tax services rendered during the fiscal
      years ended December 31, 2006 and 2005, respectively.





**ALL
      OTHER FEES**





There
      were no fees billed by RMSBG and GGK for other professional services rendered
      during the periods for fiscal years ended December 31, 2006 and 2005,
      respectively.





**PRE-APPROVAL
      OF SERVICES**





We
      do not
      have an audit committee. Our Board of Directors pre-approves all services,
      including both audit and non-audit services, provided by our independent
      accountants. For audit services, each year the independent auditor provides
      our
      Board of Directors with an engagement letter outlining the scope of the audit
      services proposed to be performed during the year, which must be formally
      accepted by the Board of Directors before the audit commences The independent
      auditor also submits an audit services fee proposal, which also must be approved
      by the Board of Directors before the audit commences.




29




**SIGNATURES**





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




**SHELRON
                GROUP, INC.**Dated:
                March 30, 2007
            By:
            /s/
              Eliron YaronEliron
                Yaron
                Chairman




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this Report has
      been
      signed below by the following person on behalf of the Company and in the
      capacities and on the date indicated.


Signature
              
              Capacity
              
              Date/s/
                  Eliron Yaron
                
                Eliron
                    Yaron
              
              Chairman
                  and Director
              
              March
                  30, 2007Issac
                  Maizel
              
              Director
              
              March
                  30, 2007Yossi
                  Levi
              
              Director
              
              March
                  30, 2007




30




**SHELRON
      GROUP INC. AND SUBSIDIARIES**


**(a
      development stage company)**





**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**


Reports
                  of Independent Registered Public Accounting Firms
              
              F-2
                  - F-3Consolidated
                  Financial Statements:Balance
                  Sheets
              
              F-4Statements
                  of Operations
              
              F-5Statements
                  of Stockholders' Equity (Deficiency)
              
              F-6
                  - F-11Statements
                  of Cash Flows
              
              F-12Notes
                  to Consolidated Financial Statements
              
              F-13
                  - F-22




F-1




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTIN** **G
      FIRM**





To
      the
      Directors and Stockholders of


Shelron
      Group Inc.





We
      have
      audited the accompanying consolidated balance sheet of Shelron Group Inc. and
      Subsidiaries (a development stage company) (the “Company”) as of December 31,
      2006 and the related consolidated statements of operations, changes in
      stockholders’ equity (deficiency) and cash flows for the year then ended and for
      the period from August 21, 2001 (date of inception) through December 31, 2006.
      The consolidated financial statements are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on these financial
      statements based on our audit. The consolidated balance sheet as of December
      31,
      2005 and the consolidated statements of operations, changes in stockholders’
equity (deficiency) and cash flows of the Company for the period from August
      21,
      2001 (date of inception) through December 31, 2005 were audited by other auditors
      whose
      report dated March 31, 2006 (except for the third paragraph of footnote 9 as
      to
      which the date is April 14, 2006) on those statements included an explanatory
      paragraph describing conditions that raised substantial doubt about the
      Company's ability to continue as a going concern.





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





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of the Company as of December
      31, 2006 and the results of their operations and cash flows for the year then
      ended and for the period from August 21, 2001 (date of inception) to December
      31, 2006, in conformity with accounting principles generally accepted in the
      United States of America.





The
      financial statements referred to above have been prepared assuming that the
      Company will continue as a going concern. As discussed in Note 1 to the
      consolidated financial statements, the Company’s recurring losses from
      operations, stockholders' deficiency and working capital deficiency raise
      substantial doubt about the Company’s ability to continue as a going concern.
      Management’s plans concerning these matters are also described in Note 1. The
      accompanying consolidated financial statements do not include any adjustments
      that might result from the outcome of this uncertainty.




/s/
                Rotenberg Meril Solomon Bertiger & Guttilla, P.C.ROTENBERG
                MERIL SOLOMON BERTIGER & GUTTILLA, P.C.Saddle
                Brook, New Jersey
              March
                  28,2007





F-2




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Directors and Stockholders of


Shelron
      Group Inc.





We
      have
      audited the accompanying consolidated balance sheet of Shelron Group Inc. and
      Subsidiaries (a development stage company) as of December 31, 2005 and the
      related consolidated statements of operations, changes in stockholders’ equity
      (deficiency) and cash flows for the year then ended and for the period from
      August 21, 2001 (date of inception) through December 31, 2005. The consolidated
      financial statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit.





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





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Shelron Group, Inc. and
      Subsidiaries as of December 31, 2005 and the results of their operations and
      cash flows for the year then ended and for the period from August 21, 2001
      (date
      of inception) through December 31, 2005, in conformity with accounting
      principles generally accepted in the United States of America.





The
accompanyingfinancial statements referred to above have been prepared assuming that
      the Company will continue as a going concern. As discussed in Note 1 of notes
      to
      consolidated financial statements, the Company has suffered recurring losses
      from operations, has a stockholders' deficiency and a working capital deficiency
      that raise substantial doubt about their ability to continue as a going concern.
      Management’s plans concerning these matters are also described in Note 1. The
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.




*/s/
                Goldstein Golub Kessler LLP**New
                York, New York**March
                31, 2006*
              *(except
                  for the 3**rd**paragraph of footnote 9 as to which the date is April 24,
                  2006)*





F-3




SHELRON
      GROUP INC. AND SUBSIDIARIES


(a
      development stage company)





CONSOLIDATED
      BALANCE SHEETS   December
                  31,
                  2006
              
              December
                  31,
                  2005Current
                  AssetsCash
              
              $
              289,083
              
              $
              791,713Note
                  receivable
              
              
              —
              
              
              6,350Accounts
                  receivable
              
              
              346,532
              
              
              324,437Other
                  current assets
              
              
              24,819
              
              
              37,783Total
                  Current Assets
              
              
              660,434
              
              
              1,160,283Property
                    and Equipment, net of accumulated depreciation of $139,612and
                  $103,983,
                  respectively
              
              
              82,879
              
              
              118,508Intangible
                  assets, net of amortization of $6,000and
                  $2,000, respectively
              
              
              34,000
              
              
              38,000Other
                  asset
              
              
              18,132
              
              
              17,711Deferred
                    tax asset, net of valuation allowance of $1,597,000 and$1,289,000,
                  respectively
              
              
              —
              
              
              —Total
                  Assets
              
              $
              795,445
              
              $
              1,334,502LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIENCY)Current
                  Liabilities:Accounts
                  payable and accrued expenses
              
              $
              252,783
              
              $
              148,409Due
                  to stockholders
              
              
              20,065
              
              
              411,907Subscriptions
                  payable
              
              
              6,000
              
              
              6,000Deferred
                  revenues
              
              
              —
              
              
              72,500Total
                  Current Liabilities
              
              
              278,848
              
              
              638,816Common
                    Stock, subject to registration requirement, $0.001 par
                    value18,500,000
                  shares issued and outstanding
              
              
              —
              
              
              1,500,000—
              
              
              1,500,000CommitmentStockholders'
                  Equity (Deficiency):Series
                  A convertible preferred stock, $.001 par value, Authorized10,000,000
                  shares, Issued and outstanding 1,000,000 shares
              
              
              1,000
              
              
              1,000Common
                  stock, par value $.001 per shareAuthorized
                  500,000,000 shares;Issued
                  and outstanding 409,789,359 and364,987,531
                  shares, respectively
              
              
              409,788
              
              
              364,987Additional
                  paid-in capital
              
              
              5,016,844
              
              
              2,822,676Deficit
                  accumulated during the development stage
              
              
              (4,911,035
              )
              
              (3,992,977
              )Total
                  Stockholders' Equity (Deficiency)
              
              
              516,597
              
              
              (804,314
              )Total
                  Liabilities andStockholders'
                  Equity (Deficiency)
              
              $
              795,445
              
              $
              1,334,502


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





F-4




SHELRON
      GROUP INC. AND SUBSIDIARIES


(a
      development stage company)





CONSOLIDATED
      STATEMENTS OF OPERATIONS


Year
                    ended December 31,
                
                For
                      the period from
                    August
                      21, 2001
                    (date
                      of inception)
                    through
                      December 31,2006
                
                2005
                
                2006Revenue
                
                $
                1,115,414
                
                $
                374,261
                
                $
                1,528,344Operating
                    Expenses:Consulting
                    fees
                
                
                296,571
                
                
                576,232
                
                
                1,558,497Research
                    and development
                
                
                132,336
                
                
                322,224
                
                
                614,108Employment
                    compensation
                
                
                170,792
                
                
                156,000
                
                
                819,292Professional
                    fees
                
                
                297,044
                
                
                192,097
                
                
                772,189Marketing
                    and advertising
                
                
                840,785
                
                
                365,441
                
                
                1,326,350Office
                    and general expenses
                
                
                162,273
                
                
                148,084
                
                
                463,917Rent
                
                
                72,873
                
                
                49,788
                
                
                152,415Depreciation
                    and amortization
                
                
                39,629
                
                
                39,340
                
                
                160,613Insurance
                
                
                22,500
                
                
                22,500
                
                
                45,000Bad
                    debt expense
                
                
                —
                
                
                —
                
                
                1,260Total
                    Operating Expenses
                
                
                2,034,803
                
                
                1,871,706
                
                
                5,913,641Loss
                    from operations
                
                
                (919,389
                )
                
                (1,497,445
                )
                
                (4,385,297
                )Other
                    income (expense):Interest
                    expense
                
                
                (8,435
                )
                
                (2,221
                )
                
                (548,189
                )Registration
                    penalty
                
                
                (17,000
                )
                
                —
                
                
                (17,000
                )Interest
                    income
                
                
                26,766
                
                
                22,844
                
                
                49,610Total
                    other income (expense)
                
                
                1,331
                
                
                20,623
                
                
                (515,579
                )Net
                    loss
                
                
                (918,058
                )
                
                (1,476,822
                )
                
                (4,900,876
                )Stock
                  dividend
                
                
                —
                
                
                —
                
                
                10,159Net
                  loss applicable to common
                  stockholders
                
                $
                (918,058
                )
                $
                (1,476,822
                )
                $
                (4,911,035
                )Basic
                    and diluted net loss per share
                
                $
                (0.00
                )
                $
                (0.00
                )
                $
                (0.02
                )Weighted
                    average number ofshares
                    outstanding - basic and diluted
                
                
                387,072,295
                
                
                345,202,778
                
                
                220,695,123




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




F-5


SHELRON
        GROUP INC. AND SUBSIDIARIES
 (a
        development stage company)
 
 CONSOLIDATED
        STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
  Year
        2001 :
  Preferred
                    Stock
                
                
                
                Common
                    Stock
                
                
                
                Deficit
                    AccumulatedNumber
                      of
                      Shares
                
                Amount
                
                Price
                        Per
                      Share
                
                Number
                        of
                        Shares
                
                Amount
                
                Additional
                        Paid-in
                        Capital
                
                During
                          The
                        Development
                          Stage
                
                Stockholders'
                      DeficiencyStockholders
                    equity of TTTTickets Holding Corp. on date of merger
                
                
                —
                
                
                —
                
                
                —
                
                
                10,066,990
                
                $
                10,067
                
                
                10,729
                
                
                (20,796
                )
                
                —Adjustment
                    upon merger with B-Park Communications, Inc.
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (20,796
                )
                
                20,796
                
                
                —Beneficial
                    conversion feature in connection with issuance of Debentures
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                214,285
                
                
                —
                
                
                214.285Conversion
                    of Debentures to common stock
                
                
                —
                
                
                —
                
                
                0.001
                
                
                1,600,000
                
                
                1,600
                
                
                (1,440
                )
                
                —
                
                
                160Shares
                    place in escrow as security for Debentures
                
                
                —
                
                
                —
                
                
                —
                
                
                9,000,000
                
                
                —
                
                
                —
                
                
                —
                
                
                —Issuance
                    of Series A Preferred Stock
                
                
                1,000,000
                
                
                1,000
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                1,000Beneficial
                    conversion on conversion of Debentures to common stock
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                234,275
                
                
                —
                
                
                234,275Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (754,941
                )
                
                (754,941
                )Balance
                    at December 31, 2001
                
                
                1,000,000
                
                $
                1,000
                
                
                —
                
                
                20,666,990
                
                $
                11,667
                
                $
                437,053
                
                $
                (754,941
                )
                $
                (305,221
                )
  The
          accompany notes to consolidated financial statements are an integral part
          of
          these statements.
  F-6
  SHELRON
          GROUP INC. AND SUBSIDIARIES
 (a
          development stage company)
 
 CONSOLIDATED
          STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
  Year
          2002 :
  Preferred
                      Stock
                  
                  Common
                      Stock
                  
                  
                  
                  Deficit
                      AccumulatedNumber
                      of
                      Shares
                  
                  Amount
                  
                  Price
                        PerShare
                  
                  Number
                            of
                            Shares
                  
                  Amount
                  
                  Additional
                            Paid-in
                            Capital
                  
                  During
                              The
                            Development
                            Stage
                  
                  Stockholders'
                            DeficiencyBalance
                      at January 1, 2002
                  
                  
                  1,000,000
                  
                  $
                  1,000
                  
                  
                  —
                  
                  
                  20,666,990
                  
                  $
                  11,667
                  
                  $
                  437,053
                  
                  $
                  (754,941
                  )
                  $
                  (305,221
                  )Conversion
                      of Debentures to common stock
                  
                  
                  —
                  
                  
                  —
                  
                  
                  0.003-0.009
                  
                  
                  7,667,513
                  
                  
                  7,667
                  
                  
                  52,333
                  
                  
                  —
                  
                  
                  60,000Issuance
                      of shares for consulting fees
                  
                  
                  —
                  
                  
                  —
                  
                  
                  0.004-0.019
                  
                  
                  11,400,000
                  
                  
                  11,400
                  
                  
                  171,660
                  
                  
                  —
                  
                  
                  183,060Beneficial
                      conversion feature in connection with issuance of Debentures
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  10,714
                  
                  
                  —
                  
                  
                  10,714Issuance
                      of common stock for cash
                  
                  
                  —
                  
                  
                  —
                  
                  
                  0.001
                  
                  
                  39,546,296
                  
                  
                  39,546
                  
                  
                  (2,546
                  )
                  
                  —
                  
                  
                  37,000Accrued
                      interest on Debentures paid through the issuance of common
                      stock
                  
                  
                  —
                  
                  
                  —
                  
                  
                  0.001
                  
                  
                  265,497
                  
                  
                  266
                  
                  
                  1,920
                  
                  
                  —
                  
                  
                  2,186Net
                      loss
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (691,262
                  )
                  
                  (691,262
                  )Balance
                      at December 31, 2002
                  
                  
                  1,000,000
                  
                  $
                  1,000
                  
                  
                  —
                  
                  
                  79,546,296
                  
                  $
                  70,546
                  
                  $
                  671,134
                  
                  $
                  (1,446,203
                  )
                  $
                  (703,523
                  )
  The
          accompany notes to consolidated financial statements are an integral part
          of
          these statements.
  F-7
  SHELRON
          GROUP INC. AND SUBSIDIARIES
 (a
          development stage company)
 
 CONSOLIDATED
          STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
  Year
          2003 :
 Preferred
                        Stock
                    
                    
                    
                    
                    
                    Common
                        Stock
                    
                    
                    
                    
                    
                    Deficit
                        AccumulatedNumber
                            of
                            Shares
                    
                    
                    Amount
                    
                    
                    Price
                          Per
                        Share
                    
                    
                    Number
                            of
                            Shares
                    
                    
                    Amount
                    
                    
                    Additional
                                    Paid-in
                                    Capital
                    
                    
                    During
                            The
                          Development
                            Stage
                    
                    
                    Stockholders'
                              DeficiencyBalance
                        at January 1, 2003
                    
                    
                    1,000,000
                    
                    $
                    1,000
                    
                    
                    —
                    
                    
                    79,546,296
                    
                    $
                    70,546
                    
                    $
                    671,134
                    
                    $
                    (1,446,203
                    )
                    $
                    (703,523
                    )Conversion
                        of debentures to common stock
                    
                    
                    —
                    
                    
                    —
                    
                    
                    0.0001-0.0065
                    
                    
                    72,619,628
                    
                    
                    84,043
                    
                    
                    87,171
                    
                    
                    —
                    
                    
                    171,214Issuance
                          of shares for consulting fees
                    
                    
                    —
                    
                    
                    —
                    
                    
                    0.0025
                    
                    
                    13,100,000
                    
                    
                    13,100
                    
                    
                    19,500
                    
                    
                    —
                    
                    
                    32,600Accrued
                          interest on debentures paid throughthe
                          issuance of common stock
                    
                    
                    —
                    
                    
                    —
                    
                    
                    0.0021-
                        0.0065
                    
                    
                    2,852,814
                    
                    
                    428
                    
                    
                    10,605
                    
                    
                    —
                    
                    
                    11,033Dividend
                        paid through the issuanceof
                        common stock
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    10,158,926
                    
                    
                    10,159
                    
                    
                    —
                    
                    
                    (10,159
                    )
                    
                    —Security
                        transfer fee paid through the issuanceof
                        common stock
                    
                    
                    —
                    
                    
                    —
                    
                    
                    0.00298
                    
                    
                    250,000
                    
                    
                    251
                    
                    
                    494
                    
                    
                    —
                    
                    
                    745Beneficial
                          conversion feature in connectionwith
                          issuance of debentures
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    16,928
                    
                    
                    —
                    
                    
                    16,928Net
                        loss
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    (413,876
                    )
                    
                    (413,876
                    )Balance
                        at December 31, 2003
                    
                    
                    1,000,000
                    
                    $
                    1,000
                    
                    
                    —
                    
                    
                    178,527,664
                    
                    $
                    178,527
                    
                    $
                    805,832
                    
                    $
                    (1,870,238
                    )
                    $
                    (884,879
                    )
 The
              accompany notes to consolidated financial statements are an integral
              part of
              these statements.
  F-8
  SHELRON
          GROUP INC. AND SUBSIDIARIES
 (a
          development stage company)
 
 CONSOLIDATED
          STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
  Year
          2004 :
 Preferred
                        Stock
                    
                    
                    
                    Common
                        Stock
                    
                    
                    
                    Deficit
                        AccumulatedNumber
                          of
                          Shares
                    
                    Amount
                    
                    Price
                        Per Share
                    
                    Number
                          of
                          Shares
                    
                    Amount
                    
                    Additional
                          Paid-in
                          Capital
                    
                    During
                              The
                            Development
                              Stage
                    
                    Stockholders'
                      DeficiencyBalance
                        at January 1, 2004
                    
                    
                    1,000,000
                    
                    $
                    1,000
                    
                    
                    —
                    
                    
                    178,527,664
                    
                    $
                    178,527
                    
                    $
                    805,832
                    
                    $
                    (1,870,238
                    )
                    $
                    (884,879
                    )Conversions
                        of debentures into common stock
                    
                    
                    —
                    
                    
                    —
                    
                    
                    0.0025-0.0028
                    
                    
                    99,000,000
                    
                    
                    99,000
                    
                    
                    169,950
                    
                    
                    —
                    
                    
                    268,950Issuance
                        of common stock for cash
                    
                    
                    —
                    
                    
                    —
                    
                    
                    0.01-0.05
                    
                    
                    27,974,541
                    
                    
                    27,975
                    
                    
                    584,025
                    
                    
                    —
                    
                    
                    612,000Issuance
                        of common stock for note receivable
                    
                    
                    —
                    
                    
                    —
                    
                    
                    0.015-0.019
                    
                    
                    2,386,333
                    
                    
                    2,386
                    
                    
                    37,614
                    
                    
                    —
                    
                    
                    40,000Issuance
                          of common stockfor
                          consulting fees and services
                    
                    
                    —
                    
                    
                    —
                    
                    
                    0.01667-0.11000
                    
                    
                    2,455,555
                    
                    
                    2,456
                    
                    
                    101,877
                    
                    
                    —
                    
                    
                    104.333Net
                        loss
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    (645,917
                    )
                    
                    (645,917
                    )Balance
                        at December 31, 2004
                    
                    
                    1,000,000
                    
                    $
                    1,000
                    
                    
                    —
                    
                    
                    310,344,093
                    
                    $
                    310,344
                    
                    $
                    1,699,298
                    
                    $
                    (2,516,155
                    )
                    $
                    (505,513
                    )
 The
            accompany notes to consolidated financial
            statements are an integral part of these statements.
  F-9
 SHELRON
          GROUP INC. AND SUBSIDIARIES
 (a
          development stage company)
 
 CONSOLIDATED
          STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
  Year
          2005 :
 Preferred
                    Stock
                
                
                
                Common
                    Stock
                
                
                
                Deficit
                    AccumulatedNumber
                        of
                        Shares
                
                Amount
                
                Price
                        Per
                      Share
                
                Number
                        of
                        Shares
                
                Amount
                
                Additional
                        Paid-in
                        Capital
                
                During
                              The
                            Development
                              Stage
                
                Stockholders'
                        DeficiencyBalance
                    at January 1, 2005
                
                
                1,000,000
                
                $
                1,000
                
                
                —
                
                
                310,344,093
                
                $
                310,344
                
                $
                1,699,298
                
                $
                (2,516,155
                )
                $
                (505,513
                )Conversions
                    of debentures into common stock
                
                
                —
                
                
                —
                
                
                0.00272
                
                
                30,000,000
                
                
                30,000
                
                
                51,450
                
                
                —
                
                
                81,450Issuance
                    of common stock for cash
                
                
                —
                
                
                —
                
                
                0.06667
                
                
                4,500,000
                
                
                4,500
                
                
                295,500
                
                
                —
                
                
                300,000Proceeds
                    from adjustment of the price per share for the issuance of common
                    stock on
                    March 15, 2004
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                26,000
                
                
                —
                
                
                26,000Issuance
                    of common stock for notes receivable
                
                
                —
                
                
                —
                
                
                0.02000
                
                
                2,000,000
                
                
                2,000
                
                
                38,000
                
                
                —
                
                
                40,000Issuance
                    of common stock for loans payable
                
                
                —
                
                
                —
                
                
                0.10000
                
                
                215,000
                
                
                215
                
                
                21,285
                
                
                —
                
                
                21,500Issuance
                    of common stock for consulting fees and services
                
                
                —
                
                
                —
                
                
                0.00100-0.08108
                
                
                17,928,438
                
                
                17,928
                
                
                691,143
                
                
                —
                
                
                709,071Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (1,476,822
                )
                
                (1,476,822
                )Balance
                    at December 31, 2005
                
                
                1,000,000
                
                $
                1,000
                
                
                —
                
                
                364,987,531
                
                $
                364,987
                
                $
                2,822,676
                
                $
                (3,992,977
                )
                $
                (804,314
                )
 The
          accompany notes to consolidated financial
          statements are an integral part of these statements.  F-10
  SHELRON
          GROUP INC. AND SUBSIDIARIES
 (a
          development stage company)
 
 CONSOLIDATED
          STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
  Year
          2006 :
  Preferred
                      Stock
                  
                  
                  
                  Common
                      Stock
                  
                  
                  
                  Deficit
                      AccumulatedNumber
                          of
                          Shares
                  
                  Amount
                  
                  Price
                          Per
                        Share
                  
                  Number
                          of
                          Shares
                  
                  Amount
                  
                  Additional
                          Paid-in
                          Capital
                  
                  During
                            The
                          Development
                            Stage
                  
                  Stockholders'
                        DeficiencyBalance
                      at January 1, 2006
                  
                  
                  1,000,000
                  
                  $
                  1,000
                  
                  
                  —
                  
                  
                  364,987,531
                  
                  $
                  364,987
                  
                  $
                  2,822,676
                  
                  $
                  (3,992,977
                  )
                  $
                  (804,314
                  )Issuance
                      of common stock for debenture payable
                  
                  
                  —
                  
                  
                  —
                  
                  
                  0.007
                  
                  
                  19,000,000
                  
                  
                  19,000
                  
                  
                  425,466
                  
                  
                  —
                  
                  
                  444,466Issuance
                        of common stock for consulting fees and
                        services
                  
                  
                  —
                  
                  
                  —
                  
                  
                  0.01-0.05
                  
                  
                  7,301,828
                  
                  
                  7,301
                  
                  
                  249,481
                  
                  
                  —
                  
                  
                  256,782Issuance
                        of stock options for consulting fees and
                        services
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  20,721
                  
                  
                  —
                  
                  
                  20,721Reclassification of
                      common stock from temporary equity
                  
                  
                  —
                  
                  
                  —
                  
                  
                  0.081
                  
                  
                  18,500,000
                  
                  
                  18,500
                  
                  
                  1,481,500
                  
                  
                  —
                  
                  
                  1,500,000Forgiveness
                      of registration penalties
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  17,000
                  
                  
                  —
                  
                  
                  17,000Net
                      loss
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (918,058
                  )
                  
                  (918,058
                  )Balance
                      at December 31, 2006
                  
                  
                  1,000,000
                  
                  $
                  1,000
                  
                  
                  —
                  
                  
                  409,789,359
                  
                  $
                  409,788
                  
                  $
                  5,016,844
                  
                  $
                  (4,911,035
                  )
                  $
                  516,597
  The accompany notes to consolidated financial statements
        are
        an integral part of these statements.  F-11




SHELRON
      GROUP INC. AND SUBSIDIARIES


(a
      development stage company)





CONSOLIDATED
      STATEMENTS OF CASH FLOWS


Year
                    endedDecember
                    31,
                
                For
                    the period from
                  August
                    21, 2001
                  (date
                    of inception)
                  through
                  December
                    31,2006
                
                2005
                
                2006CASH
                    FLOWS FROM OPERATING ACTIVITIES:Net
                    loss
                
                $
                (918,058
                )
                $
                (1,476,822
                )
                $
                (4,900,876
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activities:Noncash
                    revenue
                
                
                —
                
                
                —
                
                
                (26,500
                )Consulting
                    fees financed through note payable
                
                
                —
                
                
                —
                
                
                30,000Noncash
                    consulting, professional and advisory financial fees
                
                
                280,132
                
                
                709,070
                
                
                1,255,195Noncash
                    expenses
                
                
                —
                
                
                —
                
                
                55,745Amortization
                    of original issue discount and beneficial conversion
                    feature
                
                
                —
                
                
                —
                
                
                545,976Amortization
                    of deferred finance costs
                
                
                —
                
                
                —
                
                
                15,000Depreciation
                    and amortization
                
                
                39,629
                
                
                39,340
                
                
                145,613Changes
                    in operating assets and liabilities:Increase
                    in accounts receivable
                
                
                (22,095
                )
                
                (316,955
                )
                
                (346,533
                )(Increase)
                    decrease in other
                    current assets
                
                
                12,964
                
                
                (37,783
                )
                
                (24,819
                )Increase
                    (decrease) in accounts payable and accrued expenses
                
                
                118,745
                
                
                7,088
                
                
                252,374Increase
                    in due to stockholders
                
                
                52,624
                
                
                40,881
                
                
                464,531Increase
                    (decrease) in deferred revenues
                
                
                (72,500
                )
                
                72,500
                
                
                —Net
                    cash used in operating activities
                
                
                (508,559
                )
                
                (962,681
                )
                
                (2,534,294
                )CASH
                    FLOWS FROM INVESTING ACTIVITIES:Purchase
                    of property and equipment
                
                
                —
                
                
                (16,304
                )
                
                (39,991
                )Acquisition
                    of software
                
                
                —
                
                
                —
                
                
                (150,000
                )Investment
                    in trademarks and domains
                
                
                —
                
                
                (40,000
                )
                
                (40,000
                )Payment
                    of security deposit
                
                
                (421
                )
                
                (17,711
                )
                
                (18,132
                )Net
                    cash used in investing activities
                
                
                (421
                )
                
                (74,015
                )
                
                (240,123
                )CASH
                    FLOWS FROM FINANCING ACTIVITIES:Proceeds
                    from issuance of debentures
                
                
                —
                
                
                —
                
                
                512,000Proceeds
                    from issuance of common stock
                
                
                —
                
                
                1,826,000
                
                
                2,495,000Increase
                    in stock subscriptions payable
                
                
                —
                
                
                —
                
                
                6,000Payment
                    of deferred finance fees
                
                
                —
                
                
                —
                
                
                (15,000
                )Proceeds
                    from note receivable
                
                
                6,350
                
                
                20,000
                
                
                26,350Proceeds
                    from notes payable
                
                
                —
                
                
                —
                
                
                105,150Payment
                    of notes payable
                
                
                —
                
                
                (61,000
                )
                
                (66,000
                )Net
                    cash provided by financing activities
                
                
                6,350
                
                
                1,785,000
                
                
                3,063,500Net
                    (decrease) increase in cash
                
                
                (502,630
                )
                
                748,304
                
                
                289,083Cash
                    at the beginning of period
                
                
                791,713
                
                
                43,409
                
                
                —Cash
                    at the end of period
                
                $
                289,083
                
                $
                791,713
                
                $
                289,083




The
      accompany notes to consolidated financial statements are an integral part of
      these statements .


F-12




SUPPLEMENTAL
        SCHEDULE OF NONCASH FINANCING ACTIVITIES:
  Consulting
                    fees financed through notes payable
                
                $
                —
                
                $
                —
                
                $
                30,000Consulting
                    fee paid in exchange for series A preferred stock issuance
                
                $
                —
                
                $
                —
                
                $
                1,000Conversion
                    of debentures and related interest to common stock
                
                $
                —
                
                $
                81,450
                
                $
                583,960Consulting
                    and professional fees paid in exchangefor
                    shares of common stock
                
                $
                280,132
                
                $
                384,746
                
                $
                929,871
 Financial
                    advisory fees paid in exchange for shares of common stock
                
                $
                —
                
                $
                324,324
                
                $
                324,324Advertising
                    fees paid in exchange for shares of common stock
                
                $
                —
                
                $
                —
                
                $
                55,000Noncash
                    dividend
                
                $
                —
                
                $
                —
                
                $
                10,159Issuance
                    of common stock for a note receivable
                
                $
                —
                
                $
                6,350
                
                $
                26,350Issuance
                    of common stock for notes payables
                
                $
                —
                
                $
                42,650
                
                $
                42,650Issuance
                    of common stock for accrued consulting fees
                
                $
                14,372
                
                $
                12,500
                
                $
                26,872Issuance
                    of common stock for accrued compensation to a stockholder
                
                $
                444,466
                
                $
                —
                
                $
                444,466
 The
        accompanying notes to consolidated financial statements are an integral part
        of
        these statements.


F-13





**SHELRON
      GROUP INC. AND SUBSIDIARIES**


**(a
      development stage company)**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2006**





**NOTE
      1 - BUSINESS ORGANIZATION, PRINCIPAL BUSINESS ACTIVITY AND**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





In
      this
      report, the terms "we," "us" and the "Company" refer to Shelron Group, Inc.
      and
      its predecessors and subsidiaries, unless the context indicates
      otherwise.





B-Park
      Communications LLC was formed on August 21, 2001. On October 26, 2001, B-Park
      Communications LLC changed its name to B-Park Communications Inc. ("B-Park")
      and
      was incorporated in the State of Delaware. B-Park was formed for the sole
      purpose of acquiring the controlling interest in TTTTickets Holding Corp.,
      ("TTTTickets"). TTTTickets was incorporated under the laws of the State of
      Massachusetts on June 6, 1987 as Professional Brushes, Inc.





On
      November 9, 2001, B-Park, pursuant to a stock purchase agreement, acquired
      9,000,000 shares of common stock of TTTTickets from the controlling shareholder
      for $20,000 which is included in other operating expenses for the period ended
      December 31, 2001 on the accompanying consolidated statement of operations.
      TTTTickets formed a wholly owned subsidiary, TTTTickets Acquisition Corp.,
      a
      Delaware corporation ("Acquisition Corp."). Subsequently, pursuant to an
      Agreement of Merger dated November 9, 2001 (the "Merger Agreement"), B-Park
      was
      merged into Acquisition Corp. and Acquisition Corp. became the surviving
      corporation. The transaction was effected by the stockholders of B-Park
      exchanging all of the outstanding shares of B-Park for 9,000,000 shares of
      common stock of TTTTickets. Simultaneously with the closing of the Merger
      Agreement, the sole director of TTTTickets resigned and the director of B-Park
      was appointed the sole member of the board of directors of TTTTickets. The
      Stock
      Purchase agreement and subsequent Merger Agreement effected a change in control.
      Since TTTTickets was essentially a shell corporation and since the shareholder of
      B-Park
      became a controlling shareholder and the sole director (the "Director"); these
      transactions were accounted for as a capital transaction accompanied by a
      recapitalization. The accounting was similar to a "reverse acquisition" except
      that no goodwill was recorded with B-Park being the accounting acquiror for
      financial statement purposes. Accordingly, the consolidated financial statements
      include the historical results of operations of B-Park for the period from
      its
      inception to December 31, 2002, and for TTTTickets subsequent to the November
      9,
      2001 transaction date.





In
      September 2002, TTTTickets changed its name to Shelron Group Inc. ("Shelron").
      The Company changed its name due to the fact that it no longer operated in
      the
      business of creating a secondary marketplace for individuals to buy and sell
      event tickets on the Internet, to which the Company's former name was strongly
      associated.





During
      2004, the Company identified new business opportunities and diverted its
      development efforts and resources from the development of products integrating
      independent business applications to unify a variety of enterprise information
      and services to the development of business intelligence (BI) software,
      advertising and comparative shopping software products and services. During
      the
      second half of 2004 the Company commenced marketing its comparative shopping
      software products and services in the United States, to further market them
      worldwide.





F-14




**SHELRON
      GROUP INC. AND SUBSIDIARIES**


**(a
      development stage company)**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2006**





The
      following accounting policies have been identified as critical to the Company's
      business operations and the understanding of its results of
      operations





**Principles
      of Consolidation**





The
      accompanying consolidated financial statements include the accounts of Shelron
      and its wholly owned subsidiaries (collectively, the "Company"). All significant
      inter company transactions have been eliminated.




**Use
      of Estimates**





These
      financial statements and accompanying notes have been prepared in accordance
      with accounting principles generally accepted in the United States of America.
      The preparation of these financial statements requires management to make
      estimates, judgments and assumptions that affect the reported amounts of assets,
      liabilities, revenues and expenses. The Company continually evaluates the
      accounting policies and estimates used to prepare the consolidated financial
      statements. The Company bases its estimates on historical experiences and
      assumptions believed to be reasonable under current facts and circumstances.
      Actual amounts and results could differ from these estimates made by
      management.





**Going
      Concern**





The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern. As shown in the accompanying
      consolidated financial statements, the Company has incurred losses of $918,058,
      $1,476,822 and $4,911,035 for
      the
      years ended December 31, 2006 and 2005 and for the period from August 21, 2001
      (date of inception) through December 31, 2006, respectively, which raises
      substantial doubt about the Company's ability to continue as a going concern.
      The Company's continuation as a going concern is dependent upon its ability
      to
      ultimately attain profitable operations, generate sufficient cash flow to meet
      its obligations, and obtain additional financing as may be required. The outcome
      of these uncertainties cannot be assured.





The
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty. There can be no assurance that management will
      be
      successful in implementing its business plan or that the successful
      implementation of such business plan will actually improve the Company's
      operating results.





In
      January 2005 and in July 2005, the Company received net proceeds of
      approximately $1,500,000 and $300,000, respectively, from the private placement
      of its securities. These financings are further discussed in Note 7 below.
      Management of the Company believes that available cash resources on hand will
      enable the Company to maintain operations as presently conducted through
      December 31, 2007.





F-15





**SHELRON
      GROUP INC. AND SUBSIDIARIES**


**(a
      development stage company)**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2006**





However,
      these cash resources may not be sufficient to support any unforeseen
      contingencies that may arise or permit the Company to take advantage of business
      opportunities that may arise. Management of the Company has stated that the
      Company intends to continue raising funds through the sale of additional shares
      of common stock.





**Functional
      Currency**





The
      currency of the primary economic environment in which the Company's operations
      are conducted is the U.S. dollar, which is used as the Company's functional
      and
      reporting currency.





**Cash**





The
      Company maintains cash in bank accounts which may, at times, exceed federally
      insured limits. The Company has not experienced any loss on these
      accounts.





**Accounts
      Receivable**





Accounts
      receivable are reported at their outstanding unpaid principal balances reduced
      by an allowance for doubtful accounts. The Company estimates doubtful accounts
      based on historical bad debts, factors related to specific customers' ability
      to
      pay, and current economic trends. The Company writes off accounts receivable
      against the allowance when a balance is determined to be uncollectible.
      At December 31, 2006 and 2005, management considered accounts receivable to
      be
      fully collectible; accordingly, no allowance for doubtful accounts was provided
      for.





**Property
      and Equipment**





Depreciation
      of property and equipment is provided for by the straight-line method over
      the
      estimated useful lives of the related assets. Long-lived assets are reviewed
      for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of the asset may not be recoverable.





**Intangible
      assets**





Intangible
      assets are carried at cost less accumulated amortization. Amortization is
      computed on the straight-line method over the ten-year estimated useful life
      of
      the assets. We periodically review the carrying value of our intangible assets
      to determine whether impairment may exist. We consider relevant cash flow and
      profitability information, including estimated future operating results, trends
      and other available information, in assessing whether the carrying value of
      the
      intangible assets can be recovered. If it is determined that the carrying value
      of the intangible assets will not be recovered from the undiscounted future
      cash
      flows, the carrying value of the assets would be considered impaired. An
      impairment charge is measured as any deficiency in the amount of estimated
      fair
      value of the intangible assets over carrying value.





F-16




**SHELRON
      GROUP INC. AND SUBSIDIARIES**


**(a
      development stage company)**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2006**




**Revenue
      Recognition**





The
      Company's revenue comprises service revenue and the management of advertising
      campaigns, both of which are related to ActiveShopper.





Service
      revenue primarily derives from the implementation of partnership agreements
      according to which the Company provides a service of directing traffic to
      merchants' websites. Service revenue is primarily based on a pay-per-click
      model, reported at their net values to the Company, which represent the revenues
      the Company is entitled to receive according to the partnership agreements.
      In
      order to recognize service revenue the following criteria must be met: the
      partnership agreement must be signed by the customer, the signed agreement
      must
      specify the fees to be received for the services, the service has been performed
      and accepted by the customer, no significant Company obligations remain and
      collectibility is probable.





Management
      of advertising campaign revenues primarily relates to advertising through
      ActiveShopper websites. In order to recognize management of advertising
      campaigns revenue, the following criteria must be met: an agreement must be
      signed by the customer, the signed agreement must specify the fees to be
      received, consultancy and management have been provided and accepted by the
      customer, no significant Company obligations remain and collectibility is
      probable.





When
      the
      above stated revenue recognition criteria are not met, the Company records
      deferred revenue.





**Research
      and Development**





Costs
      incurred in connection with the research and development of the Company's
      products are expensed as incurred.





**Marketing
      and Advertising**





Marketing
      and advertising costs are expensed as incurred.





**Income
      Taxes**





Income
      taxes are accounted for under the liability method. Under this method, deferred
      tax assets and liabilities are recorded based on the temporary differences
      between the financial statement and the tax bases of assets and liabilities
      and
      for operating loss carryforward measured using the enacted tax rates in effect
      for the year in which the differences are expected to reverse. The Company
      periodically evaluates whether its net deferred tax assets will be realized
      and
      records a valuation allowance if, based on the weight of available evidence,
      it
      is more likely than not that some or all of the deferred tax assets will not
      be
      realized.





F-17





**SHELRON
      GROUP INC. AND SUBSIDIARIES**


**(a
      development stage company)**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2006**





The
      company has recorded a full valuation allowance against the deferred tax asset
      arising from the operating losses incurred through December 31, 2006 .




**Earnings
      (loss) per share**





Basic
      earnings (loss) per share is computed by dividing net income (loss) by the weighted-average
      number of shares of common stock outstanding during the period. Diluted earnings
      (loss) per share give effect to dilutive convertible securities, options,
      warrants and other potential common stock outstanding during the period, only
      in
      periods in which such effect is dilutive. The following securities have been
      excluded from the calculation of net loss per share, as their effect would
      be
      antidilutive:


2006
              
              2005Series
                  A convertible preferred stock
              
              
              1,000,000
              
              
              1,000,000Options
                  (weighted average)
              
              
              518,750
              
              
              —





**Stock-based
      Compensation**





In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standard ("SFAS") No. 123R "Share Based Payment". This
      statement is a revision of SFAS Statement No. 123, "Accounting for Stock-Based
      Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued
      to
      Employees," and its related implementation guidance. SFAS 123R addresses all
      forms of share based payment ("SBP") awards including shares issued under
      employee stock purchase plans, stock options, restricted stock and stock
      appreciation rights. Under SFAS 123R, SBP awards result in a cost that will
      be
      measured at fair value on the awards' grant date, based on the estimated number
      of awards that are expected to vest and will be reflected as compensation
      expense in the financial statements. This statement is effective for public
      entities that file as small business issuers as of the beginning of the first
      interim or annual reporting period that begins after December 15, 2005, and
      as
      adopted by the Company commencing January 1, 2006.  There
      were no employee options granted in either 2006 or 2005.





Stock
      options granted to non-employees are recorded at their fair value, as determined
      in accordance with SFAS No. 123 and Emerging Issues Task Force Consensus No.
      96-18, and recognized over the related service period. See Note 8.




**Fair
      Value of Financial Instruments**




Substantially
      all of the Company's financial instruments, consisting primarily of current
      receivables, accounts payable and accrued expenses are carried at, or
      approximate, fair value because of their short-term nature.




**Recently
      Issued Accounting Pronouncements**





In
      February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
      Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
      Derivative Instruments and Hedging Activities", and SFAS No. 140, "Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid
      financial instrument that contains an embedded derivative that otherwise would
      require bifurcation, clarifies which interest-only strips and principal-only
      strips are not subject to the requirements of SFAS No. 133, establishes a
      requirement to evaluate interest in securitized financial assets to identify
      interests that are freestanding derivatives or that are hybrid financial
      instruments that contain an embedded derivative requiring bifurcation, clarifies
      that concentrations of credit risk in the form of subordination are not embedded
      derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
      qualifying special-purpose entity from holding a derivative financial instrument
      that pertains to a beneficial interest other than another derivative financial
      instrument. This statement is effective for all financial instruments acquired
      or issued after the beginning of the Company's first fiscal year that begins
      after September 15, 2006. SFAS No. 155 is not expected to have a material effect
      on the financial position or results of operations of the Company.





In
      June
      2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in
      Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48"), which
      clarifies the accounting for uncertainty in income taxes recognized in financial
      statements in accordance with FASB No. 109,"Accounting for Income Taxes". FIN
      48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. The provisions of FIN 48 are effective for fiscal years
      beginning after December 15, 2006, with the cumulative effect of the change
      in
      accounting principle recorded as an adjustment to opening retained earnings.
      The
      Company does not expect the adoption of this pronouncement to have a material
      effect on the financial position or results of operations of the
      Company.




F-18


**SHELRON
        GROUP INC. AND SUBSIDIARIES**
 **(a
        development stage company)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2006**


In
        September 2006, the FASB issued Statement No. 157, "Fair Value Measurements".
        This Statement defines fair value, establishes a framework for measuring
        fair
        value in generally accepted accounting principles and expands disclosure
        about
        fair value measurement. The implementation of this guidance is not expected
        to
        have any impact on the Company's consolidated financial
        statements.




In
      September 2006, FASB issued SFAS 158 'Employers' Accounting for Defined Benefit
      Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
      88, 106, and 132(R)' This Statement improves financial reporting by requiring
      an
      employer to recognize the over funded or under funded status of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a
      not-for-profit organization. This Statement also improves financial reporting
      by
      requiring an employer to measure the  funded
      status of a plan as of the date of its year-end statement of financial position,
      with limited exceptions. An employer with publicly traded equity securities
      is
      required to initially recognize the funded status of a defined benefit
      postretirement plan and to provide the required disclosures as of the end of
      the
      fiscal year ending after December 15, 2006. An employer without publicly traded
      equity securities is required to recognize the funded status of a defined
      benefit postretirement plan and to provide the required disclosures as of the
      end of the fiscal year ending after June 15, 2007. However, an employer without
      publicly traded equity securities is required to disclose the following
      information in the notes to financial statements for a fiscal year ending after
      December 15, 2006, but before June 16, 2007, unless it has applied the
      recognition provisions of this Statement in preparing those financial
      statements: (1) a brief description of the provisions of this Statement; (2)
      the
      date that adoption is required and (3) the date the employer plans to adopt
      the
      recognition provisions of this Statement, if earlier. The
      Company does not expect the adoption of this pronouncement to have a material
      effect on the financial position or results of operations of the
      Company.





**NOTE
      2 - PROPERTY AND EQUIPMENT**




Property
        and equipment, at cost, at December 31, 2006 and 2005 consists
        of:


December
                  31,
              
              
              2006
              
              
              2005
              
              
              useful
                  lifeSoftware
              
              $
              150,000
              
              $
              150,000
              
              
              5
              
              yearsOffice
                  Equipment
              
              
              24,725
              
              
              24,725
              
              
              3-7
              
              yearsComputer
                  Equipment
              
              
              24,360
              
              
              24,360
              
              
              3
              
              yearsFurniture
                  and fixtures
              
              
              23,406
              
              
              23,406
              
              
              5-10
              
              years222,491
              
              
              222,491Less
                - accumulated depreciation and
                amortization
              
              
              139,612
              
              
              103,983$
              82,879
              
              $
              118,508


Depreciation
      and amortization amounted to $35,629 and $37,340 for the years ended December
      31, 2006 and 2005, respectively.





F-19


**SHELRON
          GROUP INC. AND SUBSIDIARIES**
 **(a
          development stage company)**
 
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
          31, 2006**




**NOTE
      3 - TRADEMARKS AND DOMAIN NAMES**





On
      April
      18, 2005, the Company entered into an agreement with Infospace, Inc. to purchase
      the rights, title and interest of Infospace, Inc. in the U.S. and foreign
      trademarks, trade names and service marks for "ActiveShopper" and the domain
      names activeshopper.com, activeshopper.org, active-shop.com, active-shopper.com,
      active-shopper.net and active-shopper.org. The Company made a one-time payment
      of $40,000. The trademarks and domain names are being amortized on a
      straight-line basis over ten years.





Amortization
      totaled $4,000 and $2,000 for the years ended December 31, 2006 and 2005,
      respectively. Amortization for the next five years and thereafter is expected
      to
      be as follows: $4,000 for the years 2007 through 2011 and $14,000
      thereafter.





**NOTE
      4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES**





Accounts
      payable and accrued expenses consist of the following:




December
                  31,2006
              
              2005Legal
              
              $
              1,059
              
              $
              1,630Interest
              
              
              300
              
              
              9,465Rent
                  and related expenses
              
              
              23,424
              
              
              5,400Accounting
                  and auditing fees
              
              
              19,987
              
              
              13,055Consulting
                  expenses
              
              
              26,668
              
              
              25,785Marketing
                  expenses
              
              
              168,995
              
              
              51,407Other
              
              
              12,350
              
              
              41,667Total
              
              $
              252,783
              
              $
              148,409


**NOTE
      5 - DUE TO STOCKHOLDER**


Hull
        Services, Inc. ("Hull")
 
 The
        Company is controlled by Hull, a company wholly-owned by the Company's
        chairman/principal executive officer/principal financial and accounting officer.
        In March 2005, the Company entered into a consulting agreement with Hull.
        Pursuant to the terms of the agreement, Hull receives consulting fees totaling
        $156,000 per annum in installments of $3,000 per week. Due to stockholder
        represents accrued but unpaid consulting as well as other loans payable made
        by
        Hull. On August 9, 2005, the Company received written notice from Hull that
        Hull
        desired to convert the balance due into shares of the Company's Common Stock.
        The Company and Hull reached an agreement on December 29, 2006. The Company
        issued Hull 19,000,000 restricted shares of Common Stock valued at $444,466
        in
        consideration of accrued consulting services and other loans
        payable.
 
 For
        each
        of the years ended December 31, 2006 and 2005, consulting services totaled
        $156,000. Such amounts are reflected on the statements of operations as
        employment compensation. At December 31, 2006 and 2005, the Company owed
        Hull
        $4,467 and $411,907, respectively.
 
 Eliron
        Yaron
 
 Mr.
        Yaron
        is the Company's chairman/principal executive officer/principal financial
        and
        accounting officer. At December 31, 2006, Mr. Yaron was owed
        $15,598.


F-20




**SHELRON
      GROUP INC. AND SUBSIDIARIES**


**(a
      development stage company)**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2006**




**NOTE
      6 - CONVERTIBLE PREFERRED STOCK**





On
      November 8, 2001, the Company filed a Certificate of Designation with the State
      of Delaware authorizing the issuance of one series of Preferred Stock (the
      "Series A Preferred Stock") consisting of 1,000,000 shares. All 1,000,000 shares
      of Series A Preferred Stock were issued to Hull. The holder of the Series A
      Preferred Stock is entitled to vote along with the holders of common stock
      as
      one class on all matters for which the stockholders of the Company shall vote.
      The holder of Series A Preferred Stock is entitled to a vote representing 52%
      of
      the total shares entitled to vote by all holders of the then outstanding shares
      of common stock and Series A Preferred Stock combined. Each share of the Series
      A Preferred Stock is convertible at the option of the holder into one share
      of
      common stock upon not less than 15 days and not more than 30 days notice to
      the
      Company. In addition, if all or substantially all of the Company's assets or
      all
      of the outstanding shares of the Company are sold, the shares of Series A
      Preferred Stock automatically convert to common stock.




**NOTE
      7 - COMMON STOCK**





**Private
      Placements**





In
      January 2005, the Company privately placed 18,500,000 shares of its common
      stock
      par value $0.001 per share (the "Common Stock") with an accredited investor
      for
      gross proceeds of $1.5 million pursuant to a subscription agreement dated
      January 4, 2005. Under the terms of the subscription agreement, the Company
      agreed to file a registration statement under the Securities Act of 1933, as
      amended covering the resale of the shares within 90 days of the closing date,
      which period had been subsequently extended to December 31, 2005. If the Company
      did not file the registration statement by such date, then it may be liable
      for
      penalties. By December 31, 2005 the Company has not filed the
      registration statement and therefore penalties are incurring in the amount
      of
      100,000 shares of Common Stock per each delaying month. The $1.5 million gross
      proceeds have been classified as temporary equity in the balance sheet as of
      December 31, 2005, in accordance with EITF Topic D-98, since at December 31,
      2005, the shares were subject to registration rights and the indicated
      penalties. During the year 2006, the shares had been recorded as common
      shares.


P enalties
        totaling $17,000, as measured at the fair value of the common stock, were
        accrued and charged to financial expenses for the three month period ended
        March
        31, 2006. On April 24, 2006, the accrued liability was reclassified as a
        contribution to capital with the elimination of the penalties by the accredited
        investor at that date.




F-21




**SHELRON
      GROUP INC. AND SUBSIDIARIES**


**(a
      development stage company)**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2006**





On
      April
      24, 2006, Mr. Joseph Corso, executed a letter agreement with the Company to
      clarify and amend the Subscription Agreement and the Financial Advisory
      Agreement, dated January 4, 2005 (the "Agreements"), a first extension letter,
      dated May 10, 2005 and a second extension letter, dated June 7, 2005 (the
      "Extension Letters"). The letter agreement serves to clarify the following:
      (i)
      that the Extension Letters were amendments to the Agreements to provide that all
      matters relating to the timing of the filing of the registration statement
      covering the shares issued to Mr. Corso under the Agreements are within the
      Company's control, so that the Company can use its best efforts to file the
      registration statement; (ii) that Mr. Corso has irrevocably agreed not to
      rescind the Agreements, or otherwise demand repayment of the purchase price
      for
      the shares issued in connection with the Agreements due to Company's failure
      to
      register the shares as was contemplated in the Agreements; and that (iii) any
      references in the extension letters to penalties that may be triggered or accrue
      as a result of not filing on a timely basis are eliminated by this letter
      agreement. The
      $1.5
      million gross proceeds received pursuant to the subscription agreement dated
      January 4, 2005, have been classified as permanent equity in the accompanying
      balance sheet in accordance with EITF Topic D-98, on April 24,
      2006.




In
        connection with the subscription agreement described above, the Company entered
        into a financial advisory agreement with the investor, pursuant to which
        the
        investor has provided the Company with general financial consulting services,
        including, assistance with capital-raising activities, and identification
        of
        possible merger and acquisition candidates. In consideration of
        such
        services, the Company paid the investor a one-time consulting fee of 4,000,000
        shares of its Common Stock. The Company also undertook to file a registration
        statement covering the resale of these shares by December 31, 2005. Financial
        advisory fees in the amount of $324,324 have been charged to expense in the
        year
        ended December 31, 2005.


In
      addition, in connection with the subscription agreement described above, the
      Company entered into a finder's agreement pursuant to which the Company issued
      850,000 shares of its Common Stock to an individual as compensation for that
      individual's services in introducing the Company to the investor and the
      consummation of the transaction described above. Finder's fees in the amount $850
      have
      been charged to equity in 2005.





On
      June
      6, 2005, pursuant to signed subscription agreement, the Company issued 2,000,000
      shares of Common Stock to an accredited investor for proceeds of $33,650 and
      a
      note receivable of $6,350 in the aggregate.





In
      July
      2005, the Company privately placed 4,500,000 shares of its common stock par
      value $0.001 per share (the "Common Stock") with an accredited investor for
      gross proceeds of $300,000 pursuant to a subscription agreement dated July
      16,
      2005. The investor has been granted piggyback registration rights. The Company
      sold the shares of common stock to the investors in reliance upon the exemption
      from registration afforded by Section 4(2) of the Securities Act of 1933, as
      amended, and Regulation D promulgated thereunder.





Also
      in
      connection with the subscription agreement described above, the Company entered
      into a finder's agreement pursuant to which the Company issued 200,000 shares
      of
      its Common Stock to an individual as compensation for that individual's services
      in introducing the Company to the investor and the consummation of the
      transaction described above. Finder's fees in the amount of $200 have been
      charged to equity.





All
      of
      the above issuances of the Company's shares of Common Stock were affected
      without registration in reliance upon the exemption therefrom afforded by
      Section 4(2) of the Securities Act of 1933, as amended, and Regulation D
      promulgated thereunder.





F-22




**SHELRON
      GROUP INC. AND SUBSIDIARIES**


**(a
      development stage company)**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2006**




**Issuance
      of shares of common stock for services received**





During
      the year ended December 31, 2006, the Company issued 7,301,828 shares of its
      Common Stock to five service providers in consideration of services rendered
      totaling $256,782.





During
      the year ended December 31, 2005, the Company issued 13,003,438 shares of its
      Common Stock to twelve service providers in consideration of services rendered
      totaling $397,247.


Subsequent
          to December 31, 2006 and through March 28, 2007, the Company issued 899,286
          shares of common stock to one service provider in consideration of services
          rendered totaling $13,500.
  **Issuance
        of shares of common stock for a note payable**





During
      the year ended December 31, 2005, the Company issued 90,000 shares of its Common
      Stock to a holder of a note payable in the equivalent of $9,000.





**NOTE
      8 - STOCK BASED COMPENSATION**





During
      2006, the Company granted 675,000 share options to a consultant in connection
      with services provided by the consultant to the Company during the period
      commencing January 15, 2006 through May 15, 2006. According to the agreements
      entered into with the consultant, 150,000 share options were granted at the
      end
      of each month from January through April 2006 and 75,000 share options were
      granted at May 15, 2006. All share options vested in 2006. The exercise price
      of
      the options is $0.04 with an expiration date of March 31, 2007. Consulting
      fees
      in the amount of $20,721 were charged to expense according to the fair value
      of
      each option as estimated under a Black-Scholes option pricing model. The
      following assumptions were used: risk-free interest rate of 4.58% to 4.97%;
      no
      dividend yield; an expected life of the options of 11 to 14 months; and a
      volatility factor of 106.2% to 145.2%. The weighted average grant-date fair
      value of the share options is $0.031.





With
      the
      exception of the aforementioned share options grant, the Company granted no
      additional share options during fiscal year 2006 or 2005.





As
      of
      December 31, 2006, no share options have been exercised.




**NOTE
      9 - REVENUE AND MAJOR CUSTOMERS**





During
      the years ended December 31, 2006 and 2005, revenues in the amount of $1,115,414
      and $374,261 were generated from the implementation of partnership
      agreements according to which traffic is directed to merchants' websites through
      ActiveShopper.





During
      the year ended December 31, 2006, revenues generated from two customers
      accounted for approximately 98% of total revenues accounted for the year, of
      which one customer accounted for approximately 82% of total revenues accounted
      for the year. These customers comprise approximately 98% of the Company's
      accounts receivables at December 31, 2006, of which one customer accounted
      for
      approximately 81% of accounts receivable at December 31, 2006.





During
      the year ended December 31, 2005, revenues generated from one customer accounted
      for approximately 87% of total revenues accounted for the year. This customer
      comprised approximately 97% of the Company's accounts receivables at December
      31, 2005.




Revenues
        were earned in the following countries:
  2006
              
              2005United
                  States
              
              $
              1,000,064
              
              $
              374,261United
                  Kingdom
              
              
              115,294
              
              
              —Others
              
              
              56
              
              
              —Total
              
              $
              1,115,414
              
              $
              374,261




**NOTE
      10 - INCOME TAXES**





The
      Company files its tax returns in the United States while its subsidiary files
      tax returns in Israel.





The
      deferred income tax assets at December 31, 2006 and 2005 relate to
      temporary differences between the financial statement carrying amounts and
      their
      tax basis. Assets that give rise to the deferred tax assets are as follows
      at
      December 31,:


2006
                
                2005Net
                    operating loss carry forwards
                
                $
                1,597,000
                
                $
                1,289,000Valuation
                    allowance
                
                
                (1,597,000
                )
                
                (1,289,000
                )Net
                    income tax assets
                
                $
                -
                
                $
                -
  A
        valuation allowance has been established equal to the full amount of the
        deferred tax assets as the Company is not assured at December 31, 2006 and
        2005 that it is more likely than not that these benefits will be realized.





The
      change in valuation allowance for the years ended December 31, 2006 and 2005
      was
      an increase of $308,000 and $561,000, respectively, due to increases in net
      operating loss carry forwards.




At
      December 31, 2006, the Company has unused United States federal net operating
      loss carry forwards of approximately $4,432,000 expiring between 2021 and 2026
      and unused Israel net operating loss carry forwards of approximately $359,000.
      The Israeli net operating loss carryforwards do not expire.





**NOTE
      11 - COMMITMENT**





The
      Company leases an apartment in New York from an unaffiliated party for
      approximately $2,700 per month on a month-to-month basis. In addition, on May
      31, 2005, the Company began leasing approximately 180 square meters of office
      space at 22 a Raul Wallenberg Street, Tel Aviv, Israel from an unaffiliated
      party for approximately $2,400 per month in addition to certain occupancy and
      office maintenance costs. The lease expires in May 2008.





Future
      minimum lease payments for the office in Israel are as
      follows:


2007
                
                $
                29,0002008
                
                
                12,000Total
                
                $
                41,000


Rent
      expense for the years ended December 31, 2006 and 2005 totaled $72,873 and
      $49,788, respectively.




F-23