UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

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

                   For the fiscal year ended DECEMBER 31, 2006
                                             -----------------

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

                 For the transition period from ______ to _____.


                         Commission File Number 0-32307
                                                -------


                        MEDIANET GROUP TECHNOLOGIES, INC.
                        ---------------------------------
                     (Name of small business in its charter)


                 NEVADA                                    13-4067623
      ----------------------------                     ------------------
      (State or other jurisdiction                      (I.R.S. Employer
           of incorporation)                           Identification No.)


                5100 W. COPANS ROAD, SUITE 710, MARGATE, FL 33063
                -------------------------------------------------
                (Address of principal executive office)(Zip Code)


                     Issuer's telephone number 954-974-5818
                                               ------------

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

                                       N/A


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

                         COMMON STOCK, $0 .001 PAR VALUE
                         -------------------------------
                                (Title of class)

<PAGE>

         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
[_]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not 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. [_]

         State issuer's revenues for its most recent fiscal year. $433,720

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. The aggregate market
value of the voting stock held by non-affiliates as of March 12, 2007 was
approximately $2,035,226

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.

   AS OF MARCH 12, 2007, THE COMPANY HAD 11,961,736 COMMON SHARES OUTSTANDING.

   Transitional Small Business Disclosure Format (Check one): Yes ___; No _X_

                                       ii
<PAGE>

                                TABLE OF CONTENTS

PART I

   ITEM 1.  DESCRIPTION OF BUSINESS ........................................   1

   ITEM 2.  DESCRIPTION OF PROPERTY ........................................  10

   ITEM 3.  LEGAL PROCEEDINGS ..............................................  10

   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............  10

PART II

   ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS .......  10

   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION ......  12

   ITEM 7.  FINANCIAL STATEMENTS ...........................................  17

   ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE .......................................  18

   ITEM 8A. CONTROLS AND PROCEDURES ........................................  19

   ITEM 8B. OTHER INFORMATION ..............................................  19

PART III

   ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT ..............  20

   ITEM 10. EXECUTIVE COMPENSATION .........................................  23

   ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT AND RELATED STOCKHOLDER MATTERS .....................  25

   ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .................  26

   ITEM 13. EXHIBITS .......................................................  27

   ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES .........................  28

SIGNATURES .................................................................  29

                                       iii
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

DISCLAIMER REGARDING FORWARD LOOKING STATEMENTS

         Certain statements in this Form 10-KSB which are not statements of
historical fact, are what are known as "forward looking statements," which are
basically statements about the future. For that reason, these statements involve
risk and uncertainty since no one can accurately predict the future. Words such
as "plans," "intends," "hopes," "seeks," "anticipates," "expects, "and the like,
often identify such forward looking statements, but are not the only indication
that a statement is a forward-looking statement. Such forward looking statements
include statements concerning our plans and objectives with respect to our
present and future operations, and statements which express or imply that such
present and future operations will or may produce revenues, income or profits.
In evaluating these forward-looking statements, you should consider various
factors, including those described in this Form 10-KSB under the heading "Risk
Factors". These and other factors may cause our actual results to differ
materially from any forward-looking statement. We caution you not to place undue
reliance on these forward-looking statements. Although we base these
forward-looking statements on our expectations, assumptions and projections
about future events, actual events and results may differ materially, and our
expectations, assumptions and projections may prove to be inaccurate. The
forward- looking statements speak only as of the date hereof, and we expressly
disclaim any obligation to publicly release the results of any revisions to
these forward-looking statements to reflect events or circumstances after the
date of this filing.

BACKGROUND

         MediaNet Group Technologies, Inc., ("we," "us," "our," the "Company"),
was incorporated under the laws of the State of Nevada on June 4, 1999, under
the name of Clamshell Enterprises, Inc. We changed our name to MediaNet Group
Technologies, Inc., on May 22, 2003. We were formed as a "blind pool" or "blank
check" company whose business plan was to seek to acquire a business opportunity
through a merger, exchange of stock, or other similar type of transaction.

         From the date of our incorporation through December 31, 2002, our only
business activities were the organizational activities described above and
efforts to locate a suitable business opportunity for acquisition. In January
2003, we identified a business opportunity we wanted to acquire.

         On February 3, 2003, we affected a change of control as the first step
in the business acquisition process. Brand-A-Port, Inc., (formerly ShutterPort,
Inc.), a Florida corporation, purchased from five of our major shareholders
3,331,000 (or approximately 93%) of our issued and outstanding shares. The
shares were purchased for $35,000.

         On March 31, 2003, we completed the business acquisition process by
acquiring all of the issued and outstanding common stock of Brand-A-Port, Inc.
in a share exchange transaction. We issued 5,926,662 shares in the share
exchange transaction in which Brand-A-Port's shareholders received one of our
shares for each share of common stock of Brand-A-Port which they owned. In
addition, the 3,331,000 shares which Brand-A-Port previously purchased were
surrendered for cancelation. As a result of the share exchange, Brand-A-Port
became our wholly owned and operating subsidiary.

         The former shareholders of Brand-A-Port acquired a majority of our
issued and outstanding common stock as a result of completion of the share
exchange transaction. Therefore, although Brand-A-Port became our wholly owned
subsidiary, the transaction was accounted for as a recapitalization of
Brand-A-Port, whereby Brand-A-Port is deemed to be the accounting acquirer and
is deemed to have adopted our capital structure.

                                       1
<PAGE>

CURRENT AND FUTURE OPERATIONS

         The operations of MediaNet Group Technologies, Inc. are carried on
through wholly owned subsidiaries. As used herein, the "Company" refers to
MediaNet Group Technologies, Inc and its wholly owned subsidiaries. The
Company's operations include the design development and marketing of (1) branded
loyalty programs, (2) branded websites and (3) audio and video products.

BSP Rewards                This division provides private branded loyalty and
                           reward web malls and programs to both for profit and
                           not for profit companies and organizations and for
                           on-line and in-store merchants. The program is
                           designed as a shopping service through which members
                           receive rebates (rewards) on purchases of products
                           and services from participating merchants. These
                           rewards may be accumulated and used at any time to
                           make additional purchases from any participating
                           merchant in the program. The BSP program is
                           proprietary to the Company.

Brand-A-Port               The Brand-A-Port division is building and hosting web
                           sites for business customers using proprietary
                           platform applications we have developed. Such web
                           sites are designed to include the name, logo, color
                           scheme and customized or personalized content
                           provided by the customer, but are also designed to
                           serve as Internet web portals which provide users
                           with direct access to news, weather and other
                           information available on the Internet as well as
                           private branded web malls operated by BSP Rewards.

Memory Lane Syndication    Through this division we have acquired ownership of
                           130 color episodes of the 1970's Howdy Doody
                           television show. We license others to manufacture and
                           market videos of these episodes, as well as to
                           license them for possible television and radio
                           syndication. Initial marketing of videos commenced in
                           the fourth quarter of 2004. Subsequently, in 2005, we
                           produced a combination CD/DVD known as Songs From The
                           Neighborhood / The Music of Mister Rogers which and
                           are presently offering for sale on a direct basis and
                           through various wholesale and retail distributors and
                           both on-line and brick and mortar stores. The CD/DVD
                           won the distinguished GRAMMY AWARD on February 8,
                           2006 as the best children's music album as well as a
                           Dove award, the Creative Child Award - Creative Child
                           magazine, Parents' Choice - Parent's Choice
                           Foundation and the 2006 Notable Children's Recordings
                           from the Association of Library Service To Children.

                                       2
<PAGE>

BSP REWARDS

         The BSP Rewards component of our business is a loyalty and rewards
program designed as a shopping service through which members receive rebates
(rewards points) on purchases of products and services from participating
merchants. These rewards act as a common currency that may be accumulated and
used at any time to make additional purchases from any participating merchant in
the program.

         The BSP Rewards program is primarily a web based program, but has
commenced initial expansion to also operate in physical locations. Retail
sellers of goods and services who join in the program as participating merchants
agree to pay rebates to us for our members who purchase goods and services
through the program. We collect all rebates paid by participating merchants and
retain a portion as our fee for operating the program. Another portion of the
rebate (generally one-half), is designated as a "reward" earned by the member
who made the purchase. In certain circumstances, we also pay a portion of the
rebate as residual passive income to the organization or company which enrolled
the member in the program.

         We have established a separate reserve account in which we hold all
amounts designated as accumulated member rewards. Members, merchants and member
providers may view reports on-line indicating the total amount of purchases made
and of rewards accumulated. At the present time when a member elects to redeem
all or any portion of the rewards which he or she has accumulated, the member
must purchase certificates or gift cards on-line that are redeemable at
participating merchants or load their reward points onto our stored value
MasterCard or participating affiliated cards, that can be utilized at certain
online and in-store merchants for redemption. This card allows the reward points
to be loaded on the card and spent like cash at participating merchants.

         Member Providers are companies, organizations and groups that enroll
their employees or members in the BSP Rewards program. The program is sometimes
offered free to member providers who auto-enroll their member base. This program
has commenced limited operations, and member provider agreements have been
signed with initial companies. Member provider agreements provide that the
organization will normally enroll their members for free and BSP shall pay to
the member providers a straight percentage of the rewards earned by the members
that each member provider enrolls in the program. A member provider only earns a
percentage if the members enrolled by the member provider actually earn rewards
through the program. Three of the companies or associations with whom the
Company has entered into member provider agreements are the AME Church, Global
Cash Card and ADP. At this time, none of these agreements are material and
minimum revenues have yet been produced.

         We have also signed Branded BSP Rewards Merchant Agreements with web
based merchants such as Lobstergram and Cruises, Inc who have agreed to pay a
rebate percentage of the value of each sale, and will also redeem BSP Rewards as
payment for sales to our members. Additionally the Company has signed branded
agreements with organizations such as Fortune Hi-Tech Marketing who utilizes the
program as a shopping mall and Americlean who pays the company a monthly fee to
administer the branded program we built for them.

         Additionally, BSP has signed Strategic Marketing Partnership agreements
with organizations that act as introductory or sales agents for the Company.
Such companies include ADP for the auto industry, and Spirit Incentives for
various channels.

         It is our intention to market the BSP Rewards program to larger
companies when we have the capital available to do so. Major membership clubs,
organizations credit and stored value card users and companies have the
capability of quickly expanding the BSP membership base to their large
participating groups which would greatly enhance our potential revenue stream.
Although we have commenced initial sales in these markets, we would require
substantial working capital prior to commencing marketing efforts directed at
larger organizations as such efforts can be time consuming and costly. BSP
Rewards is the Company's primary division with the preponderance of its efforts
directed towards its expansion and growth.

                                       3
<PAGE>

BRAND-A-PORT

         Our Brand-A-Port segment has a proprietary platform application which
allows us to build customized web sites which also serve as internet portals.
Internet web sites are normally single purpose sites utilized to provide
information about a person, a company or a product. Individuals typically visit
internet web sites for a single targeted purpose, and once that purpose is
satisfied, have no reason to remain on the site or to re-visit unless a specific
purpose arises again. An internet portal is a web site which is designed to
encourage visitors to remain on the site or to re-visit the site numerous times.
A web site which is also an internet portal includes the same types of specific
information normally found on a traditional web site, but also includes
additional content, information and features such as a search engine, headline
news, maps, stock market information, weather information, horoscopes, games,
and the like.

         We license the general content and appearance of a Brand-A-Port
internet portal to our clients and then brand or customize the portal to fit the
needs of the client and its unique industry and customer/visitor base. The
branding includes adding the name and color scheme of the client and may also
include adding customized content and web pages desired by the client.

         We charge clients a fee for building their portal and also charge a
monthly hosting fee. The amount of both the initial fee and the monthly hosting
fee varies depending on the features and services the client selects. Portals
are generally required to be paid for prior to construction and hosting fees are
generally required to be paid quarterly in advance. We normally charge between
$1,995 and $4,995 to build the site, and between $199 and $250 per month to host
and maintain it. We host client's portals on servers at Datapipe, a national
hosting center. Datapipe manages and maintains our server operations. We
maintain the coding and other information necessary to administer the operations
of the web portals created for our clients, and we update the content and design
of the various sites as necessary. The monthly fee which we charge clients for
hosting varies depending upon the type of portal the client selects. Hosting
fees are higher for portals which include custom features.

         Our target market for the Brand-A-Port product is currently smaller
companies with small budgets that either do not currently have a web presence,
or who wish to expand on that presence without being required to make a large
expenditure. We primarily utilize this application to build our branded BSP
Rewards sites

MEMORY LANE SYNDICATION

         We commenced operations of Memory Lane Syndication in January 2003 with
the acquisition of the 130 color episodes of the 1970's Howdy Doody Show. It is
our intention to seek to re-establish the name and recognition value of our
Howdy Doody intellectual library in a number of ways.

         We have on-going marketing efforts directed toward sales of videos to
consumers on our www.doodyville.com website. We expect to be able to continue
with this type of marketing effort regardless of whether we are able to raise
any significant amount of working capital. The suggested retail price for direct
sales on the web is between $9.49 and $49.95 for an 86-minute VHS video and DVD
box set, respectively.

         We have entered into two licensing agreements relating to Howdy Doody
episodes. The first is a Rights Acquisition Agreement with GIAM (formerly
GoodTimes Entertainment) granting them a license to manufacture and distribute
40 of the Howdy Doody episodes to retailers and on the internet. GIAM commenced
sales efforts in the last quarter of 2004 and pays a royalty of ten percent of
the net wholesale price on any sales that were made. The Agreement has a term of
five years, commencing on September 25, 2003. Revenues to date have been
nominal. There is no assurance that GIAM will be successful in selling videos
and, accordingly, there is no assurance that we will realize any substantive
revenues under the terms of the agreement.

                                       4
<PAGE>

         We have also signed a Licensing Agreement with Madacy Entertainment for
certain episodes of the Howdy Doody library. The Agreement grants a license to
Madacy Entertainment for 25 episodes to be produced as a DVD box set. The
Company will receive a royalty of fifteen percent of the net wholesale price on
all sales. The term of the Agreement is for five years, commencing December 1,
2003. Revenues to date have been nominal. There is no assurance that Madacy
Entertainment will be successful in selling videos and, accordingly, there is no
assurance that we will realize any substantive revenues under the terms of the
agreement

         We are also contacting television and radio stations relative to airing
the shows on a daily or weekly basis. If the shows are accepted, our
compensation may be in the form of money or an exchange for advertising time. To
date we have signed a contract with COX Broadcasting in Orange County
California.

         On December 11, 2004 the Company entered into an agreement with U Love
Kids, Inc. to form a partnership, "Songs From The Neighborhood - A Tribute To
Mr. Rogers". The partnership produced an original CD/DVD of songs written by
Fred Rogers and performed by popular artists.

         On September 23, 2005, the Company in a stock transaction purchased the
50% interest held by U Love Kids, Inc. The Company issued 212,121 restricted
common shares at $0.33 per share and a three (3) year warrant to purchase
250,000 common shares at $1.50 per share with an expiration date of December 31,
2008.

         The CD won the distinguished GRAMMY AWARD on February 8, 2006 as the
best children's music album as well as a Dove award, the Creative Child Award -
Creative Child magazine, Parents' Choice - Parent's Choice Foundation and the
2006 Notable Children's Recordings from the Association of Library Service To
Children.

MARKETING AND DISTRIBUTION STRATEGIES
-------------------------------------

         Our target markets for sales of our BSP Rewards program and the
Brand-A-Port product include small, medium and large sized companies and
organizations that will be able to utilize our product line. Our target market
for reselling our products and services is to companies that already have an
existing sales force or ability to act as a mass reseller for us. This potential
market also includes membership clubs, non-profit organizations, alumni
associations, retailers and corporations and their marketing alliance partners
and home based business sellers, credit and debit card issuers and network
marketing companies.

         We market our products and services primarily through third party
resellers who are paid on a commission basis. We have signed a number of
marketing partner agreements which are non-exclusive and we anticipate that we
will sign agreements with additional resellers in the future. The Agreements,
which generally have a term of one year with automatic one-year renewals,
provide for the payment by the Company of a commission on BSP rewards earned by
members that are signed into the program by the reseller. The Company also pays
a commission for any products and internet portals sold on behalf of the Company
and a commission for hosting fees paid to the Company by buyers of portals or
websites as a result of the activities of the marketing partner. In some
instances, we also allow clients for whom we have built portals to act as
resellers. Some of our existing reseller agreements are with IMC/Beryl's World,
ADP and DBL Group, Spirit Incentives, Marketing Consultants Plus, and McAdams
Marketing. As of the date of this report, the marketing agreements have not
resulted in any significant revenues.

         We anticipate that the merchants and member provider organizations that
become involved with the BSP Rewards program will devote a portion of their
advertising and marketing funds to the branded program which, in turn, will help
to develop customer awareness of our products and services.

                                       5
<PAGE>

         Part of our marketing strategy for the BSP Rewards mall and
Brand-A-Port component of our business is to continue to maintain and operate
various demonstration sites designed for specific industries. We do not
currently earn revenue from the operation of these sites, but we use them to
demonstrate to potential clients the types of features which are available
through a Brand-A-Port portal.

         Through Memory Lane Syndication, we market the Howdy Doody TV show
videos, Songs From The Neighborhood CD/DVD and other media products we may
acquire in the future through distributors and retailers and through direct
response media. We seek to offer the Howdy Doody TV show videos to various TV
and radio syndicators who, in turn, would market them to broadcasters to air to
the general public.

         Developing market acceptance for our existing and proposed projects
will require substantial marketing and sales efforts and the expenditure of a
significant amount of funds to inform potential sponsors of the benefits and
advantages of Company products and achieve name recognition. There can be no
assurance that we will be able to penetrate existing markets on a wide scale
basis.

         Currently the main marketing efforts of the Company are directed
towards the BSP Rewards program. It is our intention to market both our BSP
Rewards program and Brand-A-Port product to larger companies when we have the
capital available to do so. Major membership clubs, organizations and companies
have the capability of ordering branded rewards mall programs in larger numbers
and the capability of quickly expanding the BSP membership base to a much
greater participating group, both of which would greatly enhance our potential
revenue stream through the utilization of our internet mall. They also have the
ability to market programs directly to their customers and members.

COMPETITION
-----------

         Our competition includes web designers, major software manufacturers,
established loyalty/rewards companies and existing web portals. Although we are
not currently aware of any competitors that offer a brandable Rewards program
which also includes all of the features such as our redemption and cross
marketing applications, there are many companies which offer Loyalty and Rewards
programs. We intend to compete on the basis of pricing and speed to market, ease
of use and the number of features available in our proprietary BSP Rewards and
Brand-A-Port applications.

WEB SITES
---------

         The following is a list of some of our proprietary websites:

         o www.medianetgroup.com               o www.pixjury.com
         o www.brandaport.com                  o www.doodyville.com
         o www.bsprewards.com                  o www.memorylanesyndication.com
         o www.shutterport.com                 o www.autoloyaltyrewards.com
         o www.songsfromtheneighborhood.com    o www.bigbrandmall.com
         o www.nationalvaluecardmall.com

                                       6
<PAGE>

EMPLOYEES
---------

         Presently, we have 8 full time employees plus outside independent
representatives. The Company has an employment agreement with Martin A. Berns,
Chief Executive Officer and Director. The Company also has consulting
arrangements with a director who performs marketing services for the Company and
another director who performs sales services for the Company.

RISK FACTORS
------------

WE HAVE A LIMITED OPERATING HISTORY. WE ARE SUBJECT TO ALL THE RISKS ASSOCIATED
WITH THE FORMATION OF A NEW BUSINESS, INCLUDING POSSIBLE FAILURE TO ACHIEVE OR
SUSTAIN PROFITABILITY, WHICH WOULD ADVERSELY AFFECT THE VALUE OF THE COMPANY AND
THE MARKET VALUE OF OUR SHARES OF COMMON STOCK.

         Up to December 31, 2002, the Company was a development stage entity. In
2003, the Company commenced operations, which have been limited to date.
Therefore, there is no meaningful operating history on which to base an
evaluation of our proposed business and prospects. We are subject to all of the
substantial risks inherent in the commencement of a new business enterprise. New
enterprises in the early stage may encounter financial and operational
difficulties and intense competition and failure to become profitable. There can
be no assurance that we will achieve our business objectives, or that we will
produce significant levels of revenues or achieve sustainable profitability. Our
prospects must be considered in light of the risks, expenses, difficulties and
delays frequently encountered in connection with a developing business, the
development and commercialization of Internet websites based on innovative
technology, and the high level of competition in the industry in which we
operate. Additionally, we will be subject to all the risks incident to a rapidly
developing business. Prospective investors should consider the frequency with
which relatively newly developed and/or expanding businesses encounter
unforeseen expenses, difficulties, complications and delays, as well as such
other factors as competition with substantially larger companies.

RESALE OF OUR SECURITIES MAY BE DIFFICULT BECAUSE THERE IS A LIMITED MARKET FOR
OUR SHARES.

         Although our securities are traded on the OTCBB, there is only a
limited active public market for our securities, and no assurance that an active
public market will develop in the future. Even in the event that such an active
public market does develop, there is no assurance that it will be maintained or
that it will be sufficiently active or liquid to allow shareholders to easily
dispose of their shares.

THE DEVELOPMENT OF OUR BUSINESS WILL BE LIMITED UNLESS WE OBTAIN SUBSTANTIAL
WORKING CAPITAL. THIS MAY REDUCE OR LIMIT THE VALUE OF THE COMPANY AND THE
POTENTIAL MARKET VALUE OF OUR OUTSTANDING SHARES.

         We require substantial additional working capital to fund our business.
Our current operations are not profitable and we do not presently have adequate
cash or sources of financing to meet either our short-term or long-term capital
needs. We have not currently identified any sources of available working
capital, other than the possible receipt of up to $594,000 from the exercise of
all outstanding warrants. We may be unable to locate other sources of capital or
may find that capital is not available on terms which are acceptable to us. If
the warrants are not exercised and we are not able to raise additional capital
from other sources, we will either be unable to continue operations or we will
be required to limit our operations to those which can be financed with the
modest capital which is currently available, and we will be required to abandon
or significantly curtail our expansion plans.

                                       7
<PAGE>

OUR SUCCESS IS DEPENDENT ON RETAINING KEY PERSONNEL AND ON HIRING AND RETAINING
ADDITIONAL PERSONNEL. WE MAY BE UNABLE TO HIRE AND/OR RETAIN NECESSARY KEY
PERSONNEL, WHICH WOULD ADVERSELY AFFECT THE DEVELOPMENT OF OUR BUSINESS AND THE
POTENTIAL MARKET VALUE OF OUR OUTSTANDING SHARES.

         Our success will be largely dependent upon the efforts of Mr. Martin
Berns. Mr. Berns has an employment agreement with the Company through December
31, 2008 at an annual base salary of $52,000, plus normal fringe benefits.
Additionally Mr. Berns may receive from time to time, bonuses as determined by
the Board of Directors.

         The loss of the services of Mr. Berns would have a material adverse
effect on our ability to maintain and expand our current business operations or
to develop related products and services. We do not presently have "key man"
life insurance with respect to our management. Our success is also dependent
upon our ability to hire and retain additional qualified executives and creative
marketing personnel. There can be no assurance that we will be able to hire or
retain such necessary personnel and our inability to do so would have a material
adverse impact on our ability to expand our current business operations and
achieve profitability.

THE PORTIONS OF OUR BUSINESS WHICH ARE RELATED TO REWARD PROGRAMS, ON-LINE
COMMERCE AND THE INTERNET ARE VERY COMPETITIVE. THERE IS NO ASSURANCE THAT WE
WILL BE ABLE TO SUCCESSFULLY COMPETE IN THOSE MARKETS, WHICH WOULD ADVERSELY
AFFECT OUR ABILITY TO ACHIEVE OR SUSTAIN PROFITABILITY.

         The on-line commerce market is new, rapidly evolving and intensely
competitive. We expect competition to intensify in the future because barriers
to entry are minimal, and current and new competitors can launch new web sites
at a relatively low cost. There are a multitude of "brand your own web site"
companies and software products available and every site on the web will compete
for attention with those which we create and maintain on behalf of our
customers. In addition, all categories of the Internet and rewards industries
are intensely competitive. There are many loyalty/reward programs covering
virtually every industry and product. These programs range from individual
retail establishments to major corporations, to branded reward programs.
Although we believe we can establish a niche as a provider of high quality
portals and rewards program, we will still be competing for funding and will
face intense competition from many other entities with greater experience and
financial resources than we have. As a result, there can be no assurance that we
will be able to compete successfully to the extent necessary to significantly
expand our business and achieve profitability.

THE PORTION OF OUR BUSINESS RELATED TO MARKETING OF VIDEOS AND OFFERING PRODUCTS
FOR TELEVISION SYNDICATION IS VERY COMPETITIVE. THERE IS NO ASSURANCE THAT WE
WILL BE ABLE TO COMPETE SUCCESSFULLY IN THAT MARKET, WHICH WOULD ADVERSELY
AFFECT OUR ABILITY TO ACHIEVE OR SUSTAIN PROFITABILITY.

         There are many competitors in the business of marketing and sale of
broadcast rights, videos and DVDs, many of which are better financed and in a
better position to place or sell their intellectual properties. The Howdy Doody
videos we own were produced in the 1970's and are targeted towards children and
their parents and grandparents who buy videos for them. The Howdy Doody videos
are in competition with both nostalgic and newly produced videos available from
major studios and television stations that already have distribution channels.
It is extremely difficult to obtain agreements for television and radio
syndication and retail sales for these types of products due to the abundance of
offerings from a variety of sources and the limited amount of television/radio
time slots and retail shelf space available. We have signed two agreements
granting rights to manufacture and distribute videos of a portion of our Howdy
Doody library to retailers and on the Internet in return for payment of a
royalty fee based upon sales. There is no assurance that this agreement, or any
others we are able to sign, will result in any significant sales or revenues.

                                       8
<PAGE>

         Test marketing of the Mr. Rogers CD/DVD commenced in the fourth quarter
of 2005 with the distribution roll-out commencing in the first quarter of 2006.
To date this product has limited sales; there is no assurance of revenues in the
future.

THE INTERNET AND ON-LINE COMMERCE INDUSTRY ARE CHARACTERIZED BY RAPID
TECHNOLOGICAL CHANGE. WE MAY BE UNABLE TO COMPETE SUCCESSFULLY OR TO REMAIN
COMPETITIVE UNLESS WE ARE ABLE TO DEVELOP NEW PRODUCTS OR ADOPT EXISTING
PRODUCTS TO NEW TECHNOLOGIES. IF WE ARE UNABLE TO DO SO, IT WOULD ADVERSELY
AFFECT OUR ABILITY TO REACH OR MAINTAIN PROFITABILITY.

         To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of the web malls and Internet portals
we market and sell. The Internet and the on-line commerce industry are
characterized by rapid technological change, changes in user and customer
requirements and preferences and frequent product and service introductions. If
competitors introduce products and services embodying new technologies or if new
industry standards and practices emerge, then our existing web sites,
proprietary technology and systems may become obsolete. Our future success will
depend on our ability to do the following:

         o  license and/or internally develop leading technologies useful in our
            business;

         o  enhance our existing services;

         o  develop new services and technology that address the increasingly
            sophisticated and varied needs of our prospective customers; and

         o  respond to technological advances and emerging industry standards
            and practices on a cost-effective and timely basis.

         The development of our web sites and other proprietary technology
entails significant technical and business risks. We may use new technologies
ineffectively or we may fail to adapt our web sites, proprietary technology and
transaction processing systems to customer requirements or emerging industry
standards. If we do not continue to improve and update our services and continue
to introduce new services, products and enhancements, we may lose customers or
fail to attract new customers. Losing existing customers or failing to attract
new customers would delay or adversely affect our ability to reach or maintain
profitability.

IT MAY BE DIFFICULT FOR YOU TO SELL YOUR SHARES BECAUSE OF A LIMITED TRADING
MARKET AND BECAUSE OF RESTRICTIONS IMPOSED BY THE PENNY STOCK RULES, WHICH MAY
REDUCE OR ELIMINATE THE ABILITY TO REALIZE A PROFIT FROM THE SALE OF YOUR
SHARES.

         There is a limited trading market for the shares and there can be no
assurance that an active trading market will develop, or, if such a market does
develop, that it will be sustained. The trading market is subject to rules
adopted by the Securities and Exchange Commission that regulate broker-dealer
practices in connection with transactions in "penny stocks." Penny stocks are
generally equity securities with a price of less than $5.00, except for
securities registered on certain national securities exchanges or quoted on the
NASDAQ system, provided that current price and volume information with respect
to transactions in those securities is provided by the exchange or system. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to make a special written
determination that the penny stock is a suitable investment for the purchaser
and to receive the purchaser's written acknowledgment of the receipt of a risk
disclosure statement, a written agreement to transactions involving penny
stocks, and a signed and dated copy of a written suitability statement.

                                       9
<PAGE>

These disclosure requirements will have the effect of making it more difficult
for an active trading market in the Shares to be created or sustained. Since
there is only a limited trading market in the Shares, holders of the Shares may
have difficulty selling their shares which may reduce or eliminate their ability
to realize a profit from the sale of their shares.

ITEM 2.  DESCRIPTION OF PROPERTY.

         As of December 31, 2006, the Company leases approximately 1760 sq. ft.
of office space from an unaffiliated third party.

         On February1, 2007, the Company expanded it leased premises to 2,784
sq. ft. and extended it lease for three years.

         The term of the lease is as follows: $4,077.35 per month for the first
twelve months, $4,202.77 per month for the following twelve months, and
$4,335.57 per month for the last twelve months.

ITEM 3.  LEGAL PROCEEDINGS.

         The Company is not a party to any pending legal proceedings, and no
such proceedings are known to be contemplated.

         No director, officer or affiliate of the Company, and no owner of
record or beneficial owner of more than 5.0% of the securities of the Company,
or any associate of any such director, officer or security holder is a party
adverse to the Company or has a material interest adverse to the Company in
reference to pending litigation.

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

         No matters were submitted to a vote of the security holders of the
Company during the fourth quarter of the fiscal year which ended December 31,
2006.


                                     PART II

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

         Our common stock is traded on the over-the-counter Bulletin Board under
the symbol "MEDG". As of March 12, 2007, the last sale of common stock, as
quoted on the over-the-counter Bulletin Board, was $0.25. The following table
sets forth the range of quarterly, high and low sale prices for our Common
Stock.

                         2006                2005
                   ---------------      ---------------
QUARTER ENDED       LOW       HIGH       LOW       HIGH
-------------      -----     -----      -----     -----
March 31           $0.18     $0.52      $0.75     $1.43
June 30             0.40      0.55       0.39      0.82
September 30        0.20      0.40       0.22      0.81
December 31         0.30      0.45       0.21      0.40

         As of December 31, 2006 a total of 11,611,021 shares outstanding. Such
securities are currently held of record by a total of approximately 116 persons.
We also currently have 495,000 shares which are subject to purchase under
outstanding warrant agreements with various individuals.

                                       10
<PAGE>

         No dividends have been declared or paid on the Company's securities
within the past two fiscal years, and it is not anticipated that any dividends
will be declared or paid in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

         The following table lists all of the securities that were sold by the
Company during the fiscal year ended December 31, 2006. The securities were sold
based on the exemption from registration provided by Section 4 (2) of the
Securities Act of 1933, in that these shares were acquired for investment
purposes only. A restrictive legend was placed on the certificates issued.

                                                      PURCHASE     AGGREGATE
                                                      PRICE PER    PURCHASE
NAME                            DATE       SHARES       SHARE        PRICE
----                            ----       ------     ---------    ---------
Norman Pessin ..........     1/09/2006     500,000     $ 0.25      $125,000  (1)
Cameron Associates .....     3/06/2006      80,000       0.31        24,800  (2)
Norman Pessin ..........     6/08/2006     527,500       0.40       211,000  (1)
Gregory Fortunoff ......     6/08/2006      97,500       0.40        39,000  (1)
Norman Pessin ..........     9/29/2006     333,334       0.35       116,667  (1)
Michelle Cahr ..........     9/29/2006     100,000       0.35        35,000  (1)
Cahr Dynamic Trust .....     9/29/2006     233,333       0.35        81,667  (1)
Cameron Associates .....     10/2/2006     100,000       0.30        30,000  (2)
Daryl Moccia ...........     11/13/2006    100,000       0.35        35,000  (1)
Nancy Cohn .............     11/13/2006    100,000       0.35        35,000  (1)
Gregory Fortunoff ......     11/13/2006    133,333       0.35        46,666  (1)
Jeffrey Meshel .........     11/21/2006     25,000       0.38         9,500  (2)

(1) Shares issued for payment received for Private Placement
(2) Shares issued for consulting services.

                                       11
<PAGE>

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

SELECTED TWO YEAR FINANCIAL DATA

                                                       2006             2005
                                                       ----             ----
OPERATING DATA
  Net sales ...................................    $    433,720     $   176,722
  Operating income (loss) .....................      (1,120,401)     (1,072,743)
  Net income (loss) ...........................      (1,120,217)     (1,072,743)
  Depreciation and amortization ...............          20,982          56,183
  Capital expenditures ........................               0         113,027

PER SHARE DATA
  Earnings:
    Basic & diluted ...........................    $      (0.11)    $     (0.13)

FINANCIAL POSITION
  Working Capital .............................    $     68,321     $  (118,023)
  Property, plant & equipment, net ............           3,205           5,037
  Total assets ................................         342,653         730,063
  Long term debt ..............................               0               0
  Shareholder equity ..........................         175,283         468,046

CASH FLOW DATA
  Net cash flow from operations ...............    $   (569,244)    $  (370,927)
  Net cash flow from investing activities .....               0        (113,027)
  Net cash flows from financing activities ....         712,000         479,382

YEAR END DATA
  Shares outstanding ..........................      11,611,021       9,281,021
  Approximate number of shareholders ..........             116             150

         Certain statements in this report, including statements in the
following discussion which are not statements of historical fact, are what are
known as "forward looking statements," which are basically statements about the
future. For that reason, these statements involve risk and uncertainty since no
one can accurately predict the future. Words such as "plans," "intends," "will,"
"hopes," "seeks," "anticipates," "expects" and the like often identify such
forward looking statements, but are not the only indication that a statement is
a forward-looking statement. Such forward looking statements include statements
concerning our plans and objectives with respect to the present and future
operations of the Company, and statements which express or imply that such
present and future operations will or may produce revenues, income or profits.
Numerous factors and future events could cause the Company to change such plans
and objectives or fail to successfully implement such plans or achieve such
objectives, or cause such present and future operations to fail to produce
revenues, income or profits. Therefore, the reader is advised that the following
discussion should be considered in light of the discussion of risks and other
factors contained in this report on Form 10KSB and in the Company's other
filings with the Securities and Exchange Commission. No statements contained in
the following discussion should be construed as a guarantee or assurance of
future performance or future results.

                                       12
<PAGE>

OVERVIEW
--------

         Clamshell Enterprises, Inc. was organized under the laws of the State
of Nevada on June 4, 1999 as a "blind pool" or "blank check" company whose
business plan was to seek to acquire a business opportunity through completion
of a merger, exchange of stock, or similar type of transaction. On May 22, 2003
we changed our name to MediaNet Group Technologies, Inc.

         On March 31, 2003 we completed the acquisition of all of the issued and
outstanding shares of Brand-A-Port, Inc., in a share exchange transaction. The
former shareholders of Brand-A-Port acquired a majority of our issued and
outstanding common stock as a result of completion of the share exchange
transaction. Although the result of the share exchange transaction was that
Brand-A-Port became our wholly owned subsidiary, the transaction was accounted
for as a recapitalization of Brand-A-Port, whereby Brand-A-Port was deemed to be
the accounting acquirer and was deemed to have adopted our capital structure.

         All of our current operations are carried on through Brand-A-Port,
Inc., BSP Rewards, Inc. and Memory Lane Syndication, Inc., our wholly owned
subsidiaries.

TRANSACTION PROCESSING

         BSP Rewards receives rebates from participating merchants on all
transactions processed by BSP through its on-line mall platform. The percentage
rebate paid by merchants varies between 1 % and 30% and BSP normally shares 50%
of the rebate with the member who made the purchase.

         Since the launch of BSP Rewards in January of 2005, the company has
continued to increase individual membership, the number of participating
merchants in the network and the revenue and transactions generated through the
platform. We increased the number of merchants in our web mall in the past year
from 252 to 551. Many of them among the nation's best known retailers such as
Macy's, Sears, Shell, Hyatt Hotels, Linens-N-Things and Lowe's. We have also
launched our off-line program with Timberland and Budget Rent-A-Car as the
initial in-store merchants.

         We processed $5,115,491 of merchant transactions through our on-line
web mall during the fiscal year ended December 31, 2006 compared to $474,460 for
the fiscal year ended December 31, 2005. The merchant transactions processed
through our on-line web mall produced $305,925 in gross revenue for the BSP
Rewards segment of the Company during the fiscal year ended December 31, 2006 as
compared to $1,782 for the fiscal year ended December 31, 2005. The number of
active members processing transactions through the web mall increased 301% from
2005 and the number of active merchants increased 118.6% from 2005.

SEGMENT REPORTING
-----------------

         The Company has two reportable segments: (1) entertainment properties
which includes audio and video products and (2) branded services which includes
the branded websites and branded loyalty rewards programs, all of the products
of which are sold in the United States. These operating segments were determined
based on the nature of the products and services offered. The segments share a
common workforce and office headquarters, which include an allocation of all
overhead components. Overhead items that are specifically identifiable to a
particular segment are applied to such a segment.

                                       13
<PAGE>

         Operating segments are defined as components of an enterprise about
which separate financial information is available that is evaluated regularly by
the chief operating decision-maker in deciding how to allocate resources and in
assessing performance. The Company's chief executive officer and chief financial
officer have been identified as the chief decision makers. The Company's chief
operation decision makers direct the allocation of resources to operating
segments based on the profitability and cash flows of each respected segment.

         The Company evaluates performance based on several factors, of which
the primary financial measure is business segment income before taxes. The
accounting policies of the business segments are the same as those described in
"Note 1: Summary of Significant Accounting Policies." The following tables
reflect the operations of the Company's reportable segments:
<TABLE>
<CAPTION>
        TWELVE MONTHS ENDED               BRANDED      ENTERTAINMENT     CORPORATE      CONSOLIDATED
         DECEMBER 31, 2006                SERVICES      PROPERTIES       AND ELIM.         TOTAL
-----------------------------------      ---------     -------------     ---------      ------------
<S>                                      <C>           <C>               <C>            <C>
Net Sales (2) .....................      $ 377,431       $  56,289              -       $   433,720
Depreciation & Amortization (3) ...          2,232          18,750              -            20,982
Asset Impairment (4) ..............              -         458,124              -           458,124
Segment (Loss) Income before taxes        (336,552)       (646,712)      (136,953)       (1,120,217)
Segment assets (1) ................         63,768         132,990        145,895           342,653
Expenditures for segment assets (3)              -               -              -                 -

<CAPTION>
        TWELVE MONTHS ENDED               BRANDED      ENTERTAINMENT     CORPORATE      CONSOLIDATED
         DECEMBER 31, 2005                SERVICES      PROPERTIES       AND ELIM.         TOTAL
-----------------------------------      ---------     -------------     ---------      ------------
<S>                                      <C>           <C>               <C>            <C>
Net Sales (2) .....................      $  55,243       $ 121,479              -       $   176,722
Depreciation & Amortization (3) ...         35,002          21,181              -            56,183
Asset Impairment (4) ..............              -         482,165              -           482,165
Segment (Loss) Income before taxes        (387,599)       (552,036)      (133,108)       (1,072,743)
Segment assets (1) ................         19,328         710,131            604           730,063
Expenditures for segment assets (3)          5,495         107,532              -           113,027
</TABLE>

(1) Total Business assets are owned or allocated assets used by each business.
    Corporate assets consist of cash and cash equivalents, marketable securities
    and certain other assets.

(2) Branded Services two year comparative segment revenue follows;

    (a) Gift Cards generated $271,777 in revenue for the fiscal year ending
        December 31, 2006, as compared to $724 for the fiscal year ended
        December 31, 2005.

    (b) BSP Reward program generated $34,148 in revenue for the fiscal year
        ended December 31, 2006, as compared to $1,058 for the fiscal year ended
        December 31, 2005.

    (c) Design and Hosting generated $67,573 in revenue for the fiscal year
        ended December 31, 2006, as compared to $49,544 for the fiscal year
        ended December 31, 2005.

    (d) Other items generated $3,933 in revenue for the fiscal year ended
        December 31, 2006, as compared to $3,917 for the fiscal year ended
        December 31, 2005.

(3) Corporate property additions, depreciation and amortization expense include
    items attributable to the unallocated fixed assets of support divisions and
    common facilities.

(4) Asset impairment attributable to our strategic review of assets, comparing
    undiscounted cash flows against carrying values.

                                       14
<PAGE>

MAJOR CUSTOMERS
---------------

         During the fiscal year ended December 31, 2006, the Entertainment
Properties segment had sales to four customers, which represent approximately
31% of revenues. During the fiscal year ended December 31, 2006 the Branded
Services segment had two customers which represents approximately 16% of
revenues.

RESULTS OF OPERATIONS
---------------------

         Fiscal Year Ended December 31, 2006 as compared to Fiscal Year Ended
December 31, 2005

         For the fiscal year ended December 31, 2006, we had revenues from
operations of $433,720, and a net loss of $1,120,217. For the fiscal year ended
December 31, 2005, we had revenues from operations of $176,722, and a net loss
of $1,072,743.

         Branded Services net sales increased $322,188 or 583.2 % to $377,431
compared to $55,243 for the fiscal year ended December 31, 2005.The increase is
attributable to increased individual memberships, and an increase of merchants
participating in our web mall from 252 in fiscal year 2005 to 551 in fiscal year
2006.

         Entertainment Properties net sales decreased $65,190 or 53.7 % to
$56,289 compared to $121,479 for the fiscal year ended December 31, 2005. This
decrease is attributable to the reduction of in store advertising.

         Operating expenses for the fiscal year ended December 31, 2006, were
$1,086,148, compared to $1,031,872 for the fiscal year ended December 31, 2005,
an increase of $54,276.

         Included in operating expenses for the fiscal year ended December 31,
2006 is an Impairment loss of $290,530 against our Film Library and $167,594
against our Record Master. In fiscal year ended December 31, 2005 we recorded
Impairment against our Film Library of $482,165. While conducting its annual
review and testing of company assets the Company determined there was a loss in
carrying value of its Film Library and Record Master. The Company utilized a
discounted cash flow as the basis of its test.

         Excluding the impairments noted above operating expenses were $628,024
for the fiscal year ended December 31, 2006 and $549,707 for fiscal year
December 31, 2005 an increase of $78,317.Consulting fees decreased $62,201;
Professional fees decreased $26,170; Travel expenses decreased $17,933.
Insurance expense increased $14,675; Payroll expense and related fringe benefits
increased $94,240 due to the hiring of key management staff (previously retained
as consultants); Corporate costs increased $7,875; Marketing expense increased
$39,975; Commission expense increased $19,636 and Advertising expense increased
$8,450.

                                       15
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         Deferred revenue results from customers who pay for services in
advance, such as quarterly, or annually. The Company records the initial payment
in deferred revenue and then recognizes in each subsequent month that proportion
which is provided in services. As of December 31, 2006, deferred revenue
amounted to $31,602 compared to $26,174 at December 31, 2005.

         As of December 31, 2006, we had cash on hand of approximately $153,346.
During the fiscal year ended December 31, 2006, net cash used in operations was
$569,244, and during the fiscal year ended December 31, 2005, net cash used in
operations was $370,927. However, our operations are not yet profitable, and we
continue to require additional funding in order to continue business operations.

         To date, we have funded our cash shortage and obtained the cash
necessary to continue operations primarily through debt and equity transactions
with management and through equity private placements.

         Without receiving any additional capital investment management believes
we can continue current business operations, and continue the current gradual
expansion of our operations for the next twelve months, because the web sites,
portals and marketing materials for our various divisions are completed and
ready for use. However, until operating revenues increase significantly, we will
continue to seek outside funding for the purpose of accelerating the expansion
of our operations.

PLAN OF OPERATIONS
------------------

         Our plan of operations is to primarily develop our BSP Rewards
business. The timing and the extent to which we are able to implement our
expansion plan will primarily be dependent upon our ability to obtain outside
working capital. Although management believes we have established a base through
which we can continue to grow even without obtaining outside working capital,
receipt of such capital would allow us to enhance our existing applications and
commence a speedier and more complete marketing program.

         The primary operations of the company are focused on the Branded
Loyalty Rewards segment of the business. The efforts are concentrated on (1)
Building the On-Line merchants network. (2) The participating Gift Card
merchants. (3) Initiating a participating In-Store merchant network. (4)
Layering the BSP platform onto credit, debit and prepaid cards. (5) Increasing
the member base. (6) Increasing transactions and fees.

         The Company has signed Marketing Partner and/or Member Provider
Agreements with various individuals or companies to sell for the Company on a
straight commission basis. Additionally the Company has signed their initial
Private Branded Merchant Agreements with web-based retailers who will give and
redeem BSP Rewards and place their customers into the program as members. The
Company believes it will begin to receive limited revenues from these sales
during the 1st quarter of 2007.

         The Company commenced market testing of the Mr. Rogers CD/DVD in the
fourth quarter, 2005. We are presently offering it for sale on a direct basis
and through various wholesale and retail distributors and both on-line and brick
and mortar stores. There is no assurance that we will realize any significant
sales or revenues in the future.

         We will seek to gradually expand our operations in all areas during the
next 12 months by establishing a base of marketing partners that will allow us
to expand our marketing efforts for the BSP Rewards program, with no increased
overhead. We also intend to direct significant effort toward marketing the Howdy
Doody episode library and the Mister Rogers CD/DVD. Management believes these
two operations currently have the greatest potential for growth and production
of revenue.

                                       16
<PAGE>

         We are aware that business trends relative to the internet are
constantly changing. We are also aware that the U.S. economy is currently in a
state of uncertain growth. The combination of changing trends relative to the
internet and uncertainty regarding economic growth could have a material impact
on our short-term or long-term liquidity or on our net sales or revenues or
income from operations.

SUBSEQUENT EVENTS
-----------------

         On January 23, 2007 the company issued 40,000 shares of restricted
common stock to Joseph Porrello. Mr. Porrello (a Director) exercised his stock
option to purchase 40,000 shares valued at $0.26 per share. The securities were
sold based on the exemption from registration provided by Section 4 (2) of the
Securities Act of 1933, in that these shares were acquired for investment
purposes only. A restrictive legend was placed on the certificate issued.

         On January 23, 2007, the Board of Directors elected Robert F. Hussey to
serve on its Board of Directors, Mr. Hussey accepted the position.

         On January 23, 2007 the Company issued 25,000 shares of restricted
common stock to Robert Hussey for consulting services valued at $0.40 per share.
The $0.40 per share price is consistent with the market price of the Company's
stock as quoted on the OTC Bulletin Board on January 23, 2007. The securities
were sold based on the exemption from registration provided by Section 4 (2) of
the Securities Act of 1933, in that these shares were acquired for investment
purposes only. A restrictive legend was placed on the certificate issued.

         On January 23, 2007, the Company issued options to purchase 75,000
shares of common stock to a director. The options are exercisable at $0.20 per
share, which represents 50% of the closing bid price per share of the company's
common stock on January 23, 2007.

         On February 1, 2007, Mr. Joseph Porrello resigned from his position as
Director of the Company. There were no disagreements by the Company or Mr.
Porrello relating to the resignation.

         On February 1, 2007, Mr. Ivan Bial resigned from his position as
Director of the Company. There were no disagreements by the Company or Mr.
Porrello relating to the resignation.

         On February 2, 2007, the Company consummated the private sale of
285,715 shares to one (1) accredited investor, at a price of $0.35 per share.
The total offering price was $100,000. The securities were sold based on the
exemption from registration provided by Section 4 (2) of the Securities Act of
1933, in that these shares were acquired for investment purposes only. A
restrictive legend was placed on the certificate issued.

         On March 12, 2007, we signed a Digital Distribution Agreement with
Digital Music Group, Inc. The Agreement is relative to our Howdy Doody library
and our Songs from the Neighborhood "The Music of MISTER ROGERS" audio and
covers electronic and digital transmission. The Company will receive a royalty
on net receipts of all sales. The term of the Agreement is seven years,
commencing March 16, 2007.

ITEM 7.  FINANCIAL STATEMENTS.

         See Financial Statements commencing on page F-1.

                                       17
<PAGE>

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

         On or about January 1, 2006, Child, Sullivan & Company, the principal
accountant for MediaNet Group Technologies, Inc. (the "Company") changed its
accounting practice from a corporation to a professional limited liability
company named Child, Van Wagoner & Bradshaw, PLLC. As this is viewed as a
separate legal entity, the Company terminated its accounting arrangement with
Child, Sullivan & Company as principal accountant and engaged Child, Van Wagoner
& Bradshaw, PLLC, as the Company's principal accountants for the Company's
fiscal year ending December 31, 2005 and the interim periods for 2005 and 2006.
The decision to change principal accountants was approved by the Audit Committee
of the Company's Board of Directors and subsequently approved by the Board of
Directors.

         None of the reports of Child, Sullivan & Company, on the Company's
financial statements for either of the past two years or subsequent interim
period contained an adverse opinion or disclaimer of opinion, or was qualified
or modified as to uncertainty, audit scope or accounting principles, except that
the report for the fiscal year ended December 31, 2004 did contain a going
concern paragraph.

         There were no disagreements between the Company and Child, Sullivan &
Company, on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
the satisfaction of Child, Sullivan & Company, would have caused them to make
reference to the subject matter of the disagreement in connection with its
report. Further, Child, Sullivan & Company has not advised the Registrant that:

         1) internal controls necessary to develop reliable financial statements
            did not exist; or

         2) information has come to the attention of Child, Sullivan & Company
            which made it unwilling to rely upon management's representations,
            or made it unwilling to be associated with the financial statements
            prepared by management; or

         3) the scope of the audit should be expanded significantly, or
            information has come to the attention of Child, Sullivan & Company
            that they have concluded will, or if further investigated might,
            materially impact the fairness or reliability of a previously issued
            audit report or the underlying financial statements, or the
            financial statements issued or to be issued covering the fiscal year
            ended December 31, 2005.

         On or about January 2, 2006 the Registrant engaged Child, Van Wagoner &
Bradshaw, PLLC as its principal accountant to audit the Registrant's financial
statements as successor to Child, Sullivan & Company. During the Registrant's
two most recent fiscal years or subsequent interim period, the Registrant has
not consulted with the entity of Child, Van Wagoner & Bradshaw, PLLC regarding
the application of accounting principles to a specific transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Registrant's financial statements, nor did the entity of Child, Van Wagoner
& Bradshaw, PLLC provide advice to the Registrant, either written or oral, that
was an important factor considered by the Registrant in reaching a decision as
to the accounting, auditing or financial reporting issue.

                                       18
<PAGE>

         Further, during the Registrant's two most recent fiscal years or
subsequent interim period, the Registrant has not consulted the entity of Child,
Van Wagoner & Bradshaw, PLLC on any matter that was the subject of a
disagreement or a reportable event.

ITEM 8A. CONTROLS AND PROCEDURES.

         The Securities and Exchange Commission defines the term disclosure
controls and procedures to mean a company's controls and other procedures that
are designed to ensure that information required to be disclosed in the reports
that it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commissions rules and forms. The Company maintains such
a system of controls and procedures in an effort to ensure that all information
which it is required to disclose in the reports it files under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified under the SEC's rules and forms.

         The Company carried out an evaluation under the supervision and with
the participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that, as of the
end of December 31, 2006, the Company's disclosure controls and procedures are
effective to provide reasonable assurance that information required to be
disclosed by the Company in the reports the company files or submits under the
Securities Exchange Act of 1934 is (1) accumulated and communicated to
management, including the Company's Chief Executive Officer and Chief Financial
Officer, to allow timely decisions regarding required disclosures and (2)
recorded, processed, summarized and reported, within the time periods specified
in the Commission's rules and forms. There have been no changes in the Company's
internal controls over financial reporting during the period covered by this
report that have materially affected, or are reasonably likely to materially
affect, such internal controls.

ITEM 8B. OTHER INFORMATION.

         None.

                                       19
<PAGE>

                                    PART III

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

         The names, ages and titles of our Executive Officers and Directors as
of December 31, 2006 are as follows:
<TABLE>
<CAPTION>
NAME                     AGE      POSITION                                          COMMITTEE
-------------------      ---      --------------------------------------------      ---------
<S>                      <C>      <C>                                               <C>
Martin A. Berns (1)       70      Chairman of the Board of Director & CEO
Eugene H. Berns (1)       70      Director                                            (5)
Ivan L. Bial (3)          62      Director, Vice President, Secretary
James M. Dyas             57      Director, Chief Financial Officer, Treasurer
Joseph Porrello (2)       62      Director
Thomas C. Hill            48      Director, Director of Operations                    (5)
Lawrence Lipman           49      Director, Director of Business Development
Jeffrey Meshel            50      Director
Robert Hussey (4)         58      Director                                            (5)(**)
</TABLE>

1- Martin A. Berns and Eugene H. Berns are brothers.

2- Mr. Porrello resigned from the board effective February 1, 2007

3- Mr. Bial resigned from the board effective February 1, 2007. He remains as
   Vice President & Secretary.

4- Mr. Hussey was elected to the board on January 23, 2007.

5- Audit Committee.

** Indicates Chairman of the Committee

         The directors named above will serve until the next annual meeting of
the Company's stockholders, or until their successors have been appointed. The
directors are elected for one-year terms at the annual stockholders' meeting.

         The directors and officers named above, other than Mr. Berns, Mr. Bial
and Mr. Dyas who spend substantially all their time on the affairs of the
Company, will generally devote their time to the Company's affairs on an "as
needed" basis, which, depending on the circumstances, could amount to as little
as two hours per month, or more than forty hours per month, but more than likely
will fall within the range of five to ten hours per month.

         Officers generally hold their positions at the pleasure of the board of
directors, absent any employment agreement.

                                       20
<PAGE>

BIOGRAPHICAL INFORMATION
------------------------

         MARTIN A. BERNS has been the President, Chief Executive Officer and
Director of the Company since January 2003 and a co-founder of our wholly owned
operating subsidiary Brand-A-Port, Inc. He has been a Director, President and
Chief Executive Officer of that company since its organization in April 2000.
Mr. Berns has been the chief architect of the Company's business plan, business
model and BSP Rewards program.

         Mr. Berns has forty years of experience as a marketing consultant,
including advertising, TV commercials and show production. Mr. Berns was Vice
President of marketing for Realm Productions, a publicly held video production
company and acted as coordinating producer for the re-syndication and
distribution of the 1970's new "Howdy Doody" show. Mr. Berns' background
includes developing marketing plans and the subsequent establishment, training
and administration of sales organizations for national companies. Mr. Berns was
the founder of Solid Gold Savings Stamps in the 1960's, a loyalty rewards
program whose clients included Sinclair Oil Company.

         EUGENE H. BERNS has served as Chairman of the Board of the Company
since January 2003. He is a co-founder of our wholly owned operating subsidiary,
Brand-A-Port, Inc. Mr. Berns serves as President of Housing Marketing Team, a
marketing consultation company whose services include local and national housing
industry market trend analysis, individual and multiple community marketing
programs. He served twenty-three (23) years as Vice President of Sales and
Marketing and as a member of the board of directors for one of South Florida's
largest American Stock Exchange community builders. Additionally, he held many
leadership positions in the housing industry, including past President of the
Gold Coast Builders Association, and currently serves on many state and national
committees. He is the recipient of numerous industry awards.

         IVAN L. BIAL has been the Vice President and Secretary of the Company
since January 2003. Mr. Bial is a co-founder of our wholly owned operating
subsidiary Brand-A-Port, Inc., and has been Vice President, Sales of that
company since its organization in April 2000. Prior thereto, he served as Vice
President and General Manager of Southern Photo Service of Hollywood, Florida,
the oldest independent color photo-finishing lab in the United States. He served
as a consultant to Blockbuster Entertainment for their multi-store test of
one-hour photo labs. Mr. Bial has additional experience as a National Sales
Manager in the telecommunications, software and publishing industry, and is a
member of the Society of Photo Finishing Engineers. Mr. Bial resigned from the
board of directors effective February 1, 2007.

         JAMES M. DYAS was appointed a director and Chief Financial Officer of
the Company in September 2004. From 1992 to 2004, Mr. Dyas served as Chief
Financial Officer of the National Alliance for Excellence, Inc., a national
educational non-profit organization which he co-founded. From 1990 to 1992, Mr.
Dyas was Controller for Seal-O-Matic Corporation. Prior to 1990, Mr. Dyas held
management positions with Fashion Rite Corporation (a London Fog licensee) and
International Paint Co., Inc. Mr. Dyas has served in the position of financial
consultant, Chief Financial Officer and Controller for national and
international companies for over twenty-five (25) years. He holds a B.S degree
in accounting from St. Peter's College. Mr. Dyas is a member of Financial
Executives International.

         JEFFREY W. MESHEL was appointed a director of the Company on November
21, 2006. Since 1989 Mr. Jeffrey W. Meshel is president and co-founder of
Mercury Capital Corporation, Mercury Properties and Mercury Equity Group. Mr.
Meshel has over twenty years experience in the acquisition, management and
lending on residential and commercial real estate. Mercury Capital Corporation
is prominent in the real estate industry as a resource for bridge loans and
mezzanine debt nationwide. Mercury Properties is a fully integrated real estate
holding company that owns, operates and manages its own portfolio, which

                                       21
<PAGE>

consists of office, industrial, retail and residential property. Mercury Equity
Group is a boutique NASD Broker/Dealer that specializes in private placements.
M.E.G. provides bridge loans and funds private investments in public entities.
Mr. Meshel is the Founder and Chairman of the Strategic Forum and author of "One
Phone Call Away" (currently being published by Penguin/Portfolio). Mr. Meshel
currently serves on the board of Signature Bank, Mercury Capital and advisory
board of Broadband Capital. Mr. Meshel is the Founder and Chairman of Paradigm
V. Paradigm V is the first web based people resource engine where its members
define themselves to become a magnet for opportunity.

         LAWRENCE LIPMAN was appointed a director of the Company on February 16,
2005. Since August 2004, he has been President of DBL Group, Inc., which
provides consulting services to the Company. From 1997 to July 2004, Mr. Lipman
was the Vice President - Sales of Koala Corp, the manufacturer of the Koala Bear
Baby changing stations, playground equipment and other business to consumer
products such as water parks and safety surfacing. Mr. Lipman has over
twenty-four (24) years of successful experience working with executives in a
variety of industries that relate directly to the objectives of BSP Rewards. He
has acted in a variety of businesses as Director of Business Development, Chief
Marketing Officer, Vice President of Sales and Marketing and owned a corporation
for eight (8) years that sold a variety of products to many retail industries.
Mr. Lipman's expertise is being utilized to assist the Company in bringing to
BSP Rewards specific targeted industries. He is directly responsible for
identifying and establishing relationships with potential strategic marketing
partners and major prospective clients. Mr. Lipman worked in the loyalty rewards
industry during the late 1990's.

         THOMAS C. HILL was appointed a director of the Company on January 31,
2005. Mr. Hill has been the President of Xcel Marketing Group since January
2003. From February 1999 to December 2002, Mr. Hill was the Executive Vice
President of Xcel Marketing Group which develops loyalty marketing solutions for
the hospitality, media and financial industries. Previously, as a co-founder of
Gusto Marketing, he was responsible for all aspects of marketing and business
development for this newspaper media industry rewards/loyalty program. Mr. Hill
also served as the Marketing Director for The Miami Herald, one of
Knight-Ridder's leading newspapers.

         ROBERT F. HUSSEY was appointed a director of the Company effective
January 23, 2007. Mr. Hussey is a private equity investor. Mr. Hussey currently
serves as a Director of Axcess International, Inc., Digital Lightwave, Inc. Mr.
Hussey also serves on the board of HC Wainright & Co., DIRT Motorsports, Inc.
and on the board of advisors for Argentum Capital Partners. From 1991 through
1996, Mr. Hussey served as President, CEO and Director of Metro Vision of North
America. From 1984 through 1991, Mr. Hussey was Founder, President, CEO and
Director of POP Radio Corp. Prior to POP Radio, Mr. Hussey worked at Grey
Advertising, Inc., E.F. Hutton and American Home Products, Inc. Mr. Hussey
received a B.S. in Business Administration from Georgetown University and an MBA
in International Business from George Washington University.

AUDIT COMMITTEE
---------------

         We have an Audit Committee, which consist of Robert Hussey, Eugene
Berns, and Thomas Hill. The board has designated Robert Hussey as the "audit
committee" financial expert," as defined by Item 401(e) of Regulation S-K of the
Securities Act of 1934 and serves as its chairperson. The board determined that
Robert Hussey, Eugene Berns and Thomas Hill are "independent directors".

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
-------------------------------------------------

         The Company's officers, directors and principal shareholders have not
been delinquent in filing reports required under Section 16(a) of the Exchange
Act.

                                       22
<PAGE>

CODE OF ETHICS
--------------

         The Company has adopted a Code of Business Conduct and Ethics which
applies to its executive officers. A copy of the Code of Business Conduct and
Ethics is incorporated by reference as Exhibit 14 to this report.

ITEM 10. EXECUTIVE COMPENSATION.

         The following table provides summary information concerning cash and
compensation awarded to, earned by, or paid to our Chief Executive Officer for
the years indicated below.
<TABLE>
<CAPTION>
                                                                       LONG TERM
                                  ANNUAL COMPENSATION              COMPENSATION AWARDS
                            ---------------------------------   ------------------------
                                                 OTHER ANNUAL   RESTRICTED   SECURITIES
NAME AND PRINCIPAL                       BONUS   COMPENSATION      STOCK     UNDERLYING
POSITION             YEAR     SALARY      ($)        ($)        AWARDS ($)   OPTIONS (#)
------------------   ----   ----------   -----   ------------   ----------   -----------
<S>                  <C>    <C>          <C>     <C>            <C>          <C>
Martin Berns, CEO    2006   52,000 (1)     0          0              0            0
                     2005   52,500 (1)     0          0              0            0
                     2004   40,000 (1)     0          0              0            0
</TABLE>
(1) Mr. Berns has an employment contract with the Company, commencing January 1,
    2005 through December 31, 2008 at an annual salary of $52,000 per year, plus
    normal fringe benefits.

CONSULTING ARRANGEMENTS
-----------------------

         Mr. Lipman has a consulting arrangement with the Company pursuant to
which he provides professional services on a month-to-month basis.

         Mr. Hill has a consulting arrangement with the Company pursuant to
which he provides professional services on a month-to-month basis.

         On December 6, 2006, Mr. Lipman was granted a five (5) year option to
purchase 25,000 common shares under the Company's Incentive and Non-Statutory
Stock Option Plan. The exercise price of $0.18 per share represents 50% of the
closing price per share of the Company's common stock on the date of grant.
Options for 8,333 shares vested in 2006.

         On December 6, 2006, Mr. Meshel was granted a five (5) year option to
purchase 75,000 common shares under the Company's Incentive and Non-Statutory
Stock Option Plan. The exercise price of $0.18 per share represents 50% of the
closing price per share of the Company's common stock on the date of grant.
Options for 25,000 shares vested in 2006.

STOCK OPTIONS
-------------

         The Company has a stock option plan for key personnel covering 350,000
shares of common stock. The fair-value of the Company's stock based awards
granted to employees, non-employee directors and consultants for the years ended
December 31, 2006 and 2005 was estimated using the Black-Scholes option-pricing
model.

                                       23
<PAGE>

STOCK OPTION GRANTS IN 2006 TO NAMED EXECUTIVE OFFICERS

There were no new stock options granted to named officers in 2006 and there were
no options exercised.

COMPENSATION TO THE COMPANY'S DIRECTORS

Starting in 2006, each new director receives 25,000 restricted shares of our
common stock upon joining the board. They also receive 75,000 options to acquire
common stock at an exercise price 50% of the fair market value per share of
common stock on the date the option is granted. We also pay ordinary and
necessary out-of-pocket expenses for directors to attend board and committee
meetings.
<TABLE>
<CAPTION>
                                                                   CHANGE IN
                   FEES                                          PENSION VALUE
                  EARNED                          NON-EQUITY          AND
                  OR PAID                         INCENTIVE      NONQUALIFIED
                    IN      STOCK      OPTION         PLAN          DEFERRED       ALL OTHER
                   CASH     AWARDS     AWARDS     COMPENSATION    COMPENSATION   COMPENSATION    TOTAL
     NAM E          ($)      ($)         ($)          ($)         EARNINGS ($)        ($)         ($)
---------------   -------   ------   ----------   ------------   -------------   ------------   -------
<S>               <C>       <C>      <C>          <C>            <C>             <C>            <C>
Lawrence Lipman      -      $    -   $8,166 (1)       $-              $-              $-        $ 8,166
Joseph Porrello      -           -   10,048 (2)        -               -               -         10,048
Thomas Hill          -           -    8,166 (3)        -               -               -          8,166
James Dyas           -           -    2,512 (4)        -               -               -          2,512
Jeffrey Meshel       -       9,500    6,750 (5)        -               -               -         16,250
</TABLE>

1- Includes 25,000 stock options that were granted 25,000 on January 21, 2005 at
   $0.45 per share of which 8,333 options vest on January 21, 2005, 8,333
   options vest on January 21, 2006 and 8,334 options vest on January 21, 2007.
   Also included are 25,000 stock options that were granted on December 6, 2006
   at $0.18 per share of which 8,333 options vest on December 6, 2006, 8,333
   options vest on December 6, 2007 and 8,334 options vest on December 6, 2008.

2- Includes 60,000 stock options that were granted on October 29, 2004 at $0.26
   per share of which 20,000 options vested on October 29, 2004, 20,000 options
   vested on October 29, 2005 and 20,000 options vested on October 29, 2006.

3- Includes 25,000 stock options that were granted 25,000 on January 21, 2005 at
   $0.45 per share of which 8,333 options vest on January 21, 2005, 8,333
   options vest on January 21, 2006 and 8,334 options vest on January 21, 2007.
   Also included are 25,000 stock options that were granted on August 1, 2005 at
   $0.19 per share of which 8,333 options vest on August 1, 2005, 8,333 options
   vest on August 1, 2006 and 8,334 options vest on August 1, 2007.

4- Includes 15,000 stock options that were granted on October 29, 2004 at $0.26
   per share of which 5,000 options vested on October 29, 2004, 5,000 options
   vested on October 29, 2005 and 5,000 options vested on October 29, 2006.

5- Includes 25,000 stock options that were granted on December 6, 2006 at $0.18
   per share of which 8,333 options vest on December 6, 2006, 8,333 options vest
   on December 6, 2007 and 8,334 options vest on December 6, 2008.

                                       24
<PAGE>

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

         The following table sets forth, as of March 12, 2006, the number of
shares of Common Stock owned of record and beneficially by executive officers,
directors and persons who hold 5.0% or more of the outstanding Common Stock of
the Company. Also included are the shares held by all executive officers and
directors as a group.

                                          NUMBER OF SHARES
NAME AND ADDRESS                         BENEFICIALLY OWNED     PERCENT OF CLASS
----------------                         ------------------     ----------------

Martin A. Berns (1)
5100 W. Copans Road, Suite 710
Margate, Florida 33063                        2,645,001               22.1%

Eugene H. Berns (1)
5100 W. Copans Road, Suite 710
Margate, Florida 33063                          490,000                4.1%

Ivan L. Bial (1)
5100 W. Copans Road, Suite 710
Margate, Florida 33063                          510,000                4.3%

Jeffrey Meshel (4)
380 Lexington Ave, Ste 2020
New York, NY 10168                              130,000                1.1%

James Dyas (1)(3)
5100 W. Copans Road, Suite 710
Margate, Florida 33063                           20,000                0.2%

Lawrence Lipman (1) (2)
4950 South Yosemite
Greenwood Village, CO 80111                      70,000                0.6%

Thomas C. Hill (1) (2)
10258 Vestral Manor
Coral Springs, FL 33071                          85,833                0.7%

Robert Hussey (5)
16 Westbury rd
Garden City, NY 11530                           100,000                0.8%

Norman H. Pessin
605 Third Ave- 19th Floor
New York, NY 10158                            2,087,834               17.5%

Sandra F. Pessin (5)
605 Third Ave 19th Floor
New York, NY 10158                              603,250                5.0%

Gregory Fortunoff (6)
666 Third Ave
New York, NY 10017                              649,333                5.3%

All officers and directors (8 persons)        3,960,834               33.1%

                                       25
<PAGE>

(1) The person listed is an officer, a director, or both, of the Company.

(2) Includes 50,000 options to purchase common stock of the Company

(3) Includes 15,000 options to purchase common stock of the Company.

(4) Includes 75,000 options to purchase common stock of the Company.

(5) Includes 100,000 shares underlying three year warrants exercisable @ 1.00
    per share.

(6) Includes 25,000 shares underlying three year warrants exercisable @ 1.00 per
    share.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         During the fiscal year ended December 31, 2005 Mr. Berns had loaned to
the Company a total of $75,527 and deferred $36,500 in salary. Upon mutual
agreement with the Company, Mr. Berns was given the opportunity to convert his
loans and deferred salary into shares of the Company's common stock at market
value (bid price) at the time of conversion. The conversions were as follows:

         (1) January 14, 2005 converted $22,027 loan and $10,000 deferred
             salary@ $0.95 per share.

         (2) March 22, 2005 converted $20,000 deferred salary @ $0.96 per share.

         (3) October 21, 2005 converted $32,000 loan @ $0.22 per share.

         (4) December 28, 2005 converted $21,500 and $6,500 deferred salary @
             $0.30 per share.

         There were no loans or deferred salary during the fiscal year ended
December 31, 2006.

                                       26
<PAGE>

ITEM 13. EXHIBITS.

(a) The Exhibits listed below are filed as part of this Annual Report.

         3.1      Articles of Incorporation (incorporated by reference from
                  Registration Statement on Form 10-SB filed with the Securities
                  and Exchange Commission on June 14, 2002).

         3.2      Bylaws (incorporated by reference from Registration Statement
                  on Form 10-SB filed with the Securities and Exchange
                  Commission on June 14, 2002).

         14       Code of Ethics (incorporated by reference from Form 10-KSB for
                  the year ended 12/31/03 filed with the Securities and Exchange
                  Commission on March 29, 2004).

         31.1     Certification pursuant to Rule 13a-14(a) or 15d-14(a) under
                  the Securities Exchange Act of 1934, as amended.

         31.2     Certification pursuant to Rule 13a-14(a) or 15d-14(a) under
                  the Securities Exchange Act of 1934, as amended.

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

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

(b) Reports on Form 8-K

         On January 23, 2007, The Company filed a Form 8-K dated January 23,
         2007 reporting under ITEM 5.02 DEPARTURE OF PRINCIPAL OFFICERS;
         ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS, stating that
         Mr. Robert Hussey has been elected to serve on its Board of Director.

         On January 23, 2007, The Company filed a Form 8-K dated January 23,
         2007 reporting under ITEM 5.02 DEPARTURE OF PRINCIPAL OFFICERS;
         ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS, Mr. Joseph M.
         Porrello resigned from his position of Director of the Company
         effective February 1, 2007. There were no disagreements by the Company
         or Mr. Porrello relating to the resignation.

         On January 23, 2007, The Company filed a Form 8-K dated January 23,
         2007 reporting under ITEM 5.02 DEPARTURE OF PRINCIPAL OFFICERS;
         ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS, Mr. Ivan Bial
         resigned from his position of Director of the Company effective
         February 1, 2007. There were no disagreements by the Company or Mr.
         Bial relating to the resignation.

                                       27
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees
----------

         The aggregate fees billed by Child, Sullivan & Company for audit of the
Company's annual financial statements for the fiscal year ended December 31,
2005, were$16,000. The aggregate fees billed by Child, Sullivan & Company for
review of the Company's financial statements included in its quarterly reports
on Form 10-QSB for the year ended December 31, 2005, were $4,500.

         The aggregate fees billed by Child, Van Wagoner & Bradshaw, PLLC for
audit of the Company's annual financial statements for the fiscal year ended
December 31, 2006, were$19,000. The aggregate fees billed by Child, Sullivan &
Company for review of the Company's financial statements included in its
quarterly reports on Form 10-QSB for the year ended December 31, 2006, were
$4,500.

Audit-Related Fees
------------------

         Child, Van Wagoner & Bradshaw, PLLC billed the Company $0 for the
fiscal year ending December 31, 2006 for assurance and related services that
were related to its audit or review of the Company's financial statements.

Tax Fees
--------

         The aggregate fees billed by Child, Van Wagoner & Bradshaw, PLLC for
tax compliance, advice and planning were $0 for the fiscal year ended December
31, 2006.

All Other Fees
--------------

         Child, Van Wagoner & Bradshaw, PLLC did not bill the Company for any
products and services other than the foregoing during the fiscal year ended
December 31, 2005 and December 31, 2006.

         MediaNet Group Technologies, Inc.'s Audit Committee approves the
engagement of an accountant to render all audit and non-audit services prior to
the engagement of the accountant based upon a proposal by the accountant of
estimated fees and scope of the engagement. MediaNet Group Technologies, Inc.'s
Audit Committee has received the written disclosure and the letter from Child,
Van Wagoner & Bradshaw, PLLC required by Independence Standards Board Standard
No. 1, as currently in effect, and has discussed with Child, Van Wagoner &
Bradshaw, PLLC their independence.

                                       28
<PAGE>

                                   SIGNATURES

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

                                         MEDIANET GROUP TECHNOLOGIES, INC.

                                         By: /s/ Martin A. Berns
                                             -------------------
                                             Martin Berns, President and
         Date: March 31, 2007                Chief Executive Officer

                                         By: /s/ James M. Dyas
                                             -----------------
         Date: March 31, 2007                Chief Financial Officer

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

                                         By: /s/ Martin A. Berns
                                             -------------------
         Date: March 31, 2007                Martin A. Berns

                                         By: /s/ Eugene H. Berns
                                             -------------------
         Date: March 31, 2007                Eugene H. Berns

                                         By: /s/ James M. Dyas
                                             -----------------
         Date: March 31, 2007                James M. Dyas

                                         By: /s/ Jeffrey W. Meshel
                                             ---------------------
         Date: March 31, 2007                Jeffrey W. Meshel

                                         By: /s/ Robert F. Hussey
                                             --------------------
         Date: March 31, 2007                Robert F. Hussey

                                         By: /s/ Lawrence Lipman
                                             -------------------
         Date: March 31, 2007                Lawrence Lipman

                                         By: /s/ Thomas C. Hill
                                             -------------------
         Date: March 31, 2007                Thomas C. Hill

                                       29
<PAGE>

             Report of Independent Registered Public Accounting Firm

To the Board of Directors and Audit Committee
MEDIANET GROUP TECHNOLOGIES, INC.
Margate, Florida

We have audited the consolidated balance sheet of MEDIANET GROUP TECHNOLOGIES,
INC. (the Company) as of December 31, 2006, and the related consolidated
statements of operations, stockholders' deficit and cash flows for the years
ended December 31, 2006 and 2005. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We believe
that our audits provide 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 MEDIANET GROUP
TECHNOLOGIES, INC. as of December 31, 2006, and the results of its consolidated
operations and its consolidated cash flows for the years ended December 31, 2006
and 2005, in conformity with accounting principles generally accepted in the
United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has incurred substantial
recurring losses. This raises substantial doubt about the Company's ability to
meet its obligations and to continue as a going concern. Management's plans in
regard to this matter are described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

/s/ Child, Van Wagoner & Bradshaw, PLLC

Child, Van Wagoner & Bradshaw, PLLC
Salt Lake City, Utah
March 27, 2007

                                       F-1
<PAGE>

                        MEDIANET GROUP TECHNOLOGIES, INC.

                           CONSOLIDATED BALANCE SHEET

                                                                    December 31,
                                                                        2006
                                                                    -----------
                                     ASSETS
Current assets
  Cash and cash equivalents .....................................   $   153,346
  Accounts receivable ...........................................        14,512
  Inventory .....................................................        43,681
  Prepaid expense ...............................................        24,152
                                                                    -----------
Total current assets ............................................       235,691

Property, plant & equipment
  Computer equipment ............................................        22,758
  Accumulated depreciation ......................................       (19,553)
                                                                    -----------
Net property, plant and equipment ...............................         3,205

Other assets
  Trademark .....................................................         2,400
  Film library ..................................................        79,664
  Record master .................................................        21,693
                                                                    -----------
Total other assets ..............................................       103,757
                                                                    -----------

Total assets ....................................................   $   342,653
                                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Accounts payable and accrued liabilities ......................   $   135,768
  Deferrred revenue .............................................        31,602
                                                                    -----------
Total current liabilities .......................................       167,370

Stockholders' equity
  Common stock: par value $.001; 50,000,000 shares authorized;
  11,611,021 shares issued and outstanding ......................        11,611
  Additional paid in capital ....................................     4,347,731
  Accumulated deficit ...........................................    (4,184,059)
                                                                    -----------
Total stockholders' equity ......................................       175,283
                                                                    -----------

Total liabilities and stockholders' equity ......................   $   342,653
                                                                    ===========

                   The accompanying notes are an integral part
                    of the consolidated financial statements

                                       F-2
<PAGE>

                        MEDIANET GROUP TECHNOLOGIES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                       Year ended December 31,
                                                    ---------------------------
                                                        2006            2005
                                                    ------------    -----------
Revenues
  Sales revenues ................................   $    433,720    $   176,722
  Cost of sales .................................        467,973        217,593
                                                    ------------    -----------
    Gross profit ................................        (34,253)       (40,871)

Operating expenses
  Consulting fees ...............................        165,656        245,937
  Other selling and administrative expenses .....        462,368        303,770
  Impairment loss ...............................        458,124        482,165
                                                    ------------    -----------
    Total operating expenses ....................      1,086,148      1,031,872
                                                    ------------    -----------

Loss from operations ............................     (1,120,401)    (1,072,743)

Other income (expense)
  Interest income ...............................   $        184              -
                                                    ------------    -----------
Total other income (expense) ....................            184              -
                                                    ------------    -----------

Net loss before income taxes ....................     (1,120,217)    (1,072,743)

Provision for income taxes ......................              -              -
                                                    ------------    -----------

Net loss ........................................   $ (1,120,217)   $(1,072,743)
                                                    ============    ===========

Basic and diluted net loss per share ............   $      (0.11)   $     (0.13)
                                                    ============    ===========

Weighted average number of shares outstanding ...     10,428,281      8,417,211
                                                    ============    ===========

                   The accompanying notes are an integral part
                    of the consolidated financial statements

                                       F-3
<PAGE>

                        MEDIANET GROUP TECHNOLOGIES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                       Year ended December 31,
                                                      -------------------------
                                                          2006          2005
                                                      -----------   -----------
Cash flows from operating activities:
  Net loss .......................................... $(1,120,217)  $(1,072,743)
  Adjustments to reconcile net loss to
   net cash used in operations:
    Depreciation and amortization ...................      20,982        56,183
    Allowance for bad debt ..........................      (3,500)        3,500
    Stock and warrants issued for services ..........      64,300       122,330
    Stock options issued for services ...............      38,154        42,112
    Impairment loss on film library & record master .     458,124       482,165
    Changes in operating liabilities and assets:
      Accounts receivable ...........................      87,265      (100,926)
      Inventory .....................................     (10,822)      (32,858)
      Prepaid expense ...............................     (21,883)       (1,501)
      Accounts payable and accrued liabilities ......     (87,075)      104,637
      Deferred revenue ..............................       5,428        26,174
                                                      -----------   -----------
    Net cash used in operations .....................    (569,244)     (370,927)

Cash flows from investing activities:
  Purchase of fixed assets ..........................           -        (5,495)
  Investment in sound library .......................           -      (107,532)
                                                      -----------   -----------
    Net cash used in investing activities ...........           -      (113,027)

Cash flows from financing activities:
  Stock issued for cash .............................     725,000       397,982
  Net proceeds from due to stockholders .............     (13,000)       81,400
                                                      -----------   -----------

    Net cash provided by financing activities .......     712,000       479,382
                                                      -----------   -----------

  Increase (decrease) in cash and cash equivalents ..     142,756        (4,572)

  Cash and cash equivalents, beginning of period ....      10,590        15,162
                                                      -----------   -----------
  Cash and cash equivalents, end of period .......... $   153,346   $    10,590
                                                      ===========   ===========

Supplemental disclosures of cash flow information:
  Cash paid for interest ............................ $         -   $         -
                                                      ===========   ===========
  Cash paid for income taxes ........................ $         -   $         -
                                                      ===========   ===========
Non-cash financing transactions
  Stock issued for payment of expenses by shareholder $         -   $   121,027
                                                      ===========   ===========
  Stock issued for acquisition of sound library ..... $         -   $   100,000
                                                      ===========   ===========
  Stock options issued for services ................. $    38,154   $    42,112
                                                      ===========   ===========
  Stock issued for services ......................... $    64,300   $   143,620
                                                      ===========   ===========

                   The accompanying notes are an integral part
                    of the consolidated financial statements

                                       F-4
<PAGE>
<TABLE>
                                            MEDIANET GROUP TECHNOLOGIES, INC.

                               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                                     FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
<CAPTION>
                                                                                     Paid in
                                                                                     Capital
                                                    Common     Common    Paid in      Stock   Accumulated      Total
                                                    Shares     Stock     Capital     Options    Deficit        Equity
                                                  ----------  -------  -----------   -------  -----------   -----------
<S>                                               <C>         <C>      <C>           <C>      <C>           <C>
Balance January 1, 2005 ........................   7,772,566  $ 7,773  $ 2,725,592   $15,072  $(1,991,099)  $   757,338

Stock issued in payment of expenses 1/14 @ $.95       33,713       33       31,994         -            -        32,027
Stock issued for cash 1/18 @ $1.00 .............       8,000        8        7,992         -            -         8,000
Stock options issued for services 1/18 .........           -        -            -    11,883            -        11,883
Stock issued in payment of expenses 3/22 @ $.96       20,833       21       19,979         -            -        20,000
Stock issued for cash 3/28 @ $1.00 .............      50,000       50       49,950         -            -        50,000
Stock issued for services 3/31 @ $.90 ..........      15,000       15       13,485         -            -        13,500
Stock issued for services 4/1 @ $.90 ...........      15,000       15       13,485         -            -        13,500
Stock issued for services 5/2 @ $.68 ...........      11,000       11        7,469         -            -         7,480
Stock issued for cash 5/19 @ $.25 ..............      10,000       10        2,490         -            -         2,500
Stock issued for services 6/1 @ $.60 ...........      13,000       13        7,787         -            -         7,800
Stock issued for services 6/16 @ $.55 ..........      66,000       66       36,234         -            -        36,300
Warrants issued for services 6/16 ..............           -        -       19,320         -            -        19,320
Stock issued for cash 6/23 $.55 ................     700,000      700      384,300         -            -       385,000
Offering costs of issuance 6/23 ................           -        -      (47,518)        -            -       (47,518)
Stock issued for services 7/1 @ $.39 ...........      13,000       13        5,057         -            -         5,070
Stock issued for services 8/1 @ $.40 ...........      13,000       13        5,187         -            -         5,200
Stock options issued for services 8/2 ..........           -        -            -     2,250            -         2,250
Stock issued for sound library 9/23 @ $.33 .....     212,121      212       69,788         -            -        70,000
Warrants issued for sound library 9/23 .........           -        -       30,000         -            -        30,000
Stock issued in payment of expenses 10/21 @ $.22     145,455      146       31,854         -            -        32,000
Stock issued in payment of expenses 12/28 @ $.30     123,333      123       36,877         -            -        37,000
Stock issued for services 12/30 @ $.24 .........      59,000       59       14,101         -            -        14,160
Stock based compensation recognized for the year           -        -            -    27,979            -        27,979
Net loss for the year ..........................           -        -            -         -   (1,072,743)   (1,072,743)
                                                  ----------  -------  -----------   -------  -----------   -----------
Balance December 31, 2005 ......................   9,281,021    9,281    3,465,423    57,184   (3,063,842)      468,046

Stock issued for cash 1/9 @ $.25 ...............     500,000      500      124,500         -            -       125,000
Stock issued for services 3/6 @ $.31 ...........      80,000       80       24,720         -            -        24,800
Stock issued for cash 6/8 @ $.40 ...............     625,000      625      249,375         -            -       250,000
Stock issued for cash 9/29 @ $.35 ..............     666,667      667      232,667         -            -       233,334
Stock issued for services 10/2 @ $.30 ..........     100,000      100       29,900         -            -        30,000
Stock issued for cash 11/13 @ $.35 .............     333,333      333      116,333         -            -       116,666
Stock issued for services 11/21 @ $.38 .........      25,000       25        9,475         -            -         9,500
Stock based compensation recognized for the year           -        -            -    38,154            -        38,154
Net loss for the year ..........................           -        -            -         -   (1,120,217)   (1,120,217)
                                                  ----------  -------  -----------   -------  -----------   -----------
Balance December 31, 2006 ......................  11,611,021  $11,611  $ 4,252,393   $95,338  $(4,184,059)  $   175,283
                                                  ==========  =======  ===========   =======  ===========   ===========

                                       The accompanying notes are an integral part
                                        of the consolidated financial statements

                                                           F-5
</TABLE>
<PAGE>

                        MEDIANET GROUP TECHNOLOGIES, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     NATURE OF BUSINESS

     The Company was incorporated on June 4, 1999 in the State of Nevada as
     Clamshell Enterprises, Inc. ("Clamshell") and was organized for the purpose
     for creating a corporate vehicle to locate and acquire an operating
     business. On March 31, 2003 Clamshell acquired Brand-A-Port, Inc. ("BAP")
     in a stock for stock merger transaction and on May 22, 2003, Clamshell
     changed its name to MediaNet Group Technologies, Inc. ("MediaNet" or the
     "Company"). BAP was formerly named BSP Rewards, Inc., Shutterport, Inc.,
     and Eshutterbug.com, Inc. BAP is a Florida corporation formed on February
     4, 2000 to become an online provider of branded business to business and
     business to consumer web portals to a variety of businesses. The Company
     acts as an aggregator (to bring in a variety of interests to the portal),
     facilitator (to assist users in communicating with each other) and
     infomediary (to gather and supply information to users). The Company
     developed a loyalty rewards program ("BSP rewards") and has begun to sign
     member providers and merchants. The Company will charge merchants
     participating in the BSP rewards program a percentage of the value of
     transactions it does.

     On January 14, 2005 the Company formed Memory Lane Syndication, Inc.
     ("MLS") as a wholly owned subsidiary in the State of Florida as a vehicle
     to hold and market its video and sound libraries, namely 130 color episodes
     of the 1970's Howdy Doody television show and original recordings of songs
     written by Fred Rogers known as "Songs From The Neighborhood - A Tribute To
     Mr. Rogers".

     On June 22, 2005 the Company formed BSP Rewards, Inc. ("BSP) as a wholly
     owned subsidiary in the State of Florida as a vehicle to develop and
     promote its flagship product, the BSP Rewards Program.

     CAPITAL RESOURCES AND BUSINESS RISKS

     The Company's future operations are subject to all of the risks inherent in
     the establishment of a new business enterprise. At December 31, 2006,
     current assets exceeded current liabilities by $68,331. At December 31,
     2005, current liabilities exceeded current assets by $118,023.

     The financial statements have been prepared on the basis that the Company
     will continue as a going concern, which contemplates the realization and
     satisfaction of liabilities and commitments in the normal course of
     business. At December 31, 2006 and 2005, the Company had an accumulated
     deficit of $4,184,059 and $3,093,842. The Company also realized net losses
     of $1,120,217 and $1,072,743 for the years ended December 31, 2006 and
     2005, respectively.

     Operations to date have been primarily financed by stockholder advances and
     equity transactions. As a result, the Company's future operations are
     dependent upon the identification and successful completion of permanent
     equity financing, the continued support of shareholders and ultimately, the
     achievement of profitable operations. These financial statements do not
     include any adjustments relating to the recoverability and classification
     of recorded asset amounts nor to amounts and classification of liabilities
     that may be necessary should it be unable to continue as a going concern.

                                      F-6
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     CAPITAL RESOURCES AND BUSINESS RISKS (Continued)

     Factors that could affect the Company's future operating results and cause
     future results to vary materially from expectations include, but are not
     limited to, lower than anticipated business derived from existing clients,
     an inability to attract new clients and grow on its own, loss of a major
     customer, an inability to control expenses, technology changes in the
     industry, changes in regulatory requirements, a decline in the use of the
     Internet as a savings mechanism for consumer purchases, a decline in the
     financial stability of the Company's clients and general uncertain economic
     conditions. Negative developments in these or other risk factors could have
     a material adverse effect on the Company's future financial position,
     results of operations and cash flows.

     PRINCIPLES OF CONSOLIDATION

     The accompanying consolidated financial statements include the accounts of
     MediaNet Group Technologies, Inc. and its wholly owned subsidiaries
     Brand-A-Port, Inc., Memory Lane Syndication, Inc., and BSP Rewards, Inc.,
     as described above. All significant intercompany balances and transactions
     have been eliminated in consolidation.

     CONTROL BY PRINCIPAL STOCKHOLDERS

     The directors, executive officers and their affiliates or related parties,
     own beneficially and in the aggregate, the majority of the voting power of
     the outstanding shares of the common stock of the Company. Accordingly, the
     directors, executive officers and their affiliates, if they voted their
     shares uniformly, would have the ability to control the approval of most
     corporate actions, including increasing the authorized capital stock of the
     Company and the dissolution, merger or sale of the Company's assets.

     RELATED PARTY STOCK TRANSACTIONS AND OTHER STOCK TRANSACTIONS

     On January 14, 2005 the major stockholder exchanged $22,027 of reimbursable
     expenses and $10,000 of accrued salary owed to him by the Company, an
     aggregate amount of $32,027, for 33,713 restricted shares of the Company's
     common stock at a per share price of $0.95.

     On January 18, 2005 the Company issued 8,000 shares of its common stock to
     Mid-Continental Securities for cash at $1.00 per share upon the exercise of
     outstanding warrants.

     On March 22, 2005 the major stockholder exchanged $20,000 of accrued salary
     owed to him by the Company for 20,833 restricted shares of the Company's
     common stock at a per share price of $0.96.

     On March 28, 2005 the Company issued 50,000 shares of its common stock to
     Mid-Continental Securities for cash at $1.00 per share upon the exercise of
     outstanding warrants.

     On March 31, 2005 the Company issued 15,000 shares of restricted common
     stock to Cameron Associates for consulting services at $0.90 per share.

                                      F-7
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     RELATED PARTY STOCK TRANSACTIONS AND OTHER STOCK TRANSACTIONS (Continued)

     On April 1, 2005 the Company issued 15,000 shares of restricted common
     stock to Cameron Associates for consulting services at $0.90 per share.

     On May 2, 2005 the Company issued 11,000 shares of restricted common stock
     to Cameron Associates for consulting services at $0.68 per share.

     On May 19, 2005 the Company issued 10,000 shares at $0.25 per share for
     cash.

     On June 1, 2005 the Company issued 13,000 shares of restricted common stock
     to Cameron Associates for consulting services at $0.60 per share.

     On June 16, 2005 the Company issued 66,000 shares to two consultants for
     services at $0.55 per share.

     On June 23, 2005, the Company consummated the private sale of 700,000
     restricted common shares and warrants to purchase 175,000 shares at $1.00
     for three years, for $385,000. Costs of issuance totaled $47,518.

     On July 1, 2005 the Company issued 13,000 shares of restricted common stock
     to Cameron Associates for consulting services at $0.39 per share.

     On August 1, 2005 the Company issued 13,000 shares of restricted common
     stock to Cameron Associates for consulting services at $0.40 per share.

     On September 23, 2005 the Company issued 212,121 shares of restricted
     common stock and three year warrants to purchase 250,000 common shares at
     $1.50 per share for the remaining 50% interest in its joint venture with U
     Love Kids, an entity controlled by a stockholder of the Company. The market
     value of the shares issued was $70,000 ($0.33 per share as quoted on the
     OTCBB) and the value of the warrants was estimated to be $30,000.

     On October 21, 2005 the major stockholder exchanged $32,000 of reimbursable
     expenses owed to him by the Company for 145,455 restricted shares of the
     Company's common stock at a per share price of $0.22.

     On December 28, 2005 the major stockholder exchanged $20,500 of
     reimbursable expenses and $6,500 of accrued salary owed to him by the
     Company, an aggregate amount of $27,000, for 90,000 restricted shares of
     the Company's common stock at a per share price of $0.30.

                                      F-8
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     RELATED PARTY STOCK TRANSACTIONS AND OTHER STOCK TRANSACTIONS (Continued)

     On December 28, 2005 the Company issued 33,333 shares of restricted common
     stock to Thomas Hill, a director of the Company, for services at $0.30 per
     share.

     On December 30, 2005 the Company issued 59,000 shares of restricted common
     stock to consultants for services at $0.24.

     On January 9, 2006, the Company issued 500,000 shares at $0.25 per share
     for cash.

     On March 6, 2006, the Company issued 80,000 shares of restricted common
     stock to Cameron Associates for consulting services at $0.31 per share.

     On June 8, 2006, the Company consummated the private sale of 625,000
     restricted common shares at $0.40 per share.

     On September 29, 2006, the Company consummated the private sale of 666,667
     restricted common shares at $0.35 per share.

     On October 2, 2006, the Company issued 100,000 shares of restricted common
     stock to Cameron Associates for consulting services at $0.30 per share.

     On November 13, 2006, the Company consummated the private sale of 333,333
     restricted common shares at $0.35 per share.

     On November 21, 2006, the Company issued 25,000 shares of restricted common
     stock to Jeffrey Meshel, a director of the Company, for services at $0.38
     per share.

     USE OF ESTIMATES

     The preparation of the financial statements, in conformity with accounting
     principles generally accepted in the United States of America, requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and disclosure of contingent assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenue and expenses during the reporting period. Actual results
     could differ from those estimates.

     SIGNIFICANT ESTIMATES

     Several areas require management's estimates relating to uncertainties for
     which it is reasonably possible that there will be a material change in the
     near term. The more significant areas requiring the use of management
     estimates related to valuation of website development costs, film library,
     accrued liabilities and the useful lives for amortization and depreciation.

                                      F-9
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     RESEARCH AND DEVELOPMENT COSTS

     Research and development costs are expensed as incurred. There were no
     research and development costs for the years ended December 31, 2006 and
     2005.

     REVENUE RECOGNITION

     The Company recognizes revenue when there is persuasive evidence of an
     arrangement, delivery has occurred, the fee is fixed or determinable,
     collectibility is reasonably assured, and there are no substantive
     performance obligations remaining. The Company's revenue recognition
     policies are in conformity with the AICPA's Statement of Position No. 97-2,
     "Software Revenue Recognition", as amended ("SOP 97-2").

     SOP 97-2 generally requires revenue from software arrangements involving
     multiple elements to be allocated to each element of the arrangement based
     on the relative fair values of the elements, such as software products,
     post-contract customer support, installation, or training and recognized as
     the element is delivered and the Company has no significant remaining
     performance obligations. The determination of fair value is based on
     objective evidence that is specific to the vendor. If evidence of fair
     value for each element of the arrangement does not exist, and the only
     outstanding deliverable is post-customer support, all revenue from the
     arrangement is recognized ratably over the term of the arrangement.

     Revenue from website portal services is recognized as the services are
     performed. The web-site portal service revenues are derived from a
     combination of fees, which are prepackaged individually for each customer.
     The customers buy a combination of items specific to their individual
     needs, upon which revenues are derived.

     The Company charges a per-client, per-month repetitive web-site maintenance
     service fee. Customer payments received in advance for providing
     maintenance services are recorded as deferred revenue and are then
     recognized proportionately as the maintenance services are performed.
     Deferred revenue totaled $31,602 at December 31, 2006 and $26,174 at
     December 31, 2005.

     Revenues generated in exchange for advertising services are valued at the
     fair value of the services exchanged, based on the Company' s own
     historical practice of receiving cash, or other consideration that is
     readily convertible to known amounts of cash for similar advertising from
     buyers unrelated in the barter transaction. During the years ended December
     31, 2006 and 2005, revenues derived from barter transactions were not
     significant.

     Revenues generated from the sale of CD/DVDs of its record master are
     recognized net of a reserve for returns when the product is shipped to the
     customer in accordance with the terms of the customer's order, the price
     has been agreed upon, and collection is reasonably assured. At December 31,
     2006 a reserve for returns of $7,190 is included in accrued liabilities.

                                      F-10
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     REVENUE RECOGNITION (Continued)

     Revenues recognized in 2006 and 2005 related to licensing agreements of the
     Company's "film library", totaled $11,330 and $23,206. The revenue from the
     Howdy Doody episodes are recognized in accordance with Statement of
     Position ("SOP") 00-2, Accounting by Producers or Distributors of Films.
     The SOP specifies that revenue is to be recognized when all of the
     following conditions are met:

     1.   Persuasive evidence of a sale or licensing arrangement with a customer
          exists.

     2.   The film is complete and, in accordance with the terms of the
          arrangement, has been delivered or is available for immediate and
          unconditional delivery.

     3.   The license period of the arrangement has begun and the customer can
          begin its exploitation, exhibition, or sale.

     4.   The arrangement fee is fixed or determinable.

     5.   Collection of the arrangement fee is reasonably assured.

     When the Company's fee is based on a percentage or share of a customer's
     revenue from the exploitation of the Howdy Doody episodes, the Company
     recognizes revenue as the customer exploits the episodes and the Company
     meets all of the other revenue recognition conditions. In those
     circumstances the Company receives reports from the customers on a periodic
     basis and uses those reports as the basis for recording revenue.

     CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid debt investments with a maturity of
     three months or less as cash equivalents.

     EQUIPMENT

     Expenditures for maintenance, repairs and betterments, which do not
     materially extend the normal useful life of an asset, are charged to
     operations as incurred. Upon sale or other disposition of assets, the cost
     and related accumulated depreciation are removed from the accounts and any
     resulting gain or loss is reflected in income.

     Depreciation and amortization are provided for financial reporting
     primarily on the accelerated and the straight-line methods over the
     estimated useful lives of the respective assets as follows:

                                            Estimated
                                           Useful Life
                                           -----------

               Computer equipment            5 years

                                      F-11
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     LONG-LIVED ASSETS

     The carrying values of long-lived assets are periodically reviewed by
     management and impairments are recognized if the expected future non
     discounted cash flows derived from an asset are less than carrying value.

     OTHER ASSETS

     The Company capitalizes computer software development costs in accordance
     with the provisions of Statement of Financial Accounting Standards No. 86,
     "Accounting for the Costs of Computer Software to be Sold, Leased or
     Otherwise Marketed" ("SFAS No. 86"). SFAS No. 86 requires that the Company
     capitalize computer software development costs upon the establishment of
     the technological feasibility of a product, to the extent that such costs
     are expected to be recovered through future sales of the product.
     Management is required to use professional judgment in determining whether
     development costs meet the criteria for immediate expense or
     capitalization. These costs are amortized by the greater of the amount
     computed using (i) the ratio that current gross revenues from the sales of
     software bear to the total of current and anticipated future gross revenue
     from the sales of the software or (ii) the straight line method over the
     estimated useful life of the product. As a result, the carrying amount of
     the capitalized software costs may be reduced materially in the near term.

     Statement of Position 98-1, "Accounting for the Costs of Computer Software
     Development For or Obtained for Internal Use" ("SOP 98-1") requires
     capitalization of certain cost incurred in the development of content for
     the Company's website, and web site maintenance costs to be expensed as
     incurred.

     The Company capitalized in October 2000, $225,000 in website and software
     development costs. The capitalized costs, which are the outside consulting
     fees charged by 411now.com, Inc., are amortized to cost of sales based on
     the estimated useful life (5 years). Amortization expense for software
     development totaled $0 and $33,763 for the years ended December 31, 2006
     and 2005.

     The trademark was placed in service September 2001 and cost approximately
     $4,000. Amortization expense was $400 and $400 for the years ended December
     31, 2006 and 2005.

     AMORTIZATION AND IMPAIRMENT OF FILM LIBRARY

     The Company amortizes the License and Agreement asset to the Howdy Doody
     films using the individual-film-forecast-computation method, in accordance
     with SOP 00-2, which amortizes or accrues (expenses) such costs in the same
     ratio that current period actual revenue (numerator) bears to estimated
     remaining unrecognized ultimate revenue as of the beginning of the current
     fiscal year (denominator). The Company began amortization of the
     capitalized film library in 2004, when the Company began to recognize
     revenue from the Howdy Doody tapes. Amortization related to the film
     library was $9,585 and $8,461 for the years ended December 31, 2006 and
     2005, which amounts were included in cost of sales.

                                      F-12
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     AMORTIZATION AND IMPAIRMENT OF FILM LIBRARY (Continued)

     Ultimate revenue to be included in the denominator of the
     individual-film-forecast-computation method fraction is subject to certain
     limitations as set forth in the SOP.

     During the course of the Company's strategic review of its entertainment
     properties, specifically its Howdy Doody film library, the Company assessed
     the recoverability of the carrying value of this asset which resulted in
     impairment losses of $290,530 for the year ended 2006 and $482,165 for the
     year ended 2005. This loss reflects the amount by which the carrying value
     of this asset exceeds the estimated fair value, determined by its estimated
     future discounted cash flows. The impairment loss is recorded as a
     component of "Operating expenses" in the Statement of Operations.

     If an event or change in circumstance indicates that the Company should
     assess whether the fair value of the License and Agreement to the Howdy
     Doody episodes is less than its unamortized costs, the Company will
     determine the fair value of the film and write off to the statement of
     operations the amount by which the unamortized capitalized costs exceeds
     the episode's fair value. The Company can not subsequently restore any
     amounts written off in previous fiscal years to income.

     AMORTIZATION AND IMPAIRMENT OF RECORD MASTER

     The Company has capitalized the costs of recording and producing its "Songs
     From The Neighborhood - A Tribute To Mr. Rogers" in accordance with SFAS
     50, "Financial Reporting in the Record and Music Industry", a total of
     $210,032. The Company expects to sell 200,000 of its CD/DVDs and is
     amortizing the capitalized costs ratably over those sales. The Company
     began amortization of the capitalized record master in 2005, when the
     Company began to recognize revenue from sales of the recordings.
     Amortization related to the record master was $9,165 for the year ended
     December 31, 2006 and $11,579 for the year ended December 31, 2005, which
     amounts were included in cost of sales.

     During the course of the Company's strategic review of its entertainment
     properties, specifically its Mr. Rogers record master, the Company assessed
     the recoverability of the carrying value of this asset which resulted in
     impairment losses of $167,594. This loss reflects the amount by which the
     carrying value of this asset exceeds the estimated fair value, determined
     by its estimated future discounted cash flows. The impairment loss is
     recorded as a component of "Operating expenses" in the Statement of
     Operations.

     If an event or change in circumstance indicates that the Company should
     assess whether the fair value of its record master is less than its
     unamortized costs, the Company will determine the fair value of the record
     master and write off to the statement of operations the amount by which the
     unamortized capitalized costs exceeds the record master's fair value. The
     Company can not subsequently restore any amounts written off in previous
     fiscal years to income. No impairment loss was recorded in 2005.

                                      F-13
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     START-UP COSTS

     The Company, in accordance with the provisions of the American Institute of
     Certified Public Accountants Statement of Position (SOP) 98-5, "Reporting
     on the Costs of Start-up Activities, expensed all start-up and
     reorganization costs as they incurred.

     CONCENTRATION OF CREDIT RISK

     Financial instruments that potentially subject the Company to credit risk
     consist principally of trade receivables. The Company extends credit to a
     substantial number of its customers and performs on going credit
     evaluations of those customers financial condition while, generally
     requiring no collateral. At December 31, 2006 and 2005 the Company recorded
     a bad debt allowance of $0 and $3,500 for such receivables.

     FAIR VALUE OF FINANCIAL INSTRUMENTS

     Financial instruments reported in the Company's consolidated balance sheet
     consist of cash, prepaid expenses, accounts payable, notes payable and
     accrued expenses, the carrying value of which approximate fair value at
     December 31, 2006.

     EARNINGS PER SHARE

     The Company accounts for earnings per share under the provisions of
     Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
     Share", which requires a dual presentation of basic and diluted earnings
     per share. Basic earnings per share excludes dilution and is computed by
     dividing income available to common stockholders by the weighted average
     number of common shares outstanding for the period. Diluted earnings per
     share is computed assuming the conversion of convertible preferred stock
     and the exercise or conversion of common stock equivalent shares, if
     dilutive, consisting of unissued shares under options and warrants. Basic
     and diluted losses are the same as the inclusion of unissued warrants and
     options in the denominator would be antidilutive.

     ADVERTISING COSTS

     All costs associated with advertising and promoting products are expensed
     in the year incurred. Advertising expense was $8,450 and $5,120 for the
     years ended December 31, 2006 and 2005, respectively.

                                      F-14
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     INCOME TAXES

     Income taxes are accounted for under the asset and liability method in
     accordance with Statement of Financial Accounting Standard No. 109
     "Accounting for Income Taxes" ("FAS 109"). Deferred tax assets and
     liabilities are recognized for the future tax consequences attributable to
     differences between the financial carrying amounts of existing assets and
     liabilities and their respective tax bases and operating loss and tax
     credit carry forwards. Deferred tax assets and liabilities are measured
     using enacted tax rates expected to apply to taxable income in the years in
     which those temporary differences are expected to be recovered or settled.
     The effect on deferred tax assets and liabilities of a change in tax rates
     is recognized in income in the period that includes the enactment date.
     Deferred tax assets are reduced by a valuation allowance to the extent that
     the recoverability of the asset is not considered to be more likely than
     not.

     The Company did not provide any current or deferred income tax provision or
     benefit for any periods presented to date because it has experienced a net
     operating loss since inception, and has taken a full valuation allowance
     against all deferred tax assets.

     NEW ACCOUNTING PRONOUNCEMENTS

     In February 2006, the Financial Accounting Standards Board ("FASB") issued
     SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments - an
     amendment of FASB Statements No. 133 and 140". The statement permits fair
     value remeasurement for any hybrid financial instrument that contains an
     embedded derivative that otherwise would require bifurcation, clarifies
     which interest-only strips are not subject to the requirements of Statement
     133, establishes a requirement to evaluate interests 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 Statement
     140 to eliminate the prohibition on a qualifying special-purpose entity
     from holding a derivative financial instrument that pertains to a
     beneficial interest other than another derivative financial instrument. The
     Statement is effective for financial instruments acquired or issued after
     the beginning of the first fiscal year that begins after September 15,
     2006. The Company expects that the Statement will have no material impact
     on its financial statements.

     In February 2006, the FASB issued Staff Position No. FAS 123(R)-4,
     "Classification of Options and Similar Instruments Issued as Employee
     Compensation That Allow for Cash Settlement upon the Occurrence of a
     Contingent Event". This position addresses the classification of options
     and similar instruments issued as employee compensation that allow for cash
     settlement upon the occurrence of a contingent event, amending paragraphs
     32 and A229 of SFAS No. 123 (revised 2004), "Share-Based Payment". As the
     Company has not traditionally issued securities subject to contingencies,
     no impact is expected on its financial statements.

                                      F-15
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     FASB Interpretation No. ("FIN") 48, Accounting for Uncertainty in Income
     Taxes--an Interpretation of FASB Statement No. 109. In July 2006, the FASB
     issued FIN 48, Accounting for Uncertainty in Income Taxes--an
     Interpretation of FASB Statement No. 109, which clarifies the accounting
     for uncertainty in tax positions. This Interpretation requires the Company
     to recognize in its consolidated financial statements the impact of a tax
     position if that position is more likely than not of being sustained on
     audit, based on the technical merits of the position. The provisions of FIN
     48 are effective for the Company on January 1, 2007, with the cumulative
     effect of the change in accounting principle, if any, recorded as an
     adjustment to opening retained earnings. The Company does not believe FIN
     48 will have an impact on its consolidated financial statements.

     SFAS 157, Fair Value Measurements. In September 2006, the FASB issued SFAS
     157, Fair Value Measurements, which defines fair value, establishes a
     framework for measuring fair value in generally accepted accounting
     principles, and expands disclosures about fair value measurements. SFAS 157
     applies under other accounting pronouncements that require or permit fair
     value measurements, where fair value is the relevant measurement attribute.
     The standard does not require any new fair value measurements. SFAS 157 is
     effective for financial statements issued for fiscal years beginning after
     November 15, 2007, and interim periods within those fiscal years. The
     Company is currently evaluating the impact of adopting SFAS 157 on its
     consolidated financial statements.

     Staff Accounting Bulletin ("SAB") No. 108

     In September 2006, the SEC issued SAB No. 108, which provides guidance on
     the process of quantifying financial statement misstatements. In SAB No.
     108, the SEC staff establishes an approach that requires quantification of
     financial statement errors, under both the iron-curtain and the roll-over
     methods, based on the effects of the error on each of the Company's
     financial statements and the related financial statement disclosures. SAB
     No.108 is generally effective for annual financial statements in the first
     fiscal year ending after November 15, 2006. The transition provisions of
     SAB No. 108 permit existing public companies to record the cumulative
     effect in the first year ending after November 15, 2006 by recording
     correcting adjustments to the carrying values of assets and liabilities as
     of the beginning of that year with the offsetting adjustment recorded to
     the opening balance of retained earnings. Management does not expect that
     the adoption of SAB No.108 would have a material effect on the Company's
     consolidated financial statements.

     The Company is currently evaluating the effect of other new accounting
     pronouncements on its future statements of financial position and results
     of operations.

                                      F-16
<PAGE>

2.   EQUIPMENT

     Equipment at cost consists of computer equipment and software. Depreciation
     expense for the years ended December 31, 2006 and 2005 was $1,832 and
     $2,380.

3.   INCOME TAXES

     The Company has implemented SFAS No. 109, "Accounting for Income Taxes",
     which provides for a liability approach to accounting for income taxes.
     Total deferred tax assets and liabilities at December 31 are as follows:

                                               2006               2005
                                               ----               ----
     Deferred tax assets Tax NOL           $1,673,624         $1,225,537
     Valuation Allowance                   (1,673,624)        (1,225,537)

     The Company has available at December 31, 2006, unused federal and state
     net operating loss carryforwards totaling $4,187,059 that may be applied
     against future taxable income that expire in the years 2007 through 2021.
     The tax benefit of these net operating loss carryforwards, based on an
     effective tax rate of 40% is approximately $ 1,673,624. Management believes
     it is more likely than not that all of the deferred tax asset will not be
     realized. A valuation allowance has been provided for the entire deferred
     tax benefit.

4.   LEGAL PROCEEDINGS

     From time to time, the Company has disputes that arise in the ordinary
     course of its business. Currently, according to management, there are no
     material legal proceedings to which the Company is party or to which any of
     its property is subject.

5.   COMMITMENTS AND CONTINGENCIES

     The Company has an employment agreement with the major stockholder
     providing for certain guaranteed payments starting January 1, 2005 and
     ending December 31, 2008. The terms of this employment agreement call for
     an annual salary of $52,000 plus other standard employee benefits.

     The Company has a non-cancelable operating lease for office space with an
     unrelated party. The lease began March 1, 2004 and expires February 28,
     2009. Minimum payments under the agreement are set forth in the following
     table:

                                                  Minimum lease
               Year ended December 31,          payment required:
               -----------------------          -----------------
                       2007                         $  48,928
                       2008                            50,433
                       2009                            52,027
                                                    ---------
                      Total                         $ 151,388

                                      F-17
<PAGE>

6.   OPERATING SEGMENTS

     The Company has two reportable segments: (1) entertainment properties which
     includes audio and video products and (2) branded services which includes
     the branded websites and branded loyalty rewards programs, all their
     products are sold in the United States. These operating segments were
     determined based on the nature of the products and services offered. The
     segments share a common workforce and office headquarters, which include an
     allocation of all overhead components. Overhead items that are specifically
     identifiable to a particular segment are applied to such a segment. The
     following table reflect the operations of the Company's reportable
     segments:
<TABLE>
<CAPTION>
        TWELVE MONTHS ENDED               BRANDED      ENTERTAINMENT     CORPORATE      CONSOLIDATED
         DECEMBER 31, 2006                SERVICES      PROPERTIES       AND ELIM.         TOTAL
-----------------------------------      ---------     -------------     ---------      ------------
<S>                                      <C>           <C>               <C>            <C>
Net Sales (2) .....................      $ 377,431       $  56,289              -       $   433,720
Depreciation & Amortization (3) ...          2,232          18,750              -            20,982
Asset Impairment (4) ..............              -         458,124              -           458,124
Segment (Loss) Income before taxes        (336,552)       (646,712)      (136,953)       (1,120,217)
Segment assets (1) ................         63,768         132,990        145,895           342,653
Expenditures for segment assets (3)              -               -              -                 -

<CAPTION>
        TWELVE MONTHS ENDED               BRANDED      ENTERTAINMENT     CORPORATE      CONSOLIDATED
         DECEMBER 31, 2005                SERVICES      PROPERTIES       AND ELIM.         TOTAL
-----------------------------------      ---------     -------------     ---------      ------------
<S>                                      <C>           <C>               <C>            <C>
Net Sales (2) .....................      $  55,243       $ 121,479              -       $   176,722
Depreciation & Amortization (3) ...         35,002          21,181              -            56,183
Asset Impairment (4) ..............              -         482,165              -           482,165
Segment (Loss) Income before taxes        (387,599)       (552,036)      (133,108)       (1,072,743)
Segment assets (1) ................         19,328         710,131            604           730,063
Expenditures for segment assets (3)          5,495         107,532              -           113,027
</TABLE>
(1)  Total Business assets are owned or allocated assets used by each business.
     Corporate assets consist of cash and cash equivalents, marketable
     securities and certain other assets.

(2)  Branded Services two year comparative segment revenue follows;

     (a)  Gift Cards generated $271,777 in revenue for the fiscal year ending
          December 31, 2006, as compared to $724 for the fiscal year ended
          December 31, 2005.

     (b)  BSP Reward program generated $34,148 in revenue for the fiscal year
          ended December 31, 2006, as compared to $1,058 for the fiscal year
          ended December 31, 2005.

     (c)  Design and Hosting generated $67,573 in revenue for the fiscal year
          ended December 31, 2006, as compared to $49,544 for the fiscal year
          ended December 31, 2005.

     (d)  Other items generated $3,933 in revenue for the fiscal year ended
          December 31, 2006, as compared to $3,917 for the fiscal year ended
          December 31, 2005.

                                      F-18
<PAGE>

     (3)  Corporate property additions, depreciation and amortization expense
          include items attributable to the unallocated fixed assets of support
          divisions and common facilities.

     (4)  Asset impairment attributable to our strategic review of assets,
          comparing undiscounted cash flows against carrying values.

     Operating segments are defined as components of an enterprise about which
     separate financial information is available that is evaluated regularly by
     the chief operating decision-maker in deciding how to allocate resources
     and in assessing performance. The Company's chief executive officer and
     chief financial officer have been identified as the chief decision makers.
     The Company's chief operation decision makers direct the allocation of
     resources to operating segments based on the profitability and cash flows
     of each respective segment.

     The Company evaluates performance based on several factors, of which the
     primary financial measure is business segment income before taxes.

7.   WARRANTS AND STOCK OPTIONS

     On October 29, 2004 the Company adopted an Incentive and Non-Statutory
     Stock Option Plan. Pursuant to the Plan, the Company may grant incentive
     and non-statutory (nonqualified) stock options to officers, employees,
     directors, and certain other persons who provide services to the Company or
     its subsidiaries. A total of 350,000 shares of common stock have been
     reserved for issuance under the Plan. Non-employee directors may be granted
     options to purchase 5,000 shares of the Company's common stock upon their
     initial election or appointment to the board. Incentive options may not be
     granted to a more than 10% stockholder.

     The maximum term of options granted under the Plan is ten years. Options
     granted are nontransferable and generally expire within three months after
     the termination of the grantee's service. The exercise price of incentive
     stock options must not be less than the fair value of the common stock on
     the date of the grant. The authority to grant new options under the Plan
     will terminate on October 29, 2014, unless the Plan is terminated prior to
     that time by the board of directors.

     On January 18, 2005 the Company granted a total of 50,000 non-qualified
     stock options to two employees, in accordance with the Incentive and
     Non-Statutory Stock Option Plan. The options vest from 2005 to 2007 and are
     exercisable at $0.45 per share. On August 2, 2005 the Company granted a
     total of 25,000 non-qualified stock options to a director, in accordance
     with the Incentive and Non-Statutory Stock Option Plan. The options vest
     from 2005 to 2007 and are exercisable at $0.19 per share.

     On December 6, 2006 the Company granted a total of 75,000 non-qualified
     stock options to a director, in accordance with the Incentive and
     Non-Statutory Stock Option Plan. The options vest from 2006 to 2008 and are
     exercisable at $0.18 per share.

                                      F-19
<PAGE>

     The issuances of stock options are accounted for using the fair value
     method in accordance with SFAS No. 123, "Accounting for Stock Based
     Compensation". Accordingly, compensation expense is recognized over the
     vesting period. Compensation expense recorded due to stock option vesting
     was $38,154 and $42,112 for the years ended December 31, 2006 and 2005.

8.   WARRANTS AND STOCK OPTIONS (Continued)

     Stock option and warrant transactions are summarized as follows:

                                           Stock Options       Warrants
                                           2006     2005     2006     2005
                                         -------  -------  -------  -------
     Outstanding - beginning of year ..  165,000   90,000  495,000  458,000
     Granted ..........................  100,000   75,000        -  495,000
     Exercised ........................        -        -        -   58,000
     Forfeited ........................        -        -        -  400,000
                                         -------  -------  -------  -------
     Outstanding - end of year ........  265,000  165,000  495,000  495,000
                                         =======  =======  =======  =======

     The following table provides certain information with respect to the above
     referenced stock options outstanding at December 31, 2006:

                                                    Weighted        Weighted
                                      Number         Average     Average Life -
                    Exercise Price  Outstanding  Exercise Price      Years
                    --------------  -----------  --------------  --------------
     Stock options  $0.18 - $0.45     265,000         $0.26           3.7
     Warrants       $0.55 - $1.50     495,000         $1.20           2.0

     The following table provides certain information with respect to stock
     options exercisable at December 31, 2006:

                                                    Weighted
                                       Number        Average
                    Exercise Price  Outstanding  Exercise Price
                    --------------  -----------  --------------
     Stock options  $0.18 - $0.45     173,331         $0.27
     Warrants       $0.55 - $1.50     495,000         $1.20

     The weighted average fair value at date of grant for options granted during
     2006 was $0.18, and was estimated using the Black-Scholes option valuation
     model with the following assumptions:

          Expected life in years       5
          Interest rate              4.35%
          Volatility                100.56%
          Dividend yield              0%

                                      F-20
<PAGE>

9.   SUBSEQUENT EVENTS

     On January 23, 2007 the company issued 40,000 shares of restricted common
     stock to Joseph Porrello. Mr. Porrello (a Director) exercised his stock
     option to purchase 40,000 shares valued at $0.26 per share. The securities
     were sold based on the exemption from registration provided by Section 4
     (2) of the Securities Act of 1933, in that these shares were acquired for
     investment purposes only. A restrictive legend was placed on the
     certificate issued.

     On January 23, 2007 the Company issued 25,000 shares of restricted common
     stock to Robert Hussey for consulting services valued at $0.40 per share.
     The $0.40 per share price is consistent with the market price of the
     Company's stock as quoted on the OTC Bulletin Board on January 23, 2007.
     The securities were sold based on the exemption from registration provided
     by Section 4 (2) of the Securities Act of 1933, in that these shares were
     acquired for investment purposes only. A restrictive legend was placed on
     the certificate issued.

     On January 23, 2007, the Company issued options to purchase 75,000 shares
     of common stock to a director. The options are exercisable at $0.20 per
     share, which represents 50% of the closing bid price per share of the
     company's common stock on January 23, 2007.

     On February 2, 2007, the Company consummated the private sale of 285,715
     shares to one (1) accredited investor, at a price of $0.35 per share. The
     total offering price was $100,000. The securities were sold based on the
     exemption from registration provided by Section 4 (2) of the Securities Act
     of 1933, in that these shares were acquired for investment purposes only. A
     restrictive legend was placed on the certificate issued.

                                      F-21