U.S. Securities and Exchange CommissionWashington, D.C. 20549   FORM 10-KSB/A   (Mark One)xAnnual Report under Section 13 or 15(d) of the Securities Exchange Act of
  1934For
  the Fiscal Year Ended June 30, 2006.ORoTransition Report under Section 13 or 15(d) of the Securities Exchange Act of
  1934For
  the Transaction Period from ________ to ________.oIndicate by checkmark whether the registrant is a shell company (as defined
  in Rule 12b-2 of the       Exchange Act.oYes x No.   Commission File Number: 333-60958 SIBLING ENTERTAINMENT GROUP, INC.
(Name of Small Business Issuer in its Charter) New York

13-3963541(State or other jurisdiction of Incorporation or
organization)

(IRS Employer Identification No.) 511 West 25th Street, Suite 503
New York, NY 10001 (Address of principal office including Zip Code) (212) 414-9600 (Issuers telephone number)   Securities registered under Section 12(b) of the Exchange Act: None Securities
registered under Section 12(g) of the Exchange Act: None Check whether
the issuer: (1) filed all reports to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes
x   No o Check if there
is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
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. x State issuers revenues for its most recent fiscal year: $153,629 1    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 (see definition of affiliate
in Rule 12b-2 of the Exchange Act.): $4,274,454
as of the time of this filing based on the Companys offering price of its
common shares of $0.35 per share in its most recent private placement.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)

Check
whether the issuer has filed all documents and reports required to be filed by
Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.

Yes:
o   No: o

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the
number of shares outstanding of each of the issuers classes of common equity,
as of the latest practicable date: 30,521,330
shares of common stock were outstanding as of October 23, 2006.

Transitional
Small Business Disclosure Format (check one):

Yes:
o   No: x


DOCUMENTS INCORPORATED BY REFERENCE

If the
following documents are incorporated by reference, briefly describe them and
identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which
the document is incorporated: (1) any annual report to security holders; (2)
any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 (Securities Act). The listed
documents should be clearly described for identification purposes (e.g.,
annual report to security holders for fiscal year ended December 24, 1990).

None.

2

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Form 10-KSB
Year Ended June 30, 2006

TABLE OF
CONTENTS




PAGEPART IItem 1. Description of Business

4Item
  2. Description of Property

16Item
  3. Legal Proceedings

16Item
  4. Submissions of Matters to a Vote of Security Holders

16PART IIItem
  5. Market For Common Equity and Related Stockholder Matters

16Item
  6. Managements Discussion and Analysis or Plan of Operation

16Item
  7. Financial Statements

F-1  F-29Item
  8. Changes in and Disagreements with Accountants on Accounting and Financial
  Disclosures

21Item
  8A. Controls and Procedures

21Item
  8B. Other Information

21PART IIIItem
  9. Directors, Executive Officers, Promoters and Control Persons; Compliance
  with Section 16(a) of the Exchange Act

23Item
  10. Executive Compensation

25Item
  11. Security Ownership of Certain Beneficial Owners and Management and
  Related Stockholder Matters

26Item
  12. Certain Relationships and Related Transactions

27Item
  13. Exhibits

27Item
  14. Principal Accountant Fees and Services

283

EXPLANATORY NOTE


This Amendment No. 1 on Form
10-KSB/A, which amends and restates items identified below with respect to the Form
10-KSB/A, filed by Sibling Entertainment Group, Inc. (we or the
Company) with the Securities and Exchange Commission (the SEC) on
December 13, 2006 (the Original Filing), being filed to reflect the amendment
to the description of our financial statements for the year ended June 30, 2006.


Our management concluded that the
Companys previously filed financial statements did not clearly indicate that our
current auditors did not audit our cumulative information as shown on our financial
statements. To correct this, we have clearly indicated that the cumulative information on
our financial statements is unaudited and have included a footnote which states that our
current auditors did not audit the financial statements for the period of Development
Stage July 1, 2000 through June 30, 2004, as current auditors were engaged on May 12,
2005, and that our previous auditors are no longer doing business as a CPA firm. In
addition, our auditors have revised the audit opinion letter to clearly reflect this
circumstance.


This Form 10-KSB/A only amends and
restates certain information in Item 1 (Financial Statements), and such amendment and
restatement with respect to Item 1 only reflects the restatement of the financial
statements as described above. These changes represent revisions to language only in our
financial statements. These changes do not present a quantitative impact to our financial
statements. The Company will restate in its financial statement disclosures, as follows.
Except for the foregoing amended and restated information, this Form 10-KSB/A continues to
describe conditions as of the date of the Original Filing, and the disclosures contained
herein have not been updated to reflect events, results or developments that have occurred
after the Original Filing, or to modify or update those disclosures affected by subsequent
events. Among other things, forward-looking statements made in the Original Filing have
not been revised to reflect events, results or developments that have occurred or facts
that have become known to us after the date of the Original Filing (other than the
restatement), and such forward-looking statements should be read in their historical
context. This Form 10-KSB/A should be read in conjunction with the Companys filings
made with the SEC subsequent to the Original Filing, including any amendments to those
filings.

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

PART I

ITEM 1.
DESCRIPTION OF BUSINESSA. Overview

We are engaged
in the finance, development and production of entertainment projects and
properties including plays, musicals for the live stage, independent feature
films and other entertainment projects as well as the management of projects
including the management of entertainment based real estate properties.
References herein to the Company, we, us, or our refers to Sibling
Entertainment Group, Inc. (formerly Amici Ventures, Inc.) and its wholly owned
subsidiaries.

We currently
operate four divisions including live-stage theatrical production, independent
feature film production, theatrical real estate and theatrical management, and
music publishing and distribution under the following subsidiaries: Sibling
Theatricals, Inc. (STI), Sibling Pictures, Inc.(SPI), Sibling Properties,
Inc.(SPPI) and Sibling Music Corporation (SMC), respectively. We are also
pursing the acquisition of a music publishing and/or distribution company, and
a theater ticket brokerage and group sales company. Each division actively
pursues to identify, select, finance, develop and produce one or more unique
project or properties correlating with the primary activity of the division.
Our strategy will also include the coordination of synergetic elements between
divisions to provide optimal development for each project or property.

Our theatrical
division under STI is actively engaged in several new theatrical properties
including the development of a new musical entitled HATS! licensed from and in
association with the Red Hat Society, Inc. (a private Nevada Corporation
operating international with over 1.5 million members). This project will be
operated under HATS Holding, Inc. (a Delaware Company) to license or produce
HATS!, including the world premiere in Denver, Colorado opening October 7,
2006. Our film division through one or more subsidiaries has formed a film fund
organized to finance two or three independent films. Our theatrical management
division and our theatrical real estate division are actively engaged in
representing clients including the management of their projects and properties
(see Current Operations).

Each project
whether a play, a musical, an independent film, an author, a theatre or other
commercial exploitation, will be organized and managed through either a limited
liability company, limited partnership or other variable interest entity. The
majority of projects will be financed through the sale of limited interests
therein to high net worth accredited investors investors, corporate sponsors,
theatre owners, strategic partners and other supporters of performing arts in
film and theatre developed by us and through certain of our officers and
directors during their careers. Our control or ownership of any single project
or property may vary from a small token interest to partial or joint management
and control to total ownership, management or control.

To date, the
origination, management, executive producer and administrative fees we charge
each client, or each project during the initial stages of a projects
development, together with the participation and receipt of ongoing fees,
royalties and distributions of profits from retained interests, has been the
primary source of our revenues. In the future, it is anticipated that gross box
office income will become the primary source of our revenues.

B. Corporate History

Sibling
Entertainment Group, Inc., formerly Amici Ventures, Inc., (SEGI) was
organized under the laws of the State of New York in September 1995. In 1997,
we acquired Maxwell Entertainment, Inc. (MEI) from Mitchell Maxwell and
Victoria Maxwell and originally engaged in the development and production of
entertainment properties including plays, musicals for the live stage,
independent feature films and other entertainment projects.

In November
1999, we formed the AM Films division coincident with acquiring the broadband
distribution rights to a motion picture library from Dream, LLC (Dream) and
began to reduce our interest in and pursuit of the development and production
of plays, musicals and films. Later, we solely focused on the pursuit and
distribution of

4

SIBLING ENTERTAINMENT GROUP, INC. (A Development Stage
Company)

motion
pictures primarily over the Internet. This decision and refocus of our
operational plans away from production of live stage properties and independent
feature films led to Mitchell Maxwells and Victoria Maxwells resignation as
officers and directors.

In November,
1999, the Company acquired from a party related to its former president, an
exclusive license to distribute a library of approximately 150 motion pictures
to render video-on-demand webcasters to distribute these titles. With the
change in control of the Company on October 8, 2003, and management's focus on
other revenue source opportunities unrelated to video-on-demand over the
internet market, the motion picture rights were terminated. The write-off of
the investment in motion pictures rights in the amount of $33,400 is included
in the statement of operations for the year ended June 30, 2004. This
investment was valued at cost.

After several
years attempting to establish secure sufficient distributors and successfully
deliver our films through direct online methods, and failing to secure
necessary financing to sustain and market this emerging market, we sought to
refocus its business direction to other areas of the entertainment industry not
burdened by increasing technological and legal barriers. This realization
supported our move away from the Internet video-on-demand business.

This change
ultimately led to a change in our management and control in October 2003 and a
return to our original core operational plan to pursue the finance and
production of live-stage theatrical, independent feature films and theatrical
real estate and related synergetic businesses. The change of control included
the return of our executive officers and director, Mitchell Maxwell, President
(MM) and Victoria Maxwell, Vice President (VM) along with James Cardwell,
CFO (JC). MM, VM and JC were and continued to be officers and directors of
Sibling Entertainment, Inc., (SEI) a private company engaged in similar
business activities. This close association resulted in our relocation of
corporate offices and the sharing of office overhead costs including the costs
and compensation of its officers and staff with SEI (see Related Party
Activities).

The ownership
percentage and role of our executive officers Mitchell Maxwell, Victoria
Maxwell and James Cardwell at the time of this filing are as follows:

SEGI

SPI

SEIPercent


Role

Percent


Role

Percent


RoleMitchell Maxwell *


7.91
%

President, Director


0.00
%

None


8.22
%

President, DirectorVictoria Maxwell


7.59
%

VP, Secretary, Director


0.00
%

President, Director


4.20
%

VP, Secretary, DirectorJames Cardwell


3.78
%

CFO, Director


0.00
%

Secretary, Director


0.00
%

CFO, DirectorTOTAL


19.28
%




0.00
%

**


12.42
%*
Zachwell, Ltd. is the owner of these shares. Mitchell
  Maxwell is the sole shareholder of Zachwell, Ltd.**
As a result of the acquisition of SPI on June 17, 2005,
  all shareholders of SPI received shares in SEGI.On December
22, 2004, we entered into a non binding letter of intent to acquire SEI which
later expired on March 31, 2005 and any further intent to acquire SEI was
abandoned, but SEGI and SEI continued to share corporate locations and
overheads and pursue their respective projects, properties and similar business
operations.

On June 17,
2005 we entered into a share exchange agreement with Sibling Pictures, Inc.
(SPI) and all of the shareholders of SPI to acquire all of the issued and
outstanding shares of SPI in consideration of the issuance of an aggregate of
10,785,000 shares of the Company's common stock on a basis of 60,000 Company
shares for each share of SPI. Our acquisition of SPI also included its
subsidiary, Sibling Pictures Fund, LLC (SPFLLC), Reel Love on Film LLC
(RLOF) and Reel Love Productions, Inc. (RLPI).

Since October,
2004, the Company has had an agreement with SEI for office space, related
utilities, shipping and management services. On July 1, 2005 the Company agreed
to amend its consulting agreement with SEI whereby management fees decrease
from $21,800 per month to $12,800 per month beginning July 1, 2005. On
September 1, 2005 the consulting agreement was amended whereby management fees
increase to $19,600 per month. These changes were due to the change in
management services being provided by SEI. On February 1, 2006, this

5

SIBLING ENTERTAINMENT GROUP, INC. (A Development Stage
Company)

agreement was
terminated and payments stopped due to the change of management and executive
officers from the employment of SEI to the Company. As of June 30, 2006 there
were no outstanding payables due to SEI for these services.

On January 17,
2006, we entered into employment contracts with MM, VM and JC (the Executive
Employees) for a term of three (3) years.

In addition,
on May 8, 2006, the Company issued to the executive officers, directors and
employees of the Company 1,000,000 warrants in the aggregate. Each of these
warrants have a term of five (5) years and entitle the holder to purchase one
share of the Companys $0.001 par value common stock at a price of $0.275 per
share. These warrants were issued to the following individuals:

Name


WarrantsMitchell
  Maxwell, President & Director


249,000Victoria
  Maxwell, Vice President & Director


249,000James
  Cardwell, CFO & Director


249,000Richard
  Bernstein, Vice President & Director


225,000Christopher
  Denune, Controller


25,000Alexa
  McAllister, Executive Assistant


3,000TOTAL
  WARRANTS


1,000,000On May 8, 2006
the Company entered into an Addendum to the Advisory Services Agreement
(original agreement dated November 4, 2005) with Moneta, constituting a single
integrated written agreement, when read with the Master Consulting Agreement,
whereby the Company shall deliver to Moneta a five (5) year warrant to purchase
an aggregate of up to five million (5,000,000) shares of the Companys common
stock, $0.001 par value per share at an exercise price equal to $0.275 per
share contingent upon the successful merger or the acquisition of the Company
by Sona Development Corp. and on the further condition that Moneta provides the
additional services from the Master Consulting Agreement, including additional
introductions, strategic advice and recommendations as may be necessary for the
successful merger of the acquisition of the Company by Sona Development Corp.
Under the contract the Company shall additionally grant 200,000 warrants to
acquire 200,000 shares of Common Stock at a price of $.50 per share for a
period of five years. Further, under the contract the Company shall grant
Moneta up to 228,000 warrants to purchase 228,000 shares of the Companys
common stock contingent upon Moneta raising its share of the SOFIA movie fund.
This agreement terminated on August 31, 2006 and we expect to enter a renewed
agreement with the same terms extending the time frame with Moneta in the
quarter ended December 31, 2006.

On May 18,
2006, Sona Development Corp. (Sona) (OTCBB:SDVC) announced that it has
executed a letter of intent to purchase 100% of our assets by acquiring all of
our wholly owned subsidiaries and assuming up to $650,000 of debt associated
with the issuance of our Series H Debenture offering. A definitive agreement
was signed on June 28, 2006. On June 28, 2006, a majority of the shareholders
of the Company voted and approved the transaction. Final approval of the Sona
shareholders is being sought.


In
  consideration, Sona will issue to SEGI shares based on the number of SEGI
  shares issued and outstanding as of the date of closing.
The
  subsidiaries are as follows: Sibling Pictures, Inc.; Sibling Theatricals,
  Inc.; Sibling Music Corporation; and Sibling Properties, Inc.
At the
  Closing Date, Sona will issue warrants to SEGIs warrant holders in the same
  amounts and terms previously issued by SEGI through the date of closing not
  to exceed the amount(s) provided on Schedule A including the completion of
  any active or planned offerings.On May 31,
2006, we executed a letter of intent to acquire 80% of Dick Foster Productions,
Inc. (DFP) and Creative Productions, Inc. (CPI), whereby we have the option
to purchase eighty (80%) percent of the issued and outstanding stock of Dick
Foster Productions, Inc. equally from DFPs only two shareholders, Dick Foster
and Lynne Foster, subject to a definitive acquisition agreement to be
negotiated and executed by the parties.


Prior to the
  closing date, DFP shall acquire 100% of the issued and outstanding stock of
  CPI.6

SIBLING ENTERTAINMENT GROUP, INC. 
(A Development Stage Company)


Under the
  terms stated in the letter of intent, we shall pay a total of Seven Million
  Two Hundred Thousand ($7.2 million) dollars less any deposits previously
  paid.
Dick Foster,
  Lynne Foster and David Gravatt shall be given employment agreements upon the
  closing that shall include health insurance, automobile leases, and salary
  for each employee.On September
6, 2006, we signed an amendment to the letter of intent to pay an additional
deposit of $50,000 as a sign of good faith in the negotiations and completion
of the definitive agreement with DFP and CPI carrying forward the same terms as
stated above. As of the date of this filing the definitive agreement has not
been signed. We expect to sign the definitive agreement in the near future and
close before the end of the calendar year.

In June, 2006,
we formed Sibling Theatricals, Inc., Sibling Properties, Inc., Sibling Music
Corporation, Hats Holdings, Inc. Hats Holdings, Inc. began immediate operations
focusing on the workshop for our upcoming Red Hat Society musical HATS!.

C. Current Operations

We currently engage
in the following:


the
  purchase and exploitation of literary rights as well as investments in the
  production of both film and live-stage properties including the following:¡
HATS!  A
  Musical for the Rest of Your Life based upon the women and spirit (HATS!)
  of Red Hat Society, Inc. (RHS) opened in Denver, Colorado at the New Denver
  Civic Theatre on October 7, 2006 through an exclusive license with the RHS to
  develop and produce HATS! including sequels and future home video, pay-per-view
  events and DVD recordings.¡
the ongoing
  negotiations with Harrahs Entertainment, Inc. and one or more of its
  properties (Harrahs) including Harrahs New Orleans to open additional
  companies of HATS! beginning in January 2007 in New Orleans and other
  participation in licensing rights of the trademarks associated with HATS! and
  the selling of HATS! merchandise throughout Harrahs.¡
the ongoing
  negotiations with the world-renowned comedian and entertainer Jerry Lewis for
  the development of a new musical based upon his book DEAN & ME, a story
  of his life with Dean Martin.¡
the ongoing
  negotiations with Mr. Angel, Inc. (a Colorado Corp) to develop and produce a
  new musical entitled Hallelujah! Mr. Angel written by Marcia Dodge and
  Anthony Dodge and composed by Morris Bernstein. The controlling interest of
  Mr. Angel, Inc. is held by Richard Bernstein, a director and officer of the
  Company.¡
the ongoing
  negotiations with Bernstein Corporations Entertainment, Inc. d/b/a Finer Arts
  Records (Bernstein Corp.) to produce the cast album of HATS! in November
  2006. The controlling interest in Bernstein Corp is held by Richard Bernstein
  (RB), a director and officer of the Company.¡
the ongoing
  negotiations with Bernstein Corporations Entertainment, Inc. to acquire the
  intellectual properties, label imprint (Finer Arts Records and TransWorld
  Records, M Bernstein Music Publishing ASCAP, Bernstein Artists Management)
  and related artist recording contracts and record/music CD inventory to be
  made part of Sibling Music Corp, a wholly owned subsidiary of the Company.¡
the ongoing
  negotiations with Base Entertainment, Inc. and Stomp Las Vegas Company to
  produce the show STOMP in Las Vegas at the Planet Hollywood Hotel &
  Casino in Spring 2007.¡
an option to
  produce the screenplay REEL LOVE as an independent feature film.7

SIBLING ENTERTAINMENT GROUP, INC. 
(A Development Stage Company)

¡
the ongoing
  negotiations with URL Productions, Inc. (URL) to co-produce ONCE AROUND
  THE SUN (OATS) for Broadway with URL Productions, Inc.¡
an
  investment in the residual income from the future off-Broadway production
  income and the subsequent exploitation of musical OATS originally co-produced
  between URL and SEI:
the
  development of an independent film production business through the
  acquisition of SPI and its subsidiaries SPFLLC; RLOF and RLPI.
the
  management agreements with regional not-for-profit and professional theatres
  companies including the Denver Civic Theatre, Inc. (a not-for-profit
  organization, DCT) for which our officers and directors VM, MM,
  JC and RB also serve as members of its board of directors.;
the management
  agreements with independent theatrical and/or film production companies
  including or the acquisition of, or management of theatrical real estate;¡
the
  financial consulting agreement with SEI and SPI led to the acquisition of SPI
  and its subsidiaries.¡
additional
  consulting arrangements are being sought.
the
  alliances with companies that currently possess rights or agreements desired
  by us including:¡
an
  alliance with Mechanic Street Productions, Inc. to finance and produce one or
  more independent feature films including the finance and co-production
  independent films financed by the SPFLLC and/or other similarly organized
  film funds.¡
an
  ongoing relationship with SEI. (see related parties).Our plan to
coordinate the efforts between film, theatre, real estate, management and music
publishing follow the natural synergies that exist between the various
industries and their components. It is sometimes difficult to develop a new
theatrical project without securing the venue, and owning sufficient theatres
provides the ability for a production company combined with a theatre owner to
assure a production access needed to advance a commercial project. It is
planned that when we do have our own theatrical production to present in our
own theaters, the production will be able to rent our venues creating a source
of sustaining income.

As both a
theatre owner/manager and the presenter of original works, the long-term income
derived from the licensing of literary rights will benefit us in two ways. Many
literary works developed for the stage may also have potential as a feature
film and access and acquisition cost barriers are reduced with a common
producer of both film and theatre are united. As we develop a management
company for both real estate and theatrical productions, we will be able to
secure additional revenue sources common to the industry.

Another
natural synergy of the theatrical and movie industry includes music publishing
originated or released in association with a musical or a movie. As we develop,
we will continue to seek partners and potential companies for acquisition
within the recording and music publishing industry.

D. Industry Analysis

Our
entertainment business plan encompasses several different specific industries
unique within their own disciplines including our primary production commercial
for-profit of live-theatre for Broadway, plus other regional productions in
professional theatres, the production of independent feature films, the
management and ownership of live-stage theatrical real estate venues and the
consulting of not-for-profit and professional theatres.

The following
is a brief overview of the different industry venues in which we intend to
operate or have commenced operations.

Theatre Overview

Live
commercial theater business has historically been centered in New York City
(Broadway and Off- Broadway) and Londons West Side. Over the last several
decades, the theater business in North America has grown rapidly in

8

SIBLING ENTERTAINMENT GROUP, INC. 
(A Development Stage Company)

markets
outside New York City (touring markets) as well as numerous independent
professional theatres for the production of smaller sit-down productions. In
addition, the numbers of new not-for-profit theatre companies, as well as large
scale performing arts centers, has allowed the industry a steady growth in all
aspects of the theatrical industry. Information derived from publicly available
sources, indicate that Broadway productions contribute over $4.788 billion to
the NYC economy each year from over $862 million in box office grosses.

New York Theatrical Industry

Our Management
believes that we will acquire and develop productions for both Broadway and
Off-Broadway based upon the experience of our principal officers prior history
that developed and produced several prior Broadway and Off-Broadway
productions. Almost all productions presented for the stage are financed and
capitalized in private and/or public offerings for with a single purpose
limited partnership or limited liability corporation. As a producer, we would
normally act as a general partner or managing member and seek to receive our
share of income and monies from several key areas customary to the theatrical
industry including:


Producer fees budgeted fees paid in the
  development, management and production a play or musical, or other live-stage
  event. Such fees are commensurate with the size of the budget.
Office fees weekly fees paid to
  contribute and support the costs of a producers office and overheads.
Royalties a percentage of the adjusted
  gross box office receipts paid weekly from the weekly operating budget.
Box Office Income a percentage of the box
  office ticket sales paid weekly.
Net Profits a percentage of net profits
  paid after full recoupment of the capitalization is returned to the
  investors. Profits for an original production may include participation from
  other sources outside of New York derived from subsidiary rights, licensing
  fees, media rights and other publishing rights attached to company formed to
  present the original production.
Other Fees other reimbursable amounts
  chargeable to productions, or fees paid for consulting services during the
  development of a new play or musical.New theatres
and the rebirth of the Time Square area of New York City as well as the
subsequent tourism increases have promised more interest and business in
theatre. Assuming that the level of tourism and theatre attendance and total
box office grosses continues to increase, all of these influences, changes and
product development taking place including the ongoing changes in Times Square,
the participation of the business giants and the promotion of all of live
entertainment can only affect us positively.

The primary real
estate owners of Broadway theatres is possessed by three owners, the Shubert
Foundation managed by the Shubert Organization, Inc., the Nedelander Producing
Company of America, Inc. and Jujamcyn Theatres. The theatrical industry in New
York extends beyond Broadway and is also supported by an ever growing number of
Off-Broadway theatre and theatrical companies providing opportunities for both
the development of new works as well as a source of revenue for production
companies. Most off-Broadway theatres are independently owned by single theatre
owners, not-for-profit companies and a growing number of companies owning more
than one theatre including Dodger Stage Holding Theatricals, Inc. The number of
operating theatres has grown from less than 10 in 1985 to over 80 significant
off-Broadway theatres and performance spaces in 2004. The number of
not-for-profit theatre companies renting space and producing shows in addition
to commercial producers has increased to over 400 companies.

Regional Professional and not-for-profit
Theatre Industry

Our Management
believes that the growth and continued strength of the regional professional
and not-for profit theatres through the United States will play a strategic
roll in our growth. There are many lesser known productions

9

SIBLING ENTERTAINMENT GROUP, INC. 
(A Development Stage Company)

and smaller
productions, as well as National Tours of Broadway and Off-Broadway productions
that we can derive participation as a producer similar to the fees and income
derived as a Broadway or Off- Broadway producer. This sector of the industry
has lower capitalization costs and through the proper selection of shows can
provide with additional income. In addition, the development of new works bound
for Broadway and Off-Broadway is difficult to achieve without our ability to
successfully test early versions of new works in regional theatres.

Information
derived from publicly available sources in 2002 indicates that an estimated
32.2 million tickets were sold by not-for-profit and professional theaters
combined. The number of tickets sold from not-for-profit theatres amount to
over 21 million tickets. The number of not-for-profits theatres has steadily
grown over the last several decades. In 1961, there were approximately, 16 not-for-profit
theatre companies. Today this number has grown to 1,200 companies. From
approximately 363 larger theatres, the attendance was over 21 million with
total income of over $961 million producing over 4,787 productions and 81,828
performances. The interaction between commercial for-profit production
companies and not-for-profit theaters is key to the development of new works
for both Broadway and other regional productions. The market has increasingly
focused on musicals, which account for the majority of the tickets sold in a
season. A substantial amount of the total tickets bought are purchased by group
theatre-goers that purchase tickets annually. As a result of both growth and
the annual need of group buyers, the market demand for new product (both
revivals and new musicals) has increased.

Theater Management

Within the
theatrical management industry, both the real estate of theatres and the
productions are managed. Due to the complexities of Broadway and Off-Broadway
productions, almost all productions have contracts with management companies to
assist producers in the day-to-day affairs. Some production companies have both
a production division and a general management division to provide the distinct
responsibilities assigned to each area of their profession. A portion of the
income derived by general management fees is paid as a part of the
capitalization of a project and additional fees paid weekly through the run of
a show.

In addition,
the ownership of theatres imposes demands of its owners between staffing, their
management and the selection of shows that will be allowed to perform within
its space(s). In addition, authors and composers seeking to develop their works
frequently consult both producers and general managers to assist them in the
process of producing or coordinating the process of development to the ultimate
commercial production on Broadway. Many not-for-profit theatre and other
professional theatres have outside consultants to assist in the management of
the theatres as well as planning and seeking literary properties and
enhancement financing to allowing regional theatres to participate in the
development of a Broadway bound production. It is our belief that both current
contracts to consult theatres and attempts to secure additional contracts will
be achieved.

Film

Our Management
believes that we will acquire and develop feature films as an independent
producer. Almost all film productions are financed and capitalized in private
and/or public offerings for a single purpose limited partnership or limited
liability corporation. As a producer, we would normally act as a general
partner or managing member and seek to receive our share of income from several
key areas customary to the film industry including:


Producer fees budgeted fees paid in the
  development, management and production a movie. Such fees are commensurate
  with the size of the budget.
Office fees fees paid to contribute and
  support the costs of a producers office and overheads during the production
  of a movie.
Royalties a percentage paid from a
  movies box office grosses after all print and advertising fees and other
  deferred fees are paid. In many cases, these amounts are not paid due to a
  complete buyout by distributors.10

SIBLING ENTERTAINMENT GROUP, INC. 
(A Development Stage Company)


Net Profits a percentage of net profits
  paid after full recoupment of the capitalization is returned to the
  investors. After a film is completed, a producer will attempt to sell the
  film to a distributor in excess of the cost of the film. A producer will
  receive a percentage of this excess as profits. In addition, the purchasing
  distributor may also provide additional profits from its own earnings
  increasing the earnings potential of a producer.
Other Fees other reimbursable amounts
  chargeable to productions, or fees paid for consulting services during the
  development of a new movie.The business
of the motion picture industry in the United States may be broadly divided into
two major segments: production, involving the development, financing and making
of motion pictures, and distribution, involving the promotion and exploitation
of completed motion pictures in a variety of media.

Historically,
the largest companies, or the so-called Majors or Major Studios, have
dominated the motion picture industry by both producing and distributing in the
United States a majority of those theatrical motion pictures which generate
significant box office receipts. Over the past decade, however, Independents
 smaller film production and distribution companies - have played an
increasingly significant role in the production and distribution of motion
pictures to fill the increasing worldwide demand for filmed entertainment
product.

The Majors
include 20th Century Fox, Paramount Motion Pictures, MGM Motion Pictures,
Columbia Pictures, Columbia Tri-Star Films, Sony Pictures Entertainment, United
Artists, Universal Studios, Dreamworks SKG, Dreamworks Animation, New Line
Cinema, Warner Brothers Movies, Walt Disney Pictures, Universal Studios,
amongst others. Generally, the Majors own their own production studios
(including lots, sound stages and postproduction facilities), have a nationwide
or worldwide distribution organization, release pictures with direct production
costs generally ranging from $10 million to $50 million, and provide a
continual source of pictures to film exhibitors. In addition, some of the
Majors have divisions, which are promoted as Independent distributors of motion
pictures. These Independent divisions of Majors include Miramax Films (a
division of the Walt Disney Company) and Sony Classics (a division of Sony
Pictures).

The
Independents typically do not own production studios or employ as large a
development or production staff as the Majors. Further, the Independents
typically produce fewer motion pictures at substantially lower average
production costs than the Majors.

Our Competitive Business Conditions

Our business
is highly competitive. As mentioned above, our largest competitors are heavily
financed and include theater owner groups such as the Shubert and Nederlander
theaters and the Major Studios. Our competitive position in the theatrical
real estate, live-stage theater and film industries shies away from the largest
competitors. Our position working within mid-range sized theater venues and
with independent films provides the most strategic and beneficial advantages to
us provided our operations and business plan as detailed above. We are able to
maintain a competitive position based upon the industry contacts our company
maintains, the high level of quality we perform our research and development
for new works, and upon the talent our company can recruit in working towards
producing a quality final product.

Our relationship
with other industry professionals, such as producers, box office personnel,
general managers, company managers and public relations firms, nurtured over
the years, facilitates the services we provide and products we produce.


We believe that our officers, Mitchell Maxwell and Victoria Maxwell, have built a highly regarded reputation for quality products and
services, and a comprehensive knowledge of the film and theatre businesses. Their expertise enables them to offer opinions as to what
is appropriate for each project we work with or client we provides services for.  This enables them to sell the appropriate shows,
plan into future periods and consult with knowledgeable film and theatre people.

11

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

Our Suppliers

As we are in
the business of theater management, theatrical consulting, and the production
of live-stage theater and independent films, we gather solicited scripts from playwrights
and screenwriters and seek out theaters and theatrical productions which might
make use of our management and consulting services. For those business
divisions where we create a final product (a film or theatrical production) for
consumers, the only supplier would be those individuals or third parties that
write the scripts we would purchase or option. Our business does not rely on
suppliers to deliver raw materials or a finished product.

Our Customers

We currently
derive our revenue from two sources, but we are not barred from accepting or
expanding our sources of income, and plan to expand further into the areas
bulleted in our current operations section above. We are not dependent upon
one or a few major customers. The entertainment industry provides revenue
sources that include ticket sales for theatrical productions produced and income
derived from interests in productions, consulting fees from theaters,
management fees from theaters, financing and management fees from investors
and/or investment funds set up to fund our productions, and from film
distributors who would purchase the film from us in its finished form. The
theatrical industry of Broadway limits our ability to secure a theater from one
of only three major theater owners. Within the film industry the sources and
outlets for sales is not limited to one of a few buyers.

Regulatory Issues

At the time of
this filing, no regulation, either industry or government sponsored, is
applicable to our business plan.

Research and Development

Our research
and development efforts are centered in identifying and acquiring rights to
quality live-stage theatrical and film content. Other than the costs associated
with our search for new scripts, our development costs are limited to option
fees for the right to produce a play, musical or feature film. Our development
costs associated with a new work are recouped at the time a project is finances
for either a development production or full production, except for those
projects abandoned in the development process.

Sources of projects:

Within the
entertainment industry, there is no shortage of sources being presented to us. Our
responsibility is to select a script that in the opinion of our management is
quality and contains and potential for critical and financial success and that
would be owned by us.

Employees

Mitchell
Maxwell, Victoria Maxwell and James Cardwell were elected by the Board of
Directors as President/CEO, Secretary/Vice President and Treasurer/CFO, respectively.
Richard Bernstein is also a Vice President of the Company. Also, as previously
mentioned, we entered into contracts with SEI whereby SEI is to provide
management, in the form of labor, to us to assist with accounting and
management. These contracts expired on January 1, 2006 and all officers who
were not paid employees of the Company prior to January 1, 2006 became such on
January 1, 2006.

D. Risk Factors

Our current and proposed
  business operations may be adversely affected by a number of factors, many of
  which are beyond our control and are set forth below. Additional risks and
  uncertainties not known to us or believed to be immaterial may also adversely
  impact or impair our business.1.
  We have had losses, and we cannot assure future
  profitability. We
  have reported operating losses for fiscal years 2004, 2005 and 2006. The
  accumulated deficit and deficit accumulated during the development12

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

stage at June 30, 2006
  amounted to $248,300 and $1,898,886, respectively, and we experienced a net
  loss for the fiscal years 2005 and 2006 of $298,584 and $1,444,614,
  respectively. We cannot assure you we will operate profitably, and if we
  cannot, we may not be able to meet our working capital requirements, capital
  expenditure plans, anticipated production slate or other cash needs. Our
  inability to meet those needs could have a material adverse effect on our
  business, results of operations and financial conditions.2.
  Dependence on Mitchell Maxwell, Victoria Maxwell, Richard Bernstein
  and James Cardwell. We depend, and expect to
  continue to depend, on the services provided by Mitchell Maxwell, Victoria
  Maxwell, Richard Bernstein and James Cardwell, our directors and principal
  executives. Virtually all of the significant decisions concerning the conduct
  of our business, including the properties and rights to be developed or
  acquired and the financing, production and distribution of any theatrical
  motion pictures, Broadway or Off-Broadway production, real estate
  acquisition, or other projects are, and are expected to continue to be, made
  by Mitchell Maxwell, Victoria Maxwell, Richard Bernstein and James Cardwell.
  The loss of their services or a dispute among them could have a material
  adverse effect on our business. Presently, we do not have any employment
  agreement with any of Messrs. Maxwell, Bernstein and Cardwell or Ms. Maxwell3.
  Control of Company. Our six largest
  shareholders own 14,298,328 shares, approximately 50.97% of our existing
  issued and outstanding stock as of June 30, 2006. We are not aware of any
  agreement between any of the shareholders as to the voting of these shares in
  connection with our business operations. These shareholders nevertheless have
  the voting power to control our affairs.4.
  Dependence on a Limited Number of Changing Projects.
  We anticipate that, initially, we will be dependent on a limited number of
  entertainment projects and theatres under management that will change from
  period to period, for a substantial percentage of our revenues. The change in
  projects from period to period will principally be due to the opportunities
  available from time to time to us and to audience response to our entertainment
  product, both of which are unpredictable and subject to change. In addition,
  the loss of a major project in any period would have an adverse effect on our
  results of operations in that period.5.
  Development of New Programs. Our results of
  operations will largely depend on our having adequate access to literary
  rights, plays, musicals, film scripts that are capable of being produced or
  acquired and successfully marketed. Such accessibility is dependent upon
  numerous factors, including our reputation and credibility in the creative
  community, the relationships we have in the entertainment industry and our
  financial and other resources. There can be no assurance that we will have
  adequate access to sources of programs or that our efforts in developing or
  acquiring new programs will be successful. If we are unable to successfully
  market new programs where we have funded development costs, we will be
  subject to realizing a loss on such projects.6.
  Intense Industry Competition. The live
  theatre and motion picture industries are intensely competitive and
  speculative. We compete with the major theatrical producers, theatre owners,
  major motion picture studios and with numerous independent producers of both
  theatre and feature film production, many of which are producing an
  increasing number of theatrical productions and feature films. Most of our
  principal competitors have greater financial, distribution, technical and
  creative resources and are better established in the industry. We also
  compete for interest and acceptance of our entertainment product by the
  public. Audience appeal depends upon a variety of changing factors that
  cannot be reliably predicted and over which we have little if any control.7.
  No Dividends. We have never paid any cash
  dividends on our Common Stock and has no present intention of paying any cash
  dividends. We intend to retain any earnings in the foreseeable future to
  finance our growth and development.8.
  Risk of Dilution.Offerings of indeterminate
  amounts of common stock and other securities may be made in the future, which
  may cause dilution for those persons who convert debenture securities into
  common stock or purchase shares of common stock. If we were to conduct a
  future offering or offerings, such offerings may result in dilution to existing
  shareholders or to persons who exercise their right to convert debentures
  into common stock and purchase shares of common stock. Any decision us in the
  future to issue additional13

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

shares will
  be made by our Board of Directors in the exercise of our business judgment
  and our shareholders at such time may not have the opportunity to approve or
  disapprove of any such issuance or the terms thereof. Further, we may
  establish one or more employee stock option plans that may also result in
  dilution to existing shareholders and to debenture holders with rights of
  conversion into common stock.9.
  Nature of the Business. Our primary business
  is the production and sub-licensing of the rights we presently own or will
  acquire in the future to certain live theatrical properties and independent
  feature films. The development and production of independent feature films
  and live entertainment properties often results in a risk of loss of
  investment capital that is especially high in comparison with the prospects
  for any significant long-term profitability.10.
  No Trading Market for Our Common Stock. There
  is no trading market for our common stock. There can be no assurance that a
  trading market will develop, and even if it did develop, that such market
  would be sustained. In addition, even if a trading market were to develop,
  holders of our common stock may experience substantial difficulty in selling
  their securities as a result of the penny stock rules adopted by the SEC,
  which restrict the ability of brokers to sell certain securities of companies
  whose assets or revenues fall below the thresholds established by those
  rules.11.
  Other Activities of Our Officers and Directors.
  From time to time certain of our directors and executive officers may serve
  as directors or executive officers of other companies and, to the extent that
  such other companies may participate in the industries in which we may
  participate, such directors may have a conflict of interest. In addition, our
  dependence on directors and officers who devote time to other business
  interests may create conflicts of interest. The fiduciary obligations of an
  individual to the other company may conflict with the individuals fiduciary
  obligations to us and vice versa.Directors
  and officers must exercise their judgment to resolve all conflicts of
  interest in a manner consistent with their fiduciary duties to us. In the
  event that a conflict of interest arises at a meeting of the directors, a
  director who has such a conflict will abstain from voting for or against approval
  of such situation and/or terms. In appropriate cases, we will establish a
  special committee of independent directors to review a matter in which any
  directors, or management, may have a conflict. We are not aware of the
  existence of any conflict of interest as described herein. To date we have
  not been able to attract independent directors to serve on our board.12.
  We face substantial capital requirements and financial
  risks.Our business requires a substantial investment of
  capital.The production, acquisition and distribution of motion
  pictures and live theatre productions require a significant amount of
  capital. A significant amount of time may elapse between our expenditure of
  funds and the receipt of commercial revenues from or government contributions
  to our motion pictures or television programs. This time lapse requires us to
  fund a significant portion of our capital requirements from other sources.13.
  Requirement for Additional Capital. Our
  business plan is completely dependent upon our ability to obtain the required
  financing. There can be no assurance that we will be successful in accessing
  sufficient external capital. Without the capital to acquire and promote a new
  business activity that generates profitability and investor interest, our
  future prospects may be adversely affected.14.
  Accounting practices used in our industry may
  accentuate fluctuations in operating results. In addition to the cyclical nature of the
  entertainment industry, our accounting practices (which are standard for the
  industry) may accentuate fluctuations in our operating results.15.
  Failure to manage future growth may adversely affect our
  business. Our
  ability to grow through acquisitions, business combinations and joint
  ventures, to maintain and expand our development, production and distribution
  of motion pictures and live theatre productions and to fund our operating
  expenses depends upon our ability to obtain funds through equity financing,
  debt financing (including credit facilities) or the sale or syndication of
  some or all of our interests in certain projects or other assets. If we do
  not have access to such financing arrangements, and if other funding does not
  become available on terms acceptable to us, there could be a material adverse
  effect on our business, results of operations or financial condition.14

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

16.
  We are subject to risks associated with
  acquisitions and joint ventures. We
  have made or entered into, and will continue to pursue, various acquisitions,
  business combinations and joint ventures intended to complement or expand our
  business. Given that discussions or activities relating to possible
  acquisitions range from private negotiations to participation in open bid
  processes, the timing of any such acquisition is uncertain. Although from
  time to time we actively engage in discussions and activities with respect to
  possible acquisitions and investments, we have no present agreements or
  understandings to enter into any such material transaction. Any indebtedness
  incurred or assumed in any such transaction may or may not increase our
  leverage relative to our earnings before interest, provisions for income
  taxes, amortization, minority interests, gain on dilution of investment in
  subsidiary and discounted operation, or EBIDTA, or relative to our equity
  capitalization, and any equity issued may or may not be at prices dilutive to
  our then existing shareholders. We may encounter difficulties in integrating
  acquired assets with our operations. Furthermore, we may not realize the
  benefits we anticipated when we entered into these transactions. In addition,
  the negotiation of potential acquisitions, business combinations or joint
  ventures as well as the integration of an acquired business could require us
  to incur significant costs and cause diversion of managements time and
  resources. Future acquisitions by us could also result in:
  impairment of goodwill and
  other intangibles;
  development write-offs;
  and
  other acquisition-related
  expenses.Any of the foregoing could
  have a material adverse effect on our business, results of operations or
  financial condition.17.
  Protecting and defending against intellectual property
  claims may have a material adverse effect on our business. Our ability to compete depends, in part,
  upon successful protection of our intellectual property. We do not have the
  financial resources to protect our rights to the same extent as major
  studios. We attempt to protect proprietary and intellectual property rights
  to our productions through available copyright and trademark laws and
  licensing and distribution arrangements with reputable international
  companies in specific territories and media for limited durations. Despite
  these precautions, existing copyright and trademark laws afford only limited
  practical protection in certain countries. We also distribute our products in
  other countries in which there is no copyright and trademark protection. As a
  result, it may be possible for unauthorized third parties to copy and
  distribute our productions or certain portions or applications of our
  intended productions, which could have a material adverse effect on our
  business, results of operations or financial condition.Litigation may also be
  necessary in the future to enforce our intellectual property rights, to
  protect our trade secrets, or to determine the validity and scope of the
  proprietary rights of others or to defend against claims of infringement or
  invalidity. Any such litigation could result in substantial costs and the
  diversion of resources and could have a material adverse effect on our
  business, results of operations or financial condition. We cannot assure you
  that infringement or invalidity claims will not materially adversely affect
  our business, results of operations or financial condition. Regardless of the
  validity or the success of the assertion of these claims, we could incur
  significant costs and diversion of resources in enforcing our intellectual
  property rights or in defending against such claims, which could have a
  material adverse effect on our business, results of operations or financial
  condition.CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS

This report contains
statements that plan for or anticipate the future, called forward-looking
statements. In some cases, you can identify forward-looking statements by
terminology such as may, will, should, could, expects, plans,
intends,
anticipates, believes, estimates, predicts, potential or
continue
or the negative of those terms and other comparable terminology.

These forward-looking
statements include statements about:

15

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

o
  our market
  opportunity;o
  our
  strategies;o
  competition;o
  our
  financing plans;o
  expected activities
  and expenditures as we pursue our business plan; ando
  the adequacy
  of our available cash resources.Although we
believe that the expectations reflected in the forward-looking statement are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements.

The
accompanying information contained in this report, including the information
discussed under the headings Risk Factors, Managements Discussion and
Analysis or Pan of Operations, and Description of Business identifies
important factors that could adversely affect actual results and performance.
All forward-looking statements attributable to us are expressly qualified in
their entirety by the cautionary statement appearing above.

ITEM 2.
  DESCRIPTION OF PROPERTY(a.)
  We currently occupy space at 511 W. 25th St, NY, NY 10001.
  SEGI became the legal lessee of the space beginning December 1, 2005, when
  SEGI signed the renewal agreement for an additional 2 years. Monthly rent is $2,900
  per month. We expect to continue to have no difficulty in securing and
  renting the current space.(b.)
  Excess cash not used for operations is placed or invested in either
  money market accounts or checking/demand accounts in banking institutions. From
  time to time, the company may also invest in other entertainment related
  companies strategic to the operations of the Company. There are no restrictions
  on amounts the Company may invest or expend related to these investments.ITEM 3.
  LEGAL PROCEEDINGSWe are not a
party to any legal proceeding, and have no knowledge of any threatened or
pending legal proceeding against us or our property.


ITEM 4.
  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
  HOLDERSDuring the last quarter of the fiscal year ended June 30, 2006 the
following matters were submitted to a vote of security holders by proxy in lieu
of a meeting:

1.
  To enter a letter of
  intent whereby Sona Development Corp. (Sona) will purchase 100% of our
  assets by acquiring all of our wholly owned subsidiaries and assuming up to
  $650,000 of debt associated with the issuance of our Series H Debenture
  offering. A definitive agreement was signed on June 28, 2006. On June 28,
  2006 a majority of the shareholders of the Company voted and approved the
  transaction. Final approval of the Sona shareholders is being sought.On June 28, 2006 it was voted by a majority of votes that this matter
be approved, ratified and/or amended, as the case may be.

PART II

ITEM 5.
  MARKET FOR COMMON EQUITY AND RELATED
  STOCKHOLDER MATTERS.There is no trading market for our stock. At June 30, 2006, we had 28,051,472
shares issued
and outstanding and 438 registered shareholders of our outstanding common
stock. At the time of this filing, we have 29,317,043.43 shares issued and
outstanding and 1,365,641.10 shares reserved for subscriptions and warrants. We
now have 447 registered holders
of our outstanding common stock.

16

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

The
outstanding common stock was offered and sold either pursuant to a registration
statement or in reliance upon exemptions from the registration requirements set
forth in Securities Act. There is no trading market for our issued and
outstanding shares. There can be no assurance that a trading market will
develop. To date, neither we nor anyone acting on our behalf has taken any
affirmative steps to retain or encourage any broker/dealer to act as a market
maker for our common stock. Further, there have been no discussions or
understandings, preliminary or otherwise, between us or anyone acting on our
behalf and any market maker regarding the participation of any such market
maker in the future trading market, if any, for our common stock.

As of the time
of this filing (a) aggregate 2,334,746 shares of our common stock are eligible
for resale in public transactions without restriction or further registration
under the Securities Act unless purchased by or issued to any affiliate of
ours, as that term is defined in Rule 144 promulgated under the Securities Act,
and (b) 27,280,583 shares may be sold in accordance with Rule 144.

As of the time
of filing this report, we have not declared any dividends since inception, and
have no present intention of paying any cash dividends on our common stock in
the foreseeable future. The payment of dividends, if any, in the future, rests
within the discretion of our Board of Directors and will depend, among other
things, upon our earnings, capital requirements and financial condition, as
well as other relevant facts.

ITEM 6.
  MANAGEMENTS DISCUSSION AND ANALYSIS OR
  PLAN OF OPERATIONThe following
discussion of our financial condition and results of operations should be read
in conjunction with the Consolidated Financial Statements and Notes to those
financial statements included in this Annual Report. This discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking
statements as a result of various factors, including but not limited to, those
discussed under Risk Factors and elsewhere in this Annual Report.

Our Anticipated Sources of Revenues

Our principal sources of revenue will be from
our consulting agreement with DCT and from producer fees associated with
managing our film funds. Our current revenues are not sufficient to sustain
operations without the sale of equity securities. As a result of anticipated
and completed sale of securities combined with our current revenues, we expect
no difficulty in producing the cash funds necessary to continue business
through the next 12 months.

It is the opinion of management that the most
meaningful financial information relates primarily to current liquidity and
solvency. As of June 30, 2006, we had working capital of $105,104. We had no
bank loans as at June 30, 2006.

Plan of Operations for the Next Twelve Months

As stated in
the current operations section above, following the change in management and
control, we took steps and sought to pursue the purchase and exploitation of
literary rights for the production of film and theatrical properties, the
development of independent film and theatrical production businesses,
management consulting agreements with other theaters and companies, and the
acquisition of or management of theatrical real estate.

Also as
previously mentioned, we have entered into Agreements with the DCT for consulting
and management services provided to that Company.

Currently, and
as stated earlier, our earnings for office space and utilities provided to SEI
and from services provided and earned from other consulting agreements provide us
with the ability to operate and profit and pursue an expansion of its
operations.

For the Years Ended June 30, 2006 and 2005

RESULTS OF OPERATIONS

17

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

Revenues Revenues
for the years ended June 30, 2006 and 2005 equaled $153,629 and $96,167,
respectively. We earned fees from providing consulting services to DCT
(currently $8,775/month, starting in August 2005, and previously $6,900/month).
We also earned $50,000 in producers fees from the production Cassandras
Angel for providing services including, but not limited to, finding a director
and venue for the production.

Cost of Revenues and Gross Profit -Cost of revenues will
be presented within the periods in which revenues are received and gross profit
will be determined accordingly.

General and
Administrative Expenses - General and administrative expenses for the year ended June 30, 2006
were $1,291,748 compared to $379,592 during the year ended June 30, 2005
representing an increase of $912,156. This significant increase in expenses is
primarily due to payroll expenses of $453,819. We did not incur payroll
expenses in the year ended June 30, 2005. Health and life insurance costs were
also a new expense for the year ended June 30, 2006, totaling $35,867. In
addition, we experienced an increase of $139,042 in consulting fees to provide
a variety of corporate services including introducing the Company to third
party marketing companies, investment bankers and other corporate promotion
companies. Further, we experienced an increase in $47,353 in legal fees
incurred for work on the acquisition by Sona, the purchase of DFP, and employment
contracts with our executive officers. We did work on these transactions in the
previous year. We also incurred an impairment loss on our investment in SEI of
$233,621 for the year ended June 30, 2006, which we did not incur in the year
ended June 30, 2005. We incurred stock-based compensation for stock issued to
consultants in the amount of $80,135 for the year ended June 30, 2006. We did
not incur such costs for the year ended June 30, 2005. Finally, rent and
utility expenses increased to $43,342 for the year ended June 30, 2006 from
$9,675 for the year ended June 30, 2005 due to the change in payment
responsibility of the rent and utility bills for our offices at 511 W. 25th
Street to us from SEI.

Net Loss Net loss is determined after the
provision for minimum taxes. For the year ended June 30, 2006 we had a net loss
of $1,444,614 compared to a net loss of $298,548 for the year ended June 30,
2005, an increase in losses of $1,146,066 or 207%. This increase was primarily
due to increases in general and administrative expenses, as described in the
preceding paragraph. Other factors include an increase in production expenses
of $60,523, from $10,000 for the year ended June 30, 2005 to $70,523 for the
year ended June 30, 2006.

LIQUIDITY AND CAPITAL
RESOURCES

We ended the fiscal
year 2006 with a cash position of $47,468 dollars, as compared to $23,596 dollars
at the end of fiscal 2005. We expect to use our cash for working capital
purposes; and, assuming a trading market is established for our stock to use
our shares to expand our theatrical management and real estate business and
produce more live-stage theater productions and independent films.

We anticipate
a modest capital requirement for identifying and negotiating additional
live-stage theater and film productions as we plan to acquire those rights in
exchange for our common stock. However, we believe that this will be an
effective financing method only if a trading market develops for our stock.

Our present
marketing methods will continue; however, should we require significant
additional financial resources for future expansion, we may seek to obtain them
through public or private equity offerings. We will also need to seek
additional capital to sustain our operations if we are unable to earn income.
If we seek to obtain additional funding, there can be no assurance that we will
be successful in raising a sufficient amount of additional capital or in
internally generating a sufficient amount of capital. If we are unable to
generate the required amount of additional capital, our ability to meet our
obligations and to continue our operations may be adversely affected. No
specific plans exist for such financings at this time.

18

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

For the year ended June 30, 2006Source
  
  Cash Proceeds
  
  
  Cash
  DisbursementsNon-related party
  activities:Sale of common stock
  
  
  1,528,804
  
  
  General and administrative
  expenses
  
  
  
  
  
  1,168,048Production expenses
  
  
  
  
  
  70,523Related party activities:DCT - management services
  provided
  
  
  103,629
  
  
  SPI - executive producer
  fees earned
  
  
  50,000
  
  
  SEI - management services
  provided
  
  
  
  
  
  123,700SEI - purchase of stock
  
  
  
  
  
  50,000TOTAL
  
  $
  1,682,433
  
  $
  1,412,271For the year
ended June 30, 2006, we had received $1,528,804 in the aggregate from the sale
of common stock to third party investors. We had also spent $1,168,048 in the
aggregate for general and administrative expenses including, but not limited
to, professional and legal fees, office expenses, rent, utilities and other
operating expenses. Production expenses of $70,523 were spent on the productions
of NEWSical and The Yiddish are Coming, both of which ran at the DCT, and
on the write-off of the investments in the third party productions Were Still
Hot and Fanny Hill. Concerning related parties, for the year ended June 30,
2006, we earned $103,629 from DCT for management, marketing and booking
services provided, and $50,000 from SPI for executive producer services
provided. Additionally, we disbursed to SEI $123,700 in the aggregate for
management services SEI provided to us during the year and $50,000 for the
purchase of common stock in SEI.

VARIABLES AND TRENDS

We have been
engaged in the development and commercialization of entertainment products for
over 5 years. Key variables in our industry are caused by the lack of
popularity or attraction to certain productions. Successful theatrical shows
enjoy a longer run time (i.e. Cats ran for 18 years; Les Miserables, 16 years).
In addition, currently long running productions include Phantom of the Opera
which has run over 16 years; Beauty and the Beast, 9 years. Prior to September
11, 2001, more people had been going to see theatrical productions. Concerning
film productions, the demand to view a diverse range of popular motion pictures
is reasonably constant. However, the success of such shows does not provide any
assurance that any of our productions will enjoy similar success.

Our live-stage
theater-related revenue stream is affected by the influx of tourism into cities
in which we are producing and/or managing productions, including New York City.
The terrorist attacks on the World Trade Center on September 11, 2001 had a
severe impact on the economic situation in New York City during the remainder
of 2001 through 2003, especially with respect to tourism and theatre.
Immediately following, several advertising campaigns undertaken as well as
promotions at many of the citys hotels and restaurants encouraged tourism and
theatre attendance in New York City, which have been successful. However, there
is no assurance that the levels of tourism and theatre attendance will return
to levels that existed prior to September 11, 2001. Despite New York Citys
current leading rank amongst tourist destinations to major U.S. Cities,
unforeseen events could impact tourism without warning and negatively impact
tourism and theatre attendance would have adverse effects on our business.

New theatres
as well as the subsequent tourism increases have promised more interest and business
in theatre. Assuming that the level of tourism and theatre attendance and total
box office grosses continues to increase, all of these influences, changes and
product development taking place including the participation of the business
giants and the promotion of all of live entertainment can only affect us
positively.

New York continues to be one of
the top tourist destinations in the United States. In 2002, New York City was
ranked as the top U.S. Destination by Hotels.com for the 2003-2004 winter
destination followed by Las Vegas and

19

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

Orlando. In 2002, 35.3 million tourists
journeyed to New York an overall growth after the events September 11, 2001.
The highest reported year was 1999 with 36.4 million visitors with a
significant gain from U.S. domestic visitors and a significant reduction in
foreign visitors.

20

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

ITEM 7.
  FINANCIAL STATEMENTSITEMSIBLING ENTERTAINMENT GROUP, INC.
(FORMERLY AMICI VENTURES, INC.)
(A DEVELOPMENT STAGE COMPANY)
INDEX TO THE FINANCIAL STATEMENTS

PAGEINDEX
  TO THE FINANCIAL STATEMENTS
  
  
  F
  - 1REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
  
  
  F
   2FINANCIAL
  STATEMENTS:CONSOLIDATED BALANCE SHEET
  
  
  F
   3CONSOLIDATED STATEMENTS OF
  OPERATIONS
  
  
  F
  - 4CONSOLIDATED STATEMENTS OF
  CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
  
  
  F
  - 5CONSOLIDATED STATEMENTS OF
  CASH FLOWS
  
  
  F
  - 6NOTES TO THE CONSOLIDATED
  FINANCIAL STATEMENTS
  
  
  F  17 - F - 29F-1

Report of Independent
Registered Public Accounting Firm


To the Board of Directors
and ShareholdersSibling Entertainment Group, Inc.(Formerly Amici Ventures, Inc.)


We have audited the accompanying
consolidated balance sheet of Sibling Entertainment Group, Inc. (a development stage
company) (formerly Amici Ventures, Inc.) and subsidiaries as of June 30, 2006, and the
related consolidated statements of operations, changes in stockholders equity
(deficit), and cash flows for the years ended June 30, 2006, and 2005. These financial
statements are the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements based on our audits.


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


In our opinion, based on our audits,
the financial statements referred to above present fairly, in all material respects, the
financial position of Sibling Entertainment Group, Inc. and subsidiaries as of June 30,
2006 and the results of their operations and their cash flows for the years ended June 30,
2006 and 2005, in conformity with accounting principles generally accepted in the United
States.


The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, certain conditions raise substantial
doubt about its ability to continue as a going concern. Managements plans in regard
to these matters also are described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of this uncertainty.


As described in Note 19 to the
financial statements, the financial statements have been restated to clearly present the
inception-to-date financial information as unaudited, as it is impractical for the Company
to obtain an auditors report on such information from the prior auditor.


ROSENBERG, RICH, BAKER, BERMAN &
CO.


Bridgewater, New JerseyOctober 23, 2006, except for Note 19, which date is December 14, 2006


F-2

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)CONSOLIDATED BALANCE SHEET
June 30, 2006

AssetsCurrent
assetsCash


47,468Due from
related parties


109,554Advances and
prepaids


48,620Loans
receivable  related party


67,800Other
receivables


20,620Total current
assets


294,062Fixed
assetsComputer
equipment, net of accumulated
  depreciation


4,917Total Fixed
Assets


4,917Other
assetsGoodwill


2,779,624Deposits


185,000Recoupable
advances


33,333Production
development costs


168,652Investment in
related company


109,956Other
investments


50,826Options
purchased


38,000Total
  other assets


3,365,392Total
  assets


3,664,370Liabilities
  and Stockholders EquityLiabilitiesCurrent
liabilitiesAccounts
payable


99,436Accrued
expenses


55,450Income taxes
payable


710Due to
related parties


33,362Total current
liabilities


188,958Loan payable
 related party


5,000Total
liabilities


193,958Commitments
and contingencies


EquityCommon stock
$0.001 par value;100,000,000
authorized shares;28,051,472
shares issued and outstanding


28,051Additional
paid in capital  warrants


132,189Additional
paid in capital


5,457,358Accumulated
deficit


(248,300
)Deficit
accumulated during development
  stage


(1,898,886
)Total
equity


3,470,412Total
  liabilities and stockholders equity


3,664,370See
accompanying notes to consolidated financial statements.

F-3

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

CONSOLIDATED STATEMENTS
OF OPERATIONS

CumulativeAmounts SinceInception ofDevelopmentStage, July 1,2000 to June 30,2006(unaudited)For the year ended June 30,2006

2005Revenue
  - related companiesConsulting fee
income - related company


103,629


79,500


203,379Executive
producer fees - related company


50,000


16,667


100,000Total
  Revenue


153,629


96,167


303,379ExpenseGeneral and
administrative -Professional
fees


526,109


202,813


798,237Management
fees - related company


123,700


126,712


325,932Other


641,939


50,067


719,102Write-off of
investment in motion picture
  rights








33,400Production
expenses


70,523


10,000


80,523Operating
loss


(1,208,642
)

(293,425
)

(1,653,815
)Other
  Income (Expense)Interest
Income (Expense)


2,513





3Impairment of
investment - related company


(233,621
)




(233,621
)Equity loss on
investment - related company


(2,069
)

(4,353
)

(6,422
)Net
  loss before income taxes


(1,441,819
)

(297,778
)

(1,893,855
)Taxes


2,795


806


5,031Net
  Loss


(1,444,614
)

(298,584
)

(1,898,886
)Loss
  per common share - basic and diluted

($
0.06
)
($
0.03
)Weighted
  average number of common shares


24,482,883


9,272,972Shares
outstanding - basic and dilutedSee
accompanying notes to consolidated financial statements.

F-4


SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)

|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|------------------------------------------------------------------------- |  | ------ | ---------- | ------ | - | ------------------------------ |  | ------------------------------------ | --------- | --------------------- | - | ---------------------------------------------------- |  | ------------------------------ | -------- | - | - | ---------- | - | - | ---------- | -
|                                                                          |  | Shares |            | Amount |   | Additional
  Paid-In
  Capital |  | Additional Paid-InCapital - Warrants |           | Accumulated
  Deficit |   | Deficit
  Accumulated
  During
  Development
  Stage |  | Total
  Shareholders
  Equity |         
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |         
|Balance
  June 30, 2000                                                   |  |        | 6,000,000  |        | $ | 6,000                          |  | $                                    | 274,200   |                       | $ |                                                     |  | $                              | (248,300 | ) | $ |           |   | $ | 31,900     |  
|                                                                         
|Value
  of services provided by executive for office space and management |  |        |           |        |   |                               |  |                                      | 18,000    |                       | $ |                                                     |  |                                |         |   |   |           |   |   | 18,000     |  
|Net
  loss                                                                |  |        |           |        |   |                               |  |                                      |          |                       |   |                                                     |  |                                |         |   |   | (27,600    | ) |   | (27,600    | )
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Balance
  June 30, 2001                                                   |  |        | 6,000,000  |        | $ | 6,000                          |  | $                                    | 292,200   |                       | $ |                                                     |  | $                              | (248,300 | ) | $ | (27,600    | ) | $ | 22,300     |  
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Value
  of services provided by executive for office space and management |  |        |           |        |   |                               |  |                                      | 18,000    |                       | $ |                                                     |  |                                |         |   |   |           |   |   | 18,000     |  
|Sale
  of common shares                                                   |  |        | 2,000,000  |        |   | 2,000                          |  |                                      | 58,000    |                       | $ |                                                     |  |                                |         |   |   |           |   |   | 60,000     |  
|Net
  loss                                                                |  |        |           |        |   |                               |  |                                      |          |                       |   |                                                     |  |                                |         |   |   | (76,449    | ) |   | (76,449    | )
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Balance
  June 30, 2002                                                   |  |        | 8,000,000  |        | $ | 8,000                          |  | $                                    | 368,200   |                       | $ |                                                     |  | $                              | (248,300 | ) | $ | (104,049   | ) | $ | 23,851     |  
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Value
  of services provided by executive for office space and management |  |        |           |        |   |                               |  |                                      | 18,000    |                       |   |                                                     |  |                                |         |   |   |           |   |   | 18,000     |  
|Net
  loss                                                                |  |        |           |        |   |                               |  |                                      |          |                       |   |                                                     |  |                                |         |   |   | (15,531    | ) |   | (15,531    | )
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Balance
  June 30, 2003                                                   |  |        | 8,000,000  |        | $ | 8,000                          |  | $                                    | 386,200   |                       | $ |                                                     |  | $                              | (248,300 | ) | $ | (119,580   | ) | $ | 26,320     |  
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Forgiveness
  of debt - related party                                     |  |        |           |        | $ |                               |  | $                                    | 6,960     |                       | $ |                                                     |  | $                              |         |   |   |           |   |   | 6,960      |  
|Net
  loss                                                                |  |        |           |        |   |                               |  |                                      |          |                       |   |                                                     |  |                                |         |   |   | (36,108    | ) |   | (36,108    | )
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Balance
  June 30, 2004                                                   |  |        | 8,000,000  |        | $ | 8,000                          |  | $                                    | 393,160   |                       | $ |                                                     |  | $                              | (248,300 | ) | $ | (155,688   | ) | $ | (2,828     | )
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Value
  of services provided by consultant                                |  |        | 375,000    |        |   | 375                            |  |                                      | 93,375    |                       |   |                                                     |  |                                |         |   |   |           |   |   | 93,750     |  
|Sale
  of common shares                                                   |  |        | 1,790,000  |        |   | 1,790                          |  |                                      | 446,079   |                       |   | 4,631                                                |  |                                |         |   |   |           |   |   | 452,500    |  
|Shares
  issued in Acquisition                                            |  |        | 10,785,000 |        |   | 10,785                         |  |                                      | 2,685,465 |                       |   |                                                     |  |                                |         |   |   |           |   |   | 2,696,250  |  
|Net
  loss                                                                |  |        |           |        |   |                               |  |                                      |          |                       |   |                                                     |  |                                |         |   |   | (298,584   | ) |   | (298,584   | )
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Balance
  June 30, 2005                                                   |  |        | 20,950,000 |        | $ | 20,950                         |  | $                                    | 3,618,079 |                       | $ | 4,631                                                |  | $                              | (248,300 | ) | $ | (454,272   | ) | $ | 2,941,088  |  
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Value
  of services provided by consultant                                |  |        | 770,000    |        |   | 770                            |  |                                      | 184,803   |                       |   | 28,202                                               |  |                                |         |   |   |           |   |   | 213,776    |  
|Debentures
  converted into stock                                         |  |        | 560,000    |        |   | 560                            |  |                                      | 139,440   |                       |   |                                                     |  |                                |         |   |   |           |   |   | 140,000    |  
|Warrants
  issued to employees                                            |  |        |           |        |   |                               |  |                                      |          |                       |   | 63,859                                               |  |                                |         |   |   |           |   |   | 63,859     |  
|Sale
  of common shares                                                   |  |        | 5,661,472  |        |   | 5,661                          |  |                                      | 1,487,646 |                       |   | 35,497                                               |  |                                |         |   |   |           |   |   | 1,528,804  |  
|                                                                         
|Shares
  issued to settle liabilities                                     |  |        | 110,000    |        |   | 110                            |  |                                      | 27,390    |                       |   |                                                     |  |                                |         |   |   |           |   |   | 27,500     |  
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Net
  loss                                                                |  |        |           |        |   |                               |  |                                      |          |                       |   |                                                     |  |                                |         |   |   | (1,444,614 | ) |   | (1,444,614 | )
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  
|Balance
  June 30, 2006                                                   |  |        | 28,051,472 |        | $ | 28,051                         |  | $                                    | 5,457,358 |                       | $ | 132,189                                              |  | $                              | (248,300 | ) | $ | (1,898,886 | ) | $ | 3,470,412  |  
|                                                                          |  |        |            |        |   |                                |  |                                      |           |                       |   |                                                      |  |                                |          |   |   |            |   |   |            |  

See accompanying notes to
consolidated financial statements.

F-5

---



SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)CONSOLIDATED STATEMENTS OF CASH
FLOWS For the
  year ended June 30,

Cumulative
  Amounts
  Since Inception of
  Development Stage,
  July 1, 2000 to 
  June 30, 2006(unaudited)2006

2005Cash flows from operating
activitiesNet
Loss

$
(1,444,614
)
$
(298,584
)
$
(1,898,886
)Adjustments to
reconcile net loss to net cash (used in) provided by
  operating activities:Depreciation


747


533


1,280Stock-based
compensation


277,634


93,750


371,384Motion picture
rights written off








33,400Executive
services








54,000Equity losses
on investment - related party


2,069


4,353


6,422Impairment of
investment - related party


233,621





233,621Impairment of
loan


3,750





3,750Changes in
operating assets/liabilities:Increase
(decrease) in prepaids and other assets


(48,620
)




(48,620
)Increase in
accounts payable


58,458


16,467


86,925Increase in
accrued expenses


49,157





48,367Increase in
other receivables


(20,620
)




(20,620
)Net cash used in operating
activities


(888,418
)

(183,481
)

(1,128,977
)Cash flows from investing
activitiesPurchases of
fixed assets


(2,466
)

(3,731
)

(6,197
)Recoupable
advances


(33,333
)




(33,333
)Investment in
related company stock


(50,000
)

(300,000
)

(350,000
)Production
development cost outlays


(168,652
)




(168,652
)Deposits


(185,000
)




(185,000Options
purchased


(14,500
)

(2,500
)

(17,000
)Other
investments


(13,326
)

(37,500
)

(50,826
)Net cash used in investing
activities


(467,277
)

(343,731
)

(811,008
)Cash flows from financing
activitiesDue from
related parties





27,183


(26,940
)Repayment from
(to) related parties


26,400





16,400Advances (to)
from related companies


(103,977
)




(43,276
)Due to related
parties


(8,860
)

(88,625
)

(97,485
)Loans to
related companies


(67,800
)

(7,750
)

(75,550
)Loans from
related companies


5,000





5,000Proceeds from
issuance of common stock subscriptions





27,500


27,500Proceeds from
issuance of convertible debentures





140,000


140,000Proceeds from
issuance of common stocks


1,528,804


452,500


2,041,304Net cash (used in) provided by
financing activities


1,379,567


550,808


1,986,953Net increase (decrease) in
cash


23,872


23,596


46,968Cash and cash equivalents,
beginning of period


23,596





500Cash and cash equivalents, end
of period

$
47,468

$
23,596

$
47,468 F-6   SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

Supplemental disclosure:

Income taxes paid

$
2,975


806


5,031Supplemental information on
non cash investing and financing activities:

In 2006, the Company
converted $140,000 of convertible debentures into common stock. The Company
also issued stock in settlement of $27,500 of other liabilities to be settled
in stock.

On June 17, 2005, the
Company acquired 100% of the common stock of SPI for 10,785,000 shares of the
Companys common stock valued at $2,696,250. As a result of the acquisition,
the Company acquired assets of$21,000 and assumed
liabilities of $104,374 resulting in the recognition of goodwill of $2,779,624.

See accompanying notes to consolidated financial statements

F-7

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

1.
ORGANIZATION
  AND NATURE OF OPERATIONSSibling
  Entertainment Group, Inc., formerly Amici Ventures, Inc., (the Company) was
  organized in 1995. The Company is engaged in the finance, development and
  production of entertainment properties including plays, musicals for the live
  stage, independent feature films and other entertainment projects as well as
  the management of projects including the management of entertainment based
  real estate properties. References herein to the Company, we, us, or
  our refers to Sibling Entertainment Group, Inc.The Company
  will seek to operate specific divisions through wholly owned subsidiaries,
  each of which will be focused on a particular segment of the entertainment
  industry. Each division will be developed internally as well as through
  acquisitions of production companies engaged in similar activities. The
  primary divisions shall be aligned with key entertainment industries including:
  film production, theatre production, entertainment based real estate and
  music publishing and distribution. The Company will seek to coordinate
  efforts between each division to provide optimal development for each
  project.Each project
  (live entertainment, plays, musicals, independent films or other commercial
  exploitation) will be placed into a limited partnership (or other entity)
  sponsored and managed by the Company, and financed through the sale of
  limited interests therein to high net worth investors, corporate sponsors of
  the arts, theatre owners, strategic partners and other supporters of the
  theater developed by certain of officers and directors of the Company during
  their careers. The origination, management and administrative fees the
  Company charges each project, together with payment of royalties and
  distributions of profits from retained interests, is intended to be the
  primary source of revenues.The Company
  re-entered the development stage on July 1, 2000 since shortly after the
  discontinuance of the business of development and production of theatrical
  entertainment products. The Company has been primarily engaged in developing
  markets, initially for its film library through October, 2003, and
  subsequently to executive management and consulting in theatrical productions
  and film development projects.CONTROL BY
  PRINCIPAL STOCKHOLDERSThe
  directors, executive officers and their affiliates or related parties, own
  49% of the voting power of the outstanding shares of our common stock.F-8

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

GOING
  CONCERNAs shown in
  the consolidated financial statements, the accumulated deficit and deficit
  accumulated during the development stage amounted to $248,300 and $1,898,886,
  respectively, at June 30, 2006. The Company experienced a net loss of
  $1,444,614, $298,584 and $1,898,886 for the years ended June 30, 2006 and
  2005 and from July 1, 2000 (date of inception) to June 30, 2006,
  respectively. The Company will need additional resources to finance its
  future operations, including compliance with SEC reporting requirements.
  Management is actively seeking to raise additional capital through the sale
  of both debentures and common stock. The results of these ongoing activities
  to date are described in Note #19, Subsequent Events. However, no assurance can be given that the
  Company will continue to be successful in its financing activities.The
  accompanying financial statements do not include any adjustments that might
  result from the eventual outcome of the risks and uncertainties described
  above.2.
SUMMARY OF
  SIGNIFICANT ACCOUNTING POLICIESPRINCIPLES
  OF CONSOLIDATIONThe
  consolidated financial statements include the accounts of the Company and its
  wholly-owned subsidiaries, Sibling Pictures, Inc. (SPI), Reel Love
  Production, Inc. (RLPI), Reel Love on Film, LLC (RLOF), Sibling
  Theatricals, Inc. (STI), Sibling Music Corporation (SMC), Hats Holdings,
  Inc. (HHI) and Sibling Properties, Inc. (SPPI) for the period from July
  1, 2005 to June 30, 2006. All significant intercompany accounts and
  transactions have been eliminated in consolidation.REVENUE
  RECOGNITIONThe Company
  recognizes revenue form the sale of its services in accordance with the U.S.
  Securities and Exchange Commissions (SEC) Staff Accounting Bulletin No. 101,
  Revenue Recognition in Financial Statements. In SAB No. 101, the SEC
  expressed its view that revenue was realizable and earned when the following
  four criteria were met (1) persuasive evidence of an arrangement exists; (2)
  delivery has occurred and title has passed according to the sale terms; (3)
  the sellers price to the buyer is fixed or determinable; and (4)
  collectibility is reasonably assured.The Company
  earns and receives revenue from several different sources and recognizes each
  source of income as defined in the governing agreement related to each income
  source as described more fully below:Theatrical
  Consulting Fees: The Company recognizes revenue from
  administrative services at the time the services are rendered, on a periodic
  basis. Agreements with the Company typically provide for services on a
  monthly basis, and as such, revenue will be recognized monthly, when services
  are provided.F-9

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

2.
SUMMARY OF
  SIGNIFICANT ACCOUNTING POLICIES (continued)Financing
  Fees: The Company recognizes revenue for fees
  associated with financing film productions as earned when services are fixed
  and earned when provided. The Company typically receives the payment for
  these services upon the complete capitalization of the production.Venue
  Management Fees: The Company shall recognize revenue
  from venue management monthly as earned, when services are provided.Producer
  Fees and Office Fees: The Company shall recognize
  revenue from the producer fees and office fees (budgeted fees paid in the
  development, management and production of a play or musical or other
  live-stage event, and feature films) as earned and upon the a projects
  capitalization and when persuasive evidence of an arrangement exits, the fees
  are determinable and collectibility is reasonably assured. Any fees received
  prior to capitalization shall be treated as deferred income and recognized
  when earned in accordance with any governing agreement. The determination of
  fees and collectibility of fees vary on a case-by-case basis and management
  carefully reviews each proposed production constantly as to how the Company earns
  and recognizes its fees.Royalties
  and Net Profit Participation: As a producer of
  entertainment projects, the Company normally acts as a general partner or
  managing member entitled to receive a share of royalties from box office
  revenues and a share of net profits upon the recoupment of the initial
  capitalization repaid to investors of such project. Typically, royalties are
  determined and paid on a weekly basis and the Company shall recognize revenue
  from these royalties as reported and earned. Net profit participation and
  other residual income are typically reported on varying periods (monthly,
  quarterly and annually) and the Company shall recognize this revenue as
  earned when it is reported and deemed payable to the Company.Box Office
  Revenues & Merchandise Income: For those
  projects and productions for which tickets are sold and whereby the Company
  is required to consolidate financial statements from the operations of
  subsidiaries or variable interest entities, the Company shall report and recognize
  revenues upon the completion of each performance as reported and determined
  by the theater box office treasurer and ticket agency, if any, engaged for a
  particular production. Currently we do not own a theater. Refund policies are
  established by the box office of each particular theater, as they hold the
  funds until the performance is complete.Proceeds
  from the Sale of Film Assets: For income received
  through the completion and sale of independent feature films and similar
  rights, excluding producer fees earned upon the finance or from the
  production of the film, the Company shall recognize income in a manner
  consistent with SOP 00-2.F-10

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

2.
SUMMARY OF
  SIGNIFICANT ACCOUNTING POLICIES (continued)USE OF
  ESTIMATESThe
  preparation of financial statements in conformity with accounting principles
  generally accepted in the United States of America requires management to
  make estimates and assumptions that affect the reported amounts of assets and
  liabilities and disclosure of contingent assets and liabilities at the date
  of the financial statements and the reported amounts of revenues and expenses
  during the reporting period. Actual results could differ from those estimates.SIGNIFICANT
  ESTIMATESSeveral
  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s estimates
  related to the valuation of motion picture rights acquired by the Company and
  the valuation of donated office space and services from an executive.FINANCIAL
  INSTRUMENTSThe
  following disclosure of the estimated fair value of financial instruments is
  made in accordance with the requirements of SFAS No. 107 Disclosures about
  the Estimated Fair Value of Financial Instruments. The estimated fair amount
  has been determined by using available market information and valuation
  methodologies as described below. However, considerable judgment is required
  in interpreting market data to develop the estimates of fair value.
  Accordingly, the estimates presented herein are not necessarily indicative of
  the amounts that the Company could realize in a current market exchange. The
  use of different market assumptions and/or estimation methodologies may have
  a material effect on the estimated fair market value amounts.The
  estimated fair values of the Companys financial instruments as of June 30,
  2006, approximated their carrying amounts.Cash and
  cash equivalents, due to related companies and accrued liabilities, as
  reflected in the balance sheet, approximate fair value because of the
  short-term maturity of these instruments.CASH AND CASH
  EQUIVALENTSThe Company
  considers all highly liquid investments with a original maturities of three
  months or less as cash equivalents.INCOME TAXESThe Company
  accounts for income taxes under Statement of Financial Accounting Standards
  No. 109 Accounting for Income Taxes. Under Statement No. 109, the asset and
  liability method is used in accounting for income taxes. Deferred taxes are
  recognized for temporary differences between the basis of assets and
  liabilities for financial statement and income tax purposes. The temporary
  differences relateF-11

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

2.
SUMMARY OF
  SIGNIFICANT ACCOUNTING POLICIES (continued)primarily to
  net operating loss carry forwards. The deferred taxes represent the future
  tax return consequences of those differences, which will either be taxable or
  deductible when the assets and liabilities are recovered or settled.
  Valuation allowances are established, when necessary, to reduce deferred tax
  assets to the amount expected to be realized. Income tax expenses were
  $2,795, $806 and $5,031 for the years ended June 30, 2006 and 2005 and from
  July 1, 2000 (date of inception) to June 30, 2006, respectively.STOCK-BASED
  COMPENSATIONThe company
  accounts for stock, stock options and stock warrants issued for services and
  compensation by employees under the fair value method. For non-employees, the
  fair market value of the Companys stock on the date of stock issuance or
  option/grant is used. The Company determined the fair market value of the
  warrants/options issued under the Black-Scholes Pricing Model. Effective
  January 1, 2006, the company adopted the provisions of Statement of Financial
  Accounting Standards (SFAS) 123(R), SHARE-BASED PAYMENT, which establishes
  accounting for equity instruments exchanged for employee services. Under the
  provisions of SFAS 123(R), share-based compensation cost is measured at the
  grant date, based on the fair value of the award, and is recognized as an
  expense over the employees requisite service period (generally the vesting
  period of the equity grant).Prior to
  January 1, 2006, the Company accounted for share-based compensation to
  employees in accordance with Accounting Principles Board (APB) Opinion No.
  25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related interpretations.
  The Company also followed the disclosure requirements of SFAS 123, ACCOUNTING
  FOR STOCK-BASED COMPENSATION. The Company elected to adopt the modified
  prospective transition method as provided by SFAS 123(R) and, accordingly,
  financial statement amounts for the prior periods presented in the Form
  10-QSB have not been restated to reflect the fair value method of expensing
  share-based compensation.This method
  requires the Company to account for these transactions based on the fair
  value of the consideration received or the fair value of the equity
  instruments issued, whichever is more reliably measured.The Company
  accounts for stock-based compensation to non-employees under the provisions
  of EITF 96-18 and EITF 00-18 with regards to determining the measurement date
  and fair value of such issuances. Expense for contingently issuable
  securities is recognized based on the determination of the existence of a
  performance commitment (determined based on substantial disincentives for
  non-performance for contracts that are contingent on performance alone).F-12

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

2.
SUMMARY
  OF SIGNIFICANT ACCOUNTING POLICIES (continued)NET
  LOSS PER SHAREBasic loss per common share (LPS) is calculated
  by dividing net loss by the weighted average number of common shares
  outstanding during the period. Diluted earnings per common share are
  calculated by adjusting the weighted average outstanding shares, assuming
  conversion of all potentially dilutive stock options. As of June 30, 2006
  potentially dilutive securities include 5,901,972 warrants. The common stock
  equivalents were not included in the number of total shares outstanding as
  their effect would be anti-dilutive. The Company has not issued any
  potentially dilutive common shares. The numerator and denominator used in the
  basic and diluted net loss per share of common stock computations are
  presented in the following table:June 30,2006

2005NUMERATOR
  FOR BASIC AND DILUTED LPSNet loss to
common shareholders

$
(1,444,614
)
$
(298,584
)DENOMINATOR
  FOR BASIC AND DILUTED LPSWeighted
average shares of common stock outstanding


28,051,472


9,272,972LPS
   Basic and diluted

$
(0.06
)
$
(0.03
)The Company recognized a cumulative net loss
  since inception of the development stage of $1,898,886.CONCENTRATION OF CREDIT AND BUSINESS RISKThe concentration of 100% of the Companys
  revenues and related receivables as of and for the year ended June 30, 2006
  being from related companies, as described below in Due from Related
  Parties, exposes the Company to a relatively greater degree of risk of loss
  than would be the case with greater customer diversification.CAPITALIZATION OF FILM PRODUCTION DEVELOPMENT
  COSTSThe Company follows SOP 00-2 for the
  capitalization of certain film production development costs. Production
  development costs capitalized by the Company include, but are not limited to,
  payments to directors, authors, composers, crews, office expenses and travel
  costs directly associated with bringing the production to market. If a
  property under development has not been set for production within three years
  from the first capitalized transaction related to that property, the Company
  will write off those capitalized costs. The Company shall begin amortization
  of capitalized costs when a production is open to the public.F-13

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)CAPITALIZATION OF THEATRICAL PRODUCTION
  DEVELOPMENT COSTSProduction development costs capitalized by the
  Company include, but are not limited to, payments to directors, authors,
  composers, crews, office expenses and travel costs directly associated with
  bringing the production to market. Management periodically reviews each
  theatrical production and will write down or write off those capitalized
  costs if management determines that the likelihood to recoup costs and/or
  receive earnings from all sources related to the production has diminished.
  The Company shall begin amortization of capitalized costs when a production
  is open to the public or is licensed to third parties.MARKETING AND ADVERTISING COSTSThe Company expenses all marketing and
  advertising costs as incurred.PROPERTYThe Company shall value its property and
  equipment at cost and uses the straight line depreciation method to
  depreciate its property and equipment. The company recognized accumulated
  depreciation of $1,280 at year end. For the years ended June 30, 2006 and
  2005, the Company recognized depreciation expense of $747 and $533,
  respectively.3.
RELATED PARTY TRANSACTIONS SHARE EXCHANGE
  AGREEMENTOn June 17, 2005, the Company entered into a
  share exchange agreement with SPI and all of the shareholders of SPI, where
  the Company agreed to acquire all of the issued and outstanding shares of SPI
  in consideration of the issuance of an aggregate of 10,785,000 shares of the
  Companys common stock, at a price of $0.25 per share, on a basis of 60,000
  Company shares for each share of SPI issued and outstanding on June 17, 2005.
  SPI is engaged in the acquisition of rights to, and development of, features
  films as an independent producer. At the time of the Share Exchange Agreement,
  SEI was concentrating of live-event and other theatrical operation. SPI had
  entered into an agreement with J.P. Turner & Company to solicit and
  promote the SPFLLC to accredited investors, and the agreement was negotiated
  along with business models prepared by the Company on behalf of its
  consulting agreement with SEI and SPI. It was believed that the work
  performed to date and contracts and assets developed by SPI had value. The
  Company continued interest and involvement of the advancement of SPI provided
  the Companys desire along with its advisors to acquire SPI. As a result of
  the share exchange, the Company also gained ownership of SPFLLC, a Delaware
  corporation formed as the investment vehicle to finance and fund two or three
  independent films to be produced by SPI, Reel Love on Film LLC (RLFLLC) and
  its managing member, Reel Love Productions, Inc., (RLPI) formed to develop,
  finance and produce the film Reel Love. As a result of this transaction,
  SEI gained an ownership interest of 28.64% in the Company. We have reviewed
  the ownership of SPI, SEI, and SEGI at the time of sale, and reviewed the
  issue of commonF-14

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

control in connection with the acquisition of SPI. No group of shareholders and their family
  members hold greater than 50% interest in each of these entities. Further, no
  contemporaneous written evidence of an agreement to vote a majority of the
  entities shares in concert exists between any of these shareholders. Therefore,
  we believe that common control does not exist. Therefore, as a result of the
  acquisition, the Company recognized goodwill of $2,779,624, based on the
  excess of the fair value of the shares issued over the fair values of the
  assets and liabilities acquired. The exchange of 10,785,000 shares was
  determined by management based on its assessment of the net present value of
  projected cash flows of SPI, which exceed the value of the recorded goodwill
  at June 30, 2005. The Company updated and re-evaluated the projected cash
  flows of SPI at June 30, 2006 and determined that such values exceed the
  value of the reporting unit including recorded goodwill at June 30, 2006 and
  at the time of the filing of this report, therefore no goodwill impairment is
  indicated for the year ended June 30, 2006. A condensed balance sheet of SPI
  at the time of acquisition follows:SPIConsolidatedJune 17,2005ASSETSOther
AssetsOptions
Purchased


21,000.00Total Other
Assets


21,000.00TOTAL ASSETS


21,000.00LIABILITIES & EQUITYLiabilitiesCurrent
LiabilitiesAccounts
Payable


12,511.96Other
Current LiabilitiesDue to
Related Parties


91,862.18Total Other
Current
  Liabilities


91,862.18Total
Current Liabilities


104,374.14Total
Liabilities


104,374.14EquityCommon
Stock (no par
  value)


1,797.50Accumulated Deficit


(85,171.64
)Total
Equity


(83,374.14
)TOTAL LIABILITIES & EQUITY


21,000.00F-15

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)

Following is pro forma financial information for
  the years ended June 30, 2005, prepared to show the results of operations of
  the combined companies as if the business combination took place as of the
  beginning of the periods presented:Year endedJune 30,2005Revenue
  - related parties

$
79,500Loss
  from operations

$
(315,685
)Other
  income (expense)

$
5,159Loss
  per common share

$
(0.03
)F-16

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS

3.
RELATED
  PARTY TRANSACTIONS (continued)DUE FROM
  RELATED PARTIESSince April
  1, 2004, the Company provides consulting services to another related company,
  the New Denver Civic Theatre, Inc., (DCT) a Colorado not-for-profit
  corporation. Under the agreement, in July 2005, DCT compensated the Company
  $6,900 for services as booking agent for the theatre, marketing services for
  the theatres alternative uses, general services in the management of the
  theatre, the services of Executive Director James S. Cardwell and consulting
  services of a non-profit theatre. Beginning August 1, 2005, fees were
  increased to $8,775 per month. The Company recognized revenue for these
  services in the amount of $103,629 and $79,500 for the years ended June 30,
  2006 and 2005, respectively, and a cumulative amount since inception of
  development stage of $203,379.The Company
  bases allowances on uncollectible amounts on analysis of each account
  receivable. Due to the relationship of executive officers among the Company
  and DCT, the transparency of the DCTs financial and operational information
  to the Company, and the current success surrounding the Companys newest
  theatrical production, HATS!, running at the DCT, the Companys management
  does not believe an allowance against the current receivables is necessary..
  The Company fully expects to collect 100% of its receivables from DCT. In a
  situation where a determination of the allowance of uncollectible accounts is
  deemed necessary, the analysis begins by first aging the accounts receivable
  and collections on those receivables and then comparing that amount against
  the amount of receivables collected in each aging category. The Company
  recognizes standard accounts receivable as delinquent after 120 days, and
  shall write-off certain receivables if they are not collected within 12
  months after becoming delinquent, unless a payment plan is negotiated and
  agreed upon at that time.Mitchell
  Maxwell, Victoria Maxwell, James Cardwell and Richard Bernstein are Directors
  of SEGI and DCT. Richard Bernstein is the President of DCT, and an Executive
  Officer of SEGI. James Cardwell is Executive Director of DCT and CFO of SEGI.
  Mitchell Maxwell and Victoria Maxwell are President and Vice President,
  respectively, of SEGI.We have
  received $26,400 in the aggregate from DCT for the fiscal year ended June 30,
  2006. We have not received any monies from DCT subsequent to June 30, 2006.
  We have made cash payments to SEI of approximately $235,521 and $520,709 in
  the aggregate for the year ended June 30, 2005 and fiscal year ended June 30,
  2006 to date. We received cash payments from SEI of approximately zero and
  $42,500 for the year ended June 30, 2005 and fiscal year ended June 30, 2006
  to date.As of June
  30, 2006, DCT was indebted to the Company in the amount of $107,977 for
  consulting services and $70,223 for money the Company had loaned (including
  interest of $2,423) to the theatre for operational expenses during and
  subsequent to the run of the production Newsical the Musical.The Company
  had a balance of $109,554 due from related parties at June 30, 2006,
  including the $107,977 noted above.F-17

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS

DUE TO
  RELATED PARTIESSince
  October, 2004, the Company has had an agreement with SEI for office space,
  related utilities, shipping and management services. On July 1, 2005 the
  Company agreed to amend its consulting agreement with SEI whereby management
  fees decrease from $21,800 per month to $12,800 per month beginning July 1,
  2005. On September 1, 2005 the consulting agreement was amended whereby
  management fees increase to $19,600 per month. These changes were due to the
  change in management services being provided by SEI. As of February 1, 2006,
  this agreement was terminated and payments stopped due to the change of
  management and executive officers from the employment of SEI to the Company.
  As of June 30, 2006 there were no outstanding payables due to SEI for these
  services. For the years ended June 30, 2006 and 2005, management fee charges
  totaled $123,700 and 126,712, respectively.The Company
  recognized a total of $33,362 due to SEI at June 30, 2006 for expenses that
  SEI paid on the Companys behalf: $17,656 in legal fees incurred by SPI,
  $15,706 in option payments for the rights to produce the film Reel Love.
  The debts associated with SPI and Reel Love were assumed by the Company from
  its purchase of SPI, who originally owed these monies to SEI for film
  expenses SEI paid on SPIs behalf.ASSIGNMENT
  OF OPTION TO PURCHASE REAL ESTATEOn March 17,
  2004, the DCT sold all of its real estate, property and equipment in the DCT
  Complex to Zbigniew Mania (Mania) and at the same time, 721 Santa Fe Realty
  Company, LLC (SFR)(a wholly owned subsidiary of SEI) entered into a 49-year
  lease with Mania for the DCT Complex with an option to repurchase the DCT
  Complex at anytime during the term of the lease beginning one year after the
  purchase date, or March 17, 2005 during the term of the lease for $1.465
  million dollars on or before midnight on January 1, 2053.On July 7,
  2005, the Company entered into an agreement to pay twenty thousand ($20,000)
  dollars to SEI and fifteen thousand ($15,000) dollars within thirty (30) days
  of this agreement to the DCT to cause SFR and DCT to assign its right to
  purchase the real estate, equipment, improvements and other property known as
  the Denver Civic Theatre Complex.5.
INVESTMENT
  IN RELATED COMPANY STOCKOn October
  15, 2004, the Company signed an agreement with SEI whereby the Company would
  be allowed to acquire a maximum of 700,000 shares of common stock in SEI over
  a six month period (Investment Period) at the rate of $0.50 per share.
  Under the agreement, stock certificates will be issued at the end of each
  calendar quarter rounded to the nearest $10,000, or 20,000 Shares. There is
  no minimum amount required to be invested. The Company may advance and make
  payment at any amount during any time during the Investment Period. As of
  December 31, 2005, the Company had invested an aggregate of $350,000 and
  received 700,000 shares of common stock at $0.50 per share. The Company holds
  a 3.95% ownership in SEI. The Company accounts for its investment in SEI
  using the Equity Method of accounting and periodically re-evaluates its value
  to recognize any potential impairment in value. In accordance with EITF
  02-14, the Company accounts for its investment using the equity method of
  accounting due to the Companys ability to exercise significant influence
  over operating and financial policies of the investee and its determination
  of ownership of in-substance common stock of the investee. For the year ended
  June 30, 2005 and 2006, we recognized equity losses of $4,353 and $2,069,
  respectively, from this investment. Management periodically tests the asset
  for impairment throughF-18

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS

the revision
  and revisiting of its expected future cash flows. For the year ended June 30,
  2006 the Company recognized an impairment of $233,621. This impairment was
  made to bring the value of the investment down the estimated recoverable
  amount based on the Companys percentage ownership of the estimated fair
  value of SEIs total outstanding shares. The Company will continue to
  rigorously assess its investment. As of June 30, 2006, the Company determined
  that no further impairment was necessary.6.
LOANS
  RECEIVABLE  RELATED PARTYFor the year
  ended June 30, 2006, the Company loaned an aggregate of $67,800 to DCT. These
  loans carry an interest rate of 8% and are payable upon demand.7.
WRITE-OFF OF
  LOAN RECEIVABLEIn July of
  2005, the theatrical production Newsical the Musical closed the show. The
  ability of the production to repay the loan ended with the closing of the
  show. Therefore, the Company wrote-off the $3,750 loan issued to the
  production in July of 2005.8.
ADVANCES AND
  PREPAIDSThe Company
  entered into an agreement with Romano, Ltd., on October 16, 2005, to provide
  a variety of corporate services including introducing the Company to clients
  within the Orthodox Jewish community in Europe and the United States as well
  as other influential corporate public stock promoters, investment bankers and
  other companies related to the growth and promotion of companies in the
  public markets. The 120,000 shares issued as compensation cover the
  contractual period October 16, 2005 to October 15, 2006. Advances and
  prepaids includes $8,750 in stock-based prepaid consulting fees for the year
  ended June 30, 2006.On November
  4, 2005, the Company entered into a 12 month consulting agreement with Moneta
  Capital Advisors (Moneta) to provide a variety of corporate services
  including introducing the Company to third party marketing companies,
  investment bankers and other corporate promotion companies. The Company
  issued Moneta 100,000 shares as compensation to cover the period November 1,
  2005 to October 31, 2006. Advances and prepaids includes $8,333 in
  stock-based pre-paid consulting fees for the year ended June 30, 2006.The Company
  entered into an agreement with Venture Catalyst, LLC on March 15, 2006, to
  provide a variety of corporate services including introducing the Company to
  third party marketing companies, investment bankers and other corporate
  promotion companies in exchange for restricted Common Stock in the amount of
  25,000 shares each month during the term of the contract. The contract covers
  the period March 15, 2006 to September 15, 2006. Advances and prepaids also
  includes $3,438 for half of one month of stock-based prepaid consulting costs
  for Venture Catalyst.The Company
  entered into an agreement with Zbigniew Mania on June 14, 2006, to consult
  and assist the Company in structuring, operating and growing its business and
  with advisory and consulting services related to real estate, leasing and
  financial matters related to the DCT. The contract covers the period June 15,
  2006 to June 14, 2007. Prepaids and advances includes $26,354 for prepaid
  consulting costs for Zbigniew Mania.Advances and
  prepaids also includes $1,745 of prepaid legal expenses.F-19

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS

9.
RECOUPABLE
  ADVANCESOn November
  4, 2005, the Company entered into a 12 month consulting agreement with Moneta
  Capital Advisors (Moneta) to provide a variety of corporate services
  including introducing the Company to third party marketing companies,
  investment bankers and other corporate promotion companies. Included in the
  monthly fees paid to Moneta is recoupable advances of $4,166.67 per month, of
  which $3,333 is recoupable, for each of the first four consecutive months of
  the contract period, and increasing to $10,000 per month, of which $5,000 is
  recoupable, for each of the next 8 consecutive months. A portion of the
  monthly fees paid to Moneta are considered general corporate consulting fees.
  The remainder is considered an advance from earnings expected for Monetas
  share of income derived from specific projects known and unknown for which
  Moneta would be entitled to. Total recoupable costs at June 30, 2006 were
  $33,333.10.
PRODUCTION
  DEVELOPMENT COSTSFor the year
  ended June 30, 2006, the Company incurred capitalized costs to develop
  theatrical and independent film productions; $96,783 on development of HATS!
  and $71,869 towards the development of the Broadway production of OATS. On
  June 11, 2005 the Company entered into an agreement to pay thirty thousand
  ($30,000) dollars to SEI and SEI agreed to assign fifteen (15%) percent of
  the Adjusted Net Profits of Solace LLC (owner of the theatrical production
  Once Around The Sun (OATS) as defined by the Operating Agreement for
  Solace, LLC for the Off-Broadway production of the musical OATS. OATS profits
  are paid from SEIs share of Adjusted Net profits it receives as Managing
  Member of Solace, LLC. The Company paid this amount to SEI in full on June
  13, 2005. Solace, LLC was capitalized at $1 million. The typical investor
  would have the first right of recoupment. The Companys investment does not
  provide for the first right of recoupment. Therefore, the Company settled
  with SEI on a discounted value of $30,000.11.
OTHER
  INVESTMENTSOn April 20,
  2005, the Company invested $2,500 in the Denver, Colorado production of
  NEWSical the Musical. This investment was written off at June 30, 2006 due
  to managements analysis that the collectibility of the return of this
  investment was unlikely. On April 18, 2006, the Company invested $30,000 in
  the Denver, Colorado production of The Yiddish Are Coming. This investment
  was written off at June 30, 2006 after the close of the production and
  managements analysis that the collectibility of the return of this
  investment was unlikely. These investments represented direct, minority
  interest investments in third party productions with no further
  responsibility by the Company. Other Investments also includes a $30,000
  acquisition of 15% of the production of OATS, as described in the footnote
  above Assignment/Investment of Theatrical Production. On May 24, 2006, the
  Company invested $10,000 in a DVD release about Bariatrics. At June 30, 2006,
  other investments totaled $58,626.F-20

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS

11.
OTHER
  INVESTMENTS (continued)The Company
  periodically invests in theatrical and film productions in the form of
  literary options for either live-stage performance rights, film rights and
  other ancillary rights, as well as direct investments in third party limited
  partnerships and/or limited liability companies engaged in the development
  and production of entertainment projects. Direct investments in productions
  may represent a minority limited interests with limited or no further
  responsibility by the Company. Most limited investments do not provide any
  right to resale, but may provide the right to refund if the project is not
  fully developed or capitalized. Certain options or larger investments may
  provide the Company with additional rights including the right to be the
  owner or co-owner of a project, or the general partner or managing member of
  the related investment entity with the ability to make key decisions
  regarding the future development, production and disposition of an
  entertainment project or the production. Management reviews the Companys
  investment portfolio periodically to evaluate its fair value.12.
OPTIONS
  PURCHASED/DEPOSITSAs of June
  30, 2006, the Company had paid a total of $20,000 for the option for the
  right to produce the musical HATS!. In addition, the Company paid $18,000
  for the rights to produce the independent film Reel Love.The Company
  paid a deposit of $150,000 pursuant to the Letter of Intent with Dick Foster
  Productions, Inc. (DFP) to purchase 80% of the outstanding shares of DFP.Also
  included in deposits is $35,000 paid to affiliates in connection with an
  option to purchase real estate (see Note 3).13.
COMMON STOCK
  ISSUANCESOn July 2,
  2004, the Company commenced an offering to sell up to a maximum of 1,500,000
  units (Unit(s)). The price of each unit is one ($1.00) dollar for a total
  aggregate principal amount of $1,500,000. Each Unit sold included four (4)
  shares of its common stock, par value $0.001 per share and one (1) Series A-1
  Warrant. For the year ended June 30, 2006, an aggregate principal amount of
  $545,000 comprising 545,000 units (or 2,180,000 shares) was sold under this
  offering. Included with the related issuances are 545,000 warrants entitling
  the investors to purchase at $0.50 per share an additional 545,000 shares.
  This offering expired on December 31, 2005.In January,
  2006 the Company sold 65,000 units (each unit consists of four shares and two
  warrants) at a price of $1.00 per unit or $65,000 in the aggregate, or
  260,000 shares in the aggregate to one accredited investor. These units were
  sold pursuant to our Series C private placement of up to 565,000 units, or
  2,260,000 million shares for an aggregate offering price of $565,000. The
  Series C-1 warrant entitles the holder thereof to purchase one share of the
  Companys common stock at a price of $0.50 per share for a period of three
  (3) years commencing on the closing date. Accordingly, this investor may
  acquire up to an additional 65,000 shares. The total raised under our Series
  C private placement represents 260,000 shares, or $65,000 in the aggregate.
  This offering was terminated on January 25, 2006.In addition,
  In January through May, 2006, the Company sold 499,368 units (each unit
  consists of four shares and four warrants, two Series D-1 warrants and two
  Series D-2 warrants) at a price of $1.10 per unit or $549,305 in the
  aggregate, or 1,997,472 shares in the aggregate toF-21

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS

13.
COMMON STOCK
  ISSUANCES (continued)accredited
  investors. These units were sold pursuant to our Series D private placement
  of up to 500,000 units, or 2 million shares for an aggregate offering price
  of $550,000. The Series D-1 warrants entitle the holder thereof to purchase
  one share of the Companys common stock at a price of $0.55 per share for a
  period of five (5) years commencing on the closing date. The Series D-2
  warrants entitle the holder thereof to purchase one share of the Companys
  common stock at a price of $0.75 per share for a period of five (5) years
  commencing on the closing date. Accordingly, investors may acquire up to an
  additional 1,997,472 shares. The total raised under our Series D private
  placement represents 1,997,472 shares, or $549,305 in the aggregate.On May 8, 2006, the Company commenced an offering pursuant to which
  it will offer and sell up to a maximum, aggregate of 300,000 units
  (Unit(s)). The price of each unit is one dollar and ten cents ($1.10) for a
  total aggregate principal amount of $330,000. Each Unit sold included four
  (4) shares of common stock, at par value $0.001 per share and two (2) Series
  E-1 stock purchase warrants and two (2) Series E-2 stock purchase warrants.
  Each Series E-1 Warrant entitles the holder thereof to purchase one share of
  the Companys common stock at a price of $0.55 per share for a period of five
  (5) years commencing on the date of the acceptance of the subscription
  agreement. Each Series E-2 Warrant entitles the holder thereof to purchase
  one share of the Companys common stock at a price of $0.75 per share for a
  period of five (5) years commencing on the date of the acceptance of the
  subscription agreement. As ofJune 30, 2006, the Company has sold the maximum
  300,000 units in the aggregate, or 1,200,000 shares in the aggregate, or
  $330,000 in the aggregate. This offering was closed June 5, 2006.On June 7, 2006, the Company commenced an offering pursuant to which
  it will offer and sell up to a maximum, aggregate of 1,000,000 units
  (Unit(s)). The price of each unit is one dollar and forty cents ($1.40) for
  a total aggregate principal amount of $1,999,999.40. Each Unit sold shall
  include four (4) shares of common stock, at par value $0.001 per share and
  two (2) Series F-1 stock purchase warrants and two (2) Series F-2 stock
  purchase warrants. Each Series F-1 Warrant entitles the holder thereof to
  purchase one share of the Companys common stock at a price of $0.75 per
  share for a period of five (5) years commencing on the date of the acceptance
  of the subscription agreement. Each Series F-2 Warrant entitles the holder
  thereof to purchase one share of the Companys common stock at a price of
  $1.00 per share for a period of five (5) years commencing on the date of the
  acceptance of the subscription agreement. As of June 30, 2006, the Company
  sold 33,500 Units, or 134,000 shares in the aggregate, or $67,000 in the
  aggregate. This offering is currently open.On June 14,
  2006, the Company entered into an agreement with Zbigniew Mania to consult
  and assist the Company in structuring, operating and growing its business and
  with advisory and consulting services related to real estate, leasing and
  financial matters related to the DCT as reasonably requested by the Company
  in exchange for 100,000 shares of common stock and 150,000 series G-1
  warrants. The contract covers the period June 15, 2006 to June 14, 2007. The
  expense will be recorded as compensation at the fair value of the stock and
  warrants issued of $27,500 in equal amounts over each quarter. Warrants were
  valued based on the Black-Scholes Model of valuation. Expense of $1,146 has
  been recognized for the year ended June 30, 2006. Each G-1 warrant will
  entitle the warrant holder to purchase one share of the Companys common
  stock at a price of $0.55 per share for a period of three (3) three years.F-22

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS

13.
COMMON STOCK
  ISSUANCES (continued)On June 28, 2006, the Company commenced an offering pursuant to which
  it will offer on a no minimum basis, sixty-five (65) units (the
  Units) at a purchase price of $10,000.00 per Unit. Each Unit consists of
  $10,000 principal amount of the Companys 8% Series H Convertible Secured
  Debentures (the Convertible Debenture); the outstanding principal balance
  Convertible Debentures is convertible into shares of the Companys common
  stock, $0.001 par value per share (the Common Stock), at the rate of $0.50
  per share; for each $1.00 of the Convertible Debenture, converted by the
  Holder, the Holder shall be entitled to receive (x) one (1) stock purchase
  warrant (the Series H-2 Warrant) and (y) one (1) stock purchase warrant
  (the Series H-3 Warrant). Each Series H-2 Warrant entitles the holder
  thereof to purchase one share of the Companys common stock at a price of
  $0.75 per share for a period of five (5) years commencing on the conversion
  date and each Series H-3 Warrant entitles the holder thereof to purchase one
  share of the Companys common stock at a price of $1.00 per share for a
  period of five (5) years commencing on the conversion date. The Convertible
  Debentures shall have a term of one year by the Company and shall bear
  interest at the rate of 8% per annum payable quarterly on the first day of
  each calendar quarter and shall be prorated for any partial calendar quarter
  falling within the term of the Convertible Debenture. Subsequent to year-end,
  the Company has sold the maximum 65 units and the offering has been closed.As equity
  instruments, the Company values the warrants noted above using the
  Black-Scholes Model of valuation at the time the warrants are granted.On July 18,
  2005, the Company entered into an agreement with Var Growth Corporation to
  provide a variety of corporate services including introducing the Company to
  third party marketing companies, investment bankers and other corporate
  promotion companies including IceColdStock.com in exchange for restricted
  Common Stock in the aggregate of 350,000 shares. The issued shares cover the
  contractual period July 1, 2005 to June 30, 2006. The expense has been
  recorded as compensation for services at the fair market value in four equal
  amounts in each of the four quarters over the contract term at the price of
  $0.25 per share and valued at $21,875 per quarter ($87,500 in the aggregate).Previously,
  the Company entered into two agreements with Var Growth Corporation, on
  November 4, 2004 and November 23, 2004, to provide a variety of corporate
  services including introducing the Company to third party marketing
  companies, investment bankers and other corporate promotion companies
  including IceColdStock.com in exchange for restricted Common Stock in the
  aggregate of 375,000 shares. The issued shares cover the contractual periods
  of July 1, 2004 to June 30, 2005 for 350,000 shares and October 1, 2004 to
  September 30, 2005 for 25,000 shares, respectively. The expense was recorded
  as compensation for services at the fair market value on the dates of
  issuance at the price of $0.25 per share, or $6,250 in the aggregate for the
  contract dated November 4, 2004 for the period of October 1, 2004 to
  September 30, 2005 and $87,500 in the aggregate for the contract dated
  November 23, 2004 for the period of July 1, 2004 to June 30, 2005.On October
  16, 2005, the Company entered into an agreement with Romano, Ltd. to provide
  a variety of corporate services including introducing the Company to clients
  within the Orthodox Jewish community in Europe and the United States as well
  as other influential corporate public stock promoters, investment bankers and
  other companies related to the growth and promotion of companies in the
  public markets in exchange for restricted Common Stock in the aggregate ofF-23

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS

13.
COMMON STOCK
  ISSUANCES (continued)120,000
  shares. The issued shares cover the contractual period October 16, 2005 to
  October 15, 2006. The expense was recorded as compensation for services at
  the fair market value in four equal amounts in each of the four quarters over
  the contract term at the price of $0.25 per share, or $7,500 per quarter
  ($30,000 in the aggregate), for the period of October 16, 2005 to October 15,
  2006, resulting in a portion recognized as prepaid (see Note 8).On November
  4, 2005, the Company entered into an agreement with Moneta Capital Advisors
  Inc., to provide a variety of corporate services including introducing the
  Company to third party marketing companies, investment bankers and other
  corporate promotion companies in exchange for restricted Common Stock in the
  aggregate of 100,000 shares. The issued shares cover the contractual period
  November 1, 2005 to October 31, 2006. The expense was recorded as
  compensation at the fair market value of the stock and warrants (see below)
  issued, in four equal amounts in each of the four quarters over the contract
  term at $6,250 per quarter ($25,000 in the aggregate), for the period of
  November 1, 2005 to October 31, 2006, resulting in a portion recognized as
  prepaid (see Note 8). Under the contract the Company additionally granted
  200,000 warrants to acquire 200,000 shares at the price of $0.50 per share
  for a period of five (5) years. The Company valued these warrants using the
  Black-Scholes model of valuation. Additionally, there was an addendum dated
  May 8, 2006 signed between Moneta and the Company under which the Company
  shall deliver to Moneta a five (5) year warrant to purchase an aggregate of
  up to Five Million (5,000,000) shares of the Companys stock, $.001 par value
  per share and at an exercise price of $0.275 per share. These warrants shall
  be held in trust and shall be issued as compensation for services rendered
  contingent upon the successful completion of a merger between the Company and
  Sona. We did not recognize the value of these warrants because there is no
  material disincentive for non-performance under the agreement. Further, under
  the contract the Company shall grant Moneta up to 228,000 warrants to
  purchase 228,000 shares of the Companys common stock contingent upon Moneta
  raising its share of the SOFIA movie fund. An expense was recognized in the
  amount of $6,744 for these warrants for the year ended June 30, 2006, as
  there was a substantial disincentive for non-performance.On March 15,
  2006, the Company entered into an agreement with Venture Catalyst, LLC to
  provide a variety of corporate services including introducing the Company to
  third party marketing companies, investment bankers and other corporate
  promotion companies in exchange for restricted Common Stock in the amount of
  25,000 shares each month during the term of the contract. The contract covers
  the period March 15, 2006 to September 15, 2006. The expense has been
  recorded as compensation at the fair market value in each month (and on a
  pro-rata basis for the month of March) over the contract term at the price of
  $0.275 per share, or $24,063 in the aggregate, for the period of March 15,
  2006 to June 30, 2006.F-24

SIBLING ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS

Number of Shares

Weighted
  Avg.
  Exercise
  PriceOutstanding as of June 30,
  2004




$
Granted at
fair value


382,500

$
0.50Forfeited




$
Exercised




$
Outstanding as of June 30,
  2005


382,500

$
0.50Granted at
fair value


5,519,472

$
0.56Forfeited




$
Exercised




$
Outstanding as of June 30,
  2006


5,901,972

$
0.52Weighted
  Average
  Remaining
  Contractual
  Life (years)



ExercisableRange of 
  Exercise 
  Prices

Number of
  Warrants
  Outstanding


Weighted
  Average
  Exercise
  Price

Number
  of
  Warrants

Weighted
  Average
  Exercise
  Price$0.50


1,420,500


1.7

$
0.50


1,420,500

$
0.50$0.50 -$1.00


4,481,472


4.3

$
0.52


4,481,472

$
0.52TOTALS


5,901,972








5,901,972

$
0.52F-25

SIBLING
ENTERTAINMENT GROUP, INC.
(A Development Stage Company)NOTES TO THE FINANCIAL STATEMENTS

The Company
  granted an aggregate of 1,000,000 warrants to purchase 1,000,000 shares of
  the Companys common stock to officers and employees on May 8, 2006.  The value recognized as stock-based
  compensation for these warrants was $63,849 for the year ended June 30, 2006.14.
LONG TERM
  LIABILITIES - CONVERTIBLE DEBENTURESThe Company had
  offered for sale an aggregate principal amount of $300,000 of convertible
  debentures at par. The debentures were convertible at the option of the
  holder, into the Companys common stock at a conversion price of $0.25 per
  share.In November,
  2005, all issued convertible debentures, which represent an aggregate
  principal amount of $140,000 were converted, giving the holders an aggregate
  of 560,000 shares of the Companys common stock.15.
DEFERRED
  INCOME TAXESThe Company
  has a loss carryforward of approximately $1,956,600 at June 30, 2006 which
  may be offset against future taxable income. However, $213,388 of the loss
  carryfoward is due to a change in control of the Company in October 2003, the
  deductibility of these losses is subject to IRS Sec. 382 limitation (382
  Limitation). Under the limitation, the maximum annual amount which may be
  offset against future taxable income is limited to $4,260 and the
  carryforward loss expires in the year 2023. In addition, at June 30, 2006,
  the Company has a capital loss carryover for income tax purposes of $33,400
  which may be applied against taxable capital gains in future years. Due to
  the uncertainty regarding the success of the future operations and the
  limitation, management has not recorded a deferred tax asset.INCOME
TAXESThe income
  tax provision is comprised of the following:Federal

State

TotalYear Ended June 30, 2006Current

$


$
2,795

$
2,795Deferred








$


$
2,795

$
2,795Year Ended
  June 30, 2005Current

$


$
806

$
806Deferred








$


$
806

$
806F-26

SIBLING
ENTERTAINMENT GROUP, INC.
(A Development Stage Company)NOTES TO THE FINANCIAL STATEMENTS

15.
DEFERRED
  INCOME TAXES (Continued)The Companys
  deferred tax asset and liability as presented in the Companys financial
  statements are comprised of the following temporary differences:June 30,2006

2005Deferred Tax
  AssetNet Operating
Losses

$
707,000

$
146,000Valuation
Allowance


(707,000
)

(146,000
)Total Deferred
Tax Assets

$


$
Deferred
  taxes are recognized for temporary differences between the bases of assets
  and liabilities for financial statement and income tax purposes, and net
  operating loss.Subject to
  the 382 Limitation, the Company has total net operating loss carry forwards for
  future periods of $1,815,618 for both Federal and State tax purposes.  These net operating loss carry forwards
  may be used to reduce federal and state taxable income and tax liabilities in
  future years and expire in various years through June 30, 2023 and June 30,
  2025 for both State and Federal tax purposes.The Companys
  provision for income taxes differs from applying the statutory U.S. federal
  income tax rate to the income before taxes.
  The primary differences result from providing for state income taxes,
  generation of allowable tax credits and from deducting certain expenses for
  financial statement purposes but not for federal income tax purposes.A reconciliation
  between taxes computed at the federal statutory rate and the consolidated
  effective tax rate follows:June 30,2006

2005Federal
  statutory tax rate


-34.0
%

-34.0
%State income
  tax - net of federal tax benefit


0.0
%

0.0
%Valuation
  allowance


34.0
%

34.0
%0.0
%

0.0
%16.
OPERATING
  LEASEWe currently occupy space at 511 W. 25th St, NY, NY
  10001.  SEGI became the legal lessee
  of the space beginning December 1, 2005, when SEGI signed the renewal
  agreement for an additional 2 years.  Minimum
  monthly rent payments are $2,900 per month from December 1, 2005 to November
  30, 2006, and $2,987 from December 1, 2006 to November 30, 2007, or $35,409
  and $14,935 for the years ended June 30, 2007 and 2008, respectively.  We expect to continue to have no
  difficulty in securing and renting the current space.  Rent expense for the year ended June 30,
  2006 and 2005 were $36,205 and $9,675, respectively.F-27

SIBLING
ENTERTAINMENT GROUP, INC.
(A Development Stage Company)NOTES TO THE FINANCIAL STATEMENTS

17.
OTHER MATTERSOn May 18,
  2006, Sona Development Corp. (Sona) (OTCBB:SDVC) announced that it has
  executed a letter of intent to purchase 100% of SEGIs assets by acquiring
  all of its wholly owned subsidiaries and assuming up to $650,000 of debt
  associated with the issuance of our Series H Debenture offering.  A definitive agreement was signed on June
  28, 2006.  On June 28, 2006, a
  majority of the shareholders of the Company voted and approved the transaction.  Final approval of the Sona shareholders is
  being sought.18.
UNAUDITED CUMULATIVE AMOUNTS SINCE INCEPTION OF DEVELOPMENT STAGEThe Companys current auditors
did not audit Companys financial statements for the period of Development Stage July
1, 2000 through June 30, 2004, as current auditors were engaged on May 12, 2005. We have
been advised by the former Managing Partners of Livingston, Wachtell & Co. LLP
(Wachtell) that Wachtell is no longer doing business as a CPA firm as of
February 15, 2006. Given subsequent restatements of Companys financial statements
for the aforementioned period and impracticability for the Company to reissue an audit
report for aforementioned period due to the termination of the former auditors
practice, the Cumulative Accounts since Inception of Development Stage, July 1, 2000 to
June 30, 2006 are reported unaudited.19.
SUBSEQUENT
  EVENTSREVISION TO ISSUANCE
  OF UNREGISTERED EQUITY SECURITIESOn September
  24, 2006, the Company revised the terms of its Series F Offering whereby the
  price per Unit changed from $2.00 per Unit to $1.40 per Unit.  Therefore, the Offering seeks to raise a
  revised $2,000,005 through the sale of 1,428,575 Units in the aggregate.  Each Unit shall continue to consist of
  four shares of common stock and 2 stock purchase warrants.ISSUANCE OF
  COMMON STOCKSince June
  30, 2006 the Company has sold 357,857 Units (each consists of four shares and
  four warrants; two Series F-1 Warrants and two Series F-2 Warrants) at a
  price of $1.40 per Unit or $501,000 in the aggregate, or 1,431,429 shares in
  the aggregate to eleven accredited investors.ISSUANCE OF
  CONVERTIBLE DEBENTURESSince June
  30, 2006 the Company has sold 65 Units (each Unit consists two warrants for each
  $1.00 of the Convertible Debenture; one Series H-2 Warrant and one Series
  H-3 Warrant) at a price of $10,000 per Unit or $650,000 in the aggregate to
  fourteen accredited investors.  The
  maximum of this offering was sold and the offering was terminated September
  15, 2006.RESERVE OF
  COMMON STOCKAs of the
  date of the filing of this report, the Company has received $238,987.20 from
  six investors under its Series F offering, and has reserved 682,820.57 shares
  and 341,410.29 Series F-1 Warrants and 341,410.29 Series F-2 Warrants
  (representing an aggregate of 682,820.57 shares).  These shares and warrants will be issued in the near future,
  upon the review of the collected subscription agreements.LOANS TO
  RELATED PARTIESSince June
  30, 2006 the Company has loaned DCT an aggregate of $75,000.  The loans carry annual interest at eight
  (8%) percent and are payable on demand.F-28

SIBLING
ENTERTAINMENT GROUP, INC.
(A Development Stage Company)NOTES TO THE FINANCIAL STATEMENTS

19.
SUBSEQUENT
  EVENTS (continued)ADVANCE
  TOWARDS PRODUCTIONSOn October
  18, 2006 the Company advanced $30,000 for a production of STOMP in Las Vegas,
  NV, for which we are completing negotiations for us to participate as both an
  investor and a co-producer.On August 23,
  2006 the Company advanced $25,000 to Jerry Lewis, the world-renown comedian
  and author, as an initial advance towards the purchase of the rights to
  develop and produce a new musical based upon his book, entitled DEAN AND ME
  (a story about his experiences in the entertainment industry with Dean
  Martin).OPENING OF HATS!
  AT DCTThe first
  performance of HATS!  A Musical for the Rest of Your Life, a new musical
  based on the ideas and philosophies of the Red Hat Society and produced by
  Hats Denver LLC, was on October 7, 2006 and the official premiere was on
  October 11, 2006 at the DCT.  The DCT reported that this production
  of HATS! has broken box office records for DCT and attracted audiences from
  numerous states during its first four performances.   The sole
  investor of Hats Denver LLC is Sibling Theatricals, Inc., a wholly owned
  subsidiary of the Company.   The Managing Member of Hats Denver LLC
  is Hats Holdings, Inc. (a company organized to license HATS! and related
  merchandiser and other rights around the world).  Hats Holdings, Inc. is
  a wholly owned subsidiary of Sibling Theatricals, Inc.OPTION
  EXTENSION WITH DICK FOSTER PRODUCTIONSOn September
  7, 2006, the Company paid $25,000 to Dick Foster and $25,000 to Lynne
  Foster as a sign of good faith in the negotiations and completion of the
  definitive agreement between the Company and DFP.  As of the date of this filing the definitive agreement has not
  been signed.  We expect to sign the
  definitive agreement in the near future and close before the end of the
  calendar year.HIRING OF
  EXECUTIVE OFFICERRichard
  Bernstein was hired as a Vice President of the Company beginning September 1,
  2006.F-29

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH
  ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREOn July 20,
2006 we engaged Rosenberg Rich Baker Berman & Company, P.A. (RRBB) as the
principal accountant to audit the year ending June 30, 2006 and June 30, 2005.
During the two years previous to the earliest period provided above, and any
subsequent period, we did not consult RRBB regarding any of the items detailed
in Regulation S-B 304(a)(2).

ITEM 8A.
CONTROLS AND PROCEDURESA. Evaluation of Disclosure Controls and
Procedures:

Disclosure
controls and procedures are designed to ensure that information required to be
disclosed in the reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported, within the time period specified in the
SECs rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information
required to be disclosed in the reports filed under the Exchange Act is
accumulated and communicated to management, including the President and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. As of the end of the period covered by this report, we carried out
an evaluation, under the supervision and with the participation of our
management, including our President and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based upon and as of the date of that evaluation, the President and
Chief Financial Officer concluded that our disclosure controls and procedures
are effective to ensure that information required to be disclosed in the
reports we file and submit under the Exchange Act is recorded, processed,
summarized and reported as and when required.

B. Changes in Internal Control over Financial
Reporting:

There were no
changes in our internal control over financial reporting identified in
connection with our evaluation of these controls as of the end of the period
covered by this report that could have significantly affected those controls
subsequent to the date of the evaluation referred to in the previous paragraph,
including any correction action with regard to significant deficiencies and
material weakness.

ITEM 8B.
OTHER INFORMATIONSubsequent Events

REVISION TO ISSUANCE OF
UNREGISTERED EQUITY SECURITIES
On September 24, 2006, the Company revised the terms of its Series F Offering
whereby the price per Unit changed from $2.00 per Unit to $1.40 per Unit.
Therefore, the Offering seeks to raise a revised $1,999,999.40 through the sale
of 1,428,575 Units in the aggregate. Each Unit shall continue to consist of
four shares of par value common stock and 2 stock purchase warrants.

ISSUANCE OF COMMON STOCK
Since June 30, 2006 the Company has sold 357,857 Units (each consist of four
shares and four warrants; two Series F-1 Warrants and two Series F-2
Warrants) at a price of $1.40 per Unit or $501,000 in the aggregate, or
1,431,429 shares in the aggregate to eleven accredited investors.

ISSUANCE OF CONVERTIBLE
DEBENTURES
Since June 30, 2006 the Company has sold 65 Units (each Unit consists two
warrants for each $1.00 of the Convertible Debenture; one Series H-2 Warrant and
one Series H-3 Warrant) at a price of $10,000 per Unit or $650,000 in the
aggregate to fourteen accredited investors. The maximum under this offering was
65 Units and the offering has been closed as of the date of the filing of this
report.

RESERVE OF
COMMON STOCK
As of the date of the filing of this report, the Company has received
$238,987.20 from six investors under its Series F offering, and has reserved
682,820.57 shares and 341,410.29 Series F-1 Warrants and 341,410.29 Series F-2
Warrants (representing an aggregate of 682,820.57 shares). These shares and
warrants will be issued in the next several days, upon the review of the
collected subscription agreements.

21

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

LOANS TO RELATED PARTIES
Since June 30, 2006 the Company has loaned DCT an aggregate of $75,000. These
loans carry an annual interest rate of 8%, and are payable on demand.

ADVANCE TOWARDS PRODUCTIONS
On October 18, 2006 the Company advanced $30,000 for a production of STOMP in
Las Vegas, NV, for which we are completing negotiations for us to participate
as both an investor and a co-producer.

On August 23, 2006 the
Company advanced $25,000 to Jerry Lewis, the world-renown comedian and author,
as an initial advance towards the purchase of the rights to develop and produce
a new musical based upon his book, entitled DEAN AND ME (a story about his
experiences in the entertainment industry with Dean Martin).

OPENING OF HATS! AT DCT
The first performance of HATS!  A Musical for the Rest of Your Life, a new
musical based on the ideas and philosophies of the Red Hat Society and produced
by Hats Denver LLC, was on October 7, 2006 and the official premiere was on
October 11, 2006 at the DCT. The DCT reported that this production of
HATS! has broken box office records for DCT and attracted audiences from
numerous states during its first four performances. The sole investor of Hats
Denver LLC is Sibling Theatricals, Inc., a wholly owned subsidiary of the
Company. The Managing Member of Hats Denver LLC is Hats Holdings, Inc. (a
company organized to license HATS! and related merchandiser and other rights
around the world). Hats Holdings, Inc. is a wholly owned subsidiary of Sibling
Theatricals, Inc.

OPTION EXTENSION WITH DICK
FOSTER PRODUCTIONS
On September 7, 2006, the Company paid $25,000 to Dick Foster and $25,000
to Lynne Foster as a sign of good faith in the negotiations and completion of
the definitive agreement between the Company and DFP.

HIRING OF EXECUTIVE OFFICERRichard Bernstein was hired as a Vice
President of the Company beginning September 1, 2006.

22

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

PART III

ITEM 9.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT(a.) Identify Directors and Executive OfficersFor the years ended June 30,
2004 and 2005 we had executive
officers as follows:

Name
Age
Positions
  held with the Company
SinceMitchell Maxwell
53
President, Chief Executive Officer And
  Director
2003Victoria Maxwell
42
Vice President And Director
2003James S. Cardwell
45
Chief Financial Officer And Director
2003Richard Bernstein
45
Vice President And Director
2006The background of our executive officers are
as follows:

Mitchell Maxwell

Mitchell
Maxwell has been involved in the entertainment business for over twenty-five
years and has produced seven Broadway shows, twenty-seven Off-Broadway shows,
four national tours, three West End shows and five independent films. He has
built five entertainment companies, owned and operated two successful New York
City restaurants, owned and operated three Off-Broadway theatres, and recently
joined the board of directors of the DCT, while being instrumental in its re-birth.
He currently serves as President of SEI and as Chairman of the DCT in Denver, Colorado.

His
productions have been honored with nominations for 10 Tony Awards, 6 Olivier
Awards, 15 Outer Critics Circle Awards, 9 Drama Desk Awards and 3 Obie Awards. They
have won the Tony, Drama Desk, Outer Critics Circle, and Obie Awards, as well
as the 2000 Pulitzer Prize for Drama. Currently, his Company, SEI, is one of
the producers of Brooklyn which ran on Broadway in 2004.

Mr. Maxwell is
a graduate of Tufts University where he is currently an adjunct professor.

Victoria Maxwell

Victoria
Maxwell has been involved in the entertainment business for twenty years. As
producer of numerous theatre and film projects, she has worked with an elite
roster of including Matthew Arkin, Christine Baranski, Ellen Barkin, Betty
Comden, Dana Delany, Olympia Dukakis, Ron Eldard, Lisa Emery, Corey Feldman,
James Gandolfini, Victor Garber, Adolph Green, Robert Klein, Nathan Lane,
Anthony LaPaglia, Jerry Lewis, Donald Margulies, Penny Marshall, Rob Marshall,
Jerry Mitchell, Rob Morrow, Kevin Nealon, Bebe Neuwirth, Jack OBrien, Sarah
Jessica Parker, Faith Prince, Paul Rudnick, Budd Schulberg, Patrick Stewart,
Daniel Sullivan, Steven Weber and Sigourney Weaver.

Her
productions have been honored with nominations for Tony Awards, Olivier Awards,
Outer Critics Circle Awards, Drama Desk Awards and Obie Awards. Her shows have
won the Tony, Drama Desk, Outer Critics Circle, and Obie Awards as well as the
2000 Pulitzer Prize for Drama.

Ms. Maxwell
produced a controversial, groundbreaking independent film that broke box office
records, she was an executive producer for cast albums for five of her projects
and she co-founded three entertainment companies. Many projects are the result
of creative and business collaboration with her brother, Mitchell Maxwell - and
since 2001, as co-founder and Vice President of Sibling Entertainment, Inc.
Currently, she is also on the Advisory Board of the

23

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

WET Theatre
Company, is the Creative Consultant for the Stamford Center for the Arts and a
member of the Board of Directors of the DCT.

James S.
Cardwell

Since 2002, James Jay
Cardwell has been the Chief Financial Officer of Sibling Entertainment, Inc. He
is also the Executive Director and Board Member of The Denver Civic Theatre,
Inc. Before joining SEI, Cardwell was the Deputy Director (1999-2001) of the National Jazz Museum in
Harlem (NJMiH, a new Smithsonian Institution
Affiliate).At NJMiH, he was in charge of developing all master
business plans, including real estate development, feasibility studies,
marketing, financial development of its new museum.

In 1985, James Cardwell
launched his theatrical career as the Associate Producer of the original
production of the musicalNUNSENSE that ran
over 14 years in New York.Some of his other theatrical credits
include the critically acclaimed musical The
Last Sessionand Monsoon
Christmas (a NAACP Image Award recipient).

Previously, Mr. Cardwell was
a consultant to Denstu, Inc., providing consulting services to their interest
in the theatrical industry.

Prior to his theatrical
career Mr. Cardwell was a senior CPA consultant (1981-1984)with Arthur Andersen & Co. in St.
Louis.

Richard Bernstein

A veteran of
the entertainment industry for over 20 years, Mr. Bernstein has enjoyed success
as an artist manager, booking agent, record producer, and a theatrical stage
producer as well as owner of several night clubs. He has worked with superstars
Linda
Ronstadt, Steve Martin, Englebert Humperdinck, Dolly Parton, Joan Rivers, Don
Rickles, Sam Harris, Willie Nelson, James Brown, Elliot Gould,
Sister Sledge, Cliff Richard ,Roy Clark, Tim Weisberg, among others.
Mr. Bernstein has received numerous Grammy Awards nominations for his
productions of national recording artists. Currently, Richard serves as
President of Bernstein Entertainment Corporations and The New Denver Civic
Theatre, is a Director of SEGI, and is a member of The American Society of
Composers, Authors and Publishers (A.S.C.A.P.). Richard has been associated
with Sibling Entertainment, Mitchell Maxwell and Victoria Maxwell for over the
past eight years.

(b.) Identify
Significant Employees

James Cardwell
acts as our Chief Financial Officer (reference Item 9, Section (a) Identify
Directors and Executive Officers).

Victoria
Maxwell acts as our Vice President and Secretary (reference Item 9, Section (a)
Identify Directors and Executive Officers).

(c.) Family
Relationships

Mitchell
Maxwell and Victoria Maxwell are siblings, and have been business partners in
the film and theatre industries for years. Each of our directors and officers
shall serve for a term of one year or until his successor is duly elected and
qualified.

(d.)
Involvement in Certain Legal Proceedings

During the
past five years, none of our directors, executive officers, promoters or
control persons have been:

24

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

(a)
the subject
  of any bankruptcy petition filed by or against any business of which such
  person was a general partner or executive officer either at the time of the
  bankruptcy or within two years prior to that time;(b)
convicted in a criminal proceeding or is subject to a pending
  criminal proceeding (excluding traffic violations and other minor offenses);(c)
subject to any order, judgment, or decree, not subsequently reversed,
  suspended or vacated, of any court of competent jurisdiction, permanently or
  temporarily enjoining, barring, suspending or otherwise limiting his
  involvement in any type of business, securities or banking activities; or(d)
found by a court of competent jurisdiction (in a civil action), the
  Commission or the Commodity Futures Trading Commission to have violated a
  federal or state securities or commodities law.ITEM 10.
EXECUTIVE COMPENSATIONOn January 17,
2006, we entered into employment contracts for the first time with our
Executive Employees for a term of three (3) years.


Each
  agreement allows the Executive Employees ongoing position and association
  with SEI, except that each Executive Officer may not devote over ten (10%)
  percent of their professional working hours to SEI and SEI will not actively
  pursue, acquire the additional rights to any new entertainment projects that
  is deemed competitive with the business of Sibling, except for passive
  investment interests, limited partnership or limited liability membership
  interests.
These
  agreements also reflected each Executive Employees position as a member of
  the Board of Directors of Denver Civic Theatre, Inc. (a Colorado Charitable
  Non-Profit Organization).
The
  agreements also reflected MMs ownership and control of Zachwell, Ltd. and
  Zia, Ltd and VMs ownership and control of Victoria Maxwell Consulting, Inc.
  and their continued right to own these companies that may hold investments
  and/or other financial arrangements, including but not limited to, royalties,
  net profits, fees or other arrangements for work, services or investments
  made in productions organized and financed prior to their engagement with the
  Company.Our executive
officers did not receive compensation from us during the fiscal years ended
June 30, 2005, 2004, and 2003 and there were no employment contracts or
agreements between us and our officers for those previous years. We do not have
any employee stock option or other incentive plans. We do not have any
compensatory plan or arrangement which will result from the resignation,
retirement or other termination of employment of any directors or executive
officers or from a change of our control, or a change in any of their
responsibilities following a change of control.

25

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
  OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSAs of June 30,
2005, we did not have any compensation plans (including compensation
arrangements) under which our equity securities are authorized for issuance.

As of the time
of this filing, the beneficial ownership of common stock of each person known
to us who owns more than 5% of our issued and outstanding common stock and of
our directors and executive officers is as follows:

Name and address of
  Beneficial Owner

Amount and Nature
  of Beneficial Ownership

Percent of
  ClassRichard
  Bernstein*

540,418


1.93%927 7th
  AvenueDenver, CO
  80204James S.
  Cardwell**

1,060,000


3.78%17 East 126th
  Street, apt #4NY, NY 10035Victoria
  Maxwell

2,128,994


7.59%202 East
  21st Street, Apt 2BNew York, NY
  10010Sibling
  Entertainment, Inc.

6,000,000


21.39%511 W 25th
  Street, Ste 503New York, NY
  10001Stan Tynski

1,889,334


6.74%10200 East
  Girard Ave., Bldg. C, Ste 250Denver, CO
  80231Zachwell,
  Ltd.***

2,220,000


7.91%511 W 25th
  Street, Ste 503New York, NY
  10001All
  directors, executive officersand
  significant employees as agroup (5
  people)

5,994,412


21.36%*
Richard
  Bernstein is a Director of Sibling Entertainment Group, Inc.**
James S.
  Cardwell is CFO of Sibling Entertainment Group, Inc.***
Mitchell
  Maxwell, CEO of Sibling Entertainment Group, Inc. is the owner of Zachwell,
  Ltd.We do not have
any compensation plans (including compensation arrangements) under which our
equity securities are authorized for issuance.

26

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONSExcept as set
forth below, there have been no transactions during the last two years, or
proposed transactions, to which we were or are to be a party in which any of
our directors, executive officers, any 5% shareholder listed in Item 11 or any
member of the immediate family of any of these persons had a material interest.
We do not have a parent company.

Mr. Sierchio
is a partner of the firm Sierchio, Greco and Greco PC, our legal counsel. We
believe that the cost of the services provided by Mr. Sierchio are comparable
to, or less than, the fees that we would have to pay to unrelated third parties
providing similar services.

In October
2003, we entered into to an agreement with SEI, a New York corporation of which
Victoria Maxwell is a controlling stockholder, whereby SEI in exchange for a
monthly fee from us, agreed to: (1) permit us to use of SEIs offices and
related use of phone, fax machines, computers and other office equipment ($525
per month for rent and $185 per month for utilities). This agreement was
amended as described in the Subsequent Events section above such that as of
July 1, 2005 we assumed responsibility of the lease and utility expenses, and
shall be reimbursed by SEI for a portion of those costs on a monthly basis. On
July 1, 2004, we entered into an agreement to provide consulting services to
the DCT, a Colorado not-for-profit corporation, whereby we would earn $6,600
per month.

We also
entered into a separate agreement with SPI to consult in the development and
production of independent films owned by Sibling Pictures Fund, LLC (SPFLLC).
SPI is a New York corporation wholly owned by SEI. SPI was organized to
development, management, production and sale of independent films. SPI is the
managing member of SPFLLC. SPFLLC is a Delaware, limited liability corporation
formed to finance and produce up to three independent films. The agreement
provides fees in the amount of $4,167 per month payable upon capitalization of
SPFLLC up to a maximum of $50,000. This agreement commenced November 1, 2004
and had a term of 12 months.

Please see the
subsequent events paragraph of the Financial Statements for other material
related party transactions that occurred after June 30, 2005.

ITEM 13.
EXHIBITS AND REPORTSEXHIBIT
NUMBER
DESCRIPTION
OF EXHIBIT AND FILING REFERENCEExhibit 31.1
Certification of the President Pursuant to Section
302 of the Sarbanes-Oxley
  Act of 2002.Exhibit 31.2
Certification of the Chief Executive Officer
Pursuant to Section 302
  of the Sarbanes-Oxley Act of 2002.Exhibit 32.1
Certification of the President Pursuant to 18 U.S.C.
1350 as Adopted
  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Exhibit 32.2
Certification of the Chief Executive Officer
Pursuant to 18 U.S.C.
  1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.27

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

ITEM 14.
  PRINCIPAL ACCOUNTANT FEES AND SERVICESAudit FeesFor the years ended June 30, 2006, 2005 and 2004 we
incurred $62,800, $29,050 and $12,000, respectively. Because under previous
management of Mr. Russo, we were behind in our filings, the audit for the year
ended June 30, 2003 was completed under the current management in November of
2004. The cost of the audit was $12,000.

Tax FeesFor the year ended June 30, 2006 we paid $200 for tax
preparation and filing services. For the years ended June 30, 2005 and 2004 we
paid $0 for tax preparation services provided, as our officers prepared the
taxes.

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.

SIGNATURE
  
  TITLE
  
  DATEBy: /s/ Mitchell
  Maxwell
  
  President
  and Director
  
  December 14, 2006Mitchell
  MaxwellSIGNATURE
  
  TITLE
  
  DATEChief
  Financial Officer, Principal AccountingBy: /s/ James
  S. Cardwell
  
  Officer and
  Director
  
  December 14, 2006James S.
  CardwellSIGNATURE
  
  TITLE
  
  DATEBy: /s/ Victoria
  Maxwell
  
  Vice
  President and Director
  
  December 14, 2006Victoria
  Maxwell28

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

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

SIGNATURE
  
  TITLE
  
  DATEBy: /s/ Mitchell
  Maxwell
  
  President
  and Director
  
  December 14, 2006Mitchell
  MaxwellSIGNATURE
  
  TITLE
  
  DATEBy: /s/ James
  S. Cardwell
  
  Chief
  Financial Officer,
  
  December 14, 2006Principal
  Accounting Officer and DirectorJames S.
  CardwellSIGNATURE
  
  TITLE
  
  DATEBy: /s/ Victoria
  Maxwell
  
  Vice
  President and Director
  
  December 14, 2006Victoria
  Maxwell29

SIBLING ENTERTAINMENT GROUP, INC.(A Development Stage
Company)

Item 9.01.
  Financial Statements and Exhibits.(c)Exhibits.

-NONE-

SIGNATURES

Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.

SIBLING ENTERTAINMENT GROUP, INC.Dated: December 14, 2006
  
  By:     /s/
  James CardwellJames Cardwell, Chief Financial Officer,Principal Accounting Officer and DirectorEXHIBIT INDEX

Exhibit No.
  DescriptionNONE30