UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549




FORM
      10-KSB





(Mark
      One)





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





OR




o     TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
      FOR THE TRANSITION PERIOD FROM _______ TO _______





Commission
      File Number: 0-25356





AZZURRA
      HOLDING CORPORATION





(Exact
      Name of Registrant as Specified in its Charter)








DELAWARE
            
            77-0289371(State
                or Other Jurisdiction of
            
            (IRS
                Employer Identification Number)Incorporation
                or Organization)





6080
      CENTER DRIVE, SUITE 600, LOS ANGELES, CALIFORNIA 90045


(310)
      242-5698


(Address
      and Telephone Number of Principal Executive Offices)





Securities
      registered pursuant to Section 12(b)of the Act:





Securities
      Registered Pursuant to Section 12(g) of the Act:


COMMON
      STOCK, $0.0001 PAR VALUE





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
      (or
      for such shorter period that Azzurra Holding Corporation was required to file
      such reports), and (2) has been subject to such filing requirements for the
      past
      90 days. YES  o NO x





Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-K is not contained herein, and will not 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. YES o NO x





State
      issuer’s revenue with it most recent fiscal year, $1,411,000.





Indicate
      by check mark whether Azzurra Holding Corporation  is an accelerated
      filer as defined in the Exchange Act Rule 12b-2. YES  o NO x





The
      aggregate market value of the voting stock held by non-affiliates of Azzurra
      Holding Corporation as of November 30, 2007 was approximately
      $84,000.





Check
      whether the issue 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 x





On
      December 1, 2007, 100,000 shares of Azzurra Holding Corporation’s Common Stock,
      $0.001 par value, were outstanding.















TABLE
      OF CONTENTS










PagePART
                I
            1Item
                1. Description of Business
            2Item
                2. Description of Properties
            4Item
                3. Legal Proceedings
            4Item
                4. Submission of Matters to a Vote of Securities Holders
            4PART
                II
            4Item
                5. Market for Common Equity and Related Stockholder
                Matters
            4Item
                6. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            5Item
                7. Financial Statements
            8Item
                8. Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosures
            8Item
                8A. Control and Procedures
            9Item
                8B. Other Information
            9PART
                III
            9Item
                9. Directors, Executive Officers, Promoters and Control
                Persons
            9Item
                10. Executive Compensation
            10Item
                11. Security Ownership of Certain Beneficial Owners and
            12Item
                12. Certain Relationships and Related Transactions
            13Item
                13. Exhibits and Reports on Form 8-K
            13Item
                14. Principal Accountant Fees and Services
            13FINANCIAL
                STATEMENTSReport
                of Aidman, Piser & Company P.A.
            14Consolidated
                Balance Sheet at December 31, 2006
            15Consolidated
                Statements of Operations for the years ended December 31, 2006 and
                2005
            16Consolidated
                Statements of Stockholders' Equity (Deficit) and Comprehensive Loss
                for
                the years ended December 31, 2006 and 2005
            17Consolidated
                Statements of Cash Flows for the years ended December 31, 2006 and
                2005
            18Notes
                to Consolidated Financial Statements
            19SIGNATURE
                PAGE
            34INDEX
                TO EXHIBITS
            35







-
      i
      -











PART
      I




The
      following information contains forward-looking statements, which involve risks
      and uncertainties. Forward-looking statements are characterized by words such
      as
      "plan," "expect," "believe," "intend," "would", "will" and similar words. Our
      actual results could differ materially from those anticipated in these
      forward-looking statements as a result of certain factors, including those
      set
      forth under, "Management's Discussion and Analysis of Financial Condition and
      Results of Operations -- Certain Risk Factors Affecting Azzurra Holding
      Corporation," and elsewhere in this Annual Report on Form 10-KSB.





NOTICE
      OF FILING OF BANKRUPTCY PETITION, SALE OF OPERATING ASSETS, AND CONFIRMATION
      OF
      JOINT PLAN OF REORGANIZATION





Bankruptcy
      Proceedings.





On
      October 31, 2006, Azzurra Holding Corporation, formerly, Wave Wireless
      Corporation (the “Company,” “we,” “us,” “our” ) filed a voluntary petition for
      reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Code”) in the
      United States Bankruptcy Court for the District of Delaware (“Court”).  Our
      significant operating losses, working capital deficit, defaults on certain
      outstanding debentures, together with the significant cash required to maintain
      operations, delays in commercializing next-generation products, and the loss
      of
      a key executive, precipitated the need to seek protection under Chapter 11
      of
      the Code.





During
      the pendency of the bankruptcy proceedings, and with Court approval, the Company
      sold substantially all of its assets, including its inventory, manufacturing
      and
      research and development equipment, and its technology.  The Company
      retained its SPEEDLAN 9200 product line.





On
      April
      5, 2007, the Company and the Committee of Unsecure Creditors (“Creditors
      Committee”) filed a Joint Plan of Reorganization with the Court (“Joint Plan”),
      which Joint Plan was amended and restated and filed with the Court on May 2,
      2007.  The Joint Plan was confirmed by the Court on June 14,
      2007.  Under the terms and conditions of the Joint Plan, as confirmed
      by the Court, all equity interests of the Company as of the effective date
      of
      the Joint Plan, June 28, 2007, terminated.  The Joint Plan contained
      the following additional major provisions:





SDS
      Capital Group SPC, Ltd. ("SDS") became the owner of 80% of the issued and
      outstanding shares of common stock, which includes 80% received under the terms
      of the Joint Plan, and an additional 10% as a result of SDS’ participation in
      the Equity Financing, described below.   In addition, all
      priority unsecured claims and administrative claims were paid in full, through
      either: (i) payment on the effective date of the Joint Plan; (ii) payment
      through an escrow account established with a Plan Administration Trust
      (“Trust”); or (iii) payment from the reorganized Company following the allowance
      of a claim. The initial funding for the Trust was $250,000 less certain
      professional fees and other charges set forth in more detail in the Joint Plan.
      This initial funding was provided from funds that were otherwise distributable
      to SDS. The Trust is responsible for, among other things, objecting to general
      unsecured claims and making distributions, as appropriate, to holders of general
      unsecured claims. The Joint Plan also permitted general unsecured claimants
      and
      preferred shareholders to participate in an equity financing ("Equity
      Financing"), pursuant to which each party was permitted to purchase a portion
      of
      30,000 shares of newly issued common stock at $1.00 per share, based upon the
      terms and conditions set forth in the Joint Plan. As a result of the Equity
      Financing, three preferred shareholders each acquired 10,000 shares of our
      common stock.





In
      connection with the confirmation of the Joint Plan, the Company entered into
      a
      Contingent Promissory Note in favor of the Trust (“Contingent Note”). The
      Contingent Note provides for a further recovery to the Trust under the terms
      of
      the Joint Plan in the event SDS receives a distribution under the Joint Plan
      that exceeds $2,476,658, plus all fees and expenses accrued under the Contingent
      Note (the “Maximum Amount”). Under the terms of the Contingent Note, if SDS
      receives an amount in excess of the Maximum Amount, the Company will pay to
      the
      Trust an amount equal to 50% of any cash that remains or has accrued after
      (i)
      satisfying the Maximum Amount and all other distributions or dividends required
      under the Joint Plan, (ii) reserving cash sufficient to satisfy, in full, all
      obligations of, and claims against, the Company that have accrued during the
      one
      year period following the effective date of the Joint Plan, and (iii) reserving
      reasonably sufficient cash, in the Company's sole discretion, to fund ongoing
      business operations. The Contingent Note terminates on June 28,
      2008.  As of December 1, 2007, SDS has received $1.7 million under the
      terms of the Joint Plan.




The
      Company and SDS have also executed a Secured Promissory Note payable by the
      Company to SDS in the amount of $100,000 (the “SDS Note”). The SDS Note will
      only be issued in the event the Company deems it necessary to provide for its
      working capital requirements. Any amounts due and payable SDS are secured by
      all
      assets of the Company under the terms of a Security Agreement.




Sale
      of Remaining Operating Business.





On
      August
      10, 2007, the Company sold its SPEEDLAN product line, for and in consideration
      for approximately $100,000, plus the assumption of all warranty obligations
      associated with the product line.  The Company determined to sell its
      SPEEDLAN product line since sales of the product line had decreased
      substantially since confirmation of the Joint Plan, and since the cost to
      maintain, support and satisfy warranty obligations did not justify the continued
      sale of SPEEDLAN products by the Company.  In addition, sales were not
      anticipated to materially increase due to the fact that the SPEEDLAN product
      was
      not competitive, in terms of price or features, with other product offered
      by
      more established, and financially stronger competitors.As a result of this
      sale, the Company has no operating business, and our management and Board of
      Directors are exploring opportunities to effect an acquisition of the Company
      by
      merger, exchange or issuance of securities or similar business combination.


-1-





On
      August
      20, 2007, we changed the name of the Company to Azzurra Holding
      Corporation.





Bankruptcy
      Accounting.





As
      a
      result of the bankruptcy proceedings, confirmation of the Joint Plan and sale
      of
      our remaining operating businesses, the amounts reported in subsequent financial
      statements will materially change.  Our financial statements will also
      be affected due to the application of the provisions of Statement of Position
      90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy
      Code,” (SOP 90-7), with respect to reporting upon emergence from Chapter 11 of
      the Code.  Changes in accounting principles required under U.S. generally
      accepted accounting principles within 12 months of emerging from bankruptcy
      are
      required to be adopted at the date of emergence.  Additionally, we may
      choose to make changes in accounting practices and policies at that time.
 For all of these reasons, financial statements for periods subsequent to
      confirmation of the Joint Plan and emergence from Chapter 11 of the Code will
      not be comparable with those of prior periods.





ITEM
      1.  DESCRIPTION OF
      BUSINESS





CERTAIN
      DISCUSSIONS WHICH FOLLOW REGARDING THE DESCRIPTION OF BUSINESS REFER TO THE
      OPERATING BUSINESS PRIOR TO THE FILING OF THE BANKRUPTCY PETITION AND SUBSEQUENT
      SALE OF THE COMPANY’S OPERATING BUSINESSES, INCLUDING ITS RMA BUSINESS AND THE
      SPEEDLAN PRODUCT LINE.





We
      were
      incorporated in 1991 as a Delaware Corporation.  Our executive offices
      are located at 6080 Center Drive, Suite 600, Los Angeles, California 90045,
      and
      our telephone number is 310-242-5698.  On August 20, 2007, we changed
      the name of the Company from Wave Wireless Corporation to Azzurra Holding
      Corporation.




Company
      Overview





Prior
      to
      the disposition of our operating businesses, we were a developer of wireless
      broadband solutions, offering a portfolio of wireless mesh routers, and fixed
      and mobile non-line-of-sight (NLOS) products that could be deployed in all
      types
      of environments.  Our products were used for applications ranging from
      mission critical public safety communications, video surveillance, municipal
      networks, and private enterprise networks to last mile broadband
      access.  First responders, telecom carriers, municipalities, wireless
      Internet service providers, utilities, security companies and the military
      deployed our products.   We also provided repair, maintenance and
      other services to our licensed and other customers worldwide.





On
      March
      28, 2006, a wholly owned subsidiary of the Company was merged with and into
      WaveRider Communications Inc. (the “WaveRider Merger”). The WaveRider Merger
      brought together complementary business lines, engineering, sales and marketing
      compatibilities and technology. The combination of our SPEEDLAN family of mesh
      networking products and WaveRider’s Last Mile Solutionâ non-line-of-sight,
      fixed and mobile wireless 900 MHz products provided customers with a wide range
      of line-of-sight fixed and non-line-of-sight products and services.





The
      product, personnel and other synergies resulting from the WaveRider Merger
      were
      intended to lower operating and other costs, and increase revenue in each
      company’s respective product lines.  Following consummation of the
      WaveRider Merger, the Company experienced far longer sales cycles for new
      products than were expected, certain product availability issues in connection
      with its 900 MHz non-line-of-sight products, and continuing delays in
      commercializing new mesh products, resulting in substantially lower revenue
      in
      each of these product lines than expected.  Due to the recognition of
      lower than anticipated revenue during the quarter ended September 30, 2006,
      the
      Company was required to use a significant amount of its cash resources to
      satisfy certain legacy obligations, and the costs incurred in connection with
      consummation of the WaveRider Merger.  As a result of these factors,
      and the Company’s deteriorating cash position, management entered into
      discussions to sell certain non-core assets in order to satisfy its working
      capital requirements.





Management
      of WaveRider’s Australian subsidiary, WaveRider Communications (Australia) Pty
      Ltd. (“WaveRider Australia”) had approached it on a number of occasions about
      the possibility of a management buy-out of WaveRider Australia.  On
      June 19, 2006, the Company’s Board of Directors determined that, as a non-core
      asset, the sale of the WaveRider Australia should be considered and directed
      management to enter into formal negotiations.  On June 30, 2006, the
      Company sold WaveRider Australia for cash consideration of $370,000 plus
      contingent consideration calculated at 15% of revenue for the following 12
      months, payable quarterly in arrears.  On January 25, 2007, WaveRider
      and WaveRider Australia agreed to a lump-sum payment of $438,000 to WaveRider,
      thereby terminating all further payment obligations of WaveRider Australia
      to
      WaveRider.  As a result of this payment, WaveRider received a total of
      approximately $953,000 from the sale of WaveRider Australia.





On
      June
      1, 2006, following informal discussions between the two companies,
      representatives of VCom Inc. (“VCom”) approached the Company about the
      possibility of acquiring the Canadian operations of WaveRider.  Upon
      receipt of a tentative Letter of Offer, the Company’s Board of Directors, at
      their June 19, 2006 meeting, directed management to enter into formal
      negotiations.  On July 1, 2006, the Company sold WaveRider
      Communications (USA) Inc., Avendo Wireless Corporation and WaveRider
      Communications (Canada) Inc., including its wholly owned subsidiary, JetStream
      Internet Services Inc., to VCom (the "VCom Transaction").


-2-





The
      sale
      of the former WaveRider subsidiaries in connection with the VCom Transaction,
      while generating much needed short-term working capital, resulted in the
      disposition of substantially all of WaveRider’s international
      businesses.  The Company retained WaveRider’s intellectual property
      and its North American operations.





During
      the quarter ended September 30, 2006, Charles Brown, the Company’s then
      President and Chief Executive Officer, unexpectedly tendered his
      resignation.  Mr. Brown's resignation materially impacted the
      Company's ability to continue to address the ongoing poor operating results
      in
      the Company’s principal business units and the Company’s continuing
      deteriorating working capital position.  Following Mr. Brown’s
      resignation, the Company’s Board of Directors met to consider alternatives
      available to the Company in order to continue as a going concern.





On
      October 17, 2006, the Company sold WaveRider’s remaining operating and related
      assets associated with its 900 MHz product line to VCom, for the amount of
      $1,250,000. The purchase price was determined based on the acquisition of trade
      accounts receivable, in the amount of $592,000, inventory, in the amount of
      $467,000, capital assets, valued at $190,999, and goodwill and other intangibles
      at $1. The purchase price was adjusted for the change in the value of the
      accounts receivable and the inventory from the original valuation date and
      September 30, 2006, in the amount of $377,000. VCom also assumed responsibility
      for the cost of warranty support of WaveRider’s existing 900 MHz customer base
      and for certain WaveRider employees, related to the business.  The
      purchase price was paid and satisfied first in repayment to VCom of all amounts
      owing by the Company or its affiliates pursuant to the supply agreement between
      VCom and WaveRider, which amount was approximately $1.6 million.  As a
      result of this payment, and other reconcilliations following consummation of
      the
      VCom Transaction, WaveRider received $426,000, which amount was received
      subsequent to December 31, 2006.





In
      order
      to provide for its immediate working capital needs, and in light of the Board’s
      determination that additional equity or debt financing would likely be
      unavailable to the Company, the Board of Directors directed management to
      explore the sale of certain or all remaining product lines and business units.
      These efforts failed to generate sufficient interest to address the Company’s
      ongoing working capital needs.  As a result, the Board determined to
      seek protection from its creditors, and to reorganize under Chapter 11 of the
      Code, focused on the sale of the SPEEDLAN product line.  The Company
      filed a voluntary petition under Chapter 11 of the Code on October 31,
      2006.





On
      November 2, 2006, the Court ordered the conduct of an auction to sell the
      Company’s RMA Business.  As a result of the auction, which was held on
      November 13, 2006, we sold the RMA Business for approximately $406,000 in cash,
      plus the assumption of certain liabilities.  Also pursuant to a Court
      order entered on November 13, 2006, we sold certain de minimus assets totaling
      less than $100,000.  As a result of these sales, our continued
      operations while under the protection of Chapter 11 of the Code consisted of
      the
      marketing and sale of our SPEEDLAN product line, which was sold subsequent
      to
      the confirmation of the Joint Plan, on August 10, 2007, for approximately
      $100,000.





As
      a
      result of the forgoing actions, the Company has no operating
      business.  WaveRider, the Company’s wholly-owned subsidiary, similarly
      has no operating businesses or assets, and its remaining cash is being used
      to
      satisfy its remaining obligations.  As a result, our management and
      Board of Directors are exploring opportunities to effect an acquisition of
      the
      Company by merger, exchange or issuance of securities or similar business
      combination.





On
      August
      20, 2007, we changed the name of the Company to Azzurra Holding
      Corporation.





Products





Prior
      to
      confirmation of the Joint Plan, and sale of the SPEEDLAN product line, the
      Company developed wireless broadband solutions, offering a portfolio of wireless
      mesh routers, and fixed and mobile non-line-of-sight (NLOS) products that could
      be deployed in all types of environments.  Our products were used for
      applications ranging from mission critical public safety communications, video
      surveillance, municipal networks, and private enterprise networks to last mile
      broadband access.  First responders, telecom carriers, municipalities,
      wireless Internet service providers, utilities, security companies and the
      military deployed our products.   We also provided repair,
      maintenance and other services to our licensed and other customers
      worldwide.





Our
      research and development expenses during the fiscal years ended December 31,
      2006 and 2005 were approximately $1.1 million and $3.0 million,
      respectively.





Competition




Our
      wireless radio systems competed with other wireless telecommunications products
      and alternative telecommunications transmission media, including copper and
      fiber optic cable. We experienced competition worldwide from a number of leading
      telecommunications companies that offered a variety of competitive products
      and
      services, including Alvarion, Nortel, Proxim, Tropos Networks, Motorola, Trango
      Systems, Belair Networks, Firetide and Tranzeo Wireless Technologies. Most
      of
      these companies had substantially greater installed bases, financial resources
      and production, marketing, manufacturing, engineering and other capabilities
      than we did.




Intellectual
      Property




We
      generally owned our intellectual property, except for our patents, which we
      sold
      to a third party in November 2005. In connection with this sale, we retained
      a
      non-exclusive, perpetual, royalty free right and license to use the patents
      in
      connection with our millimeter wave radio licensed products.  In
      connection with the sale of our operating businesses, we sold all of our
      intellectual property.


-3-


Customers





Sales
      of
      our products were through two principal means:  direct sales to our
      larger customers through our in-house sales personnel, and indirect sales
      through a distributor network.  During
      2006, sales to RMS Technology Solutions accounted for approximately 28% of
      sales.




Government
      Regulation and Legal Uncertainties





The
      Company is currently subject to various laws and regulations relating to its
      business, including those of the Bankruptcy Code.  The Company
      must comply with the Orders of the Bankruptcy Court, and the Joint
      Plan.





Employees




As
      of
      December 31, 2006, we employed a total of five employees, including one in
      Operations, three in Administration, and one in IT. Of our total employees,
      one
      was a part-time employee. As of December 1, 2007,
      we had no full-time employees.  Our President and Chief Executive
      Officer, and an Accounting Manager, work part-time as consultants to the
      Company.





Current
      Business Strategy





As
      discussed elsewhere in this Annual Report, because of the sale of all of our
      operating businesses, the Company has no ongoing
      operations.    The Board has determined to maintain the
      Company as a public “shell” corporation, which will seek suitable business
      combination opportunities.  The Board believes that a business
      combination with an operating company has the potential to create greater value
      for the Company’s stockholders than a liquidation or similar
      distribution.




ITEM
      2.  DESCRIPTION OF
      PROPERTIES




We
      do not
      own any real property.  The Company’s corporate headquarters in Los
      Angeles, California are leased through April 2009.





ITEM
      3.  LEGAL
      PROCEEDINGS




On
      October 31, 2006, we filed a voluntary petition for relief under Chapter 11
      of
      the United States Bankruptcy Code (“Code”) in the United States Bankruptcy Court
      for the District of Delaware (the “Court”) in order to facilitate the
      restructuring of our debt, trade liabilities and other obligations.   On
      April 5, 2007, together with the Committee of Unsecured Creditors, we filed
      a
      Joint Plan of Reorganization with the Court (“Joint Plan”), and an amended Joint
      Plan was filed on May 2, 2007.  The Joint Plan was confirmed by the
      Court on June 14, 2007.   The Company remains subject to the
      Orders of the Court, and the Joint Plan.




In
        June
        2000, two former consultants to P-Com Italia S.p.A. filed a complaint against
        P-Com Italia in the Civil Court of Rome, Italy seeking payment of certain
        consulting fees allegedly due the consultants totaling approximately $615,000.
        The Civil Court of Rome has appointed a technical consultant in order to
        determine the merit of certain claims made by the consultants. On April 20,
        2005, the Civil Court of Rome issued judgment dismissing the case, and ordered
        the consultants to pay P-Com Italia's legal fees. The Civil Court's order
        has
        been appealed by the consultants to the Court of Appeal of Rome.
 
 In
        July
        2006, a former distributor to the Company filed a complaint against the Company
        in the Superior Court of the State of California, Count of Santa Clara, for
        breach of contract and fraud.  The Complaint seeks damages totaling
        approximately $627,000, relating to sales commissions allegedly owed, and
        for
        allegedly defective products.  While no assurances can be given, the
        Company has asserted counterclaims in excess of $1.0 million, and intends
        to
        vigorously defend the allegations contained in the Complaint.




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




None




PART
      II





ITEM
      5.  MARKET FOR
      COMMON EQUITY AND RELATED STOCKHOLDER MATTERS




The
      following table sets forth the range of high and low sale prices of our common
      stock, as reported on the OTC Bulletin Board for each quarter in 2006 and 2005.
      These quotations reflect inter-dealer prices, without retail mark-up, markdown
      or commission and may not necessarily represent actual
      transactions.   As of September 21, 2006, our common stock was
      delisted from the OTC Bulletin Board, and now trades in the “pink
      sheets”.





On
      August
      20, 2007, there were three stockholders of record of our common
      stock.


-4-





PRICE
                RANGE OF COMMON STOCKHIGH
            
            LOWYear
                Ended December 31, 2005:First
                Quarter
            
            $
            0.540
            
            $
            0.130Second
                Quarter
            
            
            0.240
            
            
            0.120Third
                Quarter
            
            
            0.360
            
            
            0.150Fourth
                Quarter
            
            
            0.240
            
            
            0.130Year
                Ended December 31, 2006:First
                Quarter
            
            $
            0.170
            
            $
            0.090Second
                Quarter
            
            
            0.150
            
            
            0.070Third
                Quarter
            
            
            0.080
            
            
            0.013Fourth
                Quarter
            
            
            0.015
            
            
            0.001






RECENT
      SALES OF UNREGISTERED SECURITIES





In
      June
      2007, the Company issued 100,000 shares of its common stock to three investors,
      pursuant to the Joint Plan.  The shares were not registered in
      reliance upon Section 1145 of the Code, as well as Section 4(2) of the
      Securities Act of 1933 in that they were not made available for sale to the
      public and are restricted against resale until they are registered under the
      Act
      or sold under an exemption from registration.





DIVIDENDS





To
      date,
      we have not paid any cash dividends on shares of our common stock. We do not
      anticipate that funds will be legally available to make the required dividend
      payments in the foreseeable future, and such obligations therefore will accrue
      in arrears until such time as we have legally available funds to make the
      required distributions.




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





Management's
      discussion and analysis of financial condition and results of operations
      contains forward-looking statements, which involve risks and uncertainties.
      Our
      actual results could differ materially from those anticipated in these
      forward-looking statements as a result of certain factors, including those
      set
      forth in the section entitled "Risk Factors" beginning on Page 7 of this Annual
      Report.  In addition, as a result of the bankruptcy proceedings,
      confirmation of the Joint Plan and sale of our remaining operating business,
      the
      amounts reported in subsequent financial statements will materially
      change.  Our financial statements will also be affected due to the
      application of the provisions of Statement of Position 90-7, “Financial
      Reporting by Entities in Reorganization under the Bankruptcy Code,” (SOP 90-7),
      with respect to reporting upon emergence from Chapter 11 of the Code.
 Changes in accounting principles required under U.S. generally accepted
      accounting principles within 12 months of emerging from bankruptcy are required
      to be adopted at the date of emergence.  Additionally, we may choose to
      make changes in accounting practices and policies at that time.  For all of
      these reasons, financial statements for periods subsequent to confirmation
      of
      the Joint Plan and emergence from Chapter 11 of the Code will not be comparable
      with those of prior periods.





Discontinued
      Operations





On
      March
      28, 2006, we merged a wholly owned subsidiary of the Company with and into
      WaveRider Communications Inc. (“WaveRider”) (the “WaveRider
      Merger”).  On June 30, 2006, the Company sold WaveRider Communications
      Australia Pty Ltd. and, on July 1, 2006, the Company sold all of its interest
      in
      WaveRider Communications (Canada) Inc. and its wholly owned subsidiary,
      JetStream Internet Services Inc., WaveRider Communications (USA) Inc. and Avendo
      Wireless Corporation.  On October 17, 2006, WaveRider sold its 900 MHz
      business.  As a result, WaveRider has no continuing operations other
      than distributing its cash to satisfy its remaining obligations.  In
      addition, on November 15, 2006, the Company disposed of its repair and
      maintenance business (“RMA Business”).  The operations of these
      entities and business units have been segregated and shown as discontinued
      operations in the consolidated statements of operations and the assets and
      liabilities of these entities still existing at December 31, 2006 have been
      shown as assets and liabilities, respectively, from discontinued operations
      in
      the consolidated balance sheet.


-5-


Years
      Ended December 31, 2006 and 2005





Sales.
      For the year ended
      December 31, 2006, sales were approximately $1.4 million, compared to $1.7
      million in the comparable period in the prior year.  Total sales
      include only revenue from the Company’s SPEEDLAN product line, the Company’s
      only continuing operation at December 31, 2006.  Revenue attributable
      to SPEEDLAN products decreased in the year ended December 31, 2006 compared
      to
      the prior year as a result of continued competitive pressures, continuing delays
      in commercializing new mesh products, and uncertainty caused by the Company’s
      deteriorating financial condition.  Subsequent to December 31, 2006,
      on August 13, 2007, the Company sold its SPEEDLAN product line.  As a
      result, the Company has no continuing operations.  Accordingly, total
      sales for the year ended December 31, 2006 are not indicative of future sales
      or
      results.





Gross
      Profit. Gross profit
      for the years ended December 31, 2006 and 2005 was $0.7 million and $0.8
      million, respectively, or 49% and 48% of sales in each of the respective
      periods.  Gross profit in each of the years ended December 31, 2006
      and 2005 was positively impacted as a result of the discounting of the value
      of
      inventory in prior periods, reflecting the Company’s intent to market and sell
      next-generation SPEEDLAN products.





Research
      and
      Development.  For the years ended December 31, 2006 and 2005,
      research and development ("R&D") expenses were approximately $1.1 million
      and $3.0 million, respectively. The Company has significantly reduced its
      R&D spending in the fiscal year ended December 31, 2006 compared to the
      prior year due to the discontinuation of certain product lines, and the
      Company’s deteriorating financial condition, offset by R&D expenses incurred
      as a result of the WaveRider Merger.  During the quarter ended
      December 31, 2006, the Company cut all R&D expenditures, and does not
      anticipate incurring R&D expenses in the future.





Selling
      and Marketing. For
      the years ended December 31, 2006 and 2005, sales and marketing expenses were
      approximately $1.1 million and $3.1 million, respectively. The substantial
      reduction in sales and marketing expenses in the fiscal year ended December
      31,
      2006 compared to the prior year is due to the discontinuation of certain product
      lines, and the deterioration of the Company’s financial condition, offset by the
      addition of sales personnel as a result of the WaveRider
      Merger.  During the quarter ended September 30, 2006, the Company cut
      substantially all sales and marketing expenditures, and elected to outsource
      substantially all of its sales and marketing efforts to its manufacturer and
      principal distributor of its SPEEDLAN product line. The Company does not
      anticipate incurring sales and marketing expenses in the future.





General
      and Administrative.
      For the years ended December 31, 2006 and 2005, general and administrative
      expenses were approximately $0.5 million and $3.5 million,
      respectively.  The decrease is due to the substantial reduction in the
      Company’s operations caused by the deterioration in the Company’s business and
      operations during the six month period ending December 31, 2006, and the
      election of the Company to file for protection from its creditors under Chapter
      11 of the Code on October 31, 2006, offset by the addition of certain general
      and administrative expenses incurred in connection with the WaveRider Merger
      during the quarter ended June 30, 2006.  Following the filing of the
      Bankruptcy Petition on October 31, 2006, the Company retained a five person
      staff to provide certain administrative and other services, and plans limited
      expenditures in the immediate future.





Impairment
      and Other
      Charges.On December 31, 2006, we impaired goodwill related
      to our SPEEDLAN product line by $150,000 because we determined the value of
      our
      SPEEDLAN product line to be $100,000, based on the sale of that product line
      on
      August 13, 2007.





On
      August
      3, 2006, we announced that we were reviewing our business operations with the
      intent to sell certain product lines and business units, or enter into strategic
      relationships for individual product lines and business
      units.  Impairment charges and loss on discontinued operation of $24.7
      million was recorded for the year ended December 31, 2006, related to the
      write-down of goodwill and disposal of other assets, partially offset by
      reductions in prior provisions.





Restructuring
      Charges.  In April 2005, we
      announced the adoption of a restructuring plan that significantly curtailed
      then
      current spending, and substantially reduced liabilities and operating and other
      costs. The restructuring plan included the divestiture of certain unprofitable
      product lines, workforce reductions, write-down of certain inventory, and a
      loss
      associated with the divestiture of the Company's research and development
      operations in Italy.





Financing
      Expense.  For the year ended December 31, 2006 financing
      expense was $10.3 million.  This expense was mainly due to non-cash
      charges, during the quarter ended March 31, 2006, related to the conversion
      of
      promissory notes and debt to Series J Convertible Preferred Stock, the issuance
      of Series J Convertible Preferred Stock to consultants in connection with the
      Company’s promissory note financing, the accretion to face value of the
      promissory notes and amortization of deferred financing
      charges.  During the quarter ended June 30, 2006, the Company failed
      to file a registration statement related to the sale of the Series J and J-1
      Convertible Preferred Stock and related warrants.  As a result, a
      penalty provision in the registration rights agreement was triggered and the
      Company has accrued a liability of $0.8 million as of December 31,
      2006.





Derivative
      Instrument Income
      (Expense).  Derivative instrument income amounted to $5.1
      million for the year ended December 31, 2006.  Derivative instrument
      income (expense) arises from fair value adjustments for certain financial
      instruments, such as convertible preferred stock and warrants to acquire common
      stock and are classified as liabilities when either (a) the holder possesses
      rights to net-cash settlement or (b) physical or net share settlement is not
      within the control of the Company.  In such instances, net-cash
      settlement is assumed for financial accounting and reporting, even when the
      terms of the underlying contracts do not provide for net-cash settlement. Such
      derivative financial instruments are initially recorded at fair value with
      subsequent changes in the fair value charged (credited) to operations each
      reporting period.




Interest
      Expense.  For the years ended December 31, 2006 and 2005,
      interest expense was $0.7 million and $1.0 million, respectively.





Gain
      (Loss) from Discontinued
      Operations.  For the years ended December 31, 2006 and 2005,
      the gain (loss) from discontinued operations was a loss of $0.3 million and
      a
      gain of $2.5 million respectively.  The Company’s wholly-owned
      subsidiary, WaveRider, sold its Australian operating subsidiary on June 30,
      2006, its North American subsidiaries on July 1, 2006, and its 900 MHz operation
      on October 18, 2006.  In addition, the Company sold its RMA Business
      on November 15, 2006.  As a result of these dispositions, the
      Company’s continuing operations at December 31, 2006 consisted solely of its
      SPEEDLAN product line, which were subsequently sold on August 13,
      2007.


-6-





LIQUIDITY
      AND CAPITAL RESOURCES





Cash
      Used in Operations.
      During the year ended December 31, 2006, the Company used approximately $3.2
      million in operating activities, primarily due to our net loss of $32.8 million,
      less net non-cash items of $30.2 million.




Cash
      from Investing
      Activities. During the year ended December 31, 2006, we generated
      approximately $2.5 million from investing activities, mainly through the sale
      of
      the WaveRider subsidiaries and other discontinued operations.





Cash
      from Financing
      Activities. During the year ended December 31, 2006, we received
      approximately $2.1 million of cash from financing activities, primarily from
      $2.2 million from the sale of Series J and J-1 Convertible Preferred Stock
      and
      $1.0 million from the sale of promissory notes, offset by $0.8 million in
      repayment of advances under the Credit Facility and $0.3 million under notes
      payable.





Contractual
      Obligations





As
      a
      result of the Company’s filing under Chapter 11 of the Code, each of the
      Company’s liabilities incurred prior to October 31, 2006 (“Petition Date”),
      including obligations under operating and other leases, are subject to
      compromise, and are reflected on the Company’s financial statements accordingly
      at December 31, 2006.  As a result of the confirmation of the Joint
      Plan on June 14, 2007, the Company received a discharge from the Court relating
      to all liabilities incurred prior to the Petition Date, including liabilities
      incurred under operating and other leases.   In addition, the
      Company received a discharge of contractual obligations for repair and
      maintenance services, for which the Company previously received payment, and
      recorded as deferred revenue.




We
      do not
      have any commitments for capital equipment, and additional future capital
      requirements are not anticipated.




Current
      Liquidity





As
      of
      December 31, 2006, our principal sources of liquidity consisted of approximately
      $1.9 million of cash and cash equivalents, compared to approximately $380,000
      in
      cash and cash equivalents at December 31, 2005.  The substantial
      increase in cash resulted from the receipt of cash from the sale of operating
      assets, and businesses, including the Company’s RMA Business.




In
      connection with the confirmation by the Court of the Joint Plan on June 14,
      2007, the Company distributed substantially all of its existing cash, or $1.7
      million, to SDS Capital Group SPC, Ltd. ("SDS"), the Company’s principal secured
      creditor.  In addition, (i) approximately $83,000 was distributed to
      satisfy priority and administrative claims under the Joint Plan; (ii) $250,000
      was distributed to the Trust to satisfy unsecured claims; and (iii) $120,000
      was
      placed in escrow with the Trust to satisfy contested priority
      claims.  As a result of such distributions, the Company had
      approximately $350,000 in cash available to provide for its working capital
      needs, of which, approximately $150,000 was used to pay for additional
      administrative claims.




CERTAIN
      RISK FACTORS AFFECTING AZZURRA HOLDING CORPORATION




An
      investment in our common stock is subject to many risks. You should carefully
      consider the risks described below, together with all of the other information
      included in this Annual Report, including the financial statements and the
      related notes, before you decide whether to invest in our common stock. Our
      business, operating results and financial condition could be harmed by any
      of
      the following risks. The trading price of our common stock could decline due
      to
      any of these risks, and you could lose all or part of your
      investment.





THE
      COMPANY LACKS OPERATIONS AND HAS LOSSES WHICH ARE EXPECTED TO CONTINUE INTO
      THE
      FUTURE.





As
      a
      result of the sale of substantially all of the Company’s operating assets, the
      Company has no operations from which to derive revenue.  The Company’s
      operating history is not a useful measure upon which an evaluation of its future
      success or failure can be made.  The Company’s ability to achieve and
      maintain profitability and positive cash flow is dependent upon its ability
      to
      generate revenues, and the ability to raise the capital necessary to acquire
      an
      operating entity or engage in a merger or other transaction with an operating
      entity.





The
      Company is a “shell” corporation as that is defined under Rule 12b-2.
 Based upon current plans, the Company expects to incur operating losses in
      future periods.  The Company cannot guarantee that it will be successful in
      generating revenues in the future.


-7-





IF
      THE COMPANY DOES NOT SUCCESSFULLY CONSUMMATE A BUSINESS COMBINATION, THE COMPANY
      WILL REQUIRE ADDITIONAL FUNDS





For
      the
      Company to once again engage in operations, it will either need to raise
      additional funds through public or private debt or sale of equity, or it will
      need to acquire or enter into a merger transaction with an operating entity.
       The Company is currently seeking to engage in such a merger with an
      operating entity, but there is no guarantee that this merger will reach a
      successful completion.   If the merger fails and the Company seeks
      additional financing, this financing may not be available when needed.
 Even if this financing is available, it may be on terms that the Company
      deems unacceptable or are materially adverse to its interests with respect
      to
      dilution of book value, dividend preference, liquidation preference, or other
      terms.





THE
      COMPANY IS NOT AN OPERATING COMPANY AND DOES NOT HAVE ANY SIGNIFICANT
      CAPITAL.





Because
      the Company does not have significant capital, it must limit its operations
      and
      there is little chance that operations will begin at any time soon, as a result
      of such limited capital, unless the Company obtains additional funding to
      acquire an operating entity or enters into a merger transaction with an
      operating entity.





BECAUSE
      SDS CAPITAL SPC, LTD. GROUP OWNS MORE THAN 50% OF THE COMPANY’S OUTSTANDING
      COMMON SHARES AND WILL BE ABLE TO DECIDE WHO WILL BE OUR DIRECTORS, YOU MAY
      NOT
      BE ABLE TO ELECT ANY DIRECTORS.





SDS
      Capital Group SPC, Ltd. (“SDS”) owns 80,000 common shares, constituting 80% of
      the Company’s outstanding common stock, and controls the Company.  As a
      result, unless the Company issues more shares to persons other than SDS or
      SDS
      sells some of its shares, SDS will be able to elect all of the Company’s
      directors and control its operations.  If the Company does enter into an
      acquisition or merger transaction, the Company may issue a significant number
      of
      shares in connection with that transaction.  This could result in a
      reduction in value to the common stock you own because of the ineffective voting
      power. SDS’ majority ownership could adversely affect the value of your shares
      and prevent the Company from undergoing a change of control in the
      future.





THE
      COMPANY HAS NOT PAID DIVIDENDS AND NONE ARE ANTICIPATED.





To
      date,
      the Company has paid no cash dividends on its common stock.  For the
      foreseeable future, the Company expects that earnings generated from the
      Company’s operations, if any, will be retained for use in its business and not
      to pay dividends.





"PENNY
      STOCK" RULES MAY MAKE BUYING OR SELLING THE COMPANY’S COMMON STOCK
      DIFFICULT.





Trading
      in the Company’s securities is subject to the “Penny Stock” Rules.





The
      SEC
      has adopted regulations that generally define a penny stock to be any equity
      security that has a market price of less than $5.00 per share, subject to
      certain exceptions. These rules require that any broker-dealer who recommends
      our securities to persons other than prior customers and accredited investors,
      must, prior to the sale, make a special written suitability determination for
      the purchaser and receive the purchaser’s written agreement to execute the
      transaction. Unless an exception is available, the regulations require the
      delivery, prior to any transaction involving a penny stock, of a disclosure
      schedule explaining the penny stock market and the risks associated with trading
      in the penny stock market. In addition, broker-dealers must disclose commissions
      payable to both the broker- dealer and the registered representative and current
      quotations for the securities they offer. The additional burdens imposed upon
      broker-dealers by such requirements may discourage broker-dealers from effecting
      transactions in our securities, which could severely limit the market price
      and
      liquidity of our securities. Broker-dealers who sell penny stocks to certain
      types of investors are required to comply with the Commission’s regulations
      concerning the transfer of penny stock. These regulations require broker-dealers
      to:




-
            Make
                a suitability determination prior to selling a penny stock to the
                purchaser;





-
            Receive
                the purchaser’s written consent to the transaction;
                and





-
            Provide
                certain written disclosures to the
                purchaser.





These
      requirements may restrict the ability of broker-dealers to sell the Company’s
      common stock and may affect your ability to resell our common
      stock.





ITEM
      7.  FINANCIAL
      STATEMENTS




The
      information required hereunder in this Annual Report on Form 10-KSB is set
      forth
      in the financial statements and the notes thereto beginning on Page
      13.




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




None.


-8-




ITEM
      8A.  CONTROLS AND PROCEDURES




Evaluation
      of Disclosure Controls and Procedures




We
      carried out an evaluation, under the supervision and with the participation
      of
      our management, including our principal executive officer and principal
      financial officer, of the effectiveness of the design and operation of our
      disclosure controls and procedures as such term is defined under Rule 13a-15(e)
      promulgated under the Securities Exchange Act of 1934, as amended (Exchange
      Act), as of December 31, 2006. Based on that evaluation, our principal
      executive officer and principal financial officer concluded that these controls
      and procedures were effective as of December 31, 2006.




Our
      disclosure controls and procedures are designed to ensure that information
      required to be disclosed by us in the reports that we file or submit under
      the
      Exchange Act is recorded, processed, summarized and reported, within the time
      periods specified in the rules and forms of the Securities and Exchange
      Commission. These disclosure controls and procedures include, among other
      things, controls and procedures designed to ensure that information required
      to
      be disclosed by us in the reports that we file under the Exchange Act is
      accumulated and communicated to our management, including our principal
      executive officer and principal financial officer, as appropriate to allow
      timely decisions regarding required disclosure.




Changes
      in Internal Control Over Financial Reporting




As
      a
      result of the filing of the Bankruptcy Petition on October 31, 2006, we
      terminated the employment of a substantial portion of our accounting staff,
      including our Chief Financial Officer.  In addition, we changed our
      accounting software systems.  Each of these factors resulted in a
      substantial change in our internal controls over our financial
      reporting.  Management does not believe that these changes have
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.




ITEM 8B.
            OTHER
                INFORMATION




None.





PART
      III





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




Directors
      and Executive Officers





The
      following table sets forth information concerning our executive officers and
      directors as of August 20, 2007:





Name
            Age
            PositionDaniel
                W. Rumsey
            46
            President,
                Chief Executive Officer, Chief Financial Officer and Chairman of the
                Board of DirectorsMark
                Schaftlein
            45
            DirectorRichard
                Reiss
            50
            Director





Daniel
      W.
      Rumsey.   Mr. Rumsey was appointed Chief Restructuring
      Officer on March 10, 2005, and to the Board of Directors on May 13, 2005. Mr.
      Rumsey resigned from his position as Chief Restructuring Officer on April 1,
      2006 in connection with the WaveRider Merger, and was reappointed as Chief
      Restructuring Officer in October 2006 upon the filing of the Bankruptcy
      Petition.  Mr. Rumsey is currently serving as a consultant to the
      Company in the capacity of President, Chief Executive Officer and Chief
      Financial Officer.  Prior to his appointment as Chief Restructuring
      Officer in March 2005, he served as the Company’s Vice President, Chief
      Financial Officer and General Counsel. Prior to joining the Company, Mr. Rumsey
      was Vice President and General Counsel of Knowledge Kids Network, Inc., a
      multi-media education company. Knowledge Kids Network is part of the Knowledge
      Universe family of companies. Prior to joining Knowledge Kids Network, Mr.
      Rumsey was the President and General Counsel of Aspen Learning Systems and
      NextSchool, Inc., which he joined in February 1997. Mr. Rumsey sold Aspen
      Learning Systems and NextSchool to Knowledge Kids Network in 1999. Mr. Rumsey
      has an extensive restructuring, legal and finance background, dating back to
      1987 when he served as a staff attorney in the U.S. Securities and Exchange
      Commission's Division of Corporation Finance. He has also served as Assistant
      General Counsel for Terra Industries, Inc. and Associate General Counsel and
      Corporate Secretary of EchoStar Communications Corporation. Mr. Rumsey also
      serves as the Interim Chief Financial Officer, and Executive Chairman of the
      Board of Directors of Prescient Applied Intelligence, Inc. and as a director
      of
      DIRT Motor Sports, Inc. and XELR8 Holdings, Inc.  Mr. Rumsey received
      his J.D. from the University of Denver College of Law in 1985, and his B.S.
      from
      the University of Denver in 1983.




Richard
      Reiss.Mr. Reiss has
      served as director of the Company since March 2005. Mr. Reiss is currently
      a
      director of Glowpoint, Inc., where he has served since May 2000. He served
      as
      the Chief Executive Officer of Glowpoint from May 2000 to April 2002, and as
      President from May 2000 to April 2002. Mr. Reiss served as Chairman of the
      Board
      of Directors, President and Chief Executive Officer of All Communications
      Corporation from its formation in 1991 until the formation of Glowpoint's
      predecessor pursuant to a merger of All Communications Corporation and View
      Tech, Inc. in May 2000.


-9-





Mark
      Schaftlein.Mr. Schaftlein has served as a director of Azzurra
      Holding Corporation since June 28, 2007.  Mr. Schaftlein is currently
      Chief Executive Officer of Epicus Communications Group, Inc., and is President
      of GlobalNet Corporation and Pacificap Entertainment Holdings,
      Inc.  Mr. Schaftlein is also a consultant with Ocean Avenue Advisors,
      focusing on corporate finance, restructuring and management
      consulting.  At Ocean Avenue Advisors, he concentrates on small and
      microcap companies with an emphasis on telecommunications, technology and
      finance.  Mr. Schaftlein is a member of the Board of Directors of
      GlobalNet Corporation, Pacificap Entertainment Holdings, Inc. and Epicus
      Communications Group, Inc.





BOARD
      COMMITTEES AND MEETINGS





The
      Board
      of Directors currently has an Audit Committee and a Compensation
      Committee.





Audit
      Committee. The Audit
      Committee currently consists of two directors, Messrs. Reiss and Schaftlein.
      The
      Audit Committee is primarily responsible for approving the services performed
      by
      the Company’s independent registered public accounting firm and reviewing their
      reports regarding the Company’s accounting practices and systems of internal
      accounting controls. The Board of Directors has determined that Mr. Reiss is
      a
      financial expert in that Mr. Reiss has (i) an understanding of generally
      accepted accounting principles and financial statements; (ii) has the ability
      to
      assess the general application of such principles in connection with the
      accounting for estimates, accruals and reserves; (iii) has experience preparing,
      auditing, analyzing or evaluating financial statements that present a breadth
      and level of complexity of accounting issues that are generally comparable
      to
      the breadth and complexity of issues that can reasonably be expected to be
      raised by the Company’s financial statements, or experience actively supervising
      one or more persons engaged in such activities; and (iv) an understanding of
      internal control over financial reporting; and an understanding of audit
      committee functions.




Compensation
      Committee. The
      Compensation Committee currently consists two directors, Messrs. Schaftlein
      and
      Reiss. The Compensation Committee is primarily responsible for reviewing and
      approving the Company’s general compensation policies and setting compensation
      levels for its executive officers. The Compensation Committee also has the
      authority to administer the Company’s Employee Stock Purchase Plan and its 2004
      Equity Incentive Plan and to make option grants thereunder.




CODE
      OF ETHICS





The
      Company has adopted a Code of Ethics that applies to the Company’s Chief
      Executive Officer, Chief Financial Officer, Controller, Treasurer, and Financial
      Reporting Officer, or persons performing similar functions. A copy of the
      Company’s Code of Ethics is filed as Exhibit 14.1 hereto. The Company will
      provide to the public, free of charge, a copy of the code of ethics upon request
      in writing to the Company’s Chief Executive Officer at Azzurra Holding
      Corporation at 6080 Center Drive, Suite 600, Los Angeles, California
      90292.





SECTION
      16(A) BENEFICIAL OWNERSHIP
      REPORTING COMPLIANCE





Section
      16(a) of the Exchange Act requires the Company’s directors and executive
      officers, and persons who beneficially own more than 10% of the Common Stock,
      to
      file with the SEC initial reports of beneficial ownership ("Form 3") and reports
      of changes in beneficial ownership of Common Stock and other equity securities
      of the Company ("Form 4"). Officers, directors and greater than 10% stockholders
      of the Company are required by SEC rules to furnish to the Company copies of
      all
      Section 16(a) reports that they file. To the Company’s knowledge, based solely
      on a review of the copies of such reports furnished to the Company and written
      representations that no other reports were required, all Section 16(a) filing
      requirements applicable to its officers, directors and greater than 10%
      beneficial owners were complied with for fiscal 2006.


ITEM 10.
              EXECUTIVE
                  COMPENSATION


SUMMARY
      COMPENSATION TABLE





The
      following table sets forth certain information about the compensation paid
      or
      accrued during the fiscal year converted by this Annual Report to our Chief
      Executive Officer and our Chief Financial Officer, along with our former Chief
      Executive Officers, and Chief Financial Officer, as well as our former
      President, and former Chief Technology Officer, the only other executive
      officers whose total compensation exceeded $100,000 in any of the last two
      fiscal years.




-10-


Name
                and Principal Position
            
            Year
            Salary ($)
            Bonus ($)
            All
                Other
              Compensation
              ($)
            Total
              ($)Daniel
                W. Rumsey(1)
              President,
                Chief Executive Officer and Chief Financial Officer
            
            2006
            191,442
            -
            15,000(2)
            206,442James
                Chinnick(3)
                (10)
              Former
                President and Interim Chief Executive Officer and
              Vice
                President, Product Operations
            
            2006
            126,647
            -
            2,993(4)
            129,640Charles
                Brown(5)
                (10)
              Former
                Chief Executive Officer
            
            2006
            73,260
            -
            -
            73,260Scott
                Worthington(6)
                (10)
              Former
                Chief Financial Officer
            
            2006
            124,948
            -
            -
            124,948Don
                Meiners(7)
              Former
                President
            
            2006
            104,677
            -
            18,850(8)
            123,527Carlos
                Belfiore(9)
              Former
                Chief Technical Officer
            
            2006
            125,098
            41,400
            -
            166,498





(1)
            Mr.
                Rumsey’s employment was terminated on April 1, 2006 as a result of the
                WaveRider Merger; however, Mr. Rumsey continued to receive severance
                payments under his employment agreement until September
                2007.  As a result of the termination of Mr. Chinnick’s
                employment with the Company on October 20, 2006, Mr. Rumsey assumed
                the
                position of Chief Restructuring Officer.  Mr. Rumsey is
                currently a consultant to the Company, serving in the capacity as
                President and Chief Executive Officer, and Chief Financial
                Officer.





(2)
            Beginning
                November 2006, WaveRider paid Mr. Rumsey $7,500 per month for
                administrative services relating to the liquidation of
                WaveRider.





(3)
            Mr.
                Chinnick’s assumed the position of Vice President, Product Operations of
                the Company on April 1, 2006 as a result of the WaveRider Merger,
                and the
                position as President and Interim Chief Executive Officer on August
                2,
                2006 as a result of Mr. Brown’s resignation as Chief Executive
                Officer.  Mr. Chinnick’s employment was terminated on October
                20, 2006.





(4)
            Represents
                consulting fees provided to the Company and WaveRider by Mr. Chinnick
                following his termination on October 20,
                2006.





(5)
            Mr.
                Brown assumed the position of Chief Executive Officer and a director
                of
                the Company on April 1, 2006 as a result of the WaveRider
                Merger.  Mr. Brown resigned from the Company as Chief Executive
                Officer and as a director effective July 28,
                2006.





(6)
            Mr.
                Worthington assumed the position of Chief Financial Officer on April
                1,
                2006 as a result of the WaveRider Merger.  Mr. Worthington’s
                employment was terminated on October 31,
                2006.





(7)
            Mr.
                Meiners served as the Company’s President until his termination on
                September 1, 2006.





(8)
            Represents
                consulting fees provided to the Company by Mr. Meiners following
                his
                termination on September 1, 2006.





(9)
            Dr.
                Belfiore served as the Company’s Chief Technical Officer until his
                termination on November 3, 2006.





(10)
            Amounts
                paid to Messrs. Brown, Chinnick and Worthington reflect only amounts
                paid
                to such persons after consummation of the WaveRider Merger on April
                1,
                2007.





-11-


DIRECTOR
      COMPENSATION





During
      the last completed fiscal year, Richard Reiss was paid $4,500 in consideration
      for his service to the Board of Directors.  No other director received
      any consideration for service to the Board during 2006, due to the deteriorating
      financial condition of the Company.  In is not intended
      that non-employee directors will receive cash compensation for their
      service as directors in the immediate future.




EMPLOYMENT
      CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND CHANGE OF CONTROL
      AGREEMENTS





The
      Company entered into a letter agreement with Daniel Rumsey, its then Chief
      Restructuring Officer, and former Vice President, General Counsel and Acting
      Chief Financial Officer, on March 22, 2006. Under the terms of the agreement,
      Mr. Rumsey’s severance agreement with the Company, as amended, terminated. The
      letter agreement provided for Mr. Rumsey’s resignation as the Chief
      Restructuring Officer upon consummation of the WaveRider Merger, and the
      termination of his employment on March 31, 2006. On that date, Mr. Rumsey was
      paid one-half of his deferred compensation owed him by the Company, or $25,000,
      and the remaining $25,000 was paid during the quarter ended June 30,
      2006.  In addition, the Company was obligated to pay Mr. Rumsey (i)
      one-half of his base salary for a period of twelve months; (ii) his COBRA
      obligations for twelve months; and (iii) all stock options and restricted stock
      to which Mr. Rumsey is entitled vested 100%.  As a result of the
      Company’s deteriorating financial condition, however, the Company terminated his
      severance payments effective September 1, 2006.  As a result of the
      filing of the Bankruptcy Petition, the letter agreement terminated, therefore
      terminating all obligations to Mr. Rumsey thereunder, subject to the treatment
      of Mr. Rumsey’s claim under the Joint Plan.





The
      Company entered into an agreement with Dr. Carlos Belfiore, its Vice President
      of Engineering and Chief Technical Officer, on October 20, 2003. Under the
      terms
      of the agreement, Dr. Belfiore is paid a base salary of $138,000 per year,
      in
      addition to a cash bonus equal to 30% of his base salary on January 15, 2005.
      The agreement also provided for the grant of an option to purchase 91,666 shares
      of Common Stock of the Company, which amount was reduced to 80,000 due to
      limitations in the Company’s 1995 Stock Option/Stock Issuance Plan. The Company
      granted Dr. Belfiore a warrant to purchase 11,666 shares of Common Stock,
      thereby making up the difference between the 91,666 shares granted by the Board
      of Directors, and the 80,000 actually issued under the Plan. In the event Dr.
      Belfiore's employment was terminated at any time without cause, the Company
      was
      obligated to pay Dr. Belfiore his salary for six months following such
      termination, and all options previously granted to Dr. Belfiore continued to
      vest in accordance with their terms and conditions for a period of two years
      following the date of such termination.  Dr. Belfiore’s employment was
      terminated on November 3, 2006.  As a result of the filing of the
      Bankruptcy Petition, Dr. Belfiore’s claim for severance under the terms of his
      agreement are subject to treatment under the Joint Plan.





The
      Company entered into a letter agreement with Don Meiners, its former President
      and former Vice President of Operations, on March 22, 2006. Under the terms
      of
      the letter agreement, in the event that Mr. Meiners’ employment is terminated at
      any time, voluntarily or involuntarily, the Company was obligated to pay his
      base salary for a period of three months, and his COBRA obligations for six
      months. In the event his employment is terminated involuntarily, all stock
      options and restricted stock previously granted to Mr. Meiners vested 100%.
      In
      the event his employment is voluntarily terminated, all his restricted stock
      and
      stock options continued to vest for a period of six months following the date
      of
      termination.  Mr. Meiners’ employment was terminated on September 1,
      2006.  As a result of the filing of the Bankruptcy Petition, Mr.
      Meiners’ claim for severance under the terms of his agreement are subject to
      treatment under the Joint Plan.





The
      Company terminated the employment of Messrs. Chinnick, on October 6, 2006,
      and
      Worthington, on October 31, 2006, as the Company’s Chief Executive Officer and
      Chief Financial Officer, respectively.  Messrs. Chinnick and
      Worthington had prior severance agreements with WaveRider requiring WaveRider
      to
      pay them $155,244 and $138,457, respectively, at the time of the termination
      of
      their employment.  In addition, WaveRider had entered into an
      agreement with Bruce Sinclair, the former Chief Executive Officer of WaveRider,
      and a director of the Company until his resignation in September 2007, pursuant
      to which WaveRider was obligated to pay Mr. Sinclair approximately $97,640
      at
      the time of his resignation.   Subsequent to December 31, 2006,
      WaveRider entered into settlement agreements with each of Messrs. Chinnick,
      Worthington and Sinclair, providing for the payment to them of $27,112, in
      the
      case of Mr. Sinclair, $38,882, in the case of Mr. Chinnick, and $35,275, in
      the
      case of Mr. Worthington.





ITEM
      11.  SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT




Under
      the
      terms and conditions of the Joint Plan, as confirmed by the Court, holders
      of
      our equity interests, including common stock and preferred stock, as of the
      effective date of the Joint Plan, June 28, 2007, have terminated.  The
      following table presents information concerning the beneficial ownership of
      all
      shares of common stock of the Company issued in connection with the Joint Plan,
      as of December 1, 2007.  The Company has no other shareholders at
      December 1, 2007.





Beneficial
      ownership is determined under the rules of the Securities and Exchange
      Commission and generally includes voting or investment power over securities.
      Except in cases where community property laws apply or as indicated in the
      footnotes to this table, the Company believes that each stockholder identified
      in the table possesses sole voting and investment power over all shares of
      common stock shown as being beneficially owned by that stockholder. The
      percentage of beneficial ownership is based on 100,000 shares of common stock
      outstanding as of December 1, 2007.


-12-





Name
                and Address of Beneficial Owner
            Common
                Stock
            Percentage
                of Shares OutstandingSDS
                Capital Group SPC, Ltd.
              113
                Church Street
              P.O.
                Box 134GT
              Grand
                Canyon, Cayman Islands
            80,000
            80%CGA
                Resources LLC
              c/o
                Cass G. Adelman
              30
                E. 72nd
                Street, 5th
                Floor
              New
                York, NY 10021
            10,000
            10%Smithfield
                Fiduciary LLC
              c/o
                Highbridge Capital Management
              1350
                Avenue of the Americas
              33rd
                Floor
              New
                York, NY 10019
            10,000
            10%





ITEM
      12.  CERTAIN RELATIONSHIPS
      AND RELATED
      TRANSACTIONS




Not
      applicable.





ITEM
      13.  EXHIBITS AND
      REPORTS ON FORM 8-K





We
      have
      listed the exhibits filed as part of this Annual Report on Form 10-KSB in the
      accompanying exhibit index, which follows the signature page to this Annual
      Report. The exhibits marked with an asterisk (*) are included with and filed
      as
      part of this Annual Report on Form 10-KSB. The exhibits marked with a double
      asterisk (**) are management contracts or compensatory plans or
      arrangements.





ITEM
      14.  PRINCIPAL ACCOUNTANT
      FEES AND
      SERVICES




AUDIT
      FEES





Aidman,
      Piser & Company, P.A. ("Aidman Piser") has been retained by the Audit
      Committee as the independent registered public accounting firm to audit our
      financial statements for the fiscal year ending December 31, 2006. The aggregate
      fees Aidman Piser billed us in 2006 for audit services, including for review
      of
      our interim financial statements, post-report review procedures and the issuance
      of consents in connection with the filing of registration statements, was
      approximately $146,000.





AUDIT-RELATED
      FEES





The
      Company did not engage Aidman Piser for any non-audit related services in 2006,
      including tax compliance, tax advisory or any other tax planning or other
      services.





AUDIT
      COMMITTEE PRE-APPROVAL POLICIES





The
      Audit
      Committee has adopted an Audit Committee Charter, which sets forth the
      procedures and policies pursuant to which services to be performed by the
      independent auditor are to be pre-approved. Under the Charter, proposed services
      either may be pre-approved by agreeing to a framework with descriptions of
      allowable services with the Audit Committee ("general pre-approval"), or require
      the specific pre-approval of the Audit Committee. Unless a type of service
      has
      received general pre-approval, it requires specific pre-approval by the Audit
      Committee if it is to be provided by the independent registered public
      accounting firm.





The
      Audit
      Committee will annually review and pre-approve the services that may be provided
      by the independent auditor that are subject to general pre-approval. Under
      the
      Charter, the Audit Committee may delegate pre-approval authority one or more
      designated members of the Audit Committee the authority to pre-approve audit
      and
      permissible non-audit services, provided such pre-approval decision is presented
      to the full Audit Committee at its scheduled meetings. The member to whom such
      authority is delegated must report, for informational purposes only, any
      pre-approval decisions to the Audit Committee at its next
      meeting.





-13-










REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM




The
      Board
      of Directors


Azzurra
      Holding Corporation





We
      have
      audited the accompanying consolidated balance sheet of Azzurra Holding
      Corporation and subsidiaries (the “Company”) as of December 31, 2006 and the
      related consolidated statements of operations, stockholders' equity (deficit)
      and comprehensive loss, and cash flows for each of the years in the two-year
      period then ended. These consolidated financial statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these consolidated financial statements based on our
      audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, 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 provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of Azzurra Holding
      Corporation and subsidiaries as of December 31, 2006 and the consolidated
      results of their operations and their cash flows for each of the years in the
      two-year period then ended in conformity with accounting principles generally
      accepted in the United States of America.





As
      more
      fully discussed in Note 1, the Company reorganized under Chapter 11 of the
      U.S.
      Bankruptcy Code under a plan of reorganization that was confirmed by the
      Bankruptcy Court on June 14, 2007.  Additionally, the Company
      discontinued its remaining operations subsequent to December 31,
      2006.  As a result, the Company is exploring opportunities to effect
      an acquisition of the Company by merger, exchange or issuance of
      securities.  The pro-forma effects on the December 31, 2006 balance
      sheet of the confirmation of the plan of reorganization as if it occurred on
      December 31, 2006 is also presented in Note 1.  The discontinuance of
      all the Company's remaining operations in 2007 raises substantial
      doubt about the Company’s ability to continue as a going concern.  The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.






/s/ 
                Aidman, Piser
&
                Company, P.A.Tampa,
                Florida
              December
                27, 2007




-14-


AZZURRA
      HOLDING CORPORATION AND SUBSIDIARIES


CONSOLIDATED
      BALANCE SHEET




(In
      thousands)





DECEMBER
      31, 2006





ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            1,849Accounts
                receivable
            
            
            391Inventory
            
            
            4Note
                receivable
            
            
            426Total
                current assets
            
            
            2,670SPEEDLAN
                automated test equipment
            
            
            16Goodwill
            
            
            100Total
                assets
            
            $
            2,786LIABILITIES
                AND STOCKHOLDERS' DEFICITCurrent
                liabilities:Accounts
                payable
            
            $
            408Accounts
                payable subject to compromise
            
            
            1,191Other
                accrued liabilities
            
            
            589Other
                accrued liabilities subject to compromise
            
            
            1,812Deferred
                revenue subject to compromise
            
            
            1,322Derivative
                liability for excess shares subject to compromise
            
            
            30Current
                maturities of long-term debt subject to compromise
            
            
            3,319Total
                current liabilities and total liabilities
            
            
            8,671Commitments
                and contingencies (Note 10)Stockholders'
                deficit:Series
                E Preferred Stock
            
            
            332Series
                G Preferred Stock
            
            
            3,224Series
                J and J-1 Preferred Stock
            
            
            16,824Common
                stock, par value $0.0001 per share; 250 million shares
                authorized;
            
            
            875,111
                shares issued; 75,081 shares outstandingTreasury
                stock, at cost; 30 shares
            
            
            (74
            )Additional
                paid-in capital
            
            
            391,660Accumulated
                deficit
            
            
            (417,859
            )Total
                stockholders' deficit
            
            
            (5,885
            )Total
                liabilities and stockholders' deficit
            
            $
            2,786


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








-15-


AZZURRA
      HOLDING CORPORATION AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF OPERATIONS




(In
      thousands, except per share data)







FOR
                THE YEARS ENDED DECEMBER 31,2006
            
            2005Sales
            
            $
            1,411
            
            $
            1,723Cost
                of sales
            
            
            712
            
            
            898Gross
                profit
            
            
            699
            
            
            825Operating
                expense:Research
                and development
            
            
            1,059
            
            
            2,982Selling
                and marketing
            
            
            1,055
            
            
            3,139General
                and administrative
            
            
            526
            
            
            3,497Impairment
                and other charges
            
            
            24,647
            
            
            ─Restructuring
                charges
            
            
            ─
            
            
            5,597Total
                operating expenses
            
            
            27,287
            
            
            15,215Loss
                from operations
            
            
            (26,588
            )
            
            (14,390
            )Other
                income (expenses):Financing
                expense
            
            
            (10,325
            )
            
            ─Derivative
                financial instrument income
            
            
            5,140
            
            
            ─Interest
                expense
            
            
            (675
            )
            
            (960
            )Other
                income, net
            
            
            (58
            )
            
            271Loss
                from continuing operations
            
            
            (32,506
            )
            
            (15,079
            )Income
                tax benefit
            
            
            --
            
            
            --Loss
                before discontinued operations
            
            
            (32,506
            )
            
            (15,079
            )Income
                (loss) from discontinued operations
            
            
            (319
            )
            
            2,497Net
                loss
            
            
            (32,825
            )
            
            (12,582
            )Preferred
                stock accretions
            
            
            (1,199
            )
            
            (3,287
            )Preferred
                stock dividends
            
            
            ─
            
            
            (541
            )Net
                loss attributable to common stockholders
            
            $
            (34,024
            )
            $
            (16,410
            )Basic
                and diluted loss per common share:Loss
                from continuing operations
            
            $
            (0.54
            )
            $
            (1.20
            )Income
                (loss) from discontinued operations
            
            
            (0.01
            )
            
            0.16Basic
                and diluted loss per common share
            
            $
            (0.55
            )
            $
            (1.04
            )Shares
                used in basic and diluted per share computation
            
            
            62,224
            
            
            15,814




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




-16-


AZZURRA
      HOLDING CORPORATION AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND


COMPREHENSIVE
      LOSS





YEARS
      ENDED DECEMBER 31, 2006 AND
      2005




(In
      thousands)




Shares
            AmountCommon
            Preferred
            Common
            Preferred
            Additional
            Treasury
            Accumulated
            Accumulated
            TotalE
            F
            G
            H
            I
            J/J-1
            
            E
            F
            G
            H
            I
            J/J-1
            Paid-in
                Capital
            Stock
            Deficit
            OtherComprehensiveIncome (Loss)Balance
                at December 31, 2004
            11,795.0
            -
            -
            -
            -
            -
            -
            $       35
            -
            -
            -
            -
            -
            -
            $376,430
            $    (74)
            $(368,885)
            $             2
            $  7,508Series
                C Preferred converted to common stock
            34.0
            -
            -
            -
            -
            -
            -
            3
            -
            -
            -
            -
            -
            -
            5
            -
            -
            -
            8Warrants
                in connection withnotes
                payable
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            44
            -
            -
            -
            44Warrants
                for former officer settlement
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            93
            -
            -
            -
            93Series
                B Preferred converted to common stock
            382.0
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            1,708
            -
            -
            -
            1,708Series
                E Preferred issued in exchangefor
                vendor payables
            -
            0.9
            -
            -
            -
            -
            -
            -
            332
            -
            -
            -
            -
            -
            -
            -
            -
            -
            332Series
                F Preferred converted to common stock
            1,120.0
            
            
            
            
            
            
            
            
            (189)
            
            
            
            
            189
            
            
            
            -Series
                G Preferred, common stock and warrants issued to redeem Series C
                Preferred
            7,090.0
            -
            -
            5.6
            -
            -
            -
            1
            -
            -
            2,839
            -
            -
            -
            2,838
            -
            (2,008)
            -
            3,670Series
                G Preferred and warrants issuedto
                redeem Series D Preferred
            -
            -
            -
            1.0
            -
            -
            -
            -
            -
            -
            360
            -
            -
            -
            180
            -
            1,460
            -
            2,000Series
                F Preferred and common stock issued for debt payments
            628.0
            -
            0.3
            -
            -
            -
            -
            2
            -
            850
            -
            -
            -
            -
            196
            -
            -
            -
            1,048Warrants
                issue with lease settlement
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            233
            -
            -
            -
            233Warrants
                issued in connection withinvestor
                bank promissory note,net
                of expense
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            549
            -
            -
            -
            549Warrants
                issued in lieu of debtpayment
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            552
            -
            -
            -
            552Warrants
                issued for debt paymentpenalty
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            165
            -
            -
            -
            165Common
                stock issued for vendor settlement
            184.0
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            20
            -
            -
            -
            20Common
                stock issued in lieu of debt payment
            372.0
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            59
            -
            -
            -
            59Restricted
                stock issue
            550.0
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            82
            -
            -
            -
            82Adjustment
                for 1:30 reverse stock split
            -
            -
            -
            -
            -
            -
            -
            (39)
            -
            -
            -
            -
            -
            -
            39
            -
            -
            -
            -Redeemable
                preferred stock accretions
              through
                date of redemption
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            (1,279)
            -
            (1,279)Exercise
                of stock options
            7.0
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -Series
                C Preferred dividends
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            145
            -
            -
            -
            396
            -
            (541)
            -
            -Foreign
                currency translationadjustments
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            (2)
            (2)Net
                loss
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            (12,582)
            -
            (12,582)Balance
                at December 31, 2005
            22,162.0
            0.9
            0.3
            6.6
            -
            -
            -
            2
            332
            661
            3,344
            -
            -
            -
            383,778
            (74)
            (383,835)
            -
            4,208Series
                F Preferred converted to common stock
            3,880.0
            -
            (0.3)
            -
            -
            -
            -
            1
            -
            (661)
            -
            -
            -
            -
            660
            -
            -
            -
            -Series
                G Preferred converted to common stock
            467.2
            -
            -
            (0.3)
            -
            -
            -
            -
            -
            -
            (120)
            -
            -
            -
            120
            -
            -
            -
            -Acquisition
                of WaveRider
            48,362.0
            -
            -
            -
            1,326.4
            132.6
            60.0
            5
            -
            -
            -
            1,882
            2,823
            958
            8,282
            -
            -
            -
            13,950Series
                J Preferred issued to redeemSeries
                H and I Preferred
            -
            -
            -
            -
            (1,326.4)
            (132.6)
            353.7
            -
            -
            -
            
            (1,882)
            (2,823)
            4,705
            -
            -
            -
            -
            -Series
                J Preferred issued in exchangefor
                Bridge Notes
            -
            -
            -
            -
            -
            -
            317.3
            -
            -
            -
            -
            -
            -
            4,442
            -
            -
            -
            -
            4,442Series
                J Preferred issued in exchangefor
                SDS Notes
            -
            -
            -
            -
            -
            -
            260.3
            -
            -
            -
            -
            -
            
            3,644
            -
            -
            -
            -
            3,644Warrants
              issued in connection with  notes converted to Series J
              Preferred
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            2,426
            -
            -
            -
            2,426Series
                J Preferred issued to consultants
            -
            -
            -
            -
            -
            -
            42.7
            -
            -
            -
            -
            -
            -
            568
            167
            -
            -
            -
            735Sale
                of Series J Preferred
            -
            -
            -
            -
            -
            -
            334.3
            -
            -
            -
            -
            -
            -
            1,308
            917
            -
            -
            
            2,225Accretion
                of contructive dividend inconnection
                sales of Series J Preferred
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            1,199
            -
            -
            (1,199)
            -
            -Warrants
                and beneficial conversion feature of investor notes
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            479
            -
            -
            -
            479Issued
                common stock to consultants
            240.0
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            1
            -
            -
            -
            1Derivative
              liability reclassification
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            (5,170)
            -
            -
            -
            (5,170)Net
                loss
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            -
            (32,825)
            -
            (32,825)Balance
                at December 31, 2006
            75,111.2
            0.9
            -
            6.3
            -
            -
            1,368.3
            $         8
            $332
            $   -
            $3,224
            $      -
            $      -
            $16,824
            $391,660
            $    (74)
            $(417,859)
            $            -
            $(5,885)








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


-17-





AZZURRA
      HOLDING CORPORATION AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


(In
      thousands)


Years
                ended December 31,2006
            
            2005Cash
                flows from operating activities:Net
                loss
            
            $
            (32,825
            )
            $
            (12,582
            )Adjustments
                to reconcile net loss to net cash flows from operating
                activities:Depreciation
                in continuing operations
            
            
            85
            
            
            550Depreciation
                in discontinued operations
            
            
            108
            
            
            --(Gain)
                loss on sale of equipment
            
            
            366
            
            
            (238
            )Gain on
                discontinued operations
            
            
            (1,008
            )
            
            --Gain
                on sale of patent
            
            
            (30
            )
            
            (400
            )(Gain)/Loss
                on debt extinguishment
            
            
            (26
            )
            
            13Warrant
                expense
            
            
            --
            
            
            408Inventory
                valuation and other charges
            
            
            --
            
            
            56Asset
                impairment and other restructuring charges
            
            
            24,647
            
            
            5,597Loss
                on conversion of promissory notes
            
            
            7,643
            
            
            --Stock-based
                compensation
            
            
            --
            
            
            93Derivative
                financial instrument income
            
            
            (5,140
            )
            
            --Securities
                issued to consultants
            
            
            735
            
            
            --Amortization
                of debt discount
            
            
            1,017
            
            
            175Bad
                debt expense
            
            
            1,031
            
            
            336Increase
                (decrease) in cash resulting from changes in:Accounts
                receivable
            
            
            (719)
            
            
            1,447Inventory
            
            
            75
            
            
            1,482Prepaid
                expenses and other assets
            
            
            423
            
            
            1,072Accounts
                payable
            
            
            252
            
            
            (1,104
            )Other
                accrued liabilities
            
            
            (264)
            
            
            (2,534
            )Deferred
                revenue
            
            
            465
            
            
            750Net
                cash flows from operating activities
            
            
            (3,165
            )
            
            (4,879
            )Cash
                flows from investing activities:Acquisition
                of property and equipment
            
            
            --
            
            
            (44
            )Proceeds
                from sale of patent
            
            
            30
            
            
            400Proceeds
                from sale of property and equipment
            
            
            123
            
            
            482Net
                cash received on acquisition of WaveRider
            
            
            174
            
            
            --Proceeds
                from sale of discontinued operations
            
            
            2,163
            
            
            --Purchase
                WaveRider Note
            
            
            --
            
            
            (250
            )Net
                cash flows from investing activities
            
            
            2,490
            
            
            588Cash
                flows from financing activities:Payments
                of notes payable
            
            
            (299
            )
            
            (716
            )Proceeds
                from (repayment of) loan payable to bank
            
            
            (771
            )
            
            759Proceeds
                from sale of preferred shares (net of cash fees of $281)
            
            
            2,225
            
            
            --Proceeds
                from convertible notes
            
            
            --
            
            
            850Proceeds
                from debentures
            
            
            --
            
            
            1,700Payments
                on debentures
            
            
            --
            
            
            (200
            )Proceeds
                from debt financing (net of cash fees of $101 in 2006)
            
            
            989
            
            
            --Net
                cash flows from financing activities
            
            
            2,144
            
            
            2,393Effect
                of exchange rate changes on cash
            
            
            --
            
            
            (2
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            1,469
            
            
            (1,900
            )Cash
                and cash equivalents at beginning of the year
            
            
            380
            
            
            2,280Cash
                and cash equivalents at end of the year
            
            $
            1,849
            
            $
            380




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








-18-


AZZURRA
      HOLDING CORPORATION AND SUBSIDIARIES


NOTES
      TO CONSOLIDATED FINANCIAL
      STATEMENTS


(AMOUNTS
      IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)





1. 
THE
      COMPANY, PROCEEDINGS UNDER
      CHAPTER 11 OF THE BANKRUPTCY CODE AND MANAGMENT'S PLANS





Company
      Overview





Azzurra
      Holding Corporation, formerly Wave Wireless Corporation (the "Company"), was
      incorporated in Delaware on August 23, 1991 to engage in the design, manufacture
      and marketing of millimeter network access wave radio systems for use in the
      worldwide wireless telecommunications market. On March 28, 2006, we merged
      WaveRider Communications, Inc. (“WaveRider”) with a wholly owned subsidiary of
      the Company, with WaveRider surviving the merger, and becoming a wholly owned
      subsidiary of the Company (the “WaveRider Merger”).




The
      product, personnel and other synergies resulting from the WaveRider Merger
      were
      intended to lower operating and other costs, and increase revenue in each
      company’s respective product lines.  Following consummation of the
      WaveRider Merger, the Company experienced far longer sales cycles for new
      products than were expected, certain product availability issues in connection
      with its 900 MHz non-line-of-sight products, and continuing delays in
      commercializing new mesh products, resulting in substantially lower revenue
      in
      each of these product lines than previously expected.  Due to the
      recognition of lower than anticipated revenue during the quarter ended September
      30, 2006, the Company was required to use a significant amount of its cash
      resources to satisfy certain legacy obligations, and the costs incurred in
      connection with consummation of the WaveRider Merger.  As a result of
      these factors, and the Company’s deteriorating cash position, management entered
      into discussions to sell certain non-core assets in order to satisfy its working
      capital requirements.





Management
      of WaveRider’s Australian subsidiary, WaveRider Communications (Australia) Pty
      Ltd. (“WaveRider Australia”) had approached it on a number of occasions about
      the possibility of a management buy-out of WaveRider Australia.  On
      June 19, 2006, the Company’s Board of Directors met and agreed that, as a
      non-core asset, the sale of the WaveRider Australia should be considered and
      directed management to enter into formal negotiations.  On June 30,
      2006, the Company sold WaveRider Australia for cash consideration of $370,000
      plus contingent consideration calculated at 15% of revenue for the following
      12
      months, payable quarterly in arrears ($145,000 received in 2006).  On
      January 25, 2007, WaveRider and WaveRider Australia agreed to a lump-sum payment
      of $438,000 to WaveRider, thereby terminating all further payment obligations
      of
      WaveRider Australia to WaveRider.  As a result of this payment,
      WaveRider received a total of approximately $953,000 from the sale of WaveRider
      Australia.





On
      June
      1, 2006, following informal discussions between the two companies,
      representatives of VCom Inc. (“VCom”) approached the Company about the
      possibility of acquiring the Canadian operations of WaveRider.  Upon
      receipt of a tentative Letter of Offer, the Company’s Board of Directors, at
      their June 19, 2006 meeting, directed management to enter into formal
      negotiations.  On July 1, 2006, the Company sold WaveRider
      Communications (USA) Inc., Avendo Wireless Corporation and WaveRider
      Communications (Canada) Inc., including its wholly owned subsidiary, JetStream
      Internet Services Inc., to VCom (the "VCom Transaction").





The
      sale
      of the former WaveRider subsidiaries, while generating much needed short-term
      working capital, resulted in the disposition of substantially all of WaveRider’s
      international revenue.  The Company retained WaveRider’s intellectual
      property and its North American operations.





During
      the quarter ended September 30, 2006, Charles Brown, the Company’s then
      President and Chief Executive Officer, unexpectedly tendered his
      resignation.  Mr. Brown's resignation materially impacted the
      Company's ability to continue to address the ongoing poor operating results
      in
      the Company’s principal business units and the Company’s continuing
      deteriorating working capital position.  Following Mr. Brown’s
      resignation, the Company’s Board of Directors met to consider alternatives
      available to the Company in order to continue as a going concern.





On
      October 17, 2006, the Company sold WaveRider’s remaining operating
      and other assets related to its 900 MHz product line to VCom, for the
      amount of $1,250,000. The purchase price was determined based on the acquisition
      of trade accounts receivable, in the amount of $592,000, inventory, in the
      amount of $467,000, capital assets, valued at $190,999, and goodwill and other
      intangibles at $1. The purchase price was adjusted for the change in the value
      of the accounts receivable and the inventory from the original valuation date
      and September 30, 2006, in the amount of $377,000. VCom also assumed
      responsibility for the cost of warranty support of WaveRider’s existing 900 MHz
      customer base and for certain WaveRider employees, related to the
      business.  The purchase price was paid and satisfied first in
      repayment to VCom of all amounts owing by the Company or its affiliates pursuant
      to the supply agreement between VCom and WaveRider, which amount was
      approximately $1.6 million.  As a result of this payment, and other
      reconcilliations following the VCom Transaction, WaveRider received $426,000,
      which amount was received subsequent to December 31, 2006.





Bankruptcy
      Proceedings – Sale of Assets





In
      order
      to provide for its immediate working capital needs, and in light of the Board’s
      determination that additional equity or debt financing would likely be
      unavailable to the Company, the Board of Directors directed management to
      explore the sale of certain or all remaining product lines and business units.
      These efforts failed to generate sufficient interest to address the Company’s
      ongoing working capital needs.  As a result, the Board determined to
      seek protection from its creditors, and to reorganize under Chapter 11 of the
      Code (“Code”).  The Company filed a voluntary petition under Chapter
      11 of the Code on October 31, 2006 (“Bankruptcy Petition”), in the United States
      Bankruptcy Court for the District of Delaware (the “Court”).





On
      November 2, 2006, the Court ordered the conduct of an auction to sell the
      Company’s RMA Business.  As a result of the auction, which was held on
      November 13, 2006, we sold the RMA Business for approximately $405,000 in cash,
      plus the assumption of certain liabilities.  Also pursuant to a Court
      order entered on November 13, 2006, we sold certain de minimus assets totaling
      less than $100,000.  As a result of these sales, our continued
      operations while under the protection of Chapter 11 of the Code consisted of
      the
      marketing and sale of our SPEEDLAN product line.





As
      a
      result of the filing of the Bankruptcy Petition, all liabilities incurred up
      to
      October 31, 2006 are reflected on the balance sheet as subject to
      compromise.


-19-


Subsequent
      Event – Bankruptcy Proceedings





On
      April
      5, 2007, the Company and the Committee of Unsecure Creditors (“Creditors
      Committee”) filed a Joint Plan of Reorganization with the Court (“Joint Plan”),
      which Joint Plan was amended and restated and filed with the Court on May 2,
      2007.  The Joint Plan was confirmed by the Court on June 14,
      2007.  Under the terms and conditions of the Joint Plan, as confirmed
      by the Court, holders of our equity interests as of the effective date of the
      Joint Plan, June 28, 2007, have terminated.  The Joint Plan contained
      the following additional major provisions:





SDS
      Capital Group SPC, Ltd. ("SDS") became the owner of 80% of the issued and
      outstanding shares of common stock, which includes 70% received under the terms
      of the Joint Plan, and an additional 10% as a result of SDS’ participation in
      the Equity Financing, described below.   In addition, all
      priority unsecured claims and administrative claims were paid in full, through
      either: (i) payment on the effective date of the Joint Plan; (ii) payment
      through an escrow account established with a Plan Administration Trust
      (“Trust”); or (iii) payment from the reorganized Company following the allowance
      of a claim. The initial funding for the Trust was $250,000.00 less certain
      professional fees and other charges set forth in more detail in the Joint Plan.
      This initial funding was provided from funds that were otherwise distributable
      to SDS. The Trust is responsible for, among other things, objecting to general
      unsecured claims and making distributions, as appropriate, to holders of general
      unsecured claims. The Joint Plan also permitted general unsecured claimants
      and
      preferred shareholders to participate in an equity financing ("Equity
      Financing"), pursuant to which each party was permitted to purchase a portion
      of
      30,000 shares of new common stock at $1.00 per share, based upon the terms
      and
      conditions set forth in the Joint Plan. As a result of the Equity Financing,
      three preferred shareholders each acquired 10,000 shares of common
      stock.





In
      connection with the confirmation of the Joint Plan, the Company entered into
      a
      Contingent Promissory Note in favor of the trust (“Contingent Note”). The
      Contingent Note provides for a further recovery to the Trust under the terms
      of
      the Joint Plan in the event SDS receives a distribution under the Joint Plan
      that exceeds $2,476,658, plus all fees and expenses accrued under the Contingent
      Note (the “Maximum Amount”). Under the terms of the Contingent Note, if SDS
      receives an amount in excess of the Maximum Amount, the Company will pay to
      the
      Trust an amount equal to 50% of any cash that remains or has accrued after
      (i)
      satisfying the Maximum Amount and all other distributions or dividends required
      under the Joint Plan, (ii) reserving cash sufficient to satisfy, in full, all
      obligations of, and claims against, the Company that have accrued during the
      one
      year period following the effective date of the Joint Plan, and (iii) reserving
      reasonably sufficient cash, in the Company's sole discretion, to fund ongoing
      business operations. The Contingent Note terminates on June 28,
      2008.  As of August 20, 2007, SDS has received $1.7 million under the
      terms of the Joint Plan.





In
      accordance with AICPA Statement of Position 90-7 "Reporting by Entities in
      Reorganization under the Bankruptcy Code", the following represents the
      pro-forma impact of fresh start accounting on the December 31, 2006 balance
      sheet of the confirmation of the Joint Plan as if it had occurred on December
      31, 2006:





(000’s
            )Cash
            
            $
            1,849
            (1)Other
                current assets
            
            
            821Total
              current assets
            
            
            2,670Goodwill
                and other assets
            
            
            116Total
                assets
            
            $
            2,786Current
                and total liabilities
            
            $
            861
            (2)Common
              stock
            
            
            100
            (3)Additional
                paid-in capital
            
            
            1,825Total
                liabilities and stockholder’s equity
            
            $
            2,786




(1)This
      amount does not reflect subsequent cash receipts or any distributions under
      the
      Joint Plan, including the $1.7 million to SDS and $250,000 to the
      Trust.




(2) Included
      in this
amount
      is $480,980 in liabilities reflected in the Company's financial statements
      as
      uninvoiced payables which may be subject to compromise and/or discharge by
      the Bankruptcy Court following proper notice to the applicable debtors and/or
      receipt of evidence necessary to support termination of such
      payables.




(3) Common
      stock, par
      value 1.00 per share; 250,000 shares authorized; 100,000 shares issued and
      outstanding.




In
      connection with the confirmation of the Joint Plan, the Company and
      SDS executed a Secured Promissory Note payable by the Company to SDS in the
      amount of $100,000 (the “SDS Note”). The SDS Note is held by the Company and
      will only be issued in the event the Company deems it necessary to provide
      for
      its working capital requirements. Any amounts due and payable SDS are secured
      by
      all assets of the Company under the terms of a Security Agreement.




Subsequent
      Event - Sale of SPEEDLAN Product Line





On
      August
      10, 2007, the Company sold its remaining business, consisting of the SPEEDLAN
      product line, for and in consideration for $100,000, plus the assumption of
      all
      warranty obligations associated with the product line.  The Company
      elected to sell its SPEEDLAN product line since sales of the product line had
      decreased substantially since confirmation of the Joint Plan, and since the
      cost
      to maintain, support and satisfy warranty obligations did not justify the
      continued sale of SPEEDLAN products by the Company.  In addition,
      sales were not anticipated to increase due to the fact that the SPEEDLAN product
      was not competitive, in terms of price or features, with other product offered
      by more established, and financially stronger competitors.As a result of this
      sale, the Company has no operating business, and our management and Board of
      Directors are exploring opportunities to effect an acquisition of the Company
      by
      merger, exchange or issuance of securities or similar business combination.


-20-





SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Management's
      Use of Estimates and Assumptions





The
      preparation of financial statements in accordance 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 disclosures 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.





The
      consolidated financial statements include the accounts of the Company and its
      wholly owned subsidiaries. All significant inter-company accounts and
      transactions have been eliminated.





Foreign
      Currency





The
      value
      of the United States dollar rises and falls day-to-day on foreign currency
      exchanges. Since the Company conducted business in foreign countries, these
      fluctuations affect the Company’s financial position and results of operations.
      Assets and liabilities of our foreign subsidiaries were translated from their
      local currencies into United States dollars at exchange rates in effect at
      the
      respective balance sheet date. Income and expense accounts were translated
      from their local currencies into United States dollars at average exchange
      rates
      for the respective period. At December 31, 2006, the Company no longer had
      any
      active subsidiaries outside the United States.





Accumulated
      net translation adjustments were recorded as a component of comprehensive income
      (loss) in stockholders' equity (deficit). Foreign exchange transaction gains
      and
      losses are included in the results of operations in the periods incurred, and
      were not material in the periods presented. The Company did not enter into
      any
      contracts to hedge the effects of foreign currency exchange
      fluctuations.





Fair
      Value of Financial Instruments





The
      estimated fair values of cash, note receivables, accounts receivable and
      payable, debt and accrued liabilities at December 31, 2006 approximated their
      respective historical cost due to the short-term maturities.





Cash
      and Cash Equivalents





The
      Company considers all highly liquid debt instruments with a maturity when
      acquired of three months or less to be cash equivalents.





Accounts
      Receivable





The
      Company records an allowance for doubtful accounts receivable based on our
      general collection history and specifically identified amounts that management
      believes to be uncollectible. The Company has a limited number of customers
      with
      individually large amounts due at any given balance sheet date. However, any
      unanticipated change in one of these customers’ credit worthiness could have a
      material adverse effect on the Company’s results of operations in the period in
      which such changes or events occur and losses become estimable. After all
      attempts to collect a receivable have failed, the receivable is written off
      against the allowance.  At December 31, 2006, the Company did not
      record an allowance for doubtful accounts, as management determined an
      allowance was not necessary.





Revenue
      Recognition





Revenue
      from product sales is recognized upon transfer of title and risk of loss, which
      is upon shipment of the product provided no significant obligations remain
      and
      collection is probable. Shipping and handling costs related to our product
      sales
      are included as a component of cost of sales. The Company has not experienced
      material returns of products. The Company warrants its products and provides
      parts and labor to repair any manufacturing defects on its equipment for a
      period of one year to three years. Provisions for estimated warranty repairs,
      returns and other allowances are recorded at the time revenue is
      recognized.





Property
      and Equipment





Property
      and equipment are stated at cost. Depreciation is computed using the
      straight-line method based upon the useful lives of the assets ranging from
      three to seven years. Leasehold improvements are amortized using the
      straight-line method based upon the shorter of the estimated useful lives of
      the
      respective improvements or the lease term.




Research
      and Development





Research
      and development costs are expensed as incurred.


-21-





Goodwill





Goodwill
      at December 31, 2006 represents the remaining unimpaired excess of the purchase
      price over the fair values of net assets acquired in connection with the
      acquisition of substantially all of the operating assets and certain liabilities
      of SPEEDCOM Wireless Corporation (“SPEEDCOM”), on December 10, 2003. In
      accordance with Statement of Financial Accounting Standards No. 142, Goodwill
      and Other Intangible Assets ("SFAS 142"), goodwill resulting from the purchase
      will not be amortized into operations. Rather, such amounts will be tested
      for
      impairment at least annually.  See Note 7 regarding 2006 impairment
      charges.





Impairment
      of Long Lived Assets





In
      the
      event that facts and circumstances indicate that the long-lived assets, other
      than goodwill, may be impaired, an evaluation of recoverability would be
      performed to determine whether impairments were present by comparing the net
      book value of long-lived assets, other than goodwill, to projected undiscounted
      cash flows at the lowest discernable level for which cash flow information
      can
      be projected. In the event that undiscounted cash flows are insufficient to
      recover the net carrying value over the remaining useful lives, impairment
      charges are calculated and recorded in the period first estimable using
      discounted cash flows or other fair value information, whichever is more
      appropriate.





Comprehensive
      Income (loss)





Under
      Statements on Financial Accounting Standards No. 130, Reporting Comprehensive
      Income ("SFAS 130"), the Company is required to display comprehensive income
      and
      its components as part of our full set of financial statements. Comprehensive
      income comprises net income (loss) and other comprehensive income (loss) items.
      Other comprehensive income (loss) includes certain changes in equity of the
      Company that are excluded from net income (loss). Specifically, SFAS 130
      requires adjustments arising from the Company’s foreign currency translation,
      which were reported separately in stockholders' equity, to be included in
      accumulated other comprehensive income (loss).




The
      following table reflects comprehensive loss for the years ended December
      31, 2006 and 2005:





2006
            
            2005Net
                Loss
            $
            (32,825
            )
            $
            (12,582
            )Foreign
                currency translation adjustment
            
            ─
            
            
            (2
            )Comprehensive
                loss
            $
            (32,825
            )
            $
            (12,584
            )




Accounting
      for Stock-Based Compensation





Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting Standards
      No. 123R, “Share-Based Payment,” (“FAS 123R”) using the
      modified-prospective-transition method.  Under this transition method,
      compensation costs subsequent to December 31, 2005 will include, as the options
      vest, costs for options granted prior to but not vested as of December 31,
      2005.  There was no compensation related to unvested options and, as
      such, the adoption of FAS 123R had no affect on the Company’s financial results
      in 2006.




The
      following table reflects supplemental financial information related to
      stock-based employee compensation, as required by SFAS 148 for the year ending
      December 31, 2005:


Stock-based
                employee compensation costs used in the determination of net income
                (loss)
                attributable to common stockholders , as reported
            
            
            --Loss
                attributable to common stockholders, as reported
            
            $
            (16,410
            )Stock-based
                employee compensation costs that would have been included in the
                determination of net loss if the fair value method (SFAS 123) had
                been
                applied to all awards
            
            $
            ($484
            )Pro
                forma net loss attributable to common stockholders, if the fair value
                method had been applied to all awards
            
            $
            (16,894
            )Net
                loss attributable to common stockholders per common share, as
                reported
            
            $
            (1.04
            )Pro
                forma net loss attributable to common Stockholders per common share,
                if
                the fair value method had been applied to all awards
            
            $
            (1.07
            )




The
      fair value of each option and warrant grant is estimated on the date of the
      grant using the Black-Scholes option-pricing model with the following
      assumptions used for grants in 2005: expected volatility of 142%;
      weighted-average risk-free interest rates of 3.8%, weighted-average expected
      lives of 4.0 years and a zero dividend yield.


-22-




Bankruptcy
      Accounting





For
      financial reporting purposes, the financial statements have been prepared on
      a
      going concern basis.  In addition, the Company has applied the
      provisions of Statement of Position 90-7, “Financial Reporting by Entities
      in
      Reorganization under the Bankruptcy Code”(“SOP 90-7”).Accordingly,
      all
      liabilities incurred prior to the filing of the Bankruptcy Petition subject
      to
      compromise have been segregated in the balance sheet and classified as
      liabilities subject to compromise, at the estimated amount of allowable
      claims.  Liabilities not subject to settlement are classified as
      current.





As
      a
      result of the bankruptcy proceedings, confirmation of the Joint Plan, and sale
      of our remaining operating businesses, the amounts reported in subsequent
      financial statements will materially change.  Our financial statements
      will also be affected due to the application of the provisions of SOP 90-7
      with
      respect to reporting upon emergence from Chapter 11 of the Code.  Changes
      in accounting principles required under U.S. generally accepted accounting
      principles within 12 months of emerging from bankruptcy are required to be
      adopted at the date of emergence.  Additionally, we may choose to make
      changes in accounting practices and policies at that time.  For all of
      these reasons, financial statements for periods subsequent to confirmation
      of
      the Joint Plan and emergence from Chapter 11 of the Code will not be comparable
      with those of prior periods.





Discontinued
      Operations





As
      a
      result of the sale by WaveRider of substantially all of its operating
      businesses, WaveRider has no continuing operations other than distributing
      its
      remaining cash for the benefit of its creditors.  In
      addition, the Company disposed of its repair and maintenance business (“RMA
      Business”).  The operations of these entities and business units have
      been segregated and shown as discontinued operations.





Derivative
      Liability Accounting





Derivative
      instrument accounting arises when certain financial instruments, such as
      warrants to acquire common stock, are classified as liabilities due to either
      (a) the holder possesses rights to net-cash settlement or (b) physical or net
      share settlement is not within the control of the Company.  In such
      instances, net-cash settlement is assumed for financial accounting and
      reporting, even when the terms of the underlying contracts do not provide for
      net-cash settlement.  Such derivative financial instruments are
      initially recorded at fair value with subsequent changes in the fair value
      charged (credited) to operations each reporting period.





With
      the
      issuance of the Company’s Series J and Series J-1 Convertible Preferred Stock,
      the Company determined that the warrants associated therewith should be
      accounted for as a derivative liability.  Additionally, at December
      31, 2006, the Company did not have enough authorized common stock, if all of
      the
      existing preferred shares and other convertible financial instruments were
      converted to common stock.  As part of the Series J and Series J-1
      offering the Company committed to seek shareholder approval for changes to
      its
      authorized capital and the holders of these securities agreed to refrain from
      exercising their warrants or converting their Series J and Series J-1
      Convertible Preferred Stock until the earlier of shareholder approval or
      December 31, 2006.  This matter was not brought before the
      shareholders for approval prior to December 31, 2006.





Fair
      value for our financial instruments was determined using the closing price
      of
      our common stock at the close of each reporting period.  Reductions in
      the remaining life of unexercised warrants and declines in the price of our
      common stock reduced the fair value of the preferred stock and warrants
      resulting in additional credits to our consolidated statements of
      operations.





Recent
      Accounting Pronouncements




In
      September 2006, the FASB issued Statement of Financial Accounting Standard
      (“SFAS”) No. 157 (“SFAS 157”), Fair Value Measurements.
      SFAS 157 defines fair value, establishes a framework and gives guidance
      regarding the methods used for measuring fair value, and expands disclosures
      about fair value measurements. SFAS 157 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007, and
      interim periods within those fiscal years. The Company is currently evaluating
      the impact of adopting SFAS 157 on its consolidated financial
      statements.




In
      February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), The Fair Value Option for
      Financial
      Assets and Financial Liabilitieswhich permits entities to choose to
      measure many financial instruments and certain other items at fair value that
      are not currently required to be measured at fair value. SFAS 159 is effective
      for financial statements issued for fiscal years beginning after
      November 15, 2007. The Company is currently evaluating the impact of
      adopting SFAS 159 on its consolidated financial statements.




The
      Financial Accounting Standards Board (FASB) issued Statement of Financial
      Accounting Standards No. 141 (revised 2007), Business Combinations(FAS
      141(R)) and No. 160, Noncontrolling Interests
      in
      Consolidated Financial Statements, an amendment of ARB No. 51(FAS
      160). FAS
      141(R) and FAS 160 are effective for both public and private companies for
      fiscal years beginning on or after December 15, 2008 (January 1, 2009 for
      companies with calendar year-ends). FAS 141(R) will be applied prospectively.
      FAS 160 requires retroactive adoption of the presentation and disclosure
      requirements for existing minority interests. All other requirements of FAS
      160
      shall be applied prospectively. Early adoption is prohibited for both
      standards.


-23-


2. 
ACQUISITION
      AND DIVESTED
      OPERATIONS





Effective
      March 28, 2006, the Company consummated the WaveRider Merger.  In
      connection with the WaveRider Merger, the Company issued 48,362,446 shares
      of
      common stock, 1,326.446 shares of Series H Preferred Stock, 132.6446 shares
      of
      Series I Preferred Stock and 8,842,089 common stock purchase warrants in
      exchange for all of the issued and outstanding shares of WaveRider, and all
      outstanding long-term debt.  The warrants are exercisable at $0.20 per
      share for a five-year period and include a net share settlement
      feature.  In addition, the Company issued to the employees of
      WaveRider 2,125,545 employee stock options, with an average exercise price
      of
      $1.02 and to the warrant holders of WaveRider 2,125,613 common share purchase
      warrants, with an average exercise price of $1.84.





The
                WaveRider Merger was accounted for as a purchase and is summarized
                as
                follows (in thousands $):




Cash
                on hand (including cash from loans made by the Company prior
                to
              the
                acquisition which were forgiven on acquisition)$
            413Other
                current assets
            
            2,241Fixed
                assets
            
            200Current
                liabilities
            
            (2,787)Net
                assets received
            
            67Goodwill
            
            14,745Total
                consideration received
            $
            14,812Common
                stock issued on closing
            $
            6,432Preferred
                stock issued on closing
            
            5,663Warrants
                issued on closing at fair value
            
            1,773WaveRider
                shares forfeited on merger
            
            450Employee
                stock options issued on closing at fair value
            
            81Expenses
                incurred on acquisition
            
            413Total
                consideration given
            $
            14,812The
                cash effect of this transaction is summarized as follows:Cash
                acquired on closing
            $
            413





The
      Company has determined that the goodwill created upon the WaveRider Merger
      be
      allocated to the individual units acquired as follows (in thousands
      $):





WaveRider
                Communications Inc.
            $
            12,679WaveRider
                Communications (Australia) Pty Ltd.
            
            1,150WaveRider
                Communications (Canada) Inc.
            
            916$
            14,745


On
      June
      19, 2006, the Company’s Board of Directors approved the disposal of WaveRider’s
      interest in WaveRider Communications (Australia) Pty Ltd. for cash consideration
      of $370,000 plus contingent consideration of 15% of the trailing 12 months
      revenue, payable quarterly in arrears.  The sale was completed on June
      30, 2006.  In October, WaveRider  received the first payment
      of the contingent consideration in the amount of $143,000.  Subsequent
      to December 31, 2007, WaveRider received a lump-sum of $438,000, thereby
      terminating all further payment obligations of WaveRider Communications
      (Australia) Pty Ltd. To WaveRider.





On
      July
      1, 2006, the Company disposed of its interests in WaveRider Communications
      (Canada) Inc., including its wholly owned subsidiary JetStream Internet Services
      Inc. (“JetStream”), WaveRider Communications (USA) Inc. and Avendo Wireless Inc.
      for proceeds of $1,773,000, of which $1,388,000 was received in cash on that
      date, and a $385,000 hold back which was to be paid, subject to satisfaction
      of
      certain conditions (the"VCom Transaction").  Subsequent to closing, it
      was determined that an adjustment of $61,000 was required in the calculation
      of
      inventory sold in the transaction, reducing the total purchase price and the
      hold back by this amount.





On
      October 17, 2006, the Company sold WaveRider’s remaining operating and related
      assets associated with its 900 MHz product line to VCom, for the amount of
      $1,250,000.  The purchase price was determined based on the
      acquisition of trade accounts receivable, in the amount of $592,000, inventory
      in the amount of $467,000, capital assets valued at 190,999, and goodwill and
      other intangibles at $1.  The purchase price was adjusted for the
      change in the value of the accounts receivable and the inventory from the
      original valuation date, and September 30, 2006, in the amount of
      $377,000.  VCom also assumed responsibility for the cost of warranty
      support of WaveRider’s existing 900 MHz customer base and for certain WaveRider
      employees, related to the business.  The purchase price was paid and
      satisfied first in repayment to VCom of all amounts owing by the Company or
      its
      affiliates pursuant to the supply agreement between VCom and WaveRider, which
      amount was approximately $1.6 million.  As a result of this payment, and
      other reconcilliations in connection with the VCom Transaction, WaveRider
      received $426,000, which amount was received subsequent to December 31,
      2006.





On
      November 2, 2006, the Court ordered the conduct of an auction to sell the
      Company’s RMA Business.  As a result of the auction, which was held on
      November 13, 2006, we sold the RMA Business for approximately $405,000 in cash,
      plus the assumption of certain liabilities.


-24-





Discontinued
      operations consist of the following for the year ended December 31, 2006 (in
      thousands):




Wave
                Wireless
              Repair
                & Maintenance
            
            
            WaveRider
              Australia
            
            
            WaveRider
              Canada
            
            
            TotalRevenues
            
            $
            2,667
            
            
            $
            1,243
            
            
            $
            3,145
            
            
            $
            7,055Cost
                of goods sold
            
            
            2,468
            
            
            
            654
            
            
            
            2,175
            
            
            
            5,297Gross
                profit
            
            
            199
            
            
            
            589
            
            
            
            970
            
            
            
            1,758Operating
                expenses
            
            
            -
            
            
            
            380
            
            
            
            2,705
            
            
            
            3,085Gain/(loss)
                on operations during 2006
            
            
            199
            
            
            
            209
            
            
            
            (1,735
            )
            
            
            (1,327
            )Sales
                price
            
            
            405
            
            
            
            370
            
            
            
            1,814
            
            
            
            2,589Net
                book value of assets sold
            
            
            -
            
            
            
            1,305
            
            
            
            276
            
            
            
            1,581Gain/(loss)
                on disposal of assets
            
            
            405
            
            
            
            (935
            )
            
            
            1,538
            
            
            
            1,008Gain/(loss)
                from discontinued operations
            
            $
            604
            
            
            $
            (726
            )
            
            $
            (197
            )
            
            $
            (319
            )


3. 
SELECTED
      BALANCE SHEET AND STATEMENT
      OF OPERATIONS COMPONENTS





Other
      accrued liabilities consist of the following at December 31, 2006 (in
      thousands):





Compensation
                and employee benefits
            
            $
            29Legal
                and accounting
            
            
            168Customer
                deposit
            
            
            50Severance
            
            
            102Development
                work and royalty
            
            
            240$
            589





Other
      accrued liabilities subject to compromise, consist of the following at December
      31, 2006 (in thousands):





Penaltyforlatefilingofregistrationstatement
            
            $
            820Severance
            
            
            553Warranty
            
            
            303Other
            
            
            136$
            1,812





Warranty
      reserve activity at December 31, 2006:


Balance
                at January 1,
            
            $
            493Reclassed
                to discontinued operations
            
            
            (38
            )Payments
            
            
            (152
            )Balance
                at December 31,
            
            $
            303


-25-





Other
      income (expense), net consists of the following for each year ended December
      31
      (in thousands):





2006
            
            2005Gains
                (losses) on settlements of accounts payable and
                liabilities
            
            $
            --
            
            $
            (82
            )Gains
                (losses) on disposals of property and equipment
            
            
            (366
            )
            
            238Royalties
            
            
            146
            
            
            --Gain
                on sale of patents for licensed products
            
            
            30
            
            
            400Property
                tax refund
            
            
            89
            
            
            --Gains
                (losses) on transactions denominated in foreign currencies
            
            
            --
            
            
            (342
            )Other
                income (expenses), net
            
            
            43
            
            
            57Total
                other income (loss), net
            
            $
            (58
            )
            $
            271




4. 
BORROWING
      AND OTHER
      OBLIGATIONS





At
      December 31, 2006, we were generally in default on all outstanding
      debt.  Debt at December 31, 2006 consisted of the following (in
      thousands $):





Debenture
                financing, in default
            $
            2,602Note
                payable – Siemens; in default
            
            350Note
                payable, former vendor, due in monthly installments of  $35,000
                through June 2006; in default
            
            322Other
            
            45$
            3,319





The
      above includes accrued interest of approximately $197,000.




Debenture
      Financing.On
      November 10, 2005, the Company
      entered into an agreement with a purchaser of notes issued under an existing
      Debenture Agreement which exchanged all issued and outstanding notes for and
      in
      consideration for the issuance to the purchaser of a new promissory note, in
      the
      principal amount of $4,153,649 (the “New Note”), which amount represented unpaid
      principal and accrued interest due under the terms of the old notes as of the
      date of the New Note, October 1, 2005. Under the terms of the New Note, interest
      accrued on such debt at an annual interest rate of 8%, and this rate increased
      to 10% on April 1, 2006.  The Company’s obligations under the
      Debenture Agreement were covered by a Security Agreement covering all of the
      assets of the Company.





On
      March
      27, 2006, the Company and the purchaser entered into an Exchange Agreement,
      pursuant to which the purchaser agreed to convert $1,230,475 of principal and
      accrued interest due to purchaser on the date thereof into 260.3183 shares
      of
      our Series J Convertible Preferred Stock and warrants to purchase 7,809,548
      shares of our common stock, at an exercise price of $0.12 per share, (the “Note
      Exchange”).  Such conversion was in lieu of the quarterly payments due
      March 31, 2006 and June 30, 2006.  The Series J Convertible Preferred
      Stock was convertible into 26,031,827 shares of our common stock.  The
      Company recorded a loss on conversion in the amount of $3.507 million, included
      in finance expense.  The fair value of the financial instruments
      issued was allocated to the Series J Convertible Preferred Stock and the
      warrants, in the amount of $3,644 and $1,094, respectively.





As
      a
      result of the Note Exchange, the total amount due purchaser on the Petition
      Date, which amount was in default, was approximately $2.4 million.





Convertible
      Notes.During 2005,
      the
      Company issued convertible promissory notes to certain purchasers in the
      principal amount of $850,000, payable on or before March 31, 2006 (the
“Convertible Notes”).  Interest accrued on the Convertible Notes at an
      annual interest rate of 10%.  As additional consideration for the
      loans evidenced by the Convertible Notes, the holders were issued warrants
      for
      the issuance of 2,125,000 shares of common stock of the Company, exercisable
      for five years, at an exercise price of $0.20 per share.  The
      Convertible Notes were discounted for the relative fair value of the warrants
      issued and the intrinsic value of the beneficial conversion features associated
      with the Convertible Notes.





From
      January 1, 2006 through March 31, 2006, the Company issued additional
      Convertible Notes to certain purchasers in the principal amount of $1.09
      million.  As additional consideration for the loans evidenced by the
      Convertible Notes, the holders were issued warrants for the issuance of
      2,725,000 shares of common stock of the Company, exercisable for five years,
      at
      an exercise price of $0.20 per share.


-26-





Under
      the
      terms of the Convertible Notes, as amended by the terms of the Amendment to
      Promissory Note dated as of March 27, 2006 (the “Amendment Agreement”), the
      outstanding principal amounts and all accrued but unpaid interest under the
      terms of all issued and outstanding Convertible Notes automatically converted
      into shares of Series J Convertible Preferred Stock and warrants to purchase
      shares of common stock, at an exercise price of $0.12 per share, on March 31,
      2006 (the “Series J Equity Securities”).  For purposes of determining
      the number of Series J Equity Securities that each holder received upon
      conversion, the holders were deemed to have tendered 120% of the outstanding
      balance of the Convertible Notes as payment of the purchase price for the Series
      J Equity Securities.  As a result of the foregoing, the Company issued
      260.318 shares of Series J  Convertible Preferred Stock (convertible into
      26,031,800 shares of common stock) and warrants to purchase 7,809,548 shares
      of
      common stock.  As consideration for entering into the Amendment Agreement
      the Company reduced the exercise price of the Warrants issued in conjunction
      with Convertible Notes from $0.20 to $0.12 per share.  The Company
      recorded a loss on conversion in the amount of $3.835 million, included in
      finance expense.





The
      Series J Convertible Preferred Stock and warrants issued in connection with
      the
      conversion of all outstanding Convertible Notes was convertible or exercisable,
      as the case may be, into 31,728,719 and 9,518,616 shares of common stock,
      respectively.   The fair value of the financial instruments
      issued was allocated to the Series J Convertible Preferred Stock and the
      warrants, in the amount of $4,442 and $1,333, respectively.





5. 
STOCKHOLDERS'
      EQUITY





Under
      the terms and conditions of the Joint Plan,
      as approved by the Court on June 14, 2007, holders of the Company’s common stock
      will not receive any distribution, and all of the rights of the common and
      preferred stockholders were terminated.





At
      December 31, 2006, the authorized capital stock of the Company consisted of
      250
      million shares of common stock, $0.0001 par value, and 2.0 million shares of
      preferred stock, $0.0001 par value, including 500,000 shares of which were
      designated Series A Junior Participating Preferred Stock (the "Series A
      Preferred Stock") pursuant to the Stockholder Rights Agreement (see discussion
      below), 2,000 shares of Series E Preferred Convertible Preferred Stock (the
      "Series E Preferred Stock"), 250 shares of Series F Convertible Preferred Stock
      (the "Series F Preferred Stock"), 10,000 shares of Series G Convertible
      Preferred Stock (the "Series G Preferred Stock"), 2,000 shares of Series H
      Convertible Preferred Stock (the “Series H Preferred Stock”), 200 shares of
      Series I Convertible Preferred Stock (the “Series I Preferred Stock”), 1,250
      shares of Series J Convertible Preferred Stock (the “Series J Preferred Stock”),
      and 300 shares of Series J-1 Convertible Preferred Stock.





PREFERRED
      STOCK





The
      Board
      of Directors is authorized to issue shares of preferred stock in one or more
      series and to fix or alter the designations, preferences, rights and any
      qualifications, limitations or restrictions of the shares of each series,
      including the dividend rights, dividend rates, conversion rights, voting rights,
      term of redemption, including sinking fund provisions, redemption price or
      prices, liquidation preferences and the number of shares constituting any series
      or designations of any series, without further action by the holders of common
      stock.





Series
      E Convertible Preferred Stock





The
      Company designated 2,000 shares of its Preferred Stock as Series E Convertible
      Preferred Stock. In June 2005, the Company issued 923 shares of Series E
      Convertible Preferred Stock to redeem $555,000 in promissory notes and settle
      certain vendor payables totaling $367,000.  The Series E Preferred
      Stock has a liquidation preference amount equal to $1,000 per share. Each share
      of Series E Preferred Stock is convertible into a number of shares of common
      stock equal to the liquidation preference amount divided by the conversion
      price
      of $0.50.





After
      consideration of several valuation models, the Company determined the fair
      value
      of the preferred stock as an amount equal to the fair value of the number of
      common shares into which the Series E Preferred Stock is convertible into using
      the trading market price on the date the Series E Preferred Stock was
      issued.





As
      of
      December 31, 2006, outstanding Series E Preferred Stock are convertible into
      approximately 1,846,262 shares of common stock.





Series
      F Convertible Preferred Stock





The
      Company has designated 250 shares of its preferred stock as Series F Convertible
      Preferred Stock.  The Series F Preferred Stock has a face amount equal
      to $10,000 per share. Each share of Series F Preferred Stock is convertible
      into
      a number of shares of common stock equal to the face amount divided by the
      conversion price of $0.50.





After
      consideration of several valuation models, determined the fair value of the
      preferred stock as an amount equal to the fair value of the number of common
      shares into which the Series F Preferred Stock is convertible into using the
      trading market price on the date the Series F Preferred Stock was
      issued.





All
      Series F Preferred Stock was converted into common stock during the year ended
      December 31, 2006.  As a result, no shares of Series F Preferred Stock
      remained outstanding at December 31, 2006,





-27-


Series
      G Convertible Preferred Stock





The
      Company has designated 10,000 shares of its preferred stock as Series G
      Convertible Preferred Stock, of which 6,292 shares were issued and outstanding
      as of December 31, 2006.





The
      Series G Preferred Stock has a liquidation preference amount equal to $1,000
      per
      share. Each share of Series G Preferred Stock is convertible into a number
      of
      shares of common stock equal to the liquidation preference amount divided by
      the
      conversion price of $0.50.





After
      consideration of several valuation models, determined the fair value of the
      preferred stock as an amount equal to the fair value of the number of common
      shares into which the Series G Preferred Stock is convertible using the trading
      market price of the common stock.





As
      of
      December 31, 2006, all outstanding shares of Series G Preferred Stock were
      convertible into approximately 12.6 million shares of common
      stock.




Series
      H and I Convertible Preferred Stock





The
      Company designated 2,000 shares of its preferred stock as Series H Convertible
      Preferred Stock (the "Series H Preferred Stock") and 200 shares of its preferred
      stock as Series I Convertible Preferred Stock (the “Series I Preferred
      Stock”).  In conjunction with the WaveRider Merger, the Company issued
      1,326.446 shares of Series H Preferred Stock and 132.6446 shares of Series
      I
      Preferred Stock, along with warrants to purchase 8,842,089 shares of common
      stock, at an exercise price of $0.20, to a holder of WaveRider convertible
      debentures.





The
      Series H Preferred Stock had a liquidation preference amount equal to $1,000
      per
      share. Each share of Series H Preferred Stock was convertible into a number
      of
      shares of common stock equal to the liquidation preference amount divided by
      the
      conversion price of $0.15.  The Series I Preferred Stock had a
      liquidation preference amount equal to $1,000 per share. Each share of Series
      I
      Preferred Stock was convertible into a number of shares of common stock equal
      to
      the liquidation preference amount divided by the conversion price of
      $0.01.





In
      connection with the closing of the WaveRider Merger, all of the issued and
      outstanding shares of the Series H and I Convertible Preferred Stock and the
      related warrants were exchanged for 353.7333 shares of Series J Convertible
      Preferred Stock and Series J Warrants to purchase 10,612,000 shares of common
      stock. The
      Company, after consideration of several valuation models, determined the fair
      value of the preferred stock as an amount equal to the fair value of the number
      of shares of common stock into which the resulting Series J Preferred Stock
      is
      convertible into using the trading market price on the date the WaveRider
      Merger.





Series
      J Convertible Preferred Stock





The
      Company designated 1,250 shares of its preferred stock as Series J Convertible
      Preferred Stock (the "Series J Preferred Stock"), of which 1,247 shares were
      issued and outstanding as of December 31, 2006.  The Series J
      Preferred Stock had a liquidation preference amount equal to $7,500 per share.
      Each share of Series J Preferred Stock was convertible into a number of shares
      of common stock equal to the liquidation preference amount divided by the
      conversion price of $0.075.





The
      Company, after consideration of several valuation models, determined the fair
      value of the preferred stock as an amount equal to the fair value of the number
      of shares of common stock into which the Series J Preferred Stock was
      convertible into using the trading market price on the date the Series J
      Preferred Stock was issued.





Series
      J-1 Convertible Preferred Stock





The
      Company designated 300 shares of its preferred stock as Series J-1 Convertible
      Preferred Stock, of which 121 shares were issued and outstanding as of December
      31, 2006.  The Series J-1 Preferred Stock had a liquidation preference
      amount equal to $7,500 per share. Each share of Series J-1 Preferred Stock
      was
      convertible into a number of shares of common stock equal to the liquidation
      preference amount divided by the conversion price of $0.075.





The
      Company, after consideration of several valuation models, determined the fair
      value of the preferred stock as an amount equal to the fair value of the number
      of common shares into which the Series J-1 Preferred Stock is convertible into
      using the trading market price on the date the Series J-1 Preferred Stock was
      issued.


Issuances
      of Series J and J-1 Convertible Preferred Stock (in thousands $)





In
                connection with exchange for Series H and I shares
            $
            4,705In
                connection with exchange of Bridge Notes
            
            4,442In
                connection with debenture exchange
            
            3,644Sold
                to qualified investors (excluding $1,199 included in derivative liability
                for excess shares)
            
            1,309Issued
                to consultants in connection with the WaveRider Merger
            
            957Issued
                to consultants in connection with the sale of a qualified
                financing
            
            568Accretion
                of shares sold to qualified investors to face value
            
            1,199$
            16,824


-28-





COMMON
      STOCK WARRANTS





The
      following table summarizes our common stock warrant activity for each year
      ended
      December 31, (in thousands, except per share amounts):




2006
            
            2005Shares
            
            Price
                Range
            
            Shares
            
            Price
                RangeOutstanding
                at beginning of year
            
            
            20,686
            
            
            $0.0001-$1,275.00
            
            
            2,703
            
            
            $0.56-$1,275.00Issued
            
            
            39,507
            
            
            $0.12-$0.20
            
            
            18,008
            
            
            $0.0001-$0.30Exercised
            
            
            --
            
            
            
            
            
            --Cancelled
            
            
            (8,842
            )
            
            $0.20
            
            
            (25
            )
            
            $3.00-$9.00Outstanding
                at end of year
            
            
            51,351
            
            
            
            
            
            20,686Warrants
                exercisable at end of year
            
            
            51,351
            
            
            
            
            
            20,686Weighted-average
                exercise price
                ofwarrants issued
                during the year
            
            $
            0.18
            
            
            
            
            $
            0.56




2006
      WARRANT ACTIVITIES





On
      March
      27, 2006, the Company and the debenture purchaser entered into an Exchange
      Agreement, pursuant to which the purchaser agreed to convert $1,230,475 of
      principal and accrued interest due to purchaser on the date thereof into
      260.3183 shares of our Series J Convertible Preferred Stock and warrants to
      purchase 7,809,548 shares of our common stock, at an exercise price of $0.12
      per
      share, (the “Note Exchange”).  Such conversion is in lieu of the
      quarterly payments due March 31, 2006 and June 30, 2006.





From
      January 1, 2006 through March 31, 2006, the Company issued additional
      Convertible Notes to certain purchasers in the principal amount of $1.09
      million.  As additional consideration for the loans evidenced by the
      Convertible Notes, the holders were issued warrants for the issuance of
      2,725,000 shares of common stock of the Company, exercisable for five years,
      at
      an exercise price of $0.20 per share.





On
      March
      27, 2006, the Company and the investors holding certain Convertible Notes agreed
      to exchange the Convertible Notes for 260.318 shares of Series J Convertible
      Preferred Stock, and warrants exercisable for 7,809,548 shares of common
      stock of the Company at $0.12 per share.





In
      conjunction with the WaveRider Merger, the Company issued 1,326.446 shares
      of
      Series H Preferred Stock and 132.6446 shares of Series I Preferred Stock, along
      with warrants to purchase 8,842,089 shares of common stock, at an exercise
      price
      of $0.20, to a holder of WaveRider convertible debentures.





In
      connection with the closing of the WaveRider Merger, all of the issued and
      outstanding shares of the Series H and I Convertible Preferred Stock and the
      related warrants were exchanged for 353.7333 shares of Series J Convertible
      Preferred Stock and Series J Warrants to purchase 10,612,000 shares of common
      stock at $0.20 per share.


-29-




STOCKHOLDER
      RIGHTS AGREEMENT





On
      September 26, 1997, the Board of Directors of the Company adopted a Stockholder
      Rights Agreement (the "Rights Agreement"). Pursuant to the Rights Agreement,
      Rights (the "Rights") were distributed as a dividend on each outstanding share
      of its Common Stock held by stockholders of record as of the close of business
      on November 3, 1997. Each Right will entitle stockholders to buy Series A
      Preferred at an exercise price of $125.00 upon certain events. The Rights will
      expire ten years from the date of the Rights Agreement.





In
      general, the Rights will be exercisable only if a person or group acquires
      15%
      or more of the Company’s Common Stock or announces a tender offer, the
      consummation of which would result in ownership by a person or group of 15%
      or
      more of the Company’s Common Stock. In the case of the State of Wisconsin
      Investment Board, Firsthand Capital Management, Alpha Capital and StoneStreet
      Limited Partnership the threshold figure is 20% rather than 15%. If, after
      the
      Rights become exercisable, the Company is acquired in a merger or other business
      combination transaction, or sells 50% or more of its assets or earning power,
      each unexercised Right will entitle its holder to purchase, at the Right's
      then-current exercise price, a number of the acquiring company's common shares
      having a market value at the time of twice the Right's exercise price. At any
      time within ten days after the public announcement that a person or group has
      acquired beneficial ownership of 15% or more of the Company’s Common Stock, the
      Board of Directors, in its sole discretion, may redeem the Rights for $0.0001
      per Right.





6. 
EMPLOYEE
      BENEFIT
      PLANS





On
      October 8, 2004, the Company’s stockholders approved the adoption of the 2004
      Equity Incentive Plan (the "2004 Plan") as a successor to the Company’s 1995
      Stock Option/Stock Issuance Plan (the "1995 Plan").





The
      2004
      Plan authorizes the issuance of up to 3,000,000 shares of Common Stock as of
      December 31, 2006.





The
      2004
      Plan provides four different types of equity incentive awards: (i) stock
      options, (ii) stock appreciation rights, (iii) restricted stock, and (iv) stock
      units.





The
      exercise price per share for incentive stock options granted
      under the 2004 Plan may not be less than 100% of the fair market value per
      share
      of common stock on the option grant date. The exercise price for non-statutory
      stock options granted under the 2004 Plan may not be less that 85% of the fair
      market value per share of common stock on the option grant date. No option
      will
      have a term in excess of 10 years.





The
      following table summarizes stock option activity under the Company’s 2004 Plan
      (in thousands, except per share amounts):





2006
            
            2005Weighted
            
            
            
            WeightedAverage
            
            
            
            AverageShares
            
            Price
            
            Shares
            
            PriceOutstanding
                at beginning of year
            
            
            3,033
            
            $
            6.85
            
            
            1,166
            
            $
            23.30Granted
            
            
            -
            
            $
            -
            
            
            2,385
            
            $
            0.15Exercised
            
            
            -
            
            $
            -
            
            
            (7
            )
            $
            0.15Canceled
            
            
            (3,033
            )
            $
            6.85
            
            
            (511
            )
            $
            13.17Outstanding
                at end of year
            
            
            -
            
            $
            -
            
            
            3,033
            
            $
            6.85Options
                exercisable at year-end
            
            
            -
            
            $
            -
            
            
            1,345
            
            $
            14.62Weighted
                average fair value of options granted
            
            $
            -
            
            
            
            
            $
            0.15





During
      2006, no awards were granted under the 2004 Plan.





7.ASSET
      IMPAIRMENT
      CHARGES





In
      light
      of the softness in telecommunications equipment markets, disappointing results
      in its principal business units, and its current working capital deficit, and
      management’s assessment regarding future operating results, at June 30, 2006,
      the Company determined that an impairment charge was required on the basis
      that
      the carrying value of goodwill exceeded its fair value.  Goodwill was
      created by the excess of the purchase price over the fair values of net assets
      acquired in connection with the acquisition of substantially all of the
      operating assets and certain liabilities of SPEEDCOM Wireless Corporation
      (“SPEEDCOM”), on December 10, 2003, and the merger with WaveRider Merger, which
      was consummated on March 27, 2006.





The
      goodwill related to the acquisition of the SPEEDCOM amounted to
      $11,990,552.  After review of the potential proceeds on the sale of
      the remaining assets associated with the SPEEDCOM product line, the Company
      determined that an impairment charge of $11,740,552 was required on the basis
      that the carrying value of goodwill exceeded its fair value.  On
      December 31, 2006, we further impaired goodwill related to SPEEDCOM by $150,000
      because we determined the value of our SPEEDLAN product line to be $100,000,
      based on the sale of that product line on August 13, 2007.


-30-





The
      goodwill related to the WaveRider Merger amounted to
      $14,745,220.  Goodwill amounting to $1,206,000 was sold in connection
      with the sale of WaveRider Communications (Australia) Pty Ltd and WaveRider
      Canada. In addition, after review of the potential proceeds on the sale of
      the remaining assets associated with the WaveRider Merger, the Company has
      determined that an impairment charge of $13,539,220 was required on the
      basis that the carrying value of the remaining goodwill exceeded its fair
      value.




8. 
NET
      LOSS PER
      SHARE





The
      numerator for calculation of net loss per common share is the Company’s net loss
      for the period, less preferred stock dividends and accretions. The denominator,
      weighted average common shares outstanding, does not include stock options
      with
      an exercise price that exceeds the average fair market value of the underlying
      Common Stock or other dilutive securities because the effect would be
      anti-dilutive.





9. 
INCOME
      TAXES





Deferred
      tax assets consist of the following (in thousands):





December
                31,2006
            
            2005Net
                operating loss carry-forwards
            
            $
            135,849
            
            $
            110,587Credit
                carry-forwards
            
            
            3,888
            
            
            3,957Intangible
                assets
            
            
            576
            
            
            16,567Reserves
                and other
            
            
            1,278
            
            
            7,448Total
                deferred tax assets
            
            $
            141,591
            
            $
            138,559Valuation
                allowance
            
            
            (141,591
            )
            
            (138,559
            )Net
                deferred tax asset
            
            $
            --
            
            $
            --





The
      Federal net operating loss carryforward for tax purposes is approximately $365.0
      million at December 31, 2006, which begin to expire in 2017.  The Company's
      ability to utilize these carryforwards may be severely limited or lost pursuant
      to Section 382 of the Internal Revenue Code as a result of the change in control
      of the Company under the Joint Plan confirmed by the Court on June 14,
      2007.  Other limitations may apply as well.  The Company has made no
      determination as to what these limitations may be.





Deferred
      income taxes reflect the tax consequences on future years of differences between
      the tax bases of assets and liabilities and their bases for financial reporting
      purposes. In addition, future tax benefits, such as net operating loss
      carry-forwards, are recognized to the extent that realization of such benefits
      is more likely than not. The Company has assessed its ability to realize future
      tax benefits, and concluded that as a result of the history of losses, it was
      more likely than not, that such benefits would not be realized. Accordingly,
      the
      Company has recorded a full valuation allowance against future tax
      benefits.




Reconciliation
      of the staturory Federal income tax rate
      to its effective tax rate is as follows:





2006
            
            2005Income
                tax benefit at federal statutory rate
            
            
            -35.0
            %
            
            -35.0
            %State
                income taxes net of federal benefit
            
            
            -5.8
            %
            
            -5.8
            %Change
                in valuation allowance
            
            
            40.8
            %
            
            40.8
            %Total
            
            
            0.0
            %
            
            0.0
            %




-31-


10. 
COMMITMENTS
      AND
      CONTINGENCIES




Default
      UnderRegistrationRightsAgreement




The
      Company is in default under a registration rights agreement that it entered
      into
      with the owners of the Series J and J-1 Convertible Preferred Stock. Under
      the
      agreement the Company was required to file a registration statement on or before
      June 2, 2006.  Failure to file the registration statement results in a
      penalty equal to 2% of the value of the securities for the first 30 days, or
      part thereof, and 1% for each subsequent 30 day period until the registration
      statement is filed.  As of December 31, 2006, we have accrued an
      estimated penalty of $828,000.





Settlement
      Agreements





The
      Company is currently in default under a Settlement Agreement and Release
      (“Settlement Agreement”) it entered into on September 15, 2004 with Siemens
      Aktiengesellchaft ("Siemens") with respect to certain claims between Siemens
      and
      the Company arising under a Joint Development and License Agreement and Original
      Equipment Manufacturer Agreement entered into between the
      parties.  Under the terms of the Settlement Agreement, the Company
      agreed to pay Siemens $500,000, of which it paid $100,000 on October 1, 2004.
      The Company was obligated to pay an additional $100,000 upon the earlier of
      the
      receipt of financing by the Company equal to at least $100,000 or December
      31,
      2004, and $300,000 in twelve monthly installments of $25,000 per month beginning
      January 1, 2005. The Company did not make the December 31, 2004 $100,000 payment
      but did make the first two monthly payments of $25,000 each in January and
      February 2005.  The Company has made no other payments to Siemens and,
      as a result of the default, the remaining amount of $350,000, plus accrued
      interest at 7% per annum, is immediately due and payable.





Contingencies





In
      June
      2000, two former consultants to P-Com Italia S.p.A. filed a complaint against
      P-Com Italia in the Civil Court of Rome, Italy seeking payment of certain
      consulting fees allegedly due the consultants totaling approximately $615,000.
      The Civil Court of Rome has appointed a technical consultant in order to
      determine the merit of certain claims made by the consultants. On April 20,
      2005, the Civil Court of Rome issued judgment dismissing the case, and ordered
      the consultants to pay P-Com Italia's legal fees. The Civil Court's order has
      been appealed by the consultants to the Court of Appeal of Rome.





In
      July
      2006, a former distributor to the Company filed a complaint against the Company
      in the Superior Court of the State of California, Count of Santa Clara, for
      breach of contract and fraud.  The Complaint seeks damages totaling
      approximately $627,000, relating to sales commissions allegedly owed, and for
      allegedly defective products.  While no assurances can be given, the
      Company has asserted counterclaims in excess of $1.0 million, and intends to
      vigorously defend the allegations contained in the Complaint.





No
      liability related to the above referenced matters has been recorded in the
      financial statements.  These liabilities are subject to disposition
      under the terms of the Joint Plan.





11. 
SUPPLEMENTAL
      CASH FLOW
      INFORMATION





The
      following provides additional information concerning supplemental disclosure
      of
      cash flow activities (in thousands).




YEAR
                ENDED DECEMBER 31,2006
            
            2005Cash
                paid for income taxes
            
            $
            --
            
            $
            --Cash
                paid for interest
            
            $
            12
            
            $
            876





NON-CASH
      TRANSACTIONS




2006




On
      March 27, 2006, the Company and the debenture
      purchaser entered into an Exchange Agreement, pursuant to which the purchaser
      agreed to convert $1,230,475 of principal and accrued interest due to purchaser
      on the date thereof into 260.3183 shares of our Series J Convertible Preferred
      Stock and warrants to purchase 7,809,548 shares of our common stock, at an
      exercise price of $0.12 per share, (the “Note Exchange”).  Such
      conversion is in lieu of the quarterly payments that were due March 31, 2006
      and
      June 30, 2006. The fair value of the financial instruments issued was
      allocated $3,644 to Series J Preferred Stock and $1,094 to the warrants
      (accounted for as a derivative liability).


-32-





The
      1,368.3 shares of Series J Convertible Preferred Stock and warrants issued
      in
      connection with the conversion of all outstanding Convertible Notes is
      convertible or exercisable, as the case may be, into 31,728,719 and 9,518,616
      shares of common stock, respectively.   The fair value of the
      financial instruments issued has been allocated to the Series J Convertible
      Preferred Stock and the warrants, in the amount of $4,442 and $1,333 (accounted
      for as a derivative liabilitiy), respectively.





In
      conjunction with the WaveRider Merger, the Company issued 1,326.446 shares
      of
      Series H Preferred Stock and 132.6446 shares of Series I Preferred Stock, along
      with warrants to purchase 8,842,089 shares of common stock, at an exercise
      price
      of $0.20, to a holder of WaveRider convertible debentures.





In
      connection with the closing of the WaveRider Merger, all of the issued and
      outstanding shares of the Series H and I Convertible Preferred Stock and the
      related warrants were exchanged for 353.7333 shares of Series J Convertible
      Preferred Stock and Series J Warrants to purchase 10,612,000 shares of common
      stock. The
      Company, after consideration of several valuation models, determined the fair
      value of the preferred stock is an amount equal to the fair value of the number
      of shares of common stock into which the resulting Series J Preferred Stock
      is
      convertible into using the trading market price on the date the WaveRider
      Merger.




2005




The
      Company converted all outstanding Series B Preferred Stock into 381,914 shares
      of common stock.




The
      Company converted all outstanding Series C Preferred Stock into approximately
      6.4 million shares of common stock (exclusive of approximately 0.7 million
      shares of common stock issued for unpaid dividends), and 5,258 shares of Series
      G Preferred Stock (exclusive of 268 shares of Series G Preferred Stock for
      unpaid dividends) ("Series C Exchange").  In addition, due to certain
      limitations set forth in the Certificate of Designations for the Series C
      Preferred Stock, certain shareholders received warrants to purchase
      approximately 4.1 million shares of common stock at an exercise price of $0.001
      per share (exclusive of warrants to purchase approximately 0.4 million shares
      of
      common stock at an exercise price of $.0001 per share for unpaid dividends),
      in
      lieu of shares of common stock otherwise required to be issued to such
      shareholders in connection with the Series C Exchange.




The
      Company converted all outstanding shares of Series D Preferred Stock into 1,000
      shares of Series G Convertible Preferred Stock, plus warrants to purchase
      1,000,000 shares of common stock at an exercise price of $0.001 per
      share.




The
      Company issued 923 shares of Series E Convertible Preferred Stock to redeem
      $555,000 in promissory notes and settle certain vendor payables totaling
      $367,000.




The
      Company issued 250 shares of Series F Convertible Preferred Stock to make
      certain debenture amortization payments due in March and June of
      2005.




During
      the third quarter of 2005, 41 shares of Series F Preferred Stock were converted
      into 815,980 shares of common stock.




During
      the fourth quarter of 2005, 15.2 shares of Series F Preferred Stock were
      converted into 304,020 shares of common stock.





12. 
SELECTED
      QUARTERLY FINANCIAL DATA
      (UNAUDITED)





The
      following table sets forth the Company’s condensed consolidated financial
      information for the quarterly periods during the years ended December 31, 2006
      and 2005. The amounts are in thousands, except income (loss) per common share.
      Income (loss) per common share for periods prior to July 19, 2004 has been
      restated to give effect to a one-for-thirty reverse stock
      split.




First
            
            Second
            
            Third
            
            FourthQuarter
            
            Quarter
            
            Quarter
            
            QuarterYEAR
                ENDED DECEMBER 31, 2006Net
                sales
            
            $
            448
            
            $
            366
            
            $
            222
            
            $
            375Gross
                Profit
            
            
            228
            
            
            179
            
            
            133
            
            
            158Income
                (loss) from continuing operations
            
            
            (10,973
            )
            
            (24,701
            )
            
            2,369
            
            
            798Income
                (loss) from discontinued operations
            
            
            173
            
            
            (1,102)
            
            
            439
            
            
            171Preferred
                stock accretions and dividends
            
            
            -
            
            
            (1,199
            )
            
            -
            
            
            -Net
                income (loss) applicable to common shareholders
            
            
            (10,800
            )
            
            (27,002
            )
            
            2,808
            
            
            970Income
                (loss) per common share
            
            
            (0.45
            )
            
            (0.37
            )
            
            0.04
            
            
            0.02




First
            
            Second
            
            Third
            
            FourthQuarter
            
            Quarter
            
            Quarter
            
            QuarterYEAR
                ENDED DECEMBER 31, 2005Net
                sales
            
            $
            330
            
            $
            408
            
            $
            506
            
            $
            479Gross
                Profit
            
            
            142
            
            
            196
            
            
            251
            
            
            236Income
                (loss) from continuing operations
            
            
            (8,608
            )
            
            (2,621
            )
            
            (2,408
            )
            
            (1,422
            )Income
                (loss) from discontinued operations
            
            
            (190)
            
            
            1,129
            
            
            1,136
            
            
            422Preferred
                stock accretions and dividends
            
            
            (580
            )
            
            (578
            )
            
            (2,670
            )
            
            --Net
                income (loss) applicable to common shareholders
            
            
            (9,378
            )
            
            (2,070
            )
            
            (3,942
            )
            
            (1,020
            )Income
                (loss) per common share
            
            
            (0.79
            )
            
            (0.17
            )
            
            (0.22
            )
            
            (0.06
            )







-33-







SIGNATURES





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




Date:
                December 27, 2007
            By:
            /s/ 
                Daniel W.
                RumseyDaniel
                W. RumseyChief
                Executive Officer




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








Signature
            
            Title
            
            Date/s/
                Daniel W. Rumsey
            
            Chief
                Executive OfficerDaniel
                W. Rumsey
            
            (Principal
                Executive Officer)
            
            December
                27, 2007/s/
                Daniel W.
                Rumsey
            
            (Principal
                Financial Officer andDaniel
                W. Rumsey
            
            Principal
                Accounting Officer)
            
            December
                27, 2007/s/
                Richard Reiss
            
            Director
                of the Company
            
            December
                27, 2007Richard
                Reiss/s/
                Mark Shaftlein
            
            Director
                of the Company
            
            December
                27, 2007Mark
                Shaftlein







-34-










INDEX
      OF
      EXHIBITS




2.1(1)
            Agreement
                and Plan of Merger, dated January 3, 2006, between The Company
                Corporation, Wave Acquisition Corporation and WaveRider Communications
                Inc.2.2(1)
            Amendment
                to Agreement and Plan of Merger, dated January 26, 2006, between
                The
                Company Corporation, Wave Acquisition Corporation and WaveRider
                Communications Inc.2.3(2)
            Joint
                Plan of Reorganization3.1
                (2)
            Amended
                and Restated Articles of Incorporation3.2(2)
            Amended
                and Restated Bylaws4.5
            Form
                of Common Stock Certificate10.1*(3)
            2004
                Equity Incentive Plan10.2*(4)
            Amendment
                to Severance Agreement, dated July 13, 2005, between P-Com, Inc.
                and
                Daniel W. Rumsey.10.3*(5)
            Letter
                Agreement dated March 22, 2006, between Don Meiners and the
                Company.10.4*(5)
            Letter
                Agreement dated March 22, 2006, between Daniel W. Rumsey and the
                Company.10.5(2)
            Contingent
                Unsecured Promissory Note of the Registrant in Favor of the Plan
                Trust.10.6(2)
            Secured
                Promissory Note in Favor of SDS Capital Group SPC, Ltd.10.7(2)
            Security
                Agreement in Favor of SDS Capital Group SPC, Ltd.14.1
            Code
                of Ethics21.1
            Subsidiaries31.1
            Rule
                13a-14(a)/15d-14(a) Certification31.2
            Rule
                13a-14(a)/15d-14(a) Certification32.1
            Section
                1350 Certification32.2
            Section
                1350 Certification





*
            Compensatory
                benefit arrangement.





(1)
            Incorporated
                by reference to the exhibits filed as part of the Company’s Registration
                Statement on Form S-4 (File No. 333-13157), declared effective with
                the
                Securities and Exchange Commission on February 13,
                2006.(2)
            Incorporated
                by reference to Exhibits 3.1 and 3.2 of the Company’s Current Report on
                Form 8-K filed with the Securities and Exchange Commission on July
                5,
                2007.(3)
            Incorporated
                by reference to Appendix A attached to the Company’s Schedule 14A filed
                with the Securities and Exchange Commission on September 13,
                2004.(4)
            Incorporated
                by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
                filed with the Securities and Exchange Commission on July 14,
                2005.











Exhibit
      31.1





CERTIFICATIONS





I,
      Daniel
      W. Rumsey, certify that:





1.
      I have
      reviewed this annual report on Form 10-KSB of Azzurra Holding
      Corporation;





2.
      Based
      on my knowledge, this report does not contain any untrue statement of a material
      fact or omit to state a material fact necessary to make the statements made,
      in
      light of the circumstances under which such statements were made, not misleading
      with respect to the period covered by this report;





3.
      Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the financial
      condition, results of operations and cash flows of the Company as of, and for,
      the periods presented in this report;





4.
      The
      Company’ other certifying officer and I are responsible for establishing and
      maintaining disclosure controls and procedures (as defined in Exchange Act
      Rules
      13a-15(e) and 15d-15(e)), for the Company and have:





a)
      Designed such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure that
      material information relating to the Company, including its consolidated
      subsidiaries, is made known to us by others within those entities, particularly
      during the period in which this report is being prepared;





b)
      Evaluated the effectiveness of the Company’s disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of the
      disclosure controls and procedures, as of the end of the period covered by
      this
      report based on such evaluation; and





c)
      Disclosed in this report any change in the Company’s internal control over
      financial reporting that occurred during the Company’s most recent fiscal
      quarter (the Company’s fourth fiscal quarter in the case of an annual report)
      that has materially affected or is reasonably likely to materially affect,
      the
      Company’s internal control over financial reporting; and





5.
      The
      Company’s other certifying officer and I have disclosed, based on our most
      recent evaluation of internal control over financial reporting, to the Company’s
      auditors and the audit committee of the Company’s Board of Directors (or persons
      performing the equivalent functions):





a)
      All
      significant deficiencies and material weaknesses in the design or operation
      of
      internal control over financial reporting which are reasonably likely to
      adversely affect The Company’ ability to record, process, summarize and report
      financial information; and





b)
      Any
      fraud, whether or not material, that involves management or other employees
      who
      have a significant role in the Company’s internal control over financial
      reporting.




Date:
                December 27, 2007
            
            /s/ 
                Daniel W.
                RumseyDaniel
                W. Rumsey
              Chief
                Executive Officer
              and
                Chief Financial Officer
              (Principal
                Executive Officer)










































Exhibit
      31.2





I,
      Daniel
      W. Rumsey, certify that:





1.
      I have
      reviewed this annual report on Form 10-KSB of Azzurra Holding
      Corporation;





2.
      Based
      on my knowledge, this report does not contain any untrue statement of a material
      fact or omit to state a material fact necessary to make the statements made,
      in
      light of the circumstances under which such statements were made, not misleading
      with respect to the period covered by this report;





3.
      Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the financial
      condition, results of operations and cash flows of the Company as of, and for,
      the periods presented in this report;





4.
      The
      Company’s other certifying officer and I are responsible for establishing and
      maintaining disclosure controls and procedures (as defined in Exchange Act
      Rules
      13a-15(e) and 15d-15(e), for the Company and have:





a)
      Designed such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure that
      material information relating to the Company, including its consolidated
      subsidiaries, is made known to us by others within those entities, particularly
      during the period in which this report is being prepared;





b)
      Evaluated the effectiveness of the Company’s disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of the
      disclosure controls and procedures, as of the end of the period covered by
      this
      report based on such evaluation; and





c)
      Disclosed in this report any change in the Company’s internal control over
      financial reporting that occurred during the Company’s most recent fiscal
      quarter (the Company’s fourth fiscal quarter in the case of an annual report)
      that has materially affected or is reasonably likely to materially affect,
      the
      Company’s internal control over financial reporting; and





5.
      The
      Company’s other certifying officer and I have disclosed, based on our most
      recent evaluation of internal control over financial reporting, to the Company’s
      auditors and the audit committee of the Company’s Board of Directors (or persons
      performing the equivalent functions):





a)
      All
      significant deficiencies and material weaknesses in the design or operation
      of
      internal controls over financial reporting which are reasonably likely to
      adversely affect the Company’s ability to record, process, summarize and report
      financial information; and





b)
      Any
      fraud, whether or not material, that involves management or other employees
      who
      have a significant role in the Company’s  internal control over
      financial reporting.




Date:
                December 27, 2007
            
            /s/ 
                Daniel W.
                RumseyDaniel
                W. Rumsey
              Chief
                Executive Officer
              and
                Chief Financial Officer
              (Principal
                Financial Officer)


















































Exhibit
      32.1





CERTIFICATION
      OF PRINCIPAL EXECUTIVE
      OFFICER


PURSUANT
      TO 18 U.S.C. SECTION 1350,





AS
      ADOPTED PURSUANT TO SECTION 906 OF THE SARANES-OXLEY ACT OF 2002





In
      connection with the filing of the Annual Report on Form 10-KSB for the year
      ended December 31, 2006 (the "Report") by Azzurra Holding Corporation
      ("Registrant"), and the undersigned hereby certifies that:





1.
      The
      Report fully complies with the requirements of Section 13(a) or 15(d) of the
      Securities Exchange Act of 1934, as amended, and





2.
      The
      information contained in the Report fairly presents, in all material respects,
      the financial condition and results of operations of Registrant as of and for
      the periods presented in the Report.




Date:
                December 27, 2007
            By:
            /s/ 
                Daniel W.
                RumseyDaniel
                W. Rumsey
              Chief
                Executive Officer
              and
                Chief Financial Officer
              (Principal
                Executive Officer)







A
      signed
      original of this written statement required by 18 U.S.C. Section 1350 has been
      provided to Azzurra Holding Corporation and will be furnished to the Securities
      and Exchange Commission or its staff upon request.











































Exhibit
      32.2





CERTIFICATION
      OF PRINCIPAL FINANCIAL
      OFFICER


PURSUANT
      TO 18 U.S.C. SECTION 1350,





AS
      ADOPTED PURSUANT TO SECTION 906 OF THE SARANES-OXLEY ACT OF 2002





In
      connection with the filing of the Annual Report on Form 10-KSB for the year
      ended December 31, 2006 (the "Report") by Azzurra Holding Corporation
      ("Registrant"), and the undersigned hereby certifies that:





1.
      The
      Report fully complies with the requirements of Section 13(a) or 15(d) of the
      Securities Exchange Act of 1934, as amended, and


2.
      The
      information contained in the Report fairly presents, in all material respects,
      the financial condition and results of operations of Registrant as of and for
      the periods presented in the Report.




Date:
                December 27, 2007
            By:
            /s/ 
                Daniel W.
                RumseyDaniel
                W. Rumsey
              Chief
                Executive Officer
              and
                Chief Financial Officer
              (Principal
                Financial Officer)





A
      signed
      original of this written statement required by 18 U.S.C. Section 1350 has been
      provided to Azzurra Holding Corporation and will be furnished to the Securities
      and Exchange Commission or its staff upon request.