**UNITED
      STATES**




**** **SECURITIES
      AND EXCHANGE COMMISSION**




Washington,
      D.C. 20549






**FORM
      10-KSB**




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**




 ̈ Transition Report Under Section 13 or 15(D) of the Securities Exchange Act
      of
      1934




for
      the
      transition period from _______________ to _______________






Commission
      File Number: **333-55166**






**SMI
      PRODUCTS, INC.**






(Exact
      name of small Business Issuer as specified in its charter)




**Nevada**
            **88-0363465**(State
                or other jurisdiction of incorporation or
            (IRS
                Employer Identification No.)organization)**122
                Ocean Park Blvd., Suite 307****Santa
                Monica, CA**
            **90405**(Address
                of principal executive offices)
            (Zip
                Code)




Issuer's
      telephone number, including area code: **(310)
      396-1691**




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






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




**Common
      Stock, par value $0.001 per share**




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
      the
      registrant was


required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. x


Yes
      [X]
      No [  ]









Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in


this
      form, and no disclosure will be contained, to the best of registrant's
      knowledge, in definitive proxy or


information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to


this
      Form
      10-KSB. [  ]




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


[X]
      Yes
      [  ] No




State
      issuer's revenues for its most recent fiscal year: $0.00




The
      aggregate market value of voting Common Stock held by non-affiliates of the
      registrant was


$800,000,
      based upon the closing price of such Common Stock on the OTCBB of $0.40 per


share
      on
      January 20, 2007, and determined by subtracting from the total number of shares
      of Common


Stock
      issued and outstanding on that date all shares held by the directors and
      executive officers of the


registrant
      and by persons holding at least 10% of such number of shares of Common Stock
      as
      of that date.




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


practicable
      date: 7,551,000 shares of common stock as of January 20, 2007.




Transitional
      Small Business Disclosure Format (check one): Yes [ ] No [X]










**TABLE
      OF CONTENTS**




**PART
                I**ITEM
                1.
            DESCRIPTION
                OF BUSINESSITEM
                2.
            PROPERTIESITEM
                3.
            LEGAL
                PROCEEDINGSITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS**PART
                II**ITEM
                5.
            MARKET
                FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
                BUSINESS ISSUER PURCHASES OF EQUITY SECURITIESITEM
                6.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONITEM
                7.
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY DATAITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSUREITEM
                8a
            CONTROLS
                AND PROCEDURES**PART
                III**ITEM
                9.
            DIRECTORS
                AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROLPERSONS;
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACTITEM
                10.
            EXECUTIVE
                COMPENSATIONITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERSITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONSITEM
                13.
            EXHIBITSITEM
                14
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICESSIGNATURESINDEX
                TO EXHIBITS







i


**FORWARD
      LOOKING STATEMENTS**




This
      Annual Report on Form 10-KSB contains statements that constitute
      "forward-looking statements." These forward-looking statements can be identified
      by the use of predictive, future-tense or forward-looking terminology like
      "believes," "anticipates," "expects," "estimates," "may," or similar terms.
      These statements appear in a number of places in this annual report and include
      statements regarding our intent, belief or current expectations and those of
      our
      directors or officers with respect to, among other things:(i) trends affecting
      our financial condition or results of operations, (ii) our business and growth
      strategies, and (iii) our financing plans. You are cautioned that
      forward-looking statements are not guarantees of future performance and involve
      significant risks and uncertainties, and that actual results may differ
      materially from those projected in the forward-looking statements as a result
      of
      various factors. Factors that could adversely affect actual results and
      performance include, among others, our need for additional capital, our history
      of losses, the intense competition we face in our business, the fact that our
      stock is a “penny stock” and the other material risks described under “ITEM 6.
      MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION- Risk Factors”. The
      accompanying information contained in this annual report, including, without
      limitation, the information set forth under the heading "Risk Factors" and
      in
      "ITEM 1. DESCRIPTION OF BUSINESS" identifies important additional factors that
      could materially adversely affect actual results and performance. You are urged
      to carefully consider these factors. All forward-looking statements attributable
      to us are expressly qualified in their entirety by the foregoing cautionary
      statement.




**PART
      I**




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




**Background**




The
      Company was incorporated in the State of Nevada on June 17, 1996. From inception
      through August 11, 2006, the Company was a development stage company in the
      business of internet real estate mortgage services. From and after August 11,
      2006, the Company ceased its prior business. The Company’s business plan now
      consists of exploring potential targets for a business combination with the
      Company through a purchase of assets, share purchase or exchange, merger or
      similar type of transaction.





Employees




As
      of
      December 31, 2006, the Company had no employees.




**ITEM
      2.**  **PROPERTIES.**




As
      of
      December 31, 2006, the Company did not own or lease any properties.







**ITEM
      3.**  **LEGAL PROCEEDINGS**




As
      of
      December 31, 2006, the Company was not a party to any pending or threatened
      legel proceedings.




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




On
      September 25, 2006, the Company’s board of directors and stockholders holding an
      aggregate of 5,551,000 shares of the Company’s common stock, representing
      approximately 73.5% of the total shares entitled to vote, consented in writing,
      without a meeting, to the following:





2


The
      Company agreeing to the adoption of the Agreement and Plan of Merger (the
“Reincorporation Merger Agreement”) between the Company and SMI Products, Inc.,
      a Delaware corporation formed by us (“SMI-Delaware”), in the form of Exhibit
      A attached
      to the Company’s Schedule 14C Information Statement (“Information Statement”)
      filed with the U. S. Securities and Exchange Commission on October 16, 2006.
      The
      Reincorporation Merger Agreement provides for the merger of the Company with
      and
      into SMI Delaware (the “Reincorporation Merger”), and will result
      in:




·
            a
                change of domicile of the Company from the State of Nevada to
                the State of Delaware;




·
            The
                right of the Company’s shareholders to receive one (1) share of common
                stock, par value $0.001 per share, of SMI-Delaware for each ten (10)
                shares of the Company’s common stock, par value $0.001 per share, owned as
                of the effective time of the reincorporation
                merger;




·
            the
                persons presently serving as the Company’s executive officers and
                directors serving in their same respective positions with SMI
                Delaware;







·
            the
                adoption of a new Certificate of Incorporation under the laws of
                Delaware
                in the form ofExhibit
                Battached to the Information Statement, pursuant to which the Company’s
                authorized capital stock will be changed from 100,000,000 shares
                of
                authorized capital stock, all of which are common stock, par value
                $0.001
                per share, to 110,000,000 shares of authorized capital stock, consisting
                of 500,000,000 shares of common stock, par value $0.001 per share,
                and
                10,000,000 shares of “blank check” preferred stock, par value $0.001 per
                share, with the right conferred upon the Board of Directors to set
                the
                dividend, voting, conversion, liquidation and other rights, as well
                as the
                qualifications, limitations and restrictions, with respect to the
                preferred stock as the Board of Directors may determine from time
                to time;
                and**the
                adoption of new Bylaws under the laws of the State of Delaware in
                the form
                ofExhibit
                Cattached to the Information
                Statement.




Copies
      of
      the Company’s Information Statement were mailed to the stockholders of the
      Company on December 12, 2006 and the action was deemed effective twenty (20)
      calendar days following such mailing. The Company expects to implement this
      action in the first quarter of 2007.





Other
      than the foregoing, no matters were submitted to a vote or for the written
      consent of security shareholders, through the solicitation of proxies or
      otherwise, during the fiscal year ended Dcember 31, 2006 and no meeting of
      shareholders was held.




**PART
      II.**




**ITEM
      5. MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED STOCKHOLDER MATTERS AND SMALL
      BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES**




**Market
      Price**




The
      Company became subject to Securities Exchange Act Reporting Requirements in
      August 2001. The symbol "SMIP": was assigned for our securities. There is a
      very
      limited trading market for our stockDuring calendar year 2006, approximately
      194,500 shares of our stock traded on the OTCBB with a high price of $0.75
      and a
      low price of $0.35. There can be no assurance that a highly-liquid market for
      our securities will ever develop. The last trade was 5,000 shares at $0.40
      per
      share on December 13, 2006.





3




**Options
      and Warrants**




None
      of
      the shares of our common stock are subject to outstanding options or warrants.




**Convertible
      Securities**




At
      Dcember 31, 2006, the Company had loans outstanding from certain shareholders
      in
      the aggregate amount of $124,750, which represents amounts loaned to the Company
      to pay the Company’s expenses of operation. Of this amount, $124,195 is
      evidenced by a Loan Agreements and Convertible Promissory Notes (each a “Note”)
      bearing interest at a rate of 2% per annum. Maturities of the Notes range from
      August 11, 2007 to September 30, 2007. At the option of the payee, the principal
      balance of each Note and all accrued interest thereunder is convertible, in
      whole or in part, into shares of the Company’s common stock at any time prior to
      maturity. The number of shares of the Company’s common stock issuable upon such
      conversion shall be determined by the Board of Directors of the Company based
      on
      what it determines is the fair market value of the Company at the time of such
      conversion.





**Status
      of Outstanding Common Stock**




As
      of
      December 31, 2006, we had a total of 7,551,000 shares of our common stock
      outstanding. Of these shares, 5,551,000 are held by “affiliates” of the Company
      and the remaining shares are either registered or may be transferred subject
      to
      the requirements of Rule 144. We have not agreed to register any additional
      outstanding shares of our common stock under the Securities Act.




**Holders**




We
      have
      issued an aggregate of 7,551,000 shares of our common stock to approximately
      16
      holders.




**Dividends**




We
      have
      not paid any dividends to date, and have no plans to do so in the immediate
      future.





**Recent
      Sales of Unregistered Securities**




None.




**Purchases
      of Equity Securities**




The
      Company has never purchased nor does it own any equity securities of any other
      issuer.




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




**Overview**




The
      Company’s current busi ness
      plan
      is to seek, investigate, and, if warranted, acquire one or more properties
      or
      businesses, and to pursue other related activities intended to enhance
      shareholder value. The acquisition of a business opportunity may be made by
      purchase, merger, exchange of stock, or otherwise, and may encompass assets
      or a
      business entity, such as a corporation, joint venture, or partnership. The
      Company has limited capital, and it is unlikely that the Company will be able
      to
      take advantage of more than one such business opportunity. The Company intends
      to seek opportunities demonstrating the potential of long-term growth as opposed
      to short-term earnings.




4


The
      Company’s principal shareholders are in contact with broker-dealers and other
      persons with whom they are acquainted who are involved in corporate finance
      matters to advise them of the Company’s existence and to determine if any
      companies or businesses they represent have an interest in considering a merger
      or acquisition with the Company. No assurance can be given
      that the Company will be successful in finding or acquiring a desirable business
      opportunity, given that limited funds are available for acquisitions, or that
      any acquisition that occurs will be on terms that are favorable to the Company
      or its stockholders.




The
      Company’s search is directed toward small and medium-sized enterprises which
      have a desire to become public corporations and which are able to satisfy,
      or
      anticipate in the reasonably near future being able to satisfy, the minimum
      asset and other requirements in order to qualify shares for trading on NASDAQ
      SmallCap Market or a stock exchange (See “Investigation and Selection of
      Business Opportunities”). The Company anticipates that the business
      opportunities presented to it may (i) be recen tly
      organized with no operating history, or a history of losses attributable to
      under-capitalization or other factors; (ii) be experiencing financial or
      operating difficulties; (iii) be in need of funds to develop a new product
      or
      service or to expand into a new market; (iv) be relying upon an untested product
      or marketing concept; or (v) have a combination of the characteristics mentioned
      in (i) through (iv). The Company intends to concentrate its acquisition efforts
      on properties or businesses that it believes to be undervalued. Given the above
      factors, investors should expect that any acquisition candidate may have a
      history of losses or low profitability.




The
      Company does not propose to restrict its search for investment opportunities
      to
      any particular geographical area or industry, and may, therefore, engage in
      essentially any business, to the extent of its limited resources. This includes
      industries such as service, finance, natural resources, manufacturing, high
      technology, product development, medi cal,
      communications and others. The Company’s discretion in the selection of business
      opportunities is unrestricted, subject to the availability of such
      opportunities, economic conditions, and other factors.




Any
      entity which has an interest in being acquired by, or merging into the Company,
      is expected to be an entity that desires to become a public company and
      establish a public trading market for its securities. In connection with such
      a
      merger or acquisition, it is highly likely that an amount of stock constituting
      control of the Company would be issued by the Company or purchased from the
      current principal shareholders of the Company by the acquiring entity or its
      affiliates. If stock is purchased from the current shareholders, the transaction
      is very likely
      to result in substantial gains to them relative to their purchase price for
      such
      stock. In the Company’s judgment, none of its officers and directors would
      thereby become an “underwriter” within the meaning of the Section 2(11) of the
      Securities Ac t
      of
      1933, as amended. The sale of a controlling interest by certain principal
      shareholders of the Company could occur at a time when the other shareholders
      of
      the Company remain subject to restrictions on the transfer of their shares.





5


It
      is
      anticipated that
      business opportunities will come to the Company’s attention from various
      sources, including its principal shareholders, professional advisors such as
      attorneys and accountants, securities broker-dealers, venture capitalists,
      members of the financial c ommunity,
      and others who may present unsolicited proposals. The Company has no plans,
      understandings, agreements, or commitments with any individual for such person
      to act as a finder of opportunities for the Company.




The
      Company does not foresee that it would enter into a merger or acquisition
      transaction with any business with which its officers, directors or principal
      shareholders are currently affiliated. Should the Company determine in the
      future, contrary to foregoing expectations, that a transaction with an affiliate
      would be in the best interests of the Company and its stockholders, the Company
      is, in general, permitted by Delaware law to enter into such a transaction
      if:




1.
      The
      material facts as to the relationship or interest of the affiliate and as to
      the
      contract or transaction are disclosed or are known to the Board of Directors,
      and the Board in good faith authorizes the contract or transaction by the
      affirmative vote of a majority of the disinterested directors, even though
      the
      disinterested directors constitute less than a quorum; or




2.
      The
      material facts as to the relationship or interest of the affiliate and as to
      the
      contract or transaction are disclosed or are known to the stockholders entitled
      to vote thereon, and the contract or transaction is specifically approved in
      good faith by vote of the stockholders; or




3.
      The
      contract or transaction is fair as to the Company as of the time it is
      authorized, approved or ratified, by the Board of Directors or the stockholders.




**Investigation
      and Selection of Business Opportunities**




To
      a
      large extent, a decision to participate in a specific business opportunity
      may
      be made upon the principal shareholders’ analysis of the quality of the other
      company’s management and personnel, the antic ipated
      acceptability of new products or marketing concepts, the merit of technological
      changes, the perceived benefit the Company will derive from becoming a publicly
      held entity, and numerous other factors which are difficult, if not impossible,
      to analyze through the application of any objective criteria. In many instances,
      it is anticipated that the historical operations of a specific business
      opportunity may not necessarily be indicative of the potential for the future
      because of the possible need to access capital, shift marketing approaches
      substantially, expand significantly, change product emphasis, change or
      substantially augment management, or make other changes. The Company will be
      dependent upon the owners of a business opportunity to identify any such
      problems which may exist and to implement, or be primarily responsible for
      the
      implementation of, required changes. Because the Company may participate in
      a
      business opportunity with a newly organized firm or with a firm which is
      entering a new phas e
      of
      growth, it should be emphasized that the Company will incur further risks,
      because management in many instances will not have proved its abilities or
      effectiveness, the eventual market for such company’s products or services will
      likely not be establi shed,
      and
      such company may not be profitable when acquired.




6


It
      is
      anticipated that the Company will not be able to diversify, but will essentially
      be limited to one such venture because of the Company’s limited financial
      resources. This lack of diversification will not permit the Company to offset
      potential losses from one business opportunity against profits from another,
      and
      should be considered an adverse factor affecting any decision to purchase the
      Company’s securities.




It
      is
      emphasized that the Company
      may effect transactions having a potentially adverse impact upon the Company’s
      shareholders pursuant to the authority and discretion of the Company’s
      management and board of directors to complete acquisitions without submitting
      any proposal to the stockholders for their consideration. Holders of the
      Company’s securities should not anticipate that the Company will necessarily
      furnish such holders, prior to any merger or acquisition, with financial
      statements, or any other documentation, concerning a target company or its
      business. In some instances, however, the proposed participation in a business
      opportunity may be submitted to the stockholders for their consideration, either
      voluntarily by such directors to seek the stockholders’ advice and
      consent or
      because state law so requires.




The
      analysis of business opportunities will be undertaken by or under the
      supervision of the Company’s principal shareholders, who are not professional
      business analysts. Although there are no current plans to do so, the Company
      might hire outside consultants to assist in the investigation and selection
      of
      business opportunities, and might pay a finder’s fee. Since the Company has no
      current plans to use any outside consultants or advisors to assist in the
      investigation and
      selection of business opportunities, no policies have been adopted regarding
      use
      of such consultants or advisors, the criteria to be used in selecting such
      consultants or advisors, the services to be provided, the term of service,
      or
      regarding the total amount of fees that may be paid. However, because of the
      limited resources of the Company, it is likely that any such fees the Company
      agrees to pay would be paid in stock and not in cash. Otherwise, the Company
      anticipates that it will consider, among other things, the following factors:




7


1.
      Potential for growth and profitability, indicated by new technology, anticipated
      market expansion, or new products;




2.
      The
      Company’s perception of how any particular business opportunity will be received
      by the investment community and by the Company’s stockholders;




3.
      Whether, following the business combination, the financial condition of the
      business opportunity would be, or would have a significant prospect in the
      foreseeable future of becoming sufficient to enable the securities of the
      Company to qualify for listing on an exchange or on a national automated
      securities quotation system, such as NASDAQ, so as to permit the trading of
      such
      securities to be exempt from the requirements of Rule 15c2-6 adopted
      b y
      the
      Securities and Exchange Commission. See “Risk Factors—The Company Regulation of
      Penny Stocks.”




4.
      Capital requirements and anticipated availability of required funds, to be
      provided by the Company or from operations, through the sale of additional
      securities, through joint ventures or similar arrangements, or from other
      sources;




5.
      The
      extent to which the business opportunity can be advanced;




6.
      Competitive position as compared to other companies of similar size and
      experience within the industry segment as well as within the industry as a
      whole;




7.
      Strength and diversity of existing management, or management prospects that
      are
      scheduled for recruitment;




8.
      The
      cost of participation by the Company as compared to the perceived tangible
      and
      intangible values and potential; and




9.
      The
      accessibility of required management expertise, personnel, raw materials,
      services, professional assistance, and other required items.




In
      regard
      to the possibility that the shares of the Company would qualify for listing
      on
      the NASDAQ SmallCap Market, the current standards include the requirements
      that
      the issuer of the securities satisfy, among other requirements, certain minimum
      levels of shareholder equity, market value or net income. Many of the business
      opportunities that might be potential candidates for a combination with the
      Company would not satisfy the NASDAQ SmallCap Market listing criteria.




8


Not
      one
      of the factors described above will be controlling in the selection of a
      business opportunity, and the Company will attempt to analyze all factors
      appropriate to each opportunity and make a determination based upon reasonable
      investigative measures and available data. Potentially available business
      opportunities may occur in many different industrie s
      and at
      various stages of development, all of which will make the task of comparative
      investigation and analysis of such business opportunities difficult and complex.
      Potential investors must recognize that, because of the Company’s limited
      capital availa ble
      for
      investigation, the Company may not discover or adequately evaluate adverse
      facts
      about the opportunity to be acquired.




The
      Company is unable to predict when it may participate in a business opportunity.
      Prior to making a decision to participate in a business opportunity, the Company
      will generally request that it be provided with written materials regarding
      the
      business opportunity containing such items as a description of products,
      services and company history; management resumes; financial information;
      available projections, with related assumptions upon which they are based;
      an
      explanation of proprietary products and services; evidence of existing patents,
      trademarks, or services marks, or rights thereto; present and proposed forms
      of
      compensation to management; a description of transactions between such company
      and its affiliates during relevant periods; a description of present and
      required facilities; an analysis of risks and competitive conditions; a
      financial plan of operation and estimated capital requirements; audited
      financial statements, or if they are not available, unaudited financial
      statements, together with reasonable assurances that audited financial
      statements would be able to be produced within a reasonable period of time
      following completion of a merger transaction; and other information deemed
      relevant.





As
      part
      of the Company’s investigation, the Company’s principal shareholders may meet
      personally with management and key personnel, may visit and inspect material
      facilities, obtain independent analysis or verification of certain information
      provided, check references of management and key personnel, and take other
      reasonable investigative measures, to the extent of the Company’s limited
      financial resources.




It
      is
      possible th at
      the
      range of business opportunities that might be available for consideration by
      the
      Company could be limited by the impact of Securities and Exchange Commission
      regulations regarding purchase and sale of “penny stocks.” The regulations would
      affect, and possibly impair, any market that might develop in the Company’s
      securities until such time as they qualify for listing on NASDAQ or on another
      exchange which would make them exempt from applicability of the “penny stock”
regulations. See “Risk Factors - Regulation of Penny Stocks.”




9


The
      Company believes that various types of potential merger or acquisition
      candidates might find a business combination with the Company to be attractive.
      These include acquisition candidates desiring to create a public market for
      their shares in order to enhance liquidity for current shareholders, acquisition
      candidates which have long-term plans for raising capital through the public
      sale of securities and believe that the possible prior existence of a public
      market for their securities would be beneficial, and acquisition candidates
      which plan to acquire additional assets through issuance of securities rather
      than for cash, and believe that the possibility of development of a public
      market for their securities will be of assistance in that process. Acquisition
      candidates which have a need for an immediate cash infusion are not likely
      to
      find a potential business combination with the Company to be an attractive
      alternative.




There
      are
      no loan arrangements or arrangements for any financing whatsoever relating
      to
      any business opportunities currently available.





**Form
      of Acquisition**




It
      is
      impossible to predict the manner in which the Company may participate in a
      business opportunity. Specific business opportunities will be reviewed as well
      as the respective needs and desires of the Company and the promoters of the
      opportunity and, upon the basis of that review and the relative negotiating
      strength of the Company and such promoters, the legal structure or method deemed
      by management to be suitable will be selected. Such structure may include,
      but
      is not limited to leases, purchase and sale agreements, licenses, joint ventures
      and other contractual arrangements. The Company may act directly or indirectly
      through an interest in a partnership, corporation or other form of organization.
      Implementing such structure may require the merger, consolidation or
      reorganization of the Company with other corporations or forms of business
      organization, and although it is likely, there is no assurance that the Company
      would be the surviving entity. In addition, the present management, board of
      directors and stockholders of the Company most likely will not have control
      of a
      majority of the voting shares of the Company following a reorganization
      t ransaction.
      As part of such a transaction, the Company’s existing management and directors
      may resign and new management and directors may be appointed without any vote
      by
      stockholders.




It
      is
      likely that the Company will acquire its participation in a business opportunity
      through the issuance of Common Stock or other securities of the Company.
      Although the terms of any such transaction cannot be predicted, it should be
      noted that in certain circumstances the criteria for determining whether or
      not
      an acq uisition
      is a so-called “tax free” reorganization under the Internal Revenue Code of
      1986, depends upon the issuance to the stockholders of the acquired company
      of a
      controlling interest (i.e. 80% or more) of the common stock of the combined
      entities immediately following the reorganization. If a transaction were
      structured to take advantage of these provisions rather than other “tax free”
provisions provided under the Internal Revenue Code, the Company’s current
      stockholders would retain in the aggregate 2 0%
      or
      less of the total issued and outstanding shares. This could result in
      substantial additional dilution in the equity of those who were stockholders
      of
      the Company prior to such reorganization. Any such issuance of additional shares
      might also be done simultaneously with a sale or transfer of shares representing
      a controlling interest in the Company by the principal
      shareholders.




10


It
      is
      anticipated that any new securities issued in any reorganization would be issued
      in reliance upon exemptions, if any are available, from registration under
      applicable federal and state securities laws. In some circumstances, however,
      as
      a negotiated element of the transaction, the Company may agree to register
      such
      securities either at the time the transaction is consumm ated,
      or
      under certain conditions or at specified times thereafter. The issuance of
      substantial additional securities and their potential sale into any trading
      market that might develop in the Company’s securities may have a depressive
      effect upon such mar ket.




The
      Company will participate in a business opportunity only after the negotiation
      and execution of a written agreement. Although the terms of such agreement
      cannot be predicted, generally such an agreement would require specific
      representations and warranties by all of the parties thereto, specify certain
      events of default, detail the terms of closing and the conditions which must
      be
      satisfied by each of the parties thereto prior to such closing, outline the
      manner of bearing costs if the transaction is not closed, set forth remedies
      upon default, and include miscellaneous other terms normally found in an
      agreement of that type.




As
      a
      general matter, the Company anticipates that it, and/or its officers and
      principal shareholders will enter into a letter of intent with the management,
      principals or owners of a prospective business opportunity prior to signing
      a
      binding agreement. Such letter of intent will set forth the terms of the
      proposed acquisition but will generally not bind any of the parties to
      consummate the transaction. Execution of a letter of intent will by no means
      indicate that consummation of an acquisition is probable. Neither the Company
      nor any of the other parties to the letter of intent will be bound to consummate
      the acquisition unless and until a definitive agreement concerning the
      acquisition as described in the preceding paragraph is executed. Even after
      a
      definitive agreement is executed, it is possible that the acquisition would
      not
      be consummated should any party elect to exercise any right provided in the
      agreement to terminate it on specified grounds.




It
      is
      anticipated that the investigation of specific business opportunities and the
      negotiation, drafting and execution of relevant agreements, disclosure documents
      and other instruments will require substantial costs for accountants, attorneys
      and others. If a decision is made not to participate in a specific business
      opportunity, the costs theretofore incurred in the related investigation might
      not be recoverable. Moreover, because many providers of goods and services
      require compensation at the time or soon after the goods and services are
      provided, the inability of the Company to pay until an indeterminate future
      time
      may make it impossible to procure such goods and services.




11


In
      all
      probability, upon completion of an acquisition or merger, there will be a change
      in control through issuance of substantially more shares of common stock.
      Further, in conjunction with an acquisition or merger, it is likely that the
      principal shareholders may offer to sell a controlling interest at a price
      not
      relative to or reflective of a price which could be achieved by individual
      shareholders at the time.





**Investment
      Company Act and Other Regulation**





The
      Company may participate in a business opportunity by purchasing, trading or
      selling the securities of such business. The Company does not, however, intend
      to engage primarily in such activities. Specifically, the Company intends to
      conduct its activities so as to avoid being classified as an
      “investment company” under the Investment Company Act of 1940 (the “Investment
      Act”), and therefore to avoid application of the costly and restrictive
      registration and other provisions of the Investment Act, and the regulations
      promulgated thereunder.




Section
      3(a) of the Investment Act contains the definition of an “investment company,”
and it excludes any entity that does not engage primarily in the business of
      investing, reinvesting or trading in securities, or that does not engage in
      the
      business of investing, owning, holding or trading “investment securities”
(defined as “all securities other than government securities or securities of
      majority-owned subsidiaries”) the value of which exceeds 40% of the value of its
      total assets (excluding government securities, cash or cash items). The Company
      intends to implement its business plan in a manner which will result in the
      availability of this exception from the definition of “investment company.”
Consequently, the Company’s participation in a business o r
      opportunity through the purchase and sale of investment securities will be
      limited.




The
      Company’s plan of business may involve changes in its capital structure,
      management, control and business, especially if it consummates a reorganization
      as discuss ed
      above.
      Each of these areas is regulated by the Investment Act, in order to protect
      purchasers of investment company securities. Since the Company will not register
      as an investment company, stockholders will not be afforded these protections.




12


Any
      sec urities
      which the Company might acquire in exchange for its Common Stock are expected
      to
      be “restricted securities” within the meaning of the Securities Act of 1933, as
      amended (the “Act”). If the Company elects to resell such securities, such sale
      cannot proceed
      unless a registration statement has been declared effective by the U. S.
      Securities and Exchange Commission or an exemption from registration is
      available. Section 4(1) of the Act, which exempts sales of securities not
      involving a distribution, would in all likelihood be available to permit a
      private sale. Although the plan of operation does not contemplate resale of
      securities acquired, if such a sale were to be necessary, the Company would
      be
      required to comply with the provisions of the Act to effect such resale.





An
      acquisition made by the Company may be in an industry which is regulated or
      licensed by federal, state or local authorities. Compliance with such
      regulations can be expected to be a time-consuming and expensive process.





**Competition**





The
      Company expects to encounter substantial competition in its efforts to locate
      attractive opportunities, primarily from business development companies, venture
      capital partnerships and corporations, venture capital affiliates of large
      industrial and financial companies, small investment companies, and wealthy
      individuals. Many of these entities will have significantly greater experience,
      resources and managerial capabilities than the Company and will therefore be
      in
      a better position than the Company to obtain access to attractive business
      opportunities.





**No
      Rights of Dissenting Shareholders**





The
      Company does not intend to provide Company shareholders with complete disclosure
      documentation including audited financial statements, concerning a possible
      target company prior to acquisition, because Delaware law vests authority in
      the
      Board of Directors to decide and approve matters involving acquisitions within
      certain restrictions. Any transaction would be structured as an acquisition,
      not
      a merger, with the Registrant being the parent company and the acquiree being
      merged into a wholly owned subsidiary.





**Risk
      Factors**





***There
      are several material risks associated with the Company. You should carefully
      consider the risks and uncertainties described below, which constitute all
      of
      the material risks relating to the Company. If any of the following risks are
      realized, our business, operating results and financial condition could be
      harmed. This means investors could lose all or a part of their
      investment.***




13





(a)
      CONFLICTS OF INTEREST. Certain conflicts of interest may exist between the
      Company and its officers, directors and principal shareholders. They have other
      business interests to which they devote their attention, and they will devote
      little time to t he
      business of the Company. As a result, conflicts of interest may arise that
      can
      be resolved only through exercise of such judgment as is consistent with
      fiduciary duties to the Company. See “Management” and “Conflicts of Interest.”




(b)
      NEED
      FOR ADDITI ONAL
      FINANCING. The Company has very limited funds, and such funds may not be
      adequate to take advantage of any available business opportunities. Even if
      the
      Company’s funds prove to be sufficient to acquire an interest in, or complete a
      transaction with, a
      business opportunity, the Company may not have enough capital to exploit the
      opportunity. The ultimate success of the Company may depend upon its ability
      to
      raise additional capital. The Company has not investigated the availability,
      source, or terms that might govern the acquisition of additional capital and
      will not do so until it determines a need for additional financing. If
      additional capital is needed, there is no assurance that funds will be available
      from any source or, if available, that they can be
      obtained on terms acceptable to the Company. If not available, the Company’s
      operations will be limited to those that can be financed with its modest
      capital.




(c)
      REGULATION OF PENNY STOCKS. The Company’s securities may be subject to a
      Securities and Exchange Commission rule that imposes special sales practice
      requirements upon broker-dealers who sell such securities to persons other
      than
      established customers or accredited investors. For purposes of the rule, the
      phrase “accredited investors” means, in general terms, institutions with assets
      in excess of $5,000,000, or individuals having a net worth in excess of
      $1,000,000 or having an annual income that exceeds $200,000 (or that, when
      combined with a spouse’s income, exceeds $300,000). For transactions covered by
      the rule, the broker-dealer must make a special suitability determination for
      the purchaser and receive the purchaser’s written agreement to the transaction
      prior to the sale. Consequently, the rule may affect the ability of
      broker-dealers to sell the Company’s securities and also may affect the ability
      of purchasers in this offering to sell their securities in any market that
      might
      develop therefore.





In
      addition, the Securities and Exchange Commission has adopted a number of rules
      to regulate “penny stocks.” Such rules include Rules 3a51-1, 15g-1, 15g-2,
      15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange
      Act
      of 1934, as amended. Because the securities of the Company may constitute “penny
      stocks” within the meaning of the rules, the rules would apply to the Company
      and to its securities. The rules may further affect the ability of owners of
      Shares to sell the securities of the Company in any market that might develop
      for them.





14


Shareholders
      should be aware that, according to Securities and Exchange Commission, the
      market for penny stocks has suffered in recent years from patterns of fraud
      and
      abuse. Such patterns include (i) control of the market for the security by
      one
      or a few broker-dealers that are often related to the
      promoter or issuer; (ii) manipulation of prices through prearranged matching
      of
      purchases and sales and false and misleading press releases; (iii) “boiler room”
practices involving high-pressure sales tactics and unrealistic price
      projections by inexp erienced
      sales persons; (iv) excessive and undisclosed bid-ask differentials and markups
      by selling broker-dealers; and (v) the wholesale dumping of the same securities
      by promoters and broker-dealers after prices have been manipulated to a desired
      level, along with the resulting inevitable collapse of those prices and with
      consequent investor losses.




(d)
      LACK
      OF OPERATING HISTORY. The majority interest in the Company was purchased in
      August 2006 for the purpose of seeking a business opportunity. Due to the
      special risks inherent in the investigation, acquisition, or involvement in
      a
      new business opportunity, the Company must be regarded as a new or start-up
      venture with all of the unforeseen costs, expenses, problems, and difficulties
      to which such ventures are subject.




(e)
      NO
      ASSURANCE OF SUCCESS OR PROFITABILITY. There is no assurance that the Company
      will acquire a favorable business opportunity. Even if the Company should become
      involved in a business opportunity, there is no assurance that it
      will generate
      revenues or profits, or that the market price of the Company’s Common Stock will
      be increased thereby.




(f)
      POSSIBLE BUSINESS - NOT IDENTIFIED AND HIGHLY RISKY. The Company has not
      identified and has no commitments to enter into or acquire a specific business
      opportunity and therefore can disclose the risks and hazards of a business
      or
      opportunity that it may enter into in only a general manner, and cannot disclose
      the risks and hazards of any specific business or opportunity that it may enter
      i nto.
      An
      investor can expect a potential business opportunity to be quite risky. The
      Company’s acquisition of or participation in a business opportunity will likely
      be highly illiquid and could result in a total loss of investment to the Company
      and its stockholders if the business or opportunity proves to be unsuccessful.
      See Item 1 “Description of Business.”




(g)
      TYPE
      OF BUSINESS ACQUIRED. The type of business to be acquired may be one that
      desires to avoid effecting its own public offering and the accom panying
      expense, delays, uncertainties, and federal and state requirements which purport
      to protect investors. Because of the Company’s limited capital, it is more
      likely than not that any acquisition by the Company will involve other parties
      whose primary interest
      is the acquisition of control of a publicly traded company. Moreover, any
      business opportunity acquired may be currently unprofitable or present other
      negative factors.




15


(h)
      IMPRACTICABILITY OF EXHAUSTIVE INVESTIGATION. The Company’s limited
      fu nds
      and
      the lack of full-time management will likely make it impracticable to conduct
      a
      complete and exhaustive investigation and analysis of a business opportunity
      before the Company commits its capital or other resources thereto. Decisions
      will therefore likely be made without detailed feasibility studies, independent
      analysis, market surveys and the like which, if the Company had more funds
      available to it, would be desirable. The Company will be particularly dependent
      in making decisions upon informatio n
      provided by the promoter, owner, sponsor, or others associated with the business
      opportunity seeking the Company’s participation. A significant portion of the
      Company’s available funds may be expended for investigative expenses and other
      expenses related to
      preliminary aspects of completing an acquisition transaction, whether or not
      any
      business opportunity investigated is eventually acquired.




(i)
      LACK
      OF DIVERSIFICATION. Because of the limited financial resources that the Company
      has, it is unlikely t hat
      the
      Company will be able to diversify its acquisitions or operations. The Company’s
      probable inability to diversify its activities into more than one area will
      subject the Company to economic fluctuations within a particular business or
      industry and therefore increase the risks associated with the Company’s
      operations.




(j)
      RELIANCE UPON FINANCIAL STATEMENTS. The Company generally will require audited
      financial statements from companies that it proposes to acquire. In cases where
      no audited financials are available, the Company will have to rely upon interim
      period unaudited information received from target companies’ management that has
      not been verified by outside auditors. The lack of the type of independent
      verification which audited financial statements would provide, increases the
      risk that the Company, in evaluating an acquisition with such a target company,
      will not have the benefit of full and accurate information about the financial
      condition and recent interim operating history of the target company. This
      risk
      increases the prospect that the acquisition of such a company might prove to
      be
      an unfavorable one for the Company or the holders of the Company’s securities.




Moreover,
      the Company will be subject to the reporting provisions of the Se curities
      Exchange Act of 1934, as amended (the “Exchange Act”), and thus will be required
      to furnish certain information about significant acquisitions, including audited
      financial statements for any business that it acquires. Consequently,
      acquisition pro spects
      that do not have, or are unable to provide reasonable assurances that they
      will
      be able to obtain, the required audited statements would not be considered
      by
      the Company to be appropriate for acquisition so long as the reporting
      requirements of the Exchange Act are applicable. Should the Company, during
      the
      time it remains subject to the reporting provisions of the Exchange Act,
      complete an acquisition of an entity for which audited financial statements
      prove to be unobtainable, the Company would be exposed
      to enforcement actions by the Securities and Exchange Commission (the
“Commission”) and to corresponding administrative sanctions, including permanent
      injunctions against the Company and its management. The legal and other costs
      of
      defending a Comm ission
      enforcement action would have material, adverse consequences for the Company
      and
      its business. The imposition of administrative sanctions would subject the
      Company to further adverse consequences. In addition, the lack of audited
      financial statements would prevent the securities of the Company from becoming
      eligible for listing on NASDAQ, or on any existing stock exchange.




16


Moreover,
      the lack of such financial statements is likely to discourage broker-dealers
      from becoming or continuing to serve as market makers in the securities of
      the
      Company. Without audited financial statements, the Company would almost
      certainly be unable to offer securities under a registration statement pursuant
      to the Securities Act of 1933, and the ability of the Company to raise capital
      would be significantly limited until such financial statements were to become
      available.




(k)
      OTHER
      REGULATION. An acquisition made by the Company may be of a business that is
      subject to regulation or licensing by federal, state, or local authorities.
      Compliance with such regulations and licensing can be expected to be a
      time-consuming, expensive process and may limit other investment opportunities
      of the Company.




(l)
      LIMITED PARTICIPATION OF MANAGEMENT. The Company currently has only one
      individual who is serving as its sole officer and
      director on a very limited-time basis. The Company is therefore heavily
      dependent upon the skills, talents, and abilities of the principal shareholders
      to implement its business plan. See “Management.”




(m)
      LACK
      OF CONTINUITY IN MANAGEMENT. The Company does not have any employment agreements
      with its officers and directors, and as a result, there is no assurance they
      will continue to be associated with the Company in the future. In connection
      with acquisition of a business opportunity, it is likely the current officers
      and directors of the Company may resign subject to compliance with Section
      14f
      of the Securities Exchange Act of 1934. A decision to resign will be based
      upon
      the identity of the business opportunity and the nature of the transaction,
      and
      is likely to occur without the vote or consent of the stockholders of the
      Company.




(n)
      NO
      INDEPENDENT AUDIT COMMITTEE OF BOARD OF DIRECTORS. The Company does not have
      an
      independent Audit Committee of it s
      Board
      of Directors. The entire Board of Directors functions as the Company’s Audit
      Committee. The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) and rules and
      regulations adopted by the U.S. Securities and Exchange Commission Rules to
      implement the Sa rbanes-Oxley
      Act impose certain standards on listed companies relative to the maintenance
      and
      operations of Board of Directors Audit Committees, including but not limited
      to
      the requirement that Audit Committees be appointed, that membership of such
      committees comprise only independent directors, that a financial professional
      be
      among the membership of such committee and that such committee be afforded
      an
      adequate operating budget and be able to employ independent professional
      advisors. The Sarbanes-Oxley A ct
      also
      requires that the Audit Committee oversee the work of a company’s outside
      auditors and that the outside auditors be responsible to the Audit Committee.
      At
      this time, the Company is not in compliance with the requirements of the
      Sarbanes-Oxley Act a s
      they
      relate to independent Board of Directors Audit Committees. The Company believes
      that under rules and regulations adopted by the U.S. Securities and Exchange
      Commission to implement these provisions of the Sarbanes-Oxley Act it is not
      required to com ply
      with
      its requirements relating to the appointment of an Audit Committee of its Board
      of Directors and conforming with the enumerated standards and guidelines because
      the Company is not a “Listed Company” as defined therein. Notwithstanding, the
      Company may ultimately be determined not to be incompliance therewith and may
      therefore face penalties and restrictions on its operations until it comes
      into
      full compliance. Additionally, the Company’s failure to comply with the
      provisions of the Sarbanes-Oxley Act could preclude it from being listed on
      NASDAQ or any other stock exchanges until it can show that it is in compliance.
      The Company’s failure to be in compliance with the Sarbanes-Oxley Act could also
      present an impediment to a potential business combin ation
      where the target company intends that the Company apply for listing on NASDAQ
      or
      any other applicable stock exchanges.




17


(o)
      INDEMNIFICATION OF OFFICERS AND DIRECTORS. Delaware Statutes provide for the
      indemnification of its directors, officers, emp loyees,
      and agents, under certain circumstances, against attorney’s fees and other
      expenses incurred by them in any litigation to which they become a party arising
      from their association with or activities on behalf of the Company. The Company
      will also bear the expenses of such litigation for any of its directors,
      officers, employees, or agents, upon such person’s promise to repay the Company
      therefor if it is ultimately determined that any such person shall not have
      been
      entitled to indemnification. This indemnification
      policy could result in substantial expenditures by the Company which it will
      be
      unable to recoup.




(p )
      DEPENDENCE UPON OUTSIDE ADVISORS. To supplement the Company’s officers,
      directors and principal shareholders, the Company may be requir ed
      to
      employ accountants, technical experts, appraisers, attorneys, or other
      consultants or advisors. The selection of any such advisors will be made by
      the
      Company without any input from stockholders. Furthermore, it is anticipated
      that
      such persons may b e
      engaged
      on an “as needed” basis without a continuing fiduciary or other obligation to
      the Company. In the event the Company considers it necessary to hire outside
      advisors, such persons may be affiliates of the Company, if they are able to
      provide the re quired
      services.




(q)
      LEVERAGED TRANSACTIONS. There is a possibility that any acquisition of a
      business opportunity by the Company may be leveraged, i.e., the Company may
      finance the acquisition of the business opportunity by borrowing against the
      assets of the
      business opportunity to be acquired, or against the projected future revenues
      or
      profits of the business opportunity. This could increase the Company’s exposure
      to larger losses. A business opportunity acquired through a leveraged
      transaction is pr ofitable
      only if it generates enough revenues to cover the related debt and expenses.
      Failure to make payments on the debt incurred to purchase the business
      opportunity could result in the loss of a portion or all of the assets acquired.
      There is no assurance that any business opportunity acquired through a leveraged
      transaction will generate sufficient revenues to cover the related debt and
      expenses.




18


(r)
      COMPETITION. The search for potentially profitable business opportunities is
      intensely competitive. The Company expects to be at a disadvantage when
      competing with many firms that have substantially greater financial and
      management resources and capabilities than the Company. These competitive
      conditions will exist in any industry in which the Company may become
      interested.




(s)
      NO
      FORESEEABLE DIVIDENDS. The Company has not paid dividends on its Common Stock
      and does not anticipate paying such dividends in the foreseeable future.




(t)
      LOSS
      OF CONTROL BY PRESENT MANAGEMENT AND STOCKHOLDERS. The Company may
      consider an acquisition in which the Company would issue as consideration for
      the business opportunity to be acquired an amount of the Company’s authorized
      but unissued Common Stock that would, upon issuance, represent the great
      majority of the voting power and equity of the Company. The result of such
      an
      acquisition would be that the acquired company’s stockholders and management
      would control the Company, and the Company’s board of directors and management
      could be replaced by persons unknown at this time.
      Such a merger would result in a greatly reduced percentage of ownership of
      the
      Company by its current shareholders.




(u)
      RULE
      144 SALES. The
      majority of the outstanding shares of Common Stock held by present stockholders
      are “restricted securities” within the meaning of Rule 144 under the Securities
      Act of 1933, as amended. As restricted shares, these shares may be resold only
      pursuant to an effective registration statement or under the requirements of
      Rule 144 or other applicable exemptions from registration under the Act and
      as
      required under applicable state securities laws. Rule 144 provides in essence
      that a person who has held restricted securities for one year may, under certain
      conditions, sell every three months, in brokerage transactions, a number of
      shares that does not exceed the greater of 1.0% of a company’s outstanding
      common stock or the average weekly trading volume during the four calendar
      weeks
      prior to the sale. There is no limit on the amount of restricted securities
      that
      may be sold by a nonaffiliate after the restricted securities have been held
      by
      the owner for a period of two years. Nonaffiliate shareholders who have held
      their shares under Rule 144 for two years are eligible to have freely tradable
      shares. A sale under Rule 144 or under any other exemption from the Act, if
      available, or pursuant to subsequent registration of shares of Common Stock
      of
      present stockholders, may have a depressive effect upon the price of the Common
      Stock in any market that may develop. All shares become available for resale
      (subject to volume limitations for affiliates) under Rule 144, one year after
      date of purchase subject to applicable volume restrictions under the Rule.




***Going
      Concern Qualification***




19


Our
      auditors have prepared their report on the auditied financial statements
      contained in this Annual Report on a going concern basis which contemplates
      the
      realization of assets and liquidation of liabilities in the ordinary course
      of
      business; however, currently such realization of assets and liquidation of
      liabilities are subject to significant uncertainties.




As
      shown
      in the accompanying audited financial statements, as of December 31, 2006 our
      current liabilities exceed our current assets by $134,778 and our total
      liabilities exceed our total assets by $134,778. These factors, among others,
      indicate that we may be unable to continue existence. The financial statements
      do not include any adjustments relating to the recoverability and classification
      of recorded asset amounts or the amounts and classification of liabilities
      that
      might be necessary should the we be unable to continue in
      existence.




The
      appropriateness by the Company of continuing to use the aforementioned basis
      of
      accounting is dependent upon, among other things, the ability to maintain and
      increase existing credit facilities or raise additional capital.




***Results
      of Operations***




***Liquidity
      and Capital Resources***




As
      of
      December 31, 2006, we had $0.00 in cash and cash equivalents and a working
      capital deficit of **** $134,778.
      We used $55,597 in operating activities for the fiscal year period ended
      December 31, 2006. For the fiscal year ended December 31, 2005, our operations
      used $17,790 in cash. We used more cash in operations in 2006 as compared to
      2005, primarily due to an increase due to an increase in professional fees.
      We
      received $0.00 in revenue during the fiscal year ended December 31,
      2006.




As
      a
      result, the Company will require a cash infusion of at least $50,000 for the
      next twelve months. Historically,
      we have depended on loans from our principal shareholders and their affiliated
      companies (to provide us with working capital as required. There is no guarantee
      that such funding will be available when required and there can be no assurance
      that our stockholders, or any of them, will continue making loans or advances
      to
      us in the future.







As
      of
      December 31, 2006, we owed $124,750 in the aggregate to our stockholders,
      comprising $124,195 in the form of Convertible Promissory Notes and a
      shareholder payable of $555.00.




20


Twelve
      Months Ended December 31, 2006 Compared to December 31, 2005




The
      following table summarizes the results of our operations during the fiscal
      years
      ended December 31, 2006 and 2005, respectively, and provides information
      regarding the dollar and percentage increase or (decrease) from the current
      12-month period to the prior 12-month period:




**Line
                Item**
            
            **12/31/06**
              **(audited)**
            
            **12/31/05**
              **(audited)**
            
            **Increase
                (Decrease)**
            
            **Percentage
                Increase (Decrease)**Revenues
            
            $
            0
            
            $
            0
            
            $
            0
            
            
            0.0
            %Net
                loss
            
            
            (61,354
            )
            
            (18,861
            )
            
            (42,493
            )
            
            (225.8
            %)Operating
                Expenses
            
            
            60,404
            
            
            18,861
            
            
            41,543
            
            
            220.3
            %Loss
                per share of common stock
            
            
            (0.01
            )
            
            (0.00
            )
            
            (0.01
            )
            
            (100.0
            %)





During
      the fiscal year ended December 31, 2006, S, G & A expenses increased
      principally due to an increase in professional fees.




We
      incurred a net loss of $61,354 for the fiscal year ended December 31, 2006
      as
      compared with a net loss of $18,861 for the fiscal year ended December 31,
      2005.
      This increase of $42,493 was mainly due to a change in our business plan and
      increased expenditures for professional fees.




***Off
      Balance Sheet Arrangements***




We
      do not
      have any off balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity or capital
      expenditures or capital resources that is material to an investor in our
      securities.




***Seasonality***




Our
      operating results are not affected by seasonality.




***Inflation***




Our
      business and operating results are not affected in any material way by
      inflation.




***Critical
      Accounting Policies***




The
      Securities and Exchange Commission issued Financial Reporting Release No. 60,
      "Cautionary Advice Regarding Disclosure About Critical Accounting Policies"
      suggesting that companies provide additional disclosure and commentary on their
      most critical accounting policies. In Financial Reporting Release No. 60, the
      Securities and Exchange Commission has defined the most critical accounting
      policies as the ones that are most important to the portrayal of a company's
      financial condition and operating results, and require management to make its
      most difficult and subjective judgments, often as a result of the need to make
      estimates of matters that are inherently uncertain. The nature of our business
      generally does not call for the preparation or use of estimates. Due to the
      fact
      that the Company does not have any operating business, we do not believe that
      we
      do not have any such critical accounting policies.




21


**ITEM
                7.**
            **FINANCIAL
                STATEMENTS AND SUPPLEMENTARY
                DATA.**




Set
      forth
      below are the audited financial statements for the Company for the fiscal years
      ended December 31, 2006 and 2005, and the reports thereon of Paritz & Co, PA
      and Amisano Hanson Chartered Accountants.





22


**Paritz
                & Company, P.A.**
            15
                Warren Street, Suite 25
              Hackensack,
                New Jersey 07601
              (201)342-7753
              Fax:
                (201) 342-7598
              E-Mail:
                paritz @paritz.comCertified
                Public Accountants

















**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








Board
      of
      Directors


SMI
      Products, Inc.


(A
      Development Stage Company)


Santa
      Monica, California







We
      have
      audited the accompanying balance sheet **** of
      SMI
      Products, Inc. (A Development Stage **** Company) **** as
      of
      December 31, 2006 and the related statements of operations, changes in
      stockholders‘ deficiency and cash flows for the year ended December 31, 2006 and
      the period from inception (June 17, 1996) to December 31, 2006. These financial
      statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit. The financial statements of SMI Products, Inc. as of December 31,
      2005 were audited by other auditors whose report dated March 22, 2006 expressed
      an unqualified opinion on those statements.





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





In
      our
      opinion, the 2006 financial statement referred to above presents fairly, in
      all
      material respects, the financial position of SMI Products, Inc. as of December
      31, 2006 and the results of its operations and its cash flows for the period
      from inception (June 17, 1996) to December 31, 2006 in conformity with
      accounting principles generally accepted in the United States of
      America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. The Company has suffered recurring net losses
      and as of December 31, 2006 its current liabilities and total liabilities
      exceeded its current assets and total assets by $134,778. These factors raise
      substantial doubt about the Company’s ability to continue as a going concern.
      The accompanying financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.











Hackensack,
      New Jersey


January
      29, 2007







23





**A
                  P****ARTNERSHIP****O****F****I****NCORPORATED**
                **P****ROFESSIONALS**
              **A****misano********H****anson****C****hartered****A****ccountants**











REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






To
      the
      Stockholders,


SMI
      Products, Inc.





We
      have
      audited the accompanying statements of operations, stockholders' deficiency
      and
      cash flows of SMI Products, Inc. for the year ended December 31, 2005 and for
      the period June 17, 1996 (Date of Inception) to December 31, 2005. These
      financial statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





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





In
      our
      opinion, these financial statements referred to above present fairly, in all
      material respects, the results of operations and cash flows of SMI Products,
      Inc. for the year ended December 31, 2005 and for the period from June 17,
      1996
      (Date of Inception) to December 31, 2005, in conformity with accounting
      principles generally accepted in the United States of America.





The
      accompanying financial statements referred to above have been prepared assuming
      that the Company will continue as a going concern. As discussed in Note 1 to
      the
      financial statements, the Company is in the development stage, and has no
      established source of revenue and is dependent on its ability to raise capital
      from shareholders or other sources to sustain operations. These factors, along
      with other matters as set forth in Note 1, raise substantial doubt that the
      Company will be able to continue as a going concern. The financial statements
      do
      not include any adjustments that might result from the outcome of this
      uncertainty.











Vancouver,
                Canada
            ***/s/
                Amisano Hanson***March
                22, 2006
            Chartered
                Accountants


750 WEST PENDER STREET, SUITE 604
              TELEPHONE:604-689-0188VANCOUVER
                  CANADA
              FACSIMILE:604-689-9773V6C
                  2T7
              E-MAIL:amishan@telus.net





24





**SMI
      PRODUCTS, INC.**


**(A
      Development Stage Company)**





BALANCE
      SHEET





DECEMBER
      31, 2006







**ASSETS****TOTAL
                ASSETS**
            
            **$**
            **-****LIABILITIES
                AND STOCKHOLDERS’ DEFICIENCY****CURRENT
                LIABILITIES:**Accounts
                payable
            
            $
            9,078Interest
                payable
            
            
            950Loans
                payable
            
            
            124,750**TOTAL
                CURRENT LIABILITIES**
            
            
            **134,778****STOCKHOLDERS’
                DEFICIENCY:**Common
                stock
            
            
            7,551Additional
                paid-in capital
            
            
            47,249Accumulated
                deficit
            
            
            (189,578
            )**TOTAL
                STOCKHOLDERS’ DEFICIENCY**
            
            
            **(134,778**
            **)****TOTAL
                LIABILITIES AND STOCKHOLDERS’ DEFICIENCY**
            
            **$**
            **-**







See
        notes
        to financial statements


25








**SMI
      PRODUCTS, INC.**


**(A
      Development Stage Company)**





**STATEMENTS
      OF OPERATIONS**








---YEAR
                ENDED DECEMBER 31,---
            
            FROM
                INCEPTION
              (JUNE
                17, 1996)
              TO
              DECEMBER
                31,2006
            
            2005
            
            2006**REVENUES**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **13,668****COSTS
                AND EXPENSES:**General
                and administrative
            
            
            10,267
            
            
            4,394
            
            
            65,148Consulting
            
            
            453
            
            
            -
            
            
            23,801Professional
                fees
            
            
            48,259
            
            
            14,467
            
            
            115,014Taxes
            
            
            1,425
            
            
            -
            
            
            1,425**TOTAL
                COSTS AND EXPENSES**
            
            
            **60,404**
            
            
            **18,861**
            
            
            **205,388****OTHER
                EXPENSES:**Interest
                expense
            
            
            950
            
            
            -
            
            
            950Write-off
                of accounts payable
            
            
            -
            
            
            -
            
            
            (2,192
            )Write-off
                of loans payable
            
            
            -
            
            
            -
            
            
            (900
            )**TOTAL
                OTHER EXPENSES**
            
            
            **950**
            
            
            **-**
            
            
            **(2,142**
            **)****TOTAL
                COSTS AND EXPENSES**
            
            
            **61,354**
            
            
            **18.861**
            
            
            **203,246****NET
                LOSS**
            
            **$**
            **(61,354**
            **)**
            **$**
            **(18,861**
            **)**
            **$**
            **(189,578**
            **)****BASIC
                AND DILUTED NET LOSS PER****COMMON
                SHARE**
            
            **$**
            **(0.01**
            **)**
            **$**
            **-**
            
            **$**
            **-****WEIGHTED
                AVERAGE NUMBER OF****SHARES
                OUTSTANDING**
            
            
            **7,551**
            
            
            **7,551**
            
            
            **-**







See
      notes
      to financial statements





26


**SMI
      PRODUCTS, INC.**


**(A
      Development Stage Company)**





**STATEMENTS
      OF CASH FLOWS**











YEAR
                ENDED DECEMBER 31
            
            FROM
                INCEPTION(JUNE
                17, 1996)TO
              DECEMBER
                31,2006
            
            
            2005
            
            
            2006**OPERATING
                ACTIVITIES:**Net
                loss
            
            $
            (61,354
            )
            $
            (18,861
            )
            $
            (189,578
            )*Adjustments
                to reconcile net loss to**net
                cash used in operating activities:*Non-cash
                expenses
            
            
            4,200
            
            
            -
            
            
            4,200*Changes
                in operating assets and liabilities:*Increase
                in accounts payable
            
            
            607
            
            
            1,071
            
            
            9,078Increase
                in interest payable
            
            
            950
            
            
            
            
            
            950**NET
                CASH USED IN OPERATING ACTIVITIES**
            
            
            **(55,597**
            **)**
            
            **(17,790**
            **)**
            
            **(175,350**
            **)****FINANCING
                ACTIVITIES:**Issuance
                of common stock
            
            
            -
            
            
            -
            
            
            50,600Increase
                in loans payable
            
            
            55,316
            
            
            17,436
            
            
            124,750**NET
                CASH PROVIDED BY FINANCING ACTIVITIES**
            
            
            **55,316**
            
            
            **17,436**
            
            
            **175,350****INCREASE
                (DECREASE) IN CASH**
            
            
            **(281**
            **)**
            
            **(354**
            **)**
            
            **-****CASH
                - BEGINNING OF YEAR**
            
            
            **281**
            
            
            **635**
            
            
            **-****CASH
                - END OF YEAR**
            
            **$**
            **-**
            
            **$**
            **281**
            
            **$**
            **-**












See
      notes
      to financial statements





27





**SMI
      PRODUCTS, INC.**


**(A
      Development Stage Company)**





STATEMENT
      OF STOCKHOLDERS’ DEFICIENCY





FROM
      INCEPTION (JUNE 17, 1996) TO DECEMBER 31, 2006







NUMBER
              OF
                SHARES
            
            
            AMOUNT
            
            
            ADDITIONAL
              PAID-IN
              CAPITAL
            
            
            DEFICIT
              ACCUMULATED
              DURING
              DEVELOPMENT
              STAGE
            
            
            TOTAL**Issued
                for services - at**
              **$0.00002**
            
            
            **5,000,000**
            
            **$**
            **1**
            
            **$**
            **99**
            
            **$**
            **-**
            
            **$**
            **100**Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (117
            )
            
            (117
            )**BALANCE**
              **DECEMBER
                31, 1996**
            
            
            **5,000,000**
            
            
            **1**
            
            
            **99**
            
            
            **(117**
            **)**
            
            **(17**
            **)**Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (200
            )
            
            (200
            )**BALANCE**
              **DECEMBER
                31, 1997**
            
            
            **5,000,000**
            
            
            **1**
            
            
            **99**
            
            
            **(317**
            **)**
            
            **(217**
            **)**Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (200
            )
            
            (200
            )**BALANCE**
              **DECEMBER
                31, 1998**
            
            
            **5,000,000**
            
            
            **1**
            
            
            **99**
            
            
            **(517**
            **)**
            
            **(417**
            **)**Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (200
            )
            
            (200
            )**BALANCE**
              **DECEMBER
                31, 1999**
            
            
            **5,000,000**
            
            
            **1**
            
            
            **99**
            
            
            **(717**
            **)**
            
            **(617**
            **)**Stock
                Split
            
            
            -
            
            
            4,999
            
            
            (4,999
            )
            
            -
            
            
            -Issued
                for cash at $0.01
            
            
            2,500,000
            
            
            2,500
            
            
            22,500
            
            
            -
            
            
            25,000at
                $0.50
            
            
            51,000
            
            
            51
            
            
            25,449
            
            
            -
            
            
            25,500Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (36,522
            )
            
            (36,522
            )**BALANCE**
              **DECEMBER
                31, 2000**
            
            
            **7,551,000**
            
            
            **7,551**
            
            
            **43,049**
            
            
            **(37,239**
            **)**
            
            **13,361**Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (22,303
            )
            
            (22,303
            )**BALANCE**
              **DECEMBER
                31, 2001**
            
            
            **7,551,000**
            
            
            **7,551**
            
            
            **43,049**
            
            
            **(59,542**
            **)**
            
            **(8,942**
            **)**Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (15,587
            )
            
            (15,587
            )**BALANCE**
              **DECEMBER
                31, 2002**
            
            
            **7,551,000**
            
            
            **7,551**
            
            
            **43,049**
            
            
            **(75,129**
            **)**
            
            **(24,529**
            **)**Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (16,157
            )
            
            (16,157
            )**BALANCE**
              **DECEMBER
                31, 2003**
            
            
            **7,551,000**
            
            
            **7,551**
            
            
            **43,049**
            
            
            **(91,286**
            **)**
            
            **(40,686**
            **)**Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (18,077
            )
            
            (18,077
            )**BALANCE**
              **DECEMBER
                31, 2004**
            
            
            **7,551,000**
            
            
            **7,551**
            
            
            **43,049**
            
            
            **(109,363**
            **)**
            
            **(58,763**
            **)**Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (18,861
            )
            
            (18,861
            )**BALANCE**
              **DECEMBER
                31, 2005**
            
            
            **7,551,000**
            
            
            **7,551**
            
            
            **43,049**
            
            
            **(128,224**
            **)**
            
            **(77,624**
            **)**Fair
                value of administrative
              services
            
            
            -
            
            
            -
            
            
            4,200
            
            
            -
            
            
            4,200Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (61,354
            )
            
            (61,354
            )**BALANCE**
              **DECEMBER
                31, 2006**
            
            
            **7,551,000**
            
            **$**
            **7,551**
            
            **$**
            **47,249**
            
            **$**
            **(189,578**
            **)**
            **$**
            **(134,778**
            **)**




The
      number of shares issued and outstanding has been restated to give retroactive
      effect for a forward stock split on a five thousand for one basis approved
      by
      the stockholders on January 15, 2000. The par value and contributed surplus
      were
      adjusted during the year ended December 31, 2000 to adjust the par value amount
      in conformity with the number of shares then issued.




See
      notes
      to financial statements




28


**SMI
      PRODUCTS, INC.**


**(A
      Development Stage Company** )





NOTES
      TO
      FINANCIAL STATEMENTS





DECEMBER
      31, 2006










**1** **NATURE
      AND CONTINUANCE OF OPERATIONS**





SMI
      Products, Inc. (the “Company”) was incorporated in the State of Nevada on June
      17, 1996. From inception through August 11, 2006 the Company was a development
      stage company in the business of internet real estate mortgage services. From
      and after August 11, 2006, the Company ceased its prior business. The Company’s
      business plan now consists of exploring potential targets for a business
      combination with the Company through the purchase of assets, share purchase
      or
      exchange, merger or similar type of transaction





These
      financial statements have been prepared in accordance with generally accepted
      accounting principles applicable to a going concern, which assumes that the
      Company will be able to meet its obligations and continue its operations for
      its
      next fiscal year. Realization values may be substantially different from
      carrying values as shown, and these financial statements do not give effect
      to
      adjustments that would be necessary to the carrying values and classification
      of
      assets and liabilities should the Company be unable to continue as a going
      concern. At December 31, 2006, the Company has not yet achieved profitable
      operations, has accumulated losses of $189,579 since its inception, has a
      working capital deficiency of $134,779 and expects to incur further losses
      in
      the development of its business, all of which casts substantial doubt about
      the
      Company’s ability to continue as a going concern. The Company’s ability to
      continue as a going concern is dependent upon its ability to generate future
      profitable operations and/or to obtain the necessary financing to meet its
      obligations and repay its liabilities arising from normal business operations
      when they come due. Management has no formal plan in place to address this
      concern, but considers that the Company will be able to obtain additional funds
      by equity financing and/or related party advances. However, there is no
      assurance of additional funding being available.








**2** **SIGNIFICANT
      ACCOUNTING POLICIES**





***Uses
      of estimates in the preparation of financial
      statements***





The
                financial statements of the Company have been prepared in accordance
                with
                accounting principles generally accepted in the United States of
                America.
                Because a precise determination of many assets and liabilities is
                dependent upon future events, the preparation of these financial
                statements necessarily involved the use of estimates, which have
                been made
                using careful judgment. Actual results may differ from these
                estimates.





These
                financial statements, in management’s opinion, have been properly prepared
                within the framework of the significant accounting policies summarized
                below.





***Development
                stage company***





The
      Company is a development stage company as defined in Statement of Financial
      Accounting Standards (“FAS”) No, 7.











***Income
      taxes***





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





***Basic
      loss per share***





The
      Company reports basic loss per share in accordance with FAS No. 128,
“ *Earnings
      per Share* ”.
      Basic
      loss per share is computed using the weighted average number of shares
      outstanding during the year.





***Financial
      instruments***





The
      carrying values of cash and accounts payable approximates fair value because
      of
      the short maturity of those instruments. Loans payable also approximates fair
      value. Unless otherwise notes, it is management’s opinion that the Company is
      not exposed to significant interest, currency or credit risks arising from
      these
      financial instruments.





***New
      accounting standards***





Management
      does not believe that any recently issued, but not yet effective, accounting
      standards if currently adopted could have a material effect on the accompanying
      financial statements.








**3** **RELATED
      PARTY TRANSACTIONS**





The
      Company was charged the following amount by former directors and officers of
      the
      Company:




DECEMBER
                31
            
            FROM
                INCEPTION(JUNE
                17, 1996)TO
              DECEMBER
                31,2006
            
            
            2005
            
            
            2006Organizational
                costs
            
            $
            -
            
            $
            -
            
            $
            1,000Consulting
                fees
            
            
            -
            
            
            -
            
            
            3,740$
            -
            
            $
            -
            
            $
            4,740








These
      charges were measured by the exchange amount, which is the amount agreed upon
      by
      the transacting parties.








**4** **LOANS
      PAYABLE - RELATED PARTIES**








At
      December 31, 2006 the Company was indebted to Fountainhead Capital Partners
      Limited, a shareholder holding approximately 73.5% of the Company’s issued and
      outstanding common shares, in the amount of $124,750, comprising (i) six
      convertible promissory notes aggregating a principal balance of $92,558 due
      and
      payable on August 11, 2007; (ii) a convertible promissory note with a principal
      balance of $31,637 due on September 30, 2007, and (iii) a shareholder loan
      payable of $555. The principal balance of the convertible promissory notes
      and
      all accrued interest thereunder are convertible, in whole or in part, into
      shares of the Company’s common stock at the option of the payee or other holder
      thereof at any time prior to maturity, upon ten days advance written notice
      to
      the Company. The number of shares of the Company’s common stock issuable upon
      such conversion shall be determined by the Board of Directors of the Company
      based on what it determines the fair market value of the Company is at the
      time
      of such conversion. Upon conversion, the notes shall be cancelled and a
      replacement note in identical terms shall be promptly issued by the maker to
      the
      holder thereof to evidence the remaining outstanding principal amounts thereof
      as of the date of the conversion, if applicable. In the event of a stock split,
      combination, stock dividend, recapitalization of the Company or similar event,
      the conversion price and number of hares issuable upon conversion shall be
      equitable adjusted to reflect the occurrence of such event. The following is
      a
      summary of loans payable to related parties:




DECEMBER
                31,2006
            
            
            2005Unsecured,
                bearing interest at 2% per annum, due within one year
            
            $
            124,195
            
            $
            69,434











**5** **DEFERRED
      TAX ASSETS**





Deferred
      tax assets consist of the following:





DECEMBER
                31,2006
            
            2005Deferred
                tax assets:Net
                operating loss carryforwards
            
            $
            189,579
            
            $
            128,224Gross
                deferred tax assets
            
            $
            64,457
            
            $
            33,257Valuation
                allowance for deferred tax assets
            
            
            64,457
            
            
            33,257$
            -
            
            $
            -




The
      amount taken into income as deferred tax assets must reflect that portion of
      the
      income tax loss carryforwards which is more likely than not to be realized
      from
      future operations. The Company has chosen to provide an allowance of 100%
      against all available income tax loss carryforwards, regardless of their time
      of
      expiry.





**6** **INCOME
      TAXES**





No
      provision for income taxes has been provided in these financial statements
      due
      to the net loss. At December 31, 2006, the Company has net operating loss
      carryforwards, which expire commencing in 2017, totaling approximately $189,579.
      The potential tax benefit of these losses, if any, has not been recorded in
      the
      financial statements.








**7** **COMPARATIVE
      FIGURES**





Certain
      of the December 31, 2005 comparative figures have been reclassified in order
      to
      conform to the current year’s presentation.





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




On
      October 31, 2006, the Company’s Board of Directors decided to engage Paritz
& Co., Hackensack, NJ as independent principal accountant and auditor to
      report on the Company's


financial
      statements for the fiscal year ended December 31, 2006,including performing
      the
      required quarterly reviews. In conjunction with the new engagement, the Company
      has dismissed its


former
      accountant, Amisano Hanson Chartered Accountants, Vancouver, Canada as the
      Company's principal accountant effective October 31, 2006. Amisano Hanson has
      served the Company well since 1996. Under Item 304 of Regulation S-K, the reason
      for the auditor change is dismissal, not


resignation
      nor declining to stand for re-election. During the two most recent fiscal years
      and the interim period through the date of the dismissal, there were no
      disagreements with Amisano Hanson on any matter of accounting principles or
      practices, financial statement disclosure or auditing scope or procedure, which
      disagreements, if not resolved to Amisano Hanson's satisfaction, would have
      caused Amisano Hanson to make reference to the subject matter of the
      disagreements in


connection
      with its reports. During the two most recent fiscal years through the date
      of
      dismissal, the


reports
      of Amisano Hanson did not contain any adverse opinion or disclaimer of opinion,
      or was modified as to uncertainty, audit scope, or accounting principles other
      than the issuance of a “going concern” opinion with respect to its Reports
      issued with respect to the Company’s financial statements dated December 31,
      2005 and December 2004, respectively. On October 31, 2006, the Company approved
      the engagement of Paritz & Co.as the Company's new independent registered
      public accounting firm for the fiscal year ending December 31, 2006.





**ITEM
          8a.** **CONTROLS
          AND PROCEDURES.**




Within
      90
      days of the filing of this Form 10-KSB, an evaluation was carried out under
      the
      supervision and with the participation of our sole officer and director, of
      the
      effectiveness of our disclosure controls and procedures. Disclosure controls
      and
      procedures are procedures that are designed with the objective of ensuring
      that
      information required to be disclosed in our reports filed under the Securities
      Exchange Act of 1934, such as this Form 10-KSB, is recorded, processed,
      summarized and reported within the time period specified in the Securities
      and
      Exchange Commission's rules and forms. Based on that evaluation, our sole
      officer and director concluded that as of December 31, 2006, and as of the
      date
      that the evaluation of the effectiveness of our disclosure controls and
      procedures was completed, our disclosure controls and procedures were effective
      to satisfy the objectives for which they are intended.





There
      were no changes in our internal control over financial reporting identified
      in
      connection with the evaluation performed that occurred during the fiscal year
      covered by this report that has materially affected or is reasonably likely
      to
      materially affect, our internal control over financial reporting.













**PART
      III.**





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





Set
      forth
      below is the name of our sole director and executive officer, his age, all
      positions and offices that he held with us, the period during which he has
      served as such, and his business experience during at least the last five
      years.




**Name**
            **Age**
            **Positions
                Held**Geoffrey
                Alison
            34
            CEO,
              President,Treasurer
              and
                Secretary since
              2006


**Geoffrey
        Alison**
  Geoffrey
        Alison has served as a President, Treasurer, Secretary and a director of
        the Company since August 2006. Mr. Alison has been registered with the National
        Association of Securities Dealers since 1999 and has worked as a General
        Securities Principal for various securities firms including Stock USA, Inc
        (January 1999 - October 2001) and Assent, LLC (November 2001 - August 2004).
        From September 2004 through the present date, Mr. Alison has been a registered
        General Securities Principal with ECHOtrade, a Philadelphia Exchange member
        firm, as a securities trader for his own capital and benefit. From July 2003
        through January 2005, he served as Chief Financial Officer, Secretary and
        a
        director of Intrac, Inc. (OTCBB:ITRD) and From January 2005 through January
        2006, he served as President, Secretary and a director of Cape Coastal Trading
        Corporation (OTCBB:CCTR). In October, 2002, Mr. Alison co-created Greenvest
        Industries, Inc. which manufactures pet products under the brand name Happy
        Tails Pet Beds. Mr. Alison is currently President and CEO of Greenvest
        Industries, Inc.
  Mr.
      Alison devotes less than 5% of his business time to the affairs of the Company.
      The time Mr. Alison spends on the business affairs of the Company varies from
      week to week and is based upon the needs and requirements of the Company.


***Audit
      Committee and Audit Committee Financial Expert***




We
      do not
      currently have an audit committee financial expert, nor do we have an audit
      committee. Our entire board of directors, which currently consists of Mr.
      Alison, handles the functions that would otherwise be handled by an audit
      committee. We do not currently have the capital resources to pay director fees
      to a qualified independent expert who would be willing to serve on our board
      and
      who would be willing to act as an audit committee financial expert. As our
      business expands and as we appoint others to our board of directors we expect
      that we will seek a qualified independent expert to become a member of our
      board
      of directors. Before retaining any such expert our board would make a
      determination as to whether such person is independent.




***Section
      16(a) Beneficial Ownership Reporting Compliance.***





Section
      16(a) of the Securities Act of 1934 requires the Company's officers and
      directors, and greater than 10% stockholders, to file reports of ownership
      and
      changes in ownership of its securities with the Securities and Exchange
      Commission. Copies of the reports are required by SEC regulation to be furnished
      to the Company. Based on management's review of these reports during the fiscal
      year ended December 31, 2005, all reports required to be filed were filed on
      a
      timely basis.










***Code
      of Ethics***




On
      August
      30, 2006, our board of directors adopted a code of ethics that our officers,
      directors and any person who may perform similar functions is subject to.
      Currently Mr. Alison is our only officer and our sole director, therefore,
      he is
      the only person subject to the Code of Ethics. If we retain additional officers
      in the future to act as our principal financial officer, principal accounting
      officer, controller or persons serving similar functions, they would become
      subject to the Code of Ethics. The Code of Ethics does not indicate the
      consequences of a breach of the code. If there is a breach, the board of
      directors would review the facts and circumstances surrounding the breach and
      take action that it deems appropriate, which action may include dismissal of
      the
      employee who breached the code. Currently, since Mr. Alison serves as the sole
      director and sole officer, he is responsible for reviewing his own conduct
      under
      the Code of Ethics and determining what action to take in the event of his
      own
      breach of the Code of Ethics.




**ITEM
      10. EXECUTIVE COMPENSATION.**




Our
      sole
      officer and director, Geoffrey Alison, does not receive any compensation for
      the
      services he renders to the Company, has not received compensation in the past,
      and is not accruing any compensation pursuant to any agreement with the Company.
      We currently have no formal written salary arrangement with our sole officer.
      Mr. Alison may receive a salary or other compensation for services that he
      provides to the Company in the future. No retirement, pension, profit sharing,
      stock option or insurance programs or other similar programs have been adopted
      by the Company for the benefit of the Company’s employees.




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




The
      following table sets forth certain information regarding beneficial stock
      ownership as of December 31, 2006 of (i) all persons known to us to be
      beneficial owners of more than 5% of our outstanding common stock; (ii) each
      director of our company and our executive officers, and (iii) all of our
      officers and directors as a group.  Each of the persons in the table below
      has sole voting power and sole dispositive power as to all of the shares shown
      as beneficially owned by them, except as otherwise indicated.




**Name**
            
            **Number
                of Shares**
              **Beneficially**
              **Owned(1)**
            
            **Percent
                of**
              **Outstanding**
              **Shares(1)**Fountainhead
                Capital Partners Limitedc/oJordans
                (C.I.) Limited
              PO
                Box 456
              Portman
                House
              Hue
                Street
              St
                Helier
              Jersey
                JE4 5RP
            
            
            5,551,000
            
            
            73.50
            %Geoffrey
                Alison5000
                Noeline Ave.
              Encino,
                CA 91436
            
            
            0
            
            
            0.00
            %Officers
                and directors as a group (four persons)
            
            
            0
            
            
            0.00
            %




___________________


(1)
            For
                the purposes of this table, a person is deemed to have “beneficial
                ownership” of any shares of capital stock that such person has the right
                to acquire within 60 days of December 31, 2006.  All percentages for
                common stock are calculated based upon a total of 7,551,000 shares
                outstanding as of December 31, 2006, plus, in the case of the person
                for
                whom the calculation is made, that number of shares of common stock
                that
                such person has the right to acquire within 60 days of December 31,
                2006.









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




As
      of December
      31, 2006, we owed approximately $125,750 in the aggregate to our stockholders,
      comprising Convertible Notes in the face amount of $124,195 and a shareholder
      payable of $555.




**ITEM
      13. EXHIBITS**


ExhibitNumber
              Description23
              Consent
                  of Amisano Hanson Chartered Accountants31
              Certification
                  of Principal Executive Officer and PrincipalFinancial
                  Officer filed pursuant to Section 302 of theSarbanes-Oxley
                  Act of 2002.32
              Certification
                  of Principal Executive Officer and PrincipalFinancial
                  Officer furnished pursuant to 18 U.S.C. Section1350,
                  as adopted pursuant to Section 906 of theSarbanes-Oxley
                  Act of 2002.




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




The
      aggregate fees billed for professional services rendered by Paritz & Co. for
      the audit of the annual financial statements and review of the quarterly
      statements and review of the Company’s Quarterly and Annual Reports was $3,000
      for the fiscal year ended December 31, 2006 and Amisano Hanson Chartered
      Accountants, the Company’s former principal accountant’s fees for the fiscal
      year ended December 31, 2005 was $10,929. The Company had no other audit-related
      fees.







**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





DATED:
      February 5, 2007




SMI
      PRODUCTS,
      INC.







By:
      /s/ Geoffrey
      Alison


Name: Geoffrey
      Alison


Title:   Chief
      Executive Officer, Director,


President,Treasurer and Secretary











EXHIBIT
      INDEX





ExhibitNumber
              Description23
              Consent
                  of Amisano Hanson Chartered Accountants31
              Certification
                  of Principal Executive Officer and PrincipalFinancial
                  Officer filed pursuant to Section 302 of theSarbanes-Oxley
                  Act of 2002.32
              Certification
                  of Principal Executive Officer and PrincipalFinancial
                  Officer furnished pursuant to 18 U.S.C. Section1350,
                  as adopted pursuant to Section 906 of theSarbanes-Oxley
                  Act of 2002.