**Table
          of Contents**





**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-KSB**


**ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF**


**THE
      SECURITIES EXCHANGE ACT OF 1934**





For
      the
      fiscal year ended December 31, 2006


Commission
      File No. 333-54822





**DEALER
      ADVANCE, INC.**


(Exact
      Name of Registrant as Specified in Its Charter)








Nevada
            
            22-376235(State
                or Other Jurisdiction of
            
            (I.R.S.
                Employer Identification No.)Incorporation
                or Organization)





16801
                Addison Road, Suite 310, Addison, TX
            
            75001(Address
                of Principal Executive Offices)
            
            (Zip
                Code)





(214)866-0606


(Registrant's
      Telephone Number, Including
      Area Code)





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


None.





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


None.




Check
      whether the Registrant: (1) filed all reports required to be filed by Section
      13
      or 15(d) of the Securities Exchange Act during the past 12 months (or for such
      shorter period that the Registrant was required to file such reports), and
      (2)
      has been subject to such filing requirements for the past 90 days.




Yes:
      x  No: o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of Registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x





State
      Registrant's revenues for fiscal year ended December 31, 2006:
      $479,474


State
      the
      aggregate market value of the common stock held by non-affiliates of the
      Registrant: $95,502 as of April 13, 2007 based on the closing sales price of
      $0.002 on that date.





**Table
        of Contents**




Indicate
      the number of shares outstanding of each of the Registrant's classes of common
      stock, as of April 13, 2007:





Class
            
            Number
                of SharesCommon
                Stock, $0.0001 par value
            
            47,751,393








The
      following documents are incorporated by reference into the Annual Report on
      Form
      10-KSB: None.





**Transitional
      Small Business Disclosure Format**





Yes:
      o   No: x


**Table
          of Contents**




**TABLE
      OF CONTENTS**





Item
            PagePART
                IItem
                1.   Business
            1Item
                2.   Properties
            12Item
                3.   Legal Proceedings
            12Item
                4.   Submission of Matters to a Vote of
                Security Holders
            13PART
                IIItem
                5.   Market for Common Equity and Related
                Stockholder Matters
            14Item
                6.   Management's Discussion and Analysis and
                Results of Operation
            14Item
                7.   Financial Statements
            27Item
                8.   Changes in and Disagreements with
                Accountants on Accounting and Financial Disclosures
            27Item
                8A.   Controls and Procedures
            27Item
                8A(T).   Controls and Procedures
            28PART
                IIIItem
                9.   Directors, Executive Officers, Promoters
                and Control Persons; Compliance with Section 16(A) of The Exchange
                Act
            29Item
                10.   Executive Compensation
            29Item
                11.   Security Ownership of Certain
                Beneficial Owners and Management and Related Stockholder Matters
            31Item
                12.   Certain Relationships and Related
                Transactions
            32Item
                13.   Exhibits
            36Item
                14.   Principal Accountant Fees and Services
            43SIGNATURES
            44FINANCIAL
                STATEMENTS
            F-1





-i-
 **Table
            of Contents**




**PART
      I**





**Item
      1. BUSINESS**





**OUR
      HISTORY**





We
      were
      incorporated as a Nevada corporation on September 8, 2000, under the name TDT
      Development, Inc. On May 16, 2002, we acquired Stronghold Technologies, Inc.,
      a
      New Jersey corporation, referred to herein as our "Predecessor Entity", pursuant
      to a merger of Stronghold Technologies into our wholly-owned subsidiary, TDT
      Stronghold Acquisition Corp., referred to herein as "Acquisition Sub". Our
      company, formerly TDT Development, Inc., was a reporting entity at the time.
      Its
      principals were Pietro Bortolatti, President, CEO and Chairman, Tiziana DiRocco,
      Vice-President and Director of European Operations and David Rector, Director.
      The merger was an arms length transactions and none of the parties had a prior
      existing relationship. As consideration for the merger, we issued 7,000,000
      shares of our common stock valued at $.75 per share to the stockholders of
      the
      Predecessor Entity in exchange for all of the issued and outstanding shares
      of
      the Predecessor Entity. No fairness opinion was issued in connection with this
      merger. Following the merger, Acquisition Sub, the survivor of the merger,
      changed its name to Stronghold Technologies, Inc. (NJ) and remains our only
      wholly-owned subsidiary. We approved the transaction as the sole shareholder
      of
      the Acquisition Sub as did the shareholders of the Predecessor Entity.





On
      July
      11, 2002, we changed our name from TDT Development, Inc. to Stronghold
      Technologies, Inc. (NV). On July 19, 2002, we exchanged all of the shares that
      we held in our two other wholly-owned subsidiaries, Terre di Toscana, Inc.
      and
      Terres Toscanes, Inc., which conducted an import and distribution business
      specializing in truffle-based food product, for 75,000 shares of our common
      stock held by Mr. Pietro Bortolatti, our former president.





On
      September 26, 2006, we changed our name to Dealer Advance, Inc. As a result,
      symbol on the OTCBB was changed to DLAV.





On
      January 25, 2007, our Predecessor Entity filed a voluntary petition for relief
      under Chapter 7 of the United States Bankruptcy Code in the United States
      Bankruptcy Court for the Northern District of Texas, Case No. 07-30322-sgj7.
      In
      connection with the filing, the Subsidiary has ceased all business activity
      and
      operations. The Subsidiary determined that it does not have sufficient resources
      to continue its operations. The court has appointed a bankruptcy trustee
      who will be responsible for the liquidation of the business through the
      bankruptcy case.





Our
      principal executive offices mailing address is 16801 Addison Road, Addison,
      Texas 75001. Our telephone number is 214-866-0606 and our Internet address
      is
      www.dealeradvance.com.





**HISTORY
      OF OUR CUSTOMER RELATIONSHIP MANAGEMENT TECHNOLOGY BUSINESS**





On
      May
      16, 2002, we entered the handheld wireless technology business via our
      acquisition by merger of the Predecessor Entity. The Predecessor Entity was
      founded on August 1, 2000 by Christopher J. Carey, our former Chief Executive
      Officer and President, and Lenard J. Berger, former Chief Technology Officer
      and
      Salvatore F. D'Ambra, former Vice President, Product Development, of our
      wholly-owned subsidiary. The Predecessor Entity was founded to develop
      proprietary handheld wireless technology for the automotive dealer software
      market.





In
      2006
      we ceased from continuing to conduct the Predecessor Entity's handheld wireless
      technology business and have developed a new web based platform called WEB
      DA
      and currently offer the wireless technology created by the predecessor as an
      option





**WEB
      BASED PRODUCT AND TECHNOLOGY DEVELOPMENT**





We
      are
      engaged in the business of selling, marketing and installing a web based
      application software and database systems that manages the auto dealer-client
      relationship. Our suite of Customer Relationship Management ("CRM") software,
      has been designed to assist auto dealerships in collecting cliental contact
      information, following up on sales prospects and aiding dealership sales
      personnel in finalizing the sale of its automobiles.  -1-
 **Table
            of Contents**


We
      have
      identified five major prospect and customer sources within an auto dealership
      that can be leveraged for revenue and profit for our dealership clients: walk
      in
      showroom traffic, call-in prospects, internet based leads, the existing owner
      base of customers and service prospects.





Our
      software system is designed to provide a single solution for all of these five
      major prospect groups to increase profitability and improve customer service
      in
      the dealership. Our software system provides information captured from
      prospects, and provides automobile dealerships with the ability to manage
      prospects and customers through a disciplined follow-up process.




On
      January 18, 2007, we announced the launch of our new web based version of Dealer
      Advance called Web DATM. This new development provides Dealerships a quick turn
      on, easy to use, cost effective and accessible system with the programs
      necessary to manage the Customer Relationship processes and functions at their
      dealerships. The software will allow dealerships to run programs without a
      significant investment in new hardware, which was previously required with
      DealerAdvance(TM).




Previously,
      dealership clients had to purchase and invest in servers, hardware, cabling
      and
      handheld devices to derive the benefits of the original Dealer Advance TM.
      Additional costs included the time to install the system and back order of
      materials. Also, the previous system required that a user or manager be
      physically located at the dealership. Now, with the new web based technology,
      users can access Web DATM from anywhere at anytime provided they have access to
      an internet connection and a web browser.




The
      new
      Web DATM system provides an immediate and secure turn on after being assigned and
      provisioned a username, password and new account. This immediate same day turn
      on is achieved for a set up cost in range of $1,500 to $2,500. Previous
      technology often required a capital investment of up to $70,000 with dependency
      on material delivery and subcontractor installation delays caused by delays
      and
      back orders.




**DESCRIPTION
      OF PRODUCTS**





WebDA(TM)
      allows automobile dealers to capture a customer's contact and vehicle
      information, purchasing requirements, and gives dealership personnel the ability
      to search inventory in their DMS inventory systems . This search feature can
      be
      used to search inventory at multiple locations, dealership personnel can locate
      an appropriate vehicle in stock and print out the necessary forms to complete
      the purchase or lease deal. Through an integrated Customer Relationship
      Management (CRM)application, the system sends detailed tasks for prospect and
      customer follow-up on a sales and management level which increases the
      likelihood that a customer will purchase from the dealer in the future. WebDA
      administrators can produce activity and scoreboard reports to measure compliance
      and dealership data. DealerAdvance(TM) allows sales professionals to capture
      customer leads quickly, improve customer follow-up, and reduce administrative
      costs.





We
      host a
      web application software system that enables Dealership clients to securely
      access the system from any web browser after being granted an account with
      a
      username and password. All data that is entered onto the application is archived
      and easily retrieved from the SQL database that we also host as part of the
      product offering. All client data is protected and is only accessible by their
      selected staff members. Additionally we provide a driver licensing scanning
      station for easy capture of client data.





Many
      auto
      dealerships still rely on a paper based process to capture its prospects and
      track their progress to purchasing a vehicle. This paper process is difficult
      to
      manage due to high turnover and skills of the typical sales force. Management
      does not have the tools to determine how many opportunities have been generated
      and if they are receiving follow up after leaving the dealership. DealerAdvance
      prompts the salesperson to capture more information about each prospect and
      advises them of the appropriate follow up. When a customer is ready to purchase
      a vehicle, the system aids the dealership in completing the sales through
      features such as inventory search and forms printing. Management is able to
      view
      dealership traffic in real-time, by salesperson, and can easily pinpoint
      deficiencies in the capture and follow up process.





WEB
      DATM
provides certain advantages to automobile dealerships, including:





o
            access
                to competitive and proprietary industry information from a variety
                of
                sources, such as convenient access to vehicle


-2-
 **Table
          of Contents**




o
            identification
                numbers, drivers license numbers and reverse telephone number information
                which provides home and business
                addresses;  o
            employee
                access to sales contracts as well as access to sales and performance
                reports; and





o
            allows
                integration with existing automotive dealer accounting and business
                systems such as ADP and Reynolds and Reynolds.








WEB
      DATM
offers features that aid in automobile sales and service such as:





o
            streamlining
                and simplifying sales and follow-up processes;





o
            providing
                current and comprehensive information and data for new and used car
                inventory, including information regarding competing products, and
                customer history with the dealership;





o
            providing
                performance data and analysis on each member of a sales team; and





o
            providing
                management with valuable and relevant transaction information on
                a
                real-time basis.





A
      user
      can enter client data via the DealerAdvance application running on any desktop.
      Data can be entered into the system typed by the user or through drivers license
      scanning Data entered by the user is transmitted to the web hosted database
      server in real time.





The
      system contains a "rules" engine which is triggered at different points in
      the
      sales process. The rules engine updates the activities scheduled for each
      customer based on business rules defined by the dealer. For example, when a
      new
      customer is entered by a user, the system will schedule a letter to be sent
      to
      the customer and a follow up phone call for the next day. If that same customer
      buys a vehicle, the system will remove the letter and follow up call and replace
      it with activities appropriate for follow up.





Users
      also have the ability to manually schedule activities with a customer. All
      activities are displayed on the user's work plan in chronological order. The
      user may select any activity, view the details of the activity and customer
      information and complete the activity. WebDA allows users to e-mail customers
      directly.




The
      system will prompt the user to schedule additional activities when completing
      follow up with a customer. For example, if the user completes a follow up call
      the system will prompt the user to set an appointment. The user can enter a
      date
      and time for the appointment, schedule an additional follow up call or indicate
      that no additional activities are required at this time.





The
      system offers a variety of reports to management to show the volume of traffic
      at the dealership and if those prospects are receiving follow up in a timely
      fashion. Reports also show ratios for data in the system, such as Calls made
      to
      Appointments Set, Appointments Set to Appointments Shown, etc All reports can
      be
      customized based on the data that a dealer would want to review.




The
      system has the following features:





o
            Prospect
                capture which allows the user to input the required information,
                reverse
                phone lookup, duplicate record checking, electronic guest sheet and
                capture signatures electronically for credit card processing.





o
            The
                system tracks compliance with National Registry and Dealership specific
                DNC list. Customers marked "DNC" have phone number hidden to avoid
                accidental calling. In addition, the dealer can print a report to
                insure
                compliance.





o
            The
                system can scan and authenticate driver licenses while capturing
                both the
                front and back image and inserting it into guest details.


-3-
 **Table
          of Contents**


o
            Provides
                a call management system for follow ups.





o
            Provides
                daily workplan and appointment scheduling which appointments, calls,
                letters and emails for salespeople.





o
            Generate
                prospect reports, scoreboard, appointment calendar and activity reports
                sorted by salesperson, sales team, or individual dealership.





o
            Receive
                leads from all internet lead sources including adf format and manage
                follow up from WEB DATM . Features include: route leads to a specific user
                based on lead source, auto responders, templates, customers using
                multiple
                lead sources, lead protection.




We
      installed Version 1.0 of the DealerAdvance Sales Solution(TM) in six pilot
      dealerships during 2001 in New Jersey, California and Connecticut. The initial
      release contained the ability to capture and display information about a
      prospective customer, search the dealership inventory, display competitive
      product information, a financial calculator, and paging functionality from
      a
      wireless handheld. Drivers license scanning, from a desktop station, was
      introduced for the State of California. Stronghold introduced Version 2.0 of
      DealerAdvance Sales Solution(TM) at all of its sites by the end of September
      2001. Version 2.0 offered an electronic desk log, email and internet access
      from
      the handheld, printing of correspondence (forms letters) , a reporting engine,
      the printing of sales forms, and the ability to import prospect records from
      3rd
      party sources.





We
      introduced Version 3.0 of our software and installed another 3 dealership sites
      in the quarter ended March 31, 2002, adding customers in New York. Version
      3.0
      introduced the CRM rules engine, which allowed the system to automatically
      schedule and manage customer follow up activities for salespeople based on
      rules
      established by the dealership management. Other features included DMS deal
      creation (allowing a user to pass information from DealerAdvance to the DMS),
      management reporting, and the expansion of drivers license scanning to include
      39 states (through a partnership with Intellicheck).





In
      the
      quarter ended June 30, 2002, through our wholly owned subsidiary, we installed
      another 7 sites, adding customers in Arizona, Southern California and South
      Carolina and introduced Version 3.1 of its software to improve the communication
      protocol between the handheld and the DealerAdvance Server. In the quarter
      ended
      September 30, 2002, through our wholly owned subsidiary, we implemented another
      10 sites, adding customers in Virginia, Florida, South Carolina and Central
      California. In the fourth quarter ending December 31, 2002, through our wholly
      owned subsidiary, we installed an additional 13 dealerships, adding customers
      in
      Texas, Indiana and Michigan. Overall, in 2002, through our wholly owned
      subsidiary, we installed DealerAdvance Sales Solution(tm), in a total of 33
      dealerships sites representing Toyota, Honda, Ford, Chevrolet, Nissan,
      Volkswagen, Buick, Pontiac, Cadillac, Chrysler, Dodge, Kia and Hyundai.





In
      the
      first quarter of 2003, we installed in 11 dealerships and released Version
      3.2.
      New features included reverse phone lookup (via partnership with Axicom),
      searches for duplicate customer records, wireless PDA trade appraisal,
      electronic buyers order, nightly download of sold customers from the DMS, and
      customer search. Additional functionality was added to the rules engine, forms
      printing, management functions were added to the PDA, 3rd party data imports,
      and customer tracking. In the quarter ended June 30, 2003, we installed another
      11 systems in 9 dealerships in California, Nevada, Indiana, Washington, Ohio,
      and Michigan. We implemented our goal to expand our direct sales network and
      operational support personnel for coverage of 14 major cities from nine at
      the
      end of 2002. Additionally, in the second quarter we realigned our sales force
      into geographic markets and hired several experienced industry veterans as
      regional business development managers.





We
      plan
      to utilize our direct sales force to market the DealerAdvance Sales Solution(tm)
      on a national basis. We have established a strong presence in most regions
      of
      the United States, and are continuing to add business development and operations
      offices pursuant to an organized growth plan. As of December 31, 2003, we had
      employees in Northern New Jersey, San Francisco, Washington, DC, Atlanta, Los
      Angeles, Phoenix, Miami, Seattle, Cleveland, and Dallas.





Version
      3.3, released in August 2003 introduced the concept of a work-plan, which
      assists the user in prioritizing follow up for prospective customers. The
      work-plan generates a simple daily "to-do" list for each salesperson, which
      can
      be viewed and updated on the handheld. Version 3.3 also introduced the concept
      of "prompted follow up" to guide the salesperson through best of breed follow
      up
      processes. The salesperson is prompted to indicate the action taken to complete
      an activity  -4-
 **Table
            of Contents**


and
      to
      enter a next activity for the customer with the goal of scheduling a next
      activity for a prospective customer until they either purchase a vehicle or
      indicate they are no longer in the market.





Version
      3.4 released in January 2004 introduced integration with WhosCalling and Call
      Bright, the two leading providers of phone call management services. The dealer
      is assigned several toll free numbers to place in a specific advertising outlet
      (newspaper, TV, radio, etc). When the customer dials the toll free number,
      the
      call management service identifies the callers’ information (name, address,
      demographics) and records the call. The call information and a link to the
      call
      recording are passed by the call management service to DealerAdvance. Version
      3.4 introduced the ability to receive Internet leads in DealerAdvance. An
      Internet Manager can view leads and follow up via email with prospective
      customers that view the dealer's web site or are passed by 3rd party lead
      providers. Through a subscription service, in Version 3.4, the dealer can
      maintain their compliance with the National Do Not Call Regulations managed
      by
      the FTC. DealerAdvance will automatically determine which customers are safe
      to
      call based on the "established business relationship" rules defined in the
      regulations. The system can produce the documentation required to demonstrate
      compliance.




In
      January 2004, we also introduced an application that lessens potential
      violations of the 2003 federal Do Not Call regulations. Our system automatically
      and regularly compares the prospect and customers within the system to the
      Do
      Not Call registry data base. The application also allows the dealership
      personnel to log prospect and customer requests not to be contacted. The system
      deletes from the database telephone numbers that match numbers in the Do Not
      Call database. Version 4.0 released in April 2004 introduced The Dealer Advance
      (DA) Campaign Manager feature, designed to provide for the simple, quick, and
      easy creation of targeted marketing activities. With DA Campaign Manager, a
      dealership Sales Manager or BDC/CDC Manager can define a sales campaign,
      including:




§
            Target
                Audience


§
            Personalized
                content (text, graphics, web links for click
                thru)


§
            Campaign
                Media (letter, email, call, other,
                combinations)


§
            Follow
                Up


§
            Sales
                Contact


§
            Frequency




The
      4.0
      release is designed to enable a campaign that is a collection of data which
      define a marketing initiative. The software enables the client to create a
      Campaign to potential clients captured by the CRM software that include the Campaign
      Target List ,
      Campaign Material, Content and Client preferences.




From
      2002
      through 2005, we generally granted a 60-day performance guarantee period for
      each new installation. If performance goals were met, the contracts became
      noncancellable for their terms, usually 36 months. In 2006 the Company
      discontinued the 60-day performance guarantee and focused efforts on developing
      the new web based application software system. As of December 31, 2006, a total
      of 32 dealers were using the DealerAdvance Sales Solution(tm), down from 83
      as
      of December 31, 2005.





This
      net
      reduction of 51 clients represents contracts that came to their term that were
      not renewed. Additionally during 2006, we added no new clients as we were
      focused on the development of our new web based software system that was not
      completed until January of 2007. As a result of the reversal in growth, the
      Company has taken proactive measures to reprice and reintroduce the software
      to
      the buying marketplace and reduce the capital expenditure and time required
      to
      utilize the old system.




**OUR
      REVENUES**





Our
      revenues in 2006 were primarily received from the maintenance contracts earned
      through the use of the DealerAdvanceTM system by 32 client dealerships in 2006.
      The typical maintenance contract for the old system is for 36 months and is
      $750.00 per month. The average total 36 month maintenance portion of the contact
      is $27,000. In the operating period from 2002 through to 2005, approximately
      50%
      of all our customers have prepaid the maintenance fees through a third party
      leasing finance company and have generated deferred revenue liability on the
      balance sheet as a result of receiving these advance payments.  -5-
 **Table
            of Contents**


Prior
      to
      2006 the Company’s revenues were primarily generated from the installation of
      the previous version of the Dealer Advance system and had an average selling
      package price of $70,000.





With
      release of the new WebDATM system announced in January 2007, the Company’s
      revenue model has changed to provide for competitive pricing advantages made
      available with the new wed based system. Our revenues moving forward will be
      primarily generated from a one-time up-front payment and monthly recurring
      fees
      covering software licenses. Our license agreements will be provided in twelve,
      twenty-four and thirty-six month terms. A $2,500 down payment and a monthly
      fee
      of $1,500 over a twelve month term will be booked as revenue at an average
      annual fee of $20,500, inclusive of the down payment.





**COST
      OF GOODS SOLD**





Our
      Cost
      of Goods Sold in 2006 was primarily attributed to supporting the maintenance
      portion of contracts as referenced above in the revenues section and were
      comprised of hardware components, software licensing and labor. Additional
      Cost
      of Goods Sold was recognized for Software Development of the new WebDA TM system.
      In total, Cost of Goods Sold as a percentage of revenues in 2006 was
      14.889%.





Prior
      to
      2006, Cost of Goods Sold as a percentage of revenue was greater due to the
      fact
      that the Company had generated revenues from new software systems and incurred
      installation expenses. The total Cost of Goods Sold as a percentage of revenue
      in 2005 was 34.37%.





With
      the
      release of the new WebDA TM system
      announced in Jan 2007, the company we will incur new categories of Cost of
      Goods
      Sold for hosting and servicing of the new product of approximately 20% of the
      estimated new estimated monthly revenue per customer of $2,500.




With
      release of the new WebDA TM system
      announced in Jan 2007 the company we will incur cost of sales attributed to
      the
      hosting and servicing of this new product. Estimated cost of sales is estimated
      to be approximately 20% of the new monthly fee of $2,500.




**SELLING,
      GENERAL AND ADMINISTRATIVE OPERATING EXPENSES**





Our
      selling, general operating expenses are primarily comprised of:





o
            Marketing
                and Selling;





o
            General
                and Administrative; and





o
            Development
                & Operations.




**MARKETING
      AND SELLING EXPENSE**





Our
      marketing and selling expenses include all labor, sales commissions and
      non-labor expenses of selling and marketing of our products and services.





As
      a
      means to conserve capital and deploy an effective and efficient sale and
      marketing plan, the Company entered into a Letter of Intent, in February of
      2006
      with one of its distribution partners, Humphries Marketing Group (“HMG”), to
      provide executive sales and marketing management services. HMG is a boutique
      advertising agency primarily focused on the automobile retail industry and
      currently has approximately 20 dealer clients nationwide. Humphries also
      provides consulting services to members of the National Automobile Dealers
      Agency (“NADA”) for advertising and CRM services.




In
      March
      2006, the Company entered into a consulting agreement with Humphries Marketing
      Group (HMG), a Texas based automotive exclusive advertising agency. As per
      that
      agreement Steven Humphries, the CEO of HMG, is to serve as President
      of the Company, and is to also provide an individual to serve as the Vice
      President of Sales of the Company. In July 2006, Mr. Humphries appointed David
      Scaturro (HMG’s Chief Operating Officer) as the Vice President of Sales.


-6-
 **Table
            of Contents**




**GENERAL
      and ADMINISTRATIVE EXPENSE**





Our
      general and administrative expenses include expenses for all facilities,
      insurance, benefits, telecommunications, legal and auditing expenses are
      included as well as the executive management group wage expense.




**RESEARCH
      AND DEVELOPMENT EXPENSE**





Since
      our
      inception in September 2000, we have spent approximately $4,300,000 on research
      and development activities. While we have been successful in meeting planned
      goals in the development and introduction of DealerAdvance Sales Solution(TM),
      there can be no assurance that our research and development efforts will be
      successful with respect to additional products, or if successful, that we will
      be able to successfully commercially exploit such additional products.





Our
      development & operations expenses also include the expenses for the Client
      Consultant group which advises and supports the installations of our Dealer
      Advance(TM) clients.





In
      June
      2006, the Company hired Rajneesh Sharma as its Chief Information Officer. His
      first action as CIO was the closing of the Company’s Virginia technical support
      operations office and the termination of its employees based in that office.
      This resulted in substantial operational savings for the Company. As a result
      of
      the closure, in June 2006 the Company began operating its technical support
      services from the new Texas based corporate offices. Mr. Sharma’s primary focus
      moving forward is the development of the new web-based version of DealerAdvanceTM
(WebDATM). Mr. Sharma is in the process of hiring a Texas based development team
      that will transfer existing application from a server-based product to a fully
      functional web-based application. The Company launched the new product (“Web
      DA”) in January of 2007. The initial release of WebDATM will take the existing
      DealerAdvanceTM software with a few added enhancements and move the product to
      the web, thus eliminating the high cost of equipment required by the current
      product. The new product will not feature the hand-held wireless technology
      utilized previously by the Company, however, should a dealer desire the benefit
      of the technology, it will be provided at an additional cost to the dealer.
      In
      the first month of each quarter moving forward, a new release will be provided
      to dealers of WebDATM, beginning with 1.0.




**COMPETITION
      RELATED TO HANDHELD TECHNOLOGY BUSINESS**





We
      compete with the traditional CRM providers and the emerging new CRM providers
      in
      the retail automotive dealer software market.





Some
      of
      our potential competitors include:





o
            Automotive
                Directions, a division of ADP Dealer Services, and a provider of
                PC-based
                customer relationship management systems as well as marketing research
                and
                consulting services;





o
            Higher
                Gear, a provider of client server based front-end sales and customer
                relationship management software which serves the retail automotive
                industry exclusively;





o
            Autobase,
                a provider of PC based front-end software which serves the retail
                automotive industry exclusively;





o
            Cobalt
                Corporation, a provider of ASP sales prospect management systems
                and
                customer relationship management systems which services the retail
                automotive industry exclusively; and


-7-
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            of Contents**


We
      believe that our proprietary technology is unique and, therefore, places us
      at a
      competitive advantage in the industry. However, there can be no assurance that
      our competitors will not develop a similar product with properties superior
      to
      our own or at greater cost-effectiveness.





**MARKETING
      AND SALES**





We
      have
      identified a target market of approximately 21,500 new car automobile
      dealerships in the United States that meet the base criteria for our system.
      More specifically, we target a primary market of approximately 10,000
      dealerships that sell a minimum of 75 new and used cars each month and do not
      currently have CRM systems. Generally, our target market consists of midline
      dealerships, including brands such as Chevrolet, Ford, Nissan, Volkswagen,
      Toyota, Honda, Buick, Pontiac, GMC Trucks, Chrysler and Dodge. The reason for
      this is that midline dealers typically have high prospect and customer traffic,
      which makes for large untapped prospect opportunities that the client can
      leverage through the follow-up process from DealerAdvance. In addition, it
      is
      estimated that only approximately one-half of the new car dealerships have
      made
      investments in CRM products.





We
      further qualify our market as dealerships with over $15 million in annual
      revenue. Obviously, a larger dealership has more traffic, more customer
      transactions, more sales people, and can more easily justify the investment.
      Finally, we limit our market to dealerships in those parts of the country where
      it has sales and support coverage.





As
      a
      means to conserve capital and deploy an effective and efficient sale and
      marketing plan, the Company entered into a Letter of Intent, in February of
      2006
      with one of its distribution partners, Humphries Marketing Group (“HMG”), to
      provide executive sales and marketing management services. HMG is a boutique
      advertising agency primarily focused on the automobile retail industry and
      currently has approximately 20 dealer clients nationwide. Humphries also
      provides consulting services to members of the National Automobile Dealers
      Association (“NADA”) 20 Groups for advertising and CRM services.




In
      March
      2006, the Company entered into a consulting agreement with Humphries Marketing
      Group (HMG), a Texas based automotive exclusive advertising agency. As per
      that
      agreement Steven Humphries, the CEO of HMG, is to serve as President of the
      Company, and is to also provide an individual to serve as the Vice President
      of
      Sales of the Company. In July 2006, Mr. Humphries appointed David Scaturro
      (HMG’s Chief Operating Officer) as the Vice President of Sales.




As
      part
      of Mr. Humphries operating sales strategy, the Company has split the country
      into two regions (East and West). The Company hired two Regional Sales Managers;
      a Texas based Eastern Manager serving dealers east of Texas and a California
      based Western Region Manager serving dealers Texas west. The Regional Managers
      are based in the Company’s Texas and California offices, respectfully. The
      primary focus of the new sales team is to re-establish the Company’s
      relationships with its remaining customers and develop new contacts in
      preparation of the launch of its new web-based CRM product “WebDATM” in the
      1 st Quarter
      of 2007. The Company will employ additional Sales Managers as the Company
      implements the launch of its new WebDATM product.




**OUR
      INTELLECTUAL PROPERTY**




We
      have a
      trademark for "DealerAdvance(TM)" and have one patent application pending
      covering the system for management of information flow in automotive dealerships
      using handheld technology. The patent application is currently being reviewed
      by
      the United States Patent and Trademark Office. We may face unexpected
      competition from various sources if our patent is denied however we do not
      believe this will have a material impact on our business.




**EMPLOYEES**




As
      of
      December 31, 2006, we had a total of 7 full-time employees, of which 4 are
      dedicated to marketing and sales and regional customer support. As of December
      31, 2006, 1 is in New Jersey, 1 in California, and 4 in Texas. Our CEO and
      VP of
      Sales, both of whom are based in Texas, provide services under a Consulting
      Agreement with Humphries Marketing Group.





We
      have
      no collective bargaining arrangements with our employees. We believe that our
      relationship with our employees is
      good.


-8-
 **Table
          of Contents**




**SAFE
      HARBOR STATEMENT**





The
      statements contained in this Annual Report on Form 10-KSB that are not
      historical facts are forward-looking statements within the meaning of Section
      21E of the Securities Exchange Act of 1934 ("the Securities Act"), as amended
      and the Private Securities Litigation Reform Act of 1995. Such forward-looking
      statements may be identified by, among other things, the use of forward-looking
      terminology such as "believes," "expects," "may," "will," "should," or
      "anticipates" or the negative thereof or other variations thereon or comparable
      terminology, or by discussions of strategy that involve risks and uncertainties.
      In particular, our statements regarding the anticipated growth in the markets
      for our technologies, the continued development of our products, the approval
      of
      our Patent Applications, the successful implementation of our sales and
      marketing strategies, the anticipated longer term growth of our business, and
      the timing of the projects and trends in future operating performance are
      examples of such forward-looking statements. The forward-looking statements
      include risks and uncertainties, including, but not limited to, the timing
      of
      revenues due to the uncertainty of market acceptance and the timing and
      completion of pilot project analysis, and other factors, including general
      economic conditions, not within our control. The factors discussed herein and
      expressed from time to time in our filings with the SEC could cause actual
      results to be materially different from those expressed in or implied by such
      statements. The forward-looking statements are made only as of the date of
      this
      filing and we undertake no obligation to publicly update such forward-looking
      statements to reflect subsequent events or circumstances.





Factors
      that Might Affect Our Business, Future Operating Results, Financial Condition
      and/or Stock Price





The
      more
      prominent risks and uncertainties inherent in our business are described below.
      However, additional risks and uncertainties may also impair our business
      operations. If any of the following risks actually occur, our business,
      financial condition or results of operations may suffer.





**Risks
      Concerning Our Business**




Our
        sole
        executive officer and director and CEO may be subject to fines, sanctions
        and/or
        penalties of an indeterminable nature as a result of violations of the Sarbanes
        Oxley Act of 2002 in connection with loans made to the sole executive officer
        and director.
  During
        the quarter ended December 31, 2006, we made certain loans to Mr. Steven
        Humphries, our sole executive officer and director, or a company controlled
        by
        Mr. Humphries, aggregating $114,141. During this same period, a portion of
        the
        loans were repaid through the payment of cash in the amount of $68,000. These
        loans made to Mr. Humphries violate Section 402 of the Sarbanes Oxley Act
        of
        2002. As a result, despite the fact that a portion of such loans were repaid,
        our company and/or Mr. Humphries may be subject to fines, sanctions and/or
        penalties. At this time, we are unable to determine the amount of such fines,
        sanctions and/or penalties that may be incurred by our company and/or Mr.
        Humphries. The purpose of such loan was for personal use.


We
      Have A
      History Of Incurring Net Losses; We Expect Our Net Losses To Continue As A
      Result Of Planned Increases In Operating Expenses; And, Therefore, We May Never
      Achieve Profitability Which May Cause Us To Seek Additional Financing Or To
      Cease Operations.





We
      have a
      history of operating losses and have incurred significant net losses in each
      fiscal quarter since our inception. We had a net loss of $4,444,000 and
      $3,632,000 for the fiscal years ended December 31, 2006 and December 31, 2005,
      respectively. We have an accumulated net operating loss of approximately
      $17,000,000 for the period from May 17, 2002 through December 31, 2006 to offset
      future taxable income. Losses prior to May 17, 2002 were passed directly to
      the
      shareholders and, therefore, are not included in the loss carry-forward. We
      expect to continue to incur net losses and negative cash flows for the
      foreseeable future. We will need to generate significant additional revenue
      to
      achieve profitability. Our ability to generate and sustain significant
      additional revenues or achieve profitability will depend upon the factors
      discussed elsewhere in this "Risk Factors" section, as well as numerous other
      factors outside of our control, including:




o
            Competing
                products that are more effective or less costly than ours;





o
            Our
                ability to develop and commercialize our own products and technologies;
                and





o
            Our
                ability to increase sales of our existing products and any new products.





It
      is
      possible that we may never achieve profitability and, even if we do achieve
      profitability, we may not sustain or increase profitability in the future.
      If we
      do not achieve sustained profitability, we may be unable to continue our
      operations.





There
      Is
      A Possibility That We Will Be Unable To Obtain Sufficient Funds, Will Incur
      A
      Cash Flow Deficit, Therefore Our Business Could Suffer A Loss Of Clients And
      Employees As Well As A Decrease In Continued Research And Development Efforts.  -9-
 **Table
            of Contents**


We
      believe that our current funds and accounts receivable will only be sufficient
      for our immediate future, raising substantial doubt about our ability to
      continue as a going concern. During 2007, the management of the Company will
      rely on receiving the balance of the $900,000 committed by the current investors
      of Convertible Notes to provide the company with sufficient working capital
      for
      the next 12 months. Of the $900,000 committed, $250,000 has already been infused
      into the Company leaving a remaining $650,000. In the event that the Company
      does not meet its business plan in 2007, the balance of the remaining $900,000
      may not satisfy the working capital requirements and the Company may need to
      raise additional capital to fund its operations in the third quarter of 2007.
      If
      the Company is unable to generate sufficient revenues or raise sufficient
      additional capital, there could be a material adverse effect on the consolidated
      financial position, results of operations and cash flows of the
      Company.




Since
      our
      inception, we have financed all of our operations through sales of private
      equity, debt financings and commercial bank loans. Our future capital
      requirements depend on numerous factors, including:





o
            The
                scope of our research and development;





o
            Our
                ability to successfully commercialize our technology; and





o
            Competing
                technological and market developments.




We
      May
      Fail To Gain Market Acceptance Of Our Products, Therefore Our Business And
      Results Of Operations Could Be Harmed.





We
      are
      still in the early marketing stages of our WebDATM Customer relationship
      Management system. The initial version of this development was completed in
      January of 2007 and we still have not signed a customer to it and therefore
      there is substantial risk of weather or not this product will be
      adopted.





We
      may
      experience design, marketing, and other difficulties that could delay or prevent
      our introduction, or marketing of the new product. In addition, the costs of
      developing and marketing our products may far outweigh the revenue stream
      generated by such products. Finally, our prospects for success will depend
      on
      our ability to successfully sell our products to key automobile dealerships
      that
      may be inhibited from doing business with us because of their commitment to
      their own technologies and products, or because of our relatively small size
      and
      lack of sales and production history.





The
      nature of our product and technology requires us to market almost exclusively
      to
      automobile dealerships. Should any particular dealership or group of dealerships
      decide not to utilize our services to the extent anticipated, our business
      may
      be adversely affected. Large and costly consumer products such as automobiles
      are sensitive to broad economic trends. Therefore, our business could suffer
      if
      automobile dealerships are affected by poor economic conditions. If dealer
      sales
      are trending downward, capital expenditures, like those associated with our
      WebDATM products, may be delayed or abandoned.




We
      are
      highly dependent on the principal members of our management, research and sales
      staff. The loss of their services might significantly delay or prevent the
      achievement of our strategic objectives. Our success depends on our ability
      to
      retain key employees and to attract additional qualified employees. Competition
      for personnel is intense, and we cannot assure you that we will be able to
      retain existing personnel or attract and retain additional highly qualified
      employees in the future.




**Risks
      Concerning Our Handheld Technology**





We
      Obtain
      Products And Services From Third Parties, Therefore An Interruption In The
      Supply Of These Products And Services Could Cause A Decline In Sales Of Our
      Products And Services.


-10-
 **Table
            of Contents**




We
      are
      dependant upon certain providers of software, including Microsoft Corporation
      and their Pocket PC software, to provide the operating system for our
      applications. If there are significant changes to this software, or if this
      software stops being available or supported, we will experience a disruption
      to
      our product and development efforts.





In
      designing, developing and supporting our wireless data services, we rely on
      mobile device manufacturers, content providers, database providers and software
      providers. These suppliers may experience difficulty in supplying us products
      or
      services sufficient to meet our needs or they may terminate or fail to renew
      contracts for supplying us these products or services on terms we find
      acceptable. Any significant interruption in the supply of any of these products
      or services could cause a decline in sales of our products and services, unless
      and until we are able to replace the functionality provided by these products
      and services. We also depend on third parties to deliver and support reliable
      products, enhance their current products, develop new products on a timely and
      cost-effective basis and respond to emerging industry standards and other
      technological changes.





Competition
      In The Wireless Technology Industry Is Intense And Technology Is Changing
      Rapidly, Therefore We May Be Unable To Compete Successfully Against Our Current
      And Future Competitors In The Future.





Many
      wireless technology and software companies are engaged in research and
      development activities relating to our range of products. The market for
      handheld wireless technology is intensely competitive, rapidly changing and
      undergoing consolidation. We may be unable to compete successfully against
      our
      current and future competitors, which may result in price reductions, reduced
      profit margins and the inability to achieve market acceptance for our products.
      Our competitors in the field are major international car dealership service
      companies, specialized technology companies, and, potentially, our joint venture
      and strategic alliance partners. Many of our competitors have substantially
      greater financial, marketing, sales, distribution and technical resources than
      us and have more experience in research and development, sales, service,
      manufacturing and marketing. We anticipate increased competition in the future
      as new companies enter the market and new technologies become available. Our
      technology may be rendered obsolete or uneconomical by technological advances
      developed by one or more of our competitors.





We
      May
      Not Have Adequately Protected Our Intellectual Property Rights, Therefore We
      May
      Not Be Successful In Protecting Our Intellectual Property Rights.





Our
      success depends on our ability to sell products and services for which we do
      not
      currently have intellectual property rights. We currently do not have patents
      on
      any of our intellectual property. We have filed for a patent which protects
      a
      number of developments pertaining to the management of information flow for
      automotive dealer-based software. We plan to file an additional patent
      application which will address certain proprietary features pertaining to our
      systems components, related equipment and software modules. We cannot assure
      you
      we will be successful in protecting our intellectual property right through
      patent law.





We
      rely
      primarily on trade secret laws, patent law, copyright law, unfair competition
      law and confidentiality agreements to protect our intellectual property. To
      the
      extent that these avenues do not adequately protect our technology, other
      companies could develop and market similar products or services, which could
      adversely affect our business.





We
      May Be
      Sued By Third Parties For Infringement Of Their Proprietary Rights, Therefore
      We
      May Incur Defense Costs And Possibly Royalty Obligations Or Lose The Right
      To
      Use Technology Important To Our Business.





The
      wireless technology and software industries are characterized by the existence
      of a large number of patents and frequent litigation based on allegations of
      patent infringement or other violations of intellectual property rights. As
      the
      number of participants in our market increases, the possibility of an
      intellectual property claim against us could increase. Any intellectual property
      claims, whether with or without merit, could be time consuming and expensive
      to
      litigate or settle and could divert management attention from the administration
      of our business. A third party asserting infringement claims against the Company
      or our customers with respect to our current or future products may adversely
      affect us.




**Risks
      Concerning Our Capital Structure**





Our
      former Chief Executive Officer Has Significant Control Of Our Common Stock
      And,
      Therefore, Could Control Our Actions In A Manner That Conflicts With Our
      Interests And The Interests Of Other Stockholders.


-11-
 **Table
            of Contents**




We
      Have
      Shares Eligible for Future Issuance, Therefore Our Stockholders May Suffer
      Dilution As A Result.




As
      of
      December 31, 2006, we had 43,587,393 shares of our Common Stock issued and
      outstanding. In addition, we have 3,707,643 shares of Common Stock reserved
      for
      issuance upon the exercise of all outstanding options, and 10,738,508 shares
      of
      Common Stock reserved for issuance upon the exercise of certain outstanding
      warrants and upon the conversion of certain shares of our Series A and Series
      B
      Preferred Stock.





We
      Do Not
      Intend to Pay Cash Dividends On Our Shares of Common Stock, Therefore Our
      Stockholders Will Not Be Able to Receive a Return on Their Shares Unless They
      Sell Them.





We
      have
      never declared or paid dividends on our Common Stock and we do not intend to
      pay
      any Common Stock dividends in the foreseeable future. We intend to retain any
      future earnings to finance the development and expansion of our business. We
      do
      not anticipate paying any cash dividends on our Common Stock in the foreseeable
      future. Unless we pay dividends, our stockholders will not be able to receive
      a
      return on their shares unless they sell them.





**Our
      Common Stock Is A Penny Stock And Therefore May Be Difficult To Sell.**





Our
      stock
      is a penny stock. The SEC generally defines a penny stock as an equity security
      that has a market price of less than $5.00 per share or an exercise price of
      less than $5.00 per share, subject to specific exemptions. The market price
      of
      our Common Stock is currently less than $5.00 per share. The SEC "penny stock"
      rules govern the trading of our Common Stock. These rules require, among other
      things, that any broker engaging in a purchase or sale of our securities provide
      its customers with the following:





o
            A
                risk disclosure document;





o
            Disclosure
                of market quotations, if any;





o
            Disclosure
                of the compensation of the broker and its salespersons in the transaction;
                and





o
            Monthly
                account statements showing the market values of our securities held
                in the
                customer's accounts.





The
      broker must provide the bid and offer quotations and compensation information
      before effecting the transaction. This information must be contained on the
      customer's confirmation. Generally, brokers may be less willing to effect
      transactions in penny stocks due to these additional delivery requirements.
      This
      may make it more difficult for investors to sell our Common Stock. Because
      the
      broker, not us, prepares this information, we cannot assure that such
      information is accurate, complete or current.





**Item
      2.****DESCRIPTION
      OF PROPERTIES**





We
      do not
      currently own any real property .





Under
      the
      terms of a Consulting Agreement between DealerAdvance, Inc. (the “Company”) and
      Humphries Marketing Group, LLC (“HMG”) dated April 30, 2006, the Company
      reimburses HMG $2,000 per month for shared use of its’ facility in Addison,
      Texas. The term is month to month. The Company has a similar arrangement for
      shared space in HMG’s Sacramento, CA office at a monthly cost of
      $1,000.





**Item
      3.****LEGAL
      PROCEEDINGS**





From
      time
      to time, we may become involved in various lawsuits and legal proceedings which
      arise in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. Except as disclosed below,
      we are currently not aware of any such legal proceedings or claims that we
      believe will have, individually or in the aggregate, a material adverse affect
      on our


-12-
 **Table
          of Contents**


business,
      financial condition or operating results.





The
      Company is engaged in arbitration proceedings with Lenard Berger (the
“Claimant”), a former officer, with regard to a claim for damages for the
      Company’s failure to remove a restrictive legend from 437,500 shares of common
      stock of the Company, additional unpaid salary accrued during his term of
      employment and pre-judgment interest on all amounts owing to the Claimant.
      On
      May 18, 2006, Mr. Berger was awarded the sum of $214,361.52. As of December
      31,
      2006, a total of $27,030 has been paid against the claim.





During
      the course of doing business the Company made certain guarantees to prospective
      clients as an inducement to contract for services. These guarantees, although
      limited, provided that the Company would pay off client third party equipment
      leases after the first 12 months of service if the client was not satisfied
      with
      the product. As of December 31, 2006, two judgments have been entered against
      the Company for failure to honor such guarantees to Wilson-Cornelius Ford and
      Great Lakes Ford - Muskegon. Two additional guarantees have been called by
      Graff
      Chevrolet and Zumwalt Ford. Graff has filed a suit against the Company in Texas
      and Zumwalt has made a demand to the Company.





On
      January 25, 2007, our Predecessor Entity, Stronghold Technologies, Inc. (NJ)
      a
      New Jersey corporation and a wholly owned subsidiary of Dealer Advance, Inc.,
      filed a voluntary petition for relief under Chapter 7 of the United States
      Bankruptcy Code in the United States Bankruptcy Court for the Northern District
      of Texas, Case No. 07-30322-sgj7. In connection with the filing, the Subsidiary
      has ceased all business activity and operations. The Subsidiary determined
      that
      it does not have sufficient resources to continue its operations. The
      court has appointed a bankruptcy trustee who will be responsible for
      the liquidation of the business through the bankruptcy case.





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





None.


-13-
 **Table
            of Contents**




**PART
      II**





**Item
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





Our
      Common Stock is traded on the OTC Bulletin Board, referred to herein as the
      OTCBB, under the symbol "DLAV". The following table sets forth the high and
      low
      bid prices of our Common Stock, as reported by the OTCBB for each quarter since
      January 1, 2005. The quotations set forth below reflect inter-dealer prices,
      without retail mark-up, markdown or commission and may not represent actual
      transactions.




**2005**
              
              **High**
              
              **Low**January
                  1, 2005 - March 31, 2005
              
              $
              0.230
              
              $
              0.020April
                  1, 2005 - June 30, 2005
              
              $
              0.090
              
              $
              0.010July
                  1, 2005 - September 30, 2005
              
              $
              0.100
              
              $
              0.040October
                  1, 2005 - December 31, 2005
              
              $
              0.040
              
              $
              0.030**2006**
              
              
              **High**
              
              
              **Low**January
                  1, 2006 - March 31, 2006
              
              $
              0.060
              
              $
              0.009April
                  1, 2006 - June 30, 2006
              
              $
              0.025
              
              $
              0.011July
                  1, 2006 - September 30, 2006
              
              $
              0.015
              
              $
              0.004October
                  1, 2006 - December 31, 2006
              
              $
              0.001
              
              $
              0.013


We
      have
      appointed Continental Stock Transfer & Trust Company, 17 Battery Place, New
      York, New York 10004, as transfer agent for our shares of Common Stock.





**Item
      6.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF
      OPERATION**S





This
      section provides a narrative on the Company's operating performance, financial
      condition and liquidity and should be read in conjunction with the accompanying
      financial statements. Certain statements under the caption "Management's
      Discussion and Analysis and Results of Operation" constitute "forward-looking
      statements" under the Private Securities Litigation Reform Act of 1995. See
      "Risk Factors-Cautionary Note Regarding Forward Looking Statements". For a
      more
      complete understanding of our operations see "Risk Factors" and "Description
      of
      Business".




**OUR
      HISTORY**





We
      were
      incorporated as a Nevada corporation on September 8, 2000, under the name TDT
      Development, Inc. On May 16, 2002, we acquired Stronghold Technologies, Inc.,
      a
      New Jersey corporation, referred to herein as our "Predecessor Entity", pursuant
      to a merger of Stronghold Technologies into our wholly-owned subsidiary, TDT
      Stronghold Acquisition Corp., referred to herein as "Acquisition Sub". Our
      company, formerly TDT Development, Inc., was a reporting entity at the time.
      Its
      principals were Pietro Bortolatti, President, CEO and Chairman, Tiziana DiRocco,
      Vice-President and Director of European Operations and David Rector, Director.
      The merger was an arms length transaction and none of the parties had a prior
      existing relationship. As consideration for the merger, we issued 7,000,000
      shares of our common stock valued at $.75 per share to the stockholders of
      the
      Predecessor Entity in exchange for all of the issued and outstanding shares
      of
      the


-14-
 **Table
            of Contents**




Predecessor
      Entity. No fairness opinion was issued in connection with this merger. Following
      the merger, Acquisition Sub, the survivor of the merger, changed its name to
      Stronghold Technologies, Inc. (NJ) and remains our only wholly-owned subsidiary.
      We approved the transaction as the sole shareholder of the Acquisition Sub
      as
      did the shareholders of the Predecessor Entity.





On
      July
      11, 2002, we changed our name from TDT Development, Inc. to Stronghold
      Technologies, Inc. (NV). On July 19, 2002, we exchanged all of the shares that
      we held in our two other wholly-owned subsidiaries, Terre di Toscana, Inc.
      and
      Terres Toscanes, Inc., which conducted an import and distribution business
      specializing in truffle-based food product, for 75,000 shares of our common
      stock held by Mr. Pietro Bortolatti, our former president.





On
      September 26, 2006, we changed our name to Dealer Advance, Inc. As a result,
      symbol on the OTCBB was changed to DLAV.





On
      January 25, 2007, our Predecessor Entity filed a voluntary petition for relief
      under Chapter 7 of the United States Bankruptcy Code in the United States
      Bankruptcy Court for the Northern District of Texas, Case No. 07-30322-sgj7.
      In
      connection with the filing, the Subsidiary has ceased all business activity
      and
      operations. The Subsidiary determined that it does not have sufficient resources
      to continue its operations. The court has appointed a bankruptcy trustee
      who will be responsible for the liquidation of the business through the
      bankruptcy case.





**HISTORY
      OF OUR CUSTOMER RELATIONSHIP MANAGEMENT TECHNOLOGY BUSINESS**





On
      May
      16, 2002, we entered the handheld wireless technology business via our
      acquisition by merger of the Predecessor Entity. The Predecessor Entity was
      founded on August 1, 2000 by Christopher J. Carey, our former Chief Executive
      Officer and President, and Lenard J. Berger, former Chief Technology Officer
      and
      Salvatore F. D'Ambra, former Vice President, Product Development, of our
      wholly-owned subsidiary. The Predecessor Entity was founded to develop
      proprietary handheld wireless technology for the automotive dealer software
      market.





Since
      the
      creation of the new subsidiary and merger of Dealer Advance Inc. and name change
      from Stronghold Technologies Inc. to Dealer Advance Inc., , In 2006 we have
      ceased from continuing to conduct the Predecessor Entity's handheld wireless
      technology business and have developed a new web based platform called WEB
      DA
      and currently offer the wireless technology created by the predecessor as an
      option




**Our
      Revenues Moving Forward**




Beginning
      with the 1st Quarter of 2007 the Company’s revenue model will change. Rather
      than being hardware driven, the Company will become software driven and will
      move its DealerAdvance product from a server based platform to a web based
      application, thus eliminating the high cost of maintaining inventory and
      installation costs. Our revenues, moving forward will be primarily generated
      from a one-time up-front payment and monthly recurring fees covering software
      licenses. Our license agreements will be provided in twelve, twenty-four and
      thirty-six month terms. A $2,500 down payment and a monthly fee of $1,500 over
      a
      twelve month term will be booked as revenue at an average annual fee of $20,500,
      inclusive of the down payment.





The
      Company currently has approximately 32 user contracts at dealerships throughout
      the United States. Management believes that the majority of those contracts,
      of
      which all are to expire in the next 12 to 18 months, will be renewed at the
      above-mentioned rates however it cannot provide any guarantee regarding these
      renewals.





Additionally,
      many of the Company’s client customer base are part of dealer groups comprised
      of three or more dealerships. Up until now the Company has not been successful
      in leveraging its relationships with these dealers enabling the Company to
      place
      the DealerAdvance product into those additional group stores. Management now
      believes that because of the its new web based product and its newly developed
      client relationships, there is an opportunity to add an additional 20 to 25
      client contracts over the next 12 to 18 months through these
      groups.


-15-
 **Table
          of Contents**




**COST
      OF GOODS SOLD**




Our
      Cost
      of Goods Sold in 2006 was primarily attributed to supporting the maintenance
      portion of contracts as referenced above in the revenues section and were
      comprised of hardware components, software licensing and labor. Additional
      Cost
      of Goods Sold was recognized for Software Development of the new WebDA TM system.
      In total, Cost of Goods Sold as a percentage of revenues in 2006 was
      14.88%.





Prior
      to
      2006, Cost of Goods Sold as a percentage of revenue was greater due to the
      fact
      that the Company had generated revenues from new software systems and incurred
      installation expenses. The total Cost of Goods Sold as a percentage of revenue
      in 2005 was 34.37%.





With
      the
      release of the new WebDA TM system
      announced in Jan 2007, the company we will incur new categories of Cost of
      Goods
      Sold for hosting and servicing of the new product of approximately 20% of the
      estimated new estimated monthly revenue per customer of $2,500.





**GENERAL
      AND ADMINISTRATIVE OPERATING EXPENSES**





Our
      general operating expenses are primarily comprised of:





o
            Marketing
                and Selling;





o
            General
                and Administrative; and





o
            Development
                & Operations.





Our
      marketing and selling expenses include all labor, sales commissions and
      non-labor expenses of selling and marketing of our products and services.





Our
      general and administrative expenses include expenses for all facilities,
      insurance, benefits, telecommunications, legal and auditing expenses are
      included as well as the executive management group wage expense.





Our
      development & operations expenses include the expenses for the Client
      Consultant group which advises and supports the installations of our Dealer
      Advance(TM) clients.




**RESEARCH
      AND DEVELOPMENT**





In
      June
      the Company hired Rajneesh Sharma as its Chief Information Officer. His first
      action as CIO was the closing of the Company’s Virginia technical support
      operations office and the termination of its employees based in that office.
      This resulted in substantial operational savings for the Company. As a result
      of
      the closure, in June 2006 the Company began operating its technical support
      services from the new Texas based corporate offices. Mr. Sharma’s primary focus
      moving forward is the development of the new web-based version of DealerAdvanceTM
(Web DA). Mr. Sharma is in the process of hiring a Texas based development
      team
      that will transfer existing application from a server-based product to a fully
      functional web-based application. The Company plans to launch the new product
      (“Web DA”) in November of 2006. The initial release of WebDA will take the
      existing DealerAdvanceTM software with a few added enhancements and move the
      product to the web, thus eliminating the high cost of equipment required by
      the
      current product. The new product will not feature the hand-held wireless
      technology utilized previously by the Company, however, should a dealer desire
      the benefit of the technology, it will be provided at an additional cost to
      the
      dealer. In the first month of each quarter moving forward, a new release will
      be
      provided to dealers of WebDA, beginning with 1.0.




**SALES
      DEVELOPMENT**




In
      March
      2006, the Company entered into a consulting agreement with Humphries Marketing
      Group (HMG), a Texas based automotive exclusive advertising agency. As per
      that
      agreement Steven Humphries, the CEO of HMG, is to serve as President of the
      Company, and is to also provide an individual to serve as the Vice President
      of
      Sales of the Company. In July 2006, Mr. Humphries appointed David Scaturro
      (HMG’s Chief Operating Officer) as the Vice President of Sales.  -16-
 **Table
            of Contents**




As
      part
      of Mr. Humphries operating sales strategy, the Company has split the country
      into two regions (East and West). The Company and hired two Regional Sales
      Managers; Suzanne Hambruch (Eastern Region), serving dealers east of Texas
      and
      Melissa Markus (Western Region), serving dealers Texas west. The Regional
      Managers are based in Stronghold’s Texas and California offices, respectfully.
      The primary focus of the new sales team is to re-establish the Company’s
      relationships with its remaining customers and develop new contacts in
      preparation of the launch of the new “Web DA”.




**YEAR
      ENDED DECEMBER 31, 2006 AND YEAR ENDED DECEMBER 31, 2005.**




**Revenue**




For
      the
      year ended December 31, 2006 we had revenue of $479,474 compared with revenue
      of
      $943,735 for the year ended December 31, 2005 for a decrease of 49%. Revenue
      is
      generated from software license and system installation, maintenance support
      and
      service revenues. Revenues for the years ended December 31, 2005 and December
      31, 2004 are broken down as follows:




**2006**
              
              **2005**
              
              **$
                  Change**
              
              **%
                  Change**Software
                  License & System Installation
              
              $
              33,336
              
              $
              288,200
              
              $
              (254,864
              )
              
              -88
              %Support
                  & Maintenance
              
              $
              429,658
              
              $
              605,723
              
              $
              (176,065
              )
              
              -29
              %Services
              
              $
              16,480
              
              $
              49,812
              
              $
              (33,332
              )
              
              -67
              %Total
                  Revenue
              
              $
              479,474
              
              $
              943,735
              
              $
              (464,261
              )
              
              -49
              %




Software
      license and system installation revenue decreased $254,864 in 2006 to $33,336
      as
      compared to $288,200 in 2005 for a decrease of 88%. The company installed no
      new
      sites in 2006 as compared to 4 sites in 2005, with an average sales price of
      $51,000. The primary reasons for the decrease in revenue can be attributed
      to 1)
      our decision to stop selling our DealerAdvance TM software
      product and devote our resources to development of our new web-based product,
      WebDA TM, and
      2)
      repeated concerns in the marketplace about the Company’s ability to continue as
      a going concern.





Support
      and maintenance revenues decreased $176,065 in 2006 to $429,658 as compared
      to
      $605,723 in 2005 for a decrease of 29%. This decrease was attributable to a
      decrease of 44 sites under maintenance contracts from 83 at the end of 2005
      to
      39 at the end of 2006. Twenty-nine maintenance contracts expired during the
      year
      ended December 31, 2005.





Services
      revenue consisting of 3 rd party
      subscription services decreased $33,332 in 2006 to $16,480 as compared to
      $49,812 in 2005 for a decrease of 67%. The decrease is attributable to the
      expiration of 29 service and support contracts .





Given
      that the company has continued to generate losses and are reliant on raising
      capital to support operations, the continued loss of momentum may cause us
      our
      revenues to continue to decrease.




**Cost
      of Sales**




Cost
      of
      sales on a percentage of revenue basis was decreased to 14.88% of revenue for
      the twelve months ended December 31, 2006 as compared to 34.37% of revenue
      for
      the twelve months ended December 31, 2005. The table below shows the Cost of
      Sales and percentage by category and the comparison in dollars and percentage
      for the twelve months ended December 31, 2006 and twelve months ended December
      31, 2005.


-17-
 **Table
          of Contents**




**2006**
              
              **2005**
              
              **2006**
              
              **2005****Cost
                  of Sales**
              
              **Dollars**
              
              **Dollars**
              
              **%
                  of Revenue**
              
              **%
                  of Revenue**
              
              **%
                  Change**Hardware
                  Components
              
              $
              10,884
              
              $
              90,957
              
              
              2.38
              %
              
              9.64
              %
              
              -7.26
              %Client
                  Software & Licensing
              
              
              14,649
              
              
              39,631
              
              
              3.20
              %
              
              4.20
              %
              
              -1.00
              %Distribution
                  Fees
              
              
              5,490
              
              
              3,274
              
              
              1.20
              %
              
              —
              
              
              1.20
              %Subcontractors
              
              
              2,748
              
              
              21,941
              
              
              0.60
              %
              
              2.32
              %
              
              -1.73
              %Misc
                  Installation Costs
              
              
              12,420
              
              
              4,051
              
              
              2.71
              %
              
              0.43
              %
              
              2.28
              %Installations/Travel
              
              
              —
              
              
              29,063
              
              
              0.00
              %
              
              3.08
              %
              
              -3.08
              %Shipping
              
              
              370
              
              
              15,630
              
              
              0.08
              %
              
              1.66
              %
              
              -1.58
              %Labor
              
              
              24,773
              
              
              119,813
              
              
              5.41
              %
              
              12.70
              %
              
              -7.29
              %Total
                  Cost of Sales
              
              **$**
              **71,334**
              
              **$**
              **324,360**Total
                  Cost of Sales % of Revenue
              
              
              **14.88**
              **%**
              
              **34.37**
              **%**
              
              
              
              
              
              
              
              **-19.49**
              **%**




**Gross
      Profits**




We
      generated $408,141 in gross profits from sales for the year ended December
      31,
      2006, which was a decrease of $211,234 from the year ended December 31, 2005,
      when we generated $619,376 in gross profits. Our gross profit margin percentage
      increased by 19.49% from 65.63% in the year ended December 31, 2005 to 85.12%
      in
      the year ended December 31, 2006.




**Selling,
      General and Administrative Expenses**




Total
      Selling, General and Administrative expenses in the year ended December 31,
      2006
      were $2,517,382, a decrease of 7.89% or $215,572 from the year ended December
      31, 2005 of $2,732,954. We reduced our full-time staff from 8 in the year ended
      December 31, 2005 to 6 during the year ended 2006, decreasing payroll expenses
      by $207,891, however this was offset by an increase in consultant expense of
      $206,366. Consolidation of our VA development center to our corporate offices
      in
      Texas resulted in a decrease of rent expense of $43,243, Other expense
      reductions within selling, general and administrative expenses for the year
      ended December 31, 2006 and December 31, 2005 included reductions as follows:




o
            Financing
                costs of $109,235




o
            Accounting
                fees of 40,530




o
            Employee
                benefits of $24,758




Our
      interest and penalty expense increased from $747,383 in the year ended December
      31, 2005 to $911,721 in the year ended December 31, 2006. This increase of
      $164,338 is primarily due to interest expense attributed to the callable secured
      convertible notes. Additionally, we recorded $85,884 in deferred interest
      associated with stock options and warrants issued during the year ended December
      31, 2006.




**Operating
      Loss**




The
      Company’s operating losses decreased by $4,337 in comparing the year ended
      December 31, 2006 to the year ended December 31, 2005, which were $2,109,242and
      $2,113,579, respectively.




**Net
      Loss**




We
      had a
      net loss of $4,443,627 the year ended December 31, 2006 compared to $3,632,448
      the year ended December 31, 2005, an increase in net losses of $811,179. This
      increase of net losses of 22.33% is attributable to a decrease of
      revenue,


-18-
 **Table
            of Contents**




increased
      interest expense and liquidated damages associated with the convertible debt
      Registration Rights Agreement, expensing of settlement costs for judgments
      and
      pending litigation, and expensing of deferred interest associated with stock
      options and warrants issued during the year ended December 31, 2006. Our loss
      per share also reduced to $.08 with a weighted average of 37,452,451 shares
      outstanding in the year ended December 31, 2006 as compared to $0.17 loss per
      share in the year ended December 31, 2005 with a weighted average of 16,997,444
      shares outstanding.




We
      have
      never declared or paid any cash dividends on our common stock. We anticipate
      that any earnings will be retained for development and expansion of our business
      and we do not anticipate paying any cash dividends in the foreseeable future.
      Our board of directors, subject to any restrictions or prohibitions that may
      be
      contained in our loan or preferred stock agreements, has sole discretion to
      pay
      dividends based on our financial condition, results of operations, capital
      requirements, contractual obligations and other relevant factors.




**FINANCIAL
      CONDITION**





**LIQUIDITY
      AND CAPITAL RESOURCES**





**OVERVIEW**





As
      of
      December 31, 2006, our cash balance was $106,556. We had a net loss of
      $4,443,627 for the fiscal year ended December 31, 2006. We had a net operating
      loss of approximately $17,000,000 for the period from May 17, 2002 through
      December 31, 2006 to offset future taxable income. Losses incurred prior to
      May
      17, 2002 were passed directly to the shareholders and, therefore, are not
      included in the loss carry-forward. There can be no assurance, however, that
      we
      will be able to take advantage of any or all tax loss carry-forwards, in future
      fiscal years. Our accounts receivable as of December 31, 2006, was $6,281 and
      $103,437 as of the year ended December 31, 2005, less allowances for doubtful
      accounts of $60,000. The reason for the decrease in accounts receivable of
      $97,156 when comparing accounts receivable as of December 31, 2006 to December
      31, 2005 was due to the decrease in revenues and write-off bad debts.
      Accounts receivable balances represent amounts owed to us for maintenance and
      support.





As
      of
      December 31, 2006, we had the following financing arrangements:




**Debt
                  Liability Summary Table****Current
                  Debt liabilities**Interest
                  payable, stockholders
              
              $
              1,187,088Notes
                  payable, stockholder, current portion
              
              
              875,000Callable
                  secured convertible notes, current portion
              
              
              2,344,973Total
                  Debt current liabilities
              
              $
              4,407,061**Long-term
                  Debt liabilities**Notes
                  payable, stockholders, convertible debt, net of deferred interest
                  of
                  $615,923
              
              $
              190,986Callable
                  secured convertible notes
              
              
              4,228,490Total
                  long term Debt liabilities
              
              $
              4,419,476
 **FINANCING
      NEEDS**





To
      date,
      we have not generated revenues in excess of our operating expenses. We have
      not
      been profitable since our inception, we expect to incur additional operating
      losses in the future and will require additional financing to continue the
      development and commercialization of our technology. We have incurred a net
      loss
      of approximately $4,443,000 and have negative cash flows from operations of
      approximately $2,040,000 for the year ended December 31, 2006, and have a
      working capital deficit of approximately $7,898,000 and a stockholders' deficit
      of approximately $12,304,000 as of


-19-
 **Table
            of Contents**




December
      31, 2006. These conditions raise substantial doubt about our ability to continue
      as a going concern. During 2006, our management will rely on raising additional
      capital to fund its future operations. If we are unable to generate sufficient
      revenues or raise sufficient additional capital, there could be a material
      adverse effect on the consolidated financial position, results of operations
      and
      we may be unable to continue our operations.




As
      of
      December 15, 2006, we had a commitment for an additional $900,000 financing
      with
      the issuance of a convertible note financing of which $250,000 was purchased
      in
      December 2006 and $125,000 of notes shall be purchased on the final business
      day
      of each month commencing in January 2007 and ending when the full $900,000
      in
      Notes has been purchased.




We
      expect
      that the remaining $900,000 will provide the necessary cash to support
      operations through the end of the second quarter of 2007. In the event that
      the
      company is unable to build its sales volume, collect current receivables and
      sustain operations until the final $900,000 is received, we may be unable to
      continue operations. Additionally, in the event that the Investors invoke their
      right to terminate additional purchases with 30 days notice during the financing
      period of the $900,000 detailed above, the Company could find itself without
      cash to support operations and unable to perform regular business.




We
      expect
      our capital requirements to increase significantly over the next several years
      as we continue to develop and market the WebDA TM suite
      and as we increase marketing and administration infrastructure and develop
      capabilities and facilities. Our future liquidity and capital funding
      requirements will depend on numerous factors, including, but not limited to,
      the
      levels and costs of our research and development initiatives, the cost of hiring
      and training additional sales and marketing personnel and the cost and timing
      of
      the expansion of our marketing efforts.




**FINANCINGS**





We
      have
      entered into the following financing transactions:





**LOANS
      FROM CHRISTOPHER J. CAREY, A SHAREHOLDER OF THE COMPANY AND FORMER OFFICER
      AND
      DIRECTOR.**





On
      July
      31, 2000, the Predecessor Entity entered into a line of credit with Mr. Chris
      Carey, our former President and Chief Executive Officer. The terms of the line
      of credit made available $1,989,500, which the Predecessor Entity could borrow
      from time to time, until August 1, 2001. The outstanding amounts accrued
      interest at the per annum rate equal to the floating base rate, as defined
      therein, computed daily, for the actual number of days elapsed as if each full
      calendar year consisted of 360 days. The first interest payment under the line
      of credit was due on August 1, 2001. On such date, the parties agreed to extend
      the line of credit for one more year, until August 1, 2002.





On
      April
      22, 2002, the Predecessor Entity issued 500,000 shares of its common stock
      to
      Mr. Carey (which converted into 1,093,750 shares of our common stock when we
      acquired the Predecessor Entity on May 16, 2002) in exchange for cancellation
      of
      $1 million of outstanding indebtedness under the July 31, 2000 line of credit
      from Mr. Carey.





On
      May
      16, 2002, the total amount outstanding under the July 31, 2000 line of credit
      with Mr. Carey was $2.2 million. On such date, we issued 666,667 shares of
      our
      common stock to Mr. Carey in exchange for the cancellation of $1 million of
      the
      then outstanding amount under the line of credit. We agreed to pay Mr. Carey
      the
      remaining $1.2 million according to the terms of a non-negotiable promissory
      note, which was issued on May 16, 2002.





On
      September 30, 2002, we renegotiated the $1,200,000 promissory note with Mr.
      Carey pursuant to a requirement contained in the promissory note with
      UnitedTrust Bank. According to the new terms of the loan, Mr. Carey extended
      the
      repayment of the principal amount until December 1, 2005. On December 1, 2005
      Mr. Carey extended the term of the loan to May 31, 2006.Until such time as
      the
      principal is paid, we will pay an interest only fee of 12% per year. As of
      December 31, 2005, $262,000 was outstanding under the promissory note issued
      to
      Mr. Carey.





On
      September 30, 2002, we entered into a loan agreement with CC Trust Fund to
      borrow an amount up to $355,128. Christopher Carey Jr., Mr. Carey's son, is
      the
      beneficiary of the trust, and Mary Carey, Mr. Carey's wife, is the trustee
      of
      the trust. This bridge loan was for a period of twelve months, with all
      principal due and payable on September 30, 2003. The 12.5% interest on the
      outstanding principal is due each year. At the end of the loan period, the
      CC
      Trust Fund will be  -20-
 **Table
            of Contents**


entitled
      to exercise 25,000 warrants at $1.50 per share. On September 30, 2003, the
      CC
      Trust Fund agreed to extend the term of their loan to December 30, 2003. On
      December 30, 2003, the CC Trust Fund agreed to extend the term of their loan
      to
      June 30, 2004. On March 30, 2004, the CC Trust Fund agreed to extend the term
      of
      their loan to March 31, 2005. On May 1, 2004, the AC Trust Fund agreed to extend
      the term of their loan to November 1, 2005. On December 31, 2005 the AC Trust
      Fund agreed to extend the term of the loan to May 31, 2006 . On
      August
      10, 2006, the CC Trust Fund agreed to extend the term of their loan to August
      31, 2006. As of June 30, 2006, $355,128 was outstanding under the CC Trust
      Fund
      loan agreement. On August 14, 2006, the CC Trust Fund (the "CC Fund") entered
      into a Settlement Agreement with the Company pursuant to which the CC Fund
      waived all rights to a loan made to the Company in the amount of $473,594
      including interest. In consideration of this waiver, the Company has agreed
      issue the CC Trust Fund 2,381 shares of Series D Convertible Preferred Stock
      with an aggregate stated value of $473,594. The shares of Series D Preferred
      Stock are convertible by dividing the stated value by the closing bid price
      on
      the day immediately prior to conversion.





On
      September 30, 2002, we entered into a loan agreement with AC Trust Fund to
      borrow an amount up to $375,404. Amie Carey, Mr. Carey's daughter, is the
      beneficiary of the trust, and Mary Carey, Mr. Carey's wife, is the trustee
      of
      the trust. This bridge loan is for a period of twelve months, with all principal
      due and payable on September 30, 2003. The 12.5% interest on the outstanding
      principal is due each year. At the end of the loan period, the Fund will be
      entitled to exercise 25,000 warrants at $1.50 per share. On September 30, 2002,
      the AC Trust Fund agreed to extend the term of their loan to December 30, 2003.
      On December 30, 2003, the AC Trust Fund agreed to extend the term of their
      loan
      to June 30, 2004. On March 30, 2004, the AC Trust Fund agreed to extend the
      term
      of their loan to March 31, 2005. On May 1, 2005, the AC Trust Fund agreed to
      extend the term of their loan to November 1, 2005. On April 11, 2006 the AC
      Trust Fund agreed to extend the term of their loan to May 31, 2006. On August
      10, 2006, the AC Trust Fund agreed to extend the term of their loan to August
      31, 2006. As of June 30, 2006, $375,404 was outstanding under the AC Trust
      Fund
      loan agreement. On August 14 2006, the AC Trust Fund (the "AC Fund") entered
      into a Settlement Agreement with the Company pursuant to which the AC Fund
      waived all rights to a loan made to the Company in the amount of $497,691
      including interest. In consideration of this waiver, the Company has agreed
      issue the AC Fund 2,502 shares of Series D Convertible Preferred Stock with
      an
      aggregate stated value of $497,691. The shares of Series D Preferred Stock
      are
      convertible by dividing the stated value by the closing bid price on the day
      immediately prior to conversion.




On
      March
      18, 2003, we entered into a bridge loan agreement with Christopher J. Carey,
      for
      a total of $400,000. The agreement stipulates that the Company will pay an
      8%
      interest rate on a quarterly basis until the loan becomes due and payable on
      June 30, 2004. We also issued to Mr. Carey 391,754 warrants exercisable for
      common stock for 10 years at a price of $0.97 per share. On December 30, 2003,
      Christopher J. Carey agreed to extend the term of the promissory note to June
      30, 2004. On May 1, 2004, Christopher J. Carey agreed to extend the term of
      the
      loan to June 1, 2005. On June 1, 2005 Mr. Carey extended the loan to May 31,
      2006. As of December 31, 2005, $394,995, including interest, was outstanding
      under the agreement.




On
      Feb.
      6, 2006 a stockholder converted $150,000 of deferred compensation into
      21,428,571 shares of common stock of the Company (the “Shares”).





On
      August
      14, 2006, Mr. Carey entered into a Settlement Agreement with the Company
      pursuant to which Mr. Carey waived all rights to the following:





o
            accrued
                salary in the amount of $781,369;


o
            a
                bridge loan in the amount of
                $262,000;


o
            a
                bridge loan in the amount of
                $360,000;


o
            auto
                allowance payable in the amount of $25,600;
                and


o
            accrued
                interest in the amount of $370,299.





In
      consideration of this waiver, the Company has agreed to pay Mr. Carey $8,000
      a
      month over a period of 15 months, issue Mr. Carey a convertible note in the
      amount of $661,369 (the "Carey Note") and issue Mr. Carey 5,117 shares of Series
      D Convertible Preferred Stock with an aggregate stated value of $1,017,899.
      The
      Carey Note matures on August 13, 2016, bears no interest and is convertible
      at
      the option of Mr. Carey at the market price of the Company's common
      stock.


-21-
 **Table
          of Contents**




The
      shares of Series D Preferred Stock are convertible by dividing the stated value
      by the closing bid price on the day immediately prior to
      conversion.




**FINANCINGS
      FROM PNC BANK (FORMERLY UNITED TRUST BANK)**





On
      November 1, 2001, the Predecessor Entity entered into a line of credit with
      UnitedTrust Bank (now PNC Bank) pursuant to which the Predecessor Entity
      borrowed $1.5 million. This line of credit was due to expire by its terms,
      and
      all outstanding amounts were due to be paid, on September 30, 2002. On September
      30, 2002, the line of credit came due and the bank granted a three-month
      extension. On September 30, 2002, we converted the outstanding line of credit
      with UnitedTrust Bank into a $1,500,000 promissory note. Such promissory note
      is
      to be paid in 36 monthly installments, which commenced in February 2003 and
      is
      due to terminate on January 1, 2006. Interest accrues on the note at the prime
      rate, adjusted annually, which is the highest New York City prime rate published
      in The Wall Street Journal. The initial prime rate that applied to the
      promissory note was 4.750%.





On
      August
      7, 2003, we entered into a modification of the loan agreement with UnitedTrust
      Bank, of which the principal balance was $1,291,666 at the time of closing
      of
      the modification. Pursuant to the modification agreement, UnitedTrust Bank
      agreed to subordinate its lien against our assets to a new lender and reduce
      the
      monthly payments from $41,666 per month principal plus accrued interest as
      follows: (a) from the date of closing through December 15, 2003, $10,000 per
      month plus accrued interest (b) from January 15, 2004 through December 15,
      2004,
      $15,000 per month plus accrued interest, (c) from January 15, 2005 through
      December 15, 2005, $20,000 per month plus interest and (d) on the maturity
      date
      of January 1, 2006, a balloon payment equal to all the outstanding principal
      and
      accrued interest. We are current with our payment of $15,000 per month.





On
      January 9, 2004, we were served with a notice of an event of default by United
      Trust Bank, now PNC Bank, a successor by merger effective January 2004 with
      United Trust Bank, ("the Bank"), under its Loan Agreement. Pursuant to section
      6.01(d) of the Loan Agreement, an Event of Default exists due to the Company's
      failure to pay Payroll Tax Obligations aggregating in the amount of $1,089,897
      as of December 31, 2003 (including estimated penalties and interest). The
      Company continues to make timely scheduled payments pursuant to the terms of
      the
      loan and is in forbearance negotiations with the Bank with respect to the
      default. On April 1, 2004, the Company received a second Notice of Event of
      Default stating that the Bank had accelerated the maturity of the Loan and
      declared all principal, interest, and other outstanding amounts due and payable.





Because
      we were in default under the terms of the loan due primarily to our payroll
      tax
      default, the Bank has instituted the default rate of interest which is 5% above
      the "highest New York City prime rate" stated above. We have entered into an
      installment agreement with the United States Internal Revenue Service to pay
      the
      withholding taxes, under the terms of which we will pay $100,000 by May 31,
      2004
      and $35,000 each month, commencing June 28, 2004, until we have paid the
      withholding taxes due in full.





On
      April
      27, 2004, PNC Bank, N.A., as successor by merger to UnitedTrust Bank filed
      a
      complaint in the Superior Court of New Jersey, Law Division, Union County
      (Docket No. UNN-L_001522-04) against our company and Christopher J. Carey,
      in
      his capacity as guarantor, to collect the sums outstanding under the Loan
      Agreement, dated as of September 30, 2002.





On
      July
      15, 2004, we entered into a fully executed forbearance agreement with PNC Bank,
      N.A. We made an initial principal payment of $420,000 with the execution of
      the
      forbearance. Additionally, we are required to make four consecutive monthly
      installments of $50,000.00 on August 15, 2004, September 15, 2004, October
      15,
      2004 and November 15, 2004 followed by the remaining principal on or before
      December 15, 2004. Failure to adhere to this schedule may cause the suit to
      be
      reinstated and PNC Bank may resume collection of the sum under the suit.





On
      November 12, 2004, our company and PNC Bank agreed upon terms of an amendment
      to
      the forbearance agreement whereby by the payment schedule will change to include
      interest only payments on November 15, 2004, December 15, 2004 and January
      15,
      2005. We have made all interest payments.


-22-
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            of Contents**




On
      March
      31, 2005, the Company paid off and satisfied the note due to PNC bank in the
      principal amount of $606,667. All accrued interest in the amount of $16,830
      was
      all paid off.





**FINANCINGS
      BY STANFORD VENTURE CAPITAL HOLDINGS, INC.**





On
      May
      15, 2002, we entered into a Securities Purchase Agreement with Stanford Venture
      Capital Holdings, Inc., referred to herein as Stanford, in which we issued
      to
      Stanford (i) such number of shares of our Series A $1.50 Convertible Preferred
      Stock, referred to herein as Series A Preferred Stock, that would in the
      aggregate equal 20% of the total issued and outstanding shares of our common
      stock, and (ii) such number of warrants for shares of our common stock that
      would equal the number of shares of Series A Preferred Stock issued to Stanford.
      The total aggregate purchase price for the Series A Preferred Stock and warrants
      paid by Stanford was $3,000,000. The issuance of the Series A Preferred Stock
      and warrants took place on each of four separate closing dates from May 16,
      2002
      through and July 19, 2002, at which we issued an aggregate of 2,002,750 shares
      of our Series A Preferred Stock and warrants for 2,002,750 shares of our common
      stock to Stanford.





The
      Series A amounts and closing dates are as follows:




CLOSING
                  DATE
              
              PURCHASE
                  PRICEMay
                  17, 2002
              
              $
              750,000July
                  3, 2002
              
              $
              750,000July
                  11, 2002
              
              $
              750,000July
                  19, 2002
              
              $
              750,000




The
      warrants issued in 2002 were valued at $294,893 using the Black-Scholes model
      using the following assumptions and a stock price of $1.50:





o
            Conversion
                price $1.50;





o
            expected
                volatility of 0%;





o
            expected
                dividend yield rate of 0%;





o
            expected
                life of 5 years; and





o
            a
                risk-free interest rate of 4.91% for the period ended June 30, 2002.





In
      connection with our Series B financing, as partial consideration for the funds
      received pursuant to the Series B financing, we agreed to decrease the exercise
      price to $.25. With respect to the decrease in the exercise price and the
      warrants being treated as a cost of the series B financing, the reduction of
      series A warrants was written in to the Series B preferred stock agreements
      as
      part of the negotiation. At the end of fiscal 2003, Stanford exercised the
      warrants for 2,002,750 shares of our common stock.





On
      April
      24, 2003, we entered into a Securities Purchase Agreement with Stanford Venture
      Capital Holdings, Inc. for the issuance of 2,444,444 shares of our Series B
      $0.90 Convertible Preferred Stock. The issuance of the Series B Preferred Stock
      took place on six separate closing dates beginning on May 5, 2003 through
      September 15, 2003. In connection with the Securities Purchase Agreement, we
      agreed to modify the previously issued five-year warrants to purchase 2,002,750
      shares of our common stock: (i) to reduce the exercise price to $.25 per share;
      and (ii) to extend the expiration date through  -23-
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            of Contents**


August
      1,
      2008. In addition, our President and Chief Executive Officer, Christopher J.
      Carey, agreed to convert outstanding loans of $543,000 to 603,333 shares of
      our
      common stock at a price of $.90 per share. In addition, the Company and Stanford
      entered into a Registration Rights Agreement, dated April 30, 2003, in which
      the
      Company agreed to register the shares of the Company's common stock issuable
      upon conversion of the Series A and Series B Preferred Stock with the Securities
      and Exchange Commission, no later than November 15, 2003. The Company and
      Stanford agreed to extend the date of the filing requirements of the
      Registration Rights Agreement to March 14, 2004. We have not yet filed a
      registration statement, and are in negotiations with Stanford regarding an
      extension of the registration filing date.





On
      March
      3, 2004 and March 15, 2004 we received loans in the amount of $437,500 each
      from
      Stanford, resulting in a total loan of $875,000. We have agreed to pay Stanford
      an 8% annual dividend on the funds invested and to redeem the securities not
      later than three years from the date of funding. The company has not made any
      of
      these payments to date and the notes are coming due.





**PRIVATE
      PLACEMENTS WITH ACCREDITED PRIVATE INVESTORS**





During
      August and September 2002, we entered into 9 subscription agreements with
      accredited private investors, as defined in Rule 501 of the Securities Act,
      pursuant to which we issued an aggregate of 179,333 shares of our common stock
      at $1.50 per share. These private investments generated total proceeds to us
      of
      $269,000.





In
      October 2003, we commenced offerings to accredited investors in private
      placements of up to $3,000,000 of our common stock. In the period of October
      2003 through January 9, 2004 we raised $225,000 under the terms of these private
      placements. The shares offered in the private placement are priced at the 5
      trading day trailing average closing price of the common stock on the OTCBB,
      less 20%. For each share purchased in the private placements, purchasers
      received a warrant to purchase one half (0.5) share of common stock at 130%
      of
      the purchase price. A minimum of $25,000 was required per investor. The number
      shares issued under this placement total 509,559, at an average price of
      $0.44/share.





**CALLABLE
      SECURED CONVERTIBLE NOTES**





To
      obtain
      funding for its ongoing operations, the Company entered into various Securities
      Purchase Agreements with the Investors for the sale of callable convertible
      secured notes and stock purchase warrants





To
      date,
      the Investors purchased $6,380,000 in notes, and received warrants to purchase
      an aggregate of 4,930,000 shares of the companies stock, in thirteen different
      traunches dated June 18, 2004 for $1,000,000, July 21, 2004 for $500,000,
      October 22, 2004 for $350,000, March 18, 2005 for $650,000, March 31, 2005
      for
      $350,000, May 4, 2005 for $300,000, July 18, 2005 for $282,500, August 30,
      2005
      for $100,000, October 6, 2005 for $210,000, November 9, 2005 for $150,000,
      December 31, 2005 for $107,480, February 6, 2006 for $180,000, March 17, 2006
      for $250,000, April 12, 2006 for $200,000, on May 12, 2006 for $200,000, on
      June
      8, 2006 for $200,000, on July 12, 2006 for $200,000 and on August 14, 2006
      for
      $150,000. On Dec 20, 2005, the Investors converted $1,297 of the convertible
      notes into 172,873 shares of common stock. During
      the year ended December 31, 2006 the investors converted $5,027 of convertible
      notes into 4,698,600 shares of common stock.





The
      Notes
      bear interest at a rate ranging from 8% to 12%, mature two years from the date
      of issuance, and are convertible into our common stock, at the Investors'
      option, at the lower of (i) $0.70 or (ii) 75% of the average of the three lowest
      intraday trading prices for the Company's common stock during the 20 trading
      days before, but not including, the conversion date. The Company may prepay
      the
      Notes in the event that no event of default exists, there are a sufficient
      number of shares available for conversion of the Notes and the market price
      is
      at or below $0.57 per share. The full principal amount of the Notes is due
      upon
      default under the terms of Notes. In addition, the Company has granted the
      investors a security interest in substantially all of its assets and
      intellectual property as well as registration rights.


-24-
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            of Contents**




To
      obtain
      funding for its ongoing operations, we entered into a Securities Purchase
      Agreement (the “Agreement”) with the investors on December 15, 2006 for the sale
      of (i) $900,000 in callable secured convertible notes (the “Notes”) and (ii)
      stock purchase warrants (the “Warrants”) to buy 5,000,000 shares of our common
      stock.





The
      following closings have occurred under the Agreement:




o
            On
                December 15, 2006, the Investors purchased $250,000 in Notes and
                received
                Warrants to purchase 1,388,500 shares of the Company’s common stock.


o
              On
                  January 11, 2007, the Investors purchased $150,000 in Notes and
                  received
                  Warrants to purchase 850,000 shares of the Company’s common
                  stock.


o
              On
                  February 12, 2007, the Investors purchased $150,000 in Notes and
                  received
                  Warrants to purchase 850,000 shares of the Company’s common
                  stock.




o
            On
                March 15, 2007, the Investors purchased $150,000 in Notes and received
                Warrants to purchase 850,000 shares of the Company’s common
                stock.





In
      addition, provided that all of the conditions in the Securities Purchase
      Agreement are satisfied, on the final business day of each month until the
      full
      amount under the Agreement has been purchased, the Company will issue to the
      Investors and the Investors will purchase $125,000 in Notes and related
      Warrants. The Company or a majority in interest of the Investors may terminate
      the obligation to issue additional Notes and Warrants upon 30 days
      notice.





The
      Notes
      bear interest at 8%, mature two years from the date of issuance, and are
      convertible into our common stock, at the Investors' option, at a conversion
      price, equal to the lower of (i) $0.05 or (ii) 25% of the average of the three
      lowest intraday trading prices for our common stock during the 20 trading days
      before, but not including, the conversion date. As of February 13, 2007, the
      average of the three lowest intraday trading prices for our common stock during
      the preceding 20 trading days as reported on the Over-The-Counter Bulletin
      Board
      was $.003 and, therefore, the conversion price for the secured convertible
      notes
      was $.00075. Based on this conversion price, the Notes in the amount of $150,000
      issued on February 12, 2007 were convertible into 200,000,000 shares of our
      common stock.





We
      may
      prepay the Notes in the event that no event of default exists, there are a
      sufficient number of shares available for conversion of the callable secured
      convertible notes and the market price is at or below $.08 per share. The full
      principal amount of the Notes is due upon default under the terms of Notes.
      In
      addition, we have granted the Investors a security interest in substantially
      all
      of our assets and intellectual property as well as registration rights.





The
      Warrants are exercisable until five years from the date of issuance at a
      purchase price of $0.05 per share. In addition, the exercise price of the
      Warrants is adjusted in the event we issue common stock at a price below market.




**CRITICAL
      ACCOUNTING POLICIES AND USE OF ESTIMATES**





Financial
      Reporting Release No. 60, recently released by the Securities and Exchange
      Commission, requires all companies to include a discussion of critical
      accounting policies or methods used in the preparation of financial statements.
      The notes to the consolidated financial statements include a summary of
      significant accounting policies and methods used in the preparation of our
      Consolidated Financial Statements. In addition, Financial Reporting Release
      No.
      61 was recently released by the SEC requires all companies to include a
      discussion which addresses, among other things, liquidity, off-balance sheet
      arrangements, contractual obligations and commercial commitments. The following
      is a brief discussion of the more significant accounting policies and methods
      used by us.


-25-
 **Table
          of Contents**





The
      discussion and analysis of our financial condition and results of operations
      are
      based upon our consolidated financial statements,
      which have been prepared in accordance with accounting principles generally
      accepted in the United States. The preparation of financial statements in
      accordance with generally accepted accounting principles in the United States
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities, including the recoverability of tangible
      and
      intangible assets, disclosure of contingent assets and liabilities as of the
      date of the financial statements and the reported amounts of revenues and
      expenses during the reported period.





On
      an
      on-going basis, we evaluate our estimates. The most significant estimates relate
      to our recognition of revenue and the capitalization of our software
      development.





We
      believe the following critical accounting policies affect our more significant
      judgments and estimates used in the preparation of our consolidated financial
      statements:





**REVENUE
      RECOGNITION POLICY**





Revenue
      is recognized under the guidelines of Statement of Position SOP 97-2 Software
      Revenue Recognition.





All
      sales
      agreements with clients do not require significant production, modification,
      or
      customization of software, additionally all the functionality of the product
      is
      made available upon delivery, therefore the Company recognizes revenue in
      accordance with Paragraph 8 of 97-2 when:





1)
            Persuasive
                evidence of an arrangement exists as evidenced by a signed contract,





2)
            Delivery
                has occurred, please note that Stronghold does not recognize revenue
                prior
                to delivery,





3)
            The
                price of Stronghold's system is fixed and determinable as evidence
                by the
                contract, and





4)
            Collectability
                is highly probable.





Previously
      in the periods of 2002 through 2005, the Company had also recognized revenue
      under the guideline of SFAS No. 48 “Revenue Recognition When Right of Return
      Exists”. Consistent with the new revenue plan of a shorter time commitment and
      proportionally minimal upfront fees as detailed in the Revenue sections herein,
      the Company has discontinued the 60 day trial period and the corresponding
      right
      of return. Additionally, the Company has also discontinued the third party
      long
      term lease arrangement that the Company also used from 2002 through 2005.
      Consistent with the release of the new WebDA TM product,
      there are minimal upfront fees as detailed in the revenue sections
      herein.





The
      current revenue recognition plan will include a set up and installation fee
      for
      the software of $2,500.00 and a monthly fee of $2,500.00. The monthly fee will
      include both the services associated with the customer relationship management
      (CRM) software and the maintenance. Approximately $750.00/month of the
      $2,500/month fee will be allocated to maintenance and the remaining
      $1,175.00/month will be allocated to customer relationship management (CRM)
      software. The allocation to maintenance is consistent with prior evidence of
      clients paying this amount for many years.





With
      the
      release of the new WebDA TM system,
      the Company’s revenue model will changed to provide for competitive pricing
      advantages. Our revenues moving forward will be primarily generated from a
      one-time up-front payment and monthly recurring fees covering software licenses.
      Our license agreements will be provided in twelve, twenty-four and thirty-six
      month terms. A $2,500 down payment and a monthly fee of $1,500 over a twelve
      month term will be booked as revenue at an average annual fee of $20,500,
      inclusive of down payment.




**DEFERRED
      REVENUE**





Under
      the
      Company’s previous revenue model, deferred revenue was recorded as a liability
      when the Company received the three year maintenance contract in a one-time
      advance payment. The Company will continue to recognize the revenue from the
      maintenance portion of the unexpired contracts on a pro rata basis through
      the
      end of each contract term.


-26-
 **Table
          of Contents**




**SOFTWARE
      DEVELOPMENT CAPITALIZATION POLICY**




Software
      development costs, including significant product enhancements incurred
      subsequent to establishing technological feasibility in the process of software
      production, are capitalized according to Statement of Financial Accounting
      Standards No. 86, "Accounting for the Costs of Computer Software to Be Sold,
      Leased, or Otherwise Marketed." Costs incurred prior to the establishment of
      technological feasibility are charged to research and development expenses.
      For
      the year ended December 31, 2006, we capitalized zero. During 2006 we fully
      amortized and expensed the $490,846 balance of software development costs
      recorded as of December 31, 2005. The determination for amortizing the 2005
      balance was made in recognition of the Company’s decision to stop marketing the
      DealerAdvance TM software
      which had reached the end to it s life cycle and commence marketing of the
      new
      WebDA TM




**DIVIDEND
      POLICY**





We
      have
      never declared or paid any cash dividends on our Common Stock. We anticipate
      that any earnings will be retained for development and expansion of our business
      and we do not anticipate paying any cash dividends in the foreseeable future.
      Our board of directors, subject to any restrictions or prohibitions that may
      be
      contained in our loan or preferred stock agreements, has sole discretion to
      pay
      dividends based on our financial condition, results of operations, capital
      requirements, contractual obligations and other relevant factors.





**Item
      7.  FINANCIAL STATEMENTS**





The
      financial statements required to be filed pursuant to this Item 7 are included
      in this Annual Report on Form 10-KSB beginning on page F-1. A list of the
      financial statements filed herewith is found on page F-1.





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





**None.**





**Item
      8A.  CONTROLS AND PROCEDURES**





**Disclosure
      Controls and Procedures**





The
      Company maintains controls and procedures designed to ensure that it is able
      to
      collect the information it is required to disclose in the reports it files
      with
      the SEC, and to process, summarize and disclose this information within the
      time
      periods specified in the rules of the SEC. The Company's Chief Executive and
      Chief Financial Officers are responsible for establishing and maintaining these
      procedures and, as required by the rules of the SEC, evaluate their
      effectiveness. Based on their evaluation of the Company's disclosure controls
      and procedures, which took place as of a date within 90 days of the filing
      date
      of this report, the Chief Executive and Chief Financial Officers believe that
      these procedures are effective to ensure that the Company is able to collect,
      process and disclose the information it is required to disclose in the reports
      it files with the SEC within the required time periods.





**Internal
      Controls**





The
      Company maintains a system of internal controls designed to provide reasonable
      assurance that: transactions are executed in accordance with management's
      general or specific authorization; transactions are recorded as necessary (i)
      to
      permit preparation of financial statements in conformity with generally accepted
      accounting principles and (ii) to maintain accountability for assets. Access
      to
      assets is permitted only in accordance with management's general or specific
      authorization and the recorded accountability for assets is compared with the
      existing assets at reasonable intervals and appropriate action is taken with
      respect to any differences.





Since
      the
      date of the most recent evaluation of the Company's internal controls by the
      Chief Executive and Chief Financial Officers, there have been no significant
      changes in such controls or in other factors that could have significantly
      affected  -27-
 **Table
            of Contents**


those
      controls, including any corrective actions with regard to significant
      deficiencies and material weaknesses.





**Item
      8A(T). CONTROLS AND PROCEDURES**





Not
      applicable


-28-
 **Table
          of Contents**




**PART
      III**





**Item
      9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS; COMPLIANCE WITH SECTION16(A) OF THE EXCHANGE ACT**





Our
      executive officers and directors and their respective ages and positions as
      of
      December 31, 2003 are as follows:




Name
                
                Age
                
                Position(s)Steven
                    E. Humphries
                
                54
                
                President,
                    Chief Executive Officer and
                    Director




On
      August
      14, 2006, the Board of Directors voted to appoint Steven E. Humphries as a
      director, the Chief Executive Officer and Chief Financial Officer of the
      Company.





In
      March,
      2003 Mr. Humphries founded Humphries Marketing Group, LLC ("HMG"),
      a full-service automotive exclusive advertising agency located in North Dallas
      (Addison), Texas. Prior to forming HMG he was co-founder, member and Chief
      Operating Officer of Caballero Television Texas, LLC, which owned MasMusica
      TeVe, the first 24 hour Spanish music video network in the United States, which
      was recently sold to Viacom. Prior to Caballero, Mr. Humphries served in
      executive positions with top US broadcast groups, including Spanish Broadcasting
      Systems, Hispanic Broadcasting Corporation (now Univision Radio) and TK Communications.
      Mr. Humphries has managed and/or consulted some of the most successful Spanish
      Radio stations in the USA including KLVE-FM Los Angeles, KLAX-FM-Los Angeles,
      WSKQ-FM-New York, WPAT-FM-New York, WLEY-Chicago and KXTN-San
      Antonio.




**EXECUTIVE
      OFFICERS**





On
      April
      30, 2006, the Company entered into a Consulting Agreement with Humphries
      Marketing Group (“HMG”) pursuant to which HMG has agreed to provide management
      and administrative services, including the appointment of Steven Humphries
      as an
      executive officer.





**BOARD
      COMMITTEES**





As
      the
      Company currently only has one director it does not have an audit committee,
      compensation committee or governance/nominating committee.





**CODE
      OF ETHICS**





Because
      we are an early-development stage company with limited resources, we have not
      yet adopted a "code of ethics", as defined by the SEC, that applies to our
      Chief
      Executive Officer, Chief Financial Officer, principal accounting officer or
      controller and persons performing similar functions. We are in the process
      of
      drafting and adopting a Code of Ethics.





**Item
      10.  E****XECUTIVE
      COMPENSATION**




The
      following table sets forth information concerning the total compensation that
      the Company has paid or that has accrued on behalf of Company’s chief executive
      officer and other executive officers with annual compensation exceeding $100,000
      during the years ended December 31, 2006 and 2005.  -29-
 **Table
            of Contents**




Name
                  & Principal Position
              
              Year
              
              Salary
                  ($)
              
              Bonus
                  ($)
              
              Stock
                  Awards ($)
              
              Option
                  Awards ($)
              
              Non-Equity
                  Incentive Plan Compensation ($)
              
              Change
                  in Pension Value and Non-Qualified Deferred Compensation Earnings
                  ($)
              
              All
                  Other Compensation
              
              Total
                  ($)Steven
                  E. Humphries
              
              
              2006
              
              
              100,000
              
              
              —
              
              
              —
              
              
              2,000
              
              
              —
              
              
              —
              
              
              —
              
              
              102,000President,
                  Chairman of the Board andChief
                  Executive Officer
              
              
              2005
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Christopher
                  J. Carey
              
              
              2006
              
              
              164,671
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              9,600
              
              
              176,277President,
                  Chairman of the Board andChief
                  Executive Officer
              
              
              2005
              
              
              350,000
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              9,600
              
              
              361,605


The
      Company has no current employment agreements or long-term compensation
      plans.




On
      April
      30, 2006, DealerAdvance, Inc. (the "Company") entered into a Consulting
      Agreement with Humphries Marketing Group, LLC ("HMG") pursuant to which HMG
      has
      agreed to provide management services, including the appointment of Steven
      Humphries as an executive officer and the appointment of a person to act as
      the
      Vice President of Sales. The Consulting Agreement is for a term of three years.
      In consideration for providing such services, the Company shall pay HMG (i)
      $15,000 per month unless it has achieved $150,000 in revenue per month, then
      the
      payment shall be $18,500 per month; (ii) 20% commission on net sales




**OUTSTANDING
      EQUITY AWARDS**




Option
                  Awards
              
              Stock
                  Awards**Name**
              
              **Number
                  of Securities Underlying Unexercised Options (#)
                  Exercisable**
              
              **Number
                  of Securities Underlying Unexercised Options (#)
                  Unexercisable**
              
              **Equity
                  Incentive Plan Awards: Number of Securities Underlying Unexercised
                  Unearned Options (#)**
              
              **Option
                  Exercise Price ($)**
              
              **Option
                  Expiration Date**
              
              **Number
                  of Shares or Units of Stock That Have Not Vested
                  (#)**
              
              **Market
                  Value of Shares or Units of Stock That Have Not Vested
                  ($)**
              
              **Equity
                  Incentive Plan Awards: Number of Unearned Shares, Units of Other
                  Rights
                  That Have Not Vested (#)**
              
              **Equity
                  Incentive Plan Awards: Market or Payout Value of Unearned Shares,
                  Unites
                  or Other Rights That Have Not Vested ($)**Steven
                  E. Humphries
              
              
              666,667
              
              
              —
              
              
              —
              
              $
              0.003
              
              
              12/14/16
              
              
              See
                  Note (1
              )
              
              
              
              
              —
              
              
              —




Except
      as
      set forth above, no other named executive officer has received an equity
      award.







(1)
            On
                April 30, 2006, the Company entered into a Consulting Agreement with
                Humphries Marketing Group, LLC ("HMG") pursuant to which HMG has
                agreed to
                provide management and administrative services including the appointment
                of Steven Humphries as an executive officer and the appointment of
                a
                person to act as the Vice President of Sales. This agreement included
                an
                option to purchase shares within the following
                parameters:




An
      option
      exercisable at an aggregate price of $1.00 to purchase an amount of shares
      of
      common stock of the Company, which vest on the 12 month anniversary of entering
      into the consulting agreement (the "First Anniversary Date"), equal to 10%
      of
      the total outstanding shares of the Company as of the First Anniversary Date
      and
      a second option to purchase shares of common stock of the Company equal to
      10%
      of the total outstanding shares of the Company as of the date the Company has
      generated positive net income for four consecutive quarters (the "Net Income
      Date"), which shall vest as of the Net Income Date; provided, however, such
      options may only be exercised upon New Millennium Capital Partners II, LLC,
      AJW
      Qualified Partners, LLC, AJW Offshore, Ltd. or AJW Partners, LLC (collectively,
      the "Investors") having fully converted their convertible debt outstanding
      as of
      April 30, 2006 (the "Debt") to shares of common stock of the
      Company.


-30-
 **Table
            of Contents**




Since
      neither the i) positive net income requirement nor the ii) requirement that
      the
      Investors have fully converted their convertible debt outstanding as of April
      30, 2006, the option to HMG cannot be vested and therefore has no value and
      is
      non-dilutive.




**DIRECTOR
      COMPENSATION**





The
      following table sets forth with respect to the named director, compensation
      information inclusive of equity awards and payments made in the year end
      December 31, 2006.





Name
            
            Fees
                Earned or Paid in Cash
            
            Stock
                Awards
            
            Option
              Awards
            
            Non-Equity
                Incentive Plan Compensation
            
            Change
                in Pension Value and Nonqualified Deferred Compensation
                Earnings
            
            All
                Other Compensation
            
            Total($)
            
            ($)
            
            ($)
            
            ($)
            
            
            
            ($)
            
            ($)None.




We
      do not
      pay directors compensation for their service as directors. We are in the process
      of developing a compensation policy for our directors.





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





The
      following table sets forth information regarding the beneficial ownership of
      our
      common stock as of April 12, 2007. The information in this table provides the
      ownership information for each person known by us to be the beneficial owner
      of
      more than 5% of our Common Stock, each officer and director;




Beneficial
      ownership has been determined in accordance with the rules and regulations
      of
      the SEC and includes voting or investment power with respect to the shares.
      Unless otherwise indicated, the persons named in the table below have sole
      voting and investment power with respect to the number of shares indicated
      as
      beneficially owned by them. Common Stock beneficially owned and percentage
      ownership is based on 47,751,393 shares outstanding on April 12, 2007, and
      assuming the exercise of any options or warrants or conversion of any
      convertible securities held by such person, which are presently exercisable
      or
      will become exercisable within 60 days after April 12, 2007.




**Number
                  of Shares**
              
              **Percentage****Name
                  and Address of Beneficial Owner**
              
              **Beneficially
                  Owned**
              
              **Outstanding****5%
                  Stockholders**Christopher
                  J. Carey60
                  Broadway, PH2Brooklyn,
                  NY 11211
              
              
              26,559,821
              
              
              50.87
              %Stanford
                  Venture Capital Holdings6075
                  Poplar AvenueMemphis,
                  TN 38119
              
              
              10,721,273
              
              
              20.54
              %Other
                  Executive Officers and DirectorsSteven
                    E. Humphries
              
              
              —
              
              
              0.00
              %







(1)
            3,937,500
                of these shares are owned by Christopher J. Carey and his wife, Mary
                Carey, as Joint Tenants with Right of Survivorship.


(2)
            The
                total beneficial ownership of Stanford Venture Capital Holdings,
                Inc. is
                10,721,273 shares which consists of: (i) 2,002,750 shares of Common
                Stock
                issuable upon the conversion of 2,002,750 shares of our Series A
                Preferred
                Stock; and (ii) 2,444,444 shares of Common Stock issuable upon the
                conversion of 2,444,444 shares of our Series B Preferred Stock and
                (iii)
                6,274,079 shares of Common StockJames
                M. Davis has voting and investment control over the securities held
                by
                Stanford Venture Capital Holdings, Inc., but he disclaims beneficial
                ownership of such securities, except to the extent of any pecuniary
                interest therein.




-31-
 **Table
          of Contents**




**EQUITY
      COMPENSATION IN FISCAL 2006**





The
      following table provides information about the securities authorized for
      issuance under our equity compensation plans as of December 31, 2006.




**EQUITY
                  COMPENSATION PLAN INFORMATION****Number
                  of securities****Remaining**
              
              **to
                  be issued upon**
              
              **Weighted-average**
              
              **Number
                  of securities****issuance**
              
              **exercise
                  of**
              
              **exercise
                  price of**
              
              **available
                  for future****compensation
                  plans****(2)**
              
              **outstanding
                  options(1)**
              
              **outstanding
                  options**
              
              **under
                  equity****Equity
                  compensation plans****approved
                  by security holders**
              
              
              3,707,643
              
              $
              0.01
              
              
              1,714,232**Equity
                  compensation plans not****approved
                  by security holders**
              
              
              —
              
              
              —
              
              
              —**Total**
              
              
              3,707,643
              
              $
              0.01
              
              
              1,714,232


(1)
            Issued
                pursuant to our 2002 Stock Incentive Plan, our 2002 California Stock
                Incentive Plan, our 2000 Stock Option Plan and our DealerAdvance,
                Inc.
                2007 Incentive Stock Plan





(2)
            223,232
                shares are available for future issuance pursuant to the 2002 Stock
                Incentive Plan, 157,667 shares are available for future issuance
                pursuant
                to the 2002 California Stock Incentive Plan and 1,333,333 shares
                are
                available for future issuance pursuant to the DealerAdvance, Inc.
                2007
                Incentive Stock Plan. We do not intend to issue any additional options
                under our 2000 Stock Option Plan.





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





Stronghold
      Technologies, Inc., the Predecessor Entity, became our wholly-owned subsidiary
      on May 16, 2002 pursuant to a merger with and into Acquisition Sub. Pursuant
      to
      the merger, the Predecessor Entity's stockholders surrendered all of their
      outstanding shares of the Predecessor Entity's common stock in exchange for
      a
      total of 7,000,000 shares of our common stock. Of these shares, Christopher
      J.
      Carey, our current President, and his wife received a total of 3,937,500 shares
      held jointly, and Mr. Carey received an additional 1,093,750 shares
      individually.





Pursuant
      to a Securities Purchase Agreement which we entered into on May 15, 2002, with
      Stanford, a major shareholder of our company, Pietro Bortolatti, a former
      officer and director of our company, and Mr. Carey, we agreed to issue to
      Stanford such number of shares of our Series A Preferred Stock that would in
      the
      aggregate equal 20% of the total issued and outstanding shares of our common
      stock, and a warrant to purchase an equal number of shares of our common stock.
      The aggregate purchase price for the Series A Preferred Stock and warrants
      purchased by Stanford was $3,000,000. The Series A Preferred Stock and warrant
      purchase took place on four separate closing dates from May 16, 2002 through
      July 19, 2002, in which we issued an aggregate of 2,002,750 shares of our Series
      A Preferred Stock to Stanford and warrants for 2,002,750 shares of our common
      stock. So long as any shares of Series A Preferred Stock are outstanding and
      held by Stanford, Stanford had the right to maintain its percentage ownership
      with respect to any additional securities we may issue,
      with certain exceptions under the Series A Securities Purchase
      Agreement.


-32-
 **Table
          of Contents**




Pursuant
      to a Securities Purchase Agreement which we entered into on April 24, 2003,
      we
      agreed to issue to Stanford a total of 2,444,444 shares of our Series B $0.90
      Convertible Preferred Stock ("Series B Preferred Stock"). The issuance of the
      Series B Preferred Stock occurred on six separate closing dates beginning on
      April 24, 2003 and closing on September 15, 2003. In connection with the
      Purchase Agreement, we modified the warrants issued in connection with the
      Series A offering to reduce the exercise price to $0.25 per share and extend
      the
      expiration date to August 1, 2008. Stanford was also granted the right to
      maintain its percentage ownership with respect to any additional securities
      we
      may issue, with certain exceptions under the Series B Securities Purchase
      Agreement. In addition, we agreed to convert all outstanding loans and
      unreimbursed expenses to certain stockholders of our company for 603,000 shares
      of our common stock at a price of $0.90 per share. The value of the warrant
      modification was treated as additional costs associated with raising capital
      and
      was shown as a reduction of additional paid-in capital of approximately $557,000
      (computed using the Black-Scholes model with the following assumptions: expected
      volatility of 0%, expected dividend yield rate of 0%, expected life of 5 years,
      and a risk-free interest rate of 4.91% for September 30, 2003).





In
      connection with the Series B Purchase Agreement, we entered into a Registration
      Rights Agreement with Stanford, dated April 30, 2003, in which we agreed to
      register the shares of common stock issuable upon conversion of the Series
      B
      Preferred Stock, no later than November 15, 2003. Stanford has agreed to extend
      the date to register the common stock issuable upon conversion of the Series
      B
      Preferred Stock until March 15, 2004, which was further extended in June 2004.





In
      connection with the Series B Purchase Agreement, we entered into a Consulting
      Agreement with Stanford, pursuant to which Stanford has agreed to perform
      certain financial consulting and advisory services, in exchange for which we
      agreed to pay Stanford a fee of $50,000 per year for two years, payable
      quarterly in equal installments of $12,500, with the first such installment
      due
      on July 1, 2003. Pursuant to the terms of the Consulting Agreement, we may,
      at
      our sole option, choose to issue shares of our common stock to Stanford in
      lieu
      of such payments.





On
      November 11, 2003, we agreed with Stanford to modify the terms of the Series
      A
      and Series B Preferred Stock to facilitate acquisitions and other company
      actions. The basic terms of the modification are: (i) waiver Section 2(e)(iii)
      of the Series A Certificate of Designation, which provides for anti-dilution
      protection if we shall issue securities which are convertible into shares of
      our
      common stock for an exercise price of less than $1.50; (ii) waiver of any rights
      of Stanford to Default Warrants (as defined in the Series A Registration Rights
      Agreement) due to our failure to register our shares of common stock; and (iii)
      modification of the warrants previously issued to Stanford and its assigns
      to
      purchase 2,002,750 shares of our common stock to reduce the initial exercise
      price to $0.25 per share and to extend the expiration date to August 1, 2008.





Pursuant
      to the Amended and Restated Series A Certificate of Designation and Series
      B
      Certificate of Designation, dated November 11, 2003, by and between our company
      and Stanford and a Written Notice, Consent, and Waiver Among The Holders Of
      Series A $1.50 Convertible Preferred Stock, Series B $.90 Convertible Preferred
      Stock and Warrants, our company and Stanford agreed to certain amendments and
      restatements including:





(a)
      the
      filing of an Amended and Restated Certificate of Designation for Series A $1.50
      Convertible Preferred Stock substantially in the form attached hereto ("Amended
      and Restated Series A Certificate of Designation") pursuant to which Stanford
      will (x) waive dilution adjustments for certain issuances of Common Stock and
      Common Stock equivalents, (y) reduce for an eighteen month period the Stated
      Value and Conversion Price (each as defined therein) to $0.50 and to $0.87
      thereafter and (z) forego certain rights to approve acquisitions of fixed
      assets, capital stock or capital expenditures, credit facilities and sales
      of
      shares of our securities. The authorized shares of Series A Preferred Stock
      was
      reduced from 2,017,200 to 2,002,750 shares.





(b)
      the
      filing of an Amended and Restated Certificate of Designation Series B $0.90
      Convertible Preferred Stock substantially in the form attached hereto pursuant
      to which Stanford will (x) waive dilution adjustments for certain issuances
      of
      Common Stock and Common Stock equivalents, (y) reduce for an eighteen month
      period the Stated Value and Conversion Price (each as defined therein) to $0.50
      and to $0.87 thereafter and (z) forego certain rights to approve acquisitions
      of
      fixed assets, capital stock or capital expenditures, credit facilities and
      sales
      of shares of our securities.





In
      connection with the Series B Purchase Agreement, our company and Stanford also
      entered into a Registration Rights Agreement, dated April 30, 2003, in which
      we
      agreed to register the shares of our common stock issuable upon
      conversion  -33-
 **Table
            of Contents**


of
      the
      Series B Preferred Stock, no later than November 15, 2003. Stanford has agreed
      to extend dare of the filing requirements of the Registration Rights Agreement
      to March 14, 2004, which was subsequently extended.





(c)
      In
      consideration of the Notice and the granting of the Consents and Waivers, we
      reduced the exercise price of the Stanford Warrants from $0.25 per share to
      $.001. On November 11, 2003, Stanford exercised in full the Stanford Warrant
      purchasing 2,002,750 shares of common stock for the purchase price of $2,002.75.





Pursuant
      to a Stockholders' Agreement which we entered into on May 16, 2002 with
      Stanford, Mr. Carey and his wife, if either Stanford or the Careys should ever
      want to sell any shares of our Series A Preferred Stock or common stock, the
      other party has a right of first refusal regarding such sale and, if such
      non-selling party does not want to exercise its right of first refusal, we
      have
      the right to purchase such shares, and a right of co-sale under the same terms
      and for the same type of consideration. In the case of a material adverse event
      related to our company, the Careys agreed to vote their shares as directed
      by
      Stanford, including removing and replacing the members of the board with
      designees nominated by Stanford. Finally, Stanford has the right to nominate
      one
      member to our board of directors and the Carey's have agreed to vote for such
      nominee.





Stanford
      is an affiliate of Stanford Financial Group, which is the majority stockholder
      of TWS International, Inc. Luis Delahoz, one of our outside directors, is the
      president and chief executive officer of TWS International, Inc. and is
      Stanford's representative on our board of directors.





On
      July
      31, 2000, the Predecessor Entity entered into a line of credit loan arrangement
      with our President, Christopher Carey, who is also president of Stronghold.
      Mr.
      Carey made available $1,989,500, which the Predecessor Entity could borrow
      from
      time to time until August 1, 2001. Outstanding amounts accrued interest at
      the
      rate of interest per annum equal to the floating Base Rate, computed daily,
      for
      the actual number of days elapsed as if each full calendar year consisted of
      360
      days. Overdue amounts accrued interest at an annual rate of 2% greater than
      the
      base rate, which is 2% above the floating base rate announced from time to
      time
      by Citibank, N.A. Under the agreement, the first payment was due on August
      1,
      2001. On such date, the line of credit was extended for one more year, until
      August 1, 2002. On April 22, 2002, the Predecessor Entity issued 500,000 shares
      of its common stock (which converted into 1,093,750 shares of our common stock
      when we acquired the Predecessor Entity on May 16, 2002) in exchange for
      cancellation of $1 million of outstanding debt under such line of credit. On
      May
      16, 2002, the total amount outstanding under the line of credit was $2.2
      million. On such date, we issued 666,667 shares of our Common Stock to Mr.
      Carey
      in exchange for cancellation of $1 million of the then outstanding amount.
      We
      will pay Mr. Carey the remaining $1.2 million according to the terms of a
      non-negotiable promissory note, which was issued on May 16, 2002, and amended
      and restated in September 2002. The terms of the amended and restated note
      stipulate that the Company may not make principle payments to Mr. Carey until
      the retirement of the United Trust Bank loan. Until such time as the principal
      is paid, we will pay an interest only fee of 12% per year. Mr. Carey's
      promissory note is expressly subordinated in right of payment to the prior
      payment in full of all of our senior indebtedness.





On
      August
      14, 2006, Mr. Carey entered into a Settlement Agreement with the Company
      pursuant to which Mr. Carey waived all rights to the following:





o
            accrued
                salary in the amount of $781,369;


o
            a
                bridge loan in the amount of
                $262,000;


o
            a
                bridge loan in the amount of
                $360,000;


o
            auto
                allowance payable in the amount of $25,600;
                and


o
            accrued
                interest in the amount of $370,299.





In
      consideration of this waiver, the Company has agreed to pay Mr. Carey $8,000
      a
      month over a period of 15 months, issue Mr. Carey a convertible note in the
      amount of $661,369 (the "Carey Note") and issue Mr. Carey 5,117 shares of Series
      D Convertible Preferred Stock with an aggregate stated value of $1,017,899.
      The
      Carey Note matures on August 13, 2016, bears no interest and is convertible
      at
      the option of Mr. Carey at the market price of the Company's common stock.
      The
      shares of Series D Preferred Stock are convertible by dividing the stated value
      by the closing bid price on the day immediately prior to
      conversion.


On
      September 14, 2000, we issued 5,000,000 shares of our common stock to our former
      president, Pietro Bortolatti, in exchange for the transfer from Mr. Bortolatti
      of all of the outstanding shares of Terre di Toscana, Inc. to us. The assets
      of
      Terre di Toscana, Inc. included rights in several customer agreements. We valued
      the 5,000,000 shares issued to Mr.  -34-
 **Table
            of Contents**


Bortolatti
      at par value, $.0001 per share. As part of our merger with the Predecessor
      Entity and the exchange of shares for our truffle business, Mr. Bortolatti
      has
      surrendered or exchanged all of such shares.





In
      August
      2002, one of our outside directors, Robert Cox, purchased 60,000 shares of
      our
      common stock at a purchase price of $1.50 per share for aggregate proceeds
      to us
      of $90,000. Such purchase was pursuant to a Subscription Agreement in which
      Mr.
      Cox made certain investment representations and warranties. The price paid
      by
      Mr. Cox had been negotiated by third parties in an arms-length transaction.
      The
      third parties who negotiated the transaction purchased a number of shares
      concurrently with Mr. Cox.





In
      January 2004, our outside director, Robert Cox, purchased an additional 147,059
      shares and a warrant to purchase 73,529 shares at $0.59/share. The price of
      $0.59/share was based on 130% of the trailing five day closing price of our
      common stock on the effective purchase date of January 9, 2004.





Lenard
      Berger, our Chief Technology Officer and Vice President and James Cummiskey,
      our
      Vice President of Sales and Marketing, received 200,000 shares of common stock
      from the Predecessor Entity as founders of such entity, at a per share price
      of
      $0.005. Such shares converted into 437,400 shares of our Common Stock.





On
      September 30, 2002, we entered into a loan agreement with CC Trust Fund to
      borrow an amount up to $355,128. This bridge loan was for a period of twelve
      months, with all principal due and payable on September 30, 2003. The 12.5%
      interest on the outstanding principal is due each year. At the end of the loan
      period, the CC Trust Fund will be entitled to exercise 25,000 warrants at $1.50
      per share. As of March 31, 2003, $355,128 was outstanding under the CC Trust
      Fund loan agreement. On September 30, 2003, the CC Trust Fund agreed to extend
      the term of their loan to December 30, 2003. On December 30, 2003, the CC Trust
      Fund agreed to extend the term of their loan to March 31, 2004. On March 30,
      2004, the CC Trust Fund agreed to extend the term of their loan to March 31,
      2005. As of December 31, 2003, $355,128 was outstanding under the CC Trust
      Fund
      loan agreement. Christopher Carey Jr., Mr. Carey's son, is the beneficiary
      of
      the trust, and Mary Carey, Mr. Carey's wife, is the trustee of the trust. On
      August 14, 2006, the CC Trust Fund (the "CC Fund") entered into a Settlement
      Agreement with the Company pursuant to which the CC Fund waived all rights
      to a
      loan made to the Company in the amount of $473,594 including interest. In
      consideration of this waiver, the Company has agreed issue the CC Trust Fund
      2,381 shares of Series D Convertible Preferred Stock with an aggregate stated
      value of $473,594. The shares of Series D Preferred Stock are convertible by
      dividing the stated value by the closing bid price on the day immediately prior
      to conversion.





On
      September 30, 2002, we entered into a loan agreement with AC Trust Fund to
      borrow an amount up to $375,404. This bridge loan is for a period of twelve
      months, with all principal due and payable on September 30, 2003. The 12.5%
      interest on the outstanding principal is due each year. At the end of the loan
      period, the AC Trust Fund will be entitled to exercise 25,000 warrants at $1.50
      per share. On September 30, 2002, the AC Trust Fund agreed to extend the term
      of
      their loan to December 30, 2003. On December 30, 2003, the AC Trust Fund agreed
      to extend the term of their loan to March 31, 2004. On March 30, 2004, the
      AC
      Trust Fund agreed to extend the term of their loan to March 31, 2005. As March
      31, 2005 Mr. Carey extended the term of the loan to May 31, 2006. As of December
      31, 2005, $375,404 was outstanding under the AC Trust Fund loan agreement.
      Amie
      Carey, Mr. Carey's daughter, is the beneficiary of the trust, and Mary Carey,
      Mr. Carey's wife, is the trustee of the trust.  On
      August
      14 2006, the AC Trust Fund (the "AC Fund") entered into a Settlement Agreement
      with the Company pursuant to which the AC Fund waived all rights to a loan
      made
      to the Company in the amount of $497,691 including interest. In consideration
      of
      this waiver, the Company has agreed issue the AC Fund 2,502 shares of Series
      D
      Convertible Preferred Stock with an aggregate stated value of $497,691. The
      shares of Series D Preferred Stock are convertible by dividing the stated value
      by the closing bid price on the day immediately prior to
      conversion.




During
      the fourth quarter of 2006, DealerAdvance, Inc. entered into financing
      transactions with the following officers, directors or the Related Parties:





On
      December 20, 2006, the Company issued a promissory note in the aggregate
      principal amount of $81,800 to Steven Humphries. Mr. Humphries is the President,
      CEO and Director of the Company. The note bears interest equal to the prime
      rate
      and is due on or before June 30, 2007. As of December 31, 2006, $31,800 was
      outstanding under the promissory note.  -35-
 **Table
            of Contents**


On
      December 20, 2006, the Company issued a promissory note in the aggregate
      principal amount of $32,341 to Humphries Marketing Group, of which Steven
      Humphries is an owner and Chief Executive Officer. The note bears interest
      equal
      to the prime rate and is due on or before June 30, 2007. As of December 31,
      2006, $19,341 was outstanding under the promissory note.




We
      believe that the terms of all of the above transactions are commercially
      reasonable and no less favorable to us than we could have obtained from an
      unaffiliated third party on an arm's length basis. Our policy requires that
      all
      related parties recuse themselves from negotiating and voting on behalf of
      our
      company in connection with related party transactions.




These
      loans made to Mr. Humphries violate Section 402 of the Sarbanes Oxley Act of
      2002. As a result, despite the fact that a portion of such loans were repaid,
      our company and/or Mr. Humphries may be subject to fines, sanctions and/or
      penalties. At this time, we are unable to determine the amount of such fines,
      sanctions and/or penalties that may be incurred by our company and/or Mr.
      Humphries. The purpose of such loan was for personal use.




**Item
      13.  EXHIBITS**




ExhibitNumber
            Description  2.1(1)(4)
            Merger
                Agreement and Plan of Merger, dated May 15, 2002, by and among TDT
                Development, Inc., Stronghold Technologies, Inc., TDT Stronghold
                Acquisition Corp., Terre Di Toscana, Inc., Terres Toscanes, Inc.,
                certain
                stockholders of TDT Development, Inc. and Christopher J.
                Carey.





2.2(5)
            Stock
                Purchase Agreement, dated July 19, 2002, by and between TDT Development,
                Inc. and Mr. Pietro Bortolatti.





3.1(2)
            Articles
                of Incorporation, as amended on July 11,
                2002.





3.2(3)
            By-Laws.





3.3(18)
            Certificate
                of Amendment filed on January 13, 2006
                (18)





3.3(20)
            Certificate
                of Designation filed on April 12,
                2006(20)





4.1(2)
            Certificate
                of Designations filed on May 16,
                2002.





4.2(5)
            Specimen
                Certificate of Common Stock.





4.3(8)
            Promissory
                Note for $300,000, dated March 18, 2003, made by Stronghold Technologies,
                Inc. in favor of Christopher J.
                Carey.





4.4(8)
            Promissory
                Note for $100,000, dated March 18, 2003, made by Stronghold Technologies,
                Inc. in favor of Christopher J.
                Carey.





4.5(8)
            Form
                of Warrant with Christopher J.
                Carey.





4.6(10)
            Amended
                and Restated Certificate of Designation of Series A $1.50 Convertible
                Preferred Stock of Stronghold Technologies,
                Inc.





4.7(10)
            Amended
                and Restated Certificate of Designation of Series B $0.90 Convertible
                Preferred Stock of Stronghold Technologies,
                Inc.





4.8(11)
            Securities
                Purchase Agreement dated June 18, 2004 between the Company and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners,
                LLC





4.9(11)
            Callable
                Secured Convertible Note in the name of New Millennium Capital Partners
                II, LLC dated June 18, 2004


-36-
 **Table
          of Contents**


4.10(11)
            Callable
                Secured Convertible Note in the name of AJW Qualified Partners, LLC
                dated
                June 18, 2004





4.11(11)
            Callable
                Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                June 18,
                2004





4.12(11)
            Callable
                Secured Convertible Note in the name of AJW Partners, LLC dated June
                18,
                2004





4.13(11)
            Stock
                Purchase Warrant in the name of New Millennium Capital Partners II,
                LLC
                dated June 18, 2004





4.14(11)
            Stock
                Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                June 18,
                2004





4.15(11)
            Stock
                Purchase Warrant in the name of AJW Offshore, Ltd. dated June 18,
                2004





4.16(11)
            Stock
                Purchase Warrant in the name of AJW Partners, LLC dated June 18,
                2004





4.17(11)
            Registration
                Rights Agreement dated June 18, 2004 between the Company and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners,
                LLC





4.18(11)
            Security
                Agreement dated June 18, 2004 between the Company and New Millennium
                Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
                Ltd.
                and AJW Partners, LLC





4.19(11)
            Intellectual
                Property Security Agreement dated June 18, 2004 between the Company
                and
                New Millennium Capital Partners II, LLC, AJW Qualified Partners,
                LLC, AJW
                Offshore, Ltd. and AJW Partners,
                LLC





4.20
            Callable
                Secured Convertible Note in the name of New Millennium Capital Partners
                II, LLC dated July 27, 2004 (16)





4.21
            Callable
                Secured Convertible Note in the name of AJW Qualified Partners, LLC
                dated
                July 27, 2004 (16)





4.22
            Callable
                Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                July 27,
                2004 (16)





4.23
            Callable
                Secured Convertible Note in the name of AJW Partners, LLC dated July
                27,
                2004(16)





4.24
            Stock
                Purchase Warrant in the name of New Millennium Capital Partners II,
                LLC
                dated July 27, 2004(16)




4.25
            Stock
                Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                July 27,
                2004(16)





4.26
            Stock
                Purchase Warrant in the name of AJW Offshore, Ltd. Dated July 27,
                2004(16)





4.27
            Stock
                Purchase Warrant in the name of AJW Partners, LLC dated July 27,
                2004(16)





4.28
            Callable
                Secured Convertible Note in the name of New Millennium Capital (16)
                Partners II, LLC dated October 22,
                2004





4.29
            Callable
                Secured Convertible Note in the name of AJW Qualified Partners, LLC
                dated
                October 22, 2004 (16)





4.30
            Callable
                Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                October
                22, 2004 (16)





4.31
            Callable
                Secured Convertible Note in the name of AJW Partners, LLC dated October
                22, 2004(16)





4.32
            Stock
                Purchase Warrant in the name of New Millennium Capital Partners II,
                LLC
                dated October 22, 2004(16)





4.33
            Stock
                Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                October
                22, 2004(16)





4.34
            Stock
                Purchase Warrant in the name of AJW Offshore, Ltd. Dated October
                22,
                2004(16)


-37-
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          of Contents**


4.35
            Stock
                Purchase Warrant in the name of AJW Partners, LLC dated October 22,
                2004(16)





4.36
            Callable
                Secured Convertible Note in the name of New Millennium Capital Partners
                II, LLC dated March 18, 2005(16)





4.37
            Callable
                Secured Convertible Note in the name of AJW Qualified Partners, LLC
                dated
                March 18, 2005 (16)





4.38
            Callable
                Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                March 18,
                2005 (16)





4.39
            Callable
                Secured Convertible Note in the name of AJW Partners, LLC dated March
                18,
                2005 (16)





4.40
            Stock
                Purchase Warrant in the name of New Millennium Capital Partners II,
                LLC
                dated March 18, 2005(16)





4.41
            Stock
                Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                March
                18, 2005(16)





4.42
            Stock
                Purchase Warrant in the name of AJW Offshore, Ltd. dated March 18,
                2005(16)





4.43
            Stock
                Purchase Warrant in the name of AJW Partners, LLC dated March 18,
                2005(16)





4.44
            Amendment
                No. 2 to the Securities Purchase Agreement dated March 4, 2005 by
                and
                among the Company and New Millennium Capital Partners II, LLC, AJW
                Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
                LLC(16)





4.45
            Letter
                of Agreement dated March 4, 2005 by and among the Company and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners,
                LLC(16)





4.46
            Amendment
                No. 1 to the Securities Purchase Agreement dated October 22, 2004
                by and
                among the Company and New Millennium Capital Partners II, LLC, AJW
                Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
                (16)





4.47
            Securities
                Purchase Agreement dated March 31, 2005 by and among the Company
                and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners, LLC
                (17)





4.48
            Form
                of Callable Secured Convertible dated March 31, 2005
                (17)





4.49
            Form
                of Stock Purchase Warrant dated March 31,
                2005(17)





4.50
            Registration
                Rights Agreement dated March 31, 2005 by and among the Company and
                New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners, LLC
                (17)





4.51
            Security
                Agreement dated March 31, 2005 by and among the Company and New Millennium
                Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
                Ltd.
                and AJW Partners, LLC (17)





4.52
            Intellectual
                Property Security Agreement dated March 31, 2005 by and among the
                Company
                and New Millennium Capital Partners II, LLC, AJW Qualified Partners,
                LLC,
                AJW Offshore, Ltd. and AJW Partners, LLC
                (17)





4.53
            Securities
                Purchase Agreement dated February 6, 2005 by and among the Company
                and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners,
                LLC(18)





4.54
            Form
                of Callable Secured Convertible dated February 6, 2006
                (18)





4.55
            Form
                of Stock Purchase Warrant dated February 6, 2006
                (18)





4.56
            Registration
                Rights Agreement dated February 6, 2006 by and among the Company
                and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners,
                LLC(18)





-38-
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            of Contents**




4.57
            Security
                Agreement dated March February 6, 2006 by and among the Company and
                New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners, LLC
                (18)





4.58
            Intellectual
                Property Security Agreement February 6, 2006 by and among the Company
                and
                New Millennium Capital Partners II, LLC, AJW Qualified Partners,
                LLC, AJW
                Offshore, Ltd. and AJW Partners, LLC
                (18)





4.59
            Securities
                Purchase Agreement dated March 17, 2006 by and among the Company
                and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners,
                LLC(19)





4.60
                Form
                    of Callable Secured Convertible Note dated March 17, 2006
                    (19)





4.61
            Form
                of Stock Purchase Warrant dated March 17, 2006
                (19)





4.62
            Registration
                Rights Agreement dated February 6, 2006 by and among the Company
                and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners,
                LLC(19)




4.63
            Security
                Agreement dated March 17, 2006 by and among the Company and New Millennium
                Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
                Ltd.
                and AJW Partners, LLC (19)





4.64
            Intellectual
                Property Security Agreement February 6, 2006 by and among the Company
                and
                New Millennium Capital Partners II, LLC, AJW Qualified Partners,
                LLC, AJW
                Offshore, Ltd. and AJW Partners, LLC
                (19)





4.65
            Callable
                Secured Convertible Note in the name of AJW Partners, LLC dated April
                11,
                2006 (21)





4.66
            Form
                of Callable Secured Convertible Note dated June 8, 2006
                (23)





4.67
            Form
                of Callable Secured Convertible Note dated July 18, 2006
                (24)





4.68
            Securities
                Purchase Agreement dated December 15, 2006 by and among the Company
                and
                New Millennium Capital Partners II, LLC, AJW Qualified Partners,
                LLC, AJW
                Offshore, Ltd. and AJW Partners,
                LLC(25)





4.69
                Form
                    of Callable Secured Convertible Note dated December 15,
                    2006(25)


4.70
                Form
                    of Stock Purchase Warrant dated December 15,
                    2006(25)





4.71
            Registration
                Rights Agreement dated December 15, 2006 by and among the Company
                and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners,
                LLC(25)





4.72
            Security
                Agreement dated March December 15, 2006 by and among the Company
                and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners, LLC
                (25)





4.73
            Intellectual
                Property Security Agreement December 15, 2006 by and among the Company
                and
                New Millennium Capital Partners II, LLC, AJW Qualified Partners,
                LLC, AJW
                Offshore, Ltd. and AJW Partners, LLC
                (25)




10.1(2)
            2002
                Stock Incentive Plan.





10.2(2)
            Form
                of Incentive Stock Option Agreement to be issued under the 2002 Stock
                Incentive Plan.





10.3(2)
            Form
                of Nonstatutory Stock Option Agreement to be issued under the 2002
                Stock
                Incentive Plan.





10.4(5)
            California
                2002 Stock Incentive Plan.





10.5(5)
            Form
                of Incentive Stock Option Agreement to be issued under the California
                2002
                Stock Incentive Plan.





10.6(5)
            Form
                of Nonstatutory Stock Option Agreement to be issued under the California
                2002 Stock Incentive Plan.




-39-
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          of Contents**




10.7(2)
            Executive
                Employment Agreement by and between Stronghold Technologies, Inc.
                and
                Christopher J. Carey, dated May 15,
                2002.





10.8(2)
            Employment
                and Non-Competition Agreement by and between Stronghold Technologies,
                Inc.
                and Lenard Berger, dated August 1,
                2000.





10.9(2)
            Employment
                and Non-Competition Agreement by and between Stronghold Technologies,
                Inc.
                and Salvatore D'Ambra, dated July 10,
                2000.





10.10(2)
            Employment
                and Non-Competition Agreement by and between Stronghold Technologies,
                Inc.
                and James J. Cummiskey, dated August 14,
                2000.





10.11(2)
            Business
                Loan Agreement by and between Stronghold Technologies, Inc. and
                UnitedTrust Bank, dated June 30,
                2002.





10.12(2)
            Promissory
                Note issued by Stronghold Technologies, Inc. made payable to UnitedTrust
                Bank, Dated June 30, 2002.





10.13(2)
            Commercial
                Security Agreement by and between Stronghold Technologies, Inc. and
                UnitedTrust Bank, dated June 30,
                2002.





10.14(2)
            Promissory
                Note issued by Stronghold Technologies, Inc. made payable to Christopher
                J. Carey, dated May 16, 2002.





10.15(4)
            Securities
                Purchase Agreement, dated May 15, 2002, by and among TDT Development,
                Inc., Stanford Venture Capital Holdings, Inc., Pietro Bortolatti,
                Stronghold Technologies, Inc. and Christopher J.
                Carey.





10.16(4)
            Registration
                Rights Agreement, dated May 16, 2002, by and among TDT Development,
                Inc.
                and Stanford Venture Capital Holdings,
                Inc.





10.17(4)
            Lock-Up
                Agreement, dated May 16, 2002, by and among TDT Development,
                Inc.





10.18(4)
            Stockholders'
                Agreement, dated May 16, 2002, by and among TDT Development, Inc.,
                Christopher J. Carey, Mary Carey and Stanford Venture Capital Holdings,
                Inc.





10.19(4)
            Form
                of Warrant to be issued pursuant to the Securities Purchase Agreement
                (Exhibit 10.11).





10.20(6)
            Loan
                Agreement by and among Stronghold Technologies, Inc., its subsidiary
                and
                UnitedTrust Bank, dated September 30,
                2002.





10.21(6)
            Commercial
                Loan Note issued by Stronghold Technologies, Inc. and its subsidiary
                made
                payable to UnitedTrust Bank, dated September
                30,2002





10.22(6)
            Security
                Agreement by and between Stronghold Technologies, Inc. and UnitedTrust
                Bank, dated September 30, 2002.





10.23(6)
            Security
                Agreement by and between Stronghold's subsidiary and UnitedTrust
                Bank,
                dated September 30, 2002.





10.24(6)
            Subordination
                Agreement by and among Christopher J. Carey, Stronghold Technologies,
                Inc.
                and UnitedTrust Bank, dated September 30,
                2002.





10.25(6)
            Subordination
                Agreement by and among Christopher J. Carey, Stronghold's subsidiary
                and
                UnitedTrust Bank, dated September 30,
                2002.


-40-
 **Table
          of Contents**




10.26(6)
            Guaranty
                by Christopher J. Carey in favor UnitedTrust Bank, dated September
                30,
                2002.





10.27(6)
            Loan
                Agreement by and among Stronghold Technologies, Inc., its subsidiary
                and
                AC Trust Fund, dated September 30,
                2002.





10.28(6)
            Loan
                Agreement by and among Stronghold Technologies, Inc., its subsidiary
                and
                CC Trust Fund, dated September 30,
                2002.





10.29(6)
            Form
                of Subscription Agreement by and between Stronghold Technologies,
                Inc. and
                each of the parties listed on the schedule of purchasers attached
                thereto.





10.30(6)
            Promissory
                Note issued by Stronghold Technologies, Inc. made payable to Christopher
                J. Carey, dated September 30. 2002.





10.31(7)
            Securities
                Purchase Agreement, dated April 30, 2003, by and between Stronghold
                Technologies, Inc. and Stanford Venture Capital Holdings,
                Inc.





10.32(7)
            Registration
                Rights Agreement, dated April 30, 2003, by and between Stronghold
                Technologies, Inc. and Stanford Venture Capital Holdings,
                Inc.





10.33(7)
            Consulting
                Agreement, dated April 30, 2003, by and between Stronghold Technologies,
                Inc. and Stanford Venture Capital Holdings,
                Inc.





10.34(9)
            First
                Modification to Loan Agreement and Note among Stronghold Technologies,
                Inc., Christopher J. Carey and UnitedTrust Bank, dated July 31,
                2003.





10.35(13)
            Lease
                Agreement entered between the Company and APA Properties No. 2,
                LP





10.36(13)
            Sublease
                Agreement between Clark/Bardes Consulting, Inc. and the
                Company





10.37(14)
            Forbearance
                Agreement entered by and between the Company and PNC
                Bank





10.38(14)
            Amendment
                No. 1 to the Forbearance Agreement entered by and between the Company
                and
                PNC Bank





10.39(22)
            Consulting
                Agreement, dated April 30, 2006, by and between Stronghold Technologies,
                Inc. and Humphries Marketing Group,
                LLC.





10.40
                DealerAdvance,
                    Inc. 2007 Incentive Stock
                    Plan




10.41
            Promissory
                Note issued by Steven E. Humphries, made payable to DealerAvance,
                Inc.,
                dated December 20, 2006.





10.42
            Promissory
                Note issued by Humphries Marketing Group, LLC, made payable to
                DealerAdvance, Inc., dated December 20,
                2006.





16.1
                Letter
                    on change in certifying accountant dated March 15, 2006 (incorporated
                    by
                    reference to the Form 8-K Current Report filed on March 16,
                    2006.





21(5)
            Subsidiaries
                of the Registrant.





31.1
            Certification
                by the Chief Executive Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.




32.1
            Certification
                by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




32.2
            Certification
                by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




-41-
 **Table
          of Contents**





(1)
            The
                exhibits and schedules to the Merger Agreement have been omitted
                from this
                filing pursuant to Item 601(b)(2) of Regulation S-K. The Company
                will
                furnish copies of any of the exhibits and schedules to the U.S. Securities
                and Exchange Commission upon
                request





(2)
            Incorporated
                herein by reference to the exhibits to Registrant's Quarterly Report
                on
                Form 10-QSB for the fiscal quarter ended June 30,
                2002.





(3)
            Incorporated
                herein by reference to the exhibits to the Registrant's Registration
                Statement on Form SB-2 as filed with the Securities and Exchange
                Commission on February 1, 2001 (No.
                333-54822).





(4)
            Incorporated
                herein by reference to the exhibits to the Registrant's Current Report
                on
                Form 8-K dated May 16, 2002.





(5)
            Incorporated
                herein by reference to the exhibits to the Registrant's Registration
                Statement on Form SB-2 as filed with the Securities and Exchange
                Commission on September 24, 2002.





(6)
            Incorporated
                herein by reference to the exhibits to Registrant's Annual Report
                on Form
                10-KSB for the fiscal year ended December 31,
                2002.





(7)
            Incorporated
                by reference to Exhibit 99.3 to the Company's Form 8-K as filed with
                the
                Securities and Exchange Commission on May 8,
                2003.)





(8)
            Incorporated
                by reference to the exhibits to Registrants Quarterly Report on Form
                10-QSB for the quarterly period ended March 31,
                2003.





(9)
            Incorporated
                by reference to the exhibits to Registrants Quarterly Report on Form
                10-QSB for the quarterly period ended June 30,
                2003.





(10)
            Incorporated
                by reference to the exhibits to Registrants Form 10-KSB for the year
                ended
                December 31, 2003.





(11)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                June 28, 2004.





(12)
            Incorporated
                by reference to the exhibits to Registrants Form SB-2 Registration
                Statement filed July 21, 2004.





(13)
            Incorporated
                by reference to the exhibits to Registrants Quarterly Report on Form
                10-QSB for the quarterly period ended September 30,
                2004.





(14)
            Incorporated
                by reference to the exhibits to Registrants Form SB-2 Registration
                Statement filed February 11, 2005.





(15)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                June 28, 2004.





(16)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                March 25, 2005.





(17)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                April 11, 2005.





(18)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                February 10, 2006.





(19)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Currrent Report
                filed
                March 23, 2006.


-42-
 **Table
          of Contents**


(20)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                on April 12, 2006





(21)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                on April 21, 2006





(22)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                on June 8, 2006





(23)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                on June 6, 2006





(24)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                on July 18, 2006





(25)
            Incorporated
                by reference to the exhibits to Registrants Form 8-K Current Report
                filed
                on December 15, 2006




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





The
      following table presents the aggregate fees billed for professional services
      rendered by Rothstein, Kass & Company, P.C. in 2005 and Paritz and Company,
      P.A. in 2005. Other than as set forth below, no professional services were
      rendered or fees billed by Rothstein, Kass & Company, P.C. or Paritz &
Company, P.A.during 2005 or 2006.




2006
              
              2005Audit
                  Fees (1)
              
              $
              18,200
              
              $
              24,500Tax
                  Fees (2)
              
              $
              0
              
              $
              3,000Other
                  Fees
              
              $
              3,750
              
              $
              500TOTAL
              
              $
              21,950
              
              $
              28,000





(1)
            Audit
                fees consist of professional services rendered for the audit of the
                Company's annual financial statements and the reviews of the quarterly
                financial statements.





(2)
            Tax
                fees consist of fees for services rendered to the Company for tax
                compliance, tax planning and advice.





-43-
 **Table
          of Contents**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized this 17th day of April, 2007.




**DEALERADVANCE,
      INC.**






*By: 
      /s/ Steven E. Humphries*


*Steven
      E. Humphries, President* *and
      Chief Executive Officer*


and
      Principal Financial/Accounting
      Officer








-44-
 **Table
            of Contents**




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM**




To
      the
      Board of Directors and Shareholders DealerAdvance, Inc.




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




We
      conducted our 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
      consolidated financial statements are free of material misstatement. The Company
      is not required to have, nor were we engaged to perform, an audit of its
      internal control over financial reporting. Our audit included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company's internal control
      over financial reporting. Accordingly, we express no such opinion. An audit
      also
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the financial statements, assessing the accounting principles
      used and significant estimates made by management, as well as evaluating the
      overall financial statement presentation. We believe that our audit provides
      a
      reasonable basis for our opinion.




The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 2, the
      Company's ability to continue in the normal course of business is dependent
      upon, among other things, its success in raising additional capital and
      achieving profitable operations. The Company has recurring losses, substantial
      working capital and stockholders' deficits and negative cash flows from
      operations. These conditions among others, raise substantial doubt about the
      Company's ability to continue as a going concern. Management's plans regarding
      these matters are also described in Note 2. These consolidated financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.




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




/s/
                Paritz & Company, P.A.




Hackensack,
      New Jersey


April
      5, 2007


F-1
 **Table
          of Contents**




**DEALERADVANCE,
      INC. AND SUBSIDIARY, FORMERLY STRONGHOLD TECNOLOGIES, INC.**





**CONSOLIDATED
      BALANCE SHEET**




**December
                  31,****ASSETS**
              
              **2006****Current
                  assets**Cash
              
              $
              106,556Accounts
                  receivable
              
              
              6,281Notes
                  receivable, related party
              
              
              51,566Prepaid
                  expenses
              
              
              69,109Total
                  current assets
              
              
              233,512**Property
                  and equipment, net**
              
              
              2,824**Other
                  assets**Deferred
                  charge, loan acquisition costs, net of amortization
              
              
              9,736Other
              
              
              1,000Total
                  other assets
              
              
              10,736$
              247,072**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****Current
                  liabilities**Accounts
                  payable
              
              $
              381,252Interest
                  payable, stockholders
              
              
              1,187,088Notes
                  payable, stockholders, current portion
              
              
              875,000Callable
                  secured convertible notes, current portion
              
              
              2,344,973Deferred
                  revenue
              
              
              94,283Liquidated
                  damages payable
              
              
              1,991,587Accrued
                  expenses and other current liabilities
              
              
              1,257,572Total
                  current liabilities
              
              
              8,131,755**Long-term
                  liabilities**Notes
                  payable, stockholders, convertible debt, net of deferred interest
                  of
                  $615,923
              
              
              190,986Callable
                  secured convertible notes, less current portion
              
              
              4,228,490Total
                  long term liabilities
              
              
              4,419,476**Commitments
                  and contingencies****Stockholders'
                  deficit**Preferred
                  stock, Series A, $.0001 par value; authorized 5,000,000shares,
                  2,002,750 issued and outstanding (aggregate liquidation preference
                  of
                  $3,004,125)and
                  preferred stock, Series B, $.0001 par value; 2,444,444 shares authorized,
                  issued andoutstanding
                  (aggregate liquidation preference $2,200,000) and preferred stock,
                  Series
                  D,$.01
                  par value; authorized 10,000 shares authorized, issued and outstanding
                  (aggregateliquidation
                  preference $1,989,200)
              
              
              545Common
                  stock, $.0001 par value, authorized 8,500,000,000shares,
                  43,587,393 issued and outstanding
              
              
              4,359Additional
                  paid-in capital
              
              
              10,853,275Accumulated
                  deficit
              
              
              (23,162,338
              )Total
                  stockholders' deficit
              
              
              (12,304,159
              )$
              247,072


See
        accompanying notes to consolidated financial statements.


F-2
 **Table
          of Contents**




**DEALERADVANCE,
      INC. AND SUBSIDIARY, FORMERLY STRONGHOLD TECHNOLOGIES,
      INC.**




**CONSOLIDATED
      STATEMENT OF OPERATIONS**


**Years
                  Ended December 31,****2006**
              
              **2005****Sales**
              
              $
              479,474
              
              $
              943,735**Cost
                  of sales**
              
              
              71,333
              
              
              324,360**Gross
                  profit**
              
              
              408,141
              
              
              619,375**Selling,
                  general and****administrative**
              
              
              2,517,383
              
              
              2,732,954**Loss
                  from operations**
              
              
              (2,109,242
              )
              
              (2,113,579
              )**Interest
                  expense**
              
              
              911,721
              
              
              747,383**Settlement
                  of Litigation**
              
              
              334,294
              
              
              —**Liquidated
                  damages**
              
              
              1,088,370
              
              
              771,486**Net
                  loss applicable to common****stockholders**
              
              $
              (4,443,627
              )
              $
              (3,632,448
              )**Basic
                  and diluted loss per****common
                  share**
              
              $
              (0.08
              )
              $
              (0.17
              )**Weighted
                  average number of****common
                  shares outstanding**
              
              
              37,452,451
              
              
              16,997,444


See
        accompanying notes to consolidated financial statements.
 F-3
 **Table
            of Contents**


**DEALERADVANCE,
      INC. AND SUBSIDIARY, FORMERLY STRONGHOLD TECHNOLOGIES,
      INC.**





**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**




**Years
                    ended December 31,****2006**
                
                **2005****Cash
                    flows from operating activities**Net
                    loss
                
                $
                (4,443,627
                )
                $
                (3,632,448
                )Adjustments
                    to reconcile net loss tonet
                    cash used in operating activities:Provision
                    for returns and allowances
                
                
                (60,000
                )
                
                (159,891
                )Depreciation
                    and amortization
                
                
                533,971
                
                
                533,171Interest
                    payable, stockholders
                
                
                772,955
                
                
                181,452Interest
                    payable, convertible debt
                
                
                
                
                
                421,809Liquidated
                    damages payable
                
                
                1,088,368
                
                
                771,486Changes
                    in operating assets and liabilities:Accounts
                    receivable
                
                
                97,156
                
                
                420,252Inventories
                
                
                18,095
                
                
                26,610Prepaid
                    expenses
                
                
                (42,071
                )
                
                63,446Accounts
                    payable
                
                
                (126,807
                )
                
                (111,121
                )Software
                    development costs
                
                
                —
                
                
                (65,455
                )Accrued
                    expenses and other current liabilities
                
                
                402,843
                
                
                (362,079
                )Deferred
                    Revenue
                
                
                (264,676
                )
                
                250,987Other
                    Assets
                
                
                (16,711
                )
                
                32,939**Net
                    cash used in operating activities**
                
                
                (2,040,504
                )
                
                (1,628,842
                )**Cash
                    flows from financing activities**Proceeds
                    from issuance of common stock, net of financing costs
                
                
                —
                
                
                79,461Proceeds
                    from notes payable, stockholders
                
                
                —
                
                
                155,000Principal
                    repayments of notes payable, stockholders
                
                
                —
                
                
                (50,496
                )Proceeds
                    from notes payable, convertible debt
                
                
                2,080,000
                
                
                2,151,575Principal
                    repayments of notes payable
                
                
                —
                
                
                (606,667
                )Principal
                    payments for obligations under capital leases
                
                
                —
                
                
                (33,471
                )**Net
                    cash provided by financing activities**
                
                
                2,080,000
                
                
                1,695,402**Net
                    increase in cash**
                
                
                39,496
                
                
                66,560**Cash,
                    beginning of year**
                
                
                67,060
                
                
                500**Cash,
                    end of year**
                
                $
                106,556
                
                $
                67,060


See
        accompanying notes to consolidated financial statements.
 F-4
 **Table
            of Contents**


**DEALERADVANCE,
        INC. AND SUBSIDIARY, FORMERLY STRONGHOLD TECHNOLOGIES,
        INC.**
 
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS - Continued**
  **Supplementary
                    schedule of non-cash investing and financing
                    activities****Years
                    Ended****December
                    31,****2006**
                
                **2005****Supplemental
                    disclosure of cash flow information,**cash
                    paid during the period for interest
                
                
                —
                
                
                80,235**Supplemental
                    disclosures of noncash investing and financing
                    activities**During
                    the year ended December 31, 2006, the Company entered into an
                    agreement to
                    convert $150,000 of accrued officer’s compensation into 21,428,571 shares
                    of common stock.During
                    the year ended December 31, 2006, the Company entered into two
                    agreements
                    to convert $806,909 of accrued compensation into convertible
                    notesDuring
                    the year ended December 31, 2006, the Company entered into three
                    separate
                    agreements to convert $1,352,532 of notes payable, stockholders
                    and
                    $636,652 of accrued interest, stockholders, into 10,000 shares
                    of
                    preferred stock.
 See
        accompanying notes to consolidated financial statements.
 F-5
 Table
              of Contents




**DEALERADVANCE,
      INC. AND SUBSIDARY, FORMERLY STRONGHOLD TECHNOLOGIES, INC.**





**CONSOLIDATED
      STATEMENTS OF STOCKHOLDER’S DEFICIT**


**Years
                  Ended December 31, 2006 and
                  2005**


**Preferred
                        Stock**
                    
                    **Preferred
                        Stock**
                    
                    **Preferred
                        Stock**
                    
                    
                    
                    **Additional**
                    
                    **Stock**
                    
                    
                    
                    **Total****Series
                        A**
                    
                    **Series
                        B**
                    
                    **Series
                        D**
                    
                    **Common
                        Stock**
                    
                    **Paid-in**
                    
                    **Subscription**
                    
                    **Accumulated**
                    
                    **Stockholders'****Shares**
                    
                    **Amount**
                    
                    **Shares**
                    
                    **Amount**
                    
                    **Shares**
                    
                    **Amount**
                    
                    **Shares**
                    
                    **Amount**
                    
                    **Capital**
                    
                    **Receivable**
                    
                    **Deficit**
                    
                    **Deficit****Balances**,December
                        31, 2004
                    
                    
                    2,002,750
                    
                    $
                    201
                    
                    
                    2,444,444
                    
                    $
                    244
                    
                    
                    
                    
                    
                    
                    
                    $
                    16,087,349
                    
                    $
                    1,609
                    
                    
                    7,924,928
                    
                    $
                    (3,000
                    )
                    $
                    (15,086,263
                    )
                    $
                    (7,162,281
                    )**Conversion
                        of convertible notes to**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    —**common
                        stock**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    172,873
                    
                    
                    17
                    
                    
                    5,152
                    
                    
                    
                    
                    
                    
                    
                    
                    5,169**Stock
                        issued for interest due, net of costs**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,200,000
                    
                    
                    120
                    
                    
                    74,309
                    
                    
                    
                    
                    
                    
                    
                    
                    74,429**Payment
                        of stock subscription**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    —**receivables**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    3,000
                    
                    
                    
                    
                    
                    3,000**Net
                        loss**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (3,632,448
                    )
                    
                    (3,632,448
                    )**Balances**,
                        December 31, 2005
                    
                    
                    2,002,750
                    
                    
                    201
                    
                    
                    2,444,444
                    
                    
                    244
                    
                    
                    —
                    
                    
                    —
                    
                    
                    17,460,222
                    
                    
                    1,746
                    
                    
                    8,004,389
                    
                    
                    —
                    
                    
                    (18,718,711
                    )
                    $
                    (10,712,131
                    )**Issuance
                        of preferred stock**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    —**Warrants
                        issued with debt**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    85,884
                    
                    
                    
                    
                    
                    
                    
                    
                    85,884**Conversion
                        of convertible notes to****common
                        stock**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    4,698,600
                    
                    
                    470
                    
                    
                    880
                    
                    
                    
                    
                    
                    
                    
                    
                    1,350**Conversion
                        of stockholder notes****to
                        preferred stock**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    10,000
                    
                    
                    100
                    
                    
                    
                    
                    
                    
                    
                    
                    1,989,083
                    
                    
                    
                    
                    
                    
                    
                    
                    1,989,183**Stock
                        Issued for compensation**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    21,428,571
                    
                    
                    2,143
                    
                    
                    147,857
                    
                    
                    
                    
                    
                    
                    
                    
                    150,000**Imputed
                        interest from noninterest bearing notes**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    625,182
                    
                    
                    
                    
                    
                    
                    
                    
                    625,182**Net
                        loss**
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (4,443,627
                    )
                    
                    (4,222,491
                    )**Balances**,
                        December 31, 2006
                    
                    
                    2,002,750
                    
                    $
                    201
                    
                    
                    2,444,444
                    
                    $
                    244
                    
                    
                    10,000
                    
                    $
                    100
                    
                    
                    43,587,393
                    
                    $
                    4,359
                    
                    $
                    10,853,275
                    
                    
                    —
                    
                    $
                    (23,162,338
                    )
                    $
                    (12,304,159
                    )
 See
            accompanying notes to consolidated financial
            statements.


F-6
 **Table
            of Contents**
  **NOTES
        TO CONSOLIDATED** **** **FINANCIAL
        STATEMENTS**


**1.**
            **Nature
                of operations**




On
      October 2, 2006 DealerAdvance, Inc. , a newly formed wholly owned subsidiary
      was
      merged into Stronghold Technologies, Inc. Stronghold Technologies, Inc. changed
      its name to Dealer Advance, Inc.





The
      Company is in the business of selling, marketing and installing a web based
      application software and database system that manages the auto dealer-client
      relationship. The Company's suite of Customer Relationship Management ("CRM")
      software has been designed to assist auto dealerships in collecting client
      contact information, following up on sales prospects and aiding dealership
      sales
      personnel in finalizing the sale of its automobiles.




**2.**
            **Going
                concern**





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. The Company incurred a net loss
      of
      approximately $4,444,000 and had negative cash flows from operations of
      approximately $2,040,000 for the year ended December 31, 2006, and had a working
      capital deficit of approximately $7,898,000 and a stockholders’ deficit of
      approximately $12,304,000 as of December 31, 2006. These conditions, among
      others, raise substantial doubt about the Company’s ability to continue as a
      going concern. During 2007, management of the Company will attempt to raise
      additional capital to fund future operations. If the Company is unable to
      generate sufficient revenues or raise sufficient additional capital, there
      would
      be a material adverse effect on the consolidated financial position, results
      of
      operations and cash flows of the Company. The accompanying consolidated
      financial statements do not include any adjustments that might be necessary
      if
      the Company is unable to continue as a going concern.




**3.**
            **Summary
                of significant accounting
                policies**





*Principles
      of Consolidation*





The
      consolidated financial statements include the accounts of the Company and its
      wholly owned subsidiary. All significant intercompany balances and transactions
      have been eliminated in consolidation.





*Property
      and Equipment*





Property
      and equipment are recorded at cost. Depreciation for equipment, software and
      furniture is provided for financial reporting and tax purposes using declining
      balance methods. Leasehold improvements are amortized by the straight line
      method.





Maintenance,
      repairs and minor renewals are charged to expenses when incurred. Replacements
      and major renewals are capitalized.





*Accounts
      Receivable*




The
      Company records its accounts receivable at cost. On a periodic basis, the
      Company evaluates its accounts receivable and establishes an allowance for
      doubtful accounts, based on a history of past write-offs and collections and
      current credit conditions. Accounts are written off as uncollectible at the
      discretion of management. No allowance for doubtful accounts is recorded as
      of
      December 31, 2006.


F-7
 **Table
          of Contents**




*Software* ****** *Development
      Costs*




Capitalized
      software development costs, including significant product enhancements incurred
      subsequent to establishing technological feasibility in the process of software
      development and production, are capitalized according to Statement of Financial
      Accounting Standards (SFAS) No. 86, “Accounting for the Costs of Computer
      Software to Be Sold, Leased, or Otherwise Marketed.” Costs incurred prior to the
      establishment of technological feasibility are charged to research and
      development expenses as incurred. The capitalized software is amortized over
      a
      three year period using the straight-line method. As of December 31, 2006,
      all
      capitalized software development costs were fully amortized.





*Fair
      Value of Financial Instruments*





Financial
      instruments held by the Company include cash, accounts receivable, notes payable
      and accounts payable. The book value of cash, accounts receivable and accounts
      payable are considered to be representative of fair value because of the short
      maturity of these instruments. The fair values of the notes payable approximate
      book values primarily because the contractual interest rates approximate
      prevailing market rates.




*Impairment
      of Long-Lived Assets*





The
      Company periodically assesses the recoverability of the carrying amounts of
      long-lived assets, including intangible assets. A loss is recognized when
      expected undiscounted future cash flows are less than the carrying amount of
      the
      asset. The impairment loss is the difference by which the carrying amount of
      the
      asset exceeds its fair value.





*Retirement
      Plan*





The
      Company has a retirement plan under Section 401(k) of the Internal Revenue
      Code
      (“the Plan”), which covers all eligible employees and provides for voluntary
      deduction of the employee’s salary, subject to limitations. The Company can make
      a matching contribution to the Plan, which is at the discretion of the Company
      and is determined annually. There were no matching contributions for the years
      ended December 31, 2006 and 2005.




*Deferred
      income taxes*





The
      Company accounts for income taxes in accordance with Statement of Financial
      Accounting Standards No. 109 (SFAS 109) which requires that deferred tax assets
      and liabilities be recognized for future tax consequences attributable to
      differences between financial statement carrying amounts of existing assets
      and
      liabilities and their respective tax bases. In addition, SFAS 109 requires
      recognition of future tax benefits, such as carryforwards, to the extent that
      realization of such benefits is more likely than not and that a valuation
      allowance be provided when it is more likely than not that some portion of
      the
      deferred tax asset will not be realized.




*Stock-Based
      Compensation*




** In
      December 2004, the FASB issued SFAS No. 123(R), *Share-Based
      Payment* ,
      which
      is a revision of SFAS No. 123, *Accounting
      for Stock-Based Compensation* .
      SFAS
      No. 123(R) requires all share-based payments to employees and directors,
      including grants of stock options, to be recognized in the financial statements
      based on their fair values. We adopted SFAS No. 123(R) on January 1, 2006,
      under
      the modified prospective method, in which the requirements of SFAS No. 123(R)
      are to be applied to new awards and to previously granted awards that are not
      fully vested on the effective date. The modified prospective method does not
      require restatement of previous years’ financial statements.





The
      fair
      value of the Company’s stock options was estimated using the Black-Scholes
      option pricing model. Prior
      to
      the adoption of SFAS No. 123(R), we accounted for share-based compensation
      using
      the intrinsic value-based method of accounting in accordance with Accounting
      Principles Board Opinion No. 25, *Accounting
      for Stock Issued to Employees* .
      The
      following table presents net income (loss) and earnings per share if the fair
      value method had been applied to all outstanding and unvested stock options
      for
      fiscal year 2006 and 2005, respectively:  F-8
 **Table
            of Contents**




**2006**
              
              **2005****Net
                  loss applicable to common****shareholders,**as
                  reported
              
              $
              (4,443,627
              )
              $
              (3,632,448
              )**Add**Total
                  stock-based compensationexpense
                  determined under fairvalue
                  method for all awards, netof
                  related tax effect
              
              
              7,122
              
              
              12,647**Pro
                  forma**
              
              $
              (4,450,749
              )
              $
              (3,645,095
              )**Basic
                  and diluted EPS**As
                  reported
              
              $
              (0.08
              )
              $
              (0.14
              )Pro
                  forma
              
              $
              (0.08
              )
              $
              (0.14
              )




The
      fair
      value of issued stock options is estimated on the date of grant using the
      Black-Scholes option-pricing model including the following assumptions: expected
      volatility of approximately 50.6%, expected dividend yield rate of 0%, expected
      life of 10 years, and a risk-free interest rate of 4.49% and 4.23% for the
      years
      ended December 31, 2006 and 2005, respectively.




*Revenue
      Recognition*





Revenue
      is recognized under the guidelines of Statement of Position SOP 97-2 Software
      Revenue Recognition.





All
      sales
      agreements with clients do not require significant production, modification,
      or
      customization of software, additionally all the functionality of the product
      is
      made available upon delivery, therefore the Company recognizes revenue in
      accordance with Paragraph 8 of 97-2 when:





1)
            Persuasive
                evidence of an arrangement exists as evidenced by a signed contract,2)
            Delivery
                has occurred, please note that Dealer Advance does not recognize
                revenue prior to delivery,


3)
            The
                price of Dealer Advance’s system is fixed and determinable as evidence by
                the contract, and4)
            Collectability
                is highly probable.





*Deferred
      Revenue*





Deferred
      revenue is recorded as a liability when the Company receives the three year
      maintenance contact in a one-time advance payment. The Company then recognizes
      the revenue from the maintenance portion of the contract on a pro rata basis
      over the term of the contract.




*Use
      of Estimates*




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


F-9
 **Table
          of Contents**




*Loss
      Per Common Share*




Loss
      per
      common share is based on the weighted average number of common shares
      outstanding. The Company complies with SFAS No. 128, “Earnings Per Share,” which
      requires dual presentation of basic and diluted earnings (loss) per share.
      Basic
      earnings (loss) per share exclude dilutions and are computed by dividing net
      loss applicable to common stockholders by the weighted average number of common
      shares outstanding for the year. Diluted earnings (loss) per share reflects
      the
      potential dilution that could occur if securities or other contracts to issue
      common stock were exercised or converted into common stock or resulted in the
      issuance of common stock that then shared in the earnings of the entity. Since
      the effect of the outstanding options and warrants are anti-dilutive, they
      have
      been excluded from the Company’s computation of loss per common
      share.





*Recently
      Issued Accounting Pronouncements*




In
      May
      2005, the FASB SFAS No. 154, “Accounting Changes and Error Corrections, a
      Replacement of APB Opinion No. 20 and FASB Statement No. 3”. This statement
      requires retrospective application to prior periods’ financial statements of
      changes in accounting principle, unless it is impracticable to determine either
      the period-specific effects or the cumulative effect of the change. It carries
      forward without change the previous guidance for reporting the correction of
      an
      error and a change in accounting estimate. SFAS No. 154 is effective for
      accounting changes and corrections of errors made in fiscal years beginning
      after December 15, 2005.




**4.**
              **Liquidated
                  damages payable**
 Pursuant
          to the callable secured convertible notes and as a result certain registration
          rights granted to investors, the Company incurred damages due to its failure
          to
          have sufficient issuable shares of common stock registered in accordance
          with
          the terms of the agreement.


**5.**
            **Property
                and Equipment**





A
      summary
      of property and equipment at December 31, 2006 and the estimated lives used
      in
      the computation of depreciation and amortization is as follows:




**Estimated****Amount**
              
              **Useful
                  Life**
              
              **Principal
                  Method**Computer
                  equipment
              
              
              195,827
              
              
              5
                  years
              
              
              Declining-
                  BalanceComputer
                  software
              
              
              19,166
              
              
              3
                  years
              
              
              Declining-
                  BalanceFurniture
                  and fixtures
              
              
              21,717
              
              
              7
                  years
              
              
              Declining-
                  BalanceComputer
                  equipment recorded under capital leases
              
              
              113,193
              
              
              5
                  years
              
              
              Declining-
                  BalanceLeasehold
                  improvements
              
              
              7,982
              
              
              4
                  years
              
              
              Straight-line357,884Less
                  accumulated depreciation and amortization
              
              
              (355,060
              )2,824




F-10
 **Table
          of Contents**




**6.**
            **Accrued
                expenses and other current
                liabilities**





Accrued
      expenses and other current liabilities consist of the following at December
      31,
      2006:


Payroll
                  taxes, including penalites and interest
              
              $
              467,026Commissions
              
              
              109,786Compensation
              
              
              46,135Sales
                  tax
              
              
              106,524Accrued
                  officer's compensation
              
              
              80,000Litigation
              
              
              334,294Other
              
              
              113,807$
              1,257,572


**7.**
            **Notes
                payable, stockholders**





At
      December 31, 2006, notes payable, stockholders consists of the
      following:


Note
                  payable, bearing interest at 8% and due in May, 2007
              
              $
              875,000Non
                  interest bearing convertible notes payable, net of interest imputed
                  at15%
                  per annum of $615,923
              
              
              190,9861,065,986Less
                  current portion
              
              
              (875,000
              )$
              190,986
  The convertible notes mature on August 13, 2016 and
          are
          convertible at the option of the stockholder at the market price of the
          company’s common stock on the day of the conversion.
 **8.**
                  **Callable
                      secured convertible notes consist of the
                      following:**


Callable
                  secured convertible notes bear interest at a rateranging
                  from 8% to 12% (weighted average 10.22%)and
                  are due at various dates from April, 2006 toDecember
                  15, 2009. The notes are secured by thecompany’s
                  assets
              
              $
              6,573,463(Less)
                  current portion
              
              
              2,344,973$
              4,228,490




F-11
 **Table
          of Contents**




The
      notes
      are convertible into our common stock, at the investors’ option, at a conversion
      price, equal to the lower of (i) $0.05 or (ii) 25% of the average of the three
      lowest intraday trading prices for our common stock during the 20 trading days
      before, but not including, the conversion date.





On
      December 15, 2006 the Company entered into an agreement with a group of
      investors for the sale of $900,000 of callable secured convertible notes and
      5,000,000 common stock purchase warrants. As of December 31, 2006, the Company
      sold $250,000 of the notes and issued 1,388,000 warrants.





In
      February and March, 2007 the company sold an additional $300,000 of notes and
      issued 1,700,000 warrants. In addition, provided that all of the conditions
      of
      the Agreement are satisfied, on the final business day of each month until
      the
      full $900,000 in Notes has been purchased, the Company will issue to the
      Investors and the Investors will purchase $150,000 in notes and related
      warrants. The Company or majority interest of the Investors may terminate the
      obligation to issue additional notes and warrants upon 30 days
      notice.




**9.**
            **Income
                taxes**





At
      December 31, 2006, the Company had net operating loss carryforwards of
      approximately $16,998,000 which expire between 2009 and 2024.




The
      Company has a deferred tax asset of approximately $5,780,000 resulting from
      available net operating loss carryforwards for which a 100% valuation allowance
      has been applied.




A
      reconciliation of the credit for income taxes with the amount computed by
      applying the statutory Federal income tax rate to loss before income taxes
      is as
      follows:




**2006**
              
              **2005**Computed
                  expected tax credit rate
              
              
              34
              %
              
              34
              %State
                  income tax credit, net of federal benefit
              
              
              7
              
              
              7Deferred
                  tax valuation allowance
              
              
              (41
              )
              
              (41
              )Effective
                  income tax rate
              
              
              0
              %
              
              0
              %




**10.**
            **Stock
                option plans**





The
      Company has adopted four stock option plans (“Plans”) providing for incentive
      stock options (“ISOs”) and non-qualified stock options (“NQSOs”). The Company
      has reserved 5,421,875shares of common stock for issuance upon the exercise
      of
      stock options granted under the Plans. The exercise price of an ISO or NQSO
      will
      not be less than 100% of the fair market value of the Company’s common stock at
      the date of the grant. The exercise price of an ISO granted to an employee
      owning greater than 10% of the Company’s common stock will not be less than 110%
      of the fair market value of the Company’s common stock at the date of the grant.
      The Plans further provide that the maximum period in which stock  F-12
 **Table
            of Contents**


options
      may be exercised will be determined by the board of directors, except that
      they
      may not be exercisable after ten years from the date of grant. All stock option
      grants vest equally over a three year period.




**Restated**
              
              **Weighted****Plan**
              
              **Per
                  Share**
              
              **Average****Options**
              
              **Exercise
                  Price**
              
              **Exercise
                  Price****Outstanding
                  at**January
                  1, 2005
              
              
              1,225,408
              
              $
              0.11-$2.00
              
              $
              0.850Granted
                  in the year endedDecember
                  31, 2005
              
              
              4,000
              
              $
              0.05
              
              $
              0.050Terminated
                  in the year endedDecember
                  31, 2005
              
              
              (728,277
              )
              $
              0.07-$1.50
              
              $
              1.220**Outstanding
                  at**Year
                  ended December 31, 2005
              
              
              501,131
              
              $
              0.05-$1.50
              
              $
              0.640Granted
                  in the year endedDecember
                  31, 2006
              
              
              3,666,668
              
              $
              0.003
              
              $
              0.003Terminated
                  in the year endedDecember
                  31, 2006
              
              
              (460,156
              )
              $
              0.05-$1.50
              
              $
              0.677**Outstanding
                  at**December
                  31, 2006
              
              
              3,707,643
              
              $
              0.003-$1.50
              
              $
              0.010




The
      exercise price ranges for options outstanding and exercisable at December 31,
      2006 were:




**Range
                  of Exercise Price**
              
              **Options
                  Outstanding**
              
              **Options
                  Exercisable****From**
              
              **To**
              
              **Number**
                **Outstanding**
              
              **Weighted
                  Remaining**
                **Contractural
                  Life**
              
              **Weighted**
                **Exercise
                  Price**
              
              **Number**
                **Outstanding**
              
              **Weighted**
                **Exercise
                  Price**$
                  0.0001
              
              
              to
              
              $
              0.2000
              
              
              3,688,543
              
              $
              9.93
              
              $
              —
              
              
              3,688,543
              
              $
              —$
                  0.2001
              
              
              to
              
              $
              0.2000
              
              
              —
              
              $
              —
              
              $
              —$
                  0.4001
              
              
              to
              
              $
              0.6000
              
              
              10,000
              
              $
              6.30
              
              $
              0.57
              
              
              10,000
              
              $
              0.57$
                  0.6001
              
              
              to
              
              $
              0.8000
              
              
              7,000
              
              $
              6.49
              
              $
              0.65
              
              
              7,000
              
              $
              0.65$
                  0.8001
              
              
              to
              
              Above
              
              
              2,100
              
              $
              6.48
              
              $
              0.86
              
              
              2,100
              
              $
              0.863,707,643
              
              $
              0.01
              
              $
              2.08
              
              
              3,707,643
              
              $
              0.01


**11.**
            **Stockholders’
                Equity**






On
      Feb.
      6, 2006 a stockholder converted $150,000 of deferred compensation into
      21,428,571 shares of common stock of the Company (the “Shares”).





On
      August
      14, 2006, a former officer entered into a Settlement Agreement with the Company
      pursuant to which he exchanged accrued salary, interest, auto allowance
      aggregating $1,177,268, and two bridge loans of $622,000 for a convertible
      note
      of $661,369 and 5,117 shares of Series D Convertible Preferred Stock with an
      aggregate stated value of $1,017,899. The shares of Series D Preferred Stock
      are
      convertible by dividing the stated value by the closing bid price on the day
      immediately prior to conversion.  F-13
 **Table
            of Contents**




On
      August
      14, 2006, the Company entered into a settlement agreement with a lender pursuant
      to which the lender exchanged a loan of $473,594 including interest for 2,381
      shares of Series D Convertible Preferred Stock with an aggregate stated value
      of
      $473,594. The shares of Series D Preferred Stock are convertible into common
      stock by dividing the stated value by the closing bid price on the day
      immediately prior to conversion.





On
      August
      14 2006, the Company into a settlement agreement with pursuant to which the
      lender exchanged a loan of $497,691 including interest for 2,502 shares of
      Series D Convertible Preferred Stock with an aggregate stated value of $497,691.
      The shares of Series D Preferred Stock are convertible by dividing the stated
      value by the closing bid price on the day immediately prior to
      conversion





*Warrants*





During
      the year ended December 31, 2006, we issued the following warrants in connection
      with callable secured convertible notes (see Note 6 above):




**Warrants**
              
              **Exercise**
              
              **Expiration****Date**
              
              **Issued**
              
              **Price**
              
              **Date**02/06/06
              
              
              180,000
              
              
              0.03
              
              
              02/06/1103/17/06
              
              
              2,900,000
              
              
              0.05
              
              
              03/17/1105/12/06
              
              
              200,000
              
              
              0.05
              
              
              05/12/1112/15/06
              
              
              1,388,000
              
              
              0.05
              
              
              12/15/114,668,000


The
      warrants were valued at approximately $85,884 using the Black-Scholes option
      pricing model including the following assumptions: exercise price of
      $0.03-$0.05, expected volatility of 43.65%, expected dividend yield rate of
      0%,
      expected life of 5 years, and a risk free interest rate of 4.41%.




**12.**
            **Commitments
                and contingencies**




*Legal
      proceedings*




The
      Company is subject to legal proceedings and claims which have arisen in the
      ordinary course of its business and have not been finally adjudicated. These
      actions when ultimately concluded and determined will not, in the opinion of
      management, have a material adverse effect on results of operations or the
      financial condition of the Company.





A
      former
      officer of the Company commenced an arbitration proceeding against the Company
      claiming, among other things, that he was due unpaid salaries and damages
      resulting from the company failing to remove a restrictive legend from shares
      of
      common stock owned by him. In May , 2006, the arbitrator awarded the former
      officer $214,362, of which $27,030 has been paid by December 31, 2006. The
      balance is included in accrued expenses and other current liabilities .





In
      the
      ordinary course of business the Company made certain guarantees to prospective
      clients as an inducement to contract for services. These guarantees, although
      limited, provided that the Company would pay client third party equipment leases
      after the first 12 months of service if the client was not satisfied with our
      DealerAdvance TM Software
      Solution. As of December 31, 2006, two judgments have been entered against
      the
      Company for failure to honor such guarantees, aggregating $203,419, which is
      included in accrued expenses. Two additional claims for failure to honor
      guarantees have been filed against the Company. These claims have an approximate
      aggregate liability of $53,000 and have been included in accrued expenses.  F-14
 **Table
            of Contents**




**13.**
            **Related
                Party Transactions**




**Transactions
      with Officers and Directors of DealerAdvance, Inc.**




The
        Company and/or the Company’s sole executive officer and director and CEO may be
        subject to fines, sanctions and/or penalties of an indeterminable nature
        as a
        result of violations of the Sarbanes Oxley Act of 2002 in connection with
        loans
        made to the sole executive officer and director.
  In
        2006
        the Company loaned its sole executive officer and director, and a company
        controlled by him, $114,141. During this same period, $68,000 of the loans
        were
        repaid. These loans violate Section 402 of the Sarbanes Oxley Act of 2002.
        As a
        result, despite the fact that a portion of such loans were repaid, the company
        and/or the Company’s sole executive officer and direcor may be subject
        to fines, sanctions and/or penalties. At this time, we are unable to determine
        the amount of such fines, sanctions and/or penalties that may be incurred
        by our
        company and/or the officer.


**14.**
            **Subsequent
                events**





On
      January 25, 2007, Stronghold Technologies, Inc. (the “Subsidiary”), a New Jersey
      corporation and a wholly owned subsidiary of DealerAdvance, Inc., filed a
      voluntary petition for relief under Chapter 7 of the United States Bankruptcy
      Code in the United States Bankruptcy Court for the Northern District of Texas,
      Case No. 07-30322-sgj7. In connection with the filing, the Subsidiary has ceased
      all business activity and operations. The Subsidiary determined that it does
      not
      have sufficient resources to continue its operations.


F-15