UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 10-K x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2006oro
TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934 For transition period from _______ to  _______ Commission file number: 000-27582 SPEEDUS CORP.(Exact name of registrant as specified in its charter) Delaware

13-3853788(State or other jurisdiction of
  incorporation or organization)

(I.R.S. Employer
  Identification Number)9 Desbrosses Street, Suite 402,
New York, NY(Address of Principal Executive Offices)

10013(Zip code)(888) 773-3669(Registrants telephone
number)Securities registered pursuant to Section
  12(b) of the Act:Common Stock, par value $.01 per share(Title of
  each class)

The NASDAQ Stock Market LLC(Name of each exchange on
which registered)Securities registered pursuant to Section
  12 (g) of the Act:None Indicate by
check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x Indicate by
check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No x Indicate by
check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o Indicate by check
mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of the
registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and
large accelerated filer in Rule 12b-2 of the Exchange Act. Large
  accelerated filer o
Accelerated filer o
Non-accelerated filer x Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No x The aggregate
market value of the Registrants Common Stock held by non-affiliates of the
Registrant was $9,706,000 on June 30, 2006, based on the closing trade price of
the Common Stock on the NASDAQ Capital Market on that date. The number of
shares of Common Stock outstanding as of March 15, 2007 was 15,969,290. DOCUMENTS INCORPORATED BY REFERENCE None    SPEEDUS CORP.
INDEX TO FORM 10-K

PagePART IItem
  1.
Business
3Item
  1A.
Risk
Factors
6Item
  1B.
Unresolved Staff
Comments
9Item
  2.
Properties
9Item
  3.
Legal
Proceedings
10Item
  4.
Submission of
Matters to a Vote of Security
  Holders
10PART IIItem
  5.
Market for
Registrants Common Equity,
  Related Stockholder Matters and Issuer Purchases of Equity Securities
11Item
  6.
Selected
Financial Data
13Item
  7.
Managements
Discussion and Analysis of
  Financial Condition and Results of Operations
14Item
  7A.
Quantitative and
Qualitative Disclosures
  About Market Risk
20Item
  8.
Financial
Statements and Supplementary Data
20Item
  9.
Changes in and
Disagreements With
  Accountants on Accounting and Financial Disclosure
20Item
  9A.
Controls and
Procedures
20Item
  9B.
Other
Information
20PART IIIItem
  10.
Directors,
Executive Officers and Corporate
  Governance
21Item
  11.
Executive
Compensation
24Item
  12.
Security
Ownership of Certain Beneficial
  Owners and Management and Related Stockholder Matters
28Item
  13.
Certain
Relationships and Related
  Transactions, and Director Independence
29Item
  14.
Principal
Accountant Fees and Services
29PART IVItem
  15.
Exhibits,
Financial Statement Schedules
30* * * * *

This Form 10-K
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended (the Exchange Act). These statements appear in a number of places in
this Form 10-K and include statements regarding the intent, belief or current
expectations of the Company or its officers with respect to, among other
things, the ability of the Company to make capital expenditures, the ability to
incur debt, to service and repay such debt, as well as other factors that may
affect the Companys financial condition or results of operations.
Forward-looking statements may include, but are not limited to, projections of
revenues, income or losses, capital expenditures, plans for future operations,
financing needs or plans, compliance with covenants in loan agreements, plans
for liquidation or sale of assets or businesses, plans relating to products or
services of the Company, assessments of materiality, predictions of future
events, and the ability to obtain financing, including the Companys ability to
meet obligations as they become due, and other pending and possible litigation,
as well as assumptions relating to the foregoing. All statements in this Form
10-K regarding industry prospects and the Companys financial position are
forward-looking statements. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date hereof.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

2

PART I

ITEM 1.
BUSINESSBusiness Activities

Speedus
Corp. is a holding company that owns significant equity interests in diverse
businesses. We seek business opportunities across all industries for potential
transactions and relationships in which we can apply our current resources and
management strengths. The companies that we target, either public or privately
held, will be seeking growth or restructuring capital to pursue near term
business objectives in demonstrated markets. We will continue to pursue
opportunities involving our expertise in the medical device and wireless
markets, as well as those areas involving our broadband assets as attractive
opportunities present themselves.

We have
co-invested with Siemens Corporate Research, Inc., a subsidiary of Siemens
Corporation, in Zargis Medical Corp. to develop advanced diagnostic decision
support products and services for primary care physicians, pediatricians,
cardiologists and other healthcare professionals. Zargis Acoustic Cardioscan®
(Cardioscan®), Zargis core product, is the first and only FDA-authorized
computer-assisted medical device designed to support physicians in analyzing
heart sounds for the identification of suspected systolic and diastolic
murmurswhich are a potential sign of heart disease. We own 90% of F&B
Güdtfood Holding Corp., the creator and operator of the original Eurocentric
chic and quick café, which is operating two stores in Manhattan. In 2005, we
conceived Wibiki, a new software-based wireless network that leverages existing
Wi-Fi infrastructures to reduce cost, complexity and risk for users when
accessing the Internet wirelessly. Wibikis business model will employ a
user opt-in advertising service we call AdChooser to generate revenues that keep
Wibiki services free to users. We own a portfolio of patents that allow for
high-speed wireless communications. We also own fixed wireless spectrum in the
New York City metropolitan area that we may commercialize in the future to
support high-speed, or broadband, Internet access service. For additional
information on each of our business segments, see the discussions below and
Notes to Consolidated Financial Statements  Note 8, Business Segment
Information.

Zargis
Medical Corp.In January 2001, we co-invested with Siemens Corporate Research, Inc., a subsidiary of
Siemens Corporation, in Zargis Medical Corp. to develop non-invasive,
diagnostic support solutions that automatically analyze acoustical data from a
patient to determine physiologically significant features useful in medical
diagnosis. The development of Zargis patented technology is a pioneering
effort in medicine which uses advanced signal processing algorithms deployed on standard
computer platforms. The first Zargis device, Cardioscan, received
its initial FDA authorization in May 2004 and additional authorizations in
September 2005 and March 2006. Cardioscan is currently being tested by a small
group of physicians during general medical examinations and physicals to
help detect and analyze suspected heart murmurs which could be a sign of
valvular and congenital heart disease. According
to the National Center for Health Statistics, the number of general medical
examinations, administered in the US totaled 64 million in 2000 alone. Zargis
is currently researching, and conducting trials on, additional noninvasive
diagnostic support tools that process acoustical data from the body in order to
provide an accurate and intelligible assessment of a patients health. These
assessments may be used by physicians and other healthcare providers to assist
in the early identification or monitoring of heart, lung, vascular and other
conditions and to provide better patient treatment.

Major next
steps remaining for Zargis include continuing market trials and clinical trials
for new applications of the Zargis technology and the formation of strategic
partnerships designed to support product commercialization.

In February
2003, we acquired a controlling interest in Zargis Medical. At December 31,
2006, as a result of continued investment, our ownership interest was
approximately 80%.

F&B
Güdtfood. We own 90% of F&B Güdtfood, the creator
and operator of the original Eurocentric chic and quick café, which is
operating two stores in Manhattan. The acquisition price was $3,500,000 in May
2002. In February 2003, we reduced our cash investment in F&B Güdtfood and
received $1,775,000 while maintaining our original 51% interest. In December
2003, as a result of renegotiation, our interest increased to 80% without an
additional investment. As a result of certain milestones not having been met,
in 2005 our interest increased to 90%. We have also entered into a management
services contract with F&B Güdtfood that will result in direct revenues to
us although these revenues will be eliminated on our consolidated financial
statements.

Broadband
Patents. We have accumulated a portfolio of patents
that teach and cover the improvement of high-speed wireless communication
systems to allow greater information content, reliability, clarity, more
efficient use of licensed spectrum as compared to prior systems and other
advances. We have 6 domestic patents

3

with expiration
dates ranging from 2007 through 2017, with approximately 46 international
counterparts in 28 countries. We also have 4 domestic patents pending and 14
patents pending in an additional 3 countries. Certain wireless communications
systems may employ a number of different combinations of our patented
technology to maximize operational and spectrum efficiency. While we believe
that there is great value in our patented technologies, it is a lengthy and
expensive process to investigate and pursue licensing/patent infringement
cases. We are evaluating a strategy for the utilization of these patents in the
future, which may include pursuit of licensing or development of other
strategic opportunities with users of the underlying technology. We have
licensed technology in the past, both domestically and internationally, but are
not currently receiving any license fees.

On
May 11, 2006, we filed two separate complaints against Cellco
Partnership (d/b/a Verizon Wireless) in United States District Court in the
Southern District of Florida, in which we assert that Verizon Wireless is infringing
two patents. Verizon Wireless is a joint venture of Verizon
Communications Inc. and Vodafone Group
PLC. The
suits address technologies now used by Verizon to transmit television to
wireless users over cellular networks and the simultaneous transmission of
analog and digital signals within the same band. On July 27 and September
12, 2006, these cases were transferred to the United States District Court for
the District of New Jersey. Discovery proceedings are presently taking place. There is no trial date set.

On June 2, 2006, we filed two separate complaints against Alltel Corp. in United States District Court in the Southern District of Florida, in which we assert that Alltel is infringing two patents. In an amended complaint, we asserted claims for infringement against Alltel Communications, Inc. and Alltel Wireless Holdings, Inc., in addition to Alltel Corp. The suits address technologies now used by Alltel to transmit television to wireless users over cellular networks and the simultaneous transmission of analog and digital signals within the same band. In October 2006, these two cases were consolidated. Alltel is attempting to have this case transferred to the Eastern District of Arkansas. There has been no decision by the Court on that motion. Discovery proceedings are presently taking place. Trial is scheduled for March 2008 in the Southern District of Florida. A separate lawsuit was
commenced in October 2006 against All Wireless, LLC, a Florida company, alleging infringement of the patent used to transmit television to wireless users over cellular networks. The All Wireless litigation has been stayed pending the completion of the claim construction process in the Alltel litigation.

Wibiki. During
2005, our technology resources
and experience in wireless broadband enabled us to conceive a new
software-based wireless network that leverages existing Wi-Fi infrastructures
to reduce cost, complexity and risk for users when accessing the Internet
wirelessly. We named that network Wibiki. Wibiki offers free beta software
designed to improve access to free Wi-Fi, including streamlining registration
and security configuration of Wi-Fi clients and routers. Wibiki software for laptops
and routers can be downloaded from www.wibiki.com. Wibikis business model
will employ a user opt-in advertising service we call AdChooser to
generate revenues that keep Wibiki services free to users.

NetfreeUs.In March 2007, NetfreeUs, a new wholly-owned subsidiary, asked the FCC for authority to manage a new nationwide Wireless Public Broadband (WPB) network in the 2155-2175 MHz frequency band. Like viewers of free over-the-air television and radio, consumers of NetfreeUS Wireless Public Broadband (WPB) service will never incur monthly fees. NetfreeUS will coordinate third-party lessees who would own and operate wireless access points (WAPs). Initially, no lessee would be authorized to operate more than fifty (50) WAPs. WPB will promote localism and the provision of advertising and public service messages targeted to local interests and communities, as well as local business and economic development, through ubiquitous coverage provided by small-footprint networks. In addition, user-designated advertising would permit local
customization of advertising messages to inform users about products and services of interest in the community.

There are six other applications for this band. Because the FCC has not established processing standards for these applications, we cannot predict whether and to what extent our application will be granted, if at all.

Local
Multipoint Distribution Service (LMDS) license.We have an FCC commercial operating license,
awarded to us in recognition of our efforts in developing and deploying LMDS
technology and for spearheading its regulatory approval at the FCC, which
covers 150 MHz of spectrum in the New York City area. Under FCC authorization,
the license includes an additional 150 MHz of spectrum until the first Ka band
satellite is launched, an event which is not currently determinable. The
license provides that the spectrum may be used for a wide variety of fixed
wireless purposes, including wireless local loop telephony, high-speed Internet
access and two-way teleconferencing.

The license has been renewed
through February 1, 2016 conditioned upon demonstrating to the FCC by March 27,
2007 that we are providing substantial service. On March 7, 2007, we
filed a notification that we are providing substantial service in
accordance with FCC standards. On March 27, 2007, out of an abundance of
caution, we requested a contingent waiver and an extension of time until March
27, 2010 to demonstrate substantial service, to the extent our
earlier demonstration is not deemed compliant with FCC standards. In a pleading
filed in the 2155-2175 MHz proceeding described above, a competing applicant has
questioned our substantial service showing. It is possible that
there will be other challenges to our FCC filings. We anticipate FCC action on
our filings in the next several months.

We will not
commence a full marketing effort using our LMDS technology until new LMDS
equipment becomes commercially available with cost and performance that allow
implementation of an economically viable business model. We cannot determine
when this will occur and this equipment may never be available to us on this
basis.

Other.We have
invested a portion of our assets in a portfolio of marketable securities
consisting of publicly traded equity securities. We have also invested a
portion of our assets in equity and debt instruments of non-publicly held
companies. We have in the past and may in the future sell publicly traded
equity securities we do not own in anticipation of declines in the fair market
values of these securities.

We have
generated operating losses and negative operating cash flows since our
inception and expect to continue to do so in the near future.

Competition

Many
of our present and potential competitors have longer operating histories and
significantly greater financial, technical, marketing and other resources than
we do and therefore may be able to respond more quickly than we can to new or
changing opportunities, technologies, standards and customer requirements.

4

Intellectual Property

To
protect our proprietary rights, we rely on a combination of copyright and
trademark laws, trade secrets, confidentiality agreements with employees and
third parties and protective contractual provisions. All of our employees have executed
confidentiality and nonuse agreements that transfer any rights they may have in
copyrightable works or patentable technologies to us.

We
have applied for registration of our service marks and trademarks in the United
States and in other countries. We may not be successful in obtaining the
service marks and trademarks for which we have applied. To the extent we
consider it necessary, we may file patents to protect our technology. Patents
with respect to our technology may not be granted, and, if granted, patents may
be challenged or invalidated. In addition, issued patents may not provide us
with any competitive advantages and may be challenged by third parties.

Despite
our efforts to protect our proprietary rights, unauthorized parties may copy
aspects of our products or services or obtain and use information that we
regard as proprietary. The laws of some foreign countries do not protect
proprietary rights to as great an extent as do the laws of the United States.
In addition, others could possibly independently develop substantially
equivalent intellectual property. If we do not effectively protect our
intellectual property, our business could suffer. Companies have frequently
resorted to litigation regarding intellectual property rights. We may have to
litigate to enforce our intellectual property rights, to protect our trade
secrets or to determine the validity and scope of other parties proprietary
rights.

We
have filed complaints and are currently litigating certain patent infringement
claims. See Item 3. Legal Proceedings.

Government Regulation

In
general, we are not currently subject to direct federal, state or local
government regulation, other than regulations that apply to businesses
generally. However, the grant, renewal and administration of spectrum licenses
is regulated by the Federal Communications Commission. See Business Activities,Local Multipoint
Distribution Service (LMDS) licensefor additional information on our substantial service demonstration and our contingent request for waiver or extension of the substantial service deadline. A failure by the FCC to conclude that we have demonstrated substantial service or to extend the deadline for demonstrating substantial service could have an adverse effect on the Company.

In
addition, medical devices such as ours are subject to strict regulation by
state and federal authorities, including the Food and Drug Administration and
comparable authorities in certain states.

Employees

As
of March 15, 2007, we had approximately 21 full time and 8 part time employees.
We also rely on a number of consultants. None of our employees is represented
by a collective bargaining agreement. We believe that we have a good
relationship with our employees.

Where You Can Find More Information

We
file annual and quarterly reports, proxy statements and other information with
the Securities and Exchange Commission, and we have an Internet website address
at www.speedus.com. We make available free of charge on our internet website address
our annual and quarterly reports and proxy statements filed pursuant to
Sections 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable
after we electronically file such material with the SEC. You may also read and
copy any document we file at the Securities and Exchange Commissions public
reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please
call the Securities and Exchange Commission at 1-800-732-0330 for further
information on the operation of such public reference room. You also can
request copies of such documents, upon payment of a duplicating fee, by writing
to the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or obtain copies of such documents from the Securities
and Exchange Commissions website at www.sec.gov.

5

ITEM 1A.
RISK FACTORSRisks
related to our business generally

Although we have
been a public company since February 1996, we have reoriented our business
several times and our current business has not generated any significant
revenues to date.

At
the time of our initial public offering, our business was primarily a
subscription television service. In November 1998, we terminated the
subscription television business and began a limited pilot program for the
delivery of high-speed Internet access. We encountered technical difficulties
in this pilot program and reoriented our business on wireless data and other
services. We have not yet generated any significant revenue from these
businesses.

We have recorded
operating losses in each reporting period since our inception and may never be
profitable.

We
have recorded operating losses and negative operating cash flows in all
reporting periods since inception and, at December 31, 2006, had an accumulated
deficit of approximately $69.4 million. We believe that we have sufficient
liquidity to finance our current level of operations through the 2007 fiscal
year. However, we do not expect to have earnings from operations, exclusive of
non-cash charges, until such time as we substantially increase our customer
base and/or form a strategic alliance for use of our capabilities in the
future.

Our
existing operations and infrastructure may not be adequate to manage the growth
necessary for successful implementation of our business plan.

Successful
implementation of our business plan will require the management of growth. Our
existing operations and infrastructure may not be adequate to manage such
growth, and any steps taken to improve such systems and controls may not be
sufficient. Our future success will depend in part upon attracting and
retaining the services of current management and technical personnel. We also
may not be successful in attracting, assimilating and retaining new personnel
in the future as future growth takes place. We do not maintain key person
life insurance policies on any of our key personnel.

Shant S. Hovnanian
and Vahak S. Hovnanian, who in the aggregate own approximately 40% of our
Common Stock, may have the power acting together to control the direction and
future operations of our company.

Shant
S. Hovnanian and Vahak S. Hovnanian in the aggregate own approximately 40% of
our outstanding Common Stock at December 31, 2006. As a result, acting together
they may have the power to elect all of the members of our Board of Directors,
amend our certificate of incorporation and by-laws and control the direction
and future operations of our Company, in each case without the approval of any
of our other stockholders.

Our
stock price has historically been volatile, which may make it more difficult
for you to resell shares when you want at prices you find attractive.

The
trading price of our Common Stock has been and may continue to be subject to
wide fluctuations. During 2006, 2005 and 2004, the high and low sale prices of
our Common Stock on the Nasdaq Stock Market ranged from $2.05 to $1.02, $2.92
to $1.06 and $4.28 to $1.39, respectively. The closing sale price of our Common
Stock was $1.25 on March 15, 2007. Our stock price may fluctuate in response to
a number of events and factors, such as quarterly variations in operating
results, announcements of technological innovations or new products and media
properties by us or our competitors, the operating and stock price performance
of other companies that investors may deem comparable, and news reports
relating to trends in our markets.

On
several occasions historically, we have not been in compliance with Marketplace
Rule 4450(a)(5), which requires listed companies to maintain a closing bid
price equal to or greater than $1.00. In all such cases, we subsequently
received notice from Nasdaq that we had regained compliance with Marketplace
Rule 4450(a)(5) and the matter was closed.

If
our Common Stock were delisted from Nasdaq, trading in our Common Stock would
have to be conducted on the OTC Bulletin Board or in the non-Nasdaq
over-the-counter market, also referred to as the pink sheets. If that were to
occur, liquidity for our Common Stock could be significantly decreased which
could reduce the trading price and increase the transaction costs of trading
shares of our Common Stock.

Sales
of shares of Common Stock by Shant S. Hovnanian and Vahak S. Hovnanian could
adversely affect the market price of the Common Stock.

Future
sales of shares of Common Stock, or the availability of shares of Common Stock
for future sale, may adversely impact the market price of the Common Stock
prevailing from time to time. Sales of substantial amounts of our Common Stock,
or the perception that such sales could occur, could adversely affect the
prevailing market price of the Common Stock.

6

Shares
of Common Stock held by Shant S. Hovnanian and Vahak S. Hovnanian have been
held by each of them for the requisite holding periods under Rule 144 under the
Securities Act and may be sold in accordance with volume restrictions.

Risks
related to certain short-term investments

Securities
that we invest in are subject to market price risks.

As
part of our overall investment strategy, we invest in publicly traded equity
securities. We purchase these securities in anticipation of increases in the
fair market values of the securities.

We
have also invested in equity and debt instruments of non-publicly held
companies and account for them under the cost method since we do not have the
ability to exercise significant influence over operations. We monitor these
investments for other than temporary impairment by considering current factors
including economic environment, market conditions, operational performance and
other specific factors relating to the business underlying the investment, and
record reductions in carrying values when necessary.

We
have in the past and may in the future sell publicly traded equity securities
that we do not own in anticipation of declines in the fair market values of the
securities. When we sell securities that we do not own, we must borrow the
securities we sold in order to deliver them and settle the trades. Thereafter,
we must buy the securities and deliver them to the lender of the securities.
Our potential for loss on these transactions is unlimited since the value of
the underlying security can keep increasing which could have a material adverse
effect on the Companys consolidated financial statements.

The
Company is seeking to eliminate the risk that it could be deemed to be an
investment company.

The
Company has substantial liquidity. Although a portion of the Companys cash is
invested in securities, the Company is pursuing an acquisition strategy that
will, if successfully executed, eliminate any risk of it being deemed to be an
investment company.

Generally,
a company must register under the Investment Company Act of 1940 and comply
with significant restrictions on operations and transactions with affiliates if
its investment securities exceed 40% of the companys total assets, or if it
holds itself out as being primarily engaged in the business of investing, owning
or holding securities. If it is deemed to be an investment company, it might
need to dispose of or acquire investments in order to avoid investment company
status.

Risks
related to investments in other companies

Ability
to successfully identify investment opportunities

We
will face substantial competition in identifying and closing appropriate
investment opportunities from, among others, venture capital firms, large
corporate investors and other publicly traded companies. These competitors may limit
our opportunity to acquire interests in new partner companies. In addition, we
may be unable to acquire interests in appropriate companies for other reasons,
including the inability to agree on terms, such as price and ownership
percentages, incompatibility between us and management and access to sufficient
funding. Our growth will be materially adversely affected if we cannot
successfully identify investments in a sufficient number of companies.

The value of our
business may fluctuate because of companies that we may invest in.

The
value of our business may fluctuate because of companies that we may invest in.
These companies may be development stage or privately held companies for which
no public market exists for their stock. The valuations of our investments in
privately held companies that we may invest in are indeterminate prior to their
public offerings, and there can be no assurance that these offerings will occur
since they will be dependent upon the development of these businesses, market
conditions and other conditions over which we may have no control.

Capital
and management resources

There
will be a number of special issues that we will have to address for investment
in start-up companies, including: the diversion of management attention in
connection with both negotiating and overseeing these transactions; the
potential issuance of additional shares of our Common Stock in connection with
these transactions, which could dilute the rights of existing shareholders, and
the need to incur additional debt in connection with these transactions. In
addition, many, if not all, of these start-up companies will face the same, or
similar, risks as we face in our own business.

7

Managing growth

Successful
implementation of our business plan will require the management of growth. We
cannot assure you that our existing operations and infrastructure will be
adequate to manage such growth, or that any steps taken to improve such systems
and controls will be sufficient. Our future success will depend in part upon
attracting and retaining the services of current management and technical
personnel. We cannot assure you that we will be successful in attracting,
assimilating and retaining new personnel in the future as future growth takes
place.

Risks
related to medical device companies

Risks
related to government regulation and future regulatory requirements

Medical
devices such as ours are subject to strict regulation by state and federal
authorities, including the Food and Drug Administration and comparable
authorities in certain states.

Manufacturers
of medical devices are required to comply with very specific rules and
regulations concerning the testing, manufacturing, packaging, labeling and
marketing of medical devices. Failure to comply with applicable regulatory
requirements could result in, among other things, civil and criminal fines,
product recalls, detentions, seizures, injunctions and criminal prosecutions.

In
addition, these regulations are subject to future change. We cannot predict
what material impact, if any, these changes might have on our business. Future
changes in regulations or enforcement policies could impose more stringent requirements
on us, compliance with which could adversely affect our business.

Potential product
recalls

In
the event that any of our products prove to be defective, we could voluntarily
recall, or the FDA could require us to redesign or implement a recall of, any
defective product. There is a possibility that we may recall products in the
future and that future recalls could result in significant costs to us and in
significant negative publicity which could harm our ability to market our
products in the future.

We
could be exposed to significant liability claims.

We
could be exposed to significant liability claims if we are unable to obtain
insurance at acceptable costs and adequate levels or otherwise protect
ourselves against potential product liability claims.

The
testing, manufacture, marketing and sale of medical devices involve the
inherent risk of liability claims. A successful product liability claim could
affect or prevent commercialization of our medical devices, or cause a
significant financial burden on us, or both, and could have a material adverse
effect on our business, financial condition, and ability to market our medical
devices.

Health
care providers may not be able to obtain adequate levels of third-party reimbursement.

The
success of our product will depend to a significant extent on the ability of
health care providers to obtain adequate levels of third-party reimbursement.
The amount of reimbursement available may vary. The cost of medical care is funded,
in substantial part, by government insurance programs, such as Medicare and
Medicaid, and private and corporate health insurance plans. Third-party payers
may deny reimbursement at adequate levels if they determine that a prescribed
device or diagnostic procedure is not used in accordance with cost-effective
treatment methods as determined by the payer, or is experimental, unnecessary
or inappropriate. The inadequacy of the reimbursement would have a material
adverse effect on our business.

The
medical device industry is characterized by rapid technological changes and
advances.

Although
the Company believes that its products are technologically current, the
development of new technologies or refinements of existing ones by the
Companys competitors could at any time make the Companys existing products
technologically or economically obsolete. Although the Company is not aware of
any pending technological developments that would be likely to materially and
adversely affect its business or financial position, there can be no assurance
that such developments will not occur at any time.

We
may rely on third parties to support the manufacture or commercialization of
our products.

We
may rely on third parties, and possibly single third parties, to manufacture or
commercialize our products. Third parties may not perform their obligations as
expected. The amount and timing of resources that third parties devote to
manufacturing or commercializing our product may not be within our control. The
third party on which we rely to commercialize our products may not be able to
recruit and retain skilled sales representatives.

8

Furthermore,
our interests may differ from those of the third party that manufacture or
commercializes our products. Disagreements that may arise with the third party
could limit the manufacture or commercialization of our products, or result in
litigation or arbitration, which would be time-consuming, distracting and
expensive. If the third party that supports the manufacture or
commercialization of our products breaches or terminates its agreement with us,
or fails to conduct its activities in a timely manner, such breach, termination
or failure could result in the disruption of our business and could have a material
adverse effect on our results of operations.

Risks related to our high-speed Internet
access service

We may be unable to
solve ongoing technical difficulties in our deployment and equipment for our
high-speed Internet access service is not, and may never be, available at a cost and with performance
levels that allow for commercial implementation on an economically attractive
basis.

Our
super high-speed Internet service utilizes a new technology that has a limited
operating history and that remains subject to further development and
refinement.

The
equipment necessary to provide our high-speed Internet access service is not
currently manufactured on a scale and at a cost suitable for the
commercialization of our service. Such equipment may never become available at
a cost and with performance levels that allow for commercial implementation on
an economically attractive basis.

Many financially
stronger competitors with broader market coverage are offering high-speed
Internet access.

The
market for Internet access and related services is highly competitive. We
expect local, regional and national Internet service providers to be
competitors for our super high-speed Internet access service. Telephone
companies with digital subscriber line technology, which increases the
effective capacity of existing copper telephone cables, are among other
competitors. Also, cable operators with high-speed cable modems are among the
other communications companies also providing high-speed Internet access. Many
of the competing Internet service providers have, or can be expected to have,
greater financial, marketing and other resources than us. We may not be able to
compete successfully with these entities.

ITEM 1B.
UNRESOLVED STAFF COMMENTSNone.

ITEM 2.
PROPERTIESAll
of our properties are leased space. Information on our major locations at
December 31, 2006 is presented below:

Location

Use

Square
  footage

Lease
  expiration

Renewal
  optionsNew York, NY


Executive and
  administrative



2,500



2007


Six-month termsthrough 2009New York, NY


F&B restaurant



1,300



2009


NoneNew York, NY


F&B restaurant



1,500



2014


NoneNew York, NY


Other



3,000



2008


NonePrinceton, NJ


Administrative and
  research



2,500



2009


NoneStamford, CT


Administrative



850



2007


NoneITEM 3.
LEGAL PROCEEDINGSOn May 11,
2006, we filed two separate complaints against Cellco Partnership
(d/b/a Verizon Wireless) in United
States District Court in the Southern District of Florida, in which we assert
that Verizon Wireless is infringing two patents. Verizon Wireless is a
joint venture of Verizon Communications Inc. and Vodafone Group PLC. The
suits address technologies now used by Verizon to transmit television to
wireless users over cellular networks and the simultaneous transmission of
analog and digital signals within the same band. On July 27 and September
12, 2006, these cases were transferred to the United States District Court for
the District of New Jersey. Discovery proceedings are presently taking place. There is no trial date set.

On June 2, 2006, we filed two separate complaints against Alltel Corp. in United
States District Court in the Southern District of Florida, in which we assert
that Alltel is infringing two patents. In an amended complaint, we asserted
claims for infringement against Alltel Communications, Inc. and Alltel Wireless
Holdings, Inc., in addition to Alltel Corp. The suits address technologies now
used by Alltel to transmit television to wireless users over cellular networks
and the simultaneous transmission of analog and digital signals within the same
band. In October 2006, these two cases were consolidated. Alltel is attempting
to have this case transferred to the Eastern District of Arkansas. There has
been no decision by the Court on that motion. Discovery proceedings are
presently taking place. Trial is scheduled for March 2008 in the Southern
District of Florida. A separate lawsuit was commenced in October 2006 against
All Wireless, LLC, a Florida company, alleging infringement of the patent used
to transmit television to wireless users over cellular networks. The All
Wireless litigation has been stayed pending the completion of the claim
construction process in the Alltel litigation.

9

ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSAt
its Annual Meeting of shareholders held on December 19, 2006, the Company
submitted the following matters to a vote of its shareholders, all of which
were approved:

1.
Election of Directors:

Name of
  Director

Votes For

Votes WithheldShant S.
  Hovnanian


13,454,094



102,095Vahak S.
  Hovnanian


13,393,370



162,819William F.
  Leimkuhler


13,461,766



94,423Jeffrey
  Najarian


13,462,166



94,023Christopher
  Vizas


13,462,166



94,0232.
Appointment of PricewaterhouseCoopers LLP as the independent registered public
accounting firm of the Company:

Votes For


Votes Against


Abstentions13,510,619


34,882


10,68810

PART II

ITEM 5.
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
  AND ISSUER PURCHASES OF EQUITY SECURITIESOur
Common Stock is listed for quotation on the Nasdaq Capital Market and trades
under the symbol SPDE. The following table sets forth high and low trade
prices for the Common Stock for the fiscal quarters indicated.

High Sale

Low Sale2006First
  quarter

$
1.680

$
1.150Second
  quarter


1.760


1.100Third
  quarter


1.370


1.020Fourth
  quarter


2.050


1.0702005First
  quarter

$
2.920

$
2.000Second
  quarter


2.100


1.240Third
  quarter


1.750


1.060Fourth
  quarter


1.690


1.110On
March 15, 2007, the closing trade price of our Common Stock was $1.25 per
share. As of December 31, 2006, there were approximately 200 registered
shareholders and, to the best of our belief, approximately 4,000 beneficial
owners of our Common Stock. During the year ended December 31, 2006, we did not
make any sales of securities that were not registered under the Securities Act
of 1933, as amended.

We
have never declared or paid any cash dividends on our Common Stock and do not
intend to declare or pay cash dividends on the Common Stock at any time in the
foreseeable future. Future earnings, if any, will be used for the expansion of
our business.

Issuer Purchases of Equity Securities

The
following table sets forth certain information regarding repurchases by the
Company of its own equity securities during the fourth quarter of 2006:

Period

Total Number
  of Shares (or
  Units) Purchased

Average Price
  Paid per Share (or
  Unit)

Total number
  of Shares (or
  Units) Purchased
  as Part of Publicly
  Announced Plans
  or Programs

Maximum
  Number (or
  Approximate
  Dollar Value) of
  Shares (or Units)
  that May Yet Be
  Purchased Under
  the Plans or
  Programs (1)October 1, 2006 - October 31, 2006


0

$



0

$
483,930November 1, 2006 - November 30, 2006


0

$



0

$
483,930December 1, 2006 - December 31, 2006


50,000

$
1.36


50,000

$
415,740Total


50,000

$
1.36


50,000

$
415,740(1) On November 21, 2000, the
Company announced that its Board of Directors had approved a stock repurchase
program for the repurchase of up to $1,000,000 of Company stock through open
market as well as privately negotiated transactions. Thereafter, the Board of
Directors approved increases to the program in the aggregate amount of
$5,500,000.

11

Equity Compensation Plans

The
following table sets forth certain information as of December 31, 2006 for all
compensation plans, including individual compensation arrangements, under which
equity securities of the Company are authorized for issuance:

Plan category

Number of
  securities to be
  issued upon
  exercise of
  outstanding
  options,
  warrants and
  rights

Weighted
  average exercise
  price of
  outstanding
  options,
  warrants and
  rights

Number of
  securities
  remaining
  available for
  further issuanceEquity
  compensation plans approved by security holders


2,161,459

$
2.07


734,368Equity
  compensation plans not approved by security holdersTotal


2,161,459

$
2.07


734,368Performance graph

The
following graph compares the cumulative return on the Companys Common Stock
for the last five years with the Total Return Index for: (i) The Nasdaq Stock
Market US (Nasdaq US), (ii) Nasdaq Non-Financial Stocks (New Peer Group),
and (iii) Nasdaq Telecommunications Stocks (Old Peer Group), as prepared for
Nasdaq by the Center for Research in Security Prices at the University of
Chicago. As a result of the Companys evolving business model, the Company has
selected a new industry peer group. The New Peer Group consists of all
companies in the Total Return Index for Nasdaq Non-Financial Stocks. The Old
Peer Group consists of all companies in the Total Return Index for Nasdaq
Telecommunications Stocks. As required during this transitional period, the
Company is showing cumulative returns from both the New Peer Group and the Old
Peer Group.

The
performance graph assumes (i) $100 was invested on December 31, 2001 and (ii)
reinvestment of dividends. Each measurement point on the graph below represents
the cumulative stockholder return as measured by the last sale price at the end
of each annual period from 2002 through 2006.

(LINE GRAPH)

12

ITEM 6.
SELECTED CONSOLIDATED FINANCIAL DATAThe selected consolidated financial data
below should be read in conjunction with Managements Discussion and Analysis
of Financial Condition and Results of Operations and the Consolidated
Financial Statements of the Company and Notes thereto included elsewhere in
this Form 10-K.

Year ended December 31,2006

2005

2004

2003

2002(in thousands, except per share data)Statement of Operations DataRevenues

$
846

$
1,038

$
917

$
711

$
907Total
  operating expenses


7,062


6,934


10,778


7,581


11,380Operating
  loss


(6,216
)

(5,896
)

(9,861
)

(6,870
)

(10,473
)Net
  interest/investment income/(loss)


601


(52
)

419


(4,520
)

(194
)Minority
  interest





159


508


779


80Equity in
  loss of associated company











(93
)

(521
)Settlement
  of litigation








15,000





Benefit
  from/(provision for) taxes





322


(62
)




Net
  earnings/(loss)

$
(5,615
)
$
(5,467
)
$
6,004

$
(10,704
)
$
(11,108
)Per Common ShareBasic
  earnings/(loss)

$
(0.35
)
$
(0.34
)
$
0.37

$
(0.65
)
$
(0.62
)Weighted
  average outstanding


16,051,706


16,182,208


16,245,281


16,498,267


17,927,000Diluted
  earnings/(loss)

$
(0.35
)
$
(0.34
)
$
0.36

$
(0.65
)
$
(0.62
)Weighted
  average outstanding


16,051,706


16,182,208


16,799,298


16,498,267


17,927,000December 31,2006

2005

2004

2003

2002(in thousands)Balance Sheet DataCash and
  cash equivalents

$
10,204

$
18,563

$
17,741

$
19,419

$
33,053United
  States Treasury bills


4,990





5,977





Working
  capital


14,658


18,635


23,329


17,774


29,544Net property
  and equipment


528


426


610


420


820Net other
  intangible assets


34


623


1,418


2,042


1,651Net goodwill











621


1,760Total assets


17,136


22,460


28,682


28,510


50,185Minority
  interest








159


531


1,592Total
  liabilities


1,034


1,285


1,673


6,990


16,175Total equity


16,102


21,176


26,850


20,989


32,418In February 2003, the Company acquired a majority interest in Zargis
Medical This acquisition was accounted for using the purchase method of
accounting and the results of operations of Zargis Medical have been included
in the consolidated statements of operations for the periods subsequent to
February 28, 2003.

In May 2002, the Company acquired a majority interest in F&B
Güdtfood This acquisition was accounted for using the purchase method of
accounting and the results of operations of F&B Güdtfood have been included
in the consolidated statements of operations for the periods subsequent to May
6, 2002.

For additional information on these transactions, see Managements
Discussion and Analysis of Financial Condition and Results of Operations.

13

ITEM 7.     
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONSOperations

Speedus
Corp. is a holding company that owns significant equity interests in diverse
businesses. We seek business opportunities across all industries for potential
transactions and relationships in which we can apply our current resources and
management strengths. The companies that we target, either public or privately
held, will be seeking growth or restructuring capital to pursue near term
business objectives in demonstrated markets. We will continue to pursue
opportunities involving our expertise in the medical device and wireless
markets, as well as those areas involving our broadband assets as attractive
opportunities present themselves.

We
have co-invested with Siemens Corporate Research, Inc., a subsidiary of Siemens
Corporation, in Zargis Medical Corp. to develop advanced diagnostic decision
support products and services for primary care physicians, pediatricians,
cardiologists and other healthcare professionals. Zargis Acoustic Cardioscan®
(Cardioscan®), Zargis core product, is the first and only FDA-authorized
computer-assisted medical device designed to support physicians in analyzing
heart sounds for the identification of suspected systolic and diastolic
murmurswhich are a potential sign of heart disease. We own 90% of F&B
Güdtfood Holding Corp., the creator and operator of the original Eurocentric
chic and quick café, which is operating two stores in Manhattan. In 2005, we
conceived Wibiki, a new software-based wireless network that leverages existing
Wi-Fi infrastructures to reduce cost, complexity and risk for users when
accessing the Internet wirelessly. Wibikis business model will employ a
user opt-in advertising service we call AdChooser to generate revenues that
keep Wibiki services free to users. We own a portfolio of patents that allow
for high-speed wireless communications. We also own fixed wireless spectrum in
the New York City metropolitan area that we may commercialize in the future to
support high-speed, or broadband, Internet access service. For additional
information on each of our business segments, see the discussions below and
Notes to Consolidated Financial Statements  Note 9, Business Segment
Information.

Zargis
Medical Corp.In January 2001, we co-invested with
Siemens Corporate Research, Inc., a subsidiary of Siemens Corporation, in
Zargis Medical Corp. to develop non-invasive, diagnostic support solutions that
automatically analyze acoustical data from a patient to determine
physiologically significant features useful in medical diagnosis. The
development of Zargis patented technology is a pioneering effort in medicine
which uses advanced signal processing algorithms deployed on standard computer platforms.
The first Zargis device, Cardioscan, received its initial FDA authorization in
May 2004 and additional authorizations in September 2005 and March 2006.
Cardioscan is currently being tested by a small group of physicians during
general medical examinations and physicals to help detect and analyze suspected
heart murmurs which could be a sign of valvular and congenital heart disease.
According to the National Center for Health Statistics, the number of general
medical examinations, administered in the US totaled 64 million in 2000 alone.
Zargis is currently researching, and conducting trials on, additional
noninvasive diagnostic support tools that process acoustical data from the body
in order to provide an accurate and intelligible assessment of a patients
health. These assessments may be used by physicians and other healthcare
providers to assist in the early identification or monitoring of heart, lung,
vascular and other conditions and to provide better patient treatment.

Major next
steps remaining for Zargis include continuing market trials and clinical trials
for new applications of the Zargis technology and the formation of strategic
partnerships designed to support product commercialization.

In February
2003, we acquired a controlling interest in Zargis Medical. At December 31,
2006, as a result of continued investment, our ownership interest was
approximately 80%.

F&B
Güdtfood. We own 90% of F&B Güdtfood, the creator
and operator of the original Eurocentric chic and quick café, which is
operating two stores in Manhattan. The acquisition price was $3,500,000 in May
2002. In February 2003, we reduced our cash investment in F&B Güdtfood and
received $1,775,000 while maintaining our original 51% interest. In December
2003, as a result of renegotiation, our interest increased to 80% without an
additional investment. As a result of certain milestones not having been met,
in 2005 our interest increased to 90%. We have also entered into a management
services contract with F&B Güdtfood that will result in direct revenues to
us although these revenues will be eliminated on our consolidated financial
statements.

Broadband
Patents. We have accumulated a portfolio of patents
that teach and cover the improvement of high-speed wireless communication
systems to allow greater information content, reliability, clarity, more
efficient use of licensed spectrum as compared to prior systems and other
advances. We have 6 domestic patents with expiration dates ranging from 2007 through
2017, with approximately 46 international counterparts in 28 countries. We also
have 4 domestic patents pending and 14 patents pending in an additional 3
countries. Certain

14

wireless communications
systems may employ a number of different combinations of our patented
technology to maximize operational and spectrum efficiency. While we believe
that there is great value in our patented technologies, it is a lengthy and
expensive process to investigate and pursue licensing/patent infringement cases.
We are evaluating a strategy for the utilization of these patents in the
future, which may include pursuit of licensing or development of other
strategic opportunities with users of the underlying technology. We have
licensed technology in the past, both domestically and internationally, but are
not currently receiving any license fees.

On
May 11, 2006, we filed two separate complaints against Cellco
Partnership (d/b/a Verizon Wireless) in United States District Court in the
Southern District of Florida, in which we assert that Verizon Wireless is infringing
two patents. Verizon Wireless is a joint venture of Verizon
Communications Inc. and Vodafone Group PLC. The suits address technologies now used by
Verizon to transmit television to wireless users over cellular networks and the
simultaneous transmission of analog and digital signals within the same
band. On July 27 and September 12, 2006, these cases were transferred to
the United States District Court for the District of New Jersey. Discovery
proceedings are presently taking place. There is no trial date set.

On June 2, 2006, we filed two separate complaints against Alltel Corp. in United States District Court in the Southern District of Florida, in which we assert that Alltel is infringing two patents. In an amended complaint, we asserted claims for infringement against Alltel Communications, Inc. and Alltel Wireless Holdings, Inc., in addition to Alltel Corp. The suits address technologies now used by Alltel to transmit television to wireless users over cellular networks and the simultaneous transmission of analog and digital signals within the same band. In October 2006, these two cases were consolidated. Alltel is attempting to have this case transferred to the Eastern District of Arkansas. There has been no decision by the Court on that motion. Discovery proceedings are presently taking place. Trial is scheduled for March 2008 in the Southern District of Florida. A separate lawsuit was
commenced in October 2006 against All Wireless, LLC, a Florida company, alleging infringement of the patent used to transmit television to wireless users over cellular networks. The All Wireless litigation has been stayed pending the completion of the claim construction process in the Alltel litigation.

Wibiki. During
2005, our technology resources
and experience in wireless broadband enabled us to conceive a new
software-based wireless network that leverages existing Wi-Fi infrastructures
to reduce cost, complexity and risk for users when accessing the Internet
wirelessly. We named that network Wibiki. Wibiki offers free beta software
designed to improve access to free Wi-Fi, including streamlining registration
and security configuration of Wi-Fi clients and routers. Wibiki software for
laptops and routers can be downloaded from www.wibiki.com. Wibikis business
model will employ a user opt-in advertising service we call AdChooser to
generate revenues that keep Wibiki services free to users.

NetfreeUs.In March 2007, NetfreeUs, a new wholly-owned subsidiary, asked the FCC for authority to manage a new nationwide Wireless Public Broadband (WPB) network in the 2155-2175 MHz frequency band. Like viewers of free over-the-air television and radio, consumers of NetfreeUS Wireless Public Broadband (WPB) service will never incur monthly fees. NetfreeUS will coordinate third-party lessees who would own and operate wireless access points (WAPs). Initially, no lessee would be authorized to operate more than fifty (50) WAPs. WPB will promote localism and the provision of advertising and public service messages targeted to local interests and communities, as well as local business and economic development, through ubiquitous coverage provided by small-footprint networks. In addition, user-designated advertising would permit local
customization of advertising messages to inform users about products and services of interest in the community.

There are six other applications for this band. Because the FCC has not established processing standards for these applications, we cannot predict whether and to what extent our application will be granted, if at all.

Local
Multipoint Distribution Service (LMDS) license.We have an FCC commercial operating license,
awarded to us in recognition of our efforts in developing and deploying LMDS
technology and for spearheading its regulatory approval at the FCC, which
covers 150 MHz of spectrum in the New York City area. Under FCC authorization,
the license includes an additional 150 MHz of spectrum until the first Ka band
satellite is launched, an event which is not currently determinable. The
license provides that the spectrum may be used for a wide variety of fixed
wireless purposes, including wireless local loop telephony, high-speed Internet
access and two-way teleconferencing.

The license has been renewed
through February 1, 2016 conditioned upon demonstrating to the FCC by March 27,
2007 that we are providing substantial service. On March 7, 2007, we
filed a notification that we are providing substantial service in
accordance with FCC standards. On March 27, 2007, out of an abundance of
caution, we requested a contingent waiver and an extension of time until March
27, 2010 to demonstrate substantial service, to the extent our
earlier demonstration is not deemed compliant with FCC standards. In a pleading
filed in the 2155-2175 MHz proceeding described above, a competing applicant has
questioned our substantial service showing. It is possible that
there will be other challenges to our FCC filings. We anticipate FCC action on
our filings in the next several months.

We will not
commence a full marketing effort using our LMDS technology until new LMDS
equipment becomes commercially available with cost and performance that allow
implementation of an economically viable business model. We cannot determine
when this will occur and this equipment may never be available to us on this
basis.

Other.We have
invested a portion of our assets in a portfolio of marketable securities
consisting of publicly traded equity securities. We have also invested a
portion of our assets in equity and debt instruments of non-publicly held
companies. We have in the past and may in the future sell publicly traded
equity securities we do not own in anticipation of declines in the fair market
values of these securities.

We have
generated operating losses and negative operating cash flows since our
inception and expect to continue to do so in the near future.

Critical
Accounting Policies

Our
discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements. The preparation of those
financial statements in conformity with generally accepted accounting
principles 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 dates of the financial statements and the
reported amounts of operating revenues and expenses during the reporting
periods. Actual results could differ from those estimates. For a description of
all of our accounting policies, see Note 2 to our consolidated financial
statements included in this Form 10-K. However, we believe the following
critical accounting policies affect the more significant judgments and
estimates used in the preparation of our consolidated financial statements.

15

Financial
instruments. Our financial instruments consist
primarily of cash equivalents, United States treasury bills and marketable
securities and may include securities sold and not purchased. The carrying
value of cash equivalents approximates market value since these highly liquid,
interest earning investments are invested in money market funds. Marketable
securities consist of publicly traded equity securities classified as trading
securities and are recorded at fair market value, i.e., closing prices quoted
on established securities markets. Securities sold and not repurchased are also
carried at the fair market value of the securities. Significant changes in the
market value of securities that we invest in could have a material impact on
our financial position and results of operations.

We
have also invested in equity and debt instruments of non-publicly held
companies and account for them under the cost method since we do not have the
ability to exercise significant influence over operations. We monitor these
investments for other than temporary impairment by considering current factors
including economic environment, market conditions, operational performance and
other specific factors relating to the business underlying the investment, and
record reductions in carrying values when necessary.

Long-lived assets.
Long-lived assets, including fixed assets and other intangibles, are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of any such asset may not be recoverable through estimated
future cash flows from that asset. The estimate of cash flow is based upon,
among other things, certain assumptions about expected future operating
performance.

Share-Based
Payments. Prior to January 1, 2006, we
accounted for our employee stock options in accordance with Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, as amended, which defines a fair value method of measuring and
accounting for compensation expense from employee stock options. FASB 123 also
allowed accounting for such options under the intrinsic value method in
accordance with Accounting Principles Board No. 25, Accounting for Stock
Issued to Employees. We elected to use the intrinsic value method and adopted
the disclosure only provisions of FASB 123. Generally, no compensation cost was
recognized since stock options were issued with exercise prices equal to the
market value of the underlying shares on the grant date.

Effective
January 1, 2006, we adopted FASB 123R, Share-Based Payment, using the
modified prospective application method. Under this method, for all unvested
awards as of January 1, 2006, we record compensation cost based upon the
fair value of those awards on the grant date over the remaining service period
of each award on a straight line basis. For awards granted after January 1,
2006, we record compensation cost based upon the fair value of those awards on
the grant date over the service period of each award on a straight line basis.

We
estimate the value of these awards on the date of grant using a Black-Scholes
option pricing model. The determination of the fair value of these awards on
the date of grant is affected by our stock price as well as assumptions
regarding a number of complex and subjective variables. These variables include
our expected stock price volatility over the term of the awards, expected term,
risk-free interest rate, expected dividends and expected forfeiture rates.

If
factors change and we employ different assumptions in the application of FASB
123R in future periods, the compensation expense that we record under FASB 123R
may differ significantly from what we have recorded in the current period.
There is a high degree of subjectivity involved when using option pricing
models to estimate share-based compensation under FASB 123R. Consequently,
there is a risk that our estimates of the fair values of these awards on the
grant dates may bear little resemblance to the actual values realized upon the
exercise, expiration, early termination or forfeiture of those share-based
payments in the future. Employee stock options may expire worthless or
otherwise result in zero intrinsic value as compared to the fair values
originally estimated on the grant date and reported in our consolidated
financial statements. Alternatively, value may be realized from these
instruments that are significantly in excess of the fair values originally
estimated on the grant date and reported in our consolidated financial
statements. During the year ended December 31, 2006, we do not believe that
reasonable changes in the projections would have had a material effect on
share-based compensation expense.

Contingencies. We account for
contingencies in accordance with Statement of Financial Accounting Standards
No. 5, Accounting for Contingencies. SFAS No. 5 requires that we record an
estimated loss when information available prior to issuance of our financial
statements indicates that it is probable that an asset has been impaired or a
liability has been incurred at the date of the financial statements and the
amount of the loss can be reasonably estimated. Accounting for contingencies
such as environmental, legal and income tax matters requires us to use our
judgment. While we believe that our accruals for these matters are adequate, if
the actual loss is significantly different than the estimated loss, our results
of operations will be affected in the period that the difference is known.

16

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

Revenues
decreased $192,000 from $1,038,000 for the twelve months ended December 31,
2005 to $846,000 for the twelve months ended December 31, 2006. This decrease
is primarily a result of a reduction in menu prices at the Companys first
store and the temporary closing of the second store for renovations, as well as
a lack of customer acceptance of the F&B format at the second store. We are
testing new menu concepts as a solution to customer acceptance.

Selling,
general and administrative expenses increased $469,000 from $3,851,000 for the
twelve months ended December 31, 2005 to $4,320,000 for the twelve months ended
December 31, 2006. This increase is primarily a result of increases in legal
expenses in connection with litigating patent infringement claims in the amount
of $400,000 and stock based compensation in the amount of $600,000, net of
decreases in other legal expenses in the amount of $200,000 and taxes in the
amount of $300,000 as a result of the receipt of a withholding tax refund, as
well as decreases as a result of personnel reductions.

Research
and development expenses decreased $119,000 from $1,797,000 for the twelve
months ended December 31, 2005 to $1,678,000 for the twelve months ended
December 31, 2006. This decrease is primarily a result of a lower level of
expenses incurred during 2006 in connection with new wireless initiatives by
the Company.

Depreciation
and amortization decreased $183,000 from $941,000 for the twelve months ended
December 31, 2005 to $758,000 for the twelve months ended December 31, 2006.
This decrease is primarily a result of a decrease in amortization of medical
technology from the completion of amortization of early tranches of medical
technology resulting from the Zargis acquisition, net of an increase as a
result of renovation to one of the F&B Restaurant stores.

Cost
of sales decreased $38,000 from $345,000 for the twelve months ended December
31, 2005 to $307,000 for the twelve months ended December 31, 2006. This
decrease is primarily a result of the decrease in revenues.

Investment
income/(loss) increased $653,000 from a net loss in the amount of $52,000 for
the twelve months ended December 31, 2005 to a net gain in the amount of
$601,000 for the twelve months ended December 31, 2006. Realized gains
increased $275,000 from net losses of $175,000 for the twelve months ended
December 31, 2005 to net gains of $100,000 for the twelve months ended December
31, 2006. Unrealized losses decreased $178,000 from net losses of $467,000 for
the twelve months ended December 31, 2005 to net losses of $289,000 for the
twelve months ended December 31, 2006. Interest income increased $200,000 from
$590,000 for the twelve months ended December 31, 2005 to $790,000 for the
twelve months ended December 31, 2006. The increase in interest income, net of
a decrease as a result of a lesser amount of funds available for short-term
investment, is a result of increased interest rates. These investment income
amounts will fluctuate based upon changes in the market value of the underlying
investments, overall market conditions and the amount of funds available for
short-term investment and are not necessarily indicative of the results that
may be expected for any future periods.

Minority
interest represents the interest of minority stockholders in the losses of
F&B Güdtfood and Zargis Medical since the dates of acquisition of a
majority interest. Through the year ended December 31, 2006, F&B Güdtfood
and Zargis Medical continued to generate losses which, during 2005, reduced the
minority interest balance to zero. As result, the Company is consolidating 100%
of the losses for these entities and continues to fund their operations with
intercompany loans or additional investment, which are eliminated in
consolidation.

During
the twelve months ended December 31, 2005, the Company recorded a benefit from
taxes in the amount of $322,000 as a result of a tax refund from the filing of
amended tax returns. No such gain was recorded in 2006.

Twelve Months Ended December 31, 2005
Compared to Twelve Months Ended December 31, 2004

Revenues
increased $121,000 from $917,000 for the twelve months ended December 31, 2004
to $1,038,000 for the twelve months ended December 31, 2005. This increase is
primarily a result of the opening of a second F&B Güdtfood store during the
second quarter of 2004. Revenues generated by the second store were $430,000
and $279,000 for 2005 and 2004, respectively. The 2005 increase is net of a
decrease in revenues in the amount of $39,000, generated by the first store in
2005 as a result of a reduction in menu prices and unfavorable weather
conditions that decreased store traffic.

Selling,
general and administrative expenses decreased $463,000 from $4,314,000 for the
twelve months ended December 31, 2004 to $3,851,000 for the twelve months ended
December 31, 2005. This decrease is primarily a result of decreases in
compensation and employee related expenses as a result of staff reductions.
This decrease is net of an increase as a result of the opening of a second
F&B Güdtfood store during the second quarter of 2004.

17

Research
and development expenses increased $281,000 from $1,516,000 for the twelve
months ended December 31, 2004 to $1,797,000 for the twelve months ended
December 31, 2005. This increase is primarily a result of new wireless
initiatives by the Company. This decrease is net of decreases in compensation
and employee related expenses as a result of staff reductions.

Depreciation
and amortization decreased $176,000 from $1,117,000 for the twelve months ended
December 31, 2004 to $941,000 for the twelve months ended December 31, 2005.
This decrease, net of an increase in the amount of $34,000 during 2005 compared
to 2004 for amortization of medical technology resulting from the Zargis
acquisition, is a result of assets becoming fully depreciated.

Cost
of sales increased $63,000 from $282,000 for the twelve months ended December
31, 2004 to $345,000 for the twelve months ended December 31, 2005. This
increase is primarily a result of the opening of a second F&B Güdtfood
store during the second quarter of 2004.

During
the twelve months ended December 31, 2004, the Company incurred $2,929,000 in
expenses in connection with a technology settlement in the amount of
$15,000,000. No such expenses were incurred in 2005. In connection with the settlement and as provided under the terms of his
2002 employment agreement, Shant S. Hovnanian, Chairman of the Board and Chief
Executive Officer of the Company, received a contingent participation in the
proceeds of the settlement in the amount of approximately $2.8 million during
the twelve months ended December 31, 2004.

During
the twelve months ended December 31, 2004, the Company recorded an impairment
charge in the amount of $621,000 in connection with goodwill recorded in
connection with the F&B Güdtfood acquisition. No such charge was recorded
in 2005.

Investment
income decreased $471,000 from a net gain in the amount of $419,000 for the
twelve months ended December 31, 2004 to a net loss in the amount of $52,000
for the twelve months ended December 31, 2005. This increase is primarily a
result of realized and unrealized gains and losses. Realized losses decreased
$177,000 from net losses of $352,000 for the twelve months ended December 31,
2004 to net losses of $175,000 for the twelve months ended December 31, 2005.
Unrealized gains decreased $754,000 from net gains of $287,000 for the twelve
months ended December 31, 2004 to net losses of $467,000 for the twelve months
ended December 31, 2005. Interest
income increased $307,000 from $283,000 for the twelve months ended December
31, 2004 to $590,000 for the twelve months ended December 31, 2005. $81,000 of
this increase is a result of interest received as a result of a tax refund from
the filing of amended tax returns. The balance of the increase, net of a
decrease as a result of a lesser amount of funds available for short-term
investment, is a result of increased interest rates. These
amounts will fluctuate based upon changes in the market value of the underlying
investments, overall market conditions and the amount of funds available for
short-term investment and are not necessarily indicative of the results that
may be expected for any future periods.



Minority
interest decreased $349,000 from $508,000 for the twelve months ended December
31, 2004 to $159,000 for the twelve months ended December 31, 2005. These
amounts represent the interest of minority stockholders in the losses of
F&B Güdtfood and Zargis Medical since the dates of acquisition of a
majority interest. During 2005, F&B Güdtfood and Zargis Medical continued
to generate losses which reduced the minority interest balance to zero. As
result, the Company is consolidating 100% of the losses for these entities and
continues to fund their operations with intercompany loans or additional
investment, which are eliminated in consolidation.

During
the twelve months ended December 31, 2004, the Company recorded a gain from
technology settlement in the amount of $15,000,000. No such gain was recorded
in 2005.

During
the twelve months ended December 31, 2005, the Company recorded a benefit from
taxes in the amount of $322,000 as a result of a tax refund from the filing of
amended tax returns.

Liquidity and Capital Resources

The
Company has recorded operating losses and negative operating cash flows in each
year of its operations since inception.

Net
cash used in operating activities was $2,900,000 for the year ended
December 31, 2006 compared to net cash used in operating activities of $5,070,000
for the year ended December 31, 2005. This net decrease in cash used in
operating activities is primarily the result of the sale of marketable
securities, net of an increase in cash used to fund an increase in net loss.

18

Net
cash used in investing activities was $5,261,000 for the year ended
December 31, 2006 compared to net cash provided by investing activities of
$6,115,000 for the year ended December 31, 2005. This net increase in cash used
in investing activities is primarily the result of a $9,990,000 decrease in
maturities and $977,000 increase in purchases of United States Treasury bills
and an increase in property and equipment additions in the amount of $244,000.

Net
cash used in financing activities was $198,000 for the year ended
December 31, 2006 compared to net cash used in financing activities of
$223,000 for the year ended December 31, 2005. This net decrease in cash
used in financing activities is primarily a result of a decrease in repurchases
of treasury stock, net of a decrease in proceeds received from the exercise of
stock options.

At
December 31, 2006, the Companys future minimum lease payments due under
noncancelable leases aggregated $1,621,000. $444,000, $382,000, $233,000,
$138,000 and $109,000 of this amount is due during the years ending December
31, 2007, 2008, 2009, 2010 and 2011, respectively, and $315,000 is payable
thereafter. In addition, in connection with a license agreement to which the
Company is a party, a termination payment will be payable by the Company in the
amount of $500,000, $300,000 or $200,000 if the license agreement is terminated
by the Company before September 2007, September 2009 or September 2011,
respectively.

The
Company believes that it has sufficient liquidity to finance its current level
of operations and expected capital requirements through the 2007 fiscal year.
However, the Company does not expect to have earnings from operations until
such time as it successfully commercializes business opportunities under
development, substantially increases its customer base and/or forms a strategic
alliance for use of its capabilities in the future. We cannot predict when this
will occur. We have no material non-cancelable commitments and the amount of
future capital funding requirements will depend on a number of factors that we
cannot quantify, including the success of our business and the types of
services we offer, as well as other factors that are not within our control,
including competitive conditions, government regulatory developments and
capital costs. The lack of additional capital in the future could have a
material adverse effect on the Companys financial condition, operating results
and prospects for growth.

We
have invested a portion of our assets in a portfolio of marketable securities
consisting of publicly traded equity securities. We purchase these securities
in anticipation of increases in the fair market values of the securities. We
have in the past and may in the future sell publicly traded equity securities
we do not own in anticipation of declines in the fair market values of these
securities. When we sell securities that we do not own, we must borrow the
securities we sold in order to deliver them and settle the trades. Thereafter,
we must buy the securities and deliver them to the lender of the securities.
Our potential for loss on these transactions is unlimited since the value of
the underlying security can keep increasing.

Off-Balance Sheet Arrangements

The
Company does not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

There
have been no recent accounting pronouncements which upon future adoption would
have an effect on the Companys results of operations or financial position, except
as disclosed below.

In
September 2006, the Financial Accounting Standards Board issued
FASB 157, Fair Value Measurements. FASB 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements.
FASB 157 is effective for fiscal years beginning after November 15, 2007
and interim periods within those fiscal years. The Company does not expect
adoption of FASB No. 157 to have a material effect on its results of operations
or financial position.

In
June 2006, the Financial Accounting Standards Board issued Interpretation No.
48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109. FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in an enterprises financial statements in accordance with
FASB Statement No. 109, Accounting for Income Taxes and prescribes that a
company should use a more-likely-than-not recognition threshold based on the
technical merits of the tax position taken. Tax positions that meet the
more-likely-than-not recognition threshold should be measured in order to
determine the tax benefit to be recognized in the financial statements. FIN 48
is effective for fiscal years beginning after December 15, 2006. The Company
does not expect adoption of FIN 48 to have a material effect on its results of
operations and financial condition.

19

In
February 2007, the Financial Accounting Standards Board issued FASB No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities Including
an Amendment of FASB Statement No. 115, which permits companies to measure
many financial instruments and certain other assets and liabilities at fair
value on an instrument-by-instrument basis (the fair value option). Adoption of
FASB 159 is optional and it may be adopted beginning in the first quarter of
2007. We are currently evaluating the possible impact of adopting FASB No. 159
on our consolidated financial statements.

ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES
  ABOUT MARKET RISKThe
Companys financial instruments at December 31, 2006 consist primarily of cash
equivalents, which are subject to interest rate risk, and marketable securities,
which are subject to equity price risk.

As
part of our overall investment strategy, we invest in publicly traded equity
securities. We purchase these securities in anticipation of increases in the
fair market values of the securities. We have in the past and may in the future
sell publicly traded equity securities that we do not own in anticipation of
declines in the fair market values of the securities. When we sell securities
that we do not own, we must borrow the securities we sold in order to deliver
them and settle the trades. Thereafter, we must buy the securities and deliver
them to the lender of the securities. Our potential for loss on these
transactions is unlimited since the value of the underlying security can keep
increasing which could have a material adverse effect on the Companys
consolidated financial statements.

The
carrying value of cash equivalents approximates market value since these highly
liquid, interest earning investments are invested in money market funds. The
Companys investment in marketable securities consists of publicly traded
equity securities classified as trading securities and are recorded at fair
market value. Securities sold and not repurchased are carried at the fair
market value of the securities.

ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAThe
Consolidated Financial Statements of the Company and related Notes thereto and
the financial information required to be filed herewith are included under Item
15 of this Form 10-K.

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURENone.

ITEM 9A.
CONTROLS AND PROCEDURESManagement
of the Company, including the Chief Executive Officer and the Chief Financial Officer,
evaluated the effectiveness of the design and operation of the Companys
disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)
as of the end of the period covered by this report. Based upon that evaluation,
the Companys Chief Executive Officer and the Chief Financial Officer concluded
that the Companys disclosure controls and procedures were effective as of the
end of the period covered by this report for the information required to be
disclosed by the Company in the reports it files or submits under the
Securities Exchange Act of 1934, as amended, to be recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commissions rules and forms.

There
have not been any changes in the Companys internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act) during the fiscal quarter ended December 31, 2006 that
have materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.

ITEM 9B.
OTHER INFORMATIONNone.

20

PART III

ITEM 10.
DIRECTORS,
  EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEDirectors and Executive Officers

The
table below sets forth the names, ages and titles of the persons who were
Directors and/or executive officers of the Company as of March 15, 2007.

Name

Age

PositionShant S. Hovnanian

47

Chairman of the Board of
  Directors,
  President and Chief Executive OfficerVahak S. Hovnanian

75

DirectorWilliam F. Leimkuhler

55

DirectorJeffrey Najarian

48

DirectorChristopher Vizas

57

DirectorThomas M. Finn

59

Secretary, Treasurer and
  Chief Financial
  OfficerJohn A. Kallassy

42

Executive Vice President,
  Chief Executive
  Officer  Zargis Medical Corp.Shant
S. Hovnanian has served as our Chairman of the Board of Directors, President
and Chief Executive Officer since October 1995. From June 1980 until January
1991, Mr. Hovnanian served as Executive Vice President of the V. S. Hovnanian
Group (the Hovnanian Group), consisting of home building operations, real
estate development and utility companies. In 1995, Mr. Hovnanian served as a
U.S. Delegate to the World Radio Conference of the International
Telecommunications Union in Geneva, Switzerland. Mr. Hovnanian is the son of
Mr. Vahak S. Hovnanian.

Vahak
S. Hovnanian has served as a Director since October 1995. Mr. Hovnanian has
been Chairman of the Board and President of the Hovnanian Group since 1968. Mr.
Hovnanian is the father of Mr. Shant S. Hovnanian.

William
F. Leimkuhler has served as a Director since September 2000. Mr. Leimkuhler is
the General Counsel and Director of Business Development of Paice Corporation,
a privately held developer of advanced vehicle powertrains. Mr. Leimkuhler is
also a director of Integral Systems, Inc. and U.S. Neurosurgical, Inc. From
1994 through 1999, he held various positions with Allen & Company, a New
York investment banking firm, initially serving as the firms General Counsel.
Prior to that, Mr. Leimkuhler was a corporate partner with the New York law
firm of Werbel & Carnelutti (now Heller Ehrman White & McAuliffe).

Jeffrey
Najarian has served as a Director since October 2000. Mr. Najarian has been
Chief Executive Officer of Starpoint Solutions, Inc., formerly TIS Worldwide,
Inc., since its inception in 1992. A creator and founder of Starpoint, he has been
instrumental in building one of the countrys fastest growing, privately-held
companies, as cited by Inc. magazine. From 1984-1992, Mr.
Najarian worked at Setford-Shaw-Najarian, a recruiting/placement firm for
technology specialists, becoming a partner after only three years. He led the
staff in billing, propelling SSN to become a leading search firm for Wall
Street banks.

Christopher
Vizas has served as a Director since July 2001. Mr. Vizas is a principal in the strategic
advisory firm of East Wind Partners. He serves as non-executive Chairman of the
Board of i1, Inc., a privately held, Chinese software provider, as well as a
member of the Boards of a few other privately held companies. Mr. Vizas
positions during the 1990s included Chairman of eGlobe, Inc, a turn around
company reorganized under Chapter 11 of the Bankruptcy Act, CEO of Quo Vadis
International, Managing Director of Kouri Capital Group and its
Telecommunications & Technology affiliate, and founder and Vice Chairman of
Orion Network Systems. Earlier in his career, he was a founder and part of the
management in Trinity Cellular and Asia Pacific Space & Communications. Mr.
Vizas served in the White House Office of Telecommunications Policy in the Ford
Administration, as Special Counsel to the U.S. Privacy Commission, and on
congressional staff.

Thomas
M. Finn has served as Secretary, Treasurer and Chief Financial Officer since
March 2003. Mr. Finn has been a consultant since 1994. Prior to that time, Mr.
Finn was a Senior Vice President of Integrated Resources, Inc., a diversified
financial services firm, and was the Chief Financial Officer of Integrateds
publicly-traded investment programs, including American Real Estate Partners,
L.P., a New York Stock Exchange master limited partnership. Previously, Mr.
Finn was an Audit Manager for Deloitte & Touche LLP. Mr. Finn is a graduate
of Long Island University.

21

John
A. Kallassy has served as Executive Vice President since September 2000 and
Chief Executive Officer of Zargis Medical Corp. since November
2004. In addition to developing and executing Zargis business strategy, Mr.
Kallassy is also responsible for evaluating new business investment
opportunities at Speedus within several business sectors. Prior to his leadership
roles at Speedus and Zargis, Mr. Kallassy was a founder and Chief Executive
Officer of American Data Consultants, Inc. (ADC), a firm specializing in
information services, direct marketing and marketing research. Mr. Kallassy
sold ADC to R.L. Polk in 1997 and continued his employment for three years at
R.L. Polk as the ADC division president and later as a corporate vice president
where he led the product management and analytical consulting groups for a $100
million business unit that was ultimately sold to Equifax Inc. Mr. Kallassy
holds a Bachelor of Science Degree in Biochemistry that was completed at Leeds
University in Leeds, England and earned his MBA from the Johnson School of
Management at Cornell University.

Audit Committee

The
Audit Committee of the Board currently consists of William F. Leimkuhler
(Chairman), Jeffrey Najarian and Christopher Vizas, all independent
non-employee directors. The Audit Committee has the duties and responsibilities
set out in the Audit Committee Charter. Those include: selection and
appointment of the independent auditor, review of its independence and of other
services provided by it, and of the fees and other arrangements regarding its
services; review with the independent auditor and management of the scope of
the audit, and of significant financial reporting issues and judgments; review
with the independent auditor and management of the annual audited financial
statements and of the quarterly financial statements; and review with the
independent auditor and management of the quality and adequacy of internal
controls. The Board has determined that Mr. Leimkuhler is an audit committee
financial expert within the meaning of the rules of the Securities and
Exchange Commission.

The
Audit Committee has adopted a charter which is available in the Investor
Relations section of the Companys website at www.speedus.com.

Audit Committee
Report

Management
is responsible for the Companys internal control, consolidated financial
statements and the financial reporting process. PricewaterhouseCoopers LLP
served as the Companys independent public accountants in 2006 and is
responsible for expressing an opinion on those consolidated financial
statements based upon an audit in accordance with auditing standards generally
accepted in the United States of America. The Committees responsibilities
include the monitoring and oversight of these processes.

The
Committee has met and held discussions with management and
PricewaterhouseCoopers. The Committee has also reviewed and discussed the 2006
quarterly and annual consolidated financial statements with management and
PricewaterhouseCoopers. The Committee has also discussed with
PricewaterhouseCoopers matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, issued by the
Auditing Standards Board of the American Institute of Certified Public
Accountants.

PricewaterhouseCoopers
has also provided to the Committee the written disclosures required by
Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees and the Committee discussed with PricewaterhouseCoopers that
firms independence.

Based
upon the Committees review and discussion of the 2006 annual consolidated
financial statements with management and PricewaterhouseCoopers, the Committee
recommended to the Board of Directors that the Companys audited 2006
consolidated financial statements be included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2006 filed with the Securities and
Exchange Commission.

By the Audit Committeeof the Board of Directors:William F.
  Leimkuhler (Chairman)Jeffrey
  NajarianChristopher
  Vizas22

Code of
Ethics

The
Company is committed to conducting its business in accordance with applicable
laws, rules and regulations and to full and accurate financial disclosure in
compliance with applicable law. In order to promote honest and ethical conduct,
the Board of Directors has adopted a Code of Business Conduct and Ethics
applicable to all Directors, officers, employees and agents of the Company and
a Code of Ethics for the Chief Executive Officer and Senior Financial Officers.

The
Code of Business Conduct and Ethics and the Code of Ethics for the Chief
Executive Officer and Senior Financial Officers are available in the Investor
Relations section of the Companys website at www.speedus.com. A copy of either
Code may also be obtained without charge by any person upon written request to
Speedus Corp., 9 Desbrosses Street, Suite 402, New York, New York 10013,
Attention: Chief Financial Officer.

Section
16(a) Beneficial Ownership Reporting Compliance

The
Companys Directors, executive officers and holders of more than 10% of the
outstanding Common Stock are required to report their initial ownership of
Common Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
by the Commission and the Company is required to disclose any failure by such
persons to file these reports in a timely manner for the 2006 fiscal year.
Based solely upon the Companys review of copies of such reports furnished to
it, the Company believes that for the 2006 fiscal year its Directors, executive
officers and holders of more than 10% of the outstanding Common Stock complied
with all reporting requirements of Section 16(a) under the Exchange Act.

ITEM 11.     
EXECUTIVE COMPENSATION

Summary
Compensation Table

The
following table sets forth the salary and bonus, as well as certain other
compensation, paid or accrued to each of the three most highly compensated
executive officers of the Company (the Named Executive Officers) for the
years ended December 31, 2006, 2005 and 2004 in all capacities in which they
served. See Employment Agreements.

Name and
  Principal Position

Year

Salary

Bonus

StockAwards

OptionAwards(1)

Non-EquityIncentivePlanCompen-sation

Non-qualifiedDeferredCompen-sationEarnings

All OtherCompen-sation(2)

TotalShant S.
  Hovnanian

2006

$
268,750

$


$


$
484,000

$


$


$
164,780

$
917,530Chief Executive
  Officer

2005


250,000

















158,411


408,4112004


250,000


2,845,186














144,000


3,239,186Thomas M. Finn

2006

$
220,325

$


$


$


$


$


$


$
220,325Chief Financial
  Officer

2005


191,000




















191,0002004


198,000




















198,000John A. Kallassy

2006

$
225,000

$
24,000

$


$


$


$


$


$
249,000Executive Vice
  President

2005


216,666


12,500





69,000











298,1662004


175,000


50,000

















225,000(1)
In determining the aggregate grant date fair value, the stock options were
valued using the Black- Scholes option pricing model. For information on the
key assumptions used in valuing the options, see Notes to Consolidated
Financial Statements - Note 2, Summary of Significant Accounting Policies -
Stock options.

(2)
Under the terms of his employment contract, Mr. Hovnanian is entitled to
certain benefits. See Employment Agreements. The amount shown in the table above
represents the total cost of these items to the Company without adjustment for
the portion of these costs allocable to business use by the Company.

In
addition, in February 2004, the Companys wholly-owned subsidiary,
CellularVision Technology & Telecommunications, L.P. (CT&T), received
$15 million from a former international licensee in settlement of litigation
that CT&T instituted in May 2001. In connection with the settlement and as
provided under the terms of his employment agreement, Mr. Hovnanian received a
contingent participation in the proceeds of the settlement in the amount of
$2,845,186.

23

Grants
of Plan-Based Awards

The
following table sets forth information concerning individual grants of options
to purchase Common Stock made to Named Executive Officers during 2006.

Estimated Future Payouts Under Non-Equity IncentivePlan Awards

Estimated Future PayoutsUnder Equity Incentive PlanAwards

All OtherStockAwards:Numberof Shares
  of Stocks

All OtherOptionAwards:Number ofSecuritiesUnderlying
  Options

Exerciseor BasePrice ofOption
  AwardsName

Grant
  Date

Thresh-
  hold

Target

Maximum

Thresh-
  hold

Target

MaximumShant S. Hovnanian

8/10/06

$


$


$


$


$


$






400,000

$
1.27For
additional information regarding stock options, see Notes to Consolidated
Financial Statements - Note 5, Stockholders Equity.

Outstanding
Equity Awards at Fiscal Year-End

The
following table sets forth information regarding the outstanding stock option
awards held by the Named Executive Officers as of December 31, 2006. None of
the Named Executive Officers have ever received any stock awards.

Number of SecuritiesUnderlyingUnexercised Options

EquityIncentivePlan Awards:Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions

OptionExercisePrice

OptionExpirationDateName

Exercisable

UnexercisableShant S. Hovnanian

5,400





$
0.890

12/2/2008250,000






4.840

6/11/2009127,700






1.000

4/3/2011250,000






1.100

4/25/2012400,000






1.270

8/10/2016Thomas M. Finn

2,000





$
0.890

12/2/200820,000






4.840

6/11/2009131






5.340

4/30/2009141






5.200

5/31/200911,136






1.000

4/3/2011100,000






1.175

6/10/2013John Kallassy

225,000





$
3.000

9/5/2010112,500






1.000

4/3/201133,333

66,667




1.500

7/15/2015For
additional information regarding stock options, see Notes to Consolidated
Financial Statements - Note 5, Stockholders Equity.

Option
Exercises and Stock Vested

None
of the Named Executive Officers exercised any stock options during 2006 and
none of the Named Executive Officers have ever received any stock awards.

Compensation
Committee

The
Compensation Committee of the Board currently consists of Jeffrey Najarian
(Chairman), Christopher Vizas and William F. Leimkuhler, all independent
non-employee directors. The Compensation Committee establishes and administers
the Companys policies regarding compensation. In addition, the Compensation
Committee, as well as the Board of Directors, administers the Companys Stock Incentive
Plan and determines which eligible employees and consultants of the Company may
participate in the Plan and the type, extent and terms of the awards to be
granted to them.

24

Compensation
Discussion and Analysis

The
Companys compensation policy for all of its executive officers is formulated
and administered by the Compensation Committee of the Board. Compensation of
the Companys executive officers, exclusive of the Chief Executive Officer, is
developed and approved by the Chief Executive Officer, subject to oversight by
the Compensation Committee. Compensation of the Chief Executive Officer is
developed and approved by the Compensation Committee. The Compensation
Committee, as well as the Board of Directors, also administers the Companys
Stock Incentive Plan, under which grants of various stock-based incentives may
be made to employees (including executive officers), directors and consultants.

The
primary goals of the Companys compensation policy are to attract, retain and
motivate skilled executive officers and to provide incentives for them to act
in the best interests of the Companys stockholders. In determining the level
of executive compensation, certain quantitative and qualitative factors,
including, but not limited to, the Companys operating and financial
performance, the individuals level of responsibilities, experience,
commitment, leadership and accomplishments relative to stated objectives, and
marketplace conditions are taken into consideration.

The
Companys compensation program for executives consists of four key elements,
discussed in greater detail below: (1) base salary, (2) consideration for a
performance-based bonus, (3) periodic grants of stock-based incentives, and (4)
other benefits and perquisites.

Base Salary.
Base salary amounts for executive officers take into account such factors as
competitive industry salaries, an executives scope of responsibilities, and
individual performance and contribution to the organization.

Performance-based
Bonus. Executive officers have an opportunity to receive
performance-based bonus awards based on the overall performance of the Company
and on specific individual performance targets.

Stock-based
Incentives.Executive officers have an opportunity to receive
stock-based incentives, generally grants of options to purchase the Companys
common Stock. These awards provide employees with the incentive to stay with
the Company for longer periods of time, which in turn, provides the Company
with greater stability. Equity awards also are less costly to the Company than
cash compensation.

Other
Benefits and Perquisites. Executive officers receive the same general health
and welfare benefits offered to all employees. Except as provided in employment
contracts, the Company provides no other perquisites to executive officers. See
Employment Contracts.

Section
162(m) of the Code. Section 162(m) of the Internal Revenue
Code of 1986, as amended (the Code), generally limits the deductibility by
the Company of compensation paid in any one year to any executive officer named
in the Summary Compensation Table to $1,000,000. Option awards under the Stock
Incentive Plan made in conformity with the performance-based exemption from
Section 162(m) will be exempt from the limits of Section 162(m). While the Companys
policy has always been to pursue a strategy of maximizing deductibility of
compensation for all of its employees, the Compensation Committee believes it
is important to maintain the flexibility to take actions it considers to be in
the best interest of the Company and its stockholders, which may be based on
considerations in addition to Section 162(m). In 2004, as provided under the terms of his employment contract, Shant S.
Hovnanian, Chairman of the Board and Chief Executive Officer of the Company, received
a contingent participation in the proceeds of the settlement in the amount of
$2,845,186 when CT&T received $15 million from a former international
licensee in settlement of litigation that CT&T instituted in May 2001.
Except as stated in the preceding sentence, through 2006 none of the
executive officers were paid cash compensation in excess of $1,000,000.

Compensation
Committee Report

The
Compensation Committee has reviewed and discussed the discussion and analysis
of the Companys compensation which appears above with management and, based on
such review and discussion, the Compensation Committee recommended to the
Companys Board of Directors that the above disclosure be included in this
Annual Report on Form 10-K.

By the Compensation Committeeof the Board of Directors:Jeffrey Najarian (Chairman)Christopher VizasWilliam F. Leimkuhler25

Compensation of Directors

The
following table sets forth information regarding the cash fees, as well as
certain other compensation, paid or accrued to our Directors for the year ended
December 31, 2006.

Name

FeesEarned orPaid inCash

StockAwards

OptionAwards(1) (2)

Non-EquityIncentivePlanCompen-sation

Change in
  PensionValue andNonqualifiedDeferredCompen-sationEarnings

All OtherCompen-sation

TotalVahak S. Hovnanian

$
24,000

$


$
11,300

$


$


$


$
35,300William F. Leimkuhler


72,000





11,300











83,300Jeffrey Najarian


24,000





11,300











35,300Christopher Vizas


72,000





11,300











83,300(1)
In determining the aggregate grant date fair value, the stock options were
valued using the Black-Scholes option pricing model. For information on the key
assumptions used in valuing the options, see Notes to Consolidated Financial
Statements - Note 2, Summary of Significant Accounting Policies - Stock
options.

(2)
At December 31, 2006, Messrs. Hovnanian, Leimkuhler, Najarian and Vizas held
stock options in the aggregate amounts of 107,500, 110,250, 90,000 and 80,000,
respectively.

During
2006, our Directors who are not officers or employees (Non-Employee
Directors) received an annual retainer of $24,000. Mr. Leimkuhler received an
additional retainer for services as a Director of two of the Companys
majority-owned subsidiaries, as lead outside director of the Company and as the
Chairman of the Companys Audit Committee in the aggregate amount of $48,000.
Mr. Vizas received an additional retainer for services as a Director of two of
the Companys subsidiaries and as the Chairman of the Companys Governance and
Nominating Committee in the aggregate amount of $48,000. In addition, upon
their initial election to the Board, new Non-Employee Directors are granted
options to purchase 5,000 shares of Common Stock that are fully vested and
immediately exercisable. Upon the date of each annual meeting, Non-Employee
Directors are granted options at fair market value to purchase an additional
10,000 shares of Common Stock that are fully vested and immediately
exercisable. Our Directors of the Company who are officers or employees do not
receive any additional compensation for serving on the Board or on any Board
committee.

Employment Agreements

Shant
S. Hovnanian, Chairman and Chief Executive Officer of the Company, had been acting
under the terms of an employment agreement that expired April 25, 2005. That
agreement provided that Mr. Hovnanian will act as our President and Chief
Executive Officer. The agreement had a three-year term and provided for an
annual salary of $250,000. Under the agreement, Mr. Hovnanian was entitled to
be considered for annual performance based bonuses targeted at 50% or greater
of his base salary and a contingent bonus based on certain performance factors,
use of a Company apartment and car, a country club membership (that Mr.
Hovnanian has not taken) and a $1,000,000 term life insurance policy with the
beneficiary designated by Mr. Hovnanian. Under that agreement, Mr. Hovnanian
was also granted 250,000 options to purchase shares of our Common Stock at the
market value as of the effective date of the agreement. The options were fully
vested and immediately exercisable.

In
April 2006, the Compensation Committee of the Board of Directors approved a new
employment agreement for Mr. Shant S. Hovnanian, effective as of April 1, 2006.
The new agreement has a three-year term and provides for an annual salary of
$275,000. Under the agreement, Mr. Hovnanian is entitled to be considered for
an annual performance based bonus targeted at 50% or greater of his base
salary, use of a Company apartment and car, a country club membership (which
Mr. Hovnanian has not taken) and a $2,000,000 term life insurance policy with
the beneficiary designated by Mr. Hovnanian. Under the new agreement, Mr.
Hovnanian was also granted 400,000 options in August 2006 to purchase shares of
our Common Stock at the market value as of the effective date of the agreement.
The options are fully vested and immediately exercisable.

We
entered into an employment agreement effective September 5, 2000 with Mr. John
A. Kallassy. The agreement provides that Mr. Kallassy will act as our Executive
Vice President. The agreement, which has no term, provides for an annual salary
of $175,000, subject to periodic review, and annual bonuses aggregating $50,000
based on the executives attainment of certain performance goals. Under this
agreement, Mr. Kallassy

26

was granted 225,000 options to
purchase shares of our Common Stock at the market value as of the effective
date of the agreement. 18,750 of these options were fully vested and
immediately exercisable at the date of grant. Of the balance, 18,750 options
become exercisable each three months after September 5, 2000 and all options
are now fully vested and exercisable. In 2005, Mr. Kallassys bonus and salary
were combined and the aggregate total paid as salary.

Compensation Committee Interlocks and Insider
Participation

No
interlocking relationship exists between the Board of Directors or the
Compensation Committee and the Board of Directors or compensation committee of
any other company, nor has any such interlocking relationship existed in the
past.

ITEM 12.     
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The
following table sets forth information as of March 15, 2007 with respect to the
beneficial ownership of our stock by (i) each person known by us to be the
beneficial owner of more than 5% of the Common Stock; (ii) each person serving
as a Director or Director nominee of the Company; (iii) each of our executive
officers, and (iv) all of our Directors and executive officers as a group.
Unless otherwise indicated, all shares are owned directly and the indicated
owner has sole voting and dispositive power with respect thereto.Common Stock Beneficially
  Owned (1)Beneficial
  Owner

Number

PercentShant S. Hovnanian
(2)(3)


4,604,317


25.7Vahak S. Hovnanian
(4)


2,896,655


16.2William F. Leimkuhler
(5)


110,250


*Jeffrey Najarian (6)


90,000


*Christpher Vizas (7)


80,000


*Thomas M. Finn (8)


133,408


*John Kallassy (9)


460,133


2.6XO Holdings, Inc.
(10)


2,000,000


11.2All Directors and executive
officers as a group (total 7 persons)


8,374,763


46.8*
  Less than 1% of the outstanding Common Stock
(1)     
Pursuant to the regulations of the Securities and Exchange Commission, shares
are deemed to be beneficially owned by a person if such person directly or
indirectly has or shares (i) the power to vote or dispose of such shares,
whether or not such person has any pecuniary interest in such shares, or (ii)
the right to acquire the power to vote or dispose of such shares within 60
days, including any right to acquire through the exercise of any option,
warrant or right.

(2)     
Includes options to purchase 1,033,100 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(3)     
Includes 137,500 shares of Common Stock owned by Mr. Shant S. Hovnanians minor
children for which Mr. Hovnanian, as custodian, has sole voting power.

(4)     
Includes options to purchase 107,500 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(5)     
Includes options to purchase 110,250 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(6)     
Includes options to purchase 90,000 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(7)     
Includes options to purchase 80,000 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(8)     
Includes options to purchase 133,408 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

27

(9)     
Includes options to purchase 370,833 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(10)   
Pursuant to a Stock Purchase Agreement dated as of June 13, 1999, the Company
is required to use all reasonable efforts, subject to fiduciary duties under
applicable law, to cause an XO Communications, Inc. representative to be
elected to the Companys Board.

In
addition, Verizon Communications Inc.,
formerly Bell Atlantic Corporation, has the right to appoint one
director to the Board, so long as Verizon shall hold at least 1% of the shares
of Common Stock outstanding on a fully diluted basis.

Equity
Compensation Plans

Information
regarding our Common Stock authorized for issuance under equity compensation
plans is included in Item 5 of this Form 10-K.

ITEM 13.      
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The
information under Director Compensation included in Item 11. of this Form
10-K is incorporated by reference.

ITEM 14.     
PRINCIPAL ACCOUNTANT FEES AND
SERVICES

Audit
Fees represent fees for services rendered in connection with the annual audit
and quarterly reviews of the Companys financial statements. For the years
ended December 31, 2006 and 2005, the Company paid or accrued $195,000 and
$177,500, respectively, for audit fees to PricewaterhouseCoopers LLP.

Audit
- Related Fees represent fees for services rendered in connection with
assurance and related services that are reasonably related to the performance
of the audit or review of the financial statements and are not reported as
Audit Fees. For the years ended December 31, 2006 and 2005, the Company did not
pay or accrue any amounts for audit related fees.

Tax
Fees represent fees for services rendered in connection with tax compliance,
tax advice and tax planning. For the years ended December 31, 2006 and 2005,
the Company paid or accrued $50,000 and $50,000, respectively, for tax fees to
PricewaterhouseCoopers LLP.

All
Other Fees represent fees for services rendered other than those described
above. For the years ended December 31, 2006 and 2005, the Company did not pay
or accrue any amounts for these services.

The
Audit Committee of the Companys Board of Directors has established a policy
requiring its pre-approval of all audit and non-audit services provided by its
independent registered public accounting firm. The policy requires the general
pre-approval of annual audit services and all other permitted services.

All
of the audit and non-audit services described above were approved by the Audit
Committee and not pursuant to the waiver of pre-approval provisions set forth
in applicable rules of the SEC.

28

PART IV

ITEM 15.     
EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Financial
Statement Schedules

(1)


Consolidated Financial
Statements

Page(s)Report of
Independent Registered Public
  Accounting Firm

32Consolidated
Balance Sheets as of December
  31, 2006 and 2005

33Consolidated
Statements of Operations for
  the years ended December 31, 2006, 2005 and 2004

34Consolidated
  Statements of Changes in Stockholders Equity for the years ended December
  31, 2006, 2005 and 2004

35Consolidated
Statements of Cash Flows for
  the years ended December 31, 2006, 2005 and 2004

36Notes to
Consolidated Financial Statements

37-46(b) Exhibits3.1a
Certificate
  of Incorporation. (1)3.1b
Certificate
  of Ownership and Merger of CVUSA Merger Corporation With and Into
  CellularVision USA, Inc. (2)3.2
By-laws. (1)4.1
Form of
  Common Stock Certificate. (1)4.3
Form of
  Rights Agreement between SPEEDUS.COM, Inc. and Equiserve Trust Company, N.A.,
  as Rights Agent. The Rights Agreement includes as Exhibit A the Certificate
  of Designation, Preferences and Rights of Series A Junior Participating
  Preferred Stock of SPEEDUS.COM, Inc., as Exhibit B the form of Rights
  Certificate and as Exhibit C the form of Summary of Rights to Purchase Shares
  of Series A Junior Participating Preferred Stock. (3)10.1
Speedus
  Corp. 2005 Stock Incentive Plan. (4)10.2
Employment
  Agreement, dated as of April 1, 2006, between Speedus Corp. and Shant S.
  Hovnanian. (5)10.3
Amended and
  Restated Agreement of Limited Partnership of CellularVision of New York,
  L.P., dated as of July 7, 1993, by and between Hye Crest Management, Inc.,
  Bell Atlantic Ventures, XXIII, Inc. and the limited partners set forth on the
  signature page thereto. (1)10.4
Agreement,
  dated as of January 12, 1996, by and among CellularVision USA, Inc.,
  CellularVision of New York, L.P., Hye Crest Management, Inc., Shant S.
  Hovnanian, Vahak S. Hovnanian, Bernard B. Bossard and Bell Atlantic Ventures
  XXIII, Inc. (1)14
Code of Ethics for Chief Executive Officer and
Senior Finance
  Officers (6)21
Subsidiaries
  of Speedus Corp. (1)23.1
Consent of PricewaterhouseCoopers LLP
(6)31.1
Certification of Chief Executive Officer
  Pursuant To Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted
  Pursuant To Section 302 of The Sarbanes-Oxley Act Of 2002 (6)31.2
Certification of Chief Financial Officer Pursuant To Rule 13a-14 of the
  Securities Exchange Act of 1934, As Adopted Pursuant To Section 302 of The
  Sarbanes-Oxley Act Of 2002 (6)32.1
Certification of Chief Executive Officer
  Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The
  Sarbanes-Oxley Act Of 2002 (6)32.2
Certification of Chief Financial Officer
  Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The
  Sarbanes-Oxley Act Of 2002 (6)29

(1)
Incorporated
  by reference to the Companys Registration Statement in Form S-1 (File No.
  33-98340) which was declared effective by the Commission on February 7, 1996.(2)
Incorporated
  by reference to the Companys Form 10-K filed on March 31, 1999.(3)
Incorporated
  by reference to the Companys Form 8-K filed on January 16, 2001.(4)
Incorporated
  by reference to the Companys Definitive Proxy Statement filed on October 13,
  2005.(5)
Incorporated
  by reference to the Companys Form 10-Q filed on August 14, 2006.(6)
Filed
  herewith.(c) Financial Statement SchedulesNone.30

REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Board of Directors and Stockholders ofSpeedus Corp.:

In our
opinion, the consolidated financial statements listed in the index appearing
under Item 15(a)(1) present fairly, in all material respects, the financial
position of Speedus Corp. and its subsidiaries at December 31, 2006 and 2005,
and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2006 in
conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

As discussed in Note 2
to the consolidated financial statements, the Company has changed its method of
accounting for share-based compensation in 2006.

PricewaterhouseCoopers LLP 
New York, New York
March 30, 2007

31

SPEEDUS CORP.
CONSOLIDATED BALANCE SHEETS

December 31,2006

2005ASSETSCurrent assets:Cash and cash
equivalents

$
10,204,167

$
18,563,088United States
Treasury bills


4,990,250


Marketable
securities


354,011


1,174,825Prepaid
expenses and other


143,654


182,008Total current
assets


15,692,082


19,919,921Property and equipment, net of
accumulated depreciation of $444,972
  and $321,256


527,828


426,201Other intangible assets, net of
accumulated amortization of
  $1,125,928 and $2,607,133


34,116


622,911Other investments


800,000


800,000Other assets


81,737


691,444Total
assets

$
17,135,763

$
22,460,477LIABILITIES
AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts
payable

$
62,805

$
68,692Accrued
liabilities


971,055


1,215,859Total current
liabilities


1,033,860


1,284,551Minority interest





Commitments and
  ContingenciesStockholders equity:Common stock
($.01 par value; 50,000,000 shares authorized;
  21,750,174 shares issued)


217,502


217,502Preferred
stock ($.01 par value; 20,000,000 shares authorized):Series A
Junior Participating ($.01 par value; 4,000 shares
  authorized; no shares issued and outstanding)





Additional
paid-in-capital


91,464,119


90,724,450Treasury stock
(at cost; 5,780,884 and 5,632,275 shares)


(6,083,360
)

(5,884,863
)Accumulated
deficit


(69,496,358
)

(63,881,163
)Stockholders equity


16,101,903


21,175,926Total
liabilities and stockholders equity

$
17,135,763

$
22,460,477The accompanying notes are an integral part of these consolidated
financial statements.

32

SPEEDUS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31,2006

2005

2004Revenues

$
846,342

$
1,038,343

$
917,237Expenses:Selling,
general and administrative


4,319,554


3,851,332


4,313,889Research and
development


1,678,139


1,797,315


1,515,934Depreciation
and amortization


757,553


940,683


1,116,759Cost of
sales


306,932


345,354


282,370Technology
settlement expenses








2,928,583Goodwill
impairment loss








620,875Total
operating expenses


7,062,178


6,934,684


10,778,410Operating loss


(6,215,836
)

(5,896,341
)

(9,861,173
)Investment income/(loss)


600,641


(52,397
)

419,197Minority interest





159,294


508,261Gain from technology
  settlement








15,000,000Earnings/(loss) before benefit
from/(provision for) income taxes


(5,615,195
)

(5,789,444
)

6,066,285Benefit from/(provision
  for) income taxes





321,539


(62,000
)Net earnings/(loss)

$
(5,615,195
)
$
(5,467,905
)
$
6,004,285Per share:Basic earnings/(loss) per
  common share

$
(0.35
)
$
(0.34
)
$
0.37Weighted average common
  shares outstanding - basic


16,051,706


16,182,208


16,245,281Diluted earnings/(loss) per
  common share

$
(0.35
)
$
(0.34
)
$
0.36Weighted average common
  shares outstanding - diluted


16,051,706


16,182,208


16,799,298The accompanying notes are an integral part
of these consolidated financial statements.

33

SPEEDUS CORP.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

For the years ended December 31, 2004, 2005
and 2006

Common Stock



Treasury Stock

Accumulated
  Deficit

Total
  Stockholders
  EquityAdditionalAmount

Shares

Paid-in-capital

Amount

SharesBalance, January
1, 2004

$
215,161


21,516,088

$
90,442,120

$
(5,250,552
)

5,257,649

$
(64,417,543
)
$
20,989,186Exercise of options and
warrants


716


71,586


70,870











71,586Stock based
compensation








33,593











33,593Repurchase of common
stock











(249,132
)

111,300





(249,132
)Net earnings

















6,004,285


6,004,285Balance, December
31, 2004


215,877


21,587,674


90,546,583


(5,499,684
)

5,368,949


(58,413,258
)

26,849,518Exercise of options


1,625


162,500


160,875











162,500Stock based
compensation








16,992











16,992Repurchase of common
stock











(385,179
)

263,326





(385,179
)Net loss

















(5,467,905
)

(5,467,905
)Balance, December
31, 2005


217,502


21,750,174


90,724,450


(5,884,863
)

5,632,275


(63,881,163
)

21,175,926Stock based
compensation








739,669











739,669Repurchase of common
stock











(198,497
)

148,609





(198,497
)Net loss

















(5,615,195
)

(5,615,195
)Balance, December
31, 2006

$
217,502


21,750,174

$
91,464,119

$
(6,083,360
)

5,780,884

$
(69,496,358
)
$
16,101,903The accompanying notes are an integral
part of these consolidated
financial statements.

34

SPEEDUS CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,2006

2005

2004Cash flows from operating
activities:Net earnings/(loss)

$
(5,615,195
)

(5,467,905
)

6,004,285Adjustments to reconcile net
earnings/(loss)
  to net cash provided by/(used in) operating activities:Depreciation and
amortization


757,553


940,683


1,116,759Goodwill impairment
loss








620,875Unrealized investment
(gains)/losses


289,394


402,617


(287,089
)Minority interest





(159,294
)

(508,261
)Stock based
compensation


673,158


16,992


33,593Changes in operating assets and
  liabilities:Marketable
securities


531,420


(516,850
)

1,969,969Due from broker








3,131,835Prepaid expenses and
other


38,354


41,105


(97,391
)Other assets


609,707


61,425


(98,717
)Accounts payable


(5,887
)

(247,050
)

164,484Accrued liabilities


(178,293
)

(141,861
)

(74,706
)Securities sold and not
purchased








(5,406,135
)Net cash provided by/(used in)
operating
  activities


(2,899,789
)

(5,070,138
)

6,569,501Cash flows from investing
activities:Property and
equipment:Additions


(270,385
)

(26,432
)

(536,253
)Dispositions





64,272


United States Treasury
bills:Purchases


(15,000,000
)

(14,022,800
)

(5,977,200
)Maturities


10,009,750


20,000,000


Other investments:Purchases





(500,000
)

(1,556,834
)Transfer to marketable
securities





600,000


Net cash provided by/(used in)
investing
  activities


(5,260,635
)

6,115,040


(8,070,287
)Cash flows from financing
activities:Proceeds from exercise of
options or
  warrants





162,500


71,586Repurchase of stock


(198,497
)

(385,179
)

(249,132
)Net cash used in financing
activities


(198,497
)

(222,679
)

(177,546
)Net increase/(decrease) in cash
and cash
  equivalents


(8,358,921
)

822,223


(1,678,332
)Cash and cash equivalents,
beginning of
  period


18,563,088


17,740,865


19,419,197Cash and cash equivalents, end
of period

$
10,204,167

$
18,563,088

$
17,740,865Supplemental information of
business acquired:Fair value of assets
acquired:Cash

$


$


$
Non current assets








Other intangible
assets








136,500Less-liabilities
assumed:Current liabilities








Minority interest








(136,500
)Cash paid








less-cash acquired








Acquisition of business, net of
cash acquired

$


$


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

35

SPEEDUS CORP.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business

Organization

Speedus
Corp. (Speedus or the Company), a Delaware corporation, was formed in
October 1995 as CellularVision USA, Inc. (CVUS) to combine the ownership of
predecessor companies that were under common control. In January 1999, through
a short form merger as allowed under Delaware law, CVUS changed its name to
SPEEDUS.COM, Inc. In June 2002, in the same manner, SPEEDUS.COM, Inc. changed
its name to Speedus Corp. Unless the context requires otherwise, the term
Company includes Speedus and its wholly- and majority-owned subsidiaries.

Business activities

Speedus
Corp. is a holding company that owns significant equity interests in diverse businesses.
We seek business opportunities across all industries for potential transactions
and relationships in which we can apply our current resources and management
strengths. The companies that we target, either public or privately held, will
be seeking growth or restructuring capital to pursue near term business
objectives in demonstrated markets. We will continue to pursue opportunities
involving our expertise in the medical device and wireless markets as well as
those areas involving our broadband assets as attractive opportunities present
themselves.

We
have co-invested with Siemens Corporate Research, Inc., a subsidiary of Siemens
Corporation, in Zargis Medical Corp. to develop advanced diagnostic decision
support products and services for primary care physicians, pediatricians,
cardiologists and other healthcare professionals. Zargis Acoustic Cardioscan
(ZAC), Zargis core product, is the first and only FDA-authorized
computer-assisted medical device designed to support physicians in analyzing
heart sounds for the identification of suspected murmurswhich are a potential
sign of heart disease. We own 90% of F&B Güdtfood Holding Corp., the
creator and operator of the original Eurocentric chic and quick café, which
is operating two stores in Manhattan. In 2005, we conceived Wibiki, a new
software-based wireless network that leverages existing Wi-Fi infrastructures
to reduce cost, complexity and risk for users when accessing the Internet
wirelessly. Wibikis business model will employ a user opt-in advertising
service we call AdChooser to generate revenues that keep Wibiki services free
to users. We own a portfolio of patents that allow for high-speed wireless
communications. We also own fixed wireless spectrum in the New York City
metropolitan area that we may commercialize in the future to support
high-speed, or broadband, Internet access service.

2. Summary of Significant Accounting Policies

Financial statements and principles of
consolidation

The
consolidated financial statements include the accounts of Speedus and its
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Companies in
which Speedus directly or
indirectly owns more than 50% of the outstanding voting securities or that
Speedus has effective control over are accounted for under the consolidation
method of accounting. Under this method, those companies balance sheets and
results of operations, from the date Speedus acquired control, are included in
Speedus consolidated financial statements. The interest in the net assets and
operations of these companies other stockholders is reflected in the caption
Minority interest in Speedus consolidated balance sheet and statements of
operations. Through the year ended December 31, 2006, F&B Güdtfood and Zargis Medical continued
to generate losses which, during 2005, reduced the minority interest balance to
zero. As result, the Company is consolidating 100% of the losses for these
entities and continues to fund their operations with intercompany loans or
additional investment, which are eliminated in consolidation.

Companies
in which Speedus owns less than 20% of the outstanding voting securities and
does not have the ability to exercise significant influence are accounted for
under the cost method of accounting.

Estimates

The
preparation of financial statements in conformity with generally accepted
accounting principles 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 dates of the financial statements and
the reported amounts of operating revenues and expenses during the reporting
periods. Actual results could differ from those estimates.

Cash and Cash Equivalents

The
Company considers all highly liquid interest earning investments with original
maturities of three months or less to be cash equivalents. At December 31, 2006
and 2005, cash equivalents consisted of money market funds.

36

Marketable Securities

All
marketable securities are defined as trading securities under the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities. At December 31, 2006 and 2005,
marketable securities consisted of publicly traded equity securities which were
recorded at fair market value. Their original cost was $887,000 and $1,419,000,
unrealized losses since acquisition were $533,000 and $244,000 and the carrying
value was $354,000 and $1,175,000, respectively. At December 31, 2006, based
upon the fair market value of these securities, 100% was invested in technology
companies.

Other investments

The
Company has invested in equity and debt instruments of non-publicly held
companies and accounts for them under the cost method since the Company does
not have the ability to exercise significant influence over operations. The
Company monitors these investments for other than temporary impairment by
considering current factors including economic environment, market conditions,
operational performance and other specific factors relating to the business
underlying the investment, and records reductions in carrying values when necessary.
The Company does not believe there has been any impairment of other investments
at December 31, 2006.

Other
investments consist of:

December 31,2006

2005(a) 791,667
  shares of preferred stock of a non-publicly held cardiovascular technology
  company, recorded at cost in the amount of $300,000. In connection with this
  investment, the Company also received warrants to purchase 375,000
  shares of common stock at $.40 per share. This investment was acquired in 2004.

$
300,000

$
300,000(b) an
  investment in an entity specifically formed to invest in convertible
  preferred stock in a non-publicly held online and directory assistance
  company, recorded at cost in the amount of $250,000. The preferred stock is
  convertible into shares of common stock at a conversion price equal to 50% of
  the price of the common stock in an initial public offering. This investment
  was acquired in 2005.


250,000


250,000(c) an
  investment in an entity specifically formed to invest in a senior third-party
  note of a non-publicly held online and directory assistance company, recorded
  at cost in the amount of $250,000. The note is convertible into shares of
  common stock at a conversion price equal to the price of the common stock in
  an initial public offering. This investment was acquired in 2005.


250,000


250,000$
800,000

$
800,000Securities sold and not purchased

The
Company has in the past and may in the future sell publicly traded equity
securities it does not own in anticipation of declines in the fair market
values of the securities. When the Company effects such transactions, it must
borrow the securities it sold in order to deliver them and settle the trades.
The amounts shown on the balance sheet as Securities sold and not purchased
represent the value of these securities at fair market value. At December 31,
2006 and 2005, there were no securities sold and not purchased.

Concentrations of Credit Risk

Financial
instruments that potentially could subject the Company to concentrations of
credit risk consist largely of cash equivalents and marketable securities.
These instruments are potentially subject to concentrations of credit risk but
the Company believes that this risk is limited due to diversification and
investments being made in investment grade securities.

The
Company has in the past and may in the future sell publicly traded equity
securities that it does not own in anticipation of declines in the fair market
values of the securities. When the Company sells securities that it does not
own, it must borrow the securities it sold in order to deliver them and settle
the trades. Thereafter, the Company

37

must buy the
securities and deliver them to the lender of the securities. The Companys
potential for loss on these transactions is unlimited since the value of the
underlying security can keep increasing which could have a material adverse
effect on the Companys consolidated financial statements.

Property and Equipment

Office
equipment and leasehold improvements are recorded at cost and depreciated on a
straight-line basis over the estimated useful lives of the assets, ranging from
three to seven years, but not longer than initial lease terms in the case of
leasehold improvements.

When
assets are fully depreciated, it is the Companys policy to remove the costs
and related accumulated depreciation from its books and records.

Long-lived assets

The
Company periodically evaluates the net realizable value of long-lived assets,
including fixed and intangible assets, in accordance with Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, relying on anticipated future cash flows. The
Companys evaluation of anticipated future cash flows considers operating
results, business plans and economic projections, as well as, non-financial
data such as market trends, product and development cycles, and changes in
managements market emphasis. An impairment in the carrying value of an asset
is recognized when the expected future operating cash flows derived from the
asset are less than its carrying value.

Goodwill and Other Intangible Assets

The
Company accounts for goodwill and other intangible assets in accordance with
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets which requires the use of a nonamortization approach to
account for purchased goodwill and certain intangibles. Under the
nonamortization approach, goodwill is not being amortized into results of
operations, but instead is reviewed for impairment on a reporting unit basis at
least annually and charged against results of operations only in the periods in
which the recorded value of goodwill is more than its implied fair value.
During the fourth quarter of 2004, after determining that the estimated present
value of future cash flows was less than its carrying value, the Company
recorded a charge for impairment of goodwill in connection with the acquisition
of F&B Güdtfood in the amount of $621,000.

At December
31, 2006, other intangible assets consist of medical technology in connection
with the acquisition of a controlling interest in Zargis Medical during 2003
and additional investment in 2004. Medical technology, in the aggregate amount
of $1,160,000 with accumulated amortization of $1,126,000 at December 31, 2006
is being amortized over a period of three years.

Amortization expense relating to intangible assets for the
years ended December 31, 2006, 2005 and 2004 amounted to $589,000, $795,000 and
$761,000, respectively. The estimated annual amortization expense for 2007, the
expiration of the remaining useful life of the Companys intangible assets at
December 31, 2006, is $34,000. Amortization expense is included in
Depreciation and amortization on the accompanying Consolidated Statement of
Operations and not allocated to Selling, General and Administrative or
Research and Development.

Revenue Recognition

Revenues
from F&B Güdtfoods operations are recorded on a cash basis.

Income Taxes

As
required by Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes, the Company is required to provide for deferred tax assets
or liabilities arising due to temporary differences between the book and tax
basis of the Companys assets and liabilities.

As
of December 31, 2006, the Company has a deferred tax asset of approximately
$6.6 million, relating primarily to operating losses. An offsetting valuation
allowance of $6.6million has been
established as the Company had no ability to carryback its losses and a limited
earnings history. During 2005, the Company recorded a benefit from income taxes
in the amount of $322,000 as a result of a tax refund from the filing of
amended tax returns.

A
reconciliation of the Companys effective income tax rate and the federal tax
rate is as follows:

Year ended December 31,2006

2005

2004Statutory rate


(34
)%

(34
)%

(34
)%Benefit from tax refund



%

(6
)%


%Permanent difference:
  goodwill impairment



%


%

10
%State and local income
  taxes, net of federal benefit


(10
)%

(10
)%

(10
)%Change in valuation
  allowance


44
%

44
%

35
%Effective rate


0
%

(6
)%

1
%38

At
December 31, 2006, the Company had net operating loss carryforwards of approximately
$19.6 million which expire between 2020 and 2028.
Under the provisions of the Internal Revenue Code, certain substantial changes
in the Companys stock ownership may result in a limitation on the amounts of
net operating loss carryforwards which can be utilized in future years.

Earnings Per Share

Basic
and diluted earnings/(loss) per common share are determined in accordance with
Statement of Financial Accounting Standards No. 128, Earnings Per Share.

For
the years ended December 31, 2006 and 2005, outstanding stock options and
warrants in the weighted average amounts of 1,885,000 and 1,837,000,
respectively, have been excluded from the diluted loss per share since their
effect would be antidilutive.

For the year ended December 31, 2004, the
weighted average common shares for diluted earnings per share were determined
by adding 554,000 weighted average shares for the assumed exercise of stock
options and warrants, calculated using the treasury stock method, to the
weighted average shares outstanding used for basic earnings per share for a
total of 16,799,000 weighted average shares outstanding for diluted earnings
per share. Outstanding stock options and warrants in the weighted average
amount of 804,000 were excluded from the computation of diluted earnings per
share for the year ended December 31, 2004 since the exercise prices were
greater than the average market price of the common stock.

Stock Options

Prior
to January 1, 2006, the Company accounted for its employee stock options in
accordance with Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation, as amended, which defines a fair
value method of measuring and accounting for compensation expense from
employee stock options. FASB 123 also allowed accounting for such options under
the intrinsic value method in accordance with Accounting Principles Board No.
25, Accounting for Stock Issued to Employees. The Company elected to use the
intrinsic value method and adopted the disclosure only provisions of FASB 123.
Under APB 25, generally no compensation cost was recognized in the consolidated
statement of operations since stock options were issued with exercise prices
equal to the market value of the underlying shares on the grant date. The
following table presents pro forma earnings and earnings per share as if the
fair value method of accounting was applied during the years ended December 31,
2005 and 2004:

2005

2004Net
  earnings/(loss) as reported

$
(5,467,905
)
$
6,004,285After tax
  effect of pro forma compensation


(74,000
)

(50,000
)Pro forma
  net loss

$
(5,541,905
)
$
5,954,285Loss per
  share:Basic - as
  reported

$
(0.34
)
$
0.37Basic - pro
  forma

$
(0.34
)
$
0.37Diluted - as
  reported

$
(0.34
)
$
0.36Diluted -
  pro forma

$
(0.34
)
$
0.35The
fair value of these awards on the grant date was estimated using a
Black-Scholes option pricing model. Key assumptions used in valuing these
options included risk-free interest rates between 2-4%, expected lives of three
years and volatility factors between 51-65%.

Effective
January 1, 2006, the Company adopted FASB 123R, Share-Based Payment, using
the modified prospective application method. Under this method, for all
unvested awards as of January 1, 2006, the Company records compensation cost
based upon the fair value of those awards on the grant date over the remaining
service period of each award on a straight line basis. For awards granted after
January 1, 2006, the Company records compensation cost based upon the fair
value of those awards on the grant date over the service period of each award
on a straight line basis. Stock based compensation expense recognized during
the year ended December 31, 2006 was $673,000. For the year ended December 31,
2006, as a result of adopting FASB 123R, the net loss increased by this amount
and both basic and diluted loss per share increased $0.04.

The
fair value of the awards on the grant date was estimated using a Black-Scholes
option pricing model. Assumptions utilized in the model for both Speedus and
Zargis are evaluated and revised, as necessary, to reflect market conditions and
experience. Expected volatility of 145% has been calculated based on the
historical volatility of the Companys stock prior to the grant date. The
expected term represents the period of time that options granted are expected
to be outstanding and is estimated based on historical option exercise
experience ranging between six and seven years. The risk-free interest rate of
5% is equivalent to the U.S. Treasury yield in effect at the time of grant for
the estimated life of the option grant. Estimated forfeiture rates are based on
historical experience.

39

Recent Accounting Pronouncements

There
have been no recent accounting pronouncements which upon future adoption would
have an effect on the Companys results of operations or financial position,
except as disclosed below.

In
September 2006, the Financial Accounting Standards Board issued FASB 157, Fair
Value Measurements. FASB 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. FASB 157 is effective for fiscal
years beginning after November 15, 2007 and interim periods within those fiscal
years. The Company does not expect adoption of FASB No. 157 to have a material
effect on its results of operations or financial position.

In
June 2006, the Financial Accounting Standards Board issued Interpretation No.
48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109. FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in an enterprises financial statements in accordance with
FASB Statement No. 109, Accounting for Income Taxes and prescribes that a
company should use a more-likely-than-not recognition threshold based on the
technical merits of the tax position taken. Tax positions that meet the
more-likely-than-not recognition threshold should be measured in order to
determine the tax benefit to be recognized in the financial statements. FIN 48
is effective for fiscal years beginning after December 15, 2006. The Company
does not expect adoption of FIN 48 to have a material effect on its results of
operations and financial condition.

In
February 2007, the Financial Accounting Standards Board issued FASB No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities Including
an Amendment of FASB Statement No. 115, which permits companies to measure
many financial instruments and certain other assets and liabilities at fair value
on an instrument-by-instrument basis (the fair value option). Adoption of FASB
159 is optional and it may be adopted beginning in the first quarter of 2007.
We are currently evaluating the possible impact of adopting FASB No. 159 on our
consolidated financial statements.

3. Property and Equipment

Property
and equipment consists of the following:

December 31,2006

2005Leasehold improvements

$
617,125

$
389,693Office equipment


355,675


357,764972,800


747,457Less accumulated
  depreciation


(444,972
)

(321,256
)Property and equipment

$
527,828

$
426,201Depreciation
expense was $169,000, $146,000 and $346,000 for the years ended December 31,
2006, 2005 and 2004, respectively. Depreciation expense is included in
Depreciation and amortization on the accompanying Consolidated Statement of
Operations and not allocated to Selling, General and Administrative,
Research and Development or Cost of Sales.

4. Stockholders Equity

Stock Options

(a)
In November 2005, stockholders approved the Companys 2005 Stock Incentive Plan
to replace the 1995 Stock Incentive Plan which expired in October 2005. While
no new grants can be made under the 1995 Plan, options outstanding at the
expiration of the 1995 Plan will remain outstanding until exercise,
cancellation or expiration. Options available for grant at the expiration of
the 1995 Plan have been made available for grant under the 2005 Plan. To the
extent that options granted under the 1995 Plan are cancelled or expire, those
options would be available for issuance under the 2005 plan. Similar to the
1995 Plan, the 2005 Plan provides for the grant of various stockbased
incentives, including non-qualified and incentive stock options, to employees,
directors and consultants. The Company has issued new shares for the exercise
of stock options and expects to continue to do so in the future.

See Note 1 for information on the Companys
accounting policy for stock options.

40

Aggregate
stock option activity and weighted average prices under both Plans for the
three years ended December 31, 2006 is summarized as follows:

2006

2005

2004Options

Price

Options

Price

Options

PriceOutstanding at January 1


1,726,459

$
2.32


1,778,959

$
2.37


1,777,465

$
2.43Granted


449,000


1.27


210,000


1.45


100,000


2.05Exercised








(162,500
)

1.00


(27,836
)

1.00Expired


(5,000
)

15.00











Forfeited


(9,000
)

1.35


(100,000
)

3.59


(70,670
)

4.00Outstanding at December 31


2,161,459

$
2.07


1,726,459

$
2.32


1,778,959

$
2.37Exercisable at December 31


2,043,237

$
2.11


1,535,400

$
2.43


1,700,623

$
2.41Available for grant at December
31


734,368





1,169,368





1,279,368Stock
options have ten year terms. 440,000 options granted in 2006 are immediately
exercisable. 9,000 options granted in 2006 were to vest over a three year term
but were thereafter forfeited.

The
weighted average fair value per share for grants during the years ended
December 31, 2006, 2005 and 2004 was $1.15, $0.68 and $0.96, respectively.

At December
31, 2006, there was $110,000 of unrecognized compensation cost related to
outstanding stock options that is expected to be recognized over a weighted
average period of 1.5 years.

The following
table aggregates certain
information concerning currently outstanding and exercisable stock options
under both Plans at December 31, 2006:



Stock options outstanding

Stock options exercisableRange ofexercise prices

Options

Weightedaverageremaininglife (years)

Weightedaverageexerciseprice

Aggregateintrinsicvalue

Options

Weightedaverageexerciseprice

Aggregateintrinsicvalue$
0.83
  - 1.00


393,220


4.3

$
0.97

$
94,000


393,220

$
0.97

$
94,0001.07
  - 2.08


1,160,000


7.8


1.31


34,000


1,041,778


1.29


34,0002.27
  - 4.84


566,500


2.8


3.92





566,500


3.92


5.20
  - 8.00


31,739


0.5


6.99





31,739


6.99


13.75


10,000


3.2


13.75





10,000


13.75


2,161,459


5.7

$
2.07

$
128,000


2,043,237

$
2.11

$
128,000Intrinsic value represents the excess of market value at December 31, 2006 over
the exercise price of stock options. The aggregate intrinsic value for stock
options outstanding and exercisable at December 31, 2005 was $104,000. The
aggregate intrinsic value for stock options outstanding and exercisable at
December 31, 2004 was $1,864,000 and $1,769,000, respectively.

(b)
In February 2002, the Board of Directors of Zargis Medical Corp. approved the
Zargis 2002 Stock Option Plan and reserved 280,000 shares of Zargis common
stock for issuance under the plan. The Zargis 2002 Plan provides for the grant
of various stockbased incentives, including non-qualified and incentive stock
options, to employees, directors, advisors and consultants. To date, there have
been no options exercised under the Zargis 2002 Plan.

Zargis
accounting policy for stock options is the same as the Companys. See Note 1.

Aggregate
stock option activity and weighted average prices under the Zargis 2002 Plan
for the three years ended December 31, 2006 is summarized as follows:

2006

2005

2004Options

Price

Options

Price

Options

PriceOutstanding at January 1


180,134

$
2.51


126,134

$
1.75


56,500

$
0.82Granted


50,000


3.50


100,000


3.50


69,634


2.50Exercised

















Expired

















Forfeited


(45,000
)

3.50


(46,000
)

2.57





Outstanding at December 31


185,134

$
2.54


180,134

$
2.51


126,134

$
1.75Exercisable at December 31


121,220

$
2.15


78,355

$
1.66


74,490

$
1.30Available for grant at December
31


94,886





99,866





153,86641

Stock
options have ten year terms. All options granted in 2006 vest over a three year
term. 45,000 options granted in 2006 were to vest over a three year term but
were thereafter forfeited.

The
weighted average fair value per share for grants during the years ended
December 31, 2006, 2005 and 2004 was $1.61, $1.61 and $1.20, respectively.

At December
31, 2006, there was $92,000 of unrecognized compensation cost related to
outstanding stock options that is expected to be recognized over a weighted
average period of 1.1 years.

The following
table aggregates certain
information concerning currently outstanding and exercisable stock options
under the Zargis 2002 Plan at December 31, 2006:

Stock options outstanding

Stock options exercisableRange ofexercise prices

Options

Weightedaverageremaininglife (years)

Weightedaverageexerciseprice

Aggregateintrinsicvalue

Options

Weightedaverageexerciseprice

Aggregateintrinsicvalue$
0.50


30,000


6.0

$
0.50

$
90,000


30,000

$
0.50

$
90,0001.75


10,500


5.8


1.75


18,000


10,500


1.75


18,0002.50


69,634


7.4


2.50


70,000


55,720


2.50


56,0003.50


75,000


8.4


3.50





25,000


3.50


185,134


7.5

$
2.54

$
178,000


121,220

$
2.15

$
164,000Intrinsic value represents the excess of market value at December 31, 2006 over
the exercise price of stock options. The aggregate intrinsic value for stock
options outstanding and exercisable at December 31, 2005 was $178,000 and
$144,000, respectively. The aggregate intrinsic value for stock options
outstanding and exercisable at December 31, 2004 was $95,000 and $89,000,
respectively.

Warrants

The
Company accounts for warrants granted to non-employees under the provisions of
Emerging Issues Task Force No. 96-18, Accounting for equity instruments that
are issued to other than employees for acquiring or in conjunction with
selling, goods and services. The fair value of the warrants at the time of
issuance was determined using the Black-Scholes option-pricing model. Expenses
are recognized over the service terms. No such expenses were recognized during
the years ended December 31, 2006, 2005 or 2004.

Warrant
activity and weighted average prices for the three years ended December 31,
2006 is summarized as follows:

2006

2005

2004Warrants

Price

Warrants

Price

Warrants

PriceOutstanding at January 1




$



113,256

$
13.77


157,006

$
10.21Granted

















Exercised














(43,750
)

1.00Cancelled








(113,256
)

13.77





Outstanding at December 31




$





$



113,256

$
13.77Exercisable at December 31




$





$



113,256

$
13.77Treasury Stock

During
the years ended December 31, 2006, 2005 and 2004, the Company repurchased
148,609, 263,326 and 111,300 shares, respectively, of its own Common Stock.

Stockholder Rights Plan

On
January 11, 2001, the Companys Board of Directors adopted a stockholder rights
plan in which preferred stock purchase rights will be distributed as a dividend
at the rate of one right for each share of the Companys Common Stock.

Each
right generally will entitle stockholders, in certain circumstances, to buy one
one-ten thousandth of a newly issued share of Series A Junior Participating
Preferred Stock of the Company at an exercise price of $50.00. The rights
generally will be exercisable and transferable apart from the Common Stock only
if a person or group acquires beneficial ownership of 17% or more of the Common
Stock or commences a tender or exchange offer upon consummation of which such
person or group would beneficially own 17% or more of the Common Stock.

If
any person becomes the beneficial owner of 17% or more of the Companys Common
Stock, then each right not owned by a 17% or more stockholder or certain
related parties will entitle its holder to purchase, at the rights
then-current exercise price, shares of Common Stock (or, in certain
circumstances as determined by the Board, cash, other property, or other
securities) having a value of twice the rights exercise price. In addition,
if, after

42

any person has
become a 17% or more stockholder, the Company is involved in a merger or other
business combination transaction with another person in which its Common Stock
is changed or converted, or sells 50% or more of its assets or earning power to
another person, each right will entitle its holder to purchase, at the rights
then-current exercise price, shares of common stock of such other person having
a value of twice the rights exercise price.

The
Company will generally be entitled to redeem the rights at $.01 per right at
any time until the tenth day following public disclosure that a person or group
has become the beneficial owner of 17% or more of the Companys common stock.
The rights will expire on January 26, 2011.

5. Gain from Technology Settlement

In
February 2004, the Companys wholly-owned subsidiary, CellularVision Technology
& Telecommunications, L.P. (CT&T), received $15 million from a former
international licensee in settlement of litigation that CT&T instituted in
May 2001.

In
connection with the settlement and as provided under the terms of his 2002
employment agreement, Shant S. Hovnanian, Chairman of the Board and Chief
Executive Officer of the Company, received a contingent participation in the
proceeds of the settlement in the amount of approximately $2.8 million. In
addition, approximately $0.1 million in legal and other closing costs was paid
at closing to unaffiliated third parties.These
expenses are included in
Technology Settlement Expenses for the year ended December 31, 2004 in the
accompanying consolidated statement of operations.

6. Commitments and Contingencies

Noncancelable Leases

At
December 31, 2006, future minimum lease payments due under noncancelable leases
are as follows:

2007

$
444,0002008


382,0002009


233,0002010


138,0002011


109,000Thereafter


315,000$
1,621,000In
addition, in connection with a license agreement to which the Company is a
party, a termination payment will be payable by the Company in the amount of
$500,000, $300,000 or $200,000 if the license agreement is terminated by the
Company before September 2007, September 2009 or September 2011, respectively.

Rent
expense was approximately $569,000, $496,000 and $491,000 for the years ended
December 31, 2006, 2005 and 2004, respectively.

Indemnification

As
permitted under Delaware law, the Companys Certificate of Incorporation and
By-Laws provide circumstances by which the Company shall indemnify each
director, officer, employee or agent of the Company. The maximum potential
exposure under these provisions is unlimited; however, the Company has an
Officers and Directors insurance policy that limits its exposure and enables it
to recover a portion of any amounts paid. The Company has not provided for any
potential exposure under these provisions at December 31, 2006.

7. Legal Proceedings

On
May 11, 2006, the Company filed two separate complaints against Cellco Partnership
(d/b/a Verizon Wireless) in United States District Court in the Southern
District of Florida, in which the Company asserts that Verizon Wireless is infringing two patents. Verizon Wireless is a joint venture of Verizon Communications Inc.
and Vodafone Group PLC. The suits address technologies now used by Verizon to
transmit television to wireless users over cellular networks and the
simultaneous transmission of analog and digital signals within the same
band. On July 27 and September 12, 2006, these cases were transferred to
the United States District Court for the District of New Jersey. Discovery
proceedings are presently taking place. There is no trial date set.

On June 2, 2006, the Company filed two separate complaints against Alltel Corp. in United States District Court in the Southern District of Florida, in which the Company asserts that Alltel is infringing two patents. In an amended complaint, the Company asserted claims for infringement against Alltel Communications, Inc. and Alltel Wireless Holdings, Inc., in addition to Alltel Corp. The suits address technologies now used by Alltel to transmit television to wireless users over cellular networks and the simultaneous transmission of analog and digital signals within the same band. In October 2006, these two cases were consolidated. Alltel is attempting to have this case transferred to the Eastern District of Arkansas. There has been no decision by the Court on that motion. Discovery proceedings are presently taking place. Trial is scheduled for March 2008 in the Southern District of Florida.
A separate lawsuit was commenced in October 2006 against All Wireless, LLC, a Florida company, alleging infringement of the patent used to transmit television to wireless users over cellular networks. The All Wireless litigation has been stayed pending the completion of the claim construction process in the Alltel litigation.

43

8. Business Segment Information

The
following table sets forth the Companys financial performance by reportable
operating segment for the years ended December 31, 2006, 2005 and 2004. The
development of Wibiki commenced in 2005.

Year ended December 31, 2006F&B

Zargis

Wibiki

Corporate
  and other

TotalsRevenues from external
  customers

$
834,754

$
11,250

$


$
338

$
846,342Depreciation and
  amortization


135,538


13,270





608,745


757,553Operating loss


(841,216
)

(1,641,052
)

(709,833
)

(3,023,735
)

(6,215,836
)Investment income/(loss)


1,523


62





599,056


600,641Other intangible assets





34,116








34,116Fixed assets


490,111


21,092





16,625


527,828Total assets


650,750


231,939





16,253,074


17,135,763Year ended December 31, 2005F&B

Zargis

Wibiki

Corporate
  and other

TotalsRevenues from external
  customers

$
1,037,703

$


$


$
640

$
1,038,343Depreciation and
  amortization


111,863


13,986





814,834


940,683Operating loss


(685,062
)

(1,739,639
)

(835,728
)

(2,635,912
)

(5,896,341
)Investment income/(loss)


1,231


83





(53,711
)

(52,397
)Other intangible assets





210,143





412,768


622,911Fixed assets


372,165


17,462





36,574


426,201Total assets


549,410


450,007





21,461,060


22,460,477Year ended December 31, 2004F&B

Zargis

Corporate
  and other

TotalsRevenues from external
  customers

$
913,620

$


$
3,617

$
917,237Depreciation and
  amortization


90,035


25,589


1,001,135


1,116,759Operating loss


(716,058
)

(2,237,028
)

(6,908,087
)

(9,861,173
)Investment income/(loss)


2,367


4,751


412,079


419,197Other intangible assets





592,259


825,536


1,417,795Fixed assets


532,626


20,690


56,524


609,840Total assets


696,480


768,002


27,217,792


28,682,274The
Company has no foreign operations. During the years ended December 31, 2006,
2005 and 2004, the Company did not have sales to any individual customer
greater than 10% of total Company revenues. The Companys accounting policies
for segments are the same as those described in Note 2.

44

9. Selected Quarterly Data (unaudited)

Quarterly
financial information is summarized in the table below (amounts in thousands,
except per share amounts):

Year ended December 31, 2006First Quarter

Second Quarter

Third Quarter

Fourth QuarterRevenues

$
219

$
209

$
210

$
208Selling, general and
administrative expenses


863


1,599


699


1,159Research and
development


457


445


482


294Cost of sales


66


93


71


77Operating loss


(1,407
)

(2,133
)

(1,216
)

(1,460
)Investment
income/(loss)


114


(78
)

232


333Net loss

$
(1,293
)
$
(2,211
)
$
(984
)
$
(1,127
)Per share (1):Basic and
diluted

$
(0.08
)
$
(0.14
)
$
(0.06
)
$
(0.07
)Year ended December 31, 2005First Quarter

Second Quarter

Third Quarter

Fourth QuarterRevenues

$
227

$
283

$
294

$
234Selling, general and
administrative expenses


975


965


981


930Research and
development


327


370


389


711Cost of sales


77


94


93


81Operating loss


(1,382
)

(1,379
)

(1,399
)

(1,736
)Investment
income/(loss)


282


(1
)

151


(484
)Net loss

$
(975
)
$
(1,381
)
$
(890
)
$
(2,222
)Per share (1):Basic and
diluted

$
(0.06
)
$
(0.09
)
$
(0.06
)
$
(0.14
)(1)
Earnings per share is computed separately for each period. Therefore, the sum
of the quarterly per share amounts may differ from the total for the year.45

SIGNATURES

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, in New York, New York on April 2,
2007.

SPEEDUS CORP./s/ Shant S. HovnanianShant S. HovnanianPresident, Chief Executive Officer andChairman of the Board of DirectorsPursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant in the
capacities and on the dates indicated.

Signature

Title

Date/s/ Shant S. Hovnanian

Chairman of the Board of Directors,

April 2, 2007President and Chief Executive OfficerShant S. Hovnanian/s/ Thomas M. Finn

Treasurer and Chief Financial and

April 2, 2007Accounting OfficerThomas M. Finn/s/ Vahak S. Hovnanian

Director

April 2, 2007Vahak S. Hovnanian/s/ William F. Leimkuhler

Director

April 2, 2007William F. Leimkuhler/s/ Jeffrey Najarian

Director

April 2, 2007Jeffrey Najarian/s/ Christopher Vizas

Director

April 2, 2007Christopher Vizas46