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  UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-KSB  [X] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 2006  or [  ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934  DATAJUNGLE SOFTWARE INC. (Name of small business issuer in its charter)  NEVADA001-0599691-0835748(State or other jurisdiction of incorporation or organization)Commission File No.(I.R.S. Employer Identification Number)  1 Hines Road, Suite 202, Ottawa, Ontario, CanadaK2K 3C7(Address of principal executive offices)(Zip Code)  Issuers telephone number:  613-254-7246  Securities registered under Section 12(b) of the Exchange Act:   none Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $.001 per share  Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   YES [X]  NO [  ]  Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act.) [  ] Yes [X] No  Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  [X]  State issuers revenues for its most recent fiscal period:  $501,238  The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing price of the issuers Common Stock as of March 21, 2007, was $5,199,295, based upon the closing price ($0.20) multiplied by the 25,996,475 shares of the issuers common stock held by non-affiliates. (In computing this number, issuer has assumed all record holders of greater than 5% of the common equity and all directors and officers are affiliates of the issuer.)  The number of shares outstanding of each of the issuers classes of common equity as of March 21, 2007: 32,537,502.  DOCUMENTS INCORPORATED BY REFERENCE:  See Item 13, Exhibits, page 73.  Transitional Small Business Disclosure Format: Yes [   ]  No [ X ]  SEC 2337 (11-06)Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


DATAJUNGLE SOFTWARE INC. Form 10-KSB December 31, 2006  Table of Contents                                                                                                                                   Page No.  Part I  Item 1. Description of Business. 4 Item 2. Description of Property. 15 Item 3. Legal Proceedings. 15 Item 4. Submission of Matters to a Vote of Security Holders 15  Part II  Item 5. Market for Common Equity and Related Stockholder Matters. 15 Item 6. Management's Discussion and Analysis or Plan of Operation. 18 Item 7. Financial Statements. 27 Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. 66 Item 8A. Controls and Procedures 66 Item 8B. Other Information 67   Part III  Item 9. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act. 68 Item 10. Executive Compensation. 70 Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 72 Item 12. Certain Relationships and Related Transactions, and Director Independence. 73 Item 13. Exhibits 74 Item 14 Principal Accountant Fees and Services 75  Signatures 76         2       PART I   CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS  We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements that we make in this report.  For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements.  This report contains statements that constitute "forward-looking statements." These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "plans," "may," "will," or similar terms.  These statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations with respect to many things.  Some of these things are: · trends affecting our financial condition or results of operations for our limited history; · our business and growth strategies; · our technology; · the Internet; and · our financing plans. We caution readers that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties.  In fact, actual results most likely will differ materially from those projected in the forward-looking statements as a result of various factors.  Some factors that could adversely affect actual results and performance include: · our limited operating history; · our level of sales to date; · our future requirements for additional capital funding; · the failure of our technology and products to perform as specified; · the discontinuance of growth in the use of the Internet; · the enactment of new adverse government regulations; and · the development of better technology and products by others. The information contained in the following sections of this report identify important additional factors that could materially adversely affect actual results and performance: "Part I. Item 1. Description of Business" especially the disclosures set out under the heading "Risk Factors"; and "Part II. Item 6. Management's Discussion and Analysis or Plan of Operation" You should carefully consider and evaluate all of these factors. In addition, we do not undertake to update forward-looking statements after we file this report with the SEC, even if new information, future events or other circumstances have made them incorrect or misleading.   3       Item 1.Description of Business.  Overview  DataJungle Software Inc. (DataJungle) develops enterprise business intelligence (BI) front-end applications that integrate with both of the back-end infrastructure platforms of Microsoft Corporation (Microsoft) and Cognos Corporation (Cognos), two of the leading BI infrastructure companies.  Our products translate raw business data into highly visual and interactive tabular and graphical displays of information.  DataJungles flagship product, MatrixTM presents itself as information dashboards or front-end solutions to the BI and relational database server infrastructures that are widely utilized by businesses worldwide. DataJungle is uniquely positioned to exploit: · The emergence of information dashboards as a top information technology (IT) priority; · The rapidly accelerating market growth for Microsoft-based BI solutions, and · Microsofts aggressive promotion of its BI solutions. Some of the world's leading businesses rely on DataJungle software to deliver business information to key decision makers.  DataJungle has a number of large enterprise customers and a growing list of prominent partners and resellers, including Microsoft and Cognos. DataJungle operates through a wholly owned Canadian subsidiary located in Ottawa, Ontario, Canada.  Our Products  MatrixTM is a powerful, zero footprint Web-based product that allows end-users to create highly visual dashboard-like live business views on top of their existing relational and OLAP data sources.  It has been specifically designed to provide maximum flexibility and user independence from corporate IT departments and from specialized report authors or programmers.  MatrixTM brings together, in one integrated application, all of the key BI capabilities required by the broadest range of user classes in an organization  these include: dashboarding, analysis, scorecarding, wireless alerting, and collaboration. MatrixTM can be deployed out-of-the-box or can be readily customized to create virtually any type of interface and BI application. With MatrixTM, end users can define personal dashboard views that allow them to understand the status of their key performance indicators at a glance and to drill in for additional detail or to perform further exploration where a deeper understanding and action is warranted.  Scorecards and user-defined alerts provide indicators when there has been a change in performance status or important thresholds have been broken. MatrixTM also provides unmatched flexibility in how it is deployed. It can run in its own application framework, or individual views can be readily ported to any Microsoft SharePoint portal or Web page, while retaining full connectivity to the backend data source.  MatrixTM also provides maximum customizability in terms of presentation and the functionality that is exposed to various user classes. MatrixTM integrates with the key Microsoft business intelligence technologies  including: Analysis Services (OLAP, ROLAP, and HOLAP), Reporting Services, SQL Server and SharePoint.  Views based on Cognos PowerPlay cubes can also be included in MatrixTM dashboards.  MatrixTM provides an easy and fast path for  4      customers to extract value from their Microsoft SQL Server/Business Intelligence platform.  MatrixTM can support a mixed environment of both the Microsoft and Cognos platforms in one end user BI application. In cases where users need to track metrics in real time, MatrixTM includes an integrated wireless alerting component (MatrixTM Mobile), which presents the same metrics and alerts that users define in their dashboard. This wireless module works with most wireless devices such as the RIM Blackberry or any WAP 2-0 enabled cell phone.  Our Markets  DataJungle targets the business intelligence software market and the business data market with the same core technology and products. Business Intelligence Software Market:This market includes a variety of tools and applications focused on helping knowledge workers and business managers to access and analyze key business data and performance metrics.  The intention of these products is primarily to help companies make better and faster business decisions. Existing products in this market provide powerful server technology but are limited in flexibility, user functionality and interactivity.  They also provide little or no integration between the different types of application servers.  The vendors in the business intelligence software market have products that are either too complex or inflexible for the typical user of the data. Business Data Market:This market includes companies that are in the business of selling industry and market research data.  These vendors typically do not provide software reporting tools to allow users of the data to extract the full value of the data. The vendors in the business data market have not been able to develop commercial quality software and many continue to deliver data in raw format, paper reports or in basic electronic formats.  DataJungle can provide the interactivity and flexibility required for these users.  Our Market Positioning  DataJungle is positioned to exploit a growing opportunity on the Microsoft BI platform.   DataJungle entered the Microsoft-based BI market in June of 2005.  Microsoft released SQL Server 2005 in December 2005 (its first major release in five years).  The SQL Server 2005 release is important to Microsofts strategic thrust in the BI infrastructure market.  However, Microsoft itself does not have a Web based front-end solution for its SQL Server nor one that integrates with both of the Microsoft and Cognos platforms.  This represents an enormous opportunity for DataJungle to work with Microsoft in the business intelligence market.  Our Sales and Distribution  DataJungle reaches its market through its own direct sales team and through the use of its growing network of partners. The direct sales approach entails our management and sales representatives making contacts within the organizations of target customers to present the benefits and competitive advantages of our products and services. Leads to such presentations are generated primarily through existing contacts of management and our sales representatives.   5      Partners include both MatrixTM resellers and OEM software companies, which embed MatrixTM as the front end to their own software solutions. In addition, DataJungle works closely with Microsoft and Cognos both as technical partners and to develop market opportunities. With the growing emergence of Microsoft as a dominant BI player, DataJungle will increasingly rely on the well-established Microsoft partner channel, because it is the fastest and most effective way of reaching the mass Microsoft market. The territory where most potential clients reside is expected to be in the U.S.  In addition to the partners and resellers described above, four individuals within the company are focused primarily on sales and marketing efforts. We anticipate that the main expense factors for continuing marketing efforts will be for: · Additional personnel · Direct marketing to potential customers · Participation in trade shows · Travel and living expense · Preparation of collateral material to support sales and distribution efforts · Training and support of resellers  Our Competition and Product Differentiation  There are few significant packaged software competitors to DataJungle on the Microsoft platform. Although these companies are successful, they still only account for a tiny share of the overall opportunity and tend to focus on a narrower, more specialized class of users, whereas DataJungle is focused on the much broader market of information workers who demand ease-of-use, independence from the IT department and a range of BI capabilities. DataJungle MatrixTM represents a new class of BI product that was designed to provide both an optimal end-user experience and virtually immediate ROI for customers. It is differentiated in a number of important ways. · All key functional modules in a single product  MatrixTM encompasses dashboarding, analysis, scorecarding, reporting, annotation, collaboration and wireless alerting. · Maximum flexibility MatrixTM provides virtually unlimited customizability · User independence and ease-of-use MatrixTM allows end-users to design highly enriched, personalized dashboards without the need to rely on the IT department or specialized report authors. · Enriched user experience MatrixTM is unmatched in terms of its interactivity and visual impact. · Support for multiple platforms A single MatrixTM dashboard can integrate with Microsoft SQL Server/Analysis Services, Microsoft Reporting Services, Microsoft SharePoint portal, Cognos data sources and other relational data sources. Although DataJungle products are not intended to directly compete with the products offered by vendors in the business intelligence software market or the business data market, our products do overlap with products and service offered by these vendors.  Some of these vendors have considerably more resources than DataJungle and may be developing capabilities competitive with DataJungle.  In addition, we cannot assure that competitive products do not currently exist or will not be developed or that our products will be saleable in the marketplace on a profitable basis.   6      Economic Dependence  For the year ended December 31, 2006, four customers accounted for 83% of our revenues.  A small customer base is expected to account for a significant portion of our revenues until our products receive wider market recognition through efforts of our sales representatives and resellers.  Research and Development  We spent the following amounts during the periods mentioned on research and development activities prior to the recovery of related tax credits from various levels of government:  Twelve MonthsTwelve MonthsDecember 31, 2006December 31, 2005$         542,927$          273,428  During 2006, we spent approximately 9,800 hours (2005  approximately 7,800 hours) on research and development activities. For more information, see: "Part II. Item 6. Management's Discussion and Analysis or Plan of Operation"  Intellectual Property Protection  We rely on trade secrets, reseller agreements and confidentiality agreements. We claim copyright in specific software products and various elements of the core technology.  In addition, we claim the rights to certain trade names and trademarks.   However, we have not registered trademarks, patents or copyrights in any jurisdiction to cover specific products described herein or any of the core technology.  We believe, but we cannot assure, that our technology and its implementation may be eligible for patent protection. We cannot assure that we will be able to obtain or maintain protection of our intellectual property. We also cannot assure that our technology does not infringe upon the intellectual property rights of others. In the event that we are unable to obtain the foregoing protection or our technology infringes intellectual property rights of others, our business and results of operations could be materially and adversely affected. For more information please see "Risk Factors" below.  Employees  As of March 21, 2007, DataJungle had 14 personnel, including 4 executive officers (2 primarily responsible for sales and marketing and product development and 2 in administration), 6 software developers and programmers, 2 in sales field support and 2 in direct sales. All of our personnel are located in Ottawa, Canada. In addition, we engage technical consultants and independent contractors to provide specific advice or to perform certain administrative or technical functions as required.   7       Risk Factors  Our business operations and our securities are subject to a number of substantial risks, including those described below. If any of these or other risks actually occur, our business, financial condition and operating results, as well as the trading price or value of our securities could be materially adversely affected.  Our limited operating history makes evaluating our business and prospects difficult. Our limited operating history makes it difficult to evaluate our current business and prospects or to accurately predict our future revenues or results of operations. Our ability to consistently generate revenue on a profitable basis is unproven and our business plan is constantly evolving. The Internet is constantly changing and software technology is constantly improving, therefore we may need to continue to modify our business plan to adapt to these changes. As a result of our limited operating history, we are more vulnerable to risks, uncertainties, expenses and difficulties than more established companies.  As a result, we may never achieve profitability and we may not be able to continue operations if we cannot successfully address the risks associated with our operations. We have a history of operating losses and we anticipate losses and negative cash flow for the foreseeable future.  Unless we are able to generate profits and positive cash flow we may not be able to continue operations. We incurred a net loss of $3,144,279 and negative cash flow from operations of $708,666 during the year ended December 31, 2006.  During the year ended December 31, 2005, we incurred a net loss of $1,105,663 and negative cash flow from operations of $588,491.  We expect operating losses and negative cash flow from operations to continue for the foreseeable future and to possibly increase from current levels as we increase expenditures for: · sales and marketing; · technology; · research and development; and · general business enhancement. With increased on-going operating expenses, we will need to generate significant revenues to achieve profitability. Consequently, we may never achieve profitability.  Even if we do achieve profitability, we may not sustain or increase profitability on a quarterly or annual basis in the future. If we are unable to achieve or sustain profitability in the future, we may be unable to continue our operations. We may require additional capital to proceed with our long-term business plan.  If we are unable to obtain such capital in future years, we may be unable to proceed with our long-term business plan and we may be forced to limit or curtail our future operations. We require additional working capital to proceed with our long-term business plan.  If we are unable to raise additional financing, we may be unable to grow or to implement our long-term business plan and, in fact, we may be forced to limit or curtail our future operations. The loss of any of our key personnel would likely have an adverse effect on our business. Our future success depends, to a significant extent, on the continued services of our key personnel.  Our loss of any of these key personnel most likely would have an adverse effect on our business.  In addition, competition for personnel throughout the industry is intense and we may be unable to retain our current personnel or attract,  8      integrate or retain other highly qualified personnel in the future.  If we do not succeed in retaining our current personnel or in attracting and motivating new personnel, our business could be materially adversely affected. The business environment is highly competitive and, if we do not compete effectively, we may experience material adverse effects on our operations. The market for business intelligence products and services is intensely competitive and we expect competition to increase in the future.  We compete with large and small companies that provide products and services that are similar in some aspects to our products and services.  These companies may develop new technologies in the future that are perceived as more effective or cost efficient than the technologies developed by us. Some of these companies also have longer operating histories, greater name recognition, access to larger customer bases and significantly greater financial, technical and marketing resources than we do.  As a result, they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements or to devote greater resources to the promotion and sale of their products than we will.  In addition, they may have established or may establish financial or strategic relationships among themselves, with existing or potential customers, resellers or other third parties and rapidly acquire significant market share.  If we cannot compete effectively, we may experience future price reductions, reduced gross margins and loss of market share, any of which will materially adversely affect our business, operating results and financial condition. If we are unable to develop brand recognition, we may be unable to generate significant revenues and our results of operations may be materially adversely affected. To attract customers we may have to develop a brand identity and increase awareness of our technology and products. To increase brand awareness, we expect to significantly increase our expenditures for marketing initiatives. However, these activities may not result in significant revenue and, even if they do, any revenue may not offset the expenses incurred in building brand recognition. Moreover, despite these efforts, we may not be able to increase awareness of our brands, which would have a material adverse effect on our results of operations. If we are unable to respond to rapid technological change and improve our products and services, our business could be materially adversely affected. The business intelligence software industry is characterized by technological advances, changes in customer requirements, frequent new product introductions and enhancements and evolving industry standards in computer hardware and software technology.  As a result, we must continually change and improve our products in response to changes in operating systems, application software, computer and communications hardware, networking software, programming tools and computer language technology.  The introduction of products embodying new technologies and the emergence of new industry standards may render existing products obsolete or unmarketable.  Our future operating results will depend upon our ability to enhance our current products and to develop and introduce new products on a timely basis that address the increasingly sophisticated needs of our customers and that keep pace with technological developments, new competitive product offerings and emerging industry standards.  If we do not respond adequately to the need to develop and introduce new products or enhancements of existing products in a timely manner in response to changing market conditions or customer requirements, our operating results may be materially diminished. We may not be able to protect and enforce our intellectual property rights, which could result in the loss of our rights, loss of business or increased costs. Our success depends to a significant degree upon the protection of our software and other proprietary technology.  The unauthorized reproduction or other misappropriation of our proprietary technology would enable third parties to benefit from our technology without paying us for it.  We depend upon a combination of  9      copyright laws, license agreements and non-disclosure and other contractual provisions to protect proprietary and distribution rights of our products.  We have not registered trademarks, copyrights or patents in any jurisdiction.  Although we have taken certain steps to protect our proprietary technology, they may be inadequate and the unauthorized use thereof could have a material adverse effect on our business, results of operations and financial condition.  Existing copyright laws and the other steps that we have taken offer only limited protection.  Moreover, the laws of other countries in which we plan to market our products may afford little or no effective protection of our intellectual property.  If we resort to legal proceedings to enforce our intellectual property rights, the proceedings could be burdensome and expensive, even if we were to prevail. Claims by third parties that we infringe upon their proprietary technology could hurt our financial condition. If we discover that any of our products or technology we license from third parties violate third party proprietary rights, we may not be able to reengineer our product or obtain a license on commercially reasonable terms to continue offering the product without substantial reengineering.    In addition, product development is inherently uncertain in a rapidly evolving technology environment in which there may be numerous patent applications pending for similar technologies, many of which are confidential when filed.  Although we sometimes may be indemnified by third parties against claims that licensed third party technology infringes proprietary rights of others, indemnity may be limited, unavailable or, where the third party lacks sufficient assets or insurance, ineffective.  We currently do not have liability insurance to protect against the risk that our technology or future licensed third party technology infringes the proprietary rights of others.  Any claim of infringement, even if invalid, could cause us to incur substantial costs defending against the claim and could distract our management from our business.  Furthermore, a party making such a claim could secure a judgment that requires us to pay substantial damages.  A judgment could also include an injunction or other court order that could prevent us from selling our products.  Any of these events could have a material adverse effect on our business, operating results and financial condition. If security were breached, our business would be materially adversely affected. A key element of our technology and products is the ability to access business information using the Internet, either through facilities of our customers or hosted by us.  If anyone was able to circumvent security measures, they could misappropriate proprietary information or cause interruptions or problems with our hardware and software or customers using our products.  Any such security breaches could significantly damage our business and our reputation.  In addition, we could be liable to our customers for the damages caused by such breaches or we could incur substantial costs as a result of defending claims for those damages. We may need to expend significant capital and other resources to protect against such security breaches or to address problems caused by such breaches. Security measures taken by us may not prevent disruptions or security breaches.    In the event that future events or developments result in a compromise or breach of the technology we use to protect a customer's personal information, our financial condition and business could be materially adversely affected. Our operating results may prove unpredictable and may fluctuate significantly. Our operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which are outside of our control.  Factors which may cause operating results to fluctuate significantly include the following: · new technology or products introduced by us or by our competitors; · the timing and uncertainty of sales cycles and any seasonal declines in sales; · our success in marketing and market acceptance of our products and services by our existing customers and by new customers;  10      · a decrease in the level of spending for information technology-related products and services by our existing and potential customers; and · general economic conditions as well as economic conditions specific to users of our products and technology. Our operating results may be volatile and difficult to predict.  As such, future operating results may fall below the expectations of securities analysts and investors.  In this event, the trading price of our common stock may fall significantly. We expect to generate the majority of revenues in U.S. dollars and incur significant expenses in Canadian dollars.  If applicable currency exchange rates fluctuate our revenues and results of operations may be materially and adversely affected. We expect that a majority of our revenues will be based on sales provided in United States dollars and currency other than the Canadian dollar.  In addition, we expect that a significant portion of our operating expenses will be incurred in Canada.  As a result, our financial performance will be affected by fluctuations in the value of the U.S. dollar and other currencies to the Canadian dollar. At the present time, we have no plan or policy to utilize forward contracts or currency options to minimize this exposure, and even if these measures are implemented there can be no assurance that such arrangements will be available, be cost effective or be able to fully offset such future currency risks. Other risks associated with international operations could adversely affect our business operations and our results of operations. There are certain risks inherent in doing business on an international level, such as: · unexpected changes in regulatory requirements, export and import restrictions; · legal uncertainty regarding liability and compliance with foreign laws; · competition with foreign companies or other domestic companies entering into the foreign markets in which we operate; · tariffs and other trade barriers and restrictions; · difficulties in staffing and managing foreign operations; · longer sales and payment cycles; · problems in collecting accounts receivable; · political instability; · fluctuations in currency exchange rates; · software piracy; · seasonal reductions in business activity; and · potentially adverse tax consequences. Any of these factors could adversely impact the success of our international operations. One or more of such factors may impair our future international operations and our overall financial condition and business prospects. Our common stock price may be volatile. The market prices of securities of technology companies are extremely volatile and sometimes reach unsustainable levels that bear no relationship to the past or present operating performance of such companies. Factors that may contribute to the volatility of the trading price of our common stock include, among others:  11       · our quarterly results of operations; · the variance between our actual quarterly results of operations and predictions by stock analysts and investors; · financial predictions and recommendations by stock analysts concerning technology companies and companies competing in our market in general, and concerning us in particular; · public announcements of technical innovations relating to our business, new products or technology by us or our competitors or acquisitions or strategic alliances by us or our competitors; · public reports concerning our products or technology or those of our competitors; and · the operating and stock price performance of other companies that investors or stock analysts may deem comparable to us. In addition to the foregoing factors, the trading prices for equity securities in the stock market in general, and technology companies in particular, have been subject to wide fluctuations that may be unrelated to the operating performance of the particular company affected by such fluctuations.  Consequently, broad market fluctuations may have an adverse effect on the trading price of our common stock regardless of our results of operations. There is a limited market for our common stock.  If a substantial and sustained market for our common stock does not develop, our shareholders' ability to sell their shares may be materially and adversely affected. Our common stock is tradable in the over-the-counter market and is quoted on the OTC Bulletin Board under the symbol of DJSW.  Many institutional and other investors refuse to invest in stocks that are traded at levels below the Nasdaq Capital Market which could make our efforts to raise capital more difficult.  In addition, the firms that make a market for our common stock could discontinue that role.  OTC Bulletin Board stocks are often lightly traded or not traded at all on any given day.  We cannot predict whether a more active market for our common stock will develop in the future.  In the absence of an active trading market: · investors may have difficulty buying and selling or obtaining market quotations; · market visibility for our common stock may be limited; and · a lack of visibility for our common stock may have a depressive effect on the market price for our common stock. Shares issuable upon the exercise of options, exercise of stock purchase warrants and the conversion of convertible debentures or under anti-dilution provisions in certain agreements could dilute stock holdings and adversely affect our stock price. We have issued options and may issue additional options in the future to acquire common stock to our employees and certain other persons at various prices, some of which have, or may in the future have, exercise prices at or below the market price of our stock.  As of March 21, 2007 we have outstanding options to purchase a total of 3,765,090 shares of our common stock.  Of these options, 448,909 have exercise prices below the recent market price of $0.20 per share (as of March 21, 2007).  If exercised, these options will cause immediate dilution to our stockholders.  Our existing stock option plan has 1,234,910 shares remaining for issuance as of March 21, 2007.  Future options issued under the plan may have further dilutive effects. At December 31, 2006, a holder of a promissory note had the option, subject to certain restrictions, of converting outstanding principal plus interest thereon into 1,656,167 shares of our common stock and 942,245 stock  12      purchase warrants to purchase 942,245 shares of our common stock at $0.30 per share until December 31, 2010.  In addition, holders of other convertible promissory notes had the right to convert outstanding principal plus interest into 324,867 shares of our common stock and 222,675 stock purchase warrants to purchase 222,675 shares of our common stock at $0.30 per share until December 31, 2010. At December 31, 2006, we had 200,000 stock purchase warrants outstanding pursuant to consulting agreements which would allow the holders to acquire up to 200,000 shares of our common stock at an exercise price of $0.50 per share expiring on December 31, 2009.  In addition, we had 5,966,331 stock purchase warrants which would allow the holders to acquire up to 5,966,331 shares of our common stock at an exercise price of $0.30 per share expiring on December 31, 2010. At December 31, 2006, we were obligated to issue 175,547 shares of our common stock pursuant to consulting agreements and a financing agreement.  Subsequent to December 31, 2006, we were obligated to issue an additional 200,000 shares of our common stock pursuant to one of these agreements. Subsequent to December 31, 2006, we issued 1,350,000 shares of our common stock to two consultants for investor relations and communications services.  In addition, we are obligated to issue 450,000 shares of our common stock in April 2007 and 300,000 shares of our common stock in June 2007 to one of these consultants if the Company hasnt cancelled the consulting agreement five days prior to those dates. Subsequent to December 31, 2006, the Company received $56,000 from an unrelated party pursuant to  demand promissory notes bearing interest at 10% per annum.  These promissory notes are convertible into 560,000 shares of common stock and 280,000 stock purchase warrants to purchase 280,000 shares of common stock at $0.30 per share.  The warrants expire on December 31, 2010. Subsequent to December 31, 2006, the Company received $45,967 from a related party pursuant to demand promissory notes bearing interest at 10% per annum.  These promissory notes are convertible into 459,670 shares of common stock and 229,835 stock purchase warrants to purchase 229,835 shares of common stock at $0.30 per share.  The warrants expire on December 31, 2010. Issuance of shares pursuant to the exercise of options, exercise of stock purchase warrants, anti-dilution provisions or the conversion of promissory notes could lead to subsequent sales of the shares in the public market which could depress the market price of our stock by creating an excess in supply of shares for sale.  Issuance of these shares and sale of these shares in the public market could also impair our ability to raise capital by selling equity securities. A large number of shares will be eligible for future sale and may depress our stock price. As of March 21, 2007, we had outstanding 32,537,502 shares of common stock of which approximately 20,744,870 shares were "restricted securities" as that term is defined under Rule 144 promulgated under the Securities Act of 1933.  These restricted shares are eligible for sale under Rule 144 at various times.  No prediction can be made as to the effect, if any, that sales of shares of common stock or the availability of such shares for sale will have on the market prices prevailing from time to time.  Nevertheless, the possibility that substantial amounts of our common stock may be sold in the public market may adversely affect prevailing market prices for the common stock and could impair our ability to raise capital through the sale of our equity securities. We do not intend to pay dividends in the near future. Our board of directors determines whether to pay dividends on our issued and outstanding shares.  The declaration of dividends will depend upon our future earnings, our capital requirements, our financial condition and other relevant factors.  Our board does not intend to declare any dividends on our shares for the foreseeable future.  13      Our common stock may be deemed to be a "penny stock."  As a result, trading of our shares may be subject to special requirements that could impede our shareholders' ability to resell their shares. Our common stock is a "penny stock" as that term is defined in Rule 3a51-1 of the Securities and Exchange Commission because it is selling at a price below five dollars per share.  In the future, if we are unable to list our common stock on NASDAQ or a national securities exchange, or the per share sale price is not at least $5.00, our common stock may continue to be deemed to be a "penny stock".  Penny stocks are stocks: · with a price of less than five dollars per share; · that are not traded on a recognized national securities exchange; · whose prices are not quoted on the NASDAQ automated quotation system; or · of issuers with net tangible assets less than o $2,000,000 if the issuer has been in continuous operation for at least three years; or o $5,000,000 if in continuous operation for less than three years; or · of issuers with average revenues of less than $6,000,000 for the last three years. Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities and Exchange Commission require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account.  Moreover, Rule 15g-9 of the Securities and Exchange Commission requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor.  This procedure requires the broker-dealer: · to obtain information from the investor concerning his or her financial situation, investment experience and investment objectives; · to determine based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; · to provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination referred to immediately above; and · to receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of our common stock to resell their shares to third parties or to otherwise dispose of them. Our current and former executive officers, directors and major shareholders own a significant percentage of our voting stock. As a result, they exercise significant control over our business affairs and policy. As of March 21, 2007, our executive officers, directors and holders of 5% or more of our outstanding common stock together beneficially owned approximately 19.8% of the outstanding common stock if they were eligible to exercise all of the conversion rights, options and warrants held by them.  These shareholders are able to significantly influence all matters requiring approval by shareholders, including the election of directors and the approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying, deterring or preventing a change in control and may make some transactions more difficult or impossible to complete without the support of these shareholders.   14      Our articles of incorporation contain provisions that could discourage an acquisition or change of control of our company. Our articles of incorporation authorize our board of directors to issue preferred stock without stockholder approval.  Provisions of our articles of incorporation, such as the provision allowing our board of directors to issue preferred stock with rights more favorable than our common stock, could make it more difficult for a third party to acquire control of us, even if that change of control might benefit our stockholders.  Our Corporate History Quad Metals Corporation, a Washington company incorporated on June 5, 1968 and Quad Metals Corporation, a wholly owned Nevada subsidiary incorporated on June 20, 2002 merged on December 11, 2002 to form Quad Metals Corporation, a Nevada corporation (Quad).  Pursuant to a Share Exchange Agreement which was effective October 1, 2003, Quad acquired all of the issued and outstanding common stock of DataJungle Ltd., a Canadian company (formed on August 15, 2001 as a merger of DataJungle, Inc., a Delaware company incorporated on August 4, 2000 and 3853021 Canada Inc., a Canadian company incorporated on July 27, 2001).  Effective November 18, 2003, Quad changed its name to DataJungle Software Inc.  Item 2.  Description of Property.  Our head office is located at 1 Hines Road, Suite 202, Ottawa, Ontario, Canada, K2K 3C7. The telephone number is 613-254-7246. Our office is leased from a non-affiliated party based on a sublease agreement for 5,692 sq. ft. of space until December 31, 2007.  Item 3.  Legal Proceedings.  We are not presently a party to any litigation.   Item 4.  Submission of Matters to a Vote of Security holders.  None   PART II  Item 5.  Market for Common Equity and Related Stockholder Matters.  (a) Market Information -- The principal U.S. market in which our common stock, all of which are of one class, $.001 par value per share, is traded is in the over-the-counter market.  Our stock is quoted on the OTC Bulletin Board under the symbol DJSW. The following table sets forth the range of high and low bid quotes of our common stock per quarter in 2005 and 2006, as reported by the OTC Bulletin Board.  These quotes reflect inter-dealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.   15      MARKET PRICE OF COMMON STOCK  BIDQuarter EndingHighLow2005January 1 to March 310.760.31April 1 to June 300.510.22July 1 to September 300.300.21October 1 to December 310.290.132006January 1 to March 310.460.16April 1 to June 300.450.17July 1 to September 300.240.16October 1 to December 310.300.13On March 21, 2007, the closing price of our common stock was $0.20 per share.  (b) Holders -- There were approximately 1,250 holders of record of our common stock as of March 21, 2007, inclusive of those brokerage firms and/or clearing houses holding our securities for their clientele, with each such brokerage house and/or clearing house being considered as one holder.  Theaggregate number of shares of common stock outstanding as of March 21, 2007 was 32,537,502 shares. (c) Dividends -- We have not paid or declared any dividends upon our common stock since inception and, by reason of our present financial status and our contemplated financial requirements, we do not contemplate or anticipate paying any dividends in the foreseeable future. (d) Securities Authorized for Issuance Under Equity Compensation Plans--The following table sets forth details regarding our common stock authorized for issuance under equity compensation plans as at December 31, 2006:  Plan categoryNumber of securities
to be issued upon exercise
of outstanding
options, warrants and rightsWeighted average
exercise price of outstanding
options, warrants
and rightsNumber of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities reflected
in column (a))(a)(b)(c)Equity compensation
plans approved by
security holders------Equity compensation
plans not approved by
security holders3,765,090$ 0.361,234,910Total3,765,090$ 0.361,234,910  We have granted options to purchase an aggregate of 83,700 shares of our common stock to non-employees in consideration for consulting services rendered.  These options entitle the holders to purchase shares of common stock at an exercise price of $0.40 per share.  All of these were vested at December 31, 2006 and are  16      exercisable at various dates until February 28, 2013.  These options were granted pursuant to our Share Option Plan, which was adopted by our board of directors and became effective on April 16, 2004.  The plan has not been approved by our stockholders.  The plan authorizes a committee of our board of directors, which administers the plan, to grant stock options and stock appreciation rights to our officers, employees and consultants.  A total of 5,000,000 shares of common stock were reserved for issuance under the terms of the Share Option Plan.  In the event of certain mergers, sales of assets, reorganizations, consolidations, recapitalizations, stock dividends or other changes in corporate structure affecting our common stock, the committee administering the plan must make an equitable substitution or adjustment in the aggregate number of shares reserved for issuance under the plan and in the number of shares exercisable under, and the exercise price of, outstanding options under the plan. (e) Sales of Unregistered Securities During the three months ended December 31, 2006, we had the following transactions: · Issued $20,000 of 10% promissory notes to an unrelated party.  These promissory notes are convertible to shares of our common stock at a price of $0.10 per share plus a warrant for the purchase of the number of common shares equal to 50% of the number of common shares purchased by the lender.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010; · Issued $86,333 of 12% promissory notes to an unrelated party.  As consideration for advance of these funds, we paid the lender a fee of $8,633 and issued 100,000 shares of our common stock; · Issued $72,198 of 10% promissory notes to a related party.  These promissory notes are convertible to shares of our common stock at a price of $0.10 per share plus a warrant for the purchase of the number of common shares equal to 50% of the number of common shares purchased by the lender.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010; · Granted 50,000 stock purchase options to an employee to purchase 50,000 shares of our common stock at $0.18 per share and expiring at various dates to September 30, 2013. During the period from January 1, 2007 to March 21, 2007, we had the following transactions: · Issued 1,350,000 shares of our common stock to two consultants for investor relations and communication services.  If the Company hasnt otherwise cancelled the agreement with one of these consultants, the Company also agreed to issue 450,000 shares of our common stock on April 8, 2007 and 300,000 shares of our common stock on June 8, 2007; · Issued 100,000 shares of our common stock to a lender as consideration for advancing funds to the Company in December 2006 pursuant to the terms of the related financing agreement; · Modified the terms of a consulting agreement with an unrelated party to allow the Company to make monthly payments of $10,000 to a consultant in shares of our common stock rather than cash.  At March 21, 2007, the Company was obligated to issue 233,333 shares of our common stock pursuant to this consulting agreement; · Received $56,000 from an unrelated party pursuant to demand promissory notes bearing interest at 10% per annum.  These promissory notes are convertible into 560,000 shares of common stock and 280,000 stock purchase warrants to purchase 280,000 shares of common stock at $0.30 per share.  The warrants expire on December 31, 2010; · Received $45,967 from a related party pursuant to demand promissory notes bearing interest at 10% per annum.  These promissory notes are convertible into 459,670 shares of common stock and 229,835 stock purchase warrants to purchase 229,835 shares of common stock at $0.30 per share.  The warrants expire on December 31, 2010.  17      The foregoing securities were issued in reliance upon the

exemption

 provided by Section 4(2) under the Securities Act of 1933

and the rules promulgated thereunder

..  Item 6.  Management's Discussion and Analysis or Plan of Operation.  Critical Accounting Policies  The financial statements of the Company are prepared in accordance with generally accepted accounting principles in the United States of America.  The following accounting policies are considered to be critical to an understanding of the financial position and results of operations for the Company discussed in this section.  Additional accounting policies for the Company have been disclosed in the audited consolidated financial statements at and for the year ended December 31, 2006 included in this report.  (a) Revenue recognition  The following policy on revenue recognition was adopted in prior years and continues to be applicable in the current year:  For contracts requiring significant customization or services, the Company recognizes revenue using the completed contract method in accordance with the guidance in Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts.  Under the completed contract method, revenue is recognized in the period when all substantial obligations of the Company under the terms and conditions of a contract have been satisfied.  Cash receipts received in advance of the recognition of revenue and rights to advance payments are recorded in the balance sheet as deferred revenue.  Direct costs associated with a contract that has not been recognized as revenue are capitalized in the balance sheet as contracts in process.  A provision for contract losses is recognized as soon as the losses become evident.  During the year-ended December 31, 2004, the Company made its initial sales of product licenses.  As a consequence, the following policy on revenue recognition was adopted in the year-ended December 31, 2004:  For sales of product licenses, the Company recognizes revenue in accordance with Statement of Position 97-2, Software Revenue Recognition (SOP 97-2), as amended by Statement of Position 98-9, Software Revenue Recognition with Respect to Certain Transactions, issued by the American Institute of Certified Public Accountants.  Revenue from sale of product licenses is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectibility is probable.  Revenue from product support contracts is recognized ratably over the life of the contract.  Revenue from services is recognized at the time such services are rendered.  For contracts with multiple elements such as product licenses, product support and services, the Company follows the residual method.  Under this method, the total fair value of the undelivered elements of the contract, as indicated by vendor specific objective evidence, is deferred and subsequently recognized in accordance with the provisions of SOP 97-2.  The difference between the total contract fee and the amount deferred for the undelivered elements is recognized as revenue related to the delivered elements.  Vendor specific objective evidence for support and consulting services is obtained from contracts where these  18      elements have been sold separately.  Where the Company cannot determine the fair value of all the obligations, the revenue is deferred until such time as it can be determined or the element is delivered.  (b) Stock-based compensation:  Effective January 1, 2006, the Company adopted the following policy with respect to stock-based compensation:  Effective January 1, 2006, the Company adopted the provisions of Financial Accounting Standards Board Statement No. 123R Share-Based Payment (SFAS 123R) to account for its stock options.  SFAS 123R requires all share-based payments, including stock options granted to employees by the Company, to be recognized in the Statement of Operations based on the fair value of the share-based payments at the date of grant.  For purposes of estimating the grant date fair value of stock options, the Company uses the Black Scholes options pricing model and has elected to treat awards with graded vesting as a single award.   The fair value is recognized as compensation expense on a straight-line basis over the requisite service period, which in the Companys circumstances is the stated vesting period of the award, provided that total compensation expense recognized at least equals the pro rata fair value of the award that has vested.  The Company has adopted the modified prospective method of applying the provisions of SFAS 123R.  Under the modified prospective method, the Company recognizes compensation expense based on the requirements of SFAS 123R for all share-based payments granted after the effective date of SFAS 123R.   In addition, compensation expense is recognized, subsequent to the effective date of SFAS 123R, for the remaining portion of the vesting period for outstanding awards granted prior to the effective date of SFAS 123R.  For periods to December 31, 2005, the Company accounted for stock-based compensation in accordance with the following policy:  For periods to December 31, 2005, the Company applied the intrinsic value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation an interpretation of APB Opinion No. 25, to account for its stock options for employees.  Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price.  Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation and SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure, an amendment of FASB Statement No. 123, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans.  For periods to December 31, 2005, the Company elected to apply the intrinsic-value based method of accounting described above and adopted only the disclosure requirements of SFAS 123, as amended.  (c)  Deferred consulting services:  The Company adopted the following policy related to deferred consulting services during the year-ended December 31, 2005:   19      Deferred consulting services represent the portion of prepaid non-cash consulting fees for services to be rendered in subsequent periods.  Prepaid non-cash consulting fees related to services to be rendered within twelve months are included in prepaid expenses on the balance sheet.  These costs will be charged to expenses as the services are rendered.  If for any reason circumstances arise which would indicate that the services will not be performed in the future, these prepaid non-cash consulting fees will be charged to expenses immediately.  Plan of Operation  Due to our limited operating history, our historical results of operations are unlikely to provide a meaningful understanding of the activities expected to take place during the period through December 31, 2007.  In addition, our plans for 2007 are dependent upon obtaining additional capital and achieving our sales objectives.  Our major initiatives through December 31, 2007 are: · furthering the development of our products; and · increasing commercial sales of our products, and continuing our current marketing program. For more information, please see Part 1. Item 1. Description of Business; Our Products. Marketing Plans: In addition to partner arrangements with Microsoft and Cognos, DataJungle has entered into a number of reseller agreements and original equipment manufacturer (OEM) agreements in North America and Europe.  Efforts to increase our customer base were increased in calendar 2006.  At March 21, 2007, we had 2 full-time sales representatives in Ottawa, Canada and 2 of our executive officers spending significant efforts to further increase our customer base.  Their current focus is to expand the number of leads and to continue to identify resellers and partners in the U.S., Western Europe and Asia. Marketing leads are being developed by direct identification of potential customers, a limited amount of advertising and through trade shows, personal contacts of management and our sales representatives. Our sales representatives, who are compensated on a salary and commission basis, will continue to follow up these leads, with the objective of more fully explaining the products and their benefits to potential customers.  In addition, we expect to hire additional sales representatives and support related staff. Developing and Improving Our Products: While we will direct a considerable portion of our activities and budget to marketing, we will continue developing the core functions of our products and additional products.  For more information please see Part I. Item 1. Description of Business; Our Products. We will improve and further develop our products based upon responses from potential customers.  The cost associated with this development is primarily a function of the activity currently planned and thus will be subject to a high degree of control.  The Company may expend additional resources on product development on a cost recovery basis through pilot projects with customers. Other Initiatives in 2007: In addition, we expect to increase general and administrative staff in 2007 in order to improve our segregation of duties and controls over financial reporting.   20      Until such time as we generate sufficient revenues from our products and services, we will continue to be dependent on raising substantial amounts of additional capital through any one of a combination of debt offerings or equity offerings, including but not limited to: · debt instruments, including demand notes and convertible debentures similar to those discussed below in Liquidity and Capital Resources; · private placements of common stock; · exercise of stock options at an average exercise price of $0.40 per share; and · funding from potential clientele or future industry partners. During the period from January 1, 2007 to March 21, 2007, we raised $56,000 from an unrelated party pursuant to demand promissory notes bearing interest at 10% per annum.  In addition, we raised $45,967 from a related party pursuant to demand promissory notes bearing interest at 10% per annum.  These funds are not sufficient to satisfy the requirements of our plan of operations.  Consequently, there will be an ongoing requirement for funding as described above.  However, there can be no assurance that any future financings can be obtained, should they be required.  In this regard, please see Risk Factors in Item 1 above.  Selected Financial Data The selected financial data set forth below with respect to our consolidated statements of operations and consolidated statements of cash flows for the years ended December 31, 2006 and 2005 and with respect to the consolidated balance sheets as at December 31, 2006 and 2005, are derived from our audited consolidated financial statements included at the end of this report.  The following selected financial data should be read in conjunction with our consolidated financial statements and the notes thereto.  Year Ended
December 31, 2006Year Ended
December 31, 2005Operations Data$$Revenues501,238588,209Gross profit386,686537,574General and administrative1,351,538850,831Sales and marketing591,244465,230Research and development490,364242,188Depreciation of property and equipment7,57313,773Interest expense
Loss on extinguishment and modification of debt526,792
550,74361,251
-Net loss3,144,2791,105,663Cash Flow DataNet cash used in operating activities(708,666)(588,491)Net cash used in investing activities(4,065)(6,503)Net cash provided by financing activities638,501686,192Effects of exchange rates on cash & cash equivalents11,585(15,452)Net increase (decrease) in cash & cash equivalents(62,645)75,746Balance Sheet DataCash & cash equivalents23,15785,802Accounts and investment tax credits receivable232,923260,057Contracts-in-process-5,677Prepaid expenses237,185249,126Total current assets493,265600,662Deferred consulting services-478,322  21       Property and equipment4,5507,970Total assets497,8151,086,954Accounts payable and accrued liabilities711,620604,462Promissory notes payable112,620788,460Promissory notes payable to a related party180,625513,500Deferred revenue39,04434,284Total current liabilities1,043,9091,940,706Stockholders deficiency(546,094)(853,752)  Results of Operations  In this section, we discuss our earnings for the years ended December 31, 2006 and 2005 and the factors affecting them that resulted in changes from one year to the other. Our financial statements have been prepared in accordance with U.S. GAAP and presented in U.S. dollars for purposes of this report. The year ended December 31, 2006 compared to the year ended December 31, 2005  Revenue:Revenues for the year ended December 31, 2006 were $501,238 compared to $588,209 for the year ended December 31, 2005.  Services revenue increased from $273,610 in 2005 to $418,532 in 2006.  This increase results primarily from an increase in service revenue from a major customer compared to 2005 and from a general increase in the number of service contracts in 2006.  Product revenue decreased from $314,599 in 2005 to $82,706 in 2006.  In late 2005, the Company recognized revenue on a major enterprise license deal.  There was no equivalent enterprise deal in 2006.  However, the Company made sales to 12 customers in 2006 compared to 7 customers in 2005 and expects ongoing business from a number of these customers during the year ended December 31, 2007.  Although there can be no certainty that this will occur, the Company is projecting a significant increase in product and service revenue in 2007 with a substantial portion of that coming from the customer base established in 2006. Gross profit:  Gross profit for the year ended December 31, 2006 was $386,686 (77% of revenue).  For the year ended December 31, 2005, the gross profit was $537,574 (91% of revenue).  For the year ended December 31, 2006, the gross profit on product sales was $74,716 (90% of product revenue) and $311,970 on services (75% of services revenue).  For the year ended December 31, 2005, the gross profit on product sales was $309,437 (98% of product revenue) and $228,137 on services (83% of services revenue).  The gross profit from products was higher in 2005 due to a major enterprise license deal that closed in 2005 that required minimal cost to deliver.    The decrease in gross profit from services in 2006 compared to 2005 results primarily from services done in 2006 at a lower margin in anticipation of ongoing work in the future. General and administrative expenses: General and administrative expenses consist primarily of personnel costs, professional fees, consulting fees including investor relations activities, occupancy related costs, financing related costs and other miscellaneous costs associated with supporting our research and development and sales and marketing activities.  During the year ended December 31, 2006, we incurred $1,351,538 in expenses compared to $850,831 during the year ended December 31, 2005.  The net increase of approximately $500,700 results primarily from the following: · Increase in stock compensation costs of $112,400.  In 2006, stock related compensation expense was $54,600 due to the implementation of FAS 123R.  In 2005, recovery of compensation expense was $57,800 due to a decline in the price of our common stock in 2005 and in accordance with the accounting principles in effect at the time.  22      · Increase of $43,000 in compensation related costs for the Chief Financial Officer in 2006 compared to costs for only a partial year in 2005. · Increase in consulting expense of $331,900.  On January 24, 2006, the Company cancelled a consulting contract and 3,000,000 warrants to purchase our common stock and expensed $717,500 of prepaid expenses and deferred consulting fees which had been recognized on the balance sheet at December 31, 2005.  During 2006, the Company incurred $164,000 for investor communications and public relations services compared to $549,600 in 2005. · Increase in professional fees of $5,500 due to the current regulatory environment and use of a contractor in early 2006 prior to the hiring of the Chief Financial Officer. · Increase in bank charges of $7,400 resulting primarily from interest and penalties on arrears in certain statutory tax payments. · Net increase in various other costs of approximately $500. Sales and marketing:Sales and marketing expenses consist primarily of personnel costs, costs related to demonstrations of our product and travel including the costs of conferences.  During the year ended December 31, 2006, we incurred $591,244 in expenses compared to $465,230 during the year ended December 31, 2005.  The net increase of approximately $126,000 results from the following: · Increase in stock compensation costs of $92,700.  In 2006, stock related compensation expense was $82,300 due to the implementation of FAS 123R.  In 2005, recovery of compensation expense was $10,400 due to a decline in the price of our common stock in 2005 and in accordance with the accounting principles in effect at the time. · Decrease in personnel related costs of $7,300.  During 2006, the Company hired an inside sales representative and increased the level of compensation for sales management.  These cost increases were more than offset by a lower level of compensation for one of the sales representatives in 2006 compared to the sales representative employed in the equivalent position in 2005.  At December 31, 2006, the Company had two sales representatives responsible for world wide sales, two sales engineers and two members of management involved primarily in sales and business development related activities. · Increase of $22,800 in travel and related costs due to attendance at a Business Intelligence trade show in Montreal, attendance at two Microsoft sponsored events and trips to major customers in the U.S. and Europe. · Increase of $7,200 in phone related costs due to an increase in the level of contacts made by our sales related personnel. · Increase of $10,600 in other costs primarily related to the cost of press releases for customer and product announcements, purchase of a mailing list for lead generation purposes and use of an outside telemarketing firm to increase the number of leads for sales staff. Research and development expenses: Research and development expenses consist primarily of personnel costs and consulting expenses directly associated with the development of our software applications plus an applicable allocation of rent for space occupied by research and development personnel.  For the year ended December 31, 2006, we incurred $490,364 in expenses compared to $242,188 during the year ended December 31, 2005.  The net increase of approximately $248,200 results from the following: · Increase in stock compensation costs of $175,600.  In 2006, stock related compensation expense was $63,600 as a result of the implementation of FAS 123R.  In 2005, recovery of compensation expense  23      was $112,000 due to a decline in the price of our common stock in 2005 and in accordance with the accounting principles in effect at the time. · Increase in personnel related costs and consultants of $135,200 due to general salary increases in 2006 and an increase in staffing levels in 2006 by the equivalent of two full-time staff members compared to 2005. · Increase in other costs of $11,300 due primarily to costs related to testing for Microsoft certification resulting in the Company achieving Microsoft Gold Certified Partner status and a general increase in rent in 2006. The above costs were offset by the following items: · Increase in research and development tax credits of $21,300 due to the labor incurred on the release of the Companys Matrix 4.0 product release and subsequent upgrades. · Increase of $52,600 in personnel related costs transferred to cost of sales due to the labor component on contracts for service related work. Amortization: Amortization expense was $7,573 for the year ended December 31, 2006 compared to $13,773 for the year ended December 31, 2005. Interest Expense: Interest expense was $526,792 for the year ended December 31, 2006 compared to $61,251 for the year ended December 31, 2005.  The increase in 2006 is primarily related to recognition of the estimated value of beneficial conversion features on convertible promissory notes issued in 2006 as interest expense.  These convertible promissory notes were issued with a conversion price less than the market price of our common stock on the date of issuance. Loss on extinguishment of debt: Loss on extinguishment of debt was $508,486 for the year ended December 31, 2006 compared to $Nil for the year ended December 31, 2005.  This loss results from the impact of conversion of promissory notes to equity in early 2006 on terms that were more favorable than the terms of the original promissory notes.  For additional details, please see notes 8(a) and 8(c) to our consolidated financial statements included in Item 7 below. Loss on modification of debt: Loss on modification of debt was $42,257 for the year ended December 31, 2006 compared to $Nil for the year ended December 31, 2005.  This loss results from modification of the terms of promissory notes payable to a related party in early 2006 to include terms that were more favorable than the terms of the original promissory notes.    For additional details, please see note 9(b) to our consolidated financial statements included in Item 7 below. Net Loss: We incurred a loss of $3,144,279 ($0.11 per share) for the year ended December 31, 2006, compared to a loss of $1,105,663 ($0.06 per share) for the year ended December 31, 2005.    Our revenues and future profitability and future rate of growth are substantially dependent on our ability to: · license our software applications to a sufficient number of clients; · modify the successful software applications, over time, to provide enhanced benefits to existing users; and · successfully develop related software applications. Liquidity and Capital Resources At December 31, 2006, we had negative working capital of $550,644, compared to negative working capital of $1,340,044 at December 31, 2005. This increase in working capital of approximately $789,400 occurred primarily as a result of a net decrease in demand promissory notes required to finance ongoing operations of  24      $1,008,700 and an increase in investment tax credits receivable of approximately $51,400 offset by a decrease in accounts receivable of $78,500 and an increase of $107,200 in accounts payable and accrued liabilities.  Cash decreased by $62,600 in 2006.  Our cash balance at December 31, 2006 was approximately $23,200 compared to approximately $85,800 at December 31, 2005. During the period from January 1, 2007 to March 21, 2007, we raised $56,000 from an unrelated party pursuant to demand promissory notes bearing interest at 10% per annum.  In addition, we raised $45,967 from a related party pursuant to demand promissory notes bearing interest at 10% per annum.  These funds are not sufficient to satisfy the requirements of our plan of operations.  Consequently, the Company will require additional capital and increases to revenue on a profitable basis.  The Company cannot be certain that sufficient resources will be available to satisfy its liquidity requirements. Net Cash Flow from Operations:  During the year ended December 31, 2006, we used $708,666 in operations, compared to using $588,491 during the year ended December 31, 2005.  The use of cash in operations during the year ended December 31, 2006 resulted primarily from a net loss of $3,144,279 partially offset by depreciation of $7,573, non-cash compensation expense of $200,543, non-cash interest expense of $526,370, non-cash financing fees of $18,811, non-cash consulting fees of $844,891, loss on extinguishment and modification of debt of $550,743 and net change in non-cash working capital of $286,682.   During the year ended December 31, 2005, the use of cash in operations resulted from a net loss of $1,105,663 or $1,285,739 excluding a recovery of non-cash compensation expense of $180,076 and then partially offset by depreciation of $13,773, non-cash interest of $59,235, non-cash consulting fees of $511,105 and a net change in non-cash working operating capital of $113,135. Net Cash Used in Investing Activities: During the year ended December 31, 2006, we invested $4,065 in property and equipment compared to $6,503 invested during the year ended December 31, 2005. Net Cash From Financing Activities:  During the year ended December 31, 2006, net cash provided by financing activities was $638,501 compared to $686,192 for the year ended December 31, 2005.  During the year ended December 31, 2006, we raised $516,528 from the issuance of promissory notes and repaid $45,988. In addition, we raised $174,550 in proceeds net of cash-based issuance costs for common stock at $0.10 per share.  During the ended December 31, 2005, we raised $783,237 from the issuance of promissory notes and repaid $111,745.  In addition, we raised $14,700 in proceeds net of cash-based issuance costs for common stock at $0.30 per share.  For information concerning our capital requirements see Plan of Operation above. During the period from January 1, 2007 to March 21, 2007, we raised $56,000 from an unrelated party pursuant to demand promissory notes bearing interest at 10% per annum.  In addition, we raised $45,967 from a related party pursuant to demand promissory notes bearing interest at 10% per annum. Commitments: Operating lease The Company has entered into an operating lease agreement for office space that expires on December 31, 2007.  The future minimum lease payments including operating costs are as follows:  YearAmount200788,004Total$88,004   25      Investor relations and communications services  Pursuant to the terms of a service agreement with an unrelated party to provide investor relations and communications services to the Company, the Company is obligated to make monthly payments of $10,000 to December 31, 2007.  For the period to June 11, 2007, the Company can elect to make the monthly payments in cash and shares of common stock calculated at a price of $0.15 per share provided that the cash component of each monthly payment is at least $5,000.  Subsequent to December 31, 2006, the consultant agreed to modify the service agreement to allow the Company make the monthly payments of $10,000 entirely in stock for a five month period commencing on January 12, 2007.  Pursuant to the terms of a consulting agreement with an unrelated party to provide investor relations services for the Company, the Company is obligated to make cash payments of $6,000 per month for the period from January 1, 2007 to July 31, 2007.  Under anti-dilution provisions in the agreement, the Company has agreed to issue additional shares of common stock to the consultant for a period of thirty-six months after termination of the agreement.  Under these anti-dilution provisions, the total number of shares of common stock issued to the consultant will total 4.99% of the issued and outstanding shares of the Company.  26       Item 7.Financial Statements.            Consolidated Financial Statements of  DATAJUNGLE SOFTWARE INC.  Years ended December 31, 2006 and 2005                            27


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28


DATAJUNGLE SOFTWARE INC. Consolidated Balance Sheets  December 31, 2006 and 2005 (In U.S. dollars) ________________________________________________________________________________________ 2006 2005 ________________________________________________________________________________________ Assets Current assets: Cash and cash equivalents $ 23,157 $ 85,802 Accounts receivable (note 3) 105,131 183,622 Investment tax credits receivable 127,792 76,435 Contracts-in-process - 5,677 Prepaid expenses (notes 7(e) and 9(b)) 237,185 249,126 ________________________________________________________________________________________ 493,265 600,662 Deferred consulting services (note 9(b)) - 478,322 Property and equipment (note 4) 4,550 7,970 ________________________________________________________________________________________ $ 497,815 $ 1,086,954 ________________________________________________________________________________________  Liabilities and Stockholders Deficiency Current liabilities: Accounts payable (note 5) $ 237,463 $ 183,871 Accrued liabilities (note 6) 474,157 420,591 Promissory notes payable (note 7) 112,620 788,460 Promissory notes payable to a related party (note 8) 180,625 513,500 Deferred revenue 39,044 34,284 ________________________________________________________________________________________ 1,043,909 1,940,706 Stockholders deficiency (note 9): Preferred stock, $0.001 par value. Authorized 10,000,000 shares; issued and outstanding Nil shares at December 31, 2006 and December 31, 2005   Common stock, $0.001 par value. Authorized 300,000,000; issued and outstanding 30,730,549 shares at December 31, 2006 and 17,650,340 shares at December 31, 2005 30,731 17,651 Common stock to be issued for services and other obligations (notes 7(e) and 9(a)) 29,050 31,000 Additional paid-in capital 6,683,592 3,254,619 Accumulated other comprehensive loss (201,925) (213,759) Deficit (7,087,542) (3,943,263) ________________________________________________________________________________________ (546,094) (853,752) Basis of presentation (note 2(a)) Guarantees and commitments (note 13) Subsequent events (note 18) ________________________________________________________________________________________ $ 497,815 $ 1,086,954 ________________________________________________________________________________________  See accompanying notes to consolidated financial statements.


29


DATAJUNGLE SOFTWARE INC. Consolidated Statements of Operations  For the years ended December 31, 2006 and 2005 (In U.S. dollars)  ________________________________________________________________________________________ 2006 2005 ________________________________________________________________________________________  Revenues: Products $ 82,706 $ 314,599 Services 418,532 273,610 ________________________________________________________________________________________ 501,238 588,209  Cost of revenues: Cost of products 7,990 5,162 Cost of services 106,562 45,473 ________________________________________________________________________________________ 114,552 50,635  ________________________________________________________________________________________ Gross profit 386,686 537,574  Expenses: General and administrative 1,351,538 850,831 Research and development (note 10) 490,364 242,188 Sales and marketing 591,244 465,230 Depreciation of property and equipment 7,573 13,773 ________________________________________________________________________________________ 2,440,719 1,572,022 ________________________________________________________________________________________ (2,054,033) (1,034,448)  Other expenses: Interest expense (526,792) (61,251) Loss on extinguishment of debt (notes 7(a) and 7(c)) (508,486) - Loss on modification of debt (note 8(b)) (42,257) - Foreign exchange loss (12,711) (9,964) ________________________________________________________________________________________ (1,090,246) (71,215) ________________________________________________________________________________________ Net loss $ (3,144,279) $ (1,105,663) ________________________________________________________________________________________  Loss per common share - basic and diluted (note 12) $ (0.11) $ (0.06) ________________________________________________________________________________________  Weighted average common shares outstanding 27,441,456 17,389,394 ________________________________________________________________________________________  See accompanying notes to consolidated financial statements.


30





DATAJUNGLE SOFTWARE INC. Consolidated Statements of Changes in Stockholders Deficiency and Comprehensive Loss  For the years ended December 31, 2006 and 2005 (In U.S. dollars) NumberCommon
stock
amountShare
subscriptions
receivedCommon stock to be issued for servicesAdditional
paid-in
capitalDeficitAccumulated
other
comprehensive
lossTotalBalances at December 31, 200417,281,173$
17,281$
35,000$
$
2,122,346$
(2,837,600)$   (183,180)$    (846,153)Issued at $0.30 per share for subscriptions received in prior year (note 9(a))116,667117(35,000)34,883Issued for cash at $0.30 per share (note 9(a))50,0005014,95015,000Issued at $0.63 per share for services (notes 9(a) and 9(b))200,000200125,800126,000Issued at $0.30 per share for services (note 9(a))2,5003747750Recovery of share issuance costs (note 9(a))1,1841,184Issuance of 200,000 Series A warrants (note 9(b))114,677114,677Issuance of 1,500,000 Series A warrants (note 9(b))982,198982,198100,000 common shares to be issued for services (note 9(a))31,00031,000Stock options issued to employees and modification of options issued to employees (note 9(c))(180,076)(180,076)Intrinsic value of beneficial conversion feature on promissory notes payable (note 7(c))37,91037,910Comprehensive loss:Net loss(1,105,663)(1,105,663)Currency translation adjustment(30,579)(30,579)Comprehensive loss(1,136,242)Balances at December 31, 200517,650,340$
17,651$
$
31,000$
3,254,619$
(3,943,263)$    (213,759)$    (853,752)  See accompanying notes to consolidated financial statements.


31


DATAJUNGLE SOFTWARE INC. Consolidated Statements of Changes in Stockholders Deficiency and Comprehensive Loss  For the years ended December 31, 2006 and 2005 (In U.S. dollars) NumberCommon
stock
amountShare
subscriptions
receivedCommon stock to be issued for servicesAdditional
paid-in
capitalDeficitAccumulated
other
comprehensive
lossTotalBalances at December 31, 200517,650,340$
17,651$
$  31,000$
3,254,619$
(3,943,263)$   (213,759)$ (853,752)Cancellation of common stock for services (note 9(a))(31,000)31,000Issued on conversion of promissory notes (note 8(a))4,309,3024,309556,554560,863Issued on conversion of promissory notes (note 7(a))2,973,1672,973740,319743,292Issued on conversion of promissory notes (note 7(g))1,265,7531,266251,885253,151Issued on conversion of promissory notes (note 7(c))417,83641883,14983,567Issued on conversion of promissory notes (note 7(f))559,15155955,35655,915Issued for services (notes 9(a) and 9(b))1,500,0001,5001,500300,000Issued on cancellation of consulting agreement (note 9(b)305,00030566,79567,100Cancellation of consulting agreement (note 9(b))(67,100)(67,100)Issued for cash at $0.10 per share (note 9(a))1,750,0001,750173,250175,000155,000 warrants to be issued for services (note 9(b))22,57422,574Loss on extinguishment of debt (note 7(a))440,180440,180Loss on extinguishment of debt (note 7(c))68,30668,306Loss on modification of debt (note 8(b))42,25742,257Share issuance costs (note 9(a))(450)(450)Stock options issued to employees (note 9(c))200,543200,543  See accompanying notes to consolidated financial statements.


32


DATAJUNGLE SOFTWARE INC. Consolidated Statements of Changes in Stockholders Deficiency and Comprehensive Loss  For the years ended December 31, 2006 and 2005 (In U.S. dollars) NumberCommon
stock
amountShare
subscriptions
receivedCommon stock to be issued for servicesAdditional
paid-in
capitalDeficitAccumulated
other
comprehensive
lossTotalIntrinsic value of beneficial conversion feature on promissory notes payable (note 7(g))249,053249,053Intrinsic value of beneficial conversion feature on promissory notes payable (note 7(f))55,00055,000Intrinsic value of beneficial conversion feature on promissory notes payable (note 8(c))143,828143,828Intrinsic value of beneficial conversion feature on promissory notes payable (note 7(d))17,97417,974100,000 common shares to be issued pursuant to a financing agreement (note 7(e))13,94013,94033,333 common shares to be issued for services (note 9(b))6,6676,66742,214 common shares to be issued for services (note 9(b))8,4438,443Comprehensive loss:Net loss(3,144,279)(3,144,279)Currency translation adjustment11,83411,834Comprehensive loss(3,132,445)Balances at December 31, 200630,730,549$
30,731$
$
29,050$6,683,592$ (7,087,542)$  (201,925)$ (546,094)  See accompanying notes to consolidated financial statements.


33


DATAJUNGLE SOFTWARE INC. Consolidated Statements of Cash Flows  Years ended December 31, 2006 and 2005 (In U.S. dollars)  _________________________________________________________________________________________ 2006 2005 _________________________________________________________________________________________ Cash flows from operating activities: Net loss $ (3,144,279) $ (1,105,663) Items not involving cash: Depreciation of property and equipment 7,573 13,773 Interest expense 526,370 59,235 Compensation expense (recovery) 200,543 (180,076) Consulting fees 844,891 511,105 Financing fees 18,811 - Loss on extinguishment of debt 508,486 - Loss on modification of debt 42,257 - Change in non-cash operating working capital (note 16) 286,682 113,135 _________________________________________________________________________________________ Net cash used in operating activities (708,666) (588,491)  Cash flows from investing activities: Purchase of property and equipment (4,065) (6,503) _________________________________________________________________________________________  Net cash used in investing activities (4,065) (6,503)  Cash flows from financing activities: Net proceeds from promissory notes payable 372,700 688,370 Payments of promissory notes payable (45,988) (58,000) Proceeds from promissory notes payable to a related party 143,828 94,867 Payments of promissory notes payable to a related party - (53,745) Issuance of common stock for cash 175,000 15,000 Deposit paid to financing consultant (6,589) - Share issuance costs (450) (300) _________________________________________________________________________________________ Net cash provided by financing activities 638,501 686,192  Effects of exchange rates on cash and cash equivalents 11,585 (15,452)  _________________________________________________________________________________________ Net increase (decrease) in cash and cash equivalents (62,645) 75,746  Cash and cash equivalents, beginning of year 85,802 10,056  _________________________________________________________________________________________ Cash and cash equivalents, end of year $ 23,157 $ 85,802 _________________________________________________________________________________________ Supplemental cash flow information: Interest paid $ 625 $ 2,016 _________________________________________________________________________________________  See accompanying notes to consolidated financial statements.  34      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements  Years ended December 31, 2006 and 2005 (In U.S. dollars)   1. General:  DataJungle Software Inc. (the Company) was incorporated in the State of Washington on June 5, 1968 as Quad Metals Corporation (Quad).  Quad became a Nevada incorporated company on December 11, 2002 when it merged with its wholly owned subsidiary.  The Company was renamed to DataJungle Software Inc. on November 18, 2003.  The Company develops and markets a web-based front-end dashboard software product for leading business intelligence platforms.  The product allows an end-user to create highly visual and interactive dashboard views on top of their existing databases and data cubes without significant involvement from specialized software programmers.  2. Summary of significant accounting policies:  (a) Basis of presentation:  These consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America and include the accounts of DataJungle Software Inc. and its wholly-owned subsidiary, DataJungle Ltd.  All significant intercompany balances and transactions have been eliminated in consolidation.  The consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has minimal revenues, negative working capital of $550,644 as at December 31, 2006, and has incurred a loss of $3,144,279 and negative cash flow from operations of $708,666 for the year then ended.  As of December 31, 2006, the Company has an accumulated deficit of $7,087,542 which results in a stockholders deficiency of $546,094.  In addition, the Company expects to continue to incur operating losses for the foreseeable future and has no lines of credit or other financing facilities in place.  To date, the Company has been able to finance its operations on a month-to-month basis from investors who recognize the advancement of the Companys activities.  All of the factors above raise substantial doubt about the Companys ability to continue as a going concern.  Managements plans to address these issues include raising capital through the private placement of equity and renegotiating the repayment terms of accounts payable, accrued liabilities and promissory notes payable.  The Companys ability to continue as a going concern is subject to managements ability to successfully implement the above plans.  Failure to implement these plans could have a material adverse effect on the Companys financial position and or results of operations and may result in ceasing operations.  The consolidated financial statements do not include adjustments that would be required if the going concern assumption was not appropriate and consequently that the assets are not realized and the liabilities settled in the normal course of operations.  35      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 2  Years ended December 31, 2006 and 2005 (In U.S. dollars)   2. Summary of significant accounting policies (continued): (a) Basis of presentation (continued):  Even if successful in obtaining financing in the near term, the Company cannot be certain that cash generated from its future operations will be sufficient to satisfy its liquidity requirements in the longer term and it may need to continue to raise capital by selling additional equity or by obtaining credit facilities.  The Companys future capital requirements will depend on many factors, including, but not limited to, the market acceptance of its products, the level of its promotional activities and advertising required to generate product sales.  No assurance can be given that any such additional funding will be available or that, if available, it can be obtained on terms favourable to the Company.  (b) Use of estimates:  The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results may differ from those estimates.  Significant management estimates include assumptions used in assessing the recoverability of accounts receivable, calculating share-based compensation and estimating investment tax credits receivable.  Receipt of investment tax credits is dependent on review and acceptance of the eligibility of expenditures by taxing authorities in Canada.  (c) Comprehensive loss:  Comprehensive loss includes the net loss and other comprehensive loss (OCL).  OCL refers to changes in net assets from transactions and other events and circumstances other than transactions with stockholders.  These changes are recorded directly as a separate component of stockholders deficiency and excluded from net loss.  The only comprehensive loss item for the Company relates to foreign currency translation adjustments pertaining to the translation of the financial statements of the Companys subsidiary, from Canadian dollars, the functional currency of the subsidiary, to U.S. dollars, the reporting and functional currency of the Company.  36      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 3  Years ended December 31, 2006 and 2005 (In U.S. dollars)   2. Summary of significant accounting policies (continued):  (d) Foreign currency translation:  The consolidated financial statements of the Company include the accounts of the Company in U.S. dollars and the accounts of its wholly owned subsidiary, translated into U.S. dollars using Financial Accounting Standards Boards Statement No. 52, Foreign Currency Translation for the translation of foreign currency operations.  The financial statements of the Companys subsidiary are measured using the Canadian dollar as its functional currency. Assets and liabilities have been translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Revenues and expenses have been translated into U.S. dollars using the average exchange rate for the period.  Gains and losses are reported as a separate component of accumulated other comprehensive loss.  (e) Revenue recognition:  For contracts requiring significant customization or services, the Company recognizes revenue using the completed contract method in accordance with the guidance in Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts.  Under the completed contract method, revenue is recognized in the period when all substantial obligations of the Company under the terms and conditions of a contract have been satisfied.  Cash receipts received in advance of the recognition of revenue and rights to advance payments are recorded in the balance sheet as deferred revenue.  Direct costs associated with a contract that has not been recognized as revenue are capitalized in the balance sheet as contracts in process.  A provision for contract losses is recognized as soon as the losses become evident.  For sales of product licenses, the Company recognizes revenue in accordance with Statement of Position 97-2, Software Revenue Recognition (SOP 97-2), as amended by Statement of Position 98-9, Software Revenue Recognition with Respect to Certain Transactions, issued by the American Institute of Certified Public Accountants.  Revenue from sale of product licenses is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectibility is probable.  Revenue from product support contracts is recognized ratably over the life of the contract.  Revenue from services is recognized at the time such services are rendered.  37      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 4  Years ended December 31, 2006 and 2005 (In U.S. dollars)   2. Summary of significant accounting policies (continued):  (e) Revenue recognition (continued):  For contracts with multiple elements such as product licenses, product support and services, the Company follows the residual method.  Under this method, the total fair value of the undelivered elements of the contract, as indicated by vendor specific objective evidence, is deferred and subsequently recognized in accordance with the provisions of SOP 97-2.  The difference between the total contract fee and the amount deferred for the undelivered elements is recognized as revenue related to the delivered elements.  Vendor specific objective evidence for support and consulting services is obtained from contracts where these elements have been sold separately.  Where the Company cannot determine the fair value of all the obligations, the revenue is deferred until such time as it can be determined or the element is delivered.  (f) Cash equivalents:  The Company considers cash equivalents to be highly liquid investments with original maturities of three months or less and restricted cash as it is available for use for current purposes.  (g) Property and equipment:  Property and equipment is stated at cost less accumulated depreciation.  Property under capital lease is initially recorded at the present value of the minimum lease payments at the inception of the lease.  Depreciation is provided over the estimated useful lives of the underlying assets on a straight-line basis using the following annual rates:  _____________________________________________________________________________________ Asset Useful life _____________________________________________________________________________________ Office equipment 3 years Computer hardware 3 years Computer software 2 years _____________________________________________________________________________________  (h) Leases:  Leases are classified as either capital or operating in nature.  Capital leases are those which substantially transfer the benefits and risk of ownership to the Company.  Assets acquired under capital leases are depreciated at the same rates as those described in note 2(g).  Obligations recorded under capital leases are reduced by the principal portion of lease payments.  The imputed interest portion of lease payments is charged to expense.  38      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 5  Years ended December 31, 2006 and 2005 (In U.S. dollars)   2. Summary of significant accounting policies (continued):  (i) Research and development:  Costs related to research, design and development of software products are charged to research and development expense as incurred unless they meet generally accepted criteria for deferral and amortization.  Software development costs incurred prior to the establishment of technological feasibility do not meet these criteria and are expensed as incurred.  Research costs are expensed as incurred.  To date, the Company has not capitalized any software development costs.  (j) Investment tax credits:  Investment tax credits are accounted for using the cost reduction approach whereby they are recorded as a reduction of the related expense or the cost of the assets acquired when there is reasonable assurance that they will be realized.  (k) Advertising:  Advertising costs are expensed as incurred.  Advertising costs amounted to $Nil for the year ended December 31, 2006 (2005 - $2,161).  (l) Income taxes:  Deferred income taxes are determined using the asset and liability method, whereby deferred income tax is recognized on temporary differences using enacted tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Temporary differences between the carrying values of assets or liabilities used for tax purposes and those used for financial reporting purposes arise in one period and reverse in one or more subsequent periods.  In assessing the realizability of deferred tax assets, management considers known and anticipated factors impacting whether some portion or all of the deferred tax assets will not be realized.  To the extent that the realization of deferred tax assets is not considered to be more likely than not, a valuation allowance is provided.  39      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 6  Years ended December 31, 2006 and 2005 (In U.S. dollars)   2. Summary of significant accounting policies (continued):  (m) Stock-based compensation:  Effective January 1, 2006, the Company adopted the provisions of Financial Accounting Standards Board Statement No. 123R Share-Based Payment (SFAS 123R) to account for its stock options.  SFAS 123R requires all share-based payments, including stock options granted to employees by the Company, to be recognized in the Statement of Operations based on the fair value of the share-based payments at the date of grant.  For purposes of estimating the grant date fair value of stock options, the Company uses the Black Scholes options pricing model and has elected to treat awards with graded vesting as a single award.   The fair value is recognized as compensation expense on a straight-line basis over the requisite service period, which in the Companys circumstances is the stated vesting period of the award, provided that total compensation expense recognized at least equals the pro rata fair value of the award that has vested.  The Company has adopted the modified prospective method of applying the provisions of SFAS 123R.  Under the modified prospective method, the Company recognizes compensation expense based on the requirements of SFAS 123R for all share-based payments granted after the effective date of SFAS 123R.  In addition, compensation expense is recognized, subsequent to the effective date of SFAS 123R, for the remaining portion of the vesting period for outstanding awards granted prior to the effective date of SFAS 123R.  Under the modified prospective method, prior periods are not adjusted and the Company continues to provide pro forma disclosure for prior periods as presented below.  For periods to December 31, 2005, the Company applied the intrinsic value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation an interpretation of APB Opinion No. 25, to account for its stock options for employees.  Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price.  Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation and SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure, an amendment of FASB Statement No. 123, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans.  For periods to December 31, 2005, the Company elected to apply the intrinsic-value based method of accounting described above and adopted only the disclosure requirements of SFAS 123, as amended.        40      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 7  Years ended December 31, 2006 and 2005 (In U.S. dollars)   2. Summary of significant accounting policies (continued): The following table illustrates the effect on net loss if the fair value-based method had been applied to all outstanding and unvested awards in each period. _______________________________________________________________________________________ 2005 _______________________________________________________________________________________ Net loss, as reported $ (1,105,663)  Deduct stock-based employee compensation expense recovery included in reported net loss (180,076)  Deduct total stock-based employee compensation expense determined under fair-value-based method for all awards (378,819) _______________________________________________________________________________________  Pro forma net loss $ (1,664,558) _______________________________________________________________________________________  Loss per common share: Basic and diluted  as reported $ (0.06) Basic and diluted  pro forma (0.10) _______________________________________________________________________________________  (n)  Deferred consulting services:  Deferred consulting services represent the portion of prepaid non-cash consulting fees for services to be rendered in subsequent periods. Prepaid non-cash consulting fees related to services to be rendered within twelve months are included in prepaid expenses on the balance sheet.  These costs will be charged to expenses as the services are rendered.  If for any reason circumstances arise which would indicate that the services will not be performed in the future, these prepaid non-cash consulting fees will be charged to expenses immediately.  (o) Impairment or disposal of long-lived assets:  The Company accounts for impairment or disposal of long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.  This Statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its undiscounted estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.  Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.  41      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 8  Years ended December 31, 2006 and 2005 (In U.S. dollars)   3. Accounts receivable: __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________ Trade accounts receivable $ 103,660 $ 177,615 Other 1,471 6,007 __________________________________________________________________________________________ $ 105,131 $ 183,622 __________________________________________________________________________________________  All trade accounts receivable are due in U.S. dollars.  4. Property and equipment:  __________________________________________________________________________________________ 2006 Accumulated Net book Cost depreciation value __________________________________________________________________________________________  Office equipment $ 1,572 $ 1,311 $ 261 Computer hardware 20,142 15,996 4,146 Computer software 4,753 4,610 143 __________________________________________________________________________________________  $ 26,467 $ 21,917 $ 4,550 __________________________________________________________________________________________   __________________________________________________________________________________________ 2005 Accumulated Net book Cost depreciation value __________________________________________________________________________________________  Office equipment $ 7,367 $ 6,580 $ 787 Computer hardware 37,177 31,472 5,705 Computer software 10,864 9,386 1,478 __________________________________________________________________________________________  $ 55,408 $ 47,438 $ 7,970 __________________________________________________________________________________________  Property and equipment that has been fully depreciated and was no longer in use at December 31, 2006, has been written off by reducing the cost of property and equipment and related accumulated depreciation by $34,174.  42      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 9  Years ended December 31, 2006 and 2005 (In U.S. dollars)   5. Accounts payable: __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________  Trade accounts payable $ 50,852 $ 18,935 Professional fees 110,704 86,332 Advertising fees 5,184 5,187 Employee related payables 37,207 33,285 Other 33,516 40,132 __________________________________________________________________________________________ $ 237,463 $ 183,871 __________________________________________________________________________________________  Included in accounts payable is $27,544 due to a corporation controlled by an officer and director of the Company for consulting services rendered in 2004.  6. Accrued liabilities:  __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________  Employee related accruals $ 352,957 $ 217,501 Interest 12,601 144,885 Professional fees 57,130 38,693 Consulting fees 18,000  Financing fees 3,726 3,726 Rent 28,323 15,555 Other 1,420 231 __________________________________________________________________________________________ $ 474,157 $ 420,591 __________________________________________________________________________________________        43      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 10  Years ended December 31, 2006 and 2005 (In U.S. dollars)   7. Promissory notes payable:  __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________  Promissory notes, payable on demand, bearing interest at 12% per annum, secured by an assignment of accounts receivable (note 7(a)) $  $ 680,370  Promissory note, payable on demand, bearing interest at 10% per annum, secured by an assignment of accounts receivable (note 7(b))  41,000  Promissory notes, payable on June 30, 2006, bearing interest at 12% per annum, secured by an assignment of accounts receivable (note 7(c)) 20,012 67,090  Promissory note, payable on demand, bearing interest at 10% per annum, secured by an assignment of accounts receivable and a floating charge on all assets of the Company (note 7(d)) 20,000   Promissory note, payable on June 30, 2007, denominated in Canadian dollars (C$100,000), bearing interest at 12% per annum secured by an assignment of investment tax credits receivable (note 7(e)) 72,608  __________________________________________________________________________________________ $ 112,620 $ 788,460 __________________________________________________________________________________________  Additional terms and conditions related to the promissory notes payable are as follows: (a) On January 24, 2006, the lender or its assignees agreed to convert the $680,370 of promissory notes together with accrued interest to January 15, 2006 of $62,922 into 2,973,167 shares of common stock of the Company and 2,973,167 warrants to purchase 2,973,167 shares of common stock of the Company.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010. On January 24, 2006, the 2,973,167 shares of common stock had a fair value of $654,097 based on a share price of $0.22 per share on that date.  On the same date, the fair value of the 2,973,167 warrants was $529,375 using the Black Scholes option pricing model with the following assumptions: expected dividend yield 0%; risk-free interest rate of 4.35%; expected volatility of 120%; and an expected life of 4.92 years.  As a consequence, the Company recognized a loss of $440,180 on the extinguishment of this debt. Accrued interest of $Nil (December 31, 2005 - $59,675) has been included in accrued liabilities at December 31, 2006.  44      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 11  Years ended December 31, 2006 and 2005 (In U.S. dollars)   7. Promissory notes payable (continued): (b) On January 9, 2006, the Company repaid $41,000 to the lender together with $625 in accrued interest. Accrued interest of $Nil (December 31, 2005 - $504) has been included in accrued liabilities at December 31, 2006. (c) During 2005, the Company received cash consideration of $105,000 in exchange for the issuance of 12% promissory notes.  The promissory notes and accrued interest were convertible, at the lenders option, into shares of common stock of the Company at a price of $0.20 per share plus a warrant for the purchase of the number of shares equal to 50% of the number of shares received by the lender on conversion.  The warrant is exercisable at $0.30 per share and expires on December 31, 2010. Accrued interest of $4,085 (December 31, 2005 - $782) has been included in accrued liabilities at December 31, 2006. At the date of issuance, the conversion feature of these promissory notes was in-the-money.  The intrinsic value of this beneficial conversion feature was $37,910.  In accordance with EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, this amount was recorded as additional paid-in capital.  The promissory notes were accreted to their face value in 2006 through a charge to interest expense of $37,910. On April 19, 2006, $80,000 of the promissory notes together with accrued interest of $3,567 were assigned to another party.  Subsequent to this assignment, the other party converted the promissory notes and accrued interest into 417,836 shares of common stock of the Company and 208,918 warrants to purchase 208,918 shares of common stock of the Company in accordance with the original conversion provisions.  In addition, the Company agreed to issue an additional 208,918 warrants to purchase 208,918 shares of common stock of the Company.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010. The fair value of the 208,918 additional warrants was $68,306 using the Black Scholes option pricing model with the following assumptions: expected dividend yield 0%; risk-free interest rate of 4.9%; expected volatility of 124%; and an expected life of 4.71 years.  As a consequence, the Company recognized a loss of $68,306 on the extinguishment of this debt. On May 19, 2006, the Company entered into an agreement to extend the maturity date of $25,000 of the promissory notes to June 30, 2006.  As consideration for this extension, the Company agreed to pay $1,250 in additional interest and to repay the principal and accrued interest from the proceeds of any financing in excess of $250,000 or at the rate of 10% of the cash proceeds from sales or any financing less than $250,000.   At June 30, 2006, the Company had not repaid or negotiated a further extension of the maturity date.  Subsequent to June 30, 2006, the Company repaid $4,988 to the lender.  On September 12, 2006, the lender assigned the promissory note and accrued interest to another party.  However, the Company has failed to make any additional payments of principal or interest to this other party.  Consequently, the Company is in default of the terms and conditions of this promissory note.   45      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 12  Years ended December 31, 2006 and 2005 (In U.S. dollars)   7. Promissory notes payable (continued): (d) In October 2006, the Company received cash consideration of $20,000 in exchange for the issuance of a 10% promissory note.  The promissory note and accrued interest are convertible, at the lenders option, into shares of common stock of the Company at a price of $0.10 per share plus a warrant for the purchase of the number of shares equal to 50% of the number of shares received by the lender on conversion.  The warrant is exercisable at $0.30 per share and expires on December 31, 2010. Accrued interest of $438 (December 31, 2005 - $Nil) has been included in accrued liabilities at December 31, 2006.  At the date of issuance, the conversion feature of the promissory note was in-the-money.  The intrinsic value of this beneficial conversion feature was $17,974.  In accordance with EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, this amount was recorded as additional paid-in capital.  The promissory note was accreted to its face value through a charge to interest expense of $17,974 for the three months ended December 31, 2006.  (e) In December 2006, the Company received cash consideration of $86,333 in exchange for the issuance of a 12% promissory note.  $77,227 of the promissory note is due on the earlier of receipt of investment tax credits receivable by the Company or June 30, 2007.  The balance of the promissory note together with accrued interest is due on June 30, 2007. As consideration for services rendered arranging the promissory note, the Company paid the lender a fee of $8,633.  Of this amount, $416 has been included as a charge to interest expense for the three months ended December 31, 2006.  The balance has been included in prepaid expenses at December 31, 2006 and will be included as a charge to interest expense for the period from January 1, 2007 to June 30, 2007. In addition, the Company agreed to grant 100,000 shares of common stock of the Company to the lender. In accordance with APB 14 Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants, $72,393 of the cash consideration received by the Company has been allocated to the promissory note and $13,940 has been allocated to the shares of common stock based on their relative fair values at the date of issuance of the promissory note.  The promissory note is being accreted to its face value through a periodic charge to interest expense over the period to June 30, 2007.  In 2006, $671 was charged to interest expense pursuant to this accretion. Accrued interest of $254 (December 31, 2005 - $Nil) has been included in accrued liabilities at December 31, 2006. (f) During the three months ended June 30, 2006, the Company received $55,000 in exchange for the issuance of 10% demand promissory notes.  These promissory notes were convertible, at the lenders option, into shares of common stock of the Company at a price of $0.10 per share plus a warrant for the  46      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 13  Years ended December 31, 2006 and 2005 (In U.S. dollars)    7. Promissory notes payable (continued):  (f) purchase of the number of shares equal to 50% of the number of shares received by the lender on conversion.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.  Accrued interest of $Nil (December 31, 2005 - $Nil) has been included in accrued liabilities at December 31, 2006.  At the date of issuance, the conversion feature of the promissory notes was in-the-money.  The intrinsic value of this beneficial conversion feature was $55,000.  In accordance with EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, this amount was recorded as additional paid-in capital.  The promissory notes were accreted to their face value through a charge to interest expense of $55,000 for the three months ended June 30, 2006.  On August 2, 2006, the promissory notes together with accrued interest of $915 were converted into 559,151 shares of common stock of the Company and 279,575 warrants to purchase 279,575 shares of common stock of the Company.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.  (g) During the six months ended June 30, 2006, the Company received $220,000 in exchange for the issuance of 12% demand promissory notes.  In addition, the Company issued $12,000 of 12% demand promissory notes for consulting services and $18,811 for financing fees.  These promissory notes were convertible, at the lenders option, into shares of common stock of the Company at a price of $0.20 per share plus a warrant for the purchase of the number of shares received by the lender on conversion.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.  At the date of issuance, the conversion feature of the promissory notes was in-the-money.  The intrinsic value of this beneficial conversion feature was $249,053.  In accordance with EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, this amount was recorded as additional paid-in capital.  The promissory notes were accreted to their face value in 2006 through a charge to interest expense of $249,053.  On April 19, 2006, the lender assigned the $250,811 of 12% demand promissory notes together with accrued interest of $2,340 to another party.  Subsequent to this assignment, the other party converted the promissory notes and accrued interest into 1,265,753 shares of common stock of the Company and 1,265,753 warrants to purchase 1,265,753 shares of common stock of the Company.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.   47      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 14  Years ended December 31, 2006 and 2005 (In U.S. dollars)    8. Promissory notes payable to a related party  __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________  Promissory note, denominated in Canadian dollars (C$549,200) on seven days notice, no fixed repayment terms, bearing interest at 10% per annum compounded semi-annually until September 16, 2003 and non-interest bearing thereafter, convertible at the option of the holder into common stock of the Company at any time (note 8(a)). $ - $ 472,227  Promissory notes, payable on demand, denominated in Canadian dollars (C$48,000), bearing interest at 10% per annum compounded annually, secured by an assignment of accounts receivable (note 8(b)). 41,188  41,273  Promissory notes, payable on demand, denominated in Canadian dollars (C$162,500), bearing interest at 10% per annum compounded annually, secured by an assignment of accounts receivable (note 8(c)). 139,437 - __________________________________________________________________________________________ $ 180,625 $ 513,500 __________________________________________________________________________________________  The promissory notes payable to a related party are also secured by a general security agreement representing a first floating charge on all of the assets of the Company.  Additional terms and conditions related to the promissory notes payable to a related party are as follows:  (a) Under the terms of the 10% promissory note, the Company could repay all amounts of principal and interest at any time without penalty or bonus.  The promissory note was denominated in Canadian dollars.  In accordance with the terms of a Memorandum of Agreement dated February 21, 2003, the lender had a right to convert all amounts of principal and interest to common stock of the Company at the rate of one common share for each $0.15 Canadian of debt converted or at such lower rate paid by any third party dealing at arms length with the Company.  In addition, as long as at least $100,000 Canadian of principal and interest was outstanding, the lender had certain rights related to management and direction of the Company.  The lender had agreed that the promissory note together with accrued interest would be convertible, at the lenders option, into 4,309,302 common shares of the Company.   Included in accrued liabilities at December 31, 2006 is $Nil (December 31, 2005  $83,573) in accrued interest on this note. On January 24, 2006, the lender assigned $183,839 of the promissory note and accrued interest to a director of the Company and a corporation controlled by a director of the Company and assigned the balance of the promissory note and accrued interest of $377,024 to unrelated parties.  Subsequent to   48       DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 15  Years ended December 31, 2006 and 2005 (In U.S. dollars)    8. Promissory notes payable to a related party (continued):  (a) the assignment of the promissory note and accrued interest, the director and the corporation controlled by a  director of the Company converted the $183,839 to 1,412,504 common shares of the Company and the unrelated parties converted the $377,024 to 2,896,798 common shares of the Company.  (b) During 2005, the Company received cash consideration of $41,122 in exchange for the issuance of 10% promissory notes.  Accrued interest of $4,477 (December 31, 2005 - $351) has been included in accrued liabilities at December 31, 2006.  On April 19, 2006, the lender agreed to modify the terms of these promissory notes by waiving the repayment and security provisions related to specific customer invoices.  As consideration for the modification, the Company agreed to permit the lender, at the lenders option, to convert the promissory notes and accrued interest into shares of common stock of the Company at a price of $0.20 per share plus a warrant for the purchase of the number of shares received by the lender on conversion.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.  In accordance with EITF 96-19, Debtors Accounting for a Modification or Exchange of Debt Instruments, this modification has been accounted for as an extinguishment of the old debt and the creation of new debt.  On April 19, 2006, the outstanding principal on the promissory notes was $42,257.  On the same date, the conversion rights granted as a result of the modification of the promissory notes had a fair value in excess of the outstanding principal.  As a consequence, the Company recognized a loss of $42,257 on the modification of this debt.  (c) During 2006 the Company received cash consideration of $143,828 in exchange for the issuance of 10% promissory notes.  Accrued interest of $3,347 has been included in accrued liabilities at December 31, 2006.  The promissory notes and accrued interest are convertible, at the lenders option, into shares of common stock of the Company at a price of $0.10 per share plus a warrant for the purchase of the number of shares equal to 50% of the number of shares received by the lender on conversion.  The warrant is exercisable at $0.30 per share and expires on December 31, 2010.  At the date of issuance, the conversion feature of some of the promissory notes was in-the-money.  The intrinsic value of this beneficial conversion feature was $143,828.  In accordance with EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, this amount was recorded as additional paid-in capital.  The promissory notes were accreted to their face value through a charge to interest expense of $143,828 for the year ended December 31, 2006.  49       DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 16  Years ended December 31, 2006 and 2005 (In U.S. dollars)    9. Stockholders deficiency:  (a) Common stock transactions:  During the year ended December 31, 2006, the Company issued 13,080,209 shares of common stock pursuant to the transactions described below:  On August 2, 2006, $55,000 of promissory notes together with accrued interest of $915 were converted into 559,151 shares of common stock of the Company and 279,575 warrants to purchase 279,575 shares of common stock of the Company.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.  Issued 1,500,000 shares of common stock of the Company to an unrelated party to provide investor relations services for the Company for the period to July 31, 2007.  During July and August 2006, the Company issued 1,750,000 shares of common stock of the Company at $0.10 per share and 875,000 warrants to purchase 875,000 shares of common stock of the Company at $0.30 per share for cash consideration of $175,000.  The warrants expire on December 31, 2010. On April 19, 2006, $250,811 of promissory notes payable together with accrued interest to April 19, 2006 of $2,340 were assigned to another party.  Subsequent to this assignment, the other party converted the promissory notes and accrued interest into 1,265,753 shares of common stock of the Company and 1,265,753 warrants to purchase 1,265,753 shares of common stock of the Company.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.  On April 19, 2006, $80,000 of promissory notes together with accrued interest to April 19, 2006 of $3,567 were assigned to another party.  Subsequent to this assignment, the other party converted the promissory notes and accrued interest into 417,836 shares of common stock of the Company and 208,918 warrants to purchase 208,918 shares of common stock of the Company in accordance with the original conversion provisions.  In addition, the Company agreed to issue an additional 208,918 warrants to purchase 208,918 shares of common stock of the Company.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.    50      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 17  Years ended December 31, 2006 and 2005 (In U.S. dollars)    9. Stockholders deficiency (continued):  (a) Common stock transactions:  On January 24, 2006, $183,839 of the promissory note payable to a related party and accrued interest thereon was assigned to a director of the Company and a corporation controlled by a director of the Company.  The balance of the promissory note payable to a related party and accrued interest of $377,024 was assigned to unrelated parties.  Subsequent to the assignment of the promissory notes payable to a related party and accrued interest, the director and the corporation controlled by a director of the Company converted the $183,839 to 1,412,504 shares of common stock of the Company and the unrelated parties converted the $377,024 to 2,896,798 shares of common stock of the Company.  On January 24, 2006, $680,370 of promissory notes payable together with accrued interest to January 15, 2006 of $62,922 was assigned to a number of unrelated parties.  Subsequent to the assignment, the promissory notes and accrued interest were converted to 2,973,167 shares of common stock of the Company and 2,973,167 warrants to purchase 2,973,167 shares of common stock of the Company.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.  On January 24, 2006, in connection with the cancellation of a consulting agreement to provide investor communication and public relations services to the Company, the Company issued 305,000 shares of common stock to the consultant or its assignees at $0.22 per share.  During the year ended December 31, 2006, cash share issuance costs of $450 were incurred and recorded as a debit to additional paid-in-capital.  During the year ended December 31, 2005, a recovery of share issuance costs of $1,184 was recorded as a credit to additional paid-in capital.  The recovery of 1,184 is net of share issuance costs of $1,344, of which $300 was paid in cash.  During 2005, the Company issued 50,000 shares of common stock at $0.30 per share in exchange for cash consideration of $15,000.  During 2005, the Company also issued 116,667 shares of common stock at $0.30 per share in exchange for share subscriptions of $35,000 received during 2004 and 200,000 shares of common stock at $0.63 per share in exchange for previous commitments to issue shares.  In addition, the Company issued 2,500 shares of common stock at $0.30 per share to settle an obligation in the amount of $750 with respect to share issuance costs.          51      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 18  Years ended December 31, 2006 and 2005 (In U.S. dollars)    9. Stockholders deficiency (continued):  (a) Common stock transactions:  At December 31, 2005, $31,000 remained as a credit to common stock to be issued for services in stockholders deficiency with respect to an obligation to issue 100,000 shares of common stock at $0.31 per share for services rendered and recognized in general and administrative expenses in 2005.  In March 2006, the provider of the services agreed to waive the right to receive the 100,000 shares of common stock.  As a consequence, the $31,000 credit to common stock to be issued for services was transferred to additional paid-in-capital.  (b)  Warrants and common stock pursuant to consulting agreements:  On December 12, 2006, the Company entered into a service agreement with an unrelated party to provide investor relations and communications services to the Company for a twelve month period.  As compensation for these services, the Company agreed to issue 155,000 warrants for the purchase of common stock of the Company at $0.30 per share expiring on December 31, 2010.  In addition, the Company agreed to make monthly payments of $10,000.  For the first six months of the agreement, the Company can elect to make the monthly payments in cash and shares of common stock calculated at a price of $0.15 per share provided that the cash component of each monthly payment is at least $5,000 (note (19)).  The fair value of the 155,000 warrants was calculated as $22,574 using the Black Scholes option pricing model with thefollowing assumptions:  expected dividend yield 0%; risk-free interest rate of 4.56%; expected volatility of 107%, and an expected life of 4.05 years.  Of this amount, $1,175 has been included in general and administrative expense for the year ended December 31, 2006.  The balance of $21,399 has been included in prepaid expenses as at December 31, 2006 and will be included in general and administrative expense on a straight-line basis as services are rendered for the period from January 1, 2007 to December 11, 2007.  The Company elected to make the initial payment pursuant to this agreement in cash of $5,000 and 33,333 shares of common stock of the Company.  At December 31, 2006, the 33,333 shares of common stock had a fair value of $6,667 which has been included in common stock to be issued for services and other obligations at December 31, 2006.  Of the total obligation of $11,667, $7,151 has been included in general and administrative expense for the year ended December 31, 2006.  The balance of $4,516 has been included in prepaid expenses as at December 31, 2006 and will be included in general and administrative expense in January 2007.  On August 14, 2006, the Company entered into a consulting agreement with an unrelated party to provide investor relations services for the Company for the period to July 31, 2007.  As consideration for these services, the Company issued 1,500,000 shares of common stock of the Company and made a cash payment of $3,500 upon signing of the agreement.  In addition, the Company agreed to make  52      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 19  Years ended December 31, 2006 and 2005 (In U.S. dollars)    9. Stockholders deficiency (continued):  (b)  Warrants and common stock pursuant to consulting agreements:  additional cash payments of $72,000 over the term of the agreement.  Under anti-dilution provisions in the agreement, the Company has agreed to issue additional shares of common stock to the consultant for a period of thirty-six months after termination of the agreement.  Under these anti-dilution provisions, the total number of shares of common stock issued to the consultant will total 4.99% of the issued and outstanding shares of the Company.  The fair value of the 1,500,000 shares of common stock has been estimated at $300,000 on the date the shares were issued.  At December 31, 2006, the Company was obligated to issue an additional 42,214 shares of common stock pursuant to the anti-dilution provisions.  The fair value of these additional shares has been estimated at $8,443 and has been included in common stock to be issued for services and other obligations at December 31, 2006.  Of the total estimated fair value of $308,443, $122,146 has been included in general and administrative expenses for the year ended December 31, 2006.  The balance of $186,297 has been included in prepaid expenses at December 31, 2006 and will be recognized as an expense on a straight-line basis as services are rendered from January 1, 2007 to July 31, 2007.  On November 22, 2004, the Company entered into a consulting agreement with an unrelated party to provide investor relations services to the Company for the period from November 22, 2004 to December 31, 2008.  As compensation for these services, the Company agreed to issue 3,000,000 warrants for the purchase of common stock at $0.50 per share expiring on December 31, 2009.  On January 17, 2005, the Company issued 1,500,000 Series A warrants and 1,500,000 Series B warrants pursuant to this consulting agreement.  The Series A warrants could be exercised at any time on or before December 31, 2009 at an exercise price of $0.50 per share or by means of a cashless exercise provision if there was no effective registration statement registering the resale of the underlying shares.  The fair value of the Series A warrants was calculated as $982,198 using the Black Scholes option pricing model with thefollowing weighted average assumptions:  expected dividend yield 0%; risk-free interest rate of 3.6%; expected volatility of 145%, and an expected life of 5.11 years.  Of this amount, $239,161 and $478,322 were included in prepaid expenses and deferred consulting services as at December 31, 2005, respectively.  The Series B warrants could be exercised at any time after July 31, 2006 at an exercise price of $0.50 per share or by means of a cashless exercise provision if there was no registration statement registering the resale of the underlying shares.  The Series B warrants could be exercised prior to July 31, 2006 if the Company had not terminated the consulting agreement and the Company had received at least $2,000,000 of investment from any and all sources during the period from July 1, 2004 to July 31, 2006.    53      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 20  Years ended December 31, 2006 and 2005 (In U.S. dollars)     9. Stockholders deficiency (continued):  (b) Warrants and common stock pursuant to consulting agreements:  In accordance with EITF 96-18 Accounting for Equity Instruments that are Issued to other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, the lowest aggregate fair value of the Series B warrants was used for recognition purposes.  At December 31, 2005, no services had been rendered.  On January 24, 2006, the Company cancelled the consulting agreement and included the balance of the prepaid expenses and deferred consulting services of $717,483 in general and administrative expenses (Year ended December 31, 2005 - $239,428).  On the same date, the Company cancelled the Series A and Series B warrants.   As compensation for cancellation of the Series A warrants, the Company issued 305,000 shares of common stock.    On January 24, 2006, the fair value of the 305,000 shares of common stock was $67,100 based on a share price of $0.22 per share on that date.  The $67,100 has been accounted for as a capital transaction.  Effective January 1, 2005, the Company entered into a consulting agreement with an unrelated party to provide investor communication and public relations services to the Company for the period from January 1, 2005 to December 31, 2005.  As compensation for these services, the Company issued 200,000 shares of common stock and 200,000 Series A warrants for the purchase of common stock at $0.50 per share expiring on December 31, 2009.  The fair value of the 200,000 shares of common stock was estimated at $126,000 based on a share price of $0.63 per share.  Of this amount $Nil was included in general and administrative expenses for the year ended December 31, 2006 (December 31, 2005 - $126,000).   The fair value of the 200,000 Series A warrants was calculated as $114,677 using the Black Scholes option pricing model with the following weighted average assumptions: expected dividend yield 0%; risk-free interest rate of 3.69%; expected volatility of 142%, and an expected life of 5 years.  Of this amount, $Nil was included in general and administrative expenses for the year ended December 31, 2006 (Year ended December 31, 2005 - $114,677).  (c) Stock option plan:  Under the Companys Stock Option Plan (the Plan), up to 5,000,000 shares of authorized but unissued common stock of the Company can be granted to officers, employees and consultants.  Options are granted with an exercise price equal to or greater than the stocks fair market value at the date of grant, vest  over a period of time as determined by the Board of Directors and expire no later than ten years from the date of vesting.  At December 31, 2006, there were 1,234,910 additional shares available for grant under the Plan.    54      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 21  Years ended December 31, 2006 and 2005 (In U.S. dollars)    9. Stockholders deficiency (continued):  (c) Stock option plan:  Effective January 1, 2006, the Company adopted the provisions of SFAS 123R to account for its stock options.  SFAS 123R requires that the fair value of stock options granted be recognized in the Statement of Operations based on the fair value of the stock options at the date of grant.  For purposes of estimating the grant date fair value of stock options, the Company uses the Black Scholes options pricing model based on certain assumptions including the expected term of the options, expected volatility of the underlying stock over the expected term of the options and the risk-free interest rate.  The expected term of the options has been estimated by calculating an average of the weighted average vesting period and the weighted average contractual term of the options.  Historical volatility of the Companys shares and historical volatility of other companies that operate in a similar business to the Company is used as a basis for projecting the expected volatility of the underlying stock.  The risk-free rate for the expected term of the options is based on the U.S. Treasury yield curve in effect at the time of grant.  The fair value is recognized as compensation expense on a straight-line basis over the requisite service period, which in the Companys circumstances is the stated vesting period of the award, provided that total compensation expense recognized at least equals the pro rata value of the award that has vested.  During the year ended December 31, 2006, there were 1,100,000 stock options granted to officers and directors and 545,000 stock options granted to employees.  During the year ended December 31, 2005, there were 160,000 stock options granted to employees.  The per share weighted-average fair value of the stock options granted to employees during the years ended December 31, 2006 and 2005 calculated using the Black Scholes option-pricing model and related weighted-average assumptions are as follows:   20062005Options granted1,645,000160,000Expected volatility125%133%Expected dividendsNilNilExpected term (years)4.06.0Risk-free rate4.48%4.02%Per share weighted
average grant date fair value$0.20$0.36      55       DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 22  Years ended December 31, 2006 and 2005 (In U.S. dollars)    9. Stockholders deficiency (continued):  (c) Stock option plan:  During the years ended June 30, 2003 and 2002, the Company modified the terms of certain stock options granted to employees to reduce the exercise price and/or extend the expiry date and to allow them to retain the awards upon a change in status from employee to non-employee.   As a result of these modifications, the Company was required to account for the modified options for periods prior to the effective date of SFAS 123R on January 1, 2006 using variable accounting as prescribed by APB 25.  For the year ended December 31, 2005, non-cash compensation recovery of $111,965, $57,770 and $10,341 has been included in research and development, general and administrative and sales and marketing expenses, respectively.  As a result of the adoption of SFAS 123R, no expense or recovery has been recognized in the Statement of Operations with respect to the modified options for the year ended December 31, 2006.  During the year ended December 31, 2006, there were no options granted to non-employees.  During the year ended December 31, 2005, there were 25,000 stock options granted to non-employees.  These options were forfeited in 2005 prior to the vesting date.  Consequently, there was no non-cash compensation expense in 2005 with respect to stock options granted to non-employees.  During the year ended December 31, 2006, a Director of the Company forfeited 100,000 stock options to purchase 100,000 common shares at $0.51 per share expiring at various dates up to June 14, 2012 and forfeited 50,000 stock options to purchase 50,000 common shares at $0.25 per share expiring at various dates up to January 31, 2012.  During the year ended December 31, 2006, employees forfeited 162,362 stock options to purchase 162,362 common shares at prices ranging from $0.13 to $0.25 per share expiring at various dates up to February 1, 2013.  During the year ended December 31, 2005, employees forfeited 300,000 stock options to purchase 300,000 common shares at $0.51 per share expiring at various dates up to March 31, 2012.  During the year ended December 31, 2005, Officers and Directors forfeited 500,000 stock options to purchase 500,000 common shares at $0.51 per share expiring at various dates up to June 14, 2012 and 21,000 stock options to purchase 21,000 common shares at $0.12 expiring on August 19, 2008.  56      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 23  Years ended December 31, 2006 and 2005 (In U.S. dollars)   9. Stockholders deficiency (continued):  (c) Stock option plan:  A summary of amounts recognized in the consolidated condensed financial statements with respect to the Plan is as follows:  20062005Amounts charged (recovered) against income, before income tax benefit$200,543($180,076)Amount of related income tax benefit recognized in incomeNilNil  The impact of adoption of SFAS 123R for the year ended December 31, 2006 was an increase in net loss of $200,543.  This increase in net loss had the impact of increasing the loss per share by $0.01.  A summary of share option activity under the Plan as of December 31, 2006 and changes during the year then ended is presented below:  __________________________________________________________________________________________ 2006 Options Weighted Weighted Aggregate Average           average intrinsic exercise remaining value price ($) contractual term (Years) __________________________________________________________________________________________ Options outstanding, January 1, 2006 2,432,452 $ 0.43 4.3 Granted 1,645,000 0.20 5.1 Forfeited (312,362) 0.33 - __________________________________________________________________________________________ Options outstanding, December 31, 2006 3,765,090 $ 0.36 4.4 $49,941 __________________________________________________________________________________________ Options exercisable, December 31, 2006 1,689,090 $ 0.40 3.4 $49,941 __________________________________________________________________________________________   57      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 24  Years ended December 31, 2006 and 2005 (In U.S. dollars)   9. Stockholders deficiency (continued):  (c) Stock option plan (continued):  The total fair value of shares vested during the year ended December 31, 2006 was $302,630 (December 31, 2005 - $426,322).  The following table summarizes information about stock options outstanding at December 31, 2006:  ______________________________________________________________________________________ Options Options Outstanding exercisable Weighted Weighted Weighted Number average average Number average Exercise outstanding remaining exercise exercisable exercise price at 12/30106 contractual term price at 12/31/06 price  ______________________________________________________________________________________ $ 0.009 180,150 1.6 years $ 0.009 180,150 $ 0.009 0.13 218,759 1.6 years 0.13 218,759 0.13 0.18 50,000 5.7 years 0.18 - 0.18 0.25 1,395,000 5.1 years 0.25 20,000 0.25 0.31 100,000 4.6 years 0.31 36,000 0.31 0.40 86,181 4.4 years 0.40 86,181 0.40 0.43 35,000 4.2 years 0.43 12,000 0.43 0.51 1,500,000 4.5 years 0.51 1,002,000 0.51 0.60 125,000 4.3 years 0.60 90,500 0.60 0.65 50,000 4.2 years 0.65 33,500 0.65 0.75 25,000 4.0 years 0.75 10,000 0.75 _______________________________________________________________________________________  3,765,090 4.4 years $ 0.36 1,689,090 $ 0.40 _______________________________________________________________________________________  At December 31, 2006, there was $191,665 of total unrecognized compensation expense related to unvested stock option awards.  This cost is expected to be recognized in expense during the year ended December 31, 2007.  58      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 25  Years ended December 31, 2006 and 2005 (In U.S. dollars)   10. Research and development:  __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________  Incurred during the year $ 542,927 $ 273,428 Less: investment tax credits (52,563) (31,240) __________________________________________________________________________________________ $ 490,364 $ 242,188 __________________________________________________________________________________________  11. Income taxes:  Deferred income taxes reflect the impact of temporary differences between amounts of assets and liabilities as reported for financial reporting purposes and such amounts as measured by tax laws.  The tax effects of temporary differences that gave rise to significant portions of the deferred tax asset and deferred tax liability are as follows:  __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________  Deferred tax asset: Net operating loss carry forwards $ 1,389,000 $ 1,055,200 Investment tax credit carry forwards 228,400 157,300 Unclaimed scientific research and experimental development 334,300 290,200 Property and equipment and other 15,800 20,400 __________________________________________________________________________________________ Total gross deferred tax asset 1,967,500 1,523,100  Valuation allowance (1,967,500) (1,523,100) __________________________________________________________________________________________ Net deferred taxes $  $  __________________________________________________________________________________________      59       DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 26  Years ended December 31, 2006 and 2005 (In U.S. dollars)   11. Income taxes (continued):  Income tax expense varies from the amount that would be computed by applying the enacted U.S. federal income tax rate to the net loss as a result of the following:  __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________  Expected tax rate 34% 34%  Expected tax recovery $ (1,069,055) $ (375,925)  Increase (decrease) in taxes resulting from: Change in valuation allowance 444,400 555,500 Change in enacted tax rates 119,500 - Cancellation of consulting agreement 243,900 - Compensation expense (recovery) 66,200 (65,000) Investment tax credit carry forwards (71,100) (49,600) Unpaid salaries 30,400 - Loss on extinguishment and modification of debt 186,800 - Interest expense 47,500 - Difference between U.S. and Canadian tax rates 13,500 (9,800) Canadian provincial differences (7,600) (4,400) Foreign exchange 2,600 (27,400) Other (7,045) (23,375)  __________________________________________________________________________________________ $  $  __________________________________________________________________________________________  The Company has net operating loss carry forwards available to be applied against Canadian taxable income and which expire as follows:  2008 $ 221,800 2009 322,300 2010 399,300 2014 406,800 2015 711,500 2026 553,900 2027 228,900  __________________________________________________________________________________________ $ 2,844,500 __________________________________________________________________________________________   60      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 27  Years ended December 31, 2006 and 2005 (In U.S. dollars)   11. Income taxes (continued):  The Company has net operating loss carry forwards which are significantly restricted and are not considered to be available to be applied against U.S. taxable income.  The Company has other losses which can be applied against U.S. taxable income and which expire as follows:  2023 $ 26,600 2024 86,300 2025 644,100 2026 567,200 __________________________________________________________________________________________ $ 1,324,200 __________________________________________________________________________________________  12. Net loss per share:  As the Company incurred a net loss during the years ended December 31, 2006 and 2005, the loss per common share is based on the weighted average common shares outstanding.  The following outstanding instruments could potentially dilute loss per share for the periods presented:  __________________________________________________________________________________________ Number of shares issued upon: 2006 2005 __________________________________________________________________________________________ Exercise of options to purchase common stock 3,765,090 2,432,452 Conversion of promissory notes 1,981,034 4,309,302 Warrants to be issued on conversion of promissory notes 1,164,920 - Exercise of Series A warrants 200,000 1,700,000 Exercise of Series B warrants - 1,500,000 Exercise of Series C warrants 2,973,167 - Exercise of Series D warrants 1,683,589 - Exercise of other warrants 1,309,575 - Common stock to be issued pursuant to financing agreement 100,000 - Common stock to be issued pursuant to consulting agreements 75,547 100,000 __________________________________________________________________________________________  13. Guarantees and commitments:  (a) Guarantees:  The Company has entered into agreements that contain features which meet the definition of a guarantee under FASB Interpretation No. 45 (FIN 45).  FIN 45 defines a guarantee to be a contract that contingently requires the Company to make payments (either in cash, financial instruments, other assets, common shares of the Company or through provision of services) to a third party based on changes in an underlying economic characteristic (such as interest rates or market value) that is related to an asset, liability or an equity security of the other party.  The Company has the following guarantees which are subject to the disclosure requirements of FIN 45:  61       DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 28  Years ended December 31, 2006 and 2005 (In U.S. dollars)   13. Guarantees and commitments (continued):  Product warranties  As part of the normal sale of software products, the Company has provided certain of its customers with product warranties of 30 days from the date of sale.  Based on managements best estimate of probable liability under its product warranties, no product warranty accrual was recognized as of December 31, 2006 and 2005.  (b) Commitments:  Operating lease  The Company has entered into an operating lease agreement for office space that expires on December 31, 2007.  The future minimum lease payments, including operating costs, are approximately as follows: 2007 - $88,004.  Rent expense for operating leases for the years ended December 31, 2006 and 2005 was $96,412 and $88,314, respectively.  Investor relations and communications services  Pursuant to the terms of a service agreement with an unrelated party to provide investor relations and communications services to the Company, the Company is obligated to make monthly payments of $10,000 to December 31, 2007.  For the period to June 11, 2007, the Company can elect to make the monthly payments in cash and shares of common stock calculated at a price of $0.15 per share provided that the cash component of each monthly payment is at least $5,000 (notes 10(b) and 19).  Pursuant to the terms of a consulting agreement with an unrelated party to provide investor relations services for the Company, the Company issued 1,500,000 shares of common stock to the consultant and is obligated to make cash payments of $6,000 per month for the period from January 1, 2007 to July 31, 2007.  Under anti-dilution provisions in the agreement, the Company has agreed to issue additional shares of common stock to the consultant for a period of thirty-six months after termination of the agreement.  Under these anti-dilution provisions, the total number of shares of common stock issued to the consultant will total 4.99% of the issued and outstanding shares of the Company.  14. Financial instruments:  The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, promissory notes payable and promissory note payable to a related party approximate fair value due to the short term to maturity of these instruments.   62       DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 29  Years ended December 31, 2006 and 2005 (In U.S. dollars)   15. Segment reporting:  The Company operates in one dominant industry segment, which involves providing web-based software solutions that translate data into tables, charts and maps.  The Companys solutions can extend the functionality of business intelligence software packages from other vendors by adding pre-built software objects on top of those vendors solutions.  Alternatively, the Companys pre-built software objects can be assembled and bundled with data from major data vendors to provide functionality and enhanced presentation capabilities.  External revenues attributable to geographic areas based on the location of the customer are as follows:  __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________ United States $ 452,404 $ 552,256 Canada 21,316 35,953 Europe 27,518 - __________________________________________________________________________________________  The Companys assets are located as follows:  __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________ Canada $ 285,603 $ 346,329 United States 212,212 740,625 __________________________________________________________________________________________  16. Statement of cash flows:  Change in non-cash operating working capital:  __________________________________________________________________________________________ 2006 2005 __________________________________________________________________________________________ Accounts receivable $ 78,491 $ (100,217) Investment tax credits receivable (51,357) (33,872) Contracts-in-process 5,677 (5,677) Prepaid expenses (2,332) (277) Accounts payable 65,592 53,006 Accrued liabilities 185,851 170,049 Deferred revenue 4,760 30,123 __________________________________________________________________________________________ $ 286,682 $ 113,135 __________________________________________________________________________________________  63       DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 30  Years ended December 31, 2006 and 2005 (In U.S. dollars)   17. Economic dependence:  For the year ended December 31, 2006, four customers account for 83% of revenue (2005 - four customers account for 95% of revenue).  18.  Subsequent events:  On January 11, 2007, the Company issued 100,000 shares of common stock pursuant to the terms of a promissory note (note 8(e)).  Effective January 10, 2007, the Company entered into a consulting agreement with an unrelated party to provide investor relations and public relations services to the Company until December 31, 2007.  As consideration for these services, the Company issued 600,000 shares of common stock to the consultant.  Effective February 9, 2007, the Company entered into a consulting agreement with an unrelated party to provide investor communication and relations services to the Company for a period of six months.  As consideration for these services, the Company issued 750,000 shares of common stock to the consultant.  If the Company hasnt otherwise cancelled the Agreement, the Company also agreed to issue 450,000 shares of common stock to the consultant on April 8, 2007 and 300,000 shares of common stock to the Consultant on June 8, 2007.  Subsequent to December 31, 2006, a consultant agreed to modify the payment terms of a consulting agreement to allow the Company to make monthly payments of $10,000 entirely in shares of common stock (note 10(b)) for a five month period commencing on January 12, 2007.  At March 12, 2007, the Company was obligated to issue 233,333 shares of common stock pursuant to this consulting agreement.  The Company is obligated to issue 123,620 shares of common stock in 2007 pursuant to the terms of the anti-dilution provisions in a consulting agreement (note 9(b)).  Subsequent to December 31, 2006, the Company issued 10% promissory notes to an unrelated party for cash consideration of $56,000.  These promissory notes together with accrued interest are convertible into shares of common stock at $0.10 per share plus warrants for the purchase of the number of shares equal to 50% of the number of shares received by the lender on conversion.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.  Subsequent to December 31, 2006, the Company issued 10% promissory notes to a related party for cash consideration of $45,967.  These promissory notes together with accrued interest are convertible into shares of common stock at $0.10 per share plus warrants for the purchase of the number of shares equal to 50% of the number of shares received by the lender on conversion.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.   64      DATAJUNGLE SOFTWARE INC. Notes to Consolidated Financial Statements, page 30  Years ended December 31, 2006 and 2005 (In U.S. dollars)   18.  Subsequent events (continued):  In March 2007, four officers of the Company agreed to defer payment on approximately $272,000 of amounts owing to them at December 31, 2006 for salaries, benefits and consulting fees until the Company has achieved certain revenue targets or until the Board of Directors determines that the Company has sufficient cash resources for payment.  As consideration for the agreement to defer payment, the officers were awarded bonuses totaling $38,455.  19. Comparative figures:  Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.              65      Item 8.Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.  None Item 8A.  Controls and Procedures The term disclosure controls and procedures is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act.  This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission.  In connection with the review of our consolidated condensed financial statements for the year ended December 31, 2006, our independent registered public accounting firm advised the Board of Directors and management of certain significant internal control deficiencies that they considered to be, in the aggregate, a material weakness.  In particular, our independent registered public accounting firm identified the following weaknesses in our internal control system:  (1) a lack of segregation of duties and (2) a lack of formal procedures relating to all areas of financial reporting including a lack of review by management.  The independent registered public accounting firm indicated that they considered these deficiencies to be reportable conditions as that term is defined under standards established by the American Institute of Certified Public Accountants.  A material weakness is a significant deficiency in one or more of the internal control components that alone or in the aggregate precludes our internal controls from reducing to an appropriately low level of risk that material misstatements in our consolidated financial statements will not be prevented or detected on a timely basis.  The Company considered these matters in connection with the period-end closing of accounts and preparation of the related consolidated financial statements and determined that no prior period financial statements were materially affected by such matters.  Notwithstanding the material weaknesses identified by our independent registered public accountants, we believe that the consolidated financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operation and cash flows of the Company as of, and for, the periods represented in this report.  The size of the Company has prevented us from being able to employ sufficient resources at this time to enable us to have an adequate level of supervision and segregation of duties within our internal control system.  Set forth below is a discussion of the significant internal control deficiencies that had not been remediated as of the beginning of the period covered by this report.  Lack of segregation of duties.Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system.  There is one person involved in processing of transactions.Therefore, it is difficult to effectively segregate accounting duties.  While we strive to segregate duties as much as practicable, there is insufficient volume of transactions to justify additional full time staff.  We are currently seeking, but cannot be assured that we will be able to find, a qualified part time person to perform routine, month end accounting procedures.  As a result, this significant internal control deficiency had not been remediated as of the end of the period covered by this report, nor do we know if we will be able to remediate this weakness in the foreseeable future.  However, we will continue to monitor and assess the costs and benefits of additional staffing. Lack of formal procedures relating to all areas of financial reporting including a lack of review by management.Due to the size of our Company, and as a consequence of the lack segregation of duties, we do not have formal month end close procedures.  As a result, there is a lack of timely review of the consolidated  66      financial statements and Forms 10-QSB and 10-KSB.  This significant internal control deficiency has not been remediated as of the end of the period covered by this report.  If we are unable to remediate the identified material weaknesses, there is a more than remote likelihood that a material misstatement to our SEC reports will not be prevented or detected, in which case investors could lose confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our ability to raise additional capital and could also have an adverse effect on our stock price. Management of the Company is responsible for establishing and maintaining adequate disclosure controls and procedures.  As required by the SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report.  This evaluation was performed under the supervision and with the participation of our management, including the President and Chief Executive Officer and Chief Financial Officer, Secretary and Treasurer.  Based upon that evaluation, our President and Chief Executive Officer and Chief Financial Officer, Secretary and Treasurer have concluded that our controls and procedures were not effective as of the end of the period covered by this Report due to the existence of the significant internal control deficiencies described above. Item 8B.  Other Information None.   67       PART III  Item 9. Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act.  The following table sets forth certain information concerning our directors and executive officers:  Name Age Position  Edward Munden 56 Director, Chairman, President and Chief Executive Officer  Edward Munden was appointed Director, Chairman, President and Chief Executive Officer of the Company in October 2003.  He is a Director of Capital House Corporation (Capital House), which he co-founded in February 1989 as an Ottawa based private boutique investment banking organization that has provided and/or arranged early and mid stage venture capital and hands-on managerial assistance to a portfolio of technology software, energy and mining companies.  In 1994, Mr. Munden co-founded DevX Energy, Inc. (DevX) as a Dallas based independent NASDAQ-traded public energy company engaged in the exploration, development and acquisition of oil and natural gas properties.  Mr. Munden held senior level positions with DevX including Director, Chairman, President and CEO until it was sold to Comstock Resources, Inc. in December 2001.  Prior to his involvement with the Company, Capital House and DevX, Mr. Munden held positions in the mining industry with Eldorado Nuclear Limited from 1980 to 1989, the manufacturing industry with Proctor and Gamble Company of Canada from 1978 to 1980, and the oil and natural gas industry with Union Oil of Canada Limited from 1974 to 1976.  Mr. Munden is also a director of Mustang Minerals Corporation and of JML Resources Limited, both mineral exploration companies whose shares are traded on the TSX Venture Exchange in Canada.  Mr. Munden is a professional engineer and holds a Bachelor of Science degree in Engineering and a Masters of Business Administration from Queens University in Kingston, Canada.  Denes Bartakovich 51 Director, Chief Operating Officer & Executive Vice President Prior to co-founding DataJungle in 2000, Mr. Bartakovich spent 9 years with Cognos in a variety of management positions. His most recent position at Cognos was Director of Internet Marketing. In this capacity he launched the first Cognos Web site and assumed all responsibilities related to leveraging the Web as a business medium and sales engine. Mr. Bartakovichs team included Web application developers and his role included the advancement of Cognos Web technologies.  While at Cognos, Mr. Bartakovich pioneered the idea of reaching a mass business audience over the Web by bundling business intelligence software with data from leading data vendors.  These data solutions have been featured on CNBC, in Fortune magazine, and many other broadcast and print media outlets. Mr. Bartakovich holds a B.A. (Hons.) from Carleton University and an M.B.A. from the University of Toronto. Don Carter 56 Director, Vice President Prior to joining DataJungle in 2001, Mr. Carter was a Vice President with Nesbitt Burns in Ottawa where he acted as an investment advisor for 12 years.  Mr. Carter has deep expertise in the financial services sector as well as extensive contacts in that sector.  Prior to Nesbitt Burns, he held a number of positions with the Government of Canada.  Mr. Carter holds a B.Sc. from McGill University.    68      Larry Bruce 48 Chief Financial Officer, Secretary & Treasurer With the exception of the period from September 30, 2005 to February 3, 2006, Mr. Bruce has been with DataJungle since 2000.  Prior to joining DataJungle, Mr. Bruce spent 11 years as Vice President Finance of a diverse group of real estate companies with operations in Ottawa and Washington and investments in various other companies including high-technology.  He was one of the original investors in Autoskill International Inc., an Ottawa based developer of educational software.  Mr. Bruce was also a manager in the Entrepreneurial Services Group of Ernst & Young and has over 5 years of public accounting experience in both the Ottawa and Toronto offices handling a diverse client base ranging from owner managed business to public companies.  Mr. Bruce is a Chartered Accountant, Certified Management Accountant and Certified Public Accountant (Illinois) and holds a B.B.A. (Hons.) from Bishops University.  Robert Poole 44 Senior Vice President Business Development and Sales Prior to co-founding DataJungle in 2000, Mr. Poole was with Cognos.  While at Cognos, he was instrumental in establishing key partnerships with the Nasdaq Stock Market, Thomson Financial and Fortune magazine.  Prior to joining Cognos, he co-founded an online information service.  Mr. Poole is a Chartered Accountant and has extensive experience in the development of financial models and the processes of translating raw data into business reporting solutions.  He holds a B.Sc. and a B.Comm., both from the University of Ottawa. Each of our officers serves a term of one year or until his successor is appointed.  Audit Committee Financial Expert  The SEC has adopted rules to implement certain requirements of the Sarbanes-Oxley Act of 2002 pertaining to public company audit committees. One of the rules adopted by the SEC requires a company to disclose whether it has an audit committee financial expert serving on its audit committee. Our board of directors has not yet established an audit committee.  As such, our board has not yet appointed an audit committee financial expert.  At this time, our board of directors believes it would be desirable to have an audit committee, and for the audit committee to have an audit committee financial expert serving on the committee. While informal discussions as to potential candidates have occurred, at this time no formal search process has commenced.  Code of Ethics Policy  We have not yet adopted a code of ethics policy because of the early stages of operations. We intend to adopt a code of ethics policy in the future.  Compliance with Section 16(a) of The Securities Exchange Act of 1934  As of the date of this Form 10-KSB, to our knowledge, based solely on a review of such materials as are required by the Securities and Exchange Commission, all of our officers, directors or beneficial holders of more than ten percent of our issued and outstanding shares of common stock have filed with the Securities and Exchange Commission forms or reports required to be so filed pursuant to Section 16(a) of the Securities Exchange Act of 1934.   69       Item 10. Executive Compensation.  The following table shows all the cash compensation paid or to be paid by us or our subsidiaries, as well as certain other compensation paid or accrued, during the fiscal years indicated to the officers listed below.  There were no other executive officers whose total annual salary and bonus exceeded $100,000 in all capacities in which the person served.  Summary Compensation Table(a)(b)( c)(d)(e)(f)(g)(h)(i)(j)Name and
Principal
PositionYearSalary ($)Bonus ($)Stock awards ($)Option awards ($)Non-equity Incentive Plan Compensation ($)Nonqualified Deferred Compensation ($)All
Other
Compensation ($)Total ($)Munden, Edward
Director, Chairman, President and Chief Executive Officer2006
2005$79,474
$74,3330
00
0$59,007
00
00
00
0$138,481
$74,333Bartakovich, Denes, Chief Operating Officer and Executive VP2006
2005$131,028
$99,2400
$12,7860
0$59,007
00
00
00
0$190,035
$112,026Poole, Robert, Senior  VP Business Development and Sales2006
2005$131,028
$99,2400
$12,7860
0$59,007
00
00
00
0$190,035
$112,026  (1) Mr. Munden and Mr. Bartakovich were Directors of the Company in 2005 and 2006 but were not separately compensated for their duties as Directors.  Mr. Bartakovich resigned as a Director on December 15, 2006.  (2) For a detailed discussion of the terms and conditions of our Share Option Plan including related calculations of fair value of options granted, please see note 10 (c) to our Consolidated Financial Statements included under Item 7. Financial Statements above.  (3) Each of the executive officers listed above were granted 250,000 stock options in 2006 to purchase 250,000 shares of our common stock at $0.25 per share.  Of these options, 85,000 vest on January 31, 2007, 85,000 vest on January 31, 2008 and 80,000 vest on January 31, 2009.  The expiry date for these options is four years from the date of vesting.  In addition, each of the executive officers listed above were granted 500,000 stock options in 2004 which have been described in the table below.           70      The following table sets forth information with respect to those executive officers listed above, concerning outstanding equity awards at December 31, 2006:  Outstanding Equity Awards at Fiscal Year-End  Option Awards(a)(b)( c)(d)(e)(f)NameNumber of Securities Underlying Unexercised Options (#) ExercisableNumber of Securities Underlying Unexercised Options (#) UnexercisableEquity Incentive Plan Awards: Number of securities Underlying Unexercised Unearned Options (#)Option Exercise Price ($)Optiion Expiration DateMunden, Edward167,000
167,000
0
0
0
00
0
166,000  (1)
85,000  (2)
85,000  (3)
80,000  (4)0
0
0
0
0
0$0.51
$0.51
$0.51
$0.25
$0.25
$0.25June 14, 2010
June 14, 2011
June 14, 2012
January 31, 2011
January 31, 2012
January 31, 2013Bartakovich, Denes167,000
167,000
0
0
0
00
0
166,000  (1)
85,000  (2)
85,000  (3)
80,000  (40
0
0
0
0
0$0.51
$0.51
$0.51
$0.25
$0.25
$0.25June 14, 2010
June 14, 2011
June 14, 2012
January 31, 2011
January 31, 2012
January 31, 2013Poole, Robert167,000
167,000
0
0
0
00
0
166,000  (1)
85,000  (2)
85,000  (3)
80,000  (4)0
0
0
0
0
0$0.51
$0.51
$0.51
$0.25
$0.25
$0.25June 14, 2010
June 14, 2011
June 14, 2012
January 31, 2011
January 31, 2012
January 31, 2013  (1) Vest on June 14, 2007 (2) Vest on January 31, 2007 (3) Vest on January 31, 2008 (4) Vest on January 31, 2009  The following table sets forth compensation with respect to our Directors  Director Compensation(a)(b)( c)(d)(e)(f)(g)(j)NameFees Earned or Paid in Cash ($)Stock Awards ($)Option Awards ($)Non-Equity Incentive Plan Compensation ($)Nonqualified Deferred Compensation Earnings ($)All Other Compensation ($)Total ($)Carter, Don00$4,025000$4,025Parkinson, Thomas00$7,360000$7,360  (1) Mr. Parkinson resigned as a Director on April 26, 2006 and forfeited 50,000 stock options granted in 2006 and 100,000 stock options granted in prior years.  Mr. Parkinson holds no stock options at December 31, 2006. (2) At December 31, 2006, Mr. Carter held 50,000 stock options to purchase 50,000 shares of our common stock.  These options were granted during 2006.   20,000 vested on January 31, 2006 and expire on January 31, 2010.  15,000 vest on January 31, 2007 and expire on January 31, 2011.  The balance of 15,000 vest on January 31, 2008 and expire on January 31, 2012.   71      Directors are not compensated for acting in their capacity as directors.  Directors are awarded options to purchase common shares in the Company.  As at December 31, 2006, our two Directors (Mr. Munden and Mr. Carter) held a total of 800,000 stock options.  Directors are reimbursed for their accountable expenses incurred in attending meetings and conducting their duties. There is no employment agreement between us and our other executive officers.  See Part 1. Item 1. Description of Business; Risk Factors  Loss of any of our key personnel   Item 11.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.  The following table sets forth information as of March 21, 2007, with respect to any person known by us to own beneficially more than 5% of our common stock; common stock beneficially owned by each of our officers and directors named in Item 10; and the amount of common stock beneficially owned by our officers and directors as a group.  Approximate Percent Name & Address of Number of Shares of Common Stock Beneficial Owner Beneficially Owned Outstanding    (1)  Edward Munden (2,3,4) 1,611,945 4.7% 30 Metcalfe Street, Suite 620 Ottawa, Ontario, K1P 5L4  Denes Bartakovich (3,7) 2,336,483 6.7% 92 Blackshire Circle Ottawa, Ontario, K2J 3M5  Larry Bruce (3,5) 660,613 2.0% 75 Stinson Avenue Nepean, Ontario, K2H 6N6  Don Carter (2,3,6) 1,106,033 3.3% 37 Marble Arch Crescent Nepean, Ontario, K2G 5S7  Robert Poole (3,8) 941 Black Road Oxford Station, Ontario, K0G1T0 2,322,953 6.7%  All executive officers and Directors 8,038,027 19.8% as a group  Notes: 1. Based on 32,537,502 shares of common stock issued and outstanding as at March 21, 2007 and includes for each person, the shares issuable upon exercise of options within 60 days of March 21, 2007. 2. Director. 3. Executive Officer. 4. Includes 94,301 shares of common stock held by spouse, 1,098,644 shares of common stock held by a corporation controlled by Mr. Munden and 419,000 options to purchase common stock.  Mr. Munden holds an additional 331,000 options to purchase common stock that vest  from June 14, 2007 to January 31, 2009. 5. Includes 205,000 options to purchase common stock and 240,000 shares of common stock held by family members.  Mr. Bruce holds an additional 165,000 options to purchase common stock that vest from January 31, 2008 to January 31, 2009. 6. Includes 757,173 shares of common stock held by a family trust and 35,000 options to purchase shares of common stock.  Mr. Carter holds an additional 15,000 options to prucahse common stock that vest on Janaury 31, 2008. 7. Includes 1,917,483 shares held by a family trust and 419,000 options to purchase common stock.  Mr. Bartakovich holds an additional 331,000 options to purchase common stock that vest  from June 14, 2007 to January 31, 2009. 8. Includes 1,903,953 shares held by a family trust and 419,000 options to purchase common stock.  .  Mr. Poole holds an additional 331,000 options to purchase common stock that vest  from June 14, 2007 to January 31, 2009.  72       For information regarding our securities authorized for issuance under equity compensation plans, see Part 2.  Item 5. Market for Common Equity and Related Stockholder Matters.  Item 12.  Certain Relationships and Related Transactions and Director Independence.  (a) Certain transactions with Capital House Corporation:  Under the terms of a 10% promissory note for cash advances made to the Company prior to 2004, the Company was indebted to Capital House Corporation (the Lender) for $555,800 at December 31, 2005 including accrued interest of $83,573.  In accordance with the terms of a Memorandum of Agreement dated February 21, 2003 (the Memorandum), the Lender had a right to convert all amounts of principal and interest pursuant to this promissory note into 4,309,302 common shares of the Company.  In addition, the Memorandum provided the Lender with certain rights related to management and direction of the Company as long as at least $100,000 Canadian of principal and interest was outstanding pursuant to the promissory note.  On January 24, 2006, the Lender assigned $183,839 of this promissory note and accrued interest to a director of the Company and a corporation controlled by a director of the Company and assigned the balance of the promissory note and accrued interest of $377,024 to unrelated parties.  Subsequent to the assignment of the promissory note and accrued interest, the director and the corporation controlled by a director of the Company converted the $183,839 to 1,412,504 common shares of the Company and the unrelated parties converted the $377,024 to 2,896,798 common shares of the Company. In addition, the Company was indebted to the Lender for $41,624 at December 31, 2005 including accrued interest of $351 pursuant to 10% promissory notes for cash advances made to the Company in 2005.  No payments of principal or interest were made on these notes in 2006.  On April 19, 2006, the terms of these promissory notes were modified by waiving the repayment and security provisions related to specific customer invoices.  As consideration for the modification, the Company agreed to permit the Lender at the its option, to convert the promissory notes and accrued interest into shares of common stock of the Company at a price of $0.20 per share plus a warrant for the purchase of the number of shares received by the lender on conversion.  The warrants are exercisable at $0.30 per share and expire on December 31, 2010.  During 2006, the Company received additional cash consideration of $143,828 from the Lender in exchange for the issuance of 10% promissory notes.  No payments of principal or interest were made on these notes in 2006.  The promissory notes and accrued interest are convertible, at the option of the Lender, into shares of common stock of the Company at a price of $0.10 per share plus a warrant for the purchase of the number of shares equal to 50% of the number of shares received by the lender on conversion.  The warrant is exercisable at $0.30 per share and expires on December 31, 2010.  At December 31, 2006, the Company was indebted to the Lender in the amount of $188,449 including accrued interest of $7,824.   73      (b) Director Independence:  The following provides details on our Board of Directors:  NameTitleMunden, Edward (1)Chairman, President & CEOBartakovich, Denes (1, 2)Chief Operating Officer & Executive Vice PresidentCarter, Don (1)Vice PresidentParkinson, Thomas (3)-  (1) Officer of the Company. (2) Resigned as a Director on December 15, 2006 for personal reasons. (3) Resigned as a Director on April 26, 2006 for personal reasons related to his employment obligations.  At December 31, 2006, the Company had two Directors (Mr. Munden and Mr. Carter).  They are not considered by the Company to be independent due to their positions as executive officers.  "Independent director" has the meaning as defined in Rule 4200 of the Nasdaq Marketplace Rules.  The Company does not have a compensation, nominating or audit committee.  Item 13. Exhibits.  Exhibit No.Document Description3.1Articles of Incorporation (1)3.2Amendment to Articles of Incorporation (1)3.3By-Laws (1)4.1Form of 12% Promissory Note (2)4.2Form of Convertible Debenture (2)4.3Form of Common Stock Purchase Warrant  Series A (2)4.4Form of Common Stock Purchase Warrant  Series B (2)4.5Form of Common Stock Purchase Warrant  Series C (3)4.6Form of Common Stock Purchase Warrant  Series D4.7Form of 12% Series A Promissory Note (3)4.8Form of 10% Promissory Note4.9Form of 10% Promissory Note4.10Form of 12% Promissory Note4.11Stock Grant Agreement4.12Amendment to Promissory Note10.1Share Option Plan (1)10.2Consulting Agreement dated November 22, 2004 (2)10.3Consulting Agreement dated January 1, 2005 (2)10.4Cancellation of Consulting Agreement dated November 22, 2004 (3)10.5Independent Consulting Agreement dated August 14, 200610.6Services Agreement dated December 12, 200610.7Consulting Agreement dated January 10, 200710.8Consulting Agreement dated February 9, 200721List of Subsidiaries (1)31.1Certification of President & Chief Executive Officer Pursuant to Section 30231.2Certification of Chief Financial Officer, Secretary & Treasurer Pursuant to Section 30232.1Certification of President & Chief Executive Officer Pursuant to Section 90632.2Certification of Chief Financial Officer, Secretary & Treasurer Pursuant to Section 906  (1) Previously filed as an Exhibit to our Annual Report on Form 10-KSB for the six months ended December 31, 2003, SEC file 001-05996, filed on April 30, 2004 and incorporated herein by reference. (2) Previously filed as an Exhibit to our Annual Report on Form 10-KSB for the year ended December 31, 2004, SEC file 001-05996, filed on March 31, 2005 and incorporated herein by reference. (3) Previously filed as an Exhibit to our Annual Report on Form 10-KSB for the year ended December 31, 2005, SEC file 001-05996, filed on March 31, 2006 and incorporated herein by reference.  74       Item 14. Principal Accountant Fees and Services  The Companys board of directors reviews and approves audit and permissible non-audit services performed by the authorized independent public accountants as well as fees charged by the independent public accountants for such services.  In its review of non-audit service fees and its appointment of the authorized independent public accountants as the Companys independent accountants, the board of directors considered whether the provision of such services is compatible with maintaining the authorized independent public accountants independence.  All of the services provided and the fees charged by the independent public accountants in 2006 and 2005 were pre-approved by the board of directors.  The following table sets out fees billed by the Companys independent public accountants for each of the previous two fiscal periods:   Description of servicesFees billed for
12 months ended
December 31, 2006Fees billed for
12 months ended
December 31, 2005Audit Fees (1)$90,631$75,594Audit-related Fees (2)--Tax Fees (3)$2,230$25,165All Other Fees (4)--  Notes: 1. Includes the aggregate fees billed by the authorized independent public accountants for professional services for the audit of the annual financial statements of the Company included in Form 10-KSB and the reviews of the financial statements included in the Companys quarterly reports on Form 10-QSB. 2. There were no other fees billed by the authorized independent public accountants for assurance and related services that were reasonably related to the performance of the audit or review of the Companys financial statements and not reported under Audit Fees above. 3. Includes the aggregate fees billed by the authorized independent public accountants for professional services rendered by the authorized independent public accountants for tax compliance services. 4. There were no other fees billed by the authorized independent public accountants for products and services provided by the authorized independent public accountants.      75       SIGNATURES  In accordance with Section 13 or 15(d) of the Exchange Act, the small business issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  DATAJUNGLE SOFTWARE INC.  By: /s/   Edward Munden Edward Munden President and Chief Executive Officer  Dated: April 16, 2007        In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the small business issuer and in the capacities and on the dates indicated.    /s/   Edward Munden Edward Munden President, Chief Executive Officer and Director (principal executive officer)  Dated: April 16, 2007    /s/   Larry Bruce Larry Bruce Chief Financial Officer, Secretary & Treasurer (principal financial officer)  Dated:  April 16, 2007    76