**United
        States Securities and Exchange Commission**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-KSB**
 
 x ANNUAL
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
 FOR
        THE
        FISCAL YEAR ENDED DECEMBER 31, 2006
 
 OR
 
  ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT
        OF 1934
 FOR
        THE
        TRANSITION PERIOD FROM  TO
 
  COMMISSION
        FILE NUMBER 000-18689
 
 **CONNECTED
        MEDIA TECHNOLOGIES, INC.**
 **(Exact
        name of registrant as specified in its charter)**
 
 **DELAWARE**
              **06-1238435****(STATE
                  OF INCORPORATION)**
              **(I.R.S.
                  ID)**
 
 **80
        SOUTHWEST 8TH STREET, SUITE 2230, MIAMI, FLORIDA 33130**
 **(Address
        of Principal Executive Offices)**
 
 **(786)
        425-0028**
 **(Issuer's
        Telephone Number, Including Area Code)**
 
 **950
        South Pine Island Road, Suite A150-1094**
 **Plantation,
        Florida 33324**
 **(Former
        Name or Former Address, if Changed Since Last Report)**
 
 Securities
        registered pursuant to Section 12(b) of the Act:
 **NONE**
 
 Securities
        registered pursuant to Section 12(g) of the Act:
 **COMMON
        STOCK, $.0001 par value**
 
 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. x Yes
o No
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B is not contained in this form, and no disclosure will be
        contained, to the best of registrant's knowledge, in definitive proxy or
        information statements incorporated by reference in Part III of this Form
        10-KSB
        or any amendment to this Form 10-KSB. [ **X** ]
 
 Indicate
        by check mark whether the registrant is a shell company as defined in Rule
        12b-2
        of the Exchange Act.
 
 Yes
o  Noo
 
 State
        issuer's revenues for its most recent fiscal year. **$446,706**
 
 State
        the
        aggregate market value of the voting and non-voting common equity held by
        non-affiliates computed by reference to the price at which the common equity
        was
        sold, or the average bid and asked price of such common equity, as of a
        specified date within the past 60 days. (See definition of affiliate in Rule
        12b-2 of the Exchange Act.) $195,908.15 as of March 31, 2007.
 
 The
        number of shares outstanding of the registrant’s common stock as of March 31,
        2007 was 641,907,436* This number excludes 15,241,223 shares that have been
        redeemed by the Company and held as treasury shares.
  
  
 
 Connected
        Media Technologies, Inc.
 
 **FORM
        10-KSB**
 
 For
        The
        Fiscal Year Ended December 31, 2006
 
 INDEX
 
 **PART
                  I**Item
                  1.
              Description
                  of Business
              1Item
                  2.
              Description
                  of Property
              7Item
                  3.
              Legal
                  Proceedings
              7Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              7**PART
                  II**Item
                  5.
              Market
                  for Common Equity, Related Stockholder Matters and Small Business
                  Issuer
                  Purchases of Equity Securities
              8Item
                  6.
              Management’s
                  Discussion and Analysis or Plan of Operation
              8Item
                  7.
              Financial
                  Statements
              21Item
                  8.
              Changes
                  in and Disagreements With Accountants on Accounting and Financial
                  Disclosure
              22Item
                  8A.
              Controls
                  and Procedures
              22Item
                  8B.
              Other
                  Information
              22**PART
                  III**Item
                  9.
              Directors
                  and Executive Officers of the Registrant
              23Item
                  10.
              Executive
                  Compensation
              26Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              27Item
                  12.
              Certain
                  Relationships and Related Transactions
              30Item
                  13.
              Exhibits,
                  List and Reports on Form 8-K
              32Item
                  14.
              Principal
                  Accountant Fees and Services
              34
 
  i
  **PART
        I**
 
 **ITEM
        1.****DESCRIPTION
        OF BUSINESS**
 
 **GENERAL**
 
 Connected
        Media Technologies, Inc. (“we”, “us”, “our”, the “Company”, or “CMT”) is a sales
        and marketing company f ocused
        on
        digital media that offers a broad spectrum of digital services across current
        and emerging media platforms, including print, television, radio, Internet,
        CD,
        DVD and mobile devices such as mobile phones and PDAs. Our customers include
        companies, government agencies, advertising agencies, advertisers and content
        owners who seek to leverage opportunities in this age of “digital
        convergence.”
  We
        offer
        creative services, marketing communications, content creation and distribution,
        and patented technology to help our clients navigate through this “new media”
landscape. Although our initial operations began with us being a technology
        focused intellectual property company, through our subsidiary Natcom Marketing
        International, Inc. ("NMI"), we have nearly 10 years experience as a
        full-service provider of strategic marketing consulting, comprehensive
        promotional planning and integrated, multi-media advertising campaigns. In
        addition, in Q4 2006 we acquired the assets of NewsProNet Interactive, LLC
        ("NPN"), a leader in converged media content solutions and interactive branding
        strategies for local television broadcasters. These assets include several
        intellectual property assets, including a library of broadcast
        content.
 
 Using
        the
        combined benefits offered by our subsidiaries, the services we currently
        provide
        include consulting, advertising, media selection and placement, sales promotion,
        direct marketing, collateral development, television production and placement,
        radio production and placement, point-of-sale displays, trade shows, barter
        programs, Internet site development, and technology solutions.
 
 **HISTORY**
  Our
        current name and business operations have been preceded by various historical
        name changes and changes in capitalization.
 
 *Mountaintop
        Corporation becomes New Mountaintop Corporation*
 
 Our
        predecessor was first organized as a Delaware corporation on December 11,
        1989
        under the name Mountaintop Corporation and in July 1990 became subject to
        the
        reporting requirements of the Securities and Exchange Act of 1934 (the “Exchange
        Act”). Mountaintop Corporation was involved in the distribution and marketing
        of
        spirits, among other things. That business ultimately did not succeed and
        in
        1992, Mountaintop Corporation ceased operations. Shortly thereafter, the
        charter
        of Mountaintop Corporation was forfeited by the State of Delaware for
        non-payment of franchise taxes. On February 21, 2003 through the efforts
        of its
        then-majority stockholder and sole director, the company revived and reinstated
        its charter effective March 1, 1993. However, during the process of reviving
        the
        company, the State of Delaware notified the company that its name, Mountaintop
        Corporation, was no longer available.
 
 Thus,
        the
        name of the company was changed to New Mountaintop Corporation. In addition,
        at
        the time of that name change, the company amended its Certificate of
        Incorporation to authorize common stock of 500,000,000 shares, par value
        $ 0.0001, and 10,000,000 shares of preferred stock, par value
        $ 0.0001. After the company had its charter reinstated, New Mountaintop
        Corporation (f/k/a Mountaintop Corporation) continued its reporting obligations
        of the Exchange Act and upon being reinstated filed its 10-K for the year
        ended
        December 31, 2002.
   1
  *New
        Mountaintop Corporation becomes Trust Licensing, Inc.*
 
 On
        August
        24, 2004, pursuant to the Florida rules and regulations governing mergers
        and
        acquisitions, we acquired, by merger, all of the assets and business of Trust
        Licensing, LLC (“TLLLC”) through our newly formed wholly owned subsidiary. As
        consideration for the merger, we issued 270,072,000 shares of our common
        stock,
        par value $ .0001 per share representing approximately 93% of its issued
        and outstanding shares (after giving effect to a 1:10 reverse stock split).
        The
        reverse merger was accompanied by a change in the name to Trust Licensing,
        Inc.,
        in the Board of Directors, management, and business focus. Prior to the merger,
        we had not conducted regular business operations for several years; rather,
        the
        primary focus of New Mountaintop Corporation was seeking a business to acquire.
        On December 31, 2004, we became eligible for trading on the
        over-the-counter bulletin board under the symbol TRTL.OB. As a result of
        the
        merger, we became the successor in interest to New Mountaintop Corporation
        and
        assumed its Exchange Act reporting obligations.
 
 *Trust
        Licensing, Inc. becomes Connected Media Technologies, Inc.*
 
 In
        early
        May 2005, we were advised by the Secretary of State of the State of Delaware
        that the State had failed to notify the company that the use of the word
“Trust”
in its corporate name was inconsistent with the applicable provisions of
        the
        Delaware Banking Law and requested that we change our name. Therefore, on
        May 18, 2005, we changed our name from Trust Licensing, Inc. to
        Connected Media Technologies, Inc. Our trading symbol was subsequently changed
        to CNCM.OB.
 
 In
        addition, prior to the 2004 reverse merger, TLLLC had been considering a
        joint
        business relationship with an unrelated third-party. In connection with this
        transaction, the third party formed a California corporation named Connected
        Media, Inc. The goal was to use the name “Connected Media” and as part of the
        relationship TLLLC funded the purchase of the web address (URL)
        www.connectedmedia.com, which was then assigned to the third party. In
        connection with this transaction, a “Connected Media” logo was developed by the
        third party. In March 2005, however, the third party decided it was not in
        a position to continue to pursue the business relationship and offered to
        assign
        to us, at no cost, all of its right, title and interest in and to the Connected
        Media name, logo and URL, as well as all of the issued and outstanding shares
        of
        Connected Media, Inc. At the time, and since its inception, Connected Media,
        Inc. had been an inactive corporation with no assets or liabilities. The
        assignment was made at zero cost and there was no accounting effect to this
        transaction. Furthermore, the transaction had no material impact on our
        business. The sole purpose of completing the assignment was to ensure that
        Connected Media would remain inactive in order to avoid confusion and protect
        and preserve our intended use of the name “Connected Media.”
  *Connected
          Media
          Technologies, Inc. acquires Natcom Marketing International,
          Inc* *.*
 
 On
        July
        10, 2006, pursuant to a Stock Purchase Agreement and Share Exchange with
        (i) NMI
        and (ii) the NMI shareholders, we acquired all of the outstanding shares
        of NMI
        in exchange for the issuance of common shares to the NMI shareholders in
        an
        amount equal to approximately fifty percent (50%) of the company’s then issued
        and outstanding shares after the issuance. As a result of the transaction,
        NMI
        became our wholly owned subsidiary.
 
 NMI
        was
        founded in 1997 as a full-service marketing communications agency focused
        on
        serving multi-national organizations, as well as emerging growth companies
        seeking to enter or expand in the U.S. Hispanic/Latin American markets. NMI
        uses
        media as its main entry into the Hispanic and minority advertising space.
        NMI’s
        clients have included Lucent Technologies, Royal Caribbean, RJR/Nabisco,
        Argent,
        IGT, Avaya, and others.
   2
 
 NMI
        has
        developed a special expertise in serving clients that are entering into or
        expanding their operations in the U.S. Hispanic marketplace, as well as the
        Latin America/Caribbean region. For these clients, NMI offers a unique marketing
        message by using television through syndicated programming to reach its market
        at a very cost efficient rate.
 
 NMI
        has
        been built upon the proposition that its primary value to its clients lies
        in
        learning as much as possible about the client’s day-to-day business operations,
        marketing goals and corporate vision. In developing this customer intimacy,
        NMI
        becomes an extension of the client organization and a partner in achieving
        mutually beneficial goals. NMI is structured to develop long standing
        relationships with clients and receives revenue from consulting services
        and
        project based fees.
 
 In
        connection with the NMI acquisition, on January 31, 2006, we also entered
        into a
        Purchase and Sale Agreement with Rothschild Trust Holdings. LLC ("RTH", an
        entity controlled by Leigh M. Rothschild, one of the company’s former directors)
        for the sale of certain issued and pending patents in exchange for the return
        of
        13,241,223 shares of our common stock. As additional consideration, we were
        granted a license to use the patents pursuant to the terms of a License and
        Royalty Agreement, which granted us a twelve month right of election to license
        the patents. (On January 26, 2007, we elected to maintain our rights in the
        RTH
        intellectual property.) Simultaneously with the execution of the Purchase
        and
        Sale Agreement, the company, RTH, Montgomery Equity Partners, L.P.
        ("Montgomery"), and David Gonzalez, as Escrow Agent for Montgomery, entered
        into
        an Escrow Agreement, whereby the company and RTH agreed to place the 13,241,223
        shares in escrow and the company agreed to deposit royalties otherwise payable
        to RTH into an escrow account held by the Escrow Agent until such time as
        royalties of $690,000 have been deposited into the escrow account or until
        Montgomery has been repaid and/or converted $690,000 of the convertible
        debentures issued to it. At such time, RTH shall have 30 days to replace
        these
        shares with $728,267.26 which shall be distributed to the company in exchange
        for these shares; otherwise, the Escrow Agent shall release these shares
        to the
        company and the royalties to RTH.
 
 *Connected
        Media Technologies, Inc. agrees to acquire assets of NewsproNet Interactive,
        LLC*
 
 On
        October 4, 2006, our wholly owned subsidiary, NPN Asset Acquisitions, Inc.
        (“NPNAA”) entered into an Assignment Agreement (the “NBC Assignment”) with
        NBC-NPN Holding, Inc. (“NBC”) and NPN, whereby NBC assigned approximately $2.365
        million in secured debt (the “Secured Debt”) against NPN to our subsidiary
        NPNAA.   Such debt is evidenced by certain promissory notes entered
        into in 2000 and 2001 by NBC and NPN, and is secured by a Security Agreement
        dated September 18, 2000.  Pursuant to the NBC Assignment, NPNAA acquired a
        first priority secured interest in all of the assets of NPN.  In
        consideration for the assignment of the Secured Debt, NPNAA agreed to enter
        into
        a Content License Agreement whereby NBC Universal, Inc. was granted a
        non-exclusive license to use certain content owned and produced by NPNAA
        consisting of audio-visual archived news stories.  As additional
        consideration for the assignment of the Secured Debt, the parties entered
        into a
        Securities Purchase Agreement whereby we agreed to issue 15,000,000 shares
        of
        our common stock to NBC.
 
 Also
        on October 4, 2006, our subsidiary NPNAA entered into an Assignment
        Agreement with NPN (the “NPN Assignment”), pursuant to which NPNAA exercised
        certain security rights with the consent of NPN.  Pursuant to the NPN
        Assignment, NPNAA agreed, in lieu of immediate foreclosure upon all of the
        Secured Debt, to accept certain assets of NPN and apply the fair market value
        of
        such assets against the balance of the Secured Debt.  Accordingly, NPN
        assigned to NPNAA all title and interest in certain assets consisting of
        equipment, accounts and accounts receivable, customer contracts, certain
        claims
        or causes of action held by NPN, all intellectual property, and NPN’s complete
        content video archive consisting of approximately 1,700 finished news
        stories.  In consideration for such assets, NPNAA agreed to reduce the
        balance of the Secured Debt to $865,000.
  3
  We
        also entered into
        certain employment agreements with four former employees of NPN for positions
        as
        Vice Presidents of NPNAA.
 
 As
        of
        December 31, 2006, we currently have the following wholly-owned subsidiaries:
        Trust Licensing, Inc., a Florida corporation (successor-by-merger to TLLLC),
        Connected Media, Inc., the inactive California corporation, Natcom Marketing
        International, Inc., a Puerto Rico corporation (NMI), and NPN Asset
        Acquisitions, Inc., a Florida corporation.
 
 **BUSINESS**
  We
        are a
        sales and marketing company focused on digital media that offers a broad
        spectrum of digital services across current and emerging media platforms,
        including print, television, radio, Internet, CD, DVD and mobile devices
        such as
        mobile phones and PDAs. Our customers include companies, government agencies,
        advertising agencies, advertisers and content owners who seek to leverage
        opportunities in this age of “digital convergence.” Thanks to the advent of
        digital technology, different media platforms have converged causing many
        changes in the way entertainment content, advertising and marketing messages
        are
        delivered to their audience. Companies are faced with a fragmented marketplace,
        where consumers are reached through multiple channels and on multiple devices
        -
        from televisions and radios, to computers, game consoles, mobile phones,
        personal digital assistants (PDA’s) and portable media players (such as the iPOD
        and other devices). We offer creative services, marketing communications,
        content creation and distribution, and patented technology to help our clients
        navigate through this “new media” landscape. Although our initial operations
        began with us being a technology focused intellectual property company, through
        NMI, we have nearly 10 years experience as a full-service provider of strategic
        marketing consulting, comprehensive promotional planning and integrated,
        multi-media advertising campaigns. As a combined entity, the services we
        currently provide include consulting, advertising, media selection and
        placement, sales promotion, direct marketing, collateral development, television
        production and placement, radio production and placement, point-of-sale
        displays, trade shows, barter programs, Internet site development, and
        technology solutions.
 
 As
        a
        result of the acquisition of NMI, our sales and marketing activities have
        been
        combined to leverage the core competencies of both entities. Operating under
        the
        Connected Media brand, with the wide range of services we now offer, we are
        able
        to provide our clients with a full turnkey “converged media” solution that can
        deliver and satisfy the customer’s needs across current and emerging media
        platforms, including Print, Television, Radio, Internet, CD, DVD and portable
        devices such as mobile phones and PDA’s. Our exclusive licenses to patented
        technologies enable us to add interactive CD-Rom and DVD disc-based solutions
        to
        enhance our offerings to customers and help them achieve their
        objectives.
 
 In
        addition, on October 4, 2006 we acquired the assets of NewsProNet Interactive,
        Inc. ("NPN"), a leader in converged media content solutions and interactive
        branding strategies for local television broadcasters. These assets include
        several intellectual property assets, including a library of broadcast content.
        We intend to use these assets to both service current clients of NPN (which
        include several broadcast media companies), and to develop numerous
        cross-selling and business development opportunities using our assets and
        the
        assets of NMI.
 
 We
        are
        headquartered in Miami, Florida with its strong Hispanic and Latin American
        influences. As such, much of our staff is fluent in Spanish and has an in-depth
        knowledge of the different nuances in language and culture that characterize
        each Hispanic community. Our NMI subsidiary has developed a special expertise
        in
        serving clients that are entering into or expanding their operations in the
        U.S.
        Hispanic marketplace, as well as the Latin America/Caribbean region.
  4
  For
        these clients,
        NMI offers a unique marketing message by using television through syndicated
        programming to reach its market at a very cost efficient rate.
 
 *Technology
        Licenses*
 
 Through
        the license agreement with RTH the Company is the exclusive licensee of United
        States Patent #6,101,534, "Interactive, Remote, Computer Interface System"
        ("'534 Patent") and a second patent, "A Media Validation System", U.S. Patent
        No. 6,952,697. The company also has certain exclusive rights to several
        additional patent applications filed with the United States Patent and Trademark
        Office.
 
 In
        general, the claims of the 534 patent relate to technology that allows
        multimedia content stored on a removable local media (including, but not
        limited
        to CD-ROM and DVD-ROM discs) to be "controlled" or "released" for access
        by the
        user by visiting a related website on the Internet.
 
 *Sales
        Strategy*
 
 In
        addition to the ongoing business of NMI and NPN, we are leveraging the
        established customer base and experience of NMI as it relates to opportunities
        for our technology. For example, NMI has been hired by a tourism bureau in
        Europe to implement an Internet marketing campaign to promote travel to the
        destination. In the past NMI has created and placed an online marketing program
        for this customer. Now we will also incorporate a “connected” CD-Rom for this
        customer.
 
 We
        have
        an in-house sales staff, currently consisting of four employees that target
        customers in travel, advertising, cable television and broadcast media, training
        & education, film, music and video. The goal of our sales staff is to
        utilize some or all of our core competencies to craft a solution to meet
        the
        needs of each individual client. This can range from the creation of marketing
        collateral or a digital branding strategy, to a full-blown turnkey solution
        involving content creation, media placement, web development and creation
        of an
        interactive CD-Rom or DVD.
 
 In
        addition to our in-house sales staff, we also are establishing a network
        of
        performance based agents who have expertise, knowledge and contacts in a
        particular industry or market sector where we believe our services and
        technology can be utilized. For example we have agents presenting our
        capabilities and services to the Education, Religious and Cruise Industry
        markets. We also provide our services to third party companies that have
        been
        contracted by the United States Government for interactive training and other
        initiatives that can utilize our capabilities and technology. In particular,
        we
        have completed an interactive training CD-ROM for the United States Department
        of Housing and Urban Development (HUD). National Communications, Inc., a
        company
        owned by our Vice Chairman and principal shareholder Robert Rodriguez, has
        a
        contract with HUD and engaged us to create a customized CD-Rom. The CD-ROM
        will
        automatically link users to a special section of the HUD website, and provide
        access to high quality video training tutorials that we also produced.
 
 We
        have
        developed a special focus on helping our customers leverage the many changes
        that have occurred in the areas of marketing, advertising and content delivery
        in the age of digital convergence and converged media. We believe that
        government agencies as well as private sector companies across many industries
        and target markets are faced with new challenges as more and more consumers
        use
        the Internet and a wide range of digital media platforms to receive their
        entertainment and information. We offer digital media services and technology
        solutions to help our customers meet such challenges in a constantly changing
        environment.
  5
  
 In
        addition to servicing and expanding our business with existing customers,
        our
        sales team has proposals in front of a variety of potential new clients.
        These
        range from advertising agencies that can grow business with their own clients
        by
        utilizing our digital media services and technology, to media research firms,
        sports organizations, and the Latin American divisions of several national
        cable
        television channels. In all cases, after meeting with potential clients and
        evaluating their needs and objectives we craft a proposed solution that utilizes
        some or all of our offerings to help the customer achieve their stated
        goals.
 
 We
        are in
        the very early stages of implementing our business plan. We believe that
        if
        potential revenue streams materialize from our services and applications
        in a
        timely and meaningful fashion, it will enable us to increase shareholder
        value.
        However, we do not believe that cash flow from operations alone will be
        sufficient to fund our activities in the next 12 months. As of December 31,
        2006, we had total assets of approximately $707,500 ($1,525 of which is cash),
        and total liabilities of approximately $4,004,600. As described below, we
        will
        need to obtain additional financing for us to both implement our plans and
        to
        continue as a going concern.
 
 **CUSTOMERS**
  Our
        targeted customers include companies, government agencies, advertising agencies,
        publishers, web sites, advertisers and content owners who seek to leverage
        opportunities in this age of "digital convergence." In addition, our targeted
        customers include licensees and potential licensees in the areas of
        entertainment content (e.g. film, music, and video), education, advertising,
        travel and promotion, who may deploy applications that utilize our services
        and/or intellectual property.
  **COMPETITION**
  We
        are
        subject to intense competition. The CD, DVD, software and Internet industries
        are highly competitive, and there are several companies that create and license
        digital media content. Although we believe that the solutions we offer are
        highly valuable and useful, there are several alternatives available to
        prospective customers that may offer equally good functionality. Prospective
        clients may choose to license similar solutions instead of ours. Additionally,
        insofar as we believe certain elements of some of offerings are protected
        by the
        patent rights we license from RTH, there can be no assurance that the patent
        rights will be enforced (particularly in foreign jurisdictions, where no
        formal
        patent rights exist) or that the license from RTH will remain in
        effect.
  Our
        competitors range from small companies with limited resources to large companies
        with substantial financial, technical and marketing resources. Competitors
        with
        greater financial resources than us may be able to broaden their offerings,
        make
        greater investments in design and product development, undertake more extensive
        marketing campaigns, and adopt more aggressive pricing policies than the
        company. There can be no assurance that we will be able to respond effectively
        to market changes or to compete successfully in the future.
 
 **EMPLOYEES**
 
 As
        of
        December 31, 2006, we employed 14 people on a full-time basis, which includes
        employees employed by our wholly-owned subsidiaries. Our success is highly
        dependent on our ability to attract and retain qualified employees. Competition
        for qualified employees remains intense in our industry. We believe that
        we can
        attract and retain qualified employees, but we cannot guarantee that we will
        be
        successful. None of our employees are subject to collective bargaining
        agreements. We believe that our relationship with our employees is
        good.
   6
 
 **AVAILABLE
        INFORMATION**
 
 Our
        primary Internet address is http://www.connectedmedia.com. In the future
        we
        intend to make available, free of charge, our annual report on Form 10-KSB,
        quarterly reports on Form 10-QSB, current reports on Form 8-K, and any
        amendments to those reports, as well as our governance documents, as soon
        as
        reasonably practicable after we electronically file such material with or
        furnish it to the SEC. The information found on our Web site is not part
        of this
        or any other report we file with or furnish to the SEC.
 
 **ITEM
        2.**  **DESCRIPTION
        OF PROPERTY**
 
 We
        do not
        own any real property. Our corporate offices are located in a professional
        office building located at 80 Southwest 8th Street, Miami, Florida 33130.
        We
        sublease office space, on a month-to-month basis, from National Communications,
        Inc, a
        company owned by our Vice Chairman and principal shareholder Robert Rodriguez.
        The company also occupies space, on a month-to-month basis, in Alpharetta
        Georgia for digital content production and editing. Our combined rent is
        approximately $ 5,500 per month, and the properties are in good condition.
  **ITEM
        3.**  **LEGAL
        PROCEEDINGS**
 On
          November 7, 2006,
          NPNAA received notice from a creditor of NPN of a claim against NPN in
          the
          amount of approximately $50,000 plus interest and attorney's fees. The
          creditor
          claimed, among other things, that the transaction between NPN and NPNAA
          was
          improper, and that NPNAA is directly liable for the amount of the claim.
          On
          December 12, 2006, the Company received notice from the creditor that it
          did not
          intend to pursue legal recourse and was withdrawing its demand letter of
          November 7, 2006.
  On
          March 23, 2007,
          the Company and its wholly-owned subsidiary Trust Licensing, Inc., were
          each
          served with a lawsuit from Irrevocable Trust Agreement Number III. The
          lawsuit
          was commenced in the Circuit Court of the 17th Judicial Circuit in and
          for
          Broward County, Florida. The lawsuit relates to amounts claimed owed to
          Irrevocable Trust Agreement Number III in the approximate total principal
          amount
          of $500,000, and also seeks various interest, costs, and fees (See " **** Management’s
          Discussion And Analysis Or Plan Of Operation - Subsequent
          Events").
 
 **ITEM
        4.**  **SUBMISSION
        OF MATTERS TO A VOTE OF SECURITY HOLDERS**
 
 On
        or
        about March 16, 2006, we received written consents in lieu of a meeting of
        stockholders from holders of 228,445,700 shares representing approximately
        76%
        of the 300,507,663 shares of the total issued and outstanding shares of voting
        stock of the Company then outstanding approving:
 
 (a)  an
        amendment
        to the Articles of Incorporation of the company, pursuant to which the maximum
        number of shares of stock that the Company shall be authorized to have
        outstanding at any time shall be increased to two billion (2,000,000,000)
        shares
        of common stock at par value of $ 0.0001 with no preemptive
        rights;
  (b)  the
        Stock
        Purchase Agreement and Share Exchange with Natcom Marketing International,
        a
        Puerto Rican based full-service marketing communications agency;
 
 (c)  the
        election
        of a new Board of Directors, upon closing of the Natcom agreement, to serve
        until the next annual meeting; and
   7
 
 (d)  the
        financing
        agreement for approximately $ 1.718 million with Montgomery Equity Partners,
        Ltd. ("Montgomery"), the Purchase and Sale Agreement, the License and Royalty
        Agreement with Rothschild Trust Holdings, LLC ("RTH") and the Escrow Agreement
        by and among the Company, RTH, Montgomery, and David Gonzalez, as Escrow
        Agent.
 
 **ITEM
        5.**  **MARKET
        FOR COMMON EQUITY, RELATED STOCKHOLDER**  **MATTERS,
        AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES**
 
 Our
        common stock is traded on Over-The-Counter Bulletin Board under the symbol
        CNCM.OB. Our common stock became eligible for trading on December 31, 2004.
        Prior to that date our Company had not traded for at least the last two fiscal
        years. As of March 31, 2007, there were approximately 350 registered holders
        of
        record of our common stock. The following table sets forth the range of high
        and
        low bid information for the period from January 1, 2006 through December
        31,
        2006.
 
 **Period**
              
              **High
                  Bid**
              
              **Low
                  Bid****2006**First
                  Quarter
              
              $
              0.04
              
              $
              0.01Second
                  Quarter
              
              $
              0.08
              
              $
              0.012Third
                  Quarter
              
              $
              0.011
              
              $
              0.0021Fourth
                  Quarter
              
              $
              .023
              
              $
              .004
 The
        above
        quotations reflect inter-dealer prices, without retail mark-up, mark-down
        or
        commission and may not represent actual transactions.
 
 **DIVIDENDS**
 
 We
        did
        not pay any cash dividends to stockholders during fiscal year 2006. The
        declaration of any future cash dividend will be at the discretion of our
        board
        of directors and will depend upon our earnings, if any, our capital requirements
        and financial position, our general economic conditions, and other pertinent
        conditions. It is our present intention not to pay any cash dividends in
        the
        foreseeable future, but rather to reinvest earnings, if any, in our business
        operations.
 
 **PART
        II**
 
 **ITEM
        6.****MANAGEMENT’S
        DISCUSSION AND ANALYSIS OR PLAN OF****OPERATION**
 
 *This
        annual report on Form 10-KSB, including this Management’s Discussion and
        Analysis of Financial Condition and Results of Operations, contains
        forward-looking statements regarding future events and our future results
        that
        are subject to the safe harbors created under the Securities Act of 1933
        and the
        Securities Exchange Act of 1934. These statements are based on current
        expectations, estimates, forecasts, and projections about the industries
        in
        which we operate and the beliefs and assumptions of our management. Words
        such
        as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” “continues,” “may,” variations of such words,
        and similar expressions are intended to identify such forward-looking
        statements. In addition, any statements that refer to projections of our
        future
        financial performance, our anticipated growth and trends in our business
        and
        other characterizations of future events or circumstances are forward-looking
        statements. Readers are cautioned that these forward-looking statements are
        only
        predictions and are subject to risks, uncertainties, and assumptions that
        are
        difficult to predict.*
  8
  *Therefore,
        actual results may differ materially and adversely from those expressed in
        any
        forward-looking statements. Readers are referred to risks and uncertainties
        identified below, under “Risk Factors” and elsewhere herein. We undertake no
        obligation to revise or update any forward-looking statements for any
        reason.*
 
 **OUR
        BUSINESS**
 
 We
        are a
        sales and marketing company focused on digital media that offers a broad
        spectrum of digital services across current and emerging media platforms,
        including print, television, radio, Internet, CD, DVD and mobile devices
        such as
        mobile phones and PDAs. Our customers include companies, government agencies,
        advertising agencies, advertisers and content owners who seek to leverage
        opportunities in this age of “digital convergence.” Thanks to the advent of
        digital technology, different media platforms have converged causing many
        changes in the way entertainment content, advertising and marketing messages
        are
        delivered to their audience. Companies are faced with a fragmented marketplace,
        where consumers are reached through multiple channels and on multiple devices
        -
        from televisions and radios, to computers, game consoles, mobile phones,
        personal digital assistants (PDA’s) and portable media players (such as the iPOD
        and other devices). We offer creative services, marketing communications,
        content creation and distribution, and technology to help our clients navigate
        through this “new media” landscape.
  On
          October 4, 2006,
          we acquired the assets of NewsProNet Interactive, LLC ("NPN"), a leader
          in
          converged media content solutions and interactive branding strategies for
          local
          television broadcasters. These assets include several intellectual property
          assets, including a library of broadcast content. We intend to use these
          assets
          to both service current clients of NPN (which include several broadcast
          media
          companies), and to develop numerous cross-selling and business development
          opportunities using our assets and the assets of NMI.
  *Technology
        Licenses*
  Through
          the license
          agreement with RTH the Company is the exclusive licensee of United States
          Patent
          No. 6,101,534, "Interactive, Remote, Computer Interface System" ("'534
          Patent")
          and a second patent, "A Media Validation System", U.S. Patent No. 6,952,697.
          The
          company also has certain exclusive rights to several additional patent
          applications filed with the United States Patent and Trademark
          Office.
 
 In
        general, the claims of the ‘534 patent relate to technology that allows
        multimedia content stored on a removable local media (including, but not
        limited
        to CD-ROM and DVD-ROM discs) to be "controlled" or "released" for access
        by the
        user by visiting a related website on the Internet.
 
 *Sales
        Strategy*
 
 In
        addition to the ongoing business of NMI and NPN, we are leveraging the
        established customer base and experience of NMI as it relates to opportunities
        for our patent licenses. For example, NMI has been hired by a tourism bureau
        in
        Europe to implement an Internet marketing campaign to promote travel to the
        destination. In the past NMI has created and placed an online marketing program
        for this customer.
 
 We
        have
        an in-house sales staff, currently consisting of four employees that target
        customers in travel, advertising, cable television and broadcast media, training
        & education, film, music and video.
  9
  The
        goal of our sales
        staff is to utilize some or all of our core competencies to craft a solution
        to
        meet the needs of each individual client. This can range from the creation
        of
        marketing collateral or a digital branding strategy, to a full-blown turnkey
        solution involving content creation, media placement, web development and
        creation of an interactive CD-Rom or DVD utilizing patented
        technology.
  In
          addition to our
          in-house sales staff, we also are establishing a network of performance
          based
          agents who have expertise, knowledge and contacts in a particular industry
          or
          market sector where we believe our services and technology can be utilized.
          For
          example, we have agents presenting our capabilities and services to the
          Education, Religious and Cruise Industry markets. We also provide our services
          to third party companies that have been contracted by the United States
          Government for interactive training and other initiatives that can utilize
          our
          capabilities and technology. In particular, we have completed an interactive
          training CD-ROM for the United States Department of Housing and Urban
          Development (HUD). Natcom Marketing Communications, Inc. (“NMC”), a company
          owned by our Vice Chairman and principal shareholder Robert Rodriguez,
          has a
          contract with HUD and NMC engaged us to create a customized CD-Rom. The
          CD-ROM
          will automatically link users to a special section of the HUD website,
          and
          provide access to high quality video training tutorials that we also
          produced.
 
 We
        have
        developed a special focus on helping our customers leverage the many changes
        that have occurred in the areas of marketing, advertising and content delivery
        in the age of digital convergence and converged media. We believe that
        government agencies as well as private sector companies across many industries
        and target markets are faced with new challenges as more and more consumers
        use
        the Internet and a wide range of digital media platforms to receive their
        entertainment and information. We offer digital media services and technology
        solutions to help our customers meet such challenges in a constantly changing
        environment.
  We
        believe that if potential revenue streams materialize from our services and
        applications in a timely and meaningful fashion, it will enable us to increase
        shareholder value. However, we do not believe that cash flow from operations
        alone will be sufficient to fund our activities in the next 12 months. As
        of
        December 31, 2006, we had total assets of approximately $707,500 ($1,525
        of
        which is cash), and total liabilities of approximately $4,004,600. As described
        below, we will need to obtain additional financing for us to both implement
        our
        plans and to continue as a going concern.
 
 **CRITICAL
        ACCOUNTING POLICIES AND ESTIMATES**
 
 The
        preparation of
        financial statements and related disclosures in conformity with accounting
        principles generally accepted in the United States requires us to make
        judgments, assumptions, and estimates that affect the amounts reported in
        the
        Consolidated Financial Statements and accompanying notes. Note 1 to the audited
        Consolidated Financial Statements describe the significant accounting policies
        and methods used in the preparation of the Consolidated Financial Statements.
        These critical accounting policies are affected significantly by judgments,
        assumptions, and estimates used in the preparation of the Consolidated Financial
        Statements and actual results could differ materially from the amounts reported
        based on these policies.
 
 *Accounting
        for
        Derivatives* - We
        evaluate our convertible debt, options, warrants or other contracts to determine
        if those contracts or embedded components of those contracts qualify as
        derivatives to be separately accounted for under Statement of Financial
        Accounting Standards 133 "Accounting for Derivative Instruments and Hedging
        Activities" and related interpretations including EITF 00-19 "Accounting
        for
        Derivative Financial Instruments Indexed to, and Potentially Settled in,
        a
        Company's Own Stock". The result of this accounting treatment is that the
        fair
        value of the embedded derivative is marked-to-market each balance sheet date
        and
        recorded as a liability.
  10
  In
        the event that the
        fair value is recorded as a liability, the change in fair value is recorded
        in
        the consolidated statement of operations as other income or expense. Upon
        conversion or exercise of a derivative instrument, the instrument is marked
        to
        fair value at the conversion date and then that fair value is reclassified
        to
        equity. Equity instruments that are initially classified as equity that become
        subject to reclassification under SFAS 133 are reclassified to liability
        at the
        fair value of the instrument on the reclassification date.
 
 In
        December 2006, the FASB issued FSP EITF 00-19-2, "Accounting for Registration
        Payments" which was effective immediately. This FSP amends EITF 00-19 to
        require
        potential registration payment arrangements be treated as a contingency pursuant
        to FASB Statement 5 rather than at fair value. We considered the effect of
        this
        standard on the above embedded conversion option and warrant classification
        as a
        liability and determined that the accounting would not have changed as a
        result
        of this standard; since the variable rate on the convertible debentures still
        cause derivative treatment. Therefore, there was no effect of implementing
        this
        standard.
 
 *Revenue
        Recognition* .
        We
        follow the guidance of the Securities and Exchange Commission’s Staff Accounting
        Bulletin No. 104 for revenue recognition. In general, we record revenue when
        persuasive evidence of an arrangement exists, services have been rendered
        or
        product delivery has occurred, the sales price to the customer is fixed or
        determinable, and collectibility is reasonably assured. T he
        following are the specific revenue recognition policies for the revenue streams
        of the Company:
 
 Content
        revenue - subscription based:  The Company produces and distributes
        broadcast and digital content for customers that subscribe to such service
        under
        monthly fixed fee arrangements.  Revenue is recognized when the minimum
        content required to be delivered monthly under the agreement is finalized,
        and
        delivered or made available to the customers for unconditional use.
 
 Content
        revenue - revenue sharing arrangements: When content is provided on a revenue
        sharing basis, the revenue is not determinable until the Company receives
        payment from the customer. Accordingly, revenue is recognized upon receipt
        of
        payment. There were no revenue sharing revenues during 2006.
 
 Content
        revenue - barter arrangements: Revenue from barter transactions will be valued
        at the fair value of the goods provided or goods received whichever is more
        readily determinable and recognized upon delivery of the content by the Company.
        There were no barter revenues during 2006.
 
 Digital
        media services revenue:  The Company creates and distributes digital
        marketing content and advertising services on a project basis.  Revenue is
        recognized when projects are completed and made available to the customer
        for
        unconditional use.
 
 *Impairment
        of Long-Lived Assets* . Our
        long-lived assets consist of patents (having a fair value of zero for GAAP
        purposes) a video content library and equipment. We review long-lived assets
        and
        certain identifiable assets related to those assets for impairment whenever
        circumstances and situations change such that there is an indication that
        the
        carrying amounts may not be recoverable. If the undiscounted future cash
        flows
        of the long-lived assets are less that the carrying amount, their carrying
        amount is reduced to fair value and an impairment loss is recognized. On
        July
        10, 2006 (the “Acquisition Date”), we acquired all of the outstanding shares of
        NMI in exchange for a total 300,507,663 or approximately 50% of the issued
        and
        outstanding shares of the Company's common stock. Pursuant to the Agreement,
        on
        the Acquisition Date, NMI became a wholly-owned subsidiary of Connected Media
        Technologies, Inc.
  11
  The
        transaction was
        accounted for as a reverse acquisition using the purchase method of accounting
        in accordance with SFAS No. 141 since both Companies are considered operating
        entities and management of NMI has obtained control through (i) holding a
        controlling interest with no other shareholder or group of shareholders holding
        equivalent rights and (ii) Board control. Accordingly, the consolidated
        financial statements subsequent to the acquisition will consist of the balance
        sheet of NMI at historical cost, the balance sheet of Connected Media
        Technologies, Inc. marked to fair value based on the purchase price, the
        historical operations of NMI and the operations of Connected Media Technologies,
        Inc. from the acquisition date. The purchase price is based on the average
        fair
        value of the Company's shares during the period before and after the date
        of the
        agreement and the date of the announcement. This amounted to approximately
        $13,476,000. The purchase price was allocated to the net assets of Connected
        Media Technologies Inc. based on their fair values. Since we have minimal
        revenues, have incurred losses and used cash in operations, we deemed the
        acquired goodwill to be impaired and wrote-off the goodwill on the acquisition
        date. Accordingly, for the year ended December 31, 2006, we recorded an
        impairment of goodwill of $16,227,967 on the accompanying statement of
        operations.
 
 *Contingencies
        and Litigation* .
        We
        record a reserve for contingencies and litigation when an adverse outcome
        is
        probable and the amount of the potential liability is reasonably
        estimable.
  On
        November 7, 2006, NPNAA received notice from a creditor of NPN of a claim
        against NPN in the amount of approximately $50,000 plus interest and attorney's
        fees. The creditor claimed, among other things, that the transaction between
        NPN
        and NPNAA was improper, and that NPNAA was directly liable for the amount
        of the
        claim. On December 12, 2006, we received notice from the creditor that it
        did
        not intend to pursue legal recourse and was withdrawing its demand letter
        of
        November 7, 2006.
 
 On
        March
        23, 2007, the Company and its wholly-owned subsidiary Trust Licensing, Inc.,
        were each served with a lawsuit from Irrevocable Trust Agreement Number III.
        Irrevocable Trust Agreement III. The lawsuit was commenced in the Circuit
        Court
        of the 17th Judicial Circuit in and for Broward County, Florida. The lawsuit
        relates to amounts claimed owed to Irrevocable Trust Agreement Number III
        in the
        approximate total principal amount of $500,000, and also seeks various interest,
        costs, and fees. (See
        "Subsequent Events.")
  From
        time
        to time we may become subject to proceedings, lawsuits and unasserted claims
        in
        the ordinary course of business.  Such matters are subject to many
        uncertainties, and outcomes are not predictable with assurance.  As of the
        date of this report, we do not believe that any of these matters would be
        material to the Company’s financial condition or operation.
  **RESULTS
        OF OPERATIONS**
 
 YEAR
        ENDED DECEMBER 31, 2006 COMPARED TO YEAR ENDED DECEMBER
        31, 2005
  Revenue.
          Our net sales were $446,706 and $497,163 for the year ended December 31,
          2006
          and December 31, 2005 respectively, a decrease of $50,457 or 10%. Because
          of
          reverse merger accounting, the comparison is made to the 2005 revenue of
          NMI
          prior to the reverse merger, which was concluded in July 2006. Connected
          Media,
          prior to the reverse merger, did not have any revenue in
          2005.
 Cost
        of
        sales. For the year ended December 31, 2006 and 2005, cost of sales amounted
        to
        $269,901 and $293,450, respectively, and included the cost of independent
        contractors and production costs.
  Operating
        Expenses. Operating expenses for the year ended December 31, 2006 was $917,054
        compared to operating expenses of $289,458 for the same period in 2005, an
        increase of $627,596 or 216.8%. The increase in operating expenses results
        primarily from the following:
   12
 
 ·
              For
                  the year ended December 31, 2006, depreciation and amortization
                  expense
                  amounted to $98,826 as compared to $17,025 for the year ended December
                  31,
                  2005, an increase of $81,801 or 480.5%. This increase was attributable
                  to
                  the acquisition of Connected Media Technologies, Inc on July 10,
                  2006 and
                  the amortization of approximately $12,000 on the intangible assets
                  acquired in October 2006.·
              For
                    the year ended December 31, 2006, bad debt amounted to $48,271
                    as compared
                    to $0 for the year ended December 31, 2005, an increase of $48,271
                    or
                    100%. This increase was attributable to the write-off of uncollectible
                    receivables.·
              For
                  the year ended December 31, 2006, professional fees amounted to
                  $177,391
                  as compared to $24,724 for the year ended December 31, 2005, an
                  increase
                  of $152,667. This increase was attributable to an increase in legal
                  fees
                  associated with our financings, acquisition activities, and registration
                  statements and an increase in accounting fees. We did not incur
                  professional fees in 2005 related to being a public
                  entity.·
              For
                    the year ended December 31, 2006, rent expense amounted to $40,988
                    as
                    compared to $0 for the year ended December 31, 2005, an increase
                    of
                    $40,988 or 100%. We sublease office space, on a month-to-month
                    basis, from
                    National Communications, Inc, a company owned by the Company’s Vice
                    Chairman and principal shareholder Robert Rodriguez. For the
                    year ended
                    December 31, 2006, rent expense paid to this related party amounted
                    to
                    $31,000. Additional rent expense is related to space in Alpharetta,
                    Georgia occupied by NPNAA.·
              For
                  the year ended December 31, 2006, payroll, contract service and
                  stock-based compensation amounted to $427,741 as compared to $110,169
                  for
                  the year ended December 31, 2005, an increase of $317,572 or 288.3%.
                  This
                  increase was attributable to an increase in stock-based compensation
                  of
                  $67,890 related to the vesting of stock options and an increase
                  in
                  compensation due to our acquisition.·
              For
                  the year ended December 31, 2006, other selling, general and
                  administrative expenses amounted to $123,837 as compared to $137,540
                  for
                  the year ended December 31, 2005, a decrease of $13,703 or 10%.
 Other
          expenses. For
          the year ended December 31, 2006, other expenses amounted to $16,746,043
          as
          compared to $311,000 for the year ended December 31, 2005. For the year
          ended
          December 31, 2006, we recorded an impairment of goodwill of $16,227,967
          related
          to the reorganization of the company and our acquisition. Additionally,
          we
          recorded a gain from the initial valuation and the change in fair value
          of
          embedded conversion option liabilities of $360,169, a loss from the change
          in
          fair market value of warrant liability of $53,230, and interest expense
          of
          $825,015 related to the amortization of debt discount and accrued interest
          on
          our debt financings. We recognized $311,000 in “other expenses” for the year
          ended December 31, 2005, which was related to the impairment of an investment
          in
          non-marketable common stock.
 
 Net
        Loss. Our net
        loss for the year ended December 31, 2006 was $17,486,292 or $.04 per
        common share compared to a net loss of $396,745 or $0.00 per common share
        for
        the same period in 2005.
 
 **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 At
        December 31, 2006,
        we had $1,525 in cash. We have no other liquid assets. The company intends
        to
        finance its activities through use of the private and public debt and equity
        financing.
   13
 Prior
          to the April
          2005 and January 2006 Montgomery transaction (described below), Connected
          Media
          financed their activities primarily through a prior loan from Montgomery
          Equity
          Partners and loans from, and loans secured by, related parties.
 
 Our
        cash requirements
        for the next twelve months are approximately $2.5 million, including
        requirements for working capital (estimated to be approximately $1.1 million),
        research and development (estimated to be approximately $100,000), personnel
        additions (estimated to be approximately $300,000), licensing activities
        (estimated to be approximately $100,000) and debt service and repayment
        (estimated to be approximately $900,000). The company expects to obtain the
        necessary funds during the course of the twelve-month period and will manage
        its
        activities accordingly.
 
 In
        the event we are
        not able to generate sufficient funds from operations or financing from
        Montgomery, we will seek to obtain funding from other means, including the
        use
        of private and public debt and equity financing.
  We
        do not believe
        that cash flow from operations will be sufficient to fund our activities
        over
        the next 12 months. Our ability to continue as a going concern is dependent
        upon
        obtaining additional public and private equity and debt financing, (which
        we do
        not anticipate in the foreseeable future). We cannot be certain that additional
        funding will be available as needed, or upon terms that are favorable. If
        we are
        unable to obtain the necessary funding, we may need to curtail the
        implementation of our core business activities and risk going out of
        business.
  On
          January 31, 2006,
          prior to the reverse acquisition, Connected Media completed a financing
          agreement for $1,718,000 with Montgomery. The amount included the original
          principal amount of $718,000 previously funded pursuant to the April 2005
          Note
          plus accrued interest and a 10% termination fee. Of the remaining $1,000,000
          balance of the note, $400,000 was funded on January 31, 2006, $300,000
          was
          scheduled to be funded on or about April 30, 2006 (90 days from closing
          of the
          first funding) (which was actually funded on July 10, 2006) and an additional
          $300,000 was scheduled to be funded on or about September 30, 2006 (150
          days
          from closing of the first funding)(and was funded during October 2006).
          Under
          the terms of the agreement, we issued to Montgomery a secured convertible
          debenture in the amount of $718,000 which represents the original principal,
          interest and fees for the $600,000 previously funded as well as an additional
          secured convertible debenture in the amount of $400,000. Both convertible
          debentures have an interest rate of 14% and maturity dates of April 30,
          2007,
          and are convertible into shares of our common stock at a conversion price
          equal
          to the lesser of (a) $0.04 or (b) seventy five percent (75%) of the lowest
          Closing Bid Price of the Common Stock, as quoted by Bloomberg, LP, of the
          ten
          (10) trading days immediately preceding the Conversion Date. The Conversion
          Price may be adjusted pursuant to the other terms of this Debenture. On
          November
          3, 2006, Montgomery converted $40,000 of the $718,000 convertible debenture
          into
          an aggregate of 5,333,333 shares of common stock. The conversion price
          was
          $.0075 per share and the conversion reduced the principal amount of this
          debenture to $678,000.
 
 The
        Convertible
        Debentures are secured by a first priority lien on all of our assets. As
        further
        security for our obligations under the Convertible Debentures, we executed
        an
        Amended and Restated Pledge Agreement, pursuant to which we re-pledged the
        60,000,000 shares of our common stock to Montgomery that were originally
        pledged
        pursuant to the April 2005 Note.
 
 Pursuant
        to the
        funding transaction, Montgomery was also issued a warrant for 8,000,000 shares
        of our common stock. The warrant is exercisable through January 31, 2009.
        The
        exercise price per share under the warrant is $0.0001 per share and the shares
        issuable upon exercise of the warrant are to be included in the registration
        statement.
   14
 
 Pursuant
        to the terms
        of a Registration Rights Agreement, we are required to register the shares
        underlying the Convertible Debentures, as well as the shares to be issued
        pursuant to the Warrant within 60 days from the Closing Date of the Stock
        Purchase Agreement with NMI and to have the registration statement declared
        effective 90 days from the date thereof. In the event that the registration
        statement is not filed or declared effective within these time limits, we
        may be
        subject to liquidated damages in the amount of 2% of the entire funding amount
        per month and may be deemed in default of the operative agreements. We filed
        an
        SB-2 registration statement on September 1, 2006, which has not yet
        been declared effective. Based on communications with the lender and the
        February 2007, loan modification agreement, the lender did not intend to
        enforce
        this liquidated damages provision as of December 31, 2006.
 
 The
        Montgomery
        financing transaction was approved by the unanimous consent of our Board
        of
        Directors on January 31, 2006. A majority of our stockholders approved the
        action by written consent in lieu of a meeting on March 16, 2006. The Montgomery
        financing documents adopted by our Board of Directors were filed as exhibits
        to
        our Form 8K with the Securities and Exchange Commission on February 8, 2006,
        and
        are hereby incorporated by reference.
 
 On
        March 21, 2007 we
        entered into a Loan Modification Agreement effective February, 2007, with
        Montgomery Equity Partners, Ltd. (see subsequent events below.)
 
 We
        received an audit opinion for the fiscal year ended December 31, 2006 that
        includes a "going concern" risk, which raises substantial doubt regarding
        our
        ability to continue as a going concern. We do not believe that cash flow
        from
        operations will be sufficient to fund our activities over the next 12 months.
        Our ability to continue as a going concern is dependent upon obtaining
        additional financing. Until we can generate sufficient cash flow from our
        operations (which we do not anticipate in the foreseeable future) we expect
        to
        finance future cash needs through private and public financings, including
        equity financings. We cannot be certain that additional funding will be
        available as needed, or upon terms that are favorable. In addition, we may
        need
        to curtail the implementation of our core business activities and plans if
        funding is not available.
  **CAPITAL
        EXPENDITURES AND COMMITMENTS**
 
 We
        did
        not acquire a material amount of fixed assets during 2006 except for property
        and equipment acquired in our reverse acquisition and currently do not plan
        to
        do so during the next fiscal year.
 
 **OFF-BALANCE
        SHEET ARRANGEMENTS**
 
 We
        do not
        currently have any off-balance sheet arrangements.
 
 **SUBSEQUENT
        EVENTS**
 
 By
        letters dated January 30, 2007 and January 31, 2007, Mr. Leigh M. Rothschild
        and
        Mr. Adam Bauman resigned as Directors, effective immediately.
 
 As
        previously disclosed, Mr. Rothschild is a beneficiary of Irrevocable Trust
        Agreement Number III ("Trust"), a creditor of Registrant. In correspondence
        accompanying his resignation letter, Mr. Rothschild indicated that his
        resignation was related in part to past due amounts owed to Trust.
 
 Mr.
        Rothschild was a member of the Registrant's Compensation Committee.
   15
 
 In
        correspondence accompanying his resignation letter, Mr. Bauman indicated
        that
        his resignation was related, in part, to unpaid compensation for Board service
        and Registrant's failure to pay certain other unsecured debt
        obligations.
 
 Mr.
        Bauman was a member of the Registrant's Audit Committee.
 
 On
        March
        9, 2007, Montgomery converted $24,000 of the $718,000 convertible debenture
        issued to Montgomery on January 31, 2006 into an aggregate of 30,000,000
        shares
        of common stock. The conversion price was $.0008 per share and the conversion
        reduced the principal amount of this debenture to $654,000.
 
 On
        March
        21, 2007 the Company entered into a Loan Modification Agreement effective
        February, 2007 with Montgomery Equity Partners, Ltd. (“Montgomery”) pursuant to
        which the due date on outstanding promissory notes was extended to June 30,
        2007
        with interest accruing at 14%. The Agreement also provides that the Company
        may
        redeem the notes for a payment of $1 million with the convertible promissory
        note in the amount of $678,000 still remaining outstanding. Upon payment
        of the
        $1million Montgomery will release all liens and encumbrances it holds on
        the
        assets of the Company and will hold back for a period of 90 days from converting
        or selling and shares underlying the convertible note.
 
 Thereafter,
        Montgomery may convert and sell shares under the convertible notes in amount
        not
        to exceed $56,500 per calendar month. The conversion price shall be changes
        to
        $0.01 per share and a discount on the conversion price will change to 60%
        of the
        lowest bid price of the Company’s common stock during the 10 days immediately
        preceding the conversion rate. Upon payment of the redemption price the Company
        will issue to Montgomery a warrant to purchase 10% of the outstanding secured
        convertible debentures as of the maturity date. The warrant will be for seven
        years with an exercise price equal to $0.01.
  On
          March 21, 2007,
          Rothschild Trust Holdings, LLC, the licensor of various patents to the
          Company,
          has alleged, among other things, that the Company's license to these patents
          has
          been terminated. The patents licensed to the Company were included in the
          License and Royalty Agreement, by and between Rothschild Trust Holdings,
          LLC and
          the Company, dated as of January 31, 2006, The licensor has now claimed
          all
          right, title and interest in the subject intellectual property and has
          further
          asserted that any subsequent use or sublicense of the subject intellectual
          property will constitute infringement. The Company disagrees with the licensor's
          assertions concerning the Company's rights in the intellectual property,
          and is
          currently evaluating its options with counsel with respect to the continued
          use
          of the subject intellectual property rights. The dispute relates, in part,
          to
          the parties' differing interpretations of the terms of the License and
          Royalty
          Agreement, and the subsequent actions and conduct between the parties relating
          thereto. Although the Company intends to assert its rights to the intellectual
          property, the patents do not represent a material portion of the Company’s
          operating revenue.
 
 On
        March
        23, 2007, the Company and its wholly-owned subsidiary Trust Licensing, Inc.,
        were each served with a lawsuit from Irrevocable Trust Agreement Number III.
        Irrevocable Trust Agreement III. The lawsuit was commenced in the Circuit
        Court
        of the 17th Judicial Circuit in and for Broward County, Florida. The lawsuit
        relates to amounts claimed owed to Irrevocable Trust Agreement Number III
        in the
        approximate total principal amount of $500,000, and also seeks various interest,
        costs, and fees. The claimed amounts, which are in dispute, relate primarily
        to
        certain promissory notes and for the reimbursement of business expenses.
        As
        previously reported by the Company, during the time in which these claims
        arose,
        Leigh M. Rothschild was a Director of the Company and a beneficiary of
        Irrevocable Trust Agreement Number III.
  16
  The
        Company notes
        that, for purposes of fiscal conservatism, it has previously included portions
        of the claimed amounts as related party Notes Payable in its financial
        statements.
 
 **Recent
        Pronouncements**
  In
        March 2006, the
        FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets,
        an
        amendment of FASB Statement No. 140, Accounting for Transfers and Servicing
        of
        Financial Assets and Extinguishments of Liabilities". This statement requires
        all separately recognized servicing assets and servicing liabilities be
        initially measured at fair value, if practicable, and permits for subsequent
        measurement using either fair value measurement with changes in fair value
        reflected in earnings or the amortization and impairment requirements of
        Statement No. 140. The subsequent measurement of separately recognized servicing
        assets and servicing liabilities at fair value eliminates the necessity for
        entities that manage the risks inherent in servicing assets and servicing
        liabilities with derivatives to qualify for hedge accounting treatment and
        eliminates the characterization of declines in fair value as impairments
        or
        direct write-downs. SFAS No. 156 is effective for an entity's first fiscal
        year
        beginning after September 15, 2006. The adoption of this statement is not
        expected to have a significant effect on our future reported financial position
        or results of operations.
  In
        July 2006, the
        Financial Accounting Standards Board (FASB) issued FASB Interpretation (FIN)
        No.
        48, "Accounting for Uncertainty in Income Taxes-an interpretation of FASB
        Statement No. 109." This interpretation provides guidance for recognizing
        and
        measuring uncertain tax positions, as defined in SFAS No. 109, "Accounting
        for
        Income Taxes." FIN No. 48 prescribes a threshold condition that a tax position
        must meet for any of the benefit of an uncertain tax position to be recognized
        in the financial statements.
 
 Guidance
        is also
        provided regarding de-recognition, classification, and disclosure of uncertain
        tax positions. FIN No. 48 is effective for fiscal years beginning after December
        15, 2006. We do not expect that this interpretation will have a material
        impact
        on our financial position, results of operations, or cash flows.
 
 In
        September 2006,
        FASB issued SFAS 157
        `Fair Value Measurements'. This Statement defines fair value, establishes
        a
        framework for measuring fair value in generally accepted accounting principles
        (GAAP), and expands disclosures about fair value measurements. This Statement
        applies under other accounting pronouncements that require or permit fair
        value
        measurements, the Board having previously concluded in those accounting
        pronouncements that fair value is the relevant measurement attribute.
        Accordingly, this Statement does not require any new fair value measurements.
        However, for some entities, the application of this Statement will change
        current practice. This Statement is effective for financial statements issued
        for fiscal years beginning after November 15, 2007, and interim
        periods within those fiscal years. Management is currently evaluating the
        effect
        of this pronouncement on financial statements.
 
 In
        December 2006,
        FASB Staff Position No. EITF 00-19-2, *“Accounting
        for Registration Payment Arrangements,”* was
        issued. The FSP specifies that the contingent obligation to make future payments
        or otherwise transfer consideration under a registration payment arrangement,
        whether issued as a separate agreement or included as a provision of a financial
        instrument or other agreement, should be separately recognized and measured
        in
        accordance with SFAS No. 5, *“Accounting
        for Contingencies.” The Company b* elieves
        that its current accounting is consistent with the FSP. Accordingly, adoption
        of
        the FSP had no effect on our consolidated financial statements.
  17
   In
        February 2007, the
        FASB issued SFAS No. 159, *“The
        Fair Value Option for Financial Assets and Financial Liabilities, Including
        an
        Amendment of FASB Statement No. 115”* ,
        under
        which entities will now be permitted to measure many financial instruments
        and
        certain other assets and liabilities at fair value on an
        instrument-by-instrument basis. This Statement is effective as of the beginning
        of an entity’s first fiscal year that begins after November 15, 2007. Early
        adoption is permitted as of the beginning of a fiscal year that begins on
        or
        before November 15, 2007, provided the entity also elects to apply the
        provisions of SFAS 157. The Company is currently assessing the impact, if
        any, the adoption of SFAS 159 will have on its consolidated financial
        statements.
 
 **RISK
        FACTORS**
 
 **WE
        ARE SUBJECT TO VARIOUS RISKS THAT MAY MATERIALLY HARM OUR BUSINESS, FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS. YOU SHOULD CAREFULLY CONSIDER THE RISKS
        AND
        UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS FILING BEFORE
        DECIDING TO PURCHASE OUR COMMON STOCK. IF ANY OF THESE RISKS OR UNCERTAINTIES
        ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS COULD
        BE
        MATERIALLY HARMED. IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD
        DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT. THE FOLLOWING
        ARE ALL
        THE MATERIAL RISKS KNOWN TO THE COMPANY.**
  This
        Annual Report on Form 10-KSB contains statements that are forward-looking.
        These
        statements are based on current expectations and assumptions that are subject
        to
        risks and uncertainties. Actual results could differ materially because of
        issues and uncertainties such as those listed below and elsewhere in this
        report, which, among others, should be considered in evaluating our future
        financial performance.
 
 In
        addition to those risks cited in the Company's prior filings, the following
        are
        additional risk factors to which the Company desires to draw your
        attention:
 
 **We
        have a history of operating losses.**
 
 The
        company has a history of operating losses and there is no guarantee we will
        be
        able to achieve a positive operating income in the future and, if achieved,
        sustain such positive operating income. For the year ended December 31, 2006,
        we
        had an aggregate net loss of $17,486,292 .
 
 Accordingly,
        an investment in the company is extremely speculative in nature and involves
        a
        high degree of risk.
 
 **Although
        NMI, our newly acquired subsidiary has generated revenue in the past, our
        business is partially dependent on our ability to monetize the licensed patents,
        which to date have generated limited revenue.**
 
 We
        have
        generated limited revenue from royalties or licensing of intellectual property.
        There can be no assurance that we will be able to do so in the future.
 
 **There
        is substantial doubt about our ability to continue as a going
        concern.**
  18
   As
          discussed in the
          accompanying consolidated financial statements, for the year ending December
          31,
          2006, we had $446,706 in revenues, a net loss of $17,486,292 and cash used
          in
          operations of $492,848. Also, at December 31, 2006, the company had a working
          capital deficiency of $3,872,558, a stockholder’s deficiency of $3,297,062, and
          an accumulated deficit $17,068,859. If we are unable to continue as a going
          concern, you may lose your entire investment.
 
 **Although
        the debt owed to Montgomery is convertible into common stock, there is no
        assurance that Montgomery will convert the debt into common
        stock.**
  Because
          of the
          convertible nature of the debt owed to Montgomery, we may not have to repay
          this
          debt with cash if the debt is converted into shares of our common stock.
          However, we cannot assure you that this debt will be converted into common
          stock
          and we may have to repay this indebtedness in cash.
 
 **We
        need additional financing and if we are unable to raise the capital necessary,
        we may be forced to abandon or curtail our business plan or
        operations.**
 
 As
        of
        December 31, 2006, our working capital deficiency (current assets less current
        liabilities) was $3,872,558. We do not have any continual commitments or
        identified sources of additional capital from third parties or from its
        officers, directors or majority shareholders. There is no assurance that
        additional financing will be available on favorable terms, if at
        all.
 
 **Existing
        stockholders may face dilution from our financing efforts as well as a result
        of
        conversion of the debt owed to Montgomery** .
 
 We
        must
        raise additional capital from external sources to execute our business plan.
        We
        plan to issue debt securities, capital stock, or a combination of these
        securities. We may not be able to sell these securities, in particular under
        current market conditions. Even if we are successful in finding buyers for
        our
        securities, the buyers could and have demanded high interest rates or require
        us
        to agree to onerous operating covenants, which could in turn harm our ability
        to
        operate our business by restricting our operating activities. We may be forced
        to sell our shares of capital stock at depressed market prices, which could
        result in substantial dilution to our existing stockholders. In addition,
        any
        shares of capital stock we may issue may have rights, privileges, and
        preferences superior to those of our common stockholders. Furthermore, existing
        stockholders may face substantial dilution if Montgomery converts its debt
        into
        shares of common stock.
 
 **We
        do not own the patents we are exploiting and are subject to the terms and
        conditions of a licensing agreement.**
 
 In
        connection with certain financing transactions described herein, on January
        31,
        2006, we entered into a Purchase and Sale Agreement with Rothschild Trust
        Holdings, LLC ("RTH"), for the sale of all of our issued and pending patents
        in
        exchange for the return of 13,241,223 shares of our common stock, which are
        treasury shares being held in escrow. Leigh M. Rothschild, one of our former
        Directors, is a beneficial owner of RTH. As additional consideration, RTH
        granted the company a license to use the patents pursuant to the terms of
        a
        License and Royalty Agreement, which granted the company a twelve month right
        of
        election to license the patents.
 
 On
        March
        21, 2007, RTH has alleged, among other things, that the Company's license
        to
        these patents has been terminated. The patents licensed to the Company were
        included in the License and Royalty Agreement, by and between Rothschild
        Trust
        Holdings, LLC and the Company, dated as of January 31, 2006,
  19
  The
        licensor has now
        claimed all right, title and interest in the subject intellectual property
        and
        has further asserted that any subsequent use or sublicense of the subject
        intellectual property will constitute infringement. The Company disagrees
        with
        the licensor's assertions concerning the Company's rights in the intellectual
        property, and is currently evaluating its options with counsel with respect
        to
        the continued use of the subject intellectual property rights. The dispute
        relates, in part, to the parties' differing interpretations of the terms
        of the
        License and Royalty Agreement, and the subsequent actions and conduct between
        the parties relating thereto. Although the Company intends to assert its
        rights
        to the intellectual property, the patents do not represent a material portion
        of
        the Company’s operating revenue. As a
        result, for our business activities related to exploiting our patents we
        are
        dependent on the license granted to us from RTH. In the event that a long-term
        License and Royalty Agreement cannot be reached, is terminated or not renewed
        by
        RTH, such a result could have an adverse affect on the company as it could
        prevent us from licensing these patents, thus potentially eliminating any
        source
        of revenue from these patents.
 
 **If
        applications for pending patents are not granted it could affect our business.**
 
 RTH
        has
        applied for patent protection for some aspects of technology that we intend
        to
        utilize. There can be no guarantee or assurance that patents will be awarded.
        In
        the event patent protection is not granted, or if other companies are granted
        patent protection on similar and/or competing technology, it may be difficult
        for us to maintain an advantage over our competition. Even if patents are
        granted, there is no assurance that competitors will not infringe upon them,
        and
        we do not explicitly control the enforcement of the patents that we license
        from
        RTH.
  **We
        do not carry liability insurance or business interruption
        insurance.**
 
 We
        carry
        customary Director’s & Officer’s Insurance, but we do not carry general
        liability insurance or business interruption insurance at this time. We intend
        to purchase such insurance when we deem such an investment to be economically
        prudent. Consequently, if any peril or event occurs that would subject the
        company to liability or business interruption, we will not be insured for
        that
        loss. Such an event could severely affect our ability to conduct our normal
        business operations and adversely affect both our business operations and
        our
        revenue.
 
 **We
        are reliant on key personnel and if we lose any of its key employees, it
        could
        have a material adverse effect on our business and
        operations.**
 
 Our
        success depends largely on highly skilled personnel. We rely upon personnel
        having skills in areas such as sales, marketing, application development,
        and
        skills relating directly to developing and commercializing the company’s
        intellectual property and intellectual property that the company licenses.
        The
        loss of the services of any key personnel could adversely affect
        us.
 
 **We
        do not expect to pay dividends for the foreseeable future.**
 
 We
        have
        not declared or paid, and do not anticipate declaring or paying in the
        foreseeable future, any cash dividends on our common stock. Our ability to
        pay
        dividends is dependent upon, among other things, our future earnings, if
        any, as
        well as our operating and financial condition, capital requirements, general
        business conditions and other pertinent factors. Furthermore, any payment
        of
        dividends by us is subject to the discretion of our board of directors.
        Accordingly, there is no assurance that any dividends will ever be paid on
        our
        common stock.
 
 **We
        are controlled by our principal shareholders.**
   20
 
 At
        present, our principal shareholders own approximately 89% of the issued and
        outstanding common stock and therefore have the ability to elect all of the
        members of the Board of Directors of the company. As such, control of the
        company will remain with the controlling shareholders who will continue to
        formulate business decisions and policy.
 
 **There
        is a limited market for our common stock and our stock price may be
        volatile.**
 
 Our
        shares are listed on the Over-the-Counter Bulletin Board, and have had a
        limited
        volume of sales, thus providing a limited liquidity into the market for our
        shares. Moreover, the price of our shares may be subject to wide fluctuations
        in
        response to several factors, including, but not limited to the sale of shares
        by
        Montgomery as a result of the exercise of their conversion rights. The size
        of
        such sales could be substantially grater than the normal amount of trading
        occurring in our stock and could have a substantial influence on the price
        of
        our stock.
 
 Our
        shares are traded on the Over-The-Counter Bulletin Board. In recent years
        the
        stock market in general has experienced extreme price fluctuations that have
        oftentimes have been unrelated to the operating performance of the affected
        companies. Similarly, the market price of our common stock may fluctuate
        significantly based upon factors unrelated or disproportionate to our operating
        performance. These market fluctuations, as well as general economic, political
        and market conditions may adversely affect the market price of our shares.
 
 **We
        are subject to price volatility due to our operations materially fluctuating;
        as
        a result, any quarter-to-quarter comparisons in our financial statements
        may not
        be meaningful.**
 
 As
        a
        result of the evolving nature of the markets in which we compete, and the
        early
        stage in development of our business plan, we believe that our operating
        results
        may fluctuate materially, as a result of which quarter-to-quarter comparisons
        of
        our results of operations may not be meaningful. Our quarterly results of
        operations may fluctuate significantly.
 
 **Our
        common stock is deemed to be “penny stock,” which may make it more difficult for
        investors to sell their shares due to suitability
        requirements.**
 
 Our
        common stock is deemed to be “penny stock” as that term is defined in Rule
        3a51-1 promulgated under the Securities Exchange Act of 1934. Penny stocks
        are
        stocks: (a) with a price of less than $5.00 per share; (b) that are not traded
        on a “recognized” national exchange; (c) whose prices are not quoted on the
        NASDAQ automated quotation system; (d) NASDAQ stocks that trade below $5.00
        per
        share are deemed a “penny stock” for purposes of Section 15(b)(6) of the
        Exchange Act; (e) issuers with net tangible assets less than $2.0 million
        (if
        the issuer has been in continuous operation for at least three years) or
        $5.0
        million (if in continuous operation for less than three years), or with average
        revenues of less than $6.0 million for the last three years.
 
 Broker/dealers
        dealing in penny stocks are required to provide potential investors with
        a
        document disclosing the risks of penny stocks. Moreover, broker/dealers are
        required to determine whether an investment in a penny stock is a suitable
        investment for a prospective investor. These requirements may reduce the
        potential market for our common stock by reducing the number of potential
        investors. This may make it more difficult for investors in our common stock
        to
        sell shares to third parties or to otherwise dispose of them. This could
        cause
        our stock price to decline.
 
 **ITEM
        7. FINANCIAL STATEMENTS**




See
        Financial Statements starting at page F-1.










21












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





None.





**ITEM
      8A.****CONTROLS
      AND PROCEDURES**





Evaluation
      of disclosure controls and procedures




Our
      principal executive officer and principal financial officer evaluated our
      disclosure controls and procedures (as defined in rule 13a-14(c) and 15d-14(c)
      under the Securities Exchange Act of 1934, as amended) as of a date within
      90
      days before the filing of this annual report (the Evaluation Date). Based on
      that evaluation, our principal executive officer and principal financial officer
      concluded that, as of the Evaluation Date, the disclosure controls and
      procedures in place were adequate to ensure that information required to be
      disclosed by us, including our consolidated subsidiaries, in reports that we
      file or submit under the Exchange Act, is recorded, processed, summarized and
      reported on a timely basis in accordance with applicable rules and regulations.
      Although our principal executive officer and principal financial officer
      believes our existing disclosure controls and procedures are adequate to enable
      us to comply with our disclosure obligations, we intend to formalize and
      document the procedures already in place and establish a disclosure
      committee.




Changes
      in internal controls




We
      have
      not made any significant changes to our internal controls subsequent to the
      Evaluation Date. We have not identified any significant deficiencies or material
      weaknesses or other factors that could significantly affect these controls,
      and
      therefore, no corrective action was taken.





**ITEM
      8B.    OTHER INFORMATION**





None.











22





**PART
      III**







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




Our
      executive officers as of March 16, 2007 **** were
      as
      follows:





**Name**
            **Age**
            **Position
                with the company**Rafael
                Diaz-Balart
            57
            Chairman
                of the BoardRobert
                Rodriguez
            44
            Vice-Chairman
                of the BoardJeffrey
                W. Sass
            47
            Chief
                Executive Officer and DirectorIsidrio
                Gonzalez
            48
            President
                and DirectorMark
                Mayo
            56
            Chief
                Financial Officer and Director




**Rafael
      J. Diaz-Balart, Chairman of the Board**





Mr. Rafael
      Diaz-Balart is CEO and Founder of Vestec International Corporation. Since 1993,
      Vestec has specialized in international investment banking and international
      business consulting. Mr. Diaz-Balart has over twenty-five years experience
      in international finance and asset management. Prior to forming Vestec,
      Mr. Diaz-Balart served in executive capacities with IBJ Schroder
      International Bank, Paine Webber, Barnett Bank and the National Bank of
      Washington, D.C. Mr. Diaz-Balart also has served as Consultant to the
      Office of the Special Advisor to the President of Venezuela. During his tenure
      at the National Bank of Washington, Mr. Diaz-Balart served, inter-alia, as
      liaison to Eximbank, World Bank and Inter-American Development Bank. In
      partnership with the principals of the Brazilian financial group—Banco
      Paulista/Socopa, Mr. Diaz-Balart founded InterTrust Bank Limited (Bahamas).
      He also advised in the creation of The Florida Special Opportunity Fund, an
      off-shore investment vehicle for U.S. based commercial real estate transactions,
      administered by The Allen Morris Company. Mr. Diaz-Balart is presently
      Senior Advisor for Credit Lyonnais--Private Banking International.
      Mr. Diaz-Balart holds a Bachelors of Arts (Government) degree from Cornell
      University (Ithaca, New York) and a Masters of Business Administration from
      The
      American University, (Washington, D.C.).




**Robert
      Rodriguez, Vice-Chairman of the Board**





President
      of NMI, Robert Rodriguez is also Co-founder and CEO of NatCom Marketing
      Communications, a 24-year-old Miami based full service Hispanic-marketing
      agency. NatCom, a twice ranked INC 500 Company represents entities such as
      Bombardier, Lucent Technologies, Chevron, FL Lottery, Avaya, Wells Fargo,
      Allegro and the Federal Government with marketing initiatives in the U.S. as
      well as Latin America. Prior to launching NatCom, Mr. Rodriguez served as
      vice president of sales at Consumer Publishing International, a Dallas Cowboys
      related company.






23





In
      addition to his corporate responsibilities, Mr. Rodriguez currently serves
      as president of the International Advertising Association’s Florida chapter
      (IAA), Chairman of the Marketing Committee at the City of Miami’s ITB. Robert is
      also an executive committee member of the Greater Miami Chamber of Commerce
      and
      Chairman of the Board of Trustees of Cushman School. Robert was the former
      vice
      chairman of the Miami Symphony and was elected as an Executive Committee member
      of the Republican Party of Miami-Dade in 1984.





In
      1993,
      NatCom Marketing Communications was a featured case study at Harvard Business
      School. He received his master’s degree in ALS from the University of Miami and
      his undergraduate degree with honors from Barry University.





**Jeffrey
      W. Sass, Chief Executive Officer and Director**




A
      veteran
      of the entertainment, licensing, and computer industries, Jeff Sass is currently
      President, Chief Executive Officer, Director and a co-founder of Connected
      Media
      Technologies, Inc., a position he has held since May 2004.  From October
      1998 through December 2001, Mr. Sass was co-founder and Chief Operating Officer
      of BarPoint.com, a publicly traded wireless information and mobile commerce
      company. He became BarPoint's President and Chief Executive Officer in January
      2002 and served in that capacity through February 2004 when BarPoint engaged
      in
      a reverse merger transaction with SchoolPop/Fundever, Inc.  During Mr.
      Sass’ tenure, BarPoint entered into strategic alliances and business
      relationships with Symbol Technologies, AT&T, Cingular, Verizon, Sprint,
      Nextel, Office Depot, The Sharper Image and others.




Prior
      to
      BarPoint, in 1997 Mr. Sass founded and ran The Marketing Machine, a full-service
      marketing agency and consulting firm, servicing the computer hardware, software
      and other industries, with clients including Fujitsu Interactive as well as
      networking hardware manufacturer Nexland, Inc. (Nexland was subsequently sold
      to
      Symantec).





Previously,
      Jeffrey Sass has held management, production, and marketing positions at
      companies including IntraCorp Entertainment (1995-1997), GameTek, Inc.
      (1994-1995) and Troma Entertainment (1987-1994). At Troma, in addition to
      writing and producing chores, he helped create and launch the cartoon series,
      TOXIC CRUSADERS, and then started and ran the independent movie studio's
      licensing and merchandising division, working closely with more than 70
      manufacturers worldwide including Marvel Comics, Playmates Toys, Golden Books
      Publishing, Sega, Bandai and more.  Jeff also handled licensing and
      merchandising for the Emmy Award winning PBS series, READING
      RAINBOW.





Jeff
      is a
      frequent guest lecturer for the “Starting New Ventures” class at the University
      of Miami School of Business Administration, and he has actively supported the
      University’s Entrepreneurship initiatives, including serving as a panel judge at
      the annual Business Plan competition.  Jeff is a graduate of Cornell
      University.





**Isidro
      Gonzalez, President and Director**





Mr. Gonzalez
      has 20 years of media sales and management experience focusing on accelerating
      revenue growth and improving bottom-line profitability in challenging, start-up,
      and turnaround situations in the US and Latin America. For the past 2 years
      at
      IMC Media Inc., he has worked as an Industry Consultant to media companies
      including SBS, Argent Trading, Natcom Marketing and WAVE Magazine. As Director
      of Advertising Sales, for Sony Pictures Television International,
      Mr. Gonzalez implemented innovative sales strategies for the SONY group of
      stations exceeding all sales budgets during his 3 year tenure, a first for
      the
      station group which included Sony Entertainment Television, E! Entertainment,
      and AXN, a global SONY network with over 80 million households.






24




At
      the CBS Station
      Group’s WFOR-4 in Miami, Florida, he was jointly responsible for taking the
      station from 3rd to 1st place market billing. As the new business development
      manager he was responsible for hiring and training sales staff, developing
      strategic promotions, campaigns, and sales commission structures at the Miami
      station. To generate additional revenue, he developed non-traditional shows
      including Showcase for Cars, Living South Florida Style, (South Florida’s first
      ever Real Estate Developer supported TV program in 1992) and a vendor-supported
      Wednesday Night Lottery sold to a major South Florida
      Retailer.





Mr. Gonzalez
      attained or surpassed all advertising revenue objectives as the Director of
      Advertising Sales for The Weather Channel (TWC) Latin America, an innovative
      start-up, where he developed the “Sharing in Profit Partnership Program” to jump
      start affiliate distribution in Latin America. Prior to TWC, during his three
      years as Producer and Sales Manager for the immensely popular Univision variety
      program Sabado Gigante, he maintained over $14 million in sponsorship sales,
      while adding $5 million in new business from such brands as Ralston Purina,
      Polaroid, and McDonalds. Mr. Gonzalez has a consulting agreement in place
      with Argent Trading, a NMI customer. Fluent in Spanish and English,
      Mr. Gonzalez holds a degree in Management Information Systems from the
      Queensborough College part of the City University of New York system
      (CUNY).





**Mark
      Mayo, Chief Financial Officer and Director**





Mark
      Mayo
      is currently the CEO and founder/visionary of the L4 Media Group, a group of
      fifteen (15) ethnically programmed TV stations primarily located in the
      Southeast. Mr. Mayo has over 30 years of management experience with major
      market TV, radio and newspapers that blends management, finance, production
      and
      business development. Previously, Mr. Mayo co-founded NewsProNet, an
      industry leader in providing syndicated news content for television to over
      120 TV clients. As the CFO and COO of NewsPronet during the past five
      years, he has built NewsProNet’s market share, asset value and core products
      from a start-up to the fastest growing creator of unique content for television.
      In 2000, he negotiated and secured significant funding from GE/NBC to build
      and
      acquire NewsProNet’s main competitor, CNX Media and TDM Productions, a leading
      corporate production company. The assets of NewsProNet were acquired by a
      wholly-owned subsidiary of Connected Media in 2006. Prior to starting
      NewsProNet, Mr. Mayo was VP/GM/CFO for an Internet start-up,
      FASTV.COM and for the Worldwide Broadcasting Network, with offices in
      Boston, New York and Los Angeles. FASTV is widely recognized as the first video
      search engine portal on the Internet. His duties involved day-to-day operations
      including sales, production, finance and program acquisitions.





Prior
      to
      FASTV, Mr. Mayo spent 10 years with Sunbeam Television Corp. starting as
      Controller in 1986 and later becoming corporate VP of Finance, Administration
      and Production in Boston and Miami hubs. In 1993, he spearheaded the successful
      $250 million acquisition of WHDH-TV, Boston, and was primarily responsible
      for
      the turnaround success at the station which today is ranked number one in the
      highly competitive Boston market.




He
      is
      also credited with playing a major role in the turnaround success at WSVN-TV,
      Miami, one of the most dominant FOX affiliates in the country. At Sunbeam
      Television he also established Sunbeam Productions which successfully launched
      Inside Report, Deco Drive and Real Life for NBC.




Prior
      to
      joining Sunbeam, Mr. Mayo worked for 12 years for the Hearst Corporation
      starting at the Baltimore Newspaper division in 1974 and then transferring
      to
      the Broadcast Division to become the Controller for WTAE television and radio
      in
      Pittsburgh, PA in 1980. Mr. Mayo holds a BS Degree in Business
      Administration and Accounting from the University of Baltimore.




25




**CERTAIN
      LEGAL PROCEEDINGS**




No
      director, nominee for director, or executive officer has appeared as a party
      in
      any legal proceeding material to an evaluation of his ability or integrity
      during the past five years.





**COMPLIANCE
      WITH SECTION 16(A) OF THE EXCHANGE ACT**





We
      have
      not filed a Form 5 for the year ending December 31, 2006.





**CODE
      OF ETHICS**





The
      company has adopted a Code of Ethics applicable to its Chief Executive Officer
      and Chief Financial Officer.





**ITEM
      10.    EXECUTIVE COMPENSATION**





The
      following table discloses executive compensation received for the three fiscal
      years ended December 31, 2006.





**SUMMARY
      COMPENSATION TABLE**


**Name
                  and Principal Position**
              **Year**
              **Annual
                  Compensation**
              
              **Long-Term**
                **Compensation
                  Awards**
              **All
                  Other****Compensation****Total**
              **Salary**
              **Bonus**
              **Restricted**
                **Stock**
                **Award(s)
                  ($)**
              **Securities****Underlying****Options
                  (#)**Rafael Diaz-Balart
                Chairman
              2006
                2005
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-Robert Rodriguez
                Vice Chairman
              2006
                2005
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-Jeffrey W. Sass
                Chief Executive Officer
              2006
                2005
              $120,000
                $-0-
              $120,000
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-Isidrio Gonzalez
                President
              2006
                2005
              $56,000
                $-0-
              $56,000
                $-0-
              $-0-
                $-0
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-Mark Mayo
                Chief Financial Officer
              2006
                2005
              $12,500
                $-0-
              $12,500
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-Leigh
                  M. Rothschild
                Former
                  Board Member (former Chairman and Vice Chairman)
              2006
                2005
              $11,737
                $-0-
              $11,737
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-
              $-0-
                $-0-










26





(1)
            Mr.
                Rothschild, Mr. Sass executed employment agreements with the Company
                on
                August 23, 2004, at base annual salaries of $ 175,000. These agreements
                expired on August 23, 2006. To provide assistance to the Company's
                cash
                flow, Mr. Rothschild and Mr. Sass had agreed to defer payment of
                accrued
                but unpaid salary to an unspecified, later date. Mr. Rothschild
                subsequently applied his accrued and unpaid salary toward consideration
                for the Purchase and Sale Agreement by and between the Company and
                Rothschild Trust Holdings, LLC. Mr. Sass is still owed approximately
                $180,000, as of December 31, 2006. An additional employee,
                Michael R. Moore, is also owed accrued by unpaid salary relating
                to: (a)
                an employment agreement by and between the Company and Mr. Moore
                which
                expired on August 23, 2006; and (b) accrued by unpaid salaries arising
                from the period between October 1, 2006 and December 31, 2006. Both
                Mr.
                Sass's and Mr. Moore's accrued but unpaid salaries have been accrued
                as a
                current liability on the Company's Balance
                Sheet.





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




**SECURITY
      OWNERSHIP**




The
        following table
        sets forth as of December 31, 2006, certain information as of the record
        date
        concerning the beneficial ownership of our common stock by: (i) each person
        known by us to be the beneficial owner of more than 5% of our outstanding
        common
        stock, (ii) each director, (iii) each of the named executive officers (as
        defined below), and (iv) all executive officers and directors as a
        group .




**Name
                  and Address**
              **Amount
                  and Nature of Beneficial Ownership**
              
              **Percentage**
                **of
                  Class (1)**Robert
                  Rodriguez, Vice Chairman
              
              300,507,663
              
              
              49.10%Jeffrey
                  W. Sass, Chief Executive Officer and Director
              
              65,018,000
              
              
              10.64%Mark
                  Mayo, Chief Financial Officer and Director
              
              0
              
              
              0%Rafael
                  Diaz-Balart, Chairman of the Board and Director
              
              15,000,000
              (2)
              
              2.45%Isidrio
                  Gonzalez, President and Director
              
              0
              
              
              0%Leigh
                  M. Rothschild
              
              163,427,700
              (3)
              
              26.70%All
                  Directors and Officers as a Group
                (6
                  individuals)
              
              543,953,363
              
              
              88.89




27





*
      = Less
      than 1%





(1)  Based
      on
      611,907,436 shares outstanding as of December 31, 2006. Excludes: (a) 60,000,000
      shares pledged to Montgomery as collateral for the company’s obligations under
      the Note; (b) 15,241,223 treasury shares held by the company of which 13,241,223
      are held in escrow as additional collateral against the Montgomery Notes; (c)
      200,000 warrants issued to Cornell Capital Partners, L.P. (“Cornell”).; (d)
      8,000,000 warrants issued to Montgomery; and (e) 3,200,000 options issued to
      non-officers and directors pursuant to our Equity Incentive Plan.





(2)  Mr.
      Diaz-Balart owns options to purchase 15,000,000 shares.





(3)   
      Includes 46,642,600 shares owned by Mr. Rothschild directly, 116,785,100 shares
      owned by Irrevocable Trust Agreement Number III. Mr. Rothschild is the direct
      beneficiary of the Irrevocable Trust Agreement Number III and Rothschild
      RTH.




**EQUITY
      INCENTIVE PLAN**





On
      January 12, 2005, Mr. Leigh M. Rothschild, as the sole Director of the company,
      approved the Equity Incentive Plan (the "Plan") covering 50,000,000 shares.
      The
      Plan was subsequently approved by the shareholders.




As
      of
      December 31, 2006, 32,100,000 have been granted under the Plan, each such grant
      being priced at the fair market value on the company’s shares on the date of
      grant.




The
      Plan
      provides a means whereby employees, officers, directors, and certain consultants
      and independent contractors of the company ("Qualified Grantees") may acquire
      the common shares of the company pursuant to grants of: (i) incentive stock
      options ("ISO"); (ii) non-qualified stock options; and (iii) restricted stock.
      A
      summary of the significant provisions of the Plan is set forth below. A copy
      of
      the full Plan is annexed to this registration statement. The following
      description of the Plan is qualified in its entirety by reference to the Plan
      itself.




The
      purpose of the Plan is to, among other things, further the long-term stability,
      continuing growth and financial success of the company by attracting and
      retaining key employees, directors and selected advisors through the use of
      stock incentives, while stimulating the efforts of these individuals upon whose
      judgment and interest the company is and will be largely dependent for the
      successful conduct of its business. The company believes that the Plan will
      strengthen these persons' desire to remain with the company and will further
      the
      identification of those persons' interests with those of the company's
      shareholders.




The
      Plan
      shall be administered by the Compensation Committee of the Board of Directors.
      The membership of the Committee shall be constituted so as to comply at all
      times with the then applicable requirements under the Exchange Act and Section
      162(m) of the Internal Revenue Code.




The
      Plan
      provides that options to purchase up to 50,000,000 common shares of the company
      may be issued to the employees, officers, directors and certain consultants
      and
      independent contractors. All present and future employees shall be eligible
      to
      receive incentive awards under the Plan, and all present and future non-employee
      directors shall be eligible to receive non-statutory options under the Plan.
      An
      eligible employee or non-employee director being awarded a grant shall be
      notified in writing of such grant, which notice shall state the number of shares
      for which options are granted, the option price per share, and conditions
      surrounding the grant and exercise of the options.






28




The
      exercise price of shares of company Stock covered by an ISO shall be not less
      than 100% of the fair market value of such shares on the date of grant; provided
      that if an ISO is granted to an employee who, at the time of the grant, is
      a 10%
      shareholder, then the exercise price of the shares covered by the incentive
      stock option shall be not less than 110% of the fair market value of such shares
      on the date of grant. The Plan also provides for cashless exercise of Options.
      In such event, there may be a charge to the earnings of the company with respect
      to the cashless exercise of the Options.




The
      Compensation Committee may determine the number of shares that may be awarded
      to
      a participant as restricted stock and the provisions relating to risk of
      forfeiture and may determine that the restricted stock is only earned upon
      the
      satisfaction of performance goals established by the Committee. The Committee
      shall also determine the nature, length and starting date of any performance
      period and the terms thereof. **** The
      maximum number of shares that may be granted to any participant may not exceed
      20% of the total shares subject to the Plan.




*U.S.
      Federal Income Tax Consequences* .
      The
      rules governing the U.S. federal tax treatment of stock options, restricted
      stock and shares acquired upon the exercise of stock options are quite
      technical. Therefore, the description of U.S. federal income tax consequences
      set forth below is necessarily general in nature and does not purport to be
      complete. Moreover, the statutory provisions are subject to change, as are
      their
      interpretations, and their application may vary in individual circumstances.
      In
      particular, the American Jobs Creation Act of 2004 imposed new rules concerning
      the taxation of various deferred compensation arrangements. It is not clear
      whether, and to what extent, these new rules apply to awards under the Plan.
      Although the company does not believe that awards under the Plan are affected
      by
      the new rules, there can be no assurance to that effect until adequate guidance
      is forthcoming from the U.S. Treasury Department. Finally, the tax consequences
      under applicable state, local and foreign income tax laws may not be the same
      as
      under the U.S. federal income tax laws.




*Incentive
      Stock Options* .
      ISOs
      granted pursuant to the Plan are intended to qualify as incentive stock options
      within the meaning of Section 422A of the Internal Revenue Code. If the
      participant makes no disposition of the shares acquired pursuant to exercise
      of
      an ISO within one year after the transfer of shares to such participant and
      within two years from grant of the option, such participant will realize no
      taxable income as a result of the grant or exercise of such option, and any
      gain
      or loss that is subsequently realized may be treated as long-term capital gain
      or loss, as the case may be. Under these circumstances, neither the company
      nor
      any subsidiary will be entitled to a deduction for federal income tax purposes
      with respect to either the issuance of the ISOs or the issuance of shares upon
      their exercise.




If
      shares
      acquired upon exercise of ISOs are disposed of prior to the expiration of the
      above time periods, the participant will recognize ordinary income in the year
      in which the disqualifying disposition occurs, the amount of which will
      generally be the lesser of (i) the excess of the fair market value of the shares
      on the date of exercise over the option price, or (ii) the gain recognized
      on
      such disposition. Such amount will ordinarily be deductible for federal income
      tax purposes by the company or subsidiary for whom the participant performs
      services (a service recipient) in the same year, provided that the amount
      constitutes reasonable compensation for services that would result in a
      deduction for U.S. federal income tax purposes and that certain federal income
      tax withholding requirements are satisfied. In addition, the excess, if any,
      of
      the amount realized on a disqualifying disposition over the market value of
      the
      shares on the date of exercise will be treated as capital gain.




The
      foregoing discussion does not consider the impact of the alternative minimum
      tax, which may be particularly applicable to the year in which an ISO is
      exercised.




*Nonqualified
      Stock Options* .
      A
      participant who acquires shares by exercise of a NQSO generally realizes as
      taxable ordinary income, at the time of exercise, the difference between the
      exercise price and the fair market value of the shares on the date of exercise.







29





Such
      amount will ordinarily be deductible by the service recipient for federal income
      tax purposes in the same year, provided that the amount constitutes reasonable
      compensation for services that would result in a deduction for U.S. federal
      income tax purposes and that certain federal income tax withholding requirements
      are satisfied. Subsequent appreciation or decline in the value of the shares
      on
      the sale or other disposition of the shares will generally be treated as capital
      gain or loss.




*Restricted
      Stock* .
      A
      participant granted shares of restricted stock under the Plan is not required
      to
      include the value of such shares in ordinary income until the first time such
      participant's rights in the shares are transferable or are not subject to
      substantial risk of forfeiture, whichever occurs earlier, unless such
      participant timely files an election under Section 83(b) of the Internal Revenue
      Code to be taxed on the receipt of the shares. In either case, the amount of
      such income will be equal to the excess of the fair market value of the stock
      at
      the time the income is recognized over the amount (if any) paid for the stock.
      The service recipient will ordinarily be entitled to a deduction, in the amount
      of the ordinary income recognized by the participant, for the service
      recipient=s taxable year in which the participant recognizes such income,
      provided that the amount constitutes reasonable compensation for services that
      would result in a deduction for U.S. federal income tax purposes and that
      certain federal income tax withholding requirements are satisfied.




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





We
      believe that all prior related party transactions have been entered into upon
      terms no less favorable to us than those that could be obtained from
      unaffiliated third parties. Our reasonable belief of fair value is based upon
      proximate similar transactions with third parties or attempts to obtain the
      consideration from third parties. All ongoing and future transactions with
      such
      persons, including any loans or compensation to such persons, will be approved
      by a majority of disinterested members of the Board of Directors.




We
      entered into employment agreements with Leigh M. Rothschild, our Chairman of
      the
      Board, Jeffrey W. Sass, our President and Chief Executive Officer, and Michael
      R. Moore, our Executive Vice President. Annual base salaries under the
      employment contracts were $ 175,000, $ 175,000, and $ 132,000,
      respectively. The initial term of each contract expired on August 23, 2006.
      Currently, our officers do not have employment agreements and employment
      agreements may be renegotiated in the near future. The company currently owes
      accrued salary and benefits to Messrs. Sass and Moore, however, as discussed
      herein, the accrued salary owed to Mr. Rothschild has been cancelled. As of
      December 31, 2006, the company has accrued compensation of $329,399 as a current
      liability for this purpose. On May 1, 2005, Mr. Moore’s employment contract was
      amended to conform the benefits to those received by the company's other
      executive officers and to increase the base salary to $ 160,000 annually.
      Mr. Moore agreed to accept payment of salary at the pre-amendment contracted
      salary rate through August 24, 2005. Until August 24, 2005, the salary increase
      was accrued and added to total compensation owed to him.




2.          Connected
      Media entered
      into a transaction with a Bank in a prior period pursuant to which the Company
      had access to a two hundred and fifty thousand dollar ($250,000) line of credit.
      In general, all or any portion of the $250,000 may be drawn down at any time,
      and must be repaid in full by October 25, 2006, with interest at prime plus
      1.5%. In addition, each consecutive month, the Company must pay accrued interest
      on outstanding amounts owed. The Company used the line of credit for general
      working capital. The credit line was guaranteed by a stockholder and secured
      by
      a Certificate of Deposit owned by a director of the Company. On October 25,
      2006, the $250,000 Line of Credit became due and payable in full.





30





We
      did
      not repay the amount due on the due date. In March 2007, the Company received
      notice from the Bank that the amounts due under the line of credit had been
      assigned on December 5, 2006 to Irrevocable Trust Agreement Number III. (See
      "Subsequent Events.")




At
      December 31, 2006, we have a note payable to Irrevocable Trust Agreement Number
      III (“Trust III”) in the amount of $202,000. This note matured on December 9,
      2006 pursuant to a Loan Extension Agreement dated January 31, 2006. In December
      2006, we defaulted on the Line of Credit and it was repaid to the bank with
      proceeds from the Certificate of Deposit held by Trust III (the “Guarantor”) in
      the amount of $250,000. Leigh M. Rothschild, a Director of the Company until
      January 30, 2007 (resignation date), is the primary beneficiary of Trust III.
      Accordingly, at December 31, 2006, we have note payables outstanding to Trust
      III of $452,000. At December 31, 2006, we have accrued interest payable, related
      party of $14,004. (See
      "Subsequent Events").




The
        company engaged
        McLaughlin & Stern, LLP a law firm whereby one of the partners is the father
        of the company’s Chief Executive Officer. The company had total expenses of
        approximately $41,000 for legal fees to this related party for the period
        July
        10, 2006 through December 31, 2006. The company has used the services of
        the law
        firm to handle various transactions and general SEC related matters, including
        the preparation of annual and quarterly reports. As of December 31, 2006,
        the
        Company had accrued approximately $171,600 as related party legal
        fees.




As
      of
      December 31, 2006, Jay Howard Linn earned fees of approximately $ 11,000
      for professional services rendered as our Acting Chief Financial Officer. Mr.
      Linn has been paid $ 6,500 of this amount and $ 4,500 remains owed to
      him. Mr. Linn is Trustee of Trust III.




In
      connection with
      the SPA executed on January 31, 2006, the company entered also into a Purchase
      and Sale Agreement with RTH for the sale of certain issued and pending patents
      owned by the company in exchange for the return of 13,241,223 shares of the
      company’s common stock. As additional consideration, RTH granted the company a
      license to use the patents pursuant to the terms of a License and Royalty
      Agreement, which grants the company a twelve month right of election to license
      the patents. The company exercised its right of election in January 2007. On
      March 21, 2007, RTH has alleged, among other things, that the Company's license
      to these patents has been terminated. The patents licensed to the Company were
      included in the License and Royalty Agreement, by and between Rothschild Trust
      Holdings, LLC and the Company, dated as of January 31, 2006, The licensor has
      now claimed all right, title and interest in the subject intellectual property
      and has further asserted that any subsequent use or sublicense of the subject
      intellectual property will constitute infringement. The Company disagrees with
      the licensor's assertions concerning the Company's rights in the intellectual
      property, and is currently evaluating its options with counsel with respect
      to
      the continued use of the subject intellectual property rights. The dispute
      relates, in part, to the parties' differing interpretations of the terms of
      the
      License and Royalty Agreement, and the subsequent actions and conduct between
      the parties relating thereto. Although the Company intends to assert its rights
      to the intellectual property, the patents do not represent a material portion
      of
      the Company’s operating revenue. As a
      result, for our business activities related to exploiting our patents we are
      dependent on the license granted to us from RTH. In the event that a long-term
      License and Royalty Agreement cannot be reached, is terminated or not renewed
      by
      RTH, such a result could have an adverse affect on the company as it could
      prevent us from licensing these patents, thus potentially eliminating any source
      of revenue from these patents.





31







Simultaneously
      therewith, in January 13, 2006, the company, RTH, Montgomery, and David
      Gonzalez, as Escrow Agent for Montgomery, entered into an Escrow Agreement,
      whereby the company and RTH agreed to place the 13,241,223 shares in escrow
      and
      the company agreed to deposit royalties otherwise payable to RTH into an escrow
      account held by the Escrow Agent until such time as royalties of $690,000 have
      been deposited into the escrow account or until Montgomery has been repaid
      and/or converted $690,000 of the Convertible Debentures. At such time, RTH
      shall
      have 30 days to replace these shares with $728,267 which shall be distributed
      to
      the company in exchange for these shares; otherwise, the Escrow Agent shall
      release these shares to the Company and the royalties to RTH.




Turis
      Natcom, a company organized under the laws of Spain (“TN”), is a client of NMI.
      Mr. Diaz Balart, our Chairman, is on the board of directors of TN and has an
      option to purchase equity in TN. Mr. Rodriguez, our Vice-Chairman, is a minority
      equity owner of TN.




Our
      offices are shared with NMI and NMC. Robert Rodriguez, our Vice-Chairman, is
      the
      majority stockholder of NMC.




NMC,
      a
      company owned by our Vice Chairman and principal shareholder Robert Rodriguez,
      has a contract with the United States Department of Housing and Urban
      Development (HUD). NMC subcontracted with us to create a customized CD-Rom
      incorporating our patented technology. During the year ended December 31, 2006
      the company recognized $40,000 of revenues related to this transaction.





**ITEM
      13.
      EXHIBITS**


(a)
              Exhibits:3A
              Articles
                  of Incorporation, incorporated by reference to Form 10-KSB filed
                  on
                  3/9/2005 for the period ended 12/31/2004, filed as Exhibit
                  3A3B
              By-Laws
                  incorporated by reference to Form 10-KSB filed on 3/9/2005 for
                  the period
                  ended 12/31/2004, filed as Exhibit 3C3C
              Amendment
                  of Articles of Incorporation, incorporated by reference to Form
                  8-K for
                  the period August 25, 2004 filed as Exhibit 5.3D
              Amendment
                  of the Articles of Incorporation, incorporated by reference to
                  Form 8-K
                  for the period April 27, 2005 filed as Exhibit 3D.3E
              Amendment
                  to the Articles of Incorporation, incorporated by reference to
                  Form 8-K
                  for the period ended May 17, 2005 filed as Exhibit 3E10.1
              Agreement
                  and Plan of Merger Among New Mountaintop Corporation, Trust Licensing,
                  Inc. and Trust Licensing, LLC dated August 24, 2004 incorporated
                  by
                  reference to Form8-K for the period August 25, 2004 filed as Exhibit
                  110.2
              Warrant
                  dated April 14, 2005 granted by the company to Cornell Capital
                  Partners,
                  L.P. incorporated by reference to Form 8-K for the period April
                  18, 2005
                  filed as Exhibit 10.1310.3
              Securities
                  Purchase Agreement dated January 31, 2006 between the company and
                  Montgomery Equity Partners, Ltd. incorporated by reference to Form
                  8-K for
                  the period January 31, 2006 filed as Exhibit 10.110.4
              Secured
                  Convertible Debenture dated January 31, 2006 in the amount of $400,000
                  and
                  payable to Montgomery Equity Partners, Ltd. incorporated by reference
                  to
                  Form 8-K for the period January 31, 2006 filed as Exhibit
                  10.210.5
              Amended
                  and Restated Convertible Debentured dated January 31, 2006 in the
                  amount
                  of $718,000 and payable to Montgomery Equity Partners, Ltd. incorporated
                  by reference to Form 8-K for the period January 31, 2006 filed
                  as Exhibit
                  10.3






32




10.6
              Investor
                  Registration Rights Agreement dated January 31, 2006 between the
                  company
                  and Montgomery Equity Partners, Ltd. incorporated by reference
                  to Form 8-K
                  for the period January 31, 2006 filed as Exhibit 10.410.7
              Amended
                  and Restated Security Agreement dated January 31, 2006 between
                  the company
                  and Montgomery Equity Partners, Ltd. incorporated by reference
                  to Form 8-K
                  for the period January 31, 2006 filed as Exhibit 10.510.8
              Amended
                  and Restated Pledge Agreement dated January 31, 2006 between the
                  company
                  and Montgomery Equity Partners, Ltd. incorporated by reference
                  to Form 8-K
                  for the period January 31, 2006 filed as Exhibit 10.610.9
              Termination
                  Agreement dated January 31, 2006 between the company and Cornell
                  Capital
                  Partners, L.P. incorporated by reference to Form 8-K for the period
                  January 31, 2006 filed as Exhibit 10.710.10
              Stock
                  Purchase Agreement dated January 31, 2006 between the company and
                  NMI
                  International Marketing, Inc. incorporated by reference to Form
                  8-K for
                  the period January 31, 2006 filed as Exhibit 10.810.11
              Purchase
                  and Sale Agreement dated January 31, 2006 between the company and
                  Rothschild Trust Holdings, LLC incorporated by reference to Form
                  8-K for
                  the period January 31, 2006 filed as Exhibit 10.910.12
              License
                  and Royalty Agreement dated January 31, 2006 between the company
                  and
                  Rothschild Trust Holdings, LLC incorporated by reference to Form
                  8-K for
                  the period January 31, 2006 filed as Exhibit 10.1010.13
              Escrow
                  Agreement dated January 31, 2006 between the company, Rothschild
                  Trust
                  Holdings, LLC, Montgomery Equity Partners, Ltd. And David Gonzalez,
                  as
                  Escrow Agent incorporated by reference to Form 8-K for the period
                  January
                  31, 2006 filed as Exhibit 10.1110.14
              Modification
                  and Amendment Agreement between the Company and NMI International
                  Marketing, Inc. incorporated by reference to Form 8-K for the period
                  July
                  10, 2006 filed as Exhibit 10.510.15
              Secured
                  Convertible Debenture dated July 13, 2006 in the amount of $300,000
                  and
                  payable to Montgomery Equity Partners, Ltd. filed as Exhibit 10.30
                  to
                  Registration Statement on Form SB-2 filed on September 1,
                  200610.16
              Consulting
                  Agreement dated August 24, 2006 between the company and Avondale
                  Capital
                  Partners II, Inc. incorporated by reference to Form 8-K for the
                  period
                  August 29, 2006 filed as Exhibit 10.110.17
              Secured
                  Convertible Debenture dated August 30, 2006 in the amount of $300,000
                  and
                  payable to Montgomery Equity Partners, Ltd. filed as Exhibit 10.32
                  to
                  Registration Statement on Form SB-2 filed on September 1,
                  200610.18
              Assignment
                  Agreement dated September 15, 2006 between NBC-NPN Holding Inc.
                  and NON
                  Asset Acquisitions, Inc. incorporated by reference to Form 8-K
                  for the
                  period October 11, 2006 filed as Exhibit 10.110.19
              Content
                  License Agreement dated September 15, 2006 between NPN Asset Acquisitions
                  Inc. and NBC Universal, Inc. incorporated by reference to Form
                  8-K for the
                  period October 11, 2006 filed as Exhibit 10.210.20
              Securities
                  Purchase Agreement dated September 15, 2006 between NPN Asset
                  Acquisitions, Inc., NBC-NPN Holding, Inc. and the Company incorporated
                  by
                  reference to Form 8-K for the period October 11, 2006 filed as
                  Exhibit
                  10.310.21
              Assignment
                  Agreement dated October 2006 between NewsProNet Interactive, LLC
                  and NPN
                  Asset Acquisitions, Inc. incorporated by reference to Form 8-K
                  for the
                  period October 11, 2006 filed as Exhibit 10.410.22
              Loan
                  Modification Agreement dated March 21, 2007 effective February
                  2007
                  between the Company and Montgomery Equity Partners, Ltd. Incorporated
                  by
                  reference to Form 8-K for the period March 23, 2007 filed as Exhibit
                  10.1






33




14.1
              Code
                  of Ethics of the company incorporated by reference to Form 10-KSB
                  for the
                  period ended December 31, 2005 filed as Exhibit 14.131.1
              Certification
                  of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-
                  Oxley Act of 200231.2
              Certification
                  of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-
                  Oxley Act of 200232.1
              Certification
                  of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                  as
                  adopted
                pursuant
                  to Section 906 of the Sarbanes-Oxley Act of
                  2002




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




The
      following table sets forth the fees billed by our principal independent
      accountants for each of our last two fiscal years for the categories of services
      indicated.




**Year
                Ended December 31,****Category**
            
            **2006**
            
            **2005**Audit
                Fees1
            
            $
            58,000
            
            $
            12,000Audit
                Related Fees2
            
            
            10,000
            
            
            0Tax
                Fees3
            
            
            0
            
            
            0All
                Other Fees4
            
            
            0
            
            
            0




1
              Consists
                  of fees billed for the audit of our annual financial statements,
                  review of
                  our Form 10-KSB and services that are normally provided by the
                  accountant
                  in connection with year end statutory and regulatory filings or
                  engagements.2
              Consists
                  of fees billed for the review of our quarterly financial statements,
                  review of our forms 10-QSB and 8-K and services that are normally
                  provided
                  by the accountant in connection with non year end statutory and
                  regulatory
                  filings on engagements.3
              Consists
                  of professional services rendered by a company aligned with our
                  principal
                  accountant for tax compliance, tax advice and tax
                  planning.4
              The
                  services provided by our accountants within this category consisted
                  of
                  advice and other services relating to SEC matters, registration
                  statement
                  review, accounting issues and client
                  conferences.













34




CONNECTED
        MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 INDEX
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
 
 
 
 
 
 CONTENTS
 
 Report
                    of Independent Registered Public Accounting Firm
                F-2(a)
                    and F-2(b)Consolidated
                    Financial Statements:Consolidated
                    Balance Sheet
                F-3Consolidated
                    Statements of Operations
                F-4Consolidated
                    Statement of Changes in Stockholders’ Deficit
                F-5Consolidated
                    Statements of Cash Flows
                F-6Notes
                    to Consolidated Financial Statements
                F-7
                    to F-20
 
 
 
 
 
 
  
 
 
 REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To
          the
          Board of Directors and Stockholders’ of
 Connected
          Media Technologies, Inc.
  We
          have audited the
          accompanying consolidated balance sheet of Connected Media Technologies,
          Inc.
          and Subsidiaries as of December 31, 2006, and the related consolidated
          statements of operations, changes in stockholders' equity (deficiency)
          and cash
          flows for the year ended December 31, 2006. These consolidated financial
          statements are the responsibility of the Company's management. Our
          responsibility is to express an opinion on these consolidated financial
          statements based on our audit.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amount and
        disclosures in the consolidated financial statements. An audit also includes
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall consolidated financial statement
        presentation. We believe that our audit provides a reasonable basis for our
        opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of Connected
        Media
        Technologies, Inc. and Subsidiaries as of December 31, 2006, and the
        consolidated results of their operations and their cash flows for the year
        ended
        December 31, 2006, in conformity with accounting principles generally accepted
        in the United States of America.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. As discussed in Note 2 to the
        consolidated financial statements, the Company has an accumulated deficit,
        stockholders’ deficit and working capital deficit of $17,068,859, $3,297,062 and
        $3,872,558, respectively, at December 31, 2006 and has a net loss and cash
        used
        in operations of $17,486,292 and $492,848, respectively, for the year ended
        December 31, 2006. This raises substantial doubt about its ability to continue
        as a going concern. Management's plans in regards to these matters are also
        described in Note 2. The consolidated financial statements do not include
        any
        adjustments that might result from the outcome of this uncertainty.
 
 /s/
        Salberg & Company, P.A.
 
 SALBERG
        & COMPANY, P.A.
 Boca
        Raton, Florida
 April
        9,
        2007
 
 
 
 F-2(a)
  
 
 
 **Independent
        Auditor's Report**
 
  
 To
        the
        Board of Directors of
 NatCom
        Marketing International, Inc.
 
  
 I
        have
        audited the accompanying balance sheets of NatCom Marketing International,
        Inc.
        (the Company) (a Puerto Rico Corporation) as of December 31, 2005 and 2004,
        and
        the related statements of income, retained earnings and cash flows for the
        years
        then ended. These financial statements are the responsibility of the Company’s
        management. My responsibility is to express an opinion on these financial
        statements based on my audit.
 
 I
        conducted my audit in accordance with generally accepted auditing standards
        of
        the Public Company Accounting Oversight Board (United States). Those standards
        require that I plan and perform the audit to obtain reasonable assurance
        about
        whether the financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the financial statements. An audit also includes assessing
        the
        accounting principles used and significant estimates made by management,
        as well
        as evaluating the overall financial statement presentation. I believe that
        my
        audit provides a reasonable basis for my opinion.
 
 In
        my
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of NatCom Marketing International,
        Inc. as of December 31, 2005 and 2004, and the results of its operations
        and its
        cash flows for the years then ended in conformity with U.S. generally accepted
        accounting principles.
  
 
  /s/
        Armando Prieto Llorente,
 Certified
        Public Accountant
 Guaynabo,
        Puerto Rico
 July
        25,
        2006
 
  
 F-2(b)
  CONNECTED
                    MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                    BALANCE SHEETDecember
                    31, 2006ASSETSCURRENT
                    ASSETS:Cash
                
                $
                1,525Accounts
                    receivable
                
                
                88,516Accounts
                    receivable - related party
                
                
                41,500Prepaid
                    expenses
                
                
                503Total
                    Current Assets
                
                
                132,044PROPERTY
                    AND EQUIPMENT - Net
                
                
                275,844OTHER
                    ASSETSIntangible
                    assets, net
                
                
                123,750Non-marketable
                    securities, at cost
                
                
                164,817Debt
                    issue costs, net
                
                
                11,085Total
                    Other Assets
                
                
                299,652Total
                    Assets
                
                $
                707,540LIABILITIES
                    AND STOCKHOLDERS' DEFICIENCYCURRENT
                    LIABILITIES:Convertible
                    debentures payable, net of discount of $711,417
                
                $
                966,583Loan
                    payable
                
                
                48,271Overdraft
                    liability
                
                
                3,508Accounts
                    payable
                
                
                344,085Accounts
                    payable - related parties
                
                
                49,557Accrued
                    expenses
                
                
                122,661Accrued
                    compensation -officer
                
                
                329,399Accrued
                    interest payable
                
                
                149,700Accrued
                    interest payable - related party
                
                
                14,004Deferred
                    revenue - related party
                
                
                61,500Notes
                    payable - related party
                
                
                452,000Warrant
                    liability
                
                
                85,929Embedded
                    conversion option liability
                
                
                1,377,405Total
                    Current Liabilities
                
                
                4,004,602Total
                    Liabilities
                
                
                4,004,602Commitments
                    and contingencies (See Note 10)STOCKHOLDERS'
                    DEFICIENCY:Preferred
                    stock
                    ($0.0001 Par Value; 10,000,000 shares authorized; Noshares
                    issued and outstanding)
                
                
                -Common
                    Stock ($0.0001 Par Value; 2,000,000,000 shares authorized;627,148,659
                    shares issued and 611,907,436 shares outstanding)
                
                
                62,715Additional
                    paid-in capital
                
                
                14,108,907Accumulated
                    deficit
                
                
                (17,068,859
                )Less:
                    treasury stock (15,241,223 common shares, at cost)
                
                
                (399,825
                )Total
                    Stockholders' Deficiency
                
                
                (3,297,062
                )Total
                    Liabilities and Stockholders' Deficiency
                
                $
                707,540
 See
          accompanying notes to consolidated financial statements.
 F-3
  CONNECTED
                    MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                    STATEMENTS OF OPERATIONSFor
                    the Year EndedDecember
                    31,2006
                
                2005NET
                    REVENUES
                
                $
                446,706
                
                $
                497,163COST
                    OF REVENUES
                
                
                269,901
                
                
                293,450GROSS
                    PROFIT
                
                
                176,805
                
                
                203,713OPERATING
                    EXPENSES:Depreciation
                    and amortization
                
                
                98,826
                
                
                17,025Bad
                    debt
                
                
                48,271
                
                
                -Professional
                    fees
                
                
                177,391
                
                
                24,724Rent
                
                
                40,988
                
                
                -Payroll,
                    contract services and stock-based compensation
                
                
                427,741
                
                
                110,169Other
                    selling, general and administrative
                
                
                123,837
                
                
                137,540Total
                    Operating Expenses
                
                
                917,054
                
                
                289,458LOSS
                    FROM OPERATIONS
                
                
                (740,249
                )
                
                (85,745
                )OTHER
                    INCOME (EXPENSES):Change
                    in fair market value of embedded conversion option
                    liability
                
                
                360,169
                
                
                -Change
                    in fair market value of warrant liability
                
                
                (53,230
                )
                
                -Impairment
                    of
                    goodwill
                
                
                (16,227,967
                )
                
                -Impairment
                    of
                    investment
                
                
                -
                
                
                (311,000
                )Interest
                    expense - related party
                
                
                (4,073
                )
                
                -Interest
                    expense
                
                
                (820,942
                )
                
                -Total
                    Other Income (Expenses)
                
                
                (16,746,043
                )
                
                (311,000
                )NET
                    LOSS
                
                $
                (17,486,292
                )
                $
                (396,745
                )NET
                    LOSS PER COMMON SHARE - Basic and Diluted
                
                $
                (0.04
                )
                $
                -WEIGHTED
                    AVERAGE COMMON SHARESOUTSTANDING
                    -
                    Basic and Diluted
                
                
                450,168,924
                
                
                300,507,663
  See
          accompanying notes to consolidated financial statements.
 F-4
 CONNECTED
                      MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                      STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)For
                      the Years Ended December 31, 2006 and 2005TotalCommon
                      Stock
                  
                  
                  
                  Retained
                  
                  
                  
                  
                  
                  Stockholders'$0.0001
                      Par Value
                  
                  Additional
                  
                  Earnings
                  
                  Deferred
                  
                  Treasury
                  
                  EquityShares
                  
                  Amount
                  
                  Paid-in
                      Capital
                  
                  (Deficit)
                  
                  Compensation
                  
                  Stock
                  
                  (Deficiency)Balance
                      at December 31, 2004
                  
                  
                  300,507,663
                  
                  $
                  30,051
                  
                  $
                  (29,051
                  )
                  $
                  814,178
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  815,178Net
                      loss for the year 2005
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (396,745
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (396,745
                  )Balance
                      at December 31, 2005
                  
                  
                  300,507,663
                  
                  
                  30,051
                  
                  
                  (29,051
                  )
                  
                  417,433
                  
                  
                  -
                  
                  
                  -
                  
                  
                  418,433Stock
                      options vested
                  
                  
                  -
                  
                  
                  -
                  
                  
                  67,890
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  67,890Recapitalization
                      pursuant to reverse acquisition
                  
                  
                  306,307,663
                  
                  
                  30,631
                  
                  
                  13,846,486
                  
                  
                  -
                  
                  
                  (1,292
                  )
                  
                  (399,825
                  )
                  
                  13,476,000Shares
                      issued in acquisition
                  
                  
                  15,000,000
                  
                  
                  1,500
                  
                  
                  133,500
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  135,000Shares
                      issued in connection with debt conversion
                  
                  
                  5,333,333
                  
                  
                  533
                  
                  
                  39,467
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  40,000Derivative
                      liability reclassified to equity
                  
                  
                  -
                  
                  
                  -
                  
                  
                  50,615
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  50,615Amortization
                      of deferred compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,292
                  
                  
                  -
                  
                  
                  1,292Net
                      loss for the year 2006
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (17,486,292
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (17,486,292
                  )Balance
                      at December 31, 2006
                  
                  
                  627,148,659
                  
                  $
                  62,715
                  
                  $
                  14,108,907
                  
                  $
                  (17,068,859
                  )
                  $
                  -
                  
                  $
                  (399,825
                  )
                  $
                  (3,297,062
                  )
  See
            accompanying notes to consolidated financial statements.
 F-5
  CONNECTED
                      MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                      STATEMENTS OF CASH FLOWSFor
                      the Year EndedDecember 31,2006
                  
                  2005CASH
                      FLOWS FROM OPERATING ACTIVITIES:Net
                      Loss
                  
                  $
                  (17,486,292
                  )
                  $
                  (396,745
                  )Adjustments
                      to
                      Reconcile Net Loss to Net Cash FlowsProvided by (Used in) Operating Activities:Depreciation
                      and amortization
                  
                  
                  98,826
                  
                  
                  17,025Amortization
                      of
                      discount on convertible notes payable
                  
                  
                  617,599
                  
                  
                  -Amortization
                      deferred consulting
                  
                  
                  1,292
                  
                  
                  -Stock-based
                      compensation
                  
                  
                  67,890
                  
                  
                  -Impairment
                      of
                      goodwill
                  
                  
                  16,227,967
                  
                  
                  -Impairment
                      of
                      investment
                  
                  
                  -
                  
                  
                  311,000Amortization
                      of
                      debt issuance cost
                  
                  
                  14,437
                  
                  
                  -Change
                      in fair value of derivatives
                  
                  
                  (306,939
                  )
                  
                  -Bad
                      debt
                  
                  
                  48,271
                  
                  
                  -(Increase)
                      Decrease in:Accounts receivable
                  
                  
                  27,053
                  
                  
                  82,813Accounts receivable - related party
                  
                  
                  (41,500
                  )
                  
                  -Prepaid expenses
                  
                  
                  11,997
                  
                  
                  -Barter credits
                  
                  
                  -
                  
                  
                  (25,934
                  )Increase
                      (Decrease) in:Accounts payable
                  
                  
                  (6,022
                  )
                  
                  37,290Accounts payable - related parties
                  
                  
                  (21,899
                  )
                  
                  -Accrued expenses
                  
                  
                  31,813
                  
                  
                  (10,261
                  )Accrued compensation -officer
                  
                  
                  10,522
                  
                  
                  -Deferred revenue
                  
                  
                  61,500
                  
                  
                  -Accrued interest payable
                  
                  
                  149,392
                  
                  
                  -Accrued interest payable - related party
                  
                  
                  1,245
                  
                  
                  -Net
                      Cash Flows Provided by (Used in) Operating Activities
                  
                  
                  (492,848
                  )
                  
                  15,188CASH
                      FLOWS FROM INVESTING ACTIVITIES:Increase
                      in
                      investment in common stock
                  
                  
                  -
                  
                  
                  (8,350
                  )Purchase
                      of
                      property and equipment
                  
                  
                  -
                  
                  
                  (8,765
                  )Cash
                      acquired in acquisition
                  
                  
                  9,205
                  
                  
                  -Net
                      Cash Flows Provided by (Used in) Operating Activities
                  
                  
                  9,205
                  
                  
                  (17,115
                  )CASH
                      FLOWS FROM FINANCING ACTIVITIES:Cash
                      overdraft
                  
                  
                  (864
                  )
                  
                  -Proceeds
                      from
                      convertible notes payable
                  
                  
                  600,000
                  
                  
                  -Placement
                      fees
                      paid
                  
                  
                  (62,250
                  )
                  
                  -Proceeds
                      from
                      (payments on) loans payable
                  
                  
                  (51,718
                  )
                  
                  48Net
                      Cash Flows Provided by Financing Activities
                  
                  
                  485,168
                  
                  
                  48Net
                      Increase (Decrease) in Cash
                  
                  
                  1,525
                  
                  
                  (1,879
                  )Cash
                      - Beginning of Year
                  
                  
                  -
                  
                  
                  1,879Cash
                      - End of Year
                  
                  $
                  1,525
                  
                  $
                  -SUPPLEMENTAL
                      DISCLOSURE OF CASH FLOW INFORMATION:Cash
                      paid during the period for:Interest
                  
                  $
                  31,253Income
                      Taxes
                  
                  $
                  -
                  
                  $
                  -NON-CASH
                      INVESTING AND FINANCING ACTIVITIES:Discount
                      on debentures payable associated with derivative
                      liabilities
                  
                  $
                  540,000
                  
                  $
                  -Common
                      stock issued for debt conversion
                  
                  $
                  40,000
                  
                  $
                  -Acquisition
                      details:Fair
                      value of assets acquired
                  
                  $
                  197,811
                  
                  $
                  -Liabilities
                      assumed
                  
                  $
                  2,814,778
                  
                  $
                  -Common
                      stock issued for acquisitions
                  
                  $
                  13,611,000
                  
                  $
                  -Goodwill
                  
                  $
                  16,227,967
                  
                  $
                  -
 See
            accompanying notes to consolidated financial statements.
 F-6
  **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
 
 **NOTE
        1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
        POLICIES**
  **Organization**
  On
        January 31, 2006, Connected Media Technologies, Inc., a Delaware publicly
        held
        corporation entered into a preliminary Stock Purchase Agreement and Share
        Exchange (the “Agreement”) with Natcom Marketing International, Inc., a
        privately held Puerto Rican based full-service marketing communications agency
        (“NMI”), and the NMI shareholders. The closing of the transaction was completed
        on July 10, 2006 (the “Acquisition Date”). On the Acquisition Date, Connected
        Media acquired all of the outstanding shares of NMI in exchange for a total
        of
        300,507,663 shares or approximately 50% of Connected Media Technologies,
        Inc.'s
        issued and outstanding common stock. As additional consideration, on the
        Acquisition Date, Connected Media Technologies, Inc. reserved up to $250,000
        of
        the funding received by Montgomery Equity Partners, LP for distribution to
        NMI
        to be used toward the acquisition of a majority interest in NewsProNet
        Interactive, LLC. On the Acquisition Date, Connected Media Technologies,
        Inc.
        also provided funding to NMI for the payment of certain outstanding debts,
        which
        included relief of the promissory note and accrued interest (See Note 6).
        Pursuant to the Agreement, on the Acquisition Date, NMI became a wholly-owned
        subsidiary of Connected Media Technologies, Inc.
  The
        transaction was accounted for as a reverse acquisition with NMI as the acquirer
        for accounting purposes using the purchase method of accounting since both
        Companies are considered operating entities and management of NMI has obtained
        control through (i) holding approximately a 50% interest with no other
        shareholder or group of shareholders holding equivalent rights; and (ii)
        Board
        control. Accordingly, the consolidated financial statements subsequent to
        the
        acquisition will consist of the balance sheet of NMI at historical cost,
        the
        balance sheet of Connected Media Technologies, Inc. marked to fair value
        based
        on the purchase price, the historical operations of NMI and the operations
        of
        Connected Media Technologies from the acquisition date. The new consolidated
        entity is hereinafter referred to as the “Company.” (See Note 3)
 
 The
        Company's legal subsidiary NMI is focused on serving multi-national
        organizations, as well as emerging growth companies seeking to enter or expand
        in the U.S. Hispanic/Latin American markets. NMI uses television programming
        as
        its main entry into the Hispanic and minority advertising space.
  On
          October 4, 2006, the Company's wholly-owned subsidiary, NPN Asset Acquisitions,
          Inc. (“NPNAA”) entered into an Assignment Agreement (the “NBC Assignment”) with
          NBC-NPN Holding, Inc. (“NBC”) and NewsProNet Interactive, LLC (“NPN”), whereby
          NBC assigned approximately $2.365 million in secured debt (the “Secured Debt”)
          against NPN to the Company’s subsidiary NPNAA.  As additional
          consideration for the assignment of the Secured Debt, the parties entered
          into a
          Securities Purchase Agreement whereby the Company issued 15,000,000 shares
          of
          Connected Media Technologies, Inc. common stock to NBC. Also on October 4,
          2006, the Company's subsidiary NPNAA entered into an Assignment Agreement
          with
          NPN (the “NPN Assignment”), pursuant to which NPNAA exercised certain security
          rights with the consent of NPN (See Note 5).
 
 Connected
        Media Technologies, Inc. is a sales and marketing company focused on digital
        media that offers a broad spectrum of services and solutions across current
        and
        emerging media platforms, including print, television, radio, Internet, CD,
        DVD
        and mobile devices such as mobile phones and personal digital assistants
        (PDAs). As a combined entity, the services the Company currently provide
        includes consulting, advertising, media selection and placement, sales
        promotion, direct marketing, collateral development, television production
        and
        placement, radio production and placement, point-of-sale displays, trade
        shows,
        barter programs, Internet site development, and patented technology solutions.
        NPNAA is an Atlanta based provider of converged media content solutions and
        interactive branding strategies for local broadcasters
 
 **Principles
        of Consolidation**
  The
        consolidated financial statements include the accounts of Connected Media
        Technologies, Inc. a Delaware corporation, and its wholly-owned subsidiaries,
        NatCom Marketing International, Inc. and NPN
        Asset
        Acquisitions, Inc., and inactive
        subsidiaries Trust Licensing, Inc. and Connected Media, Inc. All significant
        intercompany accounts and transactions have been eliminated in
        consolidation.
 
 
 
 F-7
 
 **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
 
 
 **Use
        of Estimates**
  In
        preparing financial statements, management is required to make estimates
        and
        assumptions that affect the reported amount of assets and liabilities,
        disclosure of contingent assets and liabilities at the date of the financial
        statements, and revenues and expenses during the periods presented. Actual
        results may differ from these estimates. Significant estimates during 2006
        and
        2005 include depreciable lives on equipment, valuation of accounts and other
        receivables, valuation and amortization periods of intangible assets, valuation
        of derivative liabilities, valuation of stock-based payments, and valuation
        allowance for deferred tax assets.
 
 **Cash
        and Cash Equivalents**
 
 For
        the
        purpose of the cash flow statements, the Company considers all highly liquid
        investments with original maturities of three months or less at the time
        of
        purchase to be cash equivalents.
 
 **Fair
        Value of Financial Instruments**
 
 Statement
        of Financial Accounting Standards No. 107, *“Disclosures
        about Fair Value of Financial Instruments,”* requires
        disclosures of information about the fair value of certain financial instruments
        for which it is practicable to estimate the value. For purpose of this
        disclosure, the fair value of a financial instrument is the amount at which
        the
        instrument could be exchanged in a current transaction between willing parties,
        other than in a forced sale or liquidation. The carrying amounts reported
        in the
        balance sheet for cash, loans payable and accounts payable and accrued expenses
        approximate their fair market value based on the short-term maturity of these
        instruments.
 
 **Accounts
        Receivable**
 
 Accounts
        receivable presented in the balance sheet represent customers debts to the
        Company resulting from normal business transactions during the periods. The
        Company evaluates the collectability of accounts receivable while working
        with
        its individual customers. As of December 31, 2006, no allowance for
        uncollectible amounts have been provided since, in the opinion of management,
        they will be fully paid within a reasonable time after period end.
  **Investment
        in Non-Marketable Equity Securities**
 
 Certain
        securities that the Company may invest in can be determined to be
        non-marketable. Non-marketable securities where the Company owns less than
        20%
        of the investee are accounted for at cost pursuant to APB No. 18, “The Equity
        Method of Accounting for Investments in Common Stock” (“APB 18”).
 
 The
        Company periodically reviews its investments in non-marketable securities
        and
        impairs any securities whose value is considered non-recoverable. There was
        no
        impairment losses charged to operations during the year ended December 31,
        2006.
        In 2005, the Company recorded an impairment loss of $311,000.
 
 **Property
        and Equipment**
 
 Computers,
        furniture and fixtures and equipment are stated at cost and are depreciated
        on a
        straight-line basis over the estimated useful lives of the assets, which
        is five
        years. Leasehold improvements are amortized on a straight-line basis over
        the
        term of the respective lease, or over their estimated useful lives, whichever
        is
        shorter. Expenditures
        for major renewals and betterments that extend the useful lives of property
        and
        equipment are capitalized. Expenditures for maintenance and repairs are charged
        to expense as incurred.
 
 **Long-Lived
        Assets**
 
 The
        Company reviews long-lived assets and certain identifiable assets related
        to
        those assets for impairment whenever circumstances and situations change
        such
        that there is an indication that the carrying amounts may not be recoverable.
        If
        the undiscounted future cash flows of the long-lived assets are less that
        the
        carrying amount, their carrying amount is reduced to fair value and an
        impairment loss is recognized. The Company recognized a loss on impairment
        of
        goodwill during the year ended December 31, 2006 of $16,227,967 (See Note
        3).
 
 
 F-8
 **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
 
 **Concentration
        of Credit Risk**
  The
        Company maintains its cash in bank deposit accounts, which, at times, exceed
        federally insured limits. As of December 31, 2006, the Company has no deposits
        in excess of federally insured limits. The Company has not experienced any
        losses in such accounts through December 31, 2006.
 
 **Accounting
        for Derivatives**
 
 The
        Company evaluates its convertible debt, options, warrants or other contracts
        to
        determine if those contracts or embedded components of those contracts qualify
        as derivatives to be separately accounted for under Statement of Financial
        Accounting Standards 133 “Accounting for Derivative Instruments and Hedging
        Activities” and related interpretations including EITF 00-19 “Accounting for
        Derivative Financial Instruments Indexed to, and Potentially Settled in,
        a
        Company's Own Stock”.
 
 The
        result of this accounting treatment is that the fair value of the embedded
        derivative is marked-to-market each balance sheet date and recorded as a
        liability. In the event that the fair value is recorded as a liability, the
        change in fair value is recorded in the consolidated statement of operations
        as
        other income or
        expense. Upon conversion or exercise of a derivative instrument, the instrument
        is marked to fair value at the conversion date and then that fair value is
        reclassified to equity. Equity instruments that are initially classified
        as
        equity that become subject to reclassification under SFAS 133 are reclassified
        to liability at the fair value of the instrument on the reclassification
        date.
 
 **Revenue
        Recognition**
  The
        Company follows the guidance of the Securities and Exchange Commission's
        Staff
        Accounting Bulletin No. 104 for revenue recognition. In general, the Company
        records revenue when persuasive evidence of an arrangement exists, services
        have
        been rendered or product delivery has occurred, the sales price to the customer
        is fixed or determinable, and collectibility is reasonably assured. T he
        following are the specific revenue recognition policies for the revenue streams
        of the Company:
 
 Content
        revenue - subscription based:  The Company produces and distributes
        broadcast and digital content for customers that subscribe to such service
        under
        monthly fixed fee arrangements.  Revenue is recognized when the minimum
        content required to be delivered monthly under the agreement is finalized,
        and
        delivered or made available to the customers for unconditional use.
 
 Content
        revenue - revenue sharing arrangements: When content is provided on a revenue
        sharing basis, the revenue is not determinable until the Company receives
        payment from the customer. Accordingly, revenue is recognized upon receipt
        of
        payment. There were no revenue sharing revenues during 2006.
 
 Content
        revenue - barter arrangements: Revenue from barter transactions will be valued
        at the fair value of the goods provided or goods received whichever is more
        readily determinable and recognized upon delivery of the content by the Company.
        There were no barter revenues during 2006.
 
 Digital
        media services revenue:  The Company creates and distributes digital
        marketing content and advertising services on a project basis.  Revenue is
        recognized when projects are completed and made available to the customer
        for
        unconditional use.
 
 **Advertising**
 
 Advertising
        is expensed as incurred. Advertising expenses for the years ended December
        31,
        2006 and 2005 were not material.
 
 **Stock-based
        Compensation**
  On
        January 1, 2006, the Company has adopted SFAS No. 123(R), “ *Share-Based
        Payment* ,”
which
        requires the compensation cost related to share-based payments, such as stock
        options and employee stock purchase plans, be recognized in the
        financial  statements
        based on the grant-date fair value of the award.
 
 **Income
        Taxes**
 
 Income
        taxes are accounted for under Statement of Financial Accounting Standards
        No.
        109, "Accounting for Income Taxes," which is an asset and liability approach
        that requires the recognition of deferred tax assets and liabilities for
        the
        expected future tax consequences of events that have been recognized in the
        Company's financial statements or tax returns.
   F-9
  **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
 **Net
        Loss per Share**
  In
          accordance with Statement of Financial Accounting Standards No. 128, "Earnings
          per Share", basic earnings per share is computed by dividing the net income
          (loss) less preferred dividends for the period by the weighted average
          number of
          shares outstanding. Diluted earnings per share is computed by dividing
          net
          income (loss) less preferred dividends by the weighted average number of
          shares
          outstanding including the effect of share equivalents. At December 31,
          2006,
          there were 32,100,000 options outstanding ("Issued Options") and 8,200,000
          warrants outstanding ("Issued Warrants") that could potentially dilute
          future
          earnings per share. Additionally, the Company has convertible debentures,
          which
          are convertible into 223,733,333 shares of common stock as of December
          31, 2006. The effect of these common stock equivalents is anti-dilutive
          since the company reflects a net loss.
 
 **Contingencies**
 
 Certain
        conditions may exist as of the date financial statements are issued, which
        may
        result in a loss to the Company, but which will only be resolved when one
        or
        more future events occur or fail to occur. The Company's management and its
        legal counsel assess such contingent liabilities, and such assessment inherently
        involves an exercise of judgment. In assessing loss contingencies related
        to
        legal proceedings that are pending against the Company or unasserted claims
        that
        may result in such proceedings, the Company's legal counsel evaluates the
        perceived merits of any legal proceedings or unasserted claims as well as
        the
        perceived merits of the amount of relief sought or expected to be sought
        therein. If the assessment of a contingency indicates that it is probable
        that a
        material loss has been incurred and the amount of the liability can be
        estimated, then the estimated liability would be accrued in the Company's
        financial statements. If the assessment indicates that a potentially material
        loss contingency is not probable but is reasonably possible, or is probable
        but
        cannot be estimated, then the nature of the contingent liability, together
        with
        an estimate of the range of possible loss if determinable and material, would
        be
        disclosed.
 
 **Reclassifications**
 
 Certain
        amounts in the 2005 financial statements have been reclassified to conform
        to
        the 2006 presentation.
  **Recent
        Pronouncements**
  In
        March
        2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial
        Assets, an amendment of FASB Statement No. 140, Accounting for Transfers
        and
        Servicing of Financial Assets and Extinguishments of Liabilities". This
        statement requires all separately recognized servicing assets and servicing
        liabilities be initially measured at fair value, if practicable, and permits
        for
        subsequent measurement using either fair value measurement with changes in
        fair
        value reflected in earnings or the amortization and impairment requirements
        of
        Statement No. 140. The subsequent measurement of separately recognized servicing
        assets and servicing liabilities at fair value eliminates the necessity for
        entities that manage the risks inherent in servicing assets and servicing
        liabilities with derivatives to qualify for hedge accounting treatment and
        eliminates the characterization of declines in fair value as impairments
        or
        direct write-downs. SFAS No. 156 is effective for an entity's first fiscal
        year
        beginning after September 15, 2006. The adoption of this statement is not
        expected to have a significant effect on the Company's future reported financial
        position or results of operations.
  In
        July
        2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
        (FIN) No. 48, "Accounting for Uncertainty in Income Taxes-an interpretation
        of
        FASB Statement No. 109." This interpretation provides guidance for recognizing
        and measuring uncertain tax positions, as defined in SFAS No. 109, "Accounting
        for Income Taxes." FIN No. 48 prescribes a threshold condition that a tax
        position must meet for any of the benefit of an uncertain tax position to
        be
        recognized in the financial statements. Guidance is also provided regarding
        de-recognition, classification, and disclosure of uncertain tax positions.
        FIN
        No. 48 is effective for fiscal years beginning after December 15, 2006. The
        Company does not expect that this interpretation will have a material impact
        on
        its financial position, results of operations, or cash flows.
 
 In
        September 2006, FASB issued SFAS 157
        `Fair Value Measurements'. This Statement defines fair value, establishes
        a
        framework for measuring fair value in generally accepted accounting principles
        (GAAP), and expands disclosures about fair value measurements. This Statement
        applies under other accounting pronouncements that require or permit fair
        value
        measurements, the Board having previously concluded in those accounting
        pronouncements that fair value is the relevant measurement attribute.
        Accordingly, this Statement does not require any new fair value measurements.
        However, for some entities, the application of this Statement will change
        current practice. This Statement is effective for financial statements issued
        for fiscal years beginning after November 15, 2007, and interim
        periods within those fiscal years. Management is currently evaluating the
        effect
        of this pronouncement on financial statements.
 
 
 F-10
 **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
 In
          December 2006, FASB Staff Position No. EITF 00-19-2, *“Accounting
          for Registration Payment Arrangements,”* was
          issued. The FSP specifies that the contingent obligation to make future
          payments
          or otherwise transfer consideration under a registration payment arrangement,
          whether issued as a separate agreement or included as a provision of a
          financial
          instrument or other agreement, should be separately recognized and measured
          in
          accordance with SFAS No. 5, *“Accounting
          for Contingencies.”* The
          Company *b* elieves
          that its current accounting is consistent with the FSP. Accordingly, adoption
          of
          the FSP had no effect on its consolidated financial statements.
  In
        February 2007, the FASB issued SFAS No. 159, *“The
        Fair Value Option for Financial Assets and Financial Liabilities, Including
        an
        Amendment of FASB Statement No. 115”* ,
        under
        which entities will now be permitted to measure many financial instruments
        and
        certain other assets and liabilities at fair value on an
        instrument-by-instrument basis. This Statement is effective as of the beginning
        of an entity’s first fiscal year that begins after November 15, 2007. Early
        adoption is permitted as of the beginning of a fiscal year that begins on
        or
        before November 15, 2007, provided the entity also elects to apply the
        provisions of SFAS 157. The Company is currently assessing the impact, if
        any, the adoption of SFAS 159 will have on its consolidated financial
        statements.
 
 **NOTE
        2 -** **GOING
        CONCERN**
  As
        reflected in the accompanying consolidated financial statements, the Company
        has
        a net loss of $17,486,292 and net cash used in operations of $492,848 for
        the
        year ended December 31, 2006, and a working capital deficiency of
        $3,872,558, a stockholders' deficiency of $3,297,062 and an accumulated deficit
        of $17,068,859 at December 31, 2006. The Company has incurred cumulative
        losses
        since inception and has funded operations primarily through related-party
        loans
        and investor capital. The ability of the Company to continue as a going concern
        is dependent on the Company's ability to further implement its business plan,
        raise capital, and generate revenues. The consolidated financial statements
        do
        not include any adjustments that might be necessary if the company is unable
        to
        continue as a going concern.
  The
        Company is dependent upon the ability to resolve its liquidity problems,
        principally by obtaining additional debt financing and/or equity capital.
        In
        July and August 2006, the Company obtained debt financing (See Note 6). In
        July
        2006, Connected Media Technologies, Inc. acquired Natcom Marketing International
        Inc. pursuant to a reverse acquisition transaction. (See Note 3)
 
 **NOTE
        3 -** **REVERSE
        ACQUISITION**
  On
        July
        10, 2006 (the “Acquisition Date”), the Company acquired all of the outstanding
        shares of NMI in exchange for a total 300,507,663 or approximately 50% of
        the
        issued and outstanding shares of the Company's common stock. Pursuant to
        the
        Agreement, on the Acquisition Date, NMI became a wholly-owned subsidiary
        of
        Connected Media Technologies, Inc. The transaction was accounted for as a
        reverse acquisition using the purchase method of accounting in accordance
        with
        SFAS No. 141 since both Companies are considered operating entities and
        management of NMI has obtained control through (i) holding a controlling
        interest with no other shareholder or group of shareholders holding equivalent
        rights and (ii) Board control. Accordingly, the consolidated financial
        statements subsequent to the acquisition will consist of the balance sheet
        of
        NMI at historical cost, the balance sheet of Connected Media Technologies,
        Inc.
        marked to fair value based on the purchase price, the historical operations
        of
        NMI and the operations of Connected Media Technologies, Inc. from the
        acquisition date. The purchase price is based on the average fair value of
        the
        Company's shares during the period before and after the date of the agreement
        and the date of the announcement. This amounted to $13,476,000. The purchase
        price was allocated to the net assets of Connected Media Technologies Inc.
        based
        on their fair values.
 
 The
        allocation of fair value of the net assets acquired was as follows:
  Cash
                
                $
                9,205Property
                    and equipment
                
                
                7,388Other
                    assets
                
                
                46,218Goodwill
                
                
                16,227,967Accounts
                    payable and accrued expenses
                
                
                (742,906
                )Convertible
                    debt and other debt assumed Net
                
                
                (790,984
                )Derivative
                    liabilities assumed
                
                
                (1,280,888
                )Purchase
                    Price
                
                $
                13,476,000
 
 Since
          the
          Company has minimal revenues, has incurred losses and used cash in operations,
          the Company deemed the acquired goodwill to be impaired and wrote-off the
          goodwill on the acquisition date. Accordingly, for the year ended December
          31,
          2006, the Company recorded an impairment of goodwill of $16,227,967 on
          the
          accompanying statement of operations. The accounting effect of the reverse
          acquisition on share and per share date is reflected retroactively in the
          accompanying consolidated financial statements for all periods
          presented.
 
 
 
 F-11
 **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
 
 The
        following unaudited pro forma consolidated results of operations have been
        prepared as if the acquisitions of Connected Media had occurred as of the
        following periods:
  Year
                  Ended
              
              Year
                  EndedDecember
                  31, 2006
              
              December
                  31, 2005(Unaudited)
              
              (Unaudited)Net
                  Revenues
              
              $
              486,706
              
              $
              497,163Net
                  Loss from continuing operations
              
              $
              (18,627,298
              )
              $
              (1,964,878
              )Net
                  Loss per Share from continuing operations
              
              $
              (.04
              )
              $
              --
 
 Pro
        forma
        data does not purport to be indicative of the results that would have been
        obtained had these events actually occurred at the beginning of the periods
        presented and is not intended to be a projection of future results.
 
 **NOTE
        4 -** **PROPERTY
        AND EQUIPMENT**
 
 At
        December 31, 2006, property and equipment consisted of the
        following:
  Estimated
                    LifeComputer
                    Equipment
                
                
                5
                    Years
                
                $
                231,888Furniture
                    and
                    Fixtures
                
                
                5
                    Years
                
                
                70,279Leasehold
                    Improvements
                
                
                5
                    Years
                
                
                137,505439,672Less:
                    Accumulated Depreciation
                
                
                
                
                
                (163,828
                )$
                275,844
  For
        the
        year ended December 31, 2006 and 2005, depreciation expense amounted to $87,576
        and $17,025, respectively.
  **NOTE
        5 -** **INTANGIBLE
        ASSETS**
 
 On
        October 4, 2006, the Company's wholly-owned subsidiary, NPNAA entered into
        and
        consummated an Assignment Agreement (the “NBC Assignment”) with NBC-NPN Holding,
        Inc. (“NBC”) and NewsProNet Interactive, LLC (“NPN”), whereby NBC assigned
        approximately $2.365 million in secured debt (the “Secured Debt”) against NPN
        to the Company’s subsidiary NPNAA.   Such debt is evidenced by
        certain promissory notes entered into in 2000 and 2001 by NBC and NPN, and
        is
        secured by a Security Agreement dated September 18, 2000.  Pursuant to the
        NBC Assignment, NPNAA had a first priority secured interest in all of the
        assets
        of NPN.  In consideration for the assignment of the Secured Debt, NPNAA
        agreed to enter into a Content License Agreement whereby NBC Universal, Inc.
        is
        granted a non-exclusive license to use certain content owned and produced
        by NPN
        consisting of audio-visual archived news stories.  As additional
        consideration for the assignment of the Secured Debt, the parties entered
        into a
        Securities Purchase Agreement whereby the Company issued 15,000,000 shares
        of
        Connected Media Technologies, Inc. common stock to NBC (See Note
        7).
 
 Also
        on October 4, 2006, the Company's subsidiary NPNAA entered into and
        consummated an Assignment Agreement with NPN (the “NPN Assignment”), pursuant to
        which NPNAA exercised certain security rights with the consent of NPN. 
Pursuant to the NPN Assignment, NPNAA agreed, in lieu of immediate foreclosure
        upon all of the Secured Debt, to accept certain assets of NPN and apply the
        fair
        market value of such assets against the balance of the Secured Debt. 
Accordingly, NPN assigned to NPNAA all title and interest in certain assets
        consisting of equipment, accounts and accounts receivable, customer contracts,
        certain claims or causes of action held by NPN, all intellectual property,
        and
        NPN's complete content video archive consisting of approximately 1,700 finished
        news stories. In consideration for such assets, NPNAA agreed to reduce the
        balance of the Secured Debt to $865,000.  The Company also agreed to enter
        into certain employment agreements with four former employees of NPN for
        positions as Vice Presidents of NPNAA.
 
  
 F-12
 **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
 
  
  In
        connection with the above described transaction, the Company did not attribute
        any value to the secured debt assigned to the Company since the secured debt
        is
        considered uncollectible. Pursuant to the terms and subject to the conditions
        of
        the Assignment Agreements and Security Agreement, in substance, the Company
        issued the 15,000,000 shares of its common stock for the title and interest
        in
        certain assets consisting of equipment, accounts and accounts receivable,
        customer contracts, certain claims or causes of action held by NPN, all
        intellectual property, and NPN's complete content video archive consisting
        of
        approximately 1,700 finished news stories. The aggregate purchase price for
        these assets was $135,000 and is attributable to the issuance of 15,000,000
        shares of the Company’s common stock valued at an estimated fair value of $.009
        per share based on the quoted trading price of the Company’s common stock on
        October 4, 2006. The Company accounted for this asset acquisition using the
        method of accounting in accordance with SFAS No. 142. On the date of
        acquisition, the $135,000 was allocated to the content video archive, which
        will
        be amortized over a video archive’s estimated useful life of 2 years.
  At
        December 31, 2006, intangible assets consisted of the following:
  Estimated
                    LifeVideo
                    Archive
                
                
                2
                    Years
                
                $
                135,000Less:
                    Accumulated Amortization
                
                
                
                
                
                (11,250
                )$
                123,750
 Amortization
        expense amounted to $11,250 and $0 for the years ended December 31, 2006
        and
        2005, respectively.
 
 Amortization
        expense attributable to future periods is as follows:
 
 Year
                  ending December 31:2007
              
              $
              67,5002008
              
              
              56,250$
              123,750
 
 **NOTE
        6 -** **FINANCING
        ARRANGEMENTS**
 
 **Convertible
        Debentures Payable**
 
 The
        convertible debenture liability is as follows at December 31, 2006:
  Convertible
                    debentures payable
                
                $
                1,678,000Less:
                    unamortized discount on debentures
                
                
                (711,417
                )Convertible
                    debentures, net
                
                $
                966,583
  On
        July
        10, 2006, in connection with the reverse acquisition, the Company assumed
        two
        secured convertible debentures with Montgomery Equity Partners, Ltd.
        (“Montgomery”). Under the terms of the financing agreement with Montgomery, the
        Company issued to Montgomery a secured convertible debenture in the amount
        of
        $718,000 as well
        as an additional secured convertible debenture in the amount of $400,000.
        Both
        convertible debentures have an interest rate of 14% and maturity dates of
        April
        30, 2007, and are convertible into shares of the Company's common stock at
        a
        conversion price equal to the lesser of (a) $0.04 or (b) seventy five percent
        (75%) of the lowest Closing Bid Price of the Common Stock, as quoted by
        Bloomberg, LP, of the ten (10) trading days immediately preceding the Conversion
        Date. The Conversion Price may be adjusted pursuant to the other terms of
        this
        Debenture.
  The
        Convertible Debentures are secured by a first priority lien on all of the
        Company's assets. As further security for the Company's obligations under
        the
        Convertible Debentures, the Company executed an Amended and Restated Pledge
        Agreement, pursuant to which the Company pledged 60,000,000 shares of its
        common
        stock to Montgomery which are held in escrow.
  Pursuant
        to the funding transaction, Montgomery was also issued a warrant for 8,000,000
        shares of the Company's common stock. The warrant is exercisable for a period
        of
        three years from the date of issuance, which was January 31, 2006. The
        exercise price per share under the warrant is $0.0001 per share and the shares
        issuable upon exercise of the warrant are to be included in a registration
        statement.
   F-13
 **Connected
        Media Technologies, Inc. and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **December
        31, 2006**
   Pursuant
        to the terms of a Registration Rights Agreement, the Company is required
        to
        register the shares underlying the Convertible Debentures, as well as the
        shares
        to be issued pursuant to the Warrant within 60 days from the Closing Date
        of the
        Stock Purchase Agreement with NMI and is required to have the registration
        statement declared effective 90 days from the date of filing. In the event
        that
        the registration statement is not filed or declared effective within these
        time
        limits, the Company may be subject to liquidated damages in the amount of
        2% of
        the entire funding amount per month and may be deemed in default of the
        operative agreements. Based on discussions with Montgomery and the subsequent
        loan modification Agreement (see Note 11), the Company did not accrue any
        liquidating damages as of December 31, 2006.
 
 In
        connection with the assumption of these debentures, the Company assumed a
        debt
        discount $723,818 which is being deferred as debt discount and amortized
        over
        the remaining life of the convertible debentures. Additionally, in connection
        with the assumed secured convertible debentures, the Company assumed debt
        issue
        costs of $23,272 funds which are recorded as an asset. These costs are fees
        and
        expenses incurred in connection with obtaining the debt funding from entities
        other than the lender. The debt issue costs assumed will be amortized to
        debt
        issue cost expense over the remaining life of the debentures.
 
 On
        July
        13, 2006, in connection with the “Second Closing” contemplated by the Securities
        Purchase Agreement by and between the Company and Montgomery, the Company
        issued
        to Montgomery a secured convertible debenture in the amount of $300,000.
        The
        convertible debenture has an interest rate of 14% and a maturity date of
        October
        14, 2007, and is convertible into shares of the Company's common stock at
        a
        conversion price equal to the lesser of (a) $0.016 or (b) seventy five percent
        (75%) of the lowest Closing Bid Price of the Common Stock, as quoted by
        Bloomberg, LP, of the ten (10) trading days immediately preceding the Conversion
        Date. The Conversion Price may be adjusted pursuant to the other terms of
        this
        Debenture. In addition, upon an “Event of Default” (as that term is defined in
        the debenture), the conversion price will permanently be reduced to $
        0.0001.
 
 In
        connection with the debt issuance on July 13, 2006, $32,250 was deducted
        from
        the gross proceeds of which $30,000 is being deferred as debt discount and
        amortized over the life of the convertible debentures. Other fees taken from
        the
        $300,000 in gross proceeds include $2,250 of structuring fees and related
        costs
        and fees, which are treated as debt issue costs and will be amortized to
        debt
        issue cost expense over the remaining life of the debenture.
 
 On
        August
        30, 2006, in connection with the “Third Closing” contemplated by the Securities
        Purchase Agreement by and between the Company and Montgomery, the Company
        issued
        to Montgomery a secured convertible debenture in the amount of $300,000.
        The
        convertible debenture has an interest rate of 14% and a maturity date of
        November 30, 2007, and is convertible into shares of the Company's common
        stock
        at a conversion price equal to the lesser of (a) $0.016 or (b) seventy five
        percent (75%) of the lowest Closing Bid Price of the Common Stock, as quoted
        by
        Bloomberg, LP, of the ten (10) trading days immediately preceding the Conversion
        Date. The Conversion Price may be adjusted pursuant to the other terms of
        this
        Debenture. In addition, upon an “Event of Default” (as that term is defined in
        the debenture), the conversion price will permanently be reduced to $
        0.0001.
 
 In
        connection with the debt issuance on August 30, 2006, $30,000 was deducted
        from
        the gross proceeds and is being deferred as debt discount and amortized over
        the
        life of the convertible debentures.
  During
        the year ended December 31, 2006, amortization debt issue costs was $14,437.
        The
        remaining balance of debt issue costs at December 31, 2006 was $11,085. The
        amortization of debt discounts for the year ended December 31, 2006 was
        $617,599. The balance of the discount is $711,417 at December 31,
        2006.
 
 The
        Company evaluated whether or not the secured convertible debentures contain
        embedded conversion options, which meet the definition of derivatives under
        SFAS
        133 "Accounting for Derivative Instruments and Hedging Activities" and related
        interpretations. The Company concluded that since the secured convertible
        debentures had a variable conversion rate the Company could not guarantee
        it
        would have enough authorized shares pursuant to the criteria of EITF 00-19
        and
        therefore the embedded conversion option
        must be accounted for as a derivative. In addition, all non-employee options
        or
        warrants must be classified as liabilities for the same reason. On acquisition
        date, the Company assumed an embedded conversion options liability of $1,248,189
        and warrant liability relating to 8,200,000 warrants of
        $15,543.
 
 In
        December 2006, the FASB issued FSP EITF 00-19-2, "Accounting for Registration
        Payments" which was effective immediately. This FSP amends EITF 00-19 to
        require
        potential registration payment arrangements be treated as a contingency pursuant
        to FASB Statement 5 rather than at fair value. We considered the effect of
        this
        standard on the above embedded conversion option and warrant classification
        as a
        liability and determined that the accounting would not have changed as a
        result
        of this standard; since the variable rate on the convertible debentures still
        cause derivative treatment. Therefore, there was no effect of implementing
        this
        standard.
 
 
 F-14
 **Connected
        Media Technologies, Inc. and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **December
        31, 2006**
 
 Additionally,
        in connection with the Second Closing the initial estimated fair value of
        the
        embedded conversion option was $370,180. Accordingly, the Company recorded
        a
        debt discount of $270,000 which reduced the carrying value of this secured
        convertible debenture to zero. The $100,180 excess value of the fair values
        of
        the embedded conversion option over the net proceeds received from this secured
        convertible debenture was charged to change in fair market value of embedded
        conversion option liability upon recording. The initial fair values of this
        embedded conversion option was estimated using the Black-Scholes option pricing
        model with the following assumptions: estimated volatility of 225%; risk-free
        interest rate of 5.27%; estimated life of 1.25 years based on the remaining
        contractual life and no dividends.
 
 Additionally,
        in connection with the Third Closing the initial estimated fair value of
        the
        embedded conversion option was $372,883. Accordingly, the Company recorded
        a
        debt discount of $270,000 which reduced the carrying value of this secured
        convertible debenture to zero. The $102,883 excess value of the fair values
        of
        the embedded conversion option over the net proceeds received from this secured
        convertible debenture was charged to change in fair market value of embedded
        conversion option liability upon recording. The initial fair values of this
        embedded conversion option was estimated using the Black-Scholes option pricing
        model with the following assumptions: estimated volatility of 340%; risk-free
        interest rate of 5.03%; estimated life of 1.25 years based on the remaining
        contractual life and no dividends
  On
          November 3, 2006, Montgomery converted $40,000 of the $718,000 convertible
          debenture issued to Montgomery on January 31, 2006, into an aggregate of
          5,333,333 shares of common stock. The conversion price was $.0075 per share
          and
          the conversion reduced the principal amount of this debenture to $678,000
          (see
          Note 7).
 
 At
        December 31, 2006, the Company revalued the embedded conversion option liability
        and warrants resulting in a gain on derivative liability of $510,002 due
        to
        fluctuations in the Company's stock price. At December 31, 2006, the fair
        value
        of the embedded conversion option liability and warrant liability were estimated
        using the Black-Scholes option pricing model with the following assumptions:
        estimated volatility of 340%; risk-free interest rate ranging from 4.91%;
        estimated life of 1 year based on the remaining contractual life and no
        dividends. At December 31, 2006, the estimated fair value of the embedded
        conversion option liability and warrant liability was $1,377,405 and $85,929,
        respectively, and are reflected on the accompanying consolidated balance
        sheet.
 
 **Line
        of Credit**
  The
        Company entered into a transaction with a Bank pursuant to which the Company
        had
        access to a two hundred and fifty thousand dollar ($250,000) line of credit.
        In
        general, all or any portion of the $250,000 may be drawn down at any time,
        and
        must be repaid in full by October 25, 2006, with interest at prime plus 1.5%.
        In
        addition, each consecutive month, the Company must pay accrued interest on
        outstanding amounts owed. The Company used the line of credit for general
        working capital. The credit line was guaranteed by a stockholder and secured
        by
        a Certificate of Deposit owned by a director of the Company. On October 25,
        2006, the $250,000 Line of Credit became due and payable in full. The Company
        did not repay the amount due on the due date. In March 2007, the Company
        received notice from the Bank that the amounts due under the line of credit
        had
        been assigned on December 5, 2006 to Irrevocable Trust Agreement Number III
        (See
        Notes 8 and 11).
 
 **Loan
        Payable**
 
 The
        Company has a loan with a bank. The loan bears interest at 9.75%`, is renewable
        annually, and is secured by accounts receivable. .At December 31, 2006, the
        principal amount due under the loan amounted to $48,271.
 
 The
        weighted average interest rate on the Company’s short-term obligation was
        approximately 9%.
 
 **NOTE
        7 -** **STOCKHOLDERS' DEFICIENCY**
 
 **Registration
        Rights on Previously Issued Shares**
  Of
        the
        306,307,663 shares deemed issued in connection with the recapitalization
        of the
        Company, 7,600,000 shares issued to Cornell and the 200,000 shares underlying
        warrants shall have "piggy-back" registration rights.
 
 
 
 F-15
 **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
  
 **Common
        Stock**
 
 On
        July
        10, 2006 (the “Acquisition Date”), the Company was deemed to have issued
        306,307,663 common shares pursuant to the reverse acquisition (see Note
        3).
 
 On
        October 4, 2006, p ursuant
        to the terms and subject to the conditions of a Security Agreement (See Note
        5),
        the Company issued 15,000,000 shares of its common stock for the title
        and
        interest in certain assets. The
        Company valued these common shares at the fair market value on the dates
        of the
        agreement of $0.009 per share or $135,000 based on the trading price of common
        shares.
  On
          November 3, 2006, Montgomery converted $40,000 of the $718,000 convertible
          debenture issued to Montgomery on January 31, 2006, into an aggregate of
          5,333,333 shares of common stock. The conversion price was $.0075 per share
          and
          the conversion reduced the principal amount of this debenture to $678,000
          (see
          Note 6).
 
 **Treasury
        Stock**
  In
          connection with the reverse acquisition transaction (see Note 3), the Company
          recorded treasury stock, which consists of the following:
 1.
            In
                2004, Connected Media Technologies, Inc. redeemed 2,000,000 shares
                of its
                common stock from its former sole director and former principal
                shareholder for cash consideration paid to the former principal
                stockholder totaling $135,000. The 2,000,000 shares are currently
                held in
                the company's treasury as treasury stock. 2.
            On
                January 31, 2006, Connected Media Technologies, Inc. entered into
                a
                Purchase and Sale Agreement with Rothschild Trust Holdings, LLC (the
                “Trust”), a related party (see Note 10), for the sale of certain issued
                and pending patents in exchange for the return of 13,241,223 shares
                of the
                Company’s common stock held by the Trust (the “Shares”). Additionally, on
                January 31, 2006, the Company, the Trust, Montgomery, and David Gonzalez,
                as the Escrow Agent, entered into an Escrow Agreement, whereby the
                Trust
                agreed to place the 13,241,223 shares that were returned to the Company
                and the Company agreed to deposit royalties otherwise payable to
                the Trust
                into an escrow account held by the Escrow Agent until such time as
                royalties of $690,000 have been deposited into the escrow account
                or until
                Montgomery has been repaid and/or converted $690,000 of the Convertible
                Debentures. At such time, the Trust shall have 30 days to replace
                the
                Shares with $728,267.26, which shall be distributed to the Company
                in
                exchange for the Shares; otherwise, the Escrow Agent shall release
                the
                Shares to the Company and the royalties to the Trust. As a result
                of this
                transaction, the Company placed into escrow 13,241,223 shares of
                common
                stock. The shares were valued based on the quoted trading price of
                $.02 at
                the date of the transaction resulting in a value of $264,825 of treasury
                stock. 
 **Stock
        Options**
 
 On
        October 4, 2006, in connection with employment agreements, the Company granted
        an aggregate of 10,800,000 stock options to purchase 10,800,000 shares of
        the
        Company’s common stock at an exercise price of $.009. The options expire on
        October 3, 2016. The
        Company valued these options at $ 97,161 utilizing the Black-Scholes option
        pricing model. The Company used the following assumptions for determining
        the
        fair value of options granted under the Black-Scholes option pricing model:
        expected volatility of 314%; expected holding period of 5 years; risk free
        interest rate of 4.64%; and a dividend yield of 0%. The Company uses historical
        data to estimate option exercise and employee termination within the valuation
        model. The expected term of options granted represents the period of time
        that
        options granted are expected to be outstanding.
  For
          the
          year ended December 31, 2006, the Company recorded stock-based compensation
          of
          $67,890 pursuant to SFAS 123R and was based on vesting provisions, which
          consists of $37,785 on the above 10,800,000 options and $30,105 related
          to
          options granted in prior years.
 At
        December 31, 2006, there was $59,376 of total unrecognized compensation expense
        related to non-vested option-based compensation arrangements under the
        Plan.
 
 
 
 F-16
 
 **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
 
 
 A
        summary
        of the status of the Company's outstanding stock options as of December 31,
        2006
        and changes during the year then ended are as follows:
  Number
                  of Options
              
              Weighted
                  Average Exercise PriceBalance
                at December 31, 2005
              
              
              -
              
              $
              -Stock
                  option assumed in acquisition
              
              
              21,300,000
              
              
              0.02Granted
              
              
              10,800,000
              
              
              0.009Exercised
              
              
              -
              
              
              -Forfeited
              
              
              -
              
              
              -Balance
                  at December 31, 2006
              
              
              32,100,000
              
              $
              0.016Options
                  exercisable at end of period
              
              
              25,500,000
              
              $
              0.02Weighted
                  average fair value of options granted during the period
              
              
              
              
              $
              0.009
 
 The
        following table summarizes information about employee and consultants stock
        options outstanding at December 31, 2006:
 
 Options
                  Outstanding
              
              Options
                  ExercisableRange
                  of Exercise Price
              
              Number
                  Outstanding at December 31, 2006
              
              Weighted
                  Average Remaining Contractual Life (Years)
              
              Weighted
                  Average Exercise Price
              
              Number
                Exercisable
                  at
                December
                  31, 2006
              
              Weighted
                  Average Exercise Price$
                  0.02
              
              21,000,000
              
              1.75
              $
              0.02
              
              21,000,000
              $
              0.02$
                  0.009
              
              10,800,000
              
              9.75
              
              0.009
              
              4,200,000
              
              0.009$
                  0.04
              
              300,000
              
              1.25
              
              0.04
              
              300,000
              
              0.0432,100,000
              
              
              $
              0.016
              
              25,500,000
              $
              0.018
  **Common
        Stock Warrants**
 
 A
        summary
        of the status of the Company's outstanding stock warrants as of December
        31,
        2006 and changes during the period then ended are as follows:
 
 Number
                  of Warrants
              
              Weighted
                  Average Exercise PriceBalance
                at December 31, 2005
              
              
              -
              
              $
              -Stock
                  warrants assumed in acquisition
              
              
              8,200,000
              
              
              0.0003Granted
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -Forfeited
              
              
              -
              
              
              -Balance
                  at December 31, 2006
              
              
              8,200,000
              
              $
              0.0003Warrants
                  exercisable at end of period
              
              
              8,200,000
              
              $
              0.0003
 
 
 F-17
 
 **Connected
          Media Technologies, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2006**
 
 The
        following table summarizes information about employee and consultants stock
        options outstanding at December 31, 2006:
 
 Warrants
                  Outstanding
              
              Warrants
                  ExercisableRange
                  of Exercise Price
              
              Number
                  Outstanding at December 31, 2006
              
              Weighted
                  Average Remaining Contractual Life (Years)
              
              Weighted
                  Average Exercise Price
              
              Number
                Exercisable
                  at
                December
                  31, 2006
              
              Weighted
                  Average Exercise Price.$
                  0001
              
              8,000,000
              
              2
              $
              .0001
              
              8,000,000
              $
              .0001$
                  0.01
              
              200,000
              
              2
              
              .01
              
              200,000
              
              .018,200,000
              
              
              $
              .0003
              
              8,200,000
              $
              .0003
 
 
 **NOTE
        8 -** **RELATED PARTY TRANSACTIONS**
  **Accounts
        Receivable - Related Party**
  At
          December 31, 2006, accounts receivable from progress invoices due from
          a company
          owned by the Company’s Vice Chairman and principal shareholder amounted to
          $41,500. At December 31, 2006, the Company recorded deferred revenue of
          $61,500
          related to the performance of these services, which will be completed and
          recognized as revenue in fiscal 2007.
 
 **Accounts
        Payable - Related Parties**
 
 At
        December 31, 2006, the Company had outstanding $49,557 of accounts payable
        to
        various related parties.
  **Notes
        Payable - Related party and Accrued Interest - Related
        Party**
 
 At
        December 31, 2006, the Company has note payable to Irrevocable Trust Agreement
        Number III (“Trust III”) in the amount of $202,000. This note matured on
        December 9, 2006 pursuant to a Loan Extension Agreement dated January 31,
        2006.
        In December 2006, the Company defaulted on the Line of Credit and it was
        repaid
        to the bank with proceeds from the Certificate of Deposit held by Trust III
        (the
“Guarantor”) in the amount of $250,000. Leigh M. Rothschild, a Director of the
        Company until January 30, 2007 (resignation date), is the primary beneficiary
        of
        Trust III. Accordingly, at December 31, 2006, the Company has a note payable
        outstanding to Trust III of $452,000. At December 31, 2006, the Company had
        accrued interest payable, related party of $14,004.
 
 **Other**
 
 The
        Company subleases office space, on a month-to-month basis, from National
        Communications, Inc, a
        company owned by the Company’s Vice Chairman and principal shareholder Robert
        Rodriguez. For the year ended December 31, 2006 and 2005, rent expense paid
        to
        this related party amounted to $31,000 and $0, respectively, and is included
        in
        rent expense on the accompanying consolidated statement of operations.
  The
          company engaged McLaughlin & Stern, LLP a law firm whereby one of the
          partners is the father of the company’s Chief Executive Officer. The company had
          total expenses of approximately $41,000 for legal fees to this related
          party for
          the period July 10, 2006 through December 31, 2006. The company has used
          the
          services of the law firm to handle various transactions and general SEC
          related
          matters, including the preparation of annual and quarterly reports. As
          of
          December 31, 2006, the Company had accrued approximately $171,600 as related
          party legal fees.
  **NOTE
        9 -** **INCOME TAXES**
 
 The
          treatment of the July, 2006 acquisition for income tax purposes is treated
          as a
          forward acquisition, the
          acquisition of a 100% owned subsidiary for income tax
          purposes.
  
 F-18
 **Connected
        Media Technologies, Inc. and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **December
        31, 2006**
  There
          was
          no income tax expense for the years ended December 31, 2006 and 2005 due
          to the
          Company's net losses and utilization of net operating loss carry forwards.
          Additionally, during the period from July 19, 2001 (inception) to August
          23,
          2004, the Company was taxed as a partnership and was not subject to federal
          and
          state income taxes; accordingly, no provision had been made.
  The
          Company's tax expense differs from the "expected" tax expense for the year
          ended
          December 31, 2006, (computed by applying the Federal Corporate tax rate
          of 34%
          and state tax rate of 5% to loss before taxes and 34% :
  Federal
          Corporate tax rate for 2005), as follows:
 2006
                
                
                
                2005Computed
                    "expected" tax expense (benefit)
                
                $
                (6,819,315
                )
                
                
                
                
                ($532,816
                )Impairment
                    of Goodwill
                
                
                6,328,907Other
                    & State tax
                
                
                (90,446
                )Change
                    in valuation allowance
                
                
                580,854
                
                
                
                
                $
                532,816-
                
                
                
                
                
                **-**Deferred
                    tax assets:Timing
                    differences
                
                
                
                
                $
                4,100Net
                    operating loss carry forward
                
                
                
                
                
                1,150,223Total
                    gross deferred tax assets
                
                
                
                
                $
                1,154,323Less
                    valuation allowance
                
                
                
                
                
                (1,154,323
                )Net
                    deferred tax assets
                
                
                
                
                
                **-**
  The
          Company has a net operating loss carry forward of approximately $2,949,289,
          available to offset future taxable income expiring 2025. Utilization of
          this
          loss may be limited due to a change in control, which occurred on August
          24,
          2004.
 
 The
          valuation allowance at December 31, 2005 was $573,469. The net change in
          valuation allowance during the year ended December 31, 2006 was an increase
          of
          $580,854.
  **NOTE
        10 -** **COMMITMENTS AND CONTINGENCIES**
  **Agreements
        with Rothschild Trust Holdings, LLC**
  On
        January 31, 2006, Connected Media Technologies, Inc. entered into a Purchase
        and
        Sale Agreement with Rothschild Trust Holdings, LLC (the “Trust”), a related
        party, for the sale of certain issued and pending patents in exchange for
        the
        return of 13,241,223 shares of Connected Media Technologies, Inc.'s common
        stock
        held by the Trust (the “Shares”). As additional consideration, the Trust granted
        Connected Media Technologies, Inc. a license to use the patents pursuant
        to the
        terms of a License and Royalty Agreement, which grants Connected Media
        Technologies, Inc. a twelve-month right of election to license the patents.
        If
        Connected Media Technologies, Inc. exercises the right of election, the Trust
        shall grant Connected Media Technologies, Inc. a two-year exclusive license
        for
        the use of the patents that is renewable subject to performance, and the
        Trust
        shall receive 10% royalties on all gross receipts as defined in the License
        and
        Royalty Agreement.
  On
        January 31, 2006, Connected Media Technologies, Inc., the Trust, Montgomery,
        and
        David Gonzalez, as the Escrow Agent, entered into an Escrow Agreement, whereby
        the Trust agreed to place the 13,241,223 shares that were returned to Connected
        Media Technologies, Inc. and Connected Media Technologies, Inc. agreed to
        deposit royalties otherwise payable to the Trust into an escrow account held
        by
        the Escrow Agent until such time as royalties  of $690,000 have been
        deposited into the escrow account or until Montgomery has been repaid and/or
        converted $690,000 of the Convertible Debentures. At such time, the Trust
        shall
        have 30 days to replace the Shares with $728,267, which shall be distributed
        to
        the Company in exchange for the Shares; otherwise, the Escrow Agent shall
        release the Shares to the Company and the royalties to the Trust.
  **Litigation**
  On
          November 7, 2006, NPNAA received notice from a creditor of NPN of a claim
          against NPN in the amount of approximately $50,000 plus interest and attorney's
          fees. The creditor claimed, among other things, that the transaction between
          NPN
          and NPNAA was improper, and that NPNAA is directly liable for the amount
          of the
          claim. The Company believes that the claim is without merit and has assessed
          that an unfavorable outcome is non-probable. Accordingly, no amounts have
          been
          accrued as December 31, 2006. On December 12, 2006, the Company received
          notice
          from the creditor that it did not intend to pursue legal recourse and was
          withdrawing its demand letter of November 7, 2006.
   F-19
  **Connected
        Media Technologies, Inc. and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **December
        31, 2006**
  On
          March
          23, 2007, the Company and its wholly-owned subsidiary Trust Licensing,
          Inc.,
          were each served with a lawsuit from Irrevocable Trust Agreement Number
          III. The
          lawsuit was commenced in the Circuit Court of the 17th Judicial Circuit
          in and
          for Broward County, Florida. The lawsuit relates to amounts claimed owed
          to
          Irrevocable Trust Agreement Number III in the approximate total principal
          amount
          of $500,000, and also seeks various interest, costs, and fees (see Note
          11).
 
 From
        time
        to time we may become subject to proceedings, lawsuits and unasserted claims
        in
        the ordinary course of business.  Such matters are subject to many
        uncertainties, and outcomes are not predictable with assurance.  As of the
        date of this report, we don not believe that any of these matters would be
        material to the Company’s financial condition or operation.
 
 **NOTE
        11 -** **SUBSEQUENT
        EVENTS**
 
 On
        March
        9, 2007, Montgomery converted $24,000 of the $718,000 convertible debenture
        issued to Montgomery on January 31, 2006 into an aggregate of 30,000,000
        shares
        of common stock. The conversion price was $.0008 per share and the conversion
        reduced the principal amount of this debenture to $654,000.
 
 On
        March
        21, 2007 the Company entered into a Loan Modification Agreement effective
        February, 2007 with Montgomery Equity Partner, Ltd. (“Montgomery”) pursuant to
        which the due date on outstanding promissory notes was extended to June 30,
        2007
        with interest accruing at 14%. The Agreement also provides that the Company
        may
        redeem the notes for a payment of $1 million with the convertible promissory
        note in the amount of $678,000 still remaining outstanding. Upon payment
        of the
        $1million Montgomery will release all liens and encumbrances it holds on
        the
        assets of the Company and will hold back for a period of 90 days from converting
        or selling and shares underlying the convertible note. Thereafter, Montgomery
        may convert and sell shares under the convertible notes in amount not to
        exceed
        $56,500 per calendar month. The conversion price shall be changes to $0.01
        per
        share and a discount on the conversion price will change to 60% of the lowest
        bid price of the Company’s common stock during the 10 days immediately preceding
        the conversion rate. Upon payment of the redemption price the Company will
        issue
        to Montgomery a warrant to purchase 10% of the outstanding secured convertible
        debentures as of the maturity date. The warrant will be for seven years with
        an
        exercise price equal to $0.01.
  On
        March
        21, 2007, Rothschild Trust Holdings, LLC, the licensor of various patents
        to the
        Company, alleged, among other things, that the Company's license to these
        patents has been terminated. The patents licensed to the Company were included
        in the License and Royalty Agreement, by and between Rothschild Trust Holdings,
        LLC and the Company, dated as of January 31, 2006, The licensor has now claimed
        all right, title and interest in the subject intellectual property and has
        further asserted that any subsequent use or sublicense of the subject
        intellectual property will constitute infringement. The Company disagrees
        with
        the licensor's assertions concerning the Company's rights in the intellectual
        property, and is currently evaluating its options with counsel with respect
        to
        the continued use of the subject intellectual property rights. The dispute
        relates, in part, to the parties' differing interpretations of the terms
        of the
        License and Royalty Agreement, and the subsequent actions and conduct between
        the parties relating thereto. Although the Company intends to assert its
        rights
        to the intellectual property, the patents do not represent a material portion
        of
        the Company’s operating revenue.
  On
          March
          23, 2007, the Company and its wholly-owned subsidiary Trust Licensing,
          Inc.,
          were each served with a lawsuit from Irrevocable Trust Agreement Number
          III. The
          lawsuit was commenced in the Circuit Court of the 17th Judicial Circuit
          in and
          for Broward County, Florida. The lawsuit relates to amounts claimed owed
          to
          Irrevocable Trust Agreement Number III in the approximate total principal
          amount
          of $500,000, and also seeks various interest, costs, and fees. At December
          31,
          2006, the Company has loan payables related to Trust of $452,000, which
          includes
          the $250,000 bank line of credit (See Note 5) the Company believes is the
          correct loan amount (See Notes 6 and 7).
 
 
 F-20









**SIGNATURES**





Pursuant
      to the
      requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned; thereunto duly authorized, in the City of Miami, State of Florida,
      on April 13, 2007.








**Connected Media Technologies, Inc.**By:
            /s/
                Jeffrey W. SassJeffrey
                W. SassChief Executive Officer





Pursuant
      to the
      requirements of the Securities Exchange Act of 1934, this report has been signed
      below by the following persons on behalf of Registrant and in the capacities
      indicated on April 13, 2007.





Signature
            
            Title/s/
                Rafael DiazBalart
            
            ChairmanRafael
                Diaz-Balart/s/
                Robert Rodriguez
            
            Vice
                ChairmanRobert
                Rodriguez/s/
                Isidrio Gonzalez
            
            PresidentIsidiro
                Gonzalez, President/s/
                Jeffrey W. SassJeffrey
                W. Sass
            
            Chief
                Executive Officer, and Director/s/
                Mark MayoMark
                Mayo
            
            Chief
                Financial Officer****and
                Director








35