**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549




**FORM
      10-KSB**


(Mark
      One)




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




o
              **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: 333-70932*




**Interact
      Holdings Group, Inc.**


(Name
      of
      small business issuer as specified in its charter)




Florida
            65-1102865(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)





550
      Greens Parkway, Suite 230


Houston,
      Texas 77067


(Address
      of principal executive offices, including zip code)




Registrant’s
        telephone number, including area code: (619) 615-4242


Securities
      registered pursuant to Section 12(b) of the
      Act: None


Securities
      registered pursuant to Section 12(g) of the
      Act:  $.00001
      par value common stock









Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days. Yes xNo o




Check
      if
      disclosure of delinquent filers pursuant 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. o




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


Yes
oNo
x




The
      issuer’s revenues for the most recent fiscal year were $3,198,853.




The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant was approximately $45,371 as of March 31,
      2007.




(ISSUERS
      INVOLVED IN BANKRUPTCY PROCEEDINGS


DURING
      THE PAST FIVE YEARS)




Check
      whether the Issuer has filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court.


Yes
o
      No o




The
      Issuer has not been involved in any bankruptcy proceedings;




(APPLICABLE
      ONLY TO CORPORATE ISSUERS)




State
      the
      number of shares outstanding of each of the Issuer’s classes of common equity,
      as of the latest practicable date: April 17, 2007 - 13,613,538




DOCUMENTS
      INCORPORATED BY REFERENCE




None.




Transitional
      Small Business Issuer Format Yes o No x










**Table
      of Contents**




PART
                I
            
            1Item
                1
            
            
            Description
                of Business
            
            
            1Item
                2
            
            
            Description
                of Property
            
            
            7Item
                3
            
            
            Legal
                Proceedings
            
            
            8Item
                4
            
            
            Submission
                of Matters to a Vote of Security Holders
            
            
            8PART
                II
            
            
            
            
            
            8Item
                5
            
            
            Market
                for Common Equity and Related Stockholder Matters
            
            
            8Item
                6
            
            
            Management’s
                Discussion and Analysis or Plan of Operation
            
            
            10Item
                7
            
            
            Financial
                Statements
            
            
            13PART
                III
            
            20Item
                9
            
            
            Directors,
                Executive Officers, Promoters And Control Persons; Compliance with
                Section
                16(A) of the Exchange Act
            
            
            20Item
                10
            
            
            Executive
                Compensation
            
            
            23Item
                11
            
            
            Security
                Ownership of Certain Beneficial Owners and Management
            
            
            25Item
                12
            
            
            Certain
                Relationships and Related Transactions
            
            
            25Item
                13
            
            
            Exhibits
            
            
            26Item
                14
            
            
            Principal
                Accountant Fees and Services
            
            
            27SIGNATURES
            
            28










**PART
      I**




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




**Corporate
      History**




Interact
      Holdings Group, Inc. (the “Company”, “we” or “us”) was incorporated on May 8,
      2001 under the laws of the State of Florida as a development-stage company
      under
      the name The Jackson Rivers Company.





On
      August
      31, 2005, Dennis N. Lauzon, our former President, Chief Executive Officer and
      controlling stockholder, entered into a stock purchase agreement with Jeffrey
      W.
      Flannery, our current President and Chief Executive Officer, under which
      Mr. Lauzon agreed to sell his 960,000 shares of our Series A Preferred
      Stock held by him to Mr. Flannery for a purchase price of $60,000. Payment
      was in the form of $15,000 in cash and a secured promissory note in the
      principal amount of $45,000 payable in three (3) monthly installments of $15,000
      per month. This note was fully paid in accordance with its terms.





On
      December 2, 2005, we entered into a reverse merger agreement for the acquisition
      of Diverse Networks Inc. (“DNI”), a Texas corporation which specializes in
      technical, operational and engineering services. Pursuant to the definitive
      agreement, each share of DNI common stock was converted into the right to
      receive either (i) $0.21 for every share of common stock in DNI, in the
      form of a one-year 8% promissory note or (ii) one share of our Series B
      Preferred Stock, at the election of each DNI stockholder.




On
      March
      17, 2006, we sold 100% of equity interest in our wholly owned subsidiary, JRC
      Global Products, Inc., to our former President and controlling shareholder,
      Dennis Lauzon, for $1,100 in the form of a promissory note. Such note has since
      been fully satisfied.





On
      March
      31, 2006, we entered into a Securities Purchase Agreement with certain
      accredited investors pursuant to which we agreed to issue, in three separate
      tranches, up to $2,000,000 of convertible promissory notes, as well as warrants
      to purchase shares of our common stock (the “Securities Purchase Agreement”).
      The different tranches of the notes are to be issued and sold as follows:
      (i) $700,000 upon execution and delivery of the Securities Purchase
      Agreement; (ii) $600,000 within 5 days of filing of a registration
      statement (the “Registration Statement”) with the Securities and Exchange
      Commission (the “SEC”) registering the shares of common stock that are to be
      issued upon conversion of the notes and exercise of the warrants issued pursuant
      to the Securities Purchase Agreement; and (iii) $700,000 within 5 days of
      the Registration Statement being declared effective by the SEC. The convertible
      notes have a three year term and bear interest at a rate of six percent (6%)
      per
      annum. The notes are convertible into our common stock pursuant to a “variable
      conversion price” equal to the “Applicable Percentage” multiplied by the “Market
      Price.” “Applicable Percentage” is initially 50% provided that, such percentage
      will be increased to 55% if the Registration Statement is filed on or before
      April 30, 2006 and further increased to 60% if the Registration Statement is
      declared effective by the SEC on or before July 29, 2006. “Market Price” means
      the average of the lowest three trading prices (as defined in the Securities
      Purchase Agreement) for our common stock during the 20 trading day period prior
      to conversion. Upon an event of default (as defined in the agreement), the
      notes
      are immediately due and payable at an amount equal to the greater of
      (i) 140% of the then outstanding principal amount of the notes plus
      interest and (ii) the “parity value” defined as (a) the highest number of
      shares of common stock issuable upon conversion of the notes multiplied by
      (b)
      the highest closing price for our common stock during the period beginning
      on
      the date of the occurrence of the event of default and ending one day prior
      to
      the demand for prepayment due to the event of default. The notes are secured
      by
      a first lien on all of our assets, including all of our intellectual property.
      At the time of this filing, $2,250,315.03 remains outstanding on the note and
      $84,395.00 has been converted into common shares of the Company.




1




Subject
      to certain terms and conditions set forth therein, the notes are redeemable
      by
      us at a rate of 120% to 140% of the outstanding principal amount of the notes,
      plus interest thereon at a rate of 6%. In addition, so long as the average
      daily
      price of our common stock is below the “initial market price” (as defined in the
      agreement) we may prepay such monthly portion due on the outstanding notes
      and
      the investors agree that no conversions will take place during such month where
      this option is exercised by us.





The
      notes
      were issued with warrants to purchase up to 50,000,000 shares of our common
      stock at an exercise price of $0.07 per share, subject to
      adjustment.





We
      agreed
      to register the secondary offering and resale of the shares issuable upon
      conversion of the notes and the shares issuable upon exercise of the warrants
      within 30 days of the execution of the Securities Purchase Agreement. At the
      time of this filing, the Company has not registered the secondary offering
      and
      resale of the shares issuable upon conversion.





We
      relied
      on the exemption from registration provided by Section 4(2) of the Securities
      Act of 1933, as amended, for the offer and sale of the notes and the
      warrants.





On
      May 5,
      2006, we acquired UTSI International Corporation (“UTSI”), a Texas corporation,
      pursuant to a merger agreement whereby each share of UTSI common stock
      outstanding was converted into the right to receive 1.4380297 shares of the
      Company’s Series C Preferred Stock so that the 1,529,871 shares of common stock
      of UTSI outstanding are convertible into an aggregate of 2,200,000 shares of
      Series C Preferred Stock of the Company.





In
      December 2006, we entered into a Securities Purchase Agreement with the same
      accredited investors as above pursuant to which we agreed to issue an additional
      tranche of $250,000 of convertible promissory notes. These notes have a three
      year term and bear interest at a rate of eight percent (8%) per annum and are
      convertible into our common stock under the same terms set forth for the notes
      described above. The notes also included warrants to purchase up to 10,000,000
      shares of our common stock at an exercise price of $0.0007 per share, subject
      to
      adjustment.





In
      connection with the offer and sale of all of the notes and the warrants
      discussed above, we engaged Envision Capital LLC as a finder for the
      transaction. Under the terms of the engagement, Envision will receive a ten
      percent (10%) cash commission on the sale of the notes, and warrants to purchase
      up to 5,000,000 shares of our common stock on the same terms and conditions
      as
      the warrants issued to purchasers under the Securities Purchase
      Agreement.





In
      December 2006, the Company changed its name to Interact Holdings Group, Inc.
      to
      reflect the diverse nature of its enterprises.





Our
      executive offices are located at 550 Greens Parkway, Suite 230, Houston, Texas
      and our telephone number is (619) 615-4242. We maintain a website at
      www.interactholdings.com.





**Recent
      Developments**




On
      March
      31, 2007, we entered into another Securities Purchase Agreement with the same
      accredited investors as above, pursuant to which we agreed to issue an
      additional tranche of $220,000 of convertible promissory notes. The convertible
      notes have a three year term and bear interest at a rate of eight percent (8%)
      per annum and are convertible into our common stock under the same terms set
      forth for the Notes described above. The notes also included warrants to
      purchase up to 10,000,000 shares of our common stock at an exercise price of
      $0.07 per share, subject to adjustment.




2




In
      connection with the offer and sale of all of these notes and the warrants,
      we
      engaged Envision Capital LLC as a finder for the transaction. Under the terms
      of
      the engagement, Envision will receive a ten percent (10%) cash commission on
      the
      sale of the notes, and warrants to purchase up to 5,000,000 shares of our common
      stock on the same terms and conditions as the warrants issued to purchasers
      under such Securities Purchase Agreement.





**Our
      Business**




We
      are in
      the infrastructure management and technology business. We build and operate
      large-scale wireless networks and provide consulting and engineering services
      to
      allow our customers to better manage their infrastructure, whether an oil or
      gas
      pipeline, a remote asset device, a building or a network. We also provide data
      collection and management services between remote devices called Machine to
      Machine (“M2M”) services.





**Industry
      Overview**





M2M
      products and services are applicable to industries, cities, government
      institutions or enterprises where acquiring data from machines or sharing data
      between machines improves business processes. Targeted customers of the 
Company include municipalities, government agencies and the vertical industry
      sectors of Construction, Electric, Gas, Water and Wastewater Utilities, Public
      Safety, Oil and Gas production and pipelines and related Original Equipment
      Manufacturers supplying products to these industries. Applications within these
      sectors, where efficiencies can be gained or lifecycle cost can be reduced
      by
      implementing M2M services, include asset tracking and management, automatic
      meter reading and demand response, security, logistics, HVAC (heating,
      ventilation & air conditioning) and industrial machinery maintenance, and
      environmental monitoring and control.





**Principal
      Products and Services**




We
      have
      specialized expertise dealing with wireless and wired network engineering,
      real-time application integration (SCADA), business intelligence and network
      security. We provide services throughout the United States and around the world,
      including Africa, the Caribbean, the former Soviet Union, Europe, Japan, Mexico
      and the People’s Republic of China.





Our
      focus
      is currently on three primary industries: Oil and Gas, Utility and Wireless.
      The
      oil and gas industry includes multiple streams within the international private
      sector and national oil companies. Our utility experience spans large regional
      utilities as well as small cooperatives. Within the wireless data sector, small
      broadband Wireless Internet Service Providers and large national Mobile Virtual
      Network Providers have engages us for the design, implementation, and operation
      of their customer bearing services. Some of our current clients include:
      Chevron, BP, Prenova, Constellation and Upstream Engineering.





We
      have
      two operating divisions: The M2M Services Division and the Professional Services
      Division.





**M2M
      Services Division**




M2M
      is
      about data flowing between billions of devices, and between those devices and
      people that need information to help them make better decisions. The information
      can be anything from monitoring the environment inside remote greenhouses,
      gathering data about traffic flow and thermal stresses on a bridge, to sending
      daily electricity usage information to you on a display in your
      home.




3




Our
      data
      acquisition and delivery service offers an alternative to the manual collection
      of data and to the creation of an automated collection system. It eliminates
      the
      need to build, operate, and manage a telecommunication and computer network.
      This service includes: ruggedized, industrial remote gateway units which connect
      to equipment in the field, transport of your company’s data via one of several
      available telecommunication technologies, 24/7 network management and help
      desk
      support, data archival, notification in the event of a field alarm, a web-based
      network visibility tool plus the ability for clients to retrieve data and
      generate reports.





**Professional
      Services Division**




Our
      Professional Services business leverages our data communication knowledge,
      our
      operations expertise, our experience in real-time systems and our insight into
      existing and emerging communication technologies to formulate and implement
      solutions for our clients. We help our clients to identify and enter new
      markets, achieve strategic objectives and deliver their products and services
      more effectively and efficiently.





Within
      the Professional Services Division, we offer Engineering Services, Business
      Intelligence and Security Solutions.





**a.**  **Engineering
      Services**




***Wireless
      and Wired Network Engineering:*** Our
      network engineering team is well versed in both wired and wireless technologies.
      We perform analysis of existing networks, design of new and expansion networks,
      and testing of existing networks and new solutions for network upgrades. As
      part
      of our LAN/WAN engineering, we can analyze data flow and throughput, layer
      2/3
      protocol usage, IP addressing, congestion, utilization, and reliability. We
      also
      perform network design for the core, distribution and access
      layers.





Specification
      design and implementation of fixed and mobile wireless data networks for service
      providers such as:




·
            palmOne,
                Inc.’s Palm.Net service




·
            OmniSky
                Corporation




·
            SkyRiver
                Communications, Inc.




·
            Ricochet
                Networks, Inc.




·
            AsiaCorp
                Communications in the People’s Republic of
                China




·
            CapRock
                Communications’ worldwide network





***Radio
      Frequency (RF) Engineering:*** Our
      RF
      engineering team focuses on the characteristics and performance of wireless
      data
      networks. We perform site surveys, propagation analysis, frequency coordination,
      and site selection and optimization. Our RF experience spans many frequency
      ranges and air interface standards, including UHF, Spread Spectrum, Microwave,
      Cellular/PCS, UNII, LMDS/MMDS and others. Projects have included:





·
            Site
                examination and RF plan for the University of Houston campus facilities
                and




4




·
            Site
                and equipment selection and testing for SkyRiver Communication’s
                Inc.





***Satellite
      Engineering:*** Our
      satellite engineering team can manage and engineer space segment, gateway earth
      stations, VSATs, and handle regulatory issues. When managing the space segment,
      our satellite engineering team performs economic analysis, tariff negotiation,
      and provisioning and management. We are familiar with both domestic and
      international permitting, as well as frequency coordination where necessary.
      While engineering ground segment facilities, we have performed earth station
      dimensioning and RF equipment design and configuration. Our engineers can
      optimize the economic and performance tradeoffs in the earth station, space
      segment, and transmission technology to provide the lowest life cycle cost
      and
      highest performance systems available.





**b.**  **Business
      Intelligence Services**




***Dashboards
      & Portals:*** Dashboards
      and portals allow users to customize their views so that they get only the
      data
      they need without having to wade through extraneous content. When combined
      with
      mobile connectivity, dashboard/portal technology enables clients to make
      informed decisions. The Company utilizes its knowledge and expertise to properly
      evaluate a client’s data visibility needs and architect a solution that is both
      customizable and scalable.





***Real-Time
      & Just-In-Time (JIT) Data Management:*** Our
      experience base includes a firm foundation in Real-Time/Just-In-Time scenarios
      and business models including SCADA energy management, trading enterprises,
      and
      military applications.





***SCADA
      Requirements Specification:*** The
      Company utilizes its combined SCADA products development and support experience
      to help clients determine whether a full replacement, product upgrade or better
      usage of currently implemented systems will provide it with a greater return
      on
      income (ROI). We are currently engaged on a project for Chevron for this type
      of
      service.





***Real-time
      Performance Tuning:*** We
      will
      automate cumbersome manual tasks and fine tune the configurations of SCADA
      systems to provide optimum performance. We create custom scripts and tools
      for
      trending and analysis geared towards each client’s processes and
      procedures.





The
      Company has been involved in the following key projects:




·
            software
                and application development, such as our streamlining and customization
                of
                data input and reporting for a global capital project management
                system
                for a major oil company;




·
            specification,
                design, and implementation of business processes and efficiency
                optimization systems, such as new energy management systems for
                Prenova;




·
            utility
                data center process optimization, such as our analysis and automation
                of
                systems and procedures for Itron,
                Inc.





**Security
      Solutions**




***Vulnerability
      Scanning:*** We
      provide completely automated checks for known vulnerabilities against a system
      or systems in a network using enterprise grade, commercial, industry standard,
      trade, and custom tools.





***Security
      Scanning:*** We
      perform security scans, which include manual false positive verification,
      network weakness identification, and customized, professional
      analysis.




5




***Penetration
      Testing:*** We
      provide specialized, goal-oriented testing (such as individual systems of
      interest) to gain privileged access by pre-conditional means using a safe
“hacker” methodology. Our security engineers will use the same proven techniques
      and methodology that hackers use to gain unauthorized entry to networks and
      computer systems. The results will be provided to the client in a full report
      complete with usable database data, charts and graphs, counter measure options,
      while at the same time, posing absolutely no actual risk to network or computer
      systems.





***Risk
      Assessment and Analysis:*** In
      order
      to make an informed business decision on how to handle a risk properly when
      this
      situation occurs, we offer full risk analysis and vulnerability assessment
      service, which gives our clients the necessary data for calculating the best
      solutions with proven formulas. This process is performed through interview
      and
      mid-level research, test results analysis, and personnel interviews, which
      includes business justifications, legal justifications, and industry specific
      justifications concluded by quantified actuarial formulas proven in the
      industry. The results will be provided in a full report complete with usable
      database data, charts and graphs, counter measure options, and business cost
      analysis.





***Security
      Auditing:*** We
      offer
      hands-on, privileged, code level security inspection of the operating system
      (OS) and applications of a system or systems within a network or
      networks.





***Posture
      Assessment & Security Testing:*** We
      provide project-oriented complete risk assessment of all systems, applications,
      and networks through the application of professional analysis, scanning, and
      testing, where penetration is often used to confirm false positives and false
      negatives as project time allows.





***Counter
      Measure Strategies: Firewalls, Intrusion Detection Systems (IDS), and Virtual
      Private Networks (VPN):*** We
      will
      help organizations choose the right counter measures that are the most effective
      for their architecture as well as the most cost beneficial to their budget
      with
      our proven formulas.





***Policy
      Design and Implementation:*** Our
      security professionals have years of experience designing and implementing
      security policies for some of the world’s top energy companies as well as some
      of the nations top government agencies. We help design an effective, industry
      standard security policy and integrate it into such client’s security
      architecture and teach the best ways to enforce them within their
      organization.





***Forensics:*** Our
      capabilities include the capture, recording, and analysis of network events
      in
      order to discover the source of security attacks, exposures, and
      breaches.





***Security
      Training:*** Our
      employees have extensive wired and wireless network as well as SCADA/Critical
      Infrastructure security experience. Our instructors, all with over a decade
      of
      professional security experience, come from a background of enterprise security
      software development companies, various government agencies, financial
      institutions, energy & utility companies, and some of the worlds largest oil
& gas companies.





**Competition**




We
      face a
      great deal of competition from a number of companies. Competition within the
      M2M
      market varies by industry and applications. Typical competitors are regional
      or
      national service-oriented companies that address a single niche such as HVAC,
      asset tracking, or utility meter reading. Other competitors include equipment
      manufacturers looking to develop their own monitoring service to enable
      long-term maintenance contracts or companies that offer M2M solutions for
      private label. No competitor offers an integrated, broad-based, end-to-end,
      turnkey solution that addresses any application. We expect that the number
      of
      our competitors will increase dramatically in the coming years as additional
      companies looking to become complete M2M solutions providers enter the
      market.




6




***Sources
      and Availability of Raw Materials and Names of Principal
      Suppliers***




One
      of
      the most important components of our M2M service offering is the gateway.
      Gateways are readily available from Wireless Systems, Inc., Comp-u-Lab and
      Micro
      Technology Services.





**Dependence
      on One or A Few Major Customers**




We
      are
      dependent on two customers for more than 50% of our business. A change in our
      contracts or business relationship with those customers could significantly
      impact our ability to continue as an operating entity.





**Patents,
      Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor
      Contracts**




We
      currently have the original logo for DNI trademarked. We are in the process
      of
      obtaining the trademark for the new DNI logo and the name M2M Data
      Services.





**Governmental
      Approval of Principal Products or Services**




None.





**Effect
      of Existing or Probable Governmental Regulations on Busines** **s**




Although
      there are currently no government regulations that directly affect the conduct
      of our business today, we anticipate that the passing of any new legislation
      or
      regulations increasing safety requirements on pipelines would have an overall
      positive effect on our business operations as more companies would be required
      to seek from outside sources the type of expert advice provided by the
      Company.





**Research
      and Development**




DNI
      is
      continuing the development and testing of a new end-to-end data collection
      service. Cost for ongoing development and testing is roughly $100,000 per
      month.





**Cost
      and Effects of Compliance with Environmental Laws**




The
      Company is not, at present, subject to existing environmental laws that may
      have
      an adverse effect on us.




**Employees**




As
      of
      March 31, 2007, we had 24 full-time employees and no part-time employee. As
      we
      grow, we will need to attract an unknown number of additional qualified
      employees. Although we have experienced no work stoppages and believe our
      relationships with our employees are good, we could be unsuccessful in
      attracting and retaining the persons needed. None of our employees are currently
      represented by a labor union. We expect to have a ready source of available
      labor to support our growth.





**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY**





Our
      executive and operational headquarters are based in Houston, Texas. We lease
      office space under an operating lease that expires in May 2010 at a monthly
      rent
      of $23,560. We may require additional office space if we grow. We believe there
      is an adequate supply of suitable office space for lease on terms acceptable
      to
      us should we require it.




7




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




None.




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




None.




**PART
      II**




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




Our
      common stock trades on the OTC Bulletin Board under the symbol “IHGR.” The
      following table shows the high and low bid prices for our common stock for
      each
      quarter since January 1, 2005 as reported by the OTC Bulletin Board. All share
      prices have been adjusted to provide for the 1-for-2000 reverse stock split
      which was effected on May 9, 2005 and the 4-for-1 stock split which was effected
      on May 27, 2005. We consider our stock to be “thinly traded” and any reported
      sale prices may not be a true market-based valuation of the stock. Some of
      the
      bid quotations from the OTC Bulletin Board set forth below may reflect
      inter-dealer prices, without retail mark-up, mark-down or commission and may
      not
      represent actual transactions.





**January
                1, 2005 to December 31, 2005**
            
            **High
                Bid**
            
            **Low
                Bid**First
                quarter
            
            $
            3.50000
            
            $
            0.00000Second
                quarter
            
            
            0.06500
            
            
            0.00000Third
                quarter
            
            
            0.10800
            
            
            0.00600Fourth
                quarter
            
            
            0.02500
            
            
            0.00300




**January
                1, 2006 to December 31, 2006**
            
            **High
                Bid**
            
            **Low
                Bid**First
                quarter
            
            $
            0.00220
            
            $
            0.0025Second
                quarter
            
            
            0.05000
            
            
            0.0042Third
                quarter
            
            
            0.00074
            
            
            0.0032Fourth
                quarter
            
            
            0.00400
            
            
            0.0009





**Holders**





As
      of
      April 17, 2007, there were approximately 678 record holders of our common
      stock.





**Dividends**





We
      have
      not paid any cash dividends since our inception and do not contemplate paying
      dividends in the foreseeable future. It is anticipated that earnings, if any,
      will be retained to retire debt and for the operation of the
      business.





Shares
      eligible for future sale could depress the price of our common stock, thus
      lowering the value of a buyer’s investment. Sales of substantial amounts of
      common stock, or the perception that such sales could occur, could adversely
      affect prevailing market prices for shares of our common stock.




Our
      revenues and operating results may fluctuate significantly from quarter to
      quarter, which can lead to significant volatility in the price and volume of
      our
      stock. In addition, stock markets have experienced extreme price and volume
      volatility in recent years. This volatility has had a substantial effect on
      the
      market prices of securities of many smaller public companies for reasons
      unrelated or disproportionate to the operating performance of the specific
      companies. These broad market fluctuations may adversely affect the market
      price
      of our common stock.




8




**Securities
      Authorized for Issuance Under Equity Compensation Plans**





The
      following provides information concerning compensation plans under which our
      equity securities are authorized for issuance as of December 31,
      2006:





**(a)**
            
            
            **(b**)****
            
            
            **(c**)******Plan
                Category**
            
            
            **Number
                of Securities to Be Issued upon Exercise of Outstanding Options,
                Warrants and Rights**
            
            
            **Weighted-Average
                Exercise Price of Outstanding Options, Warrants and
                Rights**
            
            
            **Number
                of Securities Remaining Available for Future Issuance under Equity
                Compensation Plans (Excluding Securities Reflected in Column (a)**)****Equity
                compensation plans approved by security holders
            
            
            45,577,624
            
            $
            0.0127
            
            
            99,655,000Equity
                compensation plans not approved by security holders
            
            
            -
            
            
            -Total
            
            
            45,577,624
            
            $
            0.0127
            
            
            99,655,000




**RECENT
      SALES OF UNREGISTERED SECURITIES**




In
      January 2006, we issued an 8% Convertible Note in the aggregate principal amount
      of $250,000 to a single accredited investor in consideration for services
      rendered under a fee agreement dated November 2005. This note is due and payable
      on or before January 1, 2007. This note is convertible into that number of
      shares of our common stock as would be determined by dividing (i) the
      unpaid principal balance plus accrued interest by (ii) 80% of the average
      of the three lowest closing bid prices for the twenty trading days immediately
      prior to conversion. No conversions can be made which would result in a holder
      owning more than 4.99% of our common stock after conversion. The issuance of
      the
      note was exempt under Section 4(2) of the Securities Act of 1933, as amended.
      No
      underwriter was used in connection with this sale.





In
      March
      2006, we issued an 8% Convertible Note in the aggregate principal amount of
      $60,000 to a single accredited investor. Upon consummation of a funding in
      the
      aggregate amount of $300,000, the holder is entitled to full payment of all
      outstanding principal and interest. In addition, the holder is entitled to
      receive Common Stock equal to the value of the principal and interest at a
      conversion price equal to the average of the lowest 3 closing bid prices in
      the
      20 trading days immediately preceding the repayment date. No conversions can
      be
      made which would result in the holder owning more than 4.99% of our common
      stock
      after conversion. The issuance of this note was exempt under Section 4(2) of
      the
      Securities Act of 1933, as amended. This note was paid in full in April of
      2006.





In
      December 2006, we entered into a Securities Purchase Agreement with the same
      accredited investors as above pursuant to which we agreed to issue an additional
      tranche of $250,000 of convertible promissory notes. These notes have a three
      year term and bear interest at a rate of eight percent (8%) per annum and are
      convertible into our common stock under the same terms set forth for the notes
      described above. The notes also included warrants to purchase up to 10,000,000
      shares of our common stock at an exercise price of $0.0007 per share, subject
      to
      adjustment.




9




On
      March
      31, 2007, we entered into another Securities Purchase Agreement with the same
      accredited investors as above, pursuant to which we agreed to issue an
      additional tranche of $220,000 of convertible promissory notes. The convertible
      notes have a three year term and bear interest at a rate of eight percent (8%)
      per annum and are convertible into our common stock under the same terms set
      forth for the Notes above. The notes also included warrants to purchase up
      to
      10,000,000 shares of our common stock at an exercise price of $0.07 per share,
      subject to adjustment.





In
      connection with the offer and sale of the notes and the warrants, we engaged
      Envision Capital LLC as a finder for the transaction. Under the terms of the
      engagement, Envision will receive a ten percent (10%) cash commission on the
      sale of the notes, and warrants to purchase up to 5,000,000 shares of our common
      stock on the same terms and conditions as the warrants issued to purchasers
      under the Securities Purchase Agreement.




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




The
      following discussion and analysis should be read in conjunction with our audited
      consolidated financial statements and related notes included in this annual
      report. This report contains “forward-looking statements” within the meaning of
      the Private Securities Litigation Reform Act of 1995. The statements contained
      in this report that are not historic in nature, particularly those that utilize
      terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“estimates,” “believes,” or “plans” or comparable terminology are
      forward-looking statements based on current expectations and
      assumptions.





The
      forward-looking events discussed in this annual report, the documents to which
      we refer and other statements made from time to time by us or our
      representatives may not occur, and actual events and results may differ
      materially and are subject to risks, uncertainties and assumptions about us.
      For
      these statements, we claim the protection of the “bespeaks caution” doctrine.
      All forward-looking statements in this document are based on information
      currently available to us as of the date of this report, and we assume no
      obligation to update any forward-looking statements, unless required by law
      or
      regulation. Forward-looking statements involve known and unknown risks,
      uncertainties and other factors that may cause the actual results to differ
      materially from any future results, performance or achievements expressed or
      implied by such forward-looking statements.





***Results
      of Continuing Operations***




**Basis
      of Presentation**




The
      results of operations set forth below for the years ended December 31, 2006
      and
      2005 are those of the continuing operations of Interact Group Holdings, Inc.,
      which include DNI and UTSI on a consolidated basis.




10




The
      following table sets forth, for the periods indicated, certain selected
      financial data expressed as a percentage of net sales from continuing
      operations:





**Year
                Ended December 31,****2005**
            
            
            **2006**Net
                sales
            
            $
            2,193,685
            
            $
            3,198,853Cost
                of sales
            
            
            1,026,414
            
            
            1,782,458Gross
                profit
            
            $
            1,167,271
            
            $
            1,416,395Research
                and Development
            
            
            
            
            
            185,565Selling,
                general and administrative
            
            
            1,363,490
            
            
            2,851,800Recapitalization
                Expense
            
            
            1,513,727
            
            
            -Depreciation
                and Amortization
            
            
            171,019
            
            
            195,096Operating
                loss
            
            $
            (1,880,965
            )
            $
            (1,816,166
            )





***Comparison
      of the Years ended December 31, 2006 and 2005***




**Net
      sales.** Net
      sales
      for operations increased to $3,198,853, or an increase of approximately 31.5%,
      for the year ended December 31, 2006, from $2,193,685 for the year ended
      December 31, 2005. This increase was attributable to the addition of
      UTSI.





**Cost
      of Sales.** Cost
      of
      sales for continued operations increased to $1,782,458, or approximately 43%,
      for the year ended December 31, 2006, from $1,026,414 for the year ended
      December 31, 2005. As a percentage of net sales, cost of sales increased to
      56%
      of net sales for the year ended December 31, 2006 versus approximately 47%
      of
      sales for the year ended December 31, 2005. The increase in cost of sales as
      a
      percentage of net sales resulted primarily from the preliminary undertaking
      of
      new business products through the mergers. As a result, we generated a gross
      profit of $1,416,395 with a gross profit margin of approximately 44% for the
      year ended December 31, 2006.





**Selling,
      general and administrative.** Selling,
      general and administrative expenses increased to $2,851,800, or an increase
      of
      approximately 102%, for the year ended December 31, 2006, from $1,363,490 for
      the year ended December 31, 2005. As a percentage of net sales, selling, general
      and administrative expenses were approximately 89% for the year ended December
      31, 2006, as compared to approximately 62% for the comparable period in 2005.
      The increase in selling, general and administrative expenses primarily results
      from the new merged companies.





**Recapitalization
      Expense.** We
      incurred no recapitalization expense for the year ended December 31, 2006.
      During the year ended December 31, 2005, we incurred $1,513,727 in connection
      with our recapitalization in December 2005.





**Depreciation
      and Amortization.** Depreciation
      and amortization expense increased to $195,096 for the year ended December
      31,
      2006, from $171,019 for the year ended December 31, 2005. This increase was
      due
      to additional equipment.





**Operating
      loss.** We
      incurred an operating loss of $1,816,166 for the year ended December 31, 2006,
      compared to an operating loss of $1,880,965 for the year ended December 31,
      2005. The decrease in operating losses for the year 2006 was due primarily
      to
      consolidation of operations after the merger and acquisitions and increased
      sales.





***Revenue
      Recognition***




The
      Company recognizes revenue when persuasive evidence of an arrangement exists,
      services have been rendered, the sales price is fixed or determinable, and
      collectibility is reasonably assured.




11




***Liquidity
      and Capital Resources***




We
      have
      financed our operations, acquisitions, debt service and capital requirements
      through cash flows generated from operations, debt financing and issuance of
      securities. Our working capital deficit at December 31, 2006 was $1,658,760
      compared to $352,407 at December 31, 2005. We had cash of $222,666 as of
      December 31, 2006, while we had cash of $36,361 as of December 31, 2005. This
      difference results primarily from additional companies and additional funds
      provided from an investment group as detailed above.





We
      used
      $2,026,287 of net cash used in operating activities for the year ended December
      31, 2006 compared to $120,932 used in the year ended December 31, 2005.





Net
      cash
      flows used in investing activities were $66,606 for the year ended December
      31,
      2006, compared to $9,753 in the year ended December 31, 2005. The cash used
      in
      investing activities for the year ended December 31, 2006 was for purchase
      of
      equipment and software.





Net
      cash
      flows provided by financing activities were $2,272,219 for the year ended
      December 31, 2006, compared to net cash used for financing activities of $71,189
      in the year ended December 31, 2005. The difference results primarily from
      proceeds of notes payable.





**Capital
      Requirements**




We
      had a
      working capital deficit of $1,658,760 as of December 31, 2006. We are
      anticipating raising funds through new issuances of stock or through private
      transactions.





In
      the
      event we seek to expand our operations or launch new products for sale into
      the
      marketplace, or in the event we seek to acquire a company or business or
      business opportunity, or in the event that our cash flows from operations are
      insufficient to fund our operations, working capital requirements, and debt
      service requirements, we would need to finance our operations through additional
      debt or equity financing, in the form of a private placement or a public
      offering, a strategic alliance or a joint venture. Such additional financing,
      alliances or joint venture opportunities might not be available to us, when
      and
      if needed, on acceptable terms or at all. If we are unable to obtain additional
      financing in sufficient amounts or on acceptable terms under such circumstances,
      our operating results and prospects could be adversely affected.





**Off-Balance
      Sheet Arrangements**




None.




12




**ITEM
      7.**  **FINANCIAL
      STATEMENTS**




***Table
                  of Contents***Report
                  of Independent Registered Public Accounting Firm
              
              
              F-1Consolidated
                  Balance Sheet
              
              
              F-2Consolidated
                  Statements of Operations
              
              
              F-3Consolidated
                  Statements of Cash Flows
              
              
              F-4Consolidated
                  Statements Stockholders’ Deficit
              
              
              F-5Notes
                  to Financial Statements
              
              
              F-6




13




Gruber
      & Company, LLC


**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





**TO
      THE BOARD OF DIRECTORS AND STOCKHOLDERS OF**


**INTERACT
      HOLDINGS GROUP, INC.**





We
      have
      audited the accompanying consolidated balance sheet of Interact Holdings Group,
      Inc. (formerly The Jackson Rivers Company) as of December 31, 2006 and the
      related consolidated statements of operations, changes in shareholders’ equity,
      and cash flows for the two years then ended. These financial statements are
      the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these financial statements based on our audits.





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





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Interact Holdings Group, Inc.
      as of
      December 31, 2006 and the results of its operations and its cash flows for
      the
      periods described in conformity with accounting principles generally accepted
      in
      the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 2 to the financial
      statements conditions exist which raise substantial doubt about the Company’s
      ability to continue as a going concern unless it is able to generate sufficient
      cash flows to meet its obligations and sustain its operations. Those conditions
      raise substantial doubt about its ability to continue as a going concern.
      Management’s plans regarding those matters are also described in Note 2. The
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.







Gruber
      & Company, LLC


Lake
      Saint Louis, Missouri


April
      2,
      2007





F-1


**INTERACT
      HOLDINGS GROUP, INC.**




**CONSOLIDATED
      BALANCE SHEET**


**As
      of December 31, 2006**




**Assets****Current
                assets**Cash
                and equivalents
            
            $
            222,666Accounts
                receivable, net
            
            
            525,697Inventory
            
            
            -Prepaid
                expenses and other assets
            
            
            146,143**Total
                current assets**
            
            $
            894,506Property
                and equipment, net
            
            $
            167,401Customer
                list, net of amortization
            
            
            674,147Goodwill
            
            
            1,868,986Other
                long-term assets
            
            
            28,206**Total
                assets**
            
            $
            3,633,246**Liabilities
                and stockholders’ deficit****Current
                liabilities**Derivative
                liability
            
            $
            250,000Notes
                payable
            
            
            807,585Line
                of credit
            
            
            438,000Accounts
                payable and accrued expenses
            
            
            669,361Capital
                lease
            
            
            3,481Customer
                deposits and advance billings
            
            
            120,657**Total
                current liabilities**
            
            $
            2,289,084Convertible
                notes payable
            
            $
            1,966,670Accrued
                derivative liability
            
            
            577,507Note
                payable - Related parties
            
            
            263,452**Total
                liabilities**
            
            $
            5,096,713**Stockholders’
                deficit**Series
                A preferred stock, par value $0.001 per share, 10,000,000 shares
                authorized;
              960,000
                shares issued and outstanding at December 31, 2006 and 2005,
                respectively
            
            $
            10Series
                B preferred stock, par value $0.001 per share, 10,000,000 shares
                authorized;
              10,000,000
                issued and outstanding at December 31, 2006 and 2005,
                respectively
            
            
            1,000Series
                C preferred stock, par value $1.00;
              2,200,000
                shares authorized issued and outstanding at December 31,
                2006
            
            
            2,200,000Common
                stock, par value $0.00001 per share, 5,000,000,000 authorized, 486,380
                issued and outstanding
            
            
            5Additional
                paid-in capital
            
            
            890,915Accumulated
                deficit
            
            
            (4,562,376
            )Comprehensive
                income
            
            
            6,979**Total
                stockholders’ deficit**
            
            $
            (1,463,467
            )**Total
                liabilities and stockholders’ deficit**
            
            $
            3,633,246





***See
      accompanying summary of accounting policies and notes to financial
      statements.***




F-2


**INTERACT
        HOLDINGS GROUP, INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


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




**Year
                Ended December 31,****2006**
            
            **2005****Sales,
                net**
            
            $
            3,198,853
            
            $
            2,193,685**Cost
                of sales**
            
            
            1,782,458
            
            
            1,026,414**Gross
                profit**
            
            $
            1,416,395
            
            $
            1,167,271.
            
            
            
            
            
            .**Operating
                expenses**Research
                and development
            
            $
            185,665Selling,
                general and administrative
            
            
            2,851,800
            
            $
            1,363,490Recapitalization
                expense
            
            
            
            
            
            1,513,727Depreciation
                and amortization
            
            
            195,096
            
            
            171,019**Total
                operating expenses**
            
            $
            3,232,561
            
            $
            3,048,236**Loss
                from operations**
            
            $
            (1,816,166
            )
            $
            (1,880,965
            )**Other
                income (expense)**Other
                income
            
            
            -
            
            $
            2,131Other
                expense
            
            $
            (34,674
            )
            
            -Change
                in accrued derivative liability
            
            
            (577,507
            )
            
            -Interest
                expense
            
            
            (391,748
            )
            $
            (30,365
            )**Net
                other income (expense)**
            
            $
            (1,003,929
            )
            $
            (28,234
            )**Loss
                before provision for income taxes**
            
            $
            (2,820,095
            )
            $
            (1,909,199
            )Income
                tax benefit
            
            
            -
            
            
            (158,817
            )**Net
                income (loss)**
            
            $
            (2,820,095
            )
            $
            (1,750,382
            )**Weighted
                average number of common shares outstanding**
            
            
            300,029
            
            
            6,556**Net
                income (loss) per share**
            
            $
            (9.40
            )
            $
            (266.98
            )




*
            Jackson
                Rivers issued preferred shares, rather than common stock, in connection
                with the merger with Diverse Networks, Inc. Accordingly, no common
                shares
                are deemed outstanding prior to the
                merger.


***See
        accompanying summary of accounting policies and notes to financial
        statements.***




F-3




**INTERACT
      HOLDINGS GROUP, INC.**




**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


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




**Year
                Ended December 31,****2006**
            
            **2005****CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                loss from operations
            
            $
            (2,820,095
            )
            $
            (1,750,382
            )**Adjustments
                to reconcile net income to net cash provided by (used by)
                operations:**Depreciation
            
            
            146,024
            
            
            143,407Amortization
            
            
            61,286
            
            
            27,612Common
                stock issued in exchange for consulting services renderedCommon
                stock issued in exchange for employee services rendered and related
                transaction costs
            
            
            25,200
            
            
            44,543Change
                in accrued derivative liability
            
            
            577,507Accretion
                of discount on notes payable
            
            
            138,425
            
            
            -Recapitalization
                expense
            
            
            -
            
            
            1,513,727Changes
                in assets and liabilities:Accounts
                receivable
            
            
            (58,712
            )
            
            215,102Inventory
            
            
            19,633
            
            
            6,856Prepaid
                expenses
            
            
            (113,462
            )
            
            94,923Accounts
                payable and accrued expenses
            
            
            (395,600
            )
            
            -Customer
                deposits and advance billings
            
            
            86,157
            
            
            (465,120
            )**Net
                cash used by operating activities**
            
            $
            (2,026,287
            )
            $
            (120,932
            )**Cash
                flows from investing activities**Capital
                expenditures
            
            $
            (38,400
            )
            $
            (9,753
            )Acquisition
                of other assets
            
            
            (28,206
            )
            
            -Net
                cash used in investing activities
            
            $
            (66,606
            )
            $
            (9,753
            )**Cash
                flows from financing activities**Proceeds
                from notes payable, net of repayments
            
            $
            2,179,350
            
            $
            (85,356
            )Proceeds
                from notes payable - related parties, net of repaymentsPayment
                on capital lease obligations
            
            
            (11,571
            )
            
            (9,690
            )Acquisition
                of UTSI
            
            
            195,229
            
            
            23,857Cash
                flows from financing activities
            
            $
            2,272,219
            
            $
            (71,189
            )**Net
                increase (decrease) in cash**
            
            $
            179,326
            
            $
            (201,874
            )**Effect
                of exchange rate on cash and cash equivalents**
            
            
            6,979
            
            
            -**Cash,
                beginning of period**
            
            
            36,361
            
            
            238,235**Cash
                at end of period**
            
            $
            222,666
            
            $
            36,361**Supplemental
                disclosure of cash flow information:****Income
                taxes paid**
            
            
            -
            
            
            -**Interest
                paid**
            
            $
            391,748
            
            $
            30,628**Common
                stock issued to retire convertible debt**
            
            
            
            
            $
            142,520




***See
        accompanying summary of accounting policies and notes to financial
        statements.***
  F-4


**INTERACT
      HOLDINGS GROUP, INC.**




**CONSOLIDATED
      STATEMENTS STOCKHOLDERS’ DEFICIT**


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




Preferred
                  Series A
              
              Preferred
                  Series B
              
              Preferred
                  Series C
              
              Common
              
              Additional
                  Paid-in
              
              Stock
              
              Retained
                  Earnings
              
              Total
                  Shareholders'Shares
              
              Stock
              
              Shares
              
              Stock
              
              Shares
              
              Stock
              
              Shares
              
              Stock
              
              Capital
              
              Subscribed
              
              (Deficit)
              
              EquityBalance,December
                  31, 2004
              
              
              —
              
              $
              —
              
              
              —
              
              $
              —
              
              
              
              
              
              
              
              
              5,005,000
              
              $
              300,060
              
              $
              
              
              $
              
              
              $
              8,101
              
              $
              308,161Proceeds
                  from sale ofcommon
                  stock
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              24,700,000
              
              
              247
              
              
              116,010
              
              
              (92,400
              )
              
              —
              
              
              23,857Stock
                  basedcompensation
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              —
              
              
              —
              
              
              92,943
              
              
              —
              
              
              —
              
              
              92,943Recapitalization
                  ofDiverse
                  Networks, Inc.
              
              
              960,000
              
              
              10
              
              
              10,000,000
              
              
              1,000
              
              
              
              
              
              
              
              
              19,822,624
              
              
              (299,812
              )
              
              298,802
              
              
              —
              
              
              —
              
              
              —Common
                  stock issuedfor
                  services
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Net
                  loss for theyear
                  endedDecember
                  31, 2005
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,750,382
              )
              
              (1,750,382
              )Balance,
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              —December
                  31, 2005
              
              
              960,000
              
              
              10
              
              
              10,000,000
              
              
              1,000
              
              
              —
              
              
              —
              
              
              49,527,624
              
              
              495
              
              
              507,755
              
              
              (92,400
              )
              
              (1,742,281
              )
              
              (1,325,421
              )Common
                  stock issuedfrom
                  subscriptionsreceivable
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (92,400
              )
              
              92,400
              
              
              —
              
              
              —Common
                  stock issuedfor
                  consulting services
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              91,250,000
              
              
              913
              
              
              306,437
              
              
              —
              
              
              —
              
              
              307,350Common
                  stock toemployees
                  for services
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              8,000,000
              
              
              80
              
              
              25,120
              
              
              
              
              
              —
              
              
              25,200
 ***See
          accompanying summary of accounting policies and notes to financial
          statements.***
 F-5
 **INTERACT
          HOLDINGS GROUP, INC.**
  **CONSOLIDATED
            STATEMENTS STOCKHOLDERS’ DEFICIT**
 **Years
            Ended December 31, 2006 and 2005**
 Preferred
                  Series A
              
              Preferred
                  Series B
              
              Preferred
                  Series C
              
              Common
              
              Additional
                  Paid-in
              
              Stock
              
              Retained
                  Earnings
              
              Total
                  Shareholders'Shares
              
              Stock
              
              Shares
              
              Stock
              
              Shares
              
              Stock
              
              Shares
              
              Stock
              
              Capital
              
              Subscribed
              
              (Deficit)
              
              EquityPreferred
                  sharesissued
                  to acquireUTSI
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              2,200,000
              
              
              2,200,000
              
              
              —
              
              
              —
              
              
              
              
              
              —
              
              
              —
              
              
              2,200,000Common
                  stock issuedto
                  retire debt
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              94,412,200
              
              
              944
              
              
              141,576
              
              
              —
              
              
              —
              
              
              142,520To
                  give effect to the1
                  -
                  500 split approved
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (242,703,444
              )
              
              (2,427
              )
              
              2,427
              
              
              —
              
              
              —
              
              
              —Net
                  loss for theyear
                  endedDecember
                  31, 2006
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (2,820,095
              )
              
              (2,820,095
              )960,000
              
              $
              10
              
              
              10,000,000
              
              $
              1,000
              
              
              2,200,000
              
              $
              2,200,000
              
              
              486,380
              
              $
              5
              
              $
              890,915
              
              $
              —
              
              $
              (4,562,376
              )
              $
              (1,470,446
              )Other
                  comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              6,979(1,463,467
              )


***See
        accompanying summary of accounting policies and notes to financial
        statements.***


F-6


**INTERACT
      HOLDINGS GROUP, INC.**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


December
      31, 2006




**Note
      1 - Organization and Principal Activities**




***Organization
      and Description of Business***




Interact
      Holdings Group, Inc. (formerly The Jackson Rivers Company) through its operating
      subsidiaries provides technology and services to the petroleum, utility and
      communications industries.




The
      accompanying consolidated financial statements include the accounts of Interact
      Holdings Group, Inc. and its wholly owned subsidiaries, Diverse Networks, Inc.
      and UTSI International Corporation (collectively, the “Company”). Significant
      intercompany transactions and accounts have been eliminated in
      consolidation.




**Note
      2 - Summary of Significant Accounting Policies**




***Basis
      of Presentation***




The
      consolidated financial statements are prepared in accordance with accounting
      principles generally accepted in the United States of America.




***Cash
      Equivalents***




Cash
      equivalents consist primarily of cash deposits and highly liquid investments
      with maturities of three months or less.




***Intangible
      Assets***




In
      accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” the
      Company evaluates intangible assets and other long-lived assets for impairment,
      at least on an annual basis and whenever events or changes in circumstances
      indicate that the carrying value may not be recoverable from its estimated
      future cash flows. Recoverability of intangible assets and other long-lived
      assets is measured by comparing their net book value to the related projected
      undiscounted cash flows from these assets, considering a number of factors
      including: past operating results, budgets, economic projections, market trends
      and product development cycles. If the net book value of the asset exceeds
      the
      related undiscounted cash flows, the asset is considered impaired, and a second
      test is performed to measure the amount of impairment loss.




***Revenue
      Recognition***




Revenue
      is recognized in accordance with SEC Staff Accounting Bulletin No. 101, “Revenue
      Recognition in Financial Statements.” The Company recognizes revenue when the
      significant risks and rewards of ownership have been transferred to the customer
      pursuant to applicable laws and regulations, including factors such as when
      there has been evidence of a sales arrangement, delivery has occurred, or
      service have been rendered, the price to the buyer is fixed or determinable,
      and
      collectibility is reasonably assured.




***Stock
      - Based Compensation***




SFAS
      No
      123, “Accounting for Stock-Based Compensation,” established and encourages the
      use of the fair value based method of accounting for stock-based compensation
      arrangements under which compensation is determined using the fair value of
      stock-based compensation determined as of the date of the grant and is
      recognized over the periods in which the related services are rendered. The
      statement also permits companies to elect to continue using the current
      intrinsic value accounting method specified in Accounting Principles Board
      (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” to account
      for stock-based compensation. The Company has elected to use the
      modified-prospective transition method. Under the modified-prospective
      transition method, compensation cost recognized includes (a) compensation cost
      for all share-based payments granted prior to, but not yet vested, as of
      December 31, 2005 based on the grant date fair value estimated in accordance
      with the original provisions of SFAS No. 123 and (b) compensation cost for
      all
      share-based payments granted on or subsequent to January 1, 2006, based on
      the
      grant-date fair value estimated in accordance with the provisions of SFAS No.
      123R. As of December 31, 2006, all options were fully vested; therefore, there
      are no expenses to the Company related to the implementation of SFAS No. 123R.




F-7


**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006


***Property
      and Equipment***




Property
      and equipment are recorded at acquisition cost and increased by the cost of
      any
      significant improvements made after purchase. The Company depreciates the cost
      over the estimated useful lives of the respective assets using straight-line
      method over the estimated useful life.




***Software***




Software
      is stated at acquisition cost and amortized on a straight-line basis over their
      estimated useful life.




***Income
      Taxes***




The
      Company accounts for income taxes under SFAS 109, “Accounting for Income Taxes.”
Under the asset and liability method of SFAS 109, deferred tax assets and
      liabilities are recognized for the future tax consequences attributable to
      differences between the financial statements carrying amounts of existing assets
      and liabilities and their respective tax bases. Deferred tax assets, including
      tax loss and credit carryforwards and liabilities are measured using enacted
      tax
      rates expected to apply to taxable income in the years in which those temporary
      differences are expected to be recovered or settled. Under SFAS 109, the effect
      on deferred tax assets and liabilities of a change in tax rates is recognized
      in
      income in the period the enactment occurs. A valuation allowance is provided
      for
      certain deferred tax assets if it is more likely than not that the Company
      will
      not realize tax assets through future operations.




***Basic
      and Diluted Income/(Loss) Per Share***




Statement
      of Financial Accounting Standards No. 128, “Earnings per Share,” requires
      presentation of basic earnings per share (“Basic EPS”) and diluted earnings per
      share (“Diluted EPS”). Basic earnings/(loss) per share is computed by dividing
      earnings/(loss) available to common stockholders by the weighted average number
      of common shares outstanding (including shares reserved for issuance) during
      the
      period. Diluted earnings per share give effect to all dilutive potential common
      shares outstanding during the period.




All
      common stock shares are presented to reflect a 500 to 1 reverse stock split
      approved by the Board of Directors on February 15, 2007.




***Advertising***




The
      costs
      of advertising, promotion and marketing programs are charged to operations
      in
      the calendar year incurred. Advertising costs included in operating expenses
      for
      the year ended December 31, 2006 totaled $6,951.




F-8


**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006


***Segmented
      Information***




Management
      has determined that the Company operates in one dominant industry segment.
      Additional segment disclosure requirements will be evaluated as it expands
      its
      operations.




***Concentration
      of Credit Risk***




Financial
      instruments, which potentially subject the Company to concentrations of credit
      risk, consist of cash, cash equivalents and accounts receivable. The Company
      places its cash with high quality financial institutions and at times may exceed
      the FDIC $100,000 insurance limit. The Company extends credit based on an
      evaluation of the customer’s financial condition, generally without collateral.
      Exposure to losses on receivables is principally dependent on each customer’s
      financial condition. The Company monitors its exposure for credit losses and
      maintains allowances for anticipated losses, as required. Accounts are
“written-off” when deemed uncollectible.




***Special
      - Purpose Entities***




The
      Company does not have any off-balance sheet financing activities.




***Going
      Concern***




The
      accompanying financial statements have been prepared in conformity with
      accounting principles generally accepted in the United States of America, which
      contemplate continuation of the Company as a going concern. As of December
      31,
      2006, the Company had a retained deficit of $4,562,376. This condition raises
      substantial doubt as to the Company’s ability to continue as a going concern.
      These financial statements do not include any adjustments that might result
      from
      the outcome of this uncertainty. These financial statements do not include
      any
      adjustments relating to the recoverability and classification of recorded asset
      amounts, or amounts and classification of liabilities that might be necessary
      should the Company be unable to continue as a going concern.




In
      order
      to improve the Company’s liquidity, the Company has and is actively pursuing
      additional equity financing through discussions with investment bankers and
      private investors. There can be no assurance that the Company will be successful
      in its continuing efforts to secure additional equity financing.




If
      operations and cash flows continue to improve through these efforts, management
      believes that the Company can continue to operate. However, no assurance can
      be
      given that management’s actions will result in profitable operations or the
      resolution of its liquidity problems.




***Use
      of Estimates***




The
      preparation of financial statements in conformity with U.S. generally accepted
      accounting principles (“GAAP”) requires management to make estimates and
      assumptions that affect the amounts reported in the financial statements. The
      Company bases its estimates on historical experience, management expectations
      for future performance, and other assumptions as appropriate. Key areas affected
      by estimates include the assessment of the recoverability of long-lived assets,
      which is based on such factors as estimated future cash flows. The Company
      re-evaluates its estimates on an ongoing basis. Actual results may vary from
      those estimates.




F-9


**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006


***Impairment
      of Long-Lived Assets***




In
      accordance with Statement of Financial Accounting Standards (SFAS) No. 144,
      “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company
      periodically assesses the impairment of long-lived assets when conditions
      indicate a possible loss. When necessary, we record charges for impairments
      of
      long-lived assets for the amount by which the present value of future cash
      flows, or some other fair value measure, is less than the carrying value of
      these assets. The Company has recorded no impairment charges.




Operating
      leases




The
      Company enters into lease agreements for a variety of business purposes,
      including facilities and equipment. These arrangements are noncancellable
      operating leases which do not meet the requirements of capital leases under
      Statement of Financial Accounting Standards No. 13, “Accounting for Leases” and
      are therefore expensed straight-line over the life of the operating
      lease.




***Fair
      Value of Financial Instruments***




The
      Company uses the following methods and assumptions to estimate the fair value
      of
      derivative and other financial instruments at the relative balance sheet
      date:




·
            Short-term
                financial statements (cash equivalents, accounts receivable and payable,
                short-term borrowings, and accrued liabilities) - cost approximates
                fair
                value because of the short maturity
                period.




·
            Long-term
                debt - fair value is based on the amount of future cash flows associated
                with each debt instrument discounted at our current borrowing rate
                for
                similar debt instruments of comparable
                terms.




**Note
      3 - Recently Issued Accounting Pronouncements**




In
      May,
      2005, The FASB issued SFAS No. 154, entitled “Accounting Changes and Error
      Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3.”
This Statement replaces APB Opinion No. 20, “Accounting Changes” and FASB
      Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements,”
and changes the requirements for the accounting for and reporting of a change
      in
      accounting principle. This statement applies to all voluntary changes in
      accounting principle. It also applies to changes required by an accounting
      pronouncement in the unusual instance that the pronouncement does not include
      specific transition provisions. Opinion 20 previously required that most
      voluntary changes in accounting principle be recognized by including in net
      income of the period of the change the cumulative effect of the change to the
      new accounting principle. This Statement requires retrospective application
      to
      prior periods’ financial statements of changes in accounting principle, unless
      it is impracticable to determine either the period-specific effects or the
      cumulative effect of the change. This Statement defines the application of
      a
      different accounting principle to prior accounting periods as if that principle
      had always been used or as the adjustment of previously issued financial
      statements to reflect a change in the reporting entity. This statement also
      redefines restatement as the revising of previously issued financial statements
      to reflect the correction of an error. The adoption of SFAS 154 did not impact
      the financial statements.




F-10




**INTERACT
      HOLDINGS GROUP, INC.**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


December
      31, 2006





In
      February, 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Statements.” SFAS No. 155 amends SFAS No. 133, “Accounting for
      Derivative Instruments and Hedging Activities” and SFAS No. 140, “Accounting for
      Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.”
SFAS No. 155, permits fair value measurement for any hybrid financial instrument
      that contains an embedded derivative that otherwise would require bifurcation,
      clarifies which interest-only strips and principal-only strips are not subject
      to the requirements of SFAS No. 133, establishes a requirement to evaluate
      interest in securitized financial assets to identify interests that are
      freestanding derivatives or that are hybrid financial statements that contain
      an
      embedded derivative requiring bifurcation, clarifies that concentrations of
      credit risk in the form of subordination are not embedded derivatives, and
      amends SFAS No. 140 to eliminate the prohibition on the qualifying
      special-purpose entity from holding a derivative financial instrument that
      pertains to a beneficial interest other than another derivative financial
      instrument. This statement is effective for all financial instruments acquired
      or issued after the beginning of the Company’s first fiscal year that begins
      after September 15, 2006. Management believes that this statement will not
      have
      a significant impact on the financial statements.




In
      March,
      2006 FASB issued SFAS 156 “Accounting for Servicing of Financial Assets.” This
      Statement amends FASB Statement No. 140, “Accounting for Transfers and Servicing
      of Financial Assets and Extinguishment of Liabilities,” with respect to the
      accounting for separately recognized servicing assets and servicing liabilities.
      This Statement:




1.
            Requires
                an entity to recognize a servicing asset or servicing liability each
                time
                it undertakes an obligation to service a financial asset by entering
                into
                a servicing contract.




2.
            Requires
                all separately recognized servicing assets and servicing liabilities
                to be
                initially measured at fair value, if
                practicable.




3.
            Permits
                an entity to choose “Amortization method” or “Fair value measurement
                method” for each class of separately recognized servicing assets and
                servicing liabilities.




4.
            At
                its initial adoption, permits a one-time reclassification of
                available-for-sale securities to trading securities by entities with
                recognized servicing rights, without calling into question the treatment
                of other available-for-sale securities under Statement 115, provided
                that
                the available-for-sale securities are identified in some manner as
                offsetting the entity’s exposure to changes in fair value of servicing
                assets or servicing liabilities that a servicer elects to subsequently
                measure at fair value.




5.
            Requires
                separate presentation of servicing assets and liabilities subsequently
                measured at fair value in the statement of financial position and
                additional disclosures for all separately recognized servicing assets
                and
                servicing liabilities.




Management
      believes that this statement will not have a significant impact on the financial
      statements.




In
      June,
      2006, the FASB issued FIN 48 “Accounting for Uncertainty in Income Taxes “ FIN
      48 clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise’s financial statements in accordance with FASB Statement No. 109,
“Accounting for Income Taxes.” FIN 48 also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition. FIN 48 is effective in fiscal years beginning after
      December 15, 2006. Management believes that this statement will not have a
      significant impact on the financial statements.




F-11


**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006




In
      September, 2006, the FASB issued SFAS No. 157, “Fair Value Measures.” SFAS No.
      157 defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (“GAAP”), expands disclosures about
      fair value measurements, and applies under other accounting pronouncements
      that
      require or permit fair value measurements. SFAS No. 157 does not require any
      new
      fair value measurements, however the FASB anticipates that for some entities,
      the application of SFAS No. 157 will change current practice. SFAS No. 157
      is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, which for the Company would be its fiscal year beginning
      January 1, 2008. The implementation of SFAS No. 157 is not expected to have
      a
      material impact on the Company’s results of operations and financial
      condition.




In
      September, 2006, the Financial Accounting Standards Board (“FASB”), issued SFAS
      No. 158, “Employer’s Accounting for Defined Benefit Pension and Other
      Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106 and
      132(R).” This statement requires employers to recognize the overfunded or
      underfunded status of a defined benefit postretirement plan (other than a
      multi-employer plan) as an asset or liability in its statement of financial
      position and to recognize changes in that funded status in the year in which
      the
      changes occur through comprehensive income of a business entity or changes
      in
      unrestricted net assets of a not-for-profit organization. This statement also
      requires an employer to measure the funded status of a plan as of the date
      of
      its year-end statement of financial position with limited exceptions. The
      provisions of SFAS No. 158 are effective for employers with publicly traded
      equity securities as of the end of the fiscal year ending after December 15,
      2006. This pronouncement does not currently apply to the Company.




In
      September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
      Accounting Bulletin No. 108 (Topic IN), “Quantifying Misstatements in Current
      Year Financial Statements” (“SAB No. 108”). SAB No. 108 addresses how the effect
      of prior year uncorrected misstatements should be considered when quantifying
      misstatements in current year financial statements. SAB No. 108 requires SEC
      registrants (i) to quantify misstatements using a combined approach which
      considers both the balance sheet and income statement approaches; (ii) to
      evaluate whether either approach results in quantifying an error that is
      material in light of relevant quantitative and qualitative factors; and
      (iii) to adjust their financial statements if the new combined approach
      results in a conclusion that an error is material. SAB No. 108 addresses the
      mechanics of correcting misstatements that include effects from prior years.
      It
      indicates that the current year correction of a material error that included
      prior period effects may result in the need to correct prior year financial
      statements even if the misstatement in the prior year or years is considered
      immaterial. Any prior year financial statements found to be materially misstated
      in years subsequent to the issuance of SAB No. 108 would be restated in
      accordance with SFAS No. 154, “Accounting Changes and Error Corrections.”
Because the combined approach represents a change in practice, the SEC staff
      will not require registrants that followed an acceptable approach in the past
      to
      restate prior years’ historical financial statements. Rather, these registrants
      can report the cumulative effect of adopting the new approach as an adjustment
      to the current year’s beginning balance of retained earnings. If the new
      approach is adopted in a quarter other than the first quarter, financial
      statements for prior interim periods within the year of adoption may need to
      be
      restated. SAB No. 108 is effective for fiscal years ending after November 15,
      2006, which for the Company would be its fiscal year January 1, 2007. The
      implementation of SAB No. 108 is not expected to have a material impact on
      the
      Company’s financial position or results of operations.




F-12


**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006


**Note
      4 –Acquisitions**




On
      December 2, 2005 the Company acquired Diverse Networks, Inc. (DNI) pursuant
      to
      the “Merger Agreement”, which provided that each share of DNI common stock would
      be converted into the right to receive either (i) $0.21 in the form of a
      one-year 8% promissory note, or (ii) one share of Series B Preferred Stock,
      at the election of each DNI stockholder. The transaction was accounted for
      as a
      recapitalization effected through a reverse merger, in which DNI was treated
      as
      the “acquiring” company for financial reporting purposes.




Each
      share of Series B stock will initially be convertible starting December 1,
      2007,
      into that number of the Company’s common stock obtained by multiplying the
      number of shares to be converted by a fraction, the numerator of which is
      .5942795 and the denominator equal to the “market price” of the Company’s common
      stock at the time of conversion. The conversion rate is subject to
      adjustment.




The
      Company issued approximately $862,000 in promissory notes and one million shares
      of Series B Preferred Stock to DNI stockholders. In addition, the Company
      assumed $228,000 of outstanding DNI debt in connection with the
      transaction.




The
      Company expensed $401,727 of net liabilities assumed upon the recapitalization
      and recorded the amount to recapitalization expense on the statement of
      operations.




On
      May 5,
      2006, the Company acquired UTSI International Corporation (UTSI) pursuant to
      the
“Agreement and Plan of Merger,” dated May 5, 2006. Pursuant to the Merger
      Agreement, UTSI merged with and into the Company, with the Company as the
      surviving corporation. Each share of UTSI common stock outstanding at the
      effective time of the merger was converted into the right to receive 1.4380297
      shares of Series C Preferred Stock. The 1,529,871 shares of UTSI common stock
      outstanding were converted into an aggregate of 2,200,000 shares of Series
      C
      Preferred Stock.




Each
      share of Series C Preferred Stock will initially be convertible, starting after
      May 5, 2008, into that number of shares of the Company’s common stock obtained
      by multiplying the number of shares to be converted by a fraction, the number
      of
      which is $1.00 and the denominator equal to the “market price” of the Company’s
      common stock at the time of conversion subject to adjustment.




The
      purchase price was allocated to tangible and intangible assets and liabilities
      at the date of acquisition as follows:




Current
                assets
            
            $
            389,884Property
                and equipment
            
            
            23,630Customer
                list
            
            
            735,433Goodwill
            
            
            1,868,986Total
                assets
            
            $
            3,017,933Less
                - Total liabilities
            
            
            817,933$
            2,200,000




F-13




**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006




The
      following unaudited pro forma financial information presents the combined
      results of operations of Interact Group Holdings, Inc. and UTSI International
      Corporation as if the acquisition had occurred as of the beginning of the period
      presented. The unaudited pro forma financial information is not necessarily
      indicative of what the Company’s consolidated results of operations actually
      would have been had the Company completed the acquisition at the beginning
      of
      each period. In addition, the unaudited pro forma financial information does
      not
      attempt to project the future results of operations of the combined
      company.




**Years
                Ended December 31,****2006**
            
            **2005**Revenues
            
            $
            3,587,107
            
            $
            4,288,505Cost
                of goods sold
            
            
            1,897,884
            
            
            2,401,321Gross
                profit
            
            $
            1,689,223
            
            $
            1,887,184Research
                and development
            
            $
            185,665
            
            
            —Selling,
                general and administrative
            
            
            3,810,324
            
            $
            2,169,869Recapitalization
                expense
            
            
            —
            
            
            1,513,727Depreciation
                and amortization
            
            
            170,215
            
            
            185,986Total
                operating expenses
            
            $
            4,166,204
            
            $
            3,869,582Loss
                from operations
            
            $
            (2,476,981
            )
            $
            (1,982,398
            )Other
                expense, net
            
            
            682,236
            
            
            48,815Loss
                before income taxes
            
            $
            (3,159,217
            )
            $
            (2,031,213
            )Income
                taxes (benefit)
            
            
            81,139
            
            
            (200,229
            )Net
                loss from continuing operations
            
            $
            (3,240,356
            )
            $
            (1,830,984
            )





**Note
      5 – Property and equipment**




Property
      and equipment consists of the following:




**As
                of December 31,****Life**
            
            **2006**
            
            **2005**Office
                furniture and equipment
            
            
            3-7
            
            $
            1,116,537
            
            $
            689,597Leasehold
                improvements
            
            
            10
            
            
            279,410
            
            
            259,835$
            1,395,947
            
            $
            949,432Less
                - Accumulated depreciation
            
            
            
            
            
            1,198,489
            
            
            723,947$
            197,458
            
            $
            225,485





**Note
      6 –  Derivative liability**




On
      March
      31, 2006, the Company entered into a Securities Purchase Agreement with certain
      accredited investors pursuant to which they agreed to issue up to $2,000,000
      of
      principal amount of convertible promissory notes in three separate tranches
      and
      warrants to purchase shares of the Company’s common stock (the “Securities
      Purchase Agreement”). The tranches of notes are to be issued and sold as
      follows: (i) $700,000 upon execution and delivery of the Securities
      Purchase Agreement; (ii) $600,000 within five days of filing of a
      registration statement with the Securities and Exchange Commission (the “SEC”)
      registering the shares of common stock issuable upon conversion of the notes
      and
      exercise of the warrants issued pursuant to the Securities Purchase Agreement
      (the “Registration Statement”) and (iii) $700,000 within five days of the
      Registration Statement being declared by the SEC. The convertible notes have
      a
      three year term and bear interest at 6%. The notes are convertible into the
      Company’s common stock pursuant to a “variable conversion price” equal to the
“Applicable Percentage” multiplied by the “Market Price.” “Applicable
      Percentage” is initially 50%, provided that such percentage will be increased to
      55% if the Registration Statement is filed on or before April 30, 2006 and
      further increased to 60% if the Registration Statement is declared effective
      by
      the SEC on or before July 29, 2006. “Market Price” means the average of the
      lowest three trading prices (as defined) for the Company’s common stock during
      the twenty trading day period prior to conversion. Upon an event of default,
      the
      notes are immediately due and payable at an amount equal to the greater of
      (i) 140% of the then outstanding principal amount of notes plus interest
      and (ii) the “parity value” defined as (a) the highest number of shares of
      common stock issuable upon conversion of the notes multiplied by (b) the highest
      closing price for the Company’s common stock during the period beginning on the
      date of the occurrence of the event of default and ending one day prior to
      the
      demand for prepayment due to the event of default. The notes are secured by
      a
      first lien on all of the Company’s assets, including all intellectual
      property.




F-14




**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006




Subject
      to certain terms and conditions, the notes are redeemable by the Company at
      a
      rate of between 120% to 140% of the outstanding principal amount of the notes
      plus interest. In addition, so long as the average daily price of the Company’s
      common stock is below the “initial market price”, the Company may prepay such
      monthly portion due on the outstanding notes and the investors agree that no
      conversions will take place during such month where this option is exercised
      by
      the Company.




The
      notes
      were issued with warrants to purchase up to 50,000,000 shares of the Company’s
      common stock at an exercise price of $0.07 per share, subject to
      adjustment.




In
      connection with the offer and sale of the notes and warrants, the Company
      engaged Envision Capital LLC, as a finder for the transaction. Envision will
      receive a ten percent cash commission on the sale of the notes and warrants
      to
      purchase up to 5,000,000 shares of the Company’s common stock on the same terms
      and conditions as the warrants issued to purchasers under the Securities
      Purchase Agreement.




The
      Company is accounting for the conversion option in the Convertible Note and
      the
      conversion price in the Securities Purchase Agreement and the associated
      warrants as derivative liabilities in accordance with SFAS 133, “Accounting for
      Derivative Instruments and Hedging Activities” and EITF 00-19 “Accounting for
      Derivative Financial Instruments Indexed to and Potentially Settled in a
      Company’s Own Stock” due to the fact that the conversion feature and the
      warrants both have a variable conversion price.




The
      fair
      value of the Convertible Note was determined utilizing the Black-Scholes stock
      option valuation model. The significant assumptions used in the valuation are:
      the exercise price as noted above; the stock price as of December 31, 2006;
      expected volatility of 66%; risk free interest rate of approximately 4.50%;
      and
      a term of one year.




The
      fair
      value of the Securities Purchase Agreement was determined utilizing the
      Black-Scholes option valuation model. The significant assumptions used in the
      valuation are: the exercise price as noted above; the stock price as of December
      31, 2006; expected volatility of 66%; risk free interest rate of approximately
      4.50%; and a term of three years.




F-15


**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006




March
                31, 2009
            
            $
            690,630May
                4, 2009
            
            
            600,000October
                11, 2009
            
            
            700,000$
            1,990,630


The
        notes
        are due as follows:


**Note
      7 –  Notes Payable**




Note
                payable to a corporation dated January 2, 2006, due with interest
                at 8%
                per annum, and due on or before January 1, 2007. This note is convertible
                into common stock pursuant to a “variable conversion price” equaling 80%
                of market, as defined.
            
            $
            250,000Note
                payable to a corporation for settlement of legal fees and costs for
                services
            
            
            25,000Note
                payable to an individual dated June 5, 2005 payable four quarterly
                installments beginning March 1, 2006, including interest at 8% per
                annum.
            
            
            174Note
                payable to an individual dated April 15, 2006, payable in monthly
                installments of $20,263 including interest at 10% per annum with
                a final
                payment due December 1, 2006.
            
            
            144,839Note
                payable to an individual dated April 15, 2006, payable in monthly
                installments of $20,263 including interest at 10% per annum with
                a final
                payment due December 1, 2006.
            
            
            144,839Note
                payable to an individual dated April 15, 2006, payable in monthly
                installments of $16,211 including interest at 10% per annum with
                a final
                payment due December 1, 2006.
            
            
            115,871Note
                payable to an individual dated December 1, 2005 payable in quarterly
                installments beginning March 1, 2006 including interest at 8% per
                annum,
                with a final payment due on December 1, 2006.
            
            
            143,302Note
                payable to a corporation dated February 14, 2006, due on March 31,
                2006
                including interest at 8%.
            
            
            45,000Note
                payable to an individual dated December 1, 2005, due in quarterly
                payments
                with interest at 8% per annum beginning March 1, 2006 with a final
                payment
                due on December 1, 2006.
            
            
            695Note
                payable to an individual dated December 1, 2005 due in quarterly
                payments
                with interest at 8% per annum beginning March 1, 2006 with a final
                payment
                due on December 1, 2006.
            
            
            17,381Note
                payable to a corporation dated April 15, 2006, payable in monthly
                installments of $20,263 including interest at 10% per annum with
                a final
                payment due December 1, 2006.
            
            
            144,839





**Note
      8 –  Line of Credit**




The
      Company has established a line of credit in the amount of $473,000 with a
      financial institution. The line of credit is secured by accounts receivable,
      inventory and fixtures, and is due on March 19, 2007. The balance due on the
      line of credit is $438,000 with an interest rate of 10% at December 31, 2006.




F-16


**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006




**Note
      9 – Lease Commitments**




The
      Company leases office space under operating leases. Rent expense totaled
      $335,271 and $176,501 for the years ended December 31, 2006 and 2005
      respectively.




The
      Company leases certain equipment under capital leases. The capital leases will
      expire during the year ending December 31, 2007. The future minimum lease
      payments due in 2007 total $3,481. These leases are secured by the leased
      equipment.




Future
      minimum payments under capital and operating leases as of December 31, 2006
      are
      as follows:




2007
            
            $
            384,9082008
            
            
            381,4612009
            
            
            381,4612010
            
            
            215,4332011
            
            
            106,095$
            1,469,358





**Note
      10 – Employee Retirement Plan**




The
      Company maintains a plan under which eligible employees may elect to defer
      a
      portion of their annual compensation, up to a maximum of 50%, not to exceed
      $15,000, pursuant to Section 401(k) of the Internal Revenue Code for the year
      ended December 31, 2006. Substantially all Company employees are eligible to
      participate. The Company may match the employee contributions on a discretionary
      basis as determined by the Board of Directors. Employees are 100% vested in
      their portion of the Company’s contributions, if any. The Company’s
      discretionary contributions to the plan for the years ended December 31, 2006
      and 2005 were $ -0- and $32,462 respectively.




**Note
      11 – Income Taxes**




The
      Company uses the liability method to account for income taxes. Under this
      method, deferred tax assets and liabilities are determined based on the expected
      future tax consequences of temporary differences between the carrying amounts
      of
      assets and liabilities for financial and income tax reporting purposes. During
      the years ended December 31, 2006 and 2005, the Company incurred net losses
      and,
      therefore, has no income tax liability. The net deferred tax asset generated
      by
      the loss carry-forward has been fully reserved. The cumulative net operating
      loss carry-forward is approximately $4,000,000 at December 31, 2006, and will
      begin to expire in the year 2025.




F-17




**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006




The
      following table represents the principal reasons for the difference between
      the
      Company’s effective tax rates and the federal statutory income tax rate of 35%
      for the years ending December 31, 2006 and 2005:




**2006**
            
            **2005**Federal
                income tax benefit at statutory rate
            
            $
            (987,033
            )
            $
            (595,130
            )Non-deductible
                expenses
            
            
            101,425
            
            
            -Adjustments
            
            
            885,608
            
            
            436,313Income
                tax benefit
            
            $
            -
            
            $
            (158,817
            )Effective
                income tax rate
            
            
            -
            
            
            9.6
            %





**Note
      12 – Capital Stock**




The
      Company has authorized 5,000,000,000 shares of common stock, with a par value
      of
      $0.00001 per share. During the year ended December 31, 2006, the Company issued
      1,936,622 shares of common stock.




The
      Company has designated 10,000,000 shares of its preferred stock as the Series
      A
      Preferred Stock. Each share of the Series A Preferred Stock is convertible
      into
      1,000 shares of common stock. On all matters submitted to a vote of the
      Company’s security holders, a holder of the Series A Preferred Stock is entitled
      to the number of votes equal to the number of shares of the Series A Preferred
      Stock held by such holder multiplied by 2,000. Upon the dissolution, liquidation
      or winding up of the Company, whether voluntary or involuntary, the holders
      of
      the then-outstanding shares of Series A Preferred Stock shall be entitled to
      receive out of the assets of the Company the sum of $0.001 per share (the
“Liquidation Rate”) before any payment or distribution shall be made on the
      common stock, or any other class of capital stock of the Company’s ranking
      junior to the Series A Preferred Stock. As of December 31, 2006, the Company
      has
      960,000 shares of Series A Preferred Stock issued and outstanding.




The
      Company has designated 10,000,000 shares of its preferred stock as the Series
      B
      Preferred Stock. Each share of the Series B Preferred Stock is convertible
      into
      shares of the Company’s common stock at 80 percent of the OTCBB, (or such other
      exchange or market on which the Common Stock is then listed, if the Common
      Stock
      is not listed on the OTCBB) five-day average closing bid price for each share
      of
      the common stock for the five days prior to the date of the conversion. Upon
      the
      dissolution, liquidation or winding up of the Company, whether voluntary or
      involuntary, the holders of the then outstanding shares of Series B Preferred
      Stock shall be entitled to receive out of the assets of the Company the sum
      of
      $0.001 per share (the “Liquidation Rae”) before any payment or distribution
      shall be made on the common stock, or any other class of capital stock of
      Jackson Rivers ranking junior to the Series B Preferred Stock. On December
      31,
      2005 the total authorized shares of the Series B Preferred Stock was reduced
      to
      8,413,607 shares. As of December 31, 2006 the Company has 1,000,000 shares
      of
      Series B preferred stock issued and outstanding.




The
      Company has evaluated the application of Statement of Financial Accounting
      Standard (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging
      Activities” and Emerging Issues Task Force (“EITF”) 00-19, “Accounting for
      Derivative Financial Instruments Indexed to, and Potentially Settled in a
      Company’s Own Stock” for the Series A and Series B Preferred Stock. Based on the
      guidance of SFAS No. 133 and EITF 00-19, the Company has concluded that these
      instruments were not required to be accounted for as derivatives.




F-18




**INTERACT
        HOLDINGS GROUP, INC.**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
        31, 2006




**Note
      13 – Stock Options**




The
      Company has stock option plans, which provide for the granting of qualified
      and
      nonqualified options to employees of the Company. A maximum of 5,000,000 shares
      of common stock may be issued under the plans. The option price, number of
      shares, vesting schedule, holding period or other restrictions and grant dates
      are determined at the discretion of a committee appointed by the Company’s board
      of directors. Options granted under the plans are exercisable for a period
      not
      to exceed ten years from the option grant date.




A
      summary
      of option transactions during the years ended December 31, 2006 and 2005 is
      shown below:




**2006**
            
            **2005****Number
                of Shares**
            
            **Weighted-Average
                Exercise Price**
            
            **Number
                of Shares**
            
            **Weighted-Average
                Exercise Price**Outstanding
                at January 1
            
            
            3,717,404
            
            $
            0.2976
            
            
            3,885,552
            
            $
            0.3185Granted
            
            
            -
            
            
            -
            
            
            120,000
            
            
            1.0000Exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            0.5000Cancelled
            
            
            -
            
            
            -
            
            
            (288,148.
            )
            
            0.4484Outstanding,
                December 31
            
            
            3,717,404
            
            $
            0.2976
            
            
            3,717,404
            
            $
            0.2976Exercisable
                at December 31
            
            
            
            
            
            
            
            
            3,490,696





A
      summary
      of options outstanding at December 31, 2006 is as follows:




**Exercise
                Price**
            
            **Number
                of Shares Outstanding**
            
            **Weighted-Average
                Remaining Contractual Life of Shares Outstanding**
            
            **Number
                of Shares Exercisable**$0.01
            
            
            1,980,811
            
            
            3.4Years
            
            
            1,980,811$0.20
            
            
            120,000
            
            
            9.5Years
            
            
            120,000$0.50
            
            
            1,108,289
            
            
            5.0Years
            
            
            1,013,785$1.00
            
            
            508,304
            
            
            5.4Years
            
            
            496,1003,717,404
            
            
            
            
            
            3,610,696





The
      weighted-average estimated fair value of stock options granted during 2006
      and
      2005 was $0.20 and $0.20 per share, respectively. These amounts were determined
      using the Black-Scholes option pricing model, which values options based on
      the
      stock price at the grant date, the expected life of the option, the estimated
      volatility of the stock, the expected dividend payments, and the risk-free
      interest rate over the expected life of the option. The assumptions used in
      the
      Black-Scholes model were as follows for stock options granted in 2006 and
      2005.




F-19




**INTERACT
          HOLDINGS GROUP, INC.**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 December
          31, 2006




Risk-free
                interest rate
            
            
            5.50
            %Expected
                life (years)
            
            
            10.00Expected
                dividends
            
            
            NoneExpected
                volatility
            
            
            145.00
            %





The
      Black-Scholes option valuation model was developed for estimating the fair
      value
      of traded options that have no vesting restrictions and are fully transferable.
      Because option valuation models require the use of subjective assumptions,
      changes in these assumptions can materially affect the fair value of the
      options, and the Company’s options do not have the characteristics of traded
      options, the option valuation models do not necessarily provide a reliable
      measure of the fair value of its options,




The
      terms
      of awards issued to employees state that awards are forfeited upon termination
      of employment with the Company. In October, 2004 the Company modified the terms
      of certain awards issued to former employees in connection with their
      termination, such that the awards continue after termination of employment.
      The
      awards were fully vested at the time of modification. As a result of this
      modification, the Company recorded expense totaling $270,060 during the year
      ended December 31, 2004, representing the fair value of the options on the
      date
      of modification.




**Note
      14 – Major Customers**




During
      the year ending December 31, 2006, the Company had four major customers, sales
      to which represent approximately 55% of the Company’s total revenues. During
      2005, the Company had two major customers which represent approximately 86%
      of
      the Company’s revenues.




F-20
 
  **ITEM
          8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
          DISCLOSURE**
  On
        January 15, 2007, the services of Malone & Bailey, PC. (“M&B”), the
        auditors for the Company, were terminated. Such termination was recommended
        and
        approved by the Board of Directors of the Company.





The
      report issued by M&B on the financial statements of the Company for the past
      two years contained no adverse opinion or disclaimer of opinion, nor were they
      modified as to uncertainty, audit scope or accounting principles.





Prior
      to
      and up to the time of termination, the Company had no disagreements with M&B
      with regard to any matter of accounting principles or practice, financial
      statement disclosure or auditing scope or procedure.





On
      January 16, 2007, the Company engaged the services of Gruber & Company, LLC,
      121 Civic Center Drive, Suite 225, Lake Saint Louis, Missouri 63367 (“Gruber”)
      as auditor.




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




As
      of the
      end of the period covered by this Annual Report, we carried out an evaluation,
      under the supervision and with the participation of our CEO and CFO, of the
      effectiveness of our disclosure controls and procedures. Based on this
      evaluation, our CEO and CFO concluded that our disclosure controls and
      procedures are effective in timely alerting them to material information
      required to be included in our periodic Securities and Exchange Commission
      reports. It should be noted that the design of any system of controls is based
      in part upon certain assumptions about the likelihood of future events, and
      there can be no assurance that any design will succeed in achieving its stated
      goals under all potential future conditions, regardless of how remote. In
      addition, we reviewed our internal controls over financial reporting and there
      have been no changes in our internal controls or in other factors in the last
      fiscal quarter that have materially affected or are reasonably likely to
      materially affect our internal control over financial reporting.




**ITEM
      8(B).**  **OTHER
      INFORMATION.**




None.




19




**PART
      III**




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




**Executive
      Officer and Directors**




The
      following table sets forth the names of all of our current directors and
      executive officers. These persons will hold their respective positions until
      the
      next annual meeting of the stockholders or until their successors are elected
      or
      appointed and qualified, or their prior resignation or termination.




**Name**
            
            **Age**
            
            **Position**Jeffrey
                W. Flannery
            
            50
            
            Director,
                Chief Executive Officer, Chief Financial OfficerJames
                E. Nelson
            
            65
            
            Director,
                President and Chief Operating OfficerDaniel
                Nagala
            
            54
            
            Director





**Jeffrey
      W. Flannery** has been
      serving as a director of Interact Group Holdings, Inc. and its Chief Executive
      Officer, Chief Financial Officer, Treasurer and Secretary since August 31,
      2005.
      Mr. Flannery brings extensive experience in business development and fiscal
      management to these positions. Since 2005, he has been serving as
      (i) President, Chief Financial Officer, Secretary and Director of Axia
      Group, Inc., a company that provides fast-construction building technologies
      in
      Southeast Asia; (ii) Chief Executive Officer and Chief Financial Officer of
      MicroHoldings US, Inc., a company which provides carrier solutions and
      telecommunications services and (iii) Chief Executive Officer and President
      of Titan Energy Worldwide, Inc., a company which manufactures, markets and
      sells
      mobile utility systems for emergency power generation. Since 1999, as a member
      of FLC Partners, Inc., an investment banking services company, Mr. Flannery
      has
      provided financial consulting and business development services for many public
      and private companies. From 1994 to 1999, Mr. Flannery, served as the Chief
      Executive Officer of Enhanced Information Systems, Inc., an online home health
      care provider for the pharmacy industry, Vice President of Development for
      IUSA,
      an information technology company, and Director of Corporate Communications
      for
      Center For Special Immunology, a public company dedicated to medical treatments
      for immune disorders. Mr. Flannery received his B.A. in Philosophy from the
      University of California, Los Angeles.




**James
      E. Nelson** has been
      serving as a director of Interact Group holdings, Inc. and its President and
      Chief Operating Officer since December 1, 2005. From 1998 to present, Mr. Nelson
      has served as the Chief Executive Officer, President, and a founder of DNI
      in
      Houston Texas. Mr. Nelson brings over 40 years of experience in engineering
      design, business operations, technology consulting and senior level management
      to the company. Mr. Nelson has 30 years of experience both in the industrial
      automation industry and in the design, deployment, and commercialization of
      wireless data communication networks. Early in his career, Mr. Nelson was
      involved in design and deployment of some of the world’s largest pipeline SCADA
      projects such as ExxonMobil system, Shell system, Trans-Alaska Pipeline, and
      Louisiana Offshore Oil Port (LOOP). Mr. Nelson has an extensive knowledge base
      of all types of wireless data communication technologies as applicable for
      both
      fixed and mobile applications. Before founding DNI in 1998 he was the Vice
      President of Network Engineering and Operations at Metricom, Inc. and as such
      had senior management responsibility for the deployment and ongoing operations
      of Metricom’s wireless Internet product called Ricochet. Mr. Nelson serves on
      the Advisory Board of the Houston InfoComm Technology (HIT) Center and has
      previously served as an Advisor to the University Of Houston College Of
      Engineering and on the Industry Advisory Council of the Department of
      Engineering Technology & Industrial Distribution at Texas A&M
      University. He is the founder and Director of To His Honor Ministries, a
      non-profit, Houston-based sponsor of youth basketball teams and the Vice
      Chairman of the Gulf District AAU Boys Basketball program. Mr. Nelson has a
      Bachelor of Science degree in Electrical Engineering from Texas A&M
      University, a Masters of Communication Technology certification from the
      American Institute, and for almost 40 years was a Registered Professional
      Engineer in the State of Texas.




20




**Daniel
      Nagala** has been
      a director of Interact Holdings Group, Inc. since May 5, 2006. Mr. Nagala was
      also appointed, on May 5, 2006, as the president of UTSI International, the
      new
      Data Solutions Division, which provides IHGR’s engineering consulting services.
      His responsibilities include general corporate management functions, as well
      as
      active participation in SCADA and leak detection consulting projects. Prior
      to
      founding UTSI in 1985, Mr. Nagala was the Director of Software Research and
      Development at Control Applications, Inc. (now owned by Telvent GIT, S.A.).
      Over
      the past twenty-four years, Mr. Nagala has acted as consultant, project manager,
      and technical leader on numerous large and small pipeline control system
      projects worldwide. His expertise includes liquid and gas pipeline SCADA
      systems, real-time data communication systems, control system architecture,
      and
      advanced application technology including real-time modeling and leak detection.
      Mr. Nagala holds a Bachelor of Science degree in Computer Science (1976) from
      Northern Arizona University.




**Significant
      Employees**




Other
      than our executive officers, we do not have any employees who are expected
      to
      make a significant contribution to our business.




**Family
      Relationships**




There
      are
      no family relationships between any director or executive officer.




**Involvement
      in Certain Legal Proceedings**




None. ****




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




Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires our
      directors, executive officers, and stockholders holding more than 10% of our
      outstanding common stock, to file with the Securities and Exchange Commission
      initial reports of ownership and reports of changes in beneficial ownership
      of
      our common stock. Executive officers, directors and greater-than-10%
      stockholders are required by SEC regulations to furnish us with copies of all
      Section 16(a) reports they file. To our knowledge, based solely on review of
      the
      copies of such reports furnished to us for the period ended December 31, 2006,
      no Section 16(a) reports required to be filed by our executive officers,
      directors and greater-than-10% stockholders were filed on a timely basis.




**Audit
      Committee**




We
      do not
      have an audit committee at this time.




21




**Code
      of Ethics**




We
      have
      adopted a code of ethics that applies to our principal executive officer,
      principal financial officer, principal accounting officer or controller, or
      persons performing similar functions. The code of ethics is designed to deter
      wrongdoing and to promote:




·
            Honest
                and ethical conduct, including the ethical handling of actual or
                apparent
                conflicts of interest between personal and professional
                relationships;




·
            Full,
                fair, accurate, timely, and understandable disclosure in reports
                and
                documents that we file with, or submit to, the SEC and in other public
                communications made by us;




·
            Compliance
                with applicable governmental laws, rules and
                regulations;




·
            The
                prompt internal reporting of violations of the code to an appropriate
                person or persons identified in the code;
                and




·
            Accountability
                for adherence to the code.




A
      copy of
      our code of ethics that applies to our principal executive officer, principal
      financial officer, principal accounting officer or controller, or persons
      performing similar functions was attached as an exhibit to our Annual Report
      for
      the year ended December 31, 2003, filed with the SEC on April 14, 2004. We
      have
      posted a copy of the code of ethics on our website at
      www.interactgroupholdings.com.




We
      will
      provide to any person without charge, upon request, a copy of our code of
      ethics. Any such request should be directed to our corporate secretary at 550
      Greens Parkway, Suite 230, Houston, Texas 77067, telephone number (619)
      615-4242.




**Nominating
      committee**




The
      Company does not have a nominating committee.




22




**ITEM
      10.**  **EXECUTIVE
      COMPENSATION**




The
      following table sets forth, for the fiscal year ended December 31, 2006, all
      compensation paid by the Company, including salary, bonuses and certain other
      compensation, if any, to its Chief Executive Officer and Chief Financial Officer
      and the Company’s highest paid executive officer other than the CEO. The
      executive officers listed in the table below are sometimes referred to as the
      “named executive officers” in this Annual Report.





**SUMMARY
                COMPENSATION TABLE****Name
                and**
              **Principal
                Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Stock
                Awards**
              **($)**
            
            **Options
                Awards**
              **($)**
            
            **Non-**
              **Equity
                Incentive Plan Compen-sation**
              **($)**
            
            **Change
                in Pension Value and Non-**
              **qualified
                Deferred Compen-sation Earnings**
              **($)**
            
            **All
                Other Compen-sation**
              **($)**
            
            **Total**
              **($)**Jeffrey
                Flannery
              CEO
                and CFO
            
            
            2006
            
            
            180,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            180,000James
                E. Nelson
            
            
            2006
            
            
            285,000
            (1)
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            285,000Director,
                President and Chief Operating Officer






**(1)**
            This
                includes Mr. Nelson’s yearly salary as an officer of the Company in the
                amount of $120,000 and his yearly salary as an officer of DNI in
                the
                amount of $165,000.




**Option
      Grants and Exercises**




There
      were no option grants or exercises by any of the executive officers named in
      the
      Summary Compensation Table above.




**Employment
      Agreements**




As
      of the
      year ended December 31, 2006, Mr. Nelson has an employment agreement, effective
      December 1, 2005 (the “Employment Agreement”) which provides for a three-year
      term expiring on December 31, 2008 and an annual salary of $120,000 through
      year
      end 2006, increasing to $126,000 for fiscal year 2007 and $132,300 for fiscal
      year 2008. The agreement also provides for medical benefits and grants of
      2,000,000 options at an exercise price of $.015 per share. Such options will
      vest over a 3 year period with 50% vesting on December 1, 2006, an additional
      25% vesting on December 1, 2007 and the final 25% vesting on December 1, 2008.
      To the extent that Mr. Nelson is terminated for a reason other than “cause” or
      if there is a “change of control”, Mr. Nelson is entitled to a lump sum payment
      equal to 2 years’ worth of salary/bonus and the continuation of health benefits
      for a period of 3 years.




We
      do not
      have employment agreements with any of our other executive
      officers.




23




**Compensation
      of Executives**




Mr.
      Jeffrey W. Flannery receives an annual salary of $180,000. All amounts due
      to
      Mr. Flannery to date have been deferred.




Mr.
      James
      E. Nelson receives an annual salary of $285,000 which consists of his salary
      as
      an officer of the Company in the amount of $120,000 and an annual salary of
      $165,000 as an officer of DNI.




**Outstanding
      Equity Awards at Fiscal Year End**




The
      table
      below sets forth the options and stock awards received by the executive officers
      of the Company as of December 31, 2006.





**OUTSTANDING
                EQUITY AWARDS AT FISCAL YEAR-END**




OPTION
                AWARDS
            
            STOCK
                AWARDSName
            
            Number
                of Securities Underlying Unexercised Options
              (#)
              Exercisable
            
            Number
                of Securities Underlying Unexercised Options
              (#)
              Unexercisable
            
            Equity
                Incentive Plan Awards: Number of Securities Underlying Unexercised
                Unearned Options
              (#)
            
            Option
                Exercise Price
              ($)
            
            Option
                Expiration Date
            
            Number
                of Shares or Units of Stock That Have Not Vested
              (#)
            
            Market
                Value of Shares or Units of Stock That Have Not Vested
              ($)
            
            Equity
                Incentive Plan Awards: Number of Unearned Shares, Units or Other
                Rights
                That Have Not Vested
              (#)
            
            Equity
                Incentive Plan Awards: Market or Payout Value of Unearned Shares,
                Units or
                Other Rights That Have Not Vested
              (#)Jeffrey
                W. Flannery
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -James
                E. Nelson
            
            
            1,000,000
            
            
            
            
            
            
            
            
            .015
            
            
            12/1/2015
            
            
            -
            
            
            -
            
            
            -
            
            
            --
            
            
            1,000,000
            (1)
            
            -
            
            
            .015
            
            
            12/1/2015
            
            
            -
            
            
            -
            
            
            -
            
            
            -100,000(2
            )
            
            -
            
            
            -
            
            
            .01
            
            
            -
            
            
            -
            
            
            -
            
            
            -100,000(2
            )
            
            -
            
            
            -
            
            
            .050
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -





(1)
            These
                shares vest as follows: 500,000 on December 1, 2007 and 500,000 on
                December 1, 2008.




(2)
            These
                options to purchase shares were issued to Mr. Nelson as part of the
                merger
                between DNI and the Company which occurred in December of
                2005.




As
      of the
      year ended December 31, 2006, Mr. Nelson was granted 2,000,000 options to
      purchase shares in the Company at an exercise price of $.015 per share. Such
      options will vest over a 3 year period with 50% vesting on December 1, 2006,
      an
      additional 25% vesting on December 1, 2007 and the final 25% vesting on December
      1, 2008. To the extent that Mr. Nelson is terminated for a reason other than
      “cause” or if there is a “change of control”, Mr. Nelson is entitled to a lump
      sum payment equal to 2 years’ worth of salary/bonus and the continuation of
      health benefits for a period of 3 years.




24




**Compensation
      of Directors**




All
      directors receive reimbursement for reasonable out-of-pocket expenses in
      attending board of directors meetings and for promoting our business. From
      time
      to time we may engage certain members of the board of directors to perform
      services on our behalf. In such cases, we compensate the members for their
      services at rates no more favorable than could be obtained from unaffiliated
      parties. During the year ended December 31, 2006, our directors have not
      received any compensation for services rendered in such capacity.




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




The
      following table sets forth certain information regarding the beneficial
      ownership of our common stock as of April 30, 2007 by the following
      persons:




·
            each
                person who is known to be the beneficial owner of more than five
                percent
                (5%) of our issued and outstanding shares of common
                stock;




·
            each
                of our directors and executive officers;
                and




·
            all
                of our directors and executive officers as a
                group.




The
      following table is computed based on 14,409,928 post-split common shares issued.
      Except as set forth in the footnotes to the table, the persons names in the
      table have sole voting and investment power with respect to all shares of common
      stock shown as beneficially owned by them, subject to community property laws
      where applicable. A person is considered the beneficial owner of any securities
      as of a given date that can be acquired within 60 days of such date through
      the
      exercise of any option, warrant or right. Shares of common stock subject to
      options, warrants or rights which are currently exercisable or exercisable
      within 60 days are considered outstanding for computing the ownership percentage
      of the person holding such options, warrants or rights, but are not considered
      outstanding for computing the ownership percentage of any other person.




**Name
                And Address****(1)**
            
            **Beneficially
                Owned**
            
            **Percentage
                Owned**Jeffrey
                W. Flannery
            
            
            480,000
            (2)
            
            48.5
            %James
                E. Nelson
            
            
            480,000
            (2)
            
            48.5
            %All
                directors and officers as a group (2 persons)
            
            
            960,000
            *
            
            97.1
            %




*  Less
      than
      1% of the outstanding shares of common stock.




(1)  Unless
      otherwise noted, the address for each person is 550 Greens Parkway, Suite 230,
      Houston, Texas 77067.




(2)  All
      are
      Series A Preferred Stock, each share of which is convertible into 1 shares
      of
      our common stock.




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




None.




25




**ITEM
      13.**  **EXHIBITS**




**Exhibit
                No.**
            
            **Description**3.1*
            
            Articles
                of Incorporation filed May 8, 2001 (incorporated by reference to
                Exhibit A
                filed with Form SB-2 October 4, 2001).3.2*
            
            Articles
                of Amendment to the Articles of Incorporation, filed effective August
                3,
                2004.3.3*
            
            Articles
                of Amendment to the Articles of Incorporation, filed effective November
                22, 2004.3.4*
            
            Articles
                of Amendment to the Articles of Incorporation, filed effective January
                31,
                20053.5*
            
            Bylaws
                (incorporated by reference to Exhibit 3(ii) filed with Form SB-2
                October
                4, 2001).3.6*
            
            Amended
                and Restated Bylaws.4.1*
            
            Certificate
                of Designation for the Series A Preferred Stock, filed effective
                October
                18, 2004.4.2*
            
            Certificate
                of Designation for the Series B Preferred Stock, filed effective
                December
                1, 2005.10.1*
            
            Consulting
                Services Agreement dated August 1, 2003.10.2*
            
            Technology
                License Agreement10.3*
            
            Stock
                Purchase Agreement dated as of August 31, 2005 by and among The Jackson
                Rivers Company, Dennis Lauzon and Jeffrey Flannery.10.4*
            
            Agreement
                and Plan of Merger dated December 1, 2005 by and among the Jackson
                Rivers
                Company, JKRC Sub, Inc., Diverse Networks, Inc. and the shareholders
                of
                Diverse Networks, Inc.10.5*
            
            Stock
                Purchase Agreement dated as of December 1, 2005 by and between Jeffrey
                W.
                Flannery, James E. Nelson and The Jackson Rivers
                Company.10.6*
            
            Employment
                Agreement dated as of December 1, 2005 between James E. Nelson and
                The
                Jackson Rivers Company10.7*
            
            Securities
                Purchase Agreement dated as of March 31, 2006 by and among The Jackson
                Rivers Company and the Purchaser set forth therein.10.8*
            
            Form
                of Callable Secured Promissory Note dated March 31,
                2006.10.9*
            
            Security
                Agreement dated as of March 31, 2006.10.10*
            
            Registration
                Rights Agreement dated as of March 31, 2006.10.11*
            
            Intellectual
                Property Security Agreement dated as of March 31, 2006.10.12*
            
            Form
                of Stock Purchase Warrant dated March 31, 2006.10.13**
            
            Convertible
                Promissory Note dated as of January 2, 2006.10.14**
            
            Convertible
                Promissory Note dated as of March 12, 2006.14*
            
            Code
                of Ethics.21**
            
            Subsidiaries.23.1**
            
            Consent
                of Gruber & Co. LLC31.1**
            
            Certification
                of Jeffrey W. Flannery, Chief Executive Officer, Chief Financial
                Officer
                and Director of The Jackson Rivers Company, pursuant to 18 U.S.C.
                Sec.
                1350, as adopted pursuant to Sec. 302 of the Sarbanes-Oxley Act of
                2002.32.1**
            
            Certification
                of Jeffrey W. Flannery, Chief Executive Officer, Chief Financial
                Officer
                and Director of The Jackson Rivers Company, pursuant to 18 U.S.C.
                Sec.
                1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of
                2002.




*  Previously
      Filed




**  Filed
      Herewith




26




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




**Appointment
      of Auditors**




Our
      Board
      of Directors selected Malone & Bailey, PC, independent accountants (“M &
B”), as our auditors for the year ended December 31, 2005.




In
      January 2007 our board of directors dismissed M & B and appointed Gruber
& Company LLC (“Gruber”) as our independent auditors. There were no
      disagreements with M & B.




**Audit
      Fees**




M
&
B
      billed us $36,139 in fees for our annual audit for the year ended December
      31,
      2005, and $12,161 in fees for the review of our quarterly financial statements
      for that year.




Gruber
      has billed us $15,000 for our annual audit for the year ended 2006.




**Audit-Related
      Fees**




M
&
B
      billed us $0 for assurance and related services in 2005 and are not reported
      under Audit Fees above.




Gruber
      billed us $0 for assurance and related services for the year ended 2006.




**Tax
      and All Other Fees**




We
      did
      not pay any fees to M & B for tax compliance, tax advice, tax planning or
      other work during our fiscal year ending December 31, 2005, nor to Gruber for
      work for the year ended 2006.




**Pre-Approval
      Policies and Procedures**




We
      have
      implemented pre-approval policies and procedures related to the provision of
      audit and non-audit services. Under these procedures, our board of directors
      pre-approves all services to be provided by Gruber and the estimated fees
      related to these services.




With
      respect to the audit of our financial statements as of December 31, 2006 and
      for
      the year then ended, none of the hours expended on Gruber’s engagement to audit
      those financial statements were attributed to work by persons other than their
      full-time, permanent employees.




27




**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      registrant caused this report to be signed on its behalf this 10th day of May,
      2007 by the undersigned, thereunto duly authorized.




**INTERACT
                HOLDINGS GROUP, INC.**By:
            /s/ Jeffrey
              W. FlanneryJeffrey
                W. FlanneryChief
                Executive Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, this
      report has been signed below by the following persons on behalf of the
      registrant and in the capacities indicated.


**Signatures**
              
              **Title**
              
              **Date**/s/
                  Jeffrey W. Flannery
              
              Chief
                  Executive Officer, Chief Financial Officer,
              
              May
                  10, 2007Jeffrey
                  W. Flannery
              
              Secretary,
                  Treasurer, Director




28