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


**WASHINGTON,
      D.C. 20549**


**FORM
      10-KSB**




**(Mark
      One)**


þ  ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      fiscal year ended December 31, 2007




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.)




8880
      Rio
      San Diego Drive, 8th Floor


San
      Diego, CA 92108


(Address
      of principal executive offices, including zip code)




Registrant’s
      telephone number, including area code: (619) 342-7443




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 þ No 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 o No þ




The
      issuer’s revenues for the most recent fiscal year were $4,473,499.




The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant was approximately $62,403 as of March 31,
      2008.




State
      the
      number of shares outstanding of each of the Issuer’s classes of common equity,
      as of the latest practicable date: March 31, 2008: 624,030,575




DOCUMENTS
      INCORPORATED BY REFERENCE




None.




Transitional
      Small Business Issuer Format Yes o No þ





**Table
      of Contents**




Page**PART
                I**ITEM
                1.
            DESCRIPTION
                OF BUSINESS
            1ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            5ITEM
                3.
            LEGAL
                PROCEEDINGS
            5ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            5**PART
                II**ITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            5ITEM
                6.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            8ITEM
                7.
            FINANCIAL
                STATEMENTS
            11ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            12ITEM 8(A).
            CONTROLS
                AND PROCEDURES.
            12ITEM
                8(B).
            OTHER
                INFORMATION.
            12**PART III**ITEM
                9.
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(A) OF THE EXCHANGE ACT
            13ITEM
                10.
            EXECUTIVE
                COMPENSATION
            14ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            15ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            16ITEM
                13.
            EXHIBITS
            17**SIGNATURES**
            
            19




i




**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 the 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 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 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 securities purchase
      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 notes 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, we have 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 our
      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 accredited
      investors 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. 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 50%. “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 securities purchase 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 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 8880 Rio San Diego Drive, 8th Floor, San Diego,
      CA 92108 and our telephone number is (619) 342-7443. We maintain a website
      at
      www.interactholdings.com.




2




**Recent
      Developments**




On
      February 12, 2007, we effected a 500-to-1 reverse stock split. The financials
      have been adjusted for all periods presented.




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. 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 50%. “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 securities purchase
      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 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.




On
      August
      21, 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 $330,000 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
      20,000,000 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 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 received 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.




In
      January 2008, we entered into a separation agreement with one of our operating
      subsidiaries UTSI International. Both parties mutually agreed to terminate
      their
      relationship. UTSI had the option to rescind the acquisition as set forth in
      the
      original stock purchase agreement between the parties, should we not meet or
      cure certain conditions. Both companies agreed to the rescission, and each
      returned stock which originally was given for consideration of the deal in
      2006.




In
      January 2008, Daniel Nagala resigned from the Board of Directors. Also in
      January 2008, James Nelson resigned from the Board of Directors and resigned
      his
      positions as President and Chief Operating Officer of the Company. Upon his
      resignation, the Preferred A Series shares held by Mr. Nelson were returned
      to
      Jeffrey Flannery, the remaining officer and board member.




**Our
      Business**




Through
      our remaining subsidiary, Diverse Networks, we continue to operate in the
      infrastructure management and technology business. However, at this time we
      are
      unsure of our ability to support these activities on an ongoing basis.
      Furthermore, our auditor has raised substantial doubts about our ability to
      continue as a going concern. See Note 2 to the Consolidated Financial
      Statements.




3




We
      currently are seeking new business opportunities. We will endeavor to
      restructure and grow through the acquisition of additional business
      opportunities. We anticipate that proposed business ventures will be made
      available to us through personal contacts of our directors, executive officers
      and principal stockholders, professional advisors, broker dealers in securities,
      venture capital personnel, and members of the financial community and others
      who
      may present unsolicited proposals. In certain cases, we may agree to pay a
      finder’s fee or to otherwise compensate the persons who submit a potential
      business endeavor in which we eventually participate. Since such persons may
      include our directors, executive officers and beneficial owners of our
      securities or their affiliates, such fees may become a factor in negotiations
      regarding any potential venture and, accordingly, may present a conflict of
      interest for such individuals. We do not presently intend to acquire or merge
      with any business enterprise in which any member has a prior ownership
      interest.




Although
      we currently have no plans to do so, depending on the nature and extent of
      services rendered, we may compensate members of management in the future for
      services that they may perform for our Company. Because we currently have
      extremely limited resources, we expect that any such compensation would take
      the
      form of an issuance of the Company’s common stock to these persons; this would
      have the effect of further diluting the holdings of our other stockholders.
      There are presently no preliminary agreements or understandings between us
      and
      members of management respecting such compensation.




Substantial
      fees are often paid in connection with the completion of all types of
      acquisitions, reorganizations or mergers, ranging from a small amount to as
      much
      as $400,000. These fees are usually divided among promoters or founders, after
      deduction of legal, accounting and other related expenses, and it is not unusual
      for a portion of these fees to be paid to members of management or to principal
      stockholders as consideration for their agreement to retire a portion of the
      shares of common stock owned by them. Management may actively negotiate or
      otherwise consent to the purchase of all or any portion of their common stock
      as
      a condition to, or in connection with, a proposed reorganization, merger or
      acquisition. It is not anticipated that any such opportunity will be afforded
      to
      other stockholders or that such other stockholders will be afforded the
      opportunity to approve or consent to any particular stock buy-out transaction.
      In the event that any such fees are paid, they may become a factor in
      negotiations regarding any potential acquisition or merger by us and,
      accordingly, may also present a conflict of interest for such individuals.
      We
      have no present arrangements or understandings respecting any of these types
      of
      fees or opportunities.




None
      of
      our directors, executive officers, founders or their affiliates or associates
      has had any negotiations with any representatives of the owners of any business
      or company regarding the possibility of an acquisition, reorganization, merger
      or other business opportunity for the Company; nor are there any similar
      arrangements with us.




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




None.




**Governmental
      Approval of Principal Products or Services**




None.




**Effect
      of Existing or Probable Governmental Regulations on
      Business**




None.




4




**Research
      and Development**




None.




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




We
      are
      not, at present, subject to existing environmental laws that may have an adverse
      effect on us.




**Employees**




As
      of
      March 31, 2008, we had no full-time employees and no part-time employees.




**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 are seeking to sublet this space to a qualified tenant so as
      to
      eliminate or minimize these monthly office expenses while we restructure.




**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, 2006 as reported by the OTC Bulletin Board. All share
      prices have been adjusted to provide for the 1-for-500 reverse stock split
      which
      was effected in January 2007. 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.




5




**January 1, 2007 to December 31, 2007**
              
              **High Bid**
              
              **Low Bid**First
                  quarter
              
              $
              0.5000
              
              $
              0.0200Second
                  quarter
              
              
              0.0270
              
              
              0.0013Third
                  quarter
              
              
              0.0042
              
              
              0.0004Fourth
                  quarter
              
              
              0.0005
              
              
              0.0001
  **January 1, 2006 to December 31, 2006**
              
              
              **High Bid**
              
              
              **Low Bid**First
                  quarter
              
              $
              1.25
              
              $
              1.10Second
                  quarter
              
              
              2.50
              
              
              2.10Third
                  quarter
              
              
              1.60
              
              
              0.37Fourth
                  quarter
              
              
              2.00
              
              
              0.45




**Holders**




As
      of
      April 17, 2008, there were approximately 600 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.




**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,
      2007:




6




**(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 accredited
      investors 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.




On
      March
      31, 2007, we entered into another securities purchase agreement with accredited
      investors 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. 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 50%. “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 securities purchase 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 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.




7




On
      August
      21, 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 $330,000 of convertible promissory notes. The convertible
      notes have a three year term and bear interest at a rate of eight percent (8%)
      per annum. 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 50%. “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 securities purchase 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
      also included warrants to purchase up to 20,000,000 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 received 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.




8




***Results
      of Continuing Operations***




**Basis
      of Presentation**




The
      results of operations set forth below for the years ended December 31, 2007
      and
      2006 are those of the continuing operations of Interact Group Holdings, Inc.,
      which include DNI and UTSI on a consolidated basis.




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,****2007**
                
                **2006**Net
                    sales
                
                $
                4,473,499
                
                $
                3,198,853Cost
                    of sales
                
                
                2,275,046
                
                
                1,782,458Gross
                    profit
                
                $
                2,198,454
                
                $
                1,416,395Research
                    and Development
                
                
                413,531
                
                
                185,565Selling,
                    general and administrative
                
                
                3,454,474
                
                
                2,851,800Depreciation
                    and Amortization
                
                
                175,375
                
                
                195,096Operating
                    loss
                
                $
                (1,844,926
                )
                $
                (1,816,166
                )




***Comparison
      of the Years ended December 31, 2007 and 2006***




**Net
      sales.** Net
      sales for operations increased to $4,473,499, or an increase of approximately
      28.5%, for the year ended December 31, 2007, from $3,198,853 for the year ended
      December 31, 2006. This increase was attributable to higher sales levels and
      UTSI.




**Cost
      of Sales.** Cost of
      sales for continued operations increased to $2,275,046, or approximately 27.7%,
      for the year ended December 31, 2007, from $1,782,458 for the year ended
      December 31, 2006. As a percentage of net sales, cost of sales decreased to
      51%
      of net sales for the year ended December 31, 2007 versus approximately 56%
      of
      sales for the year ended December 31, 2006. The decrease in cost of sales as
      a
      percentage of net sales resulted primarily from improved costing of new business
      products through the mergers. As a result, we generated a gross profit of
      $2,198,454 with a gross profit margin of approximately 49% for the year ended
      December 31, 2007.




**Selling,
      general and administrative.** Selling,
      general and administrative expenses increased to $3,454,474, or an increase
      of
      approximately 17.5%, for the year ended December 31, 2007, from $2,851,800
      for
      the year ended December 31, 2006. As a percentage of net sales, selling, general
      and administrative expenses were approximately 77% for the year ended December
      31, 2006, as compared to approximately 89% for the comparable period in 2006.
      The increase in selling, general and administrative expenses primarily resulted
      from the newly merged companies.




**Operating
      loss.** We
      incurred an operating loss of $1,844,926 for the year ended December 31, 2007,
      compared to an operating loss of $1,816,166 for the year ended December 31,
      2006.




9




***Revenue
      Recognition***




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




***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.




We
      used
      $1,372,429 of net cash in operating activities for the year ended December
      31,
      2007 compared to $2,026,287 used in the year ended December 31,
      2006.




Net
      cash
      flows used in investing activities were $31,738 for the year ended December
      31,
      2007, compared to $66,606 in the year ended December 31, 2006. 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 $1,333,429 for the year ended
      December 31, 2007, compared to net cash provided for financing activities of
      $2,272,289 in the year ended December 31, 2006. The difference results primarily
      from proceeds of notes payable.




**Capital
      Requirements**




We
      had a
      working capital deficit of $2,973,117 as of December 31, 2007. 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.




10




**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 of Stockholders’ Deficit
              F–5Notes
                  to Financial Statements
              F–6


11


[Letterhead
      of 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. as of December 31, 2007 and 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 audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform our audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company's internal control over financial
      reporting. Accordingly, we express no such opinion. An audit 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 audit provides
      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, 2007 and 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 indicated in these financial statements,
      the Company has incurred a loss in 2007 of $3,253,721 and has a cumulative
      loss
      since inception of $7,816,097. Further, the Company’s current liabilities exceed
      its current assets by $2,973,717 and it separated in January 2008 from its
      main
      operating subsidiary. These conditions 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.
      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,
      2008


F–1


**INTERACT
      HOLDINGS GROUP, INC.**


**CONSOLIDATED
      BALANCE SHEET**


**As
      of December 31, 2007**


**ASSETS****Current
                  assets**Cash
                  and equivalents
              
              $
              201,937Accounts
                  receivable, net
              
              
              577,681Prepaid
                  expenses and other assets
              
              
              108,704**Total
                  Current Assets**
              
              $
              888,322Property
                  and equipment, net
              
              $
              128,824Customer
                  list, net of amortization
              
              
              569,087Goodwill
              
              
              1,868,986Other
                  long-term assets
              
              
              55,926**Total
                  Assets**
              
              $
              3,511,145**LIABILITIES
                  AND STOCKHOLDERS****’
                  DEFICIT****Current
                  liabilities**Derivative
                  liability
              
              $
              1,337,141Notes
                  payable
              
              
              773,497Line
                  of credit
              
              
              355,089Accounts
                  payable and accrued expenses
              
              
              1,389,622Customer
                  deposits and advance billings
              
              
              6,090**Total
                  Current Liabilities**
              
              $
              3,861,439Convertible
                  notes payable
              
              $
              2,789,764Note
                  payable - Related parties
              
              
              965,144**Total
                  Liabilities**
              
              $
              7,616,347**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,
                  2007
              
              $
              10Series
                  B preferred stock, par value $0.001 per share, 10,000,000 shares
                  authorized; 10,000,000 issued and outstanding at December 31, 2007
              
              
              1,000Series
                  C preferred stock, par value $1.00; 2,200,000 shares authorized
                  issued and
                  outstanding at December 31, 2007
              
              
              2,200,000Common
                  stock, par value $0.00001 per share, 5,000,000,000 authorized,
                  594,992,267
                  issued and outstanding at December 31, 2007
              
              
              5,855Additional
                  paid-in capital
              
              
              1,497,930Accumulated
                  deficit
              
              
              (7,816,097
              )Comprehensive
                  income
              
              
              6,100**Total
                  Stockholders’ Deficit**
              
              $
              (4,105,202
              )**Total
                  Liabilities and Stockholders’ Deficit**
              
              $
              3,511,145




**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, 2007 and 2006**





**Year
                Ended December 31,****2007**
            
            **2006****Sales,
                net**
            
            $
            4,473,499
            
            $
            3,198,853**Cost
                of sales**
            
            
            2,275,046
            
            
            1,782,458**Gross
                profit**
            
            $
            2,198,454
            
            $
            1,416,395.
            
            
            
            
            
            .**Operating
                expenses**Research
                and development
            
            $
            413,531
            
            
            188,665Selling,
                general and administrative
            
            
            3,709,474
            
            $
            2,851,800Depreciation
                and amortization
            
            
            175,375
            
            
            195,096**Total
                operating expenses**
            
            $
            4,298,380
            
            $
            3,235,561**Loss
                from operations**
            
            $
            (2,099,926
            )
            $
            (1,819,166
            )**Other
                income (expense)**Other
                income
            
            
            –
            
            $
            –Other
                expense
            
            $
            –
            
            
            (34,674
            )Change
                in accrued derivative liability
            
            
            (997,187
            )
            
            (577,507
            )Interest
                expense
            
            
            (156,608
            )
            $
            (391,748
            )**Net
                other income (expense)**
            
            $
            (1,153,795
            )
            $
            (1,003,929
            )**Net
                income (loss)**
            
            $
            (3,253,721
            )
            $
            (2,823,095
            )**Weighted
                average number of common shares outstanding**
            
            
            358,231,400
            
            
            601**Net
                income (loss) per share**
            
            $
            (0.01
            )
            $
            (4,697.33
            )




**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, 2007 and 2006**




**Year
                  Ended December 31,****2007**
              
              **2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  loss from operations
              
              $
              (3,253,721
              )
              $
              (2,820,095
              )**Adjustments
                  to reconcile net income to net cash provided by (used by)
                  operations:**Depreciation
              
              
              70,315
              
              
              146,024Amortization
              
              
              105,060
              
              
              61,286Common
                  stock issued in exchange for consulting services rendered
              
              
              341,535
              
              
              307,350Common
                  stock issued in exchange for employee services rendered and related
                  transaction costs
              
              
              30,228
              
              
              25,200Change
                  in accrued derivative liability
              
              
              509,634
              
              
              577,507Accretion
                  of discount on notes payable
              
              
              
              
              
              138,425Changes
                  in assets and liabilities:Accounts
                  receivable
              
              
              (51,984
              )
              
              (58,712
              )Inventory
              
              
              
              
              
              19,633Prepaid
                  expenses
              
              
              9,719
              
              
              (113,462
              )Accounts
                  payable and accrued expenses
              
              
              720,261
              
              
              (395,600
              )Customer
                  deposits and advance billings
              
              
              (114,567
              )
              
              86,157**Net
                  Cash Used by Operating Activities**
              
              $
              (1,627,420
              )
              $
              (2,026,287
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Capital
                  expenditures
              
              $
              (31,738
              )
              $
              (38,400
              )Acquisition
                  of other assets
              
              
              
              
              
              (28,206
              )**Net
                  Cash Used in Investing Activities**
              
              $
              (31,738
              )
              $
              (66,606
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from notes payable, net of repayments
              
              $
              1,635,810
              
              $
              2,179,350Payment
                  on capital lease obligations
              
              
              (3,481
              )
              
              (11,571
              )Acquisition
                  of UTSI
              
              
              –
              
              
              195,229**Cash
                  Flows from Financing Activities**
              
              $
              1,632,329
              
              $
              2,272,219**Net
                  Increase (Decrease) in Cash**
              
              $
              (26,829
              )
              $
              179,326**Effect
                  of Exchange Rate on Cash and Cash Equivalents**
              
              
              6,100
              
              
              6,979**Cash,
                  beginning of period**
              
              
              222,666
              
              
              36,361**Cash
                  at end of period**
              
              $
              201,937
              
              $
              222,666**Supplemental
                  Disclosure of Cash Flow Information**Income
                  taxes paid
              
              
              –
              
              
              –Interest
                  paid
              
              $
              –
              
              $
              391,748Common
                  stock issued to retire convertible debt
              
              $
              241,102
              
              $
              142,530




**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, 2007 and 2006**


**Preferred Series A**
              
              **Preferred Series B**
              
              **Preferred Series C**
              
              **Common**
              
              **Additional**
                    **Pain-in**
              
              **Stock**
              
              **Retained**
                  **Earnings**
              
              **Stockholders’****Shares**
              
              **Stock**
              
              **Shares**
              
              **Stock**
              
              **Shares**
              
              **Stock**
              
              **Shares**
              
              **Stock**
              
              **Capital**
              
              **Subscribed**
              
              **(Deficit)**
              
              **Equity**Balance,
                  January 1, 2006
              
              
              960,000
              
              $
              10
              
              
              10,000,000
              
              $
              1,000
              
              
              
              
              
              
              
              
              99,055
              
              $
              1
              
              $
              508,249
              
              $
              9,299
              
              $
              (1,742,281
              )
              $
              (1,325,421
              )(92,400
              )Receipt
                  of subscription of stock
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (92,400
              )
              
              92,400
              
              
              —
              
              
              -Stock
                  based Compensation
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              182,500
              
              
              2
              
              
              307,348
              
              
              —
              
              
              —
              
              
              307,350Acquisition
                  of UTSI
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,2000000
              
              
              2,200,000
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,200,000Common
                  Stock issued for debt
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              188,824
              
              
              2
              
              
              142,518
              
              
              —
              
              
              —
              
              
              142,520Common
                  stock issued for services
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              16,000
              
              
              —
              
              
              25,200
              
              
              —
              
              
              —
              
              
              25,200Net
                  loss for the year ended December 31, 2006
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (2,820,095
              )
              
              (2,820,095
              )Comprehensive
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              6,979Balance,
                  December 31, 2006
              
              
              960,000
              
              
              10
              
              
              10,000,000
              
              
              1,000
              
              
              2,200000
              
              
              2,200,000
              
              
              486,379
              
              
              5
              
              
              890,915
              
              
              -
              
              
              (4,562,376
              )
              
              (1,463,467
              )Common
                  stock issued for consulting services
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              51,900,529
              
              
              519
              
              
              341,016
              
              
              —
              
              
              —
              
              
              341,535Common
                  stock to employees for services
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              3,287,742
              
              
              33
              
              
              30,195
              
              
              
              
              
              —
              
              
              30,228—
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              —Common
                  stock issued to retire debt
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              6,213,020
              
              
              62
              
              
              15,600
              
              
              —
              
              
              —
              
              
              15,662Common
                  Stock issued for convertible debt
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              523,611,031
              
              
              5,236
              
              
              220,204
              
              
              —
              
              
              —
              
              
              225,440Net
                  loss for the year ended December 31, 2007
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (3,253,721
              )
              
              (2,942,621
              )Balance,
                  December 31, 2007 before OCI
              
              
              960,000
              
              $
              10
              
              
              10,000,000
              
              $
              1,000
              
              
              2,200,000
              
              $
              2,200,000
              
              
              585,498,701
              
              $
              5,855
              
              $
              1,497,930
              
              
              
              
              $
              (7,816,097
              )
              $Other
                  comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              6,100Balance,
                  December 31, 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (4,055,202
              )




**See
        Accompanying Summary of Accounting Policies and Notes to Financial
        Statements**




F–5


**INTERACT
      HOLDINGS GROUP, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007**




**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 Statement of Financial Accounting Standards (“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 (“SAB”) 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 has been rendered, the price to the buyer is fixed or determinable,
      and
      collectibility is reasonably assured.




F–6


**INTERACT
        HOLDINGS GROUP, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007**




***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, 2007, all options were fully vested; therefore, there
      are no expenses to the Company related to the implementation of SFAS No.
      123R.




***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 the 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 No. 109, “Accounting for Income
      Taxes.” Under the asset and liability method of SFAS No. 109, deferred tax
      assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement 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 No. 109, the effect on deferred tax assets and liabilities of a change
      in
      tax rates is recognized as 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***




SFAS
      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.




F–7




**INTERACT
      HOLDINGS GROUP, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007**




All
      common stock shares are presented to reflect a 500-to-1 reverse stock split
      approved by the Board of Directors on November 21, 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,
      2007, the Company had a retained deficit of $7,816,097 and a working capital
      deficit of $2,973,117. In addition as discussed in note 10, the Company and
      its
      main operating subsidiary announced they are separating in January 2008. 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–8


**INTERACT
      HOLDINGS GROUP, INC.**


**NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007**


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




In
      accordance with 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
      SFAS
      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
        December 2007, the FASB issued SFAS No. 141(R), Business Combinations (FAS
        141(R)). This Statement provides greater consistency in the accounting and
        financial reporting of business combinations. It requires the acquiring entity
        in a business combination to recognize all assets acquired and liabilities
        assumed in the transaction, establishes the acquisition-date fair value as
        the
        measurement objective for all assets acquired and liabilities assumed, and
        requires the acquirer to disclose the nature and financial effect of the
        business combination. FAS 141(R) is effective for fiscal years beginning
        after
        December 15, 2008. We will adopt FAS 141(R) no later than the first quarter
        of
        fiscal 2010 and are currently assessing the impact the adoption will have
        on our
        financial position and results of operations.
 F–9
 **INTERACT
            HOLDINGS GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
            31, 2007**
  In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements”(“FAS 160”). This Statement amends Accounting
        Research Bulletin No. 51, Consolidated Financial Statements, to establish
        accounting and reporting standards for the noncontrolling interest in a
        subsidiary and for the deconsolidation of a subsidiary. FAS 160 is effective
        for
        fiscal years beginning after December 15, 2008. We will adopt FAS 160 no
        later
        than the first quarter of fiscal 2010 and are currently assessing the impact
        the
        adoption will have on our financial position and results of operations.
   In
        February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
        Assets and Financial Liabilities, which permits entities to choose to measure
        at
        fair value eligible financial instruments and certain other items that are
        not
        currently required to be measured at fair value. The standard requires that
        unrealized gains and losses on items for which the fair value option has
        been
        elected be reported in earnings at each subsequent reporting date. SFAS No.
        159
        is effective for fiscal years beginning after November 15, 2007. We will
        adopt
        SFAS No. 159 no later than the first quarter of fiscal 2009. We are currently
        assessing the impact the adoption of SFAS No. 159 will have on our financial
        position and results of operations.
   In
        September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined
        Benefit Pension and Other Postretirement Plans, an amendment of FASB Statement
        Nos. 87, 88, 106, and 132(R). SFAS No. 158 requires company plan sponsors
        to
        display the net over- or under-funded position of a defined benefit
        postretirement plan as an asset or liability, with any unrecognized prior
        service costs, transition obligations or actuarial gains/losses reported
        as a
        component of other comprehensive income in shareholders’ equity. SFAS No. 158 is
        effective for fiscal years ending after December 15, 2006. We adopted the
        recognition provisions of SFAS No. 158 as of the end of fiscal 2007. The
        adoption of SFAS No. 158 did not have an effect on the Company’s financial
        position or results of operations.
  F–10
 **INTERACT
          HOLDINGS GROUP, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
          31, 2007**
  In
        September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS
        No.
        157 establishes a framework for measuring fair value in generally accepted
        accounting principles, clarifies the definition of fair value and expands
        disclosures about fair value measurements. SFAS No. 157 does not require
        any new
        fair value measurements. However, the application of SFAS No. 157 may change
        current practice for some entities. SFAS No. 157 is effective for financial
        statements issued for fiscal years beginning after November 15, 2007, and
        interim periods within those fiscal years. We will adopt SFAS No. 157 in
        the
        first quarter of fiscal 2009. We are currently assessing the impact that
        the
        adoption of SFAS No. 157 will have on our financial position and results
        of
        operations.
   In
        July
        2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
        Income Taxes — an interpretation of FASB Statement No. 109 (FIN 48). This
        interpretation clarifies the application of SFAS No. 109, Accounting for
        Income
        Taxes, by defining a criterion that an individual tax position must meet
        for any
        part of the benefit of that position to be recognized in an enterprise’s
        financial statements and also provides guidance on measurement, derecognition,
        classification, interest and penalties, accounting in interim periods,
        disclosure and transition. FIN 48 is effective for fiscal years beginning
        after
        December 15, 2006, but earlier adoption is permitted. The Company is in the
        process of evaluating the impact of the application of the Interpretation
        to its
        financial statements.




F–11


**INTERACT
        HOLDINGS GROUP, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007**




**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 Preferred Stock will initially be convertible starting
      December 1, 2007, 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
      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





On
      January 8, 2008 the Company and its main operating subsidiary UTSI announced
      they were separating. UTSI’s financial information for the year ended December
      31, 2007 is presented below, and will no longer be part of the Company in 2008.
      Further, assets of $3,121,168 of the total consolidated assets of $3,511,145
      will no longer be present, along with liabilities of $749,997.




F–12


**INTERACT
        HOLDINGS GROUP, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007**


**Year Ended**
                **December 31,**
                **2007**Revenues
              
              $
              2,956,880Cost
                  of goods sold
              
              
              1,635,767Gross
                  profit
              
              $
              1,321,114Research
                  and development
              
              $
              –Selling,
                  general and administrative
              
              
              1,042,564Depreciation
                  and amortization
              
              
              110,785Total
                  operating expenses
              
              $
              1,153,349Profit
                  from operations
              
              $
              167,765Other
                  expense, net
              
              
              (33,090
              )Profit
              
              $
              134,675




**Note
      5 – Property and equipment**




Property
      and equipment consists of the following:




**Life**
              
              **As of**
                **December 31,**
                **2007**Office
                  furniture and equipment
              
              
              3–7
              
              $
              864,836Leasehold
                  improvements
              
              
              10
              
              
              285,591$
              1,150,427Less –
                  Accumulated depreciation
              
              
              
              
              
              1,021,603$
              128,824




**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 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 and (iii) $700,000 within five days of the registration statement
      being declared effective 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–13


**INTERACT
        HOLDINGS GROUP, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007**




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, 2007;
      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
      September 30, 2007; expected volatility of 66%; risk free interest rate of
      approximately 4.50%; and a term of three years.






**Note
      7 – Notes Payable**




The
      Company is obligated to individuals and corporations for notes with interest
      rates of between 8 and 10%, mostly payable in monthly and quarterly
      installments




F–14


**INTERACT
        HOLDINGS GROUP, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007**




**Note
      8- Leases**




The
      Company leases office space for its various subsidiaries.




Future
      minimum payments under capital and operating leases as of December 31, 2007
      are
      as follows:


2008
              
              $
              381,4612009
              
              
              381,4612010
              
              
              215,4332011
              
              
              106,095$
              1,084,450




**Note
      9 – Major Customers**




During
      the year ending December 31, 2007, the Company had four major customers, sales
      to which represent approximately 55% of the Company’s total
      revenues.


**Note
        10 - Subsequent Event**
 
 On
        January 8, 2008, the Company and its main operating subsidiary UTSI announced
        they were separating. UTSI’s financial information for the year ended December
        31, 2007 is presented below, and will no longer be part of the Company in
        2008.
        Further, assets of $3,121,168 of the total consolidated assets of $3,511,145
        will no longer be present, along with liabilities of $749,997.
  **Year
                  Ended December 31,****2007**
              
              **2006**Revenues
              
              $
              2,956,880
              
              
              1,727,336Cost
                  of goods sold
              
              
              1,635,767
              
              
              818,757Gross
                  profit
              
              $
              1,321,114
              
              
              908,579Research
                  and development
              
              $
              -Selling,
                  general and administrative
              
              
              1,042,564
              
              
              818,892Depreciation
                  and amortization
              
              
              110,785
              
              
              3,984Total
                  operating expenses
              
              $
              1,153,349
              
              
              822,876Profit
                  from operations
              
              $
              167,765
              
              
              85,703Other
                  expense, net
              
              
              (33,090
              )
              
              (27,310
              )
 F–15




**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 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).**
            **CONTROL****S
                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.




This
      annual report does not include an attestation report of the Company's registered
      public accounting firm regarding internal control over financial reporting.
      Management's report was not subject to attestation by the Company's registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange Commission that permit the Company to provide only management's report
      in this annual report.




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




None.




12




**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
              
              51
              
              Director,
                  Chief Executive Officer, Chief Financial Officer, interim President
                  and
                  interim Chief Operating
                  Officer





**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.
      Since December 31, 2007, Mr. Flannery has been serving as the interim President
      and Chief Operating Officer. Mr. Flannery brings extensive experience in
      business development and fiscal management to these positions. Since 2005,
      he
      has been serving as Chairman 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.




**Significant
      Employees**




Other
      than our executive officer, 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, 2007,
      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.




13




**Audit
      Committee**




We
      do not
      have an audit committee at this time.




**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 8880
      Rio San Diego Drive, 8th Floor, San Diego, CA 92108 address, telephone number
      (619) 342-7443.




**Nominating
      Committee**




The
      Company does not have a nominating committee.




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




The
      following table sets forth, for the fiscal year ended December 31, 2007, 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.




14




**SUMMARY
      COMPENSATION TABLE**


**Name and**
                **Principal Position**
              
              **Year**
              
              **Salary**
                **($)**
              
              **Bonus**
                **($)**
              
              **Stock**
                **Awards**
                **($)**
              
              **Options**
                **Awards**
                **($)**
              
              **Non-**
                **Equity**
                **Incentive**
                **Plan**
                **Compensation**
                **($)**
              
              **Change**
                **in**
                **Pension**
                **Value**
                **and Non-**
                **qualified**
                **Deferred**
                **Compensation**
                **Earnings**
                **($)**
              
              **All Other**
                **Compensation**
                **($)**
              
              **Total**
                **($)**Jeffrey Flannery
                CEO
                  and CFO
              
              
              2007
              
              
              180,000
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              180,000James
                E. Nelsonformer
                  Director, President and Chief Operating Officer
              
              
              2007
              
              
              285,000
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              285,000
              (1)




(1)
            This
                amount 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**




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




**Compensation
      of Executives**




Mr.
      Jeffrey W. Flannery receives an annual salary of $180,000. To date no payments
      have been made to Mr. Flannery. All amounts due to Mr. Flannery to date have
      been deferred.




**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, 2007, 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 March 31, 2008 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;




15




·
            each
                of our directors and executive officers;
                and




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




Except
      as
      set forth in the footnotes to the table, the persons named 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
              
              
              960,000
              (2)
              
              75.5
              %All
                  directors and officers as a group (one person)
              
              
              960,000
              
              
              75.5
              %


(1)
            The
                address for Jeffrey W. Flannery is 8880 Rio San Diego Drive, 8th
                Floor,
                San Diego, CA 92108(San Diego
                Office).


(2)
            All
                are Series A Preferred Stock, each share of which is convertible
                into one share of our common stock, and hold 2000 to 1 voting
                rights.




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




None.




16




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




**Exhibit**
                **No.**
              
              **Description**3.1*
              
              Articles
                  of Incorporation filed May 8, 2001 (incorporated by reference to
                  Exhibit 3.1(i) of the Company’s  Form SB-2 filed with the
                  SEC on 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,
                  2005.3.5*
              
              Bylaws
                  (incorporated by reference to Exhibit 3(ii) of the Company’s Form SB-2
                  filed with the SEC on 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, 2005.4.3*
              
              Form
                of Callable Secured Promissory Note dated March 31, 2006 (incorporated
                by
                reference to Exhibit 10.3 of the Company’s Form 8-K filed with the SEC on
                April 6, 2006).4.4*
              
              Form
                of Stock Purchase Warrant dated March 31, 2006 (incorporated by reference
                to Exhibit 10.4 of the Company’s Form 8-K filed with the SEC on April 6,
                2006).4.5*
              
              Convertible
                Promissory Note dated as of January 2, 2006 (incorporated by reference
                to
                Exhibit 10.13 of the Company’s Form 10KSB filed with the SEC on April
                17, 2006).4.6*
              
              Convertible
                Promissory Note dated as of March 12, 2006 (incorporated by reference
                to
                Exhibit 10.14 of the Company’s Form 10KSB filed with the SEC on April
                17, 2006).4.7*
              
              Stock
                  Purchase Warrant dated as of January 5, 2007 (incorporated by reference
                  to
                  Exhibit 4.1 of the Company’s Form 8-K, filed with the SEC on January 11,
                  2007).4.8*
              
              Callable
                  Secured Convertible Note, dated as of January 5, 2007 (incorporated
                  by
                  reference to Exhibit 4.2 of the Company’s Form 8-K, filed with the SEC on
                  January 11, 2007).10.1*
              
              Securities
                  Purchase Agreement dated as of March 31, 2006 by and among The
                  Jackson
                  Rivers Company and the Purchaser set forth therein (incorporated
                  by
                  reference to Exhibit 10.1 of the Company’s Form 8-K filed with the SEC on
                  April 6, 2006).10.2*
              
              Security
                  Agreement dated as of March 31, 2006 (incorporated by reference
                  to Exhibit
                  10.5 of the Company’s Form 8-K filed with the SEC on April 6,
                  2006).10.3*
              
              Registration
                  Rights Agreement dated as of March 31, 2006 (incorporated by reference
                  to
                  Exhibit 10.2 of the Company’s Form 8-K filed with the SEC on April 6,
                  2006).10.4*
              
              Intellectual
                  Property Security Agreement dated as of March 31, 2006 (incorporated
                  by
                  reference to Exhibit 10.6 of the Company’s Form 8-K filed with the SEC on
                  April 6, 2006).10.5*
              
              Securities
                Purchase Agreement dated as of January 5, 2007 (incorporated by reference
                to Exhibit 10.1 of the Company’s Form 8-K, filed with the SEC on January
                11, 2007).10.6*
              
              Security
                Agreement dated as of January 5, 2007 (incorporated by reference
                to
                Exhibit 10.2 of the Company’s Form 8-K, filed with the SEC on January 11,
                2007).14*
              
              Code
                  of Ethics (incorporated by reference to Exhibit 14 of the Company’s
                  Form 10KSB filed with the SEC on April 13, 2005).16*
              
              Letter
                  Regarding Change of Certifying Accountant (incorporated by reference
                  to
                  Exhibit 16.1 of the Company’s Form 8-K filed on January 19,
                  2007).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 Company, pursuant to 18 U.S.C. Sec. 1350, as
                  adopted pursuant to Sec. 302 of the Sarbanes-Oxley Act of
                  2002.
  17
  **Exhibit**
                **No.**
              
              **Description**32.1**
              
              Certification
                  of Jeffrey W. Flannery, Chief Executive Officer, Chief Financial
                  Officer
                  and Director of the 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




**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**




Gruber
      has billed us $15,000 for our annual audit for the fiscal year ended December
      31, 2006 and $20,000 for the fiscal year ended 2007.




**Audit-Related
      Fees**




Gruber
      billed us $0 for assurance and related services for the fiscal year ended 2006
      and $25,000 for the fiscal year ended 2007.




**Tax
      and All Other Fees**




We
      did
      not pay any fees to Gruber for tax compliance, tax advice, tax planning or
      other
      work during our fiscal years ending December 31, 2006 and 2007.




**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, 2007 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.




18




**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 16th day of April,
      2008 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,
              
              April 16, 2008Jeffrey
                  W. Flannery
              
              interim
                  Chief Operating Officer, interim President, Secretary, Treasurer,
                  Director


19
 **Exhibit**
                  **No.**
                
                **Description**3.1*
                
                Articles
                    of Incorporation filed May 8, 2001 (incorporated by reference
                    to
                    Exhibit 3.1(i) of the Company’s  Form SB-2 filed with the
                    SEC on 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,
                    2005.3.5*
                
                Bylaws
                    (incorporated by reference to Exhibit 3(ii) of the Company’s Form SB-2
                    filed with the SEC on 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, 2005.4.3*
                
                Form
                  of Callable Secured Promissory Note dated March 31, 2006 (incorporated
                  by
                  reference to Exhibit 10.3 of the Company’s Form 8-K filed with the SEC on
                  April 6, 2006).4.4*
                
                Form
                  of Stock Purchase Warrant dated March 31, 2006 (incorporated by
                  reference
                  to Exhibit 10.4 of the Company’s Form 8-K filed with the SEC on April 6,
                  2006).4.5*
                
                Convertible
                  Promissory Note dated as of January 2, 2006 (incorporated by reference
                  to
                  Exhibit 10.13 of the Company’s Form 10KSB filed with the SEC on April
                  17, 2006).4.6*
                
                Convertible
                  Promissory Note dated as of March 12, 2006 (incorporated by reference
                  to
                  Exhibit 10.14 of the Company’s Form 10KSB filed with the SEC on April
                  17, 2006).4.7*
                
                Stock
                    Purchase Warrant dated as of January 5, 2007 (incorporated by
                    reference to
                    Exhibit 4.1 of the Company’s Form 8-K, filed with the SEC on January 11,
                    2007).4.8*
                
                Callable
                    Secured Convertible Note, dated as of January 5, 2007 (incorporated
                    by
                    reference to Exhibit 4.2 of the Company’s Form 8-K, filed with the SEC on
                    January 11, 2007).10.1*
                
                Securities
                    Purchase Agreement dated as of March 31, 2006 by and among The
                    Jackson
                    Rivers Company and the Purchaser set forth therein (incorporated
                    by
                    reference to Exhibit 10.1 of the Company’s Form 8-K filed with the SEC on
                    April 6, 2006).10.2*
                
                Security
                    Agreement dated as of March 31, 2006 (incorporated by reference
                    to Exhibit
                    10.5 of the Company’s Form 8-K filed with the SEC on April 6,
                    2006).10.3*
                
                Registration
                    Rights Agreement dated as of March 31, 2006 (incorporated by
                    reference to
                    Exhibit 10.2 of the Company’s Form 8-K filed with the SEC on April 6,
                    2006).10.4*
                
                Intellectual
                    Property Security Agreement dated as of March 31, 2006 (incorporated
                    by
                    reference to Exhibit 10.6 of the Company’s Form 8-K filed with the SEC on
                    April 6, 2006).10.5*
                
                Securities
                  Purchase Agreement dated as of January 5, 2007 (incorporated by
                  reference
                  to Exhibit 10.1 of the Company’s Form 8-K, filed with the SEC on January
                  11, 2007).10.6*
                
                Security
                  Agreement dated as of January 5, 2007 (incorporated by reference
                  to
                  Exhibit 10.2 of the Company’s Form 8-K, filed with the SEC on January 11,
                  2007).14*
                
                Code
                    of Ethics (incorporated by reference to Exhibit 14 of the Company’s
                    Form 10KSB filed with the SEC on April 13, 2005).16*
                
                Letter
                    Regarding Change of Certifying Accountant (incorporated by reference
                    to
                    Exhibit 16.1 of the Company’s Form 8-K filed on January 19,
                    2007).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 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 Company, pursuant to 18 U.S.C. Sec. 1350, as
                adopted
                pursuant to Sec. 906 of the Sarbanes-Oxley Act of
                2002.




20